SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K


 X Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
   1934

                    For the fiscal year ended March 31, 1998

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act
     of 1934 for the transition period from ______________ to _____________

                        Commission File Number: 000-16014

                       ADELPHIA COMMUNICATIONS CORPORATION
             (Exact name of registrant as specified in its charter)

            Delaware                                           23-2417713
     (State or other jurisdiction of                      (I.R.S. Employer
        incorporation or organization)                   Identification No.)

                              Main at Water Street
                           Coudersport, PA             16915-1141
               (Address of principal executive offices) (Zip code)

                                  814-274-9830
               (Registrant's 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:
                      Class A Common Stock, $.01 par value.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes      X        No  ____

Aggregate market value of outstanding Class A Common Stock par value $0.01, held
by non-affiliates of the registrant at June 24, 1998 was $443.9 million based on
the closing sale price as computed by the NASDAQ National Market system as of
that date. For purposes of this calculation only, affiliates are deemed to be
directors and executive officers of the registrant.

At June 24, 1998, 20,043,528 shares of Class A Common Stock, par value $0.01,
and 10,944,476 shares of Class B Common Stock, par value $0.01 per share, of the
registrant were outstanding.

Documents Incorporated by Reference: Portions of the Annual Report on Form 10-K
of Olympus Communications, L.P. and Olympus Capital Corporation for the year
ended December 31, 1997 are incorporated by reference into Part II hereof.
Portions of the Proxy Statement for the 1998 Annual Meeting of Stockholders are
incorporated by reference into Part III hereof.

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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to the
Form 10-K. X



<PAGE>


<TABLE>
<CAPTION>

                       ADELPHIA COMMUNICATIONS CORPORATION

                                TABLE OF CONTENTS



PART I

<S>                                                                                             <C>
   ITEM 1.  BUSINESS                                                                               3

   ITEM 2.   PROPERTIES                                                                           24

   ITEM 3.  LEGAL PROCEEDINGS                                                                     24

   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   24


PART II

   ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS                                                                 27

   ITEM 6.  SELECTED FINANCIAL DATA                                                                28

   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS                                                               31

   ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                              40

   ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           40

   ITEM  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL  DISCLOSURE                                                              64


PART III

   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    64

   ITEM 11.  EXECUTIVE COMPENSATION                                                                64

   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        64

   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        64


PART IV

   ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                       64
</TABLE>

<PAGE>

PART I

ITEM 1.  BUSINESS
(Dollars in thousands, except subscriber rates and per share amounts)

Introduction

      Adelphia Communications Corporation ("Adelphia" and, collectively with its
subsidiaries, the "Company") is a leader in the telecommunications industry with
cable television operations and competitive local exchange telephony operations.
The Company is the seventh largest cable television operator in
the United States. As of March 31, 1998, cable television systems owned or
managed by the Company (the "Systems") in the aggregate passed 2,772,531 homes
and served 1,976,171 basic subscribers. The Company through its subsidiary
Hyperion Telecommunication, Inc. ("Hyperion") owns and operates one of the
largest facilities based Competitive Local Exchange Carriers ("CLEC") in the
United States. John J. Rigas, the Chairman, President, Chief Executive Officer
and founder of Adelphia, has owned and operated cable television systems since
1952.

      Cable systems owned by the Company (the "Company Systems") are located in
twelve states and are organized into seven regional clusters: Western New York,
Virginia, Western Pennsylvania, New England, Eastern Pennsylvania, Ohio and
Coastal New Jersey. The Company Systems are located primarily in suburban areas
of large and medium-sized cities within the 50 largest television markets. As of
March 31, 1998, the Company Systems passed 1,670,068 homes and served 1,215,040
basic subscribers.

      The Company also provides, for a fee, management and consulting services
to certain partnerships and certain corporations engaged in the ownership and
operation of cable television systems (the "Managed Partnerships"). John J.
Rigas and certain members of his immediate family, including entities they own
or control (collectively, the "Rigas Family"), have substantial ownership
interests in the Managed Partnerships. As of March 31, 1998, cable systems (the
"Managed Systems") owned by the Managed Partnerships passed 347,278 homes and
served 259,409 basic subscribers.

      Hyperion is a leading CLEC that designs, constructs, operates and manages
state-of-the-art, fiber optic networks and facilities. Hyperion operates one of
the largest CLECs in the United States based upon route miles and buildings
connected. Hyperion currently manages and operates 22 networks (including four
under construction), serving 46 cities. As of March 31, 1998, these networks had
5,363 route miles, connecting 1,909 buildings. Hyperion currently offers
switched services, including local dial tone, in most of its markets. Hyperion
is consolidated in Adelphia's financial results and is currently an unrestricted
subsidiary of Adelphia for purposes of Adelphia's indentures.

      On May 8, 1998, Hyperion completed an initial public offering ("IPO") of
its Class A Common Stock ("Hyperion Stock"). As part of the offering, Adelphia
purchased an incremental 3,324,001 shares of Hyperion Stock for $49,900 and
converted indebtedness owed to the Company by Hyperion into 3,642,666 shares of
Hyperion Stock. Adelphia owns approximately 66% of the Hyperion Common Stock on
a fully diluted basis and 85% of the total voting power. Additional net proceeds
of approximately $192,000 to Hyperion were received as a result of the sale of
Hyperion Stock to the public. In addition, Hyperion has recently completed
several financing transactions and acquisitions, which are discussed in Part II,
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations. For additional information, see also the Hyperion Annual Report
on Form 10-K for fiscal year ended March 31, 1998.

      John J. Rigas, the Chairman, President, Chief Executive Officer and
majority stockholder of Adelphia, is a pioneer in the cable television industry,
having built his first system in 1952 in Coudersport, Pennsylvania. Adelphia was
incorporated in Delaware on July 1, 1986 for the purpose of reorganizing five
cable television companies, then principally owned by the Rigas Family, into a
holding company structure in connection with the initial public offering of its
Class A Common Stock, $.01 par value. The Company's operations consist of
providing telecommunications services primarily over its broadband networks. The
Company did not have any material foreign operations or foreign sales in the
year ended March 31, 1998.

Olympus Communications, L.P.

      The Company owns a 50% voting interest and nonvoting Preferred Limited
Partnership ("PLP") interests entitling the Company to a 16.5% preferred return
in Olympus Communications, L.P. ("Olympus"). Olympus is a joint venture limited
partnership between the Company and subsidiaries of FPL Group, Inc. (together
with its subsidiaries, "FPL Group"). FPL Group is one of the largest public
utility holding companies in the United States supplying, through its principal
<PAGE>

subsidiaries, electric service throughout most of the east and lower west coasts
of Florida. Olympus operates the largest contiguous cable system in Florida and
is located in some of the fastest-growing markets in Florida. As of March 31,
1998, the Olympus systems passed 755,185 homes and served 501,722 basic
subscribers. Olympus is not a consolidated subsidiary of Adelphia or FPL Group.
The Company's investment in Olympus is accounted for under the equity method of
accounting.

       The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Annual Report on Form 10-K, including Management's Discussion and Analysis of
Financial Condition and Results of Operations, is forward-looking, such as
information relating to the effects of future regulation, future capital
commitments and the effects of competition. Such forward-looking information
involves important risks and uncertainties that could significantly affect
expected results in the future from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These "forward looking
statements" can be identified by the use of forward-looking terminology such as
"believes", "expects," "may," "will," "should," "intends" or "anticipates" or
the negative thereof or other variations thereon or comparable terminology, or
by discussions of strategy that involve risks and uncertainties. These risks and
uncertainties include, but are not limited to, uncertainties relating to
economic conditions, acquisitions and divestitures, government and regulatory
policies, the pricing and availability of equipment, materials, inventories and
programming, product acceptance, technological developments and changes in the
competitive environment in which the Company operates. Persons reading this
Annual Report on Form 10-K are cautioned that forward-looking statements herein
are only predictions, that no assurance can be given that the future results
will be achieved, and that actual events or results may differ materially as a
result of the risks and uncertainties facing the Company.

Cable Television Operations

    Products and Services

      Video Services

      Cable television systems receive a variety of television, radio and data
signals transmitted to receiving sites ("headends") by way of off-air antennas,
microwave relay systems and satellite earth stations. Signals are then
modulated, amplified and distributed primarily through fiber optic and coaxial
cable to subscribers, who pay fees for the service. Cable television systems are
generally constructed and operated pursuant to non-exclusive franchises awarded
by state or local government authorities for specified periods of time.

      Cable television systems typically offer subscribers a package of basic
video services consisting of local and distant television broadcast signals,
satellite-delivered non-broadcast channels (which offer programming such as
news, sports, family entertainment, music, weather, shopping, etc.) and public,
governmental and educational access channels.

      In addition, premium service channels, which provide movies, live and
taped concerts, sports events and other programming, are offered for an extra
monthly charge. Systems also offer pay-per-view programming, which allows the
subscriber to order special events or movies and to pay on a per event basis.
Local, regional and national advertising time is sold in the majority of the
Systems, with commercial advertisements inserted on certain satellite-delivered
non-broadcast channels.

      Digital video services are now available to Adelphia subscribers who lease
or purchase a digital converter. Digital TV is a computerized method of
defining, transmitting and storing information that makes up a television
signal. Since digital signals can be "compressed," Adelphia can transmit up to
12 channels in the space currently used to transmit just one analog channel.
Digital TV converters are available to approximately 85% of Adelphia's
customers.

      Adelphia's digital TV subscribers may also receive "multichannel" premium
services, such as HBO 1, 2, 3 and 4 from east and west coast satellite feeds,
enhanced Pay-Per-View options with 18 movie channels, up to 40 channels of
CD-quality music from Music Choice and an interactive on-screen program guide to
help them navigate the new digital choices.

    High-Speed Data Services

      Power Link, the Company's high-speed data service provided through cable
modems, which includes residential, institutional, and business service
offerings, constitutes an alternative to the traditional slower speed data
<PAGE>

offerings available through Internet Service Providers (ISPs). Power Link offers
customers speeds greater than those available through a T1 line, at costs that
compare to a typical ISP plus a second telephone line.

      The Company's deep fiber design allows the use of the expanded bandwidth
potential of digital compression technology for cable data and video services.
High speed cable data services are now available at speeds far in excess of that
which is currently available via a 28.8 kilobit per second telephone modem. In
addition, using a high speed cable modem and special ethernet card allows the
user to bypass telephone lines, does not require the user to log on, and allows
for multiple sessions or connections to multiple services simultaneously.

      The Company also offers high speed Internet access through the use of one
way cable modems, which provide the high speeds of broadband on the data
downstream and utilize a telephone line return path. One way cable modems enable
the Company to offer the high speed data service to 100% of its customers, while
completing the system buildout of two way broadband plant.

      The Company also offers traditional dial up Internet access for those
customers who initially prefer this method of Internet access to the higher
speeds of our broadband network. This establishes the Company as a full service
Internet provider and creates a customer base which can be upgraded to the high
speed service in the future.

    Other Services

      Adelphia offers wireless messaging services through its wholly owned
subsidiary, Page Time, Inc. ("Page Time"). Page Time provides one-way messaging
services to the Company's Systems via resale arrangements with existing paging
network operators. The Company plans to offer two-way messaging services to its
customers beginning in fiscal 1999.

      In July 1997, Adelphia began selling long distance telephone service on a
resale basis. Services offered include state-to-state and in-state long
distance, as well as 800 service, international calling, calling card services
and debit card services. The Company's sales effort is focused on the consumer
market and emphasizes the simplicity and savings of one low monthly rate
available 24 hours a day, 7 days a week.

      In addition to the activities described above, the Company has made a
substantial commitment to technological development as a member of Cable
Television Laboratories, Inc., a not-for-profit research and development company
serving the cable industry.

    Operating Strategy

      The Company's cable television operations strategy is to construct and
operate a broadband network capable of offering a broad range of
telecommunications services and providing superior customer service while
maximizing operating efficiencies. The Company intends to build on its expertise
as a cable television service provider, as well as to become a provider of
bundled communications services. It intends to combine its cable television
service with high speed data and internet access, paging and telephony service.

      By acquiring and developing systems in geographic proximity, the Company
has been able to realize significant operating efficiencies through the
consolidation of many managerial, administrative and technical functions. The
Systems have consolidated virtually all of their administrative operations,
including customer service, service call dispatching, marketing, human
resources, advertising sales and government relations into regional offices.
Each regional office has a related technical center which contains the
facilities necessary for the Systems' technical functions, including
construction, installation and system maintenance and monitoring. Consolidating
customer service functions into regional offices allows the Company to provide
customer service through better training and staffing of customer service
representatives, and by providing more advanced telecommunications and computer
equipment and software to its customer service representatives than would
otherwise be economically feasible in smaller systems.

      The Company considers technological innovation to be an important
component of its service offerings and customer satisfaction. The Company
intends to continue the upgrade of its network infrastructure to add channel
capacity, increase digital transmission capabilities and further improve system
reliability. These improvements will enable the Company to continue its
introduction of additional services, such as digital video, high speed data and
internet service and impulse-ordered pay-per-view programming, which expand
customer choices and are expected to increase Company revenues. Management
<PAGE>

believes that the Company is among the leaders of the cable industry in the
deployment of fiber optic cable with one of the most advanced cable network
infrastructures.

Hyperion

    Products and Services

         Hyperion's products and services are designed to appeal to the 
sophisticated telecommunications needs of its business, governmental and
educational customers.

      Local Services

         Hyperion provides local dial-tone services to customers, which allows
them to complete calls in their calling area and to access a long distance
calling area. Local services and long distance services can be bundled together
using the same transport facility. Hyperion's networks are designed to allow a
customer to easily increase or decrease capacity and alter enhanced services as
the telecommunications requirements of the business change. In addition to its
core local services, Hyperion also provides access to third party directory
assistance and operator services.

      Long Distance Services

      Hyperion provides domestic and international long distance services for
completing intrastate, interstate and international calls. Long distance service
is offered as an additional service to Hyperion's local exchange customers. Long
distance calls which do not terminate on Hyperion's networks (which are
currently the bulk of such calls) are passed to long distance carriers which
route the remaining portion of the call.

      Enhanced Services

       In addition to providing typical enhanced services such as voicemail,
call transfer and conference calling, Hyperion offers additional value-added
enhanced services to complement its core local and long distance services. These
enhanced service offerings include access to internet services, data networking
services and specialized application services.

    Growth Strategy

         Hyperion's  objective  is  to  be  the leading local telecommunications
service provider to businesses, governmental and educational end users, VARs,
ISPs and IXCs within its markets. To achieve this objective, Hyperion has
pursued a regionalized facilities-based strategy to provide extensive, high
capacity network coverage and to broaden the range of telecommunications
products and services it offers to targeted customers.

         Hyperion  provides its  services to  telecommunications-intensive
customers which include medium and large businesses, governmental and
educational end users, and other telecommunications providers. Management
believes that its target customers are a large and under-served universe who
generally have no choice other than to buy communications services from the
incumbent LEC or IXC. These customers generally seek reliability, high quality,
broad geographic coverage, end-to-end service, solutions-oriented customer
service and timely introduction of new and innovative services. The company
believes it will be able to continue to compete effectively for end users by
offering superior reliability, product diversity, service and custom solutions
to meet end user needs at competitive prices. Hyperion also offers its local
services to IXCs and has entered into national service agreements with AT&T and
MCI to be their preferred supplier of dedicated access and switched access
transport services.

         By providing switched voice, enhanced services and long distance access
on its own fiber optic networks, Hyperion believes it can better control the
provisioning, delivery and monitoring of its services as well as increase its
operating margins. On-net services improve the company's ability to provide
bundled service offerings by reducing its reliance upon incumbent LECs for
servicing and technological upgrades of leased dedicated transport or unbundled
network elements. Hyperion currently provides approximately 81% of its switched
services to customers on-net, though this percentage will decline as the company
continues to offer switched services on an unbundled network element and total
service resale basis. However, Hyperion believes it will provision a majority of
<PAGE>

its access lines on its own networks for the foreseeable future.

      Hyperion believes that a significant portion of business, governmental and
educational customers prefer a single-source telecommunications provider that
delivers a full range of efficient and cost effective solutions to meet their
telecommunications needs. Hyperion believes that offering a customized,
integrated package of telecommunications services positions it to best address
the increasing telecommunications requirements of businesses within its markets.
As a facilities-based, single source provider of bundled telecommunications
services, Hyperion believes it can satisfy the growing telecommunications
demands of its customers on a more effective and cost efficient basis than many
of its competitors.

Recent Development of the Systems

      The Company has focused on acquiring and developing systems in markets
which have favorable historical growth trends. The Company believes that the
strong household growth trends in its Systems' market areas are a key factor in
positioning itself for future growth in basic subscribers. For a description of
acquisitions by the Company and Olympus from April 1, 1995 through the date of
this filing, see Note 1 to Adelphia's Consolidated Financial Statements included
in Item 8 of this Form 10-K.

      TCI Partnership. On January 8, 1998, Adelphia signed a definitive
agreement to establish a partnership into which Tele-Communications, Inc.
("TCI") will contribute its cable systems in Buffalo, New York; Erie,
Pennsylvania; and Ashtabula and Lake County, Ohio, totaling approximately
166,000 subscribers, and Adelphia will contribute its Western New York and
Lorain, Ohio systems, totaling approximately 298,000 subscribers. Upon closing
of the transaction, TCI will hold a minority interest in the partnership.
Adelphia will manage the partnership and will consolidate the partnership's
results for financial reporting purposes. The Company expects that the
transaction will close prior to September 30, 1998.

      The Company will continue to evaluate new opportunities that allow for the
expansion of its business through the acquisition of additional cable television
systems in geographic proximity to its existing regional market areas or in
locations that can serve as the basis for new market areas, either directly or
indirectly through joint ventures, where appropriate.



<PAGE>



      The following table indicates the growth of the Company Systems and
Olympus systems by summarizing the number of homes passed by cable and the
number of basic subscribers for each of the five years in the period ended March
31, 1998. The table also indicates the numerical growth in subscribers
attributable to acquisitions and the numerical and percentage growth
attributable to internal growth.
 <TABLE>
 <CAPTION>


                                                                              Year Ended March 31,
                                                        ------------------------------------------------------------------
                                                           1994          1995          1996         1997         1998
                                                        ------------  ------------ ------------- ------------ ------------
     COMPANY SYSTEMS:
     Homes passed (b)
<S>                                                      <C>            <C>           <C>          <C>          <C>
        Beginning of Year.................................1,172,755     1,207,425     1,340,808    1,422,077    1,569,953
        Internal Growth (c)................................. 10,623        39,012        30,665       35,049       25,433
        % Internal Growth...................................   0.9%          3.2%          2.3%         2.5%         1.6%
        Acquired Homes Passed............................... 24,047        94,371        50,604      112,827       74,682
        End of Year.......................................1,207,425     1,340,808     1,422,077    1,569,953    1,670,068

     Basic subscribers (d)
        Beginning of Year...................................852,335       888,167       975,066    1,039,704    1,138,414
        Internal Growth (c)................................. 17,355        31,651        29,215       20,396       12,740
        % Internal Growth...................................   2.0%          3.6%          3.0%         2.0%         1.1%
        Acquired Subscribers................................ 18,477        55,248        35,423       78,314       63,886
        End of Year.........................................888,167       975,066     1,039,704    1,138,414    1,215,040
        Basic Penetration (e)...............................  73.6%         72.7%         73.1%        72.5%        72.8%

     OLYMPUS SYSTEMS (a):
     Homes passed (b)
        Beginning of Year...................................386,971       406,753       512,052      631,602      650,742
        Internal Growth (c)................................. 19,782        11,911        12,050       19,140       17,788
        % Internal Growth...................................   5.1%          2.9%          2.4%         3.0%         2.7%
        Acquired Homes Passed...............................      -        93,388       107,500            -       86,655
        End of Year.........................................406,753       512,052       631,602      650,742      755,185

     Basic subscribers (d)
        Beginning of Year...................................211,025       239,357       306,317      403,901      416,760
        Internal Growth (c)................................. 28,332        19,198         9,329       12,859       15,397
        % Internal Growth...................................  13.4%          8.0%          3.0%         3.2%         3.7%
        Acquired Subscribers................................      -        47,762        88,255            -       69,565
        End of Year.........................................239,357       306,317       403,901      416,760      501,722
        Basic Penetration (e)...............................  58.8%         59.8%         63.9%        64.0%        66.4%
<FN>

(a)  Data included for the South Dade System at March 31, 1994, 1995, 1996, 1997
     and 1998 reflects actual homes passed and basic subscribers. At July 31,
     1992, prior to Hurricane Andrew, the South Dade system had 157,992 homes
     passed by cable and 71,193 basic subscribers, respectively. At March 31,
     1994, 1995, 1996, 1997 and 1998, the South Dade system served 65,398,
     74,601, 80,725, 85,859 and 90,682 basic subscribers, respectively. Data for
     the Northeast Cable System (which was acquired from Olympus in fiscal 1995)
     is included under Company Systems and excluded from the Olympus Systems for
     all periods presented.

(b)  A home is deemed to be "passed" by cable if it can be connected to the
     distribution system without any further extension of the cable distribution
     plant.

(c)  The number of additional homes passed or additional basic subscribers not
     attributable to acquisitions of new cable systems.

(d) A home with one or more television sets connected to a cable system is
counted as one basic subscriber.

(e)  Basic subscribers as a percentage of homes passed by cable.
</FN>
</TABLE>
<PAGE>

Market Areas

         The Systems are "clustered" in eight market areas in the eastern 
portion of the United States as follows:
<TABLE>
<CAPTION>

MARKET AREA                LOCATION OF SYSTEMS
<S>                       <C>
Southeastern Florida       Portions of southern Dade, Citrus, Orange, Hillsborough, Palm Beach, Martin and
                           St. Lucie Counties and Hilton Head, South Carolina

Western                    New York Suburbs of Buffalo and the adjacent Niagara
                           Falls area, and several small communities in the
                           southern tier of New York

Virginia                   Winchester, Charlottesville,  Staunton, Richland, Martinsville, Blacksburg, Salem and
                           surrounding  communities  in Virginia,  and South Boston and  Elizabeth  City,  North
                           Carolina

Western Pennsylvania       Suburbs  of  Pittsburgh  and  several  small  communities  in  western  Pennsylvania,
                           Maryland and West Virginia

New                        England Cape Cod communities, South Shore communities
                           (the area between Boston and Cape Cod,
                           Massachusetts), Martha's Vineyard, Massachusetts; and
                           Bennington, Burlington, Rutland and Montpelier,
                           Vermont and surrounding communities in Vermont, New
                           Hampshire and New York and Seymour, Connecticut

Eastern Pennsylvania       Suburbs of Philadelphia and suburbs of Scranton

Ohio Suburbs of Cleveland and the city of Mansfield and surrounding communities,
Mt.
                           Vernon and portions of Kalamazoo County, Michigan

Coastal New Jersey         Ocean County, New Jersey

</TABLE>


<PAGE>



      The following table summarizes by market area the homes passed by cable,
basic subscribers and premium service units for the Systems as of March 31,
1998.
<TABLE>
<CAPTION>


                                               Homes         Basic         Basic       Premium       Premium
                                               Passed     Subscribers   Penetration     Units      Penetration

Company Systems:
<S>                                         <C>          <C>              <C>         <C>              <C>
Western New York..........................      402,215        275,688         68.5%     125,189          45.4%
New England...............................      327,814        233,783         71.3%     102,510          43.9%
Virginia..................................      256,538        204,736         79.8%      85,104          41.6%
Western Pennsylvania......................      247,274        179,773         72.7%      65,541          36.5%
Ohio......................................      175,820        125,225         71.2%      59,282          47.3%
Coastal New Jersey........................      129,825        101,648         78.3%      55,159          54.3%
Eastern Pennsylvania......................      130,582         94,187         72.1%      51,130          54.3%
                                             ===========  =============               ===========
     Total................................    1,670,068      1,215,040         72.8%     543,915          44.8%
                                             ===========  =============               ===========

Olympus Systems:
Southeastern Florida......................      755,185        501,722         66.4%     219,597          43.8%
                                             ===========  =============               ===========

Managed Systems:
Southeastern Florida......................      153,975        116,880         75.9%      26,604          22.8%
Virginia..................................       77,120         55,563         72.1%      30,888          55.6%
Western Pennsylvania......................       80,415         62,618         77.8%      33,306          53.2%
Eastern Pennsylvania......................       35,768         24,348         68.1%      18,001          73.9%
                                             ===========  =============               ===========
     Total................................      347,278        259,409         74.7%     108,799          41.9%
                                             ===========  =============               ===========

Total Systems:
Southeastern Florida......................      909,160        618,602         68.0%     246,201          39.8%
Western New York..........................      402,215        275,688         68.5%     125,189          45.4%
Virginia..................................      333,658        260,299         78.0%     115,992          44.6%
New England...............................      327,814        233,783         71.3%     102,510          43.9%
Western Pennsylvania......................      327,689        242,391         74.0%      98,847          40.8%
Ohio......................................      175,820        125,225         71.2%      59,282          47.3%
Eastern Pennsylvania......................      166,350        118,535         71.3%      69,131          58.3%
Coastal New Jersey........................      129,825        101,648         78.3%      55,159          54.3%
                                             ===========  =============               ===========
      Total...............................    2,772,531      1,976,171         71.3%     872,311          44.1%
                                             ===========  =============               ===========

</TABLE>

    Financial Information

      The financial data regarding the revenues, results of operations and
identifiable assets for the Company's two business segments for each of the
Company's last three fiscal years is set forth in, and incorporated herein, by
reference to Item 6 of this Form 10-K.

Cable Television Operations

    Technologies and Capital Improvements

      The Company has made a substantial commitment to the technological
development of the Systems and is aggressively investing in the upgrade of the
technical capabilities of its cable plant in a cost efficient manner. Over 50%
of Adelphia's networks have bandwidth capacity of 550 Mhz or greater. The
Company continues to deploy fiber optic cable and to upgrade the technical
capabilities of its broadband networks. The result is significant increases in
network capacity, digital capability, two-way communication and network
reliability.

      The design of the current System upgrade, when completed, will deploy on
average one fiber optic node for every two system plant miles or approximately
one fiber node for every 180 homes passed compared to the industry norm of 500
to 1000 homes passed per fiber optic node. Approximately 75% of the System will
be upgraded to 750 Mhz. Approximately 25% of the plant will remain at 550 Mhz.
The upgraded system will be completely addressable and provide two-way
communication capability. The additional bandwidth will enable the Company to
offer additional video programming services. A portion of the bandwidth will be
allocated to the new service offerings such as two-way data,
<PAGE>

telephony and video-on-demand. The Company believes this combination of
bandwidth and the relatively low homes passed per fiber node will provide
adequate capacity and flexibility to offer any and all of the existing and
anticipated services into the foreseeable future with minimal additional capital
expenditures. By the end of Fiscal 1999, approximately 50% of customers will be
served by two way cable plant.

      The upgraded System, on average, will include only two active pieces of
equipment between the headend and the home. Limiting the number of active pieces
of equipment combined with the small number of homes per fiber node reduces the
potential for mechanical failure and the number of customers affected by such a
failure, all of which provides increased reliability to the customers.

    Subscriber Services and Rates

      The Company's revenues are derived principally from monthly subscription
fees for various services. Rates to subscribers vary in accordance with the type
of service selected. Although service offerings vary across franchise areas
because of differences in plant capabilities, each of the areas typically offer
services at monthly prices ranging as follows:



                  Service                       Rate Range


        Basic Cable Television               $  7.00   -  $17.00

        Cable Value Cable Television         $  9.00   -  $25.00

        Premium Cable Television             $  9.00   -  $14.00

        High Speed Internet Access           $ 35.00   -  $45.00

        Dial-up Internet Access              $ 20.00

        Paging                               $  9.00   -  $30.00

        Long Distance                        $  4.95 plus $.10 per minute



      In addition, the Company derives revenue from telephony with rates
determined on a usage basis.

      An installation fee, which the Company may wholly or partially waive
during a promotional period, is usually charged to new subscribers. Subscribers
are free to terminate services at any time without charge, but often are charged
a fee for reconnection or change of service.

      The Cable Communications Policy Act of 1984 (the "1984 Cable Act," as
amended by the 1992 Cable Act), deregulated basic service rates for systems in
communities meeting the Federal Communication Commissions ("FCC") definition of
effective competition. Pursuant to the FCC's definition of effective competition
adopted following enactment of the 1984 Cable Act, substantially all of the
Company's franchises were rate deregulated. However, in June 1991, the FCC
amended its effective competition standard, which increased the number of cable
systems which could be subject to local rate regulation. The 1992 Cable Act
contains a new definition of effective competition under which nearly all cable
systems in the United States are subject to regulation of basic service rates.
Additionally, the legislation (i) eliminated the 5% annual basic rate increase
allowed by the 1984 Cable Act without local approval; (ii) allows the FCC to
adjudicate the reasonableness of rates for non-basic service tiers, other than
premium services, for cable systems not subject to effective competition in
response to complaints filed by franchising authorities and/or cable
subscribers; (iii) prohibits cable systems from requiring subscribers to
purchase service tiers above basic service in order to purchase premium services
if the system is technically capable of doing so; (iv) allows the FCC to impose
restrictions on the retiering and rearrangement of cable services under certain
circumstances; and (v) permits the FCC and franchising authorities more latitude
in controlling rates and rejecting rate increase requests. The
Telecommunications Act of 1996 (the "1996 Act") ends FCC regulation on nonbasic
tier rates on March 31, 1999. See "Legislation and Regulation."

      For a discussion of recent FCC rate regulation and related developments,
see "Legislation and Regulation" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Regulatory and Competitive
Matters."

<PAGE>

      Franchises

      The 1984 Cable Act provides that cable operators may not offer cable
service to a particular community without a franchise unless such operator was
lawfully providing service to the community on July 1, 1984 and the franchising
authority does not require a franchise. The Systems operate pursuant to
franchises or other authorizations issued by governmental authorities,
substantially all of which are nonexclusive. Such franchises or authorizations
awarded by a governmental authority generally are not transferable without the
consent of the authority. As of March 31, 1998, the Company held 536 franchises,
Olympus held 144 franchises and the Managed Systems held 121 franchises. Most of
these franchises can be terminated prior to their stated expiration by the
relevant governmental authority, after due process, for breach of material
provisions of the franchise.

      Under the terms of most of the Company's franchises, a franchise fee
(generally ranging up to 5% of the gross revenues of the cable system) is
payable to the governmental authority. For the past three years, franchise fee
expense incurred by the Company has averaged approximately 2.5% of gross system
revenues.

      The franchises issued by the governmental authorities are subject to
periodic renewal. In renewal hearings, the authorities generally consider, among
other things, whether the franchise holder has provided adequate service and
complied with the franchise terms. In connection with a renewal, the authority
may impose different and more stringent terms, the impact of which cannot be
predicted. To date, all of the Company's material franchises have been renewed
or extended, at or effective upon their stated expiration, generally on modified
terms. Such modified terms have not been materially adverse to the Company.

      The Company believes that all of its material franchises are in good
standing. From time to time, the Company notifies the franchising authorities of
the Company's intent to seek renewal of the franchise in accordance with the
procedures set forth in the 1984 Cable Act. The 1984 Cable Act process requires
that the governmental authority consider the franchise holder's renewal proposal
on its own merits in light of the franchise holder's past performance and the
community's needs and interests, without regard to the presence of competing
applications. See "Legislation and Regulation." The 1992 Cable Act alters the
administrative process by which operators utilize their 1984 Cable Act franchise
renewal rights. Such changes could make it easier in some instances for a
franchising authority to deny renewal of a franchise.

Hyperion

    Networks

      Network Construction

      The company's networks are constructed to cost-effectively access areas of
significant end user telecommunications traffic, as well as the POPs of most
IXCs and the majority of the LEC-COs. The company establishes with its Local
Partner general requirements for network design including
engineering specifications, fiber type and amount, construction timelines and
quality control. The company's engineering personnel provide project management,
including contract negotiation and overall supervision of the construction,
testing and certification of all facilities. The construction period for a new
network varies depending upon the number of route miles to be installed, the
initial number of buildings targeted for connection to the network, the general
deployment of the network and other factors. Networks that the company has
installed to date have generally become operational within six to ten months
after the beginning of construction.

      Network Operating Control Center("NOCC")

      In Coudersport, Pennsylvania, the company has built the NOCC, which is
equipped with state-of-the-art system monitoring and control technology. The
NOCC is a single point interface for monitoring all of the company's networks
and provisioning all services and systems necessary to operate the networks. The
NOCC supports all of the company's networks including the management of 1,909
building connections, 17 switches or remote switching modules and 5,363 network
route miles as of March 31, 1998. The NOCC is designed to accommodate the
company's anticipated growth.

      The NOCC is utilized for a variety of network management and control
<PAGE>

functions including monitoring, managing and diagnosing the company's SONET
networks, central office equipment, customer circuits and signals and the
company's switches and associated equipment. The NOCC is also the location where
the company provisions, coordinates, tests and accepts all orders for switched
and dedicated circuit orders. In addition, the NOCC maintains the database for
the company's circuits and network availability. Network personnel at the NOCC
also develop and distribute a variety of software utilized to manage and
maintain the networks.

      Connections to Customer Locations

      Office buildings are connected by network backbone extensions to one of a
number of physical rings of fiber optic cable, which originate and terminate at
the Networks central office. Signals are sent simultaneously on both primary and
alternate protection paths through a network backbone to the Networks central
office. Within each building, network internal wiring connects the Networks
fiber optic terminal equipment to the customer premises. Customer equipment is
connected to network-provided electronic equipment generally located where
customer transmissions are digitized, combined and converted to an optical
signal. The traffic is then transmitted through the network backbone to the
Networks central office where it can be reconfigured for routing to its ultimate
destination on the network.



Cable Television Operations

    Competition

      Although the Company and the cable television industry have historically
faced modest competition, the competitive landscape is changing and competition
will increase. The Company believes that the increase in competition within its
communities will occur gradually over a period of time.

      At the present time, cable television systems compete with other
communications and entertainment media, including off-air television broadcast
signals which a viewer is able to receive directly using the viewer's own
television set and antenna. The extent to which a cable system competes with
over-the-air broadcasting depends upon the quality and quantity of the broadcast
signals available by direct antenna reception compared to the quality and
quantity of such signals and alternative services offered by a cable system. In
many areas, television signals which constitute a substantial part of basic
service can be received by viewers who use their own antennas. Local television
reception for residents of apartment buildings or other multi-unit dwelling
complexes may be aided by use of private master antenna services. Cable systems
also face competition from alternative methods of distributing and receiving
television signals and from other sources of entertainment such as live sporting
events, movie theaters and home video products, including videotape recorders
and compact disc players. In recent years, the FCC has adopted policies
providing for authorization of new technologies and a more favorable operating
environment for certain existing technologies that provide, or may provide,
substantial additional competition for cable television systems. The extent to
which cable television service is competitive depends in significant part upon
the cable television system's ability to provide an even greater variety of
programming and other services than that available off-air or through
competitive alternative delivery sources. In addition, certain provisions of the
1992 Cable Act and the 1996 Act are expected to increase competition
significantly in the cable industry. See "Legislation and Regulation."

      The 1992 Cable Act prohibits the award of exclusive franchises, prohibits
franchising authorities from unreasonably refusing to award additional
franchises and permits them to operate cable systems themselves without
franchises.

      Individuals presently have the option to purchase earth stations, which
allow the direct reception of satellite-delivered program services formerly
available only to cable television subscribers. Most satellite-distributed
program signals are being electronically scrambled to permit reception only with
authorized decoding equipment, generally at a cost to the viewer. From time to
time, legislation has been introduced in Congress which, if enacted into law,
would prohibit the scrambling of certain satellite-distributed programs or would
make satellite services available to private earth stations on terms comparable
to those offered to cable systems. Broadcast television signals are being made
available to owners of earth stations under the Satellite Home View Copyright
Act of 1988, which became effective January 1, 1989 for a six-year period. This
Act establishes a statutory compulsory license for certain transmissions made by
satellite owners to home satellite dishes for which carriers are required to pay
a royalty fee to the Copyright Office. This Act has been extended by Congress
until December 31, 1999. The 1992 Cable Act enhances the right of cable
competitors to purchase nonbroadcast satellite-delivered programming. See
"Legislation and Regulation--Federal Regulation."
<PAGE>

      Video programming is now being delivered to individuals by high-powered
direct broadcast satellites ("DBS") utilizing video compression technology. This
technology has the capability of providing more than 100 channels of programming
over a single high-powered DBS satellite with significantly higher capacity
available if multiple satellites are placed in the same orbital position. Video
compression technology is being used by cable operators to similarly increase
their channel capacity. DBS service can be received virtually anywhere in the
United States through the installation of a small rooftop or side-mounted
antenna, and it is more accessible than cable television service where a cable
plant has not been constructed or where it is not cost effective to construct
cable television facilities. DBS service is being heavily marketed on a
nationwide basis by several service providers. One DBS service provider is
proposing to deliver at least some local television stations via satellite, thus
lessening the distinction between cable television and DBS service.

      Cable communications systems also compete with wireless program
distribution services such as multichannel, multipoint distribution service
("MMDS"), commonly called wireless cable systems, which use low-power microwave
frequencies to transmit video programming over-the-air to subscribers. There are
MMDS operators who are authorized to provide or are providing broadcast and
satellite programming to subscribers in areas served by the Company's Systems.
MMDS systems are less capital intensive, are not required to obtain local
franchises or to pay franchise fees and are subject to fewer regulatory
requirements than cable television systems. MMDS systems' ability to compete
with cable television systems has previously been limited by channel capacity,
the inability to obtain programming and regulatory delays. Recently, however,
MMDS systems have developed digital compression technology which provides for
more channel capacity and better signal delivery. Although relatively few MMDS
systems in the United States are currently in operation or under construction,
virtually all markets have been licensed or tentatively licensed. A series of
actions taken by the FCC, including reallocating certain frequencies to wireless
services, are intended to facilitate the development of wireless cable
television spectrum that will be used by wireless operators to provide
additional channels of programming over longer distances. Several Regional Bell
Operating Companies acquired interests in major MMDS companies. The Company is
unable to predict whether wireless video services will have a material impact on
its operations.

      Additional competition may come from private cable television systems
servicing condominiums, apartment complexes and certain other multiple unit
residential developments. The operators of these private systems, known as
satellite master antenna television ("SMATV") systems, often enter into
exclusive agreements with apartment building owners or homeowners' associations
which preclude franchised cable television operators from serving residents of
such private complexes. However, the 1984 Cable Act gives franchised cable
operators the right to use existing compatible easements within their franchise
areas upon nondiscriminatory terms and conditions. Accordingly, where there are
preexisting compatible easements, cable operators may not be unfairly denied
access or discriminated against with respect to the terms and conditions of
access to those easements. There have been conflicting judicial decisions
interpreting the scope of the access right granted by the 1984 Cable Act,
particularly with respect to easements located entirely on private property.
Further, while a franchised cable television system typically is obligated to
extend service to all areas of a community regardless of population density or
economic risk, a SMATV system may confine its operation to small areas that are
easy to serve and more likely to be profitable. Under the 1996 Act, SMATV
systems can interconnect non-commonly owned buildings without having to comply
with local, state and federal regulatory requirements that are imposed upon
cable systems providing similar services, as long as they do not use public
rights-of-way. The U.S. Copyright Office has concluded that SMATV systems are
"cable systems" for purposes of qualifying for the compulsory copyright license
established for cable systems by federal law.

      The FCC has authorized a new interactive television service which will
permit non-video transmission of information between an individual's home and
entertainment and information service providers. This service will provide an
alternative means for DBS systems and other video programming distributors,
including television stations, to initiate the new interactive television
services. This service may also be used by the cable television industry.

      The FCC also has initiated a new rulemaking proceeding looking toward the
allocation of frequencies in the 28 Ghz range for a new multi-channel wireless
video service which could make 98 video channels available in a single market.
It cannot be predicted at this time whether competitors will emerge utilizing
such frequencies or whether such competition would have a material impact on the
operations of cable television systems.

<PAGE>

      The FCC has recently auctioned a sizable amount of spectrum in the 31 Ghz
band for use by a new wireless service, Local Multipoint Distribution Service
("LMDS"), which among other uses, can deliver over 100 channels of digital
programming directly to consumers' homes. The extent to which the winning
licenses in this service will use this spectrum in particular regions of the
country to deliver multichannel video programming to subscribers, and therefore
provide competition for franchised cable systems, is at this time uncertain. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Hyperion".

      The 1996 Act eliminates the restriction against ownership and operation of
cable systems by local telephone companies within their local exchange service
areas. Telephone companies are now free to enter the retail video distribution
business through any means, such as DBS, MMDS, SMATV or as traditional
franchised cable system operators. Alternatively, the 1996 Act authorizes local
telephone companies to operate "open video systems" without obtaining a local
cable franchise, although telephone companies operating such systems can be
required to make payments to local governmental bodies in lieu of cable
franchise fees. Up to two-thirds of the channel capacity of an "open video
system" must be available to programmers unaffiliated with the local telephone
company. The open video system concept replaces the FCC's video dialtone rules.
The 1996 Act also includes numerous provisions designed to make it easier for
cable operators and others to compete directly with local exchange telephone
carriers. With certain limited exceptions, neither a local exchange carrier nor
a cable operator can acquire more than 10% of the other entity operating within
its own service area.

      Advances in communications technology, as well as changes in the
marketplace and the regulatory and legislative environment, are constantly
occurring. Thus, it is not possible to predict the effect that ongoing or future
developments might have on the cable industry. The ability of cable systems to
compete with present, emerging and future distribution media will depend to a
great extent on obtaining attractive programming. The availability and exclusive
use of a sufficient amount of quality programming may in turn be affected by
developments in regulation or copyright law. See "Legislation and Regulation."

      The cable television industry competes with radio, television and print
media for advertising revenues. As the cable television industry continues to
develop programming designed specifically for distribution by cable, advertising
revenues may increase. Premium programming provided by cable systems is subject
to the same competitive factors which exist for other programming discussed
above. The continued profitability of premium services may depend largely upon
the continued availability of attractive programming at competitive prices.

Hyperion

    Competition

      In each of the markets served by Hyperion's networks, the services offered
by Hyperion compete principally with the services offered by the incumbent Local
Exchange Carrier ("LEC") serving that area. Incumbent LECs have long-standing
relationships with their customers, have the potential to subsidize competitive
services from monopoly service revenues, and benefit from favorable state and
federal regulations. In light of the passage of the Telecommunications Act of
1996, federal and state regulatory initiatives will provide increased business
opportunities to CLECs such as Hyperion, but regulators are likely to provide
incumbent LECs with increased pricing flexibility for their services as
competition increases. There has also been significant merger activity among the
RBOCs in anticipation of entry into the long distance market, including the
merger of Bell Atlantic and NYNEX, whose combined territory covers a substantial
portion of Hyperion's markets.

      Hyperion also faces, and will continue to face, competition from other
current and potential market entrants, including other CLECs, incumbent LECs
which are not subject to RBOC restrictions on long distance, AT&T, MCI, Sprint
and other IXCs, cable television companies, electric utilities, microwave
carriers, wireless telecommunications providers and private networks built by
large end users. In addition, all of the major IXCs are expected to enter the
market for local telecommunications services. Hyperion also competes with
equipment vendors and installers, and telecommunications management companies
with respect to certain portions of its business.

Employees

      At June 6, 1998, there were 3,895 full-time employees of the Company,
Olympus, and the Managed Partnerships, of which 115 employees were covered by
collective bargaining agreements at three locations. The Company considers its
<PAGE>

relations with its employees to be good.

Legislation and Regulation

      The Company's existing and anticipated businesses are regulated by the
FCC, some state governments and most local governments. In addition, various
legislative and regulatory proposals under consideration from time to time by
Congress and various federal agencies may materially affect the Company's
existing and anticipated businesses. The following is a summary of federal laws
and regulations affecting the growth and operation of the Company's existing and
anticipated businesses and a description of certain state and local laws.

Cable Television/Federal  Laws and Regulations

    Cable Communications Policy Act of 1984

      The 1984 Cable Act became effective on December 29, 1984. This federal
statute, which amended the Communications Act of 1934 (the "Communications
Act"), created uniform national standards and guidelines for the regulation of
cable television systems. Violations by a cable television system operator of
provisions of the Communications Act, as well as of FCC regulations, can subject
the operator to substantial monetary penalties and other sanctions. Among other
things, the 1984 Cable Act affirmed the right of franchising authorities (state
or local, depending on the practice in individual states) to award one or more
franchises within their jurisdictions. It also prohibited non-grandfathered
cable television systems from operating without a franchise in such
jurisdictions. In connection with new franchises, the 1984 Cable Act provides
that in granting or renewing franchises, franchising authorities may establish
requirements for cable-related facilities and equipment, but may not establish
or enforce requirements for video programming or information services other than
in broad categories.

    Cable Television Consumer Protection and Competition Act of 1992 (the "1992 
Cable Act")

      On October 5, 1992, Congress enacted the 1992 Cable Act. This legislation
effected significant changes to the legislative and regulatory environment in
which the cable industry operates. It amended the 1984 Cable Act in many
respects. The 1992 Cable Act became effective on December 4, 1992, although
certain provisions, most notably those dealing with rate regulation and
retransmission consent, became effective at later dates. The legislation also
required the FCC to initiate a number of rulemaking proceedings to implement
various provisions of the statute. The 1992 Cable Act allows for a greater
degree of regulation on the cable industry with respect to, among other things:
(i) cable system rates for both basic and certain nonbasic services, (ii)
programming access and exclusivity arrangements, (iii) access to cable channels
by unaffiliated programming services, (iv) leased access terms and conditions,
(v) horizontal and vertical ownership of cable systems, (vi) customer service
requirements, (vii) franchise renewals, (viii) television broadcast signal
carriage and retransmission consent, (ix) technical standards, (x) subscriber
privacy, (xi) consumer protection issues, (xii) cable equipment compatibility,
(xiii) obscene or indecent programming and (xiv) requiring subscribers to
subscribe to tiers of service other than basic service as a condition of
purchasing premium services. Additionally, the legislation encourages
competition with existing cable systems by allowing municipalities to own and
operate their own cable systems without having to obtain a franchise, preventing
franchising authorities from granting exclusive franchises or unreasonably
refusing to award additional franchises covering an existing cable system's
service area and prohibiting the common ownership of cable systems and
co-located MMDS or SMATV systems. The 1992 Cable Act also precludes video
programmers affiliated with cable television companies from favoring cable
operators over competitors and requires such programmers to sell their
programming to other multichannel video distributors. This provision may limit
the ability of cable programming suppliers to offer exclusive programming
arrangements to cable television companies. A number of provisions in the 1992
Cable Act relating to, among other things, rate regulation, have had a negative
impact on the cable industry and the Company's business.

    Telecommunications Act of 1996

      The 1996 Act significantly revised the federal regulatory structure. As it
pertains to cable television, the 1996 Act, among other things, (i) eliminates
the regulation of certain nonbasic programming services in 1999, (ii) expands
the definition of effective competition, the existence of which displaces rate
regulation, (iii) eliminates the restriction against the ownership and operation
<PAGE>

of cable systems by telephone companies within their local exchange service
areas and (iv) liberalizes certain of the FCC's cross-ownership restrictions.
The FCC has been conducting a number of rulemaking proceedings in order to
implement many of the provisions of the 1996 Act.

FCC Regulation

      The FCC, the principal federal regulatory agency with jurisdiction over
cable television, has promulgated regulations covering such areas as the
registration of cable systems, cross-ownership between cable systems and other
communications businesses, carriage of television broadcast programming,
consumer education and lockbox enforcement, origination cablecasting and
sponsorship identification, children's programming, the regulation of basic
cable service rates in areas where cable systems are not subject to effective
competition, signal leakage and frequency use, technical performance,
maintenance of various records, equal employment opportunity, and antenna
structure notification, marking and lighting. The FCC has the authority to
enforce these 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. Furthermore, the 1992 Cable Act required the FCC to adopt
regulations covering, among other things, cable rates, signal carriage, consumer
protection and customer service, leased access, indecent programming, programmer
access to cable television systems, programming agreements, technical standards,
consumer electronics equipment compatibility, ownership of home wiring, program
exclusivity, equal employment opportunity, and various aspects of direct
broadcast satellite system ownership and operation. The 1996 Act requires
certain changes to various provisions of these regulations. A brief summary of
the most material federal regulations as adopted to date follows.

    Rate Regulation

      The 1984 Cable Act codified existing FCC preemption of rate regulation for
premium channels and optional nonbasic program tiers. The 1984 Cable Act also
deregulated basic cable rates for cable television systems determined by the FCC
to be subject to effective competition. The 1992 Cable Act substantially changed
the statutory and FCC rate regulation standards. The 1992 Cable Act replaced the
FCC's old standard for determining effective competition, under which most cable
systems were not subject to local rate regulation, with a statutory provision
that has resulted in nearly all cable television systems becoming subject to
local rate regulation of basic service. Additionally, the 1992 Cable Act
eliminated the 5% annual rate increase for basic service previously allowed by
the 1984 Cable Act without local approval; required the FCC to adopt a formula,
for franchising authorities to enforce, to assure that basic cable rates are
reasonable; allows the FCC to review rates for nonbasic service tiers (other
than per-channel or per-program services) in response to complaints filed by
franchising authorities; prohibits cable television systems from requiring
customers to purchase service tiers above basic service in order to purchase
premium services if the system is technically capable of doing so; required the
FCC to adopt regulations to establish, on the basis of actual costs, the price
for installation of cable service, remote controls, converter boxes and
additional outlets; and allows the FCC to impose restrictions on the retiering
and rearrangement of cable services under certain limited circumstances. The
1996 Act expands the definition of effective competition to cover situations
where a local telephone company or its affiliate, or any multichannel video
provider using telephone company facilities, offers comparable video service by
any means except DBS. Satisfaction of this test deregulates both basic and
nonbasic tiers. The 1996 Act ends FCC regulation of nonbasic tier rates on March
31, 1999.

      The FCC's regulations set standards for the regulation of basic and
nonbasic cable service rates (other than per-channel or per-program services).
The FCC's original rules became effective on September 1, 1993. The rules have
been amended several times. The rate regulations adopt a benchmark price cap
system for measuring the reasonableness of existing basic and nonbasic service
rates, and a formula for future rate increases based on inflation and increases
in certain costs. Alternatively, cable operators have the opportunity to make
cost-of-service showings which, in some cases, may justify rates above the
applicable benchmarks. The rules also require that charges for cable-related
equipment (e.g., converter boxes and remote control devices) and installation
services be unbundled from the provision of cable service and based upon actual
costs plus a reasonable profit. Local franchising authorities and/or the FCC are
empowered to order a reduction of existing rates which exceed the benchmark
level for either basic and/or nonbasic cable services and associated equipment,
and refunds could be required. The retroactive refund period for basic cable
service rates is limited to one year. A significant number of franchising
authorities have become certified by the FCC to regulate the rates charged by
the Company for basic cable service and for associated equipment. The Company's
<PAGE>

ability to implement rate increases consistent with its past practices will
likely be limited by the regulations that the FCC has adopted.

    Carriage of Broadcast Television Signals

      The 1992 Cable Act contains new mandatory carriage requirements. These new
rules allow commercial television broadcast stations which are "local" to a
cable system (i.e., the system is located in the station's Area of Dominant
Influence), to elect every three years whether to require the cable system to
carry the station, subject to certain exceptions, or whether the cable system
will have to negotiate for "retransmission consent" to carry the station. Local,
noncommercial television stations are also given mandatory carriage rights,
subject to certain exceptions, within the larger of (i) a 50 mile radius from
the station's city of license or (ii) the station's Grade B contour (a measure
of signal strength). Unlike commercial stations, noncommercial stations are not
given the option to negotiate retransmission consent for the carriage of their
signal. In addition, cable systems will have to obtain retransmission consent
for the carriage of all "distant" commercial broadcast stations, except for
certain "superstations," (i.e., commercial satellite-delivered independent
stations such as WTBS). The 1992 Cable Act also eliminated, effective December
4, 1992, the FCC's regulations requiring the provision of input selector
switches. The statutory must-carry provisions for noncommercial stations became
effective on December 4, 1992. Must-carry rules for both commercial and
noncommercial stations and retransmission consent rules for commercial stations
were adopted by the FCC on March 11, 1993. The must-carry requirement for
commercial stations went into effect on June 2, 1993, and any stations for which
retransmission consent had not been obtained (other than must-carry stations,
non-commercial stations and superstations) had to be dropped as of October 6,
1993. The most recent election between must-carry and retransmission consent for
local commercial television broadcast stations was on October 1, 1996. A number
of stations previously carried by the Company's cable television systems elected
retransmission consent. The Company was able to reach agreements with
broadcasters who elected retransmission consent and has therefore not been
required to pay cash compensation to broadcasters for retransmission consent or
been required by broadcasters to remove broadcast stations from the cable
television channel line-ups. The Company has, however, agreed to carry some
services (e.g., ESPN2 and a new service by FOX) in specified markets pursuant to
retransmission consent arrangements which it believes are comparable to those
entered into by most other large cable operators.

    Channel Set-Asides

      The 1984 Cable Act permits local franchising authorities to require cable
operators to set aside certain channels for public, educational and governmental
access programming. The Company believes that none of the Systems' franchises
contain unusually onerous access requirements. The 1984 Cable Act further
requires cable systems with thirty-six or more activated channels to designate a
portion of their channel capacity for commercial leased access by unaffiliated
third parties. While the 1984 Cable Act presently allows cable operators
substantial latitude in setting leased access rates, the 1992 Cable Act requires
leased access rates to be set according to a formula determined by the FCC. The
FCC has recently revised the existing rate formula in a way which will
significantly lower the rates cable operators have been able to charge. It is
possible that such leased access will result in competition to services offered
by the Company on the other channels of its cable systems.

    Competing Franchises

      Questions concerning the ability of municipalities to award a single cable
television franchise and to impose certain franchise restrictions upon cable
television companies have been considered in several recent federal appellate
and district court decisions. These decisions have been somewhat inconsistent
and, until the U.S. Supreme Court rules definitively on the scope of cable
television's First Amendment protections, the legality of the franchising
process and of various specific franchise requirements is likely to be in a
state of flux. It is not possible at the present time to predict the
constitutionally permissible bounds of cable franchising and particular
franchise requirements. However, the 1992 Cable Act, among other things,
prohibits franchising authorities from unreasonably refusing to grant franchises
to competing cable systems and permits franchising authorities to operate their
own cable systems without franchises.

    Cross-Ownership

      The 1996 Act repealed the 1984 Cable Act's prohibition on LECs providing
video programming directly to customers within their local exchange telephone
service areas, except in rural areas or by specific waiver of FCC rules. The
1996 Act also authorized LECs to operate "open video systems" without obtaining
a local cable franchise, although LECs operating such systems can be required to
<PAGE>

make payments to local governmental bodies in lieu of cable franchise fees.
Where demand exceeds channel capacity, up to two-thirds of the channels on an
"open video system" must be available to programmers unaffiliated with the LEC.

      The 1996 Act eliminated the FCC rule prohibiting common ownership between
a cable system and a national broadcast television network. The 1996 Act also
eliminated the statutory ban covering certain common ownership interests,
operation or control between a television station and cable system within the
station's Grade B signal coverage area. However, the parallel FCC rules against
cable/television station cross-ownership remains in place, subject to review by
the FCC within two years. Finally, the 1992 Cable Act prohibits common
ownership, control or interest in cable television systems and MMDS facilities
or SMATV systems having overlapping service areas, except in limited
circumstances. The 1996 Act exempts cable systems facing "effective competition"
from the MMDS and SMATV cross-ownership restrictions.

      Pursuant to the 1992 Cable Act, the FCC has imposed limits on the number
of cable systems which a single cable operator can own. In general, no cable
operator can have an attributable interest in cable systems which pass more than
30% of all homes nationwide. Attributable interests for these purposes include
voting interests of 5% or more (unless there is another single holder of more
than 50% of the voting stock), officerships, directorships and general
partnership interests. The FCC has stayed the effectiveness of these rules
pending the outcome of the appeal from the U.S. District Court decision holding
the multiple ownership limit provision of the 1992 Cable Act unconstitutional.

      The FCC has also adopted rules which limit the number of channels on a
cable system which can be occupied by programming in which the cable system's
owner has an attributable interest. The limit is 40% of all activated channels.

    Franchise Transfers

      The 1992 Cable Act requires franchising authorities to act on any
franchise transfer request submitted after December 4, 1992 within 120 days
after receipt of all information required by FCC regulations and by the
franchising authority. Approval is deemed to be granted if the franchising
authority fails to act within such period.

    Technical Requirements

      Historically, the FCC has imposed technical standards applicable to the
cable channels on which broadcast stations are carried, and has prohibited
franchising authorities from adopting standards which were in conflict with or
more restrictive than those established by the FCC. The FCC has recently revised
such standards and made them applicable to all classes of channels which carry
downstream NTSC video programming. Local franchising authorities are permitted
to enforce the FCC's new technical standards. The FCC also has adopted
additional standards applicable to cable television systems using frequencies in
the 108-137 MHz and 225-400 MHz bands in order to prevent harmful interference
with aeronautical navigation and safety radio services, and has also established
limits on cable system signal leakage. Periodic testing by cable operators for
compliance with these technical standards and signal leakage limits is required.
The Company believes that the Systems are in compliance with these standards in
all material respects. The 1992 Cable Act requires the FCC to update
periodically its technical standards to take into account changes in technology.
The FCC has adopted regulations to implement the requirements of the 1992 Cable
Act designed to improve the compatibility of cable systems and consumer
electronics equipment.

    Pole Attachments

      The FCC currently regulates the rates and conditions imposed by certain
public utilities for use of their poles, unless under the Federal Pole
Attachments Act, state public service commissions are able to demonstrate that
they regulate rates, terms and conditions of the cable television pole
attachments. A number of states (including Massachusetts, Michigan, New Jersey,
New York, Ohio and Vermont) and the District of Columbia have certified to the
FCC that they regulate the rates, terms and conditions for pole attachments. In
the absence of state regulation, the FCC administers such pole attachment rates
through use of a formula which it has devised and from time to time revises. The
1996 Act directs the FCC to adopt a new rate formula for any attaching party,
including cable systems, which offers telecommunications services. This new
formula will result in significantly higher attachment rates for cable systems
which choose to offer such services.
<PAGE>

    Other Matters

      FCC regulation also includes matters regarding a cable system's carriage
of local sports programming; restrictions on origination and cablecasting by
cable system operators; application of the rules governing political broadcasts;
customer service; home wiring; and limitations on advertising contained in
nonbroadcast children's programming.

    Copyright

      Cable television systems are subject to federal copyright licensing
covering carriage of broadcast signals. In exchange for making semi-annual
payments to a federal copyright royalty pool and meeting certain other
obligations, cable operators obtain a statutory license to retransmit broadcast
signals. The amount of this royalty payment varies, depending on the amount of
system revenues from certain sources, the number of distant signals carried, and
the location of the cable system with respect to over-the-air television
stations.

      Various bills have been introduced into Congress over the past several
years that would eliminate or modify the cable television compulsory license. At
the request of Congress, the Copyright Office has commenced an inquiry into
possible revisions of the compulsory license. Without the compulsory license,
cable operators might need to negotiate rights from the copyright owners for
each program carried on each broadcast station in the channel lineup. Such
negotiated agreements could increase the cost to cable operators of carrying
broadcast signals. The 1992 Cable Act's retransmission consent provisions
expressly provide that retransmission consent agreements between television
broadcast stations and cable operators do not obviate the need for cable
operators to obtain a copyright license for the programming carried on each
broadcaster's signal.

      Copyrighted music performed in programming supplied to cable television
systems by pay cable networks (such as HBO) and basic cable networks (such as
USA Network) has generally been licensed by the networks through private
agreements with the American Society of Composers and Publishers ("ASCAP") and
BMI, Inc. ("BMI"), the two major performing rights organizations in the United
States. As a result of extensive litigation, ASCAP and BMI are both now required
to offer "through to the viewer" licenses to the cable networks which would
cover the retransmission of the cable networks' programming by cable systems to
their subscribers.

      Copyrighted music performed by cable systems themselves on local
origination channels, PEG channels, and in locally inserted advertising and
cross promotional announcements must also be licensed. A blanket license is
available from BMI. Cable industry negotiations with ASCAP are still in
progress.

Cable Television/State and Local Regulation

      Because a cable television system uses local streets and rights-of-way,
cable television systems are subject to state and local regulation, typically
imposed through the franchising process. State and/or local officials are
usually involved in franchise selection, system design and construction, safety,
service rates, consumer relations, billing practices and community related
programming and services.

      Cable television systems generally are operated pursuant to nonexclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. Franchises generally are granted for fixed terms and in
many cases are terminable if the franchise operator fails to comply with
material provisions. The 1984 Cable Act established renewal procedures and
criteria designed to protect incumbent franchises against arbitrary denials of
renewal. While these formal procedures are not mandatory unless timely invoked
by either the cable operator or the franchising authority, they can provide
substantial protection to incumbent franchisees. Even after the formal renewal
procedures are invoked, franchising authorities and cable operators remain free
to negotiate a renewal outside the formal process. Nevertheless, renewal is by
no means assured, as the franchisee must meet certain statutory standards. Even
if a franchise is renewed, a franchising authority may impose new and more
onerous requirements such as upgrading facilities and equipment, although the
municipality must take into account the cost of meeting such requirements. The
1992 Cable Act makes several changes to the process under which a cable operator
seeks to enforce its renewal rights which could make it easier in some cases for
a franchising authority to deny renewal.

      Franchises usually call for the payment of fees, often based on a
percentage of the system's gross subscriber revenues, to the granting authority.
<PAGE>

Although franchising authorities may impose franchise fees under the 1984 Cable
Act, such payments cannot exceed 5% of a cable system's annual gross revenues.
In those communities in which franchise fees are required, the Company currently
pays franchise fees ranging up to 5% of gross revenues. Franchising authorities
are also empowered in awarding new franchises or renewing existing franchises to
require cable operators to provide cable-related facilities and equipment and to
enforce compliance with voluntary commitments. In the case of franchises in
effect prior to the effective date of the 1984 Cable Act, franchising
authorities may enforce requirements contained in the franchise relating to
facilities, equipment and services, whether or not cable-related. The 1984 Cable
Act, under certain limited circumstances, permits a cable operator to obtain
modifications of franchise obligations.

      Upon receipt of a franchise, the cable system owner usually is subject to
a broad range of obligations to the issuing authority directly affecting the
business of the system. The terms and conditions of franchises vary materially
from jurisdiction to jurisdiction, and even from city to city within the same
state, historically ranging from reasonable to highly restrictive or burdensome.
The 1984 Cable Act places certain limitations on a franchising authority's
ability to control the operation of a cable system operator and the courts have
from time to time reviewed the constitutionality of several general franchise
requirements, including franchise fees and access channel requirements, often
with inconsistent results. On the other hand, the 1992 Cable Act prohibits
exclusive franchises, and allows franchising authorities to exercise greater
control over the operation of franchised cable systems, especially in the area
of customer service and rate regulation. The 1992 Cable Act also allows
franchising authorities to operate their own multichannel video distribution
system without having to obtain a franchise and permits states or local
franchising authorities to adopt certain restrictions on the ownership of cable
systems. Moreover, franchising authorities are immunized from monetary damage
awards arising from regulation of cable systems or decisions made on franchise
grants, renewals, transfers and amendments.

      The specific terms and conditions of a franchise and the laws and
regulations under which it was granted directly affect the profitability of the
cable television system. Cable franchises generally contain provisions governing
charges for basic cable television services, fees to be paid to the franchising
authority, length of the franchise term, renewal, sale or transfer of the
franchise, territory of the franchise, design and technical performance of the
system, use and occupancy of public streets and number and types of cable
services provided. The 1996 Act prohibits a franchising authority from either
requiring or limiting a cable operator's provision of telecommunications
services.

      Various proposals have been introduced at the state and local levels with
regard to the regulation of cable television systems, and a number of states
have adopted legislation subjecting cable television systems to the jurisdiction
of centralized state governmental agencies, even to the exclusion of local
community regulation. Some of these states regulate jointly and impose
regulation of a character similar to that of a public utility. Attempts in other
states to regulate cable television systems are continuing and can be expected
to increase. Such proposals and legislation may be preempted by federal statute
and/or FCC regulation. To date, the states in which the Company operates that
have enacted such state level regulation are New York, New Jersey, Massachusetts
and Vermont. The Company cannot predict whether other states in which it
currently operates, or in which it may acquire systems, will engage in such
regulation in the future.

      The foregoing does not purport to describe all present and proposed
federal, state and local regulations and legislation relating to the cable
television industry. Other existing federal regulations, copyright licensing
and, in many jurisdictions, state and local franchise requirements currently are
the subject of a variety of judicial proceedings, legislative hearings and
administrative and legislative proposals which could change, in varying degrees,
the manner in which cable television systems operate. Neither the outcome of
these proceedings nor their impact upon the cable television industry or the
Company can be predicted at this time.

Telephony and Telecommunications/Federal Laws and Regulations

      The 1996 Act also alters federal, state and local laws and regulations
regarding telecommunications providers and services, including the Company, and
creates a favorable environment in which the Company may provide telephone and
other telecommunications services and facilities. The following is a summary of
the key provisions of the 1996 Act that could materially affect the
telecommunications business of the Company.

      The 1996 Act was intended to promote the provision of competitive
telephone services and facilities by cable television companies and others. The
1996 Act declares that no state or local laws or regulations may prohibit or
have the effect of prohibiting the ability of any entity to provide any
interstate or intrastate telecommunications service. States are authorized to
<PAGE>

impose "competitively neutral" requirements regarding universal service, public
safety and welfare, service quality, and consumer protection. The 1996 Act
further provides that cable operators and affiliates providing
telecommunications services are not required to obtain a separate franchise from
local franchising authorities ("LFAs") for such services. An LFA may not order a
cable operator or affiliate to discontinue providing telecommunications services
or discontinue operating its cable system on the basis that it has failed to
obtain a separate franchise or renewal for the provision of telecommunications
services. The 1996 Act prohibits LFAs from requiring cable operators to provide
telecommunications service or facilities as a condition of the grant of a
franchise, franchise renewal, or franchise transfer, except that LFAs may seek
"institutional networks" as part of such franchise negotiations.

      The 1996 Act provides that, when cable operators provide
telecommunications services, LFAs may require reasonable, competitively neutral
compensation for management of the public rights-of-way. The LFA must publicly
disclose such compensation requirements.

      The Company believes that it qualifies as a connecting carrier under
federal law and therefore does not need FCC certification to provide intrastate
service. In the event that it is determined that the Company must seek FCC
certification, the Company believes that such certification will be granted by
the FCC in a timely manner. The Company may be required to file certain tariffs
and reports with the FCC.

    Interconnection and Other Telecommunications  Carrier Obligations

      To facilitate the entry of new telecommunications providers (including
cable operators), the 1996 Act imposes interconnection obligations on all
telecommunications carriers. All carriers must interconnect their networks with
other carriers and must not deploy network features and functions that interfere
with interoperability. LECs also have a set of separate identified obligations
beyond those that apply to new entrants: (i) good faith negotiation with those
seeking interconnection, (ii) unbundling, equal access and non-discrimination
requirements, (iii) resale of services, including "resale at wholesale rates,"
(iv) notice of changes in the network that would affect interconnection and
interoperability and (v) physical collocation unless shown that practical
technical reasons, or space limitations, make physical collocation impractical.

      Under the 1996 Act, individual interconnection rates must be just and
reasonable, based on cost, and may include a reasonable profit. Traffic
termination charges shall be "mutual and reciprocal." The 1996 Act permits
carriers to agree on a "bill and keep" system, but does not require such a
system.

      The 1996 Act contemplates that interconnection agreements will be
negotiated by the parties and submitted to a state public service commission
("SPSC") for approval. A SPSC may become involved, at the request of either
party, if negotiations fail. If the state regulator refuses to act, the FCC may
determine the matter. If the SPSC acts, an aggrieved party's remedy is to file a
case in federal district court. The 1996 Act provides for a rural exemption to
interconnection requests, but also provides that the exception does not apply
where a cable operator makes an interconnection request of a rural LEC within
the operator's franchise area.

      The 1996 Act requires that all telecommunications providers (including
cable operators that provide telecommunications services) must contribute
equitably to a Universal Service Fund ("USF"), and the FCC may exempt an
interstate carrier or class of carriers if their contribution would be minimal
under the USF formula. The 1996 Act allows states to determine which intrastate
telecommunications providers contribute to the USF. The 1996 Act prohibits
geographic end user rate de-averaging to protect rural subscribers' rates.

    FCC Interconnection  Order

      On August 8, 1996 the FCC released its First Report and Order, Second
Report and Order and memorandum Opinion and Order promulgating rules and
regulations to implement Congress' statutory directive converning the
interconnection obligations of all telecommuications carriers, including
obligations of CLECs and LECs, and incumbent LEC pricing of interconnection and
unbundled elements (the "Local Competition Orders"). The Local Competition
Orders adopted a national framework for interconnection but left to the
individual states the task of implementing the FCC's rules. The Local
Competition Orders also established rules implementing the 1996 Act requirements
that LECs negotiate interconnection agreements, and provide guidelines for
review of such agreements by State PUCs.
<PAGE>

      On July 18, 1997, the U.S. Court of Appeals for the Eighth Circuit
("Eighth Circuit") vacated certain portions of the Local Competition Orders,
including provisions establishing a methodology for pricing interconnection and
unbundled netowrk elements, a rule permitting new entrants to "pick and choose"
among various provisions of existing interconnecton agreements between LECs and
their competitors, and other provisions relating to the purchase of access to
unbundled netowrk elements. The Operating Companies had negotiated and obtained
State PUCs approval of a anumber of interconnection agreements with incumbent
LECs prior to this Eighth Circuit decision. The Eighth Circuit decision has
created uncertainty about individual state rules governing pricing, terms and
conditions of interconnection decisions, and could make negotiating and
enforcing such agreements in the future more difficult and protracted. It could
also require renegotiation of relevant portions of existing incerconnection
agreements, or subject them to additional court and regulatory proceedings. It
remains to be seen whether the network can continue to obtain andmaintain
interconnection agreements on terms acceptable to them in every state, though
most states have already adopted pricing rules, if not interim prices, which are
for the most part consistent with the FCC's related pricing provisions.

      The Supreme Court has agreed to review the various Eighth Circuit
decisions vacating major portions of the FCC's Local Competition Orders. In so
doing, the Court also granted several cross-petitions for review by incumbent
LECs challenging portions of the Eighth Circuit opinion that upheld certain FCC
determinations with respect to unbundled network elements. A decision by the
Supreme Court is not expected until early 1999.

Internet Services/Federal Laws and Regulations

      Transmitting indecent material via the Internet was made criminal by the
1996 Act. However, on-line access providers are exempted from criminal liability
for simply providing interconnection service; they are also granted an
affirmative defense from criminal or other action where in "good faith" they
restrict access to indecent materials. These provisions have been challenged in
federal court. The 1996 Act further exempts on-line access providers from civil
liability for actions taken in good faith to restrict access to obscene,
excessively violent or otherwise objectionable material.

Telephony and Telecommunications/State  Law and Regulation

      Adelphia's nonconsolidated joint venture, Olympus Communications, L.P.,
has systems in Florida. In 1995, the Florida Legislature amended Chapter 362 of
Florida Statutes by enacting "An Act Relating to Local Exchange
Telecommunications Companies" ("Florida Act") (Chapter 362, Fl. Stat. (1995)).
This new law substantially altered Florida law regarding telecommunications
providers and services, such as Olympus. The following is a summary of the key
provisions of the Florida Act and associated Florida Public Service Commission
("PSC") actions that could materially affect Olympus' telecommunications
business.

    The Florida Act

      The Florida Act vests in the PSC virtually exclusive jurisdiction over
intrastate telecommunications matters. The Florida Act limits municipalities to
taxation of certain telecommunications services or management of long distance
carriers' occupation of local rights-of-way. The Florida Act further directs the
PSC to employ flexible regulatory treatment to ensure the widest possible range
of telecommunications services, and provides that new entrants such as the
Company are subject to a lesser level of regulatory oversight than LECs.

    PSC Actions

      Pursuant to the Florida Act (and the 1996 Act and the FCC's First Report
and Order), the PSC is conducting several proceedings to address competitive
issues. To summarize, pursuant to the Florida Act, the PSC has adopted rules
requiring certification of CLEC Interexchange Telecommunications Service
Providers; Operator Service Providers; Alternative Access Vendor Services; and
Shared Tenant Services Providers. The Florida Act provides that the PSC shall
grant certification to applicants upon a showing of sufficient technical,
financial, and managerial capability to provide service in the geographic area
proposed to be served. The Company believes that Olympus meets the statutory
requirements for PSC certification for any type of intrastate telecommunications
service provider, and that any such application process should be completed
expeditiously. In addition, like the 1996 Act, the Florida Act requires LECs to
interconnect with certified CLECs. Approximately fourteen interconnection
agreements have been reached between LECs and CLECs to date, while approximately
<PAGE>

five CLECs have requested PSC arbitration of stalled agreements. The PSC is
obligated under the Florida Act to arbitrate any disputes in no more than 120
days from date of request. As well, the PSC has ordered BellSouth, the state's
largest LEC, to unbundle eight network elements for resale by CLECs, and the PSC
has ordered favorable interim rates for these elements. The PSC has not yet
adopted an order resolving wholesale discounts associated with local service
resale.

      Based on the foregoing, the Company believes that the Florida Act and
actions of the PSC to date reflect a generally favorable legal and regulatory
environment for new entrants, such as Olympus, to intrastate telecommunications
in Florida.

ITEM 2.   PROPERTIES

      The Company's principal physical assets consist of cable television
operating plant and equipment, including signal receiving, encoding and decoding
devices, headends and distribution systems and subscriber 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. The Company's distribution
system consists primarily of coaxial and fiber optic cables and related
electronic equipment. Subscriber devices consist of decoding converters. The
physical components of cable television systems require maintenance and periodic
upgrading to keep pace with technological advances.

      The Company's cables and related  equipment are generally  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.
See "Legislation and Regulation-Federal Regulation."

      The Company owns or leases parcels of real property for signal reception
sites (antenna towers and headends), microwave facilities and business offices
in each of its market areas, and owns most of its service vehicles. The Company
also leases certain cable, operating and support equipment from a corporation
owned by members of the Rigas Family. All leasing transactions between the
Company and its officers, directors or principal stockholders, or any of their
affiliates, are, in the opinion of management, on terms no less favorable to the
Company than could be obtained from unaffiliated third parties.

      Substantially all of the assets of Adelphia's subsidiaries are subject to
encumbrances as collateral in connection with the Company's credit arrangements,
either directly with a security interest or indirectly through a pledge of the
stock in the respective subsidiaries. See Note 3 to the Adelphia Consolidated
Financial Statements. The Company believes that its properties, both owned and
leased, are in good operating condition and are suitable and adequate for the
Company's business operations.

      Hyperion's fiber optic cable, fiber optic telecommunications equipment and
other properties and equipment used in its networks, are owned or leased. Fiber
optic cable plant used in providing service is primarily on or under public
roads, highways or streets, with the remainder being on or under private
property. As of March 31, 1998, Hyperion's total telecommunications equipment in
service consists of fiber optic telecommunications equipment, switching
equipment, fiber optic cable, furniture and fixtures, leasehold improvements and
construction in progress.

ITEM 3.  LEGAL PROCEEDINGS

      There are no material pending legal proceedings, other than routine
litigation incidental to the business, to which the Company or any of its
subsidiaries is a part of or to which any of their property is subject.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year 1998.

Executive Officers of the Registrant

      The executive officers of the Company, first elected to hold their

<PAGE>

respective positions on July 1, 1986 following the reorganization of the Company
as a holding company, serve at the discretion of the Board of Directors.

      The executive officers of the Company are:
<TABLE>
<CAPTION>

        NAME                        AGE                           POSITION

<S>                                  <C>         <C>
        John J. Rigas............    73          Chairman, Chief Executive Officer, President and Director

        Michael J. Rigas.........    44          Executive Vice President, Operations and Director

        Timothy J. Rigas.........    42          Executive Vice President, Chief Financial Officer, Chief
                                                     Accounting Officer, Treasurer and Director

        James P. Rigas...........    40          Executive Vice President, Strategic Planning and Director

        Daniel R. Milliard.......    50          Senior Vice President, Secretary and Director

</TABLE>


      John J. Rigas is the founder, Chairman, President and Chief Executive
Officer of Adelphia and is President of its subsidiaries. He is also Chairman of
Hyperion. Mr. Rigas has served as President or general partner of most of the
constituent entities which became wholly-owned subsidiaries of Adelphia upon its
formation in 1986, as well as the cable television operating companies acquired
by the Company which were wholly or partially owned by members of the Rigas
Family. Mr. Rigas has owned and operated cable television systems since 1952.
Among his business and community service activities, Mr. Rigas is Chairman of
the Board of Directors of Citizens Bancorp., Inc., Coudersport, Pennsylvania,
and a member of the Board of Directors of Charles Cole Memorial Hospital. He is
a director of the National Cable Television Association and a past President of
the Pennsylvania Cable Television Association. He is also a member of the Board
of Directors of C-SPAN and the Cable Advertising Bureau, and is a Trustee of St.
Bonaventure University. He graduated from Rensselaer Polytechnic Institute with
a B.S. in Management Engineering in 1950.

      John J. Rigas is the father of Michael J.  Rigas,  Timothy J. Rigas and 
James P. Rigas, each of whom currently serves as a director and executive
officer of the Company.

      Michael J. Rigas is Executive Vice President, Operations of Adelphia and
is a Vice President of its subsidiaries. He is also Vice Chairman of Hyperion.
Since 1981, Mr. Rigas has served as a Senior Vice President, Vice President,
general partner or other officer of the constituent entities which became
wholly-owned subsidiaries of Adelphia upon its formation in 1986, as well as the
cable television operating companies acquired by the Company which were wholly
or partially owned by members of the Rigas Family. From 1979 to 1981, he worked
for Webster, Chamberlain & Bean, a Washington, D.C. law firm. Mr. Rigas
graduated from Harvard University (magna cum laude) in 1976 and received his
Juris Doctor degree from Harvard Law School in 1979.

      Timothy J. Rigas is Executive Vice President, Chief Financial Officer,
Chief Accounting Officer and Treasurer of Adelphia and its subsidiaries. He is
also Vice Chairman, Chief Financial Officer and Treasurer of Hyperion. Since
1979, Mr. Rigas has served as Senior Vice President, Vice President, general
partner or other officer of the constituent entities which became wholly-owned
subsidiaries of Adelphia upon its formation in 1986, as well as the cable
television operating companies acquired by the Company which were wholly or
partially owned by members of the Rigas Family. Mr. Rigas graduated from the
University of Pennsylvania, Wharton School, with a B.S. degree in Economics (cum
laude) in 1978.

      James P. Rigas is Executive Vice President, Strategic Planning of Adelphia
and is a Vice President of its subsidiaries, and also serves as Vice Chairman
and Chief Executive Officer of Hyperion. Since February 1986, Mr. Rigas has
served as a Senior Vice President, Vice President or other officer of the
constituent entities which became wholly-owned subsidiaries of Adelphia upon its
formation in 1986, as well as the cable television operating companies acquired
by the Company which were wholly or partially owned by members of the Rigas
Family. Among his business activities, Mr. Rigas is a member of the Board of
Directors of Cable Labs. Mr. Rigas graduated from Harvard University (magna cum
laude) in 1980 and received a Juris Doctor degree and an M.A. degree in
Economics from Stanford University in 1984. From June 1984 to February 1986, he
was a consultant with Bain & Co., a management consulting firm.

<PAGE>

      Daniel R. Milliard is Senior Vice President and Secretary of Adelphia and
its subsidiaries, and also serves as President of Hyperion. Since 1982, Mr.
Milliard served as Vice President, Secretary and/or General Counsel of Adelphia
and the constituent entities which became wholly-owned subsidiaries of Adelphia,
as well as the cable television operating companies acquired by the Company
which were wholly or partially owned by members of the Rigas Family. He served
as outside general counsel to the Company's predecessors from 1979 to 1982. Mr.
Milliard graduated from American University in 1970 with a Bachelor of Science
degree in Business Administration. He received an M.A. degree in Business from
Central Missouri State University in 1971, where he was an Instructor in the
Department of Finance, School of Business and Economics, from 1971-1973, and
received a Juris Doctor degree from the University of Tulsa School of Law in
1976. He is a Director of Citizens Bancorp., Inc. in Coudersport, Pennsylvania
and President of the Board of Directors of Charles Cole Memorial Hospital.



<PAGE>



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

      The Company's Class A Common Stock is listed for trading on the National
Association of Securities Dealers Automated Quotations System National Market
System (NASDAQ-NMS). Adelphia's NASDAQ-NMS symbol is "ADLAC."

      The following table sets forth the range of high and low closing bid
prices of the Class A Common Stock on NASDAQ/NMS. Such bid prices represent
inter-dealer quotations, without retail mark-up, mark-down or commission, and
may not necessarily represent actual transactions.

                                     CLASS A COMMON STOCK

        QUARTER ENDED:                               HIGH         LOW
                                                     ----         ---
        June 30, 1996                              $  7 7/8   $  6 9/16
        September 30, 1996                         $ 11       $  6 1/2
        December 31, 1996                          $ 10 1/4   $  5 3/4
        March 31, 1997                             $  7 1/8   $  5 3/8

        June 30, 1997                              $  7 3/4   $  5
        September 30, 1997                         $ 12 1/8   $  6 3/4
        December 31, 1997                          $ 18 3/4   $ 12
        March 31, 1998                             $ 30 3/8   $ 16 3/8


      As of June 24, 1998, there were approximately 162 holders of record of
Adelphia's Class A Common Stock. As of June 24, 1998, two record holders were
registered clearing agencies holding Class A Common Stock on behalf of
participants in such clearing agencies.

      No established public trading market exists for Adelphia's Class B Common
Stock. As of the date hereof, the Class B Common Stock was held of record by
seven persons, principally members of the Rigas Family, including a Pennsylvania
general partnership all of whose partners are members of the Rigas Family. The
Class B Common Stock is convertible into shares of Class A Common Stock on a
one-to-one basis. As of June 24, 1998 the Rigas Family owned 99.1% of the
outstanding Class B Common Stock.

      Adelphia has never paid a cash dividend on its common stock and
anticipates that for the foreseeable future any earnings will be retained for
use in its business. The ability of Adelphia to pay cash dividends on its common
stock is limited by the provisions of its indentures. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."

      On March 6, 1998, the Company issued 341,220 shares of Class A Common
Stock to the Gans family, as consideration for its option to purchase the
remaining 15% of its Northeast Cable, Inc. system. This issuance was made in
reliance upon the exemption from registration contained in Section 4(2) of the
Securities Act of 1933.


<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA
 (Dollars in thousands except per share amounts)

         The selected consolidated financial data as of and for each of the five
years in the period ended March 31, 1998 have been derived from the audited
consolidated financial statements of the Company. These data should be read in
conjunction with the consolidated financial statements and related notes thereto
as of March 31, 1997 and 1998 and for each of the three years in the period
ended March 31, 1998 and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Annual Report on
Form 10-K. The statement of operations data with respect to fiscal years ended
March 31, 1994 and 1995, and the balance sheet data at March 31, 1994, 1995 and
1996, have been derived from audited consolidated financial statements of the
Company not included herein.
 <TABLE>
 <CAPTION>


                                                                              Year Ended March 31,
                                                          -----------------------------------------------------------
Statements of Operations Data:                                1994         1995        1996         1997        1998
                                                          ------------- ------------ ------------ ---------- -----------

<S>                                                        <C>          <C>          <C>          <C>          <C>
Revenues                                                   $ 319,045    $ 361,505    $ 403,597    $ 472,778    $ 528,442
Direct operating and programming expense                      90,547      106,993      124,116      148,982      167,288
Selling, general and administrative expense                   52,801       63,487       68,357       81,763       95,731
Depreciation and amortization expenses                        89,402       97,602      111,031      124,066      145,041
Rate regulation charge                                          --           --          5,300         --           --
                                                          ----------    ---------    ---------   ----------   ----------
Operating income                                              86,295       93,423       94,793      117,967      120,382
Other (expense) income                                          (299)       1,453         --           --           --
Priority investment income from Olympus                       22,300       22,300       28,852       42,086       47,765
Cash interest expense - net                                 (171,268)    (169,830)    (183,780)    (190,965)    (209,677)
Noncash interest expense                                      (1,680)     (14,756)     (16,288)     (41,360)     (37,430)
Equity in loss of joint ventures                             (30,054)     (44,349)     (46,257)     (59,169)     (79,056)
Hyperion preferred stock dividends                              --           --           --           --        (12,682)
Gain on sale of investments                                     --           --           --         12,151        2,538
                                                          ----------    ---------    ---------   ----------   ----------
Loss before income taxes, extraordinary loss
and cumulative effect of change in accounting
principle (a)                                                (94,706)    (111,759)    (122,680)    (119,290)    (168,160)
Income tax (expense) benefit                                  (2,742)       5,475        2,786          358        5,606
                                                          ----------    ---------    ---------   ----------   ----------
Loss before extraordinary loss and cumulative effect
of change in accounting principle (a)                        (97,448)    (106,284)    (119,894)    (118,932)    (162,554)
Extraordinary loss on early retirement of debt                  (752)        --           --        (11,710)     (11,325)
Cumulative effect of change in accounting for
income taxes (a)                                             (89,660)        --           --           --           --
                                                          ----------    ---------    ---------   ----------   ----------
Net loss                                                    (187,860)    (106,284)    (119,894)    (130,642)    (173,879)

Dividend requirements applicable to preferred stock             --           --           --           --        (18,850)
                                                          ----------    ---------    ---------   ----------   ----------
Net loss applicable to common stockholders                 $(187,860)   $(106,284)   $(119,894)   $(130,642)   $(192,729)
                                                           =========    =========    =========    =========    =========

Basic and diluted loss per weighted average share of common stock before
extraordinary loss and cumulative
effect of change in accounting principle (a)               $   (5.66)   $   (4.32)   $   (4.56)   $   (4.50)   $   (6.07)

Basic and diluted net loss per weighted average share of
common stock                                                  (10.91)       (4.32)       (4.56)       (4.94)       (6.45)
Cash dividends declared per common share                        --           --           --           --           --
</TABLE>


<PAGE>



Business Segment Information:

      As more fully described in this Form 10-K, Adelphia operates primarily in
two lines of business within the telecommunications industry: cable television
and related investments("Adelphia, excluding Hyperion") and competitive local 
exchange carrier telephony (Hyperion). The balance sheet data and other data as
of and for each of the five years ended March 31, 1998 of Hyperion have been
derived from audited consolidated financial statements of Hyperion not included
herein. The data for the three months ended March 31, 1997 and 1998 is
unaudited; however, in the opinion of management, such data reflect all
adjustments (consisting only of normal and recurring adjustments) necessary to
fairly present the data for such interim periods.
 

<TABLE> 
<CAPTION>

                                                                                 March 31,
                                                     ------------------------------------------------------------------
                                                         1994          1995         1996         1997         1998
                                                     ------------- ----------------------------------------------------
Balance Sheet Data:

Adelphia Consolidated
<S>                                                    <C>          <C>          <C>           <C>         <C>
  Total assets.....................................    $1,073,846   $ 1,267,291  $ 1,367,579   $1,643,826  $ 2,304,671
  Total debt.......................................     1,793,711     2,021,610    2,175,473    2,544,039    2,909,745
  Investments (b)..................................        24,416        50,426       74,961      130,005      150,787
  Redeemable preferred stock.......................             -              -           -            -      355,266
  Convertible preferred stock
    (liquidation preference).......................             -             -            -            -      100,000

Hyperion
  Total assets.....................................     $  14,765    $   23,212   $   35,269    $ 174,601    $ 634,893
  Total debt.......................................        19,968        35,541       50,855      215,675      528,776
  Investments (b)..................................         9,068        15,085       27,900       56,695       66,648
  Redeemable preferred stock.......................             -             -            -            -      207,204

Adelphia, excluding Hyperion
  Total assets.....................................   $ 1,059,081   $ 1,244,079  $ 1,332,310  $ 1,469,225  $ 1,669,778
  Total debt.......................................     1,773,743     1,986,069    2,124,618    2,328,364    2,380,969
  Investments (b)..................................        15,348        35,341       47,061       73,310       84,139
  Redeemable preferred stock.......................             -             -            -            -      148,062
  Convertible preferred stock
    (liquidation preference).......................             -             -            -            -      100,000



</TABLE>







                         See "Other Data" on next page.


<PAGE>


<TABLE>
<CAPTION>



                                                                                               For the Three Months
                                              For the Year Ended March 31,                         Ended March 31,
                               -------------------------------------------------------------- -----------------------
Other Data:                      1994        1995         1996         1997         1998          1997        1998
                              ------------ ----------- ------------ ------------- ----------- -----------  ----------

Adelphia Consolidated
<S>                           <C>          <C>          <C>          <C>          <C>          <C>          <C>
Revenues                      $ 319,045    $ 361,505    $ 403,597    $ 472,778    $ 528,442    $ 122,203    $ 138,537
Priority income                  22,300       22,300       28,852       42,086       47,765       11,454       12,000
Operating expenses (c)          143,348      170,480      192,473      230,745      263,019       61,147       71,010
Depreciation and
amortization expense             89,402       97,602      111,031      124,066      145,041       34,514       40,471
Operating income                 86,295       93,423       94,793      117,967      120,382       26,542       27,056
Interest expense - net         (172,948)    (184,586)    (200,068)    (232,325)    (247,107)     (57,871)     (59,766)
Preferred stock dividends          --           --           --           --        (31,532)        --        (13,546)
Capital expenditures             75,894       92,082      100,089      129,609      183,586       43,194       66,026
Cash paid for acquisitions       21,681       70,256       60,804      143,412      146,546        7,042       58,329
Cash used for investments         8,890       38,891       24,333       51,415       86,851       14,665       24,661

Hyperion
Revenues                      $     417    $   1,729    $   3,322    $   5,088    $  13,510    $   1,477    $   4,820
Operating expenses (c)            2,375        3,906        5,774       10,212       22,118        3,137        7,756
Depreciation and
amortization expense                189          463        1,184        3,945       11,477        1,362        4,450
Operating loss                   (2,147)      (2,640)      (3,636)      (9,069)     (20,085)      (3,022)      (7,386)
Interest expense - net           (2,147)      (3,282)      (5,889)     (22,401)     (36,030)      (5,961)      (8,047)
Preferred stock dividends          --           --           --           --        (12,682)        --         (6,694)
Capital expenditures              3,097        2,850        6,084       36,127       68,629       21,177       33,795
Cash paid for acquisitions         --           --           --          5,040       65,968         --         58,329
Cash used for investments         5,510        7,526       12,815       34,769       64,260       11,371       18,141

Adelphia, excluding Hyperion
Revenues                      $ 318,628    $ 359,776    $ 400,275    $ 467,690    $ 514,932    $ 120,726    $ 133,717
Priority income                  22,300       22,300       28,852       42,086       47,765       11,454       12,000
Operating expenses (c)          140,973      166,574      186,699      220,533      240,901       58,010       63,254
Depreciation and
amortization expense             89,213       97,139      109,847      120,121      133,564       33,152       36,021
Operating income                 88,442       96,063       98,429      127,036      140,467       29,564       34,442
Interest expense - net         (170,801)    (181,304)    (194,179)    (209,924)    (211,077)     (51,910)     (51,719)
Preferred stock dividends          --           --           --           --        (18,850)        --         (6,852)
Capital expenditures             72,797       89,232       94,005       93,482      114,957       22,017       32,231
Cash paid for acquisitions       21,681       70,256       60,804      138,372       80,578        7,042         --
Cash used for investments         3,380       31,365       11,518       16,646       22,591        3,294        6,520
<FN>



(a) "Cumulative Effect of Change in Accounting Principle" refers to a change in
accounting principle for the Company. Effective April 1, 1993, the Company
adopted the provisions of Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires an asset and liability
approach for financial accounting and reporting for income taxes. The adoption
of SFAS No. 109 resulted in the cumulative recognition of an additional
liability by the Company of $89,660.

(b) Represents total investments before cumulative equity in net losses.

(c) Amount excludes depreciation and amortization.

</FN>
</TABLE>






<PAGE>





ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS
         (Dollars in thousands)

    Results of Operations

General

      Adelphia earned substantially all of its revenues in each of the last
three fiscal years from monthly subscriber fees for basic, cable value, premium
and ancillary services (such as installations and equipment rentals), local and
national advertising sales, pay-per-view programming, home shopping networks and
competitive local exchange carrier ("CLEC") services.

      The changes in Adelphia's results of operations for the years ended March
31, 1997 and 1998, compared to the respective prior year, were primarily the
result of acquisitions, expanding existing cable television operations and the
impact of increased advertising sales and other service offerings as well as an
increase in cable rates, effective October 1, 1996 and August 1, 1997.

      The high level of depreciation and amortization associated with the
significant number of acquisitions in recent years, the recent upgrading and
expansion of systems, interest costs associated with financing activities and
Hyperion's continued investment in the CLEC business will continue to have a
negative impact on the reported results of operations. Also, significant charges
for depreciation, amortization and interest are expected to be incurred in the
future by the Olympus joint venture, which will also adversely impact Adelphia's
future results of operations.
Adelphia expects to report net losses for the next several years.

      Hyperion, together with its subsidiaries, owns certain investments in CLEC
joint ventures and manages those ventures. Hyperion is an unrestricted
subsidiary for purposes of the Company's indentures.

      The following table is derived from Adelphia's consolidated financial
statements that are included in this Annual Report on Form 10-K and sets forth
the historical percentage relationship to revenues of the components of
operating income contained in such financial statements for the periods
indicated.


                             Percentage of Revenues
                              Year Ended March 31,
                                            ----------------------------------
                                                 1996       1997        1998
                                            ----------- ----------  ----------
   Revenues                                      100.0%     100.0%      100.0%

   Operating Expenses:
        Direct operating and programming          30.8       31.5        31.7
        Selling, general and administrative       16.9       17.3        18.1
        Depreciation and amortization             27.5       26.2        27.4
        Rate regulation                            1.3          -           -
                                            ----------- ----------  ----------
   Operating Income                               23.5%      25.0%       22.8%
                                            =========== ==========  ==========





<PAGE>





Comparison of the Years Ended March 31, 1996, 1997 and 1998

    Revenues

      The primary revenue sources reflected as a percentage of total revenues
were as follows:

                              Year Ended March 31,
                                            -----------------------------------
                                                  1996       1997        1998
                                            -----------------------------------
    Regulated service and equipment fees          73%         74%         75%
    Premium programming fees                      12%         12%         10%
    Advertising sales and other services          15%         14%         15%


      Revenues increased approximately 17.1% for the year ended March 31, 1997
and 11.8% for the year ended March 31, 1998 compared with the respective prior
fiscal year. The increases were attributable to the following:

                                                Year Ended March 31,
                                              -----------------------
                                                  1997       1998
                                              -----------------------
    Acquisitions                                   42%         37%
    Basic subscriber growth                        12%         9%
    Rate increases                                 38%         48%
    Premium programming fees                       (5%)       (7%)
    Advertising sales and other services           13%         13%


      Effective October 1, 1996 and August 1, 1997, certain rate increases
related to regulated cable services were implemented in substantially all of the
Company's Systems. Advertising revenues and revenues derived from other
strategic service offerings such as paging, high speed data services, long
distance and CLEC services also had a positive impact on revenues for the year
ended March 31, 1998.

      Direct Operating and Programming Expenses. Direct operating and
programming expenses, which are mainly basic and premium programming costs and
technical expenses, increased 20.0% and 12.3% for the years ended March 31, 1997
and 1998, respectively, compared with the respective prior year. Such increases
were primarily due to increased operating expenses from acquired systems,
increased programming costs and incremental costs associated with increased
subscribers. Because of regulatory limitations on the timing and extent to which
cost increases may be passed on to customers, direct operating and programming
expenses have increased at a greater rate than corresponding revenue increases.
As a result of recent FCC regulatory rulemaking decisions, the Company intends
to continue its systematic program of rate increases to reverse this trend.
Additionally, Hyperion expenses increased due to expansion of operations at its
network control center, as well as an increase in the number and size of its
networks, which resulted in increased employee related costs and equipment
maintenance costs.

      Selling, General and Administrative Expenses. These expenses, which are
mainly comprised of costs related to system offices, customer service
representatives, and sales and administrative employees, increased 19.6% and
17.1% for the years ended March 31, 1997 and 1998, respectively, compared with
the respective prior year. The increases were primarily due to incremental costs
associated with acquisitions, subscriber growth and Hyperion overhead and
network operating and control center cost increases to accommodate the growth in
the number of operating companies managed and monitored.

      Depreciation and Amortization. Depreciation and amortization was higher
for the years ended March 31, 1997 and 1998, compared with the respective prior
year, primarily due to increased depreciation and amortization related to
acquisitions consummated during the years ended March 31, 1996, 1997 and 1998,
as well as increased capital expenditures made during the past several years.



<PAGE>



      Rate Regulation Expenses. The fiscal year ended March 31, 1996 includes a
$5,300 charge representing management's estimate of the total costs associated
with the resolution of subscriber rate disputes. Such costs include (i) an
estimate of credits to be extended to customers in future periods of up to
$2,700, (ii) legal and other costs incurred during the two fiscal years ended
March 31, 1998, and (iii) an estimate of legal and other costs to be incurred
associated with the ultimate resolution of this matter. On May 1, 1997, the
Company reached a settlement with the FCC regarding such rate disputes. The
amount recorded in the year ended March 31, 1996 was adequate to cover the
settlement.

      Priority Investment Income from Olympus. Priority investment income is
comprised of payments received from Olympus of accrued priority return on the
Company's investment in PLP Interests in Olympus. Priority investment income
increased during the years ended March 31, 1997 and 1998 as compared with the
respective prior year due to increased payments by Olympus.

      Interest Expense - net. Interest expense - net increased approximately
16.1% and 6.4% for the years ended March 31, 1997 and 1998, respectively. For
the year ended March 31, 1997 interest expense increased primarily due to
incremental debt related to acquisitions and the issuance of the Hyperion 13%
Senior Discount Notes. These increases were partially offset by a decrease in
the average interest rate on outstanding debt. For the year ended March 31,
1998, interest expense -net increased primarily due to incremental debt related
to acquisitions and the issuance of the Hyperion 12 1/4% Senior Secured Notes.
These increases were partially offset by (i) the utilization of the proceeds
from the convertible preferred stock and the redeemable preferred stock
offerings to repay outstanding debt; (ii) the refinancing of outstanding
borrowings, and (iii) interest income on cash balances. Interest expense
includes non-cash accretion of original issue discount and non-cash interest
expense totaling $16,288, $41,360 and $37,430 for the years ended March 31,
1996, 1997 and 1998, respectively. The decrease in non-cash interest for the
year ended March 31, 1998 as compared to the prior year was primarily due to
Adelphia's cash payment of interest on its 9 1/2% Senior Pay-In-Kind notes for
the six month period ended February 15, 1998. This decrease was partially offset
by the accretion of original issue discount related to the Hyperion 13% Senior
Discount Notes.

      Equity in Loss of Joint Ventures. The equity in loss of joint ventures
represents primarily (i) the Company's pro rata share of Olympus' losses and the
accretion requirements of Olympus' preferred limited partner interests, and (ii)
Hyperion's pro rata share of its less than majority owned partnerships'
operating losses. The increase in the loss during the year ended March 31, 1997,
compared with the prior year, is due to an increase in the losses of certain
investments in the CLEC business in which Hyperion is a less than majority
partner and increased losses of Olympus. The increase in the loss during the
year ended March 31, 1998, compared with the prior year, is primarily due to
losses of Olympus and an increase in the losses of certain Hyperion CLEC joint
ventures.

      Hyperion Preferred Stock Dividends. During the year ended March 31, 1998,
Hyperion incurred $12,682 of expense relating to its 12 7/8% Senior Exchangeable
Redeemable Preferred Stock issued in October 1997.

      Gain on Sale of Investments. On May 16, 1996, Hyperion completed the sale
of its 15.7% partnership interest in TCG South Florida to Teleport
Communications Group Inc. for an aggregate sales price of $11,618 resulting in a
gain of $8,405. On January 23, 1997, the Company received 284,425 shares of
Republic Industries, Inc. Common Stock ("Republic stock") in exchange for its
interest in Commonwealth Security, Inc. ("Commonwealth") for an aggregate sales
price of $9,315 resulting in a gain of $3,746. During the year ended March 31,
1998, the Company sold its Republic stock, its investment in the Golf Channel
and certain other assets, resulting in a gain of $2,538.



<PAGE>



      Extraordinary Loss on Early Retirement of Debt. During the year ended
March 31, 1997, certain bank indebtedness was repaid and a portion of the 12
1/2% Senior Notes due 2002 was reacquired resulting in an extraordinary loss on
retirement of debt. The amount pertaining to the repayment of bank debt was
$2,079, which primarily represents the write-off of the remaining deferred debt
financing costs associated with the debt retired. The amount pertaining to the
12 1/2% Senior Notes was $9,631, which represents the excess of reacquisition
cost over the net carrying value of the related debt. During the year ended
March 31, 1998, Adelphia reacquired through open market purchases $20,000 of 9
1/2% Senior Pay-in-Kind Notes due 2004 and redeemed $202,000 of 12 1/2% Senior
Notes due 2002 at 106% of principal. As a result of these two transactions,
Adelphia recognized an extraordinary loss of $11,325 for the year ended March
31, 1998.

Liquidity and Capital Resources

      The cable television and other telecommunications businesses are capital
intensive and typically require continual financing for the construction,
modernization, maintenance, expansion and acquisition of cable and other
telecommunications systems. During the three fiscal years in the period ended
March 31, 1998, the Company committed substantial capital resources for these
purposes and for investments in Olympus, and other affiliates and entities.
These expenditures were funded through long-term borrowings and internally
generated funds. For the fiscal years ended March 31, 1996, 1997 and 1998, cash
provided by operating activities totaled $64,287, $43,001 and $66,270,
respectively; cash used for investing activities totaled $189,462, $322,047 and
$563,520, respectively and cash provided by financing activities totaled
$130,939, $329,776 and $712,606, respectively. The Company's aggregate
outstanding borrowings as of March 31, 1998 were $2,909,745. The Company also
had total redeemable preferred stock of $355,266 outstanding as of March 31,
1998. The Company's ability to generate cash to meet its future needs will
depend generally on its results of operations and the continued availability of
external financing.

      Capital Expenditures. Capital expenditures for Adelphia, excluding
Hyperion for the years ended March 31, 1996, 1997 and 1998 were $94,005, $93,482
and $114,957, respectively. Capital expenditures including Hyperion for the
years ended March 31, 1996, 1997 and 1998 were $100,089, $129,609 and $183,586,
respectively. The increase in capital expenditures for fiscal 1996, 1997 and
1998, compared to each respective prior year, was primarily due to the
acceleration of the rebuilding of plant using fiber-to-feeder technology and
Hyperion's introduction of switching services. The Company expects that capital
expenditures for fiscal 1999 will be in a range of approximately $150,000 to
$170,000 for Adelphia, excluding Hyperion. The company expects Hyperion to
continue to have significant capital and investment requirements.

      Financing Activities. The Company's financing strategy has been to
maintain its public long-term debt at the parent holding company level while the
Company's consolidated subsidiaries have their own senior and subordinated
credit arrangements with banks and insurance companies, or for Hyperion, its own
public debt and equity. The Company's ability to generate cash adequate to meet
its future needs will depend generally on its results of operations and the
continued availability of external financing. During the three-year period ended
March 31, 1998, the Company generally funded its working capital requirements,
capital expenditures, and investments in Olympus, CLEC joint ventures and other
affiliates and entities through long-term borrowings primarily from banks,
short-term borrowings, internally generated funds and the issuance of public
debt or equity. The Company generally has funded the principal and interest
obligations on its long-term borrowings from banks and insurance companies by
refinancing the principal with new loans or through the issuance of parent and
subsidiary company debt securities, and by paying the interest out of internally
generated funds. Adelphia has funded the interest obligations on its public
borrowings from internally generated funds.

      Most of Adelphia's directly-owned subsidiaries have their own senior
credit agreements with banks and/or insurance companies. Typically, borrowings
under these agreements are collateralized by the stock and, in some cases, by
the assets of the borrowing subsidiary and its subsidiaries and, in some cases,
are guaranteed by such subsidiary's subsidiaries. At March 31, 1998, an
aggregate of $775,725 in borrowings was outstanding under these agreements.
These agreements contain certain provisions which, among other things, provide
for limitations on borrowings of and investments by the borrowing subsidiaries,
transactions between the borrowing subsidiaries and Adelphia and its other
subsidiaries and affiliates, and the payment of dividends and fees by the
borrowing subsidiaries. Several of these agreements also contain certain
cross-default provisions relating to Adelphia or other subsidiaries. These
agreements also require the maintenance of certain financial ratios by the
borrowing subsidiaries. In addition, at March 31, 1998, an aggregate of $52,000
subordinated and unsecured borrowings by Adelphia's subsidiaries was outstanding
under credit agreements containing limitations and restrictions similar to those

<PAGE>

mentioned above. See Note 3 to the Adelphia Communications Corporation
consolidated financial statements. Management believes the Company is in
compliance with the financial covenants and related financial ratio requirements
contained in its various credit agreements, based on operating results for the
three months ended March 31, 1998. In addition, as of March 31, 1998, Hyperion
had outstanding $329,000 aggregate principal amount at maturity of 13% Senior
Discount Notes due 2003, with a carrying amount of $215,213, which were issued
under an indenture dated April 15, 1996 and $250,000 of 12 1/4% Senior Secured
Notes due 2004, which were issued under an indenture dated August 27, 1997.
Also, on October 9, 1997, Hyperion issued $200,000 aggregate liquidation
preference of 12 7/8% Senior Exchangeable Redeemable Preferred Stock due 2007.

      At March 31, 1998, Adelphia's subsidiaries had an aggregate of $235,620 in
unused credit lines with banks, part of which is subject to achieving certain
levels of operating performance. In addition, the Company had an aggregate
$276,895 in cash and cash equivalents at March 31, 1998 which combined with the
Company's unused credit lines with banks aggregated to $512,515. The Company has
the ability to pay interest on its 9 1/2% Senior Pay-In-Kind Notes by issuing
additional notes totaling approximately $18,123 in lieu of cash interest
payments from April 1, 1998 through February 15, 1999. Based upon the results of
operations of subsidiaries for the quarter ended March 31, 1998, approximately
$442,000 of available assets could have been transferred to Adelphia at March
31, 1998, under the most restrictive covenants of the subsidiaries' credit
agreements. The subsidiaries also have the ability to sell, dividend or
distribute certain assets to other subsidiaries or Adelphia, which would have
the net effect of increasing availability. At March 31, 1998, the Company's
unused credit lines were provided by reducing revolving credit facilities whose
revolver periods expire through September 30, 2004. The Company's scheduled
maturities of debt are currently $128,213 for fiscal 1999.

      At March 31, 1998, the Company's total outstanding debt aggregated
$2,909,745, which included $1,580,274 of parent company debt and $1,329,471 of
subsidiary debt. Bank debt interest rates are based upon one or more of the
following rates at the option of Adelphia: prime rate plus 0% to 1.5%;
certificate of deposit rate plus 1.25% to 2.75%; or LIBOR plus 1% to 2.5%. The
Company's weighted average interest rate on notes payable to banks and
institutions was approximately 8.11% at March 31, 1998, compared to 8.83% at
March 31, 1997. At March 31, 1998, approximately 28.77% of subsidiary debt was
subject to fixed interest rates for at least one year under the terms of such
debt or applicable interest rate swap agreements. Approximately 76.61% of the
Company's total indebtedness was at fixed interest rates as of March 31, 1998.

      Adelphia has entered into interest rate swap agreements and interest rate
cap agreements with banks and affiliates to reduce the impact of changes in
interest rates on its debt. Adelphia enters into pay-fixed agreements to
effectively convert a portion of its variable-rate debt to fixed-rate debt.
Adelphia enters into receive-fixed agreements to effectively convert a portion
of its fixed-rate debt to variable-rate debt which is indexed to LIBOR. Interest
rate cap agreements are used to reduce the impact of increases in interest rates
on variable rate debt. Adelphia is exposed to credit loss in the event of
nonperformance by the banks and the affiliates. The Company does not expect any
such nonperformance. At March 31, 1998, Adelphia would have had to pay
approximately $5,822 to settle its interest rate swap and cap agreements,
representing the excess of carrying cost over fair market value of these
agreements.

Financing Transactions

Adelphia, excluding Hyperion

      During fiscal 1997, Adelphia issued $350,000 of publicly held senior debt
("Senior Notes") and certain subsidiaries of the Company entered into a $690,000
financing arrangement consisting of a $540,000 revolving credit facility
maturing December 31, 2003 and a $150,000 term loan facility maturing December
31, 2004.

      During fiscal 1998, Adelphia issued $625,000 of Senior Notes and $150,000
aggregate liquidation preference, 13% Cumulative Exchangeable Preferred Stock
(the "Exchangeable Preferred Stock"), which is mandatorily redeemable in 2009.

      During fiscal 1998, Adelphia also issued 100,000 shares of perpetual
Series C Convertible Preferred Stock (the "Convertible Preferred Stock") with a
par value of $.01 per share and an aggregate liquidation preference of $100,000
in a private placement of which $80,000 was sold to a Rigas family affiliate and
the remainder was sold to Telesat Cablevision, Inc., a wholly owned subsidiary
of FPL Group, Inc., a New York Stock Exchange company and a 50% partner in
Olympus. The Convertible Preferred Stock accrues dividends at the rate of 8 1/8%
of the liquidation preference per annum, and is convertible at $8.48 per share
into an aggregate of 11,792,450 shares of Class A Common Stock of Adelphia. The
Convertible Preferred Stock is redeemable at the option of Adelphia after three

<PAGE>

years from the date of issuance at a premium declining to the liquidation
preference in 2002.

      Proceeds from the sale of the Exchangeable Preferred Stock, the Senior
Notes and the Convertible Preferred Stock were used to repay subsidiaries'
senior notes and revolving credit facility borrowings.

      On October 31, 1997, Adelphia redeemed $202,000 aggregate principal amount
of 12 1/2% Senior Notes due 2002 at 106% of principal. On May 15, 1998, Adelphia
redeemed the remaining $69,838 of the 12 1/2% Senior Notes due 2002 at 103% of
principal.

    Hyperion

      During Fiscal 1998, Hyperion issued $250,000 aggregate principal amount of
12 1/4% Senior Secured Notes due 2004 and $200,000 aggregate liquidation
preference 12 7/8% Senior Exchangeable Redeemable Preferred Stock due 2007. In
addition, during May 1998, Hyperion successfully completed an initial public
offering ("IPO") of its Class A Common Stock. Net proceeds from these three
transactions will primarily be used to fund capital expenditures, working
capital, potential increases in ownership interests in existing networks and for
general corporate purposes.

      For additional information regarding Adelphia's and Hyperion's financing 
transactions, see Notes 3, 4, 6 and 13 to Adelphia's Consolidated Financial
Statements.

Acquisitions

Adelphia, excluding Hyperion

      For the year ended March 31, 1998, Adelphia acquired (i) cable systems
serving approximately 25,800 subscribers in the Virginia cities of Blacksburg
and Salem for an aggregate price of $54,500, (ii) 61% of the partnership
interests of cable systems serving approximately 20,300 subscribers in the
Western New York area for an aggregate price of $20,737, (iii) cable systems
serving approximately 3,400 subscribers in Vermont for an aggregate price of
$8,096, and (iv) 82% of the partnership interests of cable systems serving
approximately 16,000 subscribers in Pennsylvania, Maryland and West Virginia for
an aggregate price of $23,615. These acquisitions further contributed to
Adelphia's existing clusters. See Note 1 to Adelphia's Consolidated Financial
Statements for a further discussion of acquisitions.

      On January 8, 1998, Adelphia signed a definitive agreement to establish a
partnership into which TCI will contribute its cable systems in Buffalo, New
York; Erie, Pennsylvania; and Ashtabula and Lake County, Ohio, totaling
approximately 166,000 subscribers, and Adelphia will contribute its Western New
York and Lorain, Ohio systems, totaling approximately 298,000 subscribers. Upon
closing of the transaction, TCI will hold a minority interest in the
partnership. The Company expects that the transaction will close prior to 
September 30, 1998.

      On April 1, 1998, Adelphia and its affiliates and Time Warner
Entertainment and an affiliate ("Time Warner") traded certain cable systems.
Adelphia exchanged its systems serving 64,400 subscribers primarily in the
Mansfield, Ohio area for systems owned by Time Warner cable companies serving
70,200 subscribers adjacent to systems owned or managed by Adelphia in Virginia,
New England and New York.

    Hyperion

      On September 12, 1997 and February 12, 1998, Hyperion acquired the
partnership interests of various of its Local Partners, thereby increasing its
ownership interest in seven of its networks to 100% for an aggregate cash
purchase price of approximately $52,000 and certain other consideration. As a
result of these transactions, Hyperion's weighted average ownership in its
networks, based upon gross property plant and equipment, increased to 77% as of
March 31, 1998. These transactions are consistent with Hyperion's goal to own at
least a 50% interest in each of its networks and to dispose of its interests in
those in which acquiring a controlling interest is not economically attractive.
Hyperion may consider similar transactions from time to time in its other
markets.

      On March 25, 1998, the FCC completed the auction of licenses for Local
Multipoint Distribution Service ("LMDS"). Hyperion, through a limited
partnership in which it is a 49.9% limited partner, was the successful bidder at
a net cost of $25,600 for 232 31-Ghz licenses, which cover approximately 38% of
the nation's population - in excess of 90 million people in the eastern half of
the United States. Hyperion funded $10,000 of such purchase in January 1998, and
<PAGE>

is committed to provide further funding to consummate such purchase upon the
granting of such licenses by the FCC, expected during fiscal 1999. LMDS is a
fixed broadband point-to-multipoint service which the FCC anticipates will be
used for the deployment of wireless local loop, high-speed data transfer and
video broadcasting services. Hyperion plans to use such spectrum for "last-mile"
connectivity in certain of its markets, and believes the spectrum to be highly
complementary to its fiber-based systems. There can be no assurances that LMDS
spectrum will provide a cost-effective means to connect to end user locations.

      Resources. The Company plans to continue to explore and consider new
commitments, arrangements or transactions to refinance existing debt, increase
the Company's liquidity or decrease the Company's leverage. These could include,
among other things, the future issuance by Adelphia, or its subsidiaries, of
public or private equity or debt and the negotiation of new or amended credit
facilities. These could also include entering into acquisitions, joint ventures
or other investment or financing activities, although no assurance can be given
that any such transactions will be consummated. The Company's ability to borrow
under current credit facilities and to enter into refinancings and new
financings is limited by covenants contained in Adelphia's indentures and its
subsidiaries' credit agreements, including covenants under which the ability to
incur indebtedness is in part a function of applicable ratios of total debt to
cash flow.

      The Company believes that cash and cash equivalents, internally generated
funds, borrowings under existing credit facilities, and future financing sources
will be sufficient to meet its short-term and long-term liquidity and capital
requirements. Although in the past the Company has been able to refinance its
indebtedness or obtain new financing, there can be no assurance that the Company
will be able to do so in the future or that the terms of such financings would
be favorable.

      Management believes that the telecommunications industry, including the
cable television and telephone industries, continues to be in a period of
consolidation characterized by mergers, joint ventures, acquisitions, sales of
all or part of cable companies or their assets, and other partnering and
investment transactions of various structures and sizes involving cable or other
telecommunications companies. The Company continues to evaluate new
opportunities that allow for the expansion of its business through the
acquisition of additional cable television systems in geographic proximity to
its existing regional markets or in locations that can serve as a basis for new
market areas. The Company, like other telecommunications companies, has
participated from time to time and is participating in preliminary discussions
with third parties regarding a variety of potential transactions, and the
Company has considered and expects to continue to consider and explore potential
transactions of various types with other cable and telecommunications companies.
However, no assurances can be given as to whether any such transaction may be
consummated or, if so, when.

Affiliates

      Olympus. The Company serves as the managing general partner of Olympus
and, as of March 31, 1998, held $5 of voting general partnership interests
representing, in the aggregate, 50% of the voting interests of Olympus. The
Company also held, as of March 31, 1998, approximately $325,911 aggregate
principal amount of nonvoting PLP interests in Olympus, which entitle the
Company to a 16.5% per annum priority return. The remaining equity in Olympus
consists of voting and non-voting partnership interests held by FPL Group.

      During the years ended March 31, 1996 and 1997, the Company received net
distributions and advances from Olympus totaling $45,499 and $9,012,
respectively. During the year ended March 31, 1998, the Company made net
investments in and advances to Olympus totaling $11,466. During the years ended
March 31, 1996, 1997 and 1998, the Company received priority investment income
from Olympus of $28,852, $42,086 and $47,765, respectively.

      The Olympus limited partnership agreement requires approval by the holders
of 85% of the voting interests for, among other things, significant acquisitions
and dispositions of assets, and the issuance of certain partnership interests,
and also requires approval by the holders of 75% of the voting interests for,
among other things, material amendments to the Olympus partnership agreement,
certain financings and refinancings, certain issuances of PLP interests, certain
transactions with related parties and the adoption of annual budgets.

      During the years ended March 31, 1996, 1997 and 1998, Olympus acquired
several cable and security systems, adding approximately 151,000 subscribers for
approximately $295,800. Olympus also completed two financing arrangements
totaling $675,000 during the years ended March 31, 1996, 1997 and 1998. For
additional information regarding Olympus acquisitions and financings, see Note 1

<PAGE>

to Olympus' Consolidated Financial Statements.

      Olympus has entered into a definitive agreement for the purchase of cable
television systems from Jones Intercable, Inc. These systems will be acquired
for $110,000 cash and serve approximately 46,000 subscribers in and around the
city of Ft. Myers, Florida. Olympus also entered into a definitive agreement for
the purchase of cable systems serving approximately 19,700 subscribers in the
Lake Okeechobee area of central Florida for $34,750. These acquisitions, which
will be accounted for under the purchase method of accounting, are expected to
close during calendar year 1998.

      The Selected Financial Data and Management's Discussion and Analysis of
Financial Condition and Results of Operations for Olympus for each of the three
years in the period ended December 31, 1997, which appear on pages 22 through 31
of the Annual Report on Form 10-K of Olympus Communications, L.P. and Olympus
Capital for the year ended December 31, 1997, are incorporated herein by
reference. The financial information for Olympus as of March 31, 1998 and for
the three months ended March 31, 1997 and 1998, which appears on pages 3 through
5 of the Olympus and Olympus Capital Corporation Form 10-Q for the quarterly
period ended March 31, 1998, is incorporated by reference in this Annual Report
on Form 10-K.

      Managed Partnerships. On September 29, 1993, the Board of Directors of the
Company authorized the Company to make loans in the future to the Managed
Partnerships up to an amount of $50,000. During the years ended March 31, 1996
and 1998, the Company made advances in the net amount of $14,859 and $21,458,
respectively, to these and other related parties, primarily for capital
expenditures and working capital purposes. During the year ended March 31, 1997,
the Managed Partnerships and other related parties repaid advances in the net
amount of $34,250.

Recent Accounting Pronouncements

      Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income", and SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information," have been issued and are effective for
fiscal years beginning after December 15, 1997. SFAS No. 130 defines
comprehensive income and outlines certain reporting and disclosure requirements
related to comprehensive income. SFAS No. 131 requires certain disclosures about
business segments of an enterprise, if applicable. The adoption of SFAS No. 130
and SFAS No. 131 is not expected to have a significant impact on the Company's
financial statements or disclosures. SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," has been issued and is effective for fiscal
quarters beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Statement of Position ("SOP") 98-5, "Reporting on the Costs of
Start-Up Activities," has been issued and is effective for fiscal years
beginning after December 15, 1998. SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs. It requires such costs to be
expensed as incurred. Management of the Company has not evaluated the impact of
SFAS 133 or SOP 98-5.

Inflation

      In the three fiscal years in the period ended March 31, 1998, inflation
did not have a significant effect on the Company. Periods of high inflation
could have an adverse effect to the extent that increased borrowing costs for
floating-rate debt may not be offset by increases in subscriber rates. At March
31, 1998, after giving effect to interest rate hedging agreements, approximately
$589,575 of the Company's total debt was subject to floating interest rates.

Regulatory and Competitive Matters

      The cable television operations of the Company may be adversely affected
by changes and developments in governmental regulation, competitive forces and
technology. The cable television industry and the Company are subject to
extensive regulation at the federal, state and local levels. The 1992 Cable Act
significantly expanded the scope of regulation of certain subscriber rates and a
number of other matters in the cable industry, such as mandatory carriage of
local broadcast stations and retransmission consent, and increased the
administrative costs of complying with such regulations. The FCC has adopted
rate regulations that establish, on a system-by-system basis, maximum allowable
rates for (i) basic and cable programming services (other than programming
offered on a per-channel or per-program basis), based upon a benchmark

<PAGE>

methodology, and (ii) associated equipment and installation services based upon
cost plus a reasonable profit. Under the FCC rules, franchising authorities are
authorized to regulate rates for basic services and associated equipment and
installation services, and the FCC will regulate rates for regulated cable
programming services in response to complaints filed with the agency. The 1996
Act ends FCC regulation of cable programming service tier rates on March 31,
1999.

      Rates for basic and cable programming services are set pursuant to a
benchmark formula. Alternatively, a cable operator may elect to use a
cost-of-service methodology to show that rates for basic and cable programming
services are reasonable. Refunds with interest will be required to be paid by
cable operators who are required to reduce regulated rates. The FCC has reserved
the right to reduce or increase the benchmarks it has established. The rate
regulations also limit increases in regulated rates to an inflation indexed
amount plus increases in certain costs such as taxes, franchise fees, costs
associated with specific franchise requirements and increased programming costs.
Cost-based adjustments to these capped rates can also be made in the event a
cable operator adds or deletes channels or completes a significant system
rebuild or upgrade. Because of the limitation on rate increases for regulated
services, future revenue growth from cable services will rely to a much greater
extent than has been true in the past on increased revenues from unregulated
services and new subscribers than from increases in previously unregulated
rates.

      The FCC has adopted regulations implementing all of the requirements of
the 1992 Cable Act. The FCC is also likely to continue to modify, clarify or
refine the rate regulations. Adelphia cannot predict the effect of the 1996 Act
or future rulemaking proceedings or changes to the rate regulations.

      In fiscal 1996, Adelphia recorded a $5,300 charge representing
management's estimate of the total costs to be incurred to resolve all of
Adelphia's rate complaints with the FCC. On May 1, 1997, Adelphia reached a
settlement of all rate complaints before the FCC on terms and conditions
consistent with certain other cable television companies that utilized a la
carte packages that have reached settlement/resolution with the FCC on this
issue. Under the terms of the agreement, Adelphia made refunds of approximately
$2,400 (including interest through December 31, 1996), plus interest from
January 1, 1997 through the date of payment. Adelphia also reduced its rates in
certain communities. At March 31, 1998, $832 of the $5,300 charge remained in
accrued interest and other liabilities, which management believes is adequate to
cover the settlement. No assurance can be given as to what other future actions
Congress, the FCC or other regulatory authorities may take or the effects
thereof on Adelphia. Adelphia is currently unable to predict the effect that the
amended regulations, future FCC treatment of a la carte packages or other future
FCC rulemaking proceedings will have on their business and results of operations
in future periods.

      Cable television companies operate under franchises granted by local
authorities which are subject to renewal and renegotiation from time to time.
Because such franchises are generally non-exclusive, there is a potential for
competition with the systems from other operators of cable television systems,
including public systems operated by municipal franchising authorities
themselves, and from other distribution systems capable of delivering television
programming to homes. The 1992 Cable Act and the 1996 Act contain provisions
which encourage competition from such other sources. The Company cannot predict
the extent to which competition will materialize from other cable television
operators, local telephone companies, other distribution systems for delivering
television programming to the home, or other potential competitors, or, if such
competition materializes, the extent of its effect on the Company.

      The 1996 Act repealed the prohibition on CLECs from providing video
programming directly to customers within their local exchange areas other than
in rural areas or by specific waiver of FCC rules. The 1996 Act also authorized
CLECs to operate "open video systems" ("OVS") without obtaining a local cable
franchise, although CLECs operating such a system can be required to make
payments to local governmental bodies in lieu of cable franchise fees. Where
demand exceeds capacity, up to two-thirds of the channels on an OVS must be
available to programmers unaffiliated with the CLEC. The statute states that the
OVS scheme supplants the FCC's "video dialtone" rules. The FCC has promulgated
rules to implement the OVS concept, and New Jersey Bell Telephone Company has
been granted permission to convert its video dialtone authorization in Dover
Township, New Jersey to an OVS authorization.

      The Company believes that the provision of video programming by telephone
companies in competition with the Company's existing operations could have an
adverse effect on the Company's financial condition and results of operations.
At this time, the impact of any such effect is not known or estimable.

      The Company also competes with DBS service providers. DBS has been
available to consumers since 1994. A single DBS satellite can provide more than

<PAGE>

100 channels of programming. DBS service can be received virtually anywhere in
the United States through the installation of a small outdoor antenna. DBS
service is being heavily marketed on a nationwide basis by several service
providers. At this time, any impact of DBS competition on the Company's future
results is not known or estimable.

Year 2000 Issues

      The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.

      The Company has recently completed the planning stage of a project that
addresses the Year 2000 data processing issues relating to modifications of its
mainframe computer applications. Internal and external resources are being used
to make the required modifications and perform the necessary tests, all of which
is expected to be completed by June 1999. The financial impact of these
modifications is not expected to be significant to the Company's financial
statements.

      In addition, the Company has begun communicating with others with whom it
does significant business to determine their Year 2000 compliance readiness and
the extent to which the Company is vulnerable to any third party Year 2000
issues. However, there can be no guarantee that the systems of other companies
on which the Company's systems rely will be timely converted, or that a failure
to convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      Not applicable.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The consolidated financial statements of Adelphia and related notes
thereto and independent auditors' report follow.

      The consolidated financial statements of Olympus and related notes thereto
and independent auditors' report dated March 6, 1998, appearing on pages 33
through 50 of the Annual Report on Form 10-K of Olympus Communications, L.P. and
Olympus Capital Corporation for the year ended December 31, 1997, are
incorporated by reference in this Annual Report on Form 10-K.




<PAGE>





<TABLE>
<CAPTION>

                         INDEX TO FINANCIAL STATEMENTS OF ADELPHIA COMMUNICATIONS CORPORATION
                                                 AND SUBSIDIARIES



<S>                                                                                                              <C>
Independent Auditors' Report..............................................................................        42
Consolidated Balance Sheets, March 31, 1997 and 1998......................................................        43
Consolidated Statements of Operations, Years Ended March 31, 1996, 1997 and 1998..........................        44
Consolidated Statements of Convertible Preferred Stock, Common Stock and Other
   Stockholders' Equity (Deficiency), Years Ended March 31, 1996, 1997 and 1998...........................        45
Consolidated Statements of Cash Flows, Years Ended March 31, 1996, 1997 and 1998..........................        46
Notes to Consolidated Financial Statements................................................................        47
</TABLE>




<PAGE>



                          INDEPENDENT AUDITORS' REPORT

Adelphia Communications Corporation:

     We have audited the accompanying consolidated balance sheets of Adelphia
Communications Corporation and subsidiaries as of March 31, 1997 and 1998, and
the related consolidated statements of operations, of convertible preferred
stock, common stock and other stockholders' equity (deficiency), and of cash
flows for each of the three years in the period ended March 31, 1998. Our audits
also included the financial statement schedules listed in the Index at Item 14.
These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Adelphia Communications
Corporation and subsidiaries at March 31, 1997 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended March 31, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.



DELOITTE & TOUCHE LLP



Pittsburgh, Pennsylvania
June 10, 1998


<PAGE>


<TABLE>
<CAPTION>

                             ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS

                               (Dollars in thousands, except per share amounts)

                                                                                          March 31,
                                                                                -----------------------------
                                                                                     1997           1998
                                                                                -------------- --------------

ASSETS:

<S>                                                                              <C>          <C>
Property, plant and equipment--net                                               $  659,575   $   918,637
Intangible assets--net                                                              650,533       695,104
Cash and cash equivalents                                                            61,539       276,895
U.S. government securities--pledged                                                    --          70,535
Investments                                                                         117,996       127,827
Preferred equity investment in Managed Partnership                                   18,338        18,338
Subscriber receivables--net                                                          24,692        30,551
Prepaid expenses and other assets--net                                               80,355       114,526
Related party receivables--net                                                       30,798        52,258
                                                                                 ----------   -----------
Total                                                                            $1,643,826   $ 2,304,671
                                                                                 ==========   ===========
LIABILITIES, PREFERRED STOCK, COMMON STOCK AND
OTHER STOCKHOLDERS' EQUITY (DEFICIENCY):
Subsidiary debt                                                                  $1,369,367   $ 1,329,471
Parent debt                                                                       1,174,672     1,580,274
Accounts payable                                                                     56,961        65,019
Subscriber advance payments and deposits                                             16,004        17,129
Accrued interest and other liabilities                                              127,938       125,824
Deferred income taxes                                                               110,097       116,351
                                                                                 ----------   -----------
Total liabilities                                                                 2,855,039     3,234,068
                                                                                 ----------   -----------
Cumulative equity in loss in excess of investment in and amounts
due from Olympus                                                                     42,668        31,202
                                                                                 ----------   -----------
Hyperion redeemable exchangeable preferred stock                                       --         207,204
                                                                                 ----------   -----------
Redeemable exchangeable preferred stock                                                --         148,062
                                                                                 ----------   -----------
Commitments and contingencies (Note 5)

Convertible preferred stock, common stock and other stockholders' equity
(deficiency):
8 1/8% Series C convertible preferred stock ($100,000 liquidation preference)          --               1
Class A common stock, $.01 par value, 200,000,000 shares
authorized, 16,130,880 and 20,043,528 shares outstanding, respectively                  161           200
Class B common stock, $.01 par value, 25,000,000 shares
authorized, 10,944,476 shares outstanding                                               109           109
Additional paid-in capital                                                          219,408       331,263
Accumulated deficit                                                              (1,473,559)   (1,647,438)
                                                                                 ----------   -----------
Convertible preferred stock, common stock and other
stockholders' equity (deficiency)                                                (1,253,881)   (1,315,865)
                                                                                 ----------   -----------
Total                                                                            $1,643,826   $ 2,304,671
                                                                                 ==========   ===========


                                    See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                              ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                (Dollars in thousands, except per share amounts)

                                                                                 Year Ended March 31,
                                                                       ---------------------------------------
                                                                           1996         1997         1998
                                                                       ------------ ------------ -------------
<S>                                                                     <C>          <C>          <C>
Revenues                                                                $ 403,597    $ 472,778    $ 528,442
                                                                        ---------    ---------    ---------

Operating expenses:
Direct operating and programming                                          124,116      148,982      167,288
Selling, general and administrative                                        68,357       81,763       95,731
Depreciation and amortization                                             111,031      124,066      145,041
Rate regulation                                                             5,300         --           --
                                                                        ---------    ---------    ---------
Total                                                                     308,804      354,811      408,060
                                                                        ---------    ---------    ---------
Operating income                                                           94,793      117,967      120,382
                                                                        ---------    ---------    ---------
Other income (expense):
Priority investment income from Olympus                                    28,852       42,086       47,765
Interest expense - net (see Note 1)                                      (220,068)    (232,325)    (247,107)
Equity in loss of Olympus and other joint ventures                        (41,965)     (51,946)     (66,089)
Equity in loss of Hyperion joint ventures                                  (4,292)      (7,223)     (12,967)
Hyperion preferred stock dividends                                           --           --        (12,682)
Gain on sale of investments                                                  --         12,151        2,538
                                                                        ---------    ---------    ---------
Total                                                                    (217,473)    (237,257)    (288,542)
                                                                        ---------    ---------    ---------
Loss before income taxes and extraordinary loss                          (122,680)    (119,290)    (168,160)
Income tax benefit                                                          2,786          358        5,606
                                                                        ---------    ---------    ---------
Loss before extraordinary loss                                           (119,894)    (118,932)    (162,554)
Extraordinary loss on early retirement of debt                               --        (11,710)     (11,325)
                                                                        ---------    ---------    ---------
Net loss                                                                 (119,894)    (130,642)    (173,879)
Dividend requirements applicable to preferred stock                          --           --        (18,850)
                                                                        ---------    ---------    ---------

Net loss applicable to common stockholders                              $(119,894)   $(130,642)   $(192,729)
                                                                        =========    =========    =========

Basic and diluted loss per weighted average share of common
stock before extraordinary loss                                         $   (4.56)   $   (4.50)   $   (6.07)
Basic and diluted extraordinary loss per weighted average
share on early retirement of debt                                            --          (0.44)       (0.38)
                                                                        ---------    ---------    ---------
Basic and diluted net loss per weighted average share of common stock   $   (4.56)   $   (4.94)   $   (6.45)
                                                                        =========    =========    =========
Weighted average shares of common stock outstanding (in thousands)         26,305       26,411       29,875
                                                                        =========    =========    =========




                                    See notes to consolidated financial statements.
</TABLE>


<PAGE>



<TABLE>
<CAPTION>

                                 ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, COMMON STOCK
                                      AND OTHER STOCKHOLDERS' EQUITY (DEFICIENCY)

                                                (Dollars in thousands)

                                   Series C
                                  Convertible   Class A     Class B    Additional
                                   Preferred    Common      Common      Paid-In   Accumulated
                                     Stock      Stock       Stock       Capital      Deficit       Total
                                   ---------- ---------   ---------   ----------  -----------  ------------
<S>                                <C>        <C>         <C>         <C>         <C>          <C>
Balance, March 31, 1995            $    --    $     149   $     109   $ 211,190   $(1,223,023) $(1,011,575)
Issuance of Class A common
stock on April 3, 1995                  --            5        --         4,995          --          5,000
Excess of purchase price of
acquired assets over
predecessor owners' book
value                                   --         --          --        (1,770)         --         (1,770)
Net loss                                --         --          --          --        (119,894)    (119,894)
                                   ---------  ---------   ---------   ---------   -----------  -----------

Balance, March 31, 1996                 --          154         109     214,415    (1,342,917)  (1,128,239)
Issuance of Class A common
stock on February 10, 1997              --            7        --         4,993          --          5,000
Net loss                                --         --          --          --        (130,642)    (130,642)
                                   ---------  ---------   ---------   ---------   -----------  -----------

Balance, March 31, 1997                 --          161         109     219,408    (1,473,559)  (1,253,881)
Issuance of Class A common
stock on June 20, 1997                  --           36        --        24,964          --         25,000
Issuance of Class A common
stock on March 6, 1998                  --            3        --         8,828          --          8,831
Issuance of Series C convertible
preferred stock on July 7, 1997            1       --          --        96,999          --         97,000
Dividend requirements applicable
to exchangeable preferred stock         --         --          --       (14,246)         --        (14,246)
Dividend requirements applicable
to convertible preferred stock          --         --          --        (4,604)         --         (4,604)
Other                                   --         --          --           (86)         --            (86)
Net loss                                --         --          --          --        (173,879)    (173,879)
                                   ---------  ---------   ---------   ---------   -----------  -----------

Balance, March 31, 1998            $       1  $     200   $     109   $ 331,263   $(1,647,438) $(1,315,865)
                                   =========  =========   =========   =========   ===========  ===========






                                    See notes to consolidated financial statements.
</TABLE>



<PAGE>



<TABLE>
<CAPTION>

              ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (Dollars in thousands)

                                                                     Year Ended March 31,
                                                           -------------------------------------------
                                                               1996          1997           1998
                                                           ------------- ------------- ---------------
Cash flows from operating activities:
<S>                                                          <C>          <C>            <C>
Net loss                                                     $(119,894)   $  (130,642)   $  (173,879)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation                                                    70,890         78,328         93,688
Amortization                                                    40,141         45,738         51,353
Noncash interest expense                                        16,288         41,360         37,430
Noncash dividends on Hyperion preferred stock                     --             --           12,682
Equity in loss of Olympus and other joint ventures              41,965         51,946         66,089
Equity in loss of Hyperion nonconsolidated joint ventures        4,292          7,223         12,967
Rate regulation                                                  2,700           --
Gain on sale of investments                                       --          (12,151)        (2,538)
Extraordinary loss on early retirement of debt                    --           11,710         11,325
Decrease in deferred taxes, net of effects of acquisitions      (3,930)          (500)        (6,305)
Changes in operating assets and liabilities, net of effects of acquisitions:
Subscriber receivables                                          (3,370)          (813)        (4,351)
Prepaid expenses and other assets                              (14,465)       (27,858)       (23,437)
Accounts payable                                                23,796         (9,784)         4,282
Subscriber advance payments and deposits                        (1,788)         1,298            658
Accrued interest and other liabilities                           7,662        (12,854)       (13,694)
                                                             ---------    -----------    -----------

Net cash provided by operating activities                       64,287         43,001         66,270
                                                             ---------    -----------    -----------

Cash flows used for investing activities:
Acquisitions                                                   (60,804)      (143,412)      (146,546)
Expenditures for property, plant and equipment                (100,089)      (129,609)      (183,586)
Investments in Hyperion joint ventures                         (12,815)       (34,769)       (64,260)
Investments in other joint ventures                            (11,518)       (16,646)       (22,591)
Investment in U.S. government securities--pledged                 --             --          (83,400)
Sale of U.S. government securities - pledged                      --             --           15,563
Amounts invested in and advanced to Olympus
and related parties                                             (4,236)        (9,229)       (91,468)
Proceeds from sale of investments                                 --           11,618         12,678
                                                             ---------    -----------    -----------

Net cash used for investing activities                        (189,462)      (322,047)      (563,520)
                                                             ---------    -----------    -----------

Cash flows from financing activities:
Proceeds from debt                                             273,508      1,280,649      1,298,137
Repayments of debt                                            (138,694)      (933,517)      (977,591)
Costs associated with debt financings                           (3,875)       (20,236)       (20,498)
Premium paid on early retirement of debt                          --           (8,207)       (12,153)
Proceeds from Hyperion's issuance of warrants                     --           11,087           --
Issuance of redeemable exchangeable preferred stock               --             --          147,976
Issuance of convertible preferred stock                           --             --           97,000
Issuance of Hyperion redeemable exchangeable
preferred stock                                                   --             --          194,522
Preferred stock dividends paid                                    --             --          (14,787)
                                                             ---------    -----------    -----------

Net cash provided by financing activities                      130,939        329,776        712,606
                                                             ---------    -----------    -----------

Increase in cash and cash equivalents                            5,764         50,730        215,356
Cash and cash equivalents, beginning of year                     5,045         10,809         61,539
                                                             ---------    -----------    -----------

Cash and cash equivalents, end of year                       $  10,809    $    61,539    $   276,895
                                                             =========    ===========    ===========

Supplemental disclosure of cash flow activity--
Cash payments for interest                                   $ 198,369    $   203,939    $   220,888
                                                             =========    ===========    ===========
                                    See notes to consolidated financial statements.
</TABLE>


<PAGE>


              ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (Dollars in thousands, except per share amounts)


1.   The Company and Summary of Significant Accounting Policies:

    The Company and Basis for Consolidation

      Adelphia Communications Corporation and subsidiaries ("Adelphia") owns,
operates and manages cable television systems and other related
telecommunications businesses. Adelphia's operations consist primarily of
selling video programming which is distributed to subscribers for a monthly fee
through a network of fiber optic and coaxial cables. These services are offered
in the respective franchise areas under the name Adelphia. Hyperion
Telecommunications, Inc. ("Hyperion") is a consolidated subsidiary of Adelphia
which owns operates and manages entities which provide competitive local
exchange carrier ("CLEC") telecommunications services.

      The consolidated financial statements include the accounts of Adelphia and
its more than 50% owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

      During the years ended March 31, 1996, 1997 and 1998, Adelphia consummated
several acquisitions, each of which was accounted for using the purchase method.
Accordingly, the financial results of each acquisition have been included in the
consolidated results of Adelphia effective with the date acquired.

      On April 12, 1995, Adelphia acquired cable systems from Clear Channels
Cable TV. These systems served approximately 10,700 subscribers at the
acquisition date located in Kittanning, New Bethlehem and Freeport, Pennsylvania
and were purchased for an aggregate price of $17,456.

      On January 9, 1996, Adelphia acquired cable systems from Eastern Telecom
Corporation and Robinson Cable TV, Inc. These systems served approximately
24,000 subscribers at the acquisition date located in western Pennsylvania and
were purchased for an aggregate price of $43,000.

      On April 1, 1996, Adelphia acquired cable systems from Cable TV Fund 11-B,
Ltd. These systems served approximately 39,700 subscribers at the acquisition
date located in the New York counties of Erie and Niagara and were purchased for
an aggregate price of $84,267.

      On July 12, 1996, Adelphia acquired cable systems from First Carolina
Cable TV, L.P. These systems served approximately 32,500 subscribers at the
acquisition date primarily located in Vermont and were purchased for an
aggregate price of $48,500.

      On February 10, 1997, Adelphia acquired the cable systems from Small
Cities Cable Television, L.P. and Small Cities Cable Television, Inc.
(collectively, "Small Cities"). These systems served approximately 6,000
subscribers at the acquisition date, primarily located in Vermont and were
purchased for an aggregate price of $12,000 in cash and Adelphia Class A Common
Stock.

      On June 20, 1997, Adelphia acquired cable systems from Booth
Communications Company ("Booth"). These systems served approximately 25,800
subscribers at the acquisition date in the Virginia cities of Blacksburg and
Salem and were purchased for an aggregate price of $54,500 in cash and Adelphia
Class A Common Stock.

      On September 12, 1997, Hyperion consummated an agreement with Time Warner
Entertainment-Advance/Newhouse ("TWEAN") to exchange interests in four New York
CLEC networks. As a result of the transaction, Hyperion paid TWEAN $7,638 and
increased its ownership in the networks serving Buffalo and Syracuse, New York
to 60% and 100%, respectively, and eliminated its interest in the Albany and
Binghamton networks, which became wholly owned by TWEAN.

      On November 7, 1997, Adelphia acquired approximately 61% of the
partnership interests in two cable systems from U.S. Cable Corporation. These
systems served approximately 20,300 subscribers at the acquisition date in the
western New York area and were purchased for an aggregate price of $20,737.

      On November 22, 1997, Adelphia acquired a cable system from Memphrecom,
Inc. This system served approximately 3,400 subscribers at the acquisition date
in Vermont and was purchased for an aggregate price of $8,096.

      On December 3, 1997, the Company exchanged its interest in Oxford, North
Carolina, a system which served approximately 4,400 subscribers, for TWEAN's

<PAGE>

interest in its DuBois, Pennsylvania system, which served approximately 3,800
subscribers.

      On December 31, 1997, Adelphia acquired 82% of the partnership interests
in Tele-Media Company of Tri States, L.P. The systems acquired in this
transaction served approximately 16,000 subscribers at the acquisition date in
Pennsylvania, Maryland and West Virginia and were purchased for an aggregate
price of $23,615.

      On February 12, 1998, Hyperion issued a warrant for 731,624 shares of
Hyperion Class A Common Stock to its 50% partner in Hyperion of Harrisburg in
exchange for such partnership interest.

      On February 12, 1998, Hyperion acquired the remaining partnership
interests in its Buffalo, NY, Louisville, KY and Lexington, KY networks for
approximately $18,300.

      On February 12, 1998, Hyperion acquired the remaining partnership
interests in its Morristown and New Brunswick, NJ networks for approximately
$26,328.

      On March 6, 1998, Adelphia exercised its option to purchase the remaining
15% of its Northeast Cable, Inc. system. The Company issued 341,220 shares of
Class A Common Stock to the sellers in connection with this purchase.

    Investment in Olympus Joint Venture Partnership

      The investment in the Olympus joint venture partnership comprises both
limited and general partner interests. The general partner interest represents a
50% voting interest in Olympus and is being accounted for using the equity
method. Under this method, Adelphia's investment, initially recorded at the
historical cost of contributed property, is adjusted for subsequent capital
contributions and its share of the losses of the partnership as well as its
share of the accretion requirements of the partnership's interests. The limited
partner interest represents a preferred interest ("PLP interests") entitled to a
16.5% annual return.

      The PLP interests are nonvoting, are senior to claims of certain other
partner interests, and provide for an annual priority return of 16.5%. Olympus
is not required to pay the entire 16.5% return currently and priority return on
PLP interests is recognized as income by Adelphia when received.
Correspondingly, equity in net loss of Olympus excludes accumulated unpaid
priority return (see Note 2).

    Subscriber Revenues

      Subscriber revenues are recorded in the month the service is provided.



<PAGE>



    Property, Plant and Equipment

      Property, plant and equipment, at cost, are comprised of the following:

                                          March 31,
                                --------------------------
                                      1997         1998
                                --------------------------
Operating plant and equipment   $   969,900    $ 1,290,915
Real estate and improvements         68,091         78,435
Support equipment                    28,808         26,961
Construction in progress            134,403        171,853
                                -----------    -----------
                                  1,201,202      1,568,164
Accumulated depreciation           (541,627)      (649,527)
                                -----------    -----------
                                $   659,575    $   918,637
                                ===========    ===========

      Depreciation is computed on the straight-line method using estimated
useful lives of 5 to 12 years for operating plant and equipment and 3 to 20
years for support equipment and real estate. Additions to property, plant and
equipment are recorded at cost which includes amounts for material, applicable
labor and overhead, and interest. Capitalized interest amounted to $1,766,
$1,727 and $5,985 for the years ended March 31, 1996, 1997 and 1998,
respectively.

    Intangible Assets

      Intangible assets, at cost, net of accumulated amortization, are comprised
of the following:

                                          March 31,
                                --------------------------
                                     1997           1998
                                --------------------------
Purchased franchises            $   486,887    $   526,333
Goodwill                             71,263         89,029
Non-compete agreements               12,937          8,705
Purchased subscribers lists          79,446         71,037
                                -----------    -----------
                                $   650,533    $   695,104
                                ===========    ===========

      A portion of the aggregate purchase price of systems acquired has been
allocated to purchased franchises, purchased subscriber lists, goodwill and
non-compete agreements. Purchased franchises and goodwill are amortized on the
straight-line method over 40 years. Purchased subscriber lists are amortized on
the straight-line method over periods which range from 5 to 10 years.
Non-compete agreements are amortized on the straight-line method over their
contractual lives which range from 4 to 12 years. Accumulated amortization of
intangible assets amounted to $170,801 and $211,967 at March 31, 1997 and 1998,
respectively.

    Cash and Cash Equivalents

      Adelphia considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Interest income on liquid
investments was $1,859, $5,789 and $13,383 for the years ended March 31, 1996,
1997, and 1998, respectively. Book overdrafts of $25,700 and $20,528 existed at
March 31, 1997 and 1998, respectively. These book overdrafts were reclassified
as accrued interest and other liabilities and accounts payable.

    U.S. Government Securities - Pledged

      U.S. Government Securities - Pledged consist of highly liquid investments 
which will be used to pay the first six semi-annual interest payments of the 
Hyperion 12 1/4% Senior Secured Notes.  Such investments are classified as held-
to-maturity and the carrying value approximates market value.

    Investments

      The equity method of accounting is generally used to account for
investments in affiliates which are greater than 20% but not more than 50%
owned. Under this method, Adelphia's initial investment is recorded at cost and
subsequently adjusted for the amount of its equity in the net income or losses
of its affiliates. Dividends or other distributions are recorded as a reduction

<PAGE>

of Adelphia's investment. Investments in affiliates accounted for using the
equity method generally reflect Adelphia's equity in their underlying assets.

      Investments in entities in which Adelphia's ownership is less than 20% and
investments greater than 20% in which Adelphia does not influence the operating
or financial decisions of the entity are generally accounted for using the cost
method. Under the cost method, Adelphia's initial investment is recorded at cost
and subsequently adjusted for the excess, if any, of dividends or other
distributions received over its share of cumulative earnings. Dividends received
in excess of earnings subsequent to the date the investment was made are
recorded as reductions of the cost of the investment.

      The balance of Adelphia's nonconsolidated investments is as follows:
<TABLE>
<CAPTION>


                                                                        March 31,
                                                               -------------------------
                                                                   1997         1998
                                                               ------------ ------------
Investments accounted for using the equity method:
Gross investment:
<S>                                                             <C>          <C>
Hyperion investments in joint ventures                          $  57,497    $  66,647
Paging                                                             14,990       15,539
Mobile communications                                               2,470       15,387
Other                                                               1,751        4,706
                                                                ---------    ---------
Total                                                              76,708      102,279
                                                                ---------    ---------
Investments accounted for using the cost method:
Niagara Frontier Hockey, L.P.                                      35,270       40,497
SuperCable ALK International                                        3,172        3,190
Programming ventures                                                2,945        1,427
Mobile communications                                               1,832        2,582
Other                                                                 763          812
                                                                ---------    ---------
Total                                                              43,982       48,508
                                                                ---------    ---------
Available for sale investments recorded at fair market value:
Republic Industries, Inc.                                           9,315         --
                                                                ---------    ---------
Total investments before cumulative equity in net losses          130,005      150,787
Cumulative equity in net losses                                   (12,009)     (22,960)
                                                                ---------    ---------
Total investments                                               $ 117,996    $ 127,827
                                                                =========    =========
</TABLE>


      On May 16, 1996, Hyperion sold its interest in one of its joint ventures
for $11,618, resulting in a gain of $8,405. On January 23, 1997, Adelphia
received 284,425 shares of Republic Industries, Inc. Common Stock ("Republic
Stock") in exchange for its interest in Commonwealth Security, Inc., resulting
in a gain of $3,746. On October 7, 1997, the Company sold its Republic Stock, on
which a gain of $408 was recognized. On March 16, 1998, the Company sold its
investment in the Golf Channel, resulting in a gain of $1,520.

      Certain members of the Rigas Family have entered into an agreement to
acquire all the voting interests of Niagara Frontier Hockey, L.P. ("NFHLP"). In
connection with the agreement, Adelphia agreed to purchase additional NFHLP
capital funding notes of approximately $11,000. Closing is subject to National
Hockey League and bank approvals.

    Subscriber Receivables

      An allowance for doubtful  accounts of $1,345 and $1,166 has been deducted
from subscriber receivables at March 31, 1997 and 1998, respectively.

    Amortization of Other Assets and Debt Discounts

      Deferred debt financing costs, included in prepaid expenses and other
assets, and debt discounts, a reduction of the carrying amount of the debt, are
amortized over the term of the related debt. The unamortized amounts of deferred
debt financing costs included in prepaid expenses and other assets were $35,786
and $47,653 at March 31, 1997 and 1998, respectively.
<PAGE>

    Franchise Expense

      The typical term of Adelphia's franchise agreements upon renewal is 10 
years. Franchise fees range from 3% to 5% of subscriber revenues and are
expensed currently.

    Net Loss Per Weighted Average Share of Common Stock

      Basic net loss per weighted average share of common stock is computed
based on the weighted average number of common shares outstanding after giving
effect to dividend requirements on the Company's preferred stock. Diluted net
loss per common share is equal to basic net loss per common share because the
Company's convertible preferred stock had an antidilutive effect for the periods
presented; however, the convertible preferred stock could have a dilutive effect
on earnings per share in future periods.

    Asset Impairments

      Adelphia periodically reviews the carrying value of its long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying value of assets may not be recoverable. Measurement of any impairment
would include a comparison of estimated future operating cash flows anticipated
to be generated during the remaining life of the assets with their net carrying
value. An impairment loss would be recognized as the amount by which the
carrying value of the assets exceeds their fair value.

    Noncash Financing and Investing Activities

      There were no material capital leases entered into during the year ended
March 31, 1996. Capital leases entered into during the years ended March 31,
1997 and 1998 totaled $1,624 and $2,842, respectively, for Adelphia, excluding
Hyperion. Hyperion entered into capital leases totaling $1,683 and $24,489,
respectively, during the years ended March 31, 1997 and 1998. Reference is made
to Notes 1 and 6 for descriptions of additional noncash financing and investing
activities.

    Interest Expense - Net

      Interest expense - net includes interest income of $10,623, $8,367 and
$23,949 for the years ended March 31, 1996, 1997 and 1998, respectively.
Interest income includes interest income from affiliates on long-term
loans and for reimbursement of interest expense on revolving credit agreements,
related to short term borrowings by such affiliates (see Note 11).

    Interest Rate Swaps

      Net settlement amounts under interest rate swap agreements are recorded as
adjustments to interest expense during the period incurred.

    Use of Estimates in the Preparation of Financial Statements

      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.

    Recent Accounting Pronouncements

      Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," have been issued and are effective for
fiscal years beginning after December 15, 1997. SFAS No. 130 defines
comprehensive income and outlines certain reporting and disclosure requirements
related to comprehensive income. SFAS No. 131 requires certain disclosures about
business segments of an enterprise, if applicable. The adoption of SFAS No. 130
and SFAS No. 131 is not expected to have a significant effect on the Company's
financial statements or disclosures. SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," has been issued and is effective for fiscal
quarters beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. It

<PAGE>

requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Statement of Position ("SOP") 98-5, "Reporting on the Costs of
Start-Up Activities," has been issued and is effective for fiscal years
beginning after December 15, 1998. SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs. It requires such costs to be
expensed as incurred. Management of the Company has not evaluated the impact of
SFAS 133 or SOP 98-5.

    Reclassifications

      Certain 1996 and 1997 amounts have been reclassified to conform with the
1998 presentation.

2.   Related Party Investments and Receivables:

      Related party receivables--net represent advances to managed partnerships
(see Note 11), John J. Rigas and certain members of his immediate family,
including entities they own or control (collectively, the "Rigas family").
No related party advances are collateralized.

      Cumulative equity in loss in excess of investment in and amounts due from
Olympus is comprised of the following:

                                                     March 31,
                                            --------------------------
                                                 1997         1998
                                            ------------- ------------
 Cumulative equity in loss over investment
 in Olympus                                 $  (95,771)   $ (94,833)
 Amounts due from Olympus                       53,103       63,631
                                            -----------   ---------
                                            $   (42,668)  $ (31,202)
                                            ===========   =========



      On March 28, 1996, ACP, Telesat, Olympus, Adelphia and certain
shareholders of Adelphia entered into an agreement which amended certain aspects
of the Olympus Partnership Agreement. The amendment provides for the repayment
of certain amounts owed to Telesat totaling $20,000, the release of certain
obligations of Telesat to Olympus and the reduction of Telesat's PLP and accrued
priority return balances by $20,000. The amendment further provides for a
$40,000 distribution to Adelphia as a reduction of its PLP interests and accrued
priority return. These repayments and distributions were made on March 29, 1996
and were funded through internally generated funds and advances from an
affiliate. At March 31, 1996, 1997 and 1998 Adelphia owned $222,860, $271,546,
and $325,911 in Olympus PLP Interests, respectively.

      The major components of the financial position of Olympus as of December
31, 1996 and 1997 and March 31, 1997 and 1998 and the results of operations for
the years ended December 31, 1996 and 1997 and the three months ended March 31,
1997 and 1998 were as follows:
 <TABLE> 
<CAPTION>


                                                      December 31,               March 31,
                                              ------------------------- -------------------------
                                                   1996         1997         1997         1998
                                              ------------ ------------ ------------ ------------
Balance Sheet Data:                                                            (unaudited)
<S>                                          <C>             <C>          <C>          <C>
Property, plant and equipment--net            $   225,775    $ 265,783    $ 229,140    $ 273,162
Total assets                                      640,221      728,952      627,392      732,336
Subsidiary debt                                   309,000      427,000      294,000      470,000
Parent debt                                       200,000      200,000      200,000      200,000
Total liabilities                                 724,420      841,169      715,309      849,582
Limited partners' interests                       407,669      488,378      427,325      508,873
General partners' equity (deficiency)            (491,868)    (600,615)    (515,242)    (626,119)

Statement of Operations Data:
Revenues                                     $    159,870    $ 176,363    $  41,411    $  50,918
Operating income                                   33,013       34,392        7,735        9,642
Net loss                                          (10,950)     (19,802)      (5,318)      (4,663)
Net loss of general and limited partners
after priority return                             (76,594)     (95,695)     (23,324)     (25,455)
</TABLE>

<PAGE>


      On October 6, 1993, Adelphia purchased the preferred Class B Limited
Partnership Interest in Syracuse Hilton Head Holdings, L.P. ("SHHH"), a managed
partnership, for a price of $18,338 from Robin Media Group. SHHH is a joint
venture of the Rigas Family and Tele-Communications, Inc. ("TCI"), which owns
systems managed by Adelphia. The Class B Limited Partnership Interest has a
preferred return annually which is payable on a current basis at the option of
SHHH, and is senior in priority to the partnership interests of the Rigas family
and TCI. Preferred return on the Class B Limited Partner Interest in SHHH
totaled $2,645, $3,066 and $3,750 and is included in revenues for the years
ended March 31, 1996, 1997 and 1998, respectively.

      During the year ended March 31, 1994, Adelphia made loans in the net
amount of $15,000 to SHHH, to facilitate the acquisition of cable television
systems serving Palm Beach County, Florida from unrelated parties. During fiscal
year 1995, Adelphia sold its investment in Tele-Media Investment Partnership,
L.P. ("TMIP") to SHHH for $13,000. On January 31, 1995, a wholly owned
subsidiary of Adelphia received a $20,000 preferred investment from SHHH to
facilitate the acquisition of TMV cable properties.

3. Debt:


Subsidiary Debt

                                                                March 31,
                                                       -------------------------
                                                           1997         1998
                                                       -------------------------
Notes to banks and institutions                        $1,159,500   $  827,725
13% Senior Discount Notes of Hyperion due 2003            187,173      215,213
12 1/4% Senior Secured Notes of Hyperion due 2004            --        250,000
Other subsidiary debt                                      22,694       36,533
                                                       ----------   ----------
Total subsidiary debt                                  $1,369,367   $1,329,471
                                                       ==========   ==========


    Notes to Banks and Institutions

      The amount of borrowings available to Adelphia under its revolving credit
agreements is generally based upon the subsidiaries achieving certain levels of
operating performance. Adelphia had commitments from banks for additional
borrowings of up to $235,620 at March 31, 1998 which expire through December 31,
2004. Adelphia pays commitment fees of up to .5% of unused principal.

      Borrowings under most of these credit arrangements of subsidiaries are
collateralized by a pledge of the stock in their respective subsidiaries, and,
in some cases, by other assets. These agreements limit, among other things,
additional borrowings, investments, transactions with affiliates and other
subsidiaries, and the payment of dividends and fees by the subsidiaries. The
agreements also require maintenance of certain financial ratios by the
subsidiaries. Several of the subsidiaries' agreements, along with the notes of
the parent company, contain cross default provisions. At March 31, 1998,
approximately $442,000 of the net assets of subsidiaries would be permitted to
be transferred to the parent company in the form of dividends, priority return
and loans without the prior approval of the lenders based upon the results of
operations of such subsidiaries for the quarter ended March 31, 1998. The
subsidiaries are permitted to pay management fees to the parent company or other
subsidiaries. Such fees are limited to a percentage of the subsidiaries'
revenues.

      A subsidiary of Adelphia is a co-borrower with a managed partnership under
a $200,000 credit agreement. Each of the co-borrowers is liable for all
borrowings under this credit agreement, although the lenders have no recourse
against Adelphia other than against Adelphia's interest in such subsidiary.

      Notes to banks and institutions mature at various dates through 2005. Bank
debt interest rates are based upon one or more of the following rates at the
option of Adelphia: prime rate plus 0% to 1.5%; certificate of deposit rate plus
1.25% to 2.75%; or LIBOR plus 1% to 2.5%. Total bank debt with interest rates
under these options was $813,200 and $644,000 at March 31, 1997 and 1998,

<PAGE>

respectively. At March 31, 1997 and 1998, the weighted average interest rate on
notes payable to banks and institutions was 8.83% and 8.11%, respectively. At
March 31, 1997 and 1998, the rates on 45.5% and 28.8%, respectively, of
Adelphia's notes payable to banks and institutions were fixed for at least one
year through the terms of the notes or interest rate swap agreements. During
fiscal 1997, as a result of a bank refinancing, Adelphia recognized an
extraordinary loss on early retirement of debt of $2,079 representing the
write-off of unamortized debt financing costs.

    13% Senior Discount Notes of Hyperion due 2003

      On April 15, 1996, Hyperion realized proceeds, net of discount,
commissions and other transaction costs, of $168,600 upon issuance of $329,000
aggregate principal amount of unsecured 13% Senior Discount Notes due April 15,
2003 and 329,000 warrants expiring April 1, 2001 to purchase an aggregate of
1,993,638 shares of Class A Common Stock of Hyperion at $0.00308 per share.
Proceeds of $11,087 were allocated to the value of the warrants. If all warrants
were exercised, the warrants would represent approximately 3.73% of the common
stock of Hyperion on a fully diluted basis. Proceeds were used to repay certain
indebtedness to Adelphia, to make loans to certain key Hyperion officers and to
fund Hyperion's expansion of its existing markets, to complete construction of
new networks and to enter additional markets, including related capital
expenditures, working capital requirements, operating losses and investments in
joint ventures. Prior to April 15, 2001, interest on the notes is not payable in
cash, but is added to principal. Thereafter, interest is payable semi-annually
commencing October 15, 2001. The notes contain restrictions on Hyperion
regarding, among other things, limitations on additional borrowings, issuance of
equity instruments, payment of dividends and other distributions, repurchase of
equity instruments or subordinated debt, liens, transactions with affiliates,
sales of assets, mergers and consolidations. On or before April 15, 1999 and
subject to certain restrictions, Hyperion may redeem, at its option, up to 25%
of the aggregate principal amount of the notes at a price of 113% of the
outstanding amount. On or after April 15, 2001, Hyperion may redeem, at its
option, all or a portion of the notes at 106.5% of the outstanding amount,
declining to par in 2002.

    12 1/4% Senior Secured Notes of Hyperion due 2004

      On August 27, 1997, Hyperion issued $250,000 aggregate principal amount of
12 1/4% Senior Secured Notes due September 1, 2004. The notes are collateralized
through the pledge of the common stock of certain of Hyperion's wholly-owned
subsidiaries. Of the proceeds to Hyperion of approximately $244,000, net of
commissions and other transaction costs, $83,400 was invested in U.S. government
securities and placed in an escrow account for payment in full when due of the
first six scheduled semi-annual interest payments on the notes as required by
the Indenture. The remainder of such proceeds will be used to fund the
acquisition of increased ownership interests in certain of its networks, for
capital expenditures, including the construction and expansion of new and
existing networks, and for general corporate and working capital purposes.
Interest is payable semi-annually commencing March 1, 1998. The notes contain
restrictions and covenants similar to those pertaining to Hyperion's 13% Senior
Discount Notes. On or before September 1, 2000 and subject to certain
restrictions, Hyperion may redeem, at its option, up to 25% of the aggregate
principal amount of the notes at a price of 112.25% of principal with the net
proceeds of one or more Qualified Equity Offerings (as defined in the
Indenture). On or after September 1, 2001, Hyperion may redeem, at its option,
all or a portion of the notes at 106.125% of principal which declines to par in
2003.



<PAGE>



Parent Debt


      Interest on the Parent Debt is due semi-annually. The Parent Debt is
effectively subordinated to all liabilities of the subsidiaries and the
agreements contain restrictions on, among other things, the incurrence of
indebtedness, mergers and sale of assets, certain restricted payments by
Adelphia, investments in affiliates and certain other affiliate transactions.
The agreements further require that Adelphia maintain a ratio of debt to
annualized operating cash flow not greater than 8.75 to 1.00, based on the
latest fiscal quarter. Net proceeds from the issuance of notes during fiscal
1996, 1997, and 1998 were used to reduce amounts outstanding on Adelphia's
subsidiaries' notes payable to banks and to purchase, redeem or otherwise retire
a portion of 12 1/2% Notes due 2002.
<TABLE>
<CAPTION>

                                Outstanding as of
              Interest       Issue         Amount          March 31,           Maturity   First Call  First Call
                Rate         Date          Issued      1997          1998        Date        Date        Rate

<S>        <C>              <C>        <C>           <C>           <C>          <C>       <C>       <C>
           10  1/4%         7/28/93    $  110,000    $   99,322    $   99,504   7/15/00    Non-call      N/A
           12  1/2% (a)     5/14/92       400,000       277,385        69,838   5/15/02    5/15/97    106.00%
            9  1/4%         9/25/97       325,000           --        325,000   10/1/02    Non-call      N/A
            9  1/2% (b)     2/15/94       150,000       197,897       186,347   2/15/04    2/15/99    103.56%
           10  1/2%         7/07/97       150,000           --        150,000   7/15/04    Non-call      N/A
           11  7/8%         9/10/92       125,000       124,539       124,579   9/15/04    9/15/99    104.50%
            9  7/8%         3/11/93       130,000       128,255       128,407   3/01/05    Non-call      N/A
            9  7/8%         2/26/97       350,000       347,274       347,446   3/01/07    Non-call      N/A
            8  3/8%         1/15/98       150,000           --        149,153   1/15/08    Non-call      N/A
                                                     ----------    ----------
                                                     $1,174,672    $1,580,274
                                                     ==========    ==========
<FN>

(a)  During fiscal 1997, $122,615 of notes were reacquired through open market
     purchases. As a result, Adelphia recognized an extraordinary loss on early
     retirement of debt of $9,631, which represents the excess of reacquisition
     cost over the net carrying value of the related debt. On October 31, 1997,
     Adelphia redeemed $202,000 aggregate principal amount of notes at 106% of
     principal and recognized an extraordinary loss on early retirement of debt
     of $13,461, which represents the excess of reacquisition cost over the net
     carrying value of the related debt. On May 15, 1998, Adelphia redeemed the
     remaining $69,838 aggregate principal amount of notes at 103% of principal.

(b)  On or prior to February 1999, all interest on these Senior Pay-In-Kind
     notes may at the option of Adelphia be paid in cash or through the issuance
     of additional notes valued at 100% of their principal amount. The notes
     will bear cash interest from February 1999 through maturity. During fiscal
     1998, $20,000 of notes were reacquired through open market purchases. As a
     result, Adelphia recognized an extraordinary gain on early retirement of
     debt of $2,136.

</FN>
</TABLE>




<PAGE>



Maturities of Debt

      The following table sets forth the mandatory reductions in principal under
all debt agreements for each of the next five years based on amounts outstanding
at March 31, 1998:

            Year ending March 31, 1999..............$    128,213
            Year ending March 31, 2000..............      50,268
            Year ending March 31, 2001..............     169,288
            Year ending March 31, 2002..............     157,740
            Year ending March 31, 2003..............     573,091


      The Company intends to fund its requirements for maturities of debt
through borrowings under new and existing credit arrangements and internally
generated funds. Changing conditions in the financial markets may have an impact
on how Adelphia will refinance its debt in the future.

Interest Rate Swaps and Caps

      Adelphia has entered into interest rate swap agreements and interest rate
cap agreements with banks, Olympus and Managed Partnerships (see Note 10) to
reduce the impact of changes in interest rates on its debt. Several of
Adelphia's credit arrangements include provisions which require interest rate
protection for a portion of its debt. Adelphia enters into pay-fixed agreements
to effectively convert a portion of its variable-rate debt to fixed-rate debt to
reduce the risk of incurring higher interest costs due to rising interest rates.
Adelphia enters into receive-fixed agreements to effectively convert a portion
of its fixed-rate debt to a variable-rate debt which is indexed to LIBOR to
reduce the risk of incurring higher interest costs in periods of falling
interest rates. Interest rate cap agreements are used to reduce the impact of
increases in interest rates on variable rate debt. Adelphia is exposed to credit
loss in the event of nonperformance by the banks, by Olympus or by the managed
entities. Adelphia does not expect any such nonperformance. The following table
summarizes the notional amounts outstanding and weighted average interest rate
data, based on variable rates in effect at March 31, 1997 and 1998, for these
swaps and caps, all of which expire through 1999.

                                                              March 31,
                                                     -----------------------
     Pay Fixed Swaps:                                    1997        1998
     ----------------                                                    
                                                     ----------    ---------
     Notional amount  ...............................$  340,000    $ 315,000
     Average receive rate............................     5.67%        5.87%
     Average pay rate ...............................     7.64%        7.42%

     Receive Fixed Swaps:
     Notional amount  ...............................$  35,000     $  35,000
     Average receive rate............................    5.68%         5.68%
     Average pay rate ...............................    5.50%         5.91%

     Interest Rate Caps:
     Notional amount  ...............................$ 165,000    $  190,000
     Average cap rate ...............................    8.30%         8.13%


4.    Redeemable Preferred Stock:

    12 7/8% Hyperion Redeemable Exchangeable Preferred Stock

      On October 9, 1997, Hyperion issued $200,000 aggregate liquidation
preference of 12 7/8% Senior Exchangeable Redeemable Preferred Stock due October
15, 2007. Proceeds to Hyperion will be used to fund the acquisition of increased
ownership interests in certain of its networks, for capital expenditures,
including the construction and expansion of new and existing networks, and for
general corporate and working capital purposes.
<PAGE>

      Dividends are payable quarterly commencing January 15, 1998 at 12 7/8% of
the liquidation preference of outstanding preferred stock. Through October 15,
2002, dividends are payable in cash or additional shares of preferred stock at
Hyperion's option. Subsequent to October 15, 2002, dividends are payable in
cash. The preferred stock ranks junior in right of payment to all indebtedness
of Hyperion, its Subsidiaries and Joint Ventures. On or before October 15, 2000,
and subject to certain restrictions, Hyperion may redeem, at it option, up to
35% of the initial aggregate liquidation preference of the preferred stock
originally issued with the net cash proceeds of one or more Qualified Equity
Offerings (as defined in the Certificate of Designation) at a redemption price
equal to 112.875% of the liquidation preference per share of the preferred
stock, plus, without duplication, accumulated and unpaid dividends to the date
of redemption; provided that, after any such redemption, there are remaining
outstanding shares of preferred stock having an aggregate liquidation preference
of at least 65% of the initial aggregate liquidation preference of the preferred
stock originally issued. On or after October 15, 2002, Hyperion may redeem, at
its option, all or a portion of the preferred stock at 106.438% of the
liquidation preference thereof declining to 100% of the liquidation preference
in 2005. Hyperion is required to redeem all of the shares of preferred stock
outstanding on October 15, 2007 at a redemption price equal to 100% of the
liquidation preference thereof, plus, without duplication, accumulated and
unpaid dividends to the date of redemption. The preferred stock contain
restrictions and covenants similar to Hyperion's 13% Senior Discount Notes.

      Hyperion may, at its option, on any dividend payment date, exchange in
whole, but not in part, the then outstanding shares of preferred stock for 12
7/8% Senior Subordinated Debentures due October 15, 2007 which have provisions
consistent with the provisions of the preferred stock. Hyperion satisfied the
dividend requirements on this preferred stock by issuing 6,860 additional shares
of Preferred Stock in January 1998.

    13% Exchangeable Redeemable Preferred Stock

      On July 7, 1997, Adelphia issued $150,000 aggregate liquidation preference
of 13% Cumulative Exchangeable Preferred Stock due July 15, 2009. Proceeds were
used to reduce amounts outstanding on Adelphia's subsidiaries' notes payable to
banks and institutions.

      Dividends are payable semi-annually commencing January 15, 1998 at 13% of
the liquidation preference of outstanding preferred stock. Dividends are payable
in cash with any accumulated unpaid dividends bearing interest at 13% per annum.
The preferred stock ranks junior in right of payment to all indebtedness of
Adelphia. On or before July 15, 2000, Adelphia may redeem, at its option, up to
33% of the initial aggregate liquidation preference of the preferred stock
originally issued with the net cash proceeds of one or more common equity
offerings at a redemption price equal to 113% of the liquidation preference per
share of the preferred stock, plus, without duplication, accumulated and unpaid
dividends to the date of redemption; provided that, after any such redemption,
there are remaining outstanding shares of preferred stock having an aggregate
liquidation preference of at least 67% of the initial aggregate liquidation
preference of the preferred stock originally issued. On or after July 15, 2002,
Adelphia may redeem, at its option, all or a portion of the preferred stock at
106.500% of the liquidation preference thereof declining to 100% of the
liquidation preference in 2008. Adelphia is required to redeem all of the shares
of preferred stock outstanding on July 15, 2009 at a redemption price equal to
100% of the liquidation preference thereof, plus, without duplication,
accumulated and unpaid dividends to the date of redemption. The preferred stock
contains restrictions and covenants similar to Adelphia's parent debt.

      Adelphia may, at its option, on any dividend payment date, exchange in
whole or in part (subject to certain restrictions), the then outstanding shares
of preferred stock for 13% Senior Subordinated Exchange Debentures due July 15,
2009 which have provisions consistent with the provisions of the preferred
stock. The Company paid cash dividends on this preferred stock of $10,183 during
the year ended March 31, 1998.

5.   Commitments and Contingencies:

      Adelphia rents office and studio space, tower sites, and space on utility
poles under leases with terms which are generally less than one year or under
agreements that are generally cancelable on short notice. Total rental expense
under all operating leases aggregated $4,687, $6,232 and $7,420 for the years
ended March 31, 1996, 1997 and 1998, respectively.

      In connection with certain obligations under franchise agreements,
Adelphia obtains surety bonds guaranteeing performance to municipalities and
public utilities. Payment is required only in the event of nonperformance.
Management believes Adelphia has fulfilled all of its obligations such that no
payments under surety bonds have been required.
<PAGE>

      On January 8, 1998, Adelphia signed a definitive agreement to establish a
partnership into which Tele-Communications, Inc. ("TCI") will contribute its
cable systems in Buffalo, New York; Erie, Pennsylvania; and Ashtabula and Lake
County, Ohio, totaling approximately 166,000 subscribers, and Adelphia will
contribute its Western New York and Lorain, Ohio systems, totaling approximately
298,000 subscribers. Upon closing of the transaction, TCI will hold a minority
interest in the partnership. Adelphia will manage the partnership and will
consolidate the partnership's results for financial reporting purposes. The
Company expects that the transaction will close prior to September 30, 1998.

      On March 2, 1998, Adelphia entered into a definitive agreement for the
purchase of cable television systems from Marcus Cable, Inc. These systems will
be acquired for $150,000 cash and serve approximately 62,000 subscribers in
Connecticut and Virginia. The acquisition, which will be accounted for under the
purchase method of accounting, is expected to close during fiscal year 1999.

      The cable television industry and Adelphia are subject to extensive
regulation at the federal, state and local levels. Pursuant to the 1992 Cable
Act, which significantly expanded the scope of regulation of certain subscriber
rates and a number of other matters in the cable industry the FCC has adopted
rate regulations that establish, on a system-by-system basis, maximum allowable
rates for (i) basic and cable programming services (other than programming
offered on a per-channel or per-program basis), based upon a benchmark
methodology, or, in the alternative, a cost of service showing, and (ii)
associated equipment and installation services based upon cost plus a reasonable
profit. Under the FCC rules, franchising authorities are authorized to regulate
rates for basic services and associated equipment and installation services, and
the FCC will regulate rates for regulated cable programming services in response
to complaints filed with the agency. The original rate regulations became
effective on September 1, 1993.
Several amendments to the rate regulations have subsequently been added.

      The FCC has adopted regulations implementing all of the requirements of
the 1992 Cable Act. The FCC is also likely to continue to modify, clarify or
refine the rate regulations. The Telecommunications Act of 1996 (the "1996 Act")
deregulates the rates for cable programming services on March 31, 1999. Adelphia
cannot predict the effect or outcome of the future rulemaking proceedings,
changes to the rate regulations, or litigation.

6. Convertible Preferred Stock, Common Stock and Other Stockholders' Equity
(Deficiency):

    Convertible Preferred Stock

      On July 7, 1997, Adelphia issued 100,000 shares of 8 1/8% Series C
Cumulative Convertible Preferred Stock with a par value of $.01 per share and an
aggregate liquidation preference of $100,000 of which $80,000 was sold to a
Rigas family affiliate and the remainder was sold to a wholly owned subsidiary
of FPL Group, Inc., an affiliate of Olympus. The preferred stock accrues
dividends at the rate of 8 1/8% of the liquidation preference per annum, and is
convertible at $8.48 per share into an aggregate of 11,792,450 shares of Class A
Common Stock of Adelphia. The preferred stock is redeemable at the option of
Adelphia on or after August 1, 2000 at 104% of the liquidation preference
declining to 100% of the liquidation preference in 2002. The Company paid cash
dividends on this preferred stock of $4,605 during the year ended March 31,
1998.

    Common Stock Issued

      On April 3, 1995, Olympus purchased from Adelphia, through a charge to its
receivable balance with Adelphia, 457,300 shares of Adelphia Class A Common
Stock for $5,000. Olympus used the stock in the acquisition of the cable and
security systems of WB Cable Associates, Ltd.

      On February 10, 1997, Adelphia issued 766,871 shares of Class A Common
Stock in connection with the acquisition of Small Cities (see Note 1).

      On June 20, 1997, Adelphia issued 3,571,428 shares of Class A Common Stock
in connection with the acquisition of Booth (see Note 1).

      On March 6, 1998, Adelphia issued 341,220 shares of Class A Common Stock
in connection with exercising its option to purchase the remaining 15% of its
Northeast Cable, Inc. system (see Note 1).
<PAGE>

      The Certificate of Incorporation of Adelphia authorizes two classes of
common stock, Class A and Class B. Holders of Class A Common Stock and Class B
Common Stock vote as a single class on all matters submitted to a vote of the
stockholders, with each share of Class A Common Stock entitled to one vote and
each share of Class B Common Stock entitled to ten votes, except (i) for the
election of directors and (ii) as otherwise provided by law. In the annual
election of directors, the holders of Class A Common Stock voting as a separate
class, are entitled to elect one of Adelphia's directors. In addition, each
share of Class B Common Stock is automatically convertible into a share of Class
A Common Stock upon transfer, subject to certain limited exceptions. In the
event a cash dividend is paid, the holders of Class A Common Stock will be paid
105% of the amount payable per share for each share of Class B Common Stock.

      Upon liquidation, dissolution or winding up of Adelphia, the holders of
Class A Common Stock are entitled to a preference of $1.00 per share. After such
amount is paid, holders of Class B Common Stock are entitled to receive $1.00
per share. Any remaining amount would then be shared ratably by both classes.

    Restricted Stock Bonus Plan

      Adelphia has reserved 500,000 shares of Class A Common Stock for issuance
to officers and other key employees at the discretion of the Compensation
Committee of the Board of Directors. The bonus shares will be awarded without
any cash payment by the recipient unless otherwise determined by the
Compensation Committee. Shares awarded under the plan vest over a five year
period. No awards have been made under the plan.

    Stock Option Plan

      Adelphia has a stock option plan, which provides for the granting of
options to purchase up to 200,000 shares of Adelphia's Class A Common Stock to
officers and other key employees of the Company and its subsidiaries. Options
may be granted at an exercise price equal to the fair market value of the shares
on the date of grant. The plan permits the granting of tax-qualified incentive
stock options, in addition to non-qualified stock options. Options outstanding
under the plan may be exercised by paying the exercise price per share through
various alternative settlement methods. No stock options have been granted under
the plan.

7.   Employee Benefit Plans:

    Savings Plan

      Adelphia has a savings plan (401(k)) which provides that eligible
full-time employees may contribute from 3% to 16% of their pre-tax compensation
subject to certain limitations. Adelphia makes matching contributions not
exceeding 1.5% of each participant's pre-tax compensation. Adelphia's matching
contributions amounted to $350, $638 and $687 for the years ended March 31,
1996, 1997 and 1998, respectively.

    Hyperion Long-Term Incentive Compensation Plan

      On October 3, 1996, Hyperion adopted its 1996 Long-Term Incentive
Compensation Plan (the "1996 Plan"). The 1996 Plan provides for the granting of
(i) options which qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, (ii) options which
do not so qualify, (iii) share awards (with or without restrictions on vesting),
(iv) stock appreciation rights and (v) stock equivalent or phantom units. The
number of shares of Hyperion Class A Common Stock available for issuance
initially was 5,687,500. Such number is to increase each year by 1% of
outstanding shares of all classes of Hyperion Common Stock, up to a maximum of
8,125,000 shares. Options, awards and units may be granted under the 1996 Plan
to directors, officers, employees and consultants. The 1996 Plan provides that
incentive stock options must be granted with an exercise price of not less than
the fair market value of the underlying Hyperion Common Stock on the date of
grant. Options outstanding under the Plan may be exercised by paying the
exercise price per share through various alternative settlement methods. On
March 4, 1997 and April 1, 1997 and 1998, Hyperion issued 338,000 shares, 58,500
shares and 58,500 shares, respectively, of its Class A Common Stock to Daniel R.
Milliard pursuant to his employment agreement with Hyperion. In April 1998 and
in recognition for valuable past service to Hyperion and as an incentive for
future services, Hyperion authorized the issuance under the 1996 Plan to each of
John J. Rigas, Michael J. Rigas, Timothy J. Rigas and James P. Rigas of (i)
stock options (the "Rigas Options") covering 100,000 shares of Hyperion Class A
Common Stock, which options will vest in equal one-third amounts on the third,
fourth and fifth year anniversaries of grant (vesting conditioned on continued

<PAGE>

service as an employee or director) and which shall be exercisable at $15.00 per
share and (ii) phantom stock awards (the "Rigas Grants") covering 100,000 shares
of Hyperion Class A Common Stock, which phantom awards will vest in equal
one-third amounts on the third, fourth and fifth year anniversaries of grant
(vesting conditioned on continued service as an employee or director). Also in
April 1998, pursuant to an existing stockholders agreement, Hyperion authorized
the issuance under the 1996 Plan to certain members of Hyperion's management
stock options (the "Management Stockholder Options") covering 13,047 shares of
Hyperion Class A Common Stock with exercise price and vesting terms identical to
the Rigas Options. In addition to the Rigas Options, the Rigas Grants, the
Management Stockholder Options and the stock options or share awards to be
issued to Daniel R. Milliard under his employment agreement, Hyperion currently
expects to issue under the 1996 Plan stock options, restrictive stock grants,
phantom stock awards or other awards to other 1996 Plan participants covering up
to a total of 325,000 shares of Hyperion Class A Common Stock during fiscal
1999.

8.   Taxes on Income:

      Adelphia and its corporate subsidiaries file a consolidated federal income
tax return, which includes its share of the subsidiary partnerships and joint
venture partnership results. At March 31, 1998, Adelphia had net operating loss
carryforwards for federal income tax purposes of approximately $1.2 billion
expiring through 2013. Depreciation and amortization expense differs for tax and
financial statement purposes due to the use of prescribed periods rather than
useful lives for tax purposes and also as a result of differences between tax
basis and book basis of certain acquisitions.



      The tax effects of significant items comprising Adelphia's net deferred
tax liability are as follows:

                                                              March 31,
                                                      -----------------------
                                                         1997         1998
                                                      -----------------------
 Deferred tax liabilities:
  Differences between book and tax basis of
  property, plant and equipment and
  intangible assets                                   $ 233,998    $ 250,298
                                                      ---------    ---------
 Deferred tax assets:
  Investment in partnerships                             55,786       82,461
  Operating loss carryforwards                          427,400      459,546
                                                      ---------    ---------
                                                        483,186      542,007
  Valuation allowance                                  (359,285)    (408,060)
                                                      ---------    ---------
  Subtotal                                              123,901      133,947
                                                      ---------    ---------
  Net deferred tax liability                          $ 110,097    $ 116,351
                                                      =========    =========

      The net change in the valuation allowance for the years ended March 31,
1997 and 1998 was an increase of $57,800 and $48,775, respectively.

      Income tax benefit is as follows:

                                    March 31,
                                               ----------------------------
                                                   1996      1997     1998
                                               -----------------------------

 Current                                        $  (1,144)  $ (142)  $  (699)
 Deferred                                           3,930      500     6,305
                                                ---------   ------   -------
 Total                                          $   2,786   $  358   $ 5,606
                                                =========   ======   =======



<PAGE>



      A reconciliation of the statutory federal income tax rate and Adelphia's
effective income tax rate is as follows:

                                                        Year Ended March 31,
                                                  -----------------------------
                                                    1996      1997      1998
                                                  -------- --------- ----------
Statutory federal income tax rate                     35%       35%        35%
Change in valuation allowance                        (37%)     (41%)      (26%)
State taxes, net of federal benefit                   (1%)       6%        (1%)
Other                                                  5%        -%        (5%)
                                                  -------- --------- ----------
Effective income tax benefit rate                      2%        -%         3%
                                                  ======== ========= ==========

9. Disclosures about Fair Value of Financial Instruments:

      Included in Adelphia's financial instrument portfolio are cash, notes
payable to banks and institutions, debentures, redeemable preferred stock and
interest rate swaps and caps. The carrying values of notes payable to banks and
institutions approximate their fair values at March 31, 1997 and 1998. The
carrying cost of the publicly traded notes, debentures and redeemable preferred
stock at March 31, 1997 and 1998 were $1,361,845 and $2,400,753, respectively.
At March 31, 1997, the carrying cost exceeded the fair value by $46,828. At
March 31, 1998, the fair value exceeded the carrying cost by $199,296. At March
31, 1997 and 1998, Adelphia would have been required to pay approximately $7,632
and $5,822, respectively, to settle its interest rate swap and cap agreements,
representing the excess of carrying cost over fair value of these agreements.
The fair values of the debt, redeemable preferred stock and interest rate swaps
and caps were based upon quoted market prices of similar instruments or on rates
available to Adelphia for instruments of the same remaining maturities.

10.   Business Segment Information

      Refer to pages 29 and 30 for information regarding business segments for
fiscal 1996, 1997 and 1998.

11.   Related Party Transactions:

      Adelphia currently manages cable television systems which are principally
owned by Olympus and limited partnerships in which certain of Adelphia's
principal shareholders who are executive officers have equity interests.

      Adelphia has agreements with Olympus and the Managed Partnerships which
provide for the payment of fees to Adelphia. The aggregate fee revenues from
Olympus and the Managed Partnerships amounted to $2,700, $2,939 and $3,960 for
the years ended March 31, 1996, 1997 and 1998, respectively. In addition,
Adelphia was reimbursed by Olympus and the Managed Partnerships for allocated
corporate costs of $7,517, $6,335 and $6,436 for the years ended March 31, 1996,
1997 and 1998, respectively, which have been recorded as a reduction of selling,
general and administrative expense.

      Adelphia leases from a partnership owned by principal shareholders who are
executive officers certain buildings under operating leases. Rent expense under
these operating leases aggregated $127, $133 and $104 for the years ended March
31, 1996, 1997 and 1998, respectively.

      Interest expense - net includes interest income from affiliates for long
term borrowings of $10,623, $8,367 and $7,129 for the years ended March 31,
1996, 1997 and 1998, respectively, and for short term borrowings of $9,340 for
the year ended March 31, 1998.

      Adelphia had interest rate swaps with affiliates for a notional amount of
$175,000 for the years ended March 31, 1997 and 1998. Adelphia had $140,000 of
pay fixed swaps with Olympus and $35,000 of received fixed swaps with the
Managed Partnerships for the years ended March 31, 1997 and 1998. These swaps
expire at various dates in 1998. The net effect of these interest rate swaps was
to increase interest expense by $826, $50 and $128 for the years ended March 31,
1996, 1997 and 1998, respectively.

      During the years ended March 31, 1997 and 1998, respectively, Adelphia
paid $2,563 and $2,485 to entities owned by certain shareholders of Adelphia
primarily for property, plant and equipment and services.



<PAGE>



12.   Quarterly Financial Data (Unaudited):

      The following tables summarize the financial results of Adelphia for each
of the quarters in the years ended March 31, 1997 and 1998:

<TABLE>
<CAPTION>

                                                                            Three Months Ended
                                                              ------------------------------------------------
                                                                June 30   September 30  December 31   March 31
                                                              ------------ ------------ ------------ ---------
Year Ended March 31, 1997:
<S>                                                           <C>          <C>          <C>          <C>
Revenues                                                      $ 111,011    $ 117,437    $ 122,127    $ 122,203
                                                              ---------    ---------    ---------    ---------

Operating expenses:
Direct operating and programming                                 33,597       35,864       39,005       40,516
Selling, general and administrative                              18,638       20,175       22,319       20,631
Depreciation and amortization                                    28,477       30,262       30,813       34,514
                                                              ---------    ---------    ---------    ---------
Total                                                            80,712       86,301       92,137       95,661
                                                              ---------    ---------    ---------    ---------
Operating income                                                 30,299       31,136       29,990       26,542
                                                              ---------    ---------    ---------    ---------
Other income (expense):
Priority investment income from Olympus                           9,817       10,273       10,542       11,454
Interest expense - net                                          (58,447)     (58,806)     (57,201)     (57,871)
Equity in loss of Olympus and other joint ventures              (13,011)     (11,916)     (14,061)     (12,958)
Equity in loss of Hyperion joint ventures                        (1,636)      (1,362)      (2,145)      (2,080)
Gain on sale of investments                                       8,405         --           --          3,746
                                                              ---------    ---------    ---------    ---------
Total                                                           (54,872)     (61,811)     (62,865)     (57,709)
                                                              ---------    ---------    ---------    ---------
Loss before income taxes and extraordinary loss                 (24,573)     (30,675)     (32,875)     (31,167)
Income tax (expense) benefit                                       (166)         175           55          294
                                                              ---------    ---------    ---------    ---------
Loss before extraordinary loss                                  (24,739)     (30,500)     (32,820)     (30,873)
Extraordinary loss on early retirement of debt                   (2,079)        --           --         (9,631)
                                                              ---------    ---------    ---------    ---------
Net loss                                                      $ (26,818)   $ (30,500)   $ (32,820)   $ (40,504)
                                                              =========    =========    =========    =========

Basic and diluted loss per weighted average share of common
stock before
extraordinary loss                                            $   (0.94)   $   (1.16)   $   (1.25)   $   (1.15)
Basic and diluted extraordinary loss per weighted average
share on early retirement of debt                                 (0.08)        --           --          (0.36)
                                                              ---------    ---------    ---------    ---------
Basic and diluted net loss per weighted average share of
common stock                                                  $   (1.02)   $   (1.16)   $   (1.25)   $   (1.51)
                                                              =========    =========    =========    =========
Weighted average shares of common stock outstanding (in
thousands)                                                       26,308       26,308       26,308       26,726
                                                              =========    =========    =========    =========



<PAGE>



                                                                               Three Months Ended
                                                               ---------------------------------------------------
                                                               June 30     September 30  December 31   March 31
                                                             ------------- ------------ ------------ ------------
Year  ended March 31, 1998:
Revenues                                                      $ 122,644    $ 128,990    $ 138,271    $ 138,537
                                                              ---------    ---------    ---------    ---------
Operating expenses:
Direct operating and programming                                 39,673       38,540       43,711       45,364
Selling, general and administrative                              22,259       23,472       24,354       25,646
Depreciation and amortization                                    33,733       33,586       37,251       40,471
                                                              ---------    ---------    ---------    ---------
Total                                                            95,665       95,598      105,316      111,481
                                                              ---------    ---------    ---------    ---------
Operating income                                                 26,979       33,392       32,955       27,056
                                                              ---------    ---------    ---------    ---------
Other income (expense):
Priority investment income from Olympus                          11,765       12,000       12,000       12,000
Interest expense - net                                          (61,737)     (62,432)     (63,172)     (59,766)
Equity in loss of Olympus and other joint ventures              (19,198)     (14,840)     (16,012)     (16,039)
Equity in loss of Hyperion joint ventures                        (2,540)      (3,886)      (2,858)      (3,683)
Hyperion preferred stock dividends                                 --           --         (5,988)      (6,694)
Gain on sale of investments                                        --            610          408        1,520
                                                              ---------    ---------    ---------    ---------
Total                                                           (71,710)     (68,548)     (75,622)     (72,662)
                                                              ---------    ---------    ---------    ---------
Loss before income taxes and extraordinary gain (loss)          (44,731)     (35,156)     (42,667)     (45,606)
Income tax benefit (expense)                                         70         (365)        (264)       6,165
                                                              ---------    ---------    ---------    ---------
Loss before extraordinary gain (loss)                           (44,661)     (35,521)     (42,931)     (39,441)
Extraordinary gain (loss) on early retirement of debt             2,300         --        (13,625)        --
                                                              ---------    ---------    ---------    ---------
Net loss                                                        (42,361)     (35,521)     (56,556)     (39,441)
Dividend requirements applicable to preferred stock                --         (4,550)      (7,448)      (6,852)
                                                              ---------    ---------    ---------    ---------
Net loss applicable to common stockholders                    $ (42,361)   $ (40,071)   $ (64,004)   $ (46,293)
                                                              =========    =========    =========    =========

Basic and diluted loss per weighted average share of common
stock before extraordinary gain (loss)                        $   (1.62)   $   (1.31)   $   (1.64)   $   (1.51)
Basic and diluted extraordinary gain (loss) per weighted
average share on early retirement of debt                          0.08         --          (0.45)        --
                                                              ---------    ---------    ---------    ---------
Basic and diluted net loss per weighted average share of
common stock                                                  $   (1.54)   $   (1.31)   $   (2.09)   $   (1.51)
                                                              =========    =========    =========    =========

Weighted average shares of common stock outstanding (in
thousands)                                                       27,468       30,647       30,647       30,730
                                                              =========    =========    =========    =========

</TABLE>

13.   Subsequent Events:

      On April 1, 1998, the Company completed an exchange of cable systems with
Time Warner. The Company exchanged its interests in Mansfield, Ohio area
systems, which served approximately 64,400 subscribers for cash and interests in
systems adjacent to systems owned or managed by Adelphia in Virginia, New
England and New York, which served approximately 70,200 subscribers.

      On May 8, 1998, Hyperion completed an initial public offering ("IPO") of
its Class A Common Stock ("Hyperion Stock"). As part of the offering, Adelphia
purchased an incremental 3,324,001 shares of Hyperion Stock for $49,900 and
converted indebtedness owed to the Company by Hyperion into 3,642,666 shares of
Hyperion Stock. Adelphia owns approximately 66% of the Hyperion common stock on
a fully diluted basis and 85% of the total voting power. Additional net proceeds
of approximately $192,000 to Hyperion were received as a result of the sale of
Hyperion Stock to the public.

      On May 15, 1998,  Adelphia redeemed $69,838  aggregate  principal amount 
of 12 1/2% Senior Notes due 2002 at 103% of principal.



<PAGE>




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

      Not applicable.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The information set forth above in Part I under the caption "Executive
Officers of the Registrant" is incorporated herein by reference. The other
information required by this item is incorporated herein by reference to the
information set forth under the caption "Election of Directors - Description of
Board of Directors"; the information set forth under the caption "Election of
Directors - Nominee for Election by Holders of Class A Common Stock"; the
information set forth under the caption "Election of Directors - Nominees for
Election by Holders of Class A Common Stock and Class B Common Stock"; and the
information, if any, under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance," in the Company's definitive proxy statement for the 1998
Annual Meeting of Stockholders filed pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended, or by reference to a filing
amending this Annual Report on Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

      The information required by this item is incorporated herein by reference
to the information set forth under the caption "Executive Compensation" in the
Company's definitive proxy statement for the 1998 Annual Meeting of Stockholders
filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, or by reference to a filing amending this Annual Report on Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The information required by this item is incorporated herein by reference
to the information set forth under the caption "Principal Stockholders" in the
Company's definitive proxy statement for the 1998 Annual Meeting of Stockholders
filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, or by reference to a filing amending this Annual Report of Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by this item is incorporated herein by reference
to the information set forth under the caption "Certain Transactions" in the
Company's definitive proxy statement for the 1998 Annual Meeting of Stockholders
filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, or by reference to a filing amending this Annual Report on Form 10-K.

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

      Financial Statements, schedules and exhibits not listed have been omitted
where the required information is included in the consolidated financial
statements or notes thereto, or is not applicable or required.
         (a)(1)  A listing of the consolidated financial statements, notes and 
                  independent auditors' reports required
                  in Item 8 are listed on pages 40 and 41 of this Annual
                  Report on Form 10-K.


<PAGE>



              (2)  Financial Statement Schedules:
                            The following are included in this Report:
                           Schedule I  -- Condensed Financial Information of the
                            Registrant
                           Schedule II -- Valuation and Qualifying Accounts

               (3) Exhibits
<TABLE>
<CAPTION>


Exhibit
   No.    Description


<S>       <C>
   3.01   Certificate of Incorporation of Adelphia Communications Corporation (Incorporated herein by reference is
          Exhibit 3.01 to the Registrant's Current Report on Form 8-K dated July 24, 1997.)  (File Number
          0-16014)

   3.02   Bylaws of Adelphia Communications Corporation (Incorporated herein by
          reference is Exhibit 3.02 to Registrant's Annual Report on Form 10-K
          for the fiscal year ended March 31, 1994.) (File Number 0-16014)

   4.01   Indenture, dated as of February 26, 1997, between the Registrant and
          Bank of Montreal Trust Company with respect to the Registrant's 9-7/8%
          Senior Notes Due 2007 (Incorporated herein by reference is Exhibit
          4.01 to Registrant's Current Report on Form 8-K dated May 1, 1997.)
          (File Number 0-16014)

   4.02   Form of Note with respect to the Registrant's 9-7/8% Senior Notes Due 2007 (contained in Indenture filed
          as Exhibit 4.01.)

   4.03   Registration Rights Agreement, dated as of February 26, 1997, between
          the Registrant and the Initial Purchaser with respect to the
          Registrant's 9-7/8% Senior Notes Due 2007 (Incorporated herein by
          reference is Exhibit 10.01 to Registrant's Current Report on Form 8-K
          dated May 1, 1997.) (File Number 0-16014)

   4.04   First Supplemental Indenture, dated as of May 4, 1994, with respect to
          Registrant's 9-1/2% Senior Pay-In-Kind Notes Due 2004 (Incorporated
          herein by reference is Exhibit 4.01 to Registrant's Current Report on
          Form 8-K dated May 5, 1994.) (File Number 0-16014)

   4.05   Indenture, dated as of February 22, 1994, with respect to Registrant's
          9-1/2% Senior Pay-In-Kind Notes Due 2004 (Incorporated herein by
          reference is Exhibit 4.05 to Registration Statement No. 33-52513 on
          Form S-4.)

   4.06   Indenture, dated as of July 28, 1993, with respect to Registrant's
          10-1/4% Senior Notes Due 2000 (Incorporated herein by reference is
          Exhibit 4.01 to Registrant's Quarterly Report on Form 10-Q for the
          quarter ended June 30, 1993.) (File Number 0-16014)

   4.07   Amended and Restated Indenture, dated as of May 11, 1993, with respect
          to Registrant's 9-7/8% Senior Debentures Due 2005 (Incorporated herein
          by reference is Exhibit 4.01 to Registrant's Annual Report on Form
          10-K for the fiscal year ended March 31, 1993.) (File Number 0-16014)

   4.08   Indenture, dated as of September 2, 1992, with respect to the
          Registrant's 11-7/8% Senior Debentures Due 2004 (Incorporated herein
          by reference is Exhibit 4.03 to Registration Statement No. 33-52630 on
          Form S-1.)

   4.09   Indenture, dated as of May 7, 1992, with respect to the Registrant's
          12-1/2% Senior Notes Due 2002 (Incorporated herein by reference is
          Exhibit 4.03 to Registrant's Annual Report on Form 10-K for the fiscal
          year ended March 31, 1992.) (File Number 0-16014)
<PAGE>

   4.10   Indenture, dated as of April 15, 1996, between Hyperion
          Telecommunications, Inc. and Bank of Montreal Trust Company
          (Incorporated by reference is Exhibit 4.1 to Registration Statement
          No. 333-06957 on Form S-4 filed for Hyperion Telecommunications, Inc.)

   4.11   Form of 13% Hyperion Telecommunications, Inc. Senior Discount Notes
          (Incorporated herein by reference is Exhibit 4.3 to Hyperion
          Telecommunications, Inc.'s Registration Statement No. 333-12619 on
          Form S-3, formerly on Form S-1.)

   4.12   First Supplemental Indenture, dated as of September 11, 1996, between
          Hyperion Telecommunications, Inc. and Bank of Montreal Trust Company
          (Incorporated herein be reference is Exhibit 4.2 of Hyperion
          Telecommunications, Inc.'s Registration Statement No. 333-12619 on
          Form S-3, formerly on Form S-1.)

   4.13   Indenture, dated as of November 12, 1996, between Olympus
          Communications, L.P., Olympus Capital Corporation and Bank of Montreal
          Trust Company (Incorporated herein by reference is Exhibit 10.02 to
          Registrant's Current Report on Form 8-K dated December 16, 1996.)
          (File Number 0-16014)

   4.14   Certificate of Designations for 13% Series A and Series B Cumulative
          Exchangeable Preferred Stock (Contained in Exhibit 3.01 to
          Registrant's Current Report on Form 8-K dated July 24, 1997, which is
          incorporated herein by reference.) (File Number 0-16014)

   4.15   Certificate of Designations for Series C Convertible Preferred Stock (Contained in Exhibit 3.01 to
          Registrant's Current Report on Form 8-K dated July 24, 1997, which is incorporated herein by
          reference.) (File Number 0-16014)

   4.16   Indenture, dated as of July 7, 1997, with respect to the Registrant's
          10 1/2% Senior Notes due 2004, between the Registrant and the Bank of
          Montreal Trust Company (Incorporated herein by reference is Exhibit
          4.03 from the Registrant's Current Report on Form 8-K dated July 24,
          1997.) (File Number 0-16014)

   4.17   Form of 10 1/2% Senior Note Due 2004 (Contained in Exhibit 4.03 to Registrant's Current Report on
          Form 8-K dated July 24, 1997 which is incorporated herein by reference.) (File Number 0-16014)

   4.18   Form of Indenture, with respect to the Registrant's 13% Senior
          Subordinated Exchange Debentures due 2009, between the Registrant and
          the Bank of Montreal Trust Company (Contained in Exhibit 3.01 as Annex
          A to Registrant's Current Report on Form 8-K dated July 24, 1997,
          which is incorporated herein by reference.) (File Number 0-16014)

   4.19   Form of Certificate for 13% Cumulative Exchangeable Preferred Stock (Incorporated herein by reference
          is Exhibit 4.06 from the Registrant's Current Report on Form 8-K dated July 24, 1997.) (File Number
          0-16014)

   4.20   Form of Certificate for Series C Convertible Preferred Stock (Incorporated herein by reference is
          Exhibit 4.06 from the Registrant's Current Report on Form 8-K dated July 24, 1997.) (File Number
          0-16014)

   4.21   Indenture, dated as of August 27, 1997, with respect to Hyperion
          Telecommunications, Inc. ("Hyperion") 12 1/4% Senior Secured Notes due
          2004, between Hyperion and the Bank of Montreal Trust Company
          (Incorporated herein by reference to Exhibit 4.01 to Hyperion's
          Current Report on Form 8-K dated August 27, 1997.) (File No. 0-21605)

   4.22   Form of 12 1/4% Senior Secured Note due 2004 (contained in Exhibit 4.21).
<PAGE>

   4.23   Second Supplemental Indenture, dated as of August 27, 1997, between
          Hyperion and the Bank of Montreal Trust Company, regarding Hyperion's
          13% Senior Discount Notes due 2003 (Incorporated by reference herein
          to Exhibit 4.06 to Hyperion's Current Report on Form 8-K dated August
          27, 1997.) (File No.
          0-21605)

   4.24   Indenture, dated as of September 25, 1997, with respect to the
          Registrant's 9 1/4% Senior Notes due 2002, between the Registrant and
          the Bank of Montreal Trust Company (Incorporated herein by reference
          is Exhibit 4.01 from the Registrant's Current Report on Form 8-K,
          dated September 25, 1997.) (File Number 0-16014)

   4.25   Registration Rights Agreement between Adelphia Communications
          Corporation and the Initial Purchaser, dated September 25, 1997,
          regarding the Registrant's 9 1/4% Senior Notes due 2002 (Incorporated
          herein by reference is Exhibit 4.02 from the Registrant's Current
          Report on Form 8-K, dated September 25, 1997.) (File Number 0-16014)

   4.26   Form of 9 1/4% Senior Note due 2002 (contained in Exhibit 4.25).

   4.27   Indenture, dated as of January 21, 1998, with respect to the
          Registrant's 8 3/8% Senior Notes due 2008, between the Registrant and
          the Bank of Montreal Trust Company (Incorporated by reference herein
          is Exhibit 4.01 from the Registrant's Current Report on Form 8-K dated
          January 21, 1998.) (File No.
          0-10614)

   4.28   Registration Rights Agreement between Adelphia Communications
          Corporation and the Initial Purchaser, dated January 21, 1998,
          regarding the Registrant's 8 3/8% Senior Notes due 2008 (Incorporated
          by reference herein is Exhibit 4.02 from the Registrant's Current
          Report on Form 8-K dated January 21, 1998.) (File No. 0-16014)

   4.29   Form of 8 3/8% Senior Note due 2008 (contained in Exhibit 4.28).

  10.01   Class B Common Stockholders Agreement (Incorporated herein by reference is Exhibit 10.01 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.02   Joinder to Class B Common Stockholders Agreement (Incorporated herein by reference is Exhibit 10.02
          to Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1994.) (File
          Number 0-16014)

  10.03   Registration Rights Agreement and Amendment to Registration Rights
          Agreement (Incorporated herein by reference are Exhibit 10.02 to
          Registration Statement No. 33-6974 on Form S-1 and Exhibit 10.35 to
          Registration Statement No. 33-25121 on Form S-1.)

  10.04   Form of Management Agreement for Managed Companies (Incorporated herein by reference is Exhibit 10.04 to
          the Registrant's Annual Report on Form 10-K for fiscal year ended March 31, 1996.) (File Number 0-16014)

  10.05   Management Agreement--Montgomery Cablevision Associates, L.P.
          (Incorporated herein by reference is Exhibit 10.08 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.06   Management Agreement--Adelphia Cablevision Associates of Radnor, L.P.
          (Incorporated herein by reference is Exhibit 10.09 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.07*  Stock Option Plan of 1986, as amended (Incorporated herein by reference is Exhibit 10.07 to Registration
          Statement No. 33-46551 on Form S-1.)
<PAGE>

  10.08*   Restricted Stock Bonus Plan, as amended (Incorporated herein by reference is Exhibit 10.08 to
          Registration Statement No. 33-46551 on Form S-1.)

  10.09   Business Opportunity Agreement (Incorporated herein by reference is Exhibit 10.13 to Registration
          Statement No. 33-3674 on Form S-1.)

  10.10*  Employment Agreement between the Company and John J. Rigas
          (Incorporated herein by reference is Exhibit 10.14 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.11*  Employment Agreement between the Company and Daniel R. Milliard
          (Incorporated herein by reference is Exhibit 10.15 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.12*  Employment Agreement between the Company and Timothy J. Rigas
          (Incorporated herein by reference is Exhibit 10.16 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.13*  Employment Agreement between the Company and Michael J. Rigas
          (Incorporated herein by reference is Exhibit 10.17 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.14*  Employment Agreement between the Company and James P. Rigas
          (Incorporated herein by reference is Exhibit 10.18 to Registration
          Statement No. 33-6974 on Form S-1.)

  10.15   Agreement Regarding Management Fees relating to the subsidiaries of
          Chauncey Communications Corporation (Incorporated herein by reference
          is Exhibit 10.16 of Registrant's Annual Report on Form 10-K for the
          fiscal year ended March 31, 1991.) (File Number 0-16014)

  10.16   Form of Note Agreement, dated as of August 1, 1990, relating to the
          10.66% Senior Secured Notes due August 1, 1998 of Chauncey
          Communications Corporation (Incorporated herein by reference is
          Exhibit 10.01 of Registrant's Quarterly Report on Form 10-Q for the
          quarter ended June 30, 1990.) (File Number 0-16014)

  10.17   Amendatory Agreement regarding Chauncey Communications Corporation
          10.66% Senior Secured Note Agreement, dated as of August 6, 1991
          (Incorporated herein by reference is Exhibit 10.02 of Registrant's
          Quarterly Report on Form 10-Q for the quarter ended September 30,
          1991.) (File Number 0-16014)

  10.18*  $50,000 Term Note and Pledge Agreement between Adelphia Communications
          Corporation as lender and Daniel R. Milliard, dated October 1, 1988
          (Incorporated herein by reference is Exhibit 10.03 of Registrant's
          Quarterly Report on Form 10-Q for the quarter ended September 30,
          1991.) (File Number 0-16014)

  10.19*  $205,000 Revolving Term Note and Pledge Agreement among Adelphia
          Communications Corporation as lender, Daniel R. Milliard and David
          Acker (Incorporated herein by reference is Exhibit 10.04 of
          Registrant's Quarterly Report on Form 10-Q for the quarter ended
          September 30, 1991.) (File Number 0-16014)

  10.20   Olympus Communications, L.P. Second Amended and Restated Limited
          Partnership Agreement, dated as of February 28, 1995 (Incorporated
          herein by reference is Exhibit 10.32 of the Registrant's Annual Report
          on Form 10-K for the fiscal year ended March 31, 1995.) (File Number
          0-16014)

  10.21   Credit, Security and Guaranty Agreement among UCA Corp. and certain of
          its Affiliates and First Union National Bank of North Carolina as
          Administrative Agent, dated as of March 15, 1995 (Incorporated herein
          by reference is Exhibit 10.32 of the Registrant's Annual Report on
          Form 10-K for the fiscal year ended March 31, 1995.) (File Number
          0-16014)
<PAGE>

  10.22   Revolving Credit Facility among Adelphia Cable partners, L.P.,
          Southwest Florida Cable, Inc., West Boca Acquisition Limited
          Partnership and Toronto-Dominion (Texas), Inc., as Administrative
          Agent, dated May 12, 1995 (Incorporated herein by reference is Exhibit
          10.03 to Registrant's Current Report on Form 8-K dated June 30, 1995.)
          (File Number 0-16014)

  10.23   Credit Agreement, dated as of October 27, 1995, among Plato
          Communications, Inc. Northeast Cable, Inc., Robinson/Plum Cablevision
          L.P., the several other banks and other financial institutions from
          time to time parties to this agreement and Chemical Bank, as
          Administrative Agent (Incorporated herein by reference is Exhibit
          10.35 to Registrant's Current Report on Form 8-K dated December 7,
          1995.) (File Number 0-16014)

  10.24   Credit Agreement, dated as of April 12, 1996, among Chelsea
          Communications, Inc., Kittanning Cablevision Inc., Robinson/Plum
          Cablevision L.P., the several banks and financial institutions parties
          thereto, and Toronto Dominion (Texas), Inc. as Administrative Agent
          (Incorporated herein by reference is Exhibit 10.36 to Registrant's
          Current Report on Form 8-K dated June 3, 1996.)
          (File Number 0-16014)

  10.25   Amended Credit Agreement, dated as of March 29, 1996, among Highland
          Video Associates L.P., Telesat Acquisition Limited Partnership, Global
          Acquisition Partners, L.P., the various financial institutions as
          parties thereto, Bank of Montreal as syndication agent, Chemical Bank
          as documentation agent, and the Bank of Nova Scotia as administrative
          agent (Incorporated herein by reference is Exhibit 10.37 to
          Registrant's Current Report on Form 8-K dated June 19, 1996.) (File
          Number 0-16014)

  10.26   Purchase Agreement dated as of April 10, 1996 between Hyperion Telecommunications, Inc. and Bear
          Stearns & Co. Inc., Chase Securities Inc. and NationsBanc Capital Markets, Inc. (Incorporated by
          reference is Exhibit 1.1 to Registration Statement No. 333-06957 on Form S-4 filed for Hyperion
          Telecommunications, Inc.)

  10.27   Purchase Agreement dated as of February 21, 1997 between the
          Registrant and Smith Barney Inc. (Incorporated herein by reference is
          Exhibit 10.02 to Adelphia Communications Corporation's Current Report
          on Form 8-K dated May 1, 1997). (File Number 0-16014)

  10.28   Registration Rights Agreement dated as of April 15, 1996, between
          Hyperion Telecommunications, Inc. and the Initial Purchasers
          (Incorporated by reference is Exhibit 4.3 to Registration Statement
          No. 333-06957 on Form S-4 filed for Hyperion Telecommunications, Inc.)

  10.29   Warrant Agreement dated as of April 15, 1996, by and among Hyperion
          Telecommunications, Inc. and Bank of Montreal Trust Company
          (Incorporated by reference is Exhibit 10.13 to Registration Statement
          No.
          333-06957 on Form S-4 filed for Hyperion Telecommunications, Inc.)

  10.30   Warrant Registration Rights Agreement dated as of April 15, 1996, by
          and among Hyperion Telecommunications, Inc. and the Initial Purchasers
          (Incorporated by reference is Exhibit 10.14 to Registration Statement
          No. 333-06957 on Form S-4 filed for Hyperion Telecommunications, Inc.)

  10.31*  Hyperion Telecommunications, Inc. Long-Term Incentive Compensation Plan (Incorporated herein by
          reference is Exhibit 10.17 to Hyperion Telecommunications, Inc.'s Registration Statement  No. 333-13663
          on Form S-1.)

  10.32   Purchase Agreement, dated as of November 6, 1996, between Olympus
          Communications, L.P., Olympus Capital Corporation and Goldman, Sachs &
          Co. (Incorporated herein by reference is Exhibit 10.01 to Registrant's
          Current Report on Form 8-K dated December 16, 1996.) (File Number
          0-16014)
<PAGE>

  10.33   Registration Rights Agreement among Charles R. Drenning, Paul D. Fajerski, Randolph S. Fowler, Adelphia
          Communications Corporation and Hyperion Telecommunications Inc. (Incorporated herein by reference is Exhibit 10.18 to
          Hyperion Telecommunications, Inc.'s Registration Statement No. 333-13663 on Form S-1.)

  10.34   Registration Rights Agreement between Adelphia Communications
          Corporation and Hyperion Telecommunications Inc. (Incorporated herein by reference is
          Exhibit 10.19 to Hyperion Telecommunications, Inc.'s Registration
          Statement No.
          333-13663 on Form S-1.)

  10.35   First Amendment to the Olympus Communications, L.P. Second Amended and
          Restated Limited Partnership Agreement, dated September 1, 1995
          (Incorporated herein by reference is Exhibit 10.33 to the Registrant's
          Annual Report on Form 10-K/A for the fiscal year ended March 31,
          1996.) (File Number 0-16014)

  10.36   First Amendment to the Olympus Communications, L.P. Second Amended and
          Restated Limited Partnership Agreement, dated March 29, 1996
          (Incorporated herein by reference is Exhibit 10.34 to the Registrant's
          Annual Report on Form 10-K/A for the fiscal year ended March 31,
          1996.) (File Number 0-16014)

  10.37   Second Amendment to the Olympus Communications, L.P. Second Amended
          and Restated Limited Partnership Agreement, dated June 27, 1996
          (Incorporated herein by reference is Exhibit 10.35 to the Registrant's
          Annual Report on Form 10-K/A for the fiscal year ended March 31,
          1996.)
          (File Number 0-16014)

  10.38*  Employment Agreement between Hyperion Telecommunications, Inc. and
          Daniel R. Milliard dated as of March 4, 1997 (Incorporated herein by
          reference is Exhibit 10.03 to Adelphia Communications Corporation's
          Current Report on Form 8-K dated May 1, 1997) (File Number 0-16014)

  10.39   Extension Agreement dated as of January 8, 1997, among Hyperion
          Telecommunications, Inc., Adelphia Communications Corporation, Charles
          R. Drenning, Paul D. Fajerski, Randolph S. Fowler, and six Trusts
          named therein (Incorporated herein by reference is Exhibit 10.04 to
          Adelphia Communications Corporation's Current Report on Form 8-K dated
          May 1, 1997) (File Number 0-16014)

  10.40   Purchase Agreement among Adelphia Communications Corporation, Smith Barney Inc., Bear Stearns & Co.
          Inc., NationsBanc Capital Markets, Inc. and TD Securities (USA) Inc. (the "Initial Purchasers") dated
          July 1, 1997.  (Incorporated herein by reference is Exhibit 10.01 from the Registrant's Current
          Report on Form 8-K dated July 24, 1997.) (File Number 0-16014)

  10.41   Registration Rights Agreement among Adelphia Communications
          Corporation, the Initial Purchasers and Highland Holdings, dated July
          7, 1997, regarding the 13% Cumulative Exchangeable Preferred Stock.
          (Incorporated herein by reference is Exhibit 10.02 from the
          Registrant's Current Report on Form 8-K dated July 24, 1997.) (File
          Number 0-16014)

  10.42   Registration Rights Agreement among Adelphia Communications
          Corporation and the Initial Purchasers, dated July 7, 1997, regarding
          the 10 1/2% Senior Notes due 2004. (Incorporated herein by reference
          is Exhibit 10.03 from the Registrant's Current Report on Form 8-K
          dated July 24, 1997.) (File Number 0-16014)

  10.43   Registration Rights Agreement among Adelphia Communications
          Corporation, Highland Holdings and Telesat Cablevision, Inc., dated
          July 7, 1997. (Incorporated herein by reference is Exhibit 10.04 from
          the Registrant's Current Report on Form 8-K dated July 24, 1997.)
          (File Number 0-16014)
<PAGE>

  10.44   Purchase Agreement between Adelphia Communications Corporation and Highland Holdings, dated July 1,
          1997.  (Incorporated herein by reference is Exhibit 10.05 from the Registrant's Current Report on
          Form 8-K dated July 24, 1997.) (File Number 0-16014)

  10.45   Series C Preferred Stock Purchase Agreement among Adelphia
          Communications Corporation, Highland Holdings and Telesat Cablevision,
          Inc., dated June 22, 1997. (Incorporated herein by reference is
          Exhibit 10.06 from the Registrant's Current Report on Form 8-K dated
          July 24, 1997.) (File Number 0-16014)

  10.46   Pledge Agreement between Hyperion and the Bank of Montreal Trust
          Company as Collateral Agent, dated as of August 27, 1997.
          (Incorporated by reference herein is Exhibit 4.03 to Hyperion's
          Current Report on Form 8-K dated August 27, 1997) (File No. 0-21605).

  10.47   Registration Rights Agreement between Hyperion and the Initial
          Purchasers, dated August 27, 1997, regarding the 12 1/4% Senior
          Secured Notes due 2004 (Incorporated herein by reference to Exhibit
          4.04 to Hyperion's Current Report on Form 8-K dated August 27, 1997.)
          (File No. 0-21605).

  10.48   Pledge, Escrow and Disbursement Agreement, between Hyperion and the
          Bank of Montreal Trust Company dated as of August 27, 1997.
          (Incorporated by reference herein to Exhibit 4.05 to Hyperion's
          Current Report on Form 8-K dated August 27, 1997) (File No. 0-21605).

  10.49   Purchase Agreement among Hyperion, Bear Stearns & Co. Inc., Chase
          Securities Inc., TD Securities (USA) Inc., CIBC Wood Gundy Securities
          Corp., and Scotia Capital Markets (the "Initial Purchasers") dated
          August 21, 1997. (Incorporated herein by reference to Exhibit 10.01 to
          Hyperion's Current Report on Form 8-K dated August 27, 1997) (File No.
          0-21605).

  10.50   Purchase Agreement among Adelphia Communications Corporation and Smith
          Barney Inc. (the "Initial Purchaser") dated September 22, 1997
          (Incorporated herein by reference is Exhibit 10.01 from the
          Registrant's Current Report on Form 8-K, dated September 25, 1997)
          (File Number 0-16014).

  10.51   Purchase Agreement among Adelphia Communications Corporation and Salomon Brothers Inc. (the "Initial
          Purchaser") dated January 15, 1998 (Incorporated by reference herein is Exhibit 10.01 from the
          Registrant's Current Report on Form 8-K dated January 21, 1998.) (File No. 0-16014)

  10.52*  Management Services Agreement dated as of April 10, 1998, between the
          Registrant and Hyperion Telecommunications, Inc. (Incorporated herein
          by reference is Exhibit 10.23 to Registration Statement No. 333-48209
          on Form S-1 filed by Hyperion Telecommunications, Inc.)

  10.53   Letter Agreement dated April 10, 1998, among Hyperion
          Telecommunications, Inc., the Registrant and MCImetro Access
          Transmission Services, Inc. (Incorporated herein by reference is
          Exhibit 10.24 to Registration Statement No. 333-48209 on Form S-1
          filed by Hyperion Telecommunications, Inc.)

  10.54   Amendment to Registration Rights Agreement dated as of April 15, 1998,
          between Hyperion Telecommunications, Inc. and the Registrant
          (Incorporated herein by reference is Exhibit 10.25 to Registration
          Statement No. 333-48209 on Form S-1 filed by Hyperion
          Telecommunications, Inc.)

  10.55   Letter Agreement dated as of April 9, 1998, between Hyperion
          Telecommunications, Inc. and the Registrant regarding the purchase of
          Hyperion's Class A Common Stock (Incorporated herein by reference is
          Exhibit 10.26 to Registration Statement No. 333-48209 on Form S-1
          filed by Hyperion Telecommunications, Inc.)

  10.56   U.S. Underwriting Agreement dated May 4, 1998 among Hyperion
          Telecommunications, Inc. and the Representatives named therein
          (Incorporated herein by reference is Exhibit 10.01 to Hyperion
          Telecommunications, Inc.'s Current Report on Form 8-K dated June 24,
          1998) (File Number 0-21605).)
<PAGE>

  10.57   International Underwriting Agreement dated May 4, 1998 among Hyperion
          Telecommunications, Inc. and the Representatives named therein
          (Incorporated herein by reference is Exhibit 10.02 to Hyperion
          Telecommunications, Inc.'s Current Report on Form 8-K dated June 24,
          1998.) (File Number 0-21605).)

  10.58   Warrant issued by Hyperion Telecommunications, Inc. to MCI dated May
          8, 1998 (Incorporated herein by reference is Exhibit 10.03 to Hyperion
          Telecommunications, Inc.'s Current Report on Form 8-K dated June 24,
          1998.) (File Number 0-21605).)

  10.59   Warrant issued by Hyperion Telecommunications, Inc. to the Registrant
          dated June 5, 1998 (Incorporated herein by reference is Exhibit 10.04
          to Hyperion Telecommunications, Inc.'s Current Report on Form 8-K
          dated June 24, 1998.) (File Number 0-21605).)

  21.01   Subsidiaries of the Registrant (Filed herewith)

  23.01   Consent of Deloitte & Touche LLP (Filed herewith)

  27.01   Financial Data Schedule (Filed herewith)

  99.01   Material incorporated by reference into this Form 10-K of the Olympus
          Communications, L.P. and Olympus Capital Corporation Form 10-K for the
          year ended December 31, 1997.

  99.02   Material incorporated by reference into this Form 10-K from pages 3 to
          6 of Form 10-Q of Olympus Communications, L.P. and Olympus Capital
          Corporation for the quarter ended March 31, 1998 (Filed herewith)
 ---------------------
<FN>

* Denotes management contracts and compensatory plans and arrangements required
to be identified by Item 14(a)(3).
-----------------------
</FN>
</TABLE>

     The Registrant will furnish to the Commission upon request copies of
instruments not filed herewith which authorize the issuance of long-term
obligations of Registrant not in excess of 10% of the Registrant's total assets
on a consolidated basis.

     (b) The Registrant filed a Form 8-K report dated January 21, 1998 which
reported information under Items 5 and 7 thereof. No financial statements were
filed with such Form 8-K report.

     (c) The Company hereby files as exhibits to this Form 10-K the exhibits set
forth in Item 14(a)(3) hereof which are not incorporated by reference.

     (d) The Company hereby files as financial statement schedules to this Form
10-K the financial statement schedules set forth in Item 14(a)(2) hereof.

<PAGE>


<TABLE>
<CAPTION>

                                            SCHEDULE I (Page 1 of 4)
                              ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                      Condensed Information as to the Financial Position of the Registrant
                                             (Dollars in thousands)

                                                                                  March 31,
                                                                        ----------------------------
                                                                           1997            1998
                                                                        ------------  --------------
ASSETS:

Investment in and net advances to cable television
<S>                                                                     <C>            <C>
subsidiaries and related parties                                        $   353,531    $   873,398
Property and equipment - net                                                 26,258         30,776
Cash and cash equivalents                                                        97            103
Other assets - net                                                           81,712         81,823
                                                                        -----------    -----------
Total                                                                   $   461,598    $   986,100
                                                                        ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY):

Losses and distributions in excess of investments in and net advances
to cable television subsidiaries                                        $   475,437    $   515,957
Parent debt                                                               1,174,672      1,580,274
Other debt                                                                    9,537          2,745
Accrued interest and other liabilities                                       55,833         54,927
                                                                        -----------    -----------
Total liabilities                                                         1,715,479      2,153,903

Redeemable exchangeable preferred stock                                        --          148,062

Stockholders' equity (deficiency) - see consolidated financial
statements included herein for details                                   (1,253,881)    (1,315,865)
                                                                        -----------    -----------
Total                                                                   $   461,598    $   986,100
                                                                        ===========    ===========






                         See notes to condensed financial information of the
Registrant.
</TABLE>



<PAGE>


<TABLE>
<CAPTION>

                                           SCHEDULE I (Page 2 of 4)
                             ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                         Condensed Information as to the Operations of the Registrant
                                            (Dollars in thousands)

                                                               Year Ended March 31,
                                                      -------------------------------------
                                                          1996         1997        1998
                                                      -----------  -----------  -----------
INCOME:

<S>                                                    <C>          <C>          <C>
Income from subsidiaries and affiliates                $  55,277    $  57,479    $  65,369
                                                       ---------    ---------    ---------

EXPENSES:

Operating expenses and fees to subsidiaries                2,156        2,044        2,144
Depreciation and amortization                              5,942        5,882        7,408
Interest expense to subsidiaries and affiliates           14,645       18,591       16,831
Interest expense to others                               107,829      103,735      134,984
                                                       ---------    ---------    ---------
Total                                                    130,572      130,252      161,367
                                                       ---------    ---------    ---------
Loss before gain on sale of investment and equity in
net loss of subsidiaries                                 (75,295)     (72,773)     (95,998)

Gain on sale of investments                                 --          3,746        1,927
Equity in net loss of subsidiaries                       (44,599)     (49,905)     (68,483)
                                                       ---------    ---------    ---------
Loss before extraordinary loss                          (119,894)    (118,932)    (162,554)
Extraordinary loss on early retirement of debt              --        (11,710)     (11,325)
                                                       ---------    ---------    ---------
Net loss                                                (119,894)    (130,642)    (173,879)
Dividend requirements applicable to preferred stock         --           --        (18,850)
                                                       ---------    ---------    ---------
Net loss applicable to common stockholders             $(119,894)   $(130,642)   $(192,729)
                                                       =========    =========    =========




                       See notes to condensed financial information of the egistrant.
</TABLE>


<PAGE>


<TABLE>
<CAPTION>


                                           SCHEDULE I (Page 3 of 4)
                             ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                         Condensed information as to the Cash Flows of the Registrant
                                            (Dollars in thousands)

                                                              Year Ended March 31,
                                                      ------------------------------------
                                                          1996         1997         1998
                                                      ------------  ----------  -----------
Cash flows from operating activities:
<S>                                                    <C>          <C>          <C>
Net loss                                               $(119,894)   $(130,642)   $(173,879)
Adjustments to reconcile net loss to net cash used for operating activities:
Equity in net loss of subsidiaries                        44,599       49,905       68,483
Gain on sale of investments                                 --         (3,746)      (1,927)
Extraordinary loss on debt retirement                       --         11,710       11,325
Depreciation and amortization                              5,942        5,882        7,408
Noncash interest expense                                  16,288       17,893        9,389
Change in operating assets and liabilities:
Other assets                                              (6,832)        (711)       1,661
Accrued interest and other liabilities                    22,107       (2,165)       2,814
                                                       ---------    ---------    ---------
Net cash used for operating activities                   (37,790)     (51,874)     (74,726)
                                                       ---------    ---------    ---------

Cash flows from investing activities:
Investments in and advances from (to) subsidiaries
and related parties - net                                 43,120     (162,812)    (539,459)
Expenditures for property, plant and equipment              (161)        (669)        (722)
Proceeds from sale of investments                           --           --         12,678
                                                       ---------    ---------    ---------
Net cash provided by (used for) investing activities      42,959     (163,481)    (527,503)
                                                       ---------    ---------    ---------

Cash flows from financing activities:
Proceeds from debt                                         1,100      348,312      624,142
Repayments of debt                                        (3,252)    (122,615)    (232,421)
Issuance of redeemable exchangeable preferred stock         --           --        147,976
Issuance of convertible preferred stock                     --           --         97,000
Preferred stock dividends paid                              --           --        (14,787)
Premium paid on early retirement of debt                    --         (8,207)     (12,153)
Debt financing costs                                        --         (5,135)      (7,522)
                                                       ---------    ---------    ---------
Net cash (used for) provided by financing activities      (2,152)     212,355      602,235
                                                       ---------    ---------    ---------

Increase (decrease) in cash and cash equivalents           3,017       (3,000)           6

Cash and cash equivalents, beginning of year                  80        3,097           97
                                                       ---------    ---------    ---------

Cash and cash equivalents, end of year                 $   3,097    $      97    $     103
                                                       =========    =========    =========

Supplemental disclosure of cash flow activity -
Cash payments for interest                             $ 103,965    $ 106,746    $ 134,805
                                                       =========    =========    =========

                        See notes to condensed financial information of the
Registrant.
</TABLE>



<PAGE>


                            SCHEDULE I (Page 4 of 4)
              ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           Notes to Condensed Financial Information of the Registrant
                             (Dollars in thousands)

    1. Amounts advanced between Adelphia and related parties:

      Adelphia Communications Corporation ("Adelphia") has periodically advanced
to and borrowed funds from subsidiaries and affiliates. Adelphia, its
subsidiaries and affiliates charge interest on such amounts at rates ranging
from 2% to 11% with principal due upon demand five years after March 31, 1998.

     2.  Reclassifications:

      Certain 1997 amounts have been reclassified to conform with the 1998
presentation.


<PAGE>


<TABLE>
<CAPTION>

                                   SCHEDULE II
              ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                             (Dollars in thousands)

                                                      Balance            Charged
                                                        at              to Costs                               Balance
                                                     Beginning             and            Deductions-          at End
                                                      of Year           Expenses          Write-Offs           of Year
                                                   --------------     --------------     --------------     --------------

Year Ended March 31, 1996

<S>                                                     <C>               <C>                  <C>               <C>
Allowance for Doubtful Accounts                         $  3,503          $   5,827            $  8,114          $   1,216
                                                        ========          =========            ========          =========

Year Ended March 31, 1997

Allowance for Doubtful Accounts                         $  1,216          $   8,398            $  8,269          $   1,345
                                                        ========          =========            ========          =========

Year Ended March 31, 1998

Allowance for Doubtful Accounts                         $  1,345          $   8,685            $  8,864          $   1,166
                                                        ========          =========            ========          =========
</TABLE>




<PAGE>


                                   SIGNATURES

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

                       ADELPHIA COMMUNICATIONS CORPORATION

June 25, 1998                         By:     /s/ John J. Rigas
                                                ------------------
                                                John J. Rigas,
                                                Chairman, President and Chief
                                                Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

June 25, 1998                                         /s/ John J. Rigas
                                                        ------------------
                                                        John J. Rigas,
                                                        Director

June 25, 1998                                         /s/ Timothy J. Rigas
                                                        ---------------------
                                                        Timothy J. Rigas,
                                                        Executive Vice
                                                        President, Chief
                                                        Financial Officer,
                                                        Chief Accounting
                                                        Officer, Treasurer and
                                                        Director

June 25, 1998                                         /s/ Michael J. Rigas
                                                        ---------------------
                                                        Michael J. Rigas,
                                                        Executive Vice
                                                        President, Operations
                                                        and Director
June 25, 1998                                         /s/ James P. Rigas
                                                        -------------------
                                                        James P. Rigas,
                                                        Executive Vice
                                                        President, Strategic
                                                        Planning and  Director

June 25, 1998                                         /s/ Daniel R. Milliard
                                                        -----------------------
                                                        Daniel R. Milliard,
                                                        Senior Vice President,
                                                        Secretary and Director

June 25, 1998                                         /s/ Dennis P. Coyle
                                                        --------------------
                                                        Dennis P. Coyle,
                                                        Director

June 25, 1998                                         /s/ Pete J. Metros
                                                        -------------------
                                                        Pete J. Metros,
                                                        Director

June 25, 1998                                         /s/ Perry S. Patterson
                                                        -----------------------
                                                        Perry S. Patterson,
                                                        Director


<PAGE>