<PAGE>   1
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------

                                    FORM 10-Q
                                QUARTERLY REPORT
                                      UNDER
                               SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                 ---------------

(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
          For the quarter ended September 30, 1999

                                       OR

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

          For the transition period from ____________ to ____________

                         Commission File Number 1-10321

                            THE ACKERLEY GROUP, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                   91-1043807
(State or other jurisdiction of           (IRS Employer Identification No.)
incorporation or organization)

                                1301 FIFTH AVENUE
                                   SUITE 4000
                            SEATTLE, WASHINGTON 98101
                                 (206) 624-2888
               (Address, including zip code, and telephone number,
        including area code, of Registrant's principal executive offices)

        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 periods 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 [ ]

        Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

             Title of Class                     Outstanding at November 1, 1999
             --------------                     -------------------------------
     Common Stock, $.01 par value                     23,838,879 shares
     Class B Common Stock, $.01 par value             11,051,230 shares


================================================================================

<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           PAGE
                                                                                           ----
<S>        <C>                                                                             <C>

PART I -   FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

           CONDENSED CONSOLIDATED BALANCE SHEETS
           SEPTEMBER 30, 1999 AND DECEMBER 31, 1998....................................      1

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1999
           AND 1998....................................................................      2

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
           NINE MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998........................      3

           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS........................      5

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............................     10

PART II -  OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K............................................     22

           SIGNATURES..................................................................     22
</TABLE>


                                       i
<PAGE>   3
                         PART I - FINANCIAL INFORMATION
                          ITEM 1 - FINANCIAL STATEMENTS
                            THE ACKERLEY GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 ---------------



<TABLE>
<CAPTION>
                                     ASSETS
                                                                                        (Unaudited)
                                                                                        September 30,       December 31,
                                                                                            1999                1998
                                                                                        ------------        ------------
                                                                                                  (In thousands)
<S>                                                                                     <C>                 <C>
Current assets:
    Cash and cash equivalents                                                           $      2,572        $      4,630
    Accounts receivable, net of allowance                                                     49,935              44,680
    Current portion of broadcast rights                                                        8,104               7,339
    Prepaid expenses                                                                          17,986              10,212
    Deferred tax assets                                                                        4,497               4,497
    Other current assets                                                                       3,840               3,883
                                                                                        ------------        ------------
        Total current assets                                                                  86,934              75,241

Property and equipment, net                                                                  138,504             113,108
Goodwill, net                                                                                224,556              70,034
Other intangibles, net                                                                        23,716               7,780
Other assets                                                                                  38,897              49,963
                                                                                        ------------        ------------
        Total assets                                                                    $    512,607        $    316,126
                                                                                        ============        ============

                       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
    Accounts payable                                                                    $      9,312        $      8,004
    Accrued interest                                                                           6,337                 694
    Other accrued liabilities                                                                 11,322              11,861
    Deferred revenue                                                                          26,841              27,736
    Current portion of broadcasting obligations                                                9,391               8,139
    Current portion of long-term debt                                                          8,833               3,101
                                                                                        ------------        ------------
        Total current liabilities                                                             72,036              59,535
Long-term debt, less current portion                                                         394,515             266,999
Litigation accrual                                                                             7,911               8,016
Other long-term liabilities                                                                    9,631               7,417
                                                                                        ------------        ------------
        Total liabilities                                                                    484,093             341,967

Stockholders' equity (deficiency): Common stock, par value $.01 per
    share--authorized 50,000,000 shares; issued 25,204,041 shares at September
    30, 1999 and 21,951,380 shares at December 31, 1998; and
    outstanding 23,829,095 shares at September 30, 1999 and                                      252                 219
    20,576,434 shares at December 31, 1998

    Class B common stock, par value $.01 per share--authorized 11,406,510
    shares; and issued and outstanding 11,051,230
    shares at September 30, 1999 and December 31, 1998                                           111                 111

    Capital in excess of par value                                                            57,385              10,339
    Deficit                                                                                  (19,145)            (26,421)
    Less common stock in treasury, at cost                                                   (10,089)            (10,089)
                                                                                        ------------        ------------
        Total stockholders' equity (deficiency)                                               28,514             (25,841)
                                                                                        ------------        ------------
        Total liabilities and stockholders' equity (deficiency)                         $    512,607        $    316,126
                                                                                        ============        ============
</TABLE>


          See Notes to the Condensed Consolidated Financial Statements


                                       1
<PAGE>   4
                            THE ACKERLEY GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                    UNAUDITED

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

<TABLE>
<CAPTION>
                                                       For the Three Month                    For the Nine Month
                                                   Periods Ended September 30,             Periods Ended September 30,
                                                    1999                1998                1999                1998
                                                 ----------          ----------          ----------          ----------
                                                                (In thousands, except per share amounts)
<S>                                              <C>                 <C>                 <C>                 <C>
Revenue                                          $   65,279          $   56,315          $  221,660          $  231,742
Less agency commissions and discounts                (9,210)             (8,228)            (26,494)            (26,772)
                                                 ----------          ----------          ----------          ----------
Net revenue                                          56,069              48,087             195,166             204,970

Expenses (other income):
    Operating expenses                               44,622              37,184             161,520             168,470
    Restructuring expenses                              (19)                ---               1,108                 ---
    Depreciation and amortization
     expense                                          8,001               3,704              19,584              10,771
    Interest expense                                  9,779               6,600              26,497              20,238
    Stock compensation expense                           25                  15                 544                 437
    Loss (gain) on disposition of assets               (122)                210             (29,055)            (32,770)
                                                 ----------          ----------          ----------          ----------
        Total expenses and other income              62,286              47,713             180,198             167,146
                                                 ----------          ----------          ----------          ----------

Income (loss) before income taxes and
    extraordinary item                               (6,217)                374              14,968              37,824
Income tax (expense) benefit                          2,475                (145)             (5,687)            (14,389)
                                                 ----------          ----------          ----------          ----------

Income (loss) before extraordinary item              (3,742)                229               9,281              23,435
Extraordinary item: loss on debt
    extinguishment                                      ---                 ---              (1,373)                ---
                                                 ----------          ----------          ----------          ----------

Net income (loss)                                $   (3,742)         $      229          $    7,908          $   23,435
                                                 ==========          ==========          ==========          ==========

Income (loss) per common share, before
    extraordinary item                           $    (0.11)         $     0.01          $     0.29          $     0.74
Extraordinary item: loss on debt
    extinguishment                                      ---                 ---               (0.04)                ---
                                                 ----------          ----------          ----------          ----------

Net income (loss) per common share               $    (0.11)         $     0.01          $     0.25          $     0.74
                                                 ==========          ==========          ==========          ==========
Income (loss) per common share, before
    extraordinary item, assuming
    dilution                                     $    (0.11)         $     0.01          $     0.29          $     0.74

Extraordinary item: loss on debt
    extinguishment                                      ---                 ---               (0.05)                ---
                                                 ----------          ----------          ----------          ----------
Net income (loss) per common share,
    assuming dilution                            $    (0.11)         $     0.01          $     0.24          $     0.74
                                                 ==========          ==========          ==========          ==========

Dividends per common share                       $      ---          $      ---          $     0.02          $     0.02
                                                 ==========          ==========          ==========          ==========

Dividends per common share, assuming
  dilution                                       $      ---          $      ---          $     0.02          $     0.02
                                                 ==========          ==========          ==========          ==========

Weighted average number of common                    33,486              31,627              32,255              31,616
    shares

Weighted average number of common
  shares, assuming dilution                          33,486              31,888              32,443              31,880
</TABLE>


          See Notes to the Condensed Consolidated Financial Statements


                                       2
<PAGE>   5
                            THE ACKERLEY GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                    UNAUDITED
                                 ---------------


<TABLE>
<CAPTION>
                                                                             For the Nine Month
                                                                         Periods Ended September 30,
                                                                          1999                1998
                                                                       ----------          ----------
                                                                               (In thousands)
<S>                                                                    <C>                 <C>
Cash flows from operating activities:
      Net income                                                       $    7,908          $   23,435
      Adjustments to reconcile net income to net cash used in
      operating activities:
          Stock compensation expense                                          544                 437
          Deferred tax expense                                              5,686              12,251
          Debt extinguishment, net of taxes                                 1,373                 ---
          Depreciation and amortization expense                            19,584              10,771
          Amortization of deferred financing costs                          1,197                 643
          Gain on disposition of assets                                   (29,055)            (32,770)
          Amortization of broadcast rights                                  8,534               7,331
          Income from barter transactions                                  (1,532)             (1,396)
          Gain on termination of interest rate swap agreement                 (56)                ---
          Change in assets and liabilities:
             Accounts receivable                                           (1,964)              8,724
             Prepaid expenses                                              (7,579)                114
             Other current assets and other assets                          2,178             (13,047)
             Accounts payable and accrued interest                          6,917              (2,122)
             Other accrued liabilities and other long-term
             liabilities                                                   (1,220)             (4,173)
             Deferred revenues                                               (895)              4,475
             Current portion of broadcast obligations                      (8,264)             (8,347)
                                                                       ----------          ----------
      Net cash provided by operating activities                             3,356               6,326

Cash flows from investing activities:
      Proceeds from disposition of assets                                  13,423              40,762
      Proceeds from sale of property and equipment                            503                 ---
      Capital expenditures                                                (21,165)            (24,207)
      Payments for acquisitions                                          (167,467)            (42,115)
      Payments for investments                                             (4,500)                ---
      Other, net                                                              ---                (513)
                                                                       ----------          ----------
      Net cash used in investing activities                              (179,206)            (26,073)

Cash flows from financing activities:
      Borrowings under credit agreements                                  297,063             220,744
      Payments under credit agreements                                   (163,219)           (198,740)
      Payments under capital lease obligations                               (672)               (547)
      Note redemption prepayment fees                                      (1,208)                ---
      Dividends paid                                                         (632)               (633)
      Payments of deferred financing costs                                 (6,080)             (1,345)
      Proceeds from stock issuance                                         46,535                  72
      Proceeds from termination of interest rate swap
             agreement                                                      2,005                 ---
                                                                       ----------          ----------
      Net cash provided by financing activities                           173,792              19,551
Net decrease in cash and cash equivalents                                  (2,058)               (196)
Cash and cash equivalents at beginning of period                            4,630               3,656
                                                                       ----------          ----------
Cash and cash equivalents at end of period                             $    2,572          $    3,460
                                                                       ==========          ==========
</TABLE>


                                       3
<PAGE>   6
<TABLE>
<CAPTION>
                                                                             For the Nine Month
                                                                         Periods Ended September 30,
                                                                          1999                1998
                                                                       ----------          ----------
                                                                               (In thousands)
<S>                                                                    <C>                 <C>
Supplemental disclosure of noncash transactions:
      Broadcast rights acquired and broadcast obligations
      assumed                                                          $    6,446          $    7,892
      Property and equipment acquired through barter                          853                 963
</TABLE>


          See Notes to the Condensed Consolidated Financial Statements


                                       4
<PAGE>   7
                            THE ACKERLEY GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

        The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. The balance sheet at December 31, 1998 has been
derived from the audited consolidated financial statements at that date. The
accompanying condensed consolidated financial statements do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
normal and recurring adjustments necessary for a fair presentation of the
financial position and the results of operations for such periods have been
included. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.

        The results of operations for any interim period are not necessarily
indicative of anticipated results for the full year. The Company's results of
operations may vary from quarter to quarter due in part to the timing of
acquisitions and to seasonal variations in the operations of the television
broadcasting, radio broadcasting, and sports & entertainment segments. In
particular, the Company's net revenue and net income historically have been
affected positively during the NBA basketball season (the first, second, and
fourth quarters) and by increased advertising activity in the second and fourth
quarters.

        Certain prior year's amounts have been reclassified to conform to the
1999 presentation.

NOTE 2. NEW ACCOUNTING STANDARDS

        In June 1999, the Financial Accounting Standards Board issued Statement
No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133. The Statement defers for one
year the effective date of Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. Statement No. 133 will now apply to all
fiscal quarters of all fiscal years beginning after June 15, 2000. Because of
our minimal use of derivatives, management does not anticipate that the adoption
of Statement No. 133 will have a significant effect on our earnings or financial
position.

NOTE 3. ACQUISITIONS AND DISPOSITIONS

        On January 5, 1999, the Company purchased substantially all of the
assets of KVIQ(TV), the CBS affiliate licensed to Eureka, California, for
approximately $5.5 million, pursuant to an agreement dated July 15, 1998.
Pending closing of the transaction, the Company operated the station pursuant to
a time brokerage agreement with the former owner. The Company recorded net
assets with estimated fair values aggregating $0.5 million and goodwill of $5.0
million in connection with the transaction.

        On February 19, 1999, the Company purchased substantially all of the
assets of an outdoor advertising company in the Boston/Worcester, Massachusetts
market for approximately $11.0 million. The Company recorded net assets with
estimated fair values aggregating $0.6 million and goodwill of $10.4 million in
connection with the transaction.

        On March 16, 1999, the Company purchased substantially all of the assets
of KMTR(TV), the NBC affiliate licensed to Eugene, Oregon, together with two
satellite stations licensed to Roseburg and


                                       5
<PAGE>   8
Coos Bay, Oregon, and a low power station licensed to Eugene. The purchase price
was approximately $26.0 million. From December 1, 1998 until closing of the
transaction, the Company operated the stations pursuant to a time brokerage
agreement with the former owner. The Company recorded net assets with estimated
fair values aggregating $3.0 million and goodwill of $23.0 million in connection
with the transaction.

        On April 12, 1999, the Company purchased substantially all of the assets
of WOKR(TV), the ABC affiliate licensed to Rochester, New York, for
approximately $128.2 million. In September 1998, the Company paid $12.5 million
of the purchase price into an escrow account, with the balance paid at closing.
The Company recorded net assets with estimated fair values aggregating $9.8
million and goodwill of $118.4 million in connection with the transaction.

        The following table summarizes, on an unaudited pro forma basis, the
consolidated results of operations of the Company for the nine month periods
ended September 30, 1999 and 1998, giving pro forma effect to the acquisition of
WOKR(TV) as if the acquisition had been made at the beginning of the periods
presented. These pro forma consolidated statements do not necessarily reflect
the results of operations which would have occurred had such an acquisition
taken place on the date indicated.

<TABLE>
<CAPTION>
                                                                   For the Nine Month
                                                               Periods Ended September 30,
                                                               1999                1998
                                                           -----------         -----------
                                                             (In thousands, except per share
                                                                        amounts)
<S>                                                        <C>                 <C>
Net revenue                                                $   199,064         $   217,992
Operating expenses                                            (164,072)           (176,023)
Income before extraordinary item                                 9,396              24,202
Net income                                                       8,023              24,202
Net income per common share                                        .25                 .77
Net income per common share, assuming dilution                     .25                 .76
</TABLE>

        On May 1, 1999, the Company exchanged substantially all of the assets
plus certain liabilities of KKTV(TV), the CBS affiliate licensed to Colorado
Springs, Colorado, for substantially all of the assets plus certain liabilities
of KCOY(TV), the CBS affiliate licensed to Santa Maria, California. In
conjunction with the transaction, the Company received a cash payment of
approximately $9.0 million (subject to certain adjustments). Pending closing of
the transaction, the Company operated KCOY(TV) and the former owner of KCOY(TV)
operated KKTV(TV) pursuant to time brokerage agreements. The Company recorded
net assets with estimated fair values aggregating $7.2 million, intangible
assets of $16.8 million, and a gain of $28.5 million in connection with this
transaction.

        On July 6, 1999, the Company sold a radio broadcasting tower for $2.8
million. In connection with the transaction, the Company recorded a loss from
disposition of assets of $1.2 million in the second quarter of 1999.

        On August 2, 1999, the Company purchased substantially all of the assets
of KTVF(TV), the NBC affiliate licensed to Fairbanks, Alaska, for $7.2 million.
The Company recorded net assets with estimated fair values aggregating $1.8
million and goodwill of $5.4 million in connection with the transaction.

        On September 13, 1999, the Company entered into a joint sales agreement
with the owner of radio station KFNK(FM) in Eatonville, Washington. Under the
agreement, the Company pays the owner a monthly fee for the right to sell
advertising on the station. In connection with the transaction, the Company paid
$4.0 million under a put and call agreement whereby the Company may elect, or be
required by the owner, to purchase the station's assets any time after November
1, 2002. The gross purchase price of the station's assets, which is primarily
based on the station's ratings at the time of the


                                       6
<PAGE>   9
sale, ranges from $4.5 million up to $11.7 million. The gross purchase price is
reduced by the Company's $4.0 million payment under the put and call agreement
plus accrued interest.

NOTE 4. DEBT

        On January 22, 1999, the Company replaced its $300.0 million credit
agreement with a new $325.0 million credit agreement (the "1999 Credit
Agreement"), consisting of a $150.0 million term loan facility (the "Term Loan")
and a $175.0 million revolving credit facility (the "Revolver"), which includes
up to $10.0 million in standby letters of credit. The transaction resulted in a
charge of approximately $0.6 million, net of applicable taxes, consisting of the
write-off of deferred financing costs.

        Principal repayments under the Term Loan are due quarterly from March
31, 2000 through December 31, 2005. The Revolver requires scheduled annual
commitment reductions, with required principal repayments of outstanding amounts
in excess of the commitment levels, quarterly beginning March 31, 2001 through
December 31, 2005.

        The Company can choose to have interest calculated at rates based on
either a base rate or LIBOR plus defined margins which vary based on the
Company's total leverage ratio. The commitment fees under the Revolver are
payable quarterly at a rate based on the Company's total leverage ratio.

        On February 24, 1999, the Company issued additional 9% Senior
Subordinated Notes due 2009 (the "9% Senior Subordinated Notes") in the
aggregate amount of $25.0 million. The total aggregate amount of 9% Senior
Subordinated Notes issued and outstanding is $200.0 million. These notes bear
interest at 9% which is payable semi-annually in January and July. Principal is
payable in full in January 2009.

        On March 15, 1999, the Company redeemed its $20.0 million outstanding
principal of the 10.48% Senior Subordinated Notes due 2000 (the "10.48% Senior
Subordinated Notes") with borrowings under the Revolver. This transaction
resulted in a charge of approximately $0.8 million, net of applicable taxes,
consisting of prepayment fees and the write-off of deferred
financing costs.

        On August 6, 1999, the Company received proceeds of $2.0 million upon
the termination of an interest rate swap agreement with a notional principal
amount of $70.0 million. In connection with the transaction, the gain on the
termination of the interest rate swap agreement is amortized as an adjustment to
interest expense over the remaining term of the interest rate swap agreement's
original contract life.

NOTE 5. STOCK OFFERING

        On August 6, 1999, the Company issued 3,000,000 shares of common stock
at $15.25 per share pursuant to an underwritten public offering. In conjunction
with the transaction, the Company received net proceeds of approximately $43.5
million. On September 7, 1999, the Company issued 250,000 additional shares of
common stock at $15.25 per share upon the exercise of the underwriters'
overallotment option. The Company received net proceeds of approximately $3.6
million in connection with the transaction.

NOTE 6. STOCK OPTION PLAN

        On May 11, 1999, the Company amended its Employee Stock Option Plan (the
"Plan") to increase the amount of common stock reserved for issuance under the
Plan from 1,000,000 shares to 1,500,000 shares. On June 14, 1999, the Company
granted 210,000 options to certain employees. The exercise price of these
options represented the market price of the Company's stock on the date of
grant.


                                       7
<PAGE>   10
NOTE 7. LITIGATION ACCRUAL

        The Company and two of its executive officers were defendants in a
wrongful termination suit brought by former employees. On February 29, 1996, a
jury issued a verdict awarding the plaintiffs compensatory and punitive damages
of approximately $13.0 million. At December 31, 1995, the Company initially
recorded an accrual of $14.2 million, including estimated additional legal
costs, related to the verdict. Following post-trial motions, the punitive
damages award was reduced, and in 1997, the Company reduced the accrual related
to this litigation by $5.0 million. At September 30, 1999, the total accrual was
approximately $7.9 million.

        On October 1, 1998, the U.S. Court of Appeals for the Ninth Circuit
ruled in the Company's favor, holding that the plaintiffs did not have a valid
claim under the Federal Fair Labor Standards Act and striking the award of
damages, including all punitive damages. The Court of Appeals remanded the case
for further consideration of whether the plaintiffs have a valid claim under the
Washington State Fair Labor Standards Act.

        On March 9, 1999, the Court of Appeals issued an order referring the
case to an 11-judge panel for a new hearing, which was held on April 23, 1999.
On June 10, 1999, the Court of Appeals reinstated the District Court verdict in
favor of the plaintiffs. The Company has petitioned for review of this decision
by the U.S. Supreme Court and anticipates that the U.S. Supreme Court will
decide whether or not to grant the petition for review before the end of 1999.
If the Court does not grant the petition for review, the Company will be
required to pay the awarded damages, accrued interest thereon, and plaintiff's
attorney's fees (which, at June 1, 1999, totaled approximately $7.2 million,
including estimated attorney's fees). If the Court grants the petition for
review, the Company anticipates that a final decision in this case may be
rendered during 2000.

NOTE 8. TELEVISION BROADCASTING GROUP RESTRUCTURING

        On April 6, 1999, the Company announced the launch of Digital
CentralCasting, a digital broadcasting system which allows the Company to
consolidate back-office functions such as operations, programming, advertising
scheduling, and accounting for all of the television stations within a regional
group at one station. To implement this strategy, the Company has organized
eleven of the television stations it owns and/or programs into the following
three regional station groups: New York (WIXT, WIVT, WUTR, and WOKR), Central
California (KGET, KION, and KCOY), and North Coast (KCBA, KFTY, KVIQ, and KMTR).

        The Company expects to implement Digital CentralCasting for all of its
television station groups over the next twelve months. The Company recorded a
$1.1 million restructuring charge in the second quarter of 1999 relating to the
implementation of Digital CentralCasting. This restructuring charge consisted
primarily of costs associated with employee staff reductions.

NOTE 9. INDUSTRY SEGMENT INFORMATION

        The Company organizes its segments based on the products and services
from which revenues are generated. The Company evaluates segment performance and
allocates resources based on Segment Operating Cash Flow. The Company defines
Operating Cash Flow as net revenue less operating and restructuring expenses
before depreciation, amortization, interest, and stock compensation expenses and
gain on disposition of assets. Segment Operating Cash Flow is defined as
Operating Cash Flow before corporate overhead.

        Selected financial information for these segments for the three and nine
month periods ended September 30, 1999 and 1998 is presented as follows (in
thousands):


                                       8
<PAGE>   11
<TABLE>
<CAPTION>
                                            OUTDOOR          TELEVISION          RADIO            SPORTS &
                                             MEDIA          BROADCASTING      BROADCASTING      ENTERTAINMENT     CONSOLIDATED
                                          ------------      ------------      ------------      -------------     ------------
<S>                                       <C>               <C>               <C>               <C>               <C>
THREE MONTH PERIOD ENDED SEPTEMBER
30, 1999:

Net revenue                               $     26,263      $     20,040      $      7,743      $      2,023      $     56,069
Segment operating expenses                     (13,758)          (17,234)           (4,165)           (4,945)          (40,102)
                                          ------------      ------------      ------------      ------------      ------------
Segment Operating Cash Flow               $     12,505      $      2,806      $      3,578      $     (2,922)     $     15,967
                                          ============      ============      ============      ============
Corporate overhead                                                                                                      (4,501)
                                                                                                                  ------------
Operating Cash Flow                                                                                                     11,466
Other expenses:
    Depreciation and amortization
    expense                                                                                                             (8,001)
    Interest (expense) income                                                                                           (9,779)
    Stock compensation expense                                                                                             (25)
    Gain on disposition of assets                                                                                          122
                                                                                                                  ------------
Loss before income taxes                                                                                          $     (6,217)
                                                                                                                  ============
Segment assets                            $     92,844      $    271,609      $     60,598      $     40,598      $    465,649
                                          ============      ============      ============      ============
Corporate assets                                                                                                        46,958
                                                                                                                  ------------
Total assets                                                                                                      $    512,607
                                                                                                                  ============

THREE MONTH PERIOD ENDED SEPTEMBER
30, 1998:

Net revenue                               $     24,603      $     15,931      $      6,981      $        572      $     48,087
Segment operating expenses                     (13,220)          (13,237)           (3,775)           (3,691)          (33,923)
                                          ------------      ------------      ------------      ------------      ------------
Segment Operating Cash Flow               $     11,383      $      2,694      $      3,206      $     (3,119)     $     14,164
                                          ============      ============      ============      ============
Corporate overhead                                                                                                      (3,261)
                                                                                                                  ------------
Operating Cash Flow                                                                                                     10,903
Other expenses:
    Depreciation and amortization
    expense                                                                                                             (3,704)
    Interest expense                                                                                                    (6,600)
    Stock compensation expense                                                                                             (15)
    Loss on disposition of assets                                                                                         (210)
                                                                                                                  ------------
Income before income taxes                                                                                        $        374
                                                                                                                  ============

NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1999:

Net revenue                               $     71,997      $     57,720      $     19,899      $     45,550      $    195,166
Segment operating expenses                     (40,764)          (52,151)          (11,518)          (46,051)         (150,484)
                                          ------------      ------------      ------------      ------------      ------------
Segment Operating Cash Flow               $     31,233      $      5,569      $      8,381      $       (501)     $     44,682
                                          ============      ============      ============      ============
Corporate overhead                                                                                                     (12,144)
                                                                                                                  ------------
Operating Cash Flow                                                                                                     32,538
Other (expenses) income:
    Depreciation and amortization
    expense                                                                                                            (19,584)
    Interest expense                                                                                                   (26,497)
    Stock compensation expense                                                                                            (544)
    Gain on disposition of assets                                                                                       29,055
                                                                                                                  ------------
Income before income taxes and
extraordinary item                                                                                                $     14,968
                                                                                                                  ============
NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1998:

Net revenue                               $     84,426      $     47,499      $     18,375      $     54,670      $    204,970
Segment operating expenses                     (52,667)          (40,888)          (10,846)          (53,125)         (157,526)
                                          ------------      ------------      ------------      ------------      ------------
Segment Operating Cash Flow               $     31,759      $      6,611      $      7,529      $      1,545      $     47,444
                                          ============      ============      ============      ============
Corporate overhead                                                                                                     (10,944)
                                                                                                                  ------------
Operating Cash Flow                                                                                                     36,500
Other (expenses) income:
    Depreciation and amortization                                                                                      (10,771)
    Interest expense                                                                                                   (20,238)
    Stock compensation expense                                                                                            (437)
    Gain on disposition of assets                                                                                       32,770
                                                                                                                  ------------
Income before income taxes                                                                                        $     37,824
                                                                                                                  ============
</TABLE>


        The increase in assets from the outdoor media and television
broadcasting segments as of September 30, 1999 compared to December 31, 1998 is
primarily due to the acquisition of an outdoor advertising company and
television stations KVIQ, KMTR, WOKR, KCOY, and KTVF as discussed in Note 3.


                                       9
<PAGE>   12
                ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

        Statements appearing in this section, Management's Discussion and
Analysis of Financial Condition and Results of Operations, which are not
historical in nature (including the discussions of the effects of recent
acquisitions, business transactions, and similar information), are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. We caution our shareholders and potential
investors that any forward-looking statements or projections set forth in this
section are subject to risks and uncertainties which may cause actual results to
differ materially from those projected. After the date of this Quarterly Report,
we will not make any public announcements updating any forward looking statement
contained in this section.

        Important factors that could cause the results to differ materially
from those expressed in this section include:

        -  material adverse changes in general economic conditions, including
           changes in inflation and interest rates;

        -  changes in laws and regulations affecting the outdoor advertising
           and television and radio broadcasting businesses, including changes
           in the FCC's treatment of time brokerage agreements and related
           matters, and the possible inability to obtain FCC consent to
           proposed or pending acquisitions or dispositions of broadcasting
           stations;

        -  competitive factors in the outdoor advertising, television
           broadcasting, radio broadcasting, and sports & entertainment
           businesses;

        -  material changes to accounting standards;

        -  expiration or non-renewal of broadcasting licenses and time
           brokerage agreements;

        -  labor matters, including the aftereffects of the NBC lockout,
           changes in labor costs, renegotiation of labor contracts, and risk
           of work stoppages or strikes;

        -  matters relating to our level of indebtedness, including
           restrictions imposed by financial covenants;

        -  the win-loss record of the SuperSonics, which has a substantial
           influence on attendance, and whether the team participates in the
           NBA playoffs;

        -  recessionary influences in the regional markets that we serve.

OVERVIEW

        We reported net income of $7.9 million for the first nine months of
1999, compared to net income of $23.4 million for the first nine months of 1998.
Net revenue for the first nine months of 1999 decreased over the same period
last year by $9.8 million, or 5%, while our Operating Cash Flow (as defined
below) decreased $4.0 million, or 11%. On April 15, 1999, we paid an annual cash
dividend of $.02 per share.

        Refinancing. On January 22, 1999, we replaced our existing $300.0
million credit agreement with a new $325.0 million credit agreement. On February
24, 1999, we issued additional 9% Senior Subordinated Notes due 2009 in the
aggregate amount of $25.0 million. On March 15, 1999, we redeemed the $20.0
million outstanding principal of the 10.48% Senior Subordinated Notes due 2000
with borrowings under the revolving credit facility of the new credit agreement.

        Acquisitions and Dispositions. During the first nine months of 1999, we
acquired five television stations and an outdoor advertising company, and we
sold one television station and a radio broadcasting tower.

        Stock Offering. On August 6, 1999, we received approximately $43.5
million in net proceeds from the issuance of 3,000,000 shares of common stock
pursuant to a firmly underwritten public offering. On September 7, 1999, we
received approximately $3.6 million in net proceeds from the issuance of 250,000
shares of common stock upon the exercise of the underwriters' overallotment
option.

        As with many media companies that have grown through acquisitions, the
Company's acquisitions and dispositions of television and radio stations have
resulted in significant non-cash and non-recurring charges to income. For this
reason, in addition to net income, management believes that Operating Cash Flow
(defined as net revenue less operating and restructuring expenses before
depreciation, amortization, interest, and stock compensation expenses and gain
on disposition of assets) is an appropriate measure of the Company's financial
performance. Similarly, management believes that Segment Operating Cash Flow
(defined as Operating Cash Flow before corporate overhead) is an appropriate
measure of the financial performance of the Company's segments. These measures
exclude certain expenses that management does not consider to be costs of
ongoing operations. The Company uses Operating Cash Flow to pay interest and
principal on its long-term debt as well as to finance capital expenditures.
Operating Cash Flow and Segment Operating Cash Flow, however, are not to be
considered alternatives to net income as an indicator of the Company's operating
performance or to cash flows as a measure of the Company's liquidity.


                                       10
<PAGE>   13
RESULTS OF OPERATIONS

        The following tables set forth certain historical financial and
operating data for the three and nine month periods ended September 30, 1999 and
1998, including net revenue, operating expenses, and Operating Cash Flow
information by segment:

<TABLE>
<CAPTION>
                                                          THREE MONTH PERIODS ENDED SEPTEMBER 30,
                                               ------------------------------------------------------------
                                                           1999                           1998
                                               ----------------------------    ----------------------------
                                                                  AS % OF                         AS % OF
                                                AMOUNT          NET REVENUE     AMOUNT          NET REVENUE
                                               --------         -----------    --------         -----------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                            <C>              <C>            <C>              <C>

Net revenue .............................      $ 56,069            100.0%      $ 48,087            100.0%

Segment operating expenses ..............        40,102             71.5         33,923             70.5
Corporate overhead ......................         4,501              8.0          3,261              6.8
                                               --------                        --------
          Total operating expenses ......        44,603             79.6         37,184             77.3
                                               --------                        --------

Operating Cash Flow .....................        11,466             20.4         10,903             22.7

Other expenses (income):
    Depreciation and amortization
       expense ..........................         8,001             14.3          3,704              7.7
    Interest expense ....................         9,779             17.4          6,600             13.7
    Stock compensation expense ..........            25              ---             15              ---
    Loss (gain) on disposition of
       assets ...........................          (122)            (0.2)           210              0.4
                                               --------                        --------
          Total other expenses (income)          17,683             31.5         10,529             21.9

Net income (loss) before income taxes ...        (6,217)           (11.1)           374              0.8
Income tax (expense) benefit ............         2,475              4.4           (145)            (0.3)
                                               --------                        --------
Net income (loss) .......................      $ (3,742)            (6.7)      $    229              0.5
                                               ========                        ========
</TABLE>


<TABLE>
<CAPTION>
                                                            NINE MONTH PERIODS ENDED SEPTEMBER 30,
                                               ----------------------------------------------------------------
                                                           1999                             1998
                                               ------------------------------   -------------------------------
                                                                    AS % OF                           AS % OF
                                                 AMOUNT           NET REVENUE     AMOUNT            NET REVENUE
                                               ----------         -----------   ----------          -----------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                            <C>                <C>           <C>                 <C>

Net revenue .............................      $  195,166             100.0%    $  204,970             100.0%

Segment operating expenses ..............         150,484              77.1        157,526              76.9
Corporate overhead ......................          12,144               6.2         10,944               5.3
                                               ----------                       ----------
          Total operating expenses ......         162,628              83.3        168,470              82.2

Operating Cash Flow .....................          32,538              16.7         36,500              17.8

Other expenses (income):
    Depreciation and amortization
       expense ..........................          19,584              10.0         10,771               5.3
    Interest expense ....................          26,497              13.6         20,238               9.9
    Stock compensation expense ..........             544               0.3            437               0.2
    Gain on disposition of assets .......         (29,055)            (14.9)       (32,770)            (16.0)
                                               ----------                       ----------
          Total other expenses (income)            17,570               9.0         (1,324)             (0.6)

Income before income taxes and
   extraordinary item ...................          14,968               7.7         37,824              18.5
Income tax expense ......................          (5,687)             (2.9)       (14,389)             (7.0)
                                               ----------                       ----------
Income before extraordinary item ........           9,281               4.8         23,435              11.4
Extraordinary item ......................          (1,373)             (0.7)           ---               ---
                                               ----------                       ----------
Net income ..............................           7,908               4.1     $   23,435              11.4
                                               ==========                       ==========
</TABLE>


                                       11
<PAGE>   14
<TABLE>
<CAPTION>
                                                                    THREE MONTH PERIODS ENDED         NINE MONTH PERIODS ENDED
                                                                          SEPTEMBER 30,                     SEPTEMBER 30,
                                                                   ---------------------------       ---------------------------
                                                                      1999             1998             1999             1998
                                                                   ----------       ----------       ----------       ----------
                                                                                      (DOLLARS IN THOUSANDS)
<S>                                                                <C>              <C>              <C>              <C>
Net revenue:
   Outdoor media ............................................      $   26,263       $   24,603       $   71,997       $   84,426
   Television broadcasting ..................................          20,040           15,931           57,720           47,499
   Radio broadcasting .......................................           7,743            6,981           19,899           18,375
   Sports & entertainment ...................................           2,023              572           45,550           54,670
                                                                   ----------       ----------       ----------       ----------
    Total net revenue .......................................      $   56,069       $   48,087       $  195,166       $  204,970
                                                                   ==========       ==========       ==========       ==========

Segment operating expenses:
   Outdoor media ............................................      $   13,758       $   13,220       $   40,764       $   52,667
   Television broadcasting ..................................          17,234           13,237           52,151           40,888
   Radio broadcasting .......................................           4,165            3,775           11,518           10,846
   Sports & entertainment ...................................           4,945            3,691           46,051           53,125
                                                                   ----------       ----------       ----------       ----------
    Total segment operating expenses ........................      $   40,102       $   33,923       $  150,484       $  157,526
                                                                   ==========       ==========       ==========       ==========

Operating Cash Flow:
   Outdoor media ............................................      $   12,505       $   11,383       $   31,233       $   31,759
   Television broadcasting ..................................           2,806            2,694            5,569            6,611
   Radio broadcasting .......................................           3,578            3,206            8,381            7,529
   Sports & entertainment ...................................          (2,922)          (3,119)            (501)           1,545
                                                                   ----------       ----------       ----------       ----------
    Total Segment Operating Cash Flow .......................          15,967           14,164           44,682           47,444
   Corporate overhead .......................................          (4,501)          (3,261)         (12,144)         (10,944)
                                                                   ----------       ----------       ----------       ----------
    Total Operating Cash Flow ...............................      $   11,466       $   10,903       $   32,538       $   36,500
                                                                   ==========       ==========       ==========       ==========

Change in net revenue from prior period:
   Outdoor media ............................................             6.7%           (15.6)%          (14.7)%            1.6%
   Television broadcasting ..................................            25.8              3.3             21.5              6.0
   Radio broadcasting .......................................            10.9             17.6              8.3             19.3
   Sports & entertainment ...................................           253.7            (72.9)           (16.7)            11.6
    Change in total net revenue .............................            16.6%            (8.6)%           (4.8)%            6.6%

Segment operating expenses as a % of segment net revenue:
   Outdoor media ............................................            52.4%            53.7%            56.6%            62.4%
   Television broadcasting ..................................            86.0             83.1             90.4             86.1
   Radio broadcasting .......................................            53.8             54.1             57.9             59.0
   Sports & entertainment ...................................           244.4            645.3            101.1             97.2
    Total segment operating expenses as a
        % of total net revenue ..............................            71.5%            70.5%            77.1%            76.9%

Segment Operating Cash Flow as a % of net revenue by segment:
   Outdoor media ............................................            47.6%            46.3%            43.4%            37.6%
   Television broadcasting ..................................            14.0             16.9              9.6             13.9
   Radio broadcasting .......................................            46.2             45.9             42.1             41.0
   Sports & entertainment ...................................          (144.4)          (545.3)            (1.1)             2.8
    Operating Cash Flow as a % of total net revenue..........
                                                                         20.4%            22.7%            16.7%            17.8%
</TABLE>


                                       12
<PAGE>   15
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTH PERIOD
ENDED SEPTEMBER 30, 1998

        Net Revenue. Our net revenue for the third quarter of 1999 was $56.1
million. This represented an increase of $8.0 million, or 17%, compared to $48.1
million for the third quarter of 1998. Changes in net revenue were as follows:

        o       Outdoor Media. Our net revenue for the third quarter of 1999
                from our outdoor media segment increased by $1.7 million, or 7%,
                compared to the third quarter of 1998. This increase was
                primarily due to increased national and local sales.

        o       Television Broadcasting. Our net revenue for the third quarter
                of 1999 from our television broadcasting segment increased by
                $4.1 million, or 26%, compared to the third quarter of 1998.
                This increase was mainly due to the exchange of station KKTV for
                station KCOY in January 1999 and the addition of stations KMTR
                in December 1998, WOKR in April 1999, and KTVF in August 1999.
                Excluding these transactions, our net revenue for the third
                quarter of 1999 from our television broadcasting segment
                decreased slightly by $0.2 million, or 1%, compared to the third
                quarter of 1998. This decrease was primarily due to the lack of
                political advertising in 1999, offset by increased national and
                local sales.

        o       Radio Broadcasting. Our net revenue for the third quarter of
                1999 from our radio broadcasting segment increased by $0.7
                million, or 10%, compared to the third quarter of 1998. This
                increase was primarily due to higher national and local sales.

        o       Sports & Entertainment. Our net revenue for the third quarter of
                1999 from our sports & entertainment segment increased by $1.4
                million compared to the third quarter of 1998. This increase was
                primarily due to adjustments to certain revenues which are
                recorded during the NBA season on the basis of estimates.
                Subsequent to the completion of the NBA season, these estimates
                are revised based on updated information and the determination
                of the actual amounts.

        Segment Operating Expenses. Our segment operating expenses (which
exclude corporate overhead) for the third quarter of 1999 were $40.1 million.
This represented an increase of $6.2 million, or 18%, compared to $33.9 million
for the third quarter of 1998. Changes in segment operating expenses were as
follows:

        o       Outdoor Media. Our operating expenses for the third quarter of
                1999 from our outdoor media segment increased by $0.6 million,
                or 5%, compared to the third quarter of 1998. This increase was
                primarily due to higher lease costs incurred to secure long-term
                property lease contracts for our advertising displays and higher
                expenses related to the expansion of our national sales force.

        o       Television Broadcasting. Our operating expenses for the third
                quarter of 1999 from our television broadcasting segment
                increased by $4.0 million, or 30%, compared to the third quarter
                of 1998. This increase was mainly due to the exchange of station
                KKTV for station KCOY in January 1999 and the addition of
                stations KMTR in December 1998, WOKR in April 1999, and KTVF in
                August 1999. Excluding these transactions, our operating
                expenses for the third quarter of 1999 from our television
                broadcasting segment increased by $0.9 million, or 8%, compared
                to the third quarter of 1998. This increase primarily relates to
                higher program, promotion, and production expenses relating to
                the expansion of local news.


                                       13
<PAGE>   16
        o       Radio Broadcasting. Our operating expenses for the third quarter
                of 1999 from our radio broadcasting segment increased by $0.4
                million, or 11%, compared to the third quarter of 1998. This
                increase was primarily due to higher expenses relating to
                increased sales activity.

        o       Sports & Entertainment. Our operating expenses for the third
                quarter of 1999 from our sports & entertainment segment
                increased by $1.2 million, or 32%, compared to the third quarter
                of 1998. This increase was primarily due to increased travel,
                personnel, and training costs related to team operations.

        Corporate Overhead. Our corporate overhead expenses were $4.5 million
for the third quarter of 1999. This represented an increase of $1.2 million, or
36%, compared to the third quarter of 1998. This increase was primarily a result
of increased personnel, travel, and marketing costs and higher utilization of
outside services.

        Operating Cash Flow. Our Operating Cash Flow for the third quarter of
1999 was $11.5 million. This represented an increase of $0.6 million, or 6%,
compared to $10.9 million for the third quarter of 1998. The increase in
Operating Cash Flow from our segments was partially offset by the increase in
corporate overhead expenses. Operating Cash Flow as a percentage of total net
revenue decreased to 20% for the third quarter of 1999 compared to 23% for the
third quarter of 1998.

        Depreciation and Amortization Expense. Our depreciation and amortization
expense was $8.0 million for the third quarter of 1999. This represented an
increase of $4.3 million, compared to $3.7 million for the third quarter of
1998. This increase primarily resulted from depreciation and amortization
expense relating to our business acquisitions during the first nine months of
1999 and depreciation expense on our new Seattle SuperSonics aircraft, which was
placed into service in December 1998.

        Interest Expense. Our interest expense was $9.8 million for the third
quarter of 1999. This represented an increase of $3.2 million, or 48%, compared
to the third quarter of 1998. This increase was primarily due to higher average
debt balances during the third quarter of 1999 used to fund our business
acquisitions.

        Income Tax (Expense) Benefit. For the third quarter of 1999, we
recognized an income tax benefit of $2.5 million based on our pretax loss
compared to an income tax expense of $0.1 million for the third quarter of 1998.

        Net Income (Loss). Our net loss for the third quarter of 1999 was $3.7
million. This represented a decrease of $3.9 million compared to net income of
$0.2 million for the third quarter of 1998. Net loss as a percentage of net
revenue was 7% for the third quarter of 1999 compared to net income as a
percentage of net revenue of 1% for the third quarter of 1998.

NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1998

        Net Revenue. Our net revenue for the nine months ended September 30,
1999 was $195.2 million. This represented a decrease of $9.8 million, or 5%,
compared to $205.0 million for the nine months ended September 30, 1998. Changes
in net revenue were as follows:

        o       Outdoor Media. Our net revenue for the first nine months of 1999
                from our outdoor media segment decreased by $12.4 million, or
                15%, compared to the first nine months of 1999. This decrease
                was primarily due to the absence of our airport advertising
                operations, which we sold in June 1998. Excluding our airport
                advertising operations, our net revenue for the first nine
                months of 1999 from our outdoor media segment increased by $3.8
                million, or 6%, compared to the first nine months of 1998. This
                increase mainly resulted from increased


                                       14
<PAGE>   17
                national and local sales and revenues from our large format
                printing operations, which began in the third quarter of 1998.

        o       Television Broadcasting. Our net revenue for the first nine
                months of 1999 from our television broadcasting segment
                increased by $10.2 million, or 21%, compared to the first nine
                months of 1998. This increase was mainly due to the exchange of
                station KKTV for station KCOY in January 1999 and the addition
                of stations KVIQ in July 1998, KMTR in December 1998, WOKR in
                April 1999, and KTFV in August 1999. Excluding these
                transactions, our net revenue for the first nine months of 1999
                from our television broadcasting segment decreased by $0.8
                million, or 2%, compared to the first nine months of 1998. This
                decrease was primarily due to the lack of political advertising
                during 1999, offset by increased national and local sales.

        o       Radio Broadcasting. Our net revenue for the first nine months of
                1999 from our radio broadcasting segment increased by $1.5
                million, or 8%, compared to the first nine months of 1998. This
                increase was primarily due to higher national and local sales.

        o       Sports & Entertainment. Our net revenue for the first nine
                months of 1999 from our sports & entertainment segment decreased
                by $9.1 million, or 17%, compared to the first nine months of
                1998. This decrease was primarily due to the failure of the
                Seattle SuperSonics to participate in the NBA playoffs (in
                contrast to the prior season, when they participated in the
                first two rounds of the 1998 NBA playoffs) and decreased revenue
                from NBA-related activities mostly due to the NBA lockout.

        Segment Operating Expenses. Our segment operating expenses (which
exclude corporate overhead) for the nine months ended September 30, 1999 were
$150.5 million. This represented a decrease of $7.0 million, or 4%, compared to
$157.5 million for nine months ended September 30, 1998. Changes in segment
operating expenses were as follows:

        o       Outdoor Media. Our operating expenses for the first nine months
                of 1999 from our outdoor media segment decreased by $11.9
                million, or 23%, compared to the third quarter of 1998. This
                decrease was primarily due to the absence of our airport
                advertising operations, which we sold in June 1998. Excluding
                our airport advertising operations, our operating expenses for
                the first nine months of 1999 from our outdoor media segment
                increased by $3.0 million, or 8%, compared to the first nine
                months of 1998. This increase was primarily due to higher lease
                costs incurred to secure long-term property lease contracts for
                our advertising displays, higher expenses related to the
                expansion of our national sales force, and expenses relating to
                our large format printing operations, which began in the third
                quarter of 1998.

        o       Television Broadcasting. Our operating expenses for the first
                nine months of 1999 from our television broadcasting segment
                increased by $11.3 million, or 28%, compared to the first nine
                months of 1998. This increase was mainly due to the exchange of
                station KKTV for station KCOY in January 1999 and the addition
                of stations KVIQ in July 1998, KMTR in December 1998, WOKR in
                April 1999, and KTVF in August 1999. This increase was also due
                to a restructuring charge of $1.1 million recognized in
                connection with our ongoing implementation of Digital
                CentralCasting. This restructuring charge consisted primarily of
                costs associated with employee staff reductions. Excluding these
                transactions, our operating expenses for the first nine months
                of 1999 from our television broadcasting segment increased by
                $1.6 million, or 5%, compared to the first nine months of 1998.
                This increase was primarily due to higher program, promotion,
                and production expenses relating to the expansion of local news.

        o       Radio Broadcasting. Our operating expenses for the first nine
                months of 1999 from our radio broadcasting segment increased by
                $0.7 million, or 6%, compared to the first nine


                                       15
<PAGE>   18
                months of 1998. This increase was primarily due to higher
                expenses relating to increased sales activity.

        o       Sports & Entertainment. Our operating expenses for the first
                nine months of 1999 from our sports & entertainment segment
                decreased by $7.0 million, or 13%, compared to the first nine
                months of 1998. This decrease was primarily due to the failure
                of the Seattle SuperSonics to participate in the NBA playoffs
                (in contrast to the prior season, when they participated in the
                first two rounds of the 1998 NBA playoffs).

        Corporate Overhead Expenses. Our corporate overhead expenses were $12.1
million for the first nine months of 1999. This represented an increase of $1.2
million, or 11%, compared to the first nine months of 1998. This increase was
primarily a result of increased marketing costs, increased personnel costs, and
higher utilization of outside services. This increase was partially offset by a
one-time severance charge recognized during 1998.

        Operating Cash Flow. Our Operating Cash Flow for the nine months ended
September 30, 1999 was $32.5 million. This represented a decrease of $4.0
million, or 11%, compared to $36.5 million for the nine months ended September
30, 1998. The decrease in Operating Cash Flow from our outdoor media, television
broadcasting, and sports and entertainment segments and the increase in
corporate overhead expenses were partially offset by the increase in the
Operating Cash Flow from our radio broadcasting segment. Operating Cash Flow as
a percentage of total net revenue decreased to 17% for the first nine months of
1999 compared to 18% from first nine months of 1998.

        Depreciation and Amortization Expense. Our depreciation and amortization
expense was $19.6 million for the first nine months of 1999. This represented an
increase of 8.8 million, or 81%, compared to $10.8 million for the first nine
months of 1998. This increase primarily resulted from depreciation and
amortization expense relating to our business acquisitions during 1999 and
depreciation expense on our new Seattle Supersonics aircraft, which was placed
into service in December 1998.

        Interest Expense. Our interest expense was $26.5 million for the first
nine months of 1999. This represented an increase of $6.3 million, or 31%,
compared to the first nine months of 1998. This increase was primarily due to
higher average debt balances during 1999 used to fund our various acquisitions.

        Stock Compensation Expense. For the first nine months of 1999, we
recognized stock compensation expense of $0.5 million compared to $0.4 million
for the first nine months of 1998. These expenses primarily related to the
amendments of certain stock option agreements.

        Gain on Disposition of Assets. For first nine months of 1999, we
recognized a net gain on disposition of assets of $29.1 million. This gain
consisted primarily of a $28.7 million gain from the exchange of the assets of
television station KKTV for the assets of television station KCOY, a $1.6
million gain relating to the sale of our airport advertising operations, and a
$1.2 million loss on the write-down of a radio broadcasting tower, which was
then sold in July 1999. For the first nine months of 1998, we recognized a $32.8
gain on disposition of assets primarily relating to the sale of our airport
advertising operations in June 1998.

        Income Tax Expense. For the first nine months of 1999, we recognized
income tax expense of $5.7 million based on our pretax income compared to $14.4
million for the first nine months of 1998.

        Extraordinary Item. In the first nine months of 1999, we replaced our
existing credit agreement with a new $325.0 million credit agreement and
redeemed our $20.0 million 10.48% Senior Subordinated Notes. These transactions
resulted in an aggregate charge of $1.4 million, net of taxes, primarily
consisting of the write-off of deferred financing costs and prepayment fees.


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        Net Income. Our net income for the nine months ended September 30, 1999
was $7.9 million. This represented a decrease of $15.5 million, or 66%, from
$23.4 million for the nine months ended September 30, 1998. This includes
pre-tax gains on dispositions of assets of $29.1 million during 1999, resulting
primarily from the exchange of television station KKTV for television station
KCOY, and $32.8 million during 1998 primarily for the sale of our airport
advertising operations. Net income as a percentage of net revenue decreased to
4% for the first nine months of 1999 from 11% for the first nine months of 1998.

LIQUIDITY AND CAPITAL RESOURCES

        On January 22, 1999, we replaced a $300.0 million credit agreement (the
"1998 Credit Agreement") with a new $325.0 million credit agreement (the "1999
Credit Agreement"), consisting of a $150.0 million term loan facility (the "Term
Loan") and a $175.0 million revolving credit facility (the "Revolver"), which
includes up to $10.0 million in standby letters of credit.

        On February 24, 1999, we issued additional 9% Senior Subordinated Notes
due 2009 in the aggregate principal amount of $25.0 million. The total aggregate
amount of 9% Senior Subordinated Notes issued and outstanding is $200.0 million.
The 9% Senior Subordinated Notes bear interest at 9%, which is payable
semi-annually in January and July. Principal is payable in full in January 2009.

        On March 15, 1999, we redeemed the $20.0 million outstanding principal
of our 10.48% Senior Subordinated Notes due 2000 with borrowings under the
Revolver.

        On August 6, 1999, we issued 3,000,000 shares of common stock at a price
of $15.25 per share pursuant to a firmly underwritten public offering. Our net
proceeds were approximately $43.5 million, which were used to repay borrowings
outstanding under the Revolver. On September 7, 1999, we received approximately
$3.6 million in net proceeds from the issuance of 250,000 shares of common stock
upon the exercise of the underwriters' overallotment option, which were also
used to repay borrowings under the Revolver. Subject to the terms of the 1999
Credit Agreement, we are entitled to make further borrowings under the Revolver.
Borrowings under the Revolver have historically been used for general corporate
purposes, including acquisitions and capital expenditures.

        As of September 30, 1999, we had borrowed $150.0 million of the Term
Loan and $39.0 million of the Revolver. Principal repayments under the Term Loan
are due quarterly from March 31, 2000 through December 31, 2005. The Revolver
requires scheduled annual commitment reductions, with required principal
repayments of outstanding amounts in excess of the commitment levels, quarterly
beginning March 31, 2001.

        Under the 1999 Credit Agreement, we can choose to have interest
calculated at rates based on either a base rate of LIBOR plus defined margins
which vary based on our total leverage ratio. As of September 30, 1999, the
annual weighted average interest rate of borrowings under the 1999 Credit
Agreement was approximately 8.37%.

        We have pledged substantially all of our subsidiaries' outstanding stock
and assets as collateral for amounts due under the 1999 Credit Agreement. Thus,
if we default under the 1999 Credit Agreement, the lenders may take possession
of and sell substantially all of our subsidiaries and their assets.

        In addition, the 1999 Credit Agreement and the 9% Senior Subordinated
Notes restrict, among other things, our ability to borrow, pay dividends,
repurchase outstanding shares of our stock, and sell or transfer our assets.
They also contain restrictive covenants requiring us to maintain certain
financial ratios.


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<PAGE>   20
        In 1999, we have purchased the assets of an outdoor advertising company
in the Boston-Worcester, Massachusetts market and television stations KVIQ,
KMTR, WOKR, KCOY, and KTVF. These acquisitions were financed with borrowings
under our 1998 and 1999 Credit Agreements. These transactions are more fully
described in Note 3 to the Condensed Consolidated Financial Statements.

        Our working capital decreased to $14.9 million at September 30, 1999
from $15.7 million at December 31, 1998. This decrease was primarily due to an
increase in accrued interest resulting from the refinancing activity in the
fourth quarter of 1998 and first quarter of 1999, partially offset by increased
accounts receivable and prepaid expenses relating to the 1999-2000 NBA season.

        We expended $21.1 million for capital expenditures in the first nine
months of 1999, compared to $24.2 million in the corresponding period in 1998.
Capital expenditures in the first nine months of 1999 were primarily for
broadcasting equipment, computer equipment, and advertising signs.

        For the periods presented, we financed our working capital needs
primarily from cash provided by operating activities and bank borrowings. Over
those periods, our long-term liquidity needs, including for acquisitions and to
refinance our indebtedness, have been financed through additions to our
long-term debt, principally through bank borrowings and the sale of senior and
subordinated debt securities and, to a lesser extent, through issuance of common
stock. Capital expenditures for new property and equipment have been financed
with both cash provided by operating activities and long-term debt. Cash
provided by operating activities was $3.4 million for the first nine months of
1999, which represents a decrease of $2.9 million from cash provided by
operating activities for the first nine months of 1998.

        On April 15, 1999, we paid our shareholders an annual cash dividend of
$.02 per share.

TELEVISION BROADCASTING GROUP RESTRUCTURING

        On April 6, 1999, we announced the launch of Digital CentralCasting, a
digital broadcasting system which allows us to consolidate back-office functions
such as operations, programming, advertising scheduling, and accounting for all
of our television stations within a regional group at one station. To implement
this strategy, we have organized eleven of the television stations we own and/or
program into the following three regional station groups: New York (WIXT, WIVT,
WUTR, and WOKR), Central California (KGET, KION, and KCOY), and North Coast
(KCBA, KFTY, KVIQ, and KMTR). In addition, we recorded a $1.1 million
restructuring charge in the second quarter of 1999 relating to the ongoing
implementation of Digital CentralCasting. This restructuring charge consisted
primarily of costs associated with employee staff reductions.

        We expect to implement Digital CentralCasting for all of our television
station groups over the next twelve months, and believe we are among the first
companies to introduce this technology in our industry. We anticipate that
Digital CentralCasting will enhance our operational efficiency through economies
of scale and the sharing of resources and programming among our stations.
However, we cannot guarantee that the implementation of Digital CentralCasting
will be achieved in a timely or effective manner and can give no assurance as to
the timing or extent of the anticipated benefits.

RECENT DEVELOPMENTS

        On October 26, 1999, we announced that we have signed a letter of intent
to sell our Miami/Ft. Lauderdale and West Palm Beach outdoor business to Eller
Media, a subsidiary of Clear Channel Communications, Inc. for $300.0 million. We
will use the funds from the sale to repay outstanding debt under our Credit
Agreement, which will provide borrowing capacity to finance future acquisitions
in the broadcast, outdoor, and sports and entertainment markets that benefit our
existing media properties. The transaction is subject to the execution of a
formal purchase agreement and to government approval.


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<PAGE>   21
YEAR 2000

        Many computer systems were originally designed to recognize calendar
years by the last two digits in the date code field. Beginning in the year 2000,
these date code fields will need to accept four-digit entries to distinguish
twenty-first century dates from twentieth century dates. The issue is not
limited to computer systems. Year 2000 issues may affect any system or equipment
that has an embedded microchip that processes date sensitive information.

State of Readiness

        We are committed to addressing the Year 2000 issue in a prompt and
responsible manner, and have dedicated the resources to do so. Our management
has completed an assessment of its automated systems and has implemented a
program to complete all steps necessary to resolve identified issues. Our
compliance program has several phases, including (1) project management; (2)
assessment; (3) testing; and (4) remediation and implementation.

        Project Management: We formed a Year 2000 compliance team in December
1997. The team meets generally on a semi-monthly basis to discuss project
status, assign tasks, determine priorities, and monitor progress. The team also
reports to senior management on a regular basis.

        Assessment: All of our mission-critical software programs have been
identified. This phase is essentially complete. Our primary software vendors and
business partners were also assessed during this phase, and vendors/business
partners who provide mission-critical software have been contacted. In most
cases, the vendors/business partners that were not already compliant have
provided new Year 2000 compliant releases that were available in the third
quarter of 1999. We will continue to monitor and work with vendors and business
partners to ensure that appropriate upgrades and/or testing is completed.

        Testing: Updating and testing of our automated systems was substantially
completed by August 31, 1999. We did not identify any in-house developed
computer systems that were non-compliant.

        Remediation and Implementation: This phase involves obtaining and
implementing renovated Year 2000 compliant software applications provided by our
vendors and performing the necessary programming to render in-house developed
systems Year 2000 compliant. This process also involves replacing non-compliant
hardware. The remediation and implementation process will continue through 1999.

Costs

        The total financial impact that Year 2000 issues will have on us cannot
be predicted with certainty at this time. In fact, in spite of all efforts being
made to rectify these issues, the success of our efforts will not be known for
sure until the year 2000 actually arrives. However, based on our assessment to
date, we do not believe that expenses related to meeting Year 2000 challenges
will exceed $750,000, of which approximately $420,000 had been expended as of
November 1, 1999, although there can be no assurance in this regard.

Risks Related to Year 2000 Issues

        The year 2000 poses certain risks to our company and our operations.
Some of these risks are present because we purchase technology and information
systems applications from other parties who face Year 2000 challenges. Other
risks are present simply because we transact business with organizations who
also face Year 2000 challenges. Although it is impossible to identify all
possible risks that we may face moving into the next millennium, our management
has identified the following potential risks.


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<PAGE>   22
        The functions performed by our mission-critical software that are
primarily at risk from Year 2000 challenges generally involve the scheduling of
advertising and programming in our television broadcasting, radio broadcasting,
and sports & entertainment segments, the scheduling of advertising in our
outdoor media segment, and the scheduling of events in our sports &
entertainment segment. In all of these cases, Year 2000 challenges could impact
our ability to deliver our product with the same efficiency as we do now.

        Our operations, like those of many other organizations, can be adversely
affected by Year 2000 triggered failures of other companies upon whom we depend.
As described above, we have identified our mission-critical vendors and are
monitoring their Year 2000 compliance programs. We have not determined the state
of compliance of certain third-party suppliers of services such as phone
companies, long distance carriers, financial institutions, and electric
companies, the failure of any one of which could severely disrupt our ability to
carry on our business.

Contingency Plans

        We have developed contingency plans related to Year 2000 issues covering
approximately 80% of our systems. As we continue the testing phase, and based on
future ongoing assessment of the readiness of vendors and service providers, we
intend to develop appropriate contingency plans for our remaining systems. It is
possible that certain circumstances may occur for which there are no completely
satisfactory contingency plans.


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<PAGE>   23
                            PART II - OTHER INFORMATION

                   ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits:

        Exhibit No.     Exhibit
        -----------     -------

           27           Financial Data Schedule for the nine-month period ending
                        September 30, 1999.

           99.1         Press Release dated October 26, 1999 regarding the
                        Company's sale of its outdoor advertising business in
                        Miami/Ft. Lauderdale and West Palm Beach, Florida.

           99.2         Press release dated November 8, 1999 announcing the
                        Company's results for the third quarter.

(b)     Reports on Form 8-K:

        (1)     Current Report on Form 8-K, filed July 13, 1999, relating to the
                announcement by the Company of its results for the second
                quarter, as described under Item 5 there.



                                   SIGNATURES

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

                                 THE ACKERLEY GROUP, INC.


DATED:  November 9, 1999         By:/s/ Keith W. Ritzmann
                                    --------------------------------------------
                                    Keith W. Ritzmann
                                    Senior Vice President and Chief Information
                                    Officer, Assistant Secretary, and Controller


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