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

                                    FORM 10-Q

(Mark One)
     X          Quarterly Report Pursuant to Section 13 or 15(d)
    ---              of the Securities Exchange Act of 1934

                For the Quarterly Period Ended September 30, 1998

                                       or

                Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                 For the Transition period from ______ to ______


                         Commission File Number: 0-15514


                      AMERICAN ENTERTAINMENT PARTNERS L.P.
              Exact Name of Registrant as Specified in its Charter


           Delaware                                      06-1183659
State or Other Jurisdiction of               I.R.S. Employer Identification No.
Incorporation or Organization

3 World Financial Center, 29th Floor,
New York, NY    Attn.:  Andre Anderson                     10285
Address of Principal Executive Offices                    Zip Code

                                 (212) 526-3183
               Registrant's Telephone Number, Including Area Code




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

                                  Yes X No ____

<PAGE>
                                       2

<TABLE>
BALANCE SHEETS
(000's Omitted)
<CAPTION>
                                              At September 30,   At December 31,
                                                         1998              1997
                                              ---------------    --------------
<S>                                                    <C>               <C>
Assets
Cash and cash equivalents                              $  356            $1,559
Motion pictures released, net of
  accumulated amortization of $54,675
  in 1998 and $54,654 in 1997                              65                86
Receivable from Twentieth Century Fox                   1,133                11
Accounts receivable - other                                 1                --
                                                       ------            ------
      Total Assets                                     $1,555            $1,656
                                                       ======            ======

Liabilities and Partners' Capital
Liabilities:
  Distribution payable                                 $   --            $  902
  Accrued management fees                                 150               200
  Accounts payable and accrued expenses                    54                59
                                                       ------            ------
      Total Liabilities                                   204             1,161
                                                       ------            ------
Partners' Capital:
  General Partner                                           9                --
  Limited Partners                                      1,342               495
                                                       ------            ------
      Total Partners' Capital                           1,351               495
                                                       ------            ------
      Total Liabilities and Partners' Capital          $1,555            $1,656
                                                       ======            ======
</TABLE>


<TABLE>
STATEMENT OF PARTNERS' CAPITAL
(000's Omitted)
For the nine months ended September 30, 1998
<CAPTION>
                                               General      Limited
                                               Partner     Partners       Total
                                               -------     --------      ------
<S>                                               <C>        <C>         <C>
Balance at December 31, 1997                      $ --       $  495      $  495
Net income                                           9          847         856
                                                  ----       ------      ------
Balance at September 30, 1998                     $  9       $1,342      $1,351
                                                  ====       ======      ======
</TABLE>


<PAGE>
                                       3

<TABLE>
STATEMENTS OF OPERATIONS
(000's Omitted Except Unit Information)
<CAPTION>
                                        Three months ended    Nine months ended
                                              September 30,        September 30,
                                           1998       1997      1998       1997
                                          -----      -----    ------     ------
<S>                                       <C>        <C>      <C>        <C>
Net Revenues
Revenues from motion picture
  exploitation                            $ 285      $ 283    $1,122     $1,114
Less:  Amortization of motion
  picture costs                               5          5        21         29
                                          -----      -----    ------     ------
      Net Revenues                          280        278     1,101      1,085
                                          -----      -----    ------     ------
Other Income (Expenses)
Interest income                              14          4        39         32
Management fees                             (50)       (50)     (150)      (150)
General and administrative                  (48)       (31)     (115)       (88)
Professional fees                            (6)        (6)      (19)       (17)
                                          -----      -----    ------     ------
      Net Other Expenses                    (90)       (83)     (245)      (223)
                                          -----      -----    ------     ------
      Net Income                          $ 190      $ 195    $  856     $  862
                                          =====      =====    ======     ======

Net Income Allocated:
To the General Partner                    $   2      $   2    $    9     $    9
To the Limited Partners                     188        193       847        853
                                          -----      -----    ------     ------
                                          $ 190      $ 195    $  856     $  862
                                          =====      =====    ======     ======

Per limited partnership unit
(63,793.25 outstanding)                   $2.95      $3.03    $13.28     $13.38
                                          -----      -----    ------     ------
</TABLE>


<TABLE>
STATEMENTS OF CASH FLOWS
(000's Omitted)
For the nine months ended September 30,
<CAPTION>
                                                              1998         1997
                                                           -------      -------
<S>                                                        <C>          <C>
Cash Flows From Operating Activities
Net income                                                 $   856      $   862
Adjustments to reconcile net income to net
cash used for operating activities:
  Amortization of motion picture costs                          21           29
  Increase (decrease) in cash arising
  from changes in operating assets and
  liabilities:
    Receivable from Twentieth Century Fox                   (1,122)      (1,114)
    Accounts receivable - other                                 (1)          --
    Accrued management fees                                    (50)         (50)
    Accounts payable and accrued expenses                       (5)          11
                                                           -------      -------
Net cash used for operating activities                        (301)        (262)
                                                           -------      -------
Cash Flows From Financing Activities
  Cash distributions                                          (902)      (1,995)
                                                           -------      -------
Net cash used for financing activities                        (902)      (1,995)
                                                           -------      -------
Net decrease in cash and cash equivalents                   (1,203)      (2,257)
Cash and cash equivalents, beginning of period               1,559        2,479
                                                           -------      -------
Cash and cash equivalents, end of period                   $   356      $   222
                                                           =======      ======= 
</TABLE>


<PAGE>
                                       4


NOTES TO THE FINANCIAL STATEMENTS

The unaudited  interim  financial  statements should be read in conjunction with
the Partnership's annual 1997 audited financial statements within Form 10-K.

The  unaudited   financial   statements   include  all  normal  and  reoccurring
adjustments which are, in the opinion of management, necessary to present a fair
statement  of  financial  position as of  September  30, 1998 and the results of
operations for the three and nine months ended  September 30, 1998 and 1997, the
statements of cash flows for the nine months ended  September 30, 1998 and 1997,
and the statement of partners'  capital for the nine months ended  September 30,
1998. Results of operations for the period are not necessarily indicative of the
results to be expected for the full year.

No  significant  events have  occurred  subsequent  to fiscal year 1997,  and no
material  contingencies  exist which would  require  disclosure  in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).


<PAGE>
                                       5


Part I, Item 2.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations

Liquidity and Capital Resources

The  Partnership's  principal  source of revenues is the cash  distributions  it
receives  pursuant to its participation in Amercent Films (the "Joint Venture"),
a joint venture with Twentieth Century Fox ("Fox"). The Joint Venture was formed
to produce,  finance,  acquire  interests in and exploit  feature  length motion
pictures.

The  Joint  Venture  Agreement  provides  Fox  with an  option  to  acquire  the
Partnership's interest in the Joint Venture at any time after June 30, 1995 at a
price determined by an independent,  third-party appraiser. On February 2, 1998,
Fox delivered  the  Preliminary  Option Notice  required to begin the process of
determining  the fair market  value of the  Partnership's  interest in the Joint
Venture. The Partnership and Fox subsequently appointed Houlihan,  Lokey, Howard
& Zukin  ("Houlihan")  as  their  independent  third-party  appraiser.  Houlihan
delivered its final  appraisal  report to the Partnership and Fox on October 16,
1998  indicating a fair market value of $5.2 million.  On October 28, 1998,  Fox
exercised  its  option  to  purchase  the  Partnership's  interest  in the Joint
Venture. The Partnership and Fox have scheduled the closing of the sale to occur
by November 30, 1998. However,  there can be no assurance that a sale will occur
or be completed within this time-frame.

The Partnership's cash balance at September 30, 1998 was approximately  $356,000
compared to  approximately  $1,559,000  at December  31,  1997.  The decrease is
primarily  attributable to the payment of the 1997 cash distribution on February
20, 1998 totaling approximately $902,000 and the payment of Partnership expenses
during 1998. The  Partnership's  cash balance is expected to provide  sufficient
liquidity  to enable the  Partnership  to fund cash  distributions  and meet its
operating expenses.

The  Partnership's  receivable  from Fox  totaled  approximately  $1,133,000  at
September 30, 1998 compared with approximately $11,000 at December 31, 1997. The
increase is due to the  recognition in 1998 of motion  picture  revenue due from
Fox. As stated above,  the Partnership  receives  proceeds from Fox on an annual
basis.

Accrued  management  fees totaled  approximately  $150,000 at September 30, 1998
compared  with  approximately  $200,000 at  December  31,  1997.  The balance at
December 31, 1997  represents the entire 1997  management fee, while the balance
at September 30, 1998 represents three-quarters of the 1998 management fee.

Results of Operations

For the three and nine months ended September 30, 1998, the Partnership reported
net income of approximately $190,000 and $856,000,  respectively,  compared with
approximately  $195,000 and $862,000 for the corresponding  periods in 1997. The
decreases in net income are  primarily due to increases in  Partnership  general
and administrative expenses.

For the  three  and nine  months  ended  September  30,  1998,  the  Partnership
recognized  revenues from motion picture  exploitation,  net of  amortization of
motion picture costs, of  approximately  $280,000 and $1,101,000,  respectively,
compared with approximately $278,000 and $1,085,000 in the corresponding periods
in 1997.  The increases are primarily due to higher revenue from the foreign pay
and U.S. free television markets. The Partnership  currently receives nearly all
of its revenues from the distribution of the films in ancillary markets.  Motion
picture  profits are based on current  estimates of ultimate  film  revenues and
costs.  These estimates are subject to review  periodically as more  information
about a film's  distribution  becomes  available.  Such  reviews  can  result in
significant adjustments to prior estimates.


<PAGE>
                                       6


General  and  administrative  expenses  for the  three  and  nine  months  ended
September  30,  1998 were  approximately  $48,000  and  $115,000,  respectively,
compared to approximately  $31,000 and $88,000 in the  corresponding  periods in
1997. The increases primarily reflect an increase in Partnership  administrative
expenses and appraisal fees.


Part II     Other Information

Items 1-5   Not applicable.

Item 6      Exhibits and reports on Form 8-K.

            (a) Exhibits -

                (27)Financial Data Schedule

            (b) Reports on Form 8-K

                No reports on Form 8-K were filed during the quarter ended
                September 30, 1998.


<PAGE>
                                       7


                                  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.



                             AMERICAN ENTERTAINMENT PARTNERS L.P.

                         BY: AEP PREMIERE CORPORATION
                             General Partner



Date: November 13, 1998      BY:  /s/Michael T. Marron
                                  Michael T. Marron
                                  President & Chief Financial Officer