<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K

             [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1996

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934
                For the transition period from ______ to ______


                         Commission File Number 0-21920


                            PEOPLE'S CHOICE TV CORP.
             (Exact name of registrant as specified in its charter)

       Delaware                                 06-1366643
(State of Incorporation)              (IRS Employer Identification No.)

                 2 Corporate Drive, Shelton, Connecticut 06484
              (Address of principal executive offices & zip code)

                 Registrant's telephone number:  (203) 925-7900

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

          Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, $.01 per share par value

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

                                     Yes  X   No
                                        -----   -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K  X.
          ---

The aggregate market value of voting stock held by nonaffiliates of the
registrant was approximately $ 48,892,676 as of March 19, 1997 based upon the
last sales price per share of the Registrant's Common Stock, as reported on the
NASDAQ National Market System on such date. As of March 19, 1997, 12,924,817
shares of Common Stock of the Registrant were outstanding.
<PAGE>

                                     PART I
ITEM 1.  BUSINESS

       (a) General Development of Business
           -------------------------------

       People's Choice TV Corp. (the "Company" or "PCTV", which terms, as
used herein, include its consolidated subsidiaries unless the context indicates
otherwise) was incorporated in Delaware on April 22, 1993.  The Company and its
predecessors have been engaged in the wireless cable television business since
1988.

BTA Auction
-----------

       On Thursday, March 28, 1996, the Federal Communication Commission ("FCC")
auction for commercial wireless cable license authorizations for Basic Trading
Areas ("BTAs") concluded.  The BTA authorizations will allow the Company to
expand its existing coverage of commercial wireless channels throughout the
geographic boundaries of the BTA, to license unallocated commercial wireless
channels in the Company's BTA's and to implement technological advances, such as
wireless return path delivery, cellular engineering design and flexible use
services.  The Company purchased 28 BTA authorizations which contain an
estimated 12,054,005 television households, including each of the BTA
authorizations for the Company's nine primary markets.  The purchase price was
$12,894,521, which equals $1.07 per household compared with the auction average
of $2.51 per household.  The Company was entitled to a small business discount
of 15%, reducing the purchase price to the amount of $10,960,343.  The discount
or portions thereof would be required to be refunded to the FCC if any BTA
authorizations are sold within five years of issuance to a company not
qualifying as a small business.

       The payment terms require (i) a 20% downpayment ($2,192,069), of which
$1,911,770 has been paid, (ii) payments of interest on the remaining principal
amount during the two years after the auction closes, and (iii) beginning two
years after the auction closes, amortization of the remaining principal amount
($6,525,896 as of December 31, 1996, increasing to $8,768,274 at the time all of
the BTA authorizations have been issued) and interest over an eight year period.
The interest rate is 2.5% plus the rate of the effective ten-year U.S. Treasury
obligation at the time the BTA authorization is issued.

       The FCC has issued to the Company 26 of the 28 BTA authorizations which
the Company was awarded in the auction.  Applications for the issuance of the
Milwaukee, WI and Columbus, IN BTA authorizations are currently pending at the
FCC.  The 28 markets for which the Company received BTA licenses (including the
pending Milwaukee and Columbus licenses) are listed below:

<TABLE>
<S>                     <C>                    <C>
       Phoenix, AZ      Tucson, AZ             Sierra Vista, AZ
       Yuma, AZ         Nogales, AZ            Juneau, AK
       Chicago, IL      Kankakee, IL           Indianapolis, IN
       Anderson, IN     Bloomington, IN        Columbus, IN
       Lafayette, IN    Kokomo, IN             Marion, IN
       Muncie, IN       Vincennes, IN          Detroit, MI
       Flint, MI        Saginaw-Bay City, MI   Kansas City, MO
       St. Louis, MO    Rolla, MO              Houston, TX
       Milwaukee, WI    Janesville-Beloit, WI  La Crosse, WI
       Madison, WI
</TABLE>

Proposed Exchange of the Kansas City market for the Salt Lake City market
-------------------------------------------------------------------------

       The Company has an agreement with CS Wireless Systems, Inc. ("CS") by
which the Company would transfer to CS its Kansas City, Missouri wireless cable
television assets and in exchange CS would transfer to the Company its Salt Lake
City, Utah wireless cable television assets and certain additional wireless
cable television assets in Provo, Utah.  By acquiring the Salt Lake City, Utah
market, the Company would be adding to its southwestern markets which include
Phoenix and Tucson, Arizona and an investment in the Albuquerque, New Mexico
wireless cable television system.  The transaction will involve an exchange of
rights to (including applications for) 24 wireless channels in Kansas City,
rights to (including applications for) 28 wireless channels in

                                       2
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Salt Lake City, and will include the BTA licenses for both markets. The Company
will also receive the BTA license to Provo/Orem, UT. The Company anticipates
that this transaction will close during 1997.

Acquisition of Sat-Tel Services, Inc.
------------------------------------

       Sat-Tel Services, Inc. ("Sat-Tel") is the exclusive provider of customer
installations and related technical services for the Company.  Prior to January
26, 1996, Sat-Tel was independently owned.  On January 26, 1996, the Company
acquired all of the capital stock of Sat-Tel whereby Sat-Tel became a wholly-
owned subsidiary of the Company. The purchase price was comprised of $3.75
million in cash and a $1.25 million promissory note, which was paid in full on
January 26, 1997.  Robert Young, President of Sat-Tel, has become a Senior Vice
President of the Company with responsibility for customer installations and
related technical services.


       (b) Financial Information About Industry Segments
           ---------------------------------------------

       The Company operates in the wireless cable television industry which is
its only business segment.  Selected financial information with respect to the
Company's wireless cable television business is set forth in the consolidated
financial statements filed under Item 8 in Part II of this Annual Report on Form
10-K.

       (c) Narrative Description of Business
           ---------------------------------

Company Overview

       People's Choice TV Corp. is a leading developer, owner and operator of
wireless cable systems.  The Company's strategy is to own, develop and operate
wireless cable systems with full channel line-ups at high signal strength in
large markets.  The Company's operating and targeted markets are concentrated in
the midwestern and the southwestern regions of the United States.  Currently,
the Company provides service in six operating systems located in Chicago,
Detroit, Houston, Phoenix, St. Louis and Tucson (the "Operating Markets"), and
controls wireless cable channel rights in three additional markets located in
Indianapolis, Milwaukee and Salt Lake City (subject to a pending acquisition)
(the "Pre-Launch Markets").  The Company controls between 19 and 32 wireless
cable channel rights in the nine primary markets included in the Company's
Operating and Pre-Launch Markets, which collectively represent approximately 7.8
million households which the Company believes can be serviced by line-of-sight
transmission.

Business Strategy

       The Company offers its customers high quality program packages which it
believes are lower priced than equivalent packages offered by its traditional
hardwire cable competitors.  The Company believes that its customers enjoy a
higher level of signal reliability and equivalent or superior picture quality
compared to traditional hardwire cable customers.  To achieve such reliability
and picture quality in its large markets, the Company invests in state-of-the-
art headend/transmission facilities.  The Company also provides an impulse pay-
per-view converter to its customers with a programmable remote control which
includes a VCR timer, advance event ordering capability, a parental control
option and other features.  In addition, the Company offers innovative
programming packages in its markets, such as its multi-channel pay-per-view-
service, Home Video Store(R), and its innovative sports service, Team-TV(R).

       The Company transmits programming through the air in a direct line-of-
sight from a headend/transmission facility to each customer's receiving antenna
by utilizing up to 200 megahertz ("MHz") of radio spectrum allocated by the FCC.
Unlike traditional hardwire cable systems, wireless cable systems do not require
extensive coaxial cable networks, amplifiers and related equipment ("Cable
Plant").  As a result, capital costs and plant-related operating costs are less
than those of a typical hardwire cable system.  In addition, the elimination of
Cable Plant utilized by traditional hardwire cable operators to deliver
television signals provides wireless cable operators with operating advantages,
including:  (i) a substantial portion of capital expenditures are demand driven
and are not made until shortly before or after a customer is added, (ii)
maintenance requirements in comparison to hardwire cable operators are reduced
because of the elimination of Cable Plant, (iii) reliability is improved due to
fewer

                                       3
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points of failure and therefore fewer potential transmission disruptions,
(iv) an equivalent or higher quality picture is provided as a result of the
elimination of signal noise inherent in a Cable Plant and (v) flexibility to
introduce advanced technologies (including digital compression) is enhanced
because new equipment only has to be installed at the customer site and the
Company's headend/transmission facility.

       In its Operating Markets, the Company currently transmits programming
services utilizing analog technology.  Analog technology permits a standard 6
MHz wireless cable television frequency to carry one full-motion audio/video
programming service, like ESPN or HBO, at a time.  During 1997, the Company
expects to begin the implementation of digital compression technology in one of
its systems.  One of the benefits of digital compression technology is that the
capacity of each wireless cable television frequency after compression is
expected to be increased by four to ten times.  Digital compression technology
is expected to enable wireless cable systems to offer more than 100 channels of
video programming services, compared to only 33 programming services over the
analog wireless cable channels available today.  It may also allow the Company
to provide data delivery services, such as high speed internet access.  The
Company has determined not to seek to add additional analog customers to its
systems.  The implementation of digital compression technology will permit the
Company to offer many additional video programming services and the Company
believes that such increased video services will enhance its ability to attract
and retain customers.  Despite the implementation of digital technology, there
can be no assurance that the Company will be able to attract and retain the
customer base necessary to compete successfully with existing competitors or new
entrants in the market for subscription television services.

       The Company's ability to commence digital wireless cable service in 1997
may be affected by a number of factors.  First, although the Company has entered
into a letter of intent with an equipment supplier for the purchase of digital
compression equipment, no such equipment has yet been delivered to the Company
and the delivery of such equipment could be delayed for one or more reasons.
Second, the Company will need to obtain certain FCC approvals to implement
digital transmission on certain of the channels in its markets and the Company
will need to secure the consent of certain adjacent market licensees for these
approvals to be granted.  Third, although the Company has sufficient capital
resources to launch one of its markets with digital compression technology, the
purchase of digital receiving equipment for customers will involve substantial
capital expenditures by the Company and therefore the Company will need
additional financings to fully develop additional markets with digital
compression technology, and it is uncertain if and on what terms such financings
will be available.  Fourth, no wireless cable system operator has yet made a
significant implementation of digital compression technology and there can be no
assurance that the implementation and optimization of digital compression
technology in the Company's wireless markets will not take longer than
anticipated.  There may be additional factors, that the Company is unaware of at
this time, that may affect the Company's ability to implement digital technology
in one of its markets in 1997.

       The Company has executed a letter of intent with an affiliate of General
Instrument Corporation ("GIC") pursuant to which the Company is negotiating an
agreement with GIC by which the Company would purchase up to 300,000 digital set
top converters and certain digital transmission equipment from GIC over a three
year period.  For further discussion of the proposed agreement with GIC, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

Wireless Cable Technology

       Wireless cable can provide customers the same or superior video
television service as that of traditional hardwire cable.  Like a traditional
hardwire cable system, wireless cable receives programming at a headend.  Unlike
traditional hardwire cable systems, however, the programming is then
retransmitted by microwave transmitters from an antenna located on a tower
associated with the headend to a small receiving antenna located on a customer's
rooftop.  To ensure the clearest line-of-sight possible in the Company's
markets, the Company has placed, and plans to place, such towers on top of tall
buildings or accessible mountain tops located in such markets.  There exists, in
each of the Company's operating and targeted markets, a number of acceptable
locations for the placement of its towers and the Company does not believe that
the failure to secure any one location for such placement in any single market
will materially affect the Company's operations in such market.  At the
customer's location, the signals are converted to frequencies that can pass
through conventional coaxial cable into a descrambling converter located on top
of a television set.  Wireless cable requires a clear line-of-sight, because the

                                       4
<PAGE>

microwave frequencies used will not pass through dense foliage, hills,
buildings, or other obstructions.  Since wireless cable systems do not require
an extensive cable distribution system, wireless cable operators can provide
customers with a high quality picture resulting in a reliable signal with few
transmission disruptions at a significantly lower system capital cost per
installed customer than traditional hardwire cable systems.

Regulatory Environment

       General.  The wireless cable industry is subject to regulation by the FCC
pursuant to the Communications Act of 1934, as amended (the "Communications
Act").  The Communications Act empowers the FCC, among other things, to issue,
revoke, modify and renew licenses within the spectrum available to wireless
cable; to approve the assignment and/or transfer of control of such licenses; to
approve the location of wireless cable systems; to regulate the kind,
configuration and operation of equipment used by wireless cable systems; and to
impose certain equal employment opportunity and other reporting requirements on
wireless cable operators.

       The FCC has determined that wireless cable systems are not "cable
systems" for purposes of the Communications Act.  Accordingly, a wireless cable
system does not require a local franchise and is subject to fewer local
regulations than a hardwire cable system. Moreover, all transmission and
reception equipment for a wireless cable system can be located on private
property; hence, there is no need to make use of utility poles or dedicated
easements or other public rights of way.  Although wireless cable operators
typically have to lease the right to use wireless cable channels from the
holders of channel licenses, unlike hardwire cable operators they do not have to
pay local franchise fees.  Legislation has been introduced in some states to
authorize state and local authorities to impose on all video program
distributors (including wireless cable distributors) a tax on the distributor's
gross receipts comparable to the franchise fees cable operators pay.  While the
proposals vary among states, the bills all would require, if passed, as much as
5% percent of gross receipts to be paid by wireless distributors to local
authorities.  The City of Chicago has adopted an ordinance which imposes a 7%
amusement tax on the gross receipts of providers of subscription video services.
This tax has been challenged by certain hardwire cable operators in Chicago and
the Company may challenge the tax in the future.  The outcome of any such legal
challenge is uncertain.  Pursuant to federal legislation, providers of video
programming services utilizing direct to home satellite systems are exempt from
such tax, but such exemption is not currently available to the Company.

       In each geographic service area of the 50 largest markets, 33 analog
channels are available for wireless cable (in addition to any local off-air
VHF/UHF broadcasts that are not retransmitted over the microwave channels). In
each geographic service area of all other markets, 32 analog channels are
available for wireless cable (in addition to any local off-air VHF/UHF
broadcasts that are not retransmitted over the microwave channels). Except in
limited circumstances, 20 of these analog channels in each of these geographic
service areas can generally only be licensed to qualified non-profit education
organizations ("ITFS Channels"), and, in general, each of these channels must be
used a minimum of 20 hours per week for instructional programming.  The
remaining "excess air time" on an ITFS Channel may be leased to wireless cable
operators for commercial use, without restrictions (other than the right of the
ITFS license holder, at its option, to recapture up to an additional 20 hours of
air time per week for educational programming).  Programs such as C-SPAN and The
Discovery Channel as well as internet service can qualify as educational
programming and thereby facilitate greater usage by the Company of an ITFS
Channel.  In addition, lessees of ITFS's "excess air time", including the
Company, generally have the right to transmit to their customers the educational
programming provided by the lessor at no incremental cost.  The remaining 13
analog channels, commonly referred to as Multichannel Multipoint Distribution
Service and Multipoint Distribution Service (collectively "MDS") or commercial
channels, available in most of the Company's markets are made available by the
FCC for full time usage without programming restrictions.

       On July 10, 1996 the Commission issued an order approving interim use of
digital transmissions for MDS and ITFS channels. This order waived certain rules
pertaining specifically to analog use of such channels until further testing can
be conducted and a future rulemaking adopting the final rules for such use is
completed. Digital transmission is specifically limited to use of two types of
digital modulation, Quadrature Amplitude Modulation ("QAM") and Vestigial
Sideband ("VSB") up to the densities of 64-QAM and 8-VSB. MDS and ITFS licensees
may utilize higher modulation densities provided that they submit supplemental
measurement data specific to these higher modulation levels in their
applications. Digital compressed techniques enable wireless cable operators and
MDS or ITFS licensees to increase their channel capacity and service offerings
using existing licenses.

                                       5
<PAGE>

       All modification applications requesting the use of digital transmissions
by either MDS or ITFS applicants are considered minor changes and will not have
to wait the entire 30-day notice period in which to be processed. Thus, all such
ITFS applications need not wait until the Commission opens a "filing window" to
be submitted. Any objections to an MDS or ITFS digital application may be
submitted informally to the Commission at any time prior to the grant of such
application.

       During the interim period governed by this ruling, the Commission will
not require additional ITFS programming by licensees who expand their spectrum
capacity by utilizing digital compression technology. The rules will continue to
provide interference protection to licensees, even when digital technology is
employed. Any conflict resulting among adjacent market stations must be resolved
by agreement between the two parties or neither party will be granted the
authority to modify its operations to employ digital technology.

       However, this is an interim order and any changes to a wireless cable
system under this order may be subject to additional changes when the final
rules regarding digital transmissions are introduced. The Company has filed
numerous applications for authority to convert to digital transmission at its
option, some of which have already been granted in the markets of Chicago,
Detroit, and Phoenix.

       Licensing Procedures. Although the FCC has utilized a number of
different selection procedures, by 1990, the FCC had established a procedure
whereby the FCC's selection among more than one acceptable commercial license
application filed on the same day was determined by a lottery. However, the
lottery procedure was later replaced by an auction procedure. Generally, once a
commercial license application is approved by the FCC and the applicant
satisfies any conditions imposed by the FCC, a conditional license results
allowing construction of the station to commence. Construction generally must be
completed within one year of the date of grant of the conditional license
whereupon a full term license will be issued. All commercial licenses expire on
May 1, 2001 and must then be renewed and may be revoked for cause in a manner
similar to other FCC licenses. The holder of an FCC license has the right to
renew such license at its expiration date provided that the license holder has
complied with the terms of the license and files appropriate renewal
applications in a timely manner. ITFS licenses are issued for terms of 10 years.
FCC rules prohibit the sale for profit of a conditional commercial license or of
a controlling interest in the conditional license holder prior to construction
of the station or, in certain instances, prior to the completion of one year of
operation. The FCC, however, does permit the leasing of 100% of a commercial
license holder's spectrum capacity to a third party and the granting of options
to purchase a controlling interest in a license once the required license
holding period has lapsed.

       Applications for new MDS stations may be filed at any time but only by
BTA authorization holders (discussed below). Applications for new ITFS licenses
and for major ITFS modifications by qualified ITFS applicants may only be made
during specified "filing windows", the first of which occurred in October of
1995.

       In June of 1995, the FCC adopted a competitive bidding (auction)
mechanism for the award of initial licenses for MDS channels. The auction was
completed on March 28, 1996. Successful bidders received the exclusive right to
apply for any and all available MDS frequencies in the entire BTA.  However, all
previously existing MDS licensees or applicants are protected since the blanket
BTA authorization allows the submission of applications for MDS channels within
the BTA only upon demonstrating interference protection to the 35 mile radius
protected service areas of incumbent MDS and ITFS stations licensed, or for
which there is an application for a license pending as of September 15, 1995,
along with any modified license or application for modification of such a
license filed prior to the BTA application filing. A BTA license holder must
show coverage of at least two-thirds of the population of the area within its
control within five years of receiving the BTA authorization. If the BTA holder
is not serving any part of the BTA at the end of 5 years, it will forfeit the
BTA authorization and will not be eligible to regain it. Likewise, if there are
unserved areas in the BTA, the Commission will partition the area and hold an
auction for that partitioned area. Again, the original holder of the BTA will
not be eligible to bid on the partitioned area. ITFS licenses are exempt from
the auction process and applications for ITFS licenses are expected to continue
to be awarded according to the FCC's existing "filing window" system and
comparative criteria.  For a discussion of the BTA authorizations acquired by
the Company, see "Business--General Development of Business--BTA Auction" above.

                                       6
<PAGE>

       Applications for renewal of MDS and ITFS licenses must be filed within a
certain period prior to expiration of the license term, and petitions to deny
applications for renewal may be filed during certain periods following the
filing of such applications. Licenses are subject to revocation or cancellation
for violation of the Communications Act or the FCC's rules and policies.
Conviction of certain criminal offenses may also render a licensee or applicant
unqualified to hold a license. The Company's lease agreements with license
holders typically require the license holders, at the Company's expense, to use
their best efforts, in cooperation with the Company, to make various required
filings with the FCC in connection with the maintenance and renewal of licenses.
The Company believes this reduces the likelihood that a license would be
revoked, canceled or not renewed by the FCC.

       Wireless cable transmissions are governed by FCC regulations dealing with
interference and reception quality. These regulations specify important signal
characteristics such as modulation (i.e., AM/FM) or encoding formats (analog or
digital).  The FCC also regulates transmitter locations and signal strength.
The operation of a wireless cable television system requires the collocation of
a commercially viable number of transmitters and operations with common power
levels.  In order to commence the operations of the Company's targeted markets,
the Company has been required to file applications with the FCC to relocate and
modify existing transmission facilities.  Many of the necessary FCC approvals
have been received and the Company believes that the necessary remaining FCC
approvals will be obtained; however, there can be no assurance that these
approvals will be forthcoming or timely.

       Under current FCC regulations, a wireless cable operator generally may
transmit anywhere within the line of sight of its transmission facility,
provided that its signal does not violate interference standards in the FCC
protected service area of another wireless license holder. Existing wireless
license holders generally are protected from interference within 35 miles of the
transmission site; however, if that site is moved, the protection remains only
within the original 35 mile zone.  Furthermore, protection to the service area
of licenses obtained through the auction is based upon an entirely different
engineering concept which may not provide an equivalent amount of protection.
This new concept requires that BTA holders must protect adjacent BTA holders by
meeting a power flux density restriction at the BTA boundary or in the case of
MDS incumbents, merely by restricting the power flux density at the border of
the incumbent's own protected service area. In some instances, this could mean
less protection afforded to BTA holder stations.

       The 1992 Cable Act.  On October 5, 1992, Congress enacted the 1992
Cable Act, which imposes additional regulation on traditional hardwire cable
operators and permits regulation of rates in markets in which there is no
"effective competition".  The 1992 Cable Act, among other things, directs the
FCC to adopt comprehensive new federal standards for local regulation of certain
rates charged by traditional hardwire cable operators.  The legislation also
provides for deregulation of traditional hardwire cable in a given market once
other multi-channel video providers offer comparable programming to at least 50%
of the households in the franchise area and serve, in the aggregate, at least
15% of the households in the cable franchise area.  Rates charged by wireless
cable operators, typically already lower than traditional hardwire cable rates,
are not subject to regulation under the 1992 Cable Act.

       While current FCC regulations are intended to promote the development
of a competitive television subscription industry, the rules and regulations
affecting the wireless cable industry may change, and any future changes in FCC
rules, regulations, policies and procedures could have a material adverse effect
on the Company.  In addition, a number of legal challenges to the 1992 Cable Act
and the regulations promulgated thereunder have been filed, both in the courts
and before the FCC.  These challenges, if successful, could result in an
increase in the Company's operating costs and otherwise have a material adverse
effect on the Company.  In particular, those sections of the 1992 Cable Act
which prohibit discriminatory or unfair practices in the sale of satellite
programming to competing multi-channel video programming distributors have been
challenged.  The Company's costs to acquire satellite programming may be
affected by the outcome of those challenges.

       1996 Telecommunications Act.   In February 1996, Congress passed and
the President signed into law the Telecommunications Act of 1996 (the "1996
Act").  Some of the provisions of the 1996 Act that directly affect wireless
cable television operators are discussed below.  Beyond those specific
provisions, the 1996 Act contains provisions intended to increase competition in
the telephone, radio, broadcast television, and hardwire and wireless cable
television businesses.  The long term effect of the 1996 Act cannot be
determined at this time, although

                                       7
<PAGE>

competition in the video programming delivery industry is likely to increase as
a result of the adoption of the 1996 Act.

       The 1996 Act changes the definition of cable television system in the
1984 Cable Act so that the definition excludes any systems that serve customers
without using any public right of way.  This change will allow wireless cable
system operators to wire together apartment complexes and other similar
properties, as long as the wiring system does not cross a public right-of-way,
without the need to apply for a local cable television franchise.

       The 1996 Act expands the effective competition test for deregulating
franchised cable operator basic and cable programming services tier rates to
include the provision of comparable video programming services directly to
customers in a cable operator's franchise area by a telephone company or its
affiliate or any multichannel video programming distributor using the facilities
of such carrier or its affiliate.  The 1996 Act also deregulates cable
programming service rates for small cable operators, or such operator's basic
service tier if that was the only tier subject to regulation as of December 31,
1994, and deregulates cable programming services rates for all cable operators
as of March 31, 1999.  These changes may limit or eliminate the extent to which
a particular cable operator is subject to rate regulation.

       The 1996 Act changed the rules with respect to the 1992 Act's uniform
rate requirement and multiple dwelling units ("MDUs").  Prior to the adoption of
the 1996 Act, franchised cable operators were required to offer uniform rates
within franchise areas and with respect to bulk service contracts for MDUs.  Now
franchised cable operators may establish different rates across franchise areas
in which they are subject to effective competition and may offer bulk service
contracts to MDUs without any uniform pricing requirement, except that the
franchised cable operator may not engage in predatory pricing, which concept is
undefined in the 1996 Act.

       The 1996 Act instructs the FCC to adopt regulations to prohibit
restrictions that impair customers' ability to receive video programming
services through reception devices. The FCC now prohibits any restriction that
impairs the installation, maintenance or use of an antenna used for reception of
wireless cable services that is one meter or less in diameter or diagonal
measurement. To impair means to unreasonably delay, prevent or increase the cost
of installation, maintenance or use or to preclude reception of an acceptable
quality signal. Prohibited regulations include, but are not limited to, any
state or local law or regulation, including zoning, land use, or building
regulation, or any private covenant, homeowner's association rule or similar
restriction on property within the exclusive use or control of the antenna user
where the user has a direct or indirect ownership interest in the property.  The
FCC has adopted certain regulations in according to this mandate.

       The 1996 Act eliminated the cable/broadcast cross-ownership and
cable/telco cross ownership prohibitions, freeing broadcasters and telcos to own
cable systems within their service areas. Pursuant to the 1996 Act the FCC
established rules governing Open Video Systems, the operators of which among
other things, must provide non-discriminatory access to video programmers with
regard to carriage.

       In general, and subject to exemption or waiver, hardwire cable operators
are prohibited from holding the license for or leasing capacity from MMDS or
ITFS channels in areas in or about their franchise areas. Additionally, the FCC
is presently considering a rule change that would allow up to 10% common
ownership between franchised and wireless cable companies serving the same area.

       Other Regulations.  Wireless cable license holders are subject to
regulation by the FAA with respect to the construction of transmission towers
and to certain local zoning regulations affecting construction of towers and
other facilities.  There may also be restrictions imposed by local authorities.
There can be no assurance that the Company will not be required to incur
additional costs in complying with such regulations and restrictions.

       Due to the regulated nature of the subscription industry, the Company's
growth and operations may be adversely impacted by the adoption of new, or
changes to existing, laws or regulations or the interpretations thereof.

       Copyright. Under the federal copyright laws, permission from the
copyright holder generally must be secured before a video program may be
retransmitted. Under Section 111 of the Copyright Act, certain "cable systems"
are entitled to engage in the secondary transmission of broadcast programming
without the prior

                                       8
<PAGE>

permission of the holders of copyrights in the programming. In order to do so, a
cable system must secure a compulsory copyright license. Such a license may be
obtained upon the filing of certain reports with and the payment of certain fees
to the U.S. Copyright Office. In 1994, Congress enacted the Satellite Home
Viewer Act of 1994 which enables operators of wireless cable television systems
to rely on the cable compulsory license under Section 111 of the Copyright Act.

       Under the retransmission consent provisions of the 1992 Cable Act,
wireless and hardwire cable operators seeking to retransmit certain commercial
television broadcast signals must first obtain the permission of the broadcast
station in order to retransmit the station's signal. However, wireless cable
systems, unlike hardwire cable systems, are not required under the FCC's "must
carry" rules to retransmit a specified number of local commercial television or
qualified low power television signals. Although there can be no assurances that
the company will be able to obtain requisite broadcaster consents, the Company
believes in most cases it will be able to do so for little or no additional
cost.

Competition

       Wireless cable television operators face competition from a number of
sources, including potential competition from emerging trends and technologies
in the subscription television industry, some of which are described below.

       Hard-Wire Cable.    The Company's principal subscription television
competitors in each market are traditional hard-wire cable operators.  Hard-wire
cable companies are generally well established and known to potential customers
and have significantly greater financial and other resources than the Company.
The hard-wire cable companies competing in the Company's markets generally offer
more channels of programming than the Company.

       Direct-to-Home  ("DTH").   DTH satellite television services originally
were available via satellite receivers which generally were 7 to 12 foot dishes
mounted in the yards of homes to receive television signals from orbiting
satellites. Until the implementation of encryption, these dishes enabled
reception of any and all signals without payment of fees.  Having to purchase
decoders and pay for programming has reduced their popularity, although the
Company will to some degree compete with these systems in marketing its
services.

       Direct Broadcast Satellite  ("DBS").  DBS involves the transmission of an
encoded signal direct from a satellite to the customer's home.  Because the
signal is at a higher power level and frequency than most satellite-transmitted
signals, its reception can be accomplished with a relatively small receiving
dish mounted on a rooftop or in the yard.  DBS service is now available from
DirecTV, Inc., United States Satellite Broadcasting Company, Inc., Prime Star
Partners, and Echostar Communications Corporation.  MCI Communications recently
acquired high power DBS spectrum at an FCC auction and intends to offer
nationwide DBS service with its partner News Corp..  In addition, News Corp. has
announced that it intends to make a significant investment in Echostar. The
growth of DBS service has been significant since such service was first launched
and the Company expects that the DBS service providers will continue to be
significant competitors for video programming customers.

       Private Cable.  Private cable is a multi-channel subscription television
service where the programming is received by satellite receiver and then
transmitted via coaxial cable throughout private property, often multiple
dwelling units ("MDUs"), without crossing public rights of way.  Private cable
operates under an agreement with a private landowner to service a specific MDU,
commercial establishment or hotel.  The FCC amended its rules to provide point-
to-point delivery of video programming by private cable operators and other
video delivery systems in the 18 GHz band.  Private cable operators compete with
the Company for exclusive rights of entry into larger MDUs.

       Telephone Companies.  The 1996 Cable Act broadened the ability for local
exchange carriers ("LECs"), including the Regional Bell Operating Companies
("RBOC's"), to acquire and develop cable television systems.  Bell Atlantic,
NYNEX, BellSouth, and Pacific Telesis have all made acquisitions of and
investments in wireless cable television systems.  Ameritech and other RBOC's
have begun acquiring hardwire cable television franchises.  In addition, in
1996, US West Media Group closed on an agreement to acquire Continental
Cablevision Inc., one of

                                       9
<PAGE>

the largest hardwire cable operators in the U.S. The Company anticipates that
the RBOC's and other LEC's will soon become significant competitors for video
programming customers.

       Local Off-Air VHF/UHF Broadcasts.   Local off-air VHF/UHF broadcast
television stations (such as ABC, NBC, CBS and Fox) provide free programming to
the public.  Potential customers may forego subscription television and only
receive free off-air programming.

       Local Multi-Point Distribution Service ("LMDS").    The FCC has
redesignated portions of the 28 Ghz and 31 Ghz bands to create a new video and
data delivery service referred to as LMDS.  The FCC will award licenses in each
of 493 BTAs pursuant to auctions.  Final rules for LMDS have been established
but no date for the auction has been scheduled.  While the Company anticipates
that LMDS may become a viable competitor for video programming customers, until
more LMDS systems are in operation, the level of competition that LMDS may
provide cannot be determined.

The Company's Marketplace

       Currently, the Company provides service in six operating systems located
in Chicago, Detroit, Houston, Phoenix, St. Louis and Tucson (the "Operating
Markets") and controls wireless cable channel rights in three additional markets
located in Indianapolis, Milwaukee and Salt Lake City (subject to a pending
acquisition) (the "Pre-Launch Markets"). The Company controls between 19 and 32
wireless cable channel rights in the nine primary markets included in the
Company's Operating and Pre-Launch Markets, which collectively represent
approximately 7.8 million households which the Company believes can be serviced
by line-of-sight transmission with existing analog technology. The Company owns
a 27% interest in a partnership that operates a wireless cable television system
in Albuquerque, New Mexico, which the Company estimates has 220,000 line of
sight households. A description of the Company's principal markets is set forth
below.

<TABLE>
<CAPTION>
                             Estimated Signal       Estimated Line-of-Sight                 Number of Customers as of
Markets                       Area Households             Households                            December 31, 1996
-------                      -----------------      -----------------------                 -------------------------
<S>                          <C>                    <C>                                     <C>
Chicago                             2,836,000             2,275,000                                    19,000
Detroit                             1,740,000             1,368,000                                     3,100
Indianapolis (1)                    1,233,000               760,000                                To be launched
Houston                             1,105,000               866,000                                    18,200
Phoenix (2)                         1,014,000               910,000                                     3,400
St. Louis                             908,000               609,000                                     6,100
Milwaukee                             650,000               423,000                                To be launched
Salt Lake City(3)                     359,000               320,000                                To be launched
Tucson                                314,000               284,000                                    28,000
                                    ---------             ---------                                    ------
Total                               10,159,00              7,815,00                                    77,800
</TABLE>

(1)  Includes Indianapolis and certain smaller markets surrounding Indianapolis
in which the Company has significant wireless cable frequency rights.

(2)  Includes Casa Grande, Arizona, which will be served by a separate transmit
site.

(3)  The acquisition of this market is pending.

       Chicago.  The Company offers 44 channels (including 12 off-air VHF/UHF
channels) in the Chicago market through its subsidiary Preferred Entertainment,
Inc. ("PEI").  PEI controls the rights to 32 wireless channels and transmits at
50 watts from the Sears Tower, the tallest building in Chicago.

       Detroit.  The Company offers 20 channels (including 8 off-air VHF/UHF
channels) in the Detroit market through its subsidiary People's Choice TV of
Detroit, Inc. ("PCTV Detroit").  The Company owns 100% of the

                                       10
<PAGE>

common stock of PCTV Detroit. PCTV Detroit controls the rights to 26 wireless
cable channels and transmits at 10 watts.

       The Company recently received digital authorizations from the FCC on 14
of its ITFS wireless cable television channels. These authorizations will allow
the Company to use these channels for digital video, data transmission and
internet service. The Company has additional applications on file at the FCC to
increase power, adjust the antenna configuration, and other matters with respect
to its 26 Detroit wireless channels. Subject to the receipt of certain
interference agreements, the Company will be able to provide digital video, data
transmission and internet service on its 12 MMDS channels in the Detroit market
and colocate those channels with the 14 ITFS channels. Because the Detroit
market is within 50 miles of the Canadian border, wireless cable television
frequency specifications are subject to a technical coordination agreement
between the FCC and the Canadian Radio and Television Commission ("CRTC").
Currently, a 1989 agreement between the FCC and CRTC regulates such cross-border
transmission interference issues. The Company expects that interference issues
arising as a result of Detroit's proximity to the Canadian border will be
resolved pursuant to this agreement. There can be no assurance, however, that
the requested applications will be approved and that the Company will be able to
modify its Detroit wireless cable television frequencies as currently proposed.

       Houston.  The Company offers 43 channels (including 12 off-air VHF/UHF
channels) in the Houston market through its wholly-owned subsidiary, People's
Choice TV of Houston, Inc. ("PCTV Houston").  PCTV Houston controls the rights
to 31 wireless cable channels and transmits at 100 watts of power from one of
the tallest buildings in Houston.

       Indianapolis.  Through its approximately 88% owned subsidiary, Wireless
Cable of Indianapolis, Inc. ("WCI"), PCTV controls the rights to 32 wireless
cable channels in the Indianapolis market.  WCI also holds significant wireless
cable frequency rights in Anderson, Bloomington, Lafayette and Kokomo, Indiana,
which markets are in proximity to the Indianapolis market.

       Milwaukee. The Company controls the rights to 19 wireless channels in the
Milwaukee market through its wholly-owned subsidiary, People's Choice TV of
Milwaukee, Inc. ("PCTV Milwaukee").

       Phoenix.  The Company offers 39 channels (including 6 off-air VHF/UHF
channels) in the Phoenix market through its wholly-owned subsidiary, People's
Choice TV of Phoenix, Inc. ("PCTV Phoenix").  PCTV Phoenix controls the rights
to 32 wireless cable channels and transmits at 100 watts.

       Salt Lake City. The Company has a pending transaction to acquire the Salt
Lake City, Utah market in exchange for its Kansas City market. See "Business--
General Development of Business--Proposed Exchange of the Kansas City market for
the Salt Lake City market." Upon the closing of this acquisition, the Company
will control the rights to 20 wireless cable channels in the Salt Lake City
market and will also have the rights to pending applications at the FCC for 8
additional channels. There can be no assurance that this acquisition will be
successfully consummated.

       St. Louis.  The Company offers 31 channels (including 6 off-air VHF/UHF
channels) in the St. Louis market through its wholly-owned subsidiary, People's
Choice TV of St. Louis, Inc. ("PCTV St. Louis").  PCTV St. Louis controls the
rights to 29 wireless channels and transmits at 200 watts.

       Tucson.  The Company offers 36 channels (including 4 off-air VHF/UHF
channels) in the Tucson market through its wholly-owned subsidiary, People's
Choice TV of Tucson, Inc. ("PCTV Tucson").  PCTV Tucson controls the rights to
32 leased channels. PCTV Tucson transmits these channels at 50 watts from the
top of Tower Peak in Pima County, Arizona.

Licenses and Channel Leases

       The Company does not hold directly any of the FCC licenses for channels
that it uses to transmit programming; instead, it has acquired the right to
transmit under long-term leases.  Some of those leases are with Alda Wireless
Holdings, Inc. and Alda Gold, Inc., corporations which are affiliates of the
Company and which are

                                       11
<PAGE>

controlled by Matthew Oristano. The Company makes nominal payments to Alda
Wireless Holdings, Inc. and Alda Gold, Inc. for those lease rights. The other
leases are with unaffiliated third parties. The average term of the Company's
channel leases, including renewals at the Company's option, is more than ten
years.

       The holder of an FCC license has the right to renew such license at its
expiration date provided that the license holder has complied with the terms of
the license and files appropriate renewal applications in a timely manner.

       Although the Company anticipates that it will continue to have access to
a sufficient number of channels to operate a successful wireless cable system,
if a significant number of the Company's channel leases are not renewed, a
significant number of its pending FCC applications are not granted or the FCC
terminates, forfeits, revokes or fails to renew the authorizations held by the
Company's channel lessors, the Company may be unable to provide a viable
programming package to customers in some or all of its markets.

       Licenses for wireless cable channels in most markets that meet the
Company's market selection criteria have already been granted or applied for.
Thus, in order to build and operate wireless cable systems in new markets where
it does not already control a critical number of channels, the Company will be
required to lease sufficient channel capacity from third parties.  There can be
no assurance that such channel capacity will be available on terms acceptable to
the Company.

Employees

       As of March 25, 1997 the Company had a total of 450 employees. None of
the Company's employees is subject to a collective bargaining agreement. The
Company has experienced no work stoppages and believes that it has good
relations with its employees.

Trademarks

       The Company owns certain trademarks; however, the Company's management
believes that the Company's business is not materially dependent upon its
ownership of any single trademark or group of trademarks.

ITEM 2.   PROPERTIES

       The Company leases approximately 7,600 square feet for its executive
offices in Shelton, Connecticut, which lease runs through August 31, 1998 and
5,800 square feet in Tucson which lease runs through March, 2001.  PCTV Tucson
leases approximately 18,000 square feet of office space in Tucson pursuant to
two leases that run through October, 1997 and March, 2001. PCTV St. Louis leases
approximately 4,000 square feet of office and warehouse space in St. Louis,
Missouri which lease runs through December, 1999.  PCTV Houston owns a 48,500
square foot building in Houston, Texas.  PCTV Houston also leases 6,400 square
feet of office and warehouse space in Houston which lease runs through December,
1997 and which is currently subleased to a third party.  PCTV Phoenix leases
approximately 43,000 square feet in an office building in Phoenix, which lease
expires in December, 2005, the majority of which is subleased to a third party.
PCTV Phoenix also leases approximately 12,000 square feet of office and
warehouse space in Phoenix which lease continues through January, 1998.  PCTV
Detroit leases approximately 1,500 square feet of office space, which lease is
currently month to month. PCTV Detroit also leases approximately 10,000 square
feet of warehouse space, which lease runs through March, 1999.  In Chicago, PEI
leases approximately 10,000 square feet of office space which space serves as
PEI's primary office and which lease expires in November, 2003.  In addition,
PEI leases two warehouse and office spaces totaling approximately 8,000 square
feet, which leases expire between November, 2003 and May, 2004.  PCTV
Indianapolis leases a small suite in Indianapolis which lease is month to month.
Sat-Tel leases approximately 2,500 square feet in Northfield, Illinois, which
lease expires in July, 1998.

       The Company expects to purchase or lease additional office space in other
cities when it expands or launches other wireless cable systems.  In addition to
office space, the Company also leases or will lease space on the top of
buildings or transmission towers located in the markets where it operates or
will operate its wireless cable systems.  The Company locates its wireless cable
transmitters on these buildings or towers.  The Company believes

                                       12
<PAGE>

that office space and space on buildings or transmission towers currently is
readily available on acceptable terms in the markets where the Company intends
to operate wireless cable systems.

ITEM 3.  LEGAL PROCEEDINGS

       Except as discussed below, the Company is not a party to any litigation
that could have a material adverse effect on its business, results of operations
or financial condition.

       Cable Equity Partners, Inc. ("CEP") had filed a complaint against the
Company and People's Choice TV of Houston, Inc. in the state courts of Texas.
The complaint alleged causes of action based upon slander, libel and tortious
interference with contractual relations.  CEP had claimed damages in excess of
$20 million.  The Company and its counsel had vigorously defended against this
lawsuit.  While the Company and its counsel believes that this lawsuit was
brought without merit, to avoid the risks inherent in a jury trial, the Company
elected to settle this lawsuit.   The parties reached a settlement agreement at
a mediation held on October 21, 1996.  The terms of the settlement provide for a
payment of $1.0 million cash to CEP and for CEP to receive 56,000 shares of
restricted Company common stock valued at $616,000.  All of the cash settlement
amount was paid by the Company's insurance carrier.

       Wireless Enterprises, Inc. and Indianapolis Wireless, L.P. have filed a
complaint against the Company in U.S. District Court in Connecticut.  The
complaint alleges causes of action based on fraud, tortious interference with
contract, negligence, breach of good faith, and unfair trade practices.  The
complaint alleges that the Company took certain actions with respect to the
Detroit market that deprived plaintiffs of the opportunity to acquire certain
wireless cable frequencies in that market.  The complaint alleges that by taking
such actions the Company breached certain obligations to the plaintiffs.  The
complaint seeks money damages and injunctive relief.  The Company has retained
counsel and the discovery process is proceeding.  Although there can be no
assurance as to the ultimate outcome, the Company believes it has meritorious
defenses in this action and intends to defend vigorously against this action.
The Company believes that the eventual outcome of this action will not have a
material adverse effect on the consolidated financial statements of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

       None.

                                       13
<PAGE>

                                    PART II

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

Market Information

       The Common Stock is traded on the NASDAQ under the symbol "PCTV" and is
designated as a NASDAQ National Market System security.  The following table
sets forth, on a per share basis for the periods shown, the range of high and
low sale prices of the Common Stock as reported by NASDAQ.

<TABLE>
<CAPTION>
                      Closing Sale Price
                      ------------------
1995                   High    Low
<S>                   <C>     <C>

First Quarter         $28.25  $15.00

Second Quarter        $30.50  $24.00

Third Quarter         $25.63  $18.25

Fourth Quarter        $25.25  $18.00

1996

First Quarter         $19.75  $15.25

Second Quarter        $19.00  $12.50

Third Quarter         $19.00  $11.50

Fourth Quarter        $15.00  $ 5.25
</TABLE>

Holders

       On March 15, 1997 there were approximately 175 holders of record of PCTV
Common Stock.

Dividends

       The Company has not declared or paid any cash dividends on its common
stock since its formation in April 1993. The Company does not currently intend
to declare or pay any cash dividends on its common stock, but intends to retain
future earnings for reinvestment in its business. The indenture relating to the
Company's Senior Discount Notes due 2004 restricts the Company from paying cash
dividends on its common stock unless certain requirements are satisfied.

       Since the Company generally conducts, and in the future intends to
generally conduct, operations through subsidiaries, the Company's ability to
declare or pay cash dividends is substantially dependent on the ability of the
Company's present and future subsidiaries to declare or pay cash dividends to
the Company.  Certain agreements between PCTV Tucson and its lenders prohibit
PCTV Tucson from paying dividends.  Similar prohibitions or restrictions may be
placed on other subsidiaries of the Company in connection with financing
arrangements made therewith.

                                       14
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

       The following table presents selected historical data for the Company and
its predecessors.  The information contained herein should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and Notes
thereto of the Company.

<TABLE>
<CAPTION>
                                                              Years Ended December 31,
----------------------------------------------------------------------------------------------------------
                                             1992          1993          1994          1995        1996
                                                       (In thousands, except per share data)
<S>                                       <C>          <C>           <C>           <C>           <C>
Statements of Operations Data:
Revenues                                  $ 3,989       $ 5,780      $ 12,557      $ 26,004      $ 33,425
Depreciation and Amortization               2,207         3,328         6,606        24,627        39,041
Operating Loss                             (4,782)       (8,189)(1)   (20,573)      (42,277)      (50,819)
Interest Expense                            1,268         1,938         2,514        15,566        27,891
Net Loss                                   (6,124)       (9,802)      (19,531)(2)   (53,235)(3)   (75,887)

Actual and Pro Forma Net Loss
   Per Common Share                        $(1.44)(4)    $(1.73)(4)    $(2.20)(2)    $(5.23)(3)    $(6.26)
Weighted Average Number of
 Common Shares Outstanding                  3,999         5,367         8,949        11,072        13,100


Balance Sheets Data:
   Total Assets                           $16,210       $43,427      $117,532      $373,093      $326,148
   Notes and Other Payables                18,395        16,659        12,116       202,317       234,431
Partner's Capital (Deficit)/
  Stockholders' Equity                     (5,628)       20,865        82,997        96,519        14,089
</TABLE>
___________________________

Financial Statement Presentation

       The consolidated financial statements include operations of People's
Choice TV Partners ("PCTV Partners") to March 10, 1993, the operations of a
successor limited partnership, People's Choice TV Partners, L.P., ("PCTV L.P."),
from March 11, 1993 to April 29, 1993 and the operations of the Company
thereafter.

       The statements of operations data for the three years ended December 31,
1996 and the balance sheets data for December 31, 1995 and 1996 are derived from
the consolidated financial statements and accompanying notes of PCTV Corp. and
Subsidiaries included in Item 8 hereto.

       The balance sheets data for December 31, 1995 and 1996 are derived from
the PCTV Corp. and Subsidiaries consolidated financial statements included in
Item 8 hereto.
___________________________

(1)  Includes approximately $1.2 million of non-recurring, non-cash compensation
     expense in connection with grants of non-qualified options made in 1993 to
     certain employees.

(2)  Includes an income tax benefit of $3.2 million or $.36 per share.

(3)  Includes an extraordinary gain of $1.2 million or $.11 per share.

(4)  The  pro forma net  loss  per share would  have  been $1.40 and $1.69 for
     the years  ended   December 31, 1992 and 1993, respectively, assuming
     97,971 and 98,832 shares, respectively, had been issued at the initial
     public offering price of $10.50


                                       15
<PAGE>

     per share for the common stock, and the proceeds were received and used to
     retire the Graphic Scanning Liquidation Corp. note on January 1, 1992.

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

Overview

       The Company's predecessor was formed in 1988 to accumulate wireless cable
channel licenses (or frequency rights) and to own, develop and operate wireless
cable systems.  The Company has accumulated one of the largest portfolios of
wireless cable channel  rights in  the United States.  The  Company  has  rights
to  between 19 and 32  wireless cable  channels  in  Tucson, Houston, St. Louis,
Chicago, Milwaukee, Phoenix, Indianapolis, Detroit and  Salt Lake City (subject
to a pending acquisition).

       The Company currently operates systems in six cities. The Tucson system
(the "Tucson System") was launched in July 1991, the Houston system (the
"Houston System") was launched in March 1994, the St. Louis system (the "St.
Louis System") was launched in October 1993, the Phoenix system (the "Phoenix
System") was launched in August, 1995, the Chicago system (the "Chicago System")
was acquired in September 1995 and the Detroit system (the "Detroit System") was
acquired in August 1995.

Results of Operations

       The following discussion should be read in conjunction with the Company's
consolidated financial statements and notes thereto, and the other financial
information appearing elsewhere in this Form 10-K.

Strategic Direction

       During 1996, the Company's strategy was to conserve capital pending the
implementation of digital video compression technology.  Pursuant to this
strategy, the Company does not plan to further develop its analog customer base.
The Company expects to implement digital video compression technology in one of
its markets in 1997.  See "Business-Business Strategy" above for certain risk
factors concerning the launch of a system with digital compression technology.
The Company believes that the implementation of digital video compression
technology will expand its video product offering (possibly beyond the number of
channels available from the Company's hardwire cable competitors) and enhance
its ability to attract and retain customers and at such time the Company expects
to resume a customer growth strategy.  There can be no assurance that PCTV will
be able to attract and retain the customer base necessary to compete
successfully with existing competitors or new entrants in the market for
subscription television services.

Revenues

       Revenues increased 29% and 107% for the years ended December 31, 1996 and
December 31, 1995, respectively.  The increases in revenue in 1996 compared to
1995 is  principally attributable to the acquisition of the Chicago and Detroit
systems, on September 8, 1995 and August 29, 1995, respectively,  and the
addition of customers in the Phoenix system.  The increase in revenue in 1995
compared to 1994 is principally attributable to the addition of customers in the
Houston, Tucson and St. Louis systems and the aforementioned acquisition of the
Chicago and Detroit systems.  Customer count decreased 3% to 77,800 at December
31, 1996 from 80,100 at December 31, 1995 primarily due to the Company's
suspension of the growth of its analog customer base in 1996.  Customer count
increased 60% to 80,100 at December 31, 1995 from 50,100 at December 31, 1994.

Service Costs

       Service Costs increased 19% and 131% for the years ended December 31,
1996 and December 31, 1995, respectively. Service Costs are mainly programming
costs, channel lease payments, transmitter site rentals, cost of program guides,
repair and maintenance expenditures and service calls. Service costs increased
in 1996 primarily due to the Chicago and Detroit system acquisitions and to the
increase of customers in the Phoenix system, partially offset by a decrease of
customers in the Houston system. Service Costs increased in the Houston System
during 1995 due to the costs associated with the high level of customers
disconnected during 1995, caused in part by delays

                                       16
<PAGE>

in implementing the Company's computerized collection system and standardized
collections procedures. The implementation of the new billing and collection
system was completed in 1995. Service Costs in the Company's other operating
systems also increased in 1995 compared to 1994 due to increases in the number
of customers and to increases in the cost of programming.

Selling, General and Administrative Costs

       Selling, general and administrative costs decreased 7% for the year ended
December 31, 1996 from the prior year due to the Company suspending the growth
of its analog customer base which caused a significant decrease in expenses,
primarily salaries and related benefits due to personnel reductions and lower
bad debt expenses in the Houston and St. Louis systems. Corporate salaries and
related benefits also decreased in 1996 due to reductions in personnel.
Partially offsetting these decreases are costs associated with the
aforementioned acquisition of the Chicago and Detroit systems, the addition of
customers in the Phoenix system, costs associated with digital compression and
internet testing, and an increase in professional fees.  Selling, general and
administrative costs increased 41% for the year ended December 31, 1995 from the
prior year primarily due to the development of the Houston system, the launch of
the Phoenix system, increased corporate headquarters costs, and costs relating
to the acquisition of the Chicago and Detroit systems.

Depreciation and Amortization

       Depreciation and amortization expense primarily includes depreciation of
wireless systems and equipment and amortization of frequency rights.
Depreciation and amortization increased for the year ended December 31, 1996
compared to 1995 primarily due to the acquisition  of  the Chicago and Detroit
systems, the launch of the Phoenix system in 1995 and additional expense
recorded on certain of the St. Louis assets.  Depreciation and amortization
expense was higher for the year ended December 31, 1995 compared to 1994,
primarily due to the installation of receiving equipment for new customers in
the Tucson, Houston and St. Louis systems and the  acquisition of the Chicago
and Detroit systems.  The Company's direct costs of obtaining customers exceeds
installation revenue.  These excess costs are capitalized and amortized over a
three year period, or the life of the customer, if shorter. The Company expects
that depreciation and amortization expense will continue to increase in the
foreseeable future.

Non-cash Settlement of Lawsuit

       The amount represents the value of 56,000 shares of restricted Company
common stock issued as part of the settlement of a lawsuit. See Item 3 - Legal
Proceedings.

Operating Loss

       Operating loss was $50.8 million, $42.3 million, and $20.6 million for
the years ended December 31, 1996, 1995 and 1994, respectively. Operating loss
increased in 1996 from 1995 principally due to increases in depreciation and
amortization expense and the non-cash settlement of the lawsuit, partially
offset by the net increase in revenues compared to service costs and selling,
general and administrative expenses. Operating loss increased in 1995 from 1994
principally due to increases in expenses in connection with the development of
the Company's business as described above. Cash flows used in operating
activities were $6.2 million, $17.9 million, and $14.7 million for the years
ended December 31, 1996, 1995 and 1994, respectively. The reduction in 1996
compared to 1995 of $11.7 million was principally due to improvement in earnings
before interest, taxes, depreciation and amortization of $6.5 million adjusted
for the non-cash settlement of a lawsuit. Also, the net change in assets and
liabilities was favorable in 1996 as compared to 1995 primarily due to prepaid
expenses and other assets which decreased $6.5 million in 1996 as compared to
1995. Partially offsetting this is a decrease in interest income from 1995 to
1996 of $.9 million. Cash flows used in operating activities increased $3.2
million from 1994 to 1995 for the same reasons that operating loss increased.

                                       17
<PAGE>

Gain/(Loss) on Sales and Writedown of Assets

       The 1996 and 1995 amounts primarily include writedowns of notes
receivable of $2.8 million and $.7 million, respectively, principally associated
with the initial investment in the Chicago System, to net realizable values.

Interest Expense

       Interest expense was $ 27.9 million, $15.6 million, and $2.5 million for
the years ended December 31, 1996, 1995 and 1994, respectively. The increase in
interest expense from 1994 through 1996 was primarily a result of the issuance
of the Senior Discount Notes in May 1995. Non-cash interest expense totaled
$26.8 million, $14.7 million and $.9 million for 1996, 1995 and 1994,
respectively, of which $26.1 million and $14.3 million were recorded on the
Senior Discount Notes in 1996 and 1995, respectively.

Interest Income and Other

       Interest income and other was $5.7 million, $6.5 million, and $1.0
million for the years ended December 31, 1996, 1995 and 1994, respectively.
Interest income increased in 1995 compared to 1994 primarily as a result of the
investment of the net proceeds from the issuance of the Convertible Preferred
Stock and Senior Discount Notes. Interest income decreased in 1996 compared to
1995 due to a reduction in cash available for investment. The Company expects
interest income to continue to decrease as the cash balance available for
investment decreases.

Equity Interest in Preferred Entertainment, Inc. ("PEI")

       Equity interest in operations includes (i) the Company's pro rata share
of the net loss of PEI's operations from May 15, 1994 to September 7, 1995 and
(ii) amortization of excess purchase price over fair market value of net assets
acquired. The Company acquired PEI on September 8, 1995. The Company's
statements of operations consolidate the results of PEI from the date of
acquisition.

Minority Interest

       Minority interest was $.1 million, $.1 million and $1.2 million for the
years ended December 31, 1996, 1995 and 1994, respectively. Amounts primarily
represent the minority interest in the Company's Albuquerque joint venture (1996
only), the Indianapolis system (1996, 1995 and 1994) and the Houston system
(1994 only).

Extraordinary Gain on Early Extinquishment of Debt

       This amount represents a net gain on early extinquishment of a $4.5
million note in exchange for 180,000 common shares of the Company's common
stock.

Net Loss

       Net loss was $75.9 million, $53.2 million, and $19.5 million for the
years ended December 31, 1996, 1995 and 1994, respectively. As described above,
these net losses are principally attributable to the significant expenses
incurred in connection with the development of the Company's business. The
Company expects to continue to incur net losses while it develops and expands
its wireless cable systems.

Liquidity and Capital Resources

       Cash, cash equivalents and marketable securities decreased to $104.7
million at December 31, 1996 from $135.7 million at December 31, 1995, a
decrease of $31.0 million. This decrease is primarily attributable to cash used
in operating activities, the acquisition of Sat-Tel Services, Inc., the
acquisition of the Tilden and Anahuac frequencies, the acquisition of BTA
licenses, repayment of notes payable and investment in wireless systems and
equipment, partially offset by cash received on the sale of the Company's
interest in Preferred Entertainment of Champaign.


                                       18
<PAGE>


       The wireless cable business is a capital intensive business. The
Company's operations require substantial capital investment for (i) the
acquisition or leasing of wireless cable channel rights in certain markets, (ii)
the construction of headend/transmission facilities as well as customer service,
maintenance and installation facilities in several cities, (iii) the
installation of customers and (iv) the funding of initial start-up losses.

       During 1997, the Company's strategy is to continue conservation of
capital pending the implementation of digital video compression technology which
is expected to take place in one of its markets during the second half of 1997.
Pursuant to this strategy, the Company does not plan to add to its analog
customer base. The Company anticipates that the development of its wireless
cable systems with digital technology will involve capital expenditures higher
than those involved in implementing analog technology because of the increased
costs for the more complex converter boxes and other equipment which utilize the
digital technology. The Company estimates that it will spend $20.7 million in
1997 on investment in wireless systems and equipment, compared to $15.5 million
in 1996. Also in 1997, the Company will make $10.4 million in expenditures for
required debt payments. To fund such 1997 capital expenditures and debt
payments, the Company anticipates using the Company's available cash and
marketable securities.

       The Company has entered into a letter of intent with an affiliate of
General Instrument Corporation ("GIC") pursuant to which the Company would
purchase from GIC up to 300,000 digital converter boxes. The Company would be
obligated to purchase 200,000 converter boxes over the three year life of the
contract. The Company can cancel its minimum purchase obligation by paying a per
box cancellation fee. The letter of intent is subject to the negotiation and
execution of a definitive agreement between the parties and there can be no
assurance that such an agreement will be executed or that it will not contain
terms different from those described above. The Company's anticipated 1997
payments for converter boxes under the terms described above have been included
in the Company's estimates of capital expenditures for 1997 stated in the
preceding paragraph. The Company believes that it will be able to recover its
remaining investment in analog converter boxes through sales of such boxes to
wireless cable system operators who intend to implement digital service at a
later date than the Company.

       The level of capital expenditures incurred for customer installations is
primarily  variable and dependent on the customer installation activities of the
Company.  Therefore, actual customer installation expenditures may be more or
less than the Company's estimate.  Further significant capital expenditures for
customer installations are expected to be incurred by the Company in 1998 and
subsequent years.  If the Company does not have adequate liquidity to fund its
desired capital expenditure plans, the Company may delay the launch of new
digital markets and slow down its system expansion activities in its operating
markets.

       The Company has experienced negative cash flow from operations in each
year since its formation and the Company expects to continue to experience
negative consolidated cash from operations due to operating costs associated
with its system development, expansion and acquisition activities. Until
sufficient cash flow is generated from operations, the Company will have to
utilize its current capital resources and external sources of funding to satisfy
its capital needs. The development of wireless cable systems in the Company's
major markets referred to above in subsequent years, the development of the
Company's other markets, acquisitions of additional channel rights and wireless
cable systems and the Company's general corporate activities will require the
Company to secure significant additional financings in the future and there can
be no assurance that such financing will be available when required.

Income Tax Matters

       The Company and its subsidiaries have net operating loss carryforwards
("NOLs") at December 31, 1996, for income tax purposes (subject to certain
limitations, including limitations on changes in control, and Internal Revenue
Service review) totaling approximately $113.0 million which expire in the years
2008 through 2011. Approximately $20.0 million of these NOLs at December 31,
1996 are available only to offset future taxable income of the Company's
subsidiaries.



                                       19
<PAGE>

Inflation

       Management does not believe that inflation has a material impact on the
Company's results of operations. Management believes it will be able to increase
customer rates to keep pace with inflationary increases in costs without a
significant decline in the number of customers.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES


                                          Page No. in
                                           Form 10-K
                                          -----------
Report of Independent Public Accountants           21
Consolidated Balance Sheets-December
 31, 1995 and 1996                                 22
Consolidated Statements of Operations
 for Each of the Three Years in the
 Period Ended December 31, 1996                    23
Consolidated Statements of
 Stockholders' Equity for Each of the
 Three Years in the Period Ended
 December 31, 1996                                 24
Consolidated Statements of Cash Flows
 for Each of the Three Years in the
 Period Ended December 31, 1996                    25
Notes to Consolidated Financial
 Statements                                        27



                                       20
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To People's Choice TV Corp.:

We have audited the accompanying consolidated balance sheets of People's Choice
TV Corp. (a Delaware corporation) and subsidiaries as of December 31, 1995 and
1996, and the related consolidated statements of operations, stockholders'
equity  and cash flows for each of the three years in the period ended December
31, 1996.  These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of People's Choice TV
Corp. and subsidiaries as of December 31, 1995 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.



                                                 ARTHUR ANDERSEN LLP

Stamford, Connecticut
March 11, 1997

                                       21
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                  December 31,
                                          -----------------------------
ASSETS                                        1995            1996
                                          -------------  --------------
<S>                                       <C>            <C>
Cash and cash equivalents                 $ 23,243,558   $  41,305,795
Marketable securities                      112,433,408      63,396,191
Subscriber receivables, net of
 allowance for doubtful accounts
   of  $651,300 and $379,500                 2,447,297       2,935,364
Notes and other receivables                  4,073,719       1,146,928
Prepaid expenses and other assets            7,394,211       3,909,492
Investment in wireless systems and
 equipment, net                            208,578,950     196,042,266
Organization and financing costs net of
 accumulated amortization of $1,790,017
 and $2,705,560                              7,406,205       5,731,263
Excess of purchase price over fair
 market value of assets acquired             7,515,329      11,680,391
                                          ------------   -------------
         Total assets                     $373,092,677   $ 326,147,690
                                          ============   =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Notes and other payables               $202,317,369   $ 234,430,828
   Accounts payable                          4,131,968       1,928,429
   Accrued expenses                          6,098,976       5,152,177
   Subscriber advance payments and
    deposits                                 2,052,969       2,662,183
   Minority interest in consolidated
    subsidiaries                             1,297,188       1,086,562
                                          ------------   -------------
         Total liabilities                 215,898,470     245,260,179

Commitments and Contingencies
Convertible Pay-In-Kind Preferred Stock,
    liquidation preference $100 per
    share                                   54,577,371      60,169,770
PCTV Detroit cumulative preferred stock      6,098,000       6,628,365

Stockholders' Equity:
Preferred stock, $0.01 par value,
 4,398,547 shares authorized, no
 shares issued and outstanding                      --              --
Common stock, $0.01 par value,
 75,000,000 shares authorized,
 12,841,203 and 12,924,817 shares
 issued and outstanding at
 December 31, 1995 and 1996,
 respectively                                  128,412         129,248
Additional paid-in capital                 172,415,949     166,447,375
Warrants                                     4,331,244       3,756,840
Accumulated deficit                        (80,356,769)   (156,244,087)
                                          ------------   -------------
           Total stockholders' equity       96,518,836      14,089,376
                                          ------------   -------------
           Total liabilities and
            stockholders' equity          $373,092,677   $ 326,147,690
                                          ============   =============
</TABLE>
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.


                                       22
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                    For the Years Ended
                                                         December 31,
                                          ------------------------------------------
                                             1994           1995           1996
                                          ------------   ------------   ------------
<S>                                       <C>            <C>            <C>
Revenues                                  $ 12,556,682   $ 26,003,786   $ 33,424,512
                                          ------------   ------------   ------------

Costs and expenses:
 Service costs                               6,861,750     15,840,272     18,827,018
 Selling, general and administrative        19,662,544     27,812,937     25,759,454
 Depreciation and amortization               6,605,506     24,627,246     39,041,234
 Non-cash settlement of lawsuit                     --             --        616,000
                                          ------------   ------------   ------------
                                            33,129,800     68,280,455     84,243,706
                                          ------------   ------------   ------------
     Operating loss                        (20,573,118)   (42,276,669)   (50,819,194)

Gain (loss) on sales and writedown of
 assets                                        198,523       (815,521)    (2,907,174)
Interest expense:
  Omni and BCI                                (599,920)       (76,931)            --
  Noncash                                     (906,250)   (14,695,295)   (26,824,846)
  Cash                                      (1,008,229)      (793,999)    (1,066,523)
Interest income and other                      986,795      6,550,607      5,672,691
Equity interest in Preferred
 Entertainment, Inc.                        (1,885,743)    (2,282,213)
Minority interest                            1,179,965        109,954        114,228
                                          ------------   ------------   ------------
Loss before income taxes                   (22,607,977)   (54,280,067)   (75,830,818)
Income tax (benefit) expense                (3,077,250)       152,500         56,500
                                          ------------   ------------   ------------
Loss before extraordinary gain             (19,530,727)   (54,432,567)   (75,887,318)
Extraordinary gain on early
 extinquishment of debt                             --      1,197,424             --
                                          ------------   ------------   ------------
Net loss                                   (19,530,727)   (53,235,143)   (75,887,318)
Preferred dividends                           (128,924)    (4,696,447)    (6,122,764)
                                          ------------   ------------   ------------
Loss applicable to common shares          $(19,659,651)  $(57,931,590)  $(82,010,082)
                                          ============   ============   ============
Loss per common share:
  Loss before extraordinary gain                $(2.20)        $(5.34)        $(6.26)
  Extraordinary gain                                --             11             --
                                          ------------   ------------   ------------
  Net loss                                      $(2.20)        $(5.23)        $(6.26)
                                          ============   ============   ============
Weighted average number of common
 shares outstanding                          8,948,528     11,072,147     13,099,538
                                          ============   ============   ============
</TABLE>
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.

                                       23
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
               FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, 1996

<TABLE>
<CAPTION>
                                            Common Stock Par Value      Additional
                                         ----------------------------     Paid-In                   Accumulated
                                         Shares                Amount     Capital      Warrants       Deficit
                                         ----------------------------  -------------  -----------  --------------
<S>                                      <C>             <C>           <C>            <C>          <C>
Balance, December 31, 1993                    6,608,358      $ 66,084  $ 28,389,757           --   $  (7,590,899)
Net loss                                             --            --            --           --     (19,530,727)
Issuance of common stock in public
   offering                                   1,437,500        14,375    38,646,322           --              --
Issuance of stock options                            --            --       906,250           --              --
Issuance of common stock in
   acquisitions                               1,011,266        10,112    28,877,581           --              --
Issuance of common stock in
   exchange                                     666,674         6,667    13,326,812           --              --
Dividends on Convertible
   Cumulative Preferred Stock                        --            --      (128,924)          --              --
Exercise of stock options                        34,410           344         3,097           --              --
                                         --------------  ------------  ------------   ----------   -------------
Balance, December 31, 1994                    9,758,208        97,582   110,020,895           --     (27,121,626)
Net loss                                             --            --            --           --     (53,235,143)
 Issuance of common stock in
   exchanges                                    302,143         3,022     6,056,891           --              --
 Issuance of common stock in
   acquisition                                2,760,479        27,605    60,702,933           --              --
 Issuance of warrants in acquisition                 --            --            --   $  574,404              --
Exercise of stock options                        17,450           174       263,082           --              --
 Issuance of common stock-
    employment contract                           2,923            29        68,595           --              --
Issuance of warrants in debt offering                --            --            --    3,756,840              --
Dividends on Convertible Preferred
   Stock                                             --            --    (4,696,447)          --              --
                                         --------------  ------------  ------------   ----------   -------------
Balance, December 31, 1995                   12,841,203       128,412   172,415,949    4,331,244     (80,356,769)
Net loss                                             --            --           --            --     (75,887,318)
 Issuance of common stock in
   acquisition                                   27,614           276       445,000           --              --
 Issuance of common stock in lawsuit             56,000           560       615,440           --              --
 Expiration of warrants from
   acquisition                                       --            --            --     (574,404)             --
Stock options expired                                --            --      (906,250)          --              --
Dividends on Cumulative
   Preferred Stock                                   --            --      (530,365)          --              --
Dividends on Convertible
   Preferred Stock                                   --            --    (5,592,399)          --              --
                                         --------------  ------------  ------------   ----------   -------------
Balance, December 31, 1996                   12,924,817      $129,248  $166,447,375   $3,756,840   $(156,244,087)
                                         ==============  ============  ============   ==========   =============
</TABLE>

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

                                       24
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                              For the Years Ended
                                                                  December 31,
                                                 ---------------------------------------------
                                                     1994            1995            1996
                                                 -------------  --------------  --------------
<S>                                              <C>            <C>             <C>
Cash flows from operating activities:
  Net loss                                       $(19,530,727)  $ (53,235,143)  $ (75,887,318)
  Adjustments to reconcile net loss to
   net cash used in operations -
    Depreciation and amortization                   6,605,506      24,627,246      39,041,234
    Deferred income taxes                          (3,225,000)             --              --
    Minority interest in subsidiaries              (1,179,965)       (109,954)       (114,228)
    Equity interest in Preferred
     Entertainment, Inc.                            1,885,743       2,282,213              --
    Extraordinary gain on early
     extinquishment of debt                                --      (1,197,424)             --
    Amortization of original issue
     discount                                              --      14,345,635      26,125,506
    Stock issued in settlement of
     lawsuit                                               --              --         616,000
    Compensation expense related to
     stock options                                         --         151,085              --
    Amortization of imputed discount on
     debt                                             906,250         349,660         699,340
   (Gain) loss on sales and writedown
     of assets                                       (198,523)        815,521       3,123,879
    Provision for losses on subscriber
     receivables                                      482,000       1,849,000         988,700
Changes in assets and liabilities'
    Increase in subscriber receivables             (2,147,748)     (1,320,553)     (1,749,222)
   (Increase) decrease in notes and
     other receivables                                113,546        (101,079)       (308,704)
   (Increase) decrease in prepaid
     expenses and other assets                     (1,719,115)     (3,196,243)      3,333,982
    Increase in organization and
     financing costs                                 (903,644)       (295,358)             --
    Increase (decrease) in accounts
     payable                                        1,839,731      (2,471,876)     (1,320,309)
    Increase (decrease) in accrued
     expenses                                       3,169,085         132,144      (1,362,357)
    Increase in subscriber advance
     payments and deposits                            616,773         210,022         609,514
    Decrease in due to affiliates                  (1,389,678)       (706,583)             --
                                                 ------------   -------------   -------------
       Net cash used in operating
        activities                                (14,675,766)    (17,871,687)     (6,203,983)
                                                 ------------   -------------   -------------

Cash flows from investing activities:
    Purchase of marketable securities             (15,669,725)   (114,429,819)   (114,505,311)
    Proceeds principally from maturity
     of marketable securities                      26,063,262       4,492,331     163,542,528
    Acquisition of  Sat-Tel Services,
     Inc.                                                  --              --      (3,440,400)
    Acquisition of Tilden and Anahuac
     frequencies                                           --              --      (2,253,687)
    Sale of interest in Preferred
     Entertainment of  Champaign                           --              --       1,997,929
    Acquisition of BTA licenses                            --              --      (1,631,474)
    Purchase of wireless systems and
     equipment from Broadcast Cable, Inc.                  --      (3,773,246)             --
    Purchase of wireless systems and
     equipment from Preferred Entertainment,
     Inc.                                                  --      (4,117,902)             --
    Purchase of wireless systems and
     equipment from Eastern Cable Networks
     of Michigan, Inc.                                     --      (4,912,229)             --
    Acquisition of Casa Grande
     frequencies                                           --      (1,200,000)             --
    Investment in wireless systems and
     equipment                                    (41,942,339)    (35,808,250)    (15,491,475)
    Proceeds from sales of assets                     161,000          69,719         645,072
    Issuance of additional notes
     receivable from affiliates                    (4,216,547)        ( 9,115)             --
    Repayment of notes receivable from
     affiliates                                     1,267,306         162,463              --
                                                 ------------   -------------   -------------

        Net cash (used in) provided by
         investing activities                     (34,337,043)   (159,526,048)     28,863,182
                                                 ------------   -------------   -------------
</TABLE>

                                       25
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                        For the Years Ended
                                                            December 31,
                                          -------------------------------------------------
                                                  1994              1995           1996
                                          --------------------  -------------  ------------
<S>                                       <C>                   <C>            <C>
Cash flows from financing activities:
    Proceeds from issuance of notes
     payable                                        1,655,000        141,350            --
    Repayment of notes payable                     (8,791,247)   (12,422,531)   (4,406,962)
Proceeds from the issuance of common
 stock from public offering, net                   38,660,697             --            --
Proceeds from sale of minority interest
 in consolidated subsidiary, net                    6,484,860             --            --
Proceeds from the issuance of
 Senior Discount Notes, net                                --    167,764,337            --

Buyout of minority interest                                --       (129,000)     (190,000)
Proceeds from the exercise of stock
 options                                                   --        180,794            --
Proceeds from the issuance of
 convertible cumulative preferred stock            10,000,000     40,000,000            --
                                                  -----------   ------------   -----------
        Net cash provided by (used in)
         financing activities                      48,009,310    195,534,950    (4,596,962)
                                                  -----------   ------------   -----------
        Net (decrease) increase in cash            (1,003,499)    18,137,215    18,062,237
Cash and cash equivalents, beginning of
 year                                               6,109,842      5,106,343    23,243,558
                                                  -----------   ------------   -----------
Cash and cash equivalents, end of year            $ 5,106,343   $ 23,243,558   $41,305,795
                                                  ===========   ============   ===========

Supplementary disclosures of cash flow
 information:
        Cash paid for interest, net of
         amount capitalized                       $ 2,828,988   $    635,627   $   794,465
        Cash received for interest                $ 1,519,804   $  6,060,869   $ 6,193,670
</TABLE>

Supplemental disclosures of noncash investing and financing activities:

During 1994, the Company issued 39,768 common shares of stock and a $850,000
note in connection with the acquisition of certain frequency rights.  The
Company also issued 971,498 common shares in connection with the acquisition of
Specchio Developers Investment Corp..  During the fourth quarter of 1994, the
PCTV Houston Preferred Stock which represented the minority interest in PCTV
Houston was exchanged for 666,674 shares of the Company's common stock.

During 1995, the Company acquired frequency rights in exchange for 7,143 shares
of common stock.  In addition, the $4,500,000 BCI note payable was exchanged for
180,000 shares of the Company's common stock.  In connection with  the
acquisition of Broadcast Cable, Inc., the Company issued a $6,727,000 promissory
note.  In May 1995, the Company issued warrants valued at $3,757,000 in
connection with the issuance of senior discount notes.  In connection with the
acquisition of Eastern Cable Networks of Michigan, Inc. in August 1995, the
Company issued warrants valued at $574,000 (which expired on December 31, 1996),
$5,150,000 of  notes payable, and cumulative preferred stock in the amount of
$5,850,000.  The Company issued 2,760,479 common shares of  stock in connection
with the acquisition of  Preferred Entertainment, Inc. in  September 1995.  In
October 1995, the Company acquired a 17.5% equity interest in People's Choice TV
of Phoenix, Inc. in exchange for 115,000 shares of PCTV Common Stock.

During 1996 in connection with the acquisition of Sat-Tel Services, Inc., the
Company issued a note payable in the amount of $1,250,000 and issued 27,614
shares of common stock.  In addition, the Company acquired frequency rights in
exchange for a note payable in the amount of $6,525,896.



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

                                       26
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) Company:

       People's Choice TV Corp. (the "Company" or "PCTV") was incorporated in
Delaware on April 22, 1993. The Company and its predecessors have been engaged
in the wireless cable television business since 1988.

       The Company's strategy is to own, develop and operate wireless cable
systems with full channel line-ups at high signal strength in large markets, a
majority of which are expected to be among the top 30 Designated Market Areas.
PCTV's operating and targeted markets are concentrated in the midwestern and
southwestern regions of the United States. Currently, the Company operates six
wireless cable systems located in Houston, Tucson, Chicago, Phoenix, St. Louis
and Detroit and controls wireless cable channel rights in three additional
markets located in Indianapolis, Kansas City and Milwaukee. The Company has a
pending transaction in which it will exchange its Kansas City wireless cable
assets for the Salt Lake City wireless assets.

       Wireless cable television is a new industry within the highly competitive
subscription television industry.  PCTV's principal competitors in each market
are traditional hardwire cable, direct broadcast satellite and private cable
operators. The Company's strategy is to conserve capital pending the
implementation of digital video compression technology which is expected to take
place in one of its markets during the second half of 1997.  Pursuant to this
strategy, the Company does not plan to further develop its analog customer base.
The Company believes that the implementation of digital video compression
technology will expand its video product offering (possibly beyond the number of
channels available from the Company's hardwire cable competitors) and enhance
its ability to attract and retain customers and at such time the Company expects
to resume a customer growth strategy.  There can be no assurance that PCTV will
be able to attract and retain the customer base necessary to compete
successfully with existing competitors or new entrants in the market for
subscription television services.


(2)  Summary of Significant Accounting Policies:

Principles of consolidation--

       The accompanying consolidated financial statements include the accounts
of the Company and its subsidiaries. All significant intercompany transactions
and balances have been eliminated.

Use of estimates---

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

Cash equivalents--

       The Company has classified marketable securities and time deposits as
cash equivalents if the original maturity of such investments is three months or
less at time of purchase.

Marketable securities--

       Marketable securities consist of U.S. Government and Federal Agency bonds
which have an original maturity in excess of three months at time of purchase.
At December 31, 1995 and 1996 these securities vary in maturity up to seven
months. The Company has classified these securities as held-to-maturity and they
are recorded at amortized cost. The fair market value of the securities as of
December 31, 1996 and 1995 approximated the carrying value.

Organization and financing costs--

       Organization and financing costs are being amortized over a five year
period. Amortization expense amounted to approximately $226,000, $1,718,000 and
$1,664,000 in 1994, 1995 and 1996, respectively.

                                       27
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Excess of purchase price over fair market value of assets acquired--

       Excess of purchase price over fair market value of assets acquired is
being amortized over 20 years.

Long-lived assets--

       The Company periodically reviews the carrying value of the investment in
wireless systems and equipment, including frequency rights and  intangible
assets, for each wireless cable system in order to determine whether an
impairment may exist.  The Company considers relevant cash flow, estimated
future operating results, trends and other available information including the
fair value of frequency rights owned, in assessing whether the carrying value of
the assets can be recovered.  An impairment would be measured as any deficiency
in estimated undiscounted cash flows of the wireless cable system to recover the
carrying value related to the assets.  The Company believes that no such
impairments exist, and that the fair market value of its frequency rights
exceeds the carrying value at December 31, 1996.

Revenue recognition--

       Subscription revenues are recognized in the period of service. The
Company charges customers an installation fee that is billed in installments for
up to six months. The Company records installment revenue billed in installments
when received. Customer related acquisition costs, including direct commissions,
exceeded installation revenues in 1994, 1995 and 1996.

System launch expenses--

       Administrative and marketing expenses incurred by systems during their
launch period are expensed as incurred.

Earnings per share--

       The net loss per share has been computed based on the weighted average of
common shares outstanding.  The 1994, 1995 and 1996 shares also include common
equivalent shares issuable upon exercise of certain outstanding stock options
and the Bank of Montreal warrant.

Reclassification

       Certain reclassifications have been made to prior year financial data to
conform to the current year presentation.

(3)  Acquisitions and Dispositions:

       In January 1996, the Company acquired rights to wireless frequencies and
certain other assets in the Tilden, Illinois and Anahuac, Texas markets for a
purchase price of approximately $2,300,000.  The Company acquired leases for 20
and 16 channels in the Tilden and Anahuac markets, respectively.

       On January 26, 1996, the Company acquired Sat-Tel Services Inc. ("Sat-
Tel"), its exclusive installation and technical service company. The purchase
price was $5,000,000 which consisted of $3,750,000 in cash (which included
repayment of two promissory notes in the amount of $410,000 to the shareholders)
and a note payable in the amount of $1,250,000, paid January 26, 1997, with an
interest rate of 5.5% per year. Also at closing, the Company repaid $1,500,000
of bank debt that was owed by Sat-Tel. As additional consideration, 27,614
common shares valued at approximately $445,000 were issued to the former owners
in April 1996. The acquisition was accounted for as a purchase transaction and,
accordingly, the purchase price was allocated to the fair value of assets
acquired and liabilities assumed. Approximately $4,700,000 of the purchase price
has been allocated to excess of purchase price over fair market value of assets
acquired. The Company believes the acquisition will reduce its installation
expenses because the Company will no longer be paying an outside contractor to
perform installation services.

       On August 29, 1995 the Company closed on an acquisition transaction with
Eastern Cable Networks Corp. and affiliates ("ECN") by which the Company
acquired the rights to 26 wireless cable frequencies in the Detroit market and
certain other related  assets (the "Detroit System").  PCTV holds the Detroit
System in a subsidiary named People's Choice TV of Detroit, Inc. ("PCTV

                                       28
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Detroit").  The consideration paid for the Detroit System by PCTV includes: (i)
$4.9 million in cash (including transaction costs); (ii) $3.0 million in the
form of a promissory note of PCTV maturing in three years with an interest rate
of 8% per annum; (iii) $2.2 million in the form of a promissory note maturing in
five years with an interest rate of 9% per annum, guaranteed by PCTV; (iv)
assumption of approximately $8.7 million in indebtedness of ECN, of which $4.5
million was paid by the Company at closing; and (v) the issuance of redeemable
cumulative preferred  stock of PCTV Detroit with a liquidation  preference of
$5.8 million and a 9% dividend rate, guaranteed by PCTV.  PCTV transferred to
ECN all of its rights to 26 wireless cable frequencies in the Baltimore market.
As of the closing date, these frequencies had a book value of approximately $1.0
million.  The Company issued to ECN warrants valued at $574,000 to purchase
154,762 shares of PCTV Common Stock, exercisable for $.10 per share, provided
that the market price of PCTV Common Stock reached $30 to $35 by December 31,
1996.  These warrants expired at December 31, 1996.  The acquisition was
accounted for as a purchase transaction and, accordingly, the purchase price was
allocated to the fair value of assets acquired and liabilities assumed.

       On May 14, 1994, the Company, People's Acquisition Corp. ("Acquisition"),
Specchio Developers Investment Corp. ("SDIC"), Michael J. Specchio
("Specchio"), and  Terrence S. Cassidy  ("Cassidy") executed and closed an
Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger
Agreement, Acquisition, a wholly-owned subsidiary of the Company, was
merged with and into SDIC so that SDIC became a wholly-owned subsidiary of the
Company (the "Merger").  The Merger of Acquisition with and into SDIC became
effective on May 16, 1994 with the filing of articles of merger.  The
acquisition was accounted for as a purchase transaction and, accordingly, the
purchase price was allocated to the fair value of assets acquired and
liabilities assumed.  The total purchase price was $27.7 million consisting of
971,498 shares of PCTV common stock valued at the transaction closing date.  The
primary assets of SDIC were 1,015,000 shares of the common stock of Preferred
Entertainment, Inc. ("PEI"), constituting approximately 22.2% of the outstanding
common stock of PEI. In addition, the Company loaned Specchio $3,500,000 in
return for a non-recourse note that bears interest at the prime rate plus 2%.
The principal plus interest was payable in full on May 14, 1996.  Specchio has
pledged to the Company 180,000 of the shares of common stock of the Company
received by him in the Merger as security for the note.  The Company has
possession of the collateral.  At December 31, 1996 the note was written down to
its net realizable value of $540,000.  In January 1996, Preferred Entertainment
of Champaign ("Champaign"), of which SDIC had a two thirds partnership interest,
was sold for approximately $2,200,000.  The Company's share of the proceeds,
after payment of all outstanding liabilities, was approximately $2,000,000
resulting in a gain on sale of approximately  $200,000.

       On September 8, 1995, PCTV and PEI closed on a merger transaction
pursuant to which PCTV acquired PEI through a merger in which PEI became an
indirect wholly-owned subsidiary of PCTV. Pursuant to the merger agreement, PCTV
acquired each share of PEI Common Stock that it did not already own for
consideration consisting of .7548 shares of PCTV Common Stock, which was valued
at $22 per share at the closing date. The total purchase price of approximately
$65,129,000 includes the issuance of approximately 2,760,479 shares of PCTV
Common Stock and other consideration. The acquisition was accounted for as a
purchase transaction and, accordingly, the purchase price was allocated to the
fair value of assets acquired and liabilities assumed. Substantially all of the
excess of purchase price over the net assets acquired has been allocated to
frequency rights. Additionally, PCTV, PEI and the former CEO of PEI have entered
into a three year non-compete agreement barring the former CEO from competing
with PCTV or PEI in any markets in which PCTV has already established a presence
or in the future establishes a presence before the former CEO.

       Summarized below are the pro forma unaudited results of operations for
the years ended December 31, 1994 and 1995 assuming the ECN and PEI acquisitions
had occurred on January 1, 1994. Adjustments have been made for depreciation and
amortization of the fair value write-up of assets acquired, interest expense on
debt issued in the ECN acquisition, the elimination of the equity in the net
loss of PEI recorded by the Company in 1994 and 1995 and dividends on the
preferred stock issued in the ECN acquisition. The pro forma loss per common
share assumes shares issued in connection with the PEI acquisition had been
outstanding since January 1, 1994.

                                       29
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                            Years Ended December 31,
                                          ----------------------------
                                              1994           1995
                                          ----------------------------
<S>                                       <C>            <C>
Revenues                                  $ 18,574,000   $ 32,415,000
Loss before extraordinary gain             (33,205,000)   (66,062,000)
Net loss                                   (33,205,000)   (64,864,000)
Pro forma loss applicable to common
 shares                                    (34,054,000)   (70,041,000)
Net loss per common share:
Loss before extraordinary gain            $      (2.91)  $      (5.24)
Extraordinary gain                                  --            .09
                                          ------------   ------------
Net loss                                  $      (2.91)  $      (5.15)
                                          ============   ============
Pro forma weighted average number of
 common shares outstanding                  11,709,000     13,600,000
</TABLE>

       Included in  the pro forma net loss are costs of $720,000 and $900,000
associated with the acquisition of PEI  for 1994 and 1995, respectively.

       In June 1995, the Company entered into a joint venture with Multimedia
Development Corp. ("MDC") to develop a wireless cable system in the Albuquerque,
New Mexico market.  The Company has a 27% interest in the joint venture and MDC
has a 73% interest in the joint venture.  Under the terms of the agreement, the
Company contributed four wireless cable channels and certain equipment, for
which it holds lease rights and certain equipment, which had a book value of
approximately $155,000, and contributed approximately $96,000 in cash.  Each
partner has the right of first refusal with respect to any transfer of such
equity interest.  MDC manages the daily operations of the joint venture.  MDC
has significant wireless cable television frequency rights in other cities in
New Mexico.  The Company  accounts for this investment under the equity method.

       Also in 1995, the Company acquired rights to wireless frequencies in the
Casa Grande, Arizona market and certain other assets for a purchase price of
$1,200,000. The Company acquired leases for 11 channels and leases with
applicants for licenses totaling 7 additional channels in the Casa Grande
market. In addition, the Company acquired a 17.5% equity interest in People's
Choice TV of Phoenix, Inc. ("PCTV Phoenix") in exchange for 115,000 shares of
PCTV Common Stock. The Company now owns 100% of the capital stock of PCTV
Phoenix.

       In March 1994, the Company acquired from Indianapolis Cellular Television
Company ("ICTC") certain wireless cable television assets in the Indianapolis
market, which included leases to 13 wireless cable television frequencies, a
transmission site lease and an office lease, and equipment. No business
operations were acquired as part of this transaction.  The aggregate purchase
price for these assets was approximately $3,700,000: including  $2,500,000 of
cash (which includes cash paid in redemption of a promissory note of the Company
to the sellers which note had a 7% interest rate), and $1,200,000 paid in the
form of 39,768 shares of the Company's Common Stock.  Pursuant to the terms of
the purchase agreement, the Company organized Wireless Cable of Indianapolis,
Inc. ("WCI"), a majority-owned subsidiary of the Company, to hold these assets.
The Company owns approximately 88% of the capital stock of WCI and certain other
investors, including principals of ICTC, own the remaining 12.25%.  On May 31,
1995, WCI closed a stock purchase agreement with the stockholders of Broadcast
Cable, Inc. ("BC") pursuant to which WCI acquired all of the capital stock of
BC.  BC has the rights to (i) 12 wireless cable frequencies in the Indianapolis
market,  (ii) 15 wireless cable frequencies in the Anderson, Indiana market,
(iii) 19 wireless cable frequencies in the Bloomington, Indiana market, and (iv)
12 wireless cable frequencies in the Kokomo, Indiana market.  The total purchase
price for BC was $10.5 million, which amount was paid by WCI through a cash
payment of $3.8 million and a promissory note with a principal amount of
approximately $6.7 million.  The transaction was accounted for as a purchase.
The note is guaranteed by PCTV and collateralized by 1,941,000 shares of PCTV
Common Stock.  Amounts due under the promissory note become payable two years
after the closing date and after certain triggering events relating to approvals
by the Federal Communications Commission ("FCC") of modification requests with
respect to the frequencies being acquired.

       In April 1996, the Company sold wireless cable frequency rights in Tulsa,
Oklahoma resulting in a gain of  $180,000.

        In July 1996, the Company agreed to exchange its wireless cable
frequencies in Kansas City for CS Wireless Systems, Inc.'s wireless cable
frequencies in Salt Lake City. The agreement covers 24 wireless cable
frequencies in Kansas City, 28 wireless cable frequencies in Salt Lake City, and
the Basic Trading Area ("BTA") licenses for both markets. Subject to due
diligence, the transaction is expected to close during 1997.

                                       30
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(4)  Investment in Wireless Systems and Equipment:

       The investment in wireless systems and equipment is as follows:

<TABLE>
<CAPTION>
                                                  December 31,
                                          ---------------------------
                                              1995           1996
                                          ---------------------------
<S>                                       <C>            <C>
Inventory (principally subscriber
 devices) and construction in
 progress (principally installations)     $  2,724,579   $  3,999,143
Property and equipment                     107,924,663    102,605,500
Frequency rights                           131,591,829    145,135,595
                                          ------------   ------------
                                           242,241,071    251,740,238
Less--accumulated depreciation and
 amortization of property and equipment    (27,347,905)   (39,890,358)
 accumulated amortization of
   frequency rights                         (6,314,216)   (15,807,614)
                                          ------------   ------------
                                          $208,578,950   $196,042,266
                                          ============   ============
</TABLE>

Depreciation and amortization is calculated on a straight-line basis over the
following useful lives:

<TABLE>
<S>                                             <C>
 Frequency rights                                 12     years
 Wireless systems and equipment                 3-10     years
 Vehicles                                          5      years
 Furniture and fixtures                            5      years
 Office equipment                                  5      years
 Leasehold improvements                            Life of respective lease
</TABLE>

       Wireless systems and equipment include the cost of initial customer
installations.  These costs include reception equipment on customer premises,
related labor and the excess of direct commission costs over installation
revenues determined to be realizable.  The excess of direct commission costs
over installation revenues are deferred and amortized over a three-year period,
the estimated useful life of customers.  Amortization is accelerated upon the
disconnection of specific customers.

(5)  Income Taxes:

       The provision for income taxes for December 31, 1994, 1995 and 1996 is as
follows:

<TABLE>
<CAPTION>
                                                   Years Ended December 31,
                                          ------------------------------------------
                                              1994              1995          1996
                                          ------------------------------------------
<S>                                       <C>           <C>             <C>
Current state and local income taxes      $   147,750         $152,500       $56,500
Deferred income tax benefit                (3,225,000)              --            --
                                          -----------         --------       -------
Total provision (benefit) for income
 taxes                                    $(3,077,250)        $152,500       $56,500
                                          ===========         ========       =======
</TABLE>

       The benefit of $3.2 million represents 1994 operating losses utilized to
reduce deferred taxes recorded in connection with the purchase of SDIC.

                                       31
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       The following represents a reconciliation of the Company's federal
statutory income tax benefit to the income tax provision:

<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                          -------------------------------------------
                                              1994            1995          1996
                                          -------------------------------------------
<S>                                       <C>           <C>             <C>
Statutory federal income tax (benefit)    $(7,912,800)   $(18,578,900)   $(26,560,600)
State and local taxes, net of federal
 expense                                       95,900          99,100          36,700
Losses not benefited                        4,731,200      18,605,200      26,560,900
Other                                           8,450          27,100          19,500
                                          -----------    ------------    ------------
Income tax (benefit) provision            $(3,077,250)   $    152,500    $     56,500
                                          ===========    ============    ============
</TABLE>

       The Company and its subsidiaries have net operating loss carryforwards
("NOLs") at December 31, 1996 for income tax purposes (subject to certain
limitations and Internal Revenue Service review) totaling approximately $113.0
million which expires in the years 2008 through 2011. Approximately $20.0
million of these NOLs are available only to offset future taxable income of
individual Company subsidiaries.


       The principal temporary items comprising the net unrecognized deferred
income tax asset are as follows:

<TABLE>
<CAPTION>
                                                  December 31,
                                          ---------------------------
                                              1995           1996
                                          ---------------------------
<S>                                       <C>            <C>
Non-qualified stock options               $    312,000   $    297,500
Depreciation and amortization                1,757,400      9,594,600
Allowance for doubtful accounts                651,300        366,500
Start up costs capitalized for tax           1,799,000      1,405,800
Amortization of discount on senior
 discount notes                             14,346,000     40,471,100
Accrued expenses                             1,400,800      3,491,700
Other                                        1,590,800      4,192,500
Net operating loss carryforward for
 income tax purposes                        70,478,800    113,017,300
Utilization of financial reporting net
 operating loss carryforward for
 deferred tax liabilities                  (73,425,000)   (78,134,000)
                                          ------------   ------------
                                            18,911,100     94,703,000
                                          ------------   ------------
Net deferred tax asset unrecognized at
 federal statutory rate                      6,618,885     33,146,050
Less:  valuation reserve                    (6,618,885)   (33,146,050)
                                          ------------   ------------
Net deferred tax asset recognized         $          0   $          0
                                          ============   ============
</TABLE>

For the years ended December 31, 1995 and 1996, the Company has utilized NOLs
for financial reporting purposes of $73.4 million and $ 78.1 million,
respectively.  These NOLs were used to reduce the deferred tax liabilities
related to the acquisitions made by the Company.

                                       32
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6)  Notes and Other Payables:

<TABLE>
<CAPTION>
                                                           December 31,
                                                 -------------------------------
                                                     1995              1996
                                                 -------------------------------
<S>                                              <C>               <C>
13.125% senior discount notes due June 1, 2004   $ 332,000,000     $ 332,000,000
  Less original issue discount ("OID")            (146,324,365)     (120,198,859)
                                                 -------------     -------------
                                                   185,675,635(a)    211,801,141(a)
                                                 -------------     -------------
Notes payable, Federal Communications
 Commission, due August and December
 2006, with interest at 9.5%                                --         6,525,896(b)
Note payable from acquisition, due and
 paid January 1997, with interest at 5.5%                   --         1,250,000
Note payable, Broadcast Cable, Inc.
 non-interest bearing, due May
 1997, face value $6,726,754 less
 imputed discount of $1,048,972
 and $349,632 at December 31, 1995
 and 1996, respectively                              5,677,782         6,377,122
Notes payable of PCTV Detroit                        8,767,648(c)      7,203,012(c)
Non-compete agreement                                  400,000(d)        300,000(d)
PEI bank line of credit of $20,000,000
 expiring  May 1997 with
 interest at 9.125%                                    579,016           579,016
Bank lines of credit of $450,000 with
 interest rates ranging from
   8.75% - 9.25%                                       393,388                --
Other, with interest rates ranging from
 6% - 13.60% and due
 dates ranging from 1997-2000,
 partially secured by equipment                        823,900           394,641
                                                 -------------     -------------
                                                 $ 202,317,369     $ 234,430,828
                                                 =============     =============
</TABLE>

(a)  On May 19, 1995 the Company completed a public offering of $332,000,000
principal amount of 13.125% senior discount notes due 2004 and warrants for the
purchase of 473,764 shares of the Company's common stock. The Company received
net proceeds after underwriting discounts and other transaction expenses of
approximately $168,000,000. The notes were sold at a discount from the face
amount and will accrete in value until June 1, 2000 at a rate of 13.125% per
annum, compounded semi-annually. Cash interest will accrue at a rate of 13.125%
subsequent to June 1, 2000 and be payable in cash, thereafter, semi-annually on
June 1 and December 1, commencing on December 1, 2000.

       The notes and warrants trade separately.  Each warrant is exercisable for
1.427 shares of common stock at a exercise price of $31.90 per share.  Such
warrants will expire on June 1, 2000.

       The Company has the option to redeem the notes, in whole or in part, on
or after June 1, 2000. For the 12 month period beginning June 1, 2000, the
redemption value is 106.0% of the accreted value plus accrued and unpaid
interest, if any, at the redemption date. After May 31, 2001, the redemption
value decreases at 2% intervals to 100% of the accreted value plus accrued and
unpaid interest at June 1, 2003 and after.

       The Indenture contains certain covenants that, among other things, limit
the ability of the Company and its subsidiaries to incur indebtedness, to pay
dividends or make other restricted payments, to permit restrictions on dividends
and other payments by subsidiaries to the Company and to engage in certain
transactions.

(b)  As a result of the FCC auction for Multichannel Multipoint Distribution
Service ("MMDS") and/or Multipoint Distribution Service ("MDS") authorizations
for BTA's, the Company purchased 28 BTA authorizations. The payment terms
require a 20% downpayment; for two years after the conclusion of the auction,
payments of interest in the remaining principal balance; and beginning two years
after the conclusion of the auction, amortization of the remaining principal and
interest over an eight year period.

(c)  As a result of the acquisition of the Detroit System, the Company issued
notes payable in the amount of $3,000,000 due in August 1998 which bears
interest at a rate of 8% per year, of which $189,000 was paid in January 1996,
and $2,150,000 of notes payable due December 2000 with an interest rate of 9%
per year. The Company also assumed a note payable to the predecessor owners in
the amount of approximately $4,200,000 due September 1998 with interest at 8%
payable in quarterly installments.

                                       33
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(d)  In connection with the acquisition of PEI, the Company entered into a three
year non-compete agreement with the former CEO of PEI. The total amount of the
agreement was $600,000, of which $200,000 was paid at closing and $100,000 was
paid in September 1996 and $300,000 is payable in September 1997.

Annual maturities of all debt are as follows:

<TABLE>
<S>                          <C>
Years ending December 31:
1997                         $  10,395,387
1998                             3,987,764
1999                               648,896
2000                             2,803,152
2001 and thereafter            337,144,120
                             -------------
                               354,979,319
OID and Imputed Discount      (120,548,491)
                             -------------
                             $ 234,430,828
                             =============
</TABLE>

The fair value of the senior discount notes at December 31, 1996, was
approximately  $144,000,000 and is based on the quoted market price of the debt.
The fair value of the other notes and other payables approximate the carrying
value.

(7)  Houston Financing:

       During 1993, PCTV Houston and the Company entered into a stock purchase
agreement with certain private placement investors pursuant to which PCTV
Houston agreed to sell $7,000,000 of 6% convertible preferred stock of PCTV
Houston to such investors and pursuant to which the Company agreed to purchase
$4,000,000 of PCTV Houston's 6% convertible preferred stock.  The transaction
closed in March 1994.  On October 17, 1994, the Company acquired, through an
exchange offer, all of the outstanding Convertible Preferred Stock of PCTV
Houston not already owned by PCTV for 666,674 shares of the Company's common
stock.  The common stock was valued at $20 per share at the closing date.  PCTV
presently owns 100% of the capital stock of PCTV Houston.

(8)  Convertible Pay-In-Kind Preferred Stock:

       On October 27, 1994, the Company, Blackstone Capital Partners II Merchant
Banking Fund L.P. and Blackstone Offshore Capital Partners II L.P. (collectively
"Blackstone") entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement"), pursuant to which the Company agreed to sell, and Blackstone agreed
to acquire, 500,000 shares of Convertible Cumulative Pay-In-Kind Preferred
Stock, par value $.01 per share and liquidation preference $100 per share (the
"Convertible Preferred Stock") of the Company for an aggregate cash purchase
price of $50,000,000.  The Convertible Preferred Stock is convertible at any
time after its date or dates of issuance into shares of the common stock, par
value $.01 per share, of the Company (the "Common Stock") and has a conversion
price of $22.50 per share, subject to anti-dilution adjustments.  The Company
closed on the sale of 100,000 shares of the Convertible Preferred Stock on
November 14, 1994, 100,000 shares on January 20, 1995, 50,000 shares on January
23, 1995, and the remaining 250,000 shares on March 24, 1995.

       The terms of the Convertible Preferred Stock and the Stock Purchase
Agreement entitle the holders of Convertible Preferred Stock, voting as a class,
to elect two members of the Board of Directors (or, if the size of the Board of
Directors is increased, a proportionately greater number) for so long as
Blackstone and certain permitted transferees own shares of Convertible Preferred
Stock in certain minimum amounts. Following conversion of the Convertible
Preferred Stock there are conditions under which holders of Common Stock shall
have the right to designate a like number of persons to the Board of Directors.

                                       34
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       The Convertible Preferred Stock is entitled to vote as a single class
with the Common Stock on all matters submitted to a vote of the stockholders.
Each share of Convertible Preferred Stock is entitled to the number of votes
equal to the number of shares of Common Stock that could be obtained upon
conversion at the then applicable conversion price. Under certain conditions,
approval of two-thirds of the outstanding shares of Convertible Preferred Stock
are required to approve (i) certain amendments to the Certificate of
Incorporation or Certificate of Designations, (ii) the issuance or
reclassification of junior or parity securities and (iii) certain consolidations
and mergers or the sale or disposal of substantially all of the assets of the
Company.

       The terms of the Stock Purchase Agreement provide: (i) that the
affirmative vote of two-thirds of the Board of Directors of the Company is
required to approve a sale of the Company, certain divestitures and
acquisitions, any amendment to the Company's Certificate of Incorporation, the
entry into a line of business other than the telecommunications business and
certain other transactions; (ii) Blackstone the right of first refusal to
provide additional capital to the Company on terms and conditions proposed by
the Company or alternative terms and conditions proposed by and agreed to by the
Company; and (iii) that if the Company issues or proposes to issue for cash any
Common Stock or other securities having voting power, as defined, Blackstone
will have the right to acquire from the Company the number of shares or other
amount of such security so that Blackstone's outstanding voting interest on a
fully diluted basis following such issuance equals the outstanding voting
interest on a fully diluted basis held immediately prior to such issuance. Such
obligations under (i) and (ii) terminates if Blackstone and certain permitted
transferees, as defined, do not own Convertible Preferred Stock and/or Common
Stock in certain minimum amounts.

       Dividends on the Convertible Preferred Stock (and interest on unpaid
dividends) accrue at an annual rate of 9-7/8% and are payable quarterly.  Upon
the occurrence of certain defaults, such rate will increase to 12% and will
continue for so long as any such default continues.  Dividends on shares of the
Preferred Stock in respect of each dividend period ending prior to the fifth
anniversary of the date of issuance of such shares of Convertible Preferred
Stock (and interest on unpaid dividends) will be paid in additional shares of
Convertible Preferred Stock.  The issuance of these shares reduces the number of
authorized shares of preferred stock. Holders of Convertible Preferred Stock
will acquire additional shares of Convertible Preferred Stock (and thus have the
right to acquire additional shares of Common Stock) as a result of such stock
dividends.

       The Convertible Preferred Stock may not be redeemed by the Company prior
to the fifth anniversary of the date of the first issuance of the Convertible
Preferred Stock. Thereafter, the Company may redeem all of the Convertible
Preferred Stock at a price per share equal to 106% of the liquidation preference
plus 106% of the sum of accrued and unpaid dividends and interest on unpaid
dividends. The Company may at its option redeem the Convertible Preferred Stock
for cash or shares of Common Stock.

       The Convertible Preferred Stock is also redeemable upon a change in
control of the Company, at a redemption price per share equal to the higher of
(i) 106% of the per share liquidation preference plus accrued and unpaid
dividends and interest on unpaid dividends to the date of redemption and (ii)
the sum of accrued and unpaid cash dividends to the date of redemption and the
value of consideration that could be obtained upon conversion of the Convertible
Preferred Stock (and any related accrued but unpaid dividends payable in shares
of Convertible Preferred Stock) into Common Stock and participating in the
change of control transaction.

       The Convertible Preferred Stock will be redeemed on the tenth anniversary
of the date of the first issuance of shares of Convertible Preferred Stock, at
an aggregate redemption price equal to 100% of the liquidation preference per
share, plus an amount in cash equal to all accrued and unpaid dividends and
interest on unpaid dividends outstanding to the redemption date.

       In connection with the execution of the Stock Purchase Agreement,
Blackstone has entered into an Agreement, dated as of October 27, 1994, with
Matthew Oristano, Victor Oristano (the "Oristanos") and the Company (the
"Stockholders' Agreement"). Pursuant to the Stockholders' Agreement, the
Oristanos have agreed that (i) they will not sell or otherwise transfer their
shares of Common Stock prior to September 30, 1999, subject to certain
exceptions, (ii) to use their best efforts to cause the nominating committee of
the Board of Directors of the Company to nominate and recommend to stockholders
the election of persons to which Blackstone, as holders of Common Stock, are
entitled to designate as described above, and to vote all shares of Common Stock
owned by them in favor of the election of such persons and (iii) to use their
best efforts to cause such person to serve on the compensation committee of the
Board of Directors of the Company and to vote all shares of Common Stock owned
by them in favor of certain amendments to the Certificate of Incorporation of
the Company which are necessary to give effect to the provisions contained in
the Stock Purchase Agreement and the Certificate of Designations relating to the
Preferred Stock. These obligations terminate if

                                       35
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Blackstone and certain permitted transferees do not own Convertible Preferred
Stock and/or Common Stock in certain minimum amounts.  The holders of the
Convertible Preferred Stock and Common Stock issued upon conversion thereof also
have certain registration rights under federal and state securities laws.

(9)  Employee Benefits:

       The Company maintains two 401(k) employee benefit plans pursuant to which
participants can defer a certain percent of their annual compensation in order
to receive certain benefits upon retirement, death, disability or termination of
employment. The Company makes matching contributions of up to $400 per employee
in one plan which vests immediately and 40% of up to 6% of  employee salary,
per employee in another plan which vests over a period of seven years.  During
1994, 1995 and 1996,  the Company incurred expenses of approximately $28,000,
$53,000 and  $89,000, respectively, related to these plans.

(10)  Common Stock, Stock Options and Warrants:

       On February 3, 1994 the Company closed on the sale of 1,250,000 shares of
common stock in connection with a public offering and received net proceeds of
approximately $34.1 million (before expenses of approximately $500,000).  On
March 9, 1994, the Company issued 187,500 shares of common stock in connection
with the exercise of the underwriters' over allotment option granted in
connection with this public offering and received additional net proceeds of
approximately $5.1 million.

       In connection with the initial public offering, the underwriter was
granted a warrant for 250,000 shares of common stock at an exercise price of
$12.60 per share. These warrants expire on July 8, 1998.

       On April 30, 1993, PCTV adopted a non-qualified stock option plan for
certain key employees (the "Key Employee Plan"), which is administered by three
members of PCTV's Board of Directors. Under the Key Employee Plan, 111,085
shares of common stock are reserved for issuance pursuant to options granted
thereunder at an exercise price of $.10 per share. Options to purchase 111,085
shares of common stock were issued in April and June 1993. The option holders
are entitled during their employment to exercise the options for a cash payment
of the exercise price at any time between the first and tenth anniversaries of
the date of grant of the options. As a result of these grants the Company
recorded $1,155,284 of non-cash, non-recurring compensation expense in 1993.
Options granted under the Key Employee Plan generally are non-transferable. As
of December 31, 1993, 1994, 1995 and 1996, 111,085, 76,675, 73,475, and 72,475
of these options are exercisable and outstanding, respectively.

       On April 30, 1993, non-qualified options to purchase shares of common
stock, were granted under a plan (the "Founders Plan") to Matthew and Victor
Oristano in the amounts of 200,000 shares and 100,000 shares, respectively. The
per share exercise price of these options is $10.50. All of these options are
fully vested as of this date and are exercisable until April 30, 2003. Non-
qualified stock options were granted to Matthew and Victor Oristano in the
amounts of 5,000 and 2,500 respectively for fiscal 1994. These options have an
exercise price of $23.00 per share and have a ten year term. As of December 31,
1993, 1994, 1995 and 1996, 300,000, 300,000, 302,500, and 305,000 options are
exercisable and outstanding, respectively.

       In April 1993, PCTV adopted its 1993 Stock Option Plan (the "1993 Plan"),
which is administered by three members of PCTV's Board of Directors. Under the
1993 Plan, options to purchase an aggregate of not more than 900,000 shares of
common stock may be granted from time to time to key employees (including
officers), advisors and independent consultants to PCTV or to any of its
subsidiaries (other than those persons eligible for participation under the
Founders Plan). Options granted to officers and employees may be designated as
incentive stock options ("ISOs") or non-qualified stock options ("NQSOs").
Options granted to independent consultants and other non-employees may only be
designated NQSOs. As of December 31, 1996, 616,500 option grants are outstanding
under the 1993 Plan. The option agreements pursuant to which these grants were
made include various vesting provisions. The per share exercise price of these
options range from $4.00 to $11.50. As of December 31, 1996, no options are
currently exercisable under this plan and 9,750 options have been previously
exercised.

                                       36
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       The Company  accounts for stock options and warrants under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
under which no compensation cost has been recognized for the options granted.
Had compensation cost for 1995 and 1996 been determined under the principles of
Statement of Financial Accounting Standards ("SFAS") No. 123, the impact on net
loss and loss per common share would have been insignificant.

(11)  Employment and Consultant Agreements:

       PCTV has written employment agreements with Matthew Oristano, Peter Lynch
and Robert Young which provide for annual base salaries of $212,000, $143,000
and $133,000, respectively. Each of these officers is eligible to receive an
annual bonus as determined by the Company. The employment agreements for Messrs.
Oristano, Lynch and Young expire in April 1998, February 1999 and January 1999,
respectively, unless earlier terminated by the Company or the employee. The
agreements contain confidentiality and non-competition provisions and require
the officers to devote full time to the business of the Company. Pursuant to
these agreements, if their employment is terminated by the Company without
cause, they are entitled to their base salary and certain benefits for, in the
case of Mr. Oristano, the remainder of the employment term, in the case of Mr.
Lynch, a period of one year, and in the case of Mr. Young, for a period of six
months. In such case, Mr. Young is also entitled to receive half of his annual
bonus.

       The Company has entered into change of control severance agreements with
six of its executive officers which require the Company, in the case of a change
of control of the Company, to pay each of such officers two times their annual
base salary and bonus. In addition, in the case of a change of control, options
issued under the Company's 1993 Stock Option Plan vest immediately.

       PCTV also has a written consulting agreement with Alda Limited Partners,
pursuant to which it and its chairman, Mr. Victor Oristano (the "Consultant"),
have agreed to render management consulting services to PCTV including advice
concerning strategic and financial planning matters, wireless development and
operation activities and public and stockholder relation matters.  This
agreement provides that the Consultant shall be paid consulting fees of $158,000
per annum and provides that the Consultant may receive an annual performance
bonus to be determined by PCTV.  This agreement will continue to July 1998 and,
if the consulting relationship is terminated by PCTV without cause, entitles the
Consultant to the base consulting fees for the remainder of the consulting term.

(12)  Commitments and Contingencies:

       Under various lease and rental agreements for offices, warehouses,
equipment and frequency licenses, the Company had expenses of approximately
$2,381,000, $3,729,000 and $6,294,000 in 1994, 1995 and 1996, respectively.
Future annual minimum payments under these non-cancelable agreements, including
only the initial terms for frequency licenses, are as follows:

<TABLE>
<S>                    <C>
1997                   $ 5,219,000
1998                     4,593,000
1999                     3,944,000
2000                     2,927,000
2001 and thereafter     13,240,000
                       -----------
                       $29,923,000
                       ===========
</TABLE>

                                       37
<PAGE>

                   PEOPLE'S CHOICE TV CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       The Company has entered into a letter of intent with an affiliate of
General Instrument Corporation ("GIC") pursuant to which the Company would
purchase from GIC up to 300,000 digital converter boxes. The Company would be
obligated to purchase 200,000 converter boxes over the three year life of the
contract. The Company can cancel its minimum purchase obligation by paying a per
box cancellation fee. The letter of intent is subject to the negotiation and
execution of a definitive agreement between the parties and there can be no
assurance that such an agreement will be executed or that it will not contain
terms different from those described above.

       The Company estimates that it will spend $20.7 million in 1997 on
investment in wireless systems and equipment. The level of capital expenditures
incurred for customer installations is primarily variable and dependent on the
customer installation activities of the Company. Therefore, actual customer
installation expenditures may be more or less than the Company's estimate.

       Except as discussed below, the Company is not a party to any litigation
that could have a material adverse effect on its business, results of operations
or financial statements.

       Cable Equity Partners, Inc. ("CEP") had filed a complaint against the
Company and People's Choice TV of Houston, Inc. in the state courts of Texas.
The complaint alleged causes of action based upon slander, libel and tortious
interference with contractual relations. CEP had claimed damages in excess of
$20 million. The Company and its counsel had vigorously defended against this
lawsuit. While the Company and its counsel believes that this lawsuit was
brought without merit, to avoid the risks inherent in a jury trial, the Company
elected to settle this lawsuit. The parties reached a settlement agreement at a
mediation held on October 21, 1996. The terms of the settlement provided for a
payment of $1.0 million cash to CEP and for CEP to receive 56,000 shares of
restricted Company common stock valued at $616,000. All of the cash settlement
amount was paid by the Company's insurance carrier.

       Wireless Enterprises, Inc. and Indianapolis Wireless, L.P. have filed a
complaint against the Company in U.S. district court in Connecticut.  The
complaint alleges causes of action based on fraud, tortious interference with
contract, negligence, breach of good faith, and unfair trade practices.  The
complaint alleges that the company took certain actions with respect to the
Detroit market that deprived plaintiffs of the opportunity to acquire certain
wireless cable frequencies in that market.  The complaint alleges that by taking
such actions the Company breached certain obligations to the plaintiffs.  The
complaint seeks money damages and injunctive relief.  The Company has retained
counsel and the discovery process is proceeding.  Although there can be no
assurance as to the ultimate outcome, the Company believes it has meritorious
defenses in this action and intends to defend vigorously against this action.
The Company believes that the eventual outcome of this action will not have a
material adverse effect on the consolidated financial statements of the Company.

(13)  Valuation and Qualifying Accounts:

<TABLE>
<CAPTION>
                                   Balance at  Charged to               Balance
                                   Beginning    Costs &                 at end
Description                        of Period    Expenses   Deductions  of Period
-----------                        ----------  ----------  ----------  ---------
<S>                                <C>         <C>         <C>         <C>
December 31, 1994
Allowance for Doubtful Accounts      $ 51,100  $  482,000  $  249,400   $283,700

December 31, 1995
Allowance for Doubtful Accounts      $283,700  $1,849,000  $1,481,400   $651,300

December 31, 1996
Allowance for Doubtful Accounts      $651,300  $  989,000  $1,260,800   $379,500
</TABLE>

                                       38
<PAGE>

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

       None.

                                    PART III

ITEM 10.  DIRECTORS AND OFFICERS OF THE REGISTRANT

Executive Officers and Directors

      The following table sets forth certain information concerning each of the
Company's directors, director nominees and executive officers:

<TABLE>
<CAPTION>
Name                         Age  Position with Company
----                         ---  ---------------------
<S>                          <C>  <C>
Matthew Oristano(1)(2)(3)     40  Chairman, Chief Executive Officer, and
                                  Director
Charles F. Schwartz           41  Senior Vice President, Chief Financial
                                  Officer and Chief of Staff
Todd A. Rowley                32  Senior Vice President--Market Development
Peter Lynch                   49  Senior Vice President--Operations
Robert Young                  41  Senior Vice President
Donald E. Olander             37  Vice President, General Counsel and Corporate
                                  Secretary
Michael F. Whalen, Jr.        31  Vice President--Finance and Acquisitions
Victor Oristano               80  Vice Chairman and Director
James J. Mossman(1)           38  Director
Anthony Grillo(1)(2)(3)       41  Director
---------------
</TABLE>
(1) Member of the Audit Committee.  The Audit Committee assists the Board of
    Directors in fulfilling its responsibilities with respect to the Company's
    accounting and financial reporting activities.
(2) Member of Compensation Committee.  The Compensation Committee determines the
    compensation to be paid by the Company to its officers.
(3) Member of Stock Option Committee.  The Stock Option Committee determines the
    stock options to be granted by the Company to employees, consultants and
    advisors.

       There are currently four members of the Board of Directors of the
Company. Two of these members are elected by the holders of the Common Stock and
Convertible Preferred Stock voting as a single class (the "Common Stock
Directors"). Two of these directors are elected by the holders of the
Convertible Preferred Stock voting as a separate class (the "Preferred Stock
Directors"). The Common Stock Directors are divided into three classes, with
directors in each class serving three-year staggered terms. There are currently
two Common Stock Directors, consisting of one director who is serving for a term
which expires in 1999, and one director who is serving for a term which expires
in 1998. The Board currently has vacant seats in the class of directors serving
for a term which expires in 1997. The Board is in the process of considering
nominees for such vacancies but has not selected any candidates at this time.
All directors hold office until their successors have been elected and
qualified. In connection with its initial public offering of Common Stock, the
Company agreed with Gerard Klauer Mattison & Co, Inc. ("GKM"), the
representative of the underwriters for that offering, that until July 8, 1998
the Company will use its best efforts to cause, if requested by GKM, an
individual selected by GKM and reasonably acceptable to the Company to be
elected to the Company's Board of Directors, who may be an officer, director or
affiliate of GKM. GKM has not exercised such right to date.

       Pursuant to the terms of the Certificate of Designations with respect to
the Convertible Preferred Stock, the holders of the Convertible Preferred Stock
have the right, voting as a separate class, to elect two persons to the Board of
Directors of the Company. Currently, James J. Mossman and Anthony Grillo are the
designees of the holders of the Convertible Preferred Stock. All of the
outstanding shares of Convertible Preferred Stock are held by

                                       39
<PAGE>

Blackstone Capital Partners and their affiliates. In addition to designating two
directors to the Board of Directors of the Company, the holders of the
Convertible Preferred Stock are entitled to vote with the holders of PCTV Common
Stock with respect to the election of the other members of the Board of
Directors.

       Matthew Oristano has been the Chairman and Chief Executive Officer and a
director of the Company since its formation in April 1993.  From 1988 to 1993,
Mr. Oristano served as an executive and manager of the Company's predecessors.
From 1984 to 1988 Mr. Oristano was on the executive committee of and was the
Chief Executive of Croydon Cable Television, one of the first cable systems in
the United Kingdom built by a U.S. company.  Also, Mr. Oristano was founder and,
from 1984 to 1988, the Chief Executive Officer of Bravo, a UK movie service
delivered to cable operators.  Mr. Oristano was on the board of directors and
executive committee of the Cable Television Association of Great Britain from
1987 to 1988.  From 1982 to 1984, Mr. Oristano was the General Manager of the
Bridgeport, Connecticut cable system owned and operated by a corporation which
was owned by the Oristano family.  During 1984 and 1985, Mr. Oristano was also
President of the Connecticut Cable Television Association.  Mr. Oristano holds a
degree in physics from Rennselaer Polytechnic Institute.  Mr. Oristano is the
son of Mr. Victor Oristano.

       Charles F. Schwartz has been Vice President and Chief Financial Officer
of the Company since August 1993 and Chief of Staff since March 1994. In
December 1994, Mr. Schwartz was named Senior Vice President. From January 1989
to August 1993, Mr. Schwartz had been Chief Financial Officer of Jimbo's Jumbos,
Incorporated, an affiliate of Chock Full O' Nuts. Mr. Schwartz is a Certified
Public Accountant.

       Todd A. Rowley has been Senior Vice President-Market Development of the
Company since its formation in April 1993, and since 1988 had been Vice-
President of the Company's predecessor.

       Peter Lynch has been Senior Vice President-Midwest Region of the Company
from August 1995 and Senior Vice President-Operations of the Company since
February, 1996. Prior to joining the Company, Mr. Lynch was executive director
of operations for NYNEX Cable Communications in England.

       Robert Young has been Senior Vice President of the Company from January
1996. From the 1980's to January 1996, Mr. Young was an executive officer and
principal stockholder of Sat-Tel Services, Inc., which company provides
installation services for the Company. In January 1996 the Company acquired all
of the outstanding capital stock of Sat-Tel Services, Inc. and Mr. Young became
an officer of the Company.

       Donald E. Olander has been Vice President, General Counsel and Secretary
of the Company since November 1993. From May 1993 until joining the Company, Mr.
Olander was an attorney with Lehman Brothers. From April 1992 to May 1993, Mr.
Olander had his own legal practice. From 1990 to 1992, Mr. Olander was an
attorney with the firm of Shea & Gould.

       Michael F. Whalen, Jr. has been Vice President-Finance and Acquisitions
of the Company since April 1994. From August 1993 until joining the Company, Mr.
Whalen was a Vice President in charge of the New York office for Amsterdam
Pacific Corporation, a media/telecommunication investment banking firm. From
October 1988 to August 1993, Mr. Whalen was employed by Bank of Montreal holding
various positions, the latest of which was as a director in the bank's private
placement group.

       Victor Oristano has been Vice Chairman and a director of the Company
since its formation in April 1993, and since 1988 has been Chairman of the
partnership that managed the business of the Company's predecessors. Mr.
Oristano is also a director of Cablevision Systems Corporation, one of the
largest U.S. hardwire cable system operators. Mr. Oristano was a Lieutenant
Commander in the United States Navy during World War II. Mr. Oristano is the
father of Mr. Matthew Oristano.

       James J. Mossman has been a Senior Managing Director of The Blackstone
Group L.P. since January 1990. He was a Vice President of The Blackstone Group
from September 1986 to December 1989. Mr. Mossman serves on the board of
directors of Transtar, Inc., Collins & Aikman Corporation, and Great Lakes
Dredge & Dock Corporation.

                                       40
<PAGE>

       Anthony Grillo has been a Senior Managing Director of The Blackstone
Group L.P. since January 1993. He was a Managing Director of The Blackstone
Group from May 1991 to January 1993. Mr. Grillo serves on the board of directors
of Littelfuse, Inc., Tracor, Inc., General Aquatics, Inc., Joule, Inc., Barr
Technologies, Inc. and other privately held companies.

Section 16 Reports

       The Company believes that all required Forms 3, 4 and 5 were filed on
time during fiscal 1996.

ITEM 11.  EXECUTIVE COMPENSATION

       The following table discloses compensation for the fiscal years listed
received by the Company's Chief Executive Officer and the Company's four other
most highly compensated executive officers.

                           Summary Compensation Table
<TABLE>
<CAPTION>

                                                     Annual Compensation
                                          ------------------------------------------
                                                                                           Long Term
                                          Fiscal                        Other Annual  Compensation Awards      All Other
Name and Principal Position                Year    Salary    Bonus(1)   Compensation       Options(#)       Compensation(2)
----------------------------------------  ------  --------  ----------  ------------  --------------------  ---------------
<S>                                       <C>     <C>       <C>         <C>           <C>                   <C>
Matthew Oristano                            1996  $212,000  $     0               $0                    0        $ 1,900
   Chairman and Chief Executive Officer     1995  $212,000  $     0               $0                    0        $50,000(3)
                                            1994  $212,000  $50,000               $0                5,000        $50,000(3)

Robert Young (4)                            1996  $126,000       --(4)            $0                5,000        $ 2,300
   Senior Vice President

Peter Lynch (5)                             1996  $142,000  $     0               $0               30,000        $ 1,500
   Senior Vice President--Operations        1995  $ 54,000  $     0               $0               25,000        $   900

Charles F. Schwartz                         1996  $139,000  $     0               $0               30,000        $   900
   Senior Vice President, Chief             1995  $108,000  $     0               $0               20,000        $   650
    Financial Officer                       1994  $108,000  $25,000               $0                7,000        $   400

Todd A. Rowley                              1996  $121,000  $     0               $0               30,000        $   600
   Senior Vice President--Market            1995  $108,000  $15,000               $0               15,000        $   200
    Development                             1994  $108,000  $ 7,500               $0                7,000        $   200
</TABLE>
_______________

(1) Cash bonuses for services rendered in fiscal years 1996, 1995 and 1994 have
    been listed in the year earned, but were actually paid in the following
    fiscal year.
(2) Except as otherwise noted, the items reported are for life insurance
    premiums and matching contributions to the Company's 401(k) plan.
(3) Reflects $50,000 received from Alda Communications Corp. as directors' fees.
(4) Mr. Young became an executive officer of the Company in January, 1996.  Mr.
    Young may receive a cash bonus for the 1996 fiscal year, but such amount has
    not been determined as of the date of this report.
(5) Mr. Lynch became an executive officer of the Company in June, 1995.

                                       41
<PAGE>

The following table sets forth certain information regarding stock option grants
made to the named executive officers in 1996.

                       Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>                               Individual Grants
                       ----------------------------------------------------
                                                                             Potential Realizable Value
                                     % of Total                              at Assumed Annual Rates of
                                        Options                               Stock Price Appreciation
                                       Granted to     Exercise                  for Option Term/(1)/
                         Options       Employees       Price     Expiration
Name                   Granted (#)   in Fiscal Year   ($/Sh.)       Date       5%($)     10%($)
----                   -----------   --------------   --------   ----------   --------  ---------
<S>                    <C>           <C>              <C>        <C>         <C>        <C>
Matthew Oristano            0               --              --           --         --         --
Robert Young            5,000/(2)/         1.9%           4.00      1/28/07    $12,578   $ 31,875
Peter Lynch            30,000/(2)/        11.6%           4.00      1/28/07    $75,467   $191,249
Charles F. Schwartz    30,000/(2)/        11.6%           4.00      1/28/07    $75,467   $191,249
Todd A. Rowley         30,000/(2)/        11.6%           4.00      1/28/07    $75,467   $191,249
---------------
</TABLE>

1 Potential realizable value is based on an assumption that the stock price
  of the Common Stock appreciates at the annual rate shown (compounded annually)
  from the date of grant until the end of the ten-year term of the option.
  Potential realizable values are net of exercise price, but before taxes
  associated with exercise.  These numbers are calculated based on the
  requirements promulgated by the Securities and Exchange Commission and do not
  reflect the Company's estimate of future stock price growth.

2 Incentive stock option which has an exercise price equal to the fair market
  value of the Common Stock on the date of grant, vests at a rate of 33 1/3
  percent on the first, second and third anniversary of the grant date and has a
  term of ten years.

Option Exercises and Fiscal 1996 Year-End Value

       The number of options exercised and the value realized from any such
exercise during fiscal 1996 and the number and value of options held at fiscal
year end for the named executive officers are set forth in the following table.

          Aggregate Option Exercises and Fiscal Year-End Option Values
          ------------------------------------------------------------

<TABLE>
<CAPTION>
                                                      Number of Securities
                                                     Underlying Unexercised       Value of Unexercised
                                                     Options at Fiscal Year     In-the-Money Options at
                                                            End (#)              Fiscal Year End ($)(1)
                                                   --------------------------  --------------------------
                         Shares       Value
                       Acquired on   Realized
Name                   Exercise(#)    ($)(2)       Exercisable  Unexercisable  Exercisable  Unexercisable
----                   -----------   --------      -----------  -------------  -----------  -------------
<S>                    <C>           <C>           <C>          <C>            <C>          <C>
Matthew Oristano                 0        $ 0          201,667          3,333     $      0             $0
Robert Young                     0        $ 0                0          5,000     $      0             $0
Peter Lynch                      0        $ 0                0         55,000     $      0             $0
Charles F. Schwartz              0        $ 0                0         70,000     $      0             $0
Todd A. Rowley                   0        $ 0           36,000         65,000     $216,900             $0
---------------
</TABLE>
(1) Value of unexercised options is (i) the fair market value of the common
    stock at fiscal 1996 year end ($6.125) less the option exercise price per
    share, times (ii) the number of shares subject to the option.
(2) Value realized upon exercise is (i) the fair market value of the Common
    Stock on the date of exercise, less the option exercise price, times (ii)
    the number of shares of common stock received on exercise of the option.

                                       42
<PAGE>

Compensation Committee Interlocks and Insider Participation

       The following individuals serve as members of the Compensation Committee
of the Board of Directors: Matthew Oristano and Anthony Grillo. Certain
transactions between members of the Compensation Committee and the Company are
described below under "Certain Relationships and Related Transactions".

Employment and Consulting Agreements

       The Company has a written employment agreement with Matthew Oristano.
Pursuant to this agreement Mr. Oristano receives an annual base salary of
$212,000 and he may receive an annual bonus to be determined by the Company's
Compensation Committee.  The agreement was executed by the Company and Mr.
Oristano in April 1993, became effective in July 1993 upon the consummation of
the Company's initial public offering and, unless terminated earlier by the
Company or Mr. Oristano, will continue in effect for five years from the
effective date.  The agreement contains confidentiality and non-competition
provisions and contemplates that Mr. Oristano will devote his full time to the
business of the Company.  Pursuant to this agreement, if Mr. Oristano's
employment is terminated by the Company without cause, he is entitled to his
base salary and certain benefits for the remainder of the employment term.

       The Company has a written employment agreement with Peter Lynch.  This
agreement provides that Mr. Lynch shall be entitled to an annual base salary of
$143,000 and provides that he may receive an annual bonus to be determined by
the Company's Compensation Committee.  The agreement became effective in
February 1996 and, unless terminated earlier by the Company or Mr. Lynch, will
continue in effect for three years from the effective date.  The agreement
contains confidentiality and non-competition provisions and contemplates that
Mr. Lynch will devote his full time to the business of the Company.  If the
Company terminates Mr. Lynch's employment prior to the end of his employment
term, Mr. Lynch is entitled to receive the continuation of his base salary and
benefits for a period of one year from the date of termination.

       The Company has a written employment agreement with Robert Young.  This
agreement provides that Mr. Young shall be entitled to an annual base salary of
$133,000 and provides that he may receive an annual bonus of up to $50,000.  The
agreement became effective in January 1996 and, unless terminated earlier by the
Company or Mr. Young, will continue in effect for three years from the effective
date.  The agreement contains confidentiality and non-competition provisions and
contemplates that Mr. Young will devote his full time to the business of the
Company.  If Mr. Young's employment with the Company is terminated by the
Company without cause Mr. Young is entitled to receive half his annual salary
and bonus and six month's benefits as a severance payment.

       The Company has entered into change of control severance agreements with
each of Mr. Lynch, Mr. Rowley and Mr. Schwartz which require the Company, in the
case of a change of control of the Company, to pay each of such officers two
times their annual base salary and bonus. In addition, in the case of a change
of control, options issued under the Company's 1993 Stock Option Plan vest
immediately.

       The Company also has a written consulting agreement with Alda Limited
Partners pursuant to which it and its chairman, Mr. Victor Oristano, have agreed
to render management consulting services to the Company, including advice
concerning strategic and financial planning matters, wireless cable system
development and operation activities and public and stockholder relations
matters.  This agreement provides that the consultant shall be paid consulting
fees of $158,000 per annum and provides that the consultant may receive an
annual performance bonus to be determined by the Company.  This agreement was
executed by the Company and the consultant in April 1993, became effective in
July 1993 upon the consummation of the Company's initial public offering of
Common Stock and, unless terminated earlier by the Company or the consultant,
will continue in effect for 5 years from the effective date.  The agreement
contains confidentiality and non-competition provisions and, if the consulting
relationship is terminated by the Company without cause, entitles the consultant
to the base consulting fees for the remainder of the consulting term.

                                       43
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

       The authorized capital stock of the Company consists of Common Stock and
Convertible Preferred Stock.  The holders of the Convertible Preferred Stock are
entitled to vote with the holders of the Common Stock as a single class on all
matters submitted to the stockholders of the Company.  When voting with the
Common Stock as a single class, each share of Convertible Preferred Stock is
entitled to 4.444 votes per share.

       The table below sets forth, as of March 14, 1997, certain information
regarding beneficial ownership of Common Stock or Convertible Preferred Stock
with respect to (i) each person or entity known to the Company who beneficially
owns 5% or more of the outstanding shares of Common Stock or Convertible
Preferred Stock, (ii) each director, (iii) the Company's Chief Executive Officer
and other most highly compensated executive officers in fiscal 1996 and (iv) all
executive officers and directors of the Company as a group:

<TABLE>
<CAPTION>

                                           Number and Percentage of                          Percentage
                                                  Shares of                Number and         of Common
                                                 Convertible          Percentage of Shares     Voting
Name of Beneficial Owner                       Preferred Stock           of Common Stock        Power
------------------------                  --------------------------  ---------------------  -----------
<S>                                       <C>            <C>          <C>           <C>      <C>
Blackstone Capital Partners II Merchant
 Banking Fund L.P. (1)                          450,177         75%                                12.6%
Blackstone Offshore Capital Partners II
 L.P. (1)                                       118,122         20%                                 3.3%
Blackstone Family Investment
 Partnership II L.P. (1)                         30,769          5%                                   *
James J. Mossman(2)                             599,068        100%                                16.7%
Anthony Grillo (2)                              599,068        100%                                16.7%
Matthew Oristano (3)                                                       783,315     6.1%         5.0%
BCI Growth III, L.P. (4)                                                 1,180,474     9.1%         7.6%
FMR Corp. (5)                                                            1,252,079     9.7%         8.0%
Fleming Capital Management(6)                                            1,211,450     9.4%         7.8%
Dimensional Fund Advisors(7)                                               942,421     7.3%         6.0%
Victor Oristano (8)                                                        222,582     1.7%         1.4%
Todd A. Rowley                                                              36,000       *            *
Charles F. Schwartz                                                              0       *            *
Peter Lynch                                                                      0       *            *
Robert Young                                                                10,200       *            *
All executive officers and directors as
 a group (10 persons) (9)                       599,068       (100%)     1,078,372     8.3%        24.0%
</TABLE>
---------------
  * Less than 1%

(1) The principal address of Blackstone Capital Partners II Merchant Banking
    Fund L.P. ("BCPII") and Blackstone Family Investment Partnership II L.P.
    ("BFIPII") is 118 North Bedford Road, Mount Kisco, New York 10549.  The
    principal address of Blackstone Offshore Capital Partners II L.P. ("BCP
    Offshore") is c/o Mees Pierson Management (Cayman), British American Center,
    Dr. Roy's Drive, Georgetown, Grand Cayman, British West Indies.  The general
    partner of BCPII, BFIPII and BCP Offshore is Blackstone Management
    Associates II L.L.C. ("BMAII").  The members of BMAII have the power to vote
    and dispose of the PCTV Convertible P-I-K Preferred Stock.
(2) Messrs. Mossman and Grillo are affiliated with The Blackstone Group L.P. in
    the capacities described under Item 10  Directors and Officers of the
    Registrant.  Each such person's business address is c/o The Blackstone Group
    L.P., 345 Park Avenue, New York, NY 10154.  Mr. Mossman and Mr. Grillo are
    members of BMAII.  Therefore, Mr. Mossman and Mr. Grillo may be deemed to
    share beneficial ownership of the PCTV

                                       44
<PAGE>

    Convertible Preferred Stock. Mr. Mossman and Mr. Grillo disclaim beneficial
    ownership of any such shares of PCTV Convertible Preferred Stock.
(3) Includes (i) 112,808 shares of Common Stock which Matthew Oristano owns
    directly, (ii) 447,227 shares of Common Stock owned by Alda Multichannels,
    Ltd. for which Matthew Oristano may be deemed to share voting power and
    investment power with members of his immediate family, (iii) 21,613
    additional shares of Common Stock over which Matthew Oristano may be deemed
    to exercise indirect control, and (iv) 201,667 shares of Common Stock which
    Matthew Oristano has an option to acquire within 60 days of the date hereof
    pursuant to stock option agreements but excludes 3,333 shares which he has
    the option to acquire thereafter.
(4) BCI Growth's mailing address is c/o BCI Advisors, Inc., Glenpointe Centre
    West, Teaneck, New Jersey 07666.
(5) The address of FMR Corp. is 82 Devonshire Street, Boston, MA 02109.
(6) The address of Fleming Capital Management is 320 Park Ave., New York, NY
   10022.
(7) The address of Dimensional Fund Advisors is 1299 Ocean Avenue, Santa Monica,
   CA 90401.
(8) Includes 100,667 shares of Common Stock which Victor Oristano has an option
    to acquire within 60 days of the date hereof pursuant to a stock option
    agreement.
(9) Includes 377,475 shares of Common Stock which all directors and executive
    officers of the Company have the option to acquire within 60 days of the
    date hereof but does not include 295,000 additional shares which all
    directors and executive officers have an option to acquire thereafter.

ITEM 13.  Certain Relationships and Related Transactions

Alda Channel Leases

       Alda Wireless Holdings, Inc. and Alda Gold, Inc. (together, the "Alda
Companies"), which are controlled by Matthew Oristano, lease to the Company the
rights to approximately 40 wireless cable frequencies held by such entities.
The leases provide that the Company shall have the exclusive right to use the
frequencies for an unlimited number of successive one-year terms renewable at
the option of the Company.  The annual lease payments to be paid by the Company
are nominal.  The Company has the option to acquire these frequency licenses for
$100 per license, and the right to lease any wireless cable frequency licenses
acquired by the Alda Companies.  The Company believes that  the terms of
these leases between the Company and the Alda Companies are no less favorable to
the Company than the terms of any similar lease that could have been obtained
through arm's length negotiations with an unaffiliated third party.

Blackstone Services

       The Company and affiliates of The Blackstone Group have entered into the
following two agreements: (a) an advisory and consulting agreement pursuant to
which Blackstone Management Partners L.P. will provide strategic financial
planning and other services (other than investment banking or other financial
advisory services in connection with acquisitions and divestitures by the
Company) to the Company for an annual fee of $250,000 (plus reimbursement of
certain out-of-pocket expenses) subject to the approval of the Company in each
year (no such amount was paid with respect to the 1996 fiscal year); and (b) a
separate agreement pursuant to which the Company paid The Blackstone Group L.P.
a fee of $600,000 for financial advisory services provided by Blackstone in
connection with the Company's acquisition of Preferred Entertainment, Inc.

Merger of Alda Communications Corp. into the Company

       The Chairman and Vice Chairman of the Company were stockholders and
officers of Alda Communications Corp. ("ACC").  The primary asset of ACC was
661,304 shares of Company Common Stock.  On June 27, 1996, ACC was merged into
the Company and the Company thereby acquired the 661,304 shares of Common Stock
held by ACC.  As consideration in the merger, the Company issued 661,304 shares
of Common Stock to the former stockholders of ACC including the Chairman and
Vice Chairman of the Company.  The merger was consummated without any cost to
the Company.

                                       45
<PAGE>

                                    PART IV

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

(a)  The following documents are filed as a part of this report:

     1.   Financial statements

          The consolidated financial statements included in this item are
          indexed in Item 8 of this report.

     2.   Exhibit List

<TABLE>
<CAPTION>
Exhibit No.                                   Description
-----------                                   -----------
<S>            <C>
3.1            Certificate of Incorporation of Registrant as dated April 22, 1993. (a)

3.2            Amendment to Certificate of Incorporation of Registrant date June 16, 1994. (i)

3.3            Bylaws of Registrant. (a)

10.1           Employment Agreement between Registrant and Mr. Matthew Oristano. (a)

10.2           Employment Agreement between Registrant and Robert Young. (*)

10.3           Employment Agreement between Registrant and Peter Lynch. (*)

10.4           Consulting Agreement between Registrant and Alda Limited Partners. (a)

10.5           Key Employee Stock Plan of Registrant. (a)

10.6           1993 Founders' Stock Option Plan of Registrant. (a)

10.7           1993 Stock Option Plan of Registrant. (a)

10.8           Excess Capacity Royalty Agreement between the Arizona Board of Regents for
               Benefit of the University of Arizona and People's Choice TV of Tucson,
               Inc., dated December 8, 1992, relating to the lease of sixteen ITFS
               channels in Tucson, Arizona. (a)

10.9           Form of lease agreement used by Registrant for ITFS or educational channel
               leases, along with amended schedule of such leases. (b)

10.10          Form of lease agreement used by Registrant for channel leases with
               Alda Multichannels Ltd., along with a schedule of such leases. (b)

10.11          Antenna Site License Agreement of People's Choice TV of Tucson, Inc. (e)

10.12          Antenna Site License Agreement of People's Choice TV of Houston, Inc. (e)

10.13          Stockholders' Agreement, dated March 15, 1994, among the Registrant,
               Wireless Cable of Indianapolis, Inc., Donald Boehm, Andrew V. Saban and Cathy Schubert. (f)

</TABLE>

                                       46
<PAGE>

<TABLE>
<S>            <C>
10.14          Warrant to Purchase Common Stock of Registrant issued by
               Registrant to BOM dated April 1993. (c)

10.15          Gerard Klauer Mattison & Co., Inc. Warrant Agreement. (d)

10.16          Stock Purchase Agreement, dated October 27, 1994, by and among Registrant
               and Blackstone Capital Partners II Merchant Banking Fund L.P. ("BCP
               II") and Blackstone Offshore Capital Partners II L.P., ("BOCP II"). (g)

10.17          Stockholders Agreement, dated October 27, 1994, among Registrant, BCP II,
               BOCP II, Matthew Oristano and Victor Oristano. (g)

10.18          Registration Rights Agreement among Registrant and BCP II and BOCP II. (g)

10.19          Certificate of Designation of Convertible Cumulative Pay-in-Kind Preferred Stock. (g)

10.20          Asset Exchange Agreement, dated November 6, 1996, among CS Wireless Systems,
               Inc., Registrant, and People's Choice TV of Kansas City, Inc. (*)

10.21          Agreement and Plan of Merger among Registrant, Preferred Entertainment,
               Inc. and Chicago Wireless, dated March 26, 1995. (h)

10.22          Agreement and Plan of Merger among Registrant, Wireless Developers, Inc. and
               Fred Atchity, dated March 26, 1995. (h)

10.23          Agreement and Plan of Merger, dated March 28, 1995, among Registrant, People's
               Choice TVof Baltimore, Inc., Eastern Cable Networks Corp ("ECN"), and
               Eastern Cable Networks of Michigan, Inc. ("ECNI"). (i)

10.24          Asset Exchange Agreement dated March 28, 1995, among Registrant, ECN and
               Eastern Cable Networks of Michigan II, Inc. ("ECNII"). (i)

10.25          Stock Purchase Agreement, dated as of March 14, 1995, among Wireless Cable of
               Indianapolis, Inc. ("WCI"), Broadcast Cable Bloomington, Inc. ("BCI"), and
               the shareholders of BCI. (l)

10.26          Note Agreement, dated as of May 31, 1995, among WCI, BCI, and the
               shareholders of BCI and Guarantee of Registrant. (l)

10.27          Form of Indenture, dated May 19, 1995, between Registrant and Bank of
               Montreal Trust Company as Trustee, relating to Senior Discount Notes. (j)

10.28          Form of Warrant Agreement, dated May 19, 1995, between Registrant and
               Harris Trust Company of New York, as Warrant Agent, with respect to
               warrants issued with Senior Discount Notes. (k)

10.29          Stock Purchase Agreement, dated August 9, 1995, among Registrant,
               Robert Young and Michael Sigesmund. (l)

10.30          Stock Acquisition Agreement, dated as of September 29, 1995, among
               Registrant, Wireless Telecommunications L.L.C., and George Ring and
               Vincent Tese. (l)

21.            Subsidiaries of Registrant. (l)
</TABLE>

                                       47
<PAGE>
<TABLE>
<S>            <C>
27.            Financial Data Schedule. (*)
___________________________
(*)            Filed herewith.

(a)            Document incorporated by reference from Form S-1 Registration
               Statement No. 33-61996 filed by the Registrant on May 3, 1993.

(b)            Document incorporated by reference from Amendment No. 1 to Form S-1
               Registration Statement No. 33-61996 filed by Registrant on June 14, 1993.

(c)            Document incorporated by reference from Amendment No. 2 to Form S-1
               Registration Statement No. 33-61996 filed by Registrant on July 2, 1993.

(d)            Document incorporated by reference from Form S-1
               Registration Statement No. 33-72180 filed by Registrant on November 26, 1993.

(e)            Document incorporated by reference from Amendment No. 1 to Form S-1
               Registration Statement No. 33-72180 filed by Registrant on December 28, 1993.

(f)            Document incorporated by reference from Form 10-K for the fiscal year ended
               December 31, 1993 filed by the Registrant on March 30, 1994.

(g)            Document incorporated by reference from Form 8-K of Registrant dated
               October 27, 1994.

(h)            Document incorporated by reference from Amendment No. 5 to Schedule 13D of PCTV
               and SDIC, dated March 26, 1995, with respect to PEI common stock.

(i)            Document incorporated by reference from Form 10-K for the fiscal year ended
               December 31, 1994 filed by Registrant on April 3, 1995.

(j)            Document incorporated by reference from Amendment No. 1 to Form S-3 Registration
               Statement No. 33-80928 filed by Registrant on April 4, 1995.

(k)            Document incorporated by reference from Amendment No. 3 to Form S-3 Registration
               Statement No 33-80928 filed by Registrant on May 12, 1995.

(l)            Document incorporated by reference from Form 10-K for the fiscal year ended
               December 31, 1995 filed by Registrant on April 1, 1996.
</TABLE>


(b)            Reports on Form 8-K:

     No reports on Form 8-K were filed by the Company during the last quarter of
the period covered by this   report.

                                       48
<PAGE>

                                   SIGNATURES

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


                                    PEOPLE'S CHOICE TV CORP.

                                    By:  /s/Matthew Oristano
                                      --------------------------
                                         Matthew Oristano
                                         Chairman and Chief Executive Officer

Dated:   March  28, 1997


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


Signature                  Title                                 Date


/s/ Matthew Oristano       Director and Chief Executive Officer  March 28, 1997
--------------------
Matthew Oristano


s/ Victor Oristano         Vice Chairman and Director            March 28, 1997
------------------
Victor Oristano


/s/ Charles F. Schwartz    Principal Financial and Accounting    March 28, 1997
-----------------------    Officer
Charles F. Schwartz


/s/ Anthony Grillo         Director                              March 28, 1997
-------------------
Anthony Grillo


/s/ James J. Mossman       Director                              March 28, 1997
---------------------
James J. Mossman

                                       49