SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

     [ x ] QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT of 1934 for the quarterly period ended September 30, 1999, or

     [ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT of 1934 for the transition period from ___________to ___________.

Commission file number 001-12878


                     TIME WARNER ENTERTAINMENT COMPANY, L.P.
             (Exact name of registrant as specified in its charter)

                      Delaware                          13-3666692
              (State or other jurisdiction of        (I.R.S. Employer
               incorporation or organization)      Identification Number)



American Television and
 Communications Corporation            Delaware              13-2922502
Warner Communications Inc.             Delaware              13-2696809
(Exact name of registrant as
 specified in its charter          (State or other        (I.R.S. Employer
                                    jurisdiction of        Identification
                                    incorporation or           Number)
                                     organization)



                              75 Rockefeller Plaza
                            New York, New York 10019
                                 (212) 484-8000

               (Address, including zip code, and telephone number,
               including area code, of each registrant's principal
                               executive offices)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  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 / /




                                       1
<PAGE>




                     TIME WARNER ENTERTAINMENT COMPANY L.P.
                            AND TWE GENERAL PARTNERS



                               INDEX TO FORM 10-Q




<TABLE>

                                                                                          Page
                                                                                          ----
                                                                                                 TWE
                                                                                               General
                                                                                     TWE       Partners
                                                                                     ----      ---------


PART I. FINANCIAL INFORMATION
<S>                                                                                   <C>           <C>
Management's discussion and analysis of results of operations and financial
 condition ................................................... .................       1            22
Consolidated balance sheets at September 30, 1999 and December 31, 1998.........      12            29
Consolidated statements of operations for the three months and nine months ended
  September 30, 1999 and 1998...................................................      13            30
Consolidated statements of cash flows for the nine months ended September 30, 1999
 and 1998 ......................................................................      14            32
Consolidated statements of partnership capital and shareholders' equity for the
  nine months ended September 30, 1999 and 1998.................................      15            33
Notes to consolidated financial statements......................................      16            34




PART II. OTHER INFORMATION......................................................      40


</TABLE>




                                       2
<PAGE>






                     TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Description of Business

        Time  Warner  Entertainment  Company,  L.P.  ("TWE"  or  the  "Company")
classifies its business  interests into three fundamental areas: Cable Networks,
consisting  principally  of interests in cable  television  programming;  Filmed
Entertainment,  consisting  principally  of interests  in filmed  entertainment,
television  production  and  television  broadcasting;   and  Cable,  consisting
principally of interests in cable television systems. TWE also manages the cable
properties owned by Time Warner and the combined cable television operations are
conducted under the name of Time Warner Cable.

Use of EBITA

        TWE evaluates operating performance based on several factors,  including
its primary financial measure of operating income before noncash amortization of
intangible  assets ("EBITA").  Consistent with  management's  financial focus on
controlling capital spending, EBITA measures operating performance after charges
for  depreciation.  In addition,  EBITA  eliminates the uneven effect across all
business segments of considerable  amounts of noncash amortization of intangible
assets recognized in business combinations accounted for by the purchase method.
These business combinations,  including Time Warner's $14 billion acquisition of
Warner  Communications Inc. in 1989 and $1.3 billion acquisition of the minority
interest in American Television and Communications  Corporation in 1992, created
over $10 billion of intangible  assets that generally are being amortized over a
twenty to forty year period.  The exclusion of noncash  amortization  charges is
also consistent with management's  belief that TWE's intangible assets,  such as
cable  television  franchises,  film and  television  libraries and the goodwill
associated with its brands,  generally are increasing in value and importance to
TWE's business  objective of creating,  extending and distributing  recognizable
brands and copyrights  throughout the world. As such, the following  comparative
discussion of the results of operations of TWE includes, among other factors, an
analysis  of  changes  in  business  segment  EBITA.  However,  EBITA  should be
considered in addition to, not as a substitute for, operating income, net income
and  other  measures  of  financial  performance  reported  in  accordance  with
generally accepted accounting principles.

AT&T-MediaOne Merger

        At the time of this filing, MediaOne Group, Inc. ("MediaOne"), a limited
partner in TWE,  had agreed to be  acquired  by AT&T Corp.  ("AT&T").  In August
1999,  TWE received a notice from MediaOne  concerning  the  termination  of its
covenant not to compete with TWE. The  termination of that covenant is necessary
for  MediaOne  to complete  its  proposed  merger with AT&T.  As a result of the
termination  notice  and  the  operation  of  the  TWE  partnership   agreement,
MediaOne's   rights  to  participate  in  the  management  of  TWE's  businesses
terminated immediately and irrevocably. MediaOne retains only certain protective
governance  rights  pertaining  to certain  limited  matters  affecting TWE as a
whole.




                                       3
<PAGE>




                     TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)


        The proposed  merger of MediaOne  and AT&T is subject to customary
closing conditions,  including regulatory approvals.  Accordingly, there is no
assurance that it will occur. Also, there are no assurances that AT&T and Time
Warner will reach final agreement on the terms of a cable telephony joint
venture, either on the terms discussed on page F-8 of TWE's Annual Report on
Form 10-K for the year ended December 31, 1998, or any alternative terms.

Transactions Affecting Comparability of Results of Operations

        As more fully described  herein,  the  comparability  of TWE's operating
results has been affected by certain  significant  transactions and nonrecurring
items in each period.

        In 1999, these  nonrecurring  items consisted of (i) an approximate $215
million net pretax gain  recognized  in the first  quarter of 1999 in connection
with the early termination and settlement of a long-term home video distribution
agreement and (ii) net pretax gains in the amount of $1.118  billion  recognized
in the first nine  months of 1999  relating  to the sale or  exchange of various
cable  television  systems and  investments.  This  compares to net pretax gains
recognized in the first nine months of 1998 of $90 million  relating to the sale
or exchange of cable television systems.

        In order to meaningfully assess underlying operating trends,  management
believes that the results of operations for each period should be analyzed after
excluding the effects of these  significant  nonrecurring  gains.  As such,  the
following  discussion  and  analysis  focuses on amounts and trends  adjusted to
exclude the impact of these unusual items.  However,  unusual items may occur in
any  period.   Accordingly,   investors  and  other  financial  statement  users
individually  should  consider  the types of events and  transactions  for which
adjustments have been made.

        In addition,  the comparability of TWE's Cable division results has been
affected further by certain 1998 cable-related  transactions,  as described more
fully in Note 8 to the accompanying  consolidated  financial  statements.  While
these  transactions had a significant  effect on the  comparability of the Cable
division's EBITA and operating income principally due to the  deconsolidation of
the  related  operations,  they  did  not  have  a  significant  effect  on  the
comparability of TWE's net income.




                                       4
<PAGE>


                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)


RESULTS OF OPERATIONS

EBITA and operating income are as follows:
<TABLE>

                                             Three Months Ended September 30,  Nine Months Ended September 30,
                                             --------------------------------  -------------------------------
                                                                Operating                   Operating
                                                     EBITA        Income         EBITA        Income
                                                     -----        ------         -----        ------
                                                  1999   1998  1999  1998       1999   1998  1999   1998
                                                  ----   ----  ----  ----       ----   ----  ----   ----
                                                                       (millions)
<S>                                               <C>   <C>   <C>    <C>     <C>    <C>    <C>    <C>
Filmed Entertainment-Warner Bros.(1)........      $180  $161  $150   $128    $  658 $  401  $ 567 $  302
Broadcasting-The WB Network.................       (24)  (17)  (25)   (17)      (95)   (78)   (98)   (80)
Cable Networks-HBO..........................       138   117   138    117       394    339    394    339
Cable(2)....................................       699   336   600    240     2,135  1,017  1,863    731
                                                   ---   ---   ---    ---     -----  -----  -----    ---

Total.......................................      $993  $597  $863   $468    $3,092 $1,679 $2,726 $1,292
                                                  ====  ====  ====   ====    ====== ====== ====== ======

------------
(1) Includes a net pretax gain of approximately  $215 million  recognized in the
    first  quarter  of  1999  in  connection  with  the  early  termination  and
    settlement of a long-term home video distribution agreement.
(2) Includes net pretax gains  relating to the sale or exchange of certain cable
    television  systems and  investments of $358 million in the third quarter of
    1999 and $6 million  in the third  quarter  of 1998.  Similarly,  nine-month
    results  include net pretax gains of $1.118  billion in 1999 and $90 million
    in 1998.
</TABLE>


     Three Months Ended  September  30, 1999  Compared to the Three Months Ended
September 30, 1998

Consolidated Results

        TWE had  revenues of $3.474  billion and net income of $561  million for
the three  months  ended  September  30,  1999,  compared  to revenues of $3.220
billion and net income of $172 million for the three months ended  September 30,
1998.

        As previously  described,  the  comparability of TWE's operating results
for 1999 and 1998 has been affected by certain  significant,  nonrecurring items
recognized in each period.  These  nonrecurring items consisted of approximately
$358 million of net pretax  gains in 1999,  compared to $6 million of net pretax
gains in 1998.

        TWE's net income  increased  to $561  million in 1999,  compared to $172
million  in 1998.  However,  excluding  the  effect  of the  nonrecurring  items
referred to earlier, net income increased by $54 million to $220 million in 1999
from $166 million in 1998.  As  discussed  more fully  below,  this  improvement
principally  resulted  from  an  overall  increase  in  TWE's  business  segment
operating income.



                                       5
<PAGE>


                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        As a U.S.  partnership,  TWE is not  subject to U.S.  federal  and state
income taxation. Income and withholding taxes of $39 million and $23 million for
the three  months ended  September  30, 1999 and 1998,  respectively,  have been
provided  for  the   operations  of  TWE's   domestic  and  foreign   subsidiary
corporations.

Business Segment Results

        Filmed  Entertainment-Warner  Bros. Revenues increased to $1.862 billion
in 1999,  compared to $1.727 billion in 1998. EBITA increased to $180 million in
1999 from $161 million in 1998.  Operating  income  increased to $150 million in
1999 from $128 million in 1998.  Revenues  benefited from increases in worldwide
theatrical, home video and television syndication operations,  offset in part by
lower revenues from consumer products operations. The increase in worldwide home
video  revenues  primarily  resulted  from  increased  sales of DVDs.  EBITA and
operating  income  increased  principally  as a result of improved  results from
worldwide theatrical,  home video and television syndication operations,  offset
in part by lower results from consumer products operations.

        In connection with declines in the operations of certain of Warner
Bros.'s retail stores, management is in the process of evaluating several
strategic alternatives for its retail operations. These alternatives include the
gradual reduction and updating of Warner Bros.'s store portfolio,  including the
transformation  of some of the  traditional  retail  outlets  to  smaller,  more
efficient stores and an increasing emphasis on e-commerce opportunities.  To the
extent  management  takes  action under some of these  alternatives,  a non-cash
charge, principally relating to the acceleration of future depreciation expense,
may be required.  Management's  evaluation  is expected to continue  through the
1999 holiday shopping season.

        Broadcasting-The WB  Network.  Revenues  were  $84  million  in 1999,
compared to $64  million in 1998.  EBITA  decreased  to a loss of $24 million in
1999 from a loss of $17  million  in 1998.  Operating  losses  increased  to $25
million in 1999 from $17 million in 1998.  Revenues  increased  principally as a
result of one additional night of weekly prime-time programming in comparison to
the  prior  year  and  advertising  rate  increases,  offset  in part  by  lower
television  ratings for the summer repeat programming  lineup.  Operating losses
increased  principally  because the  revenue  gains were more than offset by the
combination of higher programming costs associated with the expanded programming
schedule and higher  start-up costs  associated with The WB Network 100+ station
group, a distribution alliance for The WB Network in smaller markets.

        Cable Networks-HBO. Revenues increased to $540 million in 1999, compared
to $505 million in 1998. EBITA and operating income increased to $138 million in
1999 from $117 million in 1998. Revenues benefited primarily from an increase in
pay-television  subscriptions.  EBITA and operating income increased principally
due to the revenue gains and increased cost savings.

        Cable.  Revenues increased to $1.124 billion in 1999, compared to $1.052
billion in 1998.  EBITA  increased  to $699 million in 1999 from $336 million in
1998.  Operating  income  increased to $600 million in 1999 from $240 million in
1998.   These   operating   results  were  affected  by  certain   cable-related
transactions  that occurred in 1998 (the "1998 Cable  Transactions")  and by net
pretax gains of $358 million  recognized  in 1999 and $6 million in 1998 related
to the sale or exchange of various cable television systems and investments. The
1998 Cable Transactions  principally resulted in the deconsolidation or transfer
of certain operations and are described more fully in Note 8 to the accompanying
consolidated  financial  statements.  Excluding  the  effect  of the 1998  Cable
Transactions,  revenues  increased  due to  growth in basic  cable  subscribers,
increases  in basic cable  rates,  increases  in  advertising  and  pay-per-view
revenues  and an  increase  in  revenues  from  providing  Road  Runner-branded,
high-speed  online services.  Similarly,  excluding the effect of the 1998 Cable
Transactions  and the  one-time  gains,  EBITA and  operating  income  increased
principally  as a result  of the  revenue  increases,  offset  in part by higher
programming costs.


                                       6
<PAGE>


                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        Interest  and Other,  Net.  Interest and other,  net,  decreased to $185
million  of  expense  in 1999,  compared  to $203  million  of  expense in 1998.
Interest expense decreased to $138 million in 1999,  compared to $145 million in
1998,  principally  due to interest  savings  associated with the Company's 1998
debt reduction  efforts.  Other expense,  net, decreased to $47 million in 1999,
compared  to $58  million in 1998.  The  decrease  principally  related to lower
dividend  requirements  on preferred  stock of a subsidiary that was redeemed in
March 1999.

        Minority Interest. Minority interest expense increased to $60 million in
1999,  compared  to $52 million in 1998.  Minority  interest  expense  increased
primarily due to the allocation of a portion of the net pretax gains relating to
the sale or exchange of various cable television  systems and investments  owned
by  the   TWE-Advance/Newhouse   Partnership   ("TWE-A/N"),   a  majority-owned
partnership of TWE, to the minority  owners of that  partnership.  Excluding the
significant  effect of the gains recognized in 1999,  minority  interest expense
decreased slightly in 1999 principally due to a higher allocation of losses to a
minority partner in The WB Network.

     Nine Months  Ended  September  30, 1999  Compared to the Nine Months  Ended
September 30, 1998

Consolidated Results

        TWE had revenues of $9.468  billion and net income of $1.640 billion for
the nine months ended September 30, 1999, compared to revenues of $8.980 billion
and net income of $435 million for the nine months ended September 30, 1998.

        As previously  described,  the  comparability of TWE's operating results
for 1999 and 1998 has been affected by certain  significant,  nonrecurring items
recognized in each period.  These  nonrecurring items consisted of approximately
$1.333  billion  of net pretax  gains in 1999,  compared  to $90  million of net
pretax gains in 1998.

        TWE's net income  increased to $1.640 billion in 1999,  compared to $435
million in 1998.  However,  excluding the significant effect of the nonrecurring
items referred to earlier,  net income increased by $117 million to $482 million
in 1999  from  $365  million  in  1998.  As more  fully  discussed  below,  this
improvement  principally  resulted  from an overall  increase in TWE's  business
segment  operating  income,  offset in part by higher equity losses from certain
investments accounted for under the equity method of accounting.

        As a U.S.  partnership,  TWE is not  subject to U.S.  federal  and state
income taxation. Income and withholding taxes of $94 million and $55 million for
the nine  months  ended  September  30, 1999 and 1998,  respectively,  have been
provided  for  the   operations  of  TWE's   domestic  and  foreign   subsidiary
corporations.

Business Segment Results

        Filmed  Entertainment-Warner  Bros. Revenues increased to $4.688 billion
in 1999,  compared to $4.364 billion in 1998. EBITA increased to $658 million in
1999 from $401 million in 1998.  Operating  income  increased to $567 million in
1999 from $302 million in 1998.  Revenues  benefited from increases in worldwide
theatrical, home video and television distribution operations, offset in part by
lower revenues from consumer products operations. The increase in worldwide home
video  revenues  primarily  resulted  from  increased  sales of DVDs.  EBITA and
operating income  increased  primarily from the inclusion of an approximate $215
million net pretax gain  recognized  in the first  quarter of 1999 in connection
with the early termination and settlement of a long-term home video distribution
agreement.  Excluding the gain, EBITA and operating income increased principally
as a result of  improved  results  from  worldwide  theatrical,  home  video and
television  distribution  operations,  offset  in part  by  lower  results  from
consumer products operations.


                                       7
<PAGE>




                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        In  connection with declines in the operations of certain of Warner
Bros.'s retail stores, management is in the process of evaluating several
strategic alternatives for its retail operations. These alternatives include the
gradual reduction and updating of Warner Bros.'s store portfolio,  including the
transformation  of some of the  traditional  retail  outlets  to  smaller,  more
efficient stores and an increasing emphasis on e-commerce opportunities.  To the
extent  management  takes  action under some of these  alternatives,  a non-cash
charge, principally relating to the acceleration of future depreciation expense,
may be required.  Management's  evaluation  is expected to continue  through the
1999 holiday shopping season.

        Broadcasting-The WB  Network.  Revenues  were $246  million  in 1999,
compared to $170  million in 1998.  EBITA  decreased to a loss of $95 million in
1999 from a loss of $78  million  in 1998.  Operating  losses  increased  to $98
million in 1999 from $80 million in 1998.  Revenues  increased  principally as a
result of one additional night of weekly prime-time programming in comparison to
the prior year,  improved  television  ratings and  advertising  rate increases.
Operating losses increased  principally because the revenue gains were more than
offset  by the  combination  of higher  programming  costs  associated  with the
expanded  programming  schedule and higher start-up costs associated with The WB
Network  100+  station  group,  a  distribution  alliance  for The WB Network in
smaller markets.

        Cable  Networks-HBO.  Revenues  increased  to  $1.612  billion  in 1999,
compared to $1.526 billion in 1998. EBITA and operating income increased to $394
million in 1999 from $339 million in 1998.  Revenues benefited primarily from an
increase in pay-television  subscriptions.  EBITA and operating income increased
principally due to the revenue gains,  increased cost savings, and higher income
from Comedy Central, a 50%-owned equity investee.

        Cable.  Revenues increased to $3.312 billion in 1999, compared to $3.289
billion in 1998.  EBITA  increased to $2.135 billion in 1999 from $1.017 billion
in 1998.  Operating income increased to $1.863 billion in 1999 from $731 million
in 1998.  These operating  results were affected by the 1998 Cable  Transactions
and by net pretax gains of $1.118 billion  recognized in 1999 and $90 million in
1998  related to the sale or exchange of various  cable  television  systems and
investments.   The  1998  Cable   Transactions   principally   resulted  in  the
deconsolidation  or transfer of certain  operations and are described more fully
in Note 8 to the accompanying  consolidated financial statements.  Excluding the
effect of the 1998 Cable Transactions, revenues increased due to growth in basic
cable subscribers,  increases in basic cable rates, increases in advertising and
pay-per-view   revenues  and  an  increase  in  revenues  from   providing  Road
Runner-branded,  high-speed online services. Similarly,  excluding the effect of
the 1998 Cable  Transactions and the one-time gains,  EBITA and operating income
increased  principally as a result of the revenue  increases,  offset in part by
higher programming costs.

        Interest  and Other,  Net.  Interest and other,  net,  increased to $577
million  of  expense  in 1999,  compared  to $550  million  of  expense in 1998.
Interest expense decreased to $411 million in 1999,  compared to $418 million in
1998,  principally  due to interest  savings  associated with the Company's 1998
debt reduction efforts.  Other expense,  net, increased to $166 million in 1999,
compared to $132 million in 1998.  This increase  principally  related to higher
losses  from  certain  investments  accounted  for  under the  equity  method of
accounting,  offset in part by lower dividend requirements on preferred stock of
a subsidiary that was redeemed in March 1999.


                                       8
<PAGE>



                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        Minority  Interest.  Minority interest expense increased to $361 million
in 1999,  compared to $198 million in 1998.  Minority interest expense increased
primarily due to the allocation of a portion of the net pretax gains relating to
the sale or exchange of various cable television  systems and investments  owned
by TWE-A/N to the minority owners of that partnership. Excluding the significant
effect  of the  gains  recognized  in each  period,  minority  interest  expense
decreased slightly in 1999 principally due to a higher allocation of losses to a
minority partner in The WB Network.

FINANCIAL CONDITION AND LIQUIDITY
September 30, 1999

Financial Condition

        At  September  30, 1999,  TWE had $6.7 billion of debt,  $235 million of
cash and  equivalents  (net debt of $6.5  billion) and $6.3 billion of partners'
capital.  This  compares  to $6.6  billion  of  debt,  $87  million  of cash and
equivalents  (net debt of $6.5  billion),  $217 million of preferred  stock of a
subsidiary,  $603  million of Time  Warner  General  Partners'  senior  priority
capital and $5.1 billion of partners' capital at December 31, 1998.

Senior Capital Distributions

        In July 1999,  TWE paid a $627 million  distribution  to the Time Warner
General  Partners  to redeem  the  remaining  portion of their  senior  priority
capital  interests,  including a priority  capital return of $173 million.  Time
Warner used a portion of the proceeds  received from this  distribution to repay
all $400 million of outstanding borrowings under its credit agreement with TWE.

Redemption of REIT Preferred Stock

        In March 1999,  a  subsidiary  of TWE (the  "REIT")  redeemed all of its
shares of preferred stock ("REIT Preferred  Stock") at an aggregate cost of $217
million,  which  approximated  net book value.  The  redemption  was funded with
borrowings  under TWE's bank credit  agreement.  Pursuant to its terms, the REIT
Preferred  Stock was  redeemed  as a result of  proposed  changes to federal tax
regulations that  substantially  increased the likelihood that dividends paid by
the REIT or interest  paid to the REIT under a mortgage note of TWE would not be
fully deductible for federal income tax purposes.

Cash Flows

        During the first nine months of 1999,  TWE's cash provided by operations
amounted to $2.205 billion and reflected $3.092 billion of EBITA from its Filmed
Entertainment-Warner Bros.,  Broadcasting-The WB Network, Cable Networks-HBO and
Cable businesses,  $632 million of noncash  depreciation expense and $20 million
of  proceeds  from TWE's  asset  securitization  program,  less $394  million of
interest  payments,  $84  million of income  taxes,  $54  million  of  corporate
expenses, and $1.007 billion related to an aggregate increase in working capital
requirements,  other balance sheet accounts and noncash items.  Cash provided by
operations of $1.273 billion in the first nine months of 1998  reflected  $1.679
billion of EBITA from its Filmed Entertainment-Warner Bros., Broadcasting-The WB
Network,  Cable  Networks-HBO  and Cable  businesses,  $698  million  of noncash
depreciation   expense   and  $131   million  of   proceeds   from  TWE's  asset
securitization  program, less $419 million of interest payments,  $57 million of
income taxes,  $54 million of corporate  expenses and $705 million related to an
aggregate increase in working capital requirements, other balance sheet accounts
and noncash items.


                                       9
<PAGE>




                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        Cash used by  investing  activities  was $540  million in the first nine
months of 1999,  compared to $887 million in the first nine months of 1998.  The
decrease  principally resulted from the collection of TWE's $400 million loan to
Time Warner and lower  capital  expenditures,  offset in part by a $198  million
decrease  in  investment  proceeds  relating  largely  to the 1998 sale of TWE's
remaining interest in Six Flags Entertainment Corporation.  Capital expenditures
decreased to $1.009 billion in the first nine months of 1999, compared to $1.092
billion in the first nine months of 1998.

        Cash used by financing  activities  was $1.517 billion in the first nine
months of 1999,  compared to $583 million in the first nine months of 1998.  The
use of cash in 1999  principally  resulted from the redemption of REIT Preferred
Stock at an aggregate  cost of $217  million,  the payment of $1.116  billion of
capital distributions to Time Warner and $39 million of debt reduction.  The use
of cash in 1998  principally  resulted  from the  payment  of $1.060  billion of
capital distributions to Time Warner, offset in part by an $675 million increase
in net borrowings.

        Management believes that TWE's operating cash flow, cash and equivalents
and  additional  borrowing  capacity  are  sufficient  to fund its  capital  and
liquidity needs for the foreseeable future.

Cable Capital Spending

        Time  Warner   Cable  has  been   engaged  in  a  plan  to  upgrade  the
technological  capability and  reliability of its cable  television  systems and
develop  new  services,  which  it  believes  will  position  the  business  for
sustained,  long-term growth.  Capital spending by TWE's Cable division amounted
to $910 million in the nine months ended  September  30, 1999,  compared to $991
million in the nine months ended September 30, 1998.  Cable capital  spending is
expected to approximate $350 million for the remainder of 1999. Capital spending
by TWE's Cable division is expected to continue to be funded by cable  operating
cash flow.

Filmed Entertainment Backlog

        Backlog  represents  the amount of future  revenue not yet recorded from
cash contracts for the licensing of theatrical  and  television  product for pay
cable, basic cable,  network and syndicated  television  exhibition.  Backlog of
TWE's Filmed  Entertainment-Warner  Bros. division amounted to $2.571 billion at
September 30, 1999 (including  amounts relating to the licensing of film product
to TWE's cable  television  networks of $307 million and to Time Warner's  cable
television  networks  of $612  million).  This  compares  to $2.298  billion  at
December 31, 1998 (including  amounts  relating to the licensing of film product
to TWE's cable  television  networks of $199 million and to Time Warner's  cable
television networks of $570 million).

        Because  backlog  generally  relates to contracts  for the  licensing of
theatrical  and  television  product  which  have  already  been  produced,  the
recognition of revenue for such completed  product is principally only dependent
upon the commencement of the availability period for telecast under the terms of
the related licensing agreement.  Cash licensing fees are collected periodically
over the term of the related  licensing  agreements or on an  accelerated  basis
using TWE's $500  million  securitization  facility.  The portion of backlog for
which cash has not already been received has significant off-balance sheet asset
value as a source of future funding.  The backlog  excludes  advertising  barter
contracts,  which  are also  expected  to result in the  future  realization  of
revenues  and cash through the sale of  advertising  spots  received  under such
contracts.


                                       10
<PAGE>




                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



Year 2000 Technology Preparedness

        TWE,  like most  large  companies,  depends on many  different  computer
systems and other chip-based devices for the continuing conduct of its business.
Older computer  programs,  computer hardware and chip-based  devices may fail to
recognize  dates  beginning  on January 1, 2000 as being valid  dates,  and as a
result  may fail to  operate  or may  operate  improperly  when  such  dates are
introduced.

        TWE's  exposure  to  potential   Year  2000  problems   arises  both  in
technological operations under the control of the Company and in those dependent
on one or more third parties. These technological operations include information
technology  ("IT")  systems and non-IT  systems,  including  those with embedded
technology,  hardware and software.  Most of TWE's potential Year 2000 exposures
are  dependent to some degree on one or more third  parties.  Failure to achieve
high levels of Year 2000 compliance  could have a material adverse impact on TWE
and its financial statements.

        The  Company's  Year 2000  initiative  continues  to be conducted at the
operational   level  by  divisional   project  managers  and  senior  technology
executives overseen by senior divisional executives,  with assistance internally
as well as from outside professionals. The progress of each division through the
different phases of remediation--inventorying, assessment, remediation planning,
implementation and final testing--is actively overseen and reviewed on a regular
basis by an executive oversight group.

        The  Company,  initially  identified  and assessed  potential  Year 2000
difficulties in its  technological  operations,  including IT  applications,  IT
technology  and support,  desktop  hardware  and  software,  non-IT  systems and
important  third party  operations,  and  distinguished  those that are "mission
critical" from those that are not. An item is considered  "mission  critical" if
its Year 2000-related  failure would significantly  impair the ability of one of
the Company's  major  business  units to (1) produce,  market and distribute the
products or services that generate significant  revenues for that business,  (2)
meet its  obligations to pay its employees,  artists,  vendors and others or (3)
meet its  obligations  under  regulatory  requirements  and internal  accounting
controls.  The Company  and its  divisions  have  identified  approximately  600
worldwide,  "mission critical"  potential  exposures.  As of September 30, 1999,
substantially  all  of the  potential  exposures  have  been  identified  by the
divisions  as Year  2000  compliant  and  of  those  that are not  reported  as
compliant,  substantially  all were in the  installation or final testing stages
and  expected to be  substantially  completed  in all  material  respects by the
middle of the fourth quarter of 1999.  The Company,  however,  could  experience
unexpected  delays.  The Company is expecting to focus its attention  during the
fourth  quarter  of 1999 on  conducting  final  integrated  testing  in a stable
environment  and on refinements  and testing of its  contingency  and transition
plans, as necessary.


                                       11
<PAGE>




                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        As stated above, however, the Company's business is heavily dependent on
third parties,  both  domestically  and  internationally,  and these parties are
themselves  heavily  dependent  on  technology.  For  example,  if a  television
broadcaster or cable  programmer  encounters  Year 2000 problems that impede its
ability to deliver its  programming,  the Company will be unable to provide that
programming  to its cable  customers.  Because the Company is also a programming
supplier,  third-party  signal  delivery  problems  would  affect its ability to
deliver its programming to its customers. In addition, in a situation endemic to
the cable industry,  much of the Company's headend equipment that controls cable
set-top  boxes  needed to be  upgraded to become  Year 2000  compliant.  The box
manufacturers  and cable industry groups together  developed  solutions that the
Company has substantially completed installing and testing in its headend
equipment at its various  geographic locations.  The Company has attempted to
include in its "mission critical" inventory significant service  providers,
vendors, suppliers, customers and governmental entities that are  believed to
be critical to business operations and has made its determinations of their
state of Year 2000 readiness through various means,  including questionnaires,
interviews,  on-site visits, system interface testing and  industry group
participation. The Company continues to  monitor  these situations.  Moreover,
TWE is  dependent,  like  all  large companies,  on the continued functioning,
domestically and internationally,  of basic,  heavily computerized  services
such as banking,  telephony,  water and power, and various distribution
mechanisms ranging from the mail, railroads and trucking  to  high-speed  data
transmission.  TWE is taking  steps to attempt to satisfy itself that the third
parties on which it is heavily  reliant are Year 2000 compliant,  are
developing satisfactory contingency plans or that alternate means of  meeting
its  requirements  are  available,  but  cannot  predict  the likelihood of
such compliance nor the direct or indirect costs to the Company of non-
compliance  by  those  third  parties  or of  securing  such  services  from
alternate  compliant  third parties.  In areas in which the Company is uncertain
about the  anticipated  Year 2000  readiness of a significant  third party,  the
Company is investigating available alternatives, if any.

        The Company currently estimates that the aggregate cost of its Year 2000
remediation  program,  which started in 1996, will be  approximately  $50 to $85
million,  of which an estimated 75% to 85% has been incurred  through  September
30, 1999. These costs include estimates of the costs of assessment, replacement,
repair and upgrade, both planned and unplanned, of certain IT and non-IT systems
and  their   implementation  and  testing.  The  Company  anticipates  that  its
remediation  program,  and  related  expenditures,  may  continue  into  2001 as
temporary  solutions to Year 2000 problems are replaced with upgraded equipment.
These  expenditures have been and are expected to continue to be funded from the
Company's  operating  cash  flow  and have not and are not  expected  to  impact
materially the Company's financial statements.

        Management  believes  that it has  established  an effective  program to
resolve all significant  Year 2000 issues in its control in a timely manner.  As
noted  above,  however,  the  Company  has not yet  completed  all phases of its
program  and is  dependent  on third  parties  whose  progress is not within its
control. In the event that the Company experiences unanticipated failures of the
systems  within  its  control,   management  believes  that  the  Company  could
experience  significant  difficulty in producing and delivering its products and
services  and  conducting  its  business in the Year 2000 as it has in the past.
More  importantly,  disruptions  experienced  by third  parties  with  which the
Company  does  business as well as by the  economy  generally  could  materially
adversely affect the Company. The amount of potential liability and lost revenue
cannot be reasonably estimated at this time.



                                       12
<PAGE>




                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        As stated  above,  the  Company is now  focusing  its  attention  on its
contingency and transition plans. It has examined its existing standard business
interruption  strategies to evaluate whether they would  satisfactorily meet the
demands  of  failures  arising  from  Year  2000-related  problems.  It is also
developing and refining specific  transition  schedules and contingency plans in
the  event  it does not  successfully  complete  its  remaining  remediation  as
anticipated  or  experiences  unforeseen  problems  outside  the  scope of these
standard   strategies.   These  plans  are  intended  to  provide  guidance  and
alternatives for unanticipated  failures of internal systems as well as external
failures  that  may  impede  any  of the  Company's  businesses  from  operating
normally.  The Company  intends to examine its status  periodically to determine
the necessity of implementing such contingency  plans or additional  strategies,
which could involve, among other things, manual workarounds,  adjusting staffing
strategies and sharing resources across divisions.

Caution Concerning Forward-Looking Statements

        The Securities and Exchange Commission  encourages companies to disclose
forward-looking  information so that investors can better understand a company's
future prospects and make informed investment decisions. This document, together
with   management's   public   commentary   related   thereto,   contains   such
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform  Act of 1995,  particularly  statements  anticipating  future
growth in revenues, EBITA and cash flow. Words such as "anticipate", "estimate",
"expects",  "projects",  "intends",  "plans",  "believes" and words and terms of
similar  substance used in connection with any discussion of future operating or
financial   performance   identify  such   forward-looking   statements.   Those
forward-looking  statements  are  management's  present  expectations  of future
events. As with any projection or forecast,  they are inherently  susceptible to
changes  in  circumstances,  and TWE is under no  obligation  to (and  expressly
disclaims  any  such   obligation  to)  update  or  alter  its   forward-looking
statements, whether as a result of such changes, new information,  future events
or otherwise.

        TWE operates in highly competitive, consumer driven and rapidly changing
media and entertainment  businesses that are dependent on government  regulation
and  economic,  political,  social  conditions  in the  countries  in which they
operate,  consumer  demand  for  their  products  and  services,   technological
developments and (particularly in view of technological  changes)  protection of
their intellectual property rights. TWE's actual results could differ materially
from management's  expectations because of changes in such factors.  Some of the
other  factors  that also  could  cause  actual  results  to differ  from  those
contained in the  forward-looking  statements  include those identified in TWE's
other filings and:

 .   For TWE's cable business, more aggressive than expected competition from new
    technologies and other types of video  programming  distributors,  including
    DBS; increases in government regulation of cable or equipment rates or other
    terms  of   service   (such  as   "digital   must-carry"   or   "unbundling"
    requirements);  increased  difficulty in obtaining franchise  renewals;  the
    failure of new equipment  (such as digital  set-top boxes) or services (such
    as high-speed  on-line  services or telephony over cable or video on demand)
    to function  properly,  to appeal to enough  consumers or to be available at
    reasonable prices and to be delivered in a timely fashion;  and greater than
    expected increases in programming or other costs.


                                       13
<PAGE>



                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



 .   For TWE's cable programming and television businesses, greater than expected
    programming or production  costs;  public and cable  operator  resistance to
    price increases (and the negative impact on premium programmers of increases
    in basic cable rates); increased regulation of distribution agreements;  the
    sensitivity  of  advertising  to  economic  cyclicality;  and  greater  than
    expected  fragmentation of consumer viewership due to an increased number of
    programming   services  or  the  increased  popularity  of  alternatives  to
    television.

 .   For TWE's film and  television  businesses,  their  ability to  continue  to
    attract  and select  desirable  talent  and  scripts  at  manageable  costs;
    increases in production costs  generally;  fragmentation of consumer leisure
    and  entertainment  time (and its possible negative effects on the broadcast
    and cable networks,  which are significant  customers of these  businesses);
    continued   popularity  of  merchandising;   and  the  uncertain  impact  of
    technological developments such as DVD and the Internet.

 .   For TWE's digital media  businesses,  their ability to develop  products and
    services that are attractive, accessible and commercially viable in terms of
    content,  technology  and cost,  their  ability to manage costs and generate
    revenues,  aggressive competition from existing and developing  technologies
    and products,  the resolution of issues concerning commercial activities via
    the Internet, including security, reliability, cost, ease of use and access,
    and  the  possibility  of  increased  government  regulation  of  new  media
    services.

 .   The  ability  of  the  Company  and  its  key  service  providers,  vendors,
    suppliers, customers and governmental entities to replace, modify or upgrade
    computer  systems  in ways that  adequately  address  the Year  2000  issue,
    including their ability to identify and correct all relevant  computer codes
    and   embedded   chips,   unanticipated   difficulties   or  delays  in  the
    implementation  of the Company's  remediation plans and the ability of third
    parties to address adequately their own Year 2000 issues.

        In addition,  TWE's  overall  financial  strategy,  including  growth in
operations,  maintaining its financial  ratios and  strengthened  balance sheet,
could be  adversely  affected  by  increased  interest  rates,  failure  to meet
earnings   expectations,   significant   acquisitions  or  other   transactions,
consequences of the euro  conversion and changes in TWE's plans,  strategies and
intentions.





                                       14
<PAGE>




<TABLE>


                                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                                           CONSOLIDATED BALANCE SHEET
                                                  (Unaudited)
                                                                            September 30, December 31,
                                                                                1999         1998
                                                                                ----         ----
                                                                                   (millions)
<S>                                                                           <C>         <C>
ASSETS
Current assets
Cash and equivalents.......................................................    $  235     $    87
Receivables, including $1.049 billion and $765 million due from Time Warner,
   less allowances of $470 and $506 million................................     2,885       2,618
Inventories................................................................     1,238       1,312
Prepaid expenses...........................................................       223         166
                                                                                  ---         ---

Total current assets.......................................................     4,581       4,183

Noncurrent inventories.....................................................     2,021       2,327
Loan receivable from Time Warner...........................................         -         400
Investments................................................................       829         886
Property, plant and equipment..............................................     6,385       6,041
Cable television franchises................................................     4,823       3,773
Goodwill...................................................................     3,764       3,854
Other assets...............................................................       825         766
                                                                                  ---         ---
Total assets...............................................................   $23,228     $22,230
                                                                              =======     =======

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable...........................................................   $ 1,440     $ 1,473
Participations and programming costs payable...............................     1,673       1,515
Debt due within one year...................................................         6           6
Other current liabilities, including $821 and $370 million due to Time Warner   2,075       1,942
                                                                                -----       -----

Total current liabilities..................................................     5,194       4,936

Long-term debt.............................................................     6,725       6,578
Other long-term liabilities, including $1.024 and $1.130 billion due to
 Time Warner ..............................................................     3,166       3,267
Minority interests.........................................................     1,801       1,522
Preferred stock of subsidiary holding solely a mortgage note of its parent.         -         217
Time Warner General Partners' Senior Capital...............................         -         603

Partners' capital
Contributed capital........................................................     7,338       7,341
Undistributed partnership deficit..........................................      (996)     (2,234)
                                                                                 ----      ------

Total partners' capital....................................................     6,342       5,107
                                                                                -----       -----

Total liabilities and partners' capital....................................   $23,228     $22,230
                                                                              =======     =======



See accompanying notes.

</TABLE>



                                       15
<PAGE>



<TABLE>

                                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                                      CONSOLIDATED STATEMENT OF OPERATIONS
                                                  (Unaudited)


                                                               Three Months           Nine Months
                                                           Ended September 30,     Ended September 30,
                                                           -------------------     -------------------
                                                             1999       1998        1999        1998
                                                             ----       ----        ----        ----
                                                                          (millions)
<S>                                                         <C>       <C>          <C>       <C>
Revenues (a)...........................................     $3,474    $3,220       $9,468    $8,980

Cost of revenues (a)(b)................................     (2,362)   (2,181)      (6,266)   (6,017)
Selling, general and administrative (a)(b).............       (607)     (577)      (1,809)   (1,761)
Gain on sale or exchange of cable systems and investments      358         6        1,118        90
Gain on early termination of video distribution agreement        -         -          215         -
                                                                 -         -            -         -
                                                               ---       ---          ---       ---

Business segment operating income......................        863       468        2,726     1,292
Interest and other, net (a)............................       (185)     (203)        (577)     (550)
Minority interest......................................        (60)      (52)        (361)     (198)
Corporate services (a).................................        (18)      (18)         (54)      (54)
                                                               ---       ---          ---       ---

Income before income taxes.............................        600       195        1,734       490
Income taxes...........................................        (39)      (23)         (94)      (55)
                                                               ---       ---          ---       ---

Net income.............................................     $  561    $  172       $1,640   $   435
                                                            ======    ======       ======   =======

---------------
(a) Includes the following income  (expenses)  resulting from  transactions with the partners of TWE and other related companies:
      Revenues.........................................       $150      $227         $422      $474
      Cost of revenues.................................        (62)      (49)        (198)     (142)
      Selling, general and administrative..............         (7)      (14)         (23)      (16)
      Gain on sale or exchange of cable systems and
       investments                                             308         -          308         -
      Interest and other, net..........................         (8)        1           20         6
      Corporate expenses...............................        (18)      (18)         (54)      (54)

(b) Includes depreciation and amortization expense of:.     $  356    $  358       $  998    $1,085
                                                            ======    ======       ======    ======



See accompanying notes.

</TABLE>



                                       16
<PAGE>



<TABLE>

                                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                                  (Unaudited)


                                                                                Nine Months
                                                                             Ended September 30,
                                                                             -------------------
                                                                              1999        1998
                                                                              ----        ----
                                                                                 (millions)
<S>                                                                         <C>          <C>
OPERATIONS
Net income.................................................................  $1,640      $  435
Adjustments for noncash and nonoperating items:
Depreciation and amortization..............................................     998       1,085
Changes in operating assets and liabilities................................    (433)       (247)
                                                                               ----        ----

Cash provided by operations................................................   2,205       1,273
                                                                              -----       -----

INVESTING ACTIVITIES
Investments and acquisitions...............................................    (273)       (335)
Capital expenditures.......................................................  (1,009)     (1,092)
Investment proceeds........................................................     342         540
Collection of loan to Time Warner..........................................     400           -
                                                                                ---         ---

Cash used by investing activities..........................................    (540)       (887)
                                                                               ----        ----

FINANCING ACTIVITIES
Borrowings.................................................................   1,854       1,515
Debt repayments............................................................  (1,893)       (840)
Redemption of preferred stock of subsidiary................................    (217)          -
Capital distributions......................................................  (1,116)     (1,060)
Other......................................................................    (145)       (198)
                                                                               ----        ----

Cash used by financing activities..........................................  (1,517)       (583)
                                                                             ------        ----

INCREASE (DECREASE) IN CASH AND EQUIVALENTS................................     148        (197)

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD................................      87         322
                                                                                ---         ---

CASH AND EQUIVALENTS AT END OF PERIOD...................................... $   235      $  125
                                                                            =======      ======



See accompanying notes.
</TABLE>



                                       17
<PAGE>




                                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                                 CONSOLIDATED STATEMENT OF PARTNERSHIP CAPITAL
                                                  (Unaudited)






<TABLE>
                                                                                 Nine Months
                                                                              Ended September 30,
                                                                              -------------------
                                                                               1999        1998
                                                                               ----        ----
                                                                                  (millions)
<S>                                                                          <C>          <C>
BALANCE AT BEGINNING OF PERIOD.............................................  $5,107       $6,333

Net income.................................................................   1,640          435
Other comprehensive income (loss)..........................................       6          (21)
                                                                              -----          ---
Comprehensive income(a)....................................................   1,646          414

Stock option and tax-related distributions.................................    (383)        (746)
Distribution of Time Warner Telecom interests..............................       -         (191)
Allocation of income to Time Warner General Partners' Senior Capital.......     (24)         (52)
Other......................................................................      (4)          (2)
                                                                              -----         ----

BALANCE AT END OF PERIOD...................................................  $6,342       $5,756
                                                                             ======       ======

---------------
(a)     Comprehensive  income for the three months ended  September 30, 1999 and 1998 was $520 million and $167
        million, respectively.



See accompanying notes.
</TABLE>





                                       18
<PAGE>





                     TIME WARNER ENTERTAINMENT COMPANY, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.      DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

        Time Warner Entertainment  Company, L.P., a Delaware limited partnership
("TWE"),  classifies its business  interests into three fundamental areas: Cable
Networks,  consisting principally of interests in cable television  programming;
Filmed   Entertainment,   consisting   principally   of   interests   in  filmed
entertainment,  television  production and television  broadcasting;  and Cable,
consisting principally of interests in cable television systems.

        Each  of  the  business   interests   within  Cable   Networks,   Filmed
Entertainment  and Cable is important to TWE's  objective of increasing  partner
value through the creation,  extension and  distribution of recognizable  brands
and copyrights  throughout the world. Such brands and copyrights include (1) HBO
and Cinemax, the leading pay television  services,  (2) the unique and extensive
film,  television and animation libraries of Warner Bros. and trademarks such as
the  Looney  Tunes  characters  and  Batman,  (3)  The WB  Network,  a  national
broadcasting  network launched in 1995 as an extension of the Warner Bros. brand
and as an  additional  distribution  outlet  for  Warner  Bros.'  collection  of
children's  cartoons  and  television  programming,  and (4) Time Warner  Cable,
currently the largest operator of cable television systems in the U.S.

        The operating  results of TWE's various business  segments are presented
herein as an indication of financial  performance  (Note 8). Except for start-up
losses  incurred in connection  with The WB Network,  TWE's  principal  business
segments  generate  significant  operating income and cash flow from operations.
The  cash  flow  from  operations   generated  by  such  business   segments  is
considerably  greater than their operating income due to significant  amounts of
noncash amortization of intangible assets recognized  principally in Time Warner
Companies,   Inc.'s   ("Time   Warner")  $14  billion   acquisition   of  Warner
Communications Inc. ("WCI") in 1989 and $1.3 billion acquisition of the minority
interest in American Television and Communications  Corporation ("ATC") in 1992,
a portion  of which cost was  allocated  to TWE upon the  capitalization  of the
partnership.  Noncash  amortization  of  intangible  assets  recorded  by  TWE's
business segments amounted to $130 million and $129 million for the three months
ended  September  30,  1999 and 1998,  respectively  and $366  million  and $387
million for the nine months ended September 30, 1999 and 1998, respectively.

        Time Warner and certain of its wholly  owned  subsidiaries  collectively
own general and limited partnership interests in TWE consisting of 74.49% of the
pro rata  priority  capital  ("Series A Capital")  and residual  equity  capital
("Residual  Capital"),  and  100% of the  junior  priority  capital  ("Series  B
Capital").  The remaining 25.51% limited  partnership  interests in the Series A
Capital and Residual  Capital of TWE are held by a subsidiary of MediaOne Group,
Inc.  ("MediaOne").  Certain  of Time  Warner's  subsidiaries  are  the  general
partners of TWE ("Time Warner General Partners").




                                       19
<PAGE>




                     TIME WARNER ENTERTAINMENT COMPANY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                   (Unaudited)


Basis of Presentation

        The accompanying consolidated financial statements are unaudited but, in
the opinion of management, contain all the adjustments (consisting of those of a
normal recurring  nature)  considered  necessary to present fairly the financial
position and the results of operations and cash flows for the periods  presented
in  conformity  with  generally  accepted  accounting  principles  applicable to
interim periods.  The accompanying  consolidated  financial statements should be
read in conjunction with the audited  consolidated  financial  statements of TWE
included in its Annual Report on Form 10-K for the year ended  December 31, 1998
(the "1998 Form 10-K").

Reclassifications

        Certain  reclassifications  have been made to the prior year's financial
statements to conform to the 1999 presentation.

2.      GAIN ON TERMINATION OF MGM VIDEO DISTRIBUTION AGREEMENT

     In  March  1999,  Warner  Bros.  and   Metro-Goldwyn-Mayer,   Inc.  ("MGM")
terminated a long-term  distribution  agreement  under which  Warner  Bros.  had
exclusive  worldwide  distribution  rights  for  MGM/United  Artists  home video
product.  In  connection  with the  early  termination  and  settlement  of this
distribution   agreement,   Warner  Bros.   recognized  a  net  pretax  gain  of
approximately  $215 million,  which has been included in operating income in the
accompanying consolidated statement of operations.

3.      GAIN ON SALE OR EXCHANGE OF CABLE TELEVISION SYSTEMS AND INVESTMENTS

        In 1999 and  1998,  largely  in an  effort  to  enhance  its  geographic
clustering of cable television  properties,  TWE sold or exchanged various cable
television  systems  and  investments.  The 1999  transactions  included a large
exchange of cable television systems serving  approximately  450,000 subscribers
for  other  cable   television   systems  of   comparable   size  owned  by  TCI
Communications,  Inc., a subsidiary of AT&T Corp., and a large exchange of cable
television  systems serving  approximately  160,000  subscribers for other cable
television  systems of comparable  size owned by MediaOne.  As a result of these
transactions,  the  operating  results of TWE include  net pretax  gains for the
third  quarter of $358 million in 1999 and $6 million in 1998.  Net pretax gains
for the first nine months of the year amounted to $1.118 billion in 1999 and $90
million in 1998.

4.      INVESTMENT IN PRIMESTAR

        TWE  owns  an  approximate  24%  equity  interest  in  Primestar,   Inc.
("Primestar").  In January 1999, Primestar,  an indirect wholly owned subsidiary
of Primestar and the stockholders of Primestar entered into an agreement to sell
Primestar's  medium-power  direct  broadcast  satellite  business  and assets to
DirecTV,  a  competitor  of  Primestar  owned by  Hughes  Electronics  Corp.  In
addition,  a second  agreement was entered into with DirecTV,  pursuant to which
DirecTV  agreed  to  purchase  Primestar's  rights  with  respect  to the use or
acquisition of certain  high-power  satellites from a wholly owned subsidiary of
one of the  stockholders of Primestar.  In April 1999,  Primestar  closed on the
sale of its medium-power direct broadcast  satellite business to DirecTV.  Then,
in June 1999, Primestar completed the sale of its high-power satellite rights to
DirecTV.



                                       20
<PAGE>


                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        As a result of those transactions, Primestar began to substantially wind
down its  operations  during the first quarter of 1999. TWE recognized its share
of Primestar's  1999 losses under the equity method of  accounting.  Such losses
are  included  in interest  and other,  net,  in the  accompanying  consolidated
statement of operations.  As of September 30, 1999,  Primestar has substantially
completed the wind down of its operations.  As such, future wind-down losses are
not expected to be material to TWE's operating results.

5.      INVENTORIES
<TABLE>

        Inventories consist of:
                                                               September 30, 1999     December 31, 1998
                                                               ------------------     -----------------
                                                              Current  Noncurrent   Current     Noncurrent
                                                              -------  ----------   -------     ----------
                                                                             (millions)
<S>                                                           <C>         <C>       <C>         <C>
Film costs:
   Released, less amortization.........................       $  609      $  735    $  614      $  744
   Completed and not released..........................          164          64       179          76
   In process and other................................           36         324        23         572
   Library, less amortization..........................            -         521         -         560
Programming costs, less amortization...................          331         377       426         375
Merchandise............................................           98           -        70           -
                                                              ------      ------    ------      ------
Total..................................................       $1,238      $2,021    $1,312      $2,327
                                                              ======      ======    ======      ======
</TABLE>

6.      PREFERRED STOCK OF SUBSIDIARY

        In February 1997, a newly formed,  substantially owned subsidiary of TWE
(the "REIT") issued 250,000 shares of preferred stock ("REIT Preferred  Stock").
The REIT was  intended  to qualify as a real estate  investment  trust under the
Internal Revenue Code of 1986, as amended.

        In March 1999,  the REIT  redeemed  all of its shares of REIT  Preferred
Stock at an aggregate cost of $217 million,  which  approximated net book value.
The redemption  was funded with  borrowings  under TWE's bank credit  agreement.
Pursuant  to its terms,  the REIT  Preferred  Stock was  redeemed as a result of
proposed  changes to federal tax regulations  that  substantially  increased the
likelihood  that dividends paid by the REIT or interest paid to the REIT under a
mortgage  note of TWE would  not be fully  deductible  for  federal  income  tax
purposes.

7.      PARTNERS' CAPITAL

        TWE is required to make  distributions  to  reimburse  the  partners for
income  taxes at  statutory  rates  based on their  allocable  share of  taxable
income,  and to reimburse Time Warner for stock options  granted to employees of
TWE based on the amount by which the market  price of Time  Warner  Inc.  common
stock exceeds the option exercise price on the exercise date or, with respect to
options granted prior to the TWE capitalization on June 30, 1992, the greater of
the exercise  price or the $13.88 market price of Time Warner Inc.  common stock
at the time of the TWE  capitalization.  TWE accrues a stock option distribution
and a  corresponding  liability  with  respect to  unexercised  options when the
market price of Time Warner Inc.  common stock  increases  during the accounting
period,  and reverses  previously  accrued  stock option  distributions  and the
corresponding  liability when the market price of Time Warner Inc.  common stock
declines.



                                       21
<PAGE>


                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)

        During the nine months  ended  September  30,  1999,  TWE  accrued  $316
million  of   tax-related   distributions   and  $67  million  of  stock  option
distributions,  based on closing  prices of Time  Warner  Inc.  common  stock of
$60.75 at September  30, 1999 and $62.06 at December  31, 1998.  During the nine
months  ended  September  30,  1998,  TWE accrued  $264  million of  tax-related
distributions  and $482 million of stock option  distributions as a result of an
increase  at that time in the market  price of Time Warner  Inc.  common  stock.
Also,  during the nine months  ended  September  30, 1998,  Time Warner  Cable's
business telephony operations were reorganized into a separate entity named Time
Warner  Telecom  Inc.   ("Time  Warner   Telecom").   In  connection  with  that
reorganization, TWE recorded a $191 million noncash distribution of its business
telephony net assets to its partners based on their historical cost.

        During the nine months ended September 30, 1999, TWE paid  distributions
to the Time Warner General Partners in the amount of $489 million, consisting of
$316  million of  tax-related  distributions  and $173  million of stock  option
related distributions. During the nine months ended September 30, 1998, TWE paid
the Time Warner General Partners  distributions in the amount of $1.060 billion,
consisting of $264 million of tax-related  distributions,  $217 million of stock
option related  distributions and a $579 million distribution to the Time Warner
General Partners relating to their Senior Capital interests.

        In July 1999, TWE borrowed $627 million under its bank credit  agreement
and paid a  distribution  to the Time  Warner  General  Partners  to redeem  the
remaining  portion of their  senior  priority  capital  interests,  including  a
priority  capital  return of $173  million.  Time  Warner  used a portion of the
proceeds   received  from  this  distribution  to  repay  all  $400  million  of
outstanding borrowings under its credit agreement with TWE.

8.      SEGMENT INFORMATION

        TWE classifies  its business  interests  into three  fundamental  areas:
Cable  Networks,   consisting  principally  of  interests  in  cable  television
programming; Filmed Entertainment, consisting principally of interests in filmed
entertainment,  television  production and television  broadcasting;  and Cable,
consisting principally of interests in cable television systems.

        Information as to the operations of TWE in different  business  segments
is set forth below based on the nature of the products and services offered. TWE
evaluates  performance based on several factors,  of which the primary financial
measure is business  segment  operating  income before noncash  amortization  of
intangible  assets  ("EBITA").  The  operating  results of TWE's  cable  segment
reflect:  (i) the transfer of Time Warner  Cable's  direct  broadcast  satellite
operations to Primestar,  a separate holding  company,  effective as of April 1,
1998,  (ii) the formation of the Road Runner joint venture to operate and expand
Time Warner  Cable's  and  MediaOne's  existing  high-speed  online  businesses,
effective as of June 30, 1998, (iii) the  reorganization  of Time Warner Cable's
business  telephony  operations  into a separate  entity  now named Time  Warner
Telecom  Inc.,  effective  as of July 1, 1998 and (iv) the  formation of a joint
venture in Texas that owns cable television  systems serving  approximately  1.1
million subscribers,  effective as of December 31, 1998 (collectively, the "1998
Cable Transactions").  These transactions are described more fully in TWE's 1998
Form 10-K.


                                       22
<PAGE>



                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



<TABLE>

                                                             Three Months          Nine Months
                                                          Ended September 30,   Ended September 30,
                                                          -------------------   -------------------
                                                           1999        1998      1999        1998
                                                           ----        ----      ----        ----
                                                                        (millions)
<S>                                                      <C>          <C>       <C>       <C>
Revenues
Filmed Entertainment-Warner Bros.......................  $1,862       $1,727    $4,688    $4,364
Broadcasting-The WB Network............................      84           64       246       170
Cable Networks-HBO.....................................     540          505     1,612     1,526
Cable..................................................   1,124        1,052     3,312     3,289
Intersegment elimination...............................    (136)        (128)     (390)     (369)
                                                           ----         ----      ----      ----

Total..................................................  $3,474       $3,220    $9,468    $8,980
                                                         ======       ======    ======    ======

                                                             Three Months           Nine Months
                                                          Ended September 30,   Ended September 30,
                                                          -------------------   -------------------
                                                           1999        1998      1999        1998
                                                           ----        ----      ----        ----
                                                                       (millions)
EBITA(1)
Filmed Entertainment-Warner Bros.(2)...................    $180         $161    $  658    $  401
Broadcasting-The WB Network............................     (24)         (17)      (95)      (78)
Cable Networks-HBO.....................................     138          117       394       339
Cable(3)...............................................     699          336     2,135     1,017
                                                            ---          ---     -----     -----

Total..................................................    $993         $597    $3,092    $1,679
                                                           ====         ====    ======    ======
---------------
(1)EBITA   represents   business   segment   operating   income  before  noncash
   amortization of intangible assets. After deducting amortization of intangible
   assets, TWE's business segment operating income for the three and nine months
   ended September 30, 1999, respectively,  and for the corresponding periods in
   the prior year was $863  million and $2.726  billion in 1999 and $468 million
   and $1.292 billion in 1998.
(2)Includes a net pretax gain of  approximately  $215 million  recognized in the
   first quarter of 1999 in connection with the early termination and settlement
   of a long-term home video distribution agreement.
(3)Includes net pretax gains  relating to the sale or exchange of certain  cable
   television  systems  of $358  million  in the  third  quarter  of 1999 and $6
   million in the third quarter of 1998.  Similarly,  nine-month results include
   net pretax gains of $1.118 billion in 1999 and $90 million in 1998.

</TABLE>



                                       23
<PAGE>



                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)
<TABLE>

                                                             Three Months          Nine Months
                                                          Ended September 30,   Ended September 30,
                                                          -------------------   -------------------
                                                           1999        1998      1999        1998
                                                           ----         ----      ----        ----
                                                                       (millions)
<S>                                                       <C>        <C>          <C>       <C>
Depreciation of Property, Plant and Equipment
Filmed Entertainment-Warner Bros.......................   $  44      $ 48         $109      $126
Broadcasting-The WB Network............................       -         1            1         1
Cable Networks-HBO.....................................       7         6           20        16
Cable..................................................     175       174          502       555
                                                            ---       ---          ---       ---

Total..................................................    $226      $229         $632      $698
                                                           ====      ====         ====      ====

                                                             Three Months          Nine Months
                                                          Ended September 30,   Ended September 30,
                                                          -------------------   -------------------
                                                           1999        1998      1999        1998
                                                           ----        ----      ----        ----
                                                                       (millions)
Amortization of Intangible Assets (1)
Filmed Entertainment-Warner Bros.......................    $ 30      $ 33      $ 91         $ 99
Broadcasting-The WB Network............................       1         -         3            2
Cable Networks-HBO.....................................       -         -         -            -
Cable..................................................      99        96       272          286
                                                             --        --       ---          ---

Total..................................................    $130      $129      $366         $387
                                                           ====      ====      ====         ====

(1)Amortization  includes  amortization  relating to all  business  combinations
   accounted  for by the purchase  method,  including  Time Warner's $14 billion
   acquisition  of WCI in 1989  and $1.3  billion  acquisition  of the  minority
   interest in ATC in 1992.
</TABLE>

9.      COMMITMENTS AND CONTINGENCIES

        TWE is subject to numerous legal  proceedings.  In management's  opinion
and considering  established reserves,  the resolution of these matters will not
have a material effect, individually and in the aggregate, on TWE's consolidated
financial statements.


                                       24
<PAGE>


                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



<TABLE>

10.     ADDITIONAL FINANCIAL INFORMATION

                                                                                   Nine Months
                                                                                Ended September 30,
                                                                                -------------------
                                                                                 1999        1998
                                                                                 ----        ----
                                                                                    (millions)
<S>                                                                              <C>       <C>
Interest expense...........................................................      $411      $418
Cash payments made for interest............................................       394       419
Cash payments made for income taxes, net...................................        84        57
Noncash capital distributions..............................................        67       673

        Noncash  investing  activities  included the  exchange of certain  cable
television  systems in 1999 and 1998 (see Note 3). Noncash investing  activities
in the first nine months of 1998 also included the transfer of cable  television
systems (or interests therein) serving  approximately  650,000  subscribers that
were formerly owned by subsidiaries  of Time Warner to the  TWE-Advance/Newhouse
Partnership, subject to approximately $1 billion of debt, in exchange for common
and  preferred  partnership  interests  therein,  as  well  as  certain  related
transactions (collectively,  the "TWE-A/N Transfers").  For a more comprehensive
description of the TWE-A/N Transfers, see TWE's 1998 Form 10-K.

</TABLE>




                                       25
<PAGE>





                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Description of Business

        On June 30,  1992,  thirteen  direct or  indirect  subsidiaries  of Time
Warner Companies,  Inc. ("TW Companies")  contributed the assets and liabilities
or the rights to the cash flows of  substantially  all of TW Companies's  Filmed
Entertainment-Warner  Bros.,  Cable  Networks-HBO  and Cable  businesses to Time
Warner Entertainment  Company, L.P., a Delaware limited partnership ("TWE"), for
general partnership  interests.  In addition, at that time, each general partner
guaranteed  a pro rata  portion of  substantially  all of TWE's debt and accrued
interest based on the relative fair value of the net assets each  contributed to
TWE (the  "General  Partner  Guarantees").  Since then,  eleven of the  thirteen
original  general  partners  have been merged or  dissolved  into the other two.
Warner  Communications  Inc. ("WCI") and American  Television and Communications
Corporation ("ATC") are the two remaining general partners of TWE (collectively,
the  "General  Partners").  They  have  succeeded  to  the  general  partnership
interests and have assumed the General  Partner  Guarantees of the eleven former
general partners.

        Set  forth  below is a  discussion  of the  results  of  operations  and
financial  condition of WCI, the only General Partner with independent  business
operations.  WCI conducts  substantially all of TW Companies's Music operations,
which  include  copyrighted  music from many of the  world's  leading  recording
artists  that is produced  and  distributed  by a family of  established  record
labels such as Warner Bros. Records, Atlantic Records, Elektra Entertainment and
Warner Music International.  The financial position and results of operations of
ATC are principally  derived from its  investments in TWE, TW Companies,  Turner
Broadcasting  System, Inc. and Time Warner Telecom Inc. and its revolving credit
agreement with TW Companies.  Capitalized  terms are as defined and described in
the accompanying consolidated financial statements, or elsewhere herein.

Investment in TWE

        TWE was capitalized in June 1992 to own and operate substantially all of
the Filmed  Entertainment-Warner  Bros., Cable Networks-HBO and Cable businesses
previously owned by the General Partners.  The General Partners in the aggregate
hold, directly or indirectly, 63.27% of the pro rata priority capital ("Series A
Capital") and residual  equity capital  ("Residual  Capital") of TWE and 100% of
the senior  priority  capital  ("Senior  Capital") and junior  priority  capital
("Series B Capital") of TWE. TW  Companies  holds 11.22% of the Series A Capital
and Residual Capital limited partnership interests. The remaining 25.51% limited
partnership  interests in the Series A Capital and  Residual  Capital of TWE are
held by a subsidiary of MediaOne Group, Inc. ("MediaOne").

        At the time of this  filing,  MediaOne had agreed to be acquired by AT&T
Corp.  ("AT&T").  In August 1999, TWE received a notice from MediaOne concerning
the termination of its covenant not to compete with TWE. The termination of that
covenant is necessary for MediaOne to complete its proposed merger with AT&T. As
a result of the  termination  notice and the  operation  of the TWE  partnership
agreement,   MediaOne's  rights  to  participate  in  the  management  of  TWE's
businesses terminated immediately and irrevocably. MediaOne retains only certain
protective governance rights pertaining to certain limited matters affecting TWE
as a whole.  Because WCI and ATC jointly control TWE, each will continue to
account for its  investment in TWE under the equity method of accounting.




                                       26
<PAGE>




                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)



        The proposed merger of MediaOne and AT&T is subject to customary closing
conditions,  including regulatory approvals.  Accordingly, there is no assurance
that it will occur. Also, there are no assurances that AT&T and Time Warner will
reach final agreement on the terms of a cable telephony joint venture, either on
the terms discussed on page F-8 of TWE's Annual Report on Form 10-K for the year
ended December 31, 1998, or any alternative terms.

Columbia House-CDNOW Merger

        In July 1999, Time Warner Inc.  ("Time  Warner")  announced an agreement
with Sony  Corporation of America ("Sony") to merge their jointly owned Columbia
House  operations  with  CDNOW,  Inc.  ("CDNOW"),  a  leading  music  and  video
e-commerce company. Time Warner, almost entirely through WCI, and Sony will each
own 37% of the combined entity and the existing CDNOW  shareholders will own 26%
of the combined  entity.  This  investment is expected to be accounted for using
the equity method of accounting.

        With a combined  reach of  approximately  10% of all  domestic  Internet
users*,  the combined  entity is expected to create a  significant  platform for
Time  Warner's  music and video  e-commerce  initiatives  and  position  WCI for
incremental  growth  opportunities  relating to online  sales of music and video
product and the digital distribution of music. In addition,  management believes
that  the  use  of  Columbia  House's  existing  active  club  members  and  the
cross-promotional opportunities to be offered by Time Warner and Sony will lower
customer acquisition costs and increase the combined entity's customer base.

        As part of this transaction, Time Warner and Sony each have made certain
strategic and financial  commitments to the combined entity. Among the strategic
commitments,  which  have a term  of  five  years  and are  subject  to  certain
conditions  and  qualifications,  Time Warner and Sony will provide the combined
entity with opportunities to purchase  advertising and promotional  support from
their diverse media properties. In addition, as part of their commitment to make
the  combined  entity  their  primary  vehicle  to  pursue  the  packaged  music
e-commerce  business,  Time Warner and Sony will link their own music-controlled
web sites in the U.S. and Canada to the combined  entity's web sites.  This will
enable  consumers to sample content from their  favorite  artists and genres and
then immediately make a purchase.  Time Warner and Sony have also each agreed to
guarantee, for up to a three-year period, one-half of the borrowings under a new
credit  facility to be entered into by the  combined  entity upon the closing of
the merger. The credit facility is expected to provide for up to $450 million of
borrowings,  which will be used to support the ongoing  growth and capital needs
of the business and to refinance approximately $300 million of existing debt and
liabilities of Columbia House. WCI will not guarantee any of such borrowings.

        The  merger  is  expected  to  close in late  1999 or early  2000 and is
subject to customary  closing  conditions,  including  regulatory  approvals and
approval by existing  CDNOW  shareholders.  There can be no assurance  that such
approvals will be obtained.


____________
*  As measured by Media Metrix, Inc. as of September 1999.



                                       27
<PAGE>


                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)



Use of EBITA

        WCI evaluates operating performance based on several factors,  including
its primary financial measure of operating income before noncash amortization of
intangible  assets ("EBITA").  Consistent with  management's  financial focus on
controlling capital spending, EBITA measures operating performance after charges
for depreciation.  The exclusion of noncash  amortization  charges is consistent
with management's  belief that WCI's intangible assets, such as music catalogues
and  copyrights  and the  goodwill  associated  with its brands,  are  generally
increasing  in value and  importance  to WCI's  business  objective of creating,
extending and  distributing  recognizable  brands and copyrights  throughout the
world.  As  such,  the  following  comparative  discussion  of  the  results  of
operations  of WCI  includes,  among  other  factors,  an analysis of changes in
business segment EBITA. However,  EBITA should be considered in addition to, not
as a  substitute  for,  operating  income,  net  income  and other  measures  of
financial  performance reported in accordance with generally accepted accounting
principles.

RESULTS OF OPERATIONS

     Three Months Ended  September  30, 1999  Compared to the Three Months Ended
September 30, 1998

        WCI had  revenues of $852 million and net income of $193 million for the
three months ended September 30, 1999,  compared to revenues of $938 million and
net income of $66 million for the three months ended  September 30, 1998.  EBITA
decreased  to $79 million from $97 million.  Operating  income  decreased to $17
million from $31 million. Revenues decreased primarily due to lower domestic and
international  recorded music sales. The worldwide  revenue decline  principally
related to less popular  releases in  comparison  to the prior year,  as well as
industry-wide  softness  in  various  international  markets,  like  Brazil  and
Germany.  EBITA and operating  income  decreased  principally as a result of the
decline in worldwide revenues,  offset in part by increased cost savings,  lower
artist  royalty  costs and  higher  income  from DVD  manufacturing  operations.
Management  expects that the revenue  decline  relating to lower worldwide sales
levels will continue into the fourth  quarter of 1999,  which could  continue to
affect operating results negatively.

        WCI's equity in the pretax  income of TWE was $356 million for the three
months ended  September 30, 1999,  compared to $115 million for the three months
ended September 30, 1998.  TWE's pretax income  increased in 1999 as compared to
1998 because of the effect of certain significant  nonrecurring items recognized
in  each  period,  as  described  more  fully  in  Note  2 to  the  accompanying
consolidated  financial  statements.  These nonrecurring items consisted of $358
million of net pretax gains in 1999,  compared to $6 million of net pretax gains
in 1998.  Excluding the effect of these nonrecurring  items, TWE's pretax income
increased by $70 million to $259 million in 1999 from $189 million in 1998. This
increase principally resulted from an overall increase in TWE's business segment
operating income.

        WCI's  interest  and other,  net was $16  million of income in the third
quarter of 1999, compared to $3 million of expense in the third quarter of 1998.
Interest  expense  was $4  million  in both 1999 and 1998.  Other  income,  net,
increased to $20 million in the third quarter of 1999, compared to $1 million in
the third  quarter of 1998.  The  increase  principally  related to lower equity
losses  from  certain  investments  accounted  for  under the  equity  method of
accounting.


                                       28
<PAGE>



                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)



        The  relationship  between  income  before  income  taxes and income tax
expense for the General Partners is principally  affected by the amortization of
goodwill and certain other financial  statement expenses that are not deductible
for income tax  purposes.  Income tax expense  for each of the General  Partners
includes all income taxes related to its allocable  share of partnership  income
and its equity in the income tax expense of corporate subsidiaries of TWE.

     Nine Months  Ended  September  30, 1999  Compared to the Nine Months  Ended
September 30, 1998

        WCI had  revenues of $2.616  billion and net income of $664  million for
the nine months ended September 30, 1999, compared to revenues of $2.731 billion
and net income of $185  million for the nine months  ended  September  30, 1998.
EBITA decreased to $273 million from $283 million. Operating income decreased to
$81 million from $85 million. Revenues decreased primarily due to lower domestic
and   international   recorded  music  sales.  The  worldwide   revenue  decline
principally related to less popular releases in comparison to the prior year, as
well as industry-wide softness in various international markets, like Brazil and
Germany.  EBITA and operating  income  decreased  principally as a result of the
decline in worldwide  revenues and less licensing  income from  direct-marketing
activities, offset in part by increased cost savings, lower artist royalty costs
and higher income from DVD manufacturing operations. Management expects that the
revenue decline  relating to lower worldwide sales levels will continue into the
fourth  quarter  of 1999,  which  could  continue  to affect  operating  results
negatively.

        WCI's equity in the pretax income of TWE was $1.028 billion for the nine
months ended  September  30, 1999,  compared to $290 million for the nine months
ended September 30, 1998.  TWE's pretax income  increased in 1999 as compared to
1998 because of the effect of certain significant  nonrecurring items recognized
in  each  period,  as  described  more  fully  in  Note  2 to  the  accompanying
consolidated  financial  statements.   These  nonrecurring  items  consisted  of
approximately  $1.333  billion  of net  pretax  gains in 1999,  compared  to $90
million of net pretax gains in 1998.  Excluding the significant  effect of these
nonrecurring  items,  TWE's  pretax  income  increased  by $156  million to $576
million in 1999 from $420 million in 1998. This improvement principally resulted
from an overall increase in TWE's business segment operating  income,  offset in
part by higher  equity losses from certain  investments  accounted for under the
equity method of accounting.

        WCI's  interest  and other,  net was $96  million of income for the nine
months ended September 30, 1999,  compared to $12 million of income for the nine
months ended September 30, 1998.  Interest  expense was $14 million in both 1999
and 1998. Other income,  net, increased to $110 million in 1999, compared to $26
million in 1998.  The  increase  principally  related to the  recognition  of an
approximate  $53  million  pretax  gain in 1999 in  connection  with the initial
public  offering of a 20% interest in Time Warner Telecom Inc. (the "Time Warner
Telecom IPO"),  a competitive  local  exchange  carrier that provides  telephony
services  to  businesses,  and lower  equity  losses  from  certain  investments
accounted for under the equity method of accounting.

        The  relationship  between  income  before  income  taxes and income tax
expense for the General Partners is principally  affected by the amortization of
goodwill and certain other financial  statement expenses that are not deductible
for income tax  purposes.  Income tax expense  for each of the General  Partners
includes all income taxes related to its allocable  share of partnership  income
and its equity in the income tax expense of corporate subsidiaries of TWE.




                                       29
<PAGE>



                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)



FINANCIAL CONDITION AND LIQUIDITY
September 30, 1999

Financial Condition

        WCI had $8.1 billion of equity at September  30, 1999,  compared to $7.7
billion of equity at December 31, 1998. Cash and  equivalents  decreased to $143
million at September  30,  1999,  compared to $160 million at December 31, 1998.
WCI had no  long-term  debt  due to TW  Companies  under  its  revolving  credit
agreement at the end of either period.

     ATC had $1.8  billion of equity at  September  30,  1999,  compared to $1.5
billion of equity at December 31, 1998.

Senior Capital Distributions

        In July  1999,  TWE  paid a $627  million  distribution  to the  General
Partners  to redeem the  remaining  portion  of their  senior  priority  capital
interests,  including a priority  capital  return of $173  million.  Of the $627
million  distribution,  WCI and ATC  received  $372  million  and $255  million,
respectively.

Cash Flows

        During the first nine months of 1999,  WCI's cash provided by operations
amounted to $119 million and  reflected  $273  million of EBITA,  $54 million of
noncash depreciation  expense, $392 million of distributions from TWE (excluding
$269  million  representing  the  return of a portion of the  General  Partners'
Senior  Capital  interests  that has been  classified  as a source  of cash from
investing  activities),  $90  million of  proceeds  received  under  WCI's asset
securitization  program,  less $8 million of interest payments,  $550 million of
income taxes ($445 million of which was paid to TW Companies under a tax sharing
agreement) and $132 million related to an aggregate  increase in working capital
requirements,  other balance sheet accounts and noncash items. In the first nine
months of 1998, WCI's cash provided by operations of $382 million reflected $283
million of EBITA, $54 million of noncash  depreciation  expense and $358 million
of distributions  from TWE (excluding $270 million  representing the return of a
portion  of the  General  Partners'  Senior  Capital  interests  that  has  been
classified as a source of cash from  investing  activities),  less $7 million of
interest payments,  $174 million of income taxes ($121 million of which was paid
to TW Companies under a tax sharing agreement),  $120 million of proceeds repaid
under WCI's asset securitization program and $12 million related to an aggregate
increase in working  capital  requirements,  other  balance  sheet  accounts and
noncash items.

        Cash provided by investing activities was $156 million in the first nine
months of 1999, compared to $296 million in 1998,  principally as a result of an
increase in capital expenditures and a decrease in investment proceeds.

        Cash used by  financing  activities  was $292  million in the first nine
months of 1999,  compared  to $584  million  in the first  nine  months of 1998,
principally as a result of lower advances to TW Companies.


                                       30
<PAGE>



                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)



        The assets and cash flows of TWE are restricted by certain borrowing and
partnership  agreements  and are  unavailable  to the  General  Partners  except
through the payment of certain reimbursements and cash distributions,  which are
subject to  limitations.  Under its bank credit  agreement,  TWE is permitted to
incur additional  indebtedness to make  distributions and other cash payments to
the General Partners subject to its individual compliance with the cash flow and
leverage ratio covenants contained therein.

        Management believes that WCI's operating cash flow, cash and equivalents
and additional  borrowing  capacity under its revolving credit agreement with TW
Companies  are  sufficient  to fund its  capital  and  liquidity  needs  for the
foreseeable  future  without  distributions  from TWE above those  permitted  by
existing agreements.  Although ATC has no independent operations, it is expected
that  additional  tax-related  and  other  distributions  from  TWE,  as well as
availability  under ATC's  revolving  credit  agreement with TW Companies,  will
continue to be sufficient to satisfy ATC's  obligations  with respect to its tax
sharing agreement with TW Companies for the foreseeable future.

Year 2000 Technology Preparedness

        WCI,  together with TWE and like most large  companies,  depends on many
different  computer  systems and other  chip-based  devices  for the  continuing
conduct  of  its  business.  Older  computer  programs,  computer  hardware  and
chip-based  devices may fail to recognize  dates beginning on January 1, 2000 as
being valid dates, and as a result may fail to operate or may operate improperly
when such dates are introduced.

        WCI's  exposure  to  potential   Year  2000  problems   arises  both  in
technological  operations under the control of WCI and in those dependent on one
or more  third  parties.  These  technological  operations  include  information
technology  ("IT")  systems and non-IT  systems,  including  those with embedded
technology,  hardware and software.  Most of WCI's potential Year 2000 exposures
are  dependent to some degree on one or more third  parties.  Failure to achieve
high levels of Year 2000 compliance  could have a material adverse impact on WCI
and its financial statements.

        WCI's Year 2000 project has several  phases:  inventorying,  assessment,
remediation planning,  implementation and final testing.  WCI's progress through
these phases continues to be actively overseen by a senior technology  executive
who reports on a regular basis to the senior financial executive.  Assistance is
obtained, when appropriate, from both internal and outside professional sources.

        WCI initially  identified and assessed  potential Year 2000 difficulties
in its technological  operations,  including IT applications,  IT technology and
support, desktop hardware and software, non-IT systems and important third party
operations, and distinguished those that are "mission critical" from those that
are not. An item is  considered  "mission  critical"  if its  Year 2000-related
failure would  significantly  impair the ability of one of WCI's major  business
units to (1)  produce,  market and  distribute  the  products or  services  that
generate significant revenues for that business, (2) meet its obligations to pay
its employees,  artists,  vendors and others or (3) meet its  obligations  under
regulatory  requirements and internal  accounting  controls.  WCI has identified
approximately  200 worldwide,  "mission  critical"  potential  exposures.  As of
September  30, 1999,  substantially  all of these potential exposures  have been
identified  as Year  2000  compliant  and of  those  that  are not  reported  as
compliant, substantially all were in the final testing stages and expected to be
substantially  completed  in all  material  respects by the middle of the fourth
quarter of 1999.  WCI,  however,  could  experience  unexpected  delays.  WCI is
expecting to focus its attention during the fourth quarter of 1999 on conducting
final integrated  testing in a stable environment and on refinements and testing
of its contingency and transition plans, as necessary.


                                       31
<PAGE>



                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION-(Continued)



        As stated above, however,  WCI's business is dependent on third parties,
both  domestically  and  internationally,   and  these  parties  are  themselves
dependent  on  technology.  In some cases,  WCI's third party  dependence  is on
vendors of technology who are themselves  working toward  solutions to Year 2000
problems.  WCI has  attempted  to include in its  "mission  critical"  inventory
significant service providers,  vendors,  suppliers,  customers and governmental
entities  that are believed to be critical to business  operations  and has made
its  determinations of their state of Year 2000 readiness through various means,
including questionnaires,  interviews,  on-site visits, system interface testing
and industry  group  participation.  WCI continues to monitor these  situations.
Moreover,  WCI  is  dependent,  like  all  large  companies,  on  the  continued
functioning,  domestically and  internationally,  of basic, heavily computerized
services such as banking,  telephony,  water and power, and various distribution
mechanisms  ranging from the mail,  railroads  and trucking to  high-speed  data
transmission.  WCI is taking  steps to attempt to satisfy  itself that the third
parties on which it is heavily reliant are Year 2000  compliant,  are developing
satisfactory   contingency   plans  or  that  alternate  means  of  meeting  its
requirements are available, but cannot predict the likelihood of such compliance
nor the direct or indirect costs to WCI of non-compliance by those third parties
or of securing such services from alternate compliant third parties. In areas in
which  WCI  is  uncertain  about  the  anticipated  Year  2000  readiness  of  a
significant third party, WCI is investigating available alternatives, if any.

        WCI  currently  estimates  that  the  aggregate  cost of its  Year  2000
remediation  program,  which started in 1996, will be  approximately  $25 to $40
million,  of which an estimated 85% to 95% has been incurred  through  September
30, 1999. These costs include estimates of the costs of assessment, replacement,
repair and upgrade, both planned and unplanned, of certain IT and non-IT systems
and their  implementation  and testing.  WCI  anticipates  that its  remediation
program, and related expenditures, may continue into 2001 as temporary solutions
to Year 2000 problems are replaced with upgraded  equipment.  These expenditures
have been and are  expected to continue to be funded from WCI's  operating  cash
flow and have not and are not  expected  to impact  materially  WCI's  financial
statements.

        In addition to the  foregoing  areas,  WCI is also  exposed to potential
Year 2000 problems  encountered  by TWE in  technological  operations  under its
control and those dependent on one or more third parties.  ATC, while not having
any independent operations, is similarly exposed to potential Year 2000 problems
encountered by TWE.  Although WCI and ATC anticipate that TWE will  successfully
complete  its  efforts to be Year 2000  compliant  in all  material  respects in
advance of January 1, 2000,  failure by TWE to achieve  high levels of Year 2000
compliance could have a material adverse impact on WCI and ATC. For a discussion
of TWE's Year 2000 technology  preparedness,  see TWE's Management's  Discussion
and Analysis of Results of Operations and Financial Condition included elsewhere
herein.


                                       32
<PAGE>



                              TWE GENERAL PARTNERS
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued



        Management  believes  that it has  established  an effective  program to
resolve all significant  Year 2000 issues in its control in a timely manner.  As
noted above, however, WCI has not yet completed all phases of its program and is
dependent on third  parties  whose  progress is not within its  control.  In the
event that WCI experiences unanticipated failures of systems within its control,
management  believes  that  WCI  could  experience   significant  difficulty  in
producing and  delivering  its products and services and conducting its business
in  the  Year  2000  as it  has  in  the  past.  More  importantly,  disruptions
experienced  by third  parties  with which WCI does  business  as well as by the
economy generally could materially adversely affect WCI. The amount of potential
liability and lost revenue cannot be reasonably estimated at this time.

        As stated above,  WCI is now focusing its  attention on its  contingency
and  transition   plans.  It  has  examined  its  existing   standard   business
interruption  strategies to evaluate whether they would  satisfactorily meet the
demands  of  failures  arising  from  Year  2000-related  problems.  It is  also
developing and refining specific  transition  schedules and contingency plans in
the  event  it does not  successfully  complete  its  remaining  remediation  as
anticipated  or  experiences  unforeseen  problems  outside  the  scope of these
standard   strategies.   These  plans  are  intended  to  provide  guidance  and
alternatives for unanticipated  failures of internal systems as well as external
failures that may impede any of WCI's  businesses from operating  normally.  WCI
intends to  examine  its status  periodically  to  determine  the  necessity  of
implementing  such  contingency  plans or  additional  strategies,  which  could
involve,  among other things, manual workarounds,  adjusting staffing strategies
and sharing resources across divisions.

        The  discussion  of WCI's  expectations  with  respect  to its Year 2000
remediation  plans is based  on  management's  current  expectations  of  future
events.  As with any  projection,  it is  inherently  susceptible  to changes in
circumstances.  WCI's actual results could differ  materially from  management's
expectations  as a result  of such  factors  as the  ability  of WCI and its key
service providers,  vendors,  suppliers,  customers and governmental entities to
replace,  modify or upgrade computer systems in ways that adequately address the
Year 2000 issue,  including  their  ability to identify and correct all relevant
computer codes and embedded chips,  unanticipated  difficulties or delays in the
implementation  of WCI's  remediation  plans and the ability of third parties to
adequately address their own Year 2000 issues.






                                       33
<PAGE>


<TABLE>

                                             TWE GENERAL PARTNERS
                                          CONSOLIDATED BALANCE SHEETS
                                                  (Unaudited)

                                                                       WCI                           ATC
                                                                       ---                           ---
                                                            September 30,   December 31,    September 30, December 31,
                                                            -------------   ------------    ------------- ------------
                                                                1999            1998          1999        1998
                                                                ----            ----          ----        ----
                                                                                   (millions)
<S>                                                         <C>             <C>            <C>          <C>
ASSETS
Current assets
Cash and equivalents............................            $    143        $   160        $     -      $     -
Receivables, less allowances of $241 and $278 million            936          1,454              -            -
Inventories.....................................                 151            151              -            -
Prepaid expenses................................                 797            670              -            -
                                                                 ---            ---            ---          ---

Total current assets............................               2,027          2,435              -            -

Investments in and amounts due to and from TWE..               2,121          1,632          1,727        1,494
Investments in TW Companies.....................                 103            103             61           61
Other investments...............................               1,469          1,350            442          404
Music catalogues, contracts and copyrights......                 801            876              -            -
Goodwill........................................               3,412          3,509              -            -
Other assets, primarily property, plant and equipment            475            443              -            -
-----------------------------------------------------            ---            ---            ---          ---

Total assets....................................             $10,408        $10,348         $2,230       $1,959
                                                             =======        =======         ======       ======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts and royalties payable..................            $    992        $ 1,079            $ -       $    -
Other current liabilities.......................                 483            548              -            -
                                                                 ---            ---            ---          ---

Total current liabilities.......................               1,475          1,627              -            -

Long-term liabilities, including $607, $670, $433 and
   $477 million due to TW Companies.............                 832          1,020             33           477

Shareholders' equity
Common stock....................................                   1              1              1             1
Preferred stock of WCI, $.01 par value, 90,000 shares
   outstanding, $90 million liquidation preference                 -              -              -             -
Paid-in capital.................................               9,926         10,195          2,338         2,523
Retained earnings (accumulated deficit).........                 481             (1)           (15)         (360)
                                                                 ---             --            ---          ----
                                                              10,408         10,195          2,324         2,164
                                                              ======         ======          =====         =====

Due from TW Companies, net......................              (1,721)        (1,908)          (191)         (346)
Reciprocal interest in TW Companies stock.......                (586)          (586)          (336)         (336)
                                                                ----           ----           ----          ----

Total shareholders' equity......................               8,101          7,701          1,797         1,482
                                                               -----          -----          -----         -----

Total liabilities and shareholders' equity......             $10,408        $10,348         $2,230        $1,959
                                                             =======        =======         ======        ======

</TABLE>


See accompanying notes.

                                       34
<PAGE>

<TABLE>

                                             TWE GENERAL PARTNERS
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                       Three Months Ended September 30,
                                                  (Unaudited)



                                                                 WCI                 ATC
                                                                 ---                 ---
                                                           1999      1998       1999      1998
                                                           ----      ----       ----      ----
                                                                        (millions)
<S>                                                        <C>       <C>      <C>       <C>
Revenues (a)...........................................    $852      $938     $   -     $   -
                                                           ----      ----     ----      ----

Cost of revenues (a)(b)................................     465       601         -         -
Selling, general and administrative (a)(b).............     370       306         -         -
                                                            ---       ---       ---       ---

Operating expenses.....................................     835       907         -         -
                                                            ---       ---       ---       ---

Business segment operating income......................      17        31         -         -
Equity in pretax income of TWE (a).....................     356       115       244        80
Interest and other, net (a)............................      16        (3)        8         3
                                                             --        --        --        --

Income before income taxes.............................     389       143       252        83
Income taxes (a).......................................    (196)      (77)     (113)      (39)
                                                           ----       ---      ----       ---

Net income.............................................    $193      $ 66      $139      $ 44
                                                           ====      ====      ====      ====
------------------
(a) Includes the following income  (expenses)  resulting from  transactions with
    Time Warner, TW Companies, TWE or equity investees of the General Partners:

     Revenues..........................................    $ 42      $ 93     $   -      $  -
     Cost of revenues..................................      (6)       (7)        -         -
     Selling, general and administrative...............     (12)      (10)        -         -
     Equity in pretax income of TWE....................     (17)      (13)        -         -
     Interest and other, net...........................      36        16         -         -
     Income taxes......................................    (161)      (50)      (97)      (30)

(b)  Includes depreciation and amortization expense of:    $ 81      $ 82     $   -     $  -
                                                           ====      ====     =====     =====




See accompanying notes.
</TABLE>



                                       35
<PAGE>



<TABLE>

                                             TWE GENERAL PARTNERS
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                        Nine Months Ended September 30,
                                                  (Unaudited)



                                                               WCI                    ATC
                                                               ---                    ---
                                                          1999      1998        1999      1998
                                                          ----      ----        ----      ----
                                                                       (millions)
<S>                                                      <C>       <C>        <C>        <C>
Revenues (a)...........................................  $2,616    $2,731     $   -     $   -
                                                         ------    ------     -----     -----

Cost of revenues (a)(b)................................   1,499     1,732         -         -
Selling, general and administrative (a)(b).............   1,036       914         -         -
                                                          -----       ---       ---       ---

Operating expenses.....................................   2,535     2,646         -         -
                                                          -----     -----       ---       ---

Business segment operating income......................      81        85         -         -
Equity in pretax income of TWE (a).....................   1,028       290       706       200
Interest and other, net (a)(c).........................      96        12        56        17
                                                             --        --        --        --

Income before income taxes.............................   1,205       387       762       217
Income taxes (a).......................................    (541)     (202)     (318)      (99)
                                                           ----      ----      ----       ---

Net income.............................................  $  664    $  185     $ 444      $118
                                                         ======    ======     =====      ====
------------------
(a)  Includes the following income  (expenses)  resulting from transactions with
     Time Warner, TW Companies, TWE or equity investees of the General Partners:

        Revenues.......................................   $ 155      $139     $   -      $  -
        Cost of revenues...............................     (18)      (18)        -         -
        Selling, general and administrative............     (22)      (12)        -         -
        Equity in pretax income of TWE.................     (42)      (25)        -         -
        Interest and other, net........................     101        54         -         -
        Income taxes...................................    (445)     (121)     (280)      (77)

(b)  Includes depreciation and amortization expense of:   $ 246      $252     $   -      $  -
                                                          =====      ====     =====      ====

(c)  Includes an approximate  $53 million pretax gain  recognized by WCI and $36
     million  recognized by ATC in the second quarter of 1999 in connection with
     the initial public offering of a 20% interest in Time Warner Telecom, Inc.



See accompanying notes.
</TABLE>




                                       36
<PAGE>



<TABLE>

                                             TWE GENERAL PARTNERS
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        Nine Months Ended September 30,
                                                  (Unaudited)



                                                                     WCI                   ATC
                                                                     ---                   ---
                                                                1999      1998       1999      1998
                                                                ----      ----       ----      ----
                                                                            (millions)
<S>                                                          <C>        <C>        <C>        <C>
OPERATIONS
Net income.............................................        $664      $185        $444      $118
Adjustments for noncash and nonoperating items:
Depreciation and amortization..........................         246       252           -         -
Excess (deficiency) of distributions over equity in pretax
    income of TWE......................................        (636)       68        (436)       47
Equity in losses (income) of other investee companies after
    distributions......................................           9        63          (4)       (1)
Changes in operating assets and liabilities............        (164)     (186)        (18)        5
                                                               ----      ----         ---         -

Cash provided (used) by operations.....................         119       382         (14)      169
                                                                ---       ---         ---       ---

INVESTING ACTIVITIES
Investments and acquisitions...........................        (37)      (26)          -         -
Capital expenditures...................................       (101)      (73)          -         -
Investment proceeds....................................         25       125           -         -
Proceeds received from distribution of TWE Senior Capital      269       270         185       185
                                                               ---       ---         ---       ---

Cash provided by investing activities..................        156       296         185       185
                                                               ---       ---         ---       ---

FINANCING ACTIVITIES
Dividends..............................................       (479)     (477)       (326)     (324)
Decrease (increase) in amounts due from TW Companies, net      187      (107)        155       (30)
                                                               ---      ----         ---       ---

Cash used by financing activities......................       (292)     (584)       (171)     (354)
                                                              ----      ----        ----      ----

INCREASE (DECREASE) IN CASH AND EQUIVALENTS............        (17)       94           -         -

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD............        160       102           -         -
                                                               ---       ---         ---       ---

CASH AND EQUIVALENTS AT END OF PERIOD..................      $ 143      $196       $   -      $  -
                                                             =====      ====       =====      ====



See accompanying notes.

</TABLE>



                                       37
<PAGE>



<TABLE>

                                             TWE GENERAL PARTNERS
                                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                        Nine Months Ended September 30,
                                                  (Unaudited)




                                                                     WCI                   ATC
                                                                     ---                   ---
                                                                1999      1998       1999     1998
                                                                ----      ----       ----     ----
                                                                            (millions)

<S>                                                          <C>         <C>      <C>       <C>
BALANCE AT BEGINNING OF PERIOD.........................      $7,701      $8,521   $1,482    $2,087

Net income.............................................         664        185       444       118
Other comprehensive income (loss)......................         (35)       (17)        -        (8)
                                                                ---        ---       ---       ---
Comprehensive income (a)...............................         629        168       444       110

Increase in stock option distribution liability to
   TW Companies (b)....................................        (40)       (286)      (27)     (196)
Dividends..............................................       (377)       (349)     (255)     (235)
Transfers to TW Companies, net.........................        187        (107)      155       (30)
Other..................................................          1           5       ( 2)       (1)
                                                               ---         ---       ---       ---


BALANCE AT END OF PERIOD...............................      $8,101      $7,952   $1,797    $1,735
                                                             ======      ======   ======    ======

------------------
(a) Comprehensive  income for WCI was $164 million and $68 million for the three
    months ended September 30, 1999 and 1998, respectively. Comprehensive income
    for ATC was  $130  million  and $43  million  for  the  three  months  ended
    September 30, 1999 and 1998, respectively.
(b) The  General   Partners   record   distributions   to  TW  Companies  and  a
    corresponding  receivable  from TWE as a result of the stock option  related
    distribution  provisions  of the TWE  partnership  agreement.  Stock  option
    distributions  of $40 million  and $286  million for WCI and $27 million and
    $196 million for ATC were accrued in the first nine months of 1999 and 1998,
    respectively,  because of an  increase  in the market  price of Time  Warner
    common stock (Note 2).



See accompanying notes.
</TABLE>




                                       38
<PAGE>



                              TWE GENERAL PARTNERS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



1.      DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

        On June 30,  1992,  thirteen  direct or  indirect  subsidiaries  of Time
Warner Companies,  Inc. ("TW Companies")  contributed the assets and liabilities
or the rights to the cash flows of  substantially  all of TW Companies's  Filmed
Entertainment-Warner  Bros.,  Cable  Networks-HBO  and Cable  businesses to Time
Warner Entertainment  Company, L.P., a Delaware limited partnership ("TWE"), for
general partnership  interests.  In addition, at that time, each general partner
guaranteed  a pro rata  portion of  substantially  all of TWE's debt and accrued
interest based on the relative fair value of the net assets each  contributed to
TWE (the "General Partner  Guarantees,"  see Note 4). Since then,  eleven of the
thirteen  original general partners have been merged or dissolved into the other
two.   Warner   Communications   Inc.   ("WCI")  and  American   Television  and
Communications  Corporation  ("ATC") are the two remaining  general  partners of
TWE. They have succeeded to the general  partnership  interests and have assumed
the General Partner Guarantees of the eleven former general partners.

        WCI conducts substantially all of TW Companies's Music operations, which
include  copyrighted  music from many of the world's leading  recording  artists
that is produced and  distributed by a family of established  record labels such
as Warner Bros.  Records,  Atlantic  Records,  Elektra  Entertainment and Warner
Music  International.  ATC  does  not  conduct  operations  independent  of  its
ownership interests in TWE and certain other investments.

Basis of Presentation

        The accompanying consolidated financial statements are unaudited but, in
the opinion of management, contain all the adjustments (consisting of those of a
normal recurring  nature)  considered  necessary to present fairly the financial
position and the results of operations and cash flows for the periods  presented
in  conformity  with  generally  accepted  accounting  principles  applicable to
interim periods.  The accompanying  consolidated  financial statements should be
read in conjunction with the audited  consolidated  financial  statements of the
General Partners included in TWE's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "1998 Form 10-K").  Certain  reclassifications  have been
made  to  the  prior  year's  financial   statements  to  conform  to  the  1999
presentation.




                                       39
<PAGE>



<TABLE>

                                             TWE GENERAL PARTNERS
                            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                                  (Unaudited)


2.      TWE

        The General  Partners'  investment in and amounts due to and from TWE at
September 30, 1999 and December 31, 1998 consists of the following:

September 30, 1999                                                                    WCI        ATC
------------------                                                                    ---        ---
                                                                                        (millions)
<S>                                                                                 <C>       <C>
Investment in TWE..........................................................         $1,854    $1,311
Stock option related distributions due from TWE............................            608       416
Other net liabilities due to TWE, principally related to home video distribution      (341)        -
                                                                                      ----      ----

Total......................................................................         $2,121    $1,727
                                                                                    ======    ======

December 31, 1998                                                                     WCI        ATC
                                                                                      ---        ---
                                                                                        (millions)
Investment in TWE..........................................................         $1,457    $1,034
Stock option related distributions due from TWE............................            670       460
Other net liabilities due to TWE, principally related to home video distribution      (495)        -
                                                                                      ----      ----
Total......................................................................         $1,632    $1,494
                                                                                    ======    ======

Partnership Structure and Allocation of Income
</TABLE>

        TWE is a Delaware  limited  partnership that was capitalized on June 30,
1992 to own and  operate  substantially  all of the Filmed  Entertainment-Warner
Bros., Cable  Networks-HBO and Cable businesses  previously owned by the General
Partners. The General Partners collectively own, directly or indirectly,  63.27%
of the pro rata  priority  capital  ("Series A  Capital")  and  residual  equity
capital ("Residual  Capital") of TWE, and 100% of the junior priority capital of
TWE. TW  Companies  owns limited  partnership  interests in TWE of 11.22% of the
Series A Capital and Residual Capital.  The remaining 25.51% limited partnership
interests  in the  Series A Capital  and  Residual  Capital of TWE are held by a
subsidiary of MediaOne Group, Inc. ("MediaOne").

        The TWE  partnership  agreement  provides  for  special  allocations  of
income,  loss and  distributions  of  partnership  capital,  including  priority
distributions  in the event of  liquidation.  TWE  reported net income of $1.640
billion and $435 million for the nine months ended  September 30, 1999 and 1998,
respectively,  no  portion of which was  allocated  to the  limited  partnership
interests.

AT&T-MediaOne Merger

        At the time of this  filing,  MediaOne had agreed to be acquired by AT&T
Corp.  ("AT&T").  In August 1999, TWE received a notice from MediaOne concerning
the termination of its covenant not to compete with TWE. The termination of that
covenant is necessary for MediaOne to complete its proposed merger with AT&T. As
a result of the  termination  notice and the  operation  of the TWE  partnership
agreement,   MediaOne's  rights  to  participate  in  the  management  of  TWE's
businesses terminated immediately and irrevocably. MediaOne retains only certain
protective governance rights pertaining to certain limited matters affecting TWE
as a whole.  Each of WCI and ATC will continue to account for its  investment in
TWE under the equity method of accounting.



                                       40
<PAGE>



                              TWE GENERAL PARTNERS
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                  (Unaudited)


Summarized Financial Information of TWE

        Set  forth  below  is  summarized  financial  information  of TWE.  This
information  reflects (i) the transfer of Time Warner Cable's  direct  broadcast
satellite  operations  to  Primestar,  Inc.  ("Primestar"),  a separate  holding
company,  effective as of April 1, 1998,  (ii) the  formation of the Road Runner
joint venture to operate and expand Time Warner Cable's and MediaOne's  existing
high-speed  online  businesses,  effective  as  of  June  30,  1998,  (iii)  the
reorganization  of Time Warner  Cable's  business  telephony  operations  into a
separate entity now named Time Warner Telecom Inc.  effective as of July 1, 1998
and (iv) the  formation of a joint  venture in Texas that owns cable  television
systems serving approximately 1.1 million subscribers,  effective as of December
31, 1998. These transactions are described more fully in TWE's 1998 Form 10-K.

<TABLE>

                                                                       Three Months          Nine Months
                                                                   Ended September 30,   Ended September 30,
                                                                   -------------------   --------------------
                                                                   1999         1998     1999        1998
                                                                   ----         ----     ----        ----
                                                                                  (millions)
<S>                                                              <C>         <C>        <C>       <C>
Operating Statement Information
Revenues...............................................          $3,474      $3,220     $9,468    $8,980
Depreciation and amortization..........................            (356)       (358)      (998)   (1,085)
Business segment operating income (1)..................             863         468      2,726     1,292
Interest and other, net................................            (185)       (203)      (577)     (550)
Minority interest......................................             (60)        (52)      (361)     (198)
Income before income taxes.............................             600         195      1,734       490
Net income.............................................             561         172      1,640       435
------------------
(1) Includes a net pretax gain of approximately  $215 million  recognized in the
    first  quarter  of  1999  in  connection  with  the  early  termination  and
    settlement of a long-term home video  distribution  agreement.  In addition,
    includes net pretax gains  relating to the sale or exchange of certain cable
    television  systems and investments for the third quarter of $358 million in
    1999 and $6 million in 1998 and $1.118  billion and $90 million for the nine
    months ended September 30, 1999 and 1998, respectively.
</TABLE>

<TABLE>

                                                                                          Nine months
                                                                                       Ended September 30,
                                                                                       -------------------
                                                                                        1999       1998
                                                                                        ----       ----
                                                                                           (millions)
<S>                                                                                     <C>       <C>
Cash Flow Information
Cash provided by operations................................................             $2,205    $1,273
Capital expenditures.......................................................             (1,009)   (1,092)
Investments and acquisitions...............................................               (273)     (335)
Investment proceeds........................................................                342       540
Collection of loan to Time Warner..........................................                400         -
Borrowings.................................................................              1,854     1,515
Debt repayments............................................................             (1,893)     (840)
Redemption of preferred stock of subsidiary................................               (217)        -
Capital distributions......................................................             (1,116)   (1,060)
Other financing activities, net............................................               (145)     (198)
Increase (decrease) in cash and equivalents................................                148      (197)
</TABLE>



                                       41
<PAGE>




                              TWE GENERAL PARTNERS
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                  (Unaudited)
<TABLE>

                                                                                     September 30,   December 31,
                                                                                        1999            1998
                                                                                        ----            ----
                                                                                            (millions)
<S>                                                                                  <C>               <C>
Balance Sheet Information
Cash and equivalents.......................................................          $    235          $   87
Total current assets.......................................................             4,581           4,183
Total assets...............................................................            23,228          22,230
Total current liabilities..................................................             5,194           4,936
Long-term debt ............................................................             6,725           6,578
Minority interests.........................................................             1,801           1,522
Preferred stock of subsidiary..............................................                 -             217
General Partners' Senior Capital...........................................                 -             603
Partners' capital..........................................................             6,342           5,107

</TABLE>

Capital Distributions

        The assets and cash flows of TWE are  restricted by the TWE  partnership
and credit agreements and are unavailable for use by the partners except through
the payment of certain fees, reimbursements, cash distributions and loans, which
are subject to  limitations.  At September  30, 1999 and December 31, 1998,  the
General  Partners had recorded $1.024 billion and $1.130 billion,  respectively,
of stock option related  distributions  due from TWE, based on closing prices of
Time  Warner  common  stock of $60.75  and  $62.06,  respectively.  The  General
Partners  are paid when the options are  exercised.  The General  Partners  also
receive  tax-related  distributions from TWE on a current basis. During the nine
months ended  September 30, 1999, the General  Partners  received  distributions
from TWE in the amount of $1.116  billion,  consisting of $627 million of Senior
Capital  distributions  (representing  the return of $454 million of contributed
capital and the distribution of a $173 million  priority  capital return),  $316
million of  tax-related  distributions  and $173 million of stock option related
distributions.  During the nine months ended  September  30,  1998,  the General
Partners  received  distributions  from TWE in the  amount  of  $1.060  billion,
consisting of $579 million of Senior  Capital  distributions  (representing  the
return of $455  million of  contributed  capital  and the  distribution  of $124
million of priority capital return),  $264 million of tax-related  distributions
and $217  million  of stock  option  related  distributions.  Of such  aggregate
distributions  in 1999 and 1998,  WCI received  $661  million and $628  million,
respectively, and ATC received $455 million and $432 million, respectively.

Gain on Termination of MGM Video Distribution Agreement

        In March  1999,  Warner  Bros.  and  Metro-Goldwyn-Mayer,  Inc.  ("MGM")
terminated a long-term  distribution  agreement  under which  Warner  Bros.  had
exclusive  worldwide  distribution  rights  for  MGM/United  Artists  home video
product.  In  connection  with the  early  termination  and  settlement  of this
distribution   agreement,   Warner  Bros.   recognized  a  net  pretax  gain  of
approximately  $215  million,  of which $127 million has been  included in WCI's
equity in the pretax income of TWE and $88 million in ATC's equity in the pretax
income of TWE in the accompanying consolidated statements of operations.




                                       42
<PAGE>


                              TWE GENERAL PARTNERS
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                  (Unaudited)


Gain on Sale or Exchange of Cable Television Systems and Investments

        In 1999 and  1998,  largely  in an  effort  to  enhance  its  geographic
clustering of cable television  properties,  TWE sold or exchanged various cable
television  systems  and  investments.  The 1999  transactions  included a large
exchange of cable television systems serving  approximately  450,000 subscribers
for  other  cable   television   systems  of   comparable   size  owned  by  TCI
Communications,  Inc.,  a  subsidiary  of AT&T,  and a large  exchange  of cable
television  systems serving  approximately  160,000  subscribers for other cable
television  systems of comparable  size owned by MediaOne.  As a result of these
transactions,  the  operating  results of TWE include  net pretax  gains for the
third  quarter of $358 million in 1999 and $6 million in 1998.  Of such amounts,
approximately  $212 million and $4 million has been  included in WCI's equity in
the  pretax  income  of TWE  in  the  accompanying  consolidated  statements  of
operations  for the third quarter of 1999 and 1998,  respectively.  In addition,
approximately  $146  million  and $2  million  related  to these  gains has been
included  in  ATC's  equity  in the  pretax  income  of TWE in the  accompanying
consolidated  statements of  operations  for the third quarter of 1999 and 1998,
respectively.  TWE  recognized  net pretax gains of $1.118 billion for the first
nine months of 1999 and $90  million for the first nine months of 1998.  Of such
amounts,  approximately  $663 million and $53 million has been included in WCI's
equity in the pretax income of TWE in the accompanying  consolidated  statements
of  operations  for  the  nine  months  ended   September  30,  1999  and  1998,
respectively.  In addition,  approximately $455 million and $37 million has been
included  in  WCI's  equity  in the  pretax  income  of TWE in the  accompanying
consolidated  statements of operations  for the nine months ended  September 30,
1999 and 1998, respectively.

Primestar

        TWE  owns  an  approximate  24%  equity  interest  in  Primestar,   Inc.
("Primestar").  In January 1999, Primestar,  an indirect wholly owned subsidiary
of Primestar and the stockholders of Primestar entered into an agreement to sell
Primestar's  medium-power  direct  broadcast  satellite  business  and assets to
DirecTV,  a  competitor  of  Primestar  owned by  Hughes  Electronics  Corp.  In
addition,  a second  agreement was entered into with DirecTV,  pursuant to which
DirecTV  agreed  to  purchase  Primestar's  rights  with  respect  to the use or
acquisition of certain  high-power  satellites from a wholly owned subsidiary of
one of the  stockholders of Primestar.  In April 1999,  Primestar  closed on the
sale of its medium-power direct broadcast  satellite business to DirecTV.  Then,
in June 1999, Primestar completed the sale of its high-power satellite rights to
DirecTV.

        As a result of those transactions, Primestar began to substantially wind
down its  operations  during the first quarter of 1999. TWE recognized its share
of Primestar's  1999 losses under the equity method of  accounting.  Such losses
are  included in interest  and other,  net, in TWE's  consolidated  statement of
operations.  As of September 30, 1999, Primestar has substantially completed the
wind down of its operations.  As such,  future wind-down losses are not expected
to be material to TWE's operating results.

3.      GAIN ON TIME WARNER TELECOM'S INITIAL PUBLIC OFFERING

        In May 1999,  Time  Warner  Telecom  Inc.  ("Time  Warner  Telecom"),  a
competitive  local  exchange  carrier  that  provides   telephony   services  to
businesses, completed an initial public offering of 20% of its common stock (the
"Time  Warner  Telecom  IPO").  Time  Warner  Telecom  raised  net  proceeds  of
approximately  $270  million,  of which $180 million was paid to Time Warner and
TWE in  satisfaction of certain  obligations.  In turn, Time Warner and TWE used
those  proceeds  principally  to reduce bank debt. In  connection  with the Time
Warner Telecom IPO and certain related transactions, WCI's ownership interest in
Time  Warner  Telecom  was  diluted  from  27.70% to 21.55% and ATC's  ownership
interest in Time Warner Telecom was diluted from 19.04% to 14.81%.  As a result,
WCI and ATC  recognized  pretax  gains  of  approximately  $53  million  and $36
million,  respectively.  These gains have been  included in interest  and other,
net, in the accompanying consolidated statements of operations.



                                       43
<PAGE>



                              TWE GENERAL PARTNERS
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                  (Unaudited)



4.      GENERAL PARTNER GUARANTEES

        Each General Partner has guaranteed a pro rata portion of  approximately
$5.4 billion of TWE's debt and accrued  interest at September 30, 1999, based on
the  relative  fair  value  of the  net  assets  each  General  Partner  (or its
predecessor)  contributed to TWE. Such  indebtedness is recourse to each General
Partner only to the extent of its guarantee.  There are no  restrictions  on the
ability of the General  Partner  guarantors to transfer  assets,  other than TWE
assets, to parties that are not guarantors.

        The portion of TWE debt and accrued  interest at September 30, 1999 that
was guaranteed by each General Partner is set forth below (dollars in millions):

<TABLE>

                                                                                   Total Guaranteed by
                                                                                   Each General Partner
                                                                                   --------------------
General Partner                                                                        %        Amount
                                                                                     ----       ------
<S>                                                                                 <C>        <C>
WCI ................................................................                 59.27     $3,193
ATC ................................................................                 40.73      2,195
                                                                                     -----      -----
Total...............................................................                100.00     $5,388
                                                                                    ======     ======

5.      COMMITMENTS AND CONTINGENCIES

        The  General  Partners  are subject to numerous  legal  proceedings.  In
management's  opinion and considering  established  reserves,  the resolution of
these  matters  will  not  have  a  material  effect,  individually  and  in the
aggregate, on the consolidated financial statements of the General Partners.

</TABLE>

<TABLE>

6.      ADDITIONAL FINANCIAL INFORMATION

        Additional  financial  information  with  respect  to cash  flows  is as
follows:

                                                                      Nine months Ended September 30,
                                                                      -------------------------------
                                                                          1999              1998
                                                                          ----              ----
                                                                      WCI    ATC        WCI       ATC
                                                                      ---    ---        ---       ---
                                                                               (millions)
<S>                                                                 <C>      <C>       <C>       <C>
Cash payments made for interest.............................        $   8    $   -     $   7     $  -
Cash payments made for income taxes, net....................          550      280       174       77
Tax-related distributions received from TWE.................          187      129       156      108
Noncash capital distributions, net..........................           40       27       286      196


</TABLE>




                                       44
<PAGE>





                                          Part II. Other Information


Item 1.   Legal Proceedings.

        Reference  is  made  to the  consolidated  actions  referenced  as In re
Compact  Disc  Antitrust  Litigation  described  on pages I-29 and I-30 of TWE's
Annual Report on Form 10-K for the year ended  December 31, 1998 (the "1998 Form
10-K").  The Court  has  scheduled  trial to  commence  on  February  14,  2000.
Plaintiffs  claim  substantial  and treble  damages  against all record  company
defendants.

        Reference is made to the litigation  entitled Parker,  et al. v. TWE, et
al.,   described  on  page  I-31  of  TWE's  1998  Form  10-K.  The  Court,   on
reconsideration  of its earlier decision to grant defendants'  motion to dismiss
this action as had been  reported on page 33 of TWE's  Quarterly  Report on Form
10-Q for the quarter ended March 31, 1999, has now denied that motion.

Item 6.  Exhibits and Reports on Form 8-K.

        (a)  Exhibits.
             _________

        The  exhibits  listed  on the  accompanying  Exhibit  Index are filed or
incorporated  by reference  as a part of this report and such  Exhibit  Index is
incorporated herein by reference.

        (b) Reports on Form 8-K.
            ____________________

               (i) TWE filed a Current  Report on Form 8-K dated  August 3, 1999
reporting in Item 5 a significant reduction in MediaOne Group Inc.'s governance
and management rights over TWE's businesses.





                                       45
<PAGE>





                                    TIME WARNER ENTERTAINMENT COMPANY, L.P.
                                           AND TWE GENERAL PARTNERS

                                                   SIGNATURES



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

                     TIME WARNER ENTERTAINMENT COMPANY, L.P.
                         By: Warner Communications Inc.,
                                  as General Partner


                         By:    /s/Joseph A Ripp
                               -----------------
                         Name:  Joseph A. Ripp
                         Title: Executive Vice President and
                                Chief Financial Officer

                     AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION
                     WARNER COMMUNICATIONS INC.


                         By:    /s/  Joseph A. Ripp
                                -------------------
                         Name:  Joseph A. Ripp
                         Title: Executive Vice President and
                                Chief Financial Officer


Dated: November 12, 1999










                                       46

<PAGE>

                                  EXHIBIT INDEX
                    Pursuant to Item 601 of Regulations S-K



Exhibit No.   Description of Exhibit


27             Financial Data Schedule.


















                                       47