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


                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549


                             ____________________

                                   FORM 10-Q

                             ____________________


{X}  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
       Exchange Act of 1934 for the quarterly period ended March 31, 1999.

                                      or

{_}  Transition report pursuant to Section 13 or 15 (d) of the Securities
       Exchange Act of 1934 for the transition period from         to        .


                        Commission file number 1- 14595

                             ____________________


                         FOX ENTERTAINMENT GROUP, INC.
            (Exact Name of Registrant as Specified in Its Charter)


              Delaware                                 95-4577574
     (State or Other Jurisdiction of                (I.R.S. Employer
     Incorporation or Organization)                Identification No.)


                1211 Avenue of the Americas, New York, NY 10036
                   (Address of Principal Executive Offices)

      Registrant's Telephone Number, Including Area Code: (212) 852-7111

                             ____________________


     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  __
                                 ---

     As of May 12, 1999, 124,800,000 shares of Class A Common Stock, par value
$.01 per share, and 547,500,000 shares of Class B Common Stock, par value $.01
per share, were outstanding.


================================================================================
<PAGE>
 
                         FOX ENTERTAINMENT GROUP, INC.

                                   FORM 10-Q

                               TABLE OF CONTENTS
                               -----------------

<TABLE> 
<CAPTION> 
                                                                                                                          Page
                                                                                                                          ----

Part I.  Financial Information

         Item 1.  Financial Statements
<S>                                                                                                                       <C> 
         Unaudited Combined Condensed Statements of Operations for the three and nine months
            ended March 31, 1999 and 1998................................................................................   1

         Consolidated Condensed Balance Sheet at March 31, 1999 (unaudited) and
            Combined Condensed Balance Sheet at June 30, 1998............................................................   2

         Unaudited Combined Condensed Statements of Cash Flows for the nine months
            ended March 31, 1999 and 1998................................................................................   3

         Notes to the Unaudited Combined Condensed Financial Statements..................................................   4

         Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations..................   7

Signature................................................................................................................  18

Exhibit Index............................................................................................................  19
 
</TABLE>
<PAGE>
 
                         FOX ENTERTAINMENT GROUP, INC.
                                        
             UNAUDITED COMBINED CONDENSED STATEMENTS OF OPERATIONS
                    (in millions except per share amounts)

<TABLE>
<CAPTION>
                                               For the three months ended                      For the nine months ended
                                                        March 31,                                      March 31,
                                         -------------------------------------            ------------------------------------ 
                                               1999                    1998                    1999                    1998
                                         ------------             ------------            ------------            ------------ 
<S>                                         <C>                     <C>                    <C>                    <C>
Revenues                                      $1,733                  $1,814                  $6,088                  $5,269
Expenses:                                                                                                 
 Operating                                     1,347                   1,328                   4,723                   3,982
 Selling, general and                                                                                                        
  administrative                                 203                     212                     580                     570 
 Depreciation and amortization                    83                      68                     226                     183
                                         ------------             ------------            ------------            ------------ 
Operating income                                 100                     206                     559                     534
                                         ------------             ------------            ------------            ------------ 
Other expense:                                                                                            
 Interest expense, net                           (56)                    (63)                   (179)                   (182)
 Equity in losses of affiliates                  (30)                    (12)                    (96)                    (51)
                                         ------------             ------------            ------------            ------------ 
Income before income taxes                        14                     131                     284                     301
Income tax expense on a                                                                                                       
 stand-alone basis                                (6)                    (55)                   (114)                   (128) 
                                         ------------             ------------            ------------            ------------ 
Net income                                    $    8                  $   76                  $  170                  $  173
                                         ============             ============            ============            ============ 
                                                                                                          
Basic and diluted earnings per share           $0.01                   $0.14                   $0.28                   $0.32
                                         ============             ============            ============            ============ 
Basic and diluted weighted                                      
 average number of common                        
 equivalent shares outstanding                   672                     548                     611                     548 
                                         ============             ============            ============            ============ 
</TABLE>



    The accompanying notes are an integral part of these unaudited combined
                        condensed financial statements.

                                       1
<PAGE>
 

                         FOX ENTERTAINMENT GROUP, INC.

                       COMBINED CONDENSED BALANCE SHEETS
                                 (in millions)

<TABLE>
<CAPTION>
 
                                                                               March 31,                June 30,
                                                                                 1999                     1998
                                                                           -------------             -----------
                                                                             (unaudited)
 ASSETS
<S>                                                                         <C>                      <C> 
 Cash and cash equivalents                                                     $   339                  $   101
 Accounts receivable, net                                                        2,052                    1,949
 Filmed entertainment and television programming costs, net                      2,592                    2,071
 Investments in equity affiliates                                                  788                      791
 Property and equipment, net                                                     1,238                    1,111
 Intangible assets, net                                                          5,897                    5,941
 Other assets and investments                                                      735                      666
                                                                           ------------              -----------  
   Total assets                                                                $13,641                  $12,630   
                                                                           ============              ===========  
                                                                                                                  
 LIABILITIES                                                                                                      
 Accounts payable and accrued liabilities                                      $ 1,734                  $ 1,613   
 Participations, residuals and royalties payable                                 1,184                    1,153   
 Television programming rights payable                                             611                      513   
 Deferred revenue                                                                  334                      238   
 Borrowings                                                                        236                      375   
 Deferred income taxes                                                             997                      874   
 Other liabilities                                                                 233                      221   
                                                                           ------------              -----------  
                                                                                 5,329                    4,987   
 Due to intercompany affiliates                                                  1,674                    3,702   
                                                                           ------------              -----------  
   Total liabilities                                                             7,003                    8,689   
                                                                           ------------              -----------  
                                                                                                                  
 SHAREHOLDERS' EQUITY                                                                                             
 Preferred stock                                                                     -                        1   
 Common stock                                                                        7                        -   
 Paid-in capital                                                                 6,599                    3,132   
 Retained earnings and other comprehensive income                                   32                      808   
                                                                           ------------              -----------  
   Total shareholders' equity                                                    6,638                    3,941   
                                                                           ------------              -----------  
   Total liabilities and shareholders' equity                                  $13,641                  $12,630   
                                                                           ============              ===========  
</TABLE>

    The accompanying notes are an integral part of these unaudited combined
                        condensed financial statements.

                                       2
<PAGE>
 
                         FOX ENTERTAINMENT GROUP, INC.

             UNAUDITED COMBINED CONDENSED STATEMENTS OF CASH FLOWS
                                 (in millions)


<TABLE>
<CAPTION>
 
                                                                                    For the nine months ended
                                                                                             March 31,
                                                                                -------------------------------------- 
                                                                                   1999                        1998
                                                                                ----------                   --------- 
Operating Activities
<S>                                                                             <C>                           <C> 
 Net income                                                                       $   170                       $ 173
 Adjustments to reconcile net income to net cash provided by
      operating activities:
  Depreciation and amortization                                                       226                         183
  Equity in losses of affiliates                                                       96                          51
Change in operating assets and liabilities:                                                                 
  Accounts receivable and other assets                                               (184)                       (560)
  Filmed entertainment and television programming costs                              (491)                       (143)
  Accounts payable and accrued liabilities                                            405                         428
  Participations, residuals and royalties payable                                       -                          46
                                                                                ----------                   ---------
Net cash provided by operating activities                                             222                         178
                                                                                ----------                  ----------

Investing Activities
 Purchases of property and equipment                                                 (198)                       (206)
 Investments in equity affiliates                                                     (92)                        (46)
 Other investments                                                                   (137)                        (44)
                                                                                ----------                   ---------
Net cash used in investing activities                                                (427)                       (296)
                                                                                ----------                   ---------
                                                                                                             
Financing Activities                                                                                         
 Borrowings                                                                           107                         247
 Repayment of borrowings                                                             (245)                       (379)
 Net proceeds from sale of Class A Common Stock                                     2,689                           -
 Advances from affiliates, net                                                     (2,108)                        270
                                                                                ----------                   ---------
Net cash provided by financing activities                                             443                         138
                                                                                ----------                   ---------
                                                                                                             
Net increase in cash and cash equivalents                                             238                          20
Cash and cash equivalents, beginning of period                                        101                         256
                                                                                ----------                   ---------
Cash and cash equivalents, end of period                                          $   339                     $   276
                                                                                ==========                   =========
</TABLE>

    The accompanying notes are an integral part of these unaudited combined
                        condensed financial statements.

                                       3
<PAGE>
 
                         FOX ENTERTAINMENT GROUP, INC.
        NOTES TO THE UNAUDITED COMBINED CONDENSED FINANCIAL STATEMENTS
                                        

Note 1 - Basis of Presentation

Fox Entertainment Group, Inc. (the "Company") is principally engaged in the
development, production and worldwide distribution of feature films and
television programs, television broadcasting and cable network programming.  The
Company was incorporated in Delaware in May 1985 as Twentieth Holdings
Corporation. In 1998, the Company changed its corporate name to Fox
Entertainment Group, Inc.

Prior to the initial public offering referred to in the following paragraph, The
News Corporation Limited ("News Corporation") effected a reorganization (the
"Reorganization") by contributing to the Company at book value certain of its
assets and subsidiaries engaged in the production and distribution of feature
films, television programming and cable network programming. Included in this
contribution were Twentieth Century Fox Film Corporation, which was acquired by
News Corporation in 1985, News Corporation's interest in Fox Family Worldwide,
Inc., Fox/Liberty Networks, LLC, International Sports Programming Partners,
Fox/Liberty Ventures, LLC and other cable network programming and related
interests. During the period covered by these financial statements these
businesses were under common control as an integral part of News Corporation's
overall operations. These combined condensed financial statements have been
prepared from News Corporation's historical accounting records and present all
of the operations of the businesses that are owned and operated by the Company
after the Reorganization as if the Company had been a separate entity for all
periods presented.

On November 11, 1998, the Company consummated an initial public offering through
the issuance and sale of 124,800,000 shares of Class A Common Stock. The newly
issued shares of Class A Common Stock represent approximately 18.6% of the
Company's outstanding common stock. The net proceeds from the public offering
were approximately $2.7 billion and were used to reduce intercompany
indebtedness. Prior to the initial public offering, News Corporation effected
the Reorganization and a recapitalization that gave effect to the following
transactions: (i) the elimination of certain outstanding intercompany debt
against Paid-in capital, (ii) the concurrent payment of dividends to a
subsidiary of News Corporation (which reduced Retained earnings and Paid-in
capital) such that after (i) and (ii), $4.5 billion of intercompany debt was
outstanding, (iii) the authorization of the new Class A and Class B Common Stock
and the conversion of the Company's outstanding common stock into 547,500,000
shares of Class B Common Stock, and (iv) the adjustment to increase the interest
rate from 5% to 8% under the terms of the intercompany indebtedness that was
outstanding after the Reorganization. For the nine months ended March 31, 1999,
after giving effect to the initial public offering, Reorganization and
recapitalization, as if they had occurred on July 1, 1998 rather than on
November 11, 1998, the pro forma net income and earnings per share would have
been $176 million and $0.26, respectively, as a result of a decrease in
intercompany interest expense of $10 million, an increase in income taxes of $4
million and an increase of 61 million in the weighted average number of shares
outstanding.

In November 1998, for purposes of governing certain on-going relationships
between the Company and News Corporation and to facilitate the Reorganization,
the Company and News Corporation entered into a Master Intercompany Agreement
which includes various agreements relating to cash management and financing,
executive officer services, the provision of services of certain Company
employees to News Corporation and its subsidiaries, facility arrangements,
employee matters, insurance, services, trademarks, indemnities by the Company
and News Corporation. The Company and News Corporation also entered into a Tax
Sharing Agreement. These agreements were negotiated in the context of a parent-
subsidiary relationship and therefore are not the result of arm's length
negotiations between independent parties. There can be no assurance, therefore,
that each of such agreements, or the transactions provided for therein, or any
amendments thereof, will be effected on terms at least as favorable to the
Company as could have been obtained from unaffiliated third parties.

                                       4
<PAGE>
 
                         FOX ENTERTAINMENT GROUP, INC.
        NOTES TO THE UNAUDITED COMBINED CONDENSED FINANCIAL STATEMENTS
                                        
The financial information included herein may not necessarily reflect the
consolidated results of operations, financial position, changes in shareholders'
equity and cash flows of the Company in the future or what they would have been
had the Company been a separate, stand-alone entity during all the periods
presented.

The accompanying unaudited combined condensed financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been reflected in these combined
condensed financial statements. Operating results for the interim periods
presented are not necessarily indicative of the results that may be expected for
the year ending June 30, 1999.

These interim combined condensed financial statements and notes thereto should
be read in conjunction with the audited combined financial statements and notes
thereto included in the Company's Registration Statement on Form S-1 (File No.
333-61515) as declared effective by the Securities and Exchange Commission on
November 9, 1998.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
combined condensed financial statements and the reported amounts of revenues and
expenses during the reporting period.  Because of the use of estimates inherent
in the financial reporting process, actual results could differ from those
estimates.

Total comprehensive income for the three months ended March 31, 1999 and 1998
was $8 million and $76 million, respectively. Total comprehensive income for the
nine months ended March 31, 1999 and 1998 was $172 million and $167 million,
respectively.  Total comprehensive income includes net income and currency
translation adjustments of $2 million and $(6) million for the nine months ended
March 31, 1999 and 1998, respectively.

Note 2  - Guarantees of News Corporation Debt

News Corporation and certain of its subsidiaries, including the Company and
certain subsidiaries of the Company (collectively, the "Fox Guarantors") are
guarantors of various debt obligations of News Corporation and certain of its
subsidiaries. The principal amount of indebtedness outstanding under such debt
instruments at March 31, 1999 was approximately $9.36 billion, which amount
includes approximately $1 billion of obligations under Exchangeable Trust
Originated Preferred Securities SM due 2016. The debt instruments limit the
ability of News Corporation and the Fox Guarantors to subject their properties
to liens, and certain of the debt instruments impose limitations on the ability
of News Corporation and its subsidiaries, including the Fox Guarantors, to incur
indebtedness in certain circumstances. Such debt instruments mature at various
times between 1999 and 2096, with a weighted average maturity of over 20 years.
Additional subsidiaries of the Company may from time to time be required to
become guarantors of certain debt obligations.

In the case of any event of default under such debt obligations, the Fox
Guarantors will be directly liable to the creditors or debtholders. News
Corporation has agreed to indemnify the Fox Guarantors from and against any
obligations they may incur by reason of their guarantees of such debt
obligations.

                                       5
<PAGE>
 
                         FOX ENTERTAINMENT GROUP, INC.
        NOTES TO THE UNAUDITED COMBINED CONDENSED FINANCIAL STATEMENTS
                                        
Note 3 - Filmed Entertainment and Television Programming Costs

Filmed entertainment and television programming costs consisted of the
following:
<TABLE>
<CAPTION>
                                                                      March 31,   June 30,
                                                                         1999        1998
                                                                    -----------  --------
                                                                    (unaudited)
                                                                        (in millions)
                                                                    ---------------------
<S>                                                                 <C>          <C>
Filmed entertainment costs:                                       
    Released, less amortization...................................      $  900     $  788
    Completed, not released.......................................         120        141
    In process....................................................         667        564
Television programming costs, less amortization...................         905        578
                                                                        ------     ------
                                                                        $2,592     $2,071
                                                                        ======     ======
</TABLE>
Note 4 - Subsequent Event

On April 5, 1999, News Corporation announced that it would acquire substantially
all of Liberty Media Corporation's ("Liberty") 50% interest in Fox/Liberty
Networks, LLC.  In exchange for its interest, Liberty will receive approximately
51.8 million ADRs (representing 207.1 million preferred limited voting ordinary
shares of News Corporation) valued at $1.425 billion.

Upon consummation of this transaction, News Corporation has indicated that it
will transfer the acquired interests to the Company in exchange for 51,759,834
shares of the Company's Class A Common shares valued at $1.425 billion, based on
the ten day average of the Company's stock price prior to the announcement of
the transaction.  This transfer to the Company will increase News Corporation's
equity interest to 82.76% from 81.44% while its voting interest will remain
at 97.8%.

This transaction is expected to close on or about June 30, 1999 upon fulfillment
of certain customary conditions, including regulatory approvals.


                                       6
<PAGE>
 
                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                        
This document contains statements that constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. The words
"expect," "estimate," "anticipate," "predict," "believe" and similar expressions
and variations thereof are intended to identify forward-looking statements.
These statements appear in a number of places in this document and include
statements regarding the intent, belief or current expectations of the Fox
Entertainment Group, Inc. (the "Company"), its directors or its officers with
respect to, among other things, trends affecting the Company's financial
condition or results of operations. The readers of this document are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, those risks and uncertainties
discussed under the headings "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," in the Company's
Registration Statement Form S-1(SEC file no. 333-61515) as declared effective by
the Securities and Exchange Commission on November 9, 1998, as well as the
information set forth below. The Company does not ordinarily make projections of
its future operating results and undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Readers should carefully review the risk factors
referred to above and the other documents filed by the Company with the
Securities and Exchange Commission. This section should be read in conjunction
with the unaudited combined condensed financial statements of the Company and
related notes set forth elsewhere herein.

Prior to the initial public offering of Class A Common Stock of the Company,
News Corporation effected a Reorganization by contributing to the Company, at
book value, certain of its assets and subsidiaries engaged in the production and
distribution of feature films, television programming and cable network
programming. The combined condensed financial statements of the Company, which
are discussed below, reflect the historical results of operations, financial
position and cash flows of the Company's wholly owned subsidiaries prior to the
Reorganization combined with the historical financial information of the
businesses which were contributed to the Company from News Corporation as part
of the Reorganization. Management believes the assumptions underlying the
Company's combined condensed financial statements to be reasonable. The combined
financial information included herein is not necessarily indicative of the
consolidated results of operations, financial position and cash flows of the
Company had the Reorganization occurred as of the beginning of the periods
presented, and had the Company operated as a separate, stand-alone entity during
these periods.

The Company manages and reports its businesses in three segments: Filmed
Entertainment, which principally consists of the production and acquisition of
live-action and animated motion pictures for distribution and licensing in all
formats in all entertainment media worldwide and the production of original
television programming; Television Broadcasting and Related Businesses, which
principally consist of the distribution of network programming, the ownership
and operation of broadcast television stations (the "Fox Television Stations"),
the production and distribution of certain syndicated television programming and
professional sports team ownership; and Cable Network Programming, which
principally consists of the production and licensing of programming distributed
through cable television systems and direct broadcast satellite ("DBS")
operators. The Company's interests in certain cable network programming and
related ventures, including Fox/Liberty Networks, LLC, Fox Family Worldwide,
Inc., Fox/Liberty Ventures, LLC and International Sports Programming Partners,
are included in equity in earnings (loss) of affiliates and, accordingly, are
not reported in the segments set forth above.

Sources of Revenue

Filmed Entertainment. The Filmed Entertainment segment derives revenue from
theatrical distribution, home video sales, and distribution through pay-per-
view, pay television services, broadcast and cable television. The revenues and
operating results of the Filmed Entertainment segment are significantly impacted
by the timing of the Company's theatrical and home video releases, the number of
its original and returning television series that are

                                       7
<PAGE>
 
aired by Fox Broadcasting Company ("FOX") and the other broadcast television
networks and the number of its television series licensed in off-network
syndication. Theatrical release dates are determined by several factors,
including timing of vacation and holiday periods and competition in the
marketplace. Each motion picture is a separate and distinct product with its
financial success dependent upon many factors, including audience acceptance.

Television Broadcasting and Related Businesses. The Television Broadcasting and
Related Businesses segment derives revenues principally from the sale of
advertising time. Generally, advertising time is sold to national advertisers by
FOX and to local advertisers by the Fox Television Stations in their respective
markets. The sale of advertising time is affected by viewer demographics,
program ratings and market conditions. Adverse changes in general market
conditions for advertising may also affect revenues.

Cable Network Programming. The Cable Network Programming segment derives
revenues from monthly subscriber fees as well as from the sale of advertising
time. Monthly subscriber fees are dependent on maintenance of carriage
arrangements with cable television systems and DBS operators. The sale of
advertising time is affected by viewer demographics, program ratings and general
market conditions.

Components of Expenses

Filmed Entertainment. Costs incurred by the Filmed Entertainment segment include
production, certain exploitation costs, primarily including prints and
advertising, capitalized overhead and interest costs, participations and talent
residuals. General and administrative expenses include salaries, employee
benefits, rent and other routine overhead expenses, as well as legal, accounting
and consulting fees.

Television Broadcasting and Related Businesses and Cable Network Programming.
Expenses of the Television Broadcasting and Related Businesses segment and the
Cable Network Programming segment include expenses related to producing original
programming and acquiring programming and rights to programming, as well as
general and administrative expenses. Production and technical expenses typically
include expenses related to operating the technical facilities of the
broadcaster or cable network. Marketing expenses include all promotional
expenses related to improving the market visibility and awareness of the
broadcaster or cable network. Advertising expenses include sales commissions
paid to the in-house sales force involved in the sale of advertising and
commissions paid to outside representatives.

                                       8
<PAGE>
 
Results of Operations - Three months ended March 31, 1999 vs. Three months ended
March 31, 1998

The following table sets forth the Company's operating results, by segment, for
the three months ended March 31, 1999 as compared to the three months ended
March 31, 1998:

<TABLE>
<CAPTION>
                                                                              Three months ended
                                                                        ------------------------------
                                                                                  March 31,
                                                                        ------------------------------
                                                                             1999            1998           Change
                                                                        --------------  --------------  --------------
<S>                                                                     <C>             <C>             <C>
                                                                               (Dollars in Millions)
Revenues:
    Filmed Entertainment..............................................     $  812          $1,132           $(320)
    Television Broadcasting and Related Businesses....................        886             661             225
    Cable Network Programming.........................................         35              21              14
                                                                           ------          ------           -----
 Total Revenues.......................................................     $1,733          $1,814           $ (81)
                                                                           ======          ======           =====
                                                                         
Operating Income (Loss):                                                 
    Filmed Entertainment..............................................     $   41          $  158           $(117)
    Television Broadcasting and Related Businesses....................         92             101              (9)
    Cable Network Programming.........................................        (33)            (36)              3
                                                                           ------          ------           -----
                                                                              100             223            (123)
    Other charges.....................................................          -             (17)             17
                                                                           ------          ------           -----
 Total Operating Income...............................................        100             206            (106)
Interest expense, net.................................................        (56)            (63)              7
Equity in losses of affiliates........................................        (30)            (12)            (18)
                                                                           ------          ------           -----
Income before income taxes............................................         14             131            (117)
Income tax expense on a stand-alone basis.............................         (6)            (55)             49
                                                                           ------          ------           -----
Net Income............................................................     $    8          $   76           $ (68)
                                                                           ======          ======           =====
                                                                         
Other Data:                                                              
Operating Income (Loss) Before Depreciation and Amortization(1):         
    Filmed Entertainment..............................................     $   51          $  165           $(114)
    Television Broadcasting and Related Businesses....................        149             150              (1)
    Cable Network Programming.........................................        (17)            (24)              7
                                                                           ------          ------           -----
                                                                              183             291            (108)
    Other charges.....................................................          -             (17)             17
                                                                           ------          ------           -----
Total Operating Income Before                                            
         Depreciation and Amortization (1)............................     $  183          $  274           $ (91)
                                                                           ======          ======           =====
</TABLE>

(1) Operating Income Before Depreciation and Amortization is defined as
    operating income (loss) before depreciation and amortization. Operating
    Income Before Depreciation and Amortization is presented supplementally as
    management believes it allows for the most appropriate measure for
    evaluating operating performance. The Company believes Operating Income
    Before Depreciation and Amortization is a standard measure commonly reported
    and widely used by analysts, investors and others associated with the media
    and entertainment industry. Operating Income Before Depreciation and
    Amortization eliminates the uneven effect across business segments of
    considerable amounts of depreciation and amortization primarily resulting
    from the value of intangible assets acquired in business combinations
    accounted for by the purchase method of accounting. While many in the
    financial community consider Operating Income Before Depreciation and
    Amortization to be an important measure of comparative operating
    performance, it should be considered in addition to, but not as a substitute
    for, operating income, net income, cash flow and other measures of financial
    performance prepared in 

                                       9
<PAGE>
 
    accordance with GAAP. Additionally, the Company's calculation of Operating
    Income Before Depreciation and Amortization may be different than the
    calculation used by other companies and therefore, comparability may be
    affected.

Filmed Entertainment. For the third quarter of fiscal 1999, revenues decreased
28%, operating income decreased 74% and operating income before depreciation and
amortization decreased 69% compared to the corresponding period of the preceding
fiscal year. The decrease in revenues and operating income as compared to the
corresponding period of the preceding fiscal year is attributable to the fact
that the prior year period included the revenues and profits from the record-
setting international theatrical success of Titanic and the worldwide video
success of The Full Monty. The current quarter included the revenues and profits
from the domestic video release of There's Something About Mary and the
international video release of Dr. Dolittle. Favorable operating results from
the successful films in the most recently completed quarter were partially
offset by the disappointing results of Thin Red Line and Ravenous. The
corresponding period in the preceding year was negatively impacted by the
disappointing results of Oscar and Lucinda, Firestorm and Great Expectations.

Television Broadcasting and Related Businesses. For the third quarter of fiscal
1999, revenues increased 34% above levels for the corresponding period of the
preceding fiscal year, while operating income decreased by 9% and operating
income before depreciation and amortization was unchanged. The third quarter Fox
Television Stations operating results increased as compared to the corresponding
period in the preceding year, primarily reflecting an increased demand in
advertising from the broadcast of the Super Bowl, which was broadcast by a
different network in 1998. FOX's earnings decreased from the corresponding
period of the preceding fiscal year due primarily to lower ratings for National
Hockey League games and increased programming costs related to FOX's National
Football League contract as well as returning prime time programming.

Cable Network Programming. Fox News Channel reported a third quarter revenue
increase of 67%, a 8% reduction in operating losses and a 29% reduction in
operating losses before depreciation and amortization compared to the
corresponding period of the preceding fiscal year. Fox News Channel continues to
expand its distribution and is currently in 40 million homes. Consistent with
this subscriber increase, combined advertising and affiliate revenues almost
doubled in the fiscal third quarter as compared to the corresponding period in
the preceding year. The related decrease in operating losses was partially
offset by increases in marketing, programming and newsgathering expenses.

Equity in losses of affiliates. In the third quarter of fiscal 1999, equity in
losses of affiliates increased to $30 million from $12 million in the
corresponding period of the preceding fiscal year. The increase in equity in
losses of affiliates was primarily related to the results of the Company's joint
ventures with Liberty Media Corporation, where despite subscriber and
advertising sales growth at certain of the regional sports networks and the FX
network, profits were negatively impacted by a decrease in the number of 
professional events due to the NBA lockout and the costs of start-up businesses
including certain regional sports networks, Fox Sports News and Fox Sports
Americas. Additionally, equity in losses of affiliates was affected by the
results of Fox Family Worldwide, Inc., where reduced advertising revenues and
lower revenues from home video releases negatively impacted earnings.

Other charges. In fiscal 1998, the Company closed one of its film divisions
resulting in a non-recurring charge.

Interest expense. Results for the third quarter of fiscal 1999 compared to the
corresponding period of the preceding fiscal year reflect decreased external
interest expense, which was partially offset by increases in intercompany
interest expense, primarily due to an increase in the interest rate. The
interest rate was increased in connection with the Reorganization and
recapitalization that occurred prior to the initial public offering, the
interest rate on outstanding intercompany indebtedness was adjusted from 5% to
8%.

Income tax expense on a stand-alone basis. Income tax expense for the third
quarter of fiscal 1999 decreased to $6 million from $55 million in the
corresponding period of the preceding year. The decrease was due to the decrease
in income before income taxes. The effective income tax rate for the three
months ended March 31, 1999 was 43%, as compared with 42% in the corresponding
period of the preceding fiscal year.

                                       10
<PAGE>
 
Results of Operations - Nine months ended March 31, 1999 vs. Nine months ended
March 31, 1998

The following table sets forth the Company's operating results, by segment, for
the nine months ended March 31, 1999 as compared to the nine months ended March
31, 1998:

<TABLE>
<CAPTION>
                                                                                Nine months ended
                                                                                    March 31,
                                                                        ---------------------------------
                                                                             1999             1998              Change
                                                                        --------------  -----------------  ----------------
<S>                                                                     <C>             <C>                <C>
                                                                                      (Dollars in Millions)
Revenues:
    Filmed Entertainment..............................................     $3,342             $2,938              $404
    Television Broadcasting and Related Businesses....................      2,655              2,281               374
    Cable Network Programming.........................................         91                 50                41
                                                                           ------             ------              ----
 Total Revenues.......................................................     $6,088             $5,269              $819
                                                                           ======             ======              ====
                                                                          
Operating Income (Loss):                                                  
    Filmed Entertainment..............................................     $  330             $  275              $ 55
    Television Broadcasting and Related Businesses....................        324                383               (59)
    Cable Network Programming.........................................        (95)              (107)               12
                                                                           ------             ------              ----
                                                                              559                551                 8
    Other charges.....................................................          -                (17)               17
                                                                           ------             ------              ----
 Total Operating Income...............................................        559                534                25
Interest expense, net.................................................       (179)              (182)                3
Equity in losses of affiliates........................................        (96)               (51)              (45)
                                                                           ------             ------              ----
Income before income taxes............................................        284                301               (17)
Income tax expense on a stand-alone basis.............................       (114)              (128)               14
                                                                           ------             ------              ----
Net Income............................................................     $  170             $  173              $ (3)
                                                                           ======             ======              ====
                                                                          
Other Data:                                                               
Operating Income (Loss) Before Depreciation and Amortization(1):          
    Filmed Entertainment..............................................     $  357             $  295              $ 62
    Television Broadcasting and Related Businesses....................        481                514               (33)
    Cable Network Programming.........................................        (53)               (75)               22
                                                                           ------             ------              ----
                                                                              785                734                51
    Other charges.....................................................          -                (17)               17
                                                                           ------             ------              ----
Total Operating Income Before                                             
         Depreciation and Amortization (1)............................     $  785             $  717              $ 68
                                                                           ======             ======              ====
</TABLE>

(1) Operating Income Before Depreciation and Amortization is defined as
    operating income (loss) before depreciation and amortization. Operating
    Income Before Depreciation and Amortization is presented supplementally as
    management believes it allows for the most appropriate measure for
    evaluating operating performance. The Company believes Operating Income
    Before Depreciation and Amortization is a standard measure commonly reported
    and widely used by analysts, investors and others associated with the media
    and entertainment industry. Operating Income Before Depreciation and
    Amortization eliminates the uneven effect across business segments of
    considerable amounts of depreciation and amortization primarily resulting
    from the value of intangible assets acquired in business combinations
    accounted for by the purchase method of accounting. While many in the
    financial community consider Operating Income Before Depreciation and
    Amortization to be an important measure of comparative operating
    performance, it should be considered in addition to, but not as a substitute
    for, operating income, net income, cash flow and other measures of financial
    performance prepared in 

                                       11
<PAGE>
 
    accordance with GAAP. Additionally, the Company's calculation of Operating
    Income Before Depreciation and Amortization may be different than the
    calculation used by other companies and therefore, comparability may be
    affected.

Filmed Entertainment. For the first nine months of fiscal 1999, revenues
increased 14%, operating income increased 20% and operating income before
depreciation and amortization increased 21% compared to the corresponding period
of the preceding fiscal year. The increase in revenue was primarily attributable
to the continued success of summer releases combined with strong worldwide
theatrical and home video releases of There's Something About Mary and Dr.
Dolittle. Also included in the first nine months of fiscal 1999 was the
worldwide video release of Titanic which has achieved record video sales. The
comparable period of the previous year included the international theatrical
release of Titanic, the theatrical and home video release of The Full Monty, and
the video release of the Star Wars Trilogy. Operating results from the
successful films mentioned above were partially offset by the disappointing
results of Thin Red Line, Ravenous and A Cool Dry Place. The corresponding
period in the preceding year was negatively impacted by the disappointing
results of Home Alone 3, Out to Sea and The Newton Boys.

Television Broadcasting and Related Businesses. For the first nine months of
fiscal 1999, revenues increased 16% above levels for the corresponding period of
the preceding fiscal year, while operating income decreased by 15% and operating
income before depreciation and amortization decreased by 6%. FOX's earnings
decreased from the corresponding period of the preceding fiscal year due to
increased programming costs related to FOX's National Football League contract
combined with a loss on FOX's Major League Baseball contract due to the New York
Yankees' four game sweep of the 1998 World Series, resulting in a higher average
cost per game. The results of the Fox Television Stations increased slightly
from the corresponding period in the preceding fiscal year due to an increase in
market share from 18.4% to 19.5% in the first nine months of fiscal 1999.

Cable Network Programming. Fox News Channel reported a revenue increase of 82%
for the first nine months of fiscal 1999, a 11% reduction in operating losses
and a 29% reduction in operating losses before depreciation and amortization
compared to the corresponding period of the preceding fiscal year. Fox News
Channel continues to expand its distribution and is currently in 40 million
homes. Consistent with this subscriber increase, combined advertising and
affiliate revenues almost doubled in the fiscal third quarter as compared to the
corresponding period in the preceding year, partially offset by increases in
marketing, programming and newsgathering expenses.

Equity in losses of affiliates. In the first nine months of fiscal 1999, equity
in losses of affiliates increased to $96 million from $51 million in the
corresponding period of the preceding fiscal year. The increase in equity in
losses of affiliates was primarily related to the results of the Company's joint
ventures with Liberty Media Corporation, where despite subscriber and
advertising sales growth at certain of the regional sports networks and the FX
network, profits were negatively impacted by the costs of start-up businesses
including certain regional sports networks, Fox Sports News and Fox Sports
Americas. Additionally, equity in losses of affiliates was affected by the
results of Fox Family Worldwide, Inc., where reduced advertising revenues and
lower revenues from home video releases negatively impacted earnings. Results
were also negatively affected by financing costs associated with the acquisition
of a 40% interest in Regional Programming Partners, an affiliate of Rainbow
Media Sports Holdings, Inc. In addition, the increase in equity in losses of
affiliates included the cost of the Fox Family Channel launch in August 1998.

Other charges. In fiscal 1998, the Company closed one of its film divisions
resulting in a non-recurring charge.

Interest expense. Results for the first nine months of fiscal 1999 reflect
decreased external interest expense, compared to the corresponding period of the
preceding fiscal year which was partially offset by increases in intercompany
interest expense, primarily due to an increase in the interest rate. The
interest rate was increased in connection with the reorganization and
recapitalization that occurred prior to the initial public offering the interest
rate on outstanding intercompany indebtedness was adjusted from 5% to 8%.

Income tax expense on a stand-alone basis. Income tax expense for the first nine
months of fiscal 1999 decreased to $114 million from $128 million in the
corresponding period of the preceding year. The decrease was primarily due

                                       12
<PAGE>
 
to the decrease in income before income taxes. The effective income tax rate for
the nine months ended March 31, 1999 was 40% compared with 43% in the
corresponding period of the preceding fiscal year. The lower effective tax rate
reflects the relationship of non-deductible items to lower income before income
taxes in the corresponding period of the preceding fiscal year as compared to
the current period.

Liquidity and Capital Resources

The Company's principal sources of cash flow are internally generated funds and
borrowings from News Corporation and its subsidiaries.

Net cash flows provided by operating activities during the nine months ended
March 31, 1999 were $222 million as compared to $178 million in the
corresponding period of the preceding fiscal year. The increase was primarily
attributable to the collection of accounts receivable related to the
international video release of Titanic, and the domestic video releases of Dr.
Dolittle, Hope Floats and The X-Files which was partially offset by increased
payments for filmed entertainment and television programming costs, primarily
reflecting payments on the National Football League contract. The first nine
months of fiscal 1998 included receipts from the worldwide theatrical release of
The Full Monty and domestic video receipts for Volcano and The Star Wars
Trilogy.

Net cash flows used in investing activities were $427 million and $296 million
during the nine months ended March 31, 1999 and 1998, respectively.  The
increase was primarily attributable to investments in equity affiliates which
reflects additional funding to Fox/Liberty Networks, LLC, Fox Studios Australia
and other investments.

Net cash flows provided by financing activities were $443 million and $138
million during the nine months ended March 31, 1999 and 1998, respectively.  The
increase was primarily due to the net effect of advances received from News
Corporation and its subsidiaries offset by repayment of external borrowings.

In November 1998, the Company consummated an initial public offering through the
issuance and sale of 124,800,000 shares of Class A Common Stock.  The newly
issued shares of Class A Common Stock represent approximately 18.6% of the
Company's outstanding common stock.  The net proceeds from the initial public
offering were approximately $2.7 billion and were used to reduce intercompany
indebtedness.  Prior to the initial public offering, News Corporation effected
the Reorganization and a recapitalization that gave effect to the following
transactions: (i) the elimination of certain outstanding intercompany debt as of
September 30, 1998 against Paid-in capital, (ii) the concurrent payment of
dividends to a subsidiary of News Corporation (which reduced Retained earnings
and Paid-in capital) such that after (i) and (ii) $4.5 billion of intercompany
debt  was outstanding, (iii) the authorization of the new Class A and Class B
Common Stock and the conversion of the Company's outstanding common stock into
547,500,000 shares of Class B Common Stock (which has ten to one supervoting
rights over Class A Common Stock), and (iv) the adjustment to increase the
interest rate from 5% to 8% under the terms of the intercompany indebtedness
after the Reorganization. Subsequent to the Reorganization, recapitalization and
the application of the $2.7 billion of net proceeds from the initial public
offering, total intercompany debt was reduced from $4.5 billion to approximately
$1.8 billion.

In November 1998, for purposes of governing certain on-going relationships
between the Company and News Corporation and to facilitate the Reorganization,
the Company and News Corporation entered into a Master Intercompany Agreement
which includes various agreements relating to cash management and financing,
executive officer services, the provision of services of certain Company
employees to News Corporation and its subsidiaries, facility arrangements,
employee matters, insurance, services, trademarks, indemnities by the Company
and News Corporation. The Company and News Corporation also entered into a Tax
Sharing Agreement.  These agreements were negotiated in the context of a parent-
subsidiary relationship and therefore are not the result of arm's length
negotiations between independent parties.  There can be no assurance, therefore,
that each of such agreements, or the transactions provided for therein, or any
amendments thereof, will be effected on terms at least as favorable to the
Company as could have been obtained from unaffiliated third parties.

                                       13
<PAGE>
 
News Corporation and certain of its subsidiaries, including the Company and
certain subsidiaries of the Company (collectively, the "Fox Guarantors") are
guarantors of various debt obligations of News Corporation and certain of its
subsidiaries. The principal amount of indebtedness outstanding under such debt
instruments at March 31, 1999 was approximately $9.36 billion, which amount
includes approximately $1 billion of obligations under Exchangeable Trust
Originated Preferred Securities SM due 2016. The debt instruments limit the
ability of News Corporation and the Fox Guarantors to subject their properties
to liens, and certain of the debt instruments impose limitations on the ability
of News Corporation and its subsidiaries, including the Fox Guarantors, to incur
indebtedness in certain circumstances. Such debt instruments mature at various
times between 1999 and 2096, with a weighted average maturity of over 20 years.
Additional subsidiaries of the Company may from time to time be required to
become guarantors of certain debt obligations.

In the case of any event of default under such debt obligations the Fox
Guarantors will be directly liable to the creditors or debtholders. News
Corporation has agreed to indemnify the Fox Guarantors from and against any
obligations they may incur by reason of their guarantees of such debt
obligations.


Year 2000

The following disclosure is a Year 2000 readiness disclosure statement pursuant
to the Year 2000 Readiness and Disclosure Act.

The Company is currently working to resolve the potential impact of the Year
2000 on the processing of date-sensitive information by its computerized
information systems. The Year 2000 problem is the result of computer programs
being written using two digits (rather than four) to define the applicable year.
Certain programs may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or system failures.

The Company has been focused on the Year 2000 issue for several years since its
normal capital spending plan requires it to ensure that significant investments
in technology in the periods prior to December 31, 1999, would be for systems
which would be operational after December 31, 1999. As a result of its
assessment and capital planning, no acceleration of material planned systems
replacements were made due to Year 2000 issues.

Between now and January 1, 2000, the Company will proceed through its various
phases of assessment, strategy, detailed planning, implementation, testing and
management. The Company expects to be fully Year 2000 compliant with respect to
all significant business systems during the second half of calendar 1999.

The Company has in place a Year 2000 program in each of its operating divisions.
These programs, which are executed by project teams, do not rely to a
significant degree on outside consultants. The objectives of these Year 2000
programs are to determine and assess the risks of the Year 2000 issue and to
plan and institute mitigating actions to minimize those risks to acceptable
levels.

The Company's standard for compliance requires that for a computer system or a
business process to be Year 2000 compliant, it must be designed to be used prior
to, on and after January 1, 2000. Such systems or processes must be able to
operate without error in dates and date-related data, including without
limitation, calculating, comparing, indexing and sequencing prior to, on and
after January 1, 2000.

The Company's Year 2000 project teams are focusing on the following major areas:

Core Computer Systems. Information technology systems account for much of the
Year 2000 work and include all computer systems and technology managed by the
Company. All core systems have been assessed, plans are in place and work is
being undertaken to test and implement changes where required. No major
remediation has been identified. In Filmed Entertainment, in-house systems play
a limited role in the development and distribution of 

                                       14
<PAGE>
 
product. In Television and Cable Network Programming, the core systems relate to
the broadcasting of programming and the placement of advertising, with respect
to both of which the Company relies on standard package systems developed by
vendors whose products are widely used in the industry. Information Technology
vendors and suppliers have been contacted as to their Year 2000 compliance and
their responses have been factored into the Company's plans.

Equipment and Facilities. An inventory of all critical broadcast equipment,
office equipment and building infrastructure has been completed for all major
sites including the Company's Los Angeles lot and television stations.

Customers and Vendors. The Company is communicating with its significant
customers and vendors to understand their Year 2000 issues and how they might
prepare themselves to manage those issues as they relate to the Company. To
date, no significant customers or vendors have informed the Company that a
material Year 2000 issue exists which will have a material effect on the
Company.

The Company will continually review its progress against its Year 2000 plans and
conclude on the appropriate and feasible contingency plans to reduce its
exposure to Year 2000 related issues.

Based on the Company's current assessment, the costs of addressing potential
problems are not currently expected to have a material adverse impact on the
Company's financial position, results of operations or cash flows in future
periods. However, if the Company, its customers or vendors identify Year 2000
issues in the future and are unable to resolve such issues in a timely manner,
it could result in a material financial risk. Accordingly, the Company plans to
devote the necessary resources to resolve all significant Year 2000 issues in a
timely manner.

Based upon its efforts to date, the Company continues to believe that the vast
majority of its systems will be able to process date-related data without error
after January 1, 2000.  Accordingly, the Company does not currently anticipate
that internal systems failures will result in any material adverse effect to its
operations or financial condition.  At this time, the Company continues to
believe that the most likely "worst-case" scenario involves potential
disruptions in areas in which the Company's operations must rely on third
parties whose systems may not work properly after January 1, 2000.  While such
failures could affect important operations of the Company and its subsidiaries,
either directly or indirectly, in a significant manner, the Company cannot, at
present, estimate either the likelihood or the potential cost of such failures.

The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third-party modification plans
and other factors. However, there can be no guarantee that these estimates will
be achieved, or that there will not be a delay in, or increased costs associated
with, the implementation of the Company's Year 2000 compliance project. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, timely responses to and
corrections by third parties and suppliers, the ability to implement interfaces
between the new systems and the systems not being replaced, and similar
uncertainties. Due to the general uncertainty inherent in the Year 2000
readiness of third parties and the interconnection of national and international
businesses, the Company cannot ensure that its ability to timely and cost
effectively resolve problems associated with the Year 2000 issue will not affect
its operations and business, or expose it to third-party liability.

                                       15
<PAGE>
 
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

                                       16
<PAGE>
 
Part II.  Other Information

Item 1.   Legal Proceedings.

          Not Applicable

Item 2.   Changes in Securities and Use of Proceeds.

          Not Applicable

Item 3.   Defaults Upon Senior Securities.

          Not Applicable

Item 4.   Submission of Matters to a Vote of Security Holders.

          Not Applicable

Item 5.   Other Information.

          Not Applicable

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

          The exhibit index filed with this Form 10-Q follows on page 19.

          No reports on Form 8-K were filed during the quarter ended March 31,
          1999.
         

                                       17
<PAGE>
 
                                   SIGNATURE

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


Date: May 12, 1999               FOX ENTERTAINMENT GROUP, INC.

                                 By: /s/ David F. DeVoe
                                     -------------------
                                     Name:  David F. DeVoe
                                     Title: Chief Financial Officer
                                            (Principal Financial and
                                             Accounting Officer)

                                      18
<PAGE>
 
                                 Exhibit Index


Exhibit
Number         Description

27.1           Financial Data Schedule

                                      19