<PAGE>

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



                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                   FORM 10-Q

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

                   For the Quarter Ended September 30, 2001

                       Commission File Number 333-64709

                           Telemundo Holdings, Inc.
            (Exact name of registrant as specified in its charter)


                  Delaware                                13-3993031
       (State or other jurisdiction of                 (I.R.S. Employer
       incorporation or organization)                 Identification No.)


             2290 West 8th Avenue
               Hialeah, Florida                              33010
    (Address of principal executive offices)               (Zip Code)



      Registrant's telephone number, including area code: (305) 889-7068

         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 November 12, 2001 there were 10,000 shares of common stock of the
registrant outstanding, all of which were owned by an affiliate. There is no
established public trading market for the registrant's common stock.

--------------------------------------------------------------------------------
<PAGE>

                    TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

                                      INDEX
<TABLE>
<CAPTION>

                                                                                                           Page
PART I.  FINANCIAL INFORMATION:                                                                             No.
                                                                                                           ----
<S>                                                                                                        <C>

  Item 1.  Financial Statements

    Consolidated Statements of Operations for the Three and Nine Months
         Ended September 30, 2001 and 2000 (Unaudited)....................................................    2

    Consolidated Balance Sheets at September 30, 2001 (Unaudited)
         and December 31, 2000............................................................................    3

    Consolidated Statement of Changes in Stockholder's Equity
         for the Nine Months Ended September 30, 2001 (Unaudited).........................................    4

    Consolidated Statements of Cash Flows for the Nine Months
         Ended September 30, 2001 and 2000 (Unaudited)....................................................    5

    Notes to Consolidated Financial Statements (Unaudited)................................................    6

  Item 2.  Management's Discussion and Analysis of Results of
              Operations and Financial Condition..........................................................   12

  Item 3.  Quantitative and Qualitative Disclosures about Market Risk.....................................   17

PART II.  OTHER INFORMATION, AS APPLICABLE

  Item 6.  Exhibits and Reports on Form 8-K...............................................................   17

SIGNATURE.................................................................................................   18

</TABLE>
                                       1
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

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

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)

(In thousands)
<TABLE>
<CAPTION>

                                                                   Three Months Ended                Nine Months Ended
                                                                      September 30,                     September 30,
                                                                 ----------------------          --------------------------
                                                                   2001          2000              2001              2000
                                                                 --------      --------          --------         ---------
<S>                                                              <C>            <C>               <C>              <C>
Net revenue..................................................    $ 61,943       $45,091           $170,467          $140,098
                                                                 --------       -------           --------          --------

Costs and expenses:
    Direct operating costs...................................      23,294        17,887             62,426            51,464
    Selling, general and administrative expenses.............      19,068        14,782             54,599            45,130
    Depreciation and amortization............................      10,806         7,840             28,355            22,973
                                                                 --------       -------           --------          --------
                                                                   53,168        40,509            145,380           119,567
                                                                 --------       -------           --------          --------

Operating income.............................................       8,775         4,582             25,087            20,531


Interest expense, net........................................     (14,620)       (9,431)           (35,122)          (28,127)
Other expense, net...........................................        (121)            -               (234)                -
                                                                 --------       -------           --------          --------
Loss before income taxes, minority
   interest and extraordinary item...........................      (5,966)       (4,849)           (10,269)           (7,596)


Income tax benefit...........................................       1,957         1,090              2,916               759
Minority interest............................................        (644)         (442)            (1,844)           (1,326)
                                                                 --------       -------           --------          --------
Loss before extraordinary item...............................      (4,653)       (4,201)            (9,197)           (8,163)

Extraordinary item-extinguishment of debt, net
   of taxes..................................................           -             -             (3,095)                -
                                                                 --------       -------           --------          --------

Net loss.....................................................    $ (4,653)      $(4,201)          $(12,292)         $ (8,163)
                                                                 ========       =======           ========          ========
</TABLE>

See notes to consolidated financial statements.

                                       2
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
<TABLE>
<CAPTION>
                                                                                       September 30,        December 31,
Assets                                                                                      2001               2000
-------------------------------------------------------------------------------------------------------------------------
                                                                                        (Unaudited)
<S>                                                                                    <C>                 <C>
Current assets:
    Cash and cash equivalents.................................................           $   11,649           $   3,284
    Accounts receivable, less allowance for doubtful accounts of  $4,768
        and $8,219............................................................                49,101              37,859
    Current portion of television programming.................................                 7,482               5,109
    Prepaid expenses and other................................................                 4,269               4,111
    Due from Network Company, net.............................................                15,337              13,719
                                                                                         -----------          ----------
             Total current assets.............................................                87,838              64,082
Property and equipment, net...................................................                89,941              71,067
Television programming, net of current portion................................                 1,428               1,456
Other assets..................................................................                19,386              10,619
Broadcast licenses and other intangible assets, net...........................               889,759             614,136
                                                                                          ----------           ---------

                                                                                          $1,088,352            $761,360
                                                                                          ==========            ========
Liabilities and Stockholder's Equity
--------------------------------------------------------------------------------------------------------------------------

Current liabilities:
    Accounts payable and accrued expenses.....................................            $   38,299            $ 42,305
    Television programming obligations........................................                 2,887               2,218
    Current portion of long-term debt.........................................                     -               5,031
    Financial liabilities.....................................................                 7,750                   -
                                                                                          ----------            --------
            Total current liabilities.........................................                48,936              49,554
Long-term debt, net of current portion........................................               680,763             400,199
Deferred taxes, net...........................................................                64,105              69,738
Other liabilities.............................................................                23,623              24,192
                                                                                          ----------           ---------
                                                                                             817,427             543,683
                                                                                          ----------           ---------

Minority interest.............................................................                 5,710               5,627
                                                                                          ----------           ---------

Contingencies and commitments

Stockholder's equity:
    Common stock, $.01 par value, 10,000 shares authorized and outstanding....                     -                   -
    Additional paid-in capital................................................               298,706             228,706
    Retained earnings (accumulated deficit)...................................               (28,948)            (16,656)
    Accumulated other comprehensive loss......................................                (4,543)                  -
                                                                                          ----------           ---------
                                                                                             265,215             212,050
                                                                                          ----------           ---------

                                                                                          $1,088,352            $761,360
                                                                                          ==========            ========

</TABLE>
See notes to consolidated financial statements.

                                       3
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY (Unaudited)

(In thousands, except share data)
---------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                              Retained        Accumulated
                                     Number of                 Additional     Earnings           Other
                                       Shares       Common      Paid-In    (Accumulated     Comprehensive   Stockholder's
                                    Outstanding      Stock       Capital      Deficit)           Loss           Equity
                                    -----------     ------     ----------   -----------      -------------   -------------
<S>                                  <C>          <C>          <C>          <C>              <C>             <C>
Balance, December 31, 2000........     10,000       $    -      $228,706      $(16,656)         $     -         $212,050

Capital contribution..............          -            -        70,000             -                -           70,000
Net loss..........................          -            -             -       (12,292)               -          (12,292)
Cumulative adoption of new
   accounting principle - SFAS
   No. 133........................          -            -             -             -            2,344            2,344
Other comprehensive loss..........          -            -             -             -           (6,887)          (6,887)
                                       ------       ------      --------      --------          -------         --------

Balance, September 30, 2001.......     10,000       $    -      $298,706      $(28,948)         $(4,543)        $265,215
                                       ======       ======      ========      ========          =======         ========


</TABLE>

See notes to consolidated financial statements.

                                       4
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)

(In thousands)
<TABLE>
<CAPTION>

Nine Months Ended September 30                                                              2001                 2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss.......................................................................             $ (12,292)        $ (8,163)
Adjustments to reconcile net loss to net cash
  provided by operating activities:
    Depreciation and amortization..............................................                28,355           22,973
    Interest accretion.........................................................                15,065           12,768
    Provision for losses on accounts receivable................................                   940              883
    Minority interest..........................................................                 1,844            1,326
    Deferred taxes.............................................................                (4,414)          (2,869)
    Other......................................................................                  (251)               -
    Extraordinary item-extinguishment of debt..................................                 3,095                -
Changes in assets and liabilities, net of effects of business acquisitions:
    Accounts receivable........................................................               (11,337)          (5,241)
    Television programming.....................................................                (1,258)            (851)
    Television programming obligations.........................................                   385              168
    Due from Network Company, net..............................................                (1,618)           6,380
    Accounts payable and accrued expenses and other............................                (6,032)          (4,508)
                                                                                            ---------         --------
                  Net cash provided by operating activities....................                12,482           22,866
                                                                                            ---------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:

Additions to property and equipment............................................               (11,848)          (9,508)
Dispositions of property and equipment.........................................                   663                -
Business acquisitions, net of cash acquired ...................................              (304,936)               -
                                                                                            ---------         --------

                  Net cash used in investing activities........................              (316,121)          (9,508)
                                                                                            ---------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:

Capital contribution...........................................................                70,000                -
Proceeds from borrowings under credit facilities...............................               457,000                -
Payments under credit facilities...............................................              (256,532)         (13,250)
Proceeds from issuance of 2001 Senior Notes....................................                60,000                -
Deferred financing costs.......................................................               (15,476)               -
Payments to minority interest partner..........................................                (2,988)          (2,715)
Merger costs...................................................................                     -             (705)
                                                                                            ---------         --------

                  Net cash provided by (used in) financing activities..........               312,004          (16,670)
                                                                                            ---------         --------

Increase (decrease) in cash and cash equivalents...............................                 8,365           (3,312)
Cash and cash equivalents, beginning of period.................................                 3,284            7,204
                                                                                            ----------        --------

Cash and cash equivalents, end of period.......................................             $   11,649        $  3,892
                                                                                            ==========        ========

Supplemental disclosure of cash flow information:
    Interest paid..............................................................             $   16,685        $ 18,147
                                                                                            ==========        ========

    Income taxes paid, including Puerto Rico withholding taxes.................             $     990         $  2,569
                                                                                            ==========        ========
</TABLE>

See notes to consolidated financial statements.

                                       5
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------

1.   BUSINESS

Telemundo Holdings, Inc. ("Holdings", and collectively with its subsidiaries,
the "Company") is one of two national Spanish-language television broadcast
companies currently operating in the United States. The Company owns and
operates ten full-power UHF television stations serving the following Market
Areas ("Market Areas" refers to Designated Market Area, a term developed by
Nielsen Media Research, Inc. and used by the television industry to describe a
geographically distinct television market) in the United States--Los Angeles,
New York, Miami, San Francisco, Chicago, Houston, Dallas, San Antonio and
Denver. Since June 1, 2001, the Company has owned and operated KWHY-TV in Los
Angeles, California ("KWHY"), the largest independent Spanish-language
television station in the largest U.S. Hispanic market, in addition to its owned
and operated network affiliate in the Los Angeles Market Area. Since June 4,
2001, the Company has operated the full-power Spanish-language television
station WEYS-TV, in Key West, Florida ("WEYS"), serving the Miami Market Area
pursuant to a local marketing agreement. Since September 28, 2001, the Company
has owned KXTX-TV, in Dallas, Texas ("KXTX"). The Company also owns and operates
the leading full-power VHF television station and related production facilities
in Puerto Rico. The Company's stations broadcast a wide variety of programming,
including telenovelas (soap operas), talk shows, movies, entertainment programs,
national and international news, sporting events, children's programming, music,
comedy and dramatic series. Network programming is provided by Telemundo Network
Group LLC (the "Network Company"), an affiliate of the Company. In addition, the
Company supplements its network programming with local programming focused on
local news and community events.

2.   THE MERGER AND RELATED TRANSACTIONS

Holdings was originally formed as a holding company in connection with the
August 1998 acquisition of Telemundo Group, Inc. (now a wholly-owned subsidiary
of Holdings, "TGI") by Liberty Media Corporation (together with its
subsidiaries, "Liberty"), Sony Pictures Entertainment Inc. (together with its
subsidiaries, "Sony Pictures") and Station Partners, LLC ("Station Partners")
(the "Merger").

In connection with the Merger, the Network Company entered into an affiliation
agreement with the Company and related affiliation agreements with the Company's
stations (collectively, the "Affiliation Agreement"), pursuant to which the
Network Company provides network programming to the Company, and the Company and
the Network Company pool and share advertising revenue pursuant to a revenue
sharing arrangement. Pursuant to the Affiliation Agreement, the Company receives
a formula-based share of pooled advertising revenue generated by the Company and
the Network Company. The following revenue sources (collectively, the "Aggregate
Net Advertising Receipts") are included in the pooled revenue: (i) 61% of the
net advertising revenue received by the Network Company pursuant to the sale of
network advertising and (ii) 100% of the net advertising revenue received by the
Company (excluding WKAQ in Puerto Rico, KWHY in Los Angeles, WEYS in Miami and
KXTX in Dallas) from the sale of local and national spot advertising time. The
pooled revenue is shared between the Company and the Network Company, with the
Company's share based on the following formula for the first year of the
agreement: (i) 80% of the first $130 million of Aggregate Net Advertising
Receipts; plus (ii) 55% of the incremental Aggregate Net Advertising Receipts
above $130 million up to $230 million; plus (iii) 45% of the incremental
Aggregate Net Advertising Receipts above $230 million. After the first year, the
threshold levels (i.e., $130 million and $230 million) increase 3% annually.
Currently, the Company is in the fourth year of the Affiliation Agreement, and
the thresholds are $142.1 million and $251.3 million.

The Company incurs non-network marketing/promotional expenditures, programming
expenditures and capital expenditures for its stations. All network programming
costs are borne by the Network Company. As part of the Affiliation Agreement,
the Network Company and the Company agreed, subject to various conditions, to
incur certain programming, marketing/promotional and capital expenditures in
each year. These expenditures may be reduced or eliminated based on financial
tests, which assume such expenditures produce positive financial results (i.e.,
incremental revenue). The Company can also elect to incur a portion of such
expenditures in a subsequent year.

                                       6
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
--------------------------------------------------------------------------------

3.   THE RESTRUCTURING AND RELATED TRANSACTIONS


The Company's current and former stockholders consummated a restructuring of
interests on December 15, 2000 (the "Restructuring").  As part of the
Restructuring, each of Sony Pictures, Station Partners and Liberty contributed,
among other things, all of their capital stock in Holdings to the new parent
company, Telemundo Communications Group, Inc. ("TCG"), in exchange for shares of
common stock of TCG.  As a result of the Restructuring, TCG, through its
subsidiary, Telemundo Network Interest, Inc., acquired 67% of the
membership interests in the Network Company, all of whose membership interests
were previously owned by Liberty and Sony Pictures.  Specifically, Liberty
contributed, through the contribution of 100% of the capital stock of one of its
subsidiaries to TCG, 50% of the outstanding membership interests of the Network
Company in exchange for shares of TCG.  In addition, Sony Pictures contributed,
through a subsidiary, 17% of the outstanding membership interests of the Network
Company to TCG in exchange for shares of TCG. As a result, Sony Pictures
retained 33% of the Network Company's membership interests and TCG is the
managing member of the Network Company.


4.   UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


In the opinion of management, the accompanying unaudited consolidated financial
statements of the Company include all material adjustments (consisting of only
normal recurring accruals) necessary to present fairly the Company's unaudited
financial position at September 30, 2001, and the results of operations and cash
flows for all periods presented. The unaudited results of operations for interim
periods are not necessarily indicative of the results to be expected for the
year ending 2001.


For a summary of significant accounting policies, which have not changed from
December 31, 2000, and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.


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


5.   TRANSACTIONS WITH AFFILIATES


Sony Pictures and TCG, through subsidiaries, own the Network Company. TCG is the
Company's sole stockholder. Pursuant to the Affiliation Agreement, the Company
recorded $17.8 million and $14.4 million in incremental net revenue for the nine
months ended September 30, 2001 and 2000, respectively, the outstanding portion
of which is included in Due from Network Company, net. In addition, the Network
Company pays certain costs on behalf of the Company and the Company pays certain
costs on behalf of the Network Company, which are fully reimbursed. The Company
believes these costs to be at fair value and the outstanding balances are
included in Due from Network Company, net.


As a result of the Affiliation Agreement, the Company relies solely on the
Network Company for all of its network programming and is dependent, to a
significant extent, on the ability of the Network Company to generate
advertising revenue. The Spanish-language television market share for the
Company's stations are dependent upon the Network Company's ability to produce
or acquire and distribute programming which attracts significant viewer levels.
If the programming provided by the Network Company fails to attract viewers,
each of the Company's and the Network Company's ability to attract advertisers
and generate revenue and profits will be impaired. There can be no assurance
that the programming provided by the Network Company will achieve or maintain
satisfactory

                                       7
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
--------------------------------------------------------------------------------

viewership levels or that the Company or the Network Company will be able to
generate significant advertising revenue.

6.   ACQUISITIONS AND RELATED FINANCINGS

The Company acquired certain of the assets and assumed certain of the
liabilities of independent full-power Spanish-language television station
KWHY-TV, Channel 22, in Los Angeles, California and its related low-power
television station, KWHY-LP, Channel 22, in Santa Barbara, California, for
approximately $240.4 million including acquisition-related costs (the "KWHY
Acquisition"). The KWHY Acquisition closed on June 1, 2001.

The KWHY Acquisition has been accounted for under the purchase method of
accounting.

The KWHY Acquisition purchase price allocation was based on the fair values of
the assets acquired and liabilities assumed, and the intangibles which were
based on an independent valuation and allocation as follows (in thousands):

       Television programming                                  $  1,087
       Prepaid expenses and other current assets                    143
       Property and equipment                                     5,790
       Broadcast licenses and other intangibles                 236,124
       Accounts payable and accrued expenses                     (2,457)
       Television program obligations                              (284)
                                                               --------
           Total purchase price                                $240,403
                                                               ========


The allocation and related life of the intangibles are as follows (in
thousands):

       Broadcast licenses                  40 years          206,724
       Advertiser base                      7 years           29,000
       Workforce                            5 years              400


On May 31, 2001, in connection with the KWHY Acquisition, TCG issued shares of
its Series A Convertible Preferred Stock and its Series B Convertible Preferred
Stock in exchange for $70.0 million from certain of its stockholders. Station
Partners, Sony Pictures, Liberty, Bron-Villanueva Capital, LLC and TLMD LLC now
beneficially own the Company's voting interests indirectly through their
ownership of voting interests in the Company's parent TCG.

On June 1, 2001, TGI, as borrower, the Company, as parent guarantor, and a
syndicate of lenders entered into an amended and restated credit agreement (the
"Credit Agreement"). The senior secured credit facilities, covered under the
Credit Agreement, are comprised of a reducing revolving credit facility in an
aggregate principal amount of up to $100.0 million, a tranche A term credit
facility in an aggregate principal amount of $75.0 million, and a tranche B term
credit facility in an aggregate principal amount of $355.0 million (the "Credit
Facilities").

On June 1, 2001, the Company entered into a local marketing agreement with WEYS
Television Corp. to operate the full-power Spanish-language television station
WEYS in Key West, Florida, serving the Miami market. The Company also entered
into an option agreement to acquire the assets of WEYS and its associated low-
power television stations ("LPTVs") for approximately $9.0 million. With this
agreement and the KWHY Acquisition, the Company has created duopolies in two of
the three largest Hispanic markets in the U.S.

                                        8
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
--------------------------------------------------------------------------------

On August 10, 2001, the Company issued $75.2 million aggregate principal amount
at maturity of Series C 11 1/2% Senior Discount Notes due August 15, 2008 (the
"2001 Senior Notes"). The Company used the proceeds from the 2001 Senior Notes
and the Credit Facilities to fund the KXTX Acquisition, as defined below.

On September 28, 2001, the Company acquired certain of the assets and assumed
certain of the liabilities of full-power English-language television station
KXTX-TV, Channel 39, in Dallas, Texas ("KXTX") for approximately $64.5 million
including acquisition-related costs (the "KXTX Acquisition"). The Company
expects to begin operating KXTX as a Spanish-language television station on
January 1, 2002.

The KXTX Acquisition has been accounted for under the purchase method of
accounting.

The KXTX Acquisition purchase price allocation was based on the fair values of
the assets acquired and liabilities assumed, and the intangibles which were
based on a preliminary independent valuation and allocation as follows (in
thousands):

       Prepaid expenses and other current assets                 $   146
       Property and equipment                                     10,064
       Broadcast license and other intangibles                    55,470
       Accounts payable and accrued expenses                      (1,147)
                                                                 -------
           Total purchase price                                  $64,533
                                                                 =======


The allocation and related life of the intangibles are as follows (in
thousands):

       Broadcast license             Infinite lives            8,731
       Goodwill                      Infinite lives           46,739

The unaudited pro forma information of the Company as if the acquisitions had
occurred on January 1, is as follows (in thousands):

       Nine months ended September 30,            2001                  2000
       -------------------------------------------------------------------------

       Net revenue                               $190,200             $174,384
       Loss from continuing operations            (15,540)             (22,424)


On November 1, 2001 the Company commenced an exchange offer to exchange up to
$293,991,000 principal amount at maturity of the Company's registered Series D
11 1/2% Senior Discount Notes due August 15, 2008 for the Company's outstanding
Series A, B and C 11 1/2% Senior Discount Notes due August 15, 2008 (the
"Exchange Offer"). The Exchange Offer will expire December 7, 2001, unless the
Company, in its sole discretion, decides to extend the Exchange Offer.

7.   DERIVATIVES

Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards 133 ("SFAS 133"), Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS 137, Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133,
and SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities. SFAS 133 requires that all derivatives be recorded as either assets
or liabilities measured at fair value on the balance sheet and establishes
criteria for designation and effectiveness of derivative transactions for which
hedge accounting is applied. The Company assesses the initial and ongoing
effectiveness of its hedging relationships in accordance with its

                                       9
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
--------------------------------------------------------------------------------

documented policies. As a result of the adoption of this standard as of January
1, 2001, the Company recorded a transition adjustment reflecting a one-time
after-tax unrealized gain of $2.3 million to other comprehensive income.

The impact of SFAS 133 relates to the Company's three interest rate swaps, which
are used to manage financing costs associated with changes in variable interest
rates on its Credit Facilities. The interest rate swap transactions qualify as
cash flow hedges and are recorded on the consolidated balance sheet as of
September 30, 2001 as follows: $7.8 million financial liabilities and $4.5
million accumulated other comprehensive loss, net of income taxes of $3.0
million. Using the hypothetical derivative method, the Company recognized a loss
on the fair value on the interest rate swaps in the amount of $255,000, which is
included in other expense, net in the consolidated statements of operations and
cash flows for the nine months ended September 30, 2001.

8.   RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standard Board ("FASB") released SFAS
141, Business Combinations, ("SFAS 141"), and SFAS 142, Goodwill and Other
Intangible Assets ("SFAS 142"). SFAS 141 prohibits the use of the
pooling-of-interests ("pooling") method of accounting for business combinations
initiated after the issuance date of the financial statements. SFAS 142 requires
that goodwill and any identifiable intangible asset that is determined to have
an indefinite useful economic life and observable market not be amortized, but
separately tested for impairment using a fair-value based approach. SFAS 142 has
been applied to the KXTX Acquisition because the transaction closed after July
1, 2001. As a result, the intangibles identified are broadcast license and
goodwill with infinite lives. Accordingly, no amortization is included in the
accompanying statement of operations and cash flows for the nine months ended
September 30, 2001. SFAS 142 is effective January 1, 2002, when it will be
adopted by the Company. The impact on the consolidated financial Statements as a
result of the adoption of SFAS 141 and SFAS 142 has not been determined.

In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, ("SFAS 143"). SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS 143 is effective for fiscal years
beginning after June 15, 2002, and will be applied on a prospective basis. The
impact on the consolidated financial statements as a result of the adoption of
SFAS No. 143 has not been determined.

In October 2001, FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, ("SFAS 144"). SFAS 144 maintains the provisions
for (a) recognition/measurement of impairment of long-lived assets to be held
and used, and (b) measurement of long-lived assets to be disposed of by sale.
SFAS 144 is effective for fiscal years beginning after December 15, 2001, and
will be applied on a prospective basis. The impact on the consolidated financial
statements as a result of the adoption of SFAS 144 has not been determined.

9.   COMPREHENSIVE LOSS

Comprehensive loss consists of net loss and changes in the value of derivatives
in accordance with the adoption and application of SFAS 133. The components of
the Company's comprehensive loss is as follows (in thousands):

                                                              Nine Months Ended
                                                             September 30, 2001
                                                             ------------------
       Net loss.....................................              $(12,292)
       Cumulative adoption of new accounting
          principle - SFAS 133, net of
          income taxes of $1,138....................                 2,344

       Unrealized loss on derivatives,
          net of income taxes of $2,952.............                (6,887)
                                                                  ---------
       Comprehensive loss...........................              $(16,835)
                                                                  =========

                                      10
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
--------------------------------------------------------------------------------

10.  NBC Acquisition

On October 11, 2001, General Electric Company ("GE"), along with its wholly-
owned indirect subsidiary National Broadcasting Company, Inc. ("NBC"), entered
into a definitive agreement with SPE Mundo Investment Inc. ("SPE Mundo"), a
wholly-owned subsidiary of Sony Pictures, and TCG for the acquisition of TCG
through merger with a wholly-owned acquisition subsidiary of GE. NBC has also
agreed to purchase the remaining 33% of the membership interests of the Network
Company owned by SPE Mundo (See Note 3). The aggregate consideration to be paid
in the transaction is approximately $1.98 billion, consisting of GE common stock
and cash in the merger, and cash for the purchase of the membership interests
owned by SPE Mundo. NBC will also assume approximately $700.0 million of
existing debt. The NBC acquisition of TCG and the Network Company is subject to
regulatory approval and certain other closing conditions. The Company expects
the transaction to close in the second or third quarter of 2002.

                                      11
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
--------------------------------------------------------------------------------

Introduction

Telemundo Holdings, Inc. ("Holdings", and collectively with its subsidiaries,
the "Company") is one of two national Spanish-language television broadcast
companies currently operating in the United States. The Company owns and
operates ten full-power UHF television stations serving Los Angeles, New York,
Miami, San Francisco, Chicago, Houston, San Antonio, Dallas and Denver. Nine of
these stations serve the eight largest Hispanic market areas, and four of the
five largest general market areas, in the United States. The Company also owns
and operates the leading full-power VHF television station and related
production facilities in Puerto Rico and owns or operates 16 domestic LPTVs in
the United States. Additionally, the Company operates WEYS (as defined below)
serving Miami pursuant to a local marketing agreement.

The Company's stations broadcast a wide variety of network programming,
including telenovelas (soap operas), talk shows, movies, entertainment programs,
national and international news, sporting events, children's programming, music,
comedy and dramatic series. In addition, the Company supplements its network
programming with local programming focused on local news and community events.
Programming is provided 24-hours a day to the Company's network affiliated U.S.
stations by Telemundo Network Group LLC (the "Network Company"). KWHY in Los
Angeles, WKAQ in Puerto Rico and WEYS in Miami broadcast a similar variety of
programs. However, while these independent stations air certain of the Network
Company's programming, a substantial amount of their programming is either
internally developed and produced, or acquired directly by the stations from
third party producers unrelated to the Network Company. Through December 31,
2001, KFWD-TV in Dallas, Texas, the Network Company's affiliate, will continue
to broadcast network programming, while KXTX (as defined below) will continue to
broadcast its current programming schedule, which consists of paid programming
(i.e. infomercials), as well as series and movies. KXTX will broadcast network
programming effective as of January 1, 2002. Including the Company's owned and
operated stations, the Network Company currently serves 86 markets in the United
States, including 49 of the 50 largest Hispanic markets, and reaches
approximately 88% of all U.S. Hispanic households.


Recent Developments

The Restructuring. On December 15, 2000, the ownership of Holdings and of the
Network Company was restructured (the "Restructuring"). As a result of the
Restructuring, Holdings became a wholly-owned subsidiary of Telemundo
Communications Group, Inc. ("TCG"). As part of the Restructuring, Council Tree
Hispanic Broadcasters II, L.L.C. purchased all of the membership interests in
Station Partners, LLC ("Station Partners") owned by Apollo Investment Fund III,
L.P. ("Apollo") and contributed four stations in Colorado (KMAS-TV in Steamboat
Springs, KSBS-LP in Denver, KMAS-LP in Denver and K34FB in Pueblo, collectively,
the "Denver Stations") to Station Partners, which subsequently contributed the
Denver Stations to the Company.

Equity Contribution and Issuance of Convertible Preferred Stock. On May 31,
2001, in connection with the KWHY Acquisition (as defined below), TCG issued
shares of its Series A Convertible Preferred Stock and its Series B Convertible
Preferred Stock in exchange for $70.0 million from certain of its stockholders.
Shares of the Series A Convertible Preferred Stock, which have one vote per
share and are convertible into TCG's Class A Common Stock, were issued to
Liberty Media Corporation ("Liberty"), Sony Pictures Entertainment Inc. ("Sony
Pictures"), SPE Mundo Investment Inc. ("SPE Mundo") and TLMD LLC. Shares of the
Series B Convertible Preferred Stock, which have three votes per share and are
convertible into TCG's Class B Common Stock, were issued to Station Partners.
Accordingly, on a voting basis, the issued and outstanding capital stock of TCG
(including the Class A and Class B Common Stock and the Series A and Series B
Convertible Preferred Stock on a combined basis) may be voted 15.67% by Sony
Pictures (which includes the shares held by SPE Mundo), 24.92% by Liberty,
55.48% by Station Partners, 3.33% by Bron-Villanueva Capital, LLC and 0.59% by
TLMD LLC. Liberty's voting rights are subject to an irrevocable proxy, subject
to certain conditions, in favor of Station Partners to vote all the shares of
TCG held by Liberty.

Acquisition of KWHY. On June 1, 2001, the Company completed its acquisition of
the full-power independent Spanish-language television station KWHY in Los
Angeles from Harriscope of Los Angeles, Inc., for approximately $240.4 million
cash, which included acquisition-related costs (the "KWHY Acquisition"). The
KWHY Acquisition, the most successful independent Spanish-language television
station in the U.S., creates the first Spanish-language broadcasting duopoly in
the largest Hispanic market in the U.S. In connection with the KWHY Acquisition,
the Company refinanced its senior secured credit facilities. The senior secured
credit facilities are comprised of a $100.0 million revolving credit facility
and $430.0 million of term loans (the "Credit Facilities"). The Company used the
proceeds from the term loans and an additional $70.0 million equity contribution
from TCG's shareholders to finance the KWHY Acquisition, refinance its existing
credit facilities and pay fees and expenses associated with these transactions.

WEYS Local Marketing Agreement. On June 1, 2001, the Company entered into a
local marketing agreement with WEYS Television Corp. to operate the full-power
Spanish-language television station WEYS in Key West, Florida, serving the Miami
market ("WEYS"). The Company also entered into an option agreement to acquire
the assets of WEYS and its associated LPTVs for approximately $9.0 million. With
this agreement and the KWHY Acquisition, the Company has created duopolies in
two of the three largest Hispanic markets in the U.S.

Acquisition of KXTX. On September 28, 2001, the Company acquired the full-power
independent television station KXTX in Dallas, Texas from Southwest Sports for
approximately $64.5 million cash, which included acquisition-related costs
("KXTX Acquisition"). The Company funded the KXTX Acquisition and the related
fees and expenses with the proceeds from the sale of the Company's Series C 11
1/2% Senior Discount Notes due August 15, 2008 (as defined below), as well as
with borrowings under the Company's revolving credit facilities.

NBC Acquisition. On October 11, 2001, General Electric Company ("GE"), along
with its wholly-owned indirect subsidiary National Broadcasting Company, Inc.
("NBC"), entered into a definitive agreement with SPE Mundo, a wholly-owned
subsidiary of Sony Pictures, and TCG for the acquisition of TCG through merger
with a wholly-owned acquisition subsidiary of GE. NBC has also agreed to
purchase the remaining 33% of the membership interests of the Network Company
owned by SPE Mundo. The aggregate consideration to be paid in the transection is
approximately $1.98 billion, consisting of GE common stock and cash in the
merger, and cash for the purchase of the membership interests owned by SPE
Mundo. NBC will also assume approximately $700.0 million of existing debt. The
NBC acquisition of TCG and the Network Company is subject to the approval of the
Federal Communications Commission ("FCC"), including the FCC's grant for a
waiver of its ownership rules to permit the temporary common ownership by NBC of
three television stations in the Los Angeles market, and certain other
conditions, including expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the making
or receipt of required filings and/or approvals in any applicable foreign
jurisdiction. Subject to the receipt of all regulatory approvals, the Company
anticipates that this transaction will close in the second or third quarter of
2002. There are no assurances that NBC will receive the required regulatory
approvals to consummate the transection.

Exchange Offer.  On November 1, 2001 the Company commenced an exchange offer to
exchange up to $293,991,000 principal amount at maturity of its registered
Series D 11 1/2% Senior Discount Notes due August 15, 2008 for its outstanding
Series A, B and C 11 1/2% Senior Discount Notes due August 15, 2008 ("Exchange
Offer").  The Exchange Offer will expire December 7, 2001, unless the Company,
in its sole discretion, decides to extend the Exchange Offer.

Transactions Affecting Comparability of Results of Operations and Financial
Condition

Holdings was originally formed as a holding company in connection with the 1998
acquisition of Telemundo Group, Inc. ("TGI") (the "Merger"). Following the
Merger, Holdings was owned 24.95% by Liberty, 24.95% by Sony Pictures and 50.1%
by Station Partners. Station Partners was originally owned 68% by Apollo and 32%
by Bastion Capital Fund, L.P. The Network Company was owned 50% by Liberty and
50% by Sony Pictures through wholly-owned subsidiaries.

In connection with the Merger, the Network Company entered into an affiliation
agreement with the Company and related affiliation agreements with the Company's
stations (collectively, the "Affiliation Agreement"), pursuant to which the
Network Company provides network programming to the Company, and the Company and
the Network Company pool and share advertising revenue pursuant to a revenue
sharing arrangement. Pursuant to the Affiliation Agreement, the Company receives
a formula-based share of pooled advertising revenue generated by the Company and
the Network Company. The following revenue sources (collectively, the "Aggregate
Net Advertising Receipts") are included in the pooled revenue: (1) 61% of the
net advertising revenue received by the Network Company pursuant to the sale of
network advertising and (2) 100% of the net advertising revenue received by the
Company (excluding WKAQ, KWHY, WEYS and KXTX) from the sale of local and
national spot advertising time. The pooled revenue is shared between the Company
and the Network Company, with the Company's share based on the following formula
for the first year of the agreement: (i) 80% of the first $130.0 million of
Aggregate Net Advertising Receipts; plus (ii) 55% of the incremental Aggregate
Net Advertising Receipts above $130.0 million up to $230.0 million; plus (iii)
45% of the incremental Aggregate Net Advertising Receipts above $230.0 million.
After the first year, the threshold levels (i.e., $130.0 million and $230.0
million) increase 3% annually. Currently, the Company is in the fourth year of
the agreement and the thresholds are $142.1 million and $251.3 million.

                                      12
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

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

Results of Operations

The following discussion and analysis of results of operations and financial
condition should be read in conjunction with the Company's consolidated
financial statements and related notes. Except for historical information
contained herein, certain matters discussed are "forward-looking statements"
within the meaning of section 27A of the Securities Act of 1933 and section 21E
of the Securities Exchange Act of 1934. Forward-looking statements are not
guarantees of future performance and are subject to certain risks and
uncertainties, including (without limitation) those risks associated with
operating in a competitive market; effect of national and local economic
conditions; the Company's outstanding indebtedness and debt leverage;
restrictions imposed by the terms of the Company's indebtedness; changes in
advertising revenue which are caused by changes in national and local economic
conditions; the relative popularity of the Network Company's and the Company's
programming; the impact of the 2000 Census on the Company's markets and other
factors outside the Company's control; future capital requirements; the impact
of competition; the ability of third party program suppliers to produce quality
programming, including its impact on market share and advertising revenue in
each of the Company's markets; the strength or weakness of the advertising
market; the cost of programming; changes in technology and standards in the
Company's industry; the loss of key employees; the ability to attract and retain
qualified personnel; the modification or termination of the Affiliation
Agreement; the impact of litigation; the ability to retain the licenses issued
by the FCC and the impact of current or pending legislation and regulations,
including FCC rulemaking proceedings; business disruptions including
catastrophic events and terrorist attacks; the impact of any failed merger
transaction; increases in the costs and the impact of potential utility
interruptions and other factors which may be described from time to time in
filings of the Company with the Securities and Exchange Commission. The Company
disclaims any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments.

                                      13
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

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


On September 11, 2001, terrorists attacked the World Trade Center in New York
and the Pentagon in Washington, D.C. The transmitter and antenna facilities for
the Company's New York station, WNJU, were located on the north tower of the
World Trade Center. As a result of the World Trade Center disaster, the Company
experienced a significant loss in advertising revenues and as a result of its
expanded news coverage following both attacks, experienced an increase in
incremental operating expenses. Additionally, the Company has incurred capital
costs related to replacing and relocating WNJU's transmitter and antenna
facilities to an alternate site in Alpine, New Jersey.

Net revenue for the three and nine months ended September 30, 2001 as compared
to the corresponding periods of 2000 was as follows (in thousands):

<TABLE>
<CAPTION>
                                              Three Months Ended                Nine Months Ended
                                                September 30,                     September 30,
                                             --------------------            ------------------------
                                               2001         2000    Change     2001           2000       Change
                                             -------      -------   ------   --------       ---------    ------
        <S>                                  <C>          <C>       <C>      <C>            <C>          <C>

        Local..............................  $38,784      $31,339     24%    $106,994        $ 84,860       26%
        National spot......................   13,442        9,623     40%      36,146          30,183       20%
        Incremental revenue from
           Affiliation Agreement...........    4,875        2,351    107%      17,821          14,395       24%
        Other revenue......................    4,842        1,778    172%       9,506          10,660      (11%)
                                             -------      -------            --------        --------

        Net revenue........................  $61,943      $45,091            $170,467        $140,098
                                             =======      =======            ========        ========
</TABLE>

Local revenue at the Company's domestic television stations increased by 36% and
42% for the three and nine months ending September 30, 2001 from the
corresponding periods of the prior year, respectively, which was primarily the
result of increases in audience share at the Company's major stations throughout
most of 2001, continued growth in the local Spanish-language television markets
and the addition of KWHY from June 1, 2001, offset in part by revenue losses as
a result of the World Trade Center disaster. Local revenue at WKAQ-Puerto Rico
increased by 7% and 5% for the three and nine months ending September 30, 2001
from the corresponding periods of the prior year, respectively, as a result of
increases in audience share throughout most of 2001. Excluding the impact of
KWHY, local revenue at the Company's domestic television stations would have
increased by 18% and 29% for the three and nine months ending September 30, 2001
from the corresponding periods of the prior year, respectively.

The increases in national spot revenue of 40% and 20% for the three and nine
months ended September 30, 2001 from the corresponding periods of the prior
year, respectively, were primarily the result of increases in audience share
throughout most of 2001 and the addition of KWHY, which were offset in part by
revenue losses as a result of the World Trade Center disaster. Excluding the
impact of KWHY, national revenue at the Company's television stations would have
increased by 29% and 15% for the three and nine months ending September 30, 2001
from the corresponding periods of the prior year, respectively.

                                      14
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

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

The Telemundo network's average share of the Spanish-language television
audience (Adults 18-49) was 19% during the third quarter of 2001, 26% during the
first and second quarters of 2001 compared to 22% during the second and third
quarters of 2000, and 18% during the first quarter of 2000. Throughout 2000 and
most of 2001, the Company's audience share levels have increased as a result of
various successful programming initiatives. A change in audience share typically
has a delayed impact on revenue.

Incremental revenue from the Affiliation Agreement represents the share of the
pooled revenue pursuant to the Affiliation Agreement in excess of revenue
generated by the Company's U.S. stations. The amount of incremental revenue
recognized in any period is impacted by the timing of the attainment of the
Aggregate Net Advertising Receipts thresholds discussed above.

Other revenue increased by 172% and decreased by 11% for the three and nine
months ended September 30, 2001 from the corresponding periods of the prior
year, respectively. The increase for the three months was primarily the result
of the addition of KWHY and WEYS paid programming (i.e. infomercials). The
decrease for the nine months was primarily the result of the elimination of
substantially all U.S. paid programming at the end of the second quarter of
2000, offset in part by including KWHY and WEYS June and third quarter 2001 paid
programming.

Direct operating costs increased by 30% and 21% for the three and nine months
ended September 30, 2001 from the corresponding periods of the prior year,
respectively. This was primarily the result of an increase in costs incurred to
enhance and expand local news in the U.S., the addition of KWHY and expanded
news coverage as a result of the World Trade Center disaster. Excluding KWHY,
direct operating costs would have increased by 14% for both the three and nine
months ending September 30, 2001 from the corresponding periods of the prior
year, respectively.

Selling, general and administrative expenses increased by 29% and 21% for the
three and nine months ended September 30, 2001 from the corresponding periods of
the prior year, respectively. This was primarily the result of increased sales
commissions relating to the increase in local revenue, an increase in
advertising expenditures and the addition of KWHY. Excluding KWHY, selling,
general and administrative expenses would have increased by 20% and 17% for the
three and nine months ending September 30, 2001 from the corresponding periods
of the prior year, respectively.

Depreciation and amortization increased by 38% and 23% for the three and nine
months ended September 30, 2001 from the corresponding periods of the prior
year, respectively. This was primarily a result of the additions to property and
equipment during 2000 and 2001, including those relating to upgrading stations
to a digital technology platform and the addition of KWHY's property and
equipment and intangibles. Excluding KWHY, depreciation and amortization would
have increased by 4% and 8% for the three and nine months ending September 30,
2001 from the corresponding periods of the prior year, respectively.

Interest expense, net increased by 55% and 25% for the three and nine months
ended September 30, 2001 from the corresponding periods of the prior year,
respectively. This was primarily the result of higher interest rates on greater
balances outstanding under the Credit Facilities and an increase in interest
accreted on the Series A, B and C 11 1/2% Senior Discount Notes due August 2008.

The income tax benefit for the three and nine months ended September 30, 2001
results primarily from the tax effect of changes in federal, state and Puerto
Rico deferred temporary differences, offset in part by a current provision for
federal, state and Puerto Rico income taxes. The Company has net operating loss
carryovers for federal income tax purposes. The Company's use of its net
operating loss carryforwards are subject to certain limitations imposed by
Section 382 of the Internal Revenue Code and their use will be limited.

Minority interest represents the accounting impact of distributions to the 25.5%
partner in Video 44, which is based on a minimum preferred distribution to such
partner. Video 44 is a partnership that owns and operates WSNS-Chicago.

The extraordinary item-extinguishment of debt of $5.1 million, net of taxes of
$2.0 million for the nine months ended September 30, 2001, was the result of a
write-off of the debt issuance costs from the former credit facilities upon
refinancing.

                                      15
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

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

Liquidity and Sources of Capital

Cash flows provided by operating activities were $12.5 million and $22.9 million
for the nine months ended September 30, 2001 and 2000, respectively. The
decrease is primarily the result of changes in certain asset and liability
accounts, the timing of the payments of accounts payable, offset in part by the
increase in operating income before depreciation and amortization.

The Company had working capital of $38.9 million at September 30, 2001.

Capital expenditures of approximately $11.8 million were made during the nine
months ended September 30, 2001 for the replacement and upgrading of equipment
and facilities, including upgrading stations to a digital technology platform.
As a result of the continued conversion to digital television technology, as
well as regular maintenance capital spending, the Company expects to incur
capital expenditures of approximately $7.0 million during the remainder of 2001.

The Company's principal sources of liquidity are cash from operations and a
$100.0 million revolving credit facility with a final maturity of February 15,
2008 (the "Revolving Credit Facility"). The Company plans on financing cash
needs through cash generated from operations and the Revolving Credit Facility,
under which there was $12.0 million outstanding at September 30, 2001.

The Company's interest income and expense are sensitive to changes in the
general level of U.S. and certain European interest rates. In this regard,
changes in these rates affect the interest earned on the Company's cash
equivalents as well as interest paid on its Credit Facilities. To mitigate the
impact of fluctuations in interest rates, the Company entered into two-fixed
rate for London Interbank Offered Rates ("LIBOR") swap transactions in late
1998. In connection with the refinancing of the Credit Facilities, in September
2001, the Company entered into one additional fixed rate for LIBOR swap
transaction with a notional of $20 million. The Company uses derivative
financial instruments to manage financing cost associated with changes in
interest rates. Interest rate swaps involve periodic exchange of payments
without the exchange of underlying principal or notional amounts. Net payments
are recognized as an adjustment to interest expense, net. The Company does not
use any of these instruments for trading purposes. If the Company were to have
borrowings outstanding for the maximum amount possible under the Revolving
Credit Facility, it would have $100.0 million principal amount subject to
changes in interest rates, whereby a change of 100 basis points would have
approximately a $1.0 million impact on pre-tax earnings and pre-tax cash flows
over a one-year period.

The Company's credit risk associated with these derivative contracts is
generally limited to an unrealized gain on those contracts with a positive fair
market value, should any counterparty fail to perform as contracted. The
counterparty to the Company's derivative contracts is a major international
financial institution. The Company continually monitors the credit quality of
this financial institution and does not expect non-performance by the
counterparty.

                                      16
<PAGE>

TELEMUNDO HOLDINGS, INC. AND SUBSIDIARIES

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

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is included in the "Liquidity and Capital
Resources" section of the Company's Management's Discussion and Analysis of
Results of Operations and Financial Condition contained in this document.

PART II. OTHER INFORMATION

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits
          --------

          Exhibit No.   Description of Exhibit
          -----------   ----------------------

          2.1           Asset Purchase Agreement dated as of June 25, 2001 among
                        Southwest Sports Television, L.P., Telemundo of Dallas,
                        L.P., Telemundo of Dallas License Corp. and Telemundo
                        Communications Group, Inc. (incorporated herein by
                        reference to Exhibit 2.1 filed as part of Form 10-Q for
                        Telemundo Holdings, Inc. for the quarter ended June 30,
                        2001).

          2.2           First Amendment to Asset Purchase Agreement dated July
                        10, 2001 among Southwest Sports Television, L.P.,
                        Telemundo of Dallas, L.P., Telemundo of Dallas License
                        Corp. and Telemundo Communications Group, Inc.
                        (incorporated herein by reference to Exhibit 2.2 filed
                        as part of Form 10-Q for Telemundo Holdings, Inc. for
                        the quarter ended June 30, 2001).

          2.3           Agreement and Plan of Merger by and among General
                        Electric Company, National Broadcasting Company, Inc.,
                        TN Acquisition Corp., SPE Mundo Investment Inc. and
                        Telemundo Communications Group, Inc., dated as of
                        October 11, 2001 (incorporated herein by reference to
                        Exhibit 2.3 filed as part of Form S-4 for Telemundo
                        Holdings, Inc., as amended, filed with the Commission on
                        November 1, 2001).

          3.1           Restated Certificate of Incorporation of the Company
                        (incorporated herein by reference to Exhibit 3.1 filed
                        as part of the Company's 10-K for the fiscal year ended
                        December 31, 2000).

          3.2           Amended and Restated Bylaws of the Company (incorporated
                        herein by reference to Exhibit 3.2 filed as part of the
                        Company's 10-K for the fiscal year ended December 31,
                        2000).

          4.1           Indenture dated August 10, 2001 among Telemundo
                        Holdings, Inc. and The Bank of New York, as trustee,
                        relating to the 11 1/2% Senior Discount Notes due 2008
                        of Telemundo Holdings, Inc. (incorporated herein by
                        reference to Exhibit 4.1 filed as part of Form S-4 for
                        Telemundo Holdings, Inc. filed with the Commission on
                        October 5, 2001).

          10.1          First Amendment and Waiver, dated as of August 3, 2001,
                        to the Amended and Restated Credit Agreement dated as of
                        June 1, 2001, among Telemundo Group, Inc., as borrower,
                        Telemundo Holdings, Inc., as parent guarantor, the
                        Lenders (as named therein) and Credit Suisse First
                        Boston Corporation (incorporated herein by reference to
                        Exhibit 10.21 filed as part of Form S-4 for Telemundo
                        Holdings, Inc. filed with the Commission on October 5,
                        2001).

          10.2          Employment Agreement dated as of November 1, 2000 by and
                        between Telemundo Communications Group, Inc. and Vincent
                        L. Sadusky (incorporated herein by reference to Exhibit
                        10.22 filed as part of Form S-4 for Telemundo Holdings,
                        Inc., as amended, filed with the Commission on November
                        1, 2001).

          10.3          Amendment to Employment Agreement dated as of October 8,
                        2001 by and between Telemundo Communications Group, Inc.
                        and Vincent L. Sadusky (incorporated herein by reference
                        to Exhibit 10.23 filed as part of Form S-4 for Telemundo
                        Holdings, Inc., as amended, filed with the Commission on
                        November 1, 2001).

          10.4          Amendment No. 3 to Employment Agreement dated as of
                        October 11, 2001 by and between Telemundo Communications
                        Group, Inc. and James M. McNamara (incorporated herein
                        by reference to Exhibit 10.24 filed as part of Form S-4
                        for Telemundo Holdings, Inc., as amended, filed with the
                        Commission on November 1, 2001).

          10.5          Amendment No. 3 to Employment Agreement dated as of
                        October 11, 2001 by and between Telemundo Communications
                        Group, Inc. and Alan Sokol (incorporated herein by
                        reference to Exhibit 10.25 filed as part of Form S-4 for
                        Telemundo Holdings, Inc., as amended, filed with the
                        Commission on November 1, 2001).

     (b)  Reports on Form 8-K
          -------------------

          None.

                                      17
<PAGE>

                                   SIGNATURE

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

                                             TELEMUNDO HOLDINGS, INC.
                                                   (Registrant)



                                      By:  /s/  Vincent L. Sadusky
                                           ------------------------------
Dated:  November 14, 2001                  Vincent L. Sadusky
                                           Chief Financial Officer and Treasurer

                                      18