================================================================================

                                    FORM 10-K
                           ___________________________

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
(Mark One)

     [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          FOR THE FISCAL YEAR ENDED

                                DECEMBER 31, 1996

                                       OR
     [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          FOR THE TRANSITION PERIOD FROM  ___________ TO ____________

                          Commission file number 0-6983

                              COMCAST CORPORATION
                            [GRAPHIC OMITTED - LOGO]

             (Exact name of registrant as specified in its charter)

            PENNSYLVANIA                                23-1709202
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
   incorporation or organization)

    1500 Market Street, Philadelphia, PA                19102-2148
  (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (215) 665-1700
                           ___________________________

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE
                           ___________________________

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
            Class A Common Stock, $1.00 par value
            Class A Special Common Stock, $1.00 par value
            3-3/8% / 5-1/2% Step-up Convertible Subordinated Debentures Due 2005
            1-1/8% Discount Convertible Subordinated Debentures Due 2007
                           ___________________________

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.
       Yes     __X__                                           No _____

                           ___________________________

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K.                                                            [   ]
                           ___________________________

As of February 1, 1997,  the aggregate  market value of the Class A Common Stock
and Class A Special  Common Stock held by  non-affiliates  of the Registrant was
$567.5 million and $5.091 billion, respectively.
                           ___________________________

As of February 1, 1997, there were 283,488,179  shares of Class A Special Common
Stock, 33,508,729 shares of Class A Common Stock and 8,786,250 shares of Class B
Common Stock outstanding.
                           ___________________________

                       DOCUMENTS INCORPORATED BY REFERENCE
Part III - The Registrant's definitive Proxy Statement for its Annual Meeting of
Shareholders presently scheduled to be held in June 1997.
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<PAGE>
                               COMCAST CORPORATION
                          1996 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I

Item 1    Business...........................................................1
Item 2    Properties........................................................21
Item 3    Legal Proceedings.................................................22
Item 4    Submission of Matters to a Vote of Security Holders...............22
Item 4A   Executive Officers of the Registrant..............................22

                                     PART II

Item 5    Market for the Registrant's Common Equity and
              Related Stockholder Matters...................................24
Item 6    Selected Financial Data...........................................25
Item 7    Management's Discussion and Analysis of
              Financial Condition and Results of Operations.................26
Item 8    Financial Statements and Supplementary Data.......................40
Item 9    Changes in and Disagreements with
              Accountants on Accounting and Financial Disclosure............72

                                    PART III

Item 10   Directors and Executive Officers of the Registrant................72
Item 11   Executive Compensation............................................72
Item 12   Security Ownership of Certain Beneficial
              Owners and Management.........................................72
Item 13   Certain Relationships and Related Transactions....................72

                                     PART IV

Item 14   Exhibits, Financial Statement Schedules and Reports
              on Form 8-K...................................................73
SIGNATURES..................................................................81
                           ___________________________

This Annual  Report on Form 10-K for the year ended  December 31,  1996,  at the
time of  filing  with the  Securities  and  Exchange  Commission,  modifies  and
supersedes  all prior  documents  filed pursuant to Sections 13, 14 and 15(d) of
the  Securities  Exchange Act of 1934 for purposes of any offers or sales of any
securities after the date of such filing pursuant to any Registration  Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference this Annual Report.

This  Annual  Report on Form  10-K  contains  forward  looking  statements  made
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform Act of 1995.  Readers are cautioned that such forward looking  statements
involve  risks and  uncertainties  which  could  significantly  affect  expected
results  in the  future  from  those  expressed  in  any  such  forward  looking
statements  made by, or on behalf of the  Company.  Certain  factors  that could
cause actual  results to differ  materially  include,  without  limitation,  the
effects of  legislative  and  regulatory  changes;  the  potential for increased
competition;  technological  changes; the need to generate substantial growth in
the subscriber base by successfully launching,  marketing and providing services
in  identified  markets;  pricing  pressures  which could affect  demand for the
Company's services; the Company's ability to expand its distribution; changes in
labor, programming, equipment and capital costs; the Company's continued ability
to  create  or  acquire  programming  and  products  that  customers  will  find
attractive;  future  acquisitions,   strategic  partnerships  and  divestitures;
general business and economic conditions;  and other risks detailed from time to
time in the Company's  periodic  reports filed with the  Securities and Exchange
Commission.
<PAGE>
                                     PART I

ITEM 1    BUSINESS

Comcast  Corporation and its subsidiaries (the "Company") is principally engaged
in  the   development,   management   and   operation   of  wired  and  wireless
telecommunications  and  the  provision  of  content  (see  "Description  of the
Company's Businesses").  The Company was organized in 1969 under the laws of the
Commonwealth of  Pennsylvania  and has its principal  executive  offices at 1500
Market Street, Philadelphia, Pennsylvania, 19102-2148, (215) 665-1700.

                  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

See Note 10 to the Company's  consolidated  financial statements for information
about the Company's operations by industry segment.

                        GENERAL DEVELOPMENTS OF BUSINESS

E! Entertainment

As of December 31, 1996, the Company owned a 10.4% interest in E!  Entertainment
Television, Inc. ("E! Entertainment"), an entertainment programming service that
currently is  distributed to more than 42 million  subscribers.  The Company has
the  right,  by virtue  of  various  agreements  among  the  shareholders  of E!
Entertainment, to purchase an additional 58.4% interest in E! Entertainment from
Time Warner,  Inc.  ("Time  Warner") for $321.1  million.  In January 1997,  the
Company and The Walt Disney Company ("Disney") entered into an agreement to form
a new  limited  liability  company  ("Newco")  that  will be owned  50.1% by the
Company  and 49.9% by  Disney.  Pursuant  to the  agreement,  the  Company  will
contribute  to Newco  its  10.4%  interest  in E!  Entertainment,  the  right to
exercise its option to purchase the Time Warner  interest and $132.3  million in
cash. Disney will contribute to Newco $188.8 million in cash. Newco will use the
cash contributed by the Company and Disney to purchase the Time Warner interest.
Following such purchase, Newco will own a 68.8% interest in E! Entertainment. To
fund the cash  portion of its  contribution,  the  Company  will  borrow  $132.3
million from Disney in the form of two 10-year, 7% notes. These transactions are
expected to close in the first quarter of 1997,  subject to regulatory  approval
and certain other conditions.

Scripps Cable

In November 1996, the Company acquired the cable television operations ("Scripps
Cable") of The E.W. Scripps Company in exchange for 93.048 million shares of the
Company's Class A Special Common Stock,  par value $1.00 per share (the "Class A
Special Common  Stock"),  valued at $1.552 billion (the "Scripps  Acquisition").
Scripps  Cable  passed more than 1.3 million  homes and served more than 800,000
subscribers  as of December 31,  1996,  with 60% of its  subscribers  located in
Sacramento, California and Chattanooga and Knoxville, Tennessee. The Company has
accounted  for the Scripps  Acquisition  under the  purchase  method and Scripps
Cable was consolidated with the Company effective November 1, 1996.

Comcast-Spectacor

In July 1996,  the  Company  completed  its  acquisition  (the  "Sports  Venture
Acquisition") of a 66% interest in the Philadelphia Flyers Limited  Partnership,
a Pennsylvania limited partnership  ("PFLP"),  the assets of which, after giving
effect to the Sports Venture Acquisition, consist of (i) the National Basketball
Association  ("NBA")  franchise  to  own  and  operate  the  Philadelphia  76ers
basketball  team and related  assets (the  "Sixers"),  (ii) the National  Hockey
League ("NHL") franchise to own and operate the Philadelphia  Flyers hockey team
and related assets,  and (iii) two adjacent arenas,  leasehold  interests in and
development  rights related to the land underlying the arenas and other adjacent
parcels  of  land  located  in  Philadelphia,  Pennsylvania  (collectively,  the
"Arenas").  Concurrent  with the completion of the Sports  Venture  Acquisition,
PFLP was renamed Comcast Spectacor, L.P. ("Comcast-Spectacor").

<PAGE>
The Sports Venture  Acquisition  was completed in two steps.  In April 1996, the
Company  purchased  the  Sixers  for $125.0  million  in cash plus  assumed  net
liabilities of $11.0 million through a partnership controlled by the Company. To
complete the Sports Venture  Acquisition,  in July 1996, the Company contributed
its interest in the Sixers,  exchanged  approximately  3.5 million shares of the
Company's  Class A Special Common Stock and 6,370 shares of the Company's  newly
issued 5% Series A Convertible Preferred Stock (the "Preferred Stock"), and paid
$15.0  million  in cash  for its  current  interest  in  Comcast-Spectacor.  The
remaining 34% interest in Comcast-Spectacor  is owned by a group,  including the
former majority owner of PFLP, who also manages Comcast-Spectacor. In connection
with the Sports Venture Acquisition,  Comcast-Spectacor  assumed the outstanding
liabilities  relating  to the  Sixers  and  the  Arenas,  including  a  mortgage
obligation of $155.0 million.  The Company accounts for its interest in Comcast-
Spectacor under the equity method.

Sprint Spectrum

The Company, Tele-Communications, Inc. ("TCI"), Cox Communications, Inc. ("Cox,"
and  together  with the  Company  and  TCI,  the  "Cable  Parents")  and  Sprint
Corporation ("Sprint," and together with the Cable Parents, the "Parents"),  and
certain subsidiaries of the Parents (the "Partner  Subsidiaries")  engage in the
wireless  communications business through a limited partnership known as "Sprint
Spectrum,"  a  development  stage  enterprise.  The  Company  owns 15% of Sprint
Spectrum and accounts for its  investment  in Sprint  Spectrum  under the equity
method.

Sprint  Spectrum  was  the  successful  bidder  for 29  personal  communications
services ("PCS") licenses in the auction conducted by the Federal Communications
Commission ("FCC") from December 1994 through mid-March 1995. The purchase price
for the  licenses was $2.11  billion,  all of which has been paid to the FCC. In
addition,  Sprint  Spectrum has invested,  and may continue to invest,  in other
entities that hold PCS licenses, may acquire PCS licenses in future FCC auctions
or from other license holders and may affiliate with other license holders.

The Partner  Subsidiaries  have committed to contribute  $4.2 billion in cash to
Sprint Spectrum through 1999, of which the Company's share is $630.0 million. Of
this  funding  requirement,  the  Company has made total cash  contributions  to
Sprint Spectrum of $452.8 million through  December 31, 1996 and issued a $105.0
million guaranty on a portion of Sprint Spectrum's outstanding debt. The Company
anticipates that Sprint  Spectrum's  capital  requirements over the next several
years will be  significant.  Requirements  in excess of  committed  capital  are
planned to be funded by Sprint Spectrum through external  financing,  including,
but not limited to, vendor financing,  bank financing and securities  offered to
the public. In August 1996, Sprint Spectrum sold $750.0 million principal amount
at maturity of Senior  Notes and Senior  Discount  Notes due in 2006 in a public
offering.  In October 1996, Sprint Spectrum closed three credit agreements which
provided $2.0 billion in bank  financing  and $3.1 billion in vendor  financing.
The timing of the Company's  remaining capital  contributions to Sprint Spectrum
is  dependent  upon a number of factors,  including  Sprint  Spectrum's  working
capital  requirements.  The Company  anticipates  funding its remaining  capital
commitments to Sprint Spectrum through its cash flows from operating activities,
its existing cash, cash equivalents,  short-term investments and lines of credit
or other external financing, or by a combination of these sources.

Repurchase Program

Concurrent with the announcement of the Scripps Acquisition in October 1995, the
Company  announced  that its Board of Directors  authorized a market  repurchase
program (the "Repurchase  Program")  pursuant to which the Company may purchase,
at such times and on such terms as it deems appropriate, up to $500.0 million of
its  outstanding  common  stock,  subject  to  certain  restrictions  and market
conditions.  During the years  ended  December  31,  1996 and 1995,  the Company
repurchased 10.5 million shares and 680,000 shares, respectively,  of its common
stock  for  aggregate   consideration  of  $180.0  million  and  $12.4  million,
respectively,  pursuant to the  Repurchase  Program.  During  January 1997,  the
Company  repurchased  an  additional  450,000  shares  of its  common  stock for
aggregate  consideration of $7.6 million.  The Repurchase Program will terminate
in May 1997.

As part of the Repurchase  Program,  the Company sold put options on 1.0 million
and 3.0  million  shares of its Class A Special  Common  Stock  during the years
ended December 31, 1996 and 1995, respectively. The put options give the holders
the right to require the Company to repurchase  such shares at specified  prices
on specific  dates in January  through March 1997. As of December 31, 1996,  the
Company has reclassified $69.6 million,  the amount it would be obligated to pay
to  repurchase  such shares upon  exercise  of the put  options,  to a temporary
equity account in its

                                      - 2 -
<PAGE>
consolidated balance sheet. The temporary equity related to these shares will be
reclassified to additional  capital in the first quarter of 1997 upon expiration
or settlement of the options.


                     DESCRIPTION OF THE COMPANY'S BUSINESSES

                            WIRED TELECOMMUNICATIONS

Wired telecommunications  includes cable and telecommunications  services in the
United States ("US") and the United Kingdom ("UK") (see "Cable  Communications -
Company's Systems" and "- UK Activities").  The Company also owns a 50% interest
in Garden  State  Cablevision  L.P.  ("Garden  State"),  a cable  communications
company  serving  portions  of  southern  New  Jersey,  and a 16.1%  interest in
Teleport  Communications  Group, Inc. ("TCGI"),  one of the largest  competitive
alternative access providers in the US in terms of route miles.

CABLE COMMUNICATIONS

General

A cable  communications  system receives  signals by means of special  antennae,
microwave relay systems,  earth stations and fiber optics.  The system amplifies
such signals,  provides locally  originated  programs and ancillary services and
distributes  programs to  subscribers  through a fiber  optic and coaxial  cable
system.

Cable  communications  systems  generally  offer  subscribers the signals of all
national  television  networks;  local and distant  independent,  specialty  and
educational  television stations;  satellite-delivered  non-broadcast  channels;
locally originated programs; educational programs; audio programming; electronic
retailing and public service announcements.  In addition,  each of the Company's
systems offer,  for an extra monthly charge,  one or more premium services ("Pay
Cable")  such  as  Home  Box  Office(R),  Cinemax(R),   Showtime(R),  The  Movie
Channel(TM)  and  Encore(R),   which   generally   offer,   without   commercial
interruption,  feature motion pictures, live and taped sporting events, concerts
and other special  features.  Substantially  all of the Company's  systems offer
pay-per-view  services,  which permit a subscriber to order, for a separate fee,
individual  feature motion pictures and special event programs.  The Company has
also started offering or is field testing other cable-based  services  including
cable   modems  (see   "Description   of  the   Company's   Businesses  -  Wired
Telecommunications - Online Services"), video games and data transfer.

Cable  communications  systems are  generally  constructed  and  operated  under
non-exclusive  franchises  granted by state or local  governmental  authorities.
Franchises  typically  contain  many  conditions,  such as time  limitations  on
commencement  or completion of  construction;  conditions of service,  including
number of channels,  types of  programming  and  provision  of free  services to
schools and other public  institutions;  and the  maintenance  of insurance  and
indemnity bonds. Cable franchises are subject to the Cable Communications Policy
Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer Protection and
Competition  Act of 1992 (the "1992 Cable Act," and together with the 1984 Cable
Act, the "Cable Acts") and the Telecommunications Act of 1996 (the "1996 Telecom
Act"),  as well as FCC,  state  and  local  regulations  (see  "Legislation  and
Regulation").

The  Company's  franchises  typically  provide for  periodic  payment of fees to
franchising  authorities  of 5% of  "revenues"  (as  defined  by each  franchise
agreement), which fees may be passed on to subscribers. Franchises are generally
non-transferable without the consent of the governmental authority.  Many of the
Company's  franchises  were  granted for an initial  term of 15 years.  Although
franchises  historically  have been  renewed and,  under the Cable Acts,  should
continue to be renewed for  companies  that have provided  adequate  service and
have complied generally with franchise terms, renewal may be more difficult as a
result  of the  1992  Cable  Act  and  may  include  less  favorable  terms  and
conditions.   Furthermore,  the  governmental  authority  may  choose  to  award
additional  franchises to competing companies at any time (see "Competition" and
"Legislation and Regulation").  In addition, under the 1996 Telecom Act, certain
providers  of  programming   services  may  be  exempt  from  local  franchising
requirements.

                                      - 3 -
<PAGE>
Company's Systems

The table  below  sets  forth a summary  of Homes  Passed  and Cable  Subscriber
information for the Company's domestic cable communications systems for the five
years ended December 31, 1996:

<TABLE>
<CAPTION>
                                                1996 (5)     1995           1994 (4)     1993       1992
                                                                         (In thousands)
<S>                                          <C>          <C>             <C>          <C>        <C>
Homes Passed (1)(3)                             6,975        5,570           5,491        4,211      4,154

Cable Subscribers (2)(3)                        4,280        3,407           3,307        2,648      2,583
---------------
<FN>
     (1)  A home is deemed "passed" if it can be connected to the distribution
          system without further extension of the transmission lines.
     (2)  A dwelling with one or more television sets connected to a system is
          counted as one Cable Subscriber.
     (3)  Consists of systems whose financial results are consolidated with
          those of the Company. Amounts do not include information for the
          Company's investment in Garden State or in other systems managed by
          the Company in which the Company has less than a 50% interest. As of
          December 31, 1996, total Homes Passed and Cable Subscribers for such
          entities were 331,000 and 227,000, respectively.
     (4)  In 1994, the Company acquired the US cable television operations of
          Maclean Hunter Limited.
     (5)  In 1996, the Company acquired Scripps Cable.
</FN>
</TABLE>

Revenue Sources

The Company's  cable  communications  systems  offer varying  levels of service,
depending primarily on their respective channel  capacities.  As of December 31,
1996, a majority of the  Company's  subscribers  were served by systems that had
the capacity to carry in excess of 60 channels.

Monthly  service and equipment rates and related charges vary in accordance with
the type of service  selected  by the  subscriber.  The  Company  may receive an
additional  monthly fee for Pay Cable service,  the charge for which varies with
the type and level of service selected by the subscriber. Additional charges are
often imposed for installation services, commercial subscribers,  program guides
and other  services.  The  Company  also  generates  revenue  from  pay-per-view
services,   advertising   sales  and  commissions  from  electronic   retailing.
Subscribers  typically  pay on a monthly  basis and  generally  may  discontinue
services at any time (see "Legislation and Regulation").

Programming and Suppliers

The Company  generally pays either a monthly fee per subscriber per channel or a
percentage of certain  revenues for programming.  Programming  costs increase in
the ordinary  course of the  Company's  business as a result of increases in the
number of subscribers, expansion of the number of channels provided to customers
and contractual rate increases from programming suppliers.

The Company seeks and secures  long-term  programming  contracts with suppliers,
some of which provide volume discount pricing  structures and/or offer marketing
support to the Company.  The Company  anticipates that future contract  renewals
will result in programming  costs  exceeding  current levels,  particularly  for
sports programming.

National  manufacturers  are the  primary  sources of  supplies,  equipment  and
materials  utilized in the  construction,  rebuild and upgrade of the  Company's
cable communications systems. Construction,  rebuild and upgrade costs for these
systems  have  increased  during  recent  years and are  expected to continue to
increase  as a result of the need to  construct  increasingly  complex  systems,
overall demand for labor and other factors.

The Company  anticipates  that its  programming  and  construction,  rebuild and
upgrade costs will be  significant in future  periods.  The amount of such costs
will depend on numerous factors, many of which are beyond the Company's control.
These factors  include the effects of competition,  whether a particular  system
has sufficient  capacity to handle new product offerings  including the offering
of communications services,  whether and to what extent the Company will be able
to recover its  investment  under FCC rate  guidelines  and other  factors,  and
whether

                                      - 4 -
<PAGE>
the Company  acquires  additional  systems in need of upgrading  or  rebuilding.
Increases in such costs may be significant to the Company's  financial position,
results of operations and liquidity.

UK Activities

The Company  beneficially owns a 25.7% equity interest and controls 77.6% of the
total  voting  power  of  Comcast  UK Cable  Partners  Limited,  a  consolidated
subsidiary of the Company ("Comcast UK Cable"). As of December 31, 1996, Comcast
UK Cable has equity  interests in four  operating  companies  (the "UK Operating
Companies"): Birmingham Cable Corporation Limited ("Birmingham Cable"), in which
Comcast UK Cable owns a 27.5% interest,  Cable London PLC ("Cable  London"),  in
which Comcast UK Cable owns a 50.0% interest,  Cambridge Holding Company Limited
("Cambridge  Cable"), in which Comcast UK Cable owns a 100.0% interest,  and two
companies   holding  the  franchises   for  Darlington  and  Teesside,   England
("Teesside"), in which Comcast UK Cable owns a 100.0% interest. The UK Operating
Companies   hold  exclusive   cable   television   licenses  and   non-exclusive
telecommunications licenses and provide integrated cable television, residential
telephony  and  business  telecommunications  services to  subscribers  in their
respective  franchise  areas.  When  build-out  of the UK  Operating  Companies'
systems is complete,  these  systems  will have the  potential to serve over 1.6
million homes and the businesses within their franchise areas.

Based on closed and announced transactions, it is apparent that the UK cable and
telecommunications industries are undergoing a significant consolidation,  which
trend the  Company  expects to continue  in the coming  months.  The Company has
engaged an investment  advisor to assist it in  evaluating  the current state of
the UK marketplace, the position of other participants and its alternatives with
respect to Comcast UK Cable.  There can be no  assurance  that the Company  will
take any action, or in what time frame any such action, if undertaken,  might be
accomplished.

UK Operating Companies' Systems

The  table  below  sets  forth  Homes  Passed,  Telephony  Subscriber  and Cable
Subscriber  information  for the UK Operating  Companies'  cable  communications
systems for the five years ended December 31, 1996:

<TABLE>
<CAPTION>
                                                1996         1995           1994         1993       1992
                                                                         (In thousands)
<S>                                             <C>          <C>             <C>          <C>        <C>
Homes Passed (1) (2)
Birmingham Cable                                  374          292             227          156        104
Cable London                                      312          246             171          121         78
Cambridge Cable                                   188          151             115           75         36
Teesside                                          100           40

Telephony Subscribers (2) (3)
Birmingham Cable                                  108           83              59           36         23
Cable London                                       60           41              32           18         12
Cambridge Cable                                    58           44              34           12
Teesside                                           50           20

Cable Subscribers (2) (4)
Birmingham Cable                                  111           88              73           55         35
Cable London                                       67           52              42           30         20
Cambridge Cable                                    45           36              30           16          6
Teesside                                           30           14
<FN>
(1)  A home is deemed "passed" if it can be connected to the distribution system
     without further extension of the transmission lines.
(2)  Homes Passed, Telephony Subscribers and Cable Subscribers have not been
     adjusted for the Company's proportionate ownership interests in the
     respective UK Operating Companies.
(3)  A dwelling with one or more telephone lines connected to a system is
     counted as one Telephony Subscriber.
(4)  A dwelling with one or more television sets connected to a system is
     counted as one Cable Subscriber.
</FN>
</TABLE>

                                      - 5 -
<PAGE>
Competition

Cable  communications  systems  face  competition  from  alternative  methods of
receiving and  distributing  television  signals and from other sources of news,
information and entertainment such as off-air television broadcast  programming,
newspapers,  movie theaters,  live sporting events,  interactive online computer
services and home video products,  including videotape cassette  recorders.  The
extent to which a cable  communications  system is competitive depends, in part,
upon the cable system's ability to provide,  at a reasonable price to consumers,
a greater  variety of  programming  and other  communications  services than are
available   off-air  or  through  other   alternative   delivery   sources  (see
"Legislation  and  Regulation")  and upon  superior  technical  performance  and
customer service.

The 1996  Telecom  Act makes it easier for local  exchange  telephone  companies
("LECs") and others to provide a wide variety of video services competitive with
services  provided by cable  systems and to provide cable  services  directly to
subscribers (see  "Legislation and Regulation - The 1996 Telecom Act").  Various
LECs currently are providing  video services  within and outside their telephone
service  areas through a variety of  distribution  methods,  including  both the
deployment of broadband  wire  facilities  and the use of wireless  transmission
facilities.  Cable systems could be placed at a competitive  disadvantage if the
delivery  of  video  services  by LECs  becomes  widespread  since  LECs are not
required,  under certain  circumstances,  to obtain local  franchises to deliver
such video  services or to comply with the variety of  obligations  imposed upon
cable systems under such franchises (see "Legislation and  Regulation").  Issues
of  cross-subsidization  by LECs of  video  and  telephony  services  also  pose
strategic  disadvantages  for cable operators seeking to compete with LECs which
provide video services.  The Company cannot predict the likelihood of success of
video service  ventures by LECs or the impact on the Company of such competitive
ventures.

Cable communications systems generally operate pursuant to franchises granted on
a non-exclusive basis. The 1992 Cable Act prohibits franchising authorities from
unreasonably denying requests for additional  franchises and permits franchising
authorities  to  operate  cable  systems  (see  "Legislation  and  Regulation").
Well-financed  businesses  from  outside  the  cable  industry  (such as  public
utilities  that own certain of the poles on which cable is attached)  may become
competitors for franchises or providers of competing  services (see "Legislation
and  Regulation - The 1996 Telecom Act").  Competition  from other video service
providers  exists  in the areas  served by the  Company.  In  addition,  LECs in
various  states  either  have   announced   plans,   obtained  local   franchise
authorizations   or  are   currently   competing   with  the   Company's   cable
communications systems in various areas.

The  availability  of  reasonably-priced  home  satellite  dish  earth  stations
("HSDs")    enables    individual    households   to   receive   many   of   the
satellite-delivered   program   services   formerly   available  only  to  cable
subscribers.  Furthermore, the 1992 Cable Act contains provisions, which the FCC
has implemented with regulations, to enhance the ability of cable competitors to
purchase and make  available  to HSD owners  certain  satellite-delivered  cable
programming  at  competitive  costs.  The 1996  Telecom Act and FCC  regulations
implementing that law preempt certain local  restrictions on the use of HSDs and
roof-top antennae to receive satellite programming and over-the-air broadcasting
services (see "Legislation and Regulation - The 1996 Telecom Act").

Cable  operators  face  additional  competition  from private  satellite  master
antenna  television  ("SMATV")  systems that serve  condominiums,  apartment and
office  complexes  and private  residential  developments.  The 1996 Telecom Act
broadens  the  definition  of SMATV  systems  not  subject  to  regulation  as a
franchised  cable  communications  service.  SMATV  systems  offer both improved
reception of local television stations and many of the same  satellite-delivered
programming services offered by franchised cable communications  systems.  SMATV
operators  often  enter  into  exclusive  agreements  with  building  owners  or
homeowners'  associations,  although  some states have  enacted  laws to provide
franchised  cable systems access to such private  complexes,  and the 1984 Cable
Act gives a  franchised  cable  operator  the right to use  existing  compatible
easements within its franchise area under certain circumstances. These laws have
been challenged in the courts with varying results. In addition,  some companies
are developing and/or offering packages of telephony, data and video services to
these  private  residential  and  commercial  developments.  The  ability of the
Company to compete for  subscribers in residential  and commercial  developments
served by SMATV operators is uncertain.

The FCC and Congress have adopted policies providing a more favorable  operating
environment  for  new and  existing  technologies  that  provide,  or  have  the
potential  to  provide,   substantial   competition  to  cable  systems.   These
technologies  include,  among others,  the direct  broadcast  satellite  ("DBS")
service  whereby  signals are  transmitted by satellite to receiving  facilities
located on customer premises.  Programming is currently  available to the owners
of HSDs  through  conventional,  medium and  high-powered  satellites.  In 1990,
Primestar Partners, L.P. ("Primestar"),

                                      - 6 -
<PAGE>
a consortium comprised of cable operators, including the Company and a satellite
company, commenced operation of a medium-power DBS satellite system using the Ku
portion of the frequency  spectrum and currently  provides service consisting of
approximately  95  channels  of  programming,  including  broadcast  signals and
pay-per-view services (see "Wireless  Telecommunications - DBS Operations").  In
January 1997, Primestar launched a replacement  medium-power DBS satellite which
will enable it to  increase  its  capacity to  approximately  160  channels.  In
addition,  through  one of its  owners  which  is  also a  Primestar  affiliate,
Primestar  has  obtained  the right to provide  service  over a  high-power  DBS
satellite and, using video  compression  technology,  intends initially to offer
approximately 70 channels of video  programming in the future.  This programming
is intended to be offered to existing cable  subscribers as an addition to their
cable service. DirecTV, which includes AT&T Corp. as an investor, began offering
nationwide  high-power DBS service in 1994  accompanied  by extensive  marketing
efforts.  Several  other  major  companies,  including  EchoStar  Communications
Corporation  ("EchoStar")  and  American  Sky  Broadcasting  ("ASkyB"),  a joint
venture between MCI  Telecommunications  Corporation and News Corp.,  have begun
offering or are  currently  developing  high-power  DBS  services.  EchoStar has
already commenced its domestic DBS service and offers approximately 120 channels
of video  programming.  ASkyB is constructing  satellites that reportedly,  when
operational,  will provide  approximately 200 channels of DBS service in the US.
The recently  announced  plans of News Corp. to purchase an interest in EchoStar
may,  if  consummated,  create a more  significant  competitor  to cable and DBS
service providers, including the Company.

DBS systems are  expected to use video  compression  technology  to increase the
channel  capacity of their  systems to provide  movies,  broadcast  stations and
other program services  comparable to those of cable systems.  Digital satellite
service  ("DSS")  offered by DBS systems  currently has certain  advantages over
cable systems with respect to programming  capacity and digital quality, as well
as certain current  disadvantages  that include high up-front customer equipment
costs and a lack of local programming, local service and equipment distribution.
While DSS  presents a  competitive  threat to cable,  the Company  currently  is
increasing  channel  capacity  in many of its systems  and  upgrading  its local
customer service and technical support.  The Company is currently in the process
of implementing ten regional  customer service call centers.  As of December 31,
1996, three of these call centers were in operation, servicing more than 950,000
subscribers.  These  upgrades  will enable the Company to introduce  new premium
channels,  pay-per-view  programming,  interactive  computer-based  services and
other communications services in order to enhance its ability to compete.

Cable  communications  systems also compete with wireless  program  distribution
services such as multichannel,  multipoint  distribution  service ("MMDS") which
use low-power microwave  frequencies to transmit video programming  over-the-air
to  subscribers.  There are MMDS  operators who are authorized to provide or are
providing broadcast and satellite  programming to subscribers in areas served by
the Company's cable systems.  Several Regional Bell Operating Companies ("BOCs")
have acquired significant interests in major MMDS companies operating in certain
of the  Company's  cable service  areas.  Recent  public  announcements  by Bell
Atlantic Corporation ("Bell Atlantic"),  a BOC operating in the northeastern US,
indicate  that  plans  to  compete  with  the  Company  through  the use of MMDS
technology  may  be  revised.   Additionally,   the  FCC  recently  adopted  new
regulations  allocating  frequencies  in the 28-GHz band for a new  multichannel
wireless video service similar to MMDS. The Company is unable to predict whether
wireless video services will have a material impact on its operations.

Other  new  technologies,   including   internet-based   services,   may  become
competitive with services that cable  communications  systems can offer. The FCC
has authorized  television  broadcast  stations to transmit  textual and graphic
information  useful  both to  consumers  and  businesses.  The FCC also  permits
commercial and non-commercial FM stations to use their subcarrier frequencies to
provide non-broadcast services including data transmissions. The FCC established
an  over-the-air  Interactive  Video and Data Service  that will permit  two-way
interaction with commercial and educational programming along with informational
and data services.  LECs and other common  carriers also provide  facilities for
the  transmission  and  distribution  to homes  and  businesses  of  interactive
computer-based  services,  including  the  Internet,  as well as data and  other
non-video  services.  The FCC has  conducted  spectrum  auctions for licenses to
provide PCS. PCS will enable license  holders,  including  cable  operators,  to
provide  voice and data services (see  "Wireless  Telecommunications  - Cellular
Telephone Communications - Competition").

Advances in communications  technology as well as changes in the marketplace and
the regulatory and legislative environment are constantly occurring. Thus, it is
not  possible to predict the effect that  ongoing or future  developments  might
have on the cable communications industry or on the operations of the Company.

                                      - 7 -
<PAGE>
Legislation and Regulation

The Cable Acts and the 1996 Telecom Act amended the  Communications  Act of 1934
(as amended,  the  "Communications  Act") and  established a national  policy to
guide  the  development  and  regulation  of cable  systems.  The FCC and  state
regulatory  agencies are required to conduct numerous  rulemaking and regulatory
proceedings  to  implement  the  1996  Telecom  Act,  and such  proceedings  may
materially affect the cable communications  industry. The following is a summary
of federal laws and regulations materially affecting the growth and operation of
the cable  communications  industry and a description of certain state and local
laws.

The 1996 Telecom Act. The 1996 Telecom Act, the most comprehensive reform of the
nation's  telecommunications laws since the Communications Act, became effective
in  February  1996.  Although  the  long-term  goal  of this  act is to  promote
competition and decrease regulation of these industries, in the short-term,  the
law  delegates  to the FCC (and in some cases the states)  broad new  rulemaking
authority.  The 1996 Telecom Act deregulates rates for cable programming service
tiers ("CPSTs") in March 1999 for large Multiple System Operators ("MSOs"), such
as the Company,  and immediately for certain small operators.  Deregulation will
occur sooner for systems in markets where comparable video services,  other than
DBS, are offered by the LECs, or their affiliates, or by third parties utilizing
the LECs' facilities or where "effective  competition" is established  under the
1992 Cable Act. The 1996 Telecom Act also  modifies the uniform rate  provisions
of the 1992 Cable Act by prohibiting regulation of non-predatory,  bulk discount
rates offered to  subscribers  in commercial and  residential  developments  and
permits  regulated  equipment rates to be computed by aggregating costs of broad
categories of equipment at the franchise, system, regional or company level. The
1996 Telecom Act  eliminates  the right of individual  subscribers  to file rate
complaints with the FCC concerning certain CPSTs and requires the FCC to issue a
final order within 90 days after  receipt of CPST rate  complaints  filed by any
franchising authority. The 1996 Telecom Act also modifies the existing statutory
provisions governing cable system technical standards,  equipment compatibility,
subscriber notice requirements and program access,  permits certain operators to
include losses  incurred prior to September 1992 in setting  regulated rates and
repeals the three-year  anti-trafficking  prohibition  adopted in the 1992 Cable
Act. FCC  regulations  implementing  the 1996 Telecom Act preempt  certain local
restrictions  on  satellite  and   over-the-air   antenna   reception  of  video
programming services, including zoning, land-use or building regulations, or any
private  covenant,  homeowners'  association  rule  or  similar  restriction  on
property within the exclusive use or control of the antenna user.

The 1996 Telecom Act  eliminates the  requirement  that LECs obtain FCC approval
under Section 214 of the  Communications  Act before providing video services in
their telephone service areas and removes the statutory telephone  company/cable
television  cross-ownership  prohibition,  thereby  allowing LECs to offer video
services  in  their  telephone  service  areas.  LECs  may  provide  service  as
traditional  cable  operators  with local  franchises or they may opt to provide
their  programming over  unfranchised  "open video systems,"  subject to certain
conditions,  including,  but not  limited to,  setting  aside a portion of their
channel  capacity for use by unaffiliated  program  distributors  and satisfying
certain other requirements.  Under limited  circumstances,  cable operators also
may elect to offer  services  through open video  systems.  The 1996 Telecom Act
also prohibits a LEC from  acquiring a cable  operator in its telephone  service
area except in limited  circumstances.  The 1996 Telecom Act removes barriers to
entry in the local telephone  exchange market by preempting state and local laws
that restrict competition and by requiring all LECs to provide nondiscriminatory
access and  interconnection to potential  competitors,  such as cable operators,
wireless telecommunications providers and long distance companies (see "Wireless
Telecommunications   Cellular   Telephone   Communications   -  Legislation  and
Regulation").

The 1996 Telecom Act also contains  provisions  regulating  the content of video
programming and computer services.  Specifically,  the new law prohibits the use
of computer services to transmit "indecent" material to minors.  Several special
three-judge   federal  district  courts  have  issued  preliminary   injunctions
enjoining the enforcement of these provisions as  unconstitutional to the extent
they  regulate  the  transmission  of indecent  material.  The US Supreme  Court
recently  announced that it would review one of these  decisions.  In accordance
with the 1996 Telecom Act, the television  industry recently adopted a voluntary
ratings system for violent and indecent video programming.  The 1996 Telecom Act
also requires all new television sets to contain a so-called "V-chip" capable of
blocking all programs with a given rating.

Rate  Regulation.  The 1992  Cable  Act  authorized  rate  regulation  for cable
communications  services and  equipment in  communities  that are not subject to
"effective  competition,"  as defined by federal law. Most cable  communications
systems are now subject to rate regulation for basic cable service and equipment
by local officials under the oversight of the FCC, which has prescribed detailed
criteria for such rate regulation. The 1992 Cable Act also requires the FCC

                                      - 8 -
<PAGE>
to resolve complaints about rates for CPSTs (other than programming offered on a
per  channel or per  program  basis,  which  programming  is not subject to rate
regulation)  and to reduce any such  rates  found to be  unreasonable.  The 1996
Telecom Act provides for rate deregulation of CPSTs by March 1999 (see "The 1996
Telecom Act").

FCC regulations, which became effective in September 1993, govern rates that may
be charged to subscribers  for basic cable service and certain CPSTs  (together,
the "Regulated Services"). The FCC uses a benchmark methodology as the principal
method of regulating  rates for  Regulated  Services.  Cable  operators are also
permitted to justify rates using a  cost-of-service  methodology.  In 1994,  the
FCC's benchmark  regulations required operators to implement rate reductions for
Regulated  Services  of up to 17% of the  rates for such  services  in effect on
September 30, 1992, adjusted for inflation, programming modifications, equipment
costs and  increases  in certain  operating  costs.  In July 1994,  the  Company
reduced  rates for  Regulated  Services in the majority of its cable  systems to
comply with the FCC's  regulations.  The FCC has also adopted  comprehensive and
restrictive  regulations allowing operators to modify their regulated rates on a
quarterly or annual basis using various  methodologies  that account for changes
in the number of regulated channels, inflation and increases in certain external
costs,   such  as  franchise  and  other   governmental   fees,   copyright  and
retransmission  consent fees,  taxes,  programming  fees and  franchise  related
obligations. The Company cannot predict whether the FCC will modify these "going
forward" regulations in the future.

Franchising  authorities  are  empowered  to  regulate  the  rates  charged  for
additional outlets and for the installation, lease and sale of equipment used by
subscribers to receive the basic cable service tier, such as converter boxes and
remote  control  units.  The FCC's  rules  require  franchising  authorities  to
regulate  these rates on the basis of actual cost plus a reasonable  profit,  as
defined by the FCC.

Cable  operators  required  to  reduce  rates  may also be  required  to  refund
overcharges  with interest.  Rate  reductions will not be required where a cable
operator  can  demonstrate  that  existing  rates  for  Regulated  Services  are
reasonable using the FCC's cost-of-service rate regulations which require, among
other  things,  the  exclusion  of 34% of system  acquisition  costs  related to
intangible and tangible  assets used to provide  Regulated  Services.  The FCC's
cost-of-service regulations contain a rebuttable presumption of an industry-wide
11.25% after tax rate of return on an operator's  allowable  rate base,  but the
FCC has initiated a further rulemaking in which it proposes to use an operator's
actual  debt cost and capital  structure  to  determine  an  operator's  cost of
capital or rate of return.

The Company has settled the majority of outstanding  proceedings challenging its
rates charged for regulated cable services. In December 1995, the FCC adopted an
order approving a negotiated  settlement of rate complaints  pending against the
Company for CPSTs which provided $6.6 million in refunds,  plus interest,  given
in the form of bill credits  during 1996, to 1.3 million of the Company's  cable
subscribers.  As part of the negotiated settlement, the Company agreed to forego
certain  inflation  and external  cost  adjustments  for systems  covered by its
cost-of-service  filings for CPSTs. The Company  currently is seeking to justify
rates for basic cable  services and equipment in certain of its cable systems in
the State of Connecticut on the basis of a cost-of-service showing. The State of
Connecticut  has ordered the Company to reduce such rates and to make refunds to
subscribers.  The  Company has  appealed  the  Connecticut  decision to the FCC.
Recent  pronouncements  from the FCC,  which  generally  support  the  Company's
position on appeal,  have caused the State of Connecticut to reexamine its prior
ruling. While the Company cannot predict the outcome of this action, the Company
believes that the ultimate  resolution of these pending  regulatory matters will
not have a material adverse impact on the Company's financial position,  results
of operations or liquidity.

"Anti-Buy  Through"  Provisions.  The 1992 Cable Act requires  cable  systems to
permit  subscribers to purchase video  programming  offered by the operator on a
per channel or a per program basis without the necessity of  subscribing  to any
tier of service,  other than the basic cable service  tier,  unless the system's
lack of addressable converter boxes or other technological  limitations does not
permit it to do so. The  statutory  exemption for cable systems that do not have
the technological  capability to offer programming in the manner required by the
statute is available until a system obtains such capability,  but not later than
December 2002. The FCC may waive such time periods, if deemed necessary. Many of
the  Company's  systems  do not  have  the  technological  capability  to  offer
programming in the manner  required by the statute and thus currently are exempt
from complying with the requirement.

Must Carry/Retransmission  Consent. The 1992 Cable Act contains broadcast signal
carriage  requirements that allow local commercial television broadcast stations
to elect once every three years to require a cable  system to carry the station,
subject to certain exceptions,  or to negotiate for "retransmission  consent" to
carry the station. A cable system

                                      - 9 -
<PAGE>
generally  is  required  to  devote up to  one-third  of its  activated  channel
capacity  for the  carriage  of local  commercial  television  stations  whether
pursuant to the mandatory carriage or retransmission consent requirements of the
1992  Cable  Act.  Local  non-commercial  television  stations  are  also  given
mandatory  carriage rights;  however,  such stations are not given the option to
negotiate  retransmission  consent for the  carriage  of their  signals by cable
systems.  Additionally,  cable  systems are  required  to obtain  retransmission
consent for all "distant" commercial  television stations (except for commercial
satellite-delivered  independent "superstations" such as WTBS), commercial radio
stations and certain low-power television stations carried by such systems after
October  1993.  The US Supreme Court is currently  reviewing the  constitutional
validity of the 1992 Cable Act's  mandatory  signal carriage  requirements.  The
Company cannot predict the ultimate outcome of this  litigation.  Pending action
by the US Supreme Court, the mandatory  broadcast  signal carriage  requirements
remain in effect.

Designated Channels.  The Communications Act permits franchising  authorities to
require cable  operators to set aside certain  channels for public,  educational
and governmental  access  programming.  The 1984 Cable Act also requires a cable
system with 36 or more  channels to designate a portion of its channel  capacity
for commercial  leased access by third parties to provide  programming  that may
compete with services  offered by the cable operator.  The FCC has adopted rules
regulating:  (i) the maximum  reasonable  rate a cable  operator  may charge for
commercial use of the designated channel capacity; (ii) the terms and conditions
for commercial use of such channels;  and (iii) the procedures for the expedited
resolution  of disputes  concerning  rates or commercial  use of the  designated
channel capacity. The US Supreme Court recently held parts of the 1992 Cable Act
regulating   "indecent"   programming   on   local   access   channels   to   be
unconstitutional,  but upheld the statutory right of cable operators to prohibit
or limit the provision of  "indecent"  programming  on commercial  leased access
channels.

Franchise  Procedures.  The 1984  Cable Act  affirms  the  right of  franchising
authorities (state or local,  depending on the practice in individual states) to
award  one  or  more  franchises   within  their   jurisdictions  and  prohibits
non-grandfathered  cable  systems  from  operating  without a franchise  in such
jurisdictions.  The 1992 Cable Act  encourages  competition  with existing cable
systems  by (i)  allowing  municipalities  to  operate  their own cable  systems
without  franchises;  (ii)  preventing  franchising  authorities  from  granting
exclusive   franchises  or  from  unreasonably   refusing  to  award  additional
franchises   covering  an  existing  cable  system's  service  area;  and  (iii)
prohibiting (with limited  exceptions) the common ownership of cable systems and
co-located  MMDS or  SMATV  systems.  In  January,  1995,  the FCC  relaxed  its
restrictions on ownership of SMATV systems to permit a cable operator to acquire
SMATV  systems  in  the  operator's  existing  franchise  area  so  long  as the
programming  services provided through the SMATV system are offered according to
the terms and conditions of the cable operator's local franchise agreement.  The
1996 Telecom Act provides that the  cable/SMATV  and cable/MMDS  cross-ownership
rules do not apply in any  franchise  area where the operator  faces  "effective
competition" as defined by federal law.

The Cable Acts also  provide  that in  granting or  renewing  franchises,  local
authorities  may  establish   requirements  for  cable-related   facilities  and
equipment,  but not for video programming or information  services other than in
broad  categories.  The Cable Acts limit the payment of franchise  fees to 5% of
revenues  derived from cable  operations and permit the cable operator to obtain
modification of franchise  requirements  by the franchise  authority or judicial
action if warranted by changed circumstances. The Company's franchises typically
provide  for  periodic  payment  of fees  to  franchising  authorities  of 5% of
"revenues" (as defined by each franchise agreement), which fees may be passed on
to subscribers. The 1996 Telecom Act generally prohibits franchising authorities
from (i) imposing  requirements in the cable  franchising  process that require,
prohibit  or  restrict  the  provision  of  telecommunications  services  by  an
operator,  (ii) imposing franchise fees on revenues derived by the operator from
providing   telecommunications   services  over  its  cable  system,   or  (iii)
restricting  an  operator's   use  of  any  type  of  subscriber   equipment  or
transmission technology.

The 1984 Cable Act contains  renewal  procedures  designed to protect  incumbent
franchisees  against  arbitrary  denials  of  renewal.  The 1992  Cable Act made
several  changes  to the  renewal  process  which  could  make it  easier  for a
franchising  authority  to deny  renewal.  Moreover,  even if the  franchise  is
renewed,  the  franchising  authority  may seek to impose  new and more  onerous
requirements  such  as  significant  upgrades  in  facilities  and  services  or
increased franchise fees as a condition of renewal.  Similarly, if a franchising
authority's  consent is required  for the  purchase or sale of a cable system or
franchise,  such  authority  may  attempt to impose more  burdensome  or onerous
franchise   requirements   in  connection  with  a  request  for  such  consent.
Historically,  franchises  have  been  renewed  for  cable  operators  that have
provided  satisfactory  services  and  have  complied  with  the  terms of their
franchises.  The Company  believes  that it has  generally  met the terms of its
franchises  and has provided  quality  levels of service.  As such,  the Company
anticipates  that its  future  franchise  renewal  prospects  generally  will be
favorable.
                                     - 10 -
<PAGE>
Various courts have considered  whether  franchising  authorities have the legal
right to limit franchise awards to a single cable operator and to impose certain
substantive franchise requirements (e.g. access channels,  universal service and
other technical  requirements).  These decisions have been somewhat inconsistent
and,  until  the US  Supreme  Court  rules  definitively  on the  scope of cable
operators' First Amendment protections,  the legality of the franchising process
generally and of various  specific  franchise  requirements is likely to be in a
state of flux.

Ownership  Limitations.  Pursuant to the 1992 Cable Act,  the FCC adopted  rules
prescribing national subscriber limits and limits on the number of channels that
can be occupied on a cable  system by a video  programmer  in which the operator
has  an  attributable  interest.  The  effectiveness  of  these  FCC  horizontal
ownership  limits has been  stayed  because a federal  district  court found the
statutory limitation to be unconstitutional. An appeal of that decision has been
consolidated   with  appeals   challenging   the  FCC's   regulatory   ownership
restrictions  and is pending.  The 1996  Telecom Act  eliminates  the  statutory
prohibition on the common ownership,  operation or control of a cable system and
a television  broadcast  station in the same service area and directs the FCC to
review its  broadcast-cable  ownership  restrictions  to  determine  if they are
necessary  in the public  interest.  Pursuant to the mandate of the 1996 Telecom
Act, the FCC eliminated its regulatory  restriction on  cross-ownership of cable
systems and national broadcasting networks.

LEC Ownership of Cable Systems.  The 1996 Telecom Act makes far-reaching changes
in the  regulation of LECs that provide cable  services.  The new law eliminates
federal  legal  barriers  to  competition  in  the  local  telephone  and  cable
communications   businesses,   preempts  legal  barriers  to  competition   that
previously  existed  in state and local  laws and  regulations,  and sets  basic
standards for relationships between telecommunications  providers (see "The 1996
Telecom Act"). The 1996 Telecom Act generally limits  acquisitions and prohibits
certain joint ventures between LECs and cable operators in the same market.  The
FCC adopted regulations  implementing the 1996 Telecom Act requirement that LECs
open  their   telephone   networks  to  competition  by  providing   competitors
interconnection,  access to unbundled  network  elements and retail  services at
wholesale rates.  Numerous parties have appealed these regulations.  The appeals
have been  consolidated  and will be reviewed by the US Court of Appeals for the
Eighth  Circuit,  which has  stayed  the  FCC's  pricing  and  nondiscrimination
regulations   (see   "Wireless    Telecommunications    -   Cellular   Telephone
Communications  - Legislation and  Regulation").  The ultimate  outcome of these
rulemakings,  and the  ultimate  impact  of the 1996  Telecom  Act or any  final
regulations  adopted  pursuant to the new law on the  Company or its  businesses
cannot be determined at this time.

Pole Attachment.  The Communications Act requires the FCC to regulate the rates,
terms and  conditions  imposed by public  utilities  for cable  systems'  use of
utility pole and conduit space unless state  authorities  can  demonstrate  that
they adequately regulate pole attachment rates, as is the case in certain states
in which the  Company  operates.  In the  absence of state  regulation,  the FCC
administers  pole attachment  rates on a formula basis.  In some cases,  utility
companies  have  increased  pole  attachment  fees for cable  systems  that have
installed fiber optic cables and that are using such cables for the distribution
of  non-video  services.  The  FCC  concluded  that,  in the  absence  of  state
regulation,  it has  jurisdiction to determine  whether  utility  companies have
justified  their demand for additional  rental fees and that the  Communications
Act does not permit  disparate rates based on the type of service  provided over
the equipment attached to the utility's pole. The 1996 Telecom Act and the FCC's
implementing  regulations  modify the current pole attachment  provisions of the
Communications   Act   by   immediately    permitting   certain   providers   of
telecommunications  services to rely upon the protections of the current law and
by  requiring  that  utilities  provide  cable  systems  and  telecommunications
carriers  with  nondiscriminatory  access to any pole,  conduit or  right-of-way
controlled  by the utility.  Additionally,  within two years of enactment of the
1996  Telecom Act,  the FCC is required to adopt new  regulations  to govern the
charges for pole  attachments  used by  companies  providing  telecommunications
services,  including cable operators. These new pole attachment rate regulations
will become  effective  five years after  enactment of the 1996 Telecom Act, and
any increase in attachment  rates resulting from the FCC's new regulations  will
be phased in equal annual  increments  over a period of five years  beginning on
the effective date of the new FCC regulations.

Other  Statutory  Provisions.  The 1992 Cable Act,  the 1996 Telecom Act and FCC
regulations  preclude any satellite  video  programmer  affiliated  with a cable
company,  or with a common carrier providing video  programming  directly to its
subscribers,  from favoring an affiliated  company over competitors and requires
such  programmers  to  sell  their  programming  to  other   multichannel  video
distributors. These provisions limit the ability of program suppliers affiliated
with cable companies or with common carriers providing satellite delivered video
programming  directly  to  their  subscribers  to  offer  exclusive  programming
arrangements  to  their  affiliates.   The   Communications  Act  also  includes
provisions,  among others, concerning horizontal and vertical ownership of cable
systems, customer service,

                                     - 11 -
<PAGE>
subscriber privacy, marketing practices,  equal employment opportunity,  obscene
or  indecent  programming,  regulation  of  technical  standards  and  equipment
compatibility.

Other FCC Regulations.  The FCC has numerous rulemaking proceedings pending that
will implement  various  provisions of the 1996 Telecom Act; it also has adopted
regulations  implementing  various provisions of the 1992 Cable Act and the 1996
Telecom  Act that are the subject of  petitions  requesting  reconsideration  of
various  aspects  of  its  rulemaking  proceedings.   In  addition  to  the  FCC
regulations noted above, there are other FCC regulations  covering such areas as
equal employment  opportunity,  syndicated program exclusivity,  network program
non-duplication,  registration of cable systems,  maintenance of various records
and public inspection files,  microwave frequency usage,  lockbox  availability,
origination  cablecasting  and  sponsorship  identification,  antenna  structure
notification,   marking  and  lighting,   carriage  of  local  sports  broadcast
programming, application of rules governing political broadcasts, limitations on
advertising  contained  in  non-broadcast   children's   programming,   consumer
protection and customer service, ownership of home wiring, indecent programming,
programmer access to cable systems, programming agreements, technical standards,
consumer electronics equipment compatibility and DBS implementation. The FCC has
the authority to enforce its  regulations  through the imposition of substantial
fines,  the issuance of cease and desist orders  and/or the  imposition of other
administrative  sanctions,  such as the  revocation  of FCC  licenses  needed to
operate  certain  transmission  facilities  often used in connection  with cable
operations.

Other bills and administrative proposals pertaining to cable communications have
previously  been  introduced  in Congress or  considered  by other  governmental
bodies over the past several years. It is probable that further attempts will be
made by Congress and other  governmental  bodies  relating to the  regulation of
communications services.

Copyright.  Cable  communications  systems  are  subject  to  federal  copyright
licensing  covering  carriage of  television  and radio  broadcast  signals.  In
exchange for filing  certain  reports and  contributing  a  percentage  of their
revenues to a federal copyright royalty pool, cable operators can obtain blanket
permission to retransmit  copyrighted  material on broadcast signals. The nature
and amount of future payments for broadcast  signal carriage cannot be predicted
at this time. The possible  simplification,  modification  or elimination of the
compulsory  copyright license is the subject of continuing  legislative  review.
The  elimination or substantial  modification  of the cable  compulsory  license
could adversely affect the Company's ability to obtain suitable  programming and
could substantially increase the cost of programming that remained available for
distribution  to the  Company's  subscribers.  The  Company  cannot  predict the
outcome of this legislative activity.

Cable operators distribute programming and advertising that use music controlled
by the two major  music  performing  rights  organizations,  ASCAP  and BMI.  In
October 1989,  the special rate court of the US District  Court for the Southern
District  of New York  imposed  interim  rates on the  cable  industry's  use of
ASCAP-controlled  music. The same federal district court recently  established a
special  rate court for BMI.  BMI and cable  industry  representatives  recently
concluded   negotiations  for  a  standard  licensing   agreement  covering  the
performance of BMI music contained in advertising and other information inserted
by operators into cable  programming and on certain local access and origination
channels  carried on cable systems.  The Company's  settlement  with BMI did not
have a  significant  impact on the  Company's  financial  position,  results  of
operations or liquidity.  ASCAP and cable industry  representatives  have met to
discuss   the   development   of  a  standard   licensing   agreement   covering
ASCAP-controlled music in local origination and access channels and pay-per-view
programming.  Although the Company cannot predict the ultimate  outcome of these
industry  negotiations  or the amount of any license  fees it may be required to
pay for past and future use of ASCAP-controlled  music, it does not believe such
license fees will be significant to the Company's financial position, results of
operations or liquidity.

State and Local  Regulation.  Because a cable  communications  system uses local
streets  and  rights-of-way,  cable  systems  are  subject  to state  and  local
regulation,   typically   imposed   through  the  franchising   process.   Cable
communications   systems   generally  are  operated  pursuant  to  non-exclusive
franchises,  permits or  licenses  granted by a  municipality  or other state or
local government entity. Franchises generally are granted for fixed terms and in
many  cases are  terminable  if the  franchisee  fails to comply  with  material
provisions.  The  terms  and  conditions  of  franchises  vary  materially  from
jurisdiction  to  jurisdiction.  Each franchise  generally  contains  provisions
governing  cable  service  rates,   franchise  fees,   franchise  term,   system
construction and maintenance  obligations,  system channel capacity,  design and
technical  performance,  customer service standards,  franchise renewal, sale or
transfer of the franchise,  territory of the franchisee,  indemnification of the
franchising  authority,  use and occupancy of public  streets and types of cable
services provided.  A number of states subject cable  communications  systems to
the  jurisdiction  of centralized  state  governmental  agencies,  some of which
impose regulation of a character similar to that of a public utility.

                                     - 12 -
<PAGE>
Attempts in other states to regulate cable communications systems are continuing
and can be  expected to  increase.  To date,  those  states in which the Company
operates  that have enacted such state level  regulation  are  Connecticut,  New
Jersey and Delaware.  State and local franchising jurisdiction is not unlimited,
however, and must be exercised consistently with federal law. The 1992 Cable Act
immunizes  franchising  authorities  from monetary  damage  awards  arising from
regulation of cable  systems or decisions  made on franchise  grants,  renewals,
transfers and amendments.

The  foregoing  does not purport to describe all present and  proposed  federal,
state, and local regulations and legislation affecting the cable industry. Other
existing federal regulations,  copyright licensing,  and, in many jurisdictions,
state and local  franchise  requirements,  are currently the subject of judicial
proceedings,  legislative  hearings  and  administrative  proposals  which could
change,  in varying degrees,  the manner in which cable  communications  systems
operate.  Neither the  outcome of these  proceedings  nor their  impact upon the
cable communications industry or the Company can be predicted at this time.

UK Regulation. The operation of a cable television/telephony system in the UK is
regulated under both the Broadcasting Act 1990 (the  "Broadcasting  Act") (which
replaced  the Cable and  Broadcasting  Act 1984  (the "UK Cable  Act"))  and the
Telecommunications  Act 1984 (the  "Telecommunications  Act"). The operator of a
cable/telephony  franchise  covering  over 1,000  homes must hold two  principal
licenses:  (i) a license (a "cable television license") issued in the past under
the UK Cable Act or since  1990 under the  Broadcasting  Act,  which  allows the
operator to provide cable television  services in the franchise area, and (ii) a
telecommunications license issued under the Telecommunications Act, which allows
the operator to operate and use the physical network  necessary to provide cable
television  and   telecommunications   services.   The  Independent   Television
Commission  ("ITC") is  responsible  for the licensing  and  regulation of cable
television.  The  Department of Trade and Industry  ("DTI") is  responsible  for
issuing,  and the Office of  Telecommunications  ("OFTEL")  is  responsible  for
regulating  the holders of, the  telecommunications  licenses.  In addition,  an
operator is required to hold a license under the Wire- less  Telegraphy  Acts of
1949-67 for the use of microwave distribution systems. Any system covering 1,000
homes or less requires a  telecommunications  license but not a cable television
license,  and a system that covers only one building or two  adjacent  buildings
can operate pursuant to an existing general telecommunications license.

The 1996 Broadcasting Act (the "1996 Act") became law in July 1996. The 1996 Act
amends the  Broadcasting Act and makes provision for the broadcasting in digital
form of television and sound program  services and  broadcasting in digital form
on television.  The 1996 Act also addresses rights to televise sporting or other
events of national interest.  In addition,  cable operators must comply with and
are  entitled to the  benefits of the New Roads and Street  Works Act 1991,  the
principal  benefit of which is to allow cable  operators  to "piggy  back" their
construction on that of local utilities. However, the aggressive build schedules
followed by the UK  Operating  Companies  make  waiting for local  utilities  to
undertake construction impractical.

The  cable  television  licenses  held by the  relevant  subsidiaries  of the UK
Operating Companies were issued under the UK Cable Act for 15-year periods.  The
majority of the UK Operating  Companies'  cable  television  licenses  have been
extended to run for 23 years and are scheduled to expire beginning in late 2012.
The  telecommunications  licenses held by these subsidiaries of the UK Operating
Companies are for 23-year periods and are scheduled to expire  beginning in late
2012.

ONLINE SERVICES

In December 1996, the Company began marketing high-speed cable modem services in
areas served by two of its cable systems. High-speed cable modems are capable of
providing access to online information,  including the Internet,  at much faster
speeds than that of conventional or Integrated  Service Digital Network ("ISDN")
modems.  In  August  1996,  the  Company  invested  in the At  Home  Corporation
("@Home"),  which  offers a  network  that  distributes  high-speed  interactive
content   over  the   cable   industry's   hybrid-fiber   coaxial   distribution
architecture.  The Company's  @Home package  includes a high-speed  cable modem;
24-hour-a-day  unlimited  access to the Internet;  electronic  mail and chat; an
Internet guide designed by @Home,  featuring a menu of local community  content,
in addition to the vast Internet  content already  available.  @Home is owned by
the Company,  TCI, Cox and Kleiner Perkins Caufield & Byers. The Company expects
to expand the marketing of such services in selected  cable systems during 1997.
The Company  anticipates  that  competition in the online  services area will be
significant.  Competitors in this area include LECs, long distance  carriers and
others, many of whom have more substantial resources than the Company.

                                     - 13 -
<PAGE>
                           WIRELESS TELECOMMUNICATIONS

The Company's wireless  telecommunications  operations  primarily consist of the
Company's  cellular  telephone  communications  operations.  The Company's other
wireless  telecommunications  businesses includes its DBS operations,  including
the Company's  investment in Primestar  (see "Wired  Telecommunications  - Cable
Communications - Competition"),  and its interest in Sprint Spectrum,  which has
acquired 29 PCS  licenses  and is in the  process of  developing  operations  to
provide  telecommunications  services (see "General  Developments  of Business -
Sprint  Spectrum").  A  subsidiary  of the  Company  also was the high bidder on
twelve  10-MHz PCS  licenses in an auction  conducted  by the FCC  completed  in
January  1997.  In  addition,   the  Company,   through  a  majority  owned  and
consolidated  subsidiary,  provides  directory  assistance and other information
services to users of wireless telephones in a number of domestic markets.

CELLULAR TELEPHONE COMMUNICATIONS

General

The Company is engaged in the development,  management and operation of cellular
telephone  communications  systems in various service areas pursuant to licenses
granted by the FCC.  Each service area is divided into  segments  referred to as
"cells"  equipped  with  a  receiver,   signaling   equipment  and  a  low-power
transmitter.  The use of low-power transmitters and the placement of cells close
to one another permits re-use of frequencies,  thus substantially increasing the
volume of calls capable of being handled  simultaneously over the number handled
by prior  generation  systems.  Each cell has a coverage area generally  ranging
from one to more than 300 square miles. A cellular telephone system includes one
or more  computerized  central  switching  facilities  known as mobile switching
centers ("MSC") which control the automatic transfer of calls,  coordinate calls
to  and  from  cellular  telephones  and  connect  calls  to  the  LEC  or to an
interexchange  carrier.  An MSC also  records  information  on system  usage and
subscriber statistics.

Each cell's  facilities  monitor the  strength of the signal  returned  from the
subscriber's  cellular  telephone.  When  the  signal  strength  declines  to  a
predetermined level and the transmission  strength is greater at another cell in
or interconnected  with the system,  the MSC  automatically and  instantaneously
passes  the  mobile   user's  call  in  progress  to  the  other  cell   without
disconnecting the call ("hand off"). Interconnection agreements between cellular
telephone system operators and various LECs and interexchange carriers establish
the  manner  in which  the  cellular  telephone  system  integrates  with  other
telecommunications systems.

As required by the FCC, all cellular  telephones are designed for  compatibility
with cellular systems in all markets within the US so that a cellular  telephone
may be used  wherever  cellular  service is available.  Each cellular  telephone
system in the US uses one of two groups of channels, termed "Block A" and "Block
B," which the FCC has  allotted  for  cellular  service.  Minor  adjustments  to
cellular  telephones  may be required to enable the  subscriber to change from a
cellular  system  on one  frequency  block to a  cellular  system  on the  other
frequency block.

While  most MSCs  process  information  digitally,  most radio  transmission  of
cellular  telephone  calls is done on an analog basis.  Digital  transmission of
cellular telephone calls offers advantages, including larger system capacity and
the potential for lower  incremental costs for additional  subscribers.  The FCC
allows  carriers to provide digital  service and requires  cellular  carriers to
provide analog service. The Company's implementation of digital radio technology
is expected to commence in 1997. It is anticipated that a substantial portion of
increased  capacity  for  subsequent  traffic  and  subscriber  growth  will  be
accommodated using the lower cost digital technology.

The Company provides services to its cellular telephone  subscribers  similar to
those provided by conventional  landline  telephone  systems,  including  custom
calling  features such as call  forwarding,  call waiting,  conference  calling,
directory assistance and voice mail. The Company is responsible for the quality,
pricing and packaging of cellular  telephone  service for each of the systems it
owns or controls.

Reciprocal  agreements  among cellular  telephone  system  operators allow their
respective  subscribers  ("roamers")  to place and receive calls in most service
areas throughout the country. Roamers are charged rates which are generally at a
premium to the regular  service rate. In recent  years,  cellular  carriers have
experienced increased fraud associated with roamer service, including Electronic
Serial Number ("ESN") cloning. The Company and other carriers have implemented a
number of features which have decreased the incidents of fraudulent use of their
systems. Among

                                     - 14 -
<PAGE>
these are Personal  Identification  Numbers  ("PINs"),  which are required to be
used by a majority of the Company's  customers,  and the Company's Security Zone
feature which restricts customer usage outside of the Company's service areas.

In  addition,  the Company has  implemented  authentication  and  radiofrequency
("RF")   fingerprinting   technologies   which   associate   ESN/mobile   number
combinations with particular  cellular telephone units. The use of digital radio
technology  also  purportedly  will make it more  difficult  to commit  cellular
fraud.  However,  fraudulent use of the Company's  systems remains a significant
concern.

Company's Systems

The table below sets forth summary  information  regarding the total  population
("Pops")  in  the  markets  served  by the  Company's  systems  by  Metropolitan
Statistical  Area ("MSA") and Rural Service Area ("RSA") as of December 31, 1996
(in thousands):
<TABLE>
<CAPTION>
      Market                            Ownership         Pops (1)            Net Pops
<S>                                        <C>               <C>                 <C>
MSAs:
Atlantic City, NJ                            97%               333                 323
Aurora-Elgin, IL                             82%                48                  39
Joliet, IL                                   84%                36                  30
Long Branch, NJ                             100%               591                 591
New Brunswick, NJ                           100%               703                 703
Philadelphia, PA                            100%             4,894               4,894
Trenton, NJ                                  85%               331                 281
Vineland, NJ                                 95%               139                 132
Wilmington, DE                              100%               618                 618
                                                             -----               -----

                                                             7,693               7,611
                                                             -----               -----

RSAs:
Ocean County, NJ                            100%               471                 471
Kent and Sussex, DE                          50%               257                 129
                                                             -----               -----

                                                               728                 600
                                                             -----               -----

                                                             8,421               8,211
                                                             =====               =====
<FN>
-----------
(1)  Source: 1997 Rand McNally Commercial Atlas & Marketing Guide
</FN>
</TABLE>

As of December 31, 1996, the Company's  consolidated cellular telephone business
had 762,000 subscribers in the markets listed above.

Competition

The FCC generally grants two licenses to operate cellular  telephone  systems in
each market. One of the two licenses was initially awarded to a company or group
affiliated  with the  local  landline  telephone  carriers  in the  market  (the
"Wireline"  license),  and the other license was initially awarded to a company,
individual,  or group not affiliated  with any landline  telephone  carrier (the
"Non-Wireline"  license). The Company's systems are all Non-Wireline systems and
compete  directly with the Wireline  licensee in each market in  attracting  and
retaining cellular telephone customers and dealers. The Wireline licensee in the
Company's principal markets is Cellco Partnership,  a joint venture between Bell
Atlantic Mobile Systems,  Inc. and NYNEX Mobile Communications Co. The Company's
principal Wireline  competitor has a larger coverage area and may have access to
more substantial financial resources than the Company.

In recent years, new mobile  telecommunications  service  providers have entered
the market and created additional competition in the wireless telecommunications
business.  Many of such providers have access to substantial  capital  resources
and operate, or through affiliates operate, cellular telephone systems, bringing
significant wireless experience to the new marketplace. Accordingly, while there
are only two  cellular  providers  licensed  in a given  area,  new  competitors
continue  to  emerge  utilizing  different  frequencies  and  new  technologies.
Competition between

                                     - 15 -
<PAGE>
wireless  operators in each market is  principally  on the basis of services and
enhancements   offered,   technical   quality  of  the   system,   quality   and
responsiveness of customer service, price and coverage area.

The most prominent new providers are the PCS operators.  PCS is used to describe
a variety of digital, wireless communications systems currently primarily suited
for use in densely populated areas. At the power levels that the FCC's rules now
provide,  each cell of a PCS system would have more limited coverage than a cell
in a cellular telephone system. The FCC has allocated spectrum and adopted rules
for both  narrow and  broadband  PCS  services.  In 1994,  the FCC  completed  a
spectrum  auction for nationwide  narrowband  PCS licenses,  undertook the first
regional  narrowband  PCS auction,  and began the first auction of broadband PCS
spectrum (see "General Developments of Business - Sprint Spectrum").  All of the
30-MHz Major Trading Area ("MTA")  licenses for PCS were issued by June 1995 and
PCS licensees are required to construct their networks to be capable of covering
one third of their  service  area  population  within  five years of the date of
licensing.  Winners in the  Company's  Philadelphia  markets were AT&T  Wireless
Services, Inc. and PhillieCo,  L.P., an affiliate of Sprint Spectrum.  Broadband
PCS service  likely  will become a direct  competitor  to cellular  service.  In
September 1996, the FCC granted, through a bidding process, an additional 30-MHz
Basic  Trading  Area  ("BTA")  PCS  license,  designated  for  license  to small
businesses,  rural  telephone  companies  and  other  entrepreneurs.  Additional
auctions for 10-MHz blocks of PCS spectrum  (including  licenses  designated for
small  businesses)  were concluded in January 1997. A wholly owned subsidiary of
the  Company  was the  high  bidder  on  twelve  10-MHz  licenses  covering  the
Philadelphia  MTA and the  Allentown  BTA, with a bid of $17.5 million for these
licenses.

Cellular telephone systems, including the Company's systems, also face actual or
potential   competition   from  other  current  and   developing   technologies.
Specialized  Mobile Radio ("SMR")  systems,  such as those used by taxicabs,  as
well as other forms of mobile communications service, may provide competition in
certain markets.  SMR systems are permitted by FCC rules to be interconnected to
the public switched  telephone network and are  significantly  less expensive to
build and operate than cellular  telephone  systems.  SMR systems are,  however,
licensed to operate on  substantially  fewer  channels per system than  cellular
telephone  systems and  currently  lack  cellular's  ability to expand  capacity
through  frequency  re-use by using many low-power  transmitters and to hand-off
calls.  Nextel  Communications,  Inc.,  in which  the  Company  holds an  equity
interest,  has begun to implement its proposal to use its available SMR spectrum
in various  metropolitan  areas more  efficiently  to increase  capacity  and to
provide a broad range of mobile radio  communications  services.  This proposal,
known as enhanced SMR service,  could provide additional competition to existing
cellular  carriers,  including the Company.  In 1994, the FCC decided to license
SMR systems in the 800-MHz bands for wide-area  use, thus  increasing  potential
competition  with cellular.  The FCC has also decided to license SMR spectrum in
contiguous blocks via the competitive bidding process.

One-way paging or beeper services that feature voice message,  data services and
tones are also  available in the Company's  markets.  These services may provide
adequate capacity and sufficient mobile capabilities for some potential cellular
subscribers, thus providing additional competition to the Company's systems.

The FCC requires cellular  licensees to provide service to resellers of cellular
service which purchase  cellular service from licensees,  usually in the form of
blocks of numbers,  then resell the service to the public.  Thus, a reseller may
be both a customer and a competitor  of a licensed  cellular  operator.  The FCC
currently is seeking comment on whether resellers should be permitted to install
separate switching  facilities in cellular systems,  although it has tentatively
concluded  not to require  such  interconnections.  The FCC is also  considering
whether  resellers should receive direct  assignments of telephone  numbers from
LECs.

It is likely that the FCC will offer  additional  spectrum for  wireless  mobile
licenses in the future. Spectrum in the "Wireless  Communications Service" is to
be auctioned in April 1997. Applicants also have received and others are seeking
FCC authorization to construct and operate global satellite  networks to provide
domestic and international mobile communications services from geostationary and
low earth orbit satellites.  In addition,  the Omnibus Budget Reconciliation Act
of 1993 ("1993 Budget Act")  provided,  among other  things,  for the release of
200-MHz of Federal  government  spectrum for  commercial use over a fifteen year
period. These developments and further technological advances may make available
other  alternatives to cellular service thereby creating  additional  sources of
competition.

                                     - 16 -
<PAGE>
Legislation and Regulation

FCC  Regulation.  The FCC regulates the licensing,  construction,  operation and
acquisition of cellular  telephone systems pursuant to the  Communications  Act.
For licensing purposes,  the FCC divided the US into separate markets:  306 MSAs
and 428 RSAs. In each market,  the allocated  cellular  frequencies  are divided
into two blocks:  Block A, initially  awarded for  utilization  by  Non-Wireline
entities such as the Company,  and Block B, initially awarded for utilization by
affiliates of local exchange Wireline telephone companies. There is no technical
or operational  difference between Wireline and Non-Wireline  systems other than
different frequencies.

Under the  Communications  Act,  no party may  transfer  control  of or assign a
cellular license without first obtaining FCC consent.  FCC rules (i) prohibit an
entity  controlling  one system in a market  from  holding  any  interest in the
competing cellular system in the market and (ii) prohibit an entity from holding
non-controlling  interests in more than one system in any market,  if the common
ownership  interests  present  anti-competitive  concerns  under  FCC  policies.
Cellular  radio  licenses  generally  expire  on  October  1 of the  tenth  year
following  grant of the license in the  particular  market and are renewable for
periods of ten years upon  application  to the FCC.  Licenses may be revoked for
cause and  license  renewal  applications  denied if the FCC  determines  that a
renewal would not serve the public  interest.  FCC rules provide that  competing
renewal  applications  for cellular  licenses will be considered in  comparative
hearings,  and establish the qualifications  for competing  applications and the
standards to be applied in such hearings.  Under current policies,  the FCC will
grant incumbent  cellular  licensees a "renewal  expectancy" if the licensee has
provided  substantial  service  to  the  public,   substantially  complied  with
applicable  FCC rules and policies and the  Communications  Act and is otherwise
qualified to hold an FCC license.  The FCC has granted  renewal of the Company's
licenses for the  Philadelphia,  PA,  Wilmington,  DE and New Brunswick and Long
Branch,  NJ MSAs.  The  Company's  license  for the  Trenton,  NJ MSA expires in
October  1997.  The balance of the Company's  licenses  expire from 1998 through
2006.

The FCC regulates  the ability of cellular  operators to bundle the provision of
service with hardware,  the resale of cellular  service by third parties and the
coordination  of frequency  usage with other  cellular  licensees.  The FCC also
regulates  the  height and power of base  station  transmitting  facilities  and
signal  emissions in the cellular  system.  Cellular systems also are subject to
Federal  Aviation  Administration  and FCC  regulations  concerning  the siting,
construction,  marking and lighting of cellular transmitter towers and antennae.
In  addition,  the FCC also  regulates  the  employment  practices  of  cellular
operators.

The  Communications  Act currently  restricts  foreign ownership or control over
commercial mobile radio licenses, which include cellular radio service licenses.
The FCC  recently  decided to  consider  the  opportunities  that other  nations
provide  to US  companies  in their  communications  industries  as a factor  in
deciding  whether to permit  higher  levels of  indirect  foreign  ownership  in
companies controlling common carrier and certain other radio licenses.  The 1996
Telecom Act relaxes these  restrictions by eliminating the statutory  provisions
restricting  foreign  officers  and  directors  in  licensees  and their  parent
corporations.  In February  1997,  the US government  entered into a World Trade
Organization   agreement   with   respect   to   telecommunications.   Upon  its
effectiveness,  the agreement will require the US, among other things, to afford
"national"   treatment  to  foreign  investors  seeking  indirect  ownership  of
commercial  mobile radio service ("CMRS")  licenses in the US. These changes may
permit  additional  foreign  investment  and  participation  in the US  wireless
marketplace and therefore may enhance competition.

Allegations of harmful  effects from the use of hand-held  cellular  phones have
caused the cellular  industry to fund  additional  research to review and update
previous  studies  concerning  the safety of the  emissions  of  electromagnetic
energy  from  cellular  phones.  In August  1996,  however,  the FCC adopted new
standards for  evaluating the extent to which  wireless  facilities  will expose
both employees and the public to RF radiation.  At that time, the FCC determined
that state and local  regulation of RF radiation from facilities used to provide
"personal  wireless  services,"  including cellular and PCS, is preempted to the
extent the facilities comply with the FCC's RF exposure limits.

The FCC  also  requires  LECs in each  market  to  offer  reasonable  terms  and
facilities for the  interconnection  of both cellular  telephone systems in that
market to the LECs' landline network.  Cellular telephone  companies  affiliated
with the LEC are required to disclose how their systems will  interconnect  with
the landline network.  The licensee not affiliated with the LEC has the right to
interconnect  with the landline  network in a manner no less favorable than that
of the  licensee  affiliated  with  the  LEC.  In  addition,  the  licensee  not
affiliated   with  the  LEC  may,   at  its   discretion,   request   reasonable
interconnection  arrangements  that are  different  than those  provided  to the
affiliated  licensee in that market, and the LEC must negotiate such requests in
good faith. The FCC reiterated its position on

                                     - 17 -
<PAGE>
interconnection  issues in a declaratory  ruling which  clarified  that LECs are
expected  to  provide,  within  a  reasonable  time,  the  agreed-upon  form  of
interconnection.  In June 1996, the FCC adopted a national regulatory  framework
for  implementing  the local  competition  provisions  of the 1996  Telecom Act,
including adoption of rules delineating interconnection obligations of incumbent
LECs ("ILECs"),  unbundling requirements for ILEC network elements, requirements
for access to local rights-of-way,  dialing parity and telephone numbering,  and
requirements for resale of and  non-discriminatory  access to ILEC services.  In
many  instances,  the FCC left the task of  implementing  the  FCC's  regulatory
standards  to the  individual  states.  Numerous  LECs have  appealed  the FCC's
decisions   and  a  judicial   determination   of  the  legality  of  the  FCC's
interconnection  rules is  pending  at the US Court of  Appeals  for the  Eighth
Circuit,  which  has  stayed  certain  portions  of the  FCC's  new  regulations
concerning ILEC pricing and nondiscrimination obligations.

Notwithstanding   the  federal   court  stay  of  certain  FCC   interconnection
regulations,  a subsidiary of the Company has renegotiated  its  interconnection
contracts with Bell Atlantic  pursuant to the 1996 Telecom Act. The  agreements,
covering  Pennsylvania,  New  Jersey,  Delaware  and  Maryland,  provide for the
reciprocal  transport and  termination  of CMRS traffic by Bell Atlantic and the
Company at substantially  reduced rates. These agreements have been submitted to
each of the four state public utility  commissions for their approval,  and have
been  approved in three of such states.  Because the terms of these  agreements,
including  pricing,  are similar to agreements already approved by those states,
the  Company  expects to receive  regulatory  approval by the  remaining  public
utility commission without substantial modification.

To date, the FCC has undertaken significant efforts to reconsider the regulation
of  CMRS   providers   in  the   wake  of   competitive   developments   in  the
telecommunications  marketplace.  For instance, in June 1996, the FCC eliminated
the  cellular/PCS   cross-ownership  rule  in  favor  of  a  single,   generally
applicable,  CMRS spectrum cap rule.  The change permits  cellular  providers to
hold attributable interests in 20-MHz of PCS spectrum (e.g. two 10-MHz licenses)
in areas  where  there is  significant  service  area  overlap.  The FCC is also
considering  whether all CMRS providers  should provide  interconnection  to all
other CMRS providers.  The FCC recently  initiated a rulemaking to establish new
federal universal service  mechanisms.  The proceeding will determine the extent
to which cellular  operators and other wireless and wireline  telecommunications
service  providers will be required to contribute to state and federal universal
service funds, as well as their ability to draw universal  service support.  The
FCC also  initiated  a  rulemaking  to reform  its system of  interstate  access
charges to make it  compatible  with the 1996  Telecom Act and with  federal and
state  actions  to open  local  networks  to  competition.  The new  rules  will
establish a transition to an access charge  structure that more closely reflects
the economic costs of accessing  landline  networks for the  termination of long
distance calls. Further, the FCC is considering new rules to govern how customer
proprietary  network  information  ("CPNI")  may be used  by  telecommunications
carriers,  including the BOCs, in marketing a broad range of  telecommunications
services  to  their  customers,  and  the  customers  of  affiliated  companies.
Resolution  of the  issues  raised in this  proceeding  may  affect the costs of
providing  cellular  service  and the way in  which  the  Company  conducts  its
business.  However,  the Company does not  anticipate  that  resolution of these
issues will result in a significant  adverse  impact on its financial  position,
results of operations or liquidity.

Finally,  the 1996 Telecom Act  relieves  BOC-affiliated  cellular  providers of
their equal access obligations.  As such,  BOC-affiliated  carriers are afforded
greater flexibility in contracting with interexchange carriers for the provision
of long distance  services.  Prior to the legislative  change,  cellular systems
affiliated  with the BOCs were  required to offer equal access to  interexchange
carriers and those  affiliated  with AT&T  voluntarily  provided  equal  access.
Nevertheless, the FCC retains authority to require all CMRS operators to provide
unblocked  access  through the use of other  mechanisms  if customers  are being
denied access to the telephone  toll service  providers of their choice,  and if
such denial is contrary to the public interest.

State  Regulation  and Local  Approvals.  Except for the State of Illinois,  the
states  in which  the  Company  presently  operates  currently  do not  regulate
cellular  telephone  service.  In the 1993 Budget Act, Congress gave the FCC the
authority to preempt states from regulating rates or entry into CMRS,  including
cellular.  In the CMRS order,  described above, the FCC preempted the states and
established a procedure for states to petition the FCC for authority to regulate
rates and entry into CMRS. The FCC, to date,  has denied all state  petitions to
regulate the rates charged by CMRS providers.

The scope of the allowable level of state regulation of CMRS,  however,  remains
unclear.  The 1993 Budget Act does not identify the "other terms and conditions"
of CMRS service that can be  regulated  by the states.  Moreover,  the extent to
which  states  may  regulate   intrastate   LEC-CMRS   interconnection   remains
unresolved. The resolution of this

                                     - 18 -
<PAGE>
issue  will  impact the extent to which  cellular  providers  will be subject to
state regulation of CMRS  interconnection  to the LECs. The siting of cells also
remains  subject  to state and local  jurisdiction  although  petitions  seeking
clarification of states' siting authority are currently pending at the FCC.

DBS OPERATIONS

Primestar,  in which the Company holds an equity  interest (see  "Description of
the  Company's  Businesses  - Cable  Communications  -  Competition"),  provides
programming  and  marketing  support  to its  partners.  The  Company  is also a
franchisee  of the  Primestar  DBS service,  which is provided to customers  via
medium-power communications satellite to leased HSDs of approximately three feet
in  diameter.  Through  its DBS  operations,  the  Company  provided  service to
approximately 121,000 Primestar subscribers as of December 31, 1996.

                                     CONTENT

Content consists  primarily of the Company's 57% ownership interest in QVC, Inc.
and its  subsidiaries  ("QVC"),  which is  consolidated  with and managed by the
Company.  In addition,  Comcast Content and Communication  Corporation ("C3") is
engaged in the  development of content in four distinct  areas:  development and
production of programming  for the Company and other media outlets;  enhancement
of  existing  and   creation  of  new   distribution   channels;   expansion  of
transactional  services;  and  acquisitions  of  programming  and media  related
companies.   In  the  programming  sector,  C3  assists  the  Company  with  its
programming   investments   which   include  E!   Entertainment   (see  "General
Developments  of  Business  - E!  Entertainment"),  Viewer's  Choice,  The  Golf
Channel,  Speedvision,  Outdoor Life,  Music Choice,  Lightspan and the Sunshine
Network.

ELECTRONIC RETAILING

General

The Company provides  electronic  retailing services through QVC, a domestic and
international  general  merchandise  retailer.  Through its  merchandise-focused
television programs, QVC sells a wide variety of products directly to consumers.
The products are  described  and  demonstrated  by program  hosts and orders are
placed directly with QVC by viewers who call a toll-free  telephone number.  QVC
television  programming  is produced at its  facilities in  Pennsylvania  and is
distributed  nationally via satellite to affiliated local cable system operators
and other multichannel video programming providers ("Program Carriers") who have
entered into carriage agreements (the "Affiliation Agreements") with QVC and who
retransmit QVC programming to their subscribers.

QVC Services

Products.  QVC sells a variety of consumer  products and  accessories  including
jewelry, apparel and accessories,  housewares,  collectibles,  electronics, toys
and cosmetics.  QVC obtains products from domestic and foreign manufacturers and
wholesalers  and is often able to make purchases on favorable terms based on the
volume of the transactions. QVC intends to continue introducing new products and
product lines.  QVC is not dependent  upon any one  particular  supplier for any
significant portion of its inventory.

Process.  Viewers  place orders to purchase  merchandise  by calling a toll-free
telephone number.  QVC uses automatic call distributing  equipment to distribute
calls to its operators. The majority of all payments for purchases are made with
a major credit card or QVC's private label credit card. The accounts  receivable
from QVC's private label credit card program are purchased  (with  recourse) and
serviced  by an  unrelated  third  party.  QVC's  policy is to ship  merchandise
promptly from its distribution centers,  typically within 24 hours after receipt
of an order. QVC offers a return policy which permits customers to return within
30 days any  merchandise  purchased  from QVC for a full refund of the  purchase
price and original shipping charges.

Primary Channel. QVC's main channel (the "Primary Channel"), is transmitted live
24 hours a day, 7 days a week,  to  approximately  54 million  cable  television
homes and on a part-time basis to  approximately  two million  additional  cable
television  homes.  In  addition,   the  Primary  Channel  can  be  received  by
approximately  five  million  HSD users.  The QVC program  schedule  consists of
one-hour and  multi-hour  program  segments.  Each  program  segment has a theme
devoted to a particular category of product or lifestyle. From time to time, QVC
features special program

                                     - 19 -
<PAGE>
segments devoted to merchandise  associated with a particular celebrity,  event,
geographical region or seasonal interest.

Q2. QVC's secondary  channel ("Q2") broadcasts 24 hours a day, 7 days a week, to
approximately  nine million cable  television  homes and on a part-time basis to
approximately two million additional cable television homes. In addition, the Q2
service can be received by  approximately  four million HSD users.  In the first
half of 1996, the format of Q2 programming was changed to become a faster-paced,
news-like  format,  combining  live hosts and edited  tape of top  products  and
stories from the Primary Channel.

QVC UK. In October 1993, QVC launched an electronic retailing program service in
the UK ("QVC--The  Shopping  Channel")  through a joint venture  agreement  with
British Sky  Broadcasting  Limited.  This  service  currently  reaches over five
million cable television and HSD-served homes in the UK.

QVC Germany. In December 1996, QVC launched an electronic retailing  programming
service in Germany.  The  service  currently  reaches  over four  million  cable
television and HSD-served homes in Germany.

iQVC. In December 1995, QVC launched its interactive  shopping  service ("iQVC")
on The Microsoft Network ("MSN"),  Microsoft  Corporation's  on-line service. In
1996, iQVC was also made available through the Internet. The iQVC service offers
a diverse  array of  merchandise,  available  on-line,  24 hours a day, 7 days a
week.

QVC Transmission

The QVC signal is  transmitted  via two  exclusive,  protected,  non-preemptible
transponders on communications  satellites.  Each communications satellite has a
number of separate transponders.  'Protected' status means that, in the event of
transponder failure, QVC's signal will be transferred to a spare transponder or,
if none is available, to a preemptible transponder located on the same satellite
or, in certain cases,  to a transponder on another  satellite  owned by the same
lessor if one is available at the time of the failure.  'Non-preemptible' status
means  that  the  transponder  cannot  be  preempted  in  favor  of a user  of a
'protected'  transponder  that has failed.  QVC has never had an interruption in
programming  due to  transponder  failure and  believes  that because it has the
exclusive use of two protected,  non-preemptible transponders, such interruption
is unlikely to occur. There can be no assurance, however, that there will not be
an  interruption  or  termination of satellite  transmission  due to transponder
failure.  Such  interruption or termination could have a material adverse effect
on QVC.

Program Carriers

QVC has entered into  Affiliation  Agreements with Program Carriers to carry its
programming.  There are generally no additional  charges to the  subscribers for
distribution of QVC. In return for carrying QVC, each Program  Carrier  receives
an allocated portion,  based upon market share, of five percent of the net sales
of merchandise sold to customers  located in the Program Carrier's service area.
The  terms  of most  Affiliation  Agreements  are  automatically  renewable  for
one-year  terms  unless  terminated  by either  party on at least 90 days notice
prior to the end of the  term.  Affiliation  Agreements  covering  most of QVC's
cable  television  homes can be terminated in the sixth year of their respective
terms by the  Program  Carrier  unless the  Program  Carrier  earns a  specified
minimum  level of sales  commissions.  QVC's sales are  currently at levels that
meet such  minimum  requirements.  The  Affiliation  Agreements  provide for the
Program Carrier to broadcast  commercials regarding QVC on other channels and to
distribute QVC's advertising  material to subscribers.  As of December 31, 1996,
approximately  30% of the total homes reached by QVC were  attributable to QVC's
Affiliation  Agreements  with the Company  and TCI,  the  indirect  owner of the
minority interest in QVC, and their respective subsidiaries.

Renewal of these  Affiliation  Agreements on favorable  terms is dependent  upon
QVC's ability to negotiate  successfully with Program Carriers. QVC competes for
cable channels with competitive programming,  as well as alternative programming
supplied by a variety of other well-established sources,  including news, public
affairs,   entertainment  and  sports  programmers.  QVC's  business  is  highly
dependent on its affiliation  with Program  Carriers for the transmission of QVC
programming.  The loss of a significant number of cable television homes because
of termination or  non-renewal of Affiliation  Agreements  would have a material
adverse  effect  on QVC.  To induce  Program  Carriers  to enter  into or extend
Affiliation Agreements or to increase the number of cable television homes under
existing  Affiliation  Agreements,  QVC has developed other incentive  programs,
including various forms of

                                     - 20 -
<PAGE>
marketing,  launch and equipment purchase support.  QVC will continue to recruit
additional Program Carriers and seek to enlarge its audience.

Legislation and Regulation

The FCC does not directly  regulate the content or  transmission  of programming
services like those offered by QVC. The FCC does,  however,  exercise regulatory
authority over the satellites and uplink  facilities which transmit  programming
services such as those provided by QVC. The FCC has granted, subject to periodic
reviews,  permanent  licenses to QVC for its uplink  facilities  (and for backup
equipment  of  certain  of these  facilities)  at  sufficient  power  levels for
transmission of QVC. Regarding the satellites from which QVC obtains transponder
capacity,  the FCC presently exercises licensing authority but does not regulate
the rates, terms or conditions of service provided by these facilities. Pursuant
to  its  residual  statutory  authority,  the  FCC  could,  however,  alter  the
regulatory obligations applicable to satellite service providers.

Competition

QVC  operates  in a highly  competitive  environment.  As a general  merchandise
retailer,  QVC competes for consumer  expenditures  and interest with the entire
retail industry, including department, discount, warehouse and specialty stores,
mail  order and other  direct  sellers,  shopping  center and mall  tenants  and
conventional  free-standing  stores,  many of which  are  connected  in chain or
franchise  systems.  On  television,  it  is  also  in  competition  with  other
satellite-transmitted  programs  for  channel  space  and  viewer  loyalty.  QVC
believes  that,  at the present time,  most Program  Carriers are not willing to
devote more than two  channels to televised  shopping and may allocate  only one
until digital  compression  is utilized on a large-scale  basis several years in
the future. Many systems have limited channel capacity and may be precluded from
adding any new programs at the present time. The  development and utilization of
digital compression is expected to provide Program Carriers with greater channel
capacity  thereby  increasing the opportunity for QVC, in addition to other home
shopping programs, to be distributed on additional channels.

Seasonality

QVC's  business is seasonal in nature,  with its major selling season during the
last quarter of the  calendar  year.  Net revenue for the fourth  quarter of the
year ended  December 31, 1996  accounted  for 30% of QVC's annual net sales from
electronic retailing.

                                    EMPLOYEES

As of December 31, 1996, the Company had 16,400 employees,  excluding  employees
in managed operations.  Of these employees,  7,700 were associated with domestic
cable communications,  5,500 were associated with electronic retailing and 1,500
were associated with cellular  telephone  communications.  The Company  believes
that its relationships with its employees are good.

ITEM 2    PROPERTIES

Domestic Cable Communications

The principal  physical  assets of a cable  communications  system  consist of a
central receiving apparatus,  distribution cables, converters, regional customer
service call centers and local business offices.  The Company owns or leases the
receiving and  distribution  equipment of each system and owns or leases parcels
of real property for the receiving sites, regional customer service call centers
and local  business  offices.  The physical  components of cable  communications
systems require  maintenance and periodic  upgrading and rebuilding to keep pace
with technological  advances. A significant number of the Company's systems will
be upgraded or rebuilt over the next several years.

Cellular Communications

The principal  physical  assets of a cellular  telephone  communications  system
include cell sites and central switching equipment. The Company primarily leases
its  sites  used  for  its  transmission  facilities,   retail  stores  and  its
administrative   offices.  The  physical  components  of  a  cellular  telephone
communications system require maintenance

                                     - 21 -
<PAGE>
and upgrading to keep pace with technological  advances.  It is anticipated that
digital capability will be added to the Company's system beginning in 1997.

Electronic Retailing

The principal physical assets of the Company's  electronic  retailing operations
consist  of  television  studios,  telecommunications  centers,  local  business
offices and various product  warehouses and distribution  centers.  The Company,
through QVC,  owns the majority of these  assets.  The  physical  components  of
electronic  retailing  operations require maintenance and periodic upgrading and
rebuilding  to keep pace with  technological  advances.  QVC's  warehousing  and
distribution facilities will be upgraded or rebuilt over the next several years.

The Company's  management believes that substantially all of its physical assets
are in good operating condition.

ITEM 3    LEGAL PROCEEDINGS

The Company is not party to  litigation  which,  in the opinion of the Company's
management,  will have a  material  adverse  effect on the  Company's  financial
position, results of operations or liquidity.

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At a Special  Meeting of  Shareholders  on  November 7, 1996,  the  shareholders
approved the following proposal:

     To issue  Comcast  Class A Special  Common  Stock in the Merger of The E.W.
     Scripps Company with and into the Company.

      Class of Stock              For               Against           Abstain
         Class A               21,215,706            90,737            48,151
         Class B              131,793,750

ITEM 4A   EXECUTIVE OFFICERS OF THE REGISTRANT

The current term of office of each of the officers  expires at the first meeting
of the Board of Directors of the Company  following  the next Annual  Meeting of
Shareholders, presently scheduled to be held in June 1997, or as soon thereafter
as each of their successors is duly elected and qualified.

The following  table sets forth  certain  information  concerning  the principal
executive officers of the Company, including their ages, positions and tenure as
of February 1, 1997:

                                   Officer
    Name                  Age       Since     Position with the Company

Ralph J. Roberts          76       1969      Chairman of the Board of Directors;
                                             Director

Julian A. Brodsky         63       1969      Vice Chairman of the Board of
                                             Directors; Director

Brian L. Roberts          37       1986      President; Director

Lawrence S. Smith         49       1988      Executive Vice President

John R. Alchin            48       1990      Senior Vice President; Treasurer

Stanley L. Wang           56       1981      Senior Vice President; General
                                             Counsel; Secretary

                                     - 22 -
<PAGE>
Ralph J. Roberts has served as a Director and Chairman of the Board of Directors
of the Company for more than five years.  Mr. Roberts has been the President and
a Director of Sural Corporation,  a privately-held investment company ("Sural"),
the Company's largest shareholder, for more than five years. Mr. Roberts devotes
a major  portion of his time to the business  and affairs of the Company.  As of
December 31, 1996, the shares of the Company owned by Sural  constitute 80.6% of
the  voting  power of the two  classes  of the  Company's  voting  common  stock
combined. Mr. Roberts currently has voting control of Sural. Mr. Roberts is also
a Director of Comcast UK Cable Partners Limited and Storer Communications, Inc.

Julian A.  Brodsky  has served as a Director  and Vice  Chairman of the Board of
Directors  for more  than  five  years.  Mr.  Brodsky  presently  serves  as the
Treasurer and a Director of Sural.  Mr.  Brodsky  devotes a major portion of his
time to the business and affairs of the Company.  Mr. Brodsky is also a Director
of Comcast UK Cable Partners Limited, Storer Communications,  Inc. and RBB Fund,
Inc.

Brian L.  Roberts has served as  President  of the Company and as a Director for
more than five years.  Mr.  Roberts  presently  serves as Vice  President  and a
Director  of  Sural.  Mr.  Roberts  devotes a major  portion  of his time to the
business and affairs of the Company.  Mr. Roberts is also a Director of Teleport
Communications  Group,  Inc.,  Comcast  UK Cable  Partners  Limited  and  Storer
Communications, Inc. He is a son of Ralph J. Roberts.

Lawrence S. Smith was named  Executive Vice President of the Company in December
1995.  Prior to that time,  Mr.  Smith  served as Senior Vice  President  of the
Company for more than five years. Mr. Smith is the Principal  Accounting Officer
of the Company. Mr. Smith is a Director of Teleport  Communications  Group, Inc.
and Comcast UK Cable Partners Limited and is a Partnership Board  Representative
of Sprint Spectrum Holding Company, L.P.

John R. Alchin has served as Treasurer and Senior Vice  President of the Company
for more than five years. Mr. Alchin is the Principal  Financial  Officer of the
Company. Mr. Alchin is a Director of Comcast UK Cable Partners Limited.

Stanley L. Wang has  served as Senior  Vice  President,  Secretary  and  General
Counsel of the  Company  for more than five  years.  Mr.  Wang is a Director  of
Storer Communications, Inc.

                                     - 23 -
<PAGE>
                                     PART II

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

The Class A Special  Common  Stock and Class A Common  Stock of the  Company are
traded in the  over-the-counter  market  and are  included  on Nasdaq  under the
symbols CMCSK and CMCSA,  respectively.  There is no established  public trading
market for the Class B Common Stock of the Company.  The Class B Common Stock is
convertible,  on a share for share basis, into Class A Special or Class A Common
Stock.  The following table sets forth, for the indicated  periods,  the closing
price  range of the Class A Special  and Class A Common  Stock as  furnished  by
Nasdaq.

<TABLE>
<CAPTION>
                                                          Class A
                                                          Special                            Class A
                                                   High               Low             High               Low
<S>                                              <C>               <C>              <C>                <C>
1996
  First Quarter..................                 $21  1/16         $17  1/2         $20  5/8          $17  1/4
  Second Quarter.................                  18  3/4           16  1/4          18  7/8           16  5/16
  Third Quarter..................                  18  3/8           13  7/8          18  1/4           13  7/8
  Fourth Quarter.................                  17  7/8           14  5/8          17  3/4           14  1/4

1995
  First Quarter..................                 $16  5/16         $14  9/16        $16  3/8          $14  3/8
  Second Quarter.................                  19  1/16          14               18  7/8           13  3/4
  Third Quarter..................                  22                18  5/8          22  1/8           18  9/16
  Fourth Quarter.................                  20  5/8           16  5/8          20  7/16          16  1/2
</TABLE>

The Company began paying quarterly cash dividends on its Class A Common Stock in
1977.  Since 1978,  the Company has paid equal  dividends  on shares of both the
Class A Common Stock and the Class B Common Stock. Since December 1986, when the
Class A Special Common Stock was issued, the Company has paid equal dividends on
shares of the Class A Special,  Class A and Class B Common  Stock.  The  Company
declared  dividends of $.0933 for each of the years ended  December 31, 1996 and
1995 on  shares  of  Class A  Special,  Class A and  Class B Common  Stock.  The
declaration  and payment of future  dividends  and their amount  depend upon the
results of  operations,  financial  condition  and capital needs of the Company,
contractual restrictions of the Company and its subsidiaries and other factors.

The holders of the Class A Special  Common Stock are not entitled to vote in the
election of  directors  or  otherwise,  except where class voting is required by
applicable law, in which case, each holder of Class A Special Common Stock shall
be entitled to one vote per share.  Each holder of Class A Common  Stock has one
vote per share and each  holder of Class B Common  Stock has 15 votes per share.
Under applicable law, holders of Class A Special Common Stock have voting rights
in the event of certain  amendments to the Articles of Incorporation and certain
mergers  and  other  fundamental  corporate  changes.  In all  other  instances,
including  the election of  directors,  the Class A Common Stock and the Class B
Common Stock vote as one class.  Neither the holders of Class A Common Stock nor
the holders of Class B Common Stock have cumulative voting rights.

As of February 1, 1997, there were 2,672 record holders of the Company's Class A
Special  Common Stock and 1,793 record  holders of the Company's  Class A Common
Stock.  Sural  Corporation  is the sole record holder of the  Company's  Class B
Common Stock.

                                     - 24 -
<PAGE>
ITEM 6        SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                          1996 (1)         1995 (1)          1994 (1)          1993 (6)          1992 (6)
                                                               (Dollars in millions, except per share data)
<S>                                       <C>              <C>               <C>               <C>                <C>
Statement of Operations Data:

Revenues..............................    $4,038.4         $3,362.9          $1,375.3          $1,338.2           $900.3
Operating income......................       508.9            329.8             239.8             264.9            165.1
Equity in net losses of affiliates....       144.8             86.6              40.9              28.9            104.3
Loss before extraordinary items
  and cumulative effect of
  accounting changes..................       (52.5)           (37.8)            (75.3)            (98.9)          (217.9)
Extraordinary items...................        (1.0)            (6.1)            (11.7)            (17.6)           (52.3)
Cumulative effect of accounting
  changes (2).........................                                                           (742.7)
Net loss..............................       (53.5)           (43.9)            (87.0)           (859.2)          (270.2)
Loss per share before extraordinary
  items and cumulative effect of
  accounting changes (3)..............        (.21)            (.16)             (.32)             (.46)           (1.08)
Extraordinary items per share (3).....                         (.02)             (.05)             (.08)            (.26)
Cumulative effect of accounting
  changes per share (3)...............                                                            (3.47)
Net loss per share (3)................        (.21)            (.18)             (.37)            (4.01)           (1.34)
Cash dividends
  declared per share (3)..............       .0933            .0933             .0933             .0933            .0933

Balance Sheet Data:

At year end:
  Total assets........................    12,088.6          9,580.3           6,763.0           4,948.3          4,271.9
  Working capital (deficiency)........        40.9            531.6             (52.1)            176.6             36.9
  Long-term debt......................     7,102.7          6,943.8           4,810.5           4,154.8          3,973.5
  Stockholders' equity (deficiency)...       551.6           (827.7)           (726.8)           (870.5)          (181.6)

Supplementary Financial Data:

Operating income before
  depreciation and amortization (4)...     1,207.2          1,018.8             576.3             606.4            397.2
Net cash provided by
  operating activities (5)............       799.6            520.7             369.1             345.9            252.3
<FN>
---------------
(1)  See  "Management's  Discussion  and  Analysis of  Financial  Condition  and
     Results  of  Operations"  for a  discussion  of  events  which  affect  the
     comparability of the information  reflected in the above selected financial
     data.
(2)  Primarily  represents the cumulative effect of the adoption of Statement of
     Financial  Accounting  Standards No. 109,  "Accounting  for Income  Taxes,"
     effective January 1, 1993.
(3)  As adjusted for the Company's  three-for-two stock split effective February
     2, 1994.
(4)  Operating income before  depreciation and amortization is commonly referred
     to in the Company's  businesses as "operating  cash flow."  Operating  cash
     flow is a measure of a company's  ability to  generate  cash to service its
     obligations, including debt service obligations, and to finance capital and
     other  expenditures.  In part due to the  capital  intensive  nature of the
     Company's  businesses  and the  resulting  significant  level  of  non-cash
     depreciation  and amortization  expense,  operating cash flow is frequently
     used  as  one  of the  bases  for  comparing  businesses  in the  Company's
     industries. Operating cash flow does not purport to represent net income or
     net cash provided by operating activities, as those terms are defined under
     generally accepted accounting  principles,  and should not be considered as
     an  alternative  to such  measurements  as an  indicator  of the  Company's
     performance.
(5)  Represents  net cash  provided by operating  activities as presented in the
     Company's consolidated statement of cash flows.
(6)  Comparability of the information presented for the years ended December 31,
     1993 and 1992 is affected by the Company's  acquisition of AWACS, Inc., the
     Non-Wireline  cellular  telephone system serving the Philadelphia MSA, from
     Metromedia   Company   in  March   1992  and  the   split-off   of   Storer
     Communications,  Inc.  ("Storer")  between the Company and  Storer's  other
     shareholder in December 1992. Prior to December 1992, the Company had a 50%
     interest in Storer which was accounted for under the equity method.
</FN>
</TABLE>

                                     - 25 -
<PAGE>
ITEM 7    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Overview

The Company has  experienced  significant  growth in recent  years  through both
strategic  acquisitions and growth in its existing  businesses.  The Company has
historically  met its cash  needs for  operations  through  its cash  flows from
operating   activities.   Cash   requirements   for   acquisitions  and  capital
expenditures have been provided through the Company's  financing  activities and
sales of long-term  investments,  as well as its existing cash, cash equivalents
and short-term investments.

General Developments of Business

E! Entertainment

As of December 31, 1996, the Company owned a 10.4% interest in E!  Entertainment
Television, Inc. ("E! Entertainment"), an entertainment programming service that
currently is  distributed to more than 42 million  subscribers.  The Company has
the  right,  by virtue  of  various  agreements  among  the  shareholders  of E!
Entertainment, to purchase an additional 58.4% interest in E! Entertainment from
Time Warner,  Inc.  ("Time  Warner") for $321.1  million.  In January 1997,  the
Company and The Walt Disney Company ("Disney") entered into an agreement to form
a new  limited  liability  company  ("Newco")  that  will be owned  50.1% by the
Company  and 49.9% by  Disney.  Pursuant  to the  agreement,  the  Company  will
contribute  to Newco  its  10.4%  interest  in E!  Entertainment,  the  right to
exercise its option to purchase the Time Warner  interest and $132.3  million in
cash. Disney will contribute to Newco $188.8 million in cash. Newco will use the
cash contributed by the Company and Disney to purchase the Time Warner interest.
Following such purchase, Newco will own a 68.8% interest in E! Entertainment. To
fund the cash  portion of its  contribution,  the  Company  will  borrow  $132.3
million from Disney in the form of two 10-year,  7% notes (the "Disney  Notes").
These transactions (collectively, the "E! Acquisition") are expected to close in
the first  quarter of 1997,  subject to  regulatory  approval and certain  other
conditions.

Scripps Cable

In November 1996, the Company acquired the cable television operations ("Scripps
Cable") of The E.W. Scripps Company in exchange for 93.048 million shares of the
Company's Class A Special Common Stock,  par value $1.00 per share (the "Class A
Special Common  Stock"),  valued at $1.552 billion (the "Scripps  Acquisition").
Scripps  Cable  passed more than 1.3 million  homes and served more than 800,000
subscribers  as of  December  31, 1996, with 60% of its  subscribers  located in
Sacramento, California and Chattanooga and Knoxville, Tennessee. The Company has
accounted  for the Scripps  Acquisition  under the  purchase  method and Scripps
Cable was consolidated with the Company effective November 1, 1996.

Comcast-Spectacor

In July 1996,  the  Company  completed  its  acquisition  (the  "Sports  Venture
Acquisition") of a 66% interest in the Philadelphia Flyers Limited  Partnership,
a Pennsylvania limited partnership  ("PFLP"),  the assets of which, after giving
effect to the Sports Venture Acquisition, consist of (i) the National Basketball
Association  ("NBA")  franchise  to  own  and  operate  the  Philadelphia  76ers
basketball  team and related  assets (the  "Sixers"),  (ii) the National  Hockey
League ("NHL") franchise to own and operate the Philadelphia  Flyers hockey team
and related assets,  and (iii) two adjacent arenas,  leasehold  interests in and
development  rights related to the land underlying the arenas and other adjacent
parcels  of  land  located  in  Philadelphia,  Pennsylvania  (collectively,  the
"Arenas").  Concurrent  with the completion of the Sports  Venture  Acquisition,
PFLP was renamed Comcast Spectacor, L.P. ("Comcast-Spectacor").

The Sports Venture  Acquisition  was completed in two steps.  In April 1996, the
Company  purchased  the  Sixers  for $125.0  million  in cash plus  assumed  net
liabilities of $11.0 million through a partnership controlled by the Company. To
complete the Sports Venture  Acquisition,  in July 1996, the Company contributed
its interest in the Sixers,  exchanged  approximately  3.5 million shares of the
Company's  Class A Special Common Stock and 6,370 shares of the Company's  newly
issued 5% Series A Convertible Preferred Stock (the "Preferred Stock"), and paid
$15.0  million  in cash  for its  current  interest  in  Comcast-Spectacor.  The
remaining 34% interest in Comcast-Spectacor  is owned by a group,  including the
former majority owner of PFLP, who also manages Comcast-Spectacor (the "Minority

                                     - 26 -
<PAGE>
Group").  In connection with the Sports Venture  Acquisition,  Comcast-Spectacor
assumed  the  outstanding  liabilities  relating  to the Sixers and the  Arenas,
including a mortgage obligation of $155.0 million.  The Company accounts for its
interest in Comcast-Spectacor under the equity method.

Sprint Spectrum

The Company, Tele-Communications, Inc. ("TCI"), Cox Communications, Inc. ("Cox,"
and  together  with the  Company  and  TCI,  the  "Cable  Parents")  and  Sprint
Corporation ("Sprint," and together with the Cable Parents, the "Parents"),  and
certain subsidiaries of the Parents (the "Partner  Subsidiaries")  engage in the
wireless  communications business through a limited partnership known as "Sprint
Spectrum,"  a  development  stage  enterprise.  The  Company  owns 15% of Sprint
Spectrum and accounts for its  investment  in Sprint  Spectrum  under the equity
method.

Sprint  Spectrum  was  the  successful  bidder  for 29  personal  communications
services ("PCS") licenses in the auction conducted by the Federal Communications
Commission ("FCC") from December 1994 through mid-March 1995. The purchase price
for the  licenses was $2.11  billion,  all of which has been paid to the FCC. In
addition,  Sprint  Spectrum has invested,  and may continue to invest,  in other
entities that hold PCS licenses, may acquire PCS licenses in future FCC auctions
or from other license holders and may affiliate with other license holders.

Repurchase Program

Concurrent with the announcement of the Scripps Acquisition in October 1995, the
Company  announced  that its Board of Directors  authorized a market  repurchase
program (the "Repurchase  Program")  pursuant to which the Company may purchase,
at such times and on such terms as it deems appropriate, up to $500.0 million of
its  outstanding  common  stock,  subject  to  certain  restrictions  and market
conditions.  During the years  ended  December  31,  1996 and 1995,  the Company
repurchased 10.5 million shares and 680,000 shares, respectively,  of its common
stock  for  aggregate   consideration  of  $180.0  million  and  $12.4  million,
respectively,  pursuant to the  Repurchase  Program.  During  January 1997,  the
Company  repurchased  an  additional  450,000  shares  of its  common  stock for
aggregate  consideration of $7.6 million.  The Repurchase Program will terminate
in May 1997.

QVC

In February 1995, the Company and TCI acquired all of the  outstanding  stock of
QVC,  Inc.  and  its   subsidiaries   ("QVC")  not  previously   owned  by  them
(approximately  65% of such shares on a fully  diluted  basis) for $46, in cash,
per share (the "QVC  Acquisition"),  representing a total cost of  approximately
$1.4 billion.  The QVC  Acquisition,  including the exercise of certain warrants
held by the Company,  was financed with cash  contributions from the Company and
TCI of $296.3 million and $6.6 million, respectively, borrowings of $1.1 billion
under a $1.2 billion QVC credit facility and existing cash and cash  equivalents
held by QVC. Following the acquisition, the Company and TCI owned, through their
respective subsidiaries,  57.45% and 42.55%, respectively,  of QVC. The Company,
through a management agreement,  is responsible for the day to day operations of
QVC. The Company has accounted for the QVC Acquisition under the purchase method
and QVC was consolidated with the Company effective February 1, 1995.

Maclean Hunter

In December  1994,  the Company,  through  Comcast MHCP  Holdings,  L.L.C.  (the
"LLC"),  acquired the US cable  television  and alternate  access  operations of
Maclean Hunter Limited ("Maclean  Hunter") from Rogers  Communications  Inc. and
all of the outstanding shares of Barden Communications, Inc. (collectively, such
acquisitions  are  referred  to  as  the  "Maclean  Hunter   Acquisition")   for
approximately  $1.2  billion in cash.  The  Company  and the  California  Public
Employees'  Retirement  System  ("CalPERS")  invested  $305.6 million and $250.0
million,  respectively,  in the  LLC,  which  is  owned  55% by a  wholly  owned
subsidiary of the Company and 45% by CalPERS, and is managed by the Company. The
balance of the Maclean Hunter  Acquisition was financed through borrowings under
a credit  facility  of a wholly  owned  subsidiary  of the LLC.  The Company has
accounted  for the Maclean  Hunter  Acquisition  under the  purchase  method and
Maclean Hunter was consolidated  with the Company  effective  December 22, 1994.

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

                                     - 27 -
<PAGE>
Liquidity and Capital Resources

Cash, Cash Equivalents and Short-term Investments

The  Company  has  traditionally  maintained  significant  levels of cash,  cash
equivalents  and  short-term   investments  to  meet  its  short-term  liquidity
requirements.  Cash, cash equivalents and short-term  investments as of December
31, 1996 and 1995 were $539.6 million and $910.1  million,  respectively.  As of
December 31, 1996,  $376.8 million of the Company's cash,  cash  equivalents and
short-term investments is restricted to use by subsidiaries of the Company under
contractual or other arrangements,  including $213.7 million which is restricted
to use by Comcast UK Cable Partners Limited ("Comcast UK Cable"), a consolidated
subsidiary of the Company.

The Company's cash  equivalents and short-term  investments are recorded at cost
which  approximates  their fair value.  As of December 31, 1996,  the  Company's
short-term  investments  of $208.3  million  include 1.27 million shares of Time
Warner common stock recorded at fair value of $47.4 million (see "Investments").
The remaining short-term investments,  of $160.9 million, had a weighted average
maturity of approximately 10 months.

Accounts Receivable - Electronic Retailing

The Company has an agreement  with an unrelated  third party which  provides for
the  sale  and  servicing  of  accounts  receivable  relating  to the  Company's
electronic  retailing  operations.  The Company sold accounts receivable at face
value of $687.0  million and $530.2  million  under this  agreement  in 1996 and
1995,  respectively.  The Company remains obligated to repurchase  uncollectible
accounts pursuant to the recourse provisions of the agreement and is required to
maintain a specified percentage of all outstanding receivables under the program
as a deposit with the third party to secure its obligations under the agreement.

The  uncollected  balance of  accounts  receivable  sold under this  program was
$317.7   million  and  $283.1   million  as  of  December  31,  1996  and  1995,
respectively,  of  which  $284.5  million  and  $234.5  million,   respectively,
represent   deposits  under  the  agreement,   that  are  included  in  accounts
receivable.  Total  recorded  reserves  relating to the possible  repurchase  of
uncollectible  accounts was $73.2  million and $71.6  million as of December 31,
1996 and  1995,  respectively.  The  receivables  sold  under  the  program  are
considered,  for financial reporting purposes,  to be financial instruments with
off-balance sheet risk. The carrying value of accounts receivable,  adjusted for
the reserves  described above,  approximates  fair value as of December 31, 1996
and 1995.

Investments

Under the provisions of the Sprint Spectrum partnership  agreement,  the Partner
Subsidiaries  have  committed  to  contribute  $4.2  billion  in cash to  Sprint
Spectrum  through 1999, of which the Company's share is $630.0 million.  Of this
funding  requirement,  the Company has made total cash  contributions  to Sprint
Spectrum of $452.8 million through December 31, 1996 and issued a $105.0 million
guaranty  on a portion  of  Sprint  Spectrum's  outstanding  debt.  The  Company
anticipates that Sprint  Spectrum's  capital  requirements over the next several
years will be  significant.  Requirements  in excess of  committed  capital  are
planned to be funded by Sprint Spectrum through external  financing,  including,
but not limited to, vendor financing,  bank financing and securities  offered to
the public. In August 1996, Sprint Spectrum sold $750.0 million principal amount
at maturity of Senior  Notes and Senior  Discount  Notes due in 2006 in a public
offering.  In October 1996, Sprint Spectrum closed three credit agreements which
provided $2.0 billion in bank  financing  and $3.1 billion in vendor  financing.
The timing of the Company's  remaining capital  contributions to Sprint Spectrum
is  dependent  upon a number of factors,  including  Sprint  Spectrum's  working
capital  requirements.  The Company  anticipates  funding its remaining  capital
commitments to Sprint Spectrum through its cash flows from operating activities,
its existing cash, cash equivalents,  short-term investments and lines of credit
or other external financing, or by a combination of these sources.

The Company held 693,000 shares of common stock of Nextel  Communications,  Inc.
("Nextel") as of December 31, 1995. In February 1996, in connection with certain
preemptive  rights of the Company  under  previously  existing  agreements  with
Nextel, the Company purchased an additional 8.16 million shares of Nextel common
stock at $12.25 per share,  for a total cost of $99.9 million.  During the years
ended  December 31, 1996 and 1995,  the Company sold 5.6 million shares and 11.3
million  shares,  respectively,  of Nextel  common stock for $105.4  million and
$212.6 million,  respectively, and recognized pre-tax gains of $35.4 million and
$36.2 million,  respectively, as investment income in its consolidated statement
of operations. As of December 31, 1996, the Company held 3.3 million shares

                                     - 28 -
<PAGE>
of Nextel common stock,  classified as long-term investments available for sale.
As of December 31, 1996,  the Company  held  options,  which expire in September
1997, to acquire an additional 25.0 million shares of Nextel common stock at $16
per share. These options are also classified as long-term  investments available
for sale. In 1997, the Company sold these options to Nextel for $25.0 million.

The Company  received 1.36 million shares of Time Warner common stock (the "Time
Warner  Stock") in  exchange  (the  "Exchange")  for all of the shares of Turner
Broadcasting System, Inc. ("TBS") stock (the "TBS Stock") held by the Company as
a result of the merger of Time  Warner and TBS in October  1996.  As a result of
the  Exchange,  the  Company  recognized  a gain of $47.3  million in the fourth
quarter of 1996,  representing the difference  between the Company's  historical
cost basis in the TBS Stock of $8.9 million and the new basis for the  Company's
investment in Time Warner Stock of $56.2 million, which was based on the closing
price of the Time  Warner  Stock on the  merger  date of $41.375  per share.  In
December 1996 and January 1997,  the Company sold 92,500 shares and 1.27 million
shares,  respectively,  of the Time Warner  Stock,  representing  the  Company's
entire   interest  in  Time  Warner,   for  $3.7  million  and  $48.6   million,
respectively.

The Company does not have any  additional  significant  contractual  commitments
with respect to any of its investments.  However, to the extent the Company does
not fund its  investees'  capital  calls,  it exposes  itself to dilution of its
ownership interests.  The Company continually evaluates its existing investments
as well as new investment opportunities.

Investment Rights

Beginning  in January  1998,  the Company has the right to purchase the minority
interests in Comcast-Spectacor  from the Minority Group for the Minority Group's
pro  rata  portion  of the  fair  market  value  (on a going  concern  basis  as
determined by an appraisal  process) of  Comcast-Spectacor.  The Minority  Group
also has the right  (together  with the Company's  right,  the "Exit Rights") to
require the Company to purchase its interests under the same terms.  The Company
may pay the Minority Group for such interests in shares of the Company's Class A
Special  Common Stock,  subject to certain  restrictions.  If the Minority Group
exercises its Exit Rights and the Company elects not to purchase their interest,
the  Company  and the  Minority  Group  will  use  their  best  efforts  to sell
Comcast-Spectacor.

Assuming  consummation of the E! Acquisition,  after the 18 month anniversary of
the closing date of the E!  Acquisition,  Disney, in certain  circumstances,  is
entitled  to cause Newco to purchase  Disney's  entire  interest in Newco at its
then fair market value (as determined by an appraisal process).  If Newco elects
not to purchase  Disney's  interests,  Disney has the right,  at its option,  to
purchase  either the Company's  entire interest in Newco or all of the shares of
stock of E!  Entertainment  held by Newco, in each case at fair market value. In
the event that Disney exercises its rights, as described above, a portion or all
of the Disney Notes may be replaced with a three year note due to Disney.

Liberty Media Corporation ("Liberty"),  a majority owned subsidiary of TCI, may,
at certain  times  following  February 9, 2000,  trigger the exercise of certain
exit  rights  with  respect to its  investment  in QVC.  If the exit  rights are
triggered,  the Company has first  right to purchase  Liberty's  stock in QVC at
Liberty's  pro rata  portion  of the fair  market  value (on a going  concern or
liquidation  basis,  whichever is higher, as determined by an appraisal process)
of QVC. The Company may pay Liberty for such stock, subject to certain rights of
Liberty to consummate the purchase in the most  tax-efficient  method available,
in cash, the Company's  promissory note maturing not more than three years after
issuance,  the Company's equity  securities or any combination  thereof.  If the
Company  elects not to purchase  the stock of QVC held by Liberty,  then Liberty
will have a similar  right to purchase the stock of QVC held by the Company.  If
Liberty  elects  not to  purchase  the  stock of QVC held by the  Company,  then
Liberty and the Company will use their best efforts to sell QVC.

As a result of the Maclean  Hunter  Acquisition,  at any time after December 18,
2001,  CalPERS may elect to  liquidate  its interest in the LLC at a price based
upon the fair value of CalPERS'  interest in the LLC,  adjusted,  under  certain
circumstances,  for certain  performance  criteria relating to the fair value of
the  LLC  or  to  the  Company's   common  stock.   Except  in  certain  limited
circumstances,   the  Company,   at  its  option,  may  satisfy  this  liquidity
arrangement by purchasing  CalPERS'  interest for cash,  through the issuance of
the Company's  common stock (subject to certain  limitations)  or by selling the
LLC.

                                     - 29 -
<PAGE>
Capital Expenditures

It is anticipated that, during 1997, the Company will incur  approximately  $1.1
billion of capital  expenditures,  including  $600 million for the upgrading and
rebuilding  of certain  of the  Company's  cable  communications  systems,  $125
million for the upgrading of QVC's warehousing and distribution facilities, $125
million for the upgrading of the Company's cellular  communications  systems and
$150 million for the  build-out of the  Company's  consolidated  United  Kingdom
("UK") affiliates'  systems.  The remaining $100 million of anticipated  capital
expenditures  for 1997  will be  utilized  for the  Company's  direct  broadcast
satellite  operations  and  other  initiatives.   The  amount  of  such  capital
expenditures for years subsequent to 1997 will depend on numerous factors,  many
of which are  beyond  the  Company's  control.  These  factors  include  whether
competition in a particular market necessitates a cable system upgrade,  whether
a  particular  cable  system  has  sufficient  capacity  to handle  new  product
offerings   including  the  offering  of  cable  modem,   cable   telephony  and
telecommunications services, whether and to what extent the Company will be able
to recover its  investment  under FCC rate  guidelines  and other  factors,  and
whether the Company  acquires  additional  cable systems in need of upgrading or
rebuilding.  The Company,  however,  anticipates capital  expenditures for years
subsequent to 1997 will continue to be significant. As of December 31, 1996, the
Company  does not have  any  significant  contractual  obligations  for  capital
expenditures.

UK Industry Consolidation

Based on closed and announced transactions, it is apparent that the UK cable and
telecommunications industries are undergoing a significant consolidation,  which
trend the  Company  expects to continue  in the coming  months.  The Company has
engaged an investment  advisor to assist it in  evaluating  the current state of
the UK marketplace, the position of other participants and its alternatives with
respect to Comcast UK Cable.  There can be no  assurance  that the Company  will
take any action, or in what time frame any such action, if undertaken,  might be
accomplished.

Financing

The Company has  historically  utilized a strategy of financing its acquisitions
through  senior debt at the  acquired  operating  subsidiary  level.  Additional
financing  has also  been  obtained  by the  Company  through  the  issuance  of
subordinated debt at the intermediate  holding company and parent company levels
and, to some extent,  through public  offerings of a subsidiary  company's stock
and debt instruments.  As of December 31, 1996 and 1995, the Company's long-term
debt,  including  current  portion,  was  $7.332  billion  and  $7.029  billion,
respectively,  of which 45.2% and 54.0%,  respectively,  was at variable  rates.
Maturities of long-term  debt  outstanding  as of December 31, 1996 for the five
years  commencing in 1997 are $229.5 million,  $671.5  million,  $462.5 million,
$668.1 million and $1.282 billion. As of February 1, 1997, certain  subsidiaries
of the Company had unused lines of credit of $1.679  billion.  The  availability
and use of these unused lines of credit is  restricted  by the  covenants of the
related  debt  agreements  and  to  subsidiary  general  purposes  and  dividend
declaration.  In addition,  of the total unused lines of credit,  $625.0 million
was established by a subsidiary for debt  refinancing.  The Company's  long-term
debt had  estimated  fair  values of $7.323  billion  and  $7.089  billion as of
December  31,  1996 and  1995,  respectively.  The  Company's  weighted  average
interest  rate was 7.90%,  8.32% and 7.75%  during the years ended  December 31,
1996, 1995 and 1994,  respectively.  The Company continually  evaluates its debt
structure  with the  intention of reducing its debt  service  requirements  when
desirable.

In November 1995,  Comcast UK Cable received net proceeds of $291.1 million from
the sale of $517.3  million  principal  amount at maturity of its 11.20%  senior
discount debentures due 2007 (the "2007 Discount Debentures"). Interest accretes
on the 2007 Discount  Debentures at 11.20% per annum,  compounded  semi-annually
from  November 15, 1995 to November 15, 2000,  after which date interest will be
paid in cash on each May 15 and November 15, through  November 15, 2007. The net
proceeds  from the offering are being  utilized by Comcast UK Cable for advances
and capital contributions to its equity investees and subsidiaries primarily for
the build-out of their telecommunications networks in the UK.

As part of the Repurchase  Program,  the Company sold put options on 1.0 million
and 3.0  million  shares of its Class A Special  Common  Stock  during the years
ended December 31, 1996 and 1995, respectively. The put options give the holders
the right to require the Company to repurchase  such shares at specified  prices
on specific  dates in January  through March 1997. As of December 31, 1996,  the
Company has reclassified $69.6 million,  the amount it would be obligated to pay
to  repurchase  such shares upon  exercise  of the put  options,  to a temporary
equity account in its

                                     - 30 -
<PAGE>
consolidated balance sheet. The temporary equity related to these shares will be
reclassified to additional  capital in the first quarter of 1997 upon expiration
or settlement of the options.

On March 27,  1997,  the Company  announced  that its wholly  owned  subsidiary,
Comcast  Cellular  Holdings  Inc.   ("Comcast   Cellular"),   intends  to  offer
approximately $900 million of senior notes (the "Notes") in a private placement.
The Notes will be  obligations  of Comcast  Cellular and will not be obligations
of, nor guaranteed by, the Company. The interest rate and certain other terms of
the Notes have not yet been determined.  However, there can be no assurance that
acceptable  terms  will be  reached or that the  offering  will be  consummated.
Comcast Cellular  anticipates using the net proceeds from the offering to redeem
or retire existing long-term debt of its subsidiaries.

Interest Rate and Foreign Currency Risk Management

The Company is exposed to market risk  including  changes in interest  rates and
foreign  currency  exchange  rates.  To manage the volatility  relating to these
exposures,  the Company enters into various derivative  transactions pursuant to
the  Company's  policies  in areas such as  counterparty  exposure  and  hedging
practices.  Positions are monitored using techniques  including market value and
sensitivity  analyses.  The  Company  does  not  hold or  issue  any  derivative
financial  instruments  for  trading  purposes  and is not a party to  leveraged
instruments. The credit risks associated with the Company's derivative financial
instruments  are  controlled  through  the  evaluation  and  monitoring  of  the
creditworthiness of the  counterparties.  Although the Company may be exposed to
losses in the event of  nonperformance by the  counterparties,  the Company does
not expect such losses, if any, to be significant.

The use of interest  rate risk  management  instruments,  such as interest  rate
exchange  agreements  ("Swaps"),  interest  rate  cap  agreements  ("Caps")  and
interest  rate collar  agreements  ("Collars"),  is required  under the terms of
certain of the Company's outstanding debt agreements. The Company's policy is to
manage interest costs using a mix of fixed and variable rate debt.  Using Swaps,
the Company agrees to exchange,  at specified intervals,  the difference between
fixed and variable  interest  amounts  calculated by reference to an agreed-upon
notional  principal  amount.  Caps are used to lock in a maximum  interest  rate
should variable rates rise, but enable the Company to otherwise pay lower market
rates.  Collars limit the Company's  exposure to and benefits from interest rate
fluctuations on variable rate debt to within a certain range of rates.

The following table summarizes the terms of the Company's  existing Swaps,  Caps
and Collars as of December 31, 1996 and 1995 (dollars in millions):
<TABLE>
<CAPTION>
                                        Notional                             Average         Estimated
                                         Amount          Maturities       Interest Rate     Fair Value
<S>                                      <C>              <C>           <C>             <C>
As of December 31, 1996
Variable to Fixed Swaps                  $1,080.0         1997-2000           5.85%           $7.4
Caps                                        250.0           1997              8.55%
Collars                                     620.0         1997-1998       6.98% / 5.16%        0.1

As of December 31, 1995
Variable to Fixed Swaps                    $650.0         1997-2000           6.05%          ($6.8)
Caps                                        250.0           1997              8.20%
Collars                                     300.0           1997          7.21% / 5.09%       (0.9)
</TABLE>

The  notional  amounts of interest  rate  agreements,  as presented in the above
table,  are used to measure interest to be paid or received and do not represent
the amount of exposure to credit loss. The estimated fair value approximates the
proceeds  (costs) to settle the  outstanding  contracts.  While Swaps,  Caps and
Collars  represent  an  integral  part  of  the  Company's  interest  rate  risk
management  program,  their incremental effect on interest expense for the years
ended December 31, 1996, 1995 and 1994 was not significant.

The Company has entered into certain foreign currency  exchange option contracts
("FX Options") as a normal part of its foreign currency risk management efforts.
During 1995,  Comcast UK Cable entered into certain foreign  exchange put option
contracts  ("FX Puts") which may be settled only on November 16, 2000.  These FX
Puts are used to limit Comcast UK Cable's exposure to the risk that the eventual
cash  outflows  related to net monetary  liabilities  denominated  in currencies
other than its functional currency (the UK Pound Sterling or "UK Pound")

                                     - 31 -
<PAGE>
(principally the 2007 Discount  Debentures) are adversely affected by changes in
exchange  rates.  As of  December  31,  1996 and  1995,  Comcast  UK  Cable  had
(pound)250.0  million  notional  amount of FX Puts to  purchase US dollars at an
exchange  rate of $1.35 per  (pound)1.00  (the  "Ratio").  The FX Puts provide a
hedge, to the extent the exchange rate falls below the Ratio, against Comcast UK
Cable's  net  monetary  liabilities  denominated  in US dollars  since gains and
losses  realized on the FX Puts are offset  against  foreign  exchange  gains or
losses  realized on the  underlying  net  liabilities.  Premiums paid for the FX
Puts,  of  $21.4  million,  have  been  recorded  as  assets  in  the  Company's
consolidated balance sheet. These premiums are being amortized over the terms of
the related contracts. As of December 31, 1996, the FX Puts had a carrying value
of $18.4 million and an estimated  fair value of $5.5 million.  The  differences
between the carrying  amounts and the  estimated  fair value of the FX Puts were
not significant as of December 31, 1995.

In the fourth  quarter of 1995,  in order to reduce  hedging  costs,  Comcast UK
Cable sold  foreign  exchange  call option  contracts  ("FX  Calls") to exchange
(pound)250.0  million  notional  amount.  Comcast UK Cable received $5.3 million
from the sale of these  contracts.  These contracts may only be settled on their
expiration dates. Of these contracts, (pound)200.0 million notional amount, with
an exchange ratio of $1.70 per (pound)1.00, expired unexercised in November 1996
while the remaining contract,  with a (pound)50.0 million notional amount and an
exchange ratio of $1.62 per (pound)1.00, has a settlement date in November 2000.
In the fourth  quarter of 1996,  in order to continue to reduce  hedging  costs,
Comcast UK Cable sold  additional  FX Calls,  for proceeds of $3.5  million,  to
exchange  (pound)200.0  million  notional amount at an average exchange ratio of
$1.75 per  (pound)1.00.  These contracts may only be settled on their expiration
dates during the fourth quarter of 1997. The FX Calls are  marked-to-market on a
current basis in the Company's consolidated statement of operations.

As of December 31, 1996 and 1995,  the estimated  fair value of the  liabilities
related to the FX Calls,  as  recorded  in the  Company's  consolidated  balance
sheet, was $12.2 million and $5.8 million,  respectively.  Changes in fair value
between  measurement  dates relating to the FX Calls resulted in exchange losses
of $2.2  million  during  the year  ended  December  31,  1996 in the  Company's
consolidated  statement of operations.  There were no significant exchange gains
or losses relating to these contracts during the year ended December 31, 1995.

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

As  a  result  of  the  Scripps  Acquisition,   the  Company  no  longer  has  a
stockholders' deficiency.  However, the Company expects to continue to recognize
significant  losses  for  the  foreseeable  future  resulting  in  decreases  in
stockholders'  equity.  The  telecommunications  industry,  including  cable and
cellular communications,  and the electronic retailing industry are experiencing
increasing  competition and rapid  technological  changes.  The Company's future
results of operations will be affected by its ability to react to changes in the
competitive  environment  and by its  ability  to  implement  new  technologies.
However,  the Company believes that competition,  technological  changes and its
significant  losses  will  not  significantly   affect  its  ability  to  obtain
financing.

The Company  believes  that it will be able to meet its  current  and  long-term
liquidity and capital  requirements,  including fixed charges,  through its cash
flows from operating  activities,  existing cash, cash  equivalents,  short-term
investments and lines of credit and other external financing.

Statement of Cash Flows

Cash and cash equivalents  decreased $207.8 million as of December 31, 1996 from
December  31, 1995 and  increased  $203.8  million as of December  31, 1995 from
December 31, 1994. Changes in cash and cash equivalents resulted from cash flows
from operating, financing and investing activities which are explained below.

Net cash provided by operating  activities  amounted to $799.6  million,  $520.7
million and $369.1 million for the years ended December 31, 1996, 1995 and 1994,
respectively.  The increase of $278.9 million from 1995 to 1996 was  principally
due to  changes in working  capital  as a result of the timing of  receipts  and
disbursements  and  the  increase  in  the  Company's  operating  income  before
depreciation  and  amortization  (see  "Results of  Operations"),  including the
effects of the Scripps Acquisition.  The increase of $151.6 million from 1994 to
1995 was  principally  due to effects  of the QVC  Acquisition  and the  Maclean
Hunter Acquisition.

Net cash  (used  in)  provided  by  financing  activities,  which  includes  the
issuances of  securities  as well as  borrowings,  was ($81.2)  million,  $2.036
billion and $1.115 billion for the years ended December 31, 1996, 1995 and 1994,

                                     - 32 -
<PAGE>
respectively.  During 1996,  the Company  borrowed  $839.5 million under new and
existing lines of credit and repaid $734.4 million,  including $257.4 million in
connection  with the refinancing of certain  indebtedness  and $123.7 million of
repayments  under  a  vendor  financing  arrangement.  Net  repurchases  of  the
Company's  common stock in 1996 were $175.9  million.  During 1995,  the Company
borrowed  $3.728  billion  including  $1.1  billion in  connection  with the QVC
Acquisition,  $1.085  billion  in  connection  with the  refinancing  of certain
indebtedness,  $300.9 million  associated  with the funding of Sprint  Spectrum,
$300.0 million of the 2007 Discount Debentures,  $250.0 million of the Company's
9-3/8%  senior  subordinated  debentures  due 2005  and  $250.0  million  of the
Company's 9-1/8% senior  subordinated  debentures due 2006. In addition,  during
1995,  the Company  retired and repaid  $1.620  billion of its  long-term  debt,
including   $1.186  billion  in  connection  with  the  refinancing  of  certain
indebtedness,  and  $175.0  million  of  optional  repayments  on  QVC's  credit
facility.  Proceeds from  borrowings of $1.201  billion in 1994 included  $1.015
billion  relating to the Maclean  Hunter  Acquisition.  During 1994, the Company
repurchased  or  redeemed  and retired  $509.0  million of its  long-term  debt,
including the Company's $150.0 million,  11-7/8% senior subordinated  debentures
due 2004.  Net cash  provided  by  financing  activities  in 1994  excludes  the
conversion of $186.2 million of long-term debt into 16.8 million shares of Class
A Special Common Stock of the Company.  In 1994, the Company  received an equity
contribution  to a subsidiary of $250.0  million in connection  with the Maclean
Hunter  Acquisition  and received  proceeds from the issuance of common stock of
Comcast UK Cable of $209.4 million.

Net cash used in investing  activities  was $926.2  million,  $2.353 billion and
$1.309  billion  for  the  years  ended  December  31,  1996,   1995  and  1994,
respectively.  During  1996,  net cash  used in  investing  activities  includes
acquisitions,   net  of  cash  acquired,  of  $60.4  million,   additional  cash
investments  in  affiliates  of $502.0  million,  including  $159.6  million  in
connection  with  the  Company's   investment  in   Comcast-Spectacor,   capital
contributions  to Sprint  Spectrum of $106.8  million and the purchase of Nextel
shares of $99.9  million,  and  capital  expenditures  of $670.4  million.  Cash
proceeds from investing activities include proceeds from the sales of short-term
and long-term investments of $377.7 million, including $105.4 million from sales
of  Nextel  shares  and  $52.5  million  of  distributions   from  Garden  State
Cablevision,  L.P. ("Garden State"),  an investee of the Company. As the Company
issued  shares of its  Class A  Special  Common  Stock as  consideration  in the
Scripps  Acquisition,  the  transaction  had no significant  impact on investing
activities in the  consolidated  statement of cash flows.  During 1995, net cash
used  in  investing   activities   includes   acquisitions  of  $1.386  billion,
principally  the  acquisition  of QVC,  net of cash  acquired,  additional  cash
investments in affiliates of $480.2 million,  including capital contributions to
Sprint  Spectrum of $327.5 million,  capital  expenditures of $623.0 million and
net purchases of short-term  investments  of $240.8  million.  Such amounts were
offset by  proceeds  from  sales of  long-term  investments  of $410.5  million,
principally  in  connection  with the  Heritage  Transaction  (see  "Results  of
Operations - Consolidated Analysis") and the sale of Nextel shares. Acquisitions
in  1994  consisted   principally  of  $1.2  billion  paid,   including  certain
transaction  costs,  in  connection  with the Maclean  Hunter  Acquisition.  Net
proceeds of $389.3 million from the sale of short-term  investments  during 1994
were used principally to redeem and retire  long-term debt. In addition,  during
1994,  the  Company  made  capital  expenditures  of  $269.9  million  and  made
additional cash investments in affiliates of $125.0 million.

Results of Operations

The  effects  of  the  Company's  recent  acquisitions  have  been  to  increase
significantly  the  Company's  revenues and expenses,  resulting in  substantial
increases  in  its  operating  income  before   depreciation  and  amortization,
depreciation  expense,  amortization  expense and interest expense. In addition,
the Company's equity in net losses of affiliates has increased  principally as a
result of the start-up nature of certain of the Company's  equity investees (see
"Operating  Results by Business  Segment"  and  "Consolidated  Analysis").  As a
result of the  increases  in  depreciation  expense,  amortization  expense  and
interest expense  associated with these acquisitions and their financing and the
expected  increases in equity in net losses of  affiliates,  it is expected that
the Company will continue to recognize  significant  losses for the  foreseeable
future.

                                     - 33 -
<PAGE>
Summarized  consolidated  financial  information  for the  Company for the three
years ended December 31, 1996 is as follows  (dollars in millions,  "NM" denotes
percentage is not meaningful):
<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                     December 31,            Increase/(Decrease)
                                                                   1996         1995           $             %
<S>                                                              <C>          <C>            <C>           <C>
Revenues                                                         $4,038.4     $3,362.9       $675.5        20.1%
Cost of goods sold from electronic retailing                      1,110.9        898.3        212.6        23.7
Operating, selling, general and administrative expenses           1,720.3      1,445.8        274.5        19.0
                                                                 --------     --------
Operating income before depreciation and
   amortization (1)                                               1,207.2      1,018.8        188.4        18.5
Depreciation                                                        314.6        339.9        (25.3)       (7.4)
Amortization                                                        383.7        349.1         34.6         9.9
                                                                 --------     --------
Operating income                                                    508.9        329.8        179.1        54.3
                                                                 --------     --------
Interest expense                                                    540.8        524.7         16.1         3.1
Investment income                                                  (122.6)      (229.8)      (107.2)      (46.6)
Equity in net losses of affiliates                                  144.8         86.6         58.2        67.2
Gain from equity offering of affiliate                              (40.6)                     40.6         NM
Other                                                                 2.6         (6.3)        (8.9)     (141.3)
Income tax expense                                                   84.4         42.1         42.3       100.5
Minority interest                                                   (48.0)       (49.7)        (1.7)       (3.4)
Extraordinary items                                                  (1.0)        (6.1)        (5.1)      (83.6)
                                                                 --------     --------

Net loss                                                           ($53.5)      ($43.9)        $9.6        21.9%
                                                                 ========     ========
</TABLE>
<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                     December 31,            Increase/(Decrease)
                                                                   1995         1994           $             %
<S>                                                              <C>          <C>          <C>            <C>
Revenues                                                         $3,362.9     $1,375.3     $1,987.6       144.5%
Cost of goods sold from electronic retailing                        898.3                     898.3         NM
Operating, selling, general and administrative expenses           1,445.8        799.0        646.8        81.0
                                                                 --------     --------
Operating income before depreciation and
   amortization (1)                                               1,018.8        576.3        442.5        76.8
Depreciation                                                        339.9        182.2        157.7        86.6
Amortization                                                        349.1        154.3        194.8       126.2
                                                                 --------     --------
Operating income                                                    329.8        239.8         90.0        37.5
                                                                 --------     --------
Interest expense                                                    524.7        313.4        211.3        67.4
Investment income                                                  (229.8)       (24.6)       205.2         NM
Equity in net losses of affiliates                                   86.6         40.9         45.7       111.7
Other                                                                (6.3)                      6.3         NM
Income tax expense (benefit)                                         42.1         (9.2)        51.3         NM
Minority interest                                                   (49.7)        (5.4)        44.3         NM
Extraordinary items                                                  (6.1)       (11.7)        (5.6)      (47.9)
                                                                 --------     --------
Net loss                                                           ($43.9)      ($87.0)      ($43.1)      (49.5%)
                                                                 ========     ========
<FN>
------------
(1)  Operating income before  depreciation and amortization is commonly referred
     to in the Company's  businesses as "operating  cash flow."  Operating  cash
     flow is a measure of a company's  ability to  generate  cash to service its
     obligations, including debt service obligations, and to finance capital and
     other  expenditures.  In part due to the  capital  intensive  nature of the
     Company's  businesses  and the  resulting  significant  level  of  non-cash
     depreciation  and amortization  expense,  operating cash flow is frequently
     used  as  one  of the  bases  for  comparing  businesses  in the  Company's
     industries. Operating cash flow does not purport to represent net income or
     net cash provided by operating activities, as those terms are defined under
     generally accepted accounting  principles,  and should not be considered as
     an  alternative  to such  measurements  as an  indicator  of the  Company's
     performance.  See  "Statement  of Cash Flows" above for a discussion of net
     cash provided by operating activities.
</FN>
</TABLE>
                                     - 34 -
<PAGE>
Operating Results by Business Segment

The  following  represent the  operating  results of the  Company's  significant
business  segments,   including:   "Domestic  Cable  Communications,"  the  most
significant of the Company's wired  telecommunications  operations;  "Electronic
Retailing,"  the most  significant  of the  Company's  content  businesses;  and
"Cellular  Communications,"  the  most  significant  of the  Company's  wireless
telecommunications   operations.  The  remaining  components  of  the  Company's
operations  are not  independently  significant  to the  Company's  consolidated
financial  position  or  results  of  operations  (see Note 10 to the  Company's
consolidated financial statements).

Domestic Cable Communications

The following table sets forth the operating results for the Company's  domestic
cable communications segment (dollars in millions):
<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                         Increase
                                                     1996              1995               $                 %
<S>                                                 <C>              <C>                <C>               <C>
Service income                                      $1,640.9         $1,454.9           $186.0            12.8%
Operating, selling, general and
     administrative expenses                           830.9            736.4             94.5            12.8
                                                    --------         --------           ------

Operating income before depreciation
     and amortization (a)                             $810.0           $718.5            $91.5            12.7%
                                                    ========         ========           ======
</TABLE>
<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                         Increase
                                                     1995              1994               $                 %
<S>                                                 <C>              <C>                <C>               <C>
Service income                                      $1,454.9         $1,065.3           $389.6            36.6%
Operating, selling, general and
     administrative expenses                           736.4            547.8            188.6            34.4
                                                    --------         --------           ------

Operating income before depreciation
     and amortization (a)                             $718.5           $517.5           $201.0            38.8%
                                                    ========         ========           ======
<FN>
---------------
(a) See footnote (1) on page 34.
</FN>
</TABLE>

The  Scripps  Acquisition  accounted  for $52.3  million of the  $186.0  million
increase  in service  income  from 1995 to 1996.  Of the  remaining  increase of
$133.7  million,  $33.5  million is  attributable  to subscriber  growth,  $84.5
million is  attributable  to changes in rates,  $4.7 million is  attributable to
growth in cable  advertising  sales and $11.0  million  relates to other product
offerings.  The Maclean Hunter  Acquisition  accounted for $270.1 million of the
$389.6  million  increase in service  income from 1994 to 1995. Of the remaining
increase of $119.5 million,  $46.0 million is attributable to subscriber growth,
$54.6  million  relates to changes in rates,  which  includes  the change in the
estimated effects of cable rate regulation, $14.0 million results from growth in
cable  advertising  sales and $4.9  million  relates to growth in other  product
offerings.

The  Scripps  Acquisition  accounted  for $30.9  million  of the  $94.5  million
increase in operating, selling, general and administrative expenses from 1995 to
1996. Of the remaining increase of $63.6 million,  $21.7 million is attributable
to  increases  in the costs of  programming  as a result of  subscriber  growth,
additional channel offerings and changes in rates, $25.3 million is attributable
to increases in costs associated with  implementation of three regional customer
service  call  centers  and  increases  in the cost of labor,  $4.2  million  is
attributable  to  growth  in  cable  advertising  sales  and  $12.4  million  is
attributable to increases in other volume related  expenses.  The Maclean Hunter
Acquisition  accounted  for $143.7  million of the $188.6  million  increase  in
operating,  selling,  general and administrative  expenses from 1994 to 1995. Of
the  remaining  increase of $44.9  million,  $22.6  million is  attributable  to
increases in the costs of cable  programming  as a result of subscriber  growth,
additional  channel offerings and changes in rates, $7.2 million is attributable
to increases in expenses  associated with the growth in cable  advertising sales
and $15.1 million  results from  increases in the cost of labor and other volume
related expenses. It is anticipated that the Company's cost of cable programming
will increase in the future as cable  programming  rates increase and additional
sources of cable programming become available.

                                     - 35 -
<PAGE>
Electronic Retailing

As a result of the QVC  Acquisition,  the Company  commenced  consolidating  the
financial  results of QVC  effective  February  1,  1995.  The  following  table
presents actual  financial  information for the year ended December 31, 1996 and
pro forma financial  information for the years ended December 31, 1995 and 1994.
Pro forma financial information is presented herein for purposes of analysis and
may not reflect what actual  operating  results  would have been had the Company
owned QVC since January 1, 1994 (dollars in millions):

<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                         Increase
                                                     1996              1995               $                 %
<S>                                                 <C>              <C>                <C>               <C>
Net sales from electronic retailing                 $1,835.8         $1,619.2           $216.6            13.4%
Cost of goods sold from electronic retailing         1,110.9            976.4            134.5            13.8
Operating, selling, general and administrative
     expenses                                          424.6            387.4             37.2             9.6
                                                    --------         --------           ------
Operating income before depreciation
     and amortization (a)                             $300.3           $255.4            $44.9            17.6%
                                                    ========         ========           ======

Gross margin                                            39.5%            39.7%
                                                    ========         ========
</TABLE>

<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                         Increase
                                                     1995              1994               $                 %
<S>                                                 <C>              <C>                <C>               <C>
Net sales from electronic retailing                 $1,619.2         $1,374.5           $244.7            17.8%
Cost of goods sold from electronic retailing           976.4            839.5            136.9            16.3
Operating, selling, general and administrative
     expenses                                          387.4            326.1             61.3            18.8
                                                    --------         --------           ------
Operating income before depreciation
     and amortization (a)                             $255.4           $208.9            $46.5            22.3%
                                                    ========         ========           ======

Gross margin                                            39.7%            38.9%
                                                    ========         ========
<FN>
---------------
(a) See footnote (1) on page 34.
</FN>
</TABLE>

Effective  April 1, 1995,  QVC  consolidated  the results of its UK  operations.
These operations  accounted for $50.3 million of the sales increase from 1995 to
1996. Nine months of sales from these operations  accounted for $48.4 million of
the sales increase from 1994 to 1995. The remaining  increases of $166.3 million
and  $196.3  million  from  1995 to 1996  and 1994 to  1995,  respectively,  are
primarily  attributable  to increases of 7.2% and 9.2% in the average  number of
QVC homes  receiving  QVC  services  in the US over the  respective  prior  year
periods.

An allowance for returned merchandise is provided as a percentage of sales based
on historical  experience.  The return provision was approximately 21 percent of
gross sales for each of the years ended December 31, 1996, 1995 and 1994.

The $134.5  million  and  $136.9  million  increases  in cost of goods sold from
electronic  retailing  from  1995 to 1996 and 1994 to  1995,  respectively,  are
directly  related to the growth in net sales.  The 0.2 percentage point decrease
in gross  margin from 1995 to 1996 and 0.8  percentage  point  increase in gross
margin  from 1994 to 1995 are due to slight  changes in product mix from year to
year.

The growth in and consolidation of QVC's UK operations, effective April 1, 1995,
resulted in increases in operating, selling, general and administrative expenses
of  $17.4  million  and  $25.8  million  from  1995 to 1996  and  1994 to  1995,
respectively.  The  remaining  increases of $19.8 million and $35.5 million from
1995 to 1996 and 1994 to 1995,  respectively,  are  attributable to higher sales
volume,  increases in advertising costs and additional costs associated with new
businesses.

                                     - 36 -
<PAGE>
Cellular Communications

The following table sets forth the operating results for the Company's  cellular
communications segment (dollars in millions):
<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                         Increase
                                                     1996              1995               $                 %
<S>                                                   <C>              <C>               <C>              <C>
Service income                                        $426.1           $374.9            $51.2            13.7%
Operating, selling, general and administrative
     expenses                                          265.9            237.1             28.8            12.1
                                                      ------           ------            -----
Operating income before depreciation
     and amortization (a)                             $160.2           $137.8            $22.4            16.3%
                                                      ======           ======            =====
</TABLE>

<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                         Increase
                                                     1995              1994               $                 %
<S>                                                   <C>              <C>               <C>              <C>
Service income                                        $374.9           $286.1            $88.8            31.0%
Operating, selling, general and administrative
     expenses                                          237.1            169.8             67.3            39.6
                                                      ------           ------            -----
Operating income before depreciation
     and amortization (a)                             $137.8           $116.3            $21.5            18.5%
                                                      ======           ======            =====
<FN>
---------------
(a) See footnote (1) on page 34.
</FN>
</TABLE>

Of the  respective  $51.2 million and $88.8 million  increases in service income
from  1995  to  1996  and  1994  to  1995,  $69.6  million  and  $99.6  million,
respectively,  are attributable to the Company's  subscriber growth.  Offsetting
the increases  from 1995 to 1996 and 1994 to 1995 are decreases of $19.3 million
and $25.0 million,  respectively,  resulting from reductions in the average rate
per minute of use in these respective  periods.  The remaining changes from 1995
to 1996 and 1994 to 1995 are  attributable to growth in roamer revenue and other
products of $900,000 and $14.2 million,  respectively.  The Company expects that
the decrease in average  minutes-of-use per cellular subscriber will continue in
the future, which is consistent with industry trends.

Of the  respective  $28.8  million and $67.3  million  increases  in  operating,
selling, general and administrative expenses from 1995 to 1996 and 1994 to 1995,
$24.3 million and $38.2 million, respectively, are related to subscriber growth,
including the costs to acquire and service subscribers.  The remaining increases
of $4.5 million and $29.1 million,  respectively,  are due to increases in other
expenses,  including subscriber retention costs,  administrative costs and theft
of service in 1995.

Consolidated Analysis

The  $25.3  million  decrease  in  depreciation  expense  from  1995  to 1996 is
primarily attributable to the effects of the rebuild of certain of the Company's
cellular  equipment  in 1995 (see  below)  offset,  in part,  by the  effects of
capital  expenditures  during  1995  and  1996 and the  effects  of the  Scripps
Acquisition in 1996. The $157.7 million  increase in  depreciation  expense from
1994 to 1995 is  attributable  to the  effects  of the  acquisitions  of QVC and
Maclean Hunter,  the effects of the rebuild of certain of the Company's cellular
equipment in 1995 and capital expenditures during the periods,  offset, in part,
by the effects of asset disposals during the periods.

In 1995, the Company's  cellular division  purchased $172.0 million of switching
and cell site  equipment  which  replaced the existing  switching  and cell site
equipment  (the "Cellular  Rebuild").  The Company  substantially  completed the
Cellular  Rebuild during 1995.  Accordingly,  during 1995,  the Company  charged
$110.0 million to depreciation  expense which represented the difference between
the net book value of the  equipment  replaced and the residual  value  realized
upon its disposal.

                                     - 37 -
<PAGE>
The $34.6 million and $194.8 million increases in amortization expense from 1995
to 1996  and 1994 to  1995,  respectively,  are  primarily  attributable  to the
effects  of the  acquisition  of  Scripps  Cable in 1996 and the  effects of the
acquisitions of QVC and Maclean Hunter in 1995 and 1994, respectively.

The $16.1  million  increase in interest  expense from 1995 to 1996 is primarily
attributable to an increase in the Company's outstanding long-term debt, offset,
in part,  by a decrease in  interest  rates from 1995 to 1996 and the effects of
capitalized interest.  The $211.3 million increase in interest expense from 1994
to 1995 is  primarily  due to  increased  levels  of debt  associated  with  the
acquisitions of QVC and Maclean Hunter.

The Company anticipates that, for the foreseeable future,  interest expense will
be a significant cost to the Company and will have a significant  adverse effect
on the Company's  ability to realize net earnings.  The Company believes it will
continue to be able to meet its obligations through its ability both to generate
operating  income before  depreciation  and  amortization and to obtain external
financing.

The $107.2 million decrease in investment  income from 1995 to 1996 is primarily
attributable to the effects of the gain realized in the Heritage  Transaction in
1995 (see below),  offset,  in part, by the gain recognized upon the exchange of
the shares of TBS held by the Company for Time Warner Stock in 1996.  The $205.2
million  increase in investment  income from 1994 to 1995 is principally  due to
the $177.2 million in gains related to the Heritage  Transaction and the sale of
Nextel common stock in 1995.  The  remaining  increase for this period is due to
the effects of the QVC  Acquisition  and an increase in the Company's cash, cash
equivalents  and  short-term  investments,  offset  by $15.3  million  of losses
recorded  relating  to the net  realizable  value of  certain  of the  Company's
investments.

In  January   1995,   the  Company   exchanged  its   investments   in  Heritage
Communications,  Inc. with TCI for 13.3 million  publicly-traded  Class A common
shares of TCI with a fair market value of $290.0  million.  Shortly  thereafter,
the  Company  sold 9.1  million  unrestricted  TCI shares for total  proceeds of
$188.1 million (collectively,  the "Heritage Transaction"). As a result of these
transactions,  the  Company  recognized  a  pre-tax  gain of $141.0  million  as
investment income in its 1995 consolidated statement of operations.

The increases in equity in net losses of affiliates  for both periods are due to
the timing of investments in and changes in losses incurred by Sprint  Spectrum,
TCGI (as defined  below),  the  Company's  international  investees  and certain
programming  investees.  Based  on  Sprint  Spectrum's  current  operations  and
business plan, the Company  anticipates that its  proportionate  share of Sprint
Spectrum's losses will be significant in future years.

Through June 27, 1996, the Company held  investments in Teleport  Communications
Group Inc.  ("TCGI"),  TCG Partners and certain local joint ventures (the "Joint
Ventures")  managed  by TCGI and TCG  Partners.  On June  27,  1996,  TCGI  sold
approximately  27 million  shares of its Class A Common Stock (the "TCGI Class A
Stock"),  for $16 per share,  in an initial public offering (the "TCGI IPO"). In
connection with the TCGI IPO, TCGI, the Company and subsidiaries of Cox, TCI and
Continental  Cablevision  ("Continental"  and collectively with Cox, TCI and the
Company, the "Cable  Stockholders")  entered into an agreement pursuant to which
TCGI was reorganized (the  "Reorganization").  The Reorganization  consisted of,
among  other  things:  (i) the  acquisition  by TCGI of TCG  Partners;  (ii) the
acquisition  by TCGI of additional  interests in the Joint  Ventures  (including
100% of those interests held by the Company); and (iii) the contribution to TCGI
of $269.0  million  aggregate  principal  amount of  indebtedness,  plus accrued
interest  thereon,  owed by TCGI to the  Cable  Stockholders  (except  that  TCI
retained a $26  million  subordinated  note of TCGI),  including  $53.8  million
principal  amount and $4.1 million of accrued  interest owed to the Company.  In
connection with the Reorganization,  the Company received 25.6 million shares of
TCGI's Class B Common Stock (the "TCGI Class B Stock"). Each share of TCGI Class
B Stock is entitled  to voting  power  equivalent  to ten shares of TCGI Class A
Stock and is  convertible,  at the option of the holder,  into one share of TCGI
Class  A  Stock.   The  Company   recorded  a  $40.6  million  increase  in  its
proportionate  share of TCGI's  net  assets as a gain from  equity  offering  of
affiliate in its 1996 consolidated statement of operations.  After giving effect
to  the  Reorganization  and  the  TCGI  IPO,  the  Company  owns  19.5%  of the
outstanding TCGI Class B Stock  representing a 19.1% voting interest and a 16.1%
equity interest. The Company continues to account for its interest in TCGI under
the equity  method.  Assuming  conversion  of the TCGI Class B Stock held by the
Company  into TCGI Class A Stock,  the  Company's  investment  would have a fair
value of  approximately  $781.5  million based on the quoted market price of the
TCGI Class A Stock as of December 31, 1996.

The  $8.9  million  decrease  in other  income  from  1995 to 1996 is  primarily
attributable to the settlement of certain litigation in 1996 offset, in part, by
an increase in foreign exchange gains.

                                     - 38 -
<PAGE>
The $42.3 million and $51.3 million increases in income tax expense from 1995 to
1996 and 1994 to 1995 are  primarily  attributable  to increases in QVC's income
before  income  taxes  and  the  consolidation  of QVC for  financial  reporting
purposes in 1995.

The $44.3  million  increase  in minority  interest  income from 1994 to 1995 is
attributable  to minority  interests  in the net income  (loss) of QVC,  Maclean
Hunter and Comcast UK Cable.

In May 1996, the Company expensed  unamortized  debt  acquisition  costs of $1.8
million  in  connection  with the  prepayment  of a  portion  of a  subsidiary's
outstanding  debt,  resulting  in an  extraordinary  loss,  net of  tax of  $1.0
million.  The Company incurred debt  extinguishment  costs totaling $9.4 million
during  1995  in  connection  with  the  refinancing  of  certain  indebtedness,
resulting  in an  extraordinary  loss,  net of tax, of $6.1  million or $.02 per
share.  During 1994,  the Company paid  premiums and expensed  unamortized  debt
acquisition  costs  totaling  $18.0  million,  primarily in connection  with the
redemption of its $150.0  million,  11-7/8% senior  subordinated  debentures due
2004,  resulting in an extraordinary  loss, net of tax, of $11.7 million or $.05
per share.

For  the  years  ended   December  31,  1996,   1995  and  1994,  the  Company's
distributions from Garden State and earnings before  extraordinary items, income
tax expense  (benefit),  equity in net losses of  affiliates  and fixed  charges
(interest  expense)  were $770.0  million,  $615.6  million and $269.8  million,
respectively.  Such earnings were adequate to cover the Company's fixed charges,
of $572.9 million, including capitalized interest of $32.1 million, for the year
ended  December  31,  1996.  Excluding  the  pre-tax  gains  of  $177.2  million
recognized in 1995 in connection with the Heritage  Transaction and sales of the
Company's Nextel shares,  such earnings were not adequate to cover the Company's
fixed charges of $531.1  million and $313.4 million for the years ended December
31, 1995 and 1994, respectively,  including capitalized interest of $6.4 million
in 1995. The Company's fixed charges include non-cash  interest expense of $97.0
million,  $60.2 million and $53.5 million for the years ended December 31, 1996,
1995 and 1994, respectively. For the years ended December 31, 1995 and 1994, the
inadequacy  of these  earnings to cover fixed  charges is  primarily  due to the
substantial non-cash charges for depreciation expense, including the 1995 charge
associated with the Cellular Rebuild, and amortization expense.

The  Company  believes  that  its  losses  will  not  significantly  affect  the
performance of its normal business activities because of its existing cash, cash
equivalents and short-term investments, its ability to generate operating income
before  depreciation  and  amortization  and  its  ability  to  obtain  external
financing.

The  Company  believes  that  its  operations  are not  materially  affected  by
inflation.

Regulatory Developments

The Company has settled the majority of outstanding  proceedings challenging its
rates charged for regulated cable services. In December 1995, the FCC adopted an
order approving a negotiated  settlement of rate complaints  pending against the
Company for cable  programming  service  tiers  ("CPSTs")  which  provided  $6.6
million in refunds,  plus  interest,  given in the form of bill  credits  during
1996,  to 1.3  million  of the  Company's  cable  subscribers.  As  part  of the
negotiated  settlement,  the  Company  agreed to forego  certain  inflation  and
external cost adjustments for systems covered by its cost-of-service filings for
CPSTs.  The  Company  currently  is  seeking to  justify  rates for basic  cable
services  and  equipment  in  certain  of its  cable  systems  in the  State  of
Connecticut on the basis of a cost-of-service  showing. The State of Connecticut
has ordered the Company to reduce such rates and to make refunds to subscribers.
The  Company  has  appealed  the   Connecticut   decision  to  the  FCC.  Recent
pronouncements  from the FCC, which generally support the Company's  position on
appeal,  have caused the State of  Connecticut  to reexamine  its prior  ruling.
While the  Company  cannot  predict  the  outcome of this  action,  the  Company
believes that the ultimate  resolution of these pending  regulatory matters will
not have a material adverse impact on the Company's financial position,  results
of operations or liquidity.

                                     - 39 -
<PAGE>


ITEM 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Comcast Corporation
Philadelphia, Pennsylvania

We  have  audited  the  accompanying   consolidated  balance  sheet  of  Comcast
Corporation  and its  subsidiaries  as of December  31,  1996 and 1995,  and the
related consolidated statements of operations, stockholders' equity (deficiency)
and of cash flows for each of the three years in the period  ended  December 31,
1996.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements  based on our  audits.  We did not audit the  consolidated  financial
statements of QVC, Inc.  ("QVC") as of and for the year ended  December 31, 1996
and as of and for the  eleven  month  period  ended  December  31,  1995 and the
consolidated  financial  statements  of  Comcast  International  Holdings,  Inc.
("International")  and the financial statements of Garden State Cablevision L.P.
("Garden State") for the year ended December 31, 1994. QVC and International are
consolidated  with the  Company.  The  Company's  investment  in Garden State is
accounted for under the equity method.  QVC's financial statements reflect total
assets constituting 17% and 20%,  respectively,  and total revenues constituting
45% and 44%,  respectively,  of the  Company's  consolidated  total  assets  and
revenues as of and for the years ended December 31, 1996 and 1995. The Company's
combined equity in the net losses of International and Garden State for the year
ended December 31, 1994 of $39 million is included in the Company's consolidated
financial statements.  The financial statements of QVC, International and Garden
State were audited by other  auditors  whose reports have been  furnished to us,
and our opinion,  insofar as it relates to the amounts included in the Company's
consolidated  financial  statements for QVC,  International and Garden State for
the  periods  specified  above,  is based  solely  upon the reports of the other
auditors.

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

In our  opinion,  based on our audits and the  reports of other  auditors,  such
consolidated  financial statements present fairly, in all material respects, the
financial  position of Comcast  Corporation and its  subsidiaries as of December
31, 1996 and 1995, and the results of their  operations and their cash flows for
each of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.



/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania
February 28, 1997


                                     - 40 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(Dollars in millions, except share data)

<TABLE>
<CAPTION>
                                                                                    December 31,
ASSETS                                                                        1996                1995

CURRENT ASSETS
<S>                                                                      <C>                  <C>
   Cash and cash equivalents.............................................    $331.3               $539.1
   Short-term investments................................................     208.3                371.0
   Accounts receivable, less allowance for doubtful
     accounts of $97.1 and $81.3.........................................     439.3                390.7
   Inventories, net......................................................     258.4                243.4
   Other current assets..................................................     168.5                109.5
                                                                          ---------             --------

       Total current assets..............................................   1,405.8              1,653.7
                                                                          ---------             --------

INVESTMENTS, principally in affiliates...................................   1,177.7                906.4
                                                                          ---------             --------

PROPERTY AND EQUIPMENT...................................................   3,600.1              2,484.4
   Accumulated depreciation..............................................  (1,061.3)              (873.2)
                                                                          ---------             --------
   Property and equipment, net...........................................   2,538.8              1,611.2
                                                                          ---------             --------

DEFERRED CHARGES
   Franchise and license acquisition costs...............................   4,895.7              3,568.6
   Excess of cost over net assets acquired and other.....................   3,683.1              3,075.0
                                                                          ---------             --------
                                                                            8,578.8              6,643.6
   Accumulated amortization..............................................  (1,612.5)            (1,234.6)
                                                                          ---------             --------
   Deferred charges, net.................................................   6,966.3              5,409.0
                                                                          ---------             --------

                                                                          $12,088.6             $9,580.3
                                                                          =========             ========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES
   Accounts payable and accrued expenses.................................  $1,044.3               $964.0
   Accrued interest......................................................      91.1                 72.7
   Current portion of long-term debt.....................................     229.5                 85.4
                                                                          ---------             --------

       Total current liabilities.........................................   1,364.9              1,122.1
                                                                          ---------             --------

LONG-TERM DEBT, less current portion.....................................   7,102.7              6,943.8
                                                                          ---------             --------

DEFERRED INCOME TAXES....................................................   2,140.5              1,518.0
                                                                          ---------             --------

MINORITY INTEREST AND OTHER..............................................     859.3                772.0
                                                                          ---------             --------

COMMITMENTS AND CONTINGENCIES

COMMON EQUITY PUT OPTIONS................................................      69.6                 52.1
                                                                          ---------             --------

STOCKHOLDERS' EQUITY (DEFICIENCY)
   Preferred stock, no par value - authorized, 20,000,000
     shares; issued 5% series A convertible, 6,370 at redemption value...      31.9
   Class A special common stock, $1 par value - authorized,
     500,000,000 shares; issued, 283,281,675 and 192,844,814 ............     283.3                192.8
   Class A common stock, $1 par value - authorized,
     200,000,000 shares; issued, 33,959,368 and 37,706,517 ..............      34.0                 37.7
   Class B common stock, $1 par value - authorized,
     50,000,000 shares; issued, 8,786,250 ...............................       8.8                  8.8
   Additional capital....................................................   2,327.4                843.1
   Accumulated deficit...................................................  (2,127.9)            (1,914.3)
   Unrealized gains on marketable securities.............................       0.1                 22.2
   Cumulative translation adjustments....................................      (6.0)               (18.0)
                                                                          ---------             --------

       Total stockholders' equity (deficiency)...........................     551.6               (827.7)
                                                                          ---------             --------

                                                                          $12,088.6             $9,580.3
                                                                          =========             ========
</TABLE>

See notes to consolidated financial statements.

                                     - 41 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in millions, except per share data)
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1996              1995             1994
<S>                                                                     <C>              <C>               <C>
REVENUES
   Service income.............................................          $2,202.6         $1,875.2          $1,375.3
   Net sales from electronic retailing........................           1,835.8          1,487.7
                                                                        --------         --------          --------

                                                                         4,038.4          3,362.9           1,375.3
                                                                        --------         --------          --------

COSTS AND EXPENSES
   Operating..................................................             948.7            803.4             409.8
   Cost of goods sold from electronic retailing...............           1,110.9            898.3
   Selling, general and administrative........................             771.6            642.4             389.2
   Depreciation...............................................             314.6            339.9             182.2
   Amortization...............................................             383.7            349.1             154.3
                                                                        --------         --------          --------

                                                                         3,529.5          3,033.1           1,135.5
                                                                        --------         --------          --------

OPERATING INCOME..............................................             508.9            329.8             239.8

OTHER (INCOME) EXPENSE
   Interest expense...........................................             540.8            524.7             313.4
   Investment income..........................................            (122.6)          (229.8)            (24.6)
   Equity in net losses of affiliates.........................             144.8             86.6              40.9
   Gain from equity offering of affiliate.....................             (40.6)
   Other......................................................               2.6             (6.3)
                                                                        --------         --------          --------

                                                                           525.0            375.2             329.7
                                                                        --------         --------          --------

LOSS BEFORE INCOME TAX EXPENSE (BENEFIT), MINORITY
   INTEREST AND EXTRAORDINARY ITEMS...........................             (16.1)           (45.4)            (89.9)

INCOME TAX EXPENSE (BENEFIT)..................................              84.4             42.1              (9.2)
                                                                        --------         --------          --------

LOSS BEFORE MINORITY INTEREST AND EXTRAORDINARY
   ITEMS......................................................            (100.5)           (87.5)            (80.7)

MINORITY INTEREST.............................................             (48.0)           (49.7)             (5.4)
                                                                        --------         --------          --------

LOSS BEFORE EXTRAORDINARY ITEMS...............................             (52.5)           (37.8)            (75.3)

EXTRAORDINARY ITEMS ..........................................              (1.0)            (6.1)            (11.7)
                                                                        --------         --------          --------

NET LOSS......................................................            ($53.5)          ($43.9)           ($87.0)
                                                                        ========         ========          ========

LOSS PER SHARE
   Loss before extraordinary items............................             ($.21)           ($.16)            ($.32)
   Extraordinary items........................................                               (.02)             (.05)
                                                                        --------         --------          --------

     Net loss.................................................             ($.21)           ($.18)            ($.37)
                                                                        ========         ========          ========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING ...............................................             247.6            239.7             236.3
                                                                        ========         ========          ========
</TABLE>

See notes to consolidated financial statements.

                                     - 42 -
<PAGE>

COMCAST CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                           1996              1995             1994
<S>                                                                     <C>              <C>               <C>
OPERATING ACTIVITIES
   Net loss...................................................            ($53.5)          ($43.9)           ($87.0)
   Adjustments to reconcile net loss to net cash provided
    by operating activities:
     Depreciation.............................................             314.6            339.9             182.2
     Amortization.............................................             383.7            349.1             154.3
     Non-cash interest expense, net...........................              62.2             53.8              53.5
     Equity in net losses of affiliates.......................             144.8             86.6              40.9
     Gain from equity offering of affiliate...................             (40.6)
     Gains on sales of subsidiaries...........................                               (5.5)             (5.8)
     Gains on long-term investments, net......................             (69.2)          (183.0)
     Minority interest........................................             (48.0)           (49.7)             (5.4)
     Extraordinary items......................................               1.0              6.1              11.7
     Deferred income taxes and other..........................              14.0            (15.7)              9.7
                                                                       ---------        ---------         ---------
                                                                           709.0            537.7             354.1

     Increase in accounts receivable, net.....................             (38.2)           (62.4)            (28.3)
     Increase in inventories, net.............................              (5.8)           (57.5)             (7.3)
     Decrease (increase) in other current assets..............               0.6            (23.3)             (5.3)
     Increase in accounts payable and accrued expenses........             114.9            114.3              57.5
     Increase (decrease) in accrued interest..................              19.1             11.9              (1.6)
                                                                       ---------        ---------         ---------

       Net cash provided by operating activities..............             799.6            520.7             369.1
                                                                       ---------        ---------         ---------

FINANCING ACTIVITIES
   Proceeds from borrowings...................................             839.5          3,728.2           1,201.1
   Retirement and repayment of debt...........................            (734.4)        (1,619.6)           (509.0)
   (Repurchases) issuances of common stock, net...............            (175.9)            (7.1)              2.9
   Issuance of common stock of a subsidiary, net..............                                                209.4
   Equity contributions to subsidiaries.......................                                6.6             250.0
   Dividends..................................................             (26.8)           (22.4)            (22.7)
   Other......................................................              16.4            (50.0)            (16.5)
                                                                       ---------        ---------         ---------

       Net cash (used in) provided by financing activities....             (81.2)         2,035.7           1,115.2
                                                                       ---------        ---------         ---------

INVESTING ACTIVITIES
   Acquisitions, net of cash acquired.........................             (60.4)        (1,386.0)         (1,292.6)
   Proceeds from sales (purchases) of short-term
     investments, net.........................................             210.2           (240.8)            389.3
   Investments, principally in affiliates.....................            (502.0)          (480.2)           (125.0)
   Proceeds from sales of and distributions from
     long-term investments....................................             167.5            410.5
   Capital expenditures.......................................            (670.4)          (623.0)           (269.9)
   Proceeds from sale of subsidiary...........................                                                 28.2
   Other......................................................             (71.1)           (33.1)            (39.4)
                                                                       ---------        ---------         ---------

       Net cash used in investing activities..................            (926.2)        (2,352.6)         (1,309.4)
                                                                       ---------        ---------         ---------

(DECREASE) INCREASE IN CASH AND
   CASH EQUIVALENTS...........................................            (207.8)           203.8             174.9

CASH AND CASH EQUIVALENTS, beginning of year..................             539.1            335.3             160.4
                                                                       ---------        ---------         ---------

CASH AND CASH EQUIVALENTS, end of year........................            $331.3           $539.1            $335.3
                                                                       =========        =========         =========
</TABLE>

See notes to consolidated financial statements.

                                     - 43 -
<PAGE>

COMCAST CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(Dollars in millions, except per share data)

<TABLE>
<CAPTION>
                                                                                                      Unrealized
                                                                  Common Stock                         Gains on
                                                                                       Addi-   Accum-    Market-   Cumulative
                                              Preferred   Class A                     tional   ulated     able    Translation
                                                Stock     Special  Class A   Class B  Capital  Deficit  Securities Adjustments Total
<S>                                           <C>         <C>       <C>       <C>     <C>    <C>          <C>      <C>      <C>
BALANCE, JANUARY 1, 1994                       $          $174.0    $38.9     $8.8    $647.2 ($1,717.9)   $         ($21.5) ($870.5)

   Net loss                                                                                      (87.0)                       (87.0)
   Issuance of common stock                                  0.2                         2.2                                    2.4
   Conversion of convertible subordinated
     debt to common stock                                   16.8                       166.7                                  183.5
   Exercise of options                                       0.5      0.1                6.0                                    6.6
   Retirement of common stock                               (0.3)                       (5.9)                                  (6.2)
   Cash dividends, $.0933 per share                                                              (22.7)                       (22.7)
   Unrecognized gain on issuance of common
     stock of a subsidiary                                                              59.3                                   59.3
   Unrealized gains on marketable securities,
     net of deferred taxes of $2.1                                                                         3.9                  3.9
   Cumulative translation adjustments                                                                                  4.0      4.0
                                                 -----    ------    -----     ----  -------- ---------     ----      -----   ------

BALANCE, DECEMBER 31, 1994                                 191.2     39.0      8.8     875.5  (1,827.6)    3.9       (17.5)  (726.7)

   Net loss                                                                                      (43.9)                       (43.9)
   Issuance of common stock                                  1.1                        17.4                                   18.5
   Conversion of convertible subordinated
     debt to common stock                                    0.4                         4.0                                    4.4
   Exercise of options                                       0.3      0.1                3.2                                    3.6
   Retirement of common stock                               (0.2)    (1.4)              (7.5)    (20.4)                       (29.5)
   Cash dividends, $.0933 per share                                                              (22.4)                       (22.4)
   Temporary equity related to put options                                             (52.1)                                 (52.1)
   Proceeds from sales of put options                                                    2.6                                    2.6
   Unrealized gains on marketable securities,
     net of deferred taxes of $9.8                                                                         18.3                18.3
   Cumulative translation adjustments                                                                                 (0.5)    (0.5)
                                                 -----    ------    -----     ----  -------- ---------     ----      -----   ------

BALANCE, DECEMBER 31, 1995                                 192.8     37.7      8.8     843.1  (1,914.3)    22.2      (18.0)  (827.7)

   Net loss                                                                                      (53.5)                       (53.5)
   Issuance of common stock                                 97.2                     1,526.3                                1,623.5
   Issuance of preferred stock                    31.9                                                                         31.9
   Exercise of options                                       0.2      0.2                3.0                                    3.4
   Retirement of common stock                               (6.9)    (3.9)             (41.3)   (133.3)                      (185.4)
   Cash dividends, $.0933 per share                                                              (26.8)                       (26.8)
   Unrecognized gain on issuance of
     common stock of a subsidiary                                                       11.6                                   11.6
   Temporary equity related to put options                                             (17.5)                                 (17.5)
   Proceeds from sales and extensions of
     put options                                                                         2.2                                    2.2
   Unrealized losses on marketable securities,
     net of deferred taxes of ($11.9)                                                                     (22.1)              (22.1)
   Cumulative translation adjustments                                                                                 12.0     12.0
                                                 -----    ------    -----     ----  -------- ---------     ----      -----   ------

BALANCE, DECEMBER 31, 1996                       $31.9    $283.3    $34.0     $8.8  $2,327.4 ($2,127.9)    $0.1      ($6.0)  $551.6
                                                 =====    ======    =====     ====  ======== =========     ====      =====   ======
</TABLE>

See notes to consolidated financial statements.

                                     - 44 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


1.   BUSINESS

     Comcast  Corporation  and its  subsidiaries  (the "Company") is principally
     engaged in the development,  management and operation of wired and wireless
     telecommunications and the provision of content.

     Wired telecommunications  includes cable and telecommunications services in
     the United  States  ("US") and the United  Kingdom  ("UK").  The  Company's
     consolidated  domestic cable operations  served  approximately  4.3 million
     subscribers and passed  approximately  7.0 million homes as of December 31,
     1996.  The Company  owns a 50% interest in Garden  State  Cablevision  L.P.
     ("Garden State"), a cable communications  company serving more than 204,000
     subscribers and passing more than 294,000 homes in the State of New Jersey.
     In the UK, a subsidiary of the Company,  Comcast UK Cable Partners  Limited
     ("Comcast UK Cable"), holds ownership interests in four cable and telephony
     businesses that  collectively  have the potential to serve over 1.6 million
     homes.

     Wireless    telecommunications   includes   cellular   services,   personal
     communications services provided through the Company's investment in Sprint
     Spectrum  and direct to home  satellite  television  through the  Company's
     equity interest in and distribution  arrangements with Primestar  Partners,
     L.P. ("Primestar").  The Company provides cellular telephone communications
     services  pursuant  to  licenses  granted  by  the  Federal  Communications
     Commission  ("FCC") in markets with a population  of more than 8.4 million,
     including  the area in and around the City of  Philadelphia,  Pennsylvania,
     the State of Delaware and a significant portion of the State of New Jersey.

     Content is provided  through QVC,  Inc. and its  subsidiaries  ("QVC"),  an
     electronic retailer,  Comcast Content and Communication  Corporation ("C3")
     and  other  investments,   including  Comcast  Spectacor,  L.P.  ("Comcast-
     Spectacor") and E!  Entertainment  Television,  Inc. ("E!  Entertainment").
     Through QVC, the Company markets a wide variety of products and reaches, on
     a full and  part-time  basis,  over 61 million  homes in the US,  over five
     million homes in the UK and over four million homes in Germany.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and  all  wholly  owned  or  controlled   subsidiaries.   All   significant
     intercompany  accounts and transactions  among  consolidated  entities have
     been eliminated. Included in the Company's consolidated balance sheet as of
     December 31, 1996 and 1995 are net assets of foreign subsidiaries of $143.7
     million and $115.2 million, respectively.

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

     Fair Values
     The estimated fair value amounts  presented in these notes to  consolidated
     financial  statements  have been  determined by the Company using available
     market  information and appropriate  methodologies.  However,  considerable
     judgment is required in  interpreting  market data to develop the estimates
     of  fair  value.  The  estimates   presented  herein  are  not  necessarily
     indicative  of the  amounts  that the  Company  could  realize in a current
     market exchange.  The use of different market assumptions and/or estimation
     methodologies  may have a  material  effect  on the  estimated  fair  value
     amounts.  Such fair  value  estimates  are based on  pertinent  information
     available to management as of December 31, 1996 and 1995, and have not been
     comprehensively  revalued  for  purposes  of these  consolidated  financial
     statements since such dates.

                                     - 45 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)

     Cash Equivalents and Short-term Investments
     Cash  equivalents  consist   principally  of  US  Government   obligations,
     commercial  paper,  repurchase  agreements and certificates of deposit with
     maturities of three months or less when purchased.  Short-term  investments
     consist  principally  of  US  Government  obligations,   commercial  paper,
     repurchase  agreements  and  certificates  of deposit  with  maturities  of
     greater  than three  months when  purchased.  The  carrying  amounts of the
     Company's  cash  equivalents  and  short-term  investments,  classified  as
     available  for  sale  securities,  approximate  their  fair  values.  As of
     December  31,  1996,  short-term  investments  also  include the  Company's
     investment in Time Warner, Inc. ("Time Warner") common stock (see Note 4).

     Inventories - Electronic Retailing
     Inventories,  consisting primarily of products held for sale, are stated at
     the lower of cost or market. Cost is determined by the first-in,  first-out
     method.

     Investments, Principally in Affiliates
     Investments  in  entities  in which the Company has the ability to exercise
     significant  influence  over the operating  and  financial  policies of the
     investee and  investments in  partnerships  which are not controlled by the
     Company  are  accounted  for  under  the  equity   method.   Equity  method
     investments  are  recorded at original  cost and adjusted  periodically  to
     recognize the Company's proportionate share of the investees' net income or
     losses  after the date of  investment,  additional  contributions  made and
     dividends   received.   The  differences  between  the  Company's  recorded
     investments  and its  proportionate  interests  in the  book  value  of the
     investees' net assets are being  amortized to equity in net income or loss,
     primarily  over a period  of twenty  years,  which is  consistent  with the
     estimated lives of the underlying assets.

     Unrestricted  publicly traded  investments,  including  options to purchase
     such  securities,  are classified as available for sale and are recorded at
     their fair value, with unrealized gains or losses resulting from changes in
     fair  value  between   measurement   dates   recorded  as  a  component  of
     stockholders' equity (deficiency).

     Restricted  publicly  traded  investments and investments in privately held
     companies are stated at cost, adjusted for any known diminution in value.

     Property and Equipment
     Property and equipment are stated at cost.  Depreciation is provided by the
     straight-line method over estimated useful lives as follows:

            Buildings and improvements                         8-40 years
            Operating facilities                               5-20 years
            Other equipment                                    2-10 years

     Improvements  that extend asset lives are  capitalized;  other  repairs and
     maintenance  charges  are  expensed  as  incurred.  The  cost  and  related
     accumulated  depreciation  applicable to assets sold or retired are removed
     from the accounts and the gain or loss on  disposition  is  recognized as a
     component of depreciation expense.

     Deferred Charges
     Franchise and license  acquisition  costs are amortized on a  straight-line
     basis over their legal or  estimated  useful  lives of 12 to 40 years.  The
     excess  of cost  over  the  fair  value  of net  assets  acquired  is being
     amortized on a straight-line  basis over estimated useful lives of 20 to 40
     years.

     Valuation of Long-Lived Assets
     The Company  periodically  evaluates the  recoverability  of its long-lived
     assets,  including  property  and  equipment  and deferred  charges,  using
     objective  methodologies.  Such methodologies  include evaluations based on
     the cash flows generated by the underlying assets or other  determinants of
     fair value.

                                     - 46 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)



     Foreign Currency Translation
     Assets and  liabilities of the Company's  foreign  subsidiaries,  where the
     functional  currency is the local currency,  are translated into US dollars
     at the December 31 exchange rate. The related  translation  adjustments are
     recorded as a separate  component  of  stockholders'  equity  (deficiency).
     Revenues  and  expenses  are  translated   using  average   exchange  rates
     prevailing during the year.  Foreign currency  transaction gains and losses
     are included in other (income) expense.

     Revenue Recognition
     Service income is recognized as service is provided. Credit risk is managed
     by  disconnecting   services  to  cable  and  cellular  customers  who  are
     delinquent.  Net sales from electronic retailing are recognized at the time
     of shipment to customers. An allowance for returned merchandise is provided
     as a  percentage  of  sales  based on  historical  experience.  The  return
     provision was approximately 21 percent of gross sales for each of the years
     ended December 31, 1996 and 1995.

     Stock-Based Compensation
     Effective  January 1, 1996, the Company adopted the provisions of Statement
     of  Financial  Accounting  Standards  ("SFAS")  No.  123,  "Accounting  for
     Stock-Based  Compensation." SFAS No. 123 encourages,  but does not require,
     companies to record compensation cost for stock-based compensation plans at
     fair value.  The Company has elected to continue to account for stock-based
     compensation in accordance with Accounting Principles Board ("APB") Opinion
     No.  25,   "Accounting   for  Stock  Issued  to  Employees,"   and  related
     interpretations,  as permitted by SFAS 123.  Compensation expense for stock
     options is measured as the excess,  if any, of the quoted  market  price of
     the  Company's  stock at the date of the grant over the amount an  employee
     must pay to acquire the stock.  Compensation  expense for restricted  stock
     awards  is  recorded  annually  based  on the  quoted  market  price of the
     Company's  stock  at  the  date  of  the  grant  and  the  vesting  period.
     Compensation  expense for stock  appreciation  rights is recorded  annually
     based on the  changes in quoted  market  prices of the  Company's  stock or
     other determinants of fair value at the end of the year (see Note 6).

     Postretirement and Postemployment Benefits
     The estimated costs of retiree benefits and benefits for former or inactive
     employees, after employment but before retirement, are accrued and recorded
     as a charge to operations during the years the employees provide services.

     Investment Income
     Investment income includes interest income and gains, net of losses, on the
     sales of marketable  securities and long-term  investments.  Gross realized
     gains and losses are recognized  using the specific  identification  method
     (see Note 4). In 1996 and 1995,  investment income also includes impairment
     losses resulting from adjustments to the net realizable value of certain of
     the Company's long-term investments.

     Capitalized Interest
     Interest  is  capitalized  as part  of the  historical  cost  of  acquiring
     qualifying assets,  including  investments in equity method investees while
     the investee has  activities in progress  necessary to commence its planned
     principal operations. Capitalized interest for the years ended December 31,
     1996 and 1995 was $32.1 million and $6.4 million, respectively.

     Income Taxes
     The Company  recognizes  deferred tax assets and  liabilities for temporary
     differences  between the financial reporting basis and the tax basis of the
     Company's  assets and  liabilities  and expected  benefits of utilizing net
     operating  loss  carryforwards.  The impact on deferred taxes of changes in
     tax rates and laws,  if any,  applied to the years during  which  temporary
     differences are expected to be settled,  are reflected in the  consolidated
     financial statements in the period of enactment.

                                     - 47 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     Loss per Share
     For the years ended December 31, 1996, 1995 and 1994, the Company's  common
     stock  equivalents  have an antidilutive  effect on the loss per share and,
     therefore,  have not been used in determining  the total  weighted  average
     number of common shares outstanding. Fully diluted loss per share for 1996,
     1995 and 1994 is antidilutive and, therefore, has not been presented.

     Derivative Financial Instruments
     The Company uses derivative financial instruments,  including interest rate
     exchange  agreements  ("Swaps"),  interest  rate cap  agreements  ("Caps"),
     interest rate collar  agreements  ("Collars")  and foreign  exchange option
     contracts  ("FX  Options"),  to manage  its  exposure  to  fluctuations  in
     interest rates and foreign currency exchange rates.

     Swaps, Caps and Collars are matched with either fixed or variable rate debt
     and  periodic  cash  payments  are  accrued  on a  settlement  basis  as an
     adjustment  to  interest  expense.   Any  premiums  associated  with  these
     instruments are amortized over their term and realized gains or losses as a
     result of the  termination  of the  instruments  are deferred and amortized
     over the shorter of the remaining  term of the instrument or the underlying
     debt.  Written  options  are  marked-to-market  on a  current  basis in the
     Company's consolidated statement of operations. Gains and losses related to
     qualifying  hedges of foreign currency  denominated debt are offset against
     the translation  adjustment included in stockholders'  equity (deficiency).
     Other FX Options are  marked-to-market  on a current basis in the Company's
     consolidated statement of operations.

     The Company does not hold or issue any derivative financial instruments for
     trading purposes and is not a party to leveraged  instruments (see Note 5).
     The  credit  risks  associated  with  the  Company's  derivative  financial
     instruments  are  controlled  through the  evaluation and monitoring of the
     creditworthiness of the counterparties. Although the Company may be exposed
     to losses in the event of nonperformance by the counterparties, the Company
     does not expect such losses, if any, to be significant.

     Sale of Stock by a Subsidiary or Equity Method Investee
     Changes in the Company's  proportionate share of the underlying equity of a
     consolidated  subsidiary  or equity method  investee  which result from the
     issuance of  additional  securities  by such  subsidiary  or  investee  are
     recognized  as gains or losses in the Company's  consolidated  statement of
     operations  unless gain  realization  is not assured in the  circumstances.
     Gains for  which  realization  is not  assured  are  credited  directly  to
     additional capital.

     New Accounting Pronouncements
     In June 1996, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 125,  "Accounting  for Transfers and Servicing of Financial  Assets and
     Extinguishments  of  Liabilities,"  which will be adopted by the Company in
     1997,  as  required  by  this  statement.  Under  the  provisions  of  this
     statement,  after a transfer of financial  assets, an entity recognizes the
     financial  and  servicing  assets it controls  and the  liabilities  it has
     incurred,  derecognizes  financial assets when control has been surrendered
     and derecognizes liabilities when extinguished. The Company does not expect
     that  adoption  of this  standard  will  have a  significant  impact on its
     financial position or results of operations.

     In February 1997, the FASB issued SFAS No. 128,  "Earnings Per Share." This
     standard,   which  clarifies  and  supersedes  the  current   authoritative
     accounting  literature regarding the computation and disclosure of earnings
     per share,  is  applicable  to  interim  and annual  periods  ending  after
     December  15, 1997 and may not be applied  earlier.  The  Company  does not
     expect  adoption of this standard to result in  significant  changes to the
     Company's calculation or presentation of loss per share.

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1996.

                                     - 48 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


3.   ACQUISITIONS AND OTHER SIGNIFICANT EVENTS

     E! Entertainment
     As of  December  31,  1996,  the  Company  owned  a  10.4%  interest  in E!
     Entertainment,  an  entertainment  programming  service  that  currently is
     distributed to more than 42 million subscribers. The Company has the right,
     by virtue of various agreements among the shareholders of E! Entertainment,
     to purchase an  additional  58.4%  interest in E!  Entertainment  from Time
     Warner for $321.1 million. In January 1997, the Company and The Walt Disney
     Company  ("Disney")  entered  into  an  agreement  to  form  a new  limited
     liability  company  ("Newco")  that will be owned  50.1% by the Company and
     49.9% by Disney. Pursuant to the agreement,  the Company will contribute to
     Newco its 10.4%  interest in E!  Entertainment,  the right to exercise  its
     option to purchase  the Time Warner  interest  and $132.3  million in cash.
     Disney will contribute to Newco $188.8 million in cash.  Newco will use the
     cash  contributed  by the Company  and Disney to  purchase  the Time Warner
     interest.  Following such  purchase,  Newco will own a 68.8% interest in E!
     Entertainment.  To fund the cash portion of its  contribution,  the Company
     will borrow $132.3 million from Disney in the form of two 10-year, 7% notes
     (the  "Disney   Notes").   These   transactions   (collectively,   the  "E!
     Acquisition")  are expected to close in the first quarter of 1997,  subject
     to regulatory approval and certain other conditions.

     Scripps Cable
     In November  1996,  the Company  acquired the cable  television  operations
     ("Scripps Cable") of The E.W. Scripps Company ("E.W.  Scripps") in exchange
     for 93.048  million  shares of the Company's  Class A Special Common Stock,
     par value $1.00 per share (the "Class A Special Common  Stock"),  valued at
     $1.552 billion (the "Scripps Acquisition").  Scripps Cable passed more than
     1.3 million homes and served more than 800,000  subscribers  as of December
     31, 1996, with 60% of its subscribers located in Sacramento, California and
     Chattanooga  and  Knoxville,  Tennessee.  The Company has accounted for the
     Scripps  Acquisition  under  the  purchase  method  and  Scripps  Cable was
     consolidated  with  the  Company   effective   November  1,  1996.  As  the
     consideration  given in exchange  for  Scripps  Cable was shares of Class A
     Special Common Stock, the Scripps  Acquisition had no significant impact on
     the Company's consolidated statement of cash flows.

     The  allocation  of the  purchase  price to the assets and  liabilities  of
     Scripps  Cable is  preliminary  pending  a final  appraisal  and the  final
     purchase price adjustment  between the Company and E.W. Scripps.  The terms
     of  the  Scripps   Acquisition   provide  for,  among  other  things,   the
     indemnification  of the Company by E.W.  Scripps  for certain  liabilities,
     including  tax  liabilities,   relating  to  Scripps  Cable  prior  to  the
     acquisition date.

     Comcast-Spectacor
     In July 1996, the Company  completed its  acquisition  (the "Sports Venture
     Acquisition")  of  a  66%  interest  in  the  Philadelphia  Flyers  Limited
     Partnership,  a Pennsylvania  limited partnership  ("PFLP"),  the assets of
     which,  after giving effect to the Sports Venture  Acquisition,  consist of
     (i)  the  National  Basketball  Association  ("NBA")  franchise  to own and
     operate the  Philadelphia  76ers  basketball  team and related  assets (the
     "Sixers"),  (ii) the National  Hockey League  ("NHL")  franchise to own and
     operate the Philadelphia  Flyers hockey team and related assets,  and (iii)
     two adjacent arenas,  leasehold interests in and development rights related
     to the land  underlying  the  arenas  and other  adjacent  parcels  of land
     located  in  Philadelphia,   Pennsylvania  (collectively,   the  "Arenas").
     Concurrent with the completion of the Sports Venture Acquisition,  PFLP was
     renamed Comcast Spectacor, L.P. ("Comcast-Spectacor").

     The Sports Venture  Acquisition  was completed in two steps. In April 1996,
     the Company  purchased  the Sixers for $125.0  million in cash plus assumed
     net  liabilities of $11.0 million  through a partnership  controlled by the
     Company.  To complete the Sports  Venture  Acquisition,  in July 1996,  the
     Company contributed its interest in the Sixers, exchanged approximately 3.5
     million  shares of the  Company's  Class A Special  Common  Stock and 6,370
     shares of the  Company's  newly  issued 5% Series A  Convertible  Preferred
     Stock (the  "Preferred  Stock" see Note 6), and paid $15.0  million in cash
     for its current interest in  Comcast-Spectacor.  The remaining 34% interest
     in  Comcast-Spectacor  is owned by a group,  including the former  majority
     owner of PFLP, who also

                                     - 49 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     manages  Comcast-Spectacor  (the "Minority Group").  In connection with the
     Sports  Venture  Acquisition,  Comcast-Spectacor  assumed  the  outstanding
     liabilities  relating  to the Sixers and the  Arenas,  including a mortgage
     obligation  of $155.0  million.  The Company  accounts  for its interest in
     Comcast-Spectacor  under the equity  method.  The issuance of the Preferred
     Stock  and  the  Class  A  Special  Common  Stock  in  the  Sports  Venture
     Acquisition had no impact on the Company's  consolidated  statement of cash
     flows due to their non-cash nature.

     Sprint Spectrum
     The Company,  Tele-Communications,  Inc. ("TCI"), Cox Communications,  Inc.
     ("Cox," and  together  with the Company and TCI, the "Cable  Parents")  and
     Sprint  Corporation  ("Sprint,"  and together with the Cable  Parents,  the
     "Parents"),   and  certain   subsidiaries  of  the  Parents  (the  "Partner
     Subsidiaries")  engage in the wireless  communications  business  through a
     limited  partnership  known  as  "Sprint  Spectrum,"  a  development  stage
     enterprise.  The Company  owns 15% of Sprint  Spectrum and accounts for its
     investment in Sprint Spectrum under the equity method (see Note 4).

     Sprint  Spectrum was the successful  bidder for 29 personal  communications
     services ("PCS") licenses in the auction conducted by the FCC from December
     1994 through  mid-March 1995. The purchase price for the licenses was $2.11
     billion,  all of  which  has  been  paid to the FCC.  In  addition,  Sprint
     Spectrum has invested,  and may continue to invest,  in other entities that
     hold PCS licenses,  may acquire PCS licenses in future FCC auctions or from
     other license holders and may affiliate with other license holders.

     The Partner  Subsidiaries have committed to contribute $4.2 billion in cash
     to Sprint  Spectrum  through 1999,  of which the Company's  share is $630.0
     million.  Of this  funding  requirement,  the  Company  has made total cash
     contributions  to Sprint  Spectrum of $452.8 million  through  December 31,
     1996 and issued a $105.0 million guaranty on a portion of Sprint Spectrum's
     outstanding debt. The Company  anticipates that Sprint  Spectrum's  capital
     requirements over the next several years will be significant.  Requirements
     in excess of committed  capital are planned to be funded by Sprint Spectrum
     through  external  financing,   including,   but  not  limited  to,  vendor
     financing,  bank financing and securities  offered to the public. In August
     1996,  Sprint Spectrum sold $750.0 million  principal amount at maturity of
     Senior Notes and Senior Discount Notes due in 2006 in a public offering. In
     October 1996, Sprint Spectrum closed three credit agreements which provided
     $2.0 billion in bank  financing and $3.1 billion in vendor  financing.  The
     timing of the Company's remaining capital  contributions to Sprint Spectrum
     is dependent upon a number of factors,  including Sprint Spectrum's working
     capital requirements. The Company anticipates funding its remaining capital
     commitments  to Sprint  Spectrum  through  its cash  flows  from  operating
     activities, its existing cash, cash equivalents, short-term investments and
     lines of credit or other external  financing,  or by a combination of these
     sources.

     QVC
     In February 1995, the Company and TCI acquired all of the outstanding stock
     of QVC not previously owned by them  (approximately 65% of such shares on a
     fully diluted basis) for $46, in cash,  per share (the "QVC  Acquisition"),
     representing  a  total  cost  of  approximately   $1.4  billion.   The  QVC
     Acquisition,  including  the  exercise  of  certain  warrants  held  by the
     Company,  was financed with cash  contributions from the Company and TCI of
     $296.3 million and $6.6 million,  respectively,  borrowings of $1.1 billion
     under a $1.2  billion  QVC  credit  facility  and  existing  cash  and cash
     equivalents  held by QVC.  Following the  acquisition,  the Company and TCI
     owned,   through  their   respective   subsidiaries,   57.45%  and  42.55%,
     respectively,  of QVC. The  Company,  through a  management  agreement,  is
     responsible for the day to day operations of QVC. The Company has accounted
     for the QVC Acquisition  under the purchase method and QVC was consolidated
     with the Company effective February 1, 1995.

                                     - 50 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     Maclean Hunter
     In December 1994, the Company,  through Comcast MHCP Holdings,  L.L.C. (the
     "LLC"), acquired the US cable television and alternate access operations of
     Maclean Hunter Limited ("Maclean Hunter") from Rogers  Communications  Inc.
     and  all  of  the  outstanding  shares  of  Barden   Communications,   Inc.
     (collectively,  such  acquisitions  are referred to as the "Maclean  Hunter
     Acquisition") for  approximately  $1.2 billion in cash. The Company and the
     California Public Employees'  Retirement System ("CalPERS") invested $305.6
     million and $250.0 million, respectively, in the LLC, which is owned 55% by
     a wholly owned subsidiary of the Company and 45% by CalPERS, and is managed
     by the Company.  The balance of the Maclean Hunter Acquisition was financed
     through  borrowings under a credit facility of a wholly owned subsidiary of
     the LLC. The Company has accounted for the Maclean Hunter Acquisition under
     the purchase  method and Maclean Hunter was  consolidated  with the Company
     effective December 22, 1994.

     Cellular Rebuild
     In 1995,  the  Company's  cellular  division  purchased  $172.0  million of
     switching and cell site equipment which replaced the existing switching and
     cell site  equipment (the "Cellular  Rebuild").  The Company  substantially
     completed the Cellular Rebuild during 1995.  Accordingly,  during 1995, the
     Company  charged $110.0 million to depreciation  expense which  represented
     the difference between the net book value of the equipment replaced and the
     residual value realized upon its disposal.

     Unaudited Pro Forma Information
     The following  unaudited pro forma information for the years ended December
     31, 1996 and 1995 has been presented as if the Scripps  Acquisition and the
     QVC  Acquisition  had occurred on January 1, 1995. This unaudited pro forma
     information  is based on  historical  results of  operations  adjusted  for
     acquisition  costs and, in the opinion of  management,  is not  necessarily
     indicative of what the results would have been had the Company operated the
     acquired  entities  since January 1, 1995 (dollars in millions,  except per
     share data).

                                                      Year Ended December 31,
                                                       1996             1995

     Revenues...................................    $4,290.6          $3,772.0
     Loss before extraordinary items............       (79.3)            (83.5)
     Net loss...................................       (80.3)            (89.6)
     Net loss per share.........................        (.24)             (.27)

                                     - 51 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


4.   INVESTMENTS, PRINCIPALLY IN AFFILIATES
<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                                  1996             1995
                                                                                   (Dollars in millions)

<S>                                                                              <C>               <C>
           Equity method..........................................               $936.4            $678.8

           Public companies.......................................                165.5             170.1

           Privately held companies...............................                 75.8              57.5
                                                                               --------            ------

                                                                               $1,177.7            $906.4
                                                                               ========            ======
</TABLE>

     Equity Method
     The Company records its proportionate interests in the net income (loss) of
     substantially all of its investees three months in arrears,  other than the
     UK Investees.  The Company's recorded  investments exceed its proportionate
     interests in the book value of the  investees' net assets by $233.2 million
     as  of  December  31,  1996  (primarily   related  to  the  investments  in
     Comcast-Spectacor  and Sprint Spectrum).  Such excess is being amortized to
     equity in net  income  or loss,  primarily  over a period of twenty  years,
     which is consistent with the estimated lives of the underlying  assets. The
     original cost of investments  accounted for under the equity method totaled
     $1.241  billion  and  $962.2  million  as of  December  31,  1996 and 1995,
     respectively.  Summarized  financial  information for the Company's  equity
     method investees for 1996, 1995 and 1994 is presented below (in millions).
<TABLE>
<CAPTION>
                                                          Sprint                  UK
                                                         Spectrum     TCGI     Investees     QVC      Other    Combined
<S>                                                      <C>       <C>        <C>         <C>        <C>        <C>

Year Ended December 31, 1996:

   Combined Results of Operations
     Revenues, net...............................           $0.1     $192.9     $155.2                $440.0     $788.2
     Operating, selling, general and
       administrative expenses...................          208.0      180.9      140.9                 486.0    1,015.8
     Depreciation and amortization...............            1.9       57.2       57.6                  60.0      176.7
     Operating loss..............................         (209.8)     (45.2)     (43.3)               (106.0)    (404.3)
     Net loss (1)................................         (344.9)     (84.8)     (72.2)               (140.8)    (642.7)

   Company's Equity in Net Loss
     Equity in current period net loss...........         ($51.7)    ($15.1)    ($28.6)               ($45.9)   ($141.3)
     Amortization income (expense)...............            0.6       (1.1)      (0.3)                 (2.7)      (3.5)
                                                         -------    -------     ------                ------   --------

       Total equity in net loss..................         ($51.1)    ($16.2)    ($28.9)               ($48.6)   ($144.8)
                                                          ======     ======     ======                ======    =======


Year Ended December 31, 1995:

   Combined Results of Operations
     Revenues, net...............................          $         $180.5     $143.7     $425.9     $314.4   $1,064.5
     Operating, selling, general and
       administrative expenses...................           21.6      167.8      156.6      354.7      347.8    1,048.5
     Depreciation and amortization...............            0.2       44.4       52.2       13.0       57.6      167.4
     Operating (loss) income.....................          (21.8)     (31.7)     (65.1)      58.2      (91.0)    (151.4)
     Net (loss) income (1).......................          (31.2)     (72.1)     (91.2)      28.3     (116.1)    (282.3)

   Company's Equity in Net (Loss) Income
     Equity in current period net (loss)
       income....................................          ($4.7)    ($13.6)    ($37.5)      $4.3     ($29.8)    ($81.3)
     Amortization (expense) income...............           (0.5)      (2.1)                  1.2       (3.9)      (5.3)
                                                         -------    -------     ------     ------     ------   --------

       Total equity in net (loss) income.........          ($5.2)    ($15.7)    ($37.5)      $5.5     ($33.7)    ($86.6)
                                                         =======    =======     ======     ======     ======   ========
</TABLE>

                                     - 52 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)

<TABLE>
<CAPTION>
                                                          Sprint                  UK
                                                         Spectrum     TCGI     Investees     QVC       Other    Combined

<S>                                                     <C>         <C>         <C>     <C>          <C>      <C>
Year Ended December 31, 1994:

   Combined Results of Operations
     Revenues, net...............................                    $125.8      $97.6   $1,336.7     $138.7   $1,698.8
     Operating, selling, general and
       administrative expenses...................                     128.8      125.0    1,138.2      132.4    1,524.4
     Depreciation and amortization...............                      22.3       32.9       44.9       54.3      154.4
     Operating (loss) income.....................                     (25.3)     (60.3)     153.6      (48.0)      20.0
     Net (loss) income (1).......................                     (39.6)     (65.8)      41.1      (72.7)    (137.0)

   Company's Equity in Net (Loss) Income
     Equity in current period net (loss)
       income....................................                     ($7.3)    ($25.1)      $6.3     ($14.2)    ($40.3)
     Amortization (expense) income...............                      (2.1)                  4.9       (3.4)      (0.6)
                                                                    -------     ------     ------     ------   --------

       Total equity in net (loss) income.........                     ($9.4)    ($25.1)     $11.2     ($17.6)    ($40.9)
                                                                    =======     ======     ======     ======   ========
</TABLE>


<TABLE>
<CAPTION>
                                                          Sprint                  UK
                                                         Spectrum     TCGI     Investees     QVC       Other    Combined
<S>                                                     <C>         <C>         <C>     <C>          <C>      <C>
Combined Financial Position

As of December 31, 1996:
     Current assets..............................         $477.5     $988.8     $138.3                $292.7   $1,897.3
     Noncurrent assets...........................        2,921.8    1,037.1      711.4               1,262.2    5,932.5
     Current liabilities.........................          113.1      203.3      204.1                 280.5      801.0
     Noncurrent liabilities......................          682.8    1,011.1      427.6               1,180.8    3,302.3

As of December 31, 1995:
     Current assets..............................           $1.3      $59.8     $257.2                $118.9     $437.2
     Noncurrent assets...........................        2,242.8      694.9      663.0                 687.6    4,288.3
     Current liabilities.........................           20.1      124.4      107.1                  66.8      318.4
     Noncurrent liabilities......................                     400.0      565.9                 717.2    1,683.1
<FN>
--------
(1)  Net (loss) income also represents (loss) income from continuing  operations
     before  extraordinary  items and cumulative effect of changes in accounting
     principle.
</FN>
</TABLE>

     Sprint Spectrum. The Company made its initial investment in 1994 and, as of
     December 31, 1996, holds a general and limited partnership  interest of 15%
     in  Sprint  Spectrum,   a  limited  partnership  engaged  in  the  wireless
     communications  business (see Note 3). The investment in Sprint Spectrum is
     accounted  for under  the  equity  method  based on the  Company's  general
     partnership  interest and its representation on the partnership's  board of
     directors.

     TCGI.   Through  June  1996,  the  Company  held  investments  in  Teleport
     Communications  Group, Inc. ("TCGI"),  TCG Partners and certain local joint
     ventures (the "Teleport Joint Ventures")  managed by TCGI and TCG Partners.
     TCGI is one of the largest competitive  alternative access providers in the
     US in terms of route miles.  The Company had a 20.0% investment in TCGI and
     interests in the Teleport  Joint Ventures  ranging from 12.4% to 20.3%.  On
     June 27, 1996,  TCGI sold  approximately  27 million  shares of its Class A
     Common Stock (the "TCGI Class A Stock"),  for $16 per share,  in an initial
     public  offering (the "TCGI IPO").  In connection  with the TCGI IPO, TCGI,
     the  Company  and  subsidiaries  of Cox,  TCI and  Continental  Cablevision
     ("Continental"  and collectively with Cox, TCI and the Company,  the "Cable
     Stockholders") entered into an agreement pursuant

                                     - 53 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     to which TCGI was reorganized (the  "Reorganization").  The  Reorganization
     consisted  of,  among  other  things:  (i) the  acquisition  by TCGI of TCG
     Partners;  (ii) the  acquisition  by TCGI of  additional  interests  in the
     Teleport  Joint  Ventures  (including  100% of those  interests held by the
     Company);  and (iii) the  contribution to TCGI of $269.0 million  aggregate
     principal amount of indebtedness,  plus accrued interest  thereon,  owed by
     TCGI to the Cable  Stockholders  (except  that TCI  retained a $26  million
     subordinated  note of TCGI),  including $53.8 million  principal amount and
     $4.1 million of accrued  interest owed to the Company.  In connection  with
     the  Reorganization,  the Company  received  25.6 million  shares of TCGI's
     Class B Common Stock (the "TCGI Class B Stock"). Each share of TCGI Class B
     Stock is entitled to voting power  equivalent to ten shares of TCGI Class A
     Stock and is  convertible,  at the option of the holder,  into one share of
     TCGI Class A Stock.  The Company  recorded a $40.6 million  increase in its
     proportionate  share of TCGI's net assets as a gain from equity offering of
     affiliate  in its 1996  consolidated  statement  of  operations  (the "TCGI
     Gain").  After giving  effect to the  Reorganization  and the TCGI IPO, the
     Company owns 19.5% of the  outstanding  TCGI Class B Stock  representing  a
     19.1% voting interest and a 16.1% equity interest. The Company continues to
     account  for its  interest in TCGI under the equity  method  based upon its
     voting   interest   maintained   through  the  TCGI  Class  B  Stock,   its
     representation on TCGI's board of directors and its participation in a TCGI
     stockholder  agreement granting certain rights to a control group. Assuming
     conversion  of the TCGI Class B Stock held by the Company into TCGI Class A
     Stock,  the Company's  investment  would have a fair value of approximately
     $781.5 million,  based on the quoted market price of the TCGI Class A Stock
     as of December 31, 1996.

     UK Investees.  As of December 31, 1996,  Comcast UK Cable,  a  consolidated
     subsidiary of the Company,  holds a 27.5%  interest and a 50.0% interest in
     Birmingham  Cable  Corporation  Limited and Cable  London PLC. In addition,
     Comcast UK Cable has  historically  held  investments in Cambridge  Holding
     Company Limited ("Cambridge Cable") and Cable Programme  Partners-1 Limited
     Partnership ("CPP-1").  In March 1996, Comcast UK Cable purchased the 50.0%
     interest in Cambridge  Cable that it had not previously  owned for cash and
     approximately  8.9  million of its Class A Common  Shares  (the  "Cambridge
     Acquisition").  Following the Cambridge Acquisition,  Comcast UK Cable owns
     100.0% of Cambridge Cable and has consolidated  the financial  position and
     results of  operations  of  Cambridge  Cable  beginning  on March 31, 1996.
     During 1995,  CPP-1,  which  previously  developed  and  distributed  cable
     programming  in the UK, sold its only channel and wound down its operations
     to a minimal  level of  activity.  As a result,  the  Company  reduced  the
     carrying value of its 16.4% interest in CPP-1 to zero.

     In September 1994,  Comcast UK Cable consummated an initial public offering
     (the "IPO") of 15.0  million of its Class A Common  Shares for net proceeds
     of $209.4  million.  As a result of the IPO and related  transactions,  the
     Company  recorded  an  increase  in its  proportionate  share of Comcast UK
     Cable's net assets as an increase in additional  capital of $59.3  million.
     In addition, as a result of the Cambridge Acquisition, the Company recorded
     the increase in its proportionate share of Comcast UK Cable's net assets as
     an increase in additional  capital of $11.6  million.  The increases in the
     Company's  proportionate share of Comcast UK Cable's net assets as a result
     of these  transactions were recorded  directly to additional  capital since
     gain  realization  was not  assured  based on the  start-up  nature  of the
     operations  of  Comcast UK Cable and its  affiliates.  As a result of these
     transactions,  the Company beneficially owns 25.7% of the total outstanding
     Comcast  UK Cable  common  shares.  Because  the Class A Common  Shares are
     entitled to one vote per share and the Class B Common  Shares are  entitled
     to ten votes per share,  the Company,  through its ownership of the Class B
     Common Shares,  controls 77.6% of the total voting power of all outstanding
     Comcast UK Cable  common  shares and  continues to  consolidate  Comcast UK
     Cable.

     QVC.  Through  January 31, 1995,  QVC's fiscal year end was January 31, and
     therefore, the Company recorded its equity interest in QVC's net income two
     months in  arrears.  For the year ended  December  31,  1995,  the  Company
     recorded its proportionate interest in QVC's net income for the period from
     November 1, 1994 through January 31, 1995. Such results were not previously
     recorded by the Company since QVC's results of operations were recorded two
     months in arrears.  QVC's  results of operations  and  financial  position,
     subsequent  to January 31, 1995,  are not  separately  presented as QVC was
     consolidated with the Company effective February 1, 1995

                                     - 54 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     (see  Note  3).The  summarized  financial  information  for the year  ended
     December 31, 1994  includes  financial  information  for QVC for the twelve
     months ended October 31, 1994.

     Other. The Company's 13 other equity investees include investments in wired
     telecommunications   (including  Garden  State  -  see  Note  1),  wireless
     telecommunications and content providers (including Comcast-Spectacor - see
     Note 3). The  Company  holds  interests  representing  less than 20% of the
     total  outstanding  ownership  interests  in certain  of its equity  method
     investees.   The  equity   method  of  accounting  is  utilized  for  these
     investments  based  on the type of  investment  (i.e.  general  partnership
     interest),  board  representation,  participation in a controlling investor
     group,  significant  shareholder rights or a combination of these and other
     factors. In addition,  the Company's 66% interest in  Comcast-Spectacor  is
     accounted  for under the equity  method since the Company does not maintain
     control over Comcast-Spectacor's  operations. The Company does not consider
     these other equity method investments to be individually significant to its
     consolidated  financial  position,  results  of  operations  or  liquidity.
     Accordingly,  the  Company  has not  included  separate  audited  financial
     statements for these entities in this filing on Form 10-K.

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

     Except for Sprint  Spectrum  (see Note 3),  the  Company  does not have any
     additional significant  contractual  commitments with respect to any of its
     investments.  However,  to  the  extent  the  Company  does  not  fund  its
     investees'  capital  calls,  it exposes itself to dilution of its ownership
     interests.

     Public Companies
     The following is a summary of the  Company's  investments  in  unrestricted
     publicly-traded companies (dollars in millions):
<TABLE>
<CAPTION>
                                                        December 31, 1996                    December 31, 1995
                                                      Carrying   Unrealized                Carrying   Unrealized
                                                        Value    Gain (Loss)                 Value    Gain (Loss)
<S>                                                    <C>          <C>                     <C>         <C>
     Nextel Communications, Inc.
       ("Nextel") (1)..........................          $75.4      $14.2                     $30.2      ($0.9)
     Turner Broadcasting System, Inc.
       ("TBS") (2).............................                                                44.7       35.8
     Other.....................................           90.1       (9.0)                     95.2       (0.7)
                                                        ------       ----                    ------      -----
                                                        $165.5       $5.2                    $170.1      $34.2
                                                        ======       ====                    ======      =====
     -----------------
<FN>
     (1)  As of  December  31, 1996 and 1995,  the Company  held 3.3 million and
          693,000  shares of Nextel common stock,  respectively.  The investment
          includes  options,  which  expire in  September  1997,  to  acquire an
          additional  25.0  million  shares  of Nextel  common  stock at $16 per
          share.  As of December 31, 1996,  these  options have been adjusted to
          their fair value of $32.6 million,  as required by Generally  Accepted
          Accounting  Principles  issued  during 1996,  reflecting an unrealized
          gain of $12.6  million.  As of December 31, 1995,  these  options were
          recorded  at their cost of $20.0  million  and had an  estimated  fair
          value  of  $99.7  million.   At  December  31,  1995,  the  associated
          unrealized  gain  was  not  reflected  in the  above  table  or in the
          Company's  consolidated balance sheet. In 1997, the Company sold these
          options to Nextel for $25.0 million.
     (2)  The  Company's  investment  in TBS was  exchanged  for  shares of Time
          Warner during 1996. The above table excludes the Company's  investment
          in Time Warner as of December 31, 1996 (see below).
</FN>
</TABLE>

     In February  1996,  in  connection  with certain  preemptive  rights of the
     Company  under  previously  existing  agreements  with Nextel,  the Company
     purchased  an  additional  8.16  million  shares,  classified  as long-term
     investments available for sale, of Nextel common stock at $12.25 per share,
     for a total cost of $99.9 million. During the years ended December 31, 1996
     and 1995,  the Company  sold 5.6 million  shares and 11.3  million  shares,
     respectively, of Nextel common stock for $105.4 million and $212.6 million,
     respectively, and recognized

                                     - 55 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     pre-tax  gains  of  $35.4  million  and  $36.2  million,  respectively,  as
     investment income in its consolidated statement of operations.

     The Company  received 1.36 million  shares of Time Warner common stock (the
     "Time Warner Stock") in exchange (the  "Exchange") for all of the shares of
     TBS stock (the "TBS  Stock")  held by the Company as a result of the merger
     of Time Warner and TBS in October 1996.  As a result of the  Exchange,  the
     Company  recognized a gain of $47.3 million in the fourth  quarter of 1996,
     representing the difference between the Company's  historical cost basis in
     the  TBS  Stock  of  $8.9  million  and the  new  basis  for the  Company's
     investment  in Time Warner Stock of $56.2  million,  which was based on the
     closing  price of the Time  Warner  Stock on the merger date of $41.375 per
     share.  In December 1996 and January  1997,  the Company sold 92,500 shares
     and  1.27  million  shares,   respectively,   of  the  Time  Warner  Stock,
     representing the Company's entire interest in Time Warner, for $3.7 million
     and $48.6 million,  respectively. As of December 31, 1996, the 1.27 million
     shares of Time Warner Stock held by the Company were recorded at fair value
     of $47.4  million and included in short-term  investments  in the Company's
     consolidated balance sheet.

     In  January  1995,  the  Company  exchanged  its  investments  in  Heritage
     Communications,  Inc.  with TCI for 13.3  million  publicly-traded  Class A
     common  shares of TCI with a fair market value of $290.0  million.  Shortly
     thereafter,  the Company sold 9.1 million unrestricted TCI shares for total
     proceeds of $188.1 million (collectively, the "Heritage Transaction"). As a
     result of these  transactions,  the Company  recognized  a pre-tax  gain of
     $141.0 million as investment income in its 1995  consolidated  statement of
     operations.

     Privately Held Companies
     It is  not  practicable  to  estimate  the  fair  value  of  the  Company's
     investments  in privately  held  companies  due to a lack of quoted  market
     prices and excessive costs involved in determining such fair value.


                                     - 56 -

<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


5.   LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                    1996              1995
                                                                                      (Dollars in millions)
<S>                                                                               <C>               <C>
   Notes payable to banks and insurance companies, due
     in installments through 2004..........................................       $4,662.5          $4,476.5

   Senior participating redeemable zero coupon notes, due 2000.............          447.9             402.4

   11.20% Senior discount debentures, due 2007.............................          339.2             304.3

   10% Subordinated debentures, due 2003...................................          126.6             124.6

   10-1/4% Senior subordinated debentures, due 2001........................          125.0             125.0

   9-3/8% Senior subordinated debentures, due 2005.........................          250.0             250.0

   9-1/8% Senior subordinated debentures, due 2006.........................          250.0             250.0

   9-1/2% Senior subordinated debentures, due 2008.........................          200.0             200.0

   10-5/8% Senior subordinated debentures, due 2012........................          300.0             300.0

   Convertible subordinated debt:

     3-3/8% / 5-1/2% Step-up convertible subordinated
       debentures, due 2005................................................          250.0             250.0

     1-1/8% Discount convertible subordinated debentures, due 2007.........          341.3             327.5

   Other debt, due in installments principally through 2000................           39.7              18.9
                                                                                  --------          --------

                                                                                   7,332.2           7,029.2
   Less current portion ...................................................          229.5              85.4
                                                                                  --------          --------
                                                                                  $7,102.7          $6,943.8
                                                                                  ========          ========
</TABLE>


     The  maturities of long-term  debt  outstanding as of December 31, 1996 for
     the four years after 1997 are as follows:

                                             (Dollars in millions)
              1998.............................     $671.5
              1999.............................      462.5
              2000.............................      668.1
              2001.............................    1,282.4

     Zero Notes
     The senior participating  redeemable zero coupon notes, due 2000 (the "Zero
     Notes"),  have an  aggregate  face  amount  payable at  maturity  of $629.4
     million,  accreting  at 11% per  annum.  If,  at  maturity,  or an  earlier
     redemption date, 35%, subject to reduction in certain circumstances, of the
     private  market  value,  as determined  by  applicable  procedures,  of the
     Company's  cellular  subsidiaries  is greater than the accreted  value plus
     certain  premiums,  then such greater amount will constitute the redemption
     price.  The holders of the Zero Notes have the right,  upon  request of the
     holders of the majority of the notes,  to require the Company to redeem the
     Zero Notes at any time on or after March 5, 1998. The accreted value of the
     Zero Notes,  without giving effect to the alternative  formula based on the
     private  market value of the  cellular  business,  of $447.9  million as of
     December  31,1996  has  been  presented  above  as a 1998  maturity.  As of
     December  31,  1996,  $209.7  million  accreted  value of the Zero Notes is
     payable,  at the Company's option,  either in cash or the Company's Class A
     Special Common Stock.

                                     - 57 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     2007 Discount Debentures
     In November 1995,  Comcast UK Cable received net proceeds of $291.1 million
     from the sale of $517.3 million  principal amount at maturity of its 11.20%
     senior  discount  debentures  due 2007 (the  "2007  Discount  Debentures").
     Interest  accretes  on the 2007  Discount  Debentures  at 11.20% per annum,
     compounded semi-annually from November 15, 1995 to November 15, 2000, after
     which date  interest  will be paid in cash on each May 15 and  November 15,
     through November 15, 2007.

     Convertible Subordinated Debt
     The 3-3/8% / 5-1/2% step-up  convertible  subordinated  debentures due 2005
     are  convertible  into the  Company's  Class A  Special  Common  Stock at a
     conversion price of $24.50 per share. Interest on the debentures accrues at
     a rate per annum of 3-3/8% from the date of issuance to  September 8, 1997.
     From and after such  time,  the  Company  will have the right to redeem the
     debentures  for cash.  Interest  will accrue at a rate per annum of 5- 1/2%
     from September 9, 1997 to maturity, or earlier redemption.

     The  1-1/8%  discount  convertible  subordinated  debentures  due  2007 are
     convertible into the Company's Class A Special Common Stock at a conversion
     rate equal to 19.3125 shares per $1,000 principal  amount at maturity.  The
     conversion  price will not be  adjusted  for  accrued  interest or original
     issue  discount.  The debentures  were issued at 55.363% of their principal
     amount of $541.9  million at maturity  resulting in a 6%  effective  annual
     yield to maturity.  At any time on or after  October 15, 1997,  the Company
     may redeem such debentures for cash.

     Debt Extinguishments
     In May 1996, the Company expensed  unamortized  debt  acquisition  costs of
     $1.8  million  in  connection  with  the  prepayment  of  a  portion  of  a
     subsidiary's  outstanding debt,  resulting in an extraordinary loss, net of
     tax of  $1.0  million.  The  Company  incurred  debt  extinguishment  costs
     totaling $9.4 million  during 1995 in connection  with the  refinancing  of
     certain  indebtedness,  resulting in an extraordinary  loss, net of tax, of
     $6.1 million or $.02 per share.  During 1994, the Company paid premiums and
     expensed   unamortized  debt  acquisition  costs  totaling  $18.0  million,
     primarily in connection with the redemption of its $150.0 million,  11-7/8%
     Senior  subordinated  debentures  due 2004,  resulting in an  extraordinary
     loss, net of tax, of $11.7 million or $.05 per share.

     Interest Rates
     Fixed  interest  rates on notes  payable to banks and  insurance  companies
     range from 8.6% to 10.57%.  Bank debt interest rates vary based upon one or
     more of the following rates at the option of the Company:

       Prime rate to prime plus 1%;
       London Interbank Offered Rate (LIBOR) plus 3/8% to 2%; and
       Certificate of deposit rate plus 3/4% to 2%.

     As of December 31, 1996 and 1995, the Company's  effective weighted average
     interest  rate  on its  variable  rate  bank  and  insurance  company  debt
     outstanding was 6.53% and 7.13%, respectively.

     Interest Rate and Foreign Currency Risk Management
     The Company is exposed to market risk  including  changes in interest rates
     and foreign currency  exchange rates. To manage the volatility  relating to
     these exposures,  the Company enters into various  derivative  transactions
     pursuant to the Company's  policies in areas such as counterparty  exposure
     and hedging practices.  Positions are monitored using techniques  including
     market value and sensitivity analyses.

     The use of interest rate risk management  instruments,  such as Swaps, Caps
     and  Collars,  is  required  under the terms of  certain  of the  Company's
     outstanding  debt  agreements.  The Company's  policy is to manage interest
     costs using a mix of fixed and variable rate debt. Using Swaps, the Company
     agrees to exchange,  at specified  intervals,  the difference between fixed
     and variable  interest  amounts  calculated by reference to an  agreed-upon
     notional principal amount. Caps are used to lock in a maximum interest rate
     should variable rates rise, but enable

                                     - 58 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     the  Company  to  otherwise  pay  lower  market  rates.  Collars  limit the
     Company's  exposure to and benefits  from  interest  rate  fluctuations  on
     variable rate debt to within a certain range of rates.

     The following table  summarizes the terms of the Company's  existing Swaps,
     Caps and Collars as of December 31, 1996 and 1995 (dollars in millions):
<TABLE>
<CAPTION>
                                        Notional                             Average         Estimated
                                         Amount          Maturities       Interest Rate     Fair Value
<S>                                      <C>              <C>            <C>             <C>
     As of December 31, 1996
     Variable to Fixed Swaps             $1,080.0         1997-2000           5.85%           $7.4
     Caps                                   250.0           1997              8.55%
     Collars                                620.0         1997-1998       6.98% / 5.16%        0.1

     As of December 31, 1995
     Variable to Fixed Swaps               $650.0         1997-2000           6.05%          ($6.8)
     Caps                                   250.0           1997              8.20%
     Collars                                300.0           1997          7.21% / 5.09%       (0.9)
</TABLE>

     The notional amounts of interest rate agreements, as presented in the above
     table,  are used to  measure  interest  to be paid or  received  and do not
     represent the amount of exposure to credit loss.  The estimated  fair value
     approximates  the  proceeds  (costs) to settle the  outstanding  contracts.
     While Swaps,  Caps and Collars  represent an integral part of the Company's
     interest rate risk management program, their incremental effect on interest
     expense  for the  years  ended  December  31,  1996,  1995 and 1994 was not
     significant.

     The  Company has  entered  into  certain FX Options as a normal part of its
     foreign  currency risk management  efforts.  During 1995,  Comcast UK Cable
     entered into certain  foreign  exchange  put option  contracts  ("FX Puts")
     which may be settled only on November  16, 2000.  These FX Puts are used to
     limit  Comcast  UK  Cable's  exposure  to the risk that the  eventual  cash
     outflows  related to net monetary  liabilities  denominated  in  currencies
     other than its  functional  currency (the UK Pound  Sterling or "UK Pound")
     (principally  the 2007  Discount  Debentures)  are  adversely  affected  by
     changes in exchange  rates.  As of December  31, 1996 and 1995,  Comcast UK
     Cable had  (pound)250.0  million  notional amount of FX Puts to purchase US
     dollars at an exchange rate of $1.35 per (pound)1.00 (the "Ratio").  The FX
     Puts  provide a hedge,  to the extent  the  exchange  rate falls  below the
     Ratio, against Comcast UK Cable's net monetary  liabilities  denominated in
     US  dollars  since  gains and  losses  realized  on the FX Puts are  offset
     against  foreign  exchange  gains or losses  realized on the underlying net
     liabilities.  Premiums  paid for the FX Puts, of $21.4  million,  have been
     recorded  as assets in the  Company's  consolidated  balance  sheet.  These
     premiums are being amortized over the terms of the related contracts. As of
     December 31, 1996, the FX Puts had a carrying value of $18.4 million and an
     estimated fair value of $5.5 million.  The differences between the carrying
     amounts and the estimated fair value of the FX Puts were not significant as
     of December 31, 1995.

     In the fourth quarter of 1995, in order to reduce hedging costs, Comcast UK
     Cable sold foreign  exchange call option contracts ("FX Calls") to exchange
     (pound)250.0  million  notional  amount.  Comcast  UK Cable  received  $5.3
     million  from the  sale of these  contracts.  These  contracts  may only be
     settled on their expiration dates. Of these contracts, (pound)200.0 million
     notional amount,  with an exchange ratio of $1.70 per (pound)1.00,  expired
     unexercised  in  November  1996  while  the  remaining  contract,   with  a
     (pound)50.0  million  notional  amount and an  exchange  ratio of $1.62 per
     (pound)1.00,  has a settlement date in November 2000. In the fourth quarter
     of 1996,  in order to continue to reduce  hedging  costs,  Comcast UK Cable
     sold  additional  FX Calls,  for  proceeds  of $3.5  million,  to  exchange
     (pound)200.0  million notional amount at an average exchange ratio of $1.75
     per  (pound)1.00.  These contracts may only be settled on their  expiration
     dates during the fourth quarter of 1997. The FX Calls are  marked-to-market
     on a current basis in the Company's consolidated statement of operations.

                                     - 59 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     As of  December  31,  1996  and  1995,  the  estimated  fair  value  of the
     liabilities  related  to  the  FX  Calls,  as  recorded  in  the  Company's
     consolidated   balance   sheet,   was  $12.2   million  and  $5.8  million,
     respectively.  Changes in fair value between  measurement dates relating to
     the FX Calls  resulted in exchange  losses of $2.2 million  during the year
     ended  December  31,  1996  in  the  Company's  consolidated  statement  of
     operations.  There were no significant exchange gains or losses relating to
     these contracts during the year ended December 31, 1995.

     Estimated Fair Value
     The Company's  long-term  debt had estimated  fair values of $7.323 billion
     and $7.089  billion as of  December  31, 1996 and 1995,  respectively.  The
     estimated  fair value of the  Company's  publicly  traded  debt is based on
     quoted  market  prices for that  debt.  Interest  rates that are  currently
     available  to the  Company  for  issuance  of debt with  similar  terms and
     remaining  maturities  are used to estimate  fair value for debt issues for
     which quoted market prices are not available.

     Debt Covenants
     Certain of the Company's  subsidiaries' loan agreements contain restrictive
     covenants which limit the subsidiaries'  ability to enter into arrangements
     for the acquisition of property and equipment, investments, mergers and the
     incurrence of additional  debt.  Certain of these  agreements  require that
     certain  ratios and cash flow  levels be  maintained  and  contain  certain
     restrictions on dividend payments and advances of funds to the Company. The
     Company  and its  subsidiaries  were in  compliance  with such  restrictive
     covenants  for all periods  presented.  In  addition,  the stock of certain
     subsidiary  companies  is pledged as  collateral  for the notes  payable to
     banks and insurance companies.

     As of  December  31,  1996,  $376.8  million of the  Company's  cash,  cash
     equivalents and short-term investments is restricted to use by subsidiaries
     of the Company under  contractual or other  arrangements,  including $213.7
     million which is restricted to use by Comcast UK Cable.

     Restricted net assets of the Company's subsidiaries were approximately $2.4
     billion as of December 31, 1996. The restricted net assets of  subsidiaries
     exceeds the Company's  consolidated  net assets as certain of the Company's
     subsidiaries have a stockholders' deficiency.

     Lines and Letters of Credit
     As of  February  1, 1997,  certain  subsidiaries  of the Company had unused
     lines of credit of $1.679 billion. The availability and use of these unused
     lines  of  credit  is  restricted  by the  covenants  of the  related  debt
     agreements and to subsidiary general purposes and dividend declaration.  In
     addition,  of  the  total  unused  lines  of  credit,  $625.0  million  was
     established by a subsidiary for debt refinancing.

     As of December 31, 1996,  the Company and certain of its  subsidiaries  had
     unused  irrevocable  standby  letters of credit  totaling $102.3 million to
     cover potential fundings associated with several projects.

6.   STOCKHOLDERS' EQUITY (DEFICIENCY)

     Preferred Stock
     The Company is authorized to issue, in one or more series,  up to a maximum
     of 20.0 million shares of preferred stock without par value. The shares can
     be issued with such designations, preferences, qualifications,  privileges,
     limitations,  restrictions, options, conversion rights and other special or
     related rights as the Company's Board of Directors (the "Board") shall from
     time to time fix by resolution.

     In July 1996, in connection with the Sports Venture  Acquisition  (see Note
     3), the Company  issued  6,370 shares of  Preferred  Stock.  Each holder of
     shares of the  Preferred  Stock is  entitled  to  receive  cumulative  cash
     dividends  at the  annual  rate of $250 per  share,  payable  quarterly  in
     arrears.  The Preferred Stock is redeemable,  at the option of the Company,
     beginning  in July  1999 at a  redemption  price of $5,000  per share  plus
     accrued and unpaid dividends,  subject to certain conditions and conversion
     adjustments. The Preferred Stock is convertible,

                                     - 60 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     at the option of the holder,  into shares of the Company's  Class A Special
     Common Stock at a ratio of 209.1175  shares of Class A Special Common Stock
     for each share of  Preferred  Stock,  subject to  certain  conditions.  The
     holders of the Preferred Stock are not entitled to any voting rights except
     as otherwise  provided by the  Company's  Articles of  Incorporation  or by
     applicable law.

     Common Stock
     Class A Special Common Stock is generally nonvoting and each share of Class
     A Common Stock is entitled to one vote.  Each share of Class B Common Stock
     is  entitled to fifteen  votes and is  convertible,  share for share,  into
     Class A or Class A Special Common Stock, subject to certain restrictions.

     As of December 31,  1996,  20.7  million  shares of Class A Special  Common
     Stock  were  reserved  for  issuance  upon   conversion  of  the  Company's
     convertible subordinated debentures.

     Repurchase Program
     Concurrent  with the  announcement  of the Scripps  Acquisition  in October
     1995, the Company  announced that its Board authorized a market  repurchase
     program  (the  "Repurchase  Program")  pursuant  to which the  Company  may
     purchase,  at such times and on such terms as it deems  appropriate,  up to
     $500.0  million  of  its  outstanding  common  stock,  subject  to  certain
     restrictions  and market  conditions.  During the years ended  December 31,
     1996 and 1995,  the Company  repurchased  10.5  million  shares and 680,000
     shares,  respectively,  of its common stock for aggregate  consideration of
     $180.0 million and $12.4 million, respectively,  pursuant to the Repurchase
     Program. During January 1997, the Company repurchased an additional 450,000
     shares of its common stock for aggregate consideration of $7.6 million. The
     Repurchase Program will terminate in May 1997. In addition,  as of December
     31, 1996, the Company has put options  outstanding on 4.0 million shares of
     its Class A Special Common Stock (see Note 9).

     Share Exchange
     In December  1995, the Company issued 751,000 shares of its Class A Special
     Common Stock to the Company's Retirement-Investment Plan in exchange for an
     equivalent  number  of  shares  of its  Class  A  Common  Stock  held as an
     investment of the Plan. The Class A Common Stock was subsequently retired.

     Stock-Based Compensation Plans
     As of December  31,  1996,  the Company and its  subsidiaries  have several
     stock-based compensation plans for certain employees,  officers,  directors
     and other persons designated by the applicable  compensation  committees of
     the Boards of  Directors of the Company and its  subsidiaries.  These plans
     are described below.

     Comcast Option Plan. The Company maintains qualified and nonqualified stock
     option plans for certain employees, directors and other persons under which
     fixed stock  options are granted and the option  price is not less than the
     fair  value  of a share  of the  underlying  stock  at the  date  of  grant
     (collectively,  the "Comcast Option Plan").  Under the Comcast Option Plan,
     36.1 million  shares of Class A Special  Common Stock and 658,000 shares of
     Class B Common Stock were  reserved as of December  31, 1996.  Option terms
     are generally from five to 10 1/2 years,  with options  generally  becoming
     exercisable between two and 9 1/2 years from the date of grant.


                                     - 61 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     A summary of the  activity  of the  Comcast  Option  Plan as of and for the
     years ended December 31, 1996,  1995, and 1994 is presented  below (options
     in thousands):
<TABLE>
<CAPTION>
                                                  1996                    1995                    1994
                                                      Weighted-               Weighted-               Weighted-
                                                       Average                 Average                 Average
                                                      Exercise                Exercise                Exercise
                                            Options     Price       Options     Price       Options     Price
<S>                                        <C>        <C>          <C>        <C>             <C>        <C>
     Class A Special Common Stock
     Outstanding at
       beginning of year                   14,208     $14.25       11,868     $13.73          7,512      $9.34
     Granted                                1,308      17.41        2,899      15.88          5,165      19.61
     Exercised                               (199)      8.72         (267)      9.13           (527)      8.55
     Canceled                                (466)     16.08         (292)     15.42           (282)     13.84
                                           ------                  ------                     -----
     Outstanding at
       end of year                         14,851      14.54       14,208      14.25         11,868      13.73
                                           ======                  ======                     =====

     Exercisable at end of year             6,875     $13.40        5,812     $13.13          4,950     $13.12
                                           ======                  ======                     =====


     Class A Common Stock
     Outstanding at
       beginning of year                      229      $4.87          362      $4.74            468      $4.57
     Exercised                               (229)      4.87         (129)      4.52            (81)      3.71
     Canceled                                                          (4)      4.92            (25)      4.84
                                           ------                  ------                     -----
     Outstanding at
       end of year                                                    229       4.87            362       4.74
                                           ======                  ======                     =====

     Exercisable at end of year                                       226      $4.86            206      $4.66
                                           ======                  ======                     =====


     Class B Common Stock
     Outstanding at beginning
       and end of year                        658      $5.70          658      $5.70            658      $5.70
                                           ======                  ======                     =====


     Exercisable at end of year               658      $5.70          557      $5.45            304      $5.59
                                           ======                  ======                     =====
</TABLE>

                                     - 62 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     The following table summarizes information about the Class A Special Common
     Stock options  outstanding under the Comcast Option Plan as of December 31,
     1996 (options in thousands):
<TABLE>
<CAPTION>
                                       Options Outstanding                         Options Exercisable
                                             Weighted-
     Range of               Number            Average         Weighted-          Number          Weighted-
     Exercise             Outstanding        Remaining         Average         Exercisable        Average
     Prices               at 12/31/96    Contractual Life  Exercise Price      at 12/31/96    Exercise Price
<S>                         <C>           <C>                  <C>              <C>              <C>
     $6.22 to $9.92           2,851         2.8 Years            $7.14            1,811            $7.12
     $10.17 to $14.63         3,828         5.3 Years            11.78            2,247            11.14
     $15.00 to $17.63         2,652         8.7 Years            15.95               59            15.57
     $17.75 to $23.28         5,520         5.6 Years            19.61            2,758            19.33
                             ------                                               -----
                             14,851                                               6,875
                             ======                                               =====
</TABLE>


     The  weighted-average  fair  value at date of  grant  of a Class A  Special
     Common Stock option  granted under the Comcast  Option Plan during 1996 and
     1995 was $9.71 and $9.67, respectively. The fair value of each option grant
     is  estimated on the date of grant using the  Black-Scholes  option-pricing
     model with the following  weighted-average  assumptions  used for grants in
     1996 and  1995:  dividend  yield  of .53%  and  .65%  for  1996  and  1995,
     respectively;  expected  volatility  of 34.9%  and 40.7% for 1996 and 1995,
     respectively;  risk-free  interest rate of 6.8% and 7.6% for 1996 and 1995,
     respectively;  expected  option  lives of 9.9 years and 10.2 years for 1996
     and 1995, respectively; and a forfeiture rate of 3.0% for both years.

     QVC Tandem Plan. QVC established a qualified and  nonqualified  combination
     stock option/Stock Appreciation Rights ("SAR") plan (collectively, the "QVC
     Tandem  Plan")  during 1995 for  employees,  officers,  directors and other
     persons  designated  by  the  Compensation  Committee  of  QVC's  Board  of
     Directors.  Under the QVC Tandem Plan,  the option  price is generally  not
     less than the fair value, as determined by an independent  appraisal,  of a
     share of the underlying common stock of QVC (the "QVC Common Stock") at the
     date of grant.  As of the latest  valuation date, the fair value of a share
     of QVC Common Stock was $585.19.  If the SAR feature of the QVC Tandem Plan
     is elected by the eligible participant, the participant receives 75% of the
     excess of the fair value of a share of QVC Common  Stock over the  exercise
     price of the option to which it is attached at the  exercise  date.  Option
     holders have stated an intention not to exercise the SAR feature of the QVC
     Tandem Plan.  Because the  exercise of the option  component is more likely
     than the  exercise  of the SAR  feature,  compensation  expense is measured
     based on the stock option component.  Under the QVC Tandem Plan, option/SAR
     terms are ten years  from the date of grant,  with  options/SARs  generally
     becoming exercisable over four years from the date of grant. As of December
     31, 1996,  263,000 shares of QVC Common Stock were reserved under the plan.
     Compensation  expense of $4.0 million was  recorded  under this plan during
     the year ended  December 31, 1996. No  compensation  expense was recognized
     under this plan during the year ended December 31, 1995.

                                     - 63 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     A summary of the  activity  of the QVC Tandem  Plan as of and for the years
     ended  December  31,  1996 and 1995 is  presented  below  (options/SARs  in
     thousands):
<TABLE>
<CAPTION>
                                           1996                      1995
                                               Weighted-                 Weighted-
                                                Average                   Average
                                    Options/   Exercise      Options/    Exercise
                                      SARs       Price         SARs        Price
<S>                                      <C>   <C>          <C>          <C>
     Outstanding at
        beginning of year                142   $177.05
     Granted                              26    271.23             142    $177.05
     Canceled                             (4)   177.05
                                       -----                     -----

     Outstanding at
        end of year                      164    192.16             142     177.05
                                       =====                     =====


     Exercisable at end of year           36   $177.05
                                       =====
</TABLE>

     The  following  table   summarizes   information   about  the  options/SARs
     outstanding under the QVC Tandem Plan as of December 31, 1996 (options/SARs
     in thousands):
<TABLE>
<CAPTION>
                                            Options/SARs Outstanding        Options/SARs Exercisable
                                                          Weighted-
                                         Number            Average                  Number
     Exercise                          Outstanding        Remaining              Exercisable
     Price                             at 12/31/96    Contractual Life           at 12/31/96
<S>                                     <C>          <C>                           <C>
      $177.05                               157          8.3 Years                     36
       522.31                                 3          9.5 Years
       585.19                                 4          9.8 Years
                                          -----                                     -----
                                            164                                        36
                                          =====                                     =====
</TABLE>

     The  weighted-average  fair  value at date of grant of a QVC  Common  Stock
     option/SAR   granted   during   1996  and  1995  was  $385.13  and  $96.05,
     respectively.  The fair value of each option grant is estimated on the date
     of grant using the  Black-Scholes  option-pricing  model with the following
     weighted-average  assumptions used for grants in 1996 and 1995: no dividend
     yield for both years; expected volatility of 20% for both years;  risk-free
     interest  rate of 6.8% and 7.5% for 1996 and 1995,  respectively;  expected
     option lives of 10 years for both 1996 and 1995;  and a forfeiture  rate of
     3.0% for both years.

     Had compensation  expense for the Company's two aforementioned  stock-based
     compensation  plans  been  determined  based on the fair value at the grant
     dates for awards  under those plans under the  provisions  of SFAS No. 123,
     the Company's net loss and net loss per share would have been  increased to
     the pro forma  amounts  indicated  below  (dollars in millions,  except per
     share data):
<TABLE>
<CAPTION>
                                               1996              1995
<S>                                           <C>               <C>
     Net loss -- As reported                  ($53.5)           ($43.9)
     Net loss -- Pro forma                     (61.0)            (50.7)

     Net loss per share -- As reported         ($.21)            ($.18)
     Net loss per share -- Pro forma            (.24)             (.21)
</TABLE>

     The pro  forma  effect on net loss and net loss per share for 1996 and 1995
     by applying  SFAS No. 123 may not be  indicative of the pro forma effect on
     net income or loss in future years since SFAS No. 123 does not take

                                     - 64 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     into  consideration pro forma  compensation  expense related to awards made
     prior to January 1, 1995 and since  additional  awards in future  years are
     anticipated.

     Other Stock-Based Compensation Plans

     The Company  maintains a restricted  stock program  under which  management
     employees may be granted restricted shares of the Company's Class A Special
     Common Stock. The shares awarded vest annually, generally over a period not
     to exceed five years from the date of the award,  and do not have voting or
     dividend rights until vesting occurs.  At December 31, 1996, there were 1.4
     million unvested shares granted under the program,  of which 281,000 vested
     in January 1997. During the years ended December 31, 1996 and 1995, 951,000
     and 135,000  shares were granted  under the program,  respectively,  with a
     weighted-average  grant date  market  value of $19.16 and $20.61 per share,
     respectively.  Compensation  expense  recognized  during  the  years  ended
     December 31, 1996, 1995, and 1994 under this program was $5.5 million, $4.6
     million,  and  $4.4  million,   respectively.   There  was  no  significant
     difference  between the amount of  compensation  expense  recognized by the
     Company  during the years ended  December  31, 1996 and 1995 and the amount
     that would have been  recognized had  compensation  expense been determined
     under the provisions of SFAS 123.

     The Company and QVC  established SAR plans during 1996 and 1995 for certain
     employees,  officers,  directors,  and other persons (the "QVC SAR Plans").
     Under the QVC SAR Plans,  eligible  participants  are entitled to receive a
     cash payment  from the Company or QVC equal to 100% of the excess,  if any,
     of the fair value of a share of QVC Common Stock at the exercise  date over
     the fair value of such a share at the grant  date.  The SARs have a term of
     ten years from the date of grant and become  exercisable  over four to five
     years from the date of grant.  During each of the years ended  December 31,
     1996 and 1995, 11,000 SARs were awarded and 21,000 SARs were outstanding at
     December 31, 1996, of which 3,000 were  exercisable.  Compensation  expense
     related to the plans of $4.5 million and $1.1  million was recorded  during
     the years  ended  December  31, 1996 and 1995,  respectively.  There was no
     significant   difference   between  the  amount  of  compensation   expense
     recognized and the amount that would have been recognized had  compensation
     expense been determined under the provisions of SFAS 123.

7.   INCOME TAXES

     As a result of the Company's recent  acquisitions,  the Company's  deferred
     income tax  liability  and deferred  charges were  increased  for temporary
     differences  between  the  financial  reporting  basis and the  income  tax
     reporting basis of the assets  acquired at the dates of their  acquisition,
     as described below (dollars in millions):
<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                            1996              1995             1994
<S>                                                       <C>                <C>              <C>
     Scripps Cable...................................       $499.2
     Interest in Comcast-Spectacor...................         36.4
     QVC.............................................                          $45.7
     Maclean Hunter..................................                                          $488.0
</TABLE>

     At their  dates of  acquisition,  Scripps  Cable  and QVC had net  deferred
     income tax  liabilities of $101.7 million and $33.2 million,  respectively,
     which were assumed by the Company.

     The  Company  joins  with  its 80% or more  owned  subsidiaries  in  filing
     consolidated federal income tax returns. Both QVC and the direct subsidiary
     of the LLC file  separate  consolidated  federal  income tax  returns.  The
     increases in the Company's consolidated current federal income tax expense,
     shown in the table below, is primarily attributable to QVC's federal income
     tax expense being  consolidated with the Company's for financial  reporting
     purposes.

                                     - 65 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     Income tax expense (benefit) consists of the following components:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1996             1995                1994
                                                                              (Dollars in millions)
<S>                                                                <C>               <C>                <C>
     Current expense
     Federal....................................................     $82.0             $45.2              $8.1
     State......................................................      23.3              14.3              12.4
                                                                     -----             -----             -----

                                                                     105.3              59.5              20.5
                                                                     -----             -----             -----

     Deferred expense (benefit)
     Federal....................................................     (20.4)            (22.0)            (27.9)
     State......................................................      (0.5)              4.6              (1.8)
                                                                     -----             -----             -----

                                                                     (20.9)            (17.4)            (29.7)
                                                                     -----             -----             -----

     Income tax expense (benefit)...............................     $84.4             $42.1             ($9.2)
                                                                     =====             =====             =====
</TABLE>

     The effective income tax expense  (benefit) of the Company differs from the
     statutory amount because of the effect of the following items:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1996             1995                1994
                                                                              (Dollars in millions)
<S>                                                                <C>              <C>               <C>
     Federal tax at statutory rate..............................     ($5.6)           ($15.9)           ($31.5)
     Non-deductible depreciation and amortization...............      32.0              23.7               3.2
     State income taxes, net of federal benefit.................      14.8              12.3               6.9
     Non-deductible foreign losses and equity in
       net losses of affiliates.................................      27.5              17.3              10.6
     Additions to valuation allowance...........................      18.3               1.4               0.6
     Other......................................................      (2.6)              3.3               1.0
                                                                     -----             -----             -----

     Income tax expense (benefit)...............................     $84.4             $42.1             ($9.2)
                                                                     =====             =====             =====
</TABLE>

                                     - 66 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     Deferred income tax benefit resulted from the following differences between
     financial and income tax reporting:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1996             1995              1994
                                                                              (Dollars in millions)
<S>                                                                 <C>               <C>               <C>
     Depreciation and amortization.........................         ($60.2)           ($68.3)           ($36.3)
     Accrued expenses not currently deductible.............           (6.3)             (2.7)            (22.3)
     Non-deductible reserves for bad debts,
       obsolete inventory and sales returns................          (11.0)            (14.2)
     Non-taxable temporary differences associated
       with sale or exchange of securities.................           30.9              22.7
     Losses (income) from affiliated partnerships..........           25.6              (2.4)             (1.0)
     Utilization of net operating loss carryforwards.......                             41.0              28.3
     Deferred tax assets arising from current
       period losses ......................................          (23.0)            (10.0)
     Change in valuation allowance and other...............           23.1              16.5               1.6
                                                                    ------            ------            ------


     Deferred income tax benefit...........................         ($20.9)           ($17.4)           ($29.7)
                                                                    ======            ======            ======
</TABLE>

     Significant  components  of the Company's net deferred tax liability are as
     follows:
<TABLE>
<CAPTION>
                                                                       December 31,
                                                                   1996             1995
                                                                   (Dollars in millions)
<S>                                                               <C>               <C>
     Deferred tax assets:
       Net operating loss carryforwards....................         $280.9            $257.9
       Differences between book and
         tax basis of property and equipment
         and deferred charges..............................           24.5              26.8
       Reserves for bad debts, obsolete inventory
         and sales returns.................................           73.9              62.9
       Other...............................................           49.7              43.3
       Less: Valuation allowance...........................         (263.2)           (244.9)
                                                                  --------          --------
                                                                     165.8             146.0
                                                                  --------          --------

     Deferred tax liabilities, principally
       differences between book and tax
       basis of property and equipment and
       deferred charges....................................        2,228.3           1,604.2
                                                                  --------          --------
     Net deferred tax liability............................       $2,062.5          $1,458.2
                                                                  ========          ========
</TABLE>


     The deferred tax  liability is net of deferred tax assets of $78.0  million
     and $59.8 million as of December 31, 1996 and 1995, respectively, which are
     included in other  current  assets in the  Company's  consolidated  balance
     sheet.  The  Company's  valuation  allowance  against  deferred  tax assets
     includes approximately $120.0 million for which any subsequent tax benefits
     recognized  will be  allocated  to reduce  goodwill  and  other  noncurrent
     intangible assets. For income tax reporting  purposes,  the subsidiaries of
     the LLC  have net  operating  loss  carryforwards  of  approximately  $28.0
     million  for which a deferred  tax asset has been  recorded,  which  expire
     primarily in 2010 and 2011. Remaining net operating loss carryforwards, for
     which valuation allowances have been established, expire in periods through
     2011.

                                     - 67 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


8.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

     The Company  made cash  payments  for  interest of $456.8  million,  $459.1
     million and $261.6 million  during the years ended December 31, 1996,  1995
     and 1994, respectively.

     The Company made cash payments for income taxes of $101.4 million and $35.4
     million  during the years ended  December 31, 1996 and 1995,  respectively.
     Cash payments for income taxes during the year ended December 31, 1994 were
     not significant.

9.   COMMITMENTS AND CONTINGENCIES

     Commitments
     Beginning  in January  1998,  the  Company  has the right to  purchase  the
     minority  interests in  Comcast-Spectacor  from the Minority  Group for the
     Minority  Group's  pro rata  portion of the fair  market  value (on a going
     concern basis as determined by an appraisal process) of  Comcast-Spectacor.
     The Minority Group also has the right  (together with the Company's  right,
     the "Exit  Rights") to require the Company to purchase its interests  under
     the same terms.  The Company may pay the Minority  Group for such interests
     in shares of the Company's Class A Special Common Stock, subject to certain
     restrictions.  If the  Minority  Group  exercises  its Exit  Rights and the
     Company elects not to purchase their interest, the Company and the Minority
     Group will use their best efforts to sell Comcast-Spectacor.

     Assuming consummation of the E! Acquisition, after the 18 month anniversary
     of  the  closing   date  of  the  E!   Acquisition,   Disney,   in  certain
     circumstances,  is  entitled to cause  Newco to  purchase  Disney's  entire
     interest  in Newco at its then  fair  market  value  (as  determined  by an
     appraisal  process).  If Newco elects not to purchase  Disney's  interests,
     Disney has the right,  at its  option,  to  purchase  either the  Company's
     entire interest in Newco or all of the shares of stock of E!  Entertainment
     held by Newco,  in each case at fair market value. In the event that Disney
     exercises its rights,  as described  above,  a portion or all of the Disney
     Notes may be replaced with a three year note due to Disney.

     Liberty Media Corporation ("Liberty"),  a majority owned subsidiary of TCI,
     may, at certain times following  February 9, 2000,  trigger the exercise of
     certain  exit rights  with  respect to its  investment  in QVC. If the exit
     rights are  triggered,  the Company  has first right to purchase  Liberty's
     stock in QVC at  Liberty's  pro rata portion of the fair market value (on a
     going concern or liquidation  basis,  whichever is higher, as determined by
     an  appraisal  process) of QVC. The Company may pay Liberty for such stock,
     subject to certain rights of Liberty to consummate the purchase in the most
     tax-efficient  method  available,  in cash, the Company's  promissory  note
     maturing not more than three years after  issuance,  the  Company's  equity
     securities  or any  combination  thereof.  If  the  Company  elects  not to
     purchase the stock of QVC held by Liberty, then Liberty will have a similar
     right to purchase the stock of QVC held by the Company.  If Liberty  elects
     not to purchase the stock of QVC held by the Company,  then Liberty and the
     Company will use their best efforts to sell QVC.

     As a result of the Maclean Hunter  Acquisition,  at any time after December
     18, 2001, CalPERS may elect to liquidate its interest in the LLC at a price
     based upon the fair value of CalPERS' interest in the LLC, adjusted,  under
     certain  circumstances,  for certain  performance  criteria relating to the
     fair value of the LLC or to the Company's  common stock.  Except in certain
     limited  circumstances,  the  Company,  at its  option,  may  satisfy  this
     liquidity arrangement by purchasing CalPERS' interest for cash, through the
     issuance of the Company's common stock (subject to certain  limitations) or
     by selling the LLC.

     As part of the  Repurchase  Program,  the  Company  sold put options on 1.0
     million and 3.0 million  shares of its Class A Special  Common Stock during
     the years ended December 31, 1996 and 1995,  respectively.  The put options
     give the holders the right to require the Company to repurchase such shares
     at specified  prices on specific dates in January through March 1997. As of
     December 31, 1996, the Company has reclassified $69.6

                                     - 68 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     million,  the amount it would be obligated to pay to repurchase such shares
     upon  exercise of the put  options,  to a temporary  equity  account in its
     consolidated  balance sheet.  The temporary  equity related to these shares
     will be  reclassified  to  additional  capital in the first quarter of 1997
     upon  expiration or settlement of the options.  The difference  between the
     proceeds  received  from the sale of these put options and their  estimated
     fair value was not significant as of December 31, 1996 and 1995.

     Minimum  annual rental  commitments  for office space and  equipment  under
     noncancellable operating leases as of December 31, 1996 are as follows:

                                                             (Dollars
                                                            in millions)

                1997                                           $52.4
                1998                                            48.7
                1999                                            42.5
                2000                                            36.3
                2001                                            36.2
                Thereafter                                     159.8

     Rental expense of $54.7 million,  $44.6 million and $21.9 million for 1996,
     1995 and 1994, respectively, has been charged to operations.

     Contingencies
     The Company has an agreement  with an unrelated  third party which provides
     for the sale and servicing of accounts receivable relating to the Company's
     electronic  retailing  operations.  The Company sold accounts receivable at
     face value of $687.0  million and $530.2  million  under this  agreement in
     1996 and 1995,  respectively.  The Company remains  obligated to repurchase
     uncollectible accounts pursuant to the recourse provisions of the agreement
     and is  required  to maintain a  specified  percentage  of all  outstanding
     receivables  under the program as a deposit  with the third party to secure
     its obligations under the agreement.

     The uncollected  balance of accounts receivable sold under this program was
     $317.7  million  and  $283.1  million  as of  December  31,  1996 and 1995,
     respectively,  of which $284.5  million and $234.5  million,  respectively,
     represent  deposits  under the  agreement,  that are  included  in accounts
     receivable.  Total recorded reserves relating to the possible repurchase of
     uncollectible  accounts was $73.2  million and $71.6 million as of December
     31, 1996 and 1995, respectively. The receivables sold under the program are
     considered,  for financial reporting purposes,  to be financial instruments
     with  off-balance  sheet risk. The carrying  value of accounts  receivable,
     adjusted for the reserves  described above,  approximates  fair value as of
     December 31, 1996 and 1995.

     The Company is subject to claims which arise in the ordinary  course of its
     business and other legal  proceedings.  In the opinion of  management,  the
     amount  of  ultimate  liability  with  respect  to these  actions  will not
     materially  affect  the  financial  position,   results  of  operations  or
     liquidity of the Company.

     The Company has settled the majority of outstanding proceedings challenging
     its rates charged for regulated cable  services.  In December 1995, the FCC
     adopted an order  approving  a  negotiated  settlement  of rate  complaints
     pending against the Company for cable  programming  service tiers ("CPSTs")
     which provided $6.6 million in refunds, plus interest, given in the form of
     bill  credits   during  1996,  to  1.3  million  of  the  Company's   cable
     subscribers.  As part of the negotiated  settlement,  the Company agreed to
     forego certain  inflation and external cost adjustments for systems covered
     by its cost-of-service  filings for CPSTs. The Company currently is seeking
     to justify  rates for basic cable  services and equipment in certain of its
     cable systems in the State of Connecticut on the basis of a cost-of-service
     showing.  The State of  Connecticut  has ordered the Company to reduce such
     rates and to make  refunds to  subscribers.  The Company has  appealed  the
     Connecticut decision to the FCC. Recent  pronouncements from the FCC, which
     generally support the Company's  position on appeal,  have caused the State
     of  Connecticut  to reexamine  its prior ruling.  While the Company  cannot
     predict the

                                     - 69 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)


     outcome of this action,  the Company believes that the ultimate  resolution
     of these pending regulatory matters will not have a material adverse impact
     on the Company's financial position, results of operations or liquidity.

10.  FINANCIAL DATA BY BUSINESS SEGMENT

     The following  represents  the  Company's  significant  business  segments,
     including:  "Domestic Cable  Communications,"  the most  significant of the
     Company's wired telecommunications operations;  "Electronic Retailing," the
     most  significant  of  the  Company's  content  businesses;  and  "Cellular
     Communications,"   the  most   significant   of  the   Company's   wireless
     telecommunications  operations.  The remaining  components of the Company's
     operations are not independently  significant to the Company's consolidated
     financial  position or results of  operations  and are  included  under the
     caption "Corporate and Other" (dollars in millions).
<TABLE>
<CAPTION>
                                                   Domestic
                                                     Cable       Electronic     Cellular      Corporate
                                                Communications    Retailing  Communications  and Other(1)      Total
<S>                                                 <C>           <C>             <C>            <C>         <C>
   1996
   Revenues....................................     $1,640.9      $1,835.8        $426.1         $135.6      $4,038.4
   Depreciation and amortization...............        416.2         107.7         117.2           57.2         698.3
   Operating income (loss).....................        393.8         192.6          43.0         (120.5)        508.9
   Interest expense............................        228.3          65.2          92.4          154.9         540.8
   Assets......................................      6,938.3       2,162.7       1,368.3        1,619.3      12,088.6
   Long-term debt..............................      3,078.1         842.6       1,104.4        2,077.6       7,102.7
   Capital expenditures........................        290.9          63.6         116.0          199.9         670.4
   Equity in net (losses) income of
     affiliates................................        (22.1)          0.2                       (122.9)       (144.8)

   1995
   Revenues....................................     $1,454.9      $1,487.7        $374.9          $45.4      $3,362.9
   Depreciation and amortization...............        372.5          86.1         205.7           24.7         689.0
   Operating income (loss).....................        346.0         145.8         (67.9)         (94.1)        329.8
   Interest expense............................        245.6          75.3          74.7          129.1         524.7
   Assets......................................      4,531.1       2,096.4       1,349.4        1,603.4       9,580.3
   Long-term debt..............................      2,984.2         911.3         928.9        2,119.4       6,943.8
   Capital expenditures........................        237.8          28.1         228.7          128.4         623.0
   Equity in net (losses) income of
     affiliates................................        (17.6)          0.3                        (69.3)        (86.6)

   1994
   Revenues....................................     $1,065.3        $             $286.1          $23.9      $1,375.3
   Depreciation and amortization...............        229.5                        89.9           17.1         336.5
   Operating income (loss).....................        288.0                        26.4          (74.6)        239.8
   Interest expense............................        151.1                        58.6          103.7         313.4
   Assets......................................      4,504.8          84.1       1,203.2          970.9       6,763.0
   Long-term debt..............................      2,852.9                       744.5        1,213.1       4,810.5
   Capital expenditures........................        171.7                        71.9           26.3         269.9
   Equity in net (losses) income of
     affiliates................................         (8.3)         11.2                        (43.8)        (40.9)
<FN>
--------------
(1)  Corporate and other includes  certain  elimination  entries  related to the
     segments presented.
</FN>
</TABLE>

                                     - 70 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 and 1994 (Concluded)

11.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
                                                  First         Second           Third         Fourth         Total
                                                 Quarter        Quarter       Quarter (2)    Quarter (5)       Year
                                                                    (Dollars in millions, except per share data)
<S>                                              <C>             <C>            <C>          <C>             <C>
   1996

   Revenues.................................     $950.7          $945.6         $974.6       $1,167.5        $4,038.4
   Operating income before
     depreciation and amortization (1)......      270.1           296.1          295.8          345.2         1,207.2
   Operating income.........................      113.3           128.7          129.1          137.8           508.9
   (Loss) income before extraordinary
     item (4)...............................      (34.6)           17.8          (10.0)         (25.7)          (52.5)
   Extraordinary item.......................                       (1.0)                                         (1.0)
   Net (loss) income (4)....................      (34.6)           16.8          (10.0)         (25.7)          (53.5)
   (Loss) income per share before
     extraordinary item.....................       (.14)            .07           (.04)          (.10)           (.21)
   Extraordinary item per share.............
   Net (loss) income per share..............       (.14)            .07           (.04)          (.10)           (.21)
   Cash dividends per share.................      .0233           .0233          .0233          .0233           .0933

   1995

   Revenues.................................     $663.6          $823.6         $870.2       $1,005.5        $3,362.9
   Operating income before
     depreciation and amortization (1)......      219.6           260.8          264.1          274.3         1,018.8
   Operating income (3).....................      (23.9)          117.3          116.5          119.9           329.8
   Loss before extraordinary items (3)......       (0.6)          (29.3)          (2.0)          (5.9)          (37.8)
   Extraordinary items......................                                      (5.4)          (0.7)           (6.1)
   Net loss (3).............................       (0.6)          (29.3)          (7.4)          (6.6)          (43.9)
   Loss per share before
     extraordinary items....................                       (.12)          (.01)          (.03)           (.16)
   Extraordinary items per share............                                      (.02)                          (.02)
   Net loss per share.......................                       (.12)          (.03)          (.03)           (.18)
   Cash dividends per share.................      .0233           .0233          .0233          .0233           .0933
<FN>
--------------
(1)  Operating income before  depreciation and amortization is commonly referred
     to in the Company's  businesses as "operating  cash flow."  Operating  cash
     flow is a measure of a company's  ability to  generate  cash to service its
     obligations, including debt service obligations, and to finance capital and
     other  expenditures.  In part due to the  capital  intensive  nature of the
     Company's  businesses  and the  resulting  significant  level  of  non-cash
     depreciation  and amortization  expense,  operating cash flow is frequently
     used  as  one  of the  bases  for  comparing  businesses  in the  Company's
     industries. Operating cash flow does not purport to represent net income or
     net cash provided by operating activities, as those terms are defined under
     generally accepted accounting  principles,  and should not be considered as
     an  alternative  to such  measurements  as an  indicator  of the  Company's
     performance.
(2)  Results  of  operations  for the third  quarter  of 1995 were  affected  by
     premiums  paid and losses  incurred in  connection  with the  redemption of
     certain  of  the  Company's  debt,  shown  as  extraordinary  items  in the
     Company's consolidated statement of operations.
(3)  Results  of  operations  were  affected  by the  Cellular  Rebuild  and the
     Heritage Transaction in the first quarter of 1995 and by the sale of Nextel
     shares in the third quarter of 1995 (see Notes 3 and 4).
(4)  Results of operations were affected by the TCGI Gain and the sale of Nextel
     shares in the second quarter of 1996 (see Note 4).
(5)  Results of operations  for the fourth  quarter of 1996 includes the results
     of  operations of Scripps  Cable,  which have been  consolidated  effective
     November  1, 1996,  and the gain on the  Exchange  (see Notes 3 and 4). The
     Company's consolidated results of operations for the fourth quarter of 1996
     and 1995 are also affected by the  seasonality of the Company's  electronic
     retailing operations.
</FN>
</TABLE>

                                     - 71 -
<PAGE>
ITEM 9    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     Not applicable.

                                    PART III

The information  called for by Item 10, Directors and Executive  Officers of the
Registrant (except for the information  regarding  executive officers called for
by Item 401 of  Regulation  S-K which is included in Part I hereof as Item 4A in
accordance with General Instruction G(3)), Item 11, Executive Compensation, Item
12, Security Ownership of Certain Beneficial Owners and Management, and Item 13,
Certain  Relationships  and  Related  Transactions,  is hereby  incorporated  by
reference to the Registrant's  definitive Proxy Statement for its Annual Meeting
of  Shareholders  presently  scheduled  to be held in June 1997,  which shall be
filed with the Securities and Exchange  Commission within 120 days of the end of
the Registrant's latest fiscal year.



                                     - 72 -

<PAGE>
                                     PART IV


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

     (a)  The  following  consolidated  financial  statements of the Company are
          included in Part II, Item 8:

          Independent Auditors' Report.......................................40
          Consolidated Balance Sheet--December 31, 1996 and 1995.............41
          Consolidated Statement of Operations--Years
            Ended December 31, 1996, 1995 and 1994...........................42
          Consolidated Statement of Cash Flows--Years
            Ended December 31, 1996, 1995 and 1994...........................43
          Consolidated Statement of Stockholders' Equity
            (Deficiency)--Years Ended December 31, 1996,
            1995 and 1994....................................................44
          Notes to Consolidated Financial Statements.........................45

     (b)  (i)  The following  financial statement schedules required to be filed
               by Items 8 and 14(d) of Form 10-K are included in Part IV:

               Schedule I -- Condensed Financial Information of Registrant
                    Unconsolidated (Parent Only)
               Schedule II -- Valuation and Qualifying Accounts

               All other schedules are omitted because they are not applicable,
               not required or the required information is included in the
               consolidated financial statements or notes thereto.

     (c)  Exhibits required to be filed by Item 601 of Regulation S-K:

          3.1(a)    Amended and Restated Articles of Incorporation filed on July
                    24, 1990 (incorporated by reference to Exhibit 3.1(a) to the
                    Company's Annual Report on Form 10-K for the year ended
                    December 31, 1995).

          3.1(b)    Amendment to Restated Articles of Incorporation filed on
                    July 14, 1994 (incorporated by reference to Exhibit 3.1(b)
                    to the Company's Annual Report on Form 10-K for the year
                    ended December 31, 1995).

          3.1(c)    Amendment to Restated Articles of Incorporation filed on
                    July 12, 1995 (incorporated by reference to Exhibit 3.1(c)
                    to the Company's Annual Report on Form 10-K for the year
                    ended December 31, 1995).

          3.1(d)    Amendment to Restated Articles of Incorporation filed on
                    June 24, 1996 (incorporated by reference to Exhibit 4.1(d)
                    to the Company's Registration Statement on Form S-3, as
                    amended, filed on July 16, 1996).

          3.2       Amended and Restated By-Laws (incorporated by reference to
                    Exhibit 3(ii) to the Company's Annual Report on Form 10-K
                    for the year ended December 31, 1993).

          4.1       Specimen Class A Common Stock Certificate (incorporated by
                    reference to Exhibit 2(a) to the Company's Registration
                    Statement on Form S-7 filed on September 17, 1980, File No.
                    2- 69178).

                                     - 73 -
<PAGE>
          4.2       Specimen Class A Special Common Stock Certificate
                    (incorporated by reference to Exhibit 4(2) to the Company's
                    Annual Report on Form 10-K for the year ended December 31,
                    1986).

          4.3(a)    Indenture (including form of Note), dated as of May 15,
                    1983, between Storer Communications, Inc. and The Chase
                    Manhattan Bank, N.A., as Trustee, relating to 10%
                    Subordinated Debentures due May 2003 of Storer
                    Communications, Inc. (incorporated by reference to Exhibit
                    4.6 to the Registration Statement on Form S-1 (File No.
                    2-98938) of SCI Holdings, Inc.).

          4.3(b)    First Supplemental Indenture, dated December 3, 1986
                    (incorporated by reference to Exhibit 4.5 to the Current
                    Report on Form 8-K of Storer Communications, Inc. dated
                    December 3, 1986).

          4.4       Amended and Restated Indenture dated as of June 5, 1992
                    among Comcast Cellular Corporation, the Company and The Bank
                    of New York, as Trustee, relating to $500,493,000 Series A
                    Senior Participating Redeemable Zero Coupon Notes due 2000
                    and $500,493,000 Series B Senior Participating Redeemable
                    Zero Coupon Notes due 2000 (incorporated by reference to
                    Exhibit 4.3 to the Registration Statement on Form S-1 (File
                    No. 33-46863) of Comcast Cellular Corporation).

          4.5       Indenture, dated as of October 17, 1991, between the Company
                    and Morgan Guaranty Trust Company of New York, as Trustee
                    (incorporated by reference to Exhibit 2 to the Company's
                    Current Report on Form 8-K filed on October 31, 1991).

          4.6       Form of Debenture relating to the Company's 10-1/4% Senior
                    Subordinated Debentures due 2001 (incorporated by reference
                    to Exhibit 4(19) to the Company's Annual Report on Form 10-
                    K for the year ended December 31, 1991).

          4.7       Form of Debenture relating to the Company's $300,000,000
                    10-5/8% Senior Subordinated Debentures due 2012
                    (incorporated by reference to Exhibit 4(17) to the Company's
                    Annual Report on Form 10-K for the year ended December 31,
                    1992).

          4.8       Form of Debenture relating to the Company's $200,000,000
                    9-1/2% Senior Subordinated Debentures due 2008 (incorporated
                    by reference to Exhibit 4(18) to the Company's Annual Report
                    on Form 10-K for the year ended December 31, 1992).

          4.9       Indenture, dated as of February 20, 1991, between the
                    Company and Bankers Trust Company, as Trustee (incorporated
                    by reference to Exhibit 4.3 to the Company's Registration
                    Statement on Form S-3, File No. 33-32830, filed on January
                    11, 1990).

          4.10      Form of Debenture relating the Company's 3-3/8% / 5-1/2%
                    Step-up Convertible Subordinated Debentures Due 2005
                    (incorporated by reference to Exhibit 4(14) to the Company's
                    Annual Report on Form 10-K for the year ended December 31,
                    1993).

          4.11      Form of Debenture relating to the Company's 1-1/8% Discount
                    Convertible Subordinated Debentures Due 2007 (incorporated
                    by reference to Exhibit 4 to the Company's Current Report on
                    Form 8-K filed on November 15, 1993).

          4.12      Form of Debenture relating to the Company's $250.0 million
                    9-3/8% Senior Subordinated Debentures due 2005 (incorporated
                    by reference to Exhibit 4.1 to the Company's Quarterly
                    Report on Form 10-Q for the quarter ended June 30, 1995).

          4.13      Form of Debenture relating to the Company's $250.0 million
                    9-1/8% Senior Subordinated Debentures due 2006 (incorporated
                    by reference to Exhibit 4.13 to the Company's Annual Report
                    on Form 10-K for the year ended December 31, 1995).

                                     - 74 -
<PAGE>
          4.14      Indenture dated as of November 15, 1995, between Comcast UK
                    Cable Partners Limited and Bank of Montreal Trust Company,
                    as Trustee, in respect of Comcast UK Cable Partners
                    Limited's 11.20% Senior Discount Debentures due 2007
                    (incorporated by reference to Exhibit 4.1 to the
                    Registration Statement on Form S-1 (File No. 33-96932) of
                    Comcast UK Cable Partners Limited).

          4.14(a)   Form of Debenture relating to Comcast UK Cable Partners
                    Limited's 11.20% Senior Discount Debentures due 2007
                    (incorporated by reference to Exhibit 4.2 to the
                    Registration Statement on Form S-1 (File No. 33-96932) of
                    Comcast UK Cable Partners Limited).

          4.15      Form of Statement of Designations, Preferences and Rights of
                    5% Series A Convertible Preferred Stock of the Company
                    (incorporated by reference to Exhibit 4.1(e) to the
                    Company's Registration Statement on Form S-3 filed on July
                    16, 1996).

          10.1/*/   Credit Agreement, dated as of September 14, 1995, between
                    Comcast Cellular Communications, Inc., the banks listed
                    therein, The Bank of New York, Barclays Bank PLC, The Chase
                    Manhattan Bank, N.A., PNC Bank, National Association, and
                    The Toronto-Dominion Bank, as Arranging Agents, and Toronto
                    Dominion (Texas), Inc., as Administrative Agent.

          10.2/*/   Credit Agreement, dated as of September 19, 1995, between
                    Comcast Holdings, Inc., the banks listed therein, The Chase
                    Manhattan Bank, N.A., as Arranging Agent, Bank of Montreal,
                    CIBC Inc., The Long-term Credit Bank of Japan, Limited,
                    Royal Bank of Canada and Societe Generale, as Managing
                    Agents, and The Chase Manhattan Bank, N.A., as
                    Administrative Agent.

          10.3*     Comcast Corporation 1986 Non-Qualified Stock Option Plan, as
                    amended and restated, effective December 10, 1996.

          10.4*     Comcast Corporation 1987 Stock Option Plan, as amended and
                    restated, effective December 10, 1996.

          10.5*     Comcast Corporation 1996 Stock Option Plan, as amended and
                    restated, effective December 10, 1996.

          10.6*     Comcast Corporation 1996 Deferred Compensation Plan, as
                    amended and restated, effective December 10, 1996
                    (incorporated by reference to Exhibit 10 to the Company's
                    Registration Statement on Form S-8 filed on December 24,
                    1996).

          10.7*     Comcast Corporation 1990 Restricted Stock Plan, as amended
                    and restated, effective December 18, 1996.

          10.8*     1992 Executive Split Dollar Insurance Plan (incorporated by
                    reference to Exhibit 10(12) to the Company's Annual Report
                    on Form 10-K for the year ended December 31, 1992).

          10.9*     Comcast Corporation 1996 Cash Bonus Plan, as amended and
                    restated, effective December 10, 1996.

          10.10*    Comcast Corporation 1996 Executive Cash Bonus Plan, dated
                    August 15, 1996.



          ------------------
          *         Constitutes a management contract or compensatory plan or
                    arrangement.

          /*/       Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the
                    Registrant agrees to furnish a copy of the referenced
                    agreement to the Commission upon request.

                                     - 75 -
<PAGE>
          10.11*    Form of Compensation and Deferred Compensation Agreement and
                    Stock Appreciation Bonus Plan for Ralph J. Roberts
                    (incorporated by reference to Exhibit 10(13) to the
                    Company's Annual Report on Form 10-K for the year ended
                    December 31, 1993).

          10.12     The Comcast Corporation Retirement-Investment Plan, as
                    amended and restated effective January 1, 1993 (revised
                    through September 30, 1995) (incorporated by reference to
                    Exhibit 10.1 to the Company's Registration Statement on Form
                    S-8 filed on October 5, 1995).

          10.13     Defined Contribution Plans Master Trust Agreement, between
                    Comcast Corporation and State Street Bank and Trust Company
                    (incorporated by reference to Exhibit 10.2 to the Company's
                    Registration Statement on Form S-8 filed on October 5,
                    1995).

          10.14     Tax Sharing Agreement, dated as of December 2, 1992, among
                    Storer Communications, Inc., TKR Cable I, Inc., TKR Cable
                    II, Inc., TKR Cable III, Inc., Tele-Communications, Inc.,
                    the Company and each of the Departing Subsidiaries that are
                    signatories thereto (incorporated by reference to Exhibit 4
                    to the Company's Current Report on Form 8-K filed on
                    December 17, 1992, as amended by Form 8 filed January 8,
                    1993).

          10.15(a)  Credit Agreement, dated as of December 2, 1992, among
                    Comcast Storer, Inc. and The Bank of New York, The Bank of
                    Nova Scotia, Canadian Imperial Bank of Commerce, The Chase
                    Manhattan Bank (National Association), Chemical Bank, LTCB
                    Trust Company and The Toronto-Dominion Bank, as managing
                    agents, and The Bank of New York, as administrative agent
                    (incorporated by reference to Exhibit 5 to the Company's
                    Current Report on Form 8-K filed on December 17, 1992, as
                    amended by Form 8 filed January 8, 1993).

          10.15(b)/*/ Amendment No. 1, dated as of November 30, 1994, to the
                    Credit Agreement dated as of December 2, 1992, among Comcast
                    Storer, Inc., the banks named therein and The Bank of New
                    York, as administrative agent.

          10.15(c)/*/ Amendment No. 2, dated as of December 13, 1995, to the
                    Credit Agreement dated as of December 2, 1992, as amended,
                    among Comcast Storer, Inc., the banks named therein and The
                    Bank of New York, as administrative agent.

          10.15(d)/*/ Amendment No. 3 and Waiver, dated as of February 29, 1996,
                    to the Credit Agreement dated as of December 2, 1992, as
                    amended, among Comcast Storer, Inc., the banks named therein
                    and The Bank of New York, as administrative agent.

          10.16     Note Purchase Agreement, dated as of November 15, 1992,
                    among Comcast Storer, Inc., Storer Communications, Inc.,
                    Comcast Storer Finance Sub, Inc. and each of the respective
                    purchasers named therein (incorporated by reference to
                    Exhibit 6 to the Company's Current Report on Form 8-K filed
                    on December 17, 1992, as amended by Form 8 filed January 8,
                    1993).

          10.17     Payment Agreement, dated December 2, 1992, among the
                    Company, Comcast Storer, Inc., SCI Holdings, Inc., Storer
                    Communications, Inc. and each of the Remaining Subsidiaries
                    that are signatories thereto (incorporated by reference to
                    Exhibit 7 to the Company's Current Report on Form 8-K filed
                    on December 17, 1992, as amended by Form 8 filed January 8,
                    1993).

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


          *         Constitutes a management contract or compensatory plan or
                    arrangement.

          /*/       Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the
                    Registrant agrees to furnish a copy of the referenced
                    agreement to the Commission upon request.

                                     - 76 -
<PAGE>
          10.18     Intercreditor and Collateral Agency Agreement, dated as of
                    December 2, 1992, among Comcast Storer, Inc., Comcast Cable
                    Communications, Inc., Storer Communications, Inc., the banks
                    party to the Credit Agreement dated as of December 2, 1992,
                    the purchasers of the Senior Notes under the separate Note
                    Purchase Agreements each dated as of November 15, 1992, the
                    Senior Lenders (as defined therein) and The Bank of New York
                    as collateral agent for the Senior Lenders (incorporated by
                    reference to Exhibit 8 to the Company's Current Report on
                    Form 8-K filed on December 17, 1992, as amended by Form 8
                    filed January 8, 1993).

          10.19     Tax Sharing Agreement, dated December 2, 1992, between the
                    Company and Comcast Storer, Inc. (incorporated by reference
                    to Exhibit 9 to the Company's Current Report on Form 8-K
                    filed on December 17, 1992, as amended by Form 8 filed
                    January 8, 1993).

          10.20     Pledge Agreement, dated as of December 2, 1992, between
                    Comcast Cable Communications, Inc. and The Bank of New York
                    (incorporated by reference to Exhibit 10 to the Company's
                    Current Report on Form 8-K filed on December 17, 1992, as
                    amended by Form 8 filed January 8, 1993).

          10.21     Pledge Agreement, dated as of December 2, 1992, between
                    Comcast Storer, Inc. and The Bank of New York (incorporated
                    by reference to Exhibit 11 to the Company's Current Report
                    on Form 8-K filed on December 17, 1992, as amended by Form 8
                    filed January 8, 1993).

          10.22     Pledge Agreement, dated as of December 2, 1992, between
                    Storer Communications, Inc. and The Bank of New York
                    (incorporated by reference to Exhibit 12 to the Company's
                    Current Report on Form 8-K filed on December 17, 1992, as
                    amended by Form 8 filed January 8, 1993).

          10.23     Note Pledge Agreement, dated as of December 2, 1992, between
                    Comcast Storer, Inc. and The Bank of New York (incorporated
                    by reference to Exhibit 13 to the Company's Current Report
                    on Form 8-K filed on December 17, 1992, as amended by Form 8
                    filed January 8, 1993).

          10.24     Guaranty Agreement, dated as of December 2, 1992, between
                    Storer Communications, Inc. and The Bank of New York
                    (incorporated by reference to Exhibit 14 to the Company's
                    Current Report on Form 8-K filed on December 17, 1992, as
                    amended by Form 8 filed January 8, 1993).

          10.25     Guaranty Agreement, dated as of December 2, 1992, between
                    Comcast Storer Finance Sub, Inc. and The Bank of New York
                    (incorporated by reference to Exhibit 15 to the Company's
                    Current Report on Form 8-K filed on December 17, 1992, as
                    amended by Form 8 filed January 8, 1993).

          10.26     Amended and Restated Option Agreement, dated September 11,
                    1995, between Nextel Communications, Inc. and Comcast FCI,
                    Inc. (incorporated by reference to Exhibit M to Amendment
                    No. 15 to the Company's Schedule 13D dated September 13,
                    1995 filed with respect to Nextel Communications, Inc.).

          10.27(a)  Share Purchase Agreement, dated June 18, 1994, between
                    Comcast Corporation and Rogers Communications Inc.
                    (incorporated by reference to Exhibit 10(3) to the Company's
                    Quarterly Report on Form 10-Q for the quarter ended June 30,
                    1994).

          10.27(b)  First Amendment to Share Purchase Agreement, dated as of
                    December 22, 1994, by and between Comcast Corporation and
                    Rogers Communications Inc., to the Share Purchase Agreement
                    dated June 18, 1994 (incorporated by reference to Exhibit
                    10.9 to the Company's Current Report on Form 8-K filed on
                    January 6, 1995).

          10.28(a)  Agreement and Plan of Merger, dated August 4, 1994, among
                    Comcast Corporation, Liberty Media Corporation, Comcast
                    QMerger, Inc. and QVC, Inc. (incorporated by reference to
                    Exhibit 99.49 to Amendment No. 21 to the Schedule 13D of the
                    Company relating to common stock of QVC, Inc. filed on
                    August 8, 1994).

                                     - 77 -
<PAGE>
          10.28(b)  First Amendment to Agreement and Plan of Merger, dated as of
                    February 3, 1995 (incorporated by reference to Exhibit
                    (c)(35) to Amendment No. 17 to the Tender Offer Statement on
                    Schedule 14D-1 filed on February 6, 1995 by QVC Programming
                    Holdings, Inc., Comcast Corporation and Tele-Communications,
                    Inc. with respect to the tender offer for all outstanding
                    shares of QVC, Inc.).

          10.29     Amended and Restated Stockholders Agreement, dated as of
                    February 9, 1995, among Comcast Corporation, Comcast QVC,
                    Inc., QVC Programming Holdings, Inc., Liberty Media
                    Corporation, QVC Investment, Inc. and Liberty QVC, Inc.
                    (incorporated by reference to Exhibit 10.5 to the Company's
                    Quarterly Report on Form 10-Q for the quarter ended March
                    31, 1995).

          10.30(a)  Credit Agreement, dated as of February 15, 1995, among QVC,
                    Inc. and the Banks listed therein (incorporated by reference
                    to Exhibit (b)(6) to Amendment No. 21 to the Tender Offer
                    Statement on Schedule 14D-1 filed on February 17, 1995 by
                    QVC Programming Holdings, Inc., Comcast Corporation and
                    Tele-Communications, Inc. with respect to the tender offer
                    for all outstanding shares of QVC, Inc.).

          10.30(b)/*/ Amendment, dated as of July 19, 1996, to the Credit
                    Agreement, dated as of February 15, 1995, among QVC, Inc.
                    and the Banks listed therein.

          10.31     Credit Agreement, dated as of September 14, 1994, among
                    Comcast Cable Tri-Holdings, Inc., The Bank of New York, The
                    Chase Manhattan Bank (National Association), PNC Bank,
                    National Association, as Managing Agents, and the Bank of
                    New York, as Administrative Agent, and the banks named
                    therein (incorporated by reference to Exhibit 10.3 to the
                    Current Report on Form 8-K of the Company filed on November
                    2, 1994).

          10.32     Comcast MHCP Holdings, L.L.C. Amended and Restated Limited
                    Liability Company Agreement, dated as of December 18, 1994,
                    among Comcast Cable Communications, Inc., The California
                    Public Employees' Retirement System and, for certain limited
                    purposes, Comcast Corporation (incorporated by reference to
                    Exhibit 10.1 to the Company's Current Report on Form 8-K
                    filed on January 6, 1995).

          10.33     Credit Agreement, dated as of December 22, 1994, among
                    Comcast MH Holdings, Inc., the banks listed therein, The
                    Chase Manhattan Bank (National Association), NationsBank of
                    Texas, N.A. and the Toronto-Dominion Bank, as Arranging
                    Agents, The Bank of New York, The Bank of Nova Scotia,
                    Canadian Imperial Bank of Commerce and Morgan Guaranty Trust
                    Company of New York, as Managing Agents and NationsBank of
                    Texas, N.A., as Administrative Agent (incorporated by
                    reference to Exhibit 10.2 to the Company's Current Report on
                    Form 8-K filed on January 6, 1995).

          10.34     Pledge Agreement, dated as of December 22, 1994, between
                    Comcast MH Holdings, Inc. and NationsBank of Texas, N.A., as
                    the secured party (incorporated by reference to Exhibit 10.3
                    to the Company's Current Report on Form 8-K filed on January
                    6, 1995).

          10.35     Pledge Agreement, dated as of December 22, 1994, between
                    Comcast Communications Properties, Inc. and NationsBank of
                    Texas, N.A., as the Secured Party (incorporated by reference
                    to Exhibit 10.4 to the Company's Current Report on Form 8-K
                    filed on January 6, 1995).


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

          /*/       Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the
                    Registrant agrees to furnish a copy of the referenced
                    agreement to the Commission upon request.

                                     - 78 -
<PAGE>
          10.36     Affiliate Subordination Agreement (as the same may be
                    amended, modified, supplemented, waived, extended or
                    restated from time to time, this "Agreement"), dated as of
                    December 22, 1994, among Comcast Corporation, Comcast MH
                    Holdings, Inc., (the "Borrower"), any affiliate of the
                    Borrower that shall have become a party thereto and
                    NationsBank of Texas, N.A., as Administrative Agent under
                    the Credit Agreement dated as of December 22, 1994, among
                    the Borrower, the Banks listed therein, The Chase Manhattan
                    Bank (National Association), NationsBank of Texas, N.A. and
                    The Toronto-Dominion Bank, as Arranging Agents, The Bank of
                    New York, The Bank of Nova Scotia, Canadian Imperial Bank of
                    Commerce and Morgan Guaranty Trust Company of New York, as
                    Managing Agents, and the Administrative Agent (incorporated
                    by reference to Exhibit 10.5 to the Company's Current Report
                    on Form 8-K filed on January 6, 1995).

          10.37     Registration Rights and Price Protection Agreement, dated as
                    of December 22, 1994, by and between Comcast Corporation and
                    The California Public Employees' Retirement System
                    (incorporated by reference to Exhibit 10.8 to the Company's
                    Current Report on Form 8-K filed on January 6, 1995).

          10.38     Amended and Restated Agreement of Limited Partnership of
                    MajorCo, L.P., a Delaware Limited Partnership, dated as of
                    January 31, 1996, among Sprint Spectrum, L.P., TCI Network
                    Services, Comcast Telephony Services and Cox Telephony
                    Partnership (incorporated by reference to Exhibit 1 to the
                    Company's Current Report on Form 8-K filed on February 12,
                    1996).

          10.39     Parents Agreement, dated as of January 31, 1996, between
                    Comcast Corporation and Sprint Corporation (incorporated by
                    reference to Exhibit 3 to the Company's Current Report on
                    Form 8-K filed on February 12, 1996).

          10.40     Agreement and Plan of Merger by and among The E.W. Scripps
                    Company, Scripps Howard, Inc., and Comcast Corporation dated
                    as of October 28, 1995 (incorporated by reference to Exhibit
                    2.1 to the Company's Registration Statement on Form S-4
                    filed, as amended, on November 13, 1996).

          10.41     Voting Agreement by and among Comcast Corporation, The E.W.
                    Scripps Company, Sural Corporation and The Edward W. Scripps
                    Trust, dated as of October 28, 1995 (incorporated by
                    reference to Exhibit 2.2 to the Company's Registration
                    Statement on Form S-4 filed, as amended, on November 13,
                    1996).

          10.42/*/  Credit Agreement, dated as of November 15, 1996, among
                    Comcast SCH Holdings, Inc., the banks listed therein,
                    Nationsbank of Texas, N.A., as Documentation Agent, The
                    Chase Manhattan Bank, as Syndication Agent, The Bank of New
                    York, The Chase Manhattan Bank and Nationsbank of Texas,
                    N.A., as Managing Agents, and The Bank of New York, as
                    Administrative Agent.

          21        List of Subsidiaries.

          23.1      Consents of Arthur Andersen LLP.

          23.2      Consent of Arthur Andersen - Birmingham.

          23.3      Consent of Arthur Andersen - London.

          23.4      Consents of Deloitte & Touche LLP.


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

          /*/       Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the
                    Registrant agrees to furnish a copy of the referenced
                    agreement to the Commission upon request.

                                     - 79 -
<PAGE>
          23.5      Consent of Deloitte & Touche - Birmingham.

          23.6      Consent of Deloitte & Touche - London.

          23.7      Consent of KPMG Peat Marwick LLP.

          23.8      Consent of Price Waterhouse LLP.

          27.1      Financial Data Schedule.

          99.1      Report of Independent Public Accountants to QVC, Inc., as of
                    December 31, 1996 and 1995 and for the year ended December
                    31, 1996 and for the eleven-month period ended December 31,
                    1995.

          99.2      Report of Independent Public Accountants to Garden State
                    Cablevision L.P., for the year ended December 31, 1994
                    (incorporated by reference to Exhibit 99.2 to the Company's
                    Annual Report on Form 10-K for the year ended December 31,
                    1995).

          99.3      Report of Independent Public Accountants to Comcast
                    International Holdings, Inc., for the year ended December
                    31, 1994 (incorporated by reference to Exhibit 99.3 to the
                    Company's Annual Report on Form 10-K for the year ended
                    December 31, 1994).

          99.4      Consolidated financial statements of Sprint Spectrum Holding
                    Company, L.P. and subsidiaries, development stage
                    enterprises, as of and for the years ended December 31, 1996
                    and 1995, for the period from October 24, 1994 (date of
                    inception) to December 31, 1994 and for the cumulative
                    period from October 24, 1994 (date of inception) to December
                    31, 1996.

          99.5      Consolidated and combined financial statements of Teleport
                    Communications Group, Inc. and its subsidiaries as of
                    December 31, 1996 and 1995 and for the years ended December
                    31, 1996, 1995 and 1994 (incorporated by reference to Item
                    8, Financial Statements and Supplementary Data, of the
                    Annual Report on Form 10-K of Teleport Communications Group,
                    Inc. for the year ended December 31, 1996 (File No.
                    0-20913)).

          99.6      Consolidated financial statements of Birmingham Cable
                    Corporation Limited and subsidiaries as of December 31, 1996
                    and 1995 and for the years ended December 31, 1996, 1995 and
                    1994 (incorporated by reference to pages 46 through 57 of
                    the Annual Report on Form 10-K of Comcast UK Cable Partners
                    Limited for the year ended December 31, 1996 (File No.
                    0-24792)).

          99.7      Consolidated financial statements of Cable London PLC and
                    subsidiaries as of December 31, 1996 and 1995 and for the
                    years ended December 31, 1996, 1995 and 1994 (incorporated
                    by reference to pages 58 through 69 of the Annual Report on
                    Form 10-K of Comcast UK Cable Partners Limited for the year
                    ended December 31, 1996 (File No. 0-24792)).

     (d)  Reports on Form 8-K

          (i)  Comcast Corporation filed a Current Report on Form 8-K under Item
               5 on November 4, 1996 relating to its earnings release for the
               quarter ended September 30, 1996.

          (ii) Comcast Corporation filed a Current Report on Form 8-K under Item
               2 on November 27, 1996 relating to its purchase of the cable
               television operations of The E.W. Scripps Company, which included
               Comcast Corporation's Unaudited Pro Forma Condensed Consolidated
               Financial Statements as of and for the nine months ended
               September 30, 1996 and for the year ended December 31, 1995.

                                     - 80 -
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf  by  the   undersigned,   thereunto  duly  authorized  in   Philadelphia,
Pennsylvania on March 31, 1997.

                                         Comcast Corporation



                                         By: /s/ Brian L. Roberts
                                            ------------------------------------
                                            Brian L. Roberts
                                            President and Director


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

SIGNATURE                       TITLE                             DATE

/s/ Ralph J. Roberts
---------------------------
Ralph J. Roberts                Chairman of the Board of          March 31, 1997
                                Directors; Director

/s/ Julian A. Brodsky
---------------------------
Julian A. Brodsky               Vice Chairman of the Board of     March 31, 1997
                                Directors; Director

/s/ Brian L. Roberts
---------------------------
Brian L. Roberts                President; Director (Principal    March 31, 1997
                                Executive Officer)

/s/ Lawrence S. Smith
---------------------------
Lawrence S. Smith               Executive Vice President          March 31, 1997
                                (Principal Accounting Officer)

/s/ John R. Alchin
---------------------------
John R. Alchin                  Senior Vice President, Treasurer  March 31, 1997
                                (Principal Financial Officer)

/s/ Daniel Aaron
---------------------------
Daniel Aaron                    Director                          March 31, 1997

/s/ Gustave G. Amsterdam
---------------------------
Gustave G. Amsterdam            Director                          March 31, 1997

/s/ Sheldon M. Bonovitz
---------------------------
Sheldon M. Bonovitz             Director                          March 31, 1997

/s/ Joseph L. Castle II
---------------------------
Joseph L. Castle II             Director                          March 31, 1997

                                     - 81 -
<PAGE>
SIGNATURE                       TITLE                             DATE

/s/ Bernard C. Watson
---------------------------
Bernard C. Watson               Director                          March 31, 1997

/s/ Irving A. Wechsler
---------------------------
Irving A. Wechsler              Director                          March 31, 1997

/s/ Anne Wexler
---------------------------
Anne Wexler                     Director                          March 31, 1997

                                     - 82 -

<PAGE>
                      COMCAST CORPORATION AND SUBSIDIARIES

                 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF

                    REGISTRANT UNCONSOLIDATED (PARENT ONLY)

                             CONDENSED BALANCE SHEET

                    (Dollars in millions, except share data)
<TABLE>
<CAPTION>
                                                                                                     December 31,
<S>                                                                                      <C>                       <C>
ASSETS                                                                                     1996                       1995

   Cash and cash equivalents.......................................................          $9.7                      $7.6
   Other current assets............................................................           5.7                       4.2
                                                                                         --------                  --------

       Total current assets........................................................          15.4                      11.8

   Investments in and amounts due from subsidiaries................................
     eliminated upon consolidation.................................................       2,635.5                   1,113.3

   Property and equipment, net.....................................................          30.9                      16.7

   Other assets, net...............................................................          85.8                      73.5
                                                                                         --------                  --------

                                                                                         $2,767.6                  $1,215.3
                                                                                         ========                  ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

   Accrued interest................................................................         $49.5                     $46.3
   Other current liabilities.......................................................         188.3                     148.7
                                                                                         --------                  --------

       Total current liabilities...................................................         237.8                     195.0
                                                                                         --------                  --------

   Long-term debt..................................................................       1,716.3                   1,702.5
                                                                                         --------                  --------

   Deferred income taxes and other.................................................         192.3                      93.4
                                                                                         --------                  --------

   Common equity put options.......................................................          69.6                      52.1
                                                                                         --------                  --------

   Stockholders' equity (deficiency)
     Preferred stock, no par value - authorized, 20,000,000
       shares; issued 5% series A convertible, 6,370 at
       redemption value............................................................          31.9
     Class A special common stock, $1 par value - authorized,
       500,000,000 shares; issued, 283,281,675 and 192,844,814.....................         283.3                     192.8
     Class A common stock, $1 par value - authorized,
       200,000,000 shares; issued, 33,959,368 and 37,706,517.......................          34.0                      37.7
     Class B common stock, $1 par value - authorized,
       50,000,000 shares; issued, 8,786,250........................................           8.8                       8.8
     Additional capital............................................................       2,327.4                     843.1
     Accumulated deficit...........................................................      (2,127.9)                 (1,914.3)
     Unrealized gains on marketable securities, including
       securities held by subsidiaries.............................................           0.1                      22.2
     Cumulative translation adjustments of subsidiaries............................          (6.0)                    (18.0)
                                                                                         --------                  --------

       Total stockholders' equity (deficiency).....................................         551.6                    (827.7)
                                                                                         --------                  --------

                                                                                         $2,767.6                  $1,215.3
                                                                                         ========                  ========
</TABLE>

                                     - 83 -
<PAGE>
                      COMCAST CORPORATION AND SUBSIDIARIES

                SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF

                    REGISTRANT UNCONSOLIDATED (PARENT ONLY)

            CONDENSED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT

                      (In millions, except per share data)
<TABLE>
<CAPTION>

                                                                                               Year Ended December 31,
                                                                                      1996              1995             1994
<S>                                                                                    <C>              <C>               <C>
REVENUES, principally intercompany fees eliminated
     upon consolidation.........................................................       $212.0           $192.2            $153.9

GENERAL AND ADMINISTRATIVE EXPENSES.............................................         87.7             76.4              78.7
                                                                                    ---------        ---------         ---------

OPERATING INCOME................................................................        124.3            115.8              75.2

OTHER (INCOME) EXPENSE
     Interest expense, including intercompany interest, net.....................        263.6            214.6             123.0
     Equity in net (income) losses of affiliates and other......................        (37.1)           (22.3)             46.6
                                                                                    ---------        ---------         ---------
                                                                                        226.5            192.3             169.6
                                                                                    ---------        ---------         ---------

LOSS BEFORE INCOME TAX BENEFIT AND
  EXTRAORDINARY ITEMS...........................................................       (102.2)           (76.5)            (94.4)

INCOME TAX BENEFIT..............................................................         48.7             33.2              15.4
                                                                                    ---------        ---------         ---------

LOSS BEFORE EXTRAORDINARY ITEMS.................................................        (53.5)           (43.3)            (79.0)

EXTRAORDINARY ITEMS.............................................................                          (0.6)             (8.0)
                                                                                    ---------        ---------         ---------

NET LOSS........................................................................        (53.5)           (43.9)            (87.0)

ACCUMULATED DEFICIT
     Beginning of year..........................................................     (1,914.3)        (1,827.6)         (1,717.9)
     Retirement of common stock.................................................       (133.3)           (20.4)
     Cash dividends, $.0933 per share per year..................................        (26.8)           (22.4)            (22.7)
                                                                                    ---------        ---------         ---------

     End of year................................................................    ($2,127.9)       ($1,914.3)        ($1,827.6)
                                                                                    =========        =========         =========
</TABLE>


                                     - 84 -
<PAGE>
                      COMCAST CORPORATION AND SUBSIDIARIES

                SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF

                    REGISTRANT UNCONSOLIDATED (PARENT ONLY)

                        CONDENSED STATEMENT OF CASH FLOWS

                                  (In millions)
<TABLE>
<CAPTION>
                                                                                               Year Ended December 31,
                                                                                      1996              1995             1994
<S>                                                                                 <C>              <C>               <C>
OPERATING ACTIVITIES
     Net loss...................................................................       ($53.5)          ($43.9)           ($87.0)
     Adjustments to reconcile net loss to net cash
       provided by operating activities:
       Depreciation and amortization............................................          8.9              6.5               4.8
       Non-cash interest expense, net...........................................        136.2            105.5              37.4
       Equity in net (income) losses of affiliates..............................        (36.2)           (17.4)             51.9
       Extraordinary items......................................................                           0.6               8.0
       Deferred income taxes and other..........................................         57.2             33.2               9.4
                                                                                       ------           ------            ------
                                                                                        112.6             84.5              24.5

       Increase in other current assets.........................................         (1.5)            (1.2)             (2.2)
       Increase in accrued interest and other current liabilities...............         42.8             36.7              25.2
                                                                                       ------           ------            ------
         Net cash provided by operating activities..............................        153.9            120.0              47.5
                                                                                       ------           ------            ------

FINANCING ACTIVITIES
     Proceeds from borrowings...................................................                         800.9
     Retirement and repayment of debt...........................................                        (300.9)           (150.0)
     (Repurchases) issuances of common stock, net...............................       (175.9)            (7.1)              2.9
     Dividends..................................................................        (26.8)           (22.4)            (22.7)
     Other......................................................................         43.0             52.5              10.2
                                                                                       ------           ------            ------
         Net cash (used in) provided by financing activities....................       (159.7)           523.0            (159.6)
                                                                                       ------           ------            ------

INVESTING ACTIVITIES
     Net transactions with affiliates...........................................         41.7           (619.1)            155.5
     Capital expenditures.......................................................        (20.8)           (11.9)             (4.4)
     Other......................................................................        (13.0)           (15.7)            (32.2)
                                                                                       ------           ------            ------
         Net cash provided by (used in) investing activities....................          7.9           (646.7)            118.9
                                                                                       ------           ------            ------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................          2.1             (3.7)              6.8

CASH AND CASH EQUIVALENTS, beginning of year....................................          7.6             11.3               4.5
                                                                                       ------           ------            ------

CASH AND CASH EQUIVALENTS, end of year..........................................         $9.7             $7.6             $11.3
                                                                                       ======           ======            ======
</TABLE>

                                     - 85 -
<PAGE>
                      COMCAST CORPORATION AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                  (In millions)

<TABLE>
<CAPTION>
                                                                                    Additions
                                                Balance at         Effect of       Charged to        Deductions         Balance
                                                 Beginning            QVC           Costs and           from            at End
                                                  of Year         Acquisition       Expenses         Reserves(A)        of Year
<S>                                             <C>           <C>                    <C>             <C>                <C>

     Allowance for Doubtful Accounts

              1996                                 $81.3       $                       $65.1           $49.3              $97.1

              1995                                  11.3              57.8              51.4            39.2               81.3

              1994                                  11.8                                21.3            21.8               11.3

     Allowance for Obsolete
       Electronic Retailing Inventories

              1996                                 $28.5       $                       $29.7           $23.5              $34.7

              1995                                                    18.4              28.4            18.3               28.5
</TABLE>


     (A) Uncollectible accounts and obsolete inventory written off.


                                     - 86 -
<PAGE>

                                INDEX TO EXHIBITS
    Exhibit
    Number                               Exhibit

     10.1/*/        Credit Agreement, dated as of September 14, 1995, between
                    Comcast Cellular Communications, Inc., the banks listed
                    therein, The Bank of New York, Barclays Bank PLC, The Chase
                    Manhattan Bank, N.A., PNC Bank, National Association, and
                    The Toronto-Dominion Bank, as Arranging Agents, and Toronto
                    Dominion (Texas), Inc., as Administrative Agent.

     10.2/*/        Credit Agreement, dated as of September 19, 1995, between
                    Comcast Holdings, Inc., the banks listed therein, The Chase
                    Manhattan Bank, N.A., as Arranging Agent, Bank of Montreal,
                    CIBC Inc., The Long-term Credit Bank of Japan, Limited,
                    Royal Bank of Canada and Societe Generale, as Managing
                    Agents, and The Chase Manhattan Bank, N.A., as
                    Administrative Agent.

     10.3*          Comcast Corporation 1986 Non-Qualified Stock Option Plan, as
                    amended and restated, effective December 10, 1996.

     10.4*          Comcast Corporation 1987 Stock Option Plan, as amended and
                    restated, effective December 10, 1996.

     10.5*          Comcast Corporation 1996 Stock Option Plan, as amended and
                    restated, effective December 10, 1996.

     10.7*          Comcast Corporation 1990 Restricted Stock Plan, as amended
                    and restated, effective December 18, 1996.

     10.9*          Comcast Corporation 1996 Cash Bonus Plan, as amended and
                    restated, effective December 10, 1996.

     10.10*         Comcast Corporation 1996 Executive Cash Bonus Plan, dated
                    August 15, 1996.

     10.15(b)/*/    Amendment No. 1, dated as of November 30, 1994, to the
                    Credit Agreement dated as of December 2, 1992, among Comcast
                    Storer, Inc., the banks named therein and The Bank of New
                    York, as administrative agent.

     10.15(c)/*/    Amendment No. 2, dated as of December 13, 1995, to the
                    Credit Agreement dated as of December 2, 1992, as amended,
                    among Comcast Storer, Inc., the banks named therein and The
                    Bank of New York, as administrative agent.

     10.15(d)/*/    Amendment No. 3 and Waiver, dated as of February 29, 1996,
                    to the Credit Agreement dated as of December 2, 1992, as
                    amended, among Comcast Storer, Inc., the banks named therein
                    and The Bank of New York, as administrative agent.

     10.30(b)/*/    Amendment, dated as of July 19, 1996, to the Credit
                    Agreement, dated as of February 15, 1995, among QVC, Inc.
                    and the Banks listed therein.

     10.42/*/       Credit Agreement, dated as of November 15, 1996, among
                    Comcast SCH Holdings, Inc., the banks listed therein,
                    Nationsbank of Texas, N.A., as Documentation Agent, The
                    Chase Manhattan Bank, as Syndication Agent, The Bank of New
                    York, The Chase Manhattan Bank and Nationsbank of Texas,
                    N.A., as Managing Agents, and The Bank of New York, as
                    Administrative Agent.




     --------------
     *              Constitutes a management contract or compensatory plan or
                    arrangement.
     /*/            Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the
                    Registrant agrees to furnish a copy of the referenced
                    agreement to the Commission upon request.


<PAGE>
     21             List of Subsidiaries.

     23.1           Consents of Arthur Andersen LLP.

     23.2           Consent of Arthur Andersen - Birmingham.

     23.3           Consent of Arthur Andersen - London.

     23.4           Consents of Deloitte & Touche LLP.

     23.5           Consent of Deloitte & Touche - Birmingham.

     23.6           Consent of Deloitte & Touche - London.

     23.7           Consent of KPMG Peat Marwick LLP.

     23.8           Consent of Price Waterhouse LLP.

     27.1           Financial Data Schedule.

     99.1           Report of Independent Public Accountants to QVC, Inc., as of
                    December 31, 1996 and 1995 and for the year ended December
                    31, 1996 and for the eleven-month period ended December 31,
                    1995.

     99.4           Consolidated financial statements of Sprint Spectrum Holding
                    Company, L.P. and subsidiaries, development stage
                    enterprises, as of and for the years ended December 31, 1996
                    and 1995, for the period from October 24, 1994 (date of
                    inception) to December 31, 1994 and for the cumulative
                    period from October 24, 1994 (date of inception) to December
                    31, 1996.