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                                    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, 1997

                                       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
          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 January 30, 1998,  the aggregate  market value of the Class A Common Stock
and Class A Special  Common Stock held by  non-affiliates  of the Registrant was
$919.7 million and $9.743 billion, respectively.

                           --------------------------
As of January 30, 1998, there were 317,530,008  shares of Class A Special Common
Stock, 31,792,325 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 1998.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                               COMCAST CORPORATION
                          1997 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I

Item 1    Business.............................................................1
Item 2    Properties..........................................................22
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.........................42
Item 9    Changes in and Disagreements with
              Accountants on Accounting and Financial Disclosure..............78

                                    PART III

Item 10   Directors and Executive Officers of the Registrant..................78
Item 11   Executive Compensation..............................................78
Item 12   Security Ownership of Certain Beneficial
              Owners and Management...........................................78
Item 13   Certain Relationships and Related Transactions......................78

                                     PART IV

Item 14   Exhibits, Financial Statement Schedules and Reports
              on Form 8-K.....................................................79
SIGNATURES....................................................................85

This Annual  Report on Form 10-K for the year ended  December 31,  1997,  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 hybrid fiber-coaxial  broadband
cable networks,  cellular and personal  communications systems and the provision
of content.

The Company's  consolidated  domestic cable operations served  approximately 4.4
million  subscribers  and passed more than 7.1 million  homes as of December 31,
1997. The Company owns a 50% interest in Garden State  Cablevision L.P. ("Garden
State"), a cable  communications  company serving more than 208,000  subscribers
and  passing  more  than  297,000  homes in the State of New  Jersey.  Satellite
delivered video service is provided through the Company's equity interest in and
distribution  arrangements  with Primestar  Partners,  L.P.  ("Primestar")  (see
"Description  of the  Company's  Businesses  -  Cable  Communications  -  Direct
Broadcast Satellite Operations"). In the United Kingdom ("UK"), 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  (see  "General  Developments  of  Business  - Sale of Comcast UK
Cable").

The Company provides  cellular  telephone  communications  services  pursuant to
licenses  granted by the Federal  Communications  Commission  ("FCC") in markets
with a population  ("Pops") of more than 8.2 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. Personal communications services
("PCS")  are  provided  through  the  Company's  investment  in Sprint  Spectrum
Holdings Company, L.P. ("Sprint Spectrum" or "Sprint PCS").

Content is provided through the Company's majority-owned subsidiaries, QVC, Inc.
("QVC"),  an  electronic  retailer and E!  Entertainment  Television,  Inc. ("E!
Entertainment"),  and other investments,  including Comcast SportsNet,  The Golf
Channel,  The Speedvision  Network  ("Speedvision") and The Outdoor Life Network
("Outdoor  Life").  Through QVC, the Company  markets a wide variety of products
and is available, on a full and part-time basis, to over 68 million homes in the
United  States  ("US"),  over 6.5  million  homes in the UK and over 9.5 million
homes in Germany  (see  "Description  of the  Company's  Businesses  - Content -
Electronic Retailing - Distribution Channels").

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 in Item 8 for
information about the Company's operations by industry segment.

                        GENERAL DEVELOPMENTS OF BUSINESS

The  Company  entered  into a number  of  significant  transactions  in 1997 and
subsequent to December 31, 1997. These transactions are summarized below and are
more  fully  described  in  Note  3  to  the  Company's  consolidated  financial
statements in Item 8.

Sale of Comcast UK Cable
On February 4, 1998, Comcast UK Cable, a consolidated subsidiary of the Company,
entered into a definitive agreement to be acquired by NTL Incorporated  ("NTL"),
an  alternative  telecommunications  company  in the  UK.  Pursuant  to  certain
conditions,  the Company is expected to receive 4.8 million shares of NTL common
stock in exchange  for all of the shares of Comcast UK Cable held by the Company
(the "NTL  Transaction").  Based on the closing price of the NTL common stock on
February 4, 1998 of $32.00 per share,  the  Company is  expected to  recognize a
pre-tax  gain of $81.4  million  upon  closing of the NTL  Transaction.  The NTL
Transaction  is expected to close in 1998,  subject to the receipt of  necessary
regulatory and shareholder approvals,  the consent of the bondholders of Comcast
UK Cable and NTL, as well as the consent of certain NTL bank lenders.
<PAGE>
AT&T Acquisition of TCGI
On January 8, 1998, AT&T Corporation  ("AT&T") entered into a definitive  merger
agreement with Teleport Communications Group, Inc. ("TCGI"). Upon closing of the
merger (the "AT&T Transaction"), the Company is expected to receive 24.2 million
shares of AT&T common  stock in  exchange  for all of the shares of TCGI held by
the Company.  Based on the closing price of the AT&T common stock on January 30,
1998 of $62.625 per share,  the Company is expected to  recognize a pre-tax gain
of approximately  $1.390 billion upon closing of the AT&T Transaction.  The AT&T
Transaction  is  expected  to close in 1998,  subject to  receipt  of  necessary
regulatory and shareholder approvals.

E! Entertainment
On March 31, 1997, the Company,  through Comcast Entertainment Holdings LLC (the
"LLC"), which is owned 50.1% by the Company and 49.9% by The Walt Disney Company
("Disney"),  purchased a 58.4%  interest in E!  Entertainment  from Time Warner,
Inc.  ("Time Warner") for $321.9 million (the "E!  Acquisition").  In connection
with the E!  Acquisition,  the  Company  contributed  its 10.4%  interest  in E!
Entertainment  to the LLC. In December 1997, the LLC acquired the 10.4% interest
in E! Entertainment held by Cox Communications,  Inc. ("Cox") for $57.1 million.
Following these transactions, the LLC owns a 79.2% interest in E! Entertainment.

Microsoft Investment
On June 30, 1997, the Company and Microsoft Corporation  ("Microsoft") completed
a Stock  Purchase  Agreement.  Microsoft  purchased and the Company  issued 24.6
million shares of the Company's  Class A Special  Common Stock,  par value $1.00
per share,  at $20.29 per share,  for $500.0  million and 500,000  shares of the
Company's  newly  issued  5.25%  Series  B  Mandatorily  Redeemable  Convertible
Preferred Stock, par value $1,000 per share, for $500.0 million.

Offerings of Subsidiary Debt
In May 1997,  Comcast Cable  Communications,  Inc. ("Comcast Cable") and Comcast
Cellular  Corporation  (formerly  Comcast  Cellular  Holdings,  Inc.)  ("Comcast
Cellular"),  both wholly owned subsidiaries of the Company, sold a total of $2.7
billion of nonrecourse  public debt with interest rates ranging from 8 1/8% to 9
1/2% and maturity  dates from 2004 to 2027.  Comcast Cable and Comcast  Cellular
used the net proceeds from the offerings to repay  existing  borrowings by their
subsidiaries.

                     DESCRIPTION OF THE COMPANY'S BUSINESSES

CABLE COMMUNICATIONS

Technology and Capital Improvements
Comcast Cable's  broadband  networks,  which receive signals by means of special
antennae,  microwave relay systems,  earth stations and fiber optic cable lines,
distribute a variety of video, telecommunications and data services to consumers
and businesses.

The Company is continuing to upgrade most of its cable systems,  deploying fiber
optic cable and upgrading the technical  quality of its broadband  network.  The
result is an increase in channel capacity and system  reliability,  facilitating
the delivery of additional video programming and other services such as enhanced
video,   high-speed   Internet   access  and  telephony.   The  Company's  cable
communications  systems have bandwidth  capacities  ranging from 300-MHz to 860-
MHz,  which permits  carriage of 37 to 112 analog  channels.  As of December 31,
1997,  approximately  85% of the  Company's  broadband  network  had at  least a
62-channel  capacity.  During 1997,  the Company began field testing its digital
converter cable service in Southern California.  Digital compression will enable
the Company to increase the channel capacity of its cable communications systems
to more than 100 channels,  as well as to improve picture  quality.  The Company
has entered into  agreements  with suppliers of digital  converters for delivery
commencing in 1998.

In October 1997, the Company entered into a "social  contract" with the FCC (see
"Legislation  and  Regulation").  Pursuant  to this  agreement,  the Company has
committed that by March 31, 1999, 80% of the Company's cable subscribers will be
served by a system with a capacity  of at least  550-MHz and at least 60% of the
Company's  cable  subscribers  will be served by a system  with a capacity of at
least 750-MHz. In addition, the Company has agreed to provide free cable service
connections,  modems and modem service to schools and to 250 public libraries in
communities  where the  Company  commercially  deploys  cable  modem  service to
residential customers.

                                      - 2 -
<PAGE>
Franchises
Cable  communications  systems are 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 up to 5% of "revenues" (as defined by each franchise
agreement), which fees may generally 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,  renewals may include less
favorable  terms and conditions.  Furthermore,  the  governmental  authority may
choose to award  additional  franchises  to competing  companies at any time. In
addition,  under the 1996 Telecom Act, certain providers of programming services
may be  exempt  from  local  franchising  requirements  (see  "Competition"  and
"Legislation and Regulation").

Revenue Sources
The Company's cable communications systems offer varying levels of service for a
monthly fee. These fees may be for a grouping (i.e. "package") of channels (i.e.
"product tier"),  equipment  rentals,  modem services and for other products and
services. Packages of channels may consist of television 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.  The Company  also offers and may
receive  an  additional  monthly  fee  for 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.  The charge for Pay Cable services  varies with the
type and level of  service  selected  by the  subscriber.  Monthly  service  and
equipment  rates and related charges vary in accordance with the type of service
selected by the  subscriber.  Subscribers  typically  pay on a monthly basis and
generally  may  discontinue   services  at  any  time  (see   "Legislation   and
Regulation").

In addition to recurring monthly  subscription  fees, the Company also generates
revenues from advertising sales, pay-per- view services,  installation services,
commissions  from  electronic  retailing  (see  "Description  of  the  Company's
Businesses - Content - Electronic  Retailing") and other  services.  The Company
derives  revenues  from the sale of  advertising  time to  local,  regional  and
national  advertisers  on  networks  such as  ESPN,  MTV and  USA.  Pay-per-view
services permit a subscriber to order,  for a separate fee,  individual  feature
motion pictures and special event programs.

In December 1996, the Company began  marketing At Home  Corporation's  ("@Home")
high-speed cable modem services in areas served by certain of its cable systems.
The @Home service  allows  residential  subscribers  to connect  their  personal
computers via cable modems to a new high-speed  national  network  developed and
managed by @Home.  This service enables  subscribers to receive access to online
information,  including the Internet, at faster speeds than that of conventional
or Integrated  Service  Digital Network  ("ISDN")  modems.  For businesses,  the
Company, through @Home, provides a platform for Internet,  intranet and extranet
connectivity  solutions  and  networked  business  applications.  @Home  and the
Company aggregate  content,  sell advertising to businesses and provide services
to @Home  subscribers.  As of December 31, 1997,  the Comcast  @Home service was
available to be marketed to over 865,000  homes in six markets and had more than
9,700 customers (see "Description of the Company's  Businesses - Content - Cable
Television Programming Investments").

The Company's sales efforts are primarily directed toward increasing penetration
and  incremental  revenues in its franchise  areas.  The Company sells its cable
communications   services  through   telemarketing,   direct  mail  advertising,
promotional   campaigns,   door-to-door  selling,   local  media  and  newspaper
advertising.

                                      - 3 -
<PAGE>
Programming
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 and incentives
to the Company.  The Company's  programming  contracts are generally for a fixed
period of time and are subject to negotiated  renewal.  The Company  anticipates
that future contract renewals will result in programming costs exceeding current
levels, particularly for sports programming.

Customer Service
The  Company is  currently  consolidating  the  majority  of its local  customer
service call centers into large regional  operations,  consistent with its focus
on clustering of operations.  These  regional call centers have  technologically
advanced  telephone  systems that provide the capability of 24-hour per day call
answering,  telemarketing  and other  services.  These  centers  will  allow the
Company  to better  serve its  customer  base,  as well as to  cross-market  new
products and services to  subscribers.  As of December 31, 1997,  eight of these
call centers were in operation,  serving  approximately 2.1 million subscribers.
The Company  intends to expand the number of call  centers in operation to 10 in
1998,  bringing  the total  number  of  subscribers  served by a call  center to
approximately 2.6 million by December 31, 1998.  Customer service is provided to
subscribers in the remaining cable systems primarily through local  system-based
representatives.

Company's Systems
The table  below sets forth a summary of Homes  Passed,  Cable  Subscribers  and
Cable Penetration  information for the Company's  domestic cable  communications
systems as of December 31 (homes and subscribers in thousands):

<TABLE>
<CAPTION>
                                                     1997        1996 (5)       1995       1994 (6)       1993
<S>                                               <C>          <C>          <C>          <C>          <C>  
Homes Passed (1)(4)............................      7,138        6,975        5,570        5,491        4,211
Cable Subscribers (2)(4).......................      4,366        4,280        3,407        3,307        2,648
Cable Penetration (3)(4).......................       61.2%        61.4%        61.2%        60.2%        62.9%
<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)  Cable Subscribers as a percentage of Homes Passed.
(4)  Consists of systems whose financial  results are consolidated with those of
     the  Company.  Amounts do not include  information  for the  Company's  50%
     investment in Garden State or the Hattiesburg,  Mississippi  system managed
     by the  Company in which the Company  has less than a 50%  interest.  As of
     December  31,  1997,  total  Homes  Passed and Cable  Subscribers  for such
     entities were 336,000 and 233,000, respectively.
(5)  In November 1996, the Company acquired the cable  television  operations of
     The E.W. Scripps Company. 
(6)  In December 1994, the Company acquired the US cable  television  operations
     of Maclean Hunter Limited.
</FN>
</TABLE>

                                      - 4 -
<PAGE>
System  Clusters 
The Company  manages  the  majority  of its  systems in  geographic  clusters to
increase operating efficiencies. Clustering permits an increased emphasis by the
Company upon more  uniform,  efficient and cost  effective  delivery of customer
service and support.  The following  table is a summary of Homes  Passed,  Cable
Subscribers and Cable  Penetration for the Company's ten largest  regional cable
television   clusters  as  of  December  31,  1997  (homes  and  subscribers  in
thousands):

<TABLE>
<CAPTION>
Geographic Cluster                                       Homes           Cable                Cable
                                                        Passed        Subscribers          Penetration
<S>                                                      <C>               <C>               <C>  
New Jersey.......................................        940.0             596.6             63.5%
Florida..........................................        912.9             553.0             60.6%
Michigan.........................................        964.9             492.3             51.0%
Baltimore Area...................................        661.7             453.2             68.5%
Philadelphia Area................................        499.7             302.9             60.6%
Southern California..............................        508.6             271.9             53.5%
Tennessee........................................        426.7             262.1             61.4%
Sacramento.......................................        458.2             236.1             51.5%
Indianapolis.....................................        365.8             227.7             62.2%
Alabama..........................................        315.8             210.5             66.7%
                                                       -------           -------
                                                       6,054.3           3,606.3             59.6%
Other Systems....................................      1,083.8             759.9             70.1%
                                                       -------           ------- 

Total............................................      7,138.1           4,366.2             61.2%
                                                       =======           ======= 
</TABLE>

Direct Broadcast Satellite ("DBS") Operations
The Company holds a 10.4% general and limited partnership interest in Primestar,
which is principally  engaged in the business of acquiring,  originating  and/or
providing  television  programming  services  delivered by  satellite  through a
network of distributors,  including the Company, throughout the US. Primestar is
the  oldest  Ku-band  satellite  service  in  the US  with  the  second  largest
subscriber  base  of any US  digital  satellite  television  service.  Primestar
currently offers over 160 channels of entertainment programming for distribution
via  medium-power  satellite to subscribers'  home satellite  dishes  ("HSDs")of
approximately 27 to 36 inches in diameter.

The Company,  through a wholly owned  subsidiary,  distributes the Primestar DBS
service (the  "Primestar  Service") (see  "Competition")  to subscribers  within
specified  areas of 19 states in the US.  The  Company  uses  independent  sales
agents,   national  retailers  (e.g.  Radio  Shack)  and  localized  advertising
campaigns to promote demand for the Primestar Service.  As of December 31, 1997,
the Company provided the Primestar Service to more than 181,000 subscribers.

Restructuring  of Primestar  Operations 
On  February  6,  1998,  the  Company  entered  into a Merger  and  Contribution
Agreement  (the "Merger and  Contribution  Agreement")  with  Primestar  and the
affiliates of each of the other  partners of Primestar,  including TCI Satellite
Entertainment,  Inc. ("TSAT"), a publicly-traded company,  pursuant to which the
Company's DBS operations,  the Company's  partnership interests in Primestar and
the Primestar partnership interests and the DBS operations of the other partners
of Primestar will be consolidated into a newly formed company ("New Primestar").
Under the terms of the Merger and  Contribution  Agreement,  upon closing of the
transactions,   it  is  expected  that  New  Primestar,   through  a  series  of
transactions,  will pay the Company  approximately  $83 million  (based upon the
number of the Company's  subscribers to the Primestar Service as of December 31,
1997), and that the Company would own  approximately 10% of New Primestar common
equity,  both  subject  to  adjustment  based  on the  number  of the  Company's
subscribers to the Primestar Service,  inventory amounts and other factors as of
the closing of the transactions.  Subject to receipt of regulatory  approval and
other conditions,  after the closing of the  transactions,  TSAT will merge with
and into New  Primestar  in a  transaction  in which TSAT's  outstanding  common
shares will be converted into common shares of New Primestar. As of December 31,
1997 and for the year then ended,  the assets and revenues of the  Company's DBS
operations totaled $162.8 million and $114.1 million, respectively.

In June 1997,  Primestar  entered  into an agreement  with The News  Corporation
Limited,  MCI  Telecommunications  Corporation and American Sky Broadcasting LLC
("ASkyB"),  pursuant to which  Primestar  (or,  under  certain  conditions,  New
Primestar)  will acquire  certain  assets  relating to a high-power DBS business
(the "ASkyB Transaction"). In

                                      - 5 -
<PAGE>
exchange  for such  assets,  ASkyB will  receive  non-voting  securities  of New
Primestar  that  will  be  convertible  into  non-voting  common  stock  of  New
Primestar, and, accordingly, will reduce the Company's common equity interest in
New  Primestar  to  approximately  7%  on a  fully  diluted  basis,  subject  to
adjustment.

The  Merger  and  Contribution  Agreement  and  the  ASkyB  Transaction  are not
conditioned  on  each  other  and  may  close  independently.   The  Merger  and
Contribution  Agreement is expected to close in 1998, subject to receipt of TSAT
shareholder  approval.  The  ASkyB  Transaction  is  expected  to close in 1998,
subject to receipt  of all  necessary  governmental  and  regulatory  approvals,
including the approval of the FCC. There can be no assurance that such approvals
will be obtained.

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  and upon
superior technical performance and customer service.

The 1996 Telecom Act makes it easier for local  exchange  carriers  ("LECs") and
others to provide to  subscribers a wide variety of video  services  competitive
with services  provided by cable  systems.  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
cable networks and the use of wireless transmission facilities.  LECs in various
states either have announced plans,  obtained local franchise  authorizations or
are  currently  competing  with certain of the  Company's  cable  communications
systems.  An  affiliate  of  Ameritech  Corporation  ("Ameritech")  has obtained
approximately  12 cable  franchises  in its  telephone  service  areas  that are
currently  served by the  Company  and  competes  directly  with the  Company to
provide  video and  other  broadband  services  to  subscribers.  LECs and other
companies 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. Cable systems could be placed at a
competitive  disadvantage  if the  delivery  of  video  and  interactive  online
computer 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.  Issues  of  cross-subsidization  by LECs of  video,  data and
telephony services also pose strategic disadvantages for cable operators seeking
to compete with LECs which provide such services. The Company cannot predict the
likelihood of success of such video or broadband service ventures by LECs or the
impact  on the  Company  of such  competitive  ventures  (see  "Legislation  and
Regulation").

Cable  communications  systems  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.  Well-financed businesses from outside the
cable industry (such as public  utilities that own certain of the poles to which
cable is  attached)  may become  competitors  for  franchises  or  providers  of
competing services (see "Legislation and Regulation").

Congress has enacted  legislation  and the FCC has adopted  regulatory  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,  DBS
service  whereby  signals are  transmitted by satellite to receiving  facilities
located on customer premises.  Programming is currently  available to individual
households,  condominiums,  apartment and office complexes through conventional,
medium and high-power satellites. DBS providers can offer more than 100 channels
to their  subscribers.  Several  major  companies  are offering or are currently
developing  nationwide  high-power  DBS services,  including  DirecTV,  EchoStar
Communications  Corporation  and ASkyB.  Additionally,  Primestar  offers  video
programming from a medium-power DBS satellite system (see "DBS Operations"). DBS
systems 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 and  installation
costs and a lack of local  programming  and  service.  The FCC and  Congress are
presently considering proposals to

                                      - 6 -
<PAGE>
enhance the ability of DBS  providers to gain access to  additional  programming
and to authorize DBS carriers to transmit local signals to local markets.

The availability of reasonably-priced HSDs also 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").

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.  The 1984 Cable Act
also 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
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 Company is developing competitive packages of
services (video, data and telephony) to offer to such developments.

Cable  communications  systems also compete with wireless  program  distribution
services such as multichannel,  multipoint  distribution services ("MMDS") which
use low-power microwave  frequencies to transmit video programming  over-the-air
to subscribers.  There are MMDS operators which are authorized to provide or are
providing broadcast and satellite  programming to subscribers in areas served by
the  Company's  cable  systems.   Additionally,   the  FCC  adopted  regulations
allocating  frequencies in the 28-GHz band for a new multichannel wireless video
service called Local Multipoint Distribution Service ("LMDS") that is similar to
MMDS.  The FCC initiated  spectrum  auctions for LMDS licenses in February 1998.
The Company is unable to predict  whether  wireless  video  services will have a
material impact on its operations.

Competition in the online  services area is significant.  Recently,  a number of
large  corporations  in  the   telecommunications   and  technology  industries,
including the Regional Bell  Operating  Companies  ("RBOCs"),  GTE  Corporation,
Microsoft,  Compaq  Computer  Corporation and Intel  Corporation,  announced the
formation of a working group to accelerate the deployment of Asymmetric  Digital
Subscriber Line ("ADSL") technology. It is anticipated that ADSL technology will
allow Internet access at peak data transmission  speeds equal to or greater than
that of modems over  conventional  telephone  lines.  Bell Atlantic  Corporation
("Bell  Atlantic")  recently  requested  the  FCC to  fully  deregulate  packet-
switched  networks  to  allow  it  to  provide  high-speed  broadband  services,
including online services, without regard to present Local Access Transport Area
("LATA") boundaries and other regulatory restrictions. Competitors in the online
services area include existing Internet service  providers,  LECs, long distance
carriers  and  others,  many of whom have more  substantial  resources  than the
Company.  The Company  cannot  predict the  likelihood  of success of the online
services  offered by the Company's  competitors  or the impact on the Company of
such competitive ventures.

Other  new  technologies  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. PCS license
holders,  including cable operators,  are able to provide  competitive voice and
data services (see "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>
CELLULAR TELEPHONE COMMUNICATIONS

Company's Systems
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. As of December 31, 1997, the Company's  consolidated systems
covered a total  population  of over 8.2 million  and served  more than  783,000
customers, representing a penetration rate of 9.5%.

Revenue Sources
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.  The Company  charges its  customers  for service  activation,
monthly access,  per-minute  airtime and custom calling features,  and generally
offers a variety  of  pricing  options,  most of which  combine a fixed  monthly
access fee and per-minute charges.  The Company pays the local telephone service
company  directly for  interconnection  of cellular  networks  with the wireline
telephone network.

The Company  offers  products and services to increase the value to the customer
of the basic telephony service and to increase airtime  revenues.  Such products
include paging services,  enhanced directory  assistance and concierge services,
voice activated dialing, enhanced voice mail and prepaid calling. The deployment
of digital  technology (see "Technology and Capital  Improvements")  has allowed
the Company to offer additional  services such as caller  identification,  short
messaging,   message  waiting  indicators  and  enhanced  call  privacy  through
encryption.  In addition, the Company offers data transmission over its existing
cellular  network,  which allows the rapid transfer of data to and from personal
computers, personal digital assistants and other devices.

The Company currently markets its services under the Comcast  MetrophoneSM brand
name in the Philadelphia, PA metropolitan statistical area ("MSA") and under the
Comcast  CELLULARONE(R)  brand  name in its  other  markets  in New  Jersey  and
Delaware.  The Company  markets  its  products  and  services  through  multiple
distribution channels throughout its contiguous markets.  These channels include
direct   channels,   such  as  its  direct  sales  force,   retail   stores  and
telemarketing,  and indirect channels,  such as national and local retailers and
automotive  dealers.  The Company's  long-term emphasis is on the development of
its  direct  distribution  channels,  particularly  its own retail  outlets  and
telemarketing,  as a means to reduce the cost to acquire subscribers and improve
the quality of new  subscribers.  The Company  operates 54 retail outlets in its
markets and anticipates building additional retail outlets, as well as upgrading
its existing retail outlets in the future.

The Company  sells  cellular  telephone  equipment to its  customers in order to
encourage use of its  services.  The  Company's  practice,  as is typical in the
industry,  is to sell  telephones  at or below cost in response  to  competitive
pressures.

Technology and Capital Improvements
Each of the  Company's  service  areas 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.

                                      - 8 -
<PAGE>
As required by the FCC, all cellular  telephones are designed so that a cellular
telephone may be used wherever cellular service is available within the US. 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 historically has been 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  significant  investment  in  switching  and cell site  equipment
manufactured  by Lucent  Technologies,  Inc.  enabled it to deploy Time Division
Multiple   Access   ("TDMA")   digital   cellular   technology   throughout  its
Pennsylvania/New Jersey and Delaware network. This technology was implemented at
the beginning of the fourth quarter of 1997.  The deployment of this  technology
permits  the  Company's  subscribers  and  roamers  to use both  analog and TDMA
services  throughout the Company's  coverage area. The Company  believes that it
will have sufficient  capacity to accommodate both continued  subscriber  growth
and growth in subscriber minutes for the foreseeable future.

Roaming and Interconnection
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.  The Company also offers  various  service
plans which allow  customers who roam out of the  Company's  service area to pay
the same rates charged for local service in the Company's  service area,  rather
than passing through higher roaming rates  customarily  charged by many cellular
carriers. This billing practice provides the customer, in effect, with a broader
local service area but results in increased  costs for the Company.  The Company
has  been  reducing  these  costs  through  the  continued  negotiation  of more
favorable  roaming  agreements  with  cellular  service  providers  in  relevant
markets.

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 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. While the use of digital radio technology
is expected to make it more difficult to commit cellular  fraud,  fraudulent use
of the Company's systems remains a significant concern.

Customer Service
In 1997  and  1996,  the  Company  consolidated  its  New  Jersey  and  Delaware
operations,   respectively,   including  customer  care  operations,   into  the
operations  of the  Philadelphia  market.  The  Company's  sales  and  marketing
presence  (including through the Company's direct sales group and retail stores)
and customer and dealer support will be maintained  throughout  the systems.  In
addition to overall  reductions in operating  costs and increases in operational
efficiencies,  such  consolidation  permits an increased emphasis by the Company
upon more uniform, efficient and cost effective delivery of customer service and
support.

The Company  utilizes  the  MacroCell(R)  billing  and  customer  care  platform
developed and licensed by Cincinnati Bell Information  Systems,  Inc.  ("CBIS").
Customer service  representatives are able to access current billing information
in order to respond to customer inquiries.  To supplement the Company's customer
service  operations,  Company  telemarketers  contact customers  periodically to
determine their satisfaction with the Company's service and to identify problems
that can lead to subscriber cancellations.

Licensing
The FCC generally grants two licenses to operate cellular  telephone  systems in
each market.  The other cellular licensee in the Company's  principal markets is
Bell Atlantic Mobile Systems,  Inc.  ("BAMS").  In addition to BAMS, the Company
competes for wireless  customers with affiliates of AT&T, the Sprint Corporation
("Sprint"), Omnipoint

                                      - 9 -
<PAGE>
Communications,  Inc.  ("Omnipoint")  (which  operate PCS  networks)  and Nextel
Communications, Inc. ("Nextel") (which operates Specialized Mobile Radio ("SMR")
networks).

Competition
In recent years, new mobile  telecommunications  service  providers have entered
the  market  and  have  created  additional   competition  in  the  cellular/PCS
telecommunications  industry.  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  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 which are currently best
suited for use in densely  populated  areas.  Broadband  PCS service is a direct
competitor to cellular  service.  In the  Company's  Philadelphia  market,  AT&T
Wireless Services,  Inc., Omnipoint and PhillieCo,  L.P., an affiliate of Sprint
PCS, have  authorizations  for broadband PCS systems.  The FCC recently modified
the  rules  applicable  to "C  Block"  broadband  PCS  licenses  held  by  small
businesses,  minorities and women (known as "designated entities") to reduce the
government  debt now  owed by these  entities.  "Designated  entities,"  such as
Omnipoint in the Philadelphia market, compete with the Company.

Cellular telephone systems, including the Company's systems, also face actual or
potential  competition  from  other  current  and  developing  technologies.  In
addition to SMR systems,  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.  Nextel uses its  available  SMR spectrum in markets
where the Company provides wireless service.

The FCC requires cellular licensees to provide service to resellers who 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. 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 (the "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.  Also, the World Trade  Organization  ("WTO")  agreement with respect to
telecommunications,  which became  effective on February 5, 1998, is intended to
increase competition and reduce barriers to entry by telecommunications firms in
foreign and domestic  markets,  and may lead to greater  foreign  investment and
participation  in  the  US  cellular/PCS   telecommunications   industry.  These
developments and further technological  advances and regulatory changes may make
available other  alternatives to cellular service,  thereby creating  additional
sources of competition.

OTHER SERVICES

The Company  currently  holds twelve 10-MHz PCS licenses and seventeen  Wireless
Communication Service ("WCS") licenses.  The PCS licenses cover the Philadelphia
and Allentown,  PA markets, while the WCS licenses cover the majority of the US.
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.  Further,  during 1997 the
Company acquired a reseller of long distance services and is currently  offering
such services to businesses in the  Philadelphia  market and plans to offer such
services nationwide to consumers.

                                     - 10 -
<PAGE>
SPRINT PCS

The  Company  holds  a 15%  interest  in  Sprint  PCS.  Sprint  PCS,  a  limited
partnership owned by the Company,  Tele-Communications,  Inc.  ("TCI"),  Cox and
Sprint,   has  obtained   licenses  to  offer  a  full  range  of   cellular/PCS
telecommunications  services to areas in the US with an aggregate  population of
approximately  250  million  and  is in  the  process  of  building  a  seamless
integrated digital nationwide  wireless  communications  network. As of December
31, 1997, Sprint PCS had launched its service in over 130 metropolitan  markets.
The  proposed  budget for 1998 for Sprint PCS has not yet been  approved  by the
partnership board, which has resulted in the occurrence of a "Deadlock Event" as
of January 1, 1998 under the partnership agreement.  If the 1998 proposed budget
is not  approved  through  resolution  procedures  set forth in the  partnership
agreement,  certain specified  buy/sell  procedures may be triggered,  which may
result in a restructuring of the partners' interests,  the sale of the Company's
interest, or, in limited circumstances, the sale of Sprint PCS.

CONTENT

Content consists primarily of the Company's 57% ownership interest in QVC, which
is consolidated with and managed by the Company. In addition, the Company owns a
controlling interest in E! Entertainment (see "General  Developments of Business
- E!  Entertainment") and maintains  strategic  investments in other programming
ventures, including Comcast SportsNet, The Golf Channel, Speedvision and Outdoor
Life.

ELECTRONIC RETAILING

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 its viewers. QVC television  programming is produced
at its facilities and is  distributed  via satellite to affiliated  cable system
operators  and other  multichannel  video  programming  providers  (the "Program
Carriers")  who  have  entered  into  carriage   agreements  (the   "Affiliation
Agreements") with QVC and who retransmit QVC programming to their subscribers.

Revenue Sources
QVC sells a variety of consumer  products  and  accessories  including  jewelry,
housewares,  electronics,  apparel  and  accessories,   collectibles,  toys  and
cosmetics.  QVC purchases  products from domestic and foreign  manufacturers and
wholesalers,  often 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.

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.  QVC's private label credit card
program  is  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.

Distribution Channels
In the  US,  QVC  is  transmitted  live  24  hours  a day,  7  days a  week,  to
approximately  57 million  cable  television  homes and on a part-time  basis to
approximately  1.6 million  additional  cable  television  homes.  In  addition,
transmission  can be received by  approximately  9.7 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 segments devoted to
merchandise associated with a particular celebrity,  event,  geographical region
or seasonal interest.

In December 1996, QVC launched an electronic  retailing  programming  service in
Germany. The service currently is available to over 9.5 million cable television
and HSD-served homes in Germany.  However,  the Company  estimates that only 3.0
million cable  television homes have programmed their television sets to receive
this service.

                                     - 11 -
<PAGE>
In December 1995, QVC launched its interactive  shopping  service ("iQVC") which
is available  through the Internet.  The iQVC service  offers a diverse array of
merchandise, available on-line, 24 hours a day, 7 days a week.

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 6.5 million  cable
television and HSD-served homes in the UK and Ireland.

QVC Transmission
The  QVC  domestic   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. QVC subleases  transponders  for the  transmission of its
signals to the UK and Germany.

Program Carriers
QVC has entered into  Affiliation  Agreements with Program Carriers in the US to
carry  its  programming.  Generally,  there  are 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, 1997,  approximately  31.1% 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  with  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 marketing,  launch and equipment  purchase
support.  QVC will continue to recruit  additional  Program Carriers and seek to
enlarge its audience.

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.

                                     - 12 -
<PAGE>
CABLE TELEVISION PROGRAMMING INVESTMENTS

The  Company  has  made  investments  in cable  television  networks  and  other
programming  related  enterprises as a means of generating  additional  interest
among consumers in cable television. The Company's programming investments as of
December 31, 1997 include:
<TABLE>
<CAPTION>
                                                                                                     Ownership
Investment                                  Description                                             Percentage
<S>                                 <C>                                                              <C>  
@Home                               Internet Services over Cable Television                           12.3%
CN8-The Comcast Network             Regional and Local Programming                                   100.0%
Comcast SportsNet                   Regional Sports Programming and Events                            46.4% (A)
E! Entertainment                    Entertainment-related News and Original Programming               39.7% (B)
The Golf Channel                    Golf-related Programming                                          14.4%
Outdoor Life Network                Outdoor Activities                                                24.7%
Speedvision Network                 Automotive, Marine and Aviation                                   20.2%
Sunshine Network                    Regional Sports, Public Affairs and General
                                    Entertainment                                                     16.1%
Viewer's Choice                     Pay-per-view Programming                                          10.0%
<FN>
------------
(A)  Represents the Company's 66.3% ownership of Comcast Spectacor,  L.P., which
     holds a 70.0% ownership interest in Comcast SportsNet.
(B)  Represents the Company's 50.1% ownership of Comcast Entertainment  Holdings
     LLC, which holds a 79.2% ownership interest in E! Entertainment.
</FN>
</TABLE>

@Home
In 1996, the Company,  along with TCI, Cox and Kleiner Perkins Caufield & Byers,
invested in @ Home, a provider of Internet services via the cable modem over the
cable television infrastructure to consumers and businesses.

CN8-The Comcast Network
CN8-The Comcast Network,  the Company's local and regional  programming service,
was  created  in late 1996 and  presently  serves  more than 1.5  million of the
Company's  cable  subscribers  in  Pennsylvania,  New Jersey and  Maryland.  CN8
provides  original  programming,  including  local and regional  news and public
affairs, regional sports, health and cooking and family-oriented programming.

Comcast SportsNet
In July 1996, the Company acquired a 66.3% interest in Comcast  Spectacor,  L.P.
("Comcast-Spectacor"),  a  partnership  that owns the  Philadelphia  Flyers  NHL
hockey team (the  "Flyers"),  the  Philadelphia  76ers NBA basketball  team (the
"Sixers"), and their arenas. Comcast-Spectacor and the owner of the Philadelphia
Phillies major league baseball team (the  "Phillies") have formed a partnership,
Philadelphia  Sports Media,  L.P.  d/b/a  Comcast  SportsNet  ("CSN"),  which in
October 1997 launched a 24-hour regional sports  programming  network  ("Comcast
SportsNet") in the Philadelphia  television market.  Comcast SportsNet telecasts
Flyers,  Sixers  and  Phillies  games and other  sports-related  programming  to
approximately  2.5 million viewers in the Philadelphia  region.  CSN has entered
into  Affiliation  Agreements  to permit  carriage  of  Comcast  SportsNet  with
multichannel  video  programming  distributors  in the  Philadelphia  television
market. Comcast SportsNet is delivered to affiliates by microwave, a terrestrial
means of delivery. The Company and Comcast- Spectacor are currently parties to a
proceeding  at the  FCC  filed  by a DBS  provider  seeking  access  to  Comcast
SportsNet programming.

E! Entertainment
E! Entertainment is an  entertainment-related  news and information service with
distribution to approximately  46 million  customers as of December 31, 1997. E!
Entertainment  seeks to  attract  viewers  based on  international  interest  in
Hollywood and entertainment industry news, information and features. The Company
obtained a controlling  interest in E! Entertainment in March 1997 (see "General
Developments of Business - E! Entertainment").

The Golf Channel
The Golf Channel is a 24-hour network devoted  exclusively to golf  programming.
The programming schedule includes live golf coverage,  golf instruction programs
and golf news.  In  addition  to the  Company,  the other  partners  in The Golf
Channel  include an affiliate of Fox, Inc.,  Times Mirror  Corporation and other
private investors. In January and February

                                     - 13 -
<PAGE>
1998,  the  Company  entered  into  agreements  to acquire an  additional  28.9%
interest in The Golf Channel for $76.2 million.  These transactions are expected
to close in the first quarter of 1998. After  completion of these  transactions,
the Company's ownership interest in The Golf Channel will be 43.3%.

The Outdoor Life Network and The Speedvision Network
Outdoor Life, which was launched in July 1995, presents  programming  consisting
primarily  of outdoor life  themes.  Speedvision,  which was launched in January
1996,  presents a variety of  programming  of interest to  automobile,  boat and
airplane enthusiasts  including news, historical and other information and event
coverage.  The other  partners in Outdoor Life and  Speedvision  include Cox and
MediaOne Group ("MediaOne").

The Sunshine Network
The Sunshine Network is a regional sports and public affairs network,  providing
programming  emphasizing  Florida's  local  teams  and  events  to more than 4.3
million  homes in  Florida.  Programming  rights on the  network  include  eight
professional  teams,  including the Orlando Magic and Miami Heat NBA  basketball
teams and the Tampa Bay Lightning NHL hockey team.

Viewer's Choice
Viewer's Choice,  which is the brand-name operated by PPVN Holding Co. ("PPVN"),
is a cable operator-controlled  buying cooperative for pay-per-view programming.
Viewer's  Choice serves 925  affiliated  systems with  approximately  18 million
addressable  households.  The other owners of PPVN  include  Time  Warner,  Cox,
Disney, MediaOne and TCI.

                           LEGISLATION AND REGULATION

CABLE COMMUNICATIONS

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 1996 Telecom Act is
the most comprehensive reform of the nation's  telecommunications laws since the
Communications  Act.  Although the long-term  goal of the 1996 Telecom Act is to
promote   competition   and  decrease   regulation  of  various   communications
industries, in the short-term the law delegates to the FCC (and in some cases to
the  states)  broad  new  rulemaking  authority.  Principal  responsibility  for
implementing  the  policies  of the  Cable  Acts  and the  1996  Telecom  Act is
allocated  between the FCC and state or local franchising  authorities.  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.

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 to resolve complaints about
rates for cable  programming  service tiers  ("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  eliminates  the  right  of  individuals  to file  CPST  rate
complaints  with the FCC and  requires  the FCC to issue a final order within 90
days after receipt of CPST rate complaints  filed by any franchising  authority.
The 1992 Cable Act limits the ability of cable television systems to raise rates
for basic and certain cable programming services  (collectively,  the "Regulated
Services").

FCC  regulations  govern rates that may be charged to subscribers  for 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,  which contains a rebuttable
presumption of an industry-wide 11.25% after tax rate of return on an operator's
allowable rate base. Franchising authorities are empowered to regulate the rates
charged  for  monthly  basic  service,   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

                                     - 14 -
<PAGE>
the FCC. Cable operators required to reduce rates may also be required to refund
overcharges with interest. 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.

The 1996  Telecom Act  provides  for rate  deregulation  of CPSTs by March 1999,
although  legislation  has  been  proposed  to  extend  the  regulatory  period.
Deregulation  will occur sooner for systems in markets  where  comparable  video
programming services,  other than DBS, are offered by local telephone companies,
or their  affiliates,  or by third parties using the local  telephone  company's
facilities, or where "effective competition" is established under the 1992 Cable
Act. The 1996 Telecom Act also  modifies the uniform rate  provision of the 1992
Cable Act by prohibiting  regulation of nonpredatory 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.

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. The FCC and the Company
recently  negotiated a "social  contract" in which the Company has  committed to
complete  certain system  upgrades and  improvements by March 1999 in return for
which it may move a limited number of currently regulated  programming  services
in certain cable systems to a single  migrated  product tier on each system that
may become an unregulated new product tier after December 1997 (see "Description
of the  Company's  Businesses - Cable  Communications  - Technology  and Capital
Improvements").  The Company is also currently in negotiations to settle pending
proceedings  involving  the  Company's  basic  service  rates in  certain of its
systems.  While the  Company  cannot  predict the  outcome of this  action,  the
Company believes that the ultimate resolution of this proceeding 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 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 WGN), commercial radio
stations and certain low-power  television  stations carried by such systems. In
March 1997, the US Supreme Court upheld the constitutional  validity of the 1992
Cable Act's  mandatory  signal  carriage  requirements.  The FCC will  conduct a
rulemaking  in the future to consider the  requirements,  if any, for  mandatory
carriage of digital television signals.  The Company cannot predict the ultimate
outcome of such a rulemaking or the impact of new carriage  requirements  on the
Company or its business.

                                     - 15 -
<PAGE>
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.

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.  The FCC
has 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 up to 5% of
"revenues" (as defined by each franchise agreement), which fees may be passed on
to subscribers. Recently, a federal appellate court held that a cable operator's
gross revenue includes all revenue received from subscribers, without deduction,
and overturned an FCC order which had held that a cable operator's gross revenue
does not include money collected from subscribers that is allocated to pay local
franchise  fees.  The Company  cannot  predict the ultimate  resolution of these
matters. 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.  The Company  anticipates
that its future franchise renewal prospects generally will be favorable.

Various courts have considered  whether  franchising  authorities have the legal
right to limit the number of franchises awarded within a community and to impose
certain  substantive  franchise  requirements  (e.g. access channels,  universal
service  and  other   technical   requirements).   These   decisions  have  been
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.

                                     - 16 -
<PAGE>
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.  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 made  far-reaching  changes in the  regulation of LECs that
provide cable services.  The 1996 Telecom Act eliminated  federal legal barriers
to  competition  in the local  telephone  and cable  communications  businesses,
preempted  legal barriers to competition  that  previously  existed in state and
local laws and regulations,  and set basic standards for  relationships  between
telecommunications  providers.  The 1996 Telecom Act  eliminated  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  on a
non-discriminatory basis. The 1996 Telecom Act generally limits acquisitions and
prohibits  certain joint ventures  between LECs and cable  operators in the same
market.

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 has 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 FCC's existing pole attachment rate formula,
which may be modified by a pending rulemaking, governs charges for utilities for
attachments by cable operators  providing only cable services.  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.  The FCC recently  adopted 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 in February  2001.  Any resulting  increase in attachment
rates will be phased in equal  annual  increments  over a period of five  years,
beginning in February 2001. The ultimate  impact of any revised FCC rate formula
or of any new pole attachment rate  regulations on the Company or its businesses
cannot be determined at this time.

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. In December 1997, the FCC initiated a rulemaking to address a number
of possible  changes to its program access rules.  Among the issues on which the
FCC has sought comment is whether the FCC has jurisdiction to extend its program
access rules to terrestrially-delivered  programming, such as Comcast SportsNet,
and if it does have such  jurisdiction,  whether  it should  expand the rules in
this  fashion.  This  rulemaking  is pending at the FCC and the  Company  cannot
predict the ultimate outcome of this proceeding.

                                     - 17 -
<PAGE>
The 1992 Cable Act  requires  cable  operators to block fully both the video and
audio portion of sexually explicit or indecent  programming on channels that are
primarily  dedicated to sexually oriented  programming or alternatively to carry
such programming only at "safe harbor" time periods currently defined by the FCC
as the hours  between 10 p.m. to 6 a.m.  The  Communications  Act also  includes
provisions,  among others, concerning horizontal and vertical ownership of cable
systems,  customer  service,  subscriber  privacy,  marketing  practices,  equal
employment opportunity, obscene or indecent programming, regulation of technical
standards and equipment compatibility.

Other FCC Regulations
The FCC  recently  revised  its  cable  inside  wiring  rules to  provide a more
specific  procedure for the disposition of internal cable wiring that belongs to
an incumbent  cable operator that is forced to terminate its cable services in a
multiple  dwelling unit ("MDU")  building by the building owner. The FCC is also
considering additional rules relating to MDU inside wiring that, if adopted, may
disadvantage   incumbent  cable  operators.   The  FCC  has  various  rulemaking
proceedings  pending  that will  implement  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.  Other FCC
regulations  covering  such areas as equal  employment  opportunity,  syndicated
program exclusivity, network program non-duplication, closed captioning of video
programming,  registration of cable systems,  maintenance of various records and
public inspection files, microwave frequency usage, 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,
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.
In a report to Congress,  the Copyright  Office  recommended  that Congress make
major revisions of both the cable television and satellite  compulsory  licenses
to make them as simple as possible to administer,  to provide  copyright  owners
with  full  compensation  for  the  use  of  their  works,  and to  treat  every
multichannel  video  delivery  system  the  same,  except  to  the  extent  that
technological  differences or differences in the regulatory  burdens placed upon
the  delivery  system  justify  different  copyright  treatment.   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 remains  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  principal  major  music  performing  rights   organizations,   the
Association  of  Songwriters,  Composers,  Artists and  Producers  ("ASCAP") and
Broadcast Music, Inc. ("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  established  a  special  rate  court  for  BMI.  BMI and  cable  industry
representatives  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

                                     - 18 -
<PAGE>
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.  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  communications  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  Wireless  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 Company's four cable and telephony businesses in the UK (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

                                     - 19 -
<PAGE>
by these subsidiaries of the UK Operating  Companies are for 23-year periods and
are scheduled to expire beginning in late 2012.

CELLULAR/PCS TELECOMMUNICATIONS

FCC Regulation
The FCC regulates the  licensing,  construction,  operation and  acquisition  of
wireless telephone systems,  including the Company's cellular systems,  pursuant
to the Communications Act.

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,  (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,  and
(iii)  restrict the amount of  commercial  mobile radio  spectrum  that a single
entity may hold in any particular area. Cellular radio licenses generally expire
ten years  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,  Long Branch and Trenton, NJ. The licenses for the Aurora/Elgin,  IL,
Joliet,  IL,  Vineland,  NJ and Atlantic City, NJ expire in 1998. The balance of
the Company's licenses expire from 1999 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.

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.  The FCC also has adopted  standards for limiting
human exposure to RF energy from cellular/PCS telecommunications facilities. The
FCC has determined that these standards preempt state and local regulation of RF
exposure.

The FCC  also  requires  LECs in each  market  to  offer  reasonable  terms  and
facilities for the  interconnection of wireless telephone systems in that market
to the  LECs'  landline  network.  In June  1996,  the FCC  adopted  a  national
regulatory  framework for  implementing the local  competition  provision of the
1996  Telecom  Act,  including  adoption  of rules  delineating  interconnection
obligations  of incumbent  LECs,  unbundling  requirements  for incumbent  LECs,
network elements, requirements for access to local rights of way, dialing parity
and telephone numbering and number  portability,  and requirements for resale of
and  nondiscriminatory  access to incumbent LEC services.  The FCC established a
national  regulatory  framework that sets pricing standards and negotiations and
arbitration guidelines.  However, the US Court of Appeals for the Eighth Circuit
vacated certain of these  standards and guidelines,  on the grounds that the FCC
lacked the authority to bind state  regulators on the matter of local pricing of
interconnection.  As a result, landline  interconnection pricing will be left to
state-by-state  determinations.  The Eighth Circuit also determined that the FCC
has special authority over Commercial  Mobile Radio Services ("CMRS")  carriers,
which include the Company's  wireless  operations and their  interconnection  to
incumbent LECs. Accordingly,  national  interconnection rules will be maintained
for the Company's CMRS operations.  In January 1998, the US Supreme Court agreed
to review the Eighth Circuit decision. The Company cannot predict the outcome of
this litigation or the FCC rulemakings, and the ultimate impact of any final FCC
regulations on the Company or its businesses cannot be determined at this time.

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

                                     - 20 -
<PAGE>
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.

The FCC changes  its  regulations  from time to time in response to  competitive
developments in the  telecommunications  marketplace or new federal legislation.
For instance,  the FCC is considering  whether all CMRS providers should provide
interconnection  to all other CMRS providers.  In its implementation of the 1996
Telecom Act, the FCC recently  established new federal  universal service rules,
under which wireless service providers are eligible to receive universal service
subsidies  for the first  time,  but also are  required  to  contribute  to both
federal  and state  universal  service  funds.  The  Company  began  making  its
contributions  to the federal  universal  service programs in February 1998. For
the first quarter of 1998, the FCC's  universal  service  assessments  amount to
0.72%  of   telecommunications   revenues  and  an   additional   3.19%  of  all
telecommunications revenues. Various parties have challenged the FCC's universal
service  rules and the cases have been  consolidated  in the US Court of Appeals
for  the  Fifth  Circuit.  The  Company  cannot  predict  the  outcome  of  this
proceeding.

Finally,  the 1996 Telecom Act relieves  RBOC-affiliated  cellular  providers of
their   obligations   to  provide  equal  access  to  long  distance   carriers.
RBOC-affiliated  carriers are now afforded  greater  flexibility  in contracting
with  interexchange  carriers  for  the  provision  of long  distance  services.
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.  In October  1997,  the FCC
released  an  order   establishing   uniform  rules   governing   incumbent  LEC
participation  in broadband  CMRS within each LEC's landline  telephone  region.
These rules will expire in January 2002,  unless  extended by the FCC. While the
FCC  eliminated  the  requirements  in its  cellular  rules for full  structural
separation  of the  incumbent  LEC  cellular  affiliate  from  the LEC  landline
affiliate,  the FCC adopted new rules designed to address  incentives  incumbent
LECs may have to engage in  anti-competitive  practices  against CMRS providers,
such  as  discriminatory  interconnection,  cost-shifting  and  anti-competitive
pricing.  Specifically,  the FCC will require  incumbent LECs to create separate
corporations  for their in- region broadband CMRS operation  (whether  cellular,
PCS or other) and to apply existing FCC rules on affiliate  transactions and use
of  customer   proprietary   network   information   to   LEC-CMRS   operations.
Additionally, the order addressed provisions of the 1996 Telecom Act that govern
incumbent  LEC joint  marketing  of CMRS and landline  services,  as well as LEC
obligations  to  disclose  material  changes  in  their  networks.  The FCC also
recently  released a notice of inquiry on calling  party pays, a mechanism  that
would allow CMRS  providers to offer  service  plans under which callers to CMRS
customers would pay for the calls that they make.

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 issue will  determine  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.

CONTENT

The FCC does not directly  regulate the content or  transmission  of programming
services like those offered by QVC and E! Entertainment.  The FCC does, however,
exercise  regulatory  authority over the satellites and uplink  facilities which
transmit   programming   services   such  as  those   provided  by  QVC  and  E!
Entertainment.  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 the QVC
service.  Regarding the satellites  from which QVC and E!  Entertainment  obtain
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

                                     - 21 -
<PAGE>
could, however, alter the regulatory obligations applicable to satellite service
providers.  The QVC  programming  services  offered  in the UK and  Germany  are
regulated by the media authorities in those countries.

                                    EMPLOYEES

As of December 31, 1997, the Company had 17,600 employees,  excluding  employees
in managed operations.  Of these employees,  8,200 were associated with domestic
cable   communications,   1,600  were   associated   with   cellular   telephone
communications,  5,500 were associated with electronic  retailing and 2,300 were
associated with other  divisions.  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.

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  and  upgrading  to keep  pace with
technological advances.  During 1997, the Company's systems,  including its cell
sites  and  switching   equipment  were  upgraded  with  TDMA  digital  cellular
technology,  permitting its  subscribers and roamers to use both analog and TDMA
services throughout the Company's coverage area.

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.  These assets
include QVC's recently constructed studios and offices,  Studio Park, located in
West Chester, Pennsylvania. 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
continue to be upgraded 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  subject to legal  proceedings  and  claims  which  arise in the
ordinary  course of its business.  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.

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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 1998, or as soon thereafter
as each of their successors is duly elected and qualified.

                                     - 22 -
<PAGE>
The following  table sets forth  certain  information  concerning  the principal
executive officers of the Company, including their ages, positions and tenure as
of January 30, 1998:
<TABLE>
<CAPTION>
                                                  Officer
    Name                               Age         Since                        Position with the Company
<S>                                    <C>         <C>                       <C>                               
Ralph J. Roberts                       77          1969                      Chairman of the Board of Directors;
                                                                             Director

Julian A. Brodsky                      64          1969                      Vice Chairman of the Board of
                                                                             Directors; Director

Brian L. Roberts                       38          1986                      President; Director

Lawrence S. Smith                      50          1988                      Executive Vice President

John R. Alchin                         49          1990                      Senior Vice President; Treasurer

Stanley L. Wang                        57          1981                      Senior Vice President; General
                                                                             Counsel; Secretary
</TABLE>

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 devotes a major portion of
his time to the business and affairs of the  Company.  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 is also a Director of Comcast UK Cable Partners Limited. Mr. Roberts
is the father of Brian L. Roberts.

Julian A.  Brodsky  has served as a Director  and Vice  Chairman of the Board of
Directors of the Company for more than five years.  Mr. Brodsky  devotes a major
portion of his time to the  business  and affairs of the  Company.  Mr.  Brodsky
presently serves as the Treasurer and a Director of Sural. Mr. Brodsky is also a
Director of Comcast UK Cable Partners Limited 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  devotes a major  portion of his time to the
business  and  affairs of the  Company.  Mr.  Roberts  presently  serves as Vice
President  and a Director of Sural.  As of December 31, 1997,  the shares of the
Company owned by Sural constituted  approximately 82% of the voting power of the
two classes of the Company's voting common stock combined.  Mr. Roberts has sole
voting  power over stock  representing  a majority of voting  power of all Sural
stock and, therefore, effectively controls the Company and its subsidiaries. Mr.
Roberts is also a Director  of Comcast  UK Cable  Partners  Limited  and At Home
Corporation. Mr. Roberts 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 also 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 also a Director of Comcast UK Cable Partners Limited and
Teleport Communications Group, Inc.

Stanley L. Wang has  served as Senior  Vice  President,  Secretary  and  General
Counsel of the Company for more than five years.

                                     - 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>  
1997
  First Quarter..................                 $19  3/8          $16  7/8         $18  15/16        $16  3/8
  Second Quarter.................                  22  1/4           14  5/8          22  3/16          14  1/2
  Third Quarter..................                  25  3/4           19  3/4          25  5/8           19  13/16
  Fourth Quarter.................                  32  9/16          25  19/32        32  3/4           25  11/16

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
</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, 1997 and
1996 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 January 30, 1998, there were 2,568 record holders of the Company's Class A
Special  Common Stock and 1,880 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,
                                          1997 (1)         1996 (1)          1995 (1)            1994              1993
                                                               (Dollars in millions, except per share data)
<S>                                       <C>              <C>               <C>               <C>              <C>     
Statement of Operations Data:
Revenues..............................    $4,912.6         $4,038.4          $3,362.9          $1,375.3         $1,338.2
Operating income......................       532.1            508.9             329.8             239.8            264.9
Equity in net losses of affiliates....       330.1            144.8              86.6              40.9             28.9
Loss before extraordinary items
  and cumulative effect of
  accounting changes..................      (208.5)           (52.5)            (37.8)            (75.3)           (98.9)
Extraordinary items...................       (30.2)            (1.0)             (6.1)            (11.7)           (17.6)
Cumulative effect of accounting
  changes (2).........................                                                                            (742.7)
Net loss..............................      (238.7)           (53.5)            (43.9)            (87.0)          (859.2)
Loss for common stockholders per
  common share before extraordinary
  items and cumulative effect of
  accounting changes (3)..............        (.66)            (.21)             (.16)             (.32)            (.46)
Extraordinary items per share (3).....        (.09)                              (.02)             (.05)            (.08)
Cumulative effect of accounting
  changes per share (3)...............                                                                             (3.47)
Net loss for common stockholders 
  per common share(3).................        (.75)            (.21)             (.18)             (.37)           (4.01)

Cash dividends declared
  per common share (3)................       .0933            .0933             .0933             .0933            .0933

Balance Sheet Data (at year end):

Total assets..........................    12,804.2         12,088.6           9,580.3           6,763.0          4,948.3
Working capital (deficiency)..........       141.7             40.9             531.6             (52.1)           176.6
Long-term debt........................     6,558.6          7,102.7           6,943.8           4,810.5          4,154.8
Stockholders' equity (deficiency).....     1,646.5            551.6            (827.7)           (726.8)          (870.5)

Supplementary Financial Data:

Operating income before
  depreciation and amortization (4)...     1,468.5          1,207.2           1,018.8             576.3            606.4
Net cash provided by
  operating activities (5)............       916.0            799.6             520.7             369.1            345.9
<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,  although the Company's  measure of operating cash flow may not
     be comparable to similarly  titled measures of other  companies.  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.
</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

See "General  Developments  of  Business" in Part I and Note 3 to the  Company's
consolidated financial statements in Item 8.

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, 1997 and 1996 were $577.6 million and $539.6  million,  respectively.  As of
December 31, 1997,  $251.6 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 $61.7 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,  1997,  short-term
investments have a weighted average maturity of approximately four months.

Accounts Receivable - Electronic Retailing

QVC, Inc. ("QVC"), an electronic  retailer and majority-owned  subsidiary of the
Company, has an agreement with an unrelated third party (the "Bank") whereby the
Bank provides  revolving credit directly to QVC customers.  The revolving credit
card  issued  by the Bank  may be used  solely  for the  purchase  of goods  and
services from QVC. The Bank may advance a portion of the purchase  price to QVC.
QVC is obligated to purchase from the Bank any uncollected  customers' accounts.
The  uncollected  balances of revolving  credit  extended by the Bank under this
agreement  are $340.0  million and $317.7  million as of  December  31, 1997 and
1996,  respectively,  of which  $309.6  million  and  $284.5  million  represent
interest  bearing deposits due from the unrelated third party. The total reserve
balances maintained for the purchase of uncollectible accounts are $76.5 million
and $73.2 million as of December 31, 1997 and 1996, respectively.  The Company's
potential obligations 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, 1997 and 1996.

Investments

Sprint PCS. The Company, Tele-Communications,  Inc. ("TCI"), Cox Communications,
Inc.  ("Cox") and Sprint  Corporation  ("Sprint," and together with the Company,
TCI and Cox,  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"  or "Sprint  PCS." The Partner
Subsidiaries  have  committed to  contribute  $4.2 billion in cash to Sprint PCS
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 PCS of
$602.0 million  through  January 30, 1998. The Company  anticipates  that Sprint
PCS'  capital  requirements  over the next  several  years will be  significant.
Requirements  in excess of committed  capital are planned to be funded by Sprint
PCS through external financing, including, but not limited to, vendor financing,
bank financing and securities offered to the public.

                                     - 26 -
<PAGE>
The  proposed  budget for 1998 for Sprint PCS has not yet been  approved  by the
partnership board, which has resulted in the occurrence of a "Deadlock Event" as
of January 1, 1998 under the partnership agreement.  If the 1998 proposed budget
is not  approved  through  resolution  procedures  set forth in the  partnership
agreement,  certain  specified  buy/sell  procedures may be triggered  which may
result in a restructuring of the partners' interests,  the sale of the Company's
interest, or, in limited circumstances, the sale of Sprint PCS.

TCGI. On January 8, 1998, AT&T  Corporation  ("AT&T")  entered into a definitive
merger agreement with Teleport Communications Group, Inc. ("TCGI"). Upon closing
of the merger (the "AT&T Transaction"),  the Company is expected to receive 24.2
million  shares of AT&T common  stock in exchange  for all of the shares of TCGI
held by the  Company.  Based on the closing  price of the AT&T  common  stock on
January 30, 1998 of $62.625  per share,  the Company is expected to  recognize a
pre-tax  gain  of  approximately   $1.390  billion  upon  closing  of  the  AT&T
Transaction.  Certain conditions agreed to in the AT&T Transaction  restrict the
Company's  ability to sell the AT&T common  stock to be received for a period of
between 45 to 135 days after the closing date of the AT&T Transaction.  The AT&T
Transaction  is  expected  to close in 1998,  subject to  receipt  of  necessary
regulatory and shareholder approvals.

In November  1997,  TCGI filed a  registration  statement with the United States
("US")  Securities  and Exchange  Commission to sell 7.3 million  shares of TCGI
Class A Stock  (the  "TCGI  Offering").  As a result of the TCGI  Offering,  the
Company will recognize a $59.6 million  increase in its  proportionate  share of
TCGI's net assets as a gain from equity offering of affiliate. Such gain will be
recorded in the Company's  March 31, 1998  condensed  consolidated  statement of
operations  and  accumulated  deficit as the Company  records its  proportionate
share of TCGI's net losses one quarter in arrears.

Comcast  UK  Cable.  On  February  4,  1998,  Comcast  UK Cable  entered  into a
definitive agreement to be acquired by NTL Incorporated  ("NTL"), an alternative
telecommunications  company in the United  Kingdom  ("UK").  Pursuant to certain
conditions,  the Company is expected to receive 4.8 million shares of NTL common
stock in exchange  for all of the shares of Comcast UK Cable held by the Company
(the "NTL  Transaction").  Based on the  closing  price of NTL  common  stock on
February 4, 1998 of $32.00 per share,  the  Company is  expected to  recognize a
pre-tax  gain of $81.4  million  upon  closing of the NTL  Transaction.  Certain
conditions  agreed to in the NTL Transaction  restrict the Company's  ability to
sell the NTL  common  stock to be  received  for a period of 180 days  after the
closing date of the NTL Transaction. The NTL Transaction is expected to close in
1998, subject to receipt of necessary regulatory and shareholder approvals,  the
consent of the  bondholders  of Comcast UK Cable and NTL, as well as the consent
of certain  NTL bank  lenders.  As of  December  31,  1997 and for the year then
ended,  the assets and revenues of Comcast UK Cable totaled  $736.0  million and
$93.3 million, respectively.

Primestar. The Company holds a 10.4% general and limited partnership interest in
Primestar  Partners,  L.P.  ("Primestar"),  which is principally  engaged in the
business of  acquiring,  originating  and/or  providing  television  programming
services delivered by satellite through a network of distributors, including the
Company,  throughout  the US. The Company,  through a wholly  owned  subsidiary,
distributes  the  Primestar  Direct  Broadcast  Satellite  ("DBS")  service (the
"Primestar  Service") to subscribers  within specified areas of 19 states in the
US. As of December 31, 1997, the Company provided the Primestar  Service to more
than 181,000 subscribers.

On  February  6,  1998,  the  Company  entered  into a Merger  and  Contribution
Agreement  (the "Merger and  Contribution  Agreement")  with  Primestar  and the
affiliates of each of the other  partners of Primestar,  including TCI Satellite
Entertainment,  Inc. ("TSAT"), a publicly-traded company,  pursuant to which the
Company's DBS operations,  the Company's  partnership interests in Primestar and
the Primestar partnership interests and the DBS operations of the other partners
of Primestar will be consolidated into a newly formed company ("New Primestar").
Under the terms of the Merger and  Contribution  Agreement,  upon closing of the
transactions,   it  is  expected  that  New  Primestar,   through  a  series  of
transactions,  will pay the Company  approximately  $83 million  (based upon the
number of the Company's  subscribers to the Primestar Service as of December 31,
1997), and that the Company would own  approximately 10% of New Primestar common
equity,  both  subject  to  adjustment  based  on the  number  of the  Company's
subscribers to the Primestar Service,  inventory amounts and other factors as of
the closing of the transactions.  Subject to receipt of regulatory  approval and
other conditions,  after the closing of the  transactions,  TSAT will merge with
and into New  Primestar  in a  transaction  in which TSAT's  outstanding  common
shares will be converted into common shares of New Primestar. As of December 31,
1997 and for the year then ended,  the assets and revenues of the  Company's DBS
operations totaled $162.8 million and $114.1 million, respectively.

                                     - 27 -
<PAGE>
In June 1997,  Primestar  entered  into an agreement  with The News  Corporation
Limited,  MCI  Telecommunications  Corporation and American Sky Broadcasting LLC
("ASkyB"),  pursuant to which  Primestar  (or,  under  certain  conditions,  New
Primestar)  will acquire  certain  assets  relating to a high-power DBS business
(the "ASkyB  Transaction").  In exchange  for such  assets,  ASkyB will  receive
non-voting  securities of New Primestar that will be convertible into non-voting
common  stock of New  Primestar,  and,  accordingly,  will reduce the  Company's
common equity interest in New Primestar to  approximately  7% on a fully diluted
basis, subject to adjustment.

The  Merger  and  Contribution  Agreement  and  the  ASkyB  Transaction  are not
conditioned  on  each  other  and  may  close  independently.   The  Merger  and
Contribution  Agreement is expected to close in 1998, subject to receipt of TSAT
shareholder  approval.  The  ASkyB  Transaction  is  expected  to close in 1998,
subject to receipt  of all  necessary  governmental  and  regulatory  approvals,
including the approval of the Federal  Communications  Commission ("FCC"). There
can be no assurance that such approvals will be obtained.

@Home. In July 1997, At Home Corporation  ("@Home")  completed an initial public
offering of its Series A Common Stock (the "@Home IPO"). @Home provides Internet
services  to  customers  and  businesses  via the  cable  modem  over the  cable
television  infrastructure  in a  limited  number  of  cities  in the US.  As of
December 31, 1997, the Company holds 8.0 million contractually restricted shares
(the "Restricted Shares") and 6.6 million unrestricted shares (the "Unrestricted
Shares")  of  @Home  Series  A  Common  Stock  (the  "@Home  Series  A  Stock"),
representing a 12.3% and a 5.7% equity and voting  interest,  respectively.  The
Company has  recorded the  Restricted  Shares at their  historical  cost of $1.1
million and the Unrestricted Shares, which are classified as available for sale,
at their  estimated  fair value of $164.6  million,  based on the quoted  market
price of the @Home Series A Stock as of December 31, 1997.

The Golf Channel.  The Golf Channel is a 24-hour network devoted  exclusively to
golf programming.  The programming  schedule  includes live golf coverage,  golf
instruction  programs  and golf news.  In  addition  to the  Company,  the other
partners in The Golf Channel  include an affiliate  of Fox,  Inc.,  Times Mirror
Corporation  and other  private  investors.  In January and February  1998,  the
Company entered into  agreements to acquire an additional  28.9% interest in The
Golf Channel for $76.2 million.  These transactions are expected to close in the
first quarter of 1998.  After  completion of these  transactions,  the Company's
ownership interest in The Golf Channel will be 43.3%.

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.  The Company continually evaluates its existing investments
as well as new investment opportunities.

Investment Rights

In July 1996,  the Company  acquired a 66% interest in Comcast  Spectacor,  L.P.
("Comcast-Spectacor"), the owner of two professional sports teams and two arenas
in  Philadelphia,  PA.  Beginning in January 1998,  the Company has the right to
purchase the  remaining  34%  minority  interest in  Comcast-Spectacor  from the
minority partner for the minority  partner'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  partner 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  partner for
such interests in shares of the Company's Class A Special Common Stock,  subject
to certain  restrictions.  If the minority partner exercises its Exit Rights and
the Company elects not to purchase their interest,  the Company and the minority
partner will use their best efforts to sell Comcast-Spectacor.

Beginning  in October  1998,  the Walt  Disney  Company  ("Disney"),  in certain
circumstances,  is entitled to cause  Comcast  Entertainment  Holdings  LLC (the
"LLC"),  which is owned 50.1% by the  Company  and 49.9% by Disney,  to purchase
Disney's entire interest in the LLC at its then fair market value (as determined
by an appraisal process).  If the LLC elects not to purchase Disney's interests,
Disney has the right,  at its option,  to purchase  either the Company's  entire
interest  in  the  LLC  or  all  of the  shares  of  stock  of E!  Entertainment
Television,  Inc.  ("E!  Entertainment")  held by the LLC,  in each case at fair
market value. In the event that Disney exercises its rights, as described above,
a portion or all of the $132.8 million aggregate  principal amount ten-year,  7%
notes  payable to Disney (the "Disney  Notes") may be replaced with a three year
note due to Disney.

In February  1995, the Company and TCI acquired (the "QVC  Acquisition")  all of
the outstanding stock of QVC not previously owned by them  (approximately 65% of
such shares on a fully diluted basis) for $1.4 billion. Following the

                                     - 28 -
<PAGE>
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
accounted  for  the  QVC  Acquisition  under  the  purchase  method  and QVC was
consolidated  with  the  Company  effective  February  1,  1995.  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.

At any time after December 18, 2001, the California Public Employees  Retirement
System ("CalPERS") may elect to liquidate its interest in MHCP Holdings,  L.L.C.
("MHCP Holdings"),  a 55% owned indirect  subsidiary of the Company (which holds
the US cable  operations  formerly  known as Maclean  Hunter  Limited)  in which
CalPERS owns the remaining 45% interest, at a price based upon the fair value of
CalPERS' interest in MHCP Holdings,  adjusted, under certain circumstances,  for
certain  performance  criteria relating to the fair value of MHCP Holdings 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 MHCP Holdings.

Year 2000 Issue

The Year 2000 Issue is the result of computer  programs  being written using two
digits rather than four to define the applicable year.  Certain of the Company's
computer programs that have  date-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000 (the "Year 2000 Issue"). If this
situation   occurs,   the  potential  exists  for  computer  system  failure  or
miscalculations   by  computer   programs,   which  could  cause  disruption  of
operations.

Based on an inventory  conducted in 1997,  the Company has  identified  computer
systems that will require modification or replacement so that they will properly
utilize dates beyond December 31, 1999. The Company presently believes that with
modifications  to existing  software and  conversions to new software,  the Year
2000 Issue can be mitigated.  However, if such modifications and conversions are
not made,  or are not  completed  within an adequate  time frame,  the Year 2000
Issue could have a material impact on the operations of the Company.

The Company has initiated  communications  with all of its significant  software
suppliers and service  bureaus to determine their plans for remediating the Year
2000  Issue in their  software  which  the  Company  uses or  relies  upon.  The
Company's  estimate to complete the remediation plan includes the estimated time
associated  with  mitigating  the Year  2000  Issue for  third  party  software.
However,  there can be no guarantee that the systems of other companies on which
the Company  relies will be  converted on a timely  basis,  or that a failure to
convert  by  another  company  would  not have  material  adverse  effect on the
Company.

The Company  continues to use both internal and external  resources to reprogram
or replace software for Year 2000 modifications.  Management of the Company will
also continue to periodically  report the progress of its Year 2000  remediation
plan to the Audit  Committee of the Company's  Board of  Directors.  The Company
plans  to  complete  the  Year  2000  mitigation  in 1999.  The  costs  directly
attributable  to the Year 2000 Issue are not expected to have a material  effect
on the Company's results of operations.

The costs of the project and the date on which the Company plans to complete the
Year  2000  modifications  and  replacements  are  based  on  management's  best
estimates,  which were derived using  assumptions of future events including the
continued   availability  of  resources  and  the  reliability  of  third  party
modification plans. However, there can be no guarantee that these estimates will
be  achieved  and actual  results  could  differ  materially  from those  plans.
Specific factors that might cause such material differences include, but are not
limited to, the availability  and cost of personnel with  appropriate  necessary
skills, the ability to locate and correct all relevant computer code and similar
uncertainties.

                                     - 29 -
<PAGE>
Capital Expenditures

It is anticipated that, during 1998, the Company will incur  approximately  $1.1
billion of capital  expenditures,  including  $700 million for the upgrading and
rebuilding  of certain  of the  Company's  cable  communications  systems,  $100
million for the upgrading of QVC's warehousing and distribution facilities, $100
million for the upgrading of the Company's cellular  communications  systems and
$150 million for the  build-out of the  Company's  consolidated  UK  affiliates'
systems  (subject  to the  timing of the  closing of the NTL  Transaction).  The
amount of such capital  expenditures for years subsequent to 1998 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.   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. Costs 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. Future
increases in such costs may be significant to the Company's  financial position,
results  of  operations  and   liquidity.   The  Company   anticipates   capital
expenditures for years subsequent to 1998 will continue to be significant. As of
December  31,  1997,  the  Company  does not have  any  significant  contractual
obligations for capital expenditures.

Financing

Other than the acquisition of the cable television  operations ("Scripps Cable")
of the E.W.  Scripps Company in November 1996 (the "Scripps  Acquisition"),  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 through public  offerings of subsidiary  stock and debt  instruments.  As of
December 31, 1997 and 1996,  the Company's  long-term  debt,  including  current
portion, was $6.691 billion and $7.332 billion, respectively, of which 17.1% and
45.2%,  respectively,  was at variable  rates.  As of January  30,1998,  certain
subsidiaries  of the Company  had unused  lines of credit of $1.0  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.  The Company's long-term debt had estimated fair values of
$7.123   billion  and  $7.323   billion  as  of  December  31,  1997  and  1996,
respectively.  The Company's weighted average interest rate was 8.36%, 7.90% and
8.32% during the years ended December 31, 1997, 1996 and 1995, respectively. The
Company continually  evaluates its debt structure with the intention of reducing
its debt service requirements when desirable.

On February 26, 1998,  the Company  announced its intention to redeem its $541.9
million principal amount 1 1/8% discount convertible subordinated debentures due
2007  (the "1 1/8%  Debentures")  on March  30,  1998 at a  redemption  price of
67.112% of the principal amount,  together with accrued interest thereon.  As of
December  31,  1997,  the  accreted  value of the 1 1/8%  Debentures  was $355.9
million.  Each $1,000  principal amount of 1 1/8% Debentures is convertible into
19.3125  shares of the  Company's  Class A Special  Common  Stock.  The  Company
anticipates  using available  borrowings  under a subsidiary  credit facility to
fund  amounts  redeemed  for  cash,  if  any.  In the  first  quarter  of  1998,
stockholders'  equity  will  be  increased  by  the  full  amount  of the 1 1/8%
Debentures  converted,  if any, plus accrued  interest,  less  unamortized  debt
acquisition costs.

In December  1997,  Comcast UK Holdings  Ltd.  ("UK  Holdings"),  a wholly owned
subsidiary of Comcast UK Cable,  entered into a loan agreement with a consortium
of banks  to  provide  financing  under a  revolving  credit  facility  (the "UK
Holdings  Credit  Facility") up to a maximum of (UK Pound)200.0  million.  There
were no borrowings  under the UK Holdings  Credit Facility at December 31, 1997.
In January  1998,  UK Holdings  borrowed  (UK  Pound)75.0  million  under the UK
Holdings  Credit  Facility.  The UK Holdings Credit Facility bears interest at a
rate per annum equal to the London Interbank Offered Rate ("LIBOR") plus 1/2% to
2 1/4%.  Amounts available under the UK Holdings Credit Facility will be reduced
each quarter in varying amounts beginning March 31, 2000 and continuing  through
December 31, 2000.  Final maturity of the UK Holdings Credit Facility is January
31, 2001.  Borrowings  under the UK Holdings  Credit  Facility are guaranteed by
certain of Comcast UK Cable's wholly owned subsidiaries.

In October  1997,  the Company  completed the  redemption of its $250.0  million
principal amount 3 3/8% / 5 1/2% step up convertible subordinated debentures due
2005 (the "Step Up Debentures"). The Company issued 8.4 million shares

                                     - 30 -
<PAGE>
of its Class A Special Common Stock upon conversion of $206.4 million  principal
amount of Step Up  Debentures  while $43.6 million  principal  amount of Step Up
Debentures  was  redeemed  for  cash at a  redemption  price of  105.58%  of the
principal amount,  together with accrued interest thereon.  Stockholders' equity
was  increased by the full amount of Step Up Debentures  converted  plus accrued
interest, less unamortized debt acquisition costs. The issuance of the Company's
Class A Special  Common Stock upon  conversion of the Step Up Debentures  had no
impact on the Company's  consolidated statement of cash flows due to its noncash
nature.

In October 1997,  Comcast Cellular (see below) refinanced its existing revolving
credit  facility with the proceeds from  borrowings  under a new $400.0  million
credit  agreement  (the  "New  Bank  Facility")  with  certain  banks.   Initial
borrowings  under the New Bank Facility were used  principally to repay existing
debt.

In  June  1997,  the  Company  redeemed  for  cash  all of its  outstanding  10%
Subordinated Debentures, due 2003 (the "10% Debentures"). An aggregate principal
amount of $139.3  million of the 10%  Debentures  was  redeemed at a  redemption
price of 100% of the principal  amount thereof,  together with accrued  interest
thereon. On the date of redemption,  the 10% Debentures had an accreted value of
$127.7 million.

In May 1997,  Comcast Cable  Communications,  Inc.  ("Comcast  Cable"), a wholly
owned  subsidiary of the Company,  completed the sale of $1.7 billion  principal
amount of notes (the "Cable Notes") through a private offering with registration
rights.  The Cable Notes were issued in four tranches:  $300.0 million principal
amount of 8 1/8% Notes due 2004, $600.0 million principal amount of 8 3/8% Notes
due 2007,  $550.0 million  principal  amount of 8 7/8% Notes due 2017 and $250.0
million  principal  amount  of  8  1/2%  Notes  due  2027.  Comcast  Cable  used
substantially  all of the net  proceeds  from the offering of the Cable Notes to
repay certain of its subsidiaries'  notes payable to banks with the balance used
for subsidiary general purposes.  Collectively,  the offering of the Cable Notes
and the repayment of the aforementioned notes payable with the net proceeds from
the  offering  of  the  Cable  Notes  are  referred  to  herein  as  the  "Cable
Refinancing."

In May 1997, Comcast Cellular  Corporation  (formerly Comcast Cellular Holdings,
Inc.) ("Comcast Cellular"), a wholly owned subsidiary of the Company,  completed
the sale of $1.0 billion  principal  amount of 9 1/2% Senior Notes due 2007 (the
"Cellular Notes") through a private offering with registration  rights.  Comcast
Cellular  used  the  net  proceeds  from  the  offering  to  redeem  its  senior
participating  redeemable  zero  coupon  notes  and  repay  existing  subsidiary
indebtedness.   Collectively,  the  offering  of  the  Cellular  Notes  and  the
redemption and the repayments of the aforementioned  notes with the net proceeds
from the offering of the Cellular  Notes are referred to herein as the "Cellular
Refinancing."

In October 1997,  Comcast Cable and Comcast  Cellular  completed the exchange of
the Cable Notes and the Cellular Notes for new notes (with the same terms) which
were registered under the Securities Act of 1933, as amended.

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  were  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.

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 could purchase,
at such times and on such terms as it deemed  appropriate,  up to $500.0 million
of its outstanding common equity securities, subject to certain restrictions and
market  conditions.  Based on the trade date for stock  repurchases,  during the
years ended  December  31,  1997,  1996 and 1995,  the Company  repurchased  2.3
million  shares,  10.5 million shares and 680,000 shares,  respectively,  of its
common stock for aggregate  consideration  of $36.2 million,  $180.0 million and
$12.4 million, respectively, pursuant to the Repurchase Program. During the term
of the  Repurchase  Program,  which  terminated  on May 13,  1997,  the  Company
repurchased  a total of 13.5 million  shares of its common  stock for  aggregate
consideration of $228.6 million.

                                     - 31 -
<PAGE>
Interest Rate and Foreign Currency Exchange Rate 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.

Interest Rate Risk

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 table set forth  below  summarizes  the fair  values and  contract  terms of
financial instruments subject to interest rate risk maintained by the Company as
of December 31, 1997 (dollars in millions):

<TABLE>
<CAPTION>
                                               Expected Maturity Date                                     Fair Value at
                                  1998       1999       2000       2001       2002    Thereafter   Total     12/31/97
<S>                               <C>         <C>       <C>       <C>        <C>      <C>        <C>        <C>     
Debt

Fixed Rate....................     $43.9       $9.1      $19.7     $226.2     $101.2   $4,548.7   $4,948.8   $5,380.0
   Average Interest Rate......     10.4%       8.9%       8.2%       9.5%       8.6%       9.0%       9.0%

Variable Rate.................     $88.8     $198.8     $282.1     $347.4     $389.3     $436.1   $1,742.5   $1,742.5
   Average Interest Rate......      6.5%       6.8%       6.8%       6.9%       6.9%       6.8%       6.8%

Interest Rate Instruments

Variable to Fixed Swaps.......    $100.0      $50.0     $450.0                                      $600.0       $4.3
   Average Pay Rate...........      5.7%       5.7%       5.5%                                        5.6%
   Average Receive Rate.......      5.9%       6.0%       6.1%                                        6.1%
Caps..........................    $150.0                                                            $150.0       $ --
   Average Cap Rate...........      6.7%                                                              6.7%
Collar........................     $50.0                                                             $50.0       $0.2
   Average Cap Rate...........      7.0%                                                              7.0%
   Average Floor Rate.........      4.9%                                                              4.9%
</TABLE>

The notional  amounts of interest  rate  instruments,  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. Interest rates on variable
debt are estimated by the Company using the average  implied forward LIBOR rates
for the year of maturity based on the yield curve in effect at December 31, 1997
plus the  borrowing  margin in effect for each credit  facility at December  31,
1997.  Average receive rates on the Variable to Fixed Swaps are estimated by the
Company using the average  implied  forward LIBOR rates for the year of maturity
based on the yield curve in effect at December 31, 1997.  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, 1997, 1996 and 1995 was not significant.

                                     - 32 -
<PAGE>
Foreign Currency Exchange Rate Risk

The Company has entered into certain  foreign  exchange  option  contracts  ("FX
Options")  as a normal part of its foreign  currency  risk  management  efforts.
These FX Options 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.  During 1995,  Comcast UK Cable entered into certain
foreign  exchange put option  contracts ("FX Puts") which may be settled only on
November  16, 2000.  As of December 31, 1997 and 1996,  Comcast UK Cable had (UK
Pound)250.0  million  notional  amount of FX Puts to  purchase  US dollars at an
exchange rate of $1.35 per (UK 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,  1997 and  1996,  the FX Puts had
carrying values of $13.1 million and $18.4 million,  respectively, and estimated
fair  values of $5.2  million and $5.5  million,  respectively.  The  difference
between the carrying  amount and the estimated fair value of the FX Puts was not
significant as of December 31, 1995.

In 1995,  in order to  reduce  hedging  costs,  Comcast  UK Cable  sold  foreign
exchange call option contracts ("FX Calls") to exchange (UK 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, (UK Pound)200.0 million notional amount, with an exchange ratio
of $1.70 per (UK  Pound)1.00,  expired  unexercised  in November  1996 while the
remaining  contract,  with  a (UK  Pound)50.0  million  notional  amount  and an
exchange ratio of $1.62 per (UK  Pound)1.00,  has a settlement  date in November
2000. In 1996, in order to continue to reduce  hedging  costs,  Comcast UK Cable
sold  additional  FX Calls,  for  proceeds  of $3.5  million,  to  exchange  (UK
Pound)200.0  million  notional amount at an average  exchange ratio of $1.75 per
(UK  Pound)1.00.  These contracts  expired  unexercised in 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, 1997 and 1996,  the estimated  fair value of the  liabilities
related to the FX Calls,  as  recorded  in the  Company's  consolidated  balance
sheet, was $4.4 million and $12.2 million,  respectively.  Changes in fair value
between measurement dates relating to the FX Calls resulted in exchange gains of
$7.4 million and exchange losses of $2.2 million during the years ended December
31, 1997 and 1996,  respectively.  There were no  significant  exchange gains or
losses relating to these contracts during the year ended December 31, 1995.

The table set forth  below  summarizes  the fair  values and  contract  terms of
financial   instruments,   subject  to  foreign  currency  exchange  rate  risk,
maintained by the Company (dollars in millions):

<TABLE>
<CAPTION>
                                                              Expected        Fair Value at
                                                            Maturity 2007       12/31/97
<S>                                                       <C>              <C>   
On Balance Sheet Financial Instruments

(UK Pound)UK Functional Currency:
   Long-term debt ($US) at accreted value............            $378.3           $417.7
     Average interest rate...........................             11.20%

                                                              Expected        Fair Value at
                                                            Maturity 2000     12/31/97 (1)
Foreign Exchange Rate Derivatives

(UK Pound)UK Functional Currency:
   FX Puts
     Contract amount.................................            $337.5             $5.2
     Exchange rate ($US/(UK Pound)UK)................              1.35
   FX Calls
     Contract amount.................................             $81.0            ($4.4)
     Exchange rate ($US/(UK Pound)UK)................              1.62
<FN>
---------------
(1)  The estimated fair value  approximates  the proceeds  (costs) to settle the
     outstanding contracts.
</FN>
</TABLE>

                                     - 33 -
<PAGE>
Equity Price Risk

As part of the Repurchase Program, the Company sold put options on shares of its
Class A Special  Common Stock.  Put options on 4.0 million  shares,  sold by the
Company  during 1996 and 1995 and  outstanding  at December  31,  1996,  expired
unexercised  during the first  quarter of 1997.  Upon  expiration,  the  Company
reclassified  $69.6  million,  the amount it would have been obligated to pay to
repurchase  such shares had the put options been  exercised,  from common equity
put options to additional capital in the Company's consolidated balance sheet.

As part of the Repurchase  Program,  in April 1997, the Company sold put options
on 2.0 million shares of its Class A Special Common Stock.  The put options give
the holder the right to require the Company to repurchase  such shares at $15.68
per share on specific  dates in April and May 1998. The amount the Company would
be obligated to pay to repurchase  such shares upon exercise of the put options,
totaling $31.4 million,  has been reclassified from additional capital to common
equity put  options in the  Company's  December  31, 1997  consolidated  balance
sheet.  The  difference  between the proceeds from the sale of these put options
and their estimated fair value was not significant as of December 31, 1997.

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

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  increased $82.4 million as of December 31, 1997 from
December  31, 1996 and  decreased  $207.8  million as of December  31, 1996 from
December 31, 1995. Changes in cash and cash equivalents resulted from cash flows
from operating, financing and investing activities as explained below.

Net cash provided by operating  activities  amounted to $916.0  million,  $799.6
million and $520.7 million for the years ended December 31, 1997, 1996 and 1995,
respectively.  The increases of $116.4  million and $278.9  million from 1996 to
1997 and 1995 to 1996 were  principally  due to the  increase  in the  Company's
operating  income  before   depreciation  and  amortization   (see  "Results  of
Operations"),  including the effects of the Scripps  Acquisition  and changes in
working capital as a result of the timing of receipts and disbursements.

Net  cash  provided  by (used  in)  financing  activities,  which  includes  the
issuances and  repurchases of securities as well as borrowings and repayments of
debt, was $355.6 million, ($81.2) million and $2.036 billion for the years ended
December  31,  1997,  1996 and 1995,  respectively.  During  1997,  the  Company
borrowed  $3.045  billion,  including  the Cable  Notes of $1.691  billion,  the
Cellular  Notes of  $998.4  million,  the  Disney  Notes of $132.8  million  and
borrowings under its existing lines of credit,  and repaid $3.580 billion of its
long-term  debt,  including  $1.665 billion  relating to the Cable  Refinancing,
$981.8 million relating to the Cellular  Refinancing,  $43.6 million relating to
the  redemption of the Step Up  Debentures  and $139.3  million  relating to the
redemption of the 10% Debentures. Deferred financing costs of $44.9 million were
incurred during 1997 related  principally to the issuance of the Cable Notes and
the Cellular Notes. In addition,  during 1997, the Company received $1.0 billion
from Microsoft  Corporation for the issuance of its Class A Special Common Stock
and Series B Preferred Stock,  repurchased $33.6 million of its common stock and
paid cash  dividends on its Common  Stock and Series A Preferred  Stock of $34.0
million. 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 and cash  dividends paid on
its common stock and Series A Preferred  Stock  totaled  $26.8  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 PCS,
$300.0 million of the 2007 Discount Debentures,

                                     - 34 -
<PAGE>
$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.  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. Deferred financing costs of $43.5 million incurred during 1995 related
principally  to the  refinancing of certain  indebtedness  and borrowings of the
2007  Discount  Debentures.  In  addition,  during  1995,  the Company paid cash
dividends on its common stock of $22.4 million.

Net cash used in investing  activities  was $1.189  billion,  $926.2 million and
$2.353  billion  for  the  years  ended  December  31,  1997,   1996  and  1995,
respectively.  During  1997,  net cash  used in  investing  activities  includes
acquisitions, net of cash acquired, of $170.1 million, relating primarily to the
acquisition of E!  Entertainment,  investments in affiliates of $268.7  million,
including  capital  contributions  to Sprint PCS of $144.3 million,  and capital
expenditures of $925.5 million.  Cash proceeds from investing activities include
proceeds  from the sales of and  distributions  from  short-term  and  long-term
investments  of $216.7  million,  including  $98.4  million from sales of Nextel
Communications,  Inc. ("Nextel") common stock and options and $68.9 million from
the  sale of TCGI  Class A  Stock.  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 PCS 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., 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 PCS 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.

Results of Operations

The effects of the Company's recent acquisitions, as well as increased levels of
capital expenditures,  were 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").

                                     - 35 -
<PAGE>
Summarized  consolidated  financial  information  for the  Company for the three
years ended December 31, 1997 is as follows  (dollars in millions,  "NM" denotes
percentage is not meaningful):

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                     December 31,            Increase/(Decrease)
                                                                   1997         1996           $             %
<S>                                                           <C>          <C>            <C>           <C>  
Revenues......................................................   $4,912.6     $4,038.4       $874.2        21.6%
Cost of goods sold from electronic retailing..................    1,270.2      1,114.2        156.0        14.0
Operating, selling, general and administrative expenses.......    2,173.9      1,717.0        456.9        26.6
                                                                 --------     --------
Operating income before depreciation and amortization (1) ....    1,468.5      1,207.2        261.3        21.6
Depreciation..................................................      474.3        314.6        159.7        50.8
Amortization..................................................      462.1        383.7         78.4        20.4
                                                                 --------     --------
Operating income..............................................      532.1        508.9         23.2         4.6
                                                                 --------     --------
Interest expense..............................................      564.9        540.8         24.1         4.5
Investment income.............................................     (137.1)      (122.6)        14.5        11.8
Equity in net losses of affiliates............................      330.1        144.8        185.3          NM
Gain from equity offering of affiliate........................       (7.7)       (40.6)       (32.9)      (81.0)
Other.........................................................       11.0          2.6          8.4          NM
Income tax expense............................................       55.6         84.4        (28.8)      (34.1)
Minority interest.............................................      (76.2)       (48.0)        28.2        58.8
Extraordinary items...........................................      (30.2)        (1.0)        29.2          NM
                                                                 --------     --------
Net loss......................................................    ($238.7)      ($53.5)      $185.2          NM
                                                                 ========     ========
</TABLE>
<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..................    1,114.2        900.8        213.4        23.7
Operating, selling, general and administrative expenses.......    1,717.0      1,443.3        273.7        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)         NM
Income tax expense............................................       84.4         42.1         42.3          NM
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%
                                                                 ========     ========
<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,  although the Company's  measure of operating cash flow may not
     be comparable to similarly  titled measures of other  companies.  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>

                                     - 36 -
<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  cable  communications  operations;  "Electronic
Retailing,"  the most  significant  of the  Company's  content  businesses;  and
"Cellular    Communications,"    the   most   significant   of   the   Company's
cellular/personal  communications services  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

As a result of the Scripps Acquisition,  the Company commenced consolidating the
financial  results of Scripps Cable  effective  November 1, 1996.  The following
table presents actual financial information for the year ended December 31, 1997
and pro forma  financial  information  for the years ended December 31, 1996 and
1995 as if the  Scripps  Acquisition  occurred  on January  1,  1995.  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
Scripps Cable since January 1, 1995 (dollars in millions):

<TABLE>
<CAPTION>
                                                          Year Ended
                                                         December 31,
                                                                     Pro Forma                 Increase
                                                     1997              1996               $                 %
<S>                                                 <C>              <C>                <C>                <C> 
Service income...................................   $2,073.0         $1,893.8           $179.2             9.5%
Operating, selling, general and
     administrative expenses.....................    1,085.3            979.1            106.2            10.8
                                                    --------         --------           ------
Operating income before depreciation
     and amortization (a)........................     $987.7           $914.7            $73.0             8.0%
                                                    ========         ========           ======
</TABLE>
<TABLE>
<CAPTION>
                                                          Year Ended
                                                         December 31,
                                                   Pro Forma         Pro Forma                 Increase
                                                     1996              1995               $                 %
<S>                                                 <C>              <C>                <C>                <C> 
Service income...................................   $1,893.8         $1,729.7           $164.1             9.5%
Operating, selling, general and
     administrative expenses.....................      979.1            892.6             86.5             9.7
                                                    --------         --------           ------
Operating income before depreciation
     and amortization (a)........................     $914.7           $837.1            $77.6             9.3%
                                                    ========         ========           ======
<FN>
---------------
(a) See footnote (1) on page 36.
</FN>
</TABLE>

Of the respective  $179.2 million and $164.1 million increases in service income
for the years ended December 31, 1997 and 1996,  $38.1 million and $45.8 million
are attributable to subscriber growth,  $122.8 million and $101.0 million relate
to changes in rates,  $11.0 million and $5.5 million are  attributable to growth
in cable  advertising  sales and $7.3 million and $11.8 million  relate to other
product offerings.

Of the  respective  $106.2  million and $86.5  million  increases in  operating,
selling,  general and  administrative  expenses for the years ended December 31,
1997 and 1996,  $27.9 million and $34.7 million are attributable to increases in
the costs of cable  programming  as a result of  subscriber  growth,  additional
channel  offerings  and changes in rates,  $19.2  million and $13.5  million are
attributable  to increases  in costs  associated  with  customer  service,  $7.7
million and $4.5 million are attributable to growth in cable  advertising  sales
and $51.4 million and $33.8 million result from increases in the costs of labor,
other volume related expenses and costs  associated with new product  offerings.
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.

                                     - 37 -
<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 years ended December 31, 1997 and
1996 and pro forma financial information for the year ended December 31, 1995 as
if the QVC  Acquisition  occurred  on  January  1,  1995.  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, 1995 (dollars in millions):
<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                         Increase
                                                     1997              1996               $                 %
<S>                                                 <C>              <C>                <C>               <C>  
Net sales from electronic retailing..............   $2,082.5         $1,835.8           $246.7            13.4%
Cost of goods sold from electronic retailing.....    1,270.2          1,114.2            156.0            14.0
Operating, selling, general and administrative
     expenses....................................      474.6            421.3             53.3            12.7
                                                    --------         --------           ------
Operating income before depreciation
     and amortization (a)........................     $337.7           $300.3            $37.4            12.5%
                                                    ========         ========           ======

Gross margin.....................................       39.0%            39.3%
                                                    ========         ========
</TABLE>
<TABLE>
<CAPTION>
                                                          Year Ended
                                                         December 31,
                                                                     Pro Forma                 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.....    1,114.2            978.8            135.4            13.8
Operating, selling, general and administrative
     expenses....................................      421.3            385.0             36.3             9.4
                                                    --------         --------           ------
Operating income before depreciation
     and amortization (a)........................     $300.3           $255.4            $44.9            17.6%
                                                    ========         ========           ======

Gross margin.....................................       39.3%            39.6%
                                                    ========         ========
<FN>
---------------
(a) See footnote (1) on page 36.
</FN>
</TABLE>

The  respective  increases  in net sales  from  electronic  retailing  of $246.7
million and $216.6  million for the years ended  December  31, 1997 and 1996 are
primarily  attributable to the effects of 7.4% and 7.2% increases,  respectively
in the average  number of homes  receiving  QVC services in the US and 13.7% and
36.5%  increases,  respectively,  in the average  number of homes  receiving QVC
services in the UK.

An allowance for returned merchandise is provided as a percentage of sales based
on historical  experience.  The return provision was  approximately 21% of gross
sales for each of the years ended December 31, 1997, 1996 and 1995.

The  increases in cost of goods sold from  electronic  retailing  are  primarily
related to the growth in net sales.  The changes in gross margin  between  these
periods are primarily due to slight changes in product mix from year to year.

Of the respective  increases in operating,  selling,  general and administrative
expenses of $53.3  million and $36.3  million for the years ended  December  31,
1997 and 1996, $25.5 million and $6.0 million are attributable to start-up costs
incurred by QVC in  Germany,  which began  operations  in the fourth  quarter of
1996,  and the remaining  increases are primarily  attributable  to higher sales
volume,  increases in advertising costs and additional costs associated with new
businesses,  offset,  in  part,  by the  reduction  in  expenses  realized  upon
consolidation of QVC's multichannel operations in 1996.

                                     - 38 -
<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
                                                     1997              1996               $                 %
<S>                                                 <C>              <C>               <C>               <C> 
Service income...................................     $444.9           $426.1            $18.8             4.4%
Operating, selling, general and administrative
     expenses....................................      269.5            265.9              3.6             1.4
                                                      ------           ------            -----
Operating income before depreciation
     and amortization (a)........................     $175.4           $160.2            $15.2             9.5%
                                                      ======           ======            =====
</TABLE>

<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%
                                                      ======           ======            =====
<FN>
---------------
(a) See footnote (1) on page 36.
</FN>
</TABLE>

Of the  respective  $18.8 million and $51.2 million  increases in service income
for the years ended December 31, 1997 and 1996, $18.2 million and $69.6 million,
respectively,  are  attributable  to the Company's  subscriber  growth and $15.4
million  and  $500,000,   respectively,   are  attributable  to  roamer  growth.
Offsetting  the  increases  are  decreases of $14.8  million and $18.9  million,
respectively,  resulting  primarily  from a reduction  in the  average  rate per
minute of use as a result of promotional and free minutes provided to customers.

The $3.6 million  increase in  operating,  selling,  general and  administrative
expenses from 1996 to 1997 is primarily attributable to a $10.5 million increase
in fixed costs related to retail centers. Offsetting this increase is a decrease
of $6.9 million primarily  attributable to expense  reductions  achieved through
implementation of fraud management  programs,  improved bad debt experience as a
result of  stronger  credit  procedures  and a  reduction  in  commission  costs
resulting  from fewer gross  subscriber  additions  in 1997.  The $28.8  million
increase in operating, selling, general and administrative expenses from 1995 to
1996 is primarily attributable to a $24.3 million increase related to subscriber
growth,  including the costs to acquire and service  subscribers.  The remaining
increase of $4.5 million is primarily  due to increases in customer  service and
administrative  costs,  partially offset by expense reductions  achieved through
implementation of fraud management programs.

Consolidated Analysis

The  $159.7  million  increase  in  depreciation  expense  from  1996 to 1997 is
primarily  attributable to the effects of capital  expenditures  during 1996 and
1997 and the effects of the Scripps  Acquisition.  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.

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.

                                     - 39 -
<PAGE>
The $78.4 million and $34.6 million increases in amortization  expense from 1996
to 1997  and 1995 to  1996,  respectively,  are  primarily  attributable  to the
effects of the  Scripps  Acquisition  in  November  1996 and the  effects of the
QVC Acquisition in February 1995, respectively.

The $24.1  million  increase in interest  expense from 1996 to 1997 is primarily
attributable to an increase in the Company's  weighted  average interest rate on
the Company's  outstanding debt and a decrease in capitalized interest from 1996
to 1997, offset, in part, by a decrease in the Company's  outstanding  long-term
debt.  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 and an  increase in
capitalized interest from 1995 to 1996.

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 $14.5 million  increase in investment  income from 1996 to 1997 is primarily
attributable  to the $68.9  million gain  recognized in 1997 on the sale of TCGI
Class A stock,  offset,  in part, by the $47.3 million gain  recognized upon the
exchange of the shares of Turner  Broadcasting  System, Inc. ("TBS") held by the
Company for Time Warner,  Inc.  ("Time Warner") common stock in 1996 as a result
of the  merger of Time  Warner  and TBS in  October  1996.  The  $107.2  million
decrease  in  investment  income  from  1995 to 1996 is  principally  due 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 common stock in 1996.

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 1995.

In February  1997, in connection  with an  acquisition,  TCGI issued 2.1 million
unregistered  shares  of its  TCGI  Class A  Stock.  As a  result  of the  stock
issuance,  the Company  recorded a $7.7  million  increase in its  proportionate
share of TCGI's net assets as a gain from equity  offering of  affiliate  in its
1997  consolidated  statement  of  operations.  As a result of the TCGI IPO, 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  $185.3  million  and $58.2  million  increases  in equity in net  losses of
affiliates  from  1996 to 1997 and 1995 to  1996,  respectively,  are due to the
timing of investments in and changes in losses incurred by Sprint PCS, TCGI, the
Company's  international  investees,  Comcast-Spectacor  and certain programming
investees,  and the effects of the E! Acquisition.  Based on Sprint PCS' current
operations  and business plan, the Company  anticipates  that its  proportionate
share of Sprint PCS' losses will be significant in future years. In addition, as
a result of the acquisition of E!  Entertainment,  the Company recorded a charge
representing the cumulative amount that would have been recorded had the Company
accounted for its investment in E!  Entertainment  under the equity method since
the date of initial  investment (the "Cumulative  Charge").  Since the Company's
proportionate share of E! Entertainment's cumulative losses was in excess of the
Company's historical cost basis in E! Entertainment and as the Company was under
no contractual obligation to fund the losses of E! Entertainment, the Cumulative
Charge was limited to the Company's historical cost basis of $12.1 million. Such
amount is included in equity in net losses of affiliates  in the Company's  1997
consolidated statement of operations as it is not significant for restatement of
the Company's prior year financial statements.

The $8.4 million and $8.9 million  increases in other  expense from 1996 to 1997
and from 1995 to 1996 are primarily  attributable  to the  settlement of certain
litigation  in 1996 and the  effects of changes  in foreign  exchange  gains and
losses.

The $28.8 million  decrease in income tax expense from 1996 to 1997 is primarily
attributable to the increase in loss before income taxes, offset by increases in
certain non-deductible  expenses, such as goodwill amortization,  foreign losses
and equity in net losses of certain  affiliates.  The $42.3 million  increase in
income tax expense from 1995 to 1996 is primarily  attributable  to the decrease
in loss before income taxes, plus increases in certain non-deductible expenses.

                                     - 40 -
<PAGE>
The $28.2  million  increase  in minority  interest  income from 1996 to 1997 is
primarily attributable to minority interests in the net loss of Comcast UK Cable
and the net income of QVC.

Extraordinary  items for the year ended  December  31, 1997 of $30.2  million or
$.09 per common share consist of  unamortized  debt  acquisition  costs and debt
extinguishment  costs of $47.9 million,  net of the related tax benefit of $17.7
million,  expensed  in  connection  with the  Cable  Refinancing,  the  Cellular
Refinancing, the redemption of the 10% Debentures, the redemption of the Step Up
Debentures and repayments made with the proceeds from the New Bank Facility.

The  extraordinary  item for the year ended  December  31, 1996 of $1.0  million
consists of  unamortized  debt  acquisition  costs of $1.8  million,  net of the
related tax benefit of $800,000, expensed in connection with the prepayment of a
portion of a subsidiary's outstanding debt.

The  extraordinary  item for the year ended December 31, 1995 of $6.1 million or
$.02 per common share consists of debt extinguishment costs of $9.4 million, net
of the related  tax benefit of $3.3  million,  expensed in  connection  with the
refinancing of certain indebtedness.

For  the  years  ended   December  31,  1997,   1996  and  1995,  the  Company's
distributions from investees and earnings before extraordinary items, income tax
expense, equity in net losses of affiliates and fixed charges (interest expense)
were $742.1  million,  $770.0  million and $615.6  million,  respectively.  Such
earnings  were  adequate  to  cover  the  Company's  fixed  charges,   including
capitalized interest of $18.0 million, $32.1 million and $6.4 million, of $582.9
million,  $572.9  million and $531.1  million for the years ended  December  31,
1997, 1996 and 1995, respectively.  The Company's fixed charges include non-cash
interest expense of $75.5 million, $97.0 million and $60.2 million for the years
ended December 31, 1997, 1996 and 1995, respectively.

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.

                                     - 41 -
<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,  1997 and 1996,  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,
1997.  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") (a consolidated  subsidiary)  which  statements
reflect total assets constituting 17% of the Company's consolidated total assets
as of December 31, 1997 and 1996 and total  revenues  constituting  42%, 45% and
44% of the  Company's  consolidated  revenues  for the years ended  December 31,
1997,  1996 and 1995,  respectively.  Those  statements  were  audited  by other
auditors whose report has been  furnished to us, and our opinion,  insofar as it
relates  to  the  amounts  included  in  the  Company's  consolidated  financial
statements for QVC, is based solely upon the report of such 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 report of other auditors provide a reasonable
basis for our opinion.

In our  opinion,  based on our  audits and the  report 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, 1997 and 1996, and the results of their  operations and their cash flows for
each of the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.



Deloitte & Touche LLP

Philadelphia, Pennsylvania
February 27, 1998


                                     - 42 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                                    December 31,
ASSETS                                                                        1997                1996
<S>                                                                        <C>                  <C>     
CURRENT ASSETS
   Cash and cash equivalents.............................................    $413.7               $331.3
   Short-term investments................................................     163.9                208.3
   Accounts receivable, less allowance for doubtful
     accounts of $115.0 and $97.1........................................     498.8                439.3
   Inventories, net......................................................     324.0                258.4
   Other current assets..................................................     159.1                168.5
                                                                          ---------            ---------

       Total current assets..............................................   1,559.5              1,405.8
                                                                          ---------            ---------

INVESTMENTS, principally in affiliates...................................   1,264.3              1,177.7
                                                                          ---------            ---------

PROPERTY AND EQUIPMENT...................................................   4,285.4              3,600.1
   Accumulated depreciation..............................................  (1,388.5)            (1,061.3)
                                                                          ---------            ---------
   Property and equipment, net...........................................   2,896.9              2,538.8
                                                                          ---------            ---------

DEFERRED CHARGES
   Franchise and license acquisition costs...............................   4,920.5              4,895.7
   Excess of cost over net assets acquired and other.....................   4,292.8              3,683.1
                                                                          ---------            ---------
                                                                            9,213.3              8,578.8
   Accumulated amortization..............................................  (2,129.8)            (1,612.5)
                                                                          ---------            ---------
   Deferred charges, net.................................................   7,083.5              6,966.3
                                                                          ---------            ---------

                                                                          $12,804.2            $12,088.6
                                                                          =========            =========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued expenses.................................  $1,195.5             $1,044.3
   Accrued interest......................................................      89.6                 91.1
   Current portion of long-term debt.....................................     132.7                229.5
                                                                          ---------            ---------

       Total current liabilities.........................................   1,417.8              1,364.9
                                                                          ---------            ---------

LONG-TERM DEBT, less current portion.....................................   6,558.6              7,102.7
                                                                          ---------            ---------

DEFERRED INCOME TAXES....................................................   2,112.2              2,140.5
                                                                          ---------            ---------

MINORITY INTEREST AND OTHER..............................................   1,037.7                859.3
                                                                          ---------            ---------

COMMITMENTS AND CONTINGENCIES

COMMON EQUITY PUT OPTIONS................................................      31.4                 69.6
                                                                          ---------            ---------

STOCKHOLDERS' EQUITY
   Preferred stock - authorized, 20,000,000 shares; 
     5% series A convertible, no par value; issued, 
     6,370 at redemption value...........................................      31.9                 31.9
     5.25% series B mandatorily redeemable convertible, 
     $1,000 par value; issued, 513,211 at redemption value...............     513.2
   Class A special common stock, $1 par value - authorized,
     500,000,000 shares; issued, 317,025,969 and 283,281,675 ............     317.0                283.3
   Class A common stock, $1 par value - authorized,
     200,000,000 shares; issued, 31,793,487 and 33,959,368...............      31.8                 34.0
   Class B common stock, $1 par value - authorized,
     50,000,000 shares; issued, 8,786,250 ...............................       8.8                  8.8
   Additional capital....................................................   3,030.6              2,326.6
   Accumulated deficit...................................................  (2,415.9)            (2,127.1)
   Unrealized gains on marketable securities.............................     140.7                  0.1
   Cumulative translation adjustments....................................     (11.6)                (6.0)
                                                                          ---------            ---------

       Total stockholders' equity........................................   1,646.5                551.6
                                                                          ---------            ---------

                                                                          $12,804.2            $12,088.6
                                                                          =========            =========
</TABLE>

See notes to consolidated financial statements.

                                     - 43 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in millions, except per share data)
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1997              1996             1995
<S>                                                                     <C>              <C>               <C>     
REVENUES
   Service income.............................................          $2,830.1         $2,202.6          $1,875.2
   Net sales from electronic retailing........................           2,082.5          1,835.8           1,487.7
                                                                        --------         --------          --------

                                                                         4,912.6          4,038.4           3,362.9
                                                                        --------         --------          --------

COSTS AND EXPENSES
   Operating..................................................           1,239.7            948.7             803.4
   Cost of goods sold from electronic retailing...............           1,270.2          1,114.2             900.8
   Selling, general and administrative........................             934.2            768.3             639.9
   Depreciation...............................................             474.3            314.6             339.9
   Amortization...............................................             462.1            383.7             349.1
                                                                        --------         --------          --------

                                                                         4,380.5          3,529.5           3,033.1
                                                                        --------         --------          --------

OPERATING INCOME..............................................             532.1            508.9             329.8

OTHER (INCOME) EXPENSE
   Interest expense...........................................             564.9            540.8             524.7
   Investment income..........................................            (137.1)          (122.6)           (229.8)
   Equity in net losses of affiliates.........................             330.1            144.8              86.6
   Gain from equity offering of affiliate.....................              (7.7)           (40.6)
   Other......................................................              11.0              2.6              (6.3)
                                                                        --------         --------          --------

                                                                           761.2            525.0             375.2
                                                                        --------         --------          --------

LOSS BEFORE INCOME TAX EXPENSE, MINORITY
   INTEREST AND EXTRAORDINARY ITEMS...........................            (229.1)           (16.1)            (45.4)

INCOME TAX EXPENSE............................................              55.6             84.4              42.1
                                                                        --------         --------          --------

LOSS BEFORE MINORITY INTEREST AND EXTRAORDINARY
   ITEMS......................................................            (284.7)          (100.5)            (87.5)

MINORITY INTEREST.............................................             (76.2)           (48.0)            (49.7)
                                                                        --------         --------          --------

LOSS BEFORE EXTRAORDINARY ITEMS...............................            (208.5)           (52.5)            (37.8)

EXTRAORDINARY ITEMS ..........................................             (30.2)            (1.0)             (6.1)
                                                                        --------         --------          --------

NET LOSS......................................................            (238.7)           (53.5)            (43.9)

PREFERRED DIVIDENDS...........................................             (14.8)            (0.7)
                                                                        --------         --------          --------

NET LOSS FOR COMMON STOCKHOLDERS..............................           ($253.5)          ($54.2)           ($43.9)
                                                                        ========         ========          ========

LOSS FOR COMMON STOCKHOLDERS PER COMMON SHARE
   Loss before extraordinary items............................             ($.66)           ($.21)            ($.16)
   Extraordinary items........................................              (.09)                              (.02)
                                                                        --------         --------          --------

     Net loss.................................................             ($.75)           ($.21)            ($.18)
                                                                        ========         ========          ========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING ...............................................             339.0            247.6             239.7
                                                                        ========         ========          ========
</TABLE>

See notes to consolidated financial statements.

                                     - 44 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                         1997              1996             1995
<S>                                                                   <C>               <C>               <C>    
OPERATING ACTIVITIES
   Net loss...................................................           ($238.7)          ($53.5)           ($43.9)
   Adjustments to reconcile net loss to net cash provided
    by operating activities:
     Depreciation.............................................             474.3            314.6             339.9
     Amortization.............................................             462.1            383.7             349.1
     Non-cash interest expense, net...........................              51.3             62.2              53.8
     Equity in net losses of affiliates.......................             330.1            144.8              86.6
     Gain from equity offering of affiliate...................              (7.7)           (40.6)
     Gains on sale of a subsidiary............................                                                 (5.5)
     Gains on long-term investments, net......................             (81.0)           (69.2)           (183.0)
     Minority interest........................................             (76.2)           (48.0)            (49.7)
     Extraordinary items......................................              30.2              1.0               6.1
     Deferred income taxes and other..........................             (56.6)            14.0             (15.7)
                                                                        --------           ------          -------- 
                                                                           887.8            709.0             537.7

     Increase in accounts receivable, net.....................             (35.2)           (38.2)            (62.4)
     Increase in inventories, net.............................             (65.6)            (5.8)            (57.5)
     Decrease (increase) in other current assets..............               6.4              0.6             (23.3)
     Increase in accounts payable and accrued expenses........             109.5            114.9             114.3
     Increase in accrued interest.............................              13.1             19.1              11.9
                                                                        --------           ------          -------- 

       Net cash provided by operating activities..............             916.0            799.6             520.7
                                                                        --------           ------          -------- 

FINANCING ACTIVITIES
   Proceeds from borrowings...................................           3,044.5            839.5           3,728.2
   Retirement and repayment of debt...........................          (3,580.3)          (734.4)         (1,619.6)
   Issuance of preferred stock................................             500.0
   Issuances (repurchases) of common stock, net...............             470.2           (175.9)             (7.1)
   Equity contribution to a subsidiary........................                                                  6.6
   Dividends..................................................             (34.0)           (26.8)            (22.4)
   Deferred financing costs...................................             (44.9)            (5.0)            (43.5)
   Other......................................................               0.1             21.4              (6.5)
                                                                        --------           ------          -------- 

       Net cash provided by (used in) financing activities....             355.6            (81.2)          2,035.7
                                                                        --------           ------          -------- 

INVESTING ACTIVITIES
   Acquisitions, net of cash acquired.........................            (170.1)           (60.4)         (1,386.0)
   Proceeds from sales (purchases) of short-term investments, net           45.6            210.2            (240.8)
   Investments, principally in affiliates.....................            (268.7)          (502.0)           (480.2)
   Proceeds from sales of and distributions from investments,
     principally in affiliates................................             171.1            167.5             410.5
   Proceeds from investees' repayments of loans...............              30.6
   Capital expenditures.......................................            (925.5)          (670.4)           (623.0)
   Additions to deferred charges..............................             (61.5)           (38.9)            (34.4)
   Other......................................................             (10.7)           (32.2)              1.3
                                                                        --------           ------          -------- 

       Net cash used in investing activities..................          (1,189.2)          (926.2)         (2,352.6)
                                                                        --------           ------          -------- 

INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS...........................................              82.4           (207.8)            203.8

CASH AND CASH EQUIVALENTS, beginning of year..................             331.3            539.1             335.3
                                                                        --------           ------          -------- 

CASH AND CASH EQUIVALENTS, end of year........................            $413.7           $331.3            $539.1
                                                                        ========           ======          ======== 
</TABLE>

See notes to consolidated financial statements.

                                     - 45 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
                                                                                                     Unrealized
                                   Preferred Stock           Common Stock                    Accum-   Gains on   Cumulative
                                  Series    Series    Class A                    Additional  ulated  Marketable  Translation
                                     A        B       Special   Class A  Class B   Capital   Deficit Securities  Adjustments  Total

<S>                                <C>      <C>        <C>       <C>        <C>    <C>     <C>           <C>      <C>       <C>     
BALANCE, JANUARY 1, 1995............$       $          $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, common,
    $.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)             (41.4)    (133.2)                        (185.4)
 Cash dividends, common,
    $.0933 per share................                                                           (26.1)                         (26.1)
 Cash dividends, Series A preferred.                                                 (0.7)                                     (0.7)
 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  2,326.6   (2,127.1)     0.1       (6.0)     551.6

 Net loss...........................                                                          (238.7)                        (238.7)
 Issuance of common stock...........                     24.9                       475.4                                     500.3
 Issuance of preferred stock........          500.0                                                                           500.0
 Exercise of options................                      1.0                        14.8                                      15.8
 Conversion of convertible 
   subordinated debt to common 
   stock............................                      8.4                       210.1                                     218.5
 Retirement of common stock.........                     (0.6)    (2.2)             (22.3)     (17.7)                         (42.8)
 Cash dividends, common,
   $.0933 per share.................                                                           (32.4)                         (32.4)
 Cash dividends, Series A preferred.                                                 (1.6)                                     (1.6)
 Series B preferred dividends.......           13.2                                 (13.2)
 Temporary equity related to put 
   options .........................                                                 38.2                                      38.2
 Proceeds from sales and extensions
   of put options...................                                                  2.6                                       2.6
 Unrealized gains on marketable
   securities, net of deferred taxes
   of $75.8.........................                                                                    140.6                 140.6
 Cumulative translation adjustments.                                                                                (5.6)      (5.6)
                                    -----    ------    ------    -----      ---- --------  ---------   ------     ------   --------

BALANCE, DECEMBER 31, 1997..........$31.9    $513.2    $317.0    $31.8      $8.8 $3,030.6  ($2,415.9)  $140.7     ($11.6)  $1,646.5
                                    =====    ======    ======    =====      ==== ========  =========   ======     ======   ========
</TABLE>

See notes to consolidated financial statements.

                                     - 46 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


1.   BUSINESS

     Comcast  Corporation  and its  subsidiaries  (the "Company") is principally
     engaged in the  development,  management  and operation of broadband  cable
     networks, cellular and personal communications systems and the provision of
     content.

     Cable communications includes cable and telecommunications  services in the
     United  States  ("US")  and  the  United  Kingdom  ("UK").   The  Company's
     consolidated  domestic cable operations  served  approximately  4.4 million
     subscribers and passed  approximately  7.1 million homes as of December 31,
     1997.  The Company  owns a 50% interest in Garden  State  Cablevision  L.P.
     ("Garden State"), a cable communications  company serving more than 208,000
     subscribers and passing more than 297,000 homes in the State of New Jersey.
     Satellite-delivered  video service is provided through the Company's equity
     interest in and distribution  arrangements  with Primestar  Partners,  L.P.
     ("Primestar") (see Note 4). 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 (see Notes 3 and 4).

     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 8.2 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.   Personal
     communications   services   ("PCS")  are  provided  through  the  Company's
     investment in Sprint Spectrum Holdings Company,  L.P. ("Sprint Spectrum" or
     "Sprint PCS") (see Note 4).

     Content is provided through the Company's majority-owned, subsidiaries QVC,
     Inc. ("QVC"), an electronic retailer and E! Entertainment Television,  Inc.
     ("E! Entertainment") (see Note 3), and other investments, including Comcast
     SportsNet,  The Golf Channel,  The Speedvision Network and The Outdoor Life
     Network. Through QVC, the Company markets a wide variety of products and is
     available to, on a full and part-time  basis,  over 68 million homes in the
     US, over 6.5 million homes in the UK and over 9.5 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, 1997 and 1996 are net assets of foreign subsidiaries of $141.1
     million and $143.7 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

                                     - 47 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     as of  December  31,  1997 and  1996,  and  have  not been  comprehensively
     revalued for purposes of these consolidated financial statements since such
     dates.

     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 average cost method,
     which approximates 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 20 to 30 years,  which is  consistent  with the
     estimated lives of the underlying assets.

     Unrestricted  publicly  traded  investments are classified as available for
     sale and  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.

     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.

                                     - 48 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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.

     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.  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.  The Company's  policy is to allow  customers to
     return merchandise for credit up to thirty days after date of shipment.  An
     allowance  for returned  merchandise  is provided as a percentage  of sales
     based on historical experience.  The return provision was approximately 21%
     of gross  sales for each of the years ended  December  31,  1997,  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,"  which  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 No. 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). 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,
     1997,  1996 and 1995 was $18.0  million,  $32.1  million and $6.4  million,
     respectively.

                                     - 49 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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.

     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"),  foreign  exchange  option
     contracts  ("FX  Options"),  and common  stock  option  contracts  ("Equity
     Options") to manage its exposure to fluctuations in interest rates, foreign
     currency exchange rates and prices of its Class A Special Common Stock, par
     value $1.00 per share (the "Class A Special Common Stock").

     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 remaining term of the underlying debt. Unrealized gains and losses
     as a result of these  instruments are recognized when the underlying hedged
     item is extinguished or otherwise terminated.

     Written FX 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.

     Proceeds  from sales of Equity  Options  written on the  Company's  Class A
     Special  Common  Stock are recorded in  stockholders'  equity and an amount
     equal to the  redemption  price of the common  stock is  reclassified  from
     permanent  equity to  temporary  equity.  Subsequent  changes in the market
     value of the Equity Options are not recorded.

     Those  instruments  that have been  entered  into by the  Company  to hedge
     exposure to  interest  rate and foreign  currency  exchange  rate risks are
     periodically  examined by the Company to ensure  that the  instruments  are
     matched with underlying liabilities, reduce the Company's risks relating to
     interest rates and foreign  currency  exchange rates,  and,  through market
     value and sensitivity analysis, maintain a high correlation to the interest
     expense or underlying value of the hedged item. For those  instruments that
     do not  meet  the  above  criteria,  variations  in their  fair  value  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  1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
     Income."  This  statement,  which  establishes  standards for reporting and
     disclosure of comprehensive income, is effective for interim and annual

                                     - 50 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     periods  beginning after December 15, 1997,  although  earlier  adoption is
     permitted.  Reclassification  of financial  information for earlier periods
     presented for comparative  purposes is required under SFAS No. 130. As this
     statement   only   requires   additional   disclosures   in  the  Company's
     consolidated financial statements, its adoption will not have any impact on
     the Company's consolidated financial position or results of operations. The
     Company will adopt SFAS No. 130 effective January 1, 1998.

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures about Segments of
     an Enterprise and Related  Information." This statement,  which establishes
     standards for the reporting of  information  about  operating  segments and
     requires the reporting of selected  information about operating segments in
     interim financial statements, is effective for fiscal years beginning after
     December   15,   1997,   although   earlier   application   is   permitted.
     Reclassification  of segment  information for earlier periods presented for
     comparative  purposes is required  under SFAS No. 131. The Company does not
     expect  adoption of this statement to result in significant  changes to its
     presentation  of  financial  data by business  segment  (see Note 10).  The
     Company will adopt SFAS No. 131 effective January 1, 1998.

     Loss for Common Stockholders Per Common Share
     Loss for common  stockholders  per common share is computed by dividing net
     loss and loss before  extraordinary  items,  after  deduction  of preferred
     stock   dividends,   by  the  weighted  average  number  of  common  shares
     outstanding during the period.

     In February 1997, the FASB issued SFAS No. 128, "Earnings per Share," which
     was adopted by the Company  effective for the year ended December 31, 1997,
     as required by the statement.  For the years ended December 31, 1997,  1996
     and 1995, the Company's potential common shares have an antidilutive effect
     on the loss for common stockholders per common share and,  therefore,  have
     not been used in determining  the total  weighted  average number of common
     shares  outstanding.  Diluted loss for common stockholders per common share
     for  1997,  1996  and 1995 is  antidilutive  and,  therefore,  has not been
     presented.

     The following table  summarizes  those  securities  that could  potentially
     dilute loss  (earnings)  for common  stockholders  per common  share in the
     future that were not included in determining  loss for common  stockholders
     per common share as the effect was antidilutive (amounts in millions).
<TABLE>
<CAPTION>
                                                                                December 31,
         Potential Common Shares resulting from:                   1997             1996              1995
<S>                                                              <C>              <C>               <C> 
         Stock options......................................       16.8             15.5              14.9
         Shares under restricted stock program..............        1.3              1.4               1.1
         Convertible preferred stock........................       22.6              1.3
         Convertible subordinated debt (see Note 6).........       10.5             20.7              20.7
         Written Equity Options.............................        2.0              4.0               3.0
                                                                 ------           ------            ------
                                                                   53.2             42.9              39.7
                                                                 ======           ======            ======
</TABLE>

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1997.

                                     - 51 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


3.   ACQUISITIONS AND OTHER SIGNIFICANT EVENTS

     Sale of Comcast UK Cable
     On February 4, 1998,  Comcast UK Cable,  a  consolidated  subsidiary of the
     Company,  entered  into  a  definitive  agreement  to be  acquired  by  NTL
     Incorporated ("NTL"), an alternative  telecommunications company in the UK.
     Pursuant  to certain  conditions,  the  Company is  expected to receive 4.8
     million  shares of NTL common  stock in  exchange  for all of the shares of
     Comcast UK Cable held by the Company (the "NTL Transaction").  Based on the
     closing  price of the NTL common  stock on  February  4, 1998 of $32.00 per
     share, the Company is expected to recognize a pre-tax gain of $81.4 million
     upon closing of the NTL Transaction.  Certain  conditions  agreed to in the
     NTL Transaction restrict the Company's ability to sell the NTL common stock
     to be  received  for a period  of 180 days  after  the  closing  of the NTL
     Transaction.  The NTL Transaction is expected to close in 1998,  subject to
     the receipt of necessary regulatory and shareholder approvals,  the consent
     of the  bondholders  of Comcast UK Cable and NTL, as well as the consent of
     certain NTL bank  lenders.  As of  December  31, 1997 and for the year then
     ended,  the assets and revenues of Comcast UK Cable totaled  $736.0 million
     and $93.3 million, respectively.

     AT&T Acquisition of TCGI
     On January 8, 1998,  AT&T  Corporation  ("AT&T")  entered into a definitive
     merger agreement with Teleport  Communications  Group, Inc. ("TCGI").  Upon
     closing of the merger (the "AT&T Transaction"),  the Company is expected to
     receive 24.2 million shares of AT&T common stock in exchange for all of the
     shares of TCGI held by the Company (see Note 4). Based on the closing price
     of the AT&T common  stock on January  30,  1998 of $62.625  per share,  the
     Company is expected to  recognize a pre-tax  gain of  approximately  $1.390
     billion upon closing of the AT&T Transaction.  Certain conditions agreed to
     in the AT&T  Transaction  restrict the  Company's  ability to sell the AT&T
     common  stock to be  received  for a period of between 45 to 135 days after
     the closing of the AT&T  Transaction.  The AT&T  Transaction is expected to
     close in 1998,  subject to receipt of necessary  regulatory and shareholder
     approvals.

     E! Entertainment
     On March 31, 1997, the Company,  through Comcast Entertainment Holdings LLC
     (the  "LLC"),  which is owned  50.1% by the  Company  and 49.9% by The Walt
     Disney Company  ("Disney"),  purchased a 58.4% interest in E! Entertainment
     from  Time  Warner  for  $321.9  million  (the  "E!  Acquisition").  The E!
     Acquisition was funded by cash  contributions to the LLC by the Company and
     Disney of $132.8 million and $189.1  million,  respectively.  In connection
     with the E! Acquisition,  the Company  contributed its 10.4% interest in E!
     Entertainment  to the LLC. To fund the cash  contribution  to the LLC,  the
     Company borrowed $132.8 million from Disney in the form of two 10-year,  7%
     notes (the "Disney Notes").

     In December 1997,  the LLC acquired the 10.4% interest in E!  Entertainment
     held by Cox Communications, Inc. ("Cox") for $57.1 million. The acquisition
     was funded by cash  contributions  to the LLC by the  Company and Disney of
     $28.6 million and $28.5 million, respectively. As of December 31, 1997, the
     LLC owns a 79.2% interest in E! Entertainment.

     The Company accounted for the acquisitions under the purchase method and E!
     Entertainment  was consolidated  with the Company effective March 31, 1997.
     The allocation of the purchase price relating to the assets and liabilities
     of E! Entertainment is preliminary pending a final appraisal.

     Microsoft Investment
     On  June  30,  1997  (the  "Issuance  Date"),  the  Company  and  Microsoft
     Corporation  ("Microsoft") completed a Stock Purchase Agreement.  Microsoft
     purchased and the Company issued 24.6 million shares of the Company's Class
     A Special Common Stock at $20.29 per share,  for $500.0 million and 500,000
     shares of the Company's newly issued 5.25% Series B Mandatorily  Redeemable
     Convertible  Preferred  Stock,  par value  $1,000 per share (the  "Series B
     Preferred Stock"), for $500.0 million (see Note 6).

                                     - 52 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Offerings of Subsidiary Debt
     In May 1997,  Comcast  Cable  Communications,  Inc.  ("Comcast  Cable") and
     Comcast Cellular  Corporation  (formerly Comcast Cellular  Holdings,  Inc.)
     ("Comcast Cellular"), both wholly owned subsidiaries of the Company, sold a
     total of $2.7  billion  of  nonrecourse  public  debt with  interest  rates
     ranging from 8 1/8% to 9 1/2% and maturity dates from 2004 to 2027. Comcast
     Cable and Comcast  Cellular  used the net  proceeds  from the  offerings to
     repay existing borrowings by their subsidiaries (see Note 5).

     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,
     valued at $1.552 billion (the "Scripps Acquisition"). The Company 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.

     During the second quarter of 1997, the Company  recorded the final purchase
     price  allocation  relating  to the Scripps  Acquisition.  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.

     QVC
     In  February  1995,  the  Company  and  Tele-Communications,  Inc.  ("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
     accounted  for the QVC  Acquisition  under the purchase  method and QVC was
     consolidated with the Company effective February 1, 1995.

     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).

                                     - 53 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                                 1996             1995
<S>                                                                            <C>               <C>     
     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)
</TABLE>

4.   INVESTMENTS, PRINCIPALLY IN AFFILIATES
<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                                  1997             1996
                                                                                   (Dollars in millions)
<S>                                                                              <C>               <C>   
     Equity method................................................               $867.6            $966.1
     Fair value method............................................                346.5             165.5
     Cost method..................................................                 50.2              46.1
                                                                               --------          --------
                                                                               $1,264.3          $1,177.7
                                                                               ========          ========
</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 (see below).  The Company's  recorded  investments  exceed its
     proportionate  interests in the book value of the  investees' net assets by
     $225.8  million  as  of  December  31,  1997  (primarily   related  to  the
     investments  in  Comcast-Spectacor  and Sprint  PCS).  Such excess is being
     amortized to equity in net income or loss, primarily over a period of 20 to
     30 years,  which is consistent  with the estimated  lives of the underlying
     assets.  The original  cost of  investments  accounted for under the equity
     method  totaled  $1.454  billion and $1.271 billion as of December 31, 1997
     and 1996, respectively.  Summarized financial information for the Company's
     equity method  investees for 1997, 1996 and 1995 is as follows  (dollars in
     millions).

                                     - 54 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


<TABLE>
<CAPTION>
                                                Sprint                  UK       Comcast
                                                  PCS       TCGI     Investees  Spectacor     QVC       Other    Combined
<S>                                           <C>         <C>        <C>        <C>        <C>         <C>      <C>     
Year Ended December 31, 1997:

   Combined Results of Operations
     Revenues, net..........................     $111.5     $431.3     $197.5     $140.8                $755.0   $1,636.1
     Operating, selling, general and
       administrative expenses..............      959.4      398.5      168.4      117.9                 831.2    2,475.4
     Depreciation and amortization..........      194.2      133.9       76.0       46.5                  69.1      519.7
     Operating loss.........................   (1,042.1)    (101.1)     (46.9)     (23.6)               (145.3)  (1,359.0)
     Net loss (a)...........................   (1,187.3)    (192.9)     (92.2)     (39.6)               (191.2)  (1,703.2)

   Company's Equity in Net Loss
     Equity in current period net loss (b)..    ($178.1)    ($30.5)    ($34.6)    ($26.2)               ($51.6)   ($321.0)
     Amortization expense...................       (1.5)      (0.2)      (0.6)      (5.4)                 (1.4)      (9.1)
                                                -------    -------    -------    -------    -------    -------    -------
       Total equity in net loss.............    ($179.6)    ($30.7)    ($35.2)    ($31.6)               ($53.0)   ($330.1)
                                                =======    =======    =======    =======    =======    =======    ======= 

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 (a)...........................     (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 (a)..................      (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)
                                                =======    =======    =======    =======    =======    =======    ======= 
<FN>
---------
(a) see footnote (1) on page 56.
(b) see footnote (2) on page 56.
</FN>
</TABLE>

                                     - 55 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

<TABLE>
<CAPTION>
                                               Sprint                  UK       Comcast
                                                 PCS       TCGI     Investees  Spectacor    Other    Combined
<S>                                          <C>        <C>          <C>        <C>        <C>      <C>    
Combined Financial Position

As of December 31, 1997:
     Current assets.....................       $317.3     $440.8      $35.9      $84.9     $224.0   $1,102.9
     Noncurrent assets..................      5,483.3    1,675.2      716.4      285.4      971.2    9,131.5
     Current liabilities................        440.2      302.8       74.6      107.7      750.4    1,675.7
     Noncurrent liabilities.............      3,312.9    1,061.6      558.7      188.0      377.2    5,498.4

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
<FN>
--------
(1)  Net (loss) income also represents (loss) income from continuing  operations
     before  extraordinary  items and cumulative effect of changes in accounting
     principle.
(2)  As  a  result  of  the  E!  Acquisition,  the  Company  recorded  a  charge
     representing  the  cumulative  amount that would have been recorded had the
     Company accounted for its investment in E!  Entertainment  under the equity
     method  since the date of initial  investment  (the  "Cumulative  Charge").
     Since the Company's  proportionate share of E!  Entertainment's  cumulative
     losses  was  in  excess  of  the  Company's  historical  cost  basis  in E!
     Entertainment  and as the Company was under no  contractual  obligation  to
     fund the losses of E!  Entertainment,  the Cumulative Charge was limited to
     the  Company's  historical  cost  basis of $12.1  million.  Such  amount is
     included  in  equity  in  net  losses  of   affiliates   in  the  Company's
     consolidated  statement of operations  for the year ended December 31, 1997
     as it is not  significant  for  restatement  of the  Company's  prior  year
     financial statements.
</FN>
</TABLE>

     Sprint PCS. The Company,  TCI, Cox and Sprint  Corporation  ("Sprint,"  and
     together  with  the  Company,  TCI and Cox,  the  "Parents"),  and  certain
     subsidiaries  of the Parents (the  "Partner  Subsidiaries"),  engage in the
     wireless  communications  business through Sprint PCS, a development  stage
     enterprise  through June 30, 1997. The Company made its initial  investment
     in 1994  and,  as of  December  31,  1997,  holds  a  general  and  limited
     partnership  interest of 15% in Sprint PCS.  The  Company's  investment  in
     Sprint PCS is accounted  for under the equity method based on the Company's
     general  partnership  interest and its  representation on the partnership's
     board.

     Sprint PCS was the  successful  bidder for 29 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 PCS 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 PCS 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 PCS of $602.0  million  through  January  30,  1998.  The Company
     anticipates  that Sprint PCS'  capital  requirements  over the next several
     years will be significant.  Requirements in excess of committed capital are
     planned to be funded by Sprint PCS through external  financing,  including,
     but not limited to, vendor financing, bank financing and securities offered
     to the public.

     The  proposed  budget for 1998 for Sprint PCS has not yet been  approved by
     the partnership  board, which has resulted in the occurrence of a "Deadlock
     Event" as of January 1, 1998 under the partnership  agreement.  If the 1998
     proposed budget is not approved through resolution  procedures set forth in
     the partnership  agreement,  certain specified  buy/sell  procedures may be
     triggered which may result in a restructuring  of the partners'  interests,
     the sale of the Company's interest, or, in limited circumstances,  the sale
     of Sprint PCS.

                                     - 56 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     TCGI. Through June 1996, the Company held investments in 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
     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.  As a result of the TCGI IPO,  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").

     In  February  1997,  in  connection  with an  acquisition,  TCGI issued 2.1
     million  unregistered  shares of its TCGI Class A Stock. As a result of the
     stock  issuance,  the  Company  recorded  a $7.7  million  increase  in its
     proportionate  share of TCGI's net assets as a gain from equity offering of
     affiliate in its 1997 consolidated statement of operations.

     In March 1997,  the Company  received  2.76 million  shares of TCGI Class A
     Stock from TCGI in exchange for the Company's shares of an alternate access
     provider.  In May 1997,  the Company sold all of its shares of TCGI Class A
     Stock for $68.9 million and recognized a $68.9 million pre-tax gain,  which
     is included in  investment  income in its 1997  consolidated  statement  of
     operations.

     In  November  1997,  TCGI  filed  a  registration  statement  with  the  US
     Securities and Exchange Commission to sell 7.3 million shares of TCGI Class
     A Stock  (the  "TCGI  Offering").  As a result  of the TCGI  Offering,  the
     Company will recognize a $59.6 million increase in its proportionate  share
     of TCGI's net assets as a gain from equity offering of affiliate. Such gain
     will be recorded in the  Company's  March 31, 1998  condensed  consolidated
     statement of operations and accumulated  deficit as the Company records its
     proportionate share of TCGI's net losses one quarter in arrears.

     As of December 31, 1997, the Company owns 25.6 million shares of TCGI Class
     B Stock  representing a 20.1% voting interest and a 14.7% equity  interest.
     The Company  continues to account for its interest in TCGI under the equity
     method  based on 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.

     UK Investees.  As of December 31, 1997, Comcast UK Cable (see Note 3) holds
     a 27.5%  interest  in  Birmingham  Cable  Corporation  Limited  and a 50.0%
     interest in Cable  London PLC. In addition,  Comcast UK Cable  historically
     held  an  investment  in  Cambridge  Holding  Company  Limited  ("Cambridge
     Cable").  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  consolidated  the  financial  position and results of
     operations of Cambridge Cable effective March 31, 1996.

                                     - 57 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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 "Series A 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 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 and other obligations of $155.0
     million. The Company accounts for its interest in  Comcast-Spectacor  under
     the  equity   method   since  the  Company   does  not  have  control  over
     Comcast-Spectacor's  operations.  The  issuance  of the Series A  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.

     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 (see Note 3).

     Other.  The Company's other equity investees  include  investments in cable
     communications  (including  Garden  State - see Note 1),  direct  broadcast
     satellite   ("DBS")  services  via  Primestar  (see  below),   cellular/PCS
     telecommunications  and  content  providers.  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.  The  Company  does not  consider  these other
     equity  method   investments   to  be   individually   significant  to  its
     consolidated financial position, results of operations or liquidity.

     Restructuring of Primestar's Operations.  The Company holds a 10.4% general
     and limited partnership interest in Primestar, which is principally engaged
     in the  business of  acquiring,  originating  and/or  providing  television
     programming   services   delivered  by  satellite   through  a  network  of
     distributors, including the Company, throughout the US.

     The Company,  through a wholly owned subsidiary,  distributes the Primestar
     DBS service (the "Primestar Service") to subscribers within specified areas
     of 19 states in the US. As of December 31, 1997,  the Company  provided the
     Primestar Service to more than 181,000 subscribers.


                                     - 58 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     On February 6, 1998,  the Company  entered  into a Merger and  Contribution
     Agreement (the "Merger and Contribution  Agreement") with Primestar and the
     affiliates  of each of the  other  partners  of  Primestar,  including  TCI
     Satellite Entertainment, Inc. ("TSAT"), a publicly-traded company, pursuant
     to which the Company's DBS operations,  the Company's partnership interests
     in Primestar and the Primestar partnership interests and the DBS operations
     of the other partners of Primestar will be consolidated into a newly formed
     company ("New  Primestar").  Under the terms of the Merger and Contribution
     Agreement,  upon  closing  of the  transactions,  it is  expected  that New
     Primestar,  through  a  series  of  transactions,   will  pay  the  Company
     approximately   $83  million  (based  upon  the  number  of  the  Company's
     subscribers to the Primestar Service as of December 31, 1997), and that the
     Company would own  approximately  10% of New Primestar common equity,  both
     subject to adjustment  based on the number of the Company's  subscribers to
     the  Primestar  Service,  inventory  amounts  and other  factors  as of the
     closing of the transactions.  Subject to receipt of regulatory approval and
     other conditions,  after the closing of the  transactions,  TSAT will merge
     with and into New  Primestar in a transaction  in which TSAT's  outstanding
     common shares will be converted into common shares of New Primestar.  As of
     December  31, 1997 and for the year then ended,  the assets and revenues of
     the Company's DBS operations  totaled  $162.8  million and $114.1  million,
     respectively.

     In June 1997, Primestar entered into an agreement with The News Corporation
     Limited, MCI  Telecommunications  Corporation and American Sky Broadcasting
     LLC ("ASkyB"),  pursuant to which Primestar (or, under certain  conditions,
     New Primestar)  will acquire  certain  assets  relating to a high-power DBS
     business (the "ASkyB Transaction"). In exchange for such assets, ASkyB will
     receive  non-voting  securities of New Primestar  that will be  convertible
     into  non-voting  common stock of New  Primestar,  and,  accordingly,  will
     reduce  the  Company's   common   equity   interest  in  New  Primestar  to
     approximately 7% on a fully diluted basis, subject to adjustment.

     The Merger and  Contribution  Agreement and the ASkyB  Transaction  are not
     conditioned  on each  other and may close  independently.  The  Merger  and
     Contribution  Agreement is expected to close in 1998, subject to receipt of
     TSAT shareholder  approval.  The ASkyB  Transaction is expected to close in
     1998,  subject to the receipt of all necessary  governmental and regulatory
     approvals,  including  the  approval of the FCC.  There can be no assurance
     that such approvals will be obtained.

     The Golf Channel. The Golf Channel is a 24-hour network devoted exclusively
     to golf programming.  The programming schedule includes live golf coverage,
     golf  instruction  programs and golf news. In addition to the Company,  the
     other partners in The Golf Channel include an affiliate of Fox, Inc., Times
     Mirror  Corporation  and other private  investors.  In January and February
     1998, the Company  entered into  agreements to acquire an additional  28.9%
     interest in The Golf  Channel for $76.2  million.  These  transactions  are
     expected to close in the first quarter of 1998.  After  completion of these
     transactions,  the Company's ownership interest in The Golf Channel will be
     43.3%.

     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.

     Fair Value Method 
     The Company  holds  unrestricted  equity  investments  in certain  publicly
     traded  companies,  including an investment  classified as short-term as of
     December 31, 1996 (see "Time Warner/TBS" below), with an historical cost of
     $130.0  million  and  $212.7  million  as of  December  31,  1997 and 1996,
     respectively.  The  Company  has  recorded  these  investments,  which  are
     classified as available for sale, at their  estimated fair values of $346.5
     million and $212.9 million as of December 31, 1997 and 1996,  respectively.
     The  unrealized  pre-tax gains as of December 31, 1997 (which  includes the
     @Home  Unrestricted  Shares - see below) and  December  31,  1996 of $216.5
     million and  $200,000,  respectively,  have been  reported in the Company's
     consolidated  balance sheet as a component of stockholders'  equity, net of
     related  deferred  income  tax  expense  of  $75.8  million  and  $100,000,
     respectively.

                                     - 59 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     @Home.  In July 1997,  At Home  Corporation  ("@Home"),  an investee of the
     Company  previously  accounted  for under the equity  method,  completed an
     initial  public  offering of its Series A Common  Stock (the "@Home  IPO").
     @Home provides Internet services to customers and businesses over the cable
     television  infrastructure  in a  limited  number  of  cities  in  the  US.
     Effective  July 1, 1997,  due to the dilution of the  Company's  equity and
     voting interests and other factors subsequent to the @Home IPO, the Company
     discontinued  the equity method of accounting  for its investment in @Home.
     As of  December  31,  1997,  the Company  holds 8.0  million  contractually
     restricted  shares (the "Restricted  Shares") and 6.6 million  unrestricted
     shares  (the  "Unrestricted  Shares") of @Home  Series A Common  Stock (the
     "@Home Series A Stock"),  representing a 12.3% and a 5.7% equity and voting
     interest,  respectively.  The Company has recorded the Restricted Shares at
     their  historical cost of $1.1 million and the Unrestricted  Shares,  which
     are  classified  as available for sale,  at their  estimated  fair value of
     $164.6  million,  based on the quoted  market  price of the @Home  Series A
     Stock as of December 31, 1997. The  unrealized  pre-tax gain as of December
     31, 1997 of $163.7 million has been reported in the Company's  consolidated
     balance  sheet as a  component  of  stockholders'  equity,  net of  related
     deferred income tax expense of $57.3 million.

     Nextel.  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,   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 year ended December 31, 1996, the Company
     sold 5.6  million  shares of Nextel  common  stock for $105.4  million  and
     recognized a pre-tax gain of $35.4  million which is included in investment
     income in its consolidated  statement of operations.  At December 31, 1996,
     the Company held 3.3 million  shares of Nextel  common stock and options to
     acquire an additional 25.0 million shares of Nextel common stock at $16 per
     share. As of December 31, 1996, these options, which had an historical cost
     of $20.0 million, were included in investments in publicly traded companies
     at their fair value of $32.6  million.  In February  1997, the Company sold
     these options to Nextel for $25.0 million and  recognized a pre-tax gain of
     $5.0  million.  In July 1997,  the Company  sold its 3.3 million  shares of
     Nextel common stock for $73.4 million, resulting in a pre-tax gain of $32.2
     million.  The gains on both the sale of the Nextel  options  and the Nextel
     common  stock are  included  in  investment  income in the  Company's  1997
     consolidated statement of operations.

     Time  Warner/TBS.  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.
     In connection with the January 1997 sales, the Company recognized a pre-tax
     loss of $3.8 million,  which is included in  investment  income in its 1997
     consolidated  statement of  operations.  As of December 31, 1996,  the 1.27
     million  shares of Time Warner Stock held by the Company  were  recorded at
     their  fair  value  of  $47.4  million  and  were  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. 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.

                                     - 60 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Cost Method
     It is  not  practicable  to  estimate  the  fair  value  of  the  Company's
     investments  in  privately  held  companies,  accounted  for under the cost
     method,  due to a lack of quoted market prices and excessive costs involved
     in determining such fair value.

5.   LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                    1997              1996
                                                                                      (Dollars in millions)
<S>                                                                               <C>               <C>     
   Notes payable to banks and insurance companies, due
     in installments through 2003..........................................       $1,978.3          $4,662.5
   Senior participating redeemable zero coupon notes, due 2000.............                            447.9
   8-1/8% Senior notes, due 2004...........................................          299.7
   8-3/8% Senior notes, due 2007...........................................          596.3
   9-1/2% Senior notes, due 2007...........................................          998.4
   8-7/8% Senior notes, due 2017...........................................          545.5
   8-1/2% Senior notes, due 2027...........................................          249.6
   11.20% Senior discount debentures, due 2007.............................          378.3             339.2
   10% Subordinated debentures, due 2003...................................                            126.6
   10-1/4% Senior subordinated debentures, due 2001........................          125.0             125.0
   9-3/8% Senior subordinated debentures, due 2005.........................          234.1             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
     1-1/8% Discount convertible subordinated debentures, due 2007.........          355.9             341.3
   7% Disney Notes, due 2007 (see Note 3)..................................          132.8
   Other debt, due in installments principally through 2000................           47.4              39.7
                                                                                  --------          --------

                                                                                   6,691.3           7,332.2
   Less current portion....................................................          132.7             229.5
                                                                                  --------          --------
                                                                                  $6,558.6          $7,102.7
                                                                                  ========          ========
</TABLE>

   Maturities of long-term debt outstanding as of December 31, 1997 for the four
   years after 1998 are as follows (dollars in millions):

         1999.................................................         $207.9
         2000.................................................          301.8
         2001.................................................          573.6
         2002.................................................          490.5

                                     - 61 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Cable Notes
     In May 1997,  Comcast Cable  completed  the sale of $1.7 billion  principal
     amount  of notes  (the  "Cable  Notes")  through a  private  offering  with
     registration  rights. The Cable Notes were issued in four tranches:  $300.0
     million principal amount of 8 1/8% Notes due 2004 (the "Seven-Year Notes"),
     $600.0  million  principal  amount of 8 3/8% Notes due 2007 (the  "Ten-Year
     Notes"),  $550.0  million  principal  amount of 8 7/8%  Notes due 2017 (the
     "Twenty-Year  Notes") and $250.0 million  principal  amount of 8 1/2% Notes
     due 2027 (the "Thirty-Year Notes"). Comcast Cable used substantially all of
     the net proceeds  from the offering of the Cable Notes to repay  certain of
     its  subsidiaries'  notes  payable  to  banks  with  the  balance  used for
     subsidiary general purposes.  Collectively, the offering of the Cable Notes
     and the repayment of the aforementioned notes payable with the net proceeds
     from the  offering of the Cable Notes are  referred to herein as the "Cable
     Refinancing."

     Interest on the Cable Notes is payable semiannually on May 1 and November 1
     of each year,  commencing  November  1, 1997.  The  Seven-Year  Notes,  the
     Ten-Year Notes and the  Twenty-Year  Notes are  redeemable,  in whole or in
     part, at the option of Comcast Cable at any time and the Thirty-Year  Notes
     are redeemable,  in whole or in part, at the option of Comcast Cable at any
     time after May 1, 2009,  in each case at a  redemption  price  equal to the
     greater  of (i) 100% of  their  principal  amount,  plus  accrued  interest
     thereon to the date of redemption, or (ii) the sum of the present values of
     the  remaining   scheduled  payments  of  principal  and  interest  thereon
     discounted to the date of redemption on a semiannual  basis at the Adjusted
     Treasury Rate (as defined), plus accrued interest on the Cable Notes to the
     date of  redemption.  Each  holder of the  Thirty-Year  Notes  may  require
     Comcast Cable to repurchase all or a portion of the Thirty-Year Notes owned
     by such  holder on May 1,  2009 at a  purchase  price  equal to 100% of the
     principal amount thereof.

     The Cable Notes are unsecured  and  unsubordinated  obligations  of Comcast
     Cable  and rank pari  passu  with all other  unsecured  and  unsubordinated
     indebtedness  and other  obligations of Comcast Cable.  The Cable Notes are
     effectively   subordinated   to  all   liabilities   of   Comcast   Cable's
     subsidiaries,  including  trade  payables.  The Cable Notes are obligations
     only  of  Comcast  Cable  and are not  guaranteed  by and do not  otherwise
     constitute obligations of the Company.

     The   indenture  for  the  Cable  Notes,   among  other  things,   contains
     restrictions (with certain  exceptions) on the ability of Comcast Cable and
     its Restricted  Subsidiaries (as defined) to: (i) make dividend payments or
     other  restricted  payments;  (ii)  create  liens  or enter  into  sale and
     leaseback transactions;  and (iii) enter into mergers,  consolidations,  or
     sales of all or substantially all of their assets.

     In October 1997,  Comcast Cable  completed an exchange of 100% of the Cable
     Notes for new notes (having the terms described above) registered under the
     Securities Act of 1933, as amended.

     Cellular Notes
     In May 1997,  Comcast Cellular completed the sale of $1.0 billion principal
     amount of 9 1/2% Senior  Notes due 2007 (the  "Cellular  Notes")  through a
     private offering with  registration  rights.  Comcast Cellular used the net
     proceeds  from the  offering  of the  Cellular  Notes to redeem  its senior
     participating  redeemable zero coupon notes (see "Redemption of Zero Coupon
     Notes" below) and to repay certain subsidiary  indebtedness.  Collectively,
     the offering of the Cellular Notes and the redemption and the repayments of
     the  aforementioned  notes with the net  proceeds  from the offering of the
     Cellular Notes is referred to herein as the "Cellular Refinancing."

     Interest on the Cellular  Notes is payable in cash  semi-annually  on May 1
     and November 1 of each year,  commencing on November 1, 1997.  The Cellular
     Notes  are  redeemable,  in whole  or in part,  at the  option  of  Comcast
     Cellular,  at any  time on or  after  May 1,  2002 at a  redemption  price,
     initially  of 104.75% of the  principal  amount of the  Cellular  Notes and
     declining  annually  to  100%  on May 1,  2005,  plus  accrued  and  unpaid
     interest, if any, to the date of redemption.  In addition,  prior to May 1,
     2000,  Comcast  Cellular may redeem the Cellular  Notes at a price equal to
     108.5% of the principal amount,  plus accrued and unpaid interest,  if any,
     to the redemption date, with the net cash

                                     - 62 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     proceeds from one or more Public Equity  Offerings (as defined);  provided,
     however, that at least 65% of the originally issued principal amount of the
     Cellular  Notes would remain  outstanding  after giving  effect to any such
     redemption. Upon the occurrence of a Change of Control Triggering Event (as
     defined),  each holder of the Cellular Notes will have the right to require
     Comcast Cellular to repurchase such holder's  Cellular Notes at 101% of the
     principal  amount,  plus  accrued  and  unpaid  interest,  if  any,  to the
     repurchase date.

     The Cellular Notes are general  unsecured  obligations of Comcast  Cellular
     ranking  senior to all  subordinated  Indebtedness  (as defined) of Comcast
     Cellular  and pari passu in right of payment  with all other  existing  and
     future  unsecured  unsubordinated   Indebtedness  (as  defined)  and  other
     liabilities of Comcast Cellular.  The Cellular Notes are subordinate to all
     liabilities, including trade payables, of Comcast Cellular's subsidiaries.

     The indenture for the Cellular  Notes imposes  certain  limitations  on the
     ability of Comcast  Cellular and its Restricted  Subsidiaries  (as defined)
     to, among other things,  incur  Indebtedness (as defined),  make Restricted
     Payments (as defined),  including the payment of cash  dividends on Comcast
     Cellular's  Series A  Preferred  Stock,  effect  certain  Asset  Sales  (as
     defined),  enter  into  certain  transactions  with  affiliates,  merge  or
     consolidate with any other person or transfer all or  substantially  all of
     their properties and assets.

     In October  1997,  Comcast  Cellular  completed  an exchange of 100% of the
     Cellular Notes for new notes (having the terms described  above) which were
     registered under the Securities Act of 1933, as amended.

     Redemption of Zero Coupon Notes
     In May 1997,  Comcast  Cellular  used the net proceeds from the sale of the
     Cellular  Notes  to  redeem  all  of  its  Series  A  Senior  Participating
     Redeemable  Zero  Coupon  Notes Due 2000 and Series B Senior  Participating
     Redeemable Zero Coupon Notes Due 2000 (together,  the "Zero Coupon Notes").
     Unamortized  debt  acquisition  costs related to the Zero Coupon Notes were
     not significant.

     Redemption of 1 1/8% Debentures
     On February 26, 1998,  the Company  announced  its  intention to redeem its
     $541.9 million  principal amount 1 1/8% discount  convertible  subordinated
     debentures  due  2007  (the "1 1/8%  Debentures")  on March  30,  1998 at a
     redemption price of 67.112% of the principal amount,  together with accrued
     interest  thereon.  Each $1,000  principal  amount of 1 1/8%  Debentures is
     convertible  into 19.3125  shares of the Company's  Class A Special  Common
     Stock.  The  Company   anticipates  using  available   borrowings  under  a
     subsidiary  credit  facility to fund amounts  redeemed for cash, if any. In
     the first  quarter of 1998,  stockholders'  equity will be increased by the
     full amount of the 1 1/8%  Debentures  converted (see Note 6), if any, plus
     accrued interest, less unamortized debt acquisition costs.

     UK Holdings Credit Facility 
     In December 1997, Comcast UK Holdings Ltd. ("UK Holdings"),  a wholly owned
     subsidiary  of  Comcast  UK Cable,  entered  into a loan  agreement  with a
     consortium of banks to provide  financing under a revolving credit facility
     (the "UK  Holdings  Credit  Facility")  up to a maximum of (UK  Pound)200.0
     million.  There were no borrowings under the UK Holdings Credit Facility at
     December 31, 1997.  In January 1998,  UK Holdings  borrowed (UK  Pound)75.0
     million  under the UK Holdings  Credit  Facility.  The UK  Holdings  Credit
     Facility bears  interest at a rate per annum equal to the London  Interbank
     Offered Rate ("LIBOR") plus 1/2% to 2 1/4%.  Amounts available under the UK
     Holdings  Credit  Facility will be reduced each quarter in varying  amounts
     beginning March 31, 2000 and continuing  through  December 31, 2000.  Final
     maturity of the UK Holdings Credit Facility is January 31, 2001. Borrowings
     under the UK Holdings  Credit Facility are guaranteed by certain of Comcast
     UK Cable's wholly owned subsidiaries.

     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

                                     - 63 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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.

     Debt Repayments
     In October 1997, the Company completed the redemption of its $250.0 million
     principal  amount  3  3/8%  /  5  1/2%  step  up  convertible  subordinated
     debentures  due 2005 (the "Step Up  Debentures").  The  Company  issued 8.4
     million  shares of its Class A Special  Common  Stock  upon  conversion  of
     $206.4 million  principal  amount of Step Up Debentures while $43.6 million
     principal  amount  of  Step  Up  Debentures  was  redeemed  for  cash  at a
     redemption price of 105.58% of the principal amount,  together with accrued
     interest thereon.  Stockholders' equity was increased by the full amount of
     Step Up Debentures  converted plus accrued interest,  less unamortized debt
     acquisition  costs.  The issuance of the Company's  Class A Special  Common
     Stock  upon  conversion  of the Step Up  Debentures  had no  impact  on the
     Company's consolidated statement of cash flows due to its noncash nature.

     In October 1997, a wholly owned subsidiary of Comcast  Cellular  refinanced
     its existing  revolving  credit  facility with the proceeds from borrowings
     under a new $400.0 million credit  agreement (the "New Bank Facility") with
     certain  banks.  Initial  borrowings  under the New Bank Facility were used
     principally to repay existing debt.  Borrowings under the New Bank Facility
     are senior to the Cellular Notes and are secured by a pledge of the capital
     stock of Comcast  Cellular's  subsidiaries.  The New Bank Facility contains
     various covenants,  including  financial  covenants  restricting changes in
     control (or making such an event of default) and restricting the payment of
     dividends, distributions and loans or advances to Comcast Cellular.

     In June 1997,  the Company  redeemed  for cash all of its  outstanding  10%
     Subordinated  Debentures,  due 2003 (the "10%  Debentures").  An  aggregate
     principal  amount of $139.3 million of the 10% Debentures was redeemed at a
     redemption  price of 100% of the principal  amount  thereof,  together with
     accrued interest thereon. On the date of redemption, the 10% Debentures had
     an accreted value of $127.7 million.

     Extraordinary Items
     Extraordinary  items for the year ended  December 31, 1997 of $30.2 million
     or $.09 per common share consist of unamortized debt acquisition  costs and
     debt extinguishment  costs of $47.9 million, net of the related tax benefit
     of $17.7 million,  expensed in connection with the Cable  Refinancing,  the
     Cellular Refinancing,  the redemption of the 10% Debentures, the redemption
     of the Step Up Debentures  and  repayments  made with the proceeds from the
     New Bank Facility.

     Extraordinary  items for the year ended  December  31, 1996 of $1.0 million
     consist of unamortized debt acquisitions costs of $1.8 million,  net of the
     related tax benefit of $800,000, expensed in connection with the prepayment
     of a portion of a subsidiary's outstanding debt.

     Extraordinary items for the year ended December 31, 1995 of $6.1 million or
     $.02 per common share consist of debt extinguishment costs of $9.4 million,
     net of the related tax benefit of $3.3 million, expensed in connection with
     the refinancing of certain indebtedness.

     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 0.75%;  
         Federal  Funds rate plus 0.5% to 1.5%; and 
         LIBOR plus 0.3% to 1.875%.

     As of December 31, 1997 and 1996, the Company's  effective weighted average
     interest  rate  on its  variable  rate  bank  and  insurance  company  debt
     outstanding was 6.58% and 6.53%, respectively.

                                     - 64 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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 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, 1997 and 1996 (dollars in millions):
<TABLE>
<CAPTION>
                                        Notional                             Average         Estimated
                                         Amount          Maturities       Interest Rate     Fair Value
<S>                                     <C>            <C>              <C>                <C> 
     As of December 31, 1997
     Variable to Fixed Swaps..........     $600.0         1998-2000           5.56%             $4.3
     Caps.............................      150.0           1998              6.67%
     Collar...........................       50.0           1998           7.00%/4.90%           0.2

     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
</TABLE>

     The  notional  amounts of interest  rate  instruments,  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,  1997,  1996 and 1995 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, 1997 and 1996,  Comcast UK
     Cable had (UK Pound)250.0 million notional amount of FX Puts to purchase US
     dollars at an exchange rate of $1.35 per (UK 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,  1997 and  1996,  the FX Puts had  carrying  values  of $13.1
     million and $18.4 million,  respectively, and estimated fair values of $5.2
     million and $5.5 million, respectively. The difference between the carrying
     amount and the estimated  fair value of the FX Puts was not  significant as
     of December 31, 1995.

                                     - 65 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     In 1995, in order to reduce  hedging  costs,  Comcast UK Cable sold foreign
     exchange  call option  contracts  ("FX Calls") to exchange (UK  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,  (UK Pound)200.0  million  notional
     amount,  with an  exchange  ratio  of  $1.70  per (UK  Pound)1.00,  expired
     unexercised  in  November  1996 while the  remaining  contract,  with a (UK
     Pound)50.0  million  notional amount and an exchange ratio of $1.62 per (UK
     Pound)1.00,  has a settlement  date in November  2000. In 1996, in order to
     continue  to reduce  hedging  costs,  Comcast UK Cable sold  additional  FX
     Calls,  for proceeds of $3.5 million,  to exchange (UK Pound)200.0  million
     notional  amount at an average  exchange ratio of $1.75 per (UK Pound)1.00.
     These contracts  expired  unexercised in 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,  1997  and  1996,  the  estimated  fair  value  of the
     liabilities  related  to  the  FX  Calls,  as  recorded  in  the  Company's
     consolidated   balance   sheet,   was  $4.4  million  and  $12.2   million,
     respectively.  Changes in fair value between  measurement dates relating to
     the FX Calls resulted in exchange gains of $7.4 million and exchange losses
     of $2.2  million  during  the  years  ended  December  31,  1997 and  1996,
     respectively.  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 $7.123 billion
     and $7.323  billion as of  December  31, 1997 and 1996,  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,  1997,  $251.6  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  $61.7
     million which is restricted to use by Comcast UK Cable.

     Restricted net assets of the Company's subsidiaries were approximately $2.7
     billion as of December 31, 1997. 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 January  30,  1998,  certain  subsidiaries  of the Company had unused
     lines of credit of $1.0 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.

     As of December 31, 1997,  the Company and certain of its  subsidiaries  had
     unused  irrevocable  standby  letters of credit  totaling $120.5 million to
     cover potential fundings associated with several projects.

                                     - 66 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


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.  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 June 1997, in connection with Microsoft's investment in the Company (see
     Note 3), the  Company  issued the Series B  Preferred  Stock.  The Series B
     Preferred Stock has a 5.25% pay-in-kind annual dividend.  Dividends will be
     paid  quarterly  through  the  issuance  of  additional  shares of Series B
     Preferred Stock (the  "Additional  Shares") and will be cumulative from the
     Issuance Date (except that dividends on the  Additional  Shares will accrue
     from the date such  Additional  Shares are issued).  The Series B Preferred
     Stock,  including the Additional  Shares, is convertible,  at the option of
     Microsoft, into 21.2 million shares of the Company's Class A Special Common
     Stock, subject to adjustment in certain limited circumstances, which equals
     an initial conversion price of $23.54 per share,  increasing as a result of
     the  Additional  Shares to $33.91 per share on June 30, 2004.  The Series B
     Preferred  Stock is  mandatorily  redeemable  on June 30, 2017,  or, at the
     option  of the  Company  beginning  on June 30,  2004 or at the  option  of
     Microsoft  on June  30,  2004 or on June 30,  2012.  Upon  redemption,  the
     Company,  at its option, may redeem the Series B Preferred Stock with cash,
     Class A Special  Common  Stock or a  combination  thereof.  As the  Company
     currently  intends  to redeem  the  Series B  Preferred  Stock with Class A
     Special Common Stock upon redemption, the Series B Preferred Stock has been
     classified as a component of stockholders'  equity as of December 31, 1997.
     The Series B Preferred Stock is generally non-voting.

     In July 1996, in connection with the Sports Venture  Acquisition  (see Note
     4), the  Company  issued  6,370  shares of Series A Preferred  Stock.  Each
     holder of shares of the Series A  Preferred  Stock is  entitled  to receive
     cumulative  cash  dividends  at the annual rate of $250 per share,  payable
     quarterly in arrears.  The Series A 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 Series A Preferred  Stock is
     convertible,  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 Series A Preferred Stock, subject to
     certain  conditions.  The holders of the Series A  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
     The Company's 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,  1997,  10.5  million  shares of Class A Special  Common
     Stock were  reserved for issuance  upon  conversion of the Company's 1 1/8%
     Debentures (see Note 5).

     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  could
     purchase,  at such times and on such terms as it deemed appropriate,  up to
     $500.0  million of its  outstanding  common equity  securities,  subject to
     certain  restrictions  and market  conditions.  Based on the trade date for
     stock repurchases, during the years ended December 31, 1997, 1996 and 1995,
     the Company repurchased 2.3 million shares, 10.5 million shares and 680,000
     shares,  respectively,  of its common stock for aggregate  consideration of
     $36.2 million, $180.0 million and $12.4 million, respectively,  pursuant to
     the Repurchase Program. During the term of the

                                     - 67 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Repurchase  Program,   which  terminated  on  May  13,  1997,  the  Company
     repurchased  a  total  of 13.5  million  shares  of its  common  stock  for
     aggregate consideration of $228.6 million.

     As part of the Repurchase  Program,  the Company sold put options on shares
     of its Class A Special  Common  Stock.  Put options on 4.0 million  shares,
     sold by the Company  during 1996 and 1995 and  outstanding  at December 31,
     1996,   expired   unexercised  during  the  first  quarter  of  1997.  Upon
     expiration,  the Company  reclassified  $69.6 million,  the amount it would
     have been  obligated to pay to  repurchase  such shares had the put options
     been exercised, from common equity put options to additional capital in the
     Company's consolidated balance sheet.

     As part of the  Repurchase  Program,  in April 1997,  the Company  sold put
     options on 2.0 million shares of its Class A Special Common Stock.  The put
     options give the holder the right to require the Company to repurchase such
     shares at $15.68  per share on  specific  dates in April and May 1998.  The
     amount the Company would be obligated to pay to repurchase such shares upon
     exercise of the put options,  totaling $31.4 million, has been reclassified
     from  additional  capital  to common  equity put  options in the  Company's
     December 31, 1997  consolidated  balance sheet. The difference  between the
     proceeds from the sale of these put options and their  estimated fair value
     was not significant as of December 31, 1997.

     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 in the Plan. The Class A Common Stock was subsequently retired.

     Stock-Based Compensation Plans
     As of December  31,  1997,  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,
     33.5 million  shares of Class A Special  Common Stock and 658,000 shares of
     Class B Common Stock were  reserved as of December  31, 1997.  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.

                                     - 68 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     A summary of the  activity  of the  Comcast  Option  Plan as of and for the
     years ended December 31, 1997, 1996 and 1995 is presented below (options in
     thousands):
<TABLE>
<CAPTION>

                                                  1997                    1996                    1995
                                                      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..    14,851     $14.54       14,208       $14.25       11,868      $13.73
     Granted...........................     2,599      19.47        1,308        17.41        2,899       15.88
     Exercised.........................      (795)      9.95         (199)        8.72         (267)       9.13
     Canceled..........................      (545)     16.40         (466)       16.08         (292)      15.42
                                           ------                  ------                    ------
     Outstanding at end of year........    16,110      15.50       14,851        14.54       14,208       14.25
                                           ======                  ======                    ======

     Exercisable at end of year........     7,693     $13.91        6,875       $13.40        5,812      $13.13
                                           ======                  ======                    ======

     Class A Common Stock
     Outstanding at beginning of year..                               229        $4.87          362       $4.74
     Exercised.........................                              (229)        4.87         (129)       4.52
     Canceled..........................                                                          (4)       4.92
                                                                   ------                    ------
     Outstanding at end of year........                                                         229        4.87
                                                                   ======                    ======

     Exercisable at end of year........                                                         226       $4.86
                                                                   ======                    ======

     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          658        $5.70          557       $5.45
                                           ======                  ======                    ======
</TABLE>

     The following table summarizes information about the Class A Special Common
     Stock options  outstanding under the Comcast Option Plan as of December 31,
     1997 (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 12/31/97    Contractual Life  Exercise Price      at 12/31/97    Exercise Price
<S>                        <C>           <C>                  <C>              <C>              <C>  
     $6.22 to $10.72          2,493         2.0 Years            $7.30            1,846            $7.18
     $10.83 to $14.63         3,353         4.4 Years            11.78            2,236            11.30
     $15.00 to $19.00         4,667         8.3 Years            16.96              428            15.91
     $19.13 to $23.81         5,597         4.9 Years            20.16            3,183            19.38
                             ------                                               -----
                             16,110                                               7,693
                             ======                                               =====
</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 1997, 1996
     and 1995 was $10.18, $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:
     dividend  yield  of  .52%,   .53%  and  .65%  for  1997,   1996  and  1995,
     respectively;  expected volatility of 30.1%, 34.9% and 40.7% for 1997, 1996
     and 1995, respectively; risk-free interest rate of

                                     - 69 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     6.5%, 6.8% and 7.6% for 1997, 1996 and 1995, respectively;  expected option
     lives of 9.9  years  for 1997 and 1996  and  10.2  years  for  1995;  and a
     forfeiture rate of 3.0% for all 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 $688.14.  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, 1997,  236,000 shares of QVC Common Stock were reserved under the plan.
     Compensation  expense of $3.4 million and $4.0  million was recorded  under
     the QVC Tandem  Plan  during the years  ended  December  31, 1997 and 1996,
     respectively.  No compensation  expense was recognized under the QVC Tandem
     Plan during the year ended December 31, 1995.

     A summary of the  activity  of the QVC Tandem  Plan as of and for the years
     ended December 31, 1997, 1996 and 1995 is presented below  (options/SARs in
     thousands):
<TABLE>
<CAPTION>
                                           1997                      1996                     1995
                                               Weighted-                 Weighted-                  Weighted-
                                                Average                   Average                    Average
                                    Options/   Exercise      Options/    Exercise       Options/    Exercise
                                      SARs       Price         SARs        Price          SARs        Price
<S>                                      <C>   <C>              <C>      <C>           <C>          <C>
     Outstanding at
         beginning of year.......        164   $192.16          142      $177.05
     Granted.....................         74    601.28           26       271.23          142       $177.05
     Exercised...................        (55)   177.05
     Canceled....................         (3)   262.20           (4)      177.05
                                         ---                    ---                       ---
     Outstanding at end of year..        180    363.99          164       192.16          142        177.05
                                         ===                    ===                       ===

     Exercisable at end of year..         20   $205.42           36      $177.05
                                         ===                    ===
</TABLE>

     The  following  table   summarizes   information   about  the  options/SARs
     outstanding under the QVC Tandem Plan as of December 31, 1997 (options/SARs
     in thousands):
<TABLE>
<CAPTION>
                                        Options/SARs Outstanding            Options/SARs Exercisable
                                                          Weighted-
                                         Number            Average                   Number
     Exercise                          Outstanding        Remaining                Exercisable
     Price                             at 12/31/97    Contractual Life             at 12/31/97
<S>                                       <C>          <C>                           <C>
      $177.05                               105          7.7 Years                     18
       522.31                                 3          8.5 Years                      1
       585.19                                 5          9.0 Years                      1
       634.25                                66          9.7 Years
       688.14                                 1          9.8 Years
                                           ----                                       ---
                                            180                                        20
                                           ====                                       ===
</TABLE>

                                     - 70 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     The  weighted-average  fair  value at date of grant of a QVC  Common  Stock
     option/SAR  granted  during 1997,  1996 and 1995 was  $331.93,  $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:  no dividend yield for all years;
     expected volatility of 20% for all years;  risk-free interest rate of 6.2%,
     6.8% and 7.5% for 1997, 1996 and 1995, respectively;  expected option lives
     of 10 years for all years; and a forfeiture rate of 3.0% for all 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>
                                                                 1997              1996              1995
<S>                                                            <C>               <C>               <C>    
     Net loss - As reported...............................     ($238.7)          ($53.5)           ($43.9)
     Net loss - Pro forma.................................      (252.0)           (61.0)            (50.7)

     Net loss for common stockholders  - As reported......     ($253.5)          ($54.2)           ($43.9)
     Net loss for common stockholders - Pro forma.........      (266.7)           (61.7)            (50.7)

     Net loss for common stockholders 
       per common share - As reported ....................       ($.75)           ($.21)            ($.18)
     Net loss for common stockholders 
       per common share - Pro forma.......................        (.79)            (.24)             (.21)
</TABLE>

     The pro forma effect on net loss and net loss per share for the years ended
     December  31,  1997,  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 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, 1997, there were 1.3
     million unvested shares granted under the program,  of which 327,000 vested
     in January 1998.  During the years ended December 31, 1997,  1996 and 1995,
     208,000,  951,000  and  135,000  shares  were  granted  under the  program,
     respectively,  with a  weighted-average  grant date market value of $17.36,
     $19.16 and $20.61 per share, respectively.  Compensation expense recognized
     during the years ended December 31, 1997,  1996 and 1995 under this program
     was $7.1 million, $5.5 million, and $4.6 million,  respectively.  There was
     no  significant  difference  between  the  amount of  compensation  expense
     recognized by the Company  during the years ended  December 31, 1997,  1996
     and 1995 and the amount that would have been  recognized  had  compensation
     expense been determined under the provisions of SFAS No. 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 the years ended  December  31,  1997,
     1996 and 1995,  4,000,  11,000 and 11,000 SARs were awarded,  respectively,
     and 20,000 SARs were  outstanding at December 31, 1997, of which 4,000 were
     exercisable.  Compensation  expense  related  to the QVC SAR  Plans of $3.4
     million,  $4.5 million and $1.1 million was recorded during the years ended
     December 31, 1997,  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 No. 123.

                                     - 71 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     E!  Entertainment  established  a SAR  plan  in  1995  for  certain  of its
     employees and officers (the "E! SAR Plan").  Approximately  7.8 million SAR
     units  were  reserved  under  the E! SAR Plan  and were  outstanding  as of
     December 31,  1997.  SAR units  granted  under the E! SAR Plan will be 100%
     vested at December 31, 1998,  or earlier  upon death or  disability  or the
     occurrence  of  certain  transactions  or  events.  The value of a SAR unit
     granted  pursuant to the E! SAR Plan will be based on the  appreciation  of
     the value of E!  Entertainment,  determined  by an  independent  appraisal,
     between  January 1, 1995 and December 31, 1998, or December 31, 1999 should
     the  participants  holding  the  majority  of SAR units elect to extend the
     valuation date.  Payments may be deferred by E! Entertainment under certain
     circumstances  and will not begin earlier than 1999.  Compensation  expense
     related to the E! SAR Plan was $7.0 million  during the year ended December
     31,  1997.  There  was no  significant  difference  between  the  amount of
     compensation  expense  recognized  and the  amounts  that  would  have been
     recognized had compensation expense been determined under the provisions of
     SFAS No. 123.

7.   INCOME TAXES

     The  Company   joins  with  its  80%  or  more  owned   subsidiaries   (the
     "Consolidated  Group") in filing  consolidated  federal income tax returns.
     Both QVC and Comcast Communications Properties,  Inc., an indirect majority
     owned subsidiary of the Company,  file separate consolidated federal income
     tax returns.

     Income tax expense consists of the following components:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996                1995
                                                                              (Dollars in millions)
<S>                                                                  <C>               <C>               <C>  
     Current expense
     Federal....................................................     $94.4             $82.0             $45.2
     State......................................................      24.9              23.3              14.3
                                                                     -----             -----             -----

                                                                     119.3             105.3              59.5
                                                                     -----             -----             -----
     Deferred expense (benefit)
     Federal....................................................     (61.1)            (20.4)            (22.0)
     State......................................................      (2.6)             (0.5)              4.6
                                                                     -----             -----             -----

                                                                     (63.7)            (20.9)            (17.4)
                                                                     -----             -----             -----

     Income tax expense.........................................     $55.6             $84.4             $42.1
                                                                     =====             =====             =====
</TABLE>

                                     - 72 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     The effective  income tax expense of the Company differs from the statutory
     amount because of the effect of the following items:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996                1995
                                                                              (Dollars in millions)
<S>                                                                 <C>                <C>              <C>    
     Federal tax at statutory rate..............................    ($80.2)            ($5.6)           ($15.9)
     Non-deductible depreciation and amortization...............      42.6              32.0              23.7
     State income taxes, net of federal benefit.................      14.5              14.8              12.3
     Non-deductible foreign losses and equity in
       net losses of affiliates.................................      53.1              27.5              17.3
     Additions to valuation allowance...........................      16.3              18.3               1.4
     Other......................................................       9.3              (2.6)              3.3
                                                                    ------             -----            ------ 

     Income tax expense.........................................     $55.6             $84.4             $42.1
                                                                    ======             =====            ====== 
</TABLE>

     Deferred income tax benefit resulted from the following differences between
     financial and income tax reporting:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996              1995
                                                                              (Dollars in millions)
<S>                                                                 <C>               <C>               <C>    
     Depreciation and amortization.........................         ($95.4)           ($60.2)           ($68.3)
     Accrued expenses not currently deductible.............          (13.2)             (6.3)             (2.7)
     Non-deductible reserves for bad debts,
       obsolete inventory and sales returns................          (10.9)            (11.0)            (14.2)
     Non-taxable temporary differences associated
       with sale or exchange of securities.................            6.4              30.9              22.7
     Losses (income) from affiliated partnerships..........           45.9              25.6              (2.4)
     Utilization of net operating loss carryforwards.......                                               41.0
     Deferred tax assets arising from current
       period losses ......................................          (16.6)            (23.0)            (10.0)
     Change in valuation allowance and other...............           20.1              23.1              16.5
                                                                    ------            ------            ------ 

     Deferred income tax benefit...........................         ($63.7)           ($20.9)           ($17.4)
                                                                    ======            ======            ====== 
</TABLE>

                                     - 73 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Significant  components  of the Company's net deferred tax liability are as
follows:
<TABLE>
<CAPTION>
                                                                          December 31,
                                                                     1997             1996
                                                                     (Dollars in millions)
<S>                                                               <C>               <C>   
     Deferred tax assets:
       Net operating loss carryforwards....................         $343.8            $280.9
       Differences between book and
         tax basis of property and equipment
         and deferred charges..............................           24.5              24.5
       Reserves for bad debts, obsolete inventory
         and sales returns.................................           84.8              73.9
       Other...............................................           62.9              49.7
       Less: Valuation allowance...........................         (279.5)           (263.2)
                                                                  --------          --------
                                                                     236.5             165.8
                                                                  --------          --------
     Deferred tax liabilities, principally
       differences between book and tax
       basis of property and equipment and
       deferred charges....................................        2,256.2           2,228.3
                                                                  --------          --------
     Net deferred tax liability............................       $2,019.7          $2,062.5
                                                                  ========          ========
</TABLE>

     The deferred tax  liability is net of deferred tax assets of $92.5  million
     and $78.0 million as of December 31, 1997 and 1996, 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  Consolidated
     Group and Comcast Communications  Properties,  Inc. have net operating loss
     carryforwards   for  which  deferred  tax  assets  have  been  recorded  of
     approximately $150.0 million and $30.0 million, respectively,  which expire
     primarily in 2010 and 2011. Remaining net operating loss carryforwards, for
     which valuation allowances have been established, expire in periods through
     2012.

8.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

     The Company  made cash  payments  for  interest of $494.4  million,  $456.8
     million and $459.1 million  during the years ended December 31, 1997,  1996
     and 1995, respectively.

     The Company made cash payments for income taxes of $114.2  million,  $101.4
     million and $35.4 million  during the years ended  December 31, 1997,  1996
     and 1995, respectively.

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.

                                     - 74 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Beginning in October 1998, Disney, in certain circumstances, is entitled to
     cause the LLC to purchase  Disney's  entire interest in the LLC at its then
     fair market  value (as  determined  by an  appraisal  process).  If the LLC
     elects not to purchase  Disney's  interests,  Disney has the right,  at its
     option,  to purchase either the Company's entire interest in the LLC or all
     of the shares of stock of E! Entertainment held by the LLC, 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 (see Notes 3 and 5)
     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.

     At any time after  December  18,  2001,  the  California  Public  Employees
     Retirement  System  ("CalPERS") may elect to liquidate its interest in MHCP
     Holdings,  L.L.C. ("MHCP Holdings"), a 55% owned indirect subsidiary of the
     Company (which holds the US cable television  operations  formerly known as
     Maclean  Hunter  Limited) in which CalPERS owns the remaining 45% interest,
     at a price based upon the fair value of CalPERS' interest in MHCP Holdings,
     adjusted,  under certain  circumstances,  for certain performance  criteria
     relating  to the fair value of MHCP  Holdings  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 MHCP Holdings.

     Minimum  annual  rental   commitments  for  office  space,   equipment  and
     transponder service agreements under noncancellable  operating leases as of
     December 31, 1997 are as follows:
                                                             (Dollars
                                                           in millions)

                1998........................................   $58.0
                1999........................................    52.4
                2000........................................    43.3
                2001........................................    37.7
                2002........................................    36.4
                Thereafter..................................   158.8

     Rental expense of $77.3 million,  $54.7 million and $44.6 million for 1997,
     1996 and 1995, respectively, has been charged to operations.

     Contingencies
     QVC has an agreement with an unrelated third party (the "Bank") whereby the
     Bank provides  revolving  credit  directly to QVC customers.  The revolving
     credit card issued by the Bank may be used solely for the purchase of goods
     and services from QVC. The Bank may advance a portion of the purchase price
     to QVC.  QVC is  obligated  to  purchase  from  the  Bank  any  uncollected
     customers' accounts.  The uncollected balances of revolving credit extended
     by the Bank under this  agreement are $340.0  million and $317.7 million as
     of December 31, 1997 and 1996,  respectively,  of which $309.6  million and
     $284.5 million  represent  interest bearing deposits due from the unrelated
     third party.  The total  reserve  balances  maintained  for the purchase of
     uncollectible  accounts are $76.5  million and $73.2 million as of December
     31, 1997 and 1996, respectively. The Company's potential 

                                     - 75 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     obligations  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, 1997 and 1996.

     The Company is subject to legal  proceedings  and claims which arise in the
     ordinary course of its business.  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.

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 cable communications operations; "Electronic Retailing," the most
     significant   of  the   Company's   content   businesses;   and   "Cellular
     Communications,"  the  most  significant  of  the  Company's   cellular/PCS
     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 "Other" (dollars in millions).
<TABLE>
<CAPTION>
                                                   Domestic
                                                     Cable       Electronic     Cellular      Corporate
                                                Communications    Retailing  Communications and Other(1)      Total
<S>                                                 <C>           <C>             <C>            <C>         <C>     
   1997
   Revenues....................................     $2,073.0      $2,082.5        $444.9         $312.2      $4,912.6
   Depreciation and amortization...............        626.1         115.0         109.8           85.5         936.4
   Operating income (loss).....................        361.6         222.7          65.6         (117.8)        532.1
   Interest expense............................        227.9          56.3         111.3          169.4         564.9
   Assets......................................      6,057.8       2,268.3       1,480.8        2,997.3      12,804.2
   Long-term debt..............................      2,554.9         768.8       1,224.5        2,010.4       6,558.6
   Capital expenditures........................        497.8          97.3         130.0          200.4         925.5
   Equity in net losses of affiliates..........                                                  (330.1)       (330.1)

   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)
<FN>
--------------
(1)  Other includes certain  operating  businesses,  including E!  Entertainment
     (beginning on March 31,  1997),  the  Company's  consolidated  UK cable and
     telecommunications operations, the Company's DBS operations and elimination
     entries related to the segments presented.
</FN>
</TABLE>

                                     - 76 -
<PAGE>
COMCAST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 and 1995 (Concluded)

11.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
                                                  First         Second           Third         Fourth           Total
                                                 Quarter      Quarter (4)       Quarter      Quarter (5)        Year
                                                                    (Dollars in millions, except per share data)
<S>                                            <C>             <C>            <C>            <C>             <C>     
   1997
   Revenues.................................   $1,130.8        $1,184.5       $1,204.2       $1,393.1        $4,912.6
   Operating income before
     depreciation and amortization (1)......      333.7           367.4          365.0          402.4         1,468.5
   Operating income.........................      121.3           117.4          123.7          169.7           532.1
   Loss before extraordinary items (2)......      (64.7)          (14.6)         (52.1)         (77.1)         (208.5)
   Extraordinary items (6)..................                      (22.8)          (3.1)          (4.3)          (30.2)
   Net loss (2).............................      (64.7)          (37.4)         (55.2)         (81.4)         (238.7)
   Loss per share before extraordinary items       (.20)           (.05)          (.17)          (.24)           (.66)
   Extraordinary items per share............                       (.07)          (.01)          (.01)           (.09)
   Net loss per share.......................       (.20)           (.12)          (.18)          (.25)           (.75)
   Cash dividends per common share..........      .0233           .0233          .0233          .0233           .0933

   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 (3)...............................      (34.6)           17.8          (10.0)         (25.7)          (52.5)
   Extraordinary item.......................                       (1.0)                                         (1.0)
   Net (loss) income (3)....................      (34.6)           16.8          (10.0)         (25.7)          (53.5)
   (Loss) income per share before
     extraordinary item.....................       (.14)            .07           (.04)          (.09)           (.21)
   Extraordinary item per share.............
   Net (loss) income per share..............       (.14)            .07           (.04)          (.09)           (.21)
   Cash dividends per common 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,  although the Company's  measure of operating cash flow may not
     be comparable to similarly  titled measures of other  companies.  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 were affected by the gain on the sale of TCGI Class A
     stock in the  second  quarter  of 1997  and the gain on the sale of  Nextel
     common stock in the third quarter of 1997 (see Note 4).
(3)  Results of  operations  were  affected by the TCGI IPO Gain and the sale of
     Nextel shares in the second quarter of 1996 (see Note 4).
(4)  Results of operations for the second quarter of 1997 include the results of
     E!  Entertainment,  which have been  consolidated  effective March 31, 1997
     (see Note 3).
(5)  Results of operations for the fourth quarter of 1996 include 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 1997
     and 1996 are also affected by the  seasonality of the Company's  electronic
     retailing operations.
(6)  Extraordinary  items  consist  of  unamortized  debt  acquisition  and debt
     extinguishment costs expensed in connection with the Cable Refinancing, the
     Cellular Refinancing and the redemption of the 10% debentures in the second
     quarter of 1997,  the  redemption  of the Step Up  Debentures  in the third
     quarter of 1997 and the repayments made with the proceeds from the New Bank
     Facility in the fourth quarter of 1997 (see Note 5).
</FN>
</TABLE>

                                     - 77 -
<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 1998,  which shall be
filed with the Securities and Exchange  Commission within 120 days of the end of
the Registrant's latest fiscal year.



                                     - 78 -
<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....................................42
              Consolidated Balance Sheet--December 31, 1997 and 1996..........43
              Consolidated Statement of Operations--Years
                Ended December 31, 1997, 1996 and 1995........................44
              Consolidated Statement of Cash Flows--Years
                Ended December 31, 1997, 1996 and 1995........................45
              Consolidated Statement of Stockholders' Equity
                (Deficiency)--Years Ended December 31, 1997, 1996 and 1995....46
              Notes to Consolidated Financial Statements......................47

     (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)  Reports on Form 8-K
          (i)  Comcast Corporation filed a Current Report on Form 8-K under Item
               1 on October  27,  1997  relating to the change in control of the
               Registrant.

     (d)  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).

          3.1(e)    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).

          3.1(f)    Form of Statement of Designations, Preferences and Rights of
                    Series B Convertible Preferred Stock of the Company
                    (incorporated by reference to Exhibit 3.1 to the Company's
                    Quarterly Report on Form 10-Q for the quarter ended June 30,
                    1997).

          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).

                                     - 79 -
<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       Indenture, dated as of October 17, 1991, between the Company
                    and Bank of Montreal/Harris Trust (successor to 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).

          4.4       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).

          4.5       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).

          4.6       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).

          4.7       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).

          4.8       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).

          4.9       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).

          4.10      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).

          4.11      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).

          4.11(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).

          10.1*     Comcast Corporation 1986 Non-Qualified Stock Option Plan, as
                    amended and restated, effective December 10, 1996
                    (incorporated by reference to Exhibit 10.3 to the Company's
                    Annual Report on Form 10-K for the year ended December 31,
                    1996).

          10.2*     Comcast Corporation 1987 Stock Option Plan, as amended and
                    restated, effective December 10, 1996 (incorporated by
                    reference to Exhibit 10.4 to the Company's Annual Report on
                    Form 10-K for the year ended December 31, 1996).

          10.3*     Comcast Corporation 1996 Stock Option Plan, as amended and
                    restated, effective May 1, 1997 (incorporated by reference
                    to Exhibit 10.1 to the Company's Quarterly Report on Form
                    10-Q for the quarter ended September 30, 1997).

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

                                     - 80 -
<PAGE>
          10.4*     Comcast Corporation 1996 Deferred Compensation Plan, as
                    amended and restated, effective January 9, 1998.

          10.5*     Comcast Corporation 1990 Restricted Stock Plan, as amended
                    and restated, effective September 16, 1997 (incorporated by
                    reference to Exhibit 10.3 to the Company's Quarterly Report
                    on Form 10-Q for the quarter ended September 30, 1997).

          10.6*     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).

          10.7*     Comcast Corporation 1996 Cash Bonus Plan, as amended and
                    restated, effective May 30, 1997 (incorporated by reference
                    to Exhibit 10.4 to the Company's Quarterly Report on Form
                    10-Q for the quarter ended September 30, 1997).

          10.8*     Comcast Corporation 1996 Executive Cash Bonus Plan, dated
                    August 15, 1996 (incorporated by reference to Exhibit 10.10
                    to the Company's Annual Report on Form 10-K for the year
                    ended December 31, 1996).

          10.9*     Compensation and Deferred Compensation Agreement by and
                    between Comcast Corporation and Ralph J. Roberts, dated
                    December 16, 1997.

          10.10     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).

          10.11     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).

          10.12     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).

          10.13*    Comcast Corporation 1997 Deferred Stock Option Plan, as
                    amended and restated, effective December 18, 1997.

          10.14     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).

          10.15     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).

          10.16     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).

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

                                     - 81 -
<PAGE>
          10.17     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).

          10.18     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).

          10.19     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).

          10.20     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).

          10.21     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).

          10.22     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).

          10.23     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).

          10.24     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).

          10.25(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.).

        10.25(b)/*/ Amendment No. 3, dated as of July 19, 1996, to the Credit
                    Agreement, dated as of February 15, 1995, among QVC, Inc.
                    and the Banks listed therein.

          10.26     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).

          10.27     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).

          ------------------
          /*/       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.

                                     - 82 -
<PAGE>
          10.28     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).

          10.29     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).

          10.30     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).

          10.31     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).

          10.32     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).

          10.33     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).

          10.34     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).

          10.35/*/  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.

          10.36     Indenture dated as of May 1, 1997, between Comcast Cable
                    Communications, Inc. and Bank of Montreal Trust Company, as
                    Trustee, in respect of Comcast Cable Communications, Inc.'s
                    8-1/8% Notes due 2004, 8-3/8% Notes due 2007, 8-7/8% Notes
                    due 2017 and 8-1/2% Notes due 2027 (incorporated by
                    reference to Exhibit 4.1(a) to the Registration Statement on
                    Form S-4 (File No. 333-30745) of Comcast Cable
                    Communications, Inc.).

          10.37     Indenture dated as of May 8, 1997, between Comcast Cellular
                    Corporation (formerly Comcast Cellular Holdings, Inc.) and
                    The Bank of New York, as Trustee, in respect of Comcast
                    Cellular Holdings, Inc.'s 9-1/2% Senior Notes due 2007
                    (incorporated by reference to Exhibit 4.1 to the
                    Registration Statement on Form S-4 (File No. 333-31009) of
                    Comcast Cellular Holdings, Inc.).

          ------------------
          /*/       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.

                                     - 83 -
<PAGE>
          21        List of Subsidiaries.

          23.1(a)   Consent of Deloitte & Touche LLP.

          23.2      Consent of KPMG Peat Marwick LLP.

          27.1      Financial Data Schedule.

          99.1      Report of Independent Public Accountants to QVC, Inc., as of
                    and for the years ended December 31, 1997 and 1996 and for
                    the eleven-month period ended December 31, 1995.

                                     - 84 -
<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 3, 1998.

                                           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 3, 1998
                                Directors; Director

/s/ Julian A. Brodsky
----------------------------
Julian A. Brodsky               Vice Chairman of the Board of      March 3, 1998
                                Directors; Director

/s/ Brian L. Roberts
----------------------------
Brian L. Roberts                President; Director (Principal     March 3, 1998
                                Executive Officer)

/s/ Lawrence S. Smith
----------------------------
Lawrence S. Smith               Executive Vice President           March 3, 1998
                                (Principal Accounting Officer)

/s/ John R. Alchin
----------------------------
John R. Alchin                  Senior Vice President, Treasurer   March 3, 1998
                                (Principal Financial Officer)

/s/ Daniel Aaron                             
----------------------------
Daniel Aaron                    Director                           March 3, 1998

/s/ Gustave G. Amsterdam
----------------------------
Gustave G. Amsterdam            Director                           March 3, 1998

/s/ Sheldon M. Bonovitz
----------------------------
Sheldon M. Bonovitz             Director                           March 3, 1998

/s/ Joseph L. Castle II
----------------------------
Joseph L. Castle II             Director                           March 3, 1998

                                     - 85 -

<PAGE>
SIGNATURE                              TITLE                           DATE

/s/ Bernard C. Watson
----------------------------
Bernard C. Watson               Director                           March 3, 1998

/s/ Irving A. Wechsler
----------------------------
Irving A. Wechsler              Director                           March 3, 1998

/s/ Anne Wexler
----------------------------
Anne Wexler                     Director                           March 3, 1998

                                     - 86 -

<PAGE>
                      COMCAST CORPORATION AND SUBSIDIARIES

                 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF

                     REGISTRANT UNCONSOLIDATED (PARENT ONLY)

                             CONDENSED BALANCE SHEET

                        (In millions, except share data)

<TABLE>
<CAPTION>
                                                                                    December 31,
ASSETS                                                                        1997                1996
<S>                                                                       <C>                   <C> 
   Cash and cash equivalents.............................................     $12.8                 $9.7
   Other current assets..................................................       5.9                  5.7
                                                                           --------             --------
     Total current assets................................................      18.7                 15.4
   Investments in and amounts due from subsidiaries
     eliminated upon consolidation.......................................   3,487.0              2,646.8
   Property and equipment, net...........................................      38.5                 30.9
   Other assets, net.....................................................      45.5                 85.8
                                                                           --------             --------
                                                                           $3,589.7             $2,778.9
                                                                           ========             ========

LIABILITIES AND STOCKHOLDERS' EQUITY

   Accrued interest......................................................     $35.0                $49.5
   Other current liabilities.............................................     108.1                188.3
                                                                           --------             --------
     Total current liabilities...........................................     143.1                237.8
                                                                           --------             --------
   Long-term debt........................................................   1,464.9              1,716.3
                                                                           --------             --------
   Deferred income taxes and other.......................................     303.8                203.6
                                                                           --------             --------
   Common equity put options.............................................      31.4                 69.6
                                                                           --------             --------

   Stockholders' equity
     Preferred stock - authorized, 20,000,000 shares; 
       5% series A convertible, no par value; issued,
       6,370 at redemption value.........................................      31.9                 31.9
       5.25% series B mandatorily redeemable convertible,
       $1,000 par value; issued, 513,211 at redemption value.............     513.2
     Class A special common stock, $1 par value - authorized,
       500,000,000 shares; issued, 317,025,969 and 283,281,675...........     317.0                283.3
     Class A common stock, $1 par value - authorized,
       200,000,000 shares; issued, 31,793,487 and 33,959,368.............      31.8                 34.0
     Class B common stock, $1 par value - authorized,
       50,000,000 shares; issued, 8,786,250..............................       8.8                  8.8
     Additional capital..................................................   3,030.6              2,326.6
     Accumulated deficit.................................................  (2,415.9)            (2,127.1)
     Unrealized gains on marketable securities, including
       securities held by subsidiaries...................................     140.7                  0.1
     Cumulative translation adjustments of subsidiaries..................     (11.6)                (6.0)
                                                                           --------             --------
       Total stockholders' equity........................................   1,646.5                551.6
                                                                           --------             --------
                                                                           $3,589.7             $2,778.9
                                                                           ========             ========
</TABLE>

                                     - 87 -
<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,
                                                                          1997              1996             1995
<S>                                                                   <C>              <C>               <C>   
REVENUES, principally intercompany fees eliminated
   upon consolidation.........................................            $286.8           $212.0            $192.2

GENERAL AND ADMINISTRATIVE EXPENSES...........................              69.5             55.6              53.8
                                                                       ---------        ---------         --------- 

OPERATING INCOME..............................................             217.3            156.4             138.4

OTHER (INCOME) EXPENSE
   Interest expense, including intercompany interest, net.....             231.2            263.6             214.6
   Equity in net losses (income) of affiliates and other......             238.6            (16.3)             (7.6)
                                                                       ---------        ---------         --------- 
                                                                           469.8            247.3             207.0
                                                                       ---------        ---------         --------- 

LOSS BEFORE INCOME TAX BENEFIT AND
   EXTRAORDINARY ITEMS........................................            (252.5)           (90.9)            (68.6)

INCOME TAX BENEFIT............................................             (16.6)           (37.4)            (25.3)
                                                                       ---------        ---------         --------- 

LOSS BEFORE EXTRAORDINARY ITEMS...............................            (235.9)           (53.5)            (43.3)

EXTRAORDINARY ITEMS...........................................              (2.8)                              (0.6)
                                                                       ---------        ---------         --------- 

NET LOSS......................................................            (238.7)           (53.5)            (43.9)

ACCUMULATED DEFICIT
   Beginning of year..........................................          (2,127.1)        (1,914.3)         (1,827.6)
   Retirement of common stock.................................             (17.7)          (133.3)            (20.4)
   Cash dividends, $.0933 per share per year..................             (32.4)           (26.0)            (22.4)
                                                                       ---------        ---------         --------- 

   End of year................................................         ($2,415.9)       ($2,127.1)        ($1,914.3)
                                                                       =========        =========         ========= 
</TABLE>

                                     - 88 -
<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,
                                                                          1997              1996             1995
<S>                                                                   <C>               <C>               <C>    
OPERATING ACTIVITIES
   Net loss...................................................           ($238.7)          ($53.5)           ($43.9)
   Adjustments to reconcile net loss to net cash
    provided by operating activities:
     Depreciation and amortization............................               7.0              8.9               6.5
     Non-cash interest expense, net...........................             106.8            136.2             105.5
     Equity in net losses (income) of affiliates..............             275.2            (15.2)             (2.7)
     Extraordinary items......................................               2.8                                0.6
     Deferred income taxes and other..........................              88.9             68.4              41.1
                                                                        --------          -------            ------ 
                                                                           242.0            144.8             107.1

     Increase in other current assets.........................              (0.2)            (1.5)             (1.2)
     (Decrease) increase in accrued interest and
       other current liabilities..............................             (79.9)            42.8              36.7
                                                                        --------          -------            ------ 
         Net cash provided by operating activities............             161.9            186.1             142.6
                                                                        --------          -------            ------ 

FINANCING ACTIVITIES
   Proceeds from borrowings...................................                                                800.9
   Retirement and repayment of debt ..........................             (59.5)                            (300.9)
   Issuance of preferred stock................................             500.0
   Issuances (repurchases) of common stock, net...............             470.2           (175.9)             (7.1)
   Dividends..................................................             (34.0)           (26.8)            (22.4)
   Other......................................................              12.7             43.0              52.5
                                                                        --------          -------            ------ 
         Net cash provided by (used in) financing activities..             889.4           (159.7)            523.0
                                                                        --------          -------            ------ 

INVESTING ACTIVITIES
   Net transactions with affiliates...........................          (1,026.4)             9.5            (641.7)
   Capital expenditures.......................................             (18.6)           (20.8)            (11.9)
   Other......................................................              (3.2)           (13.0)            (15.7)
                                                                        --------          -------            ------ 
         Net cash used in investing activities................          (1,048.2)           (24.3)           (669.3)
                                                                        --------          -------            ------ 

INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS...........................................               3.1              2.1              (3.7)

CASH AND CASH EQUIVALENTS, beginning of year..................               9.7              7.6              11.3
                                                                        --------          -------            ------ 

CASH AND CASH EQUIVALENTS, end of year........................             $12.8             $9.7              $7.6
                                                                        ========          =======            ====== 
</TABLE>

                                     - 89 -
<PAGE>
                      COMCAST CORPORATION AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                  (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

   1997.....................................             $97.1       $             $65.4        $47.5        $115.0

   1996.....................................              81.3                      65.1         49.3          97.1

   1995.....................................              11.3         57.8         51.4         39.2          81.3


Allowance for Obsolete
  Electronic Retailing Inventories

   1997.....................................             $34.7       $             $37.0        $27.2         $44.5

   1996.....................................              28.5                      29.7         23.5          34.7

   1995.....................................                           18.4         28.4         18.3          28.5

<FN>
(A) Uncollectible accounts and obsolete inventory written off.
</FN>
</TABLE>

                                     - 90 -