<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   Form 10-Q

                 Quarterly Report Under Section 13 or 15(d) of
                      The Securities Exchange Act of 1934


For the quarter ended March 31, 1997                 Commission file no. 1-5029


                        True North Communications Inc.
            (Exact name of Registrant as specified in its charter)


                 Delaware                                    36-1088161
     (State or other jurisdiction of                      (I.R.S. Employer
      incorporation of organization)                     Identification No.)


101 East Erie Street, Chicago, Illinois                          60611
(Address of principal executive offices)                      (Zip Code)


Registrant's Telephone Number:                              (312) 425-6500



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, and (2) has been subject to such filing requirements
for the past 90 days.

                                                          Yes  X    No
                                                              ----     ---- 


There were 24,896,856 shares of the Registrant's 33 1/3 cents per share par
value Common Stock outstanding as of May 12, 1997.

<PAGE>
                        TRUE NORTH COMMUNICATIONS INC.
                                     INDEX
<TABLE> 
<CAPTION> 
                                                                           Page
                                                                          Number
                                                                          ------
<S>                                                                       <C> 
PART I.  FINANCIAL INFORMATION

 Item 1. Financial Statements and Exhibits
 
         Consolidated Statements of Income for the
          Three Months Ended March 31, 1996 and 1997                         3
 
         Consolidated Balance Sheets as of March 31, 1996,
          December 31, 1996, and March 31, 1997                              4
 
         Consolidated Statements of Cash Flows for the
          Three Months Ended March 31, 1996 and 1997                         5
 
         Note to Consolidated Condensed Financial
          Statements                                                         6
 
 Item 2. Management's Discussion and Analysis of Financial
          Condition and Operating Results                                    7
 
PART II. OTHER INFORMATION

 Item 4. Submission of Matters to a Vote of Security Holders                 8

 Item 6. Exhibits and Reports on Form 8-K                                    8
</TABLE> 

                                       2

<PAGE>
 
                TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                  (Unaudited)
                (Amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                          Three months ended
                                               March 31
                                            1996      1997 
                                          --------  --------
<S>                                       <C>       <C>    
Revenues                                  $105,934  $130,601
                                          --------  --------
Costs and Expenses:
  Salaries and employee benefits          $ 74,074  $ 87,547
  Office and general expenses               34,628    41,445 
  Other (income) expense                         6     1,280 
                                          --------  -------- 
     Total Costs and Expenses             $108,708  $130,272 
                                          --------  -------- 
Income (Loss) Before Provision for Taxes                     
  on Income                               $ (2,774) $    329 
                                                             
Provision for Federal, Foreign & State                       
  Income Taxes                              (1,181)      168 
                                          --------  -------- 
                                          $ (1,593) $    161 
                                                             
Minority Interest Credit (Expense)             351      (223) 
  Equity in Earnings (Losses) of                               
  Affiliated Companies                         520       277 
                                          --------  -------- 
Net Income                                $   (722) $    215 
                                          ========  ======== 
Net Income Per Share                      $   (.03) $    .01 
                                          ========  ======== 
Average Number of Common and Common                          
  Equivalent Shares Outstanding             22,904    24,234 
                                          ========  ========  
</TABLE>

       The accompanying notes are an integral part of these statements.

                                       3

<PAGE>
 
                TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                                  (Unaudited)
                            (Amounts in thousands)

<TABLE>
<CAPTION>
 
 
                                          Mar. 31    Dec. 31     Mar. 31
                                           1996       1996        1997
                                         ---------  ---------  -----------
 
ASSETS:
-------
<S>                                      <C>        <C>        <C>
  Cash and short-term investments        $ 34,147   $ 56,996   $   51,232
  Accounts receivable, net                373,597    402,786      443,868
  Other current assets                     53,780     44,464       60,745
                                         --------   --------   ----------
      Total current assets               $461,524   $504,246   $  555,845
 
  Property and equipment, net            $ 56,467   $ 61,369   $   62,670
  Goodwill                                108,046    151,640      213,114
  Investment in affiliated companies      186,888    202,397      202,533
  Other noncurrent assets                   7,580     13,008       16,331
                                         --------   --------   ----------
      Total assets                       $820,505   $932,660   $1,050,493
                                         ========   ========   ==========
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
-------------------------------------
  Accounts payable and accruals          $434,589   $470,911   $  518,373
  Short-term bank borrowings               93,062     79,698      139,442
  Current portion of long-term debt           262        270        2,902
  Liability for taxes on income               968      2,312        2,828
                                         --------   --------   ----------
      Total current liabilities          $528,881   $553,191   $  663,545
                                         --------   --------   ----------
 
  Long-term debt                         $  5,577   $ 31,513   $   32,310
                                         --------   --------   ----------
  Accrued future compensation exp.       $ 37,632   $ 44,501   $   44,189
                                         --------   --------   ----------
  Other noncurrent liabilities           $ 27,174   $ 37,727   $   48,811
                                         --------   --------   ----------
  Obligation to Modem Media partners     $     --   $ 24,387   $       --
                                         --------   --------   ----------
 
  Common stock                           $  7,848   $  7,957   $    8,333
  Paid-in capital                         116,975    123,740      147,828
  Retained earnings                       101,549    119,399      115,895
  Less-Treasury stock                         (57)    (4,553)      (5,109)
  Cumulative translation adjustment        (5,074)    (5,202)      (5,309)
                                         --------   --------   ----------
     Total stockholders' equity          $221,241   $241,341   $  261,638
                                         --------   --------   ----------
     Total liabilities and
        stockholders' equity             $820,505   $932,660   $1,050,493
                                         ========   ========   ==========
 
</TABLE>
The accompanying notes are an integral part of these balance sheets.

                                       4
<PAGE>
 
                TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                            (Amounts in thousands)

<TABLE>
<CAPTION>
 
 
                                                                                   Three months ended Mar. 31
                                                                                        1996       1997  
                                                                                      --------   --------
<S>                                                                                 <C>           <C>
Cash Flows From Operating Activities:
--------------------------------------------------
  Net income                                                                        $   (722)     $    215
  Adjustments to reconcile net income to
    net cash provided by operating activities:
  Depreciation and amortization                                                        4,342         5,665
  Equity earnings of affiliates, net of dividends received                                84          (277)
  Accounts receivable                                                                (39,417)      (17,095)
  Accounts payable and accruals                                                      (18,140)      (11,737)
  Other current assets                                                               (13,810)      (14,088)
  Other                                                                               (1,823)         (895)
                                                                                    --------      --------
                                                                                    $(69,486)     $(38,212)
                                                                                    --------      --------
 
Cash Provided By (Used For) Financing Activities:
--------------------------------------------------
  Short-term investments and marketable securities                                  $    267      $ (4,412)
  Increase in liability for cash overdrafts                                           27,386        18,423
  Additions to long-term debt                                                             63           146
  Payments of long-term debt                                                            (105)          (41)
  Cash dividends paid                                                                 (3,529)       (3,719)
  Common stock issuances                                                               3,114            77
  Treasury stock purchases                                                                --          (556)
  Short-term borrowings                                                               43,080        51,420
                                                                                    --------      --------
                                                                                    $ 70,276      $ 61,338
                                                                                    --------      --------
 
Cash Provided By (Used For) Investment Activities:
--------------------------------------------------
  Purchase of subsidiaries                                                          $(19,014)     $(30,044)
  Capital expenditures                                                                (4,343)       (3,384)
                                                                                    --------      --------
                                                                                    $(23,357)     $(33,428)
                                                                                    --------      --------
Increase (Decrease) In Cash                                                         $(22,567)     $(10,302)
Balance at beginning of period                                                        48,408        45,946
                                                                                    --------      --------
Balance at end of period                                                            $ 25,841      $ 35,644
                                                                                    ========      ========
 
</TABLE>

The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
 

                TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
              NOTE TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
                                  (Unaudited)



The condensed financial statements included herein have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission, and include all adjustments which the Company considers
necessary for a fair presentation. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The consolidated condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's latest Annual Report on Form 10-K.

Revenues and net income for the first three months of the year should not be
considered reliable indicators of revenues or net income for the entire year
because the Registrant's business is cyclical.

                                       6
<PAGE>
 

                TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
                   (in thousands, except per share amounts)



Results of Operations

Revenues increased 23.3% to $130,601 in 1997 from $105,934 in 1996. North
American revenues increased 22.4% to $106,402 and International revenues
increased 27.4% to $24,199. Excluding the impact of acquisitions, consolidated
revenues increased 13.6% as a result of new business won during 1996 and 1997.

During the latter part of 1996 and in 1997, the Company purchased several
agencies in North America, Latin America and the Pacific Rim. These acquisitions
contributed $10,269 and $1,534 to the Company's revenues and pretax income,
respectively.

Salaries and benefits expenses increased 18.2% to $87,547 in 1997, compared to
the 23.3% increase in consolidated revenues. As a percent of revenues, this
category of expenses improved from 69.9% in 1996 to 67.0% in 1997. Excluding the
impact of acquisitions, salaries and benefits expenses increased 10.6%, compared
to the Company's organic revenue growth rate of 13.6%.

Office and general expenses increased 19.7% to $41,445 in 1997, compared to the
23.3% increase in consolidated revenues. As a percent of revenues, this category
of expenses improved from 32.7% in 1996 to 31.7% in 1997. Excluding the impact
of acquisitions, office and general expenses increased 10.7%, compared to the
Company's organic revenue growth rate of 13.6%.

The components of "Other Expense" in both years were as follows:

<TABLE>
<CAPTION>
                                                                1996      1997
                                                              -------   ------- 
<S>                                                           <C>       <C>
Interest expense                                              $ 2,036   $ 3,187
Interest (income)                                                (868)   (1,433)
Unrealized (gain) loss on Shandwick investment                 (1,162)     (474)
                                                              -------   -------
                                                              $     6   $ 1,280
                                                              =======   =======
</TABLE>

Net interest expense increased between years due to the fact that the Company is
carrying higher average debt levels in 1997 resulting from its acquisition
program.

Minority interests was income in 1996 of $351, compared to expense of $223 in
1997. During the first quarter of 1996, the Company's 60% owned operations in
Brazil recorded substantial operating losses. During 1997, the Brazilian
operations reported improved results. In addition, during 1996 and 1997, the
Company purchased majority ownerships in agencies in India and Chile.

                                       7
<PAGE>
 

Equity income declined from $520 in 1996 to $277 in 1997. Approximately half of
the decline is due to the impact of currency on the Company's share of the
results of its European joint venture with Publicis. The remainder of the
decline results from a deterioration in the results of the Company's investment
in a South African affiliate.

Liquidity and Capital Resources

As more fully explained below, the decline in "Cash and short-term investments"
and increases in "Accounts receivable, net", "Other current assets", and "Short-
term bank borrowings" from the beginning of the year reflect the cyclical nature
of the advertising business and are inter-related.

The increase in "Other current assets" is due to the production of client
commercials which will be shown during the summer months. The costs related to
these commercials are billed to clients during the second quarter when the
commercials are completed. Commercial production activity in the last month of
the year is typically low.

The increase in "Accounts receivable, net" is due, in part, to a slowing of
collections which also is typical of the middle portion of the calendar year.

The decrease in "Cash and short-term investments" and the increase in "Short-
term bank borrowings" reflect the higher level of commercial production
activity, as well as the slowing of accounts receivable collections during the
middle parts of the year.

As previously disclosed, the Company continues to contemplate strategic
acquisitions to enhance its worldwide network. During the first quarter of 1997,
the Company completed the acquisition of agencies in India and Europe. In
addition, it made contingent payments related to acquisitions made in prior
years. These payments were financed by the issuance of additional short-term
borrowings.

                          PART II.  OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders - None.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits -

              27.  Financial Data Schedule.

         (b)  Reports on Form 8-K - None.

                                       8
<PAGE>
 

                                  SIGNATURES


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


                                            TRUE NORTH COMMUNICATIONS INC.
                                                     (Registrant)
                                            
                                            
                                                    John J. Rezich
                                            ------------------------------
                                                     (Signature)
                                            
                                            John J. Rezich
                                            Vice President, Controller
                                            Chief Accounting Officer


Date: May 13, 1997

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