<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C. 20549

                                   FORM 10-K

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
                                          
                                       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: 0-14505


                        ENSTAR INCOME PROGRAM II-2, L.P.
                    -----------------------------------------
              (Exact name of Registrant as specified in its charter)

               GEORGIA                                 58-1628872
---------------------------------------  --------------------------------------
   (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)               Identification Number)

 10900 WILSHIRE BOULEVARD - 15TH FLOOR
       LOS ANGELES, CALIFORNIA                            90024
---------------------------------------  --------------------------------------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:         (310) 824-9990
                                                            ---------------
                                                                  NONE
Securities registered pursuant to Section 12 (b) of the Act: 
Securities registered pursuant to Section 12 (g) of the Act:

                                                          Name of each exchange
                 Title of each Class                       on which registered
                 -------------------                      ---------------------
      UNITS OF LIMITED PARTNERSHIP INTEREST                       NONE

     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 amendment to this Form 10-K.  [X]

     State the aggregate market value of the voting equity securities held by 
non-affiliates of the registrant - all of the registrant's 29,880 units of 
limited partnership interests, its only class of equity securities, are held 
by non-affiliates.  There is no public trading market for the units, and 
transfers of units are subject to certain restrictions; accordingly, the 
registrant is unable to state the market value of the units held by 
non-affiliates.

===============================================================================
                     The Exhibit Index is located at Page E-1.

<PAGE>
                                       PART I 
ITEM 1.   BUSINESS

INTRODUCTION

          Enstar Income Program II-2, L.P., a Georgia limited partnership 
(the "Partnership"), is engaged in the ownership, operation and development, 
and, when appropriate, sale or other disposition, of cable television systems 
in small to medium-sized communities.  The Partnership was formed on July 3, 
1984. The general partners of the Partnership are Enstar Communications 
Corporation, a Georgia corporation (the "Corporate General Partner"), and 
Robert T. Graff, Jr. (the "Individual General Partner" and, together with the 
Corporate General Partner, the "General Partners").  On September 30, 1988, 
ownership of the Corporate General Partner was acquired by Falcon 
Cablevision, a California limited partnership that has been engaged in the 
ownership and operation of cable television systems since 1984 ("Falcon 
Cablevision").  The general partner of Falcon Cablevision was Falcon Holding 
Group, L.P., a Delaware limited partnership ("FHGLP"), until September 1998.  
On September 30, 1998, FHGLP acquired ownership of the Corporate General 
Partner from Falcon Cablevision. Simultaneously with the closing of that 
transaction, FHGLP contributed all of its existing cable television system 
operations to Falcon Communications, L.P. ("FCLP"), a California limited 
partnership and successor to FHGLP.  FHGLP serves as the managing partner of 
FCLP, and the general partner of FHGLP is Falcon Holding Group, Inc., a 
California corporation ("FHGI").  The Corporate General Partner has 
contracted with FCLP and its affiliates to provide management services for 
the Partnership.  See Item 13., "Certain Relationships and Related 
Transactions."  The General Partner, FCLP and affiliated companies are 
responsible for the day to day management of the Partnership and its 
operations. See "Employees" below.

          Based on its belief that the market for cable systems has generally 
improved, the Corporate General Partner is evaluating strategies for 
liquidating the Partnership.  These strategies include the potential sale of 
substantially all of the Partnership's assets to third parties and/or 
affiliates of the Corporate General Partner, and the subsequent liquidation 
of the Partnership. The Corporate General Partner expects to complete its 
evaluation within the next several months and intends to advise unitholders 
promptly if it believes that commencing a liquidating transaction would be in 
the best interests of unitholders.

          A cable television system receives television, radio and data 
signals at the system's "headend" site by means of over-the-air  antennas, 
microwave relay systems and satellite earth stations.  These signals are then 
modulated, amplified and distributed, primarily through coaxial and fiber 
optic distribution systems, to customers who pay a fee for this service.  
Cable television systems may also originate their own television programming 
and other information services for distribution through the system.  Cable 
television systems generally are constructed and operated pursuant to 
non-exclusive franchises or similar licenses granted by local governmental 
authorities for a specified term of years.

          The Partnership's cable television systems (the "systems") offer 
customers various levels (or "tiers") of cable services consisting of 
broadcast television signals of local network, independent and educational 
stations, a limited number of television signals from so-called "super 
stations" originating from distant cities (such as WGN), various 
satellite-delivered, non-broadcast channels (such as Cable News Network 
("CNN"), MTV:  Music Television ("MTV"), the USA Network ("USA"), ESPN, 
Turner Network Television ("TNT") and The Disney Channel), programming 
originated locally by the cable television system (such as public, 
educational and governmental access programs) and informational displays 
featuring news, weather, stock market and financial reports, and public 
service announcements.  A number of the satellite services are also offered 
in certain packages. For an extra monthly charge, the systems also offer 
"premium" television services to their customers.  These services (such as 
Home Box Office ("HBO") and Showtime) are satellite channels that consist 
principally of feature films, live sporting events, concerts and other 
special entertainment features, usually presented without commercial 
interruption.  See "Legislation and Regulation."


                                      -2-

<PAGE>

          A customer generally pays an initial installation charge and fixed 
monthly fees for basic, expanded basic, other tiers of satellite services and 
premium programming services.  Such monthly service fees constitute the 
primary source of revenues for the systems.  In addition to customer 
revenues, the systems receive revenue from the sale of available advertising 
spots on advertiser-supported programming.  The systems also offer to their 
customers home shopping services, which pay the systems a share of revenues 
from sales of products in the systems' service areas, in addition to paying 
the systems a separate fee in return for carrying their shopping service.  
Certain other channels have also offered the cable systems managed by FCLP, 
including those of the Partnership, fees in return for carrying their 
service.  Due to a general lack of channel capacity available for adding new 
channels in certain of its systems, the Partnership's management cannot 
predict the impact of such potential payments on the Partnership's business.  
See Item 7., "Management's Discussion and Analysis of Financial Condition and 
Results of Operations -Liquidity and Capital Resources."

          The Partnership began its cable television business operations in 
February 1986 with the acquisition of certain cable television systems that 
provide service to customers in the cities of Pana, Hillsboro, Nokomis and 
Jerseyville, Illinois.  In January 1987, the Partnership expanded its 
operations by acquiring a cable television system that provides service to 
customers in the cities of Malden and Campbell, Missouri.  As of December 31, 
1998, the Partnership served approximately 8,900 basic subscribers in these 
areas. The Partnership does not expect to make any additional material 
acquisitions during the remaining term of the Partnership.

          FCLP receives a management fee and reimbursement of expenses from 
the Corporate General Partner for managing the Partnership's cable television 
operations.  See Item 11., "Executive Compensation."

          The Chief Executive Officer of FHGI is Marc B. Nathanson.  Mr. 
Nathanson has managed FCLP or its predecessors since 1975.  Mr. Nathanson is 
a veteran of more than 30 years in the cable industry and, prior to forming 
FCLP's predecessors, held several key executive positions with some of the 
nation's largest cable television companies.  The principal executive offices 
of the Partnership, the Corporate General Partner and FCLP are located at 
10900 Wilshire Boulevard, 15th Floor, Los Angeles, California 90024, and 
their telephone number is (310) 824-9990.  See Item 10., "Directors and 
Executive Officers of the Registrant." 

BUSINESS STRATEGY

          Historically, the Partnership has followed a systematic approach to 
acquiring, operating and developing cable television systems based on the 
primary goal of increasing operating cash flow while maintaining the quality 
of services offered by its cable television systems.  The Partnership's 
business strategy has focused on serving small to medium-sized communities.  
The Partnership believes that given a similar rate, technical, and 
channel/capacity utilization profile, its cable television systems generally 
involve less risk of increased competition than systems in large urban 
cities. In the Partnership's markets, consumers have access to only a limited 
number of over-the-air broadcast television signals. In addition, these 
markets typically offer fewer competing entertainment alternatives than large 
cities. Nonetheless, the Partnership believes that all cable operators will 
face increased competition in the future from alternative providers of 
multi-channel video programming services. See "Competition."

          Adoption of rules implementing certain provisions of the Cable 
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable 
Act") by the Federal Communications Commission (the "FCC") has had a negative 
impact on the Partnership's revenues and cash flow. These rules are subject 
to further amendment to give effect to the Telecommunications Act of 1996 
(the "1996 Telecom Act").  Among other changes, the 1996 Telecom Act provides 
that the regulation of certain cable programming service tier ("CPST") rates 
will terminate on March 31, 1999.  There can be no assurance as to what, if 
any, further action may be taken by the FCC, Congress or any other regulatory 
authority or court, or the effect thereof on the 


                                      -3-

<PAGE>

Partnership's business.  See "Legislation and Regulation" and Item 7., 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations."

          CLUSTERING

          The Partnership has sought to acquire cable television operations 
in communities that are proximate to other owned or affiliated systems in 
order to achieve the economies of scale and operating efficiencies associated 
with regional "clusters."  The Partnership believes clustering can reduce 
marketing and personnel costs and can also reduce capital expenditures in 
cases where cable service can be delivered through a central headend 
reception facility.

          CAPITAL EXPENDITURES

          As noted in "Technological Developments," the Partnership's 
Jerseyville, Illinois and Malden, Missouri systems have no available channel 
capacity with which to add new channels or to provide pay-per-view offerings 
to customers. As a result, significant amounts of capital for upgrades are 
required in order to increase available channel capacity, improve quality of 
service and facilitate the expansion of new services such as advertising, 
pay-per-view, new unregulated tiers of satellite-delivered services and home 
shopping, so that the systems remain competitive within the industry.

          The Partnership's management has selected a technical standard that 
incorporates the use of fiber optic technology where applicable in its 
engineering design for the majority of its systems that are to be rebuilt.  A 
system built with this type of architecture can provide for future channels 
of analog service as well as new digital services.  Such a system will also 
permit the introduction of high speed data transmission/Internet access and 
telephony services in the future after incurring incremental capital 
expenditures related to these services.  The Partnership is also evaluating 
the use of digital compression technology in its systems.  See "Technological 
Developments" and "Digital Compression."

          The Partnership's future capital expenditure plans are, however, 
subject to the availability of adequate capital on terms satisfactory to the 
Partnership, of which there can be no assurance.  The Partnership is 
rebuilding its Jerseyville, Illinois and surrounding cable systems at an 
estimated total cost of approximately $2.1 million, including approximately 
$100,000 budgeted for 1999 to complete the project.  Other capital 
expenditures budgeted for 1999 include approximately $486,800 for the 
improvement and upgrade of other assets. Additionally, the Partnership is 
required to upgrade its cable plant in Malden, Missouri at an estimated cost 
of approximately $1.8 million, the start of which is dependent upon obtaining 
a renewal of the franchise agreement for that community.  The Partnership 
also has tentative plans for a project in 2001 to upgrade its Pana, Illinois 
cable system at an estimated cost of approximately $1.1 million.  See 
"Legislation and Regulation" and Item 7., "Management's Discussion and 
Analysis of Financial Condition and Results of Operations -Liquidity and 
Capital Resources."

          DECENTRALIZED MANAGEMENT

          The Corporate General Partner manages the Partnership's systems on 
a decentralized basis.  The Corporate General Partner believes that its 
decentralized management structure, by enhancing management presence at the 
system level, increases its sensitivity to the needs of its customers, 
enhances the effectiveness of its customer service efforts, eliminates the 
need for maintaining a large centralized corporate staff and facilitates the 
maintenance of good relations with local governmental authorities.

          MARKETING

          The Partnership's marketing strategy is to provide added value to 
increasing levels of subscription services through "packaging."  In addition 
to the basic service package, customers in 


                                      -4-

<PAGE>

substantially all of the systems may purchase an expanded group of regulated 
services, additional unregulated packages of satellite-delivered services, 
and premium services.  The Partnership has employed a variety of targeted 
marketing techniques to attract new customers by focusing on delivering 
value, choice, convenience and quality. The Partnership employs direct mail, 
radio and local newspaper advertising, telemarketing and door-to-door selling 
utilizing demographic "cluster codes" to target specific messages to target 
audiences. In certain systems, the Partnership offers discounts to customers 
who purchase premium services on a limited trial basis in order to encourage 
a higher level of service subscription. The Partnership also has a 
coordinated strategy for retaining customers that includes televised 
retention advertising to reinforce the initial decision to subscribe and 
encourage customers to purchase higher service levels.

          CUSTOMER SERVICE AND COMMUNITY RELATIONS

          The Partnership places a strong emphasis on customer service and 
community relations and believes that success in these areas is critical to 
its business. The Partnership has developed and implemented a wide range of 
monthly internal training programs for its employees, including its regional 
managers, that focus on the Partnership's operations and employee interaction 
with customers. The effectiveness of the Partnership's training program as it 
relates to the employees' interaction with customers is monitored on an 
ongoing basis, and a portion of the regional managers' compensation is tied 
to achieving customer service targets. The Partnership conducts an extensive 
customer survey on a periodic basis and uses the information in its efforts 
to enhance service and better address the needs of its customers.  A 
quarterly newsletter keeps customers up to date on new service offerings, 
special events and company information.  In addition, the Partnership is 
participating in the industry's Customer Service Initiative which emphasizes 
an on-time guarantee program for service and installation appointments. The 
Partnership's corporate executives and regional managers lead the 
Partnership's involvement in a number of programs benefiting the communities 
the Partnership serves, including, among others, Cable in the Classroom, Drug 
Awareness, Holiday Toy Drive and the Cystic Fibrosis Foundation. Cable in the 
Classroom is the cable television industry's public service initiative to 
enrich education through the use of commercial-free cable programming.  In 
addition, a monthly publication,  CABLE IN THE CLASSROOM magazine provides 
educational program listings by curriculum area, as well as feature articles 
on how teachers across the country use the programs.


                                      -5-

<PAGE>

DESCRIPTION OF THE PARTNERSHIP'S SYSTEMS

          The table below sets forth certain operating statistics for the 
Partnership's cable systems as of December 31, 1998.
<TABLE>
<CAPTION>
                                                                                   Average
                                                                                   Monthly
                                                         Premium                  Revenue
                  Homes       Basic          Basic       Service     Premium      Per Basic
 System          Passed(1)  Subscribers  Penetration(2)  Units(3)  Penetration(4) Subscriber(5)
 ------          --------   -----------  --------------  --------  -------------- -------------
 <S>             <C>        <C>          <C>             <C>       <C>            <C>
 Hillsboro, IL    11,648       6,389         54.9%        1,362       21.3%          $39.00

 Malden, MO        3,635       2,478         68.2%          432       17.4%          $32.88
                  ------       -----                      -----
 Total            15,283       8,867         58.0%        1,794       20.2%          $37.25
                  ------       -----                      -----
                  ------       -----                      -----
</TABLE>

         (1)  Homes passed refers to estimates by the Partnership of the 
approximate number of dwelling units in a particular community that can be 
connected to the distribution system without any further extension of 
principal transmission lines. Such estimates are based upon a variety of 
sources, including billing records, house counts, city directories and other 
local sources.

         (2)  Basic subscribers as a percentage of homes passed by cable.

         (3)  Premium service units include only single channel services 
offered for a monthly fee per channel and do not include tiers of channels 
offered as a package for a single monthly fee.

         (4)  Premium service units as a percentage of homes subscribing to 
cable service.  A customer may purchase more than one premium service, each 
of which is counted as a separate premium service unit.  This ratio may be 
greater than 100% if the average customer subscribes for more than one 
premium service.

         (5)  Average monthly revenue per basic subscriber has been computed 
based on revenue for the year ended December 31, 1998.


                                      -6-

<PAGE>

CUSTOMER RATES AND SERVICES

          The Partnership's cable television systems offer customers packages 
of services that include the local area network, independent and educational 
television stations, a limited number of television signals from distant 
cities, numerous satellite-delivered, non-broadcast channels (such as CNN, 
MTV, USA, ESPN, TNT and The Disney Channel) and certain informational and 
public access channels.  For an extra monthly charge, the systems provide 
certain premium television services, such as HBO and Showtime.  The 
Partnership also offers other cable television services to its customers. For 
additional charges, in most of its systems, the Partnership also rents remote 
control devices and VCR compatible devices (devices that make it easier for a 
customer to tape a program from one channel while watching a program on 
another).

          The service options offered by the Partnership vary from system to 
system, depending upon a system's channel capacity and viewer interests.  
Rates for services also vary from market to market and according to the type 
of services selected.  

          Pursuant to the 1992 Cable Act, most cable television systems are 
subject to rate regulation of the basic service tier, the non-basic service 
tiers other than premium (per channel or program) services, the charges for 
installation of cable service, and the rental rates for customer premises 
equipment such as converter boxes and remote control devices.  These rate 
regulation provisions affect all of the Partnership's systems not deemed to 
be subject to effective competition under the FCC's definition.  Currently, 
none of the Partnership's systems are subject to effective competition.  See 
"Legislation and Regulation."

          At December 31, 1998, the Partnership's monthly rates for basic 
cable service for residential customers, including certain discounted rates, 
ranged from $17.04 to $24.18 and its premium service rate was $11.95, 
excluding special promotions offered periodically in conjunction with the 
Partnership's marketing programs.  A one-time installation fee, which the 
Partnership may wholly or partially waive during a promotional period, is 
usually charged to new customers.  Commercial customers, such as hotels, 
motels and hospitals, are charged a negotiated, non-recurring fee for 
installation of service and monthly fees based upon a standard discounting 
procedure.  Most multi-unit dwellings are offered a negotiated bulk rate in 
exchange for single-point billing and basic service to all units.  These 
rates are also subject to regulation.

EMPLOYEES

          The various personnel required to operate the Partnership's 
business are employed by the Partnership, the Corporate General Partner, its 
subsidiary corporation and FCLP.  As of February 12, 1999, the Partnership 
had four employees, the cost of which is charged directly to the Partnership. 
The Partnership believes that its relations with its employees are good.  
The employment costs incurred by the Corporate General Partner, its 
subsidiary corporation and FCLP are allocated and charged to the Partnership 
for reimbursement pursuant to the partnership agreement and management 
agreement. Other personnel required to operate the Partnership's business are 
employed by an affiliate of the Corporate General Partner.  The cost of such 
employment is allocated and charged to the Partnership.  The amounts of these 
reimbursable costs are set forth below in Item 11., "Executive Compensation."

TECHNOLOGICAL DEVELOPMENTS

          As part of its commitment to customer service, the Partnership 
seeks to apply technological advances in the cable television industry to its 
cable television systems on the basis of cost effectiveness, capital 
availability, enhancement of product quality and service delivery and 
industry-wide acceptance.  The Partnership's present plan is to upgrade the 
technical quality of its systems' cable plant and to increase channel 
capacity for the delivery of additional programming and new services.  The 
Partnership's Jerseyville, Illinois and Malden, Missouri systems, which 
together serve 50% of the Partnership's customers, have an average channel 
capacity of 38, which was substantially utilized at December 31, 1998.  The 
Partnership's 


                                      -7-

<PAGE>

remaining systems, which serve 50% of its customers, have an average channel 
capacity of 60 and, on average, utilize 72% of their channel capacity.  The 
Partnership believes that system upgrades would enable it to provide 
customers with greater programming diversity, better picture quality and 
alternative communications delivery systems made possible by the introduction 
of fiber optic technology and by the possible future application of digital 
compression. The implementation of the Partnership's capital expenditure 
plans is, however, dependent in part on the availability of adequate capital 
on terms satisfactory to the Partnership, of which there can be no assurance. 
See "Legislation and Regulation" and Item 7., "Management's Discussion and 
Analysis of Financial Condition and Results of Operations."

          The use of fiber optic cable as an alternative to coaxial cable is 
playing a major role in expanding channel capacity and improving the 
performance of cable television systems.  Fiber optic cable is capable of 
carrying hundreds of video, data and voice channels and, accordingly, its 
utilization is essential to the enhancement of a cable television system's 
technical capabilities.  The Partnership's current policy is to utilize fiber 
optic technology where applicable in rebuild projects which it undertakes. 
The benefits of fiber optic technology over traditional coaxial cable 
distribution plant include lower ongoing maintenance and power costs and 
improved picture quality and reliability.

DIGITAL COMPRESSION

          The Partnership has been closely monitoring developments in the 
area of digital compression, a technology that will enable cable operators to 
increase the channel capacity of cable television systems by permitting a 
significantly increased number of video signals to fit in a cable television 
system's existing bandwidth.  Depending on the technical characteristics of 
the existing system, the Partnership believes that the utilization of digital 
compression technology will enable its systems to increase channel capacity 
in certain systems in a manner that could, in the short term, be more cost 
efficient than rebuilding such systems with higher capacity distribution 
plant. However, the Partnership believes that unless the system has 
sufficient unused channel capacity and bandwidth, the use of digital 
compression to increase channel offerings is not a substitute for the rebuild 
of the system, which will improve picture quality, system reliability and 
quality of service.  The use of digital compression will expand the number 
and types of services these systems offer and enhance the development of 
current and future revenue sources.  This technology is under frequent 
management review.

PROGRAMMING

          The Partnership purchases basic and premium programming for its 
systems from FCLP.  In turn, FCLP charges the Partnership for these costs 
based on an estimate of what the Corporate General Partner could negotiate 
for such services for the 15 partnerships managed by the Corporate General 
Partner as a group (approximately 91,000 basic subscribers at December 31, 
1998), which is generally based on a fixed fee per customer or a percentage 
of the gross receipts for the particular service.  Certain other channels 
have also offered FCLP and the Partnership's systems fees in return for 
carrying their service. Due to a lack of channel capacity available for 
adding new channels in certain of its systems, the Partnership's management 
cannot predict the impact of such potential payments on its business.  In 
addition, the FCC may require that such payments from programmers be offset 
against the programming fee increases which can be passed through to 
subscribers under the FCC's rate regulations.  FCLP's programming contracts 
are generally for a fixed period of time and are subject to negotiated 
renewal.  FCLP does not have long-term programming contracts for the supply 
of a substantial amount of its programming.  Accordingly, no assurances can 
be given that its, and correspondingly the Partnership's, programming costs 
will not continue to increase substantially in the near future, or that other 
materially adverse terms will not be added to FCLP's programming contracts.  
Management believes, however, that FCLP's relations with its programming 
suppliers generally are good.

          The Partnership's cable programming costs have increased in recent 
years and are expected to continue to increase due to additional programming 
being provided to basic customers, requirements to carry 


                                      -8-

<PAGE>

channels under retransmission carriage agreements entered into with certain 
programming sources, increased costs to produce or purchase cable programming 
generally (including sports programming), inflationary increases and other 
factors.  The 1996 retransmission carriage agreement negotiations resulted in 
the Partnership agreeing to carry one new service in its Hillsboro system, 
for which it expects to receive reimbursement of certain costs related to 
launching the service.  All other negotiations were completed with 
essentially no change to the previous agreements.  Under the FCC's rate 
regulations, increases in programming costs for regulated cable services 
occurring after the earlier of March 1, 1994, or the date a system's basic 
cable service became regulated, may be passed through to customers.  See 
"Legislation and Regulation - Federal Regulation - Carriage of Broadcast 
Television Signals."  Generally, programming costs are charged among systems 
on a per customer basis.

FRANCHISES

          Cable television systems are generally constructed and operated 
under non-exclusive franchises granted by local governmental authorities.  
These franchises typically contain many conditions, such as time limitations 
on commencement and completion of construction; conditions of service, 
including number of channels, types of programming and the provision of free 
service to schools and certain other public institutions; and the maintenance 
of insurance and indemnity bonds.  The provisions of local franchises are 
subject to federal regulation under the Cable Communications Policy Act of 
1984 (the "1984 Cable Act"), the 1992 Cable Act and the 1996 Telecom Act.  
See "Legislation and Regulation."

          As of December 31, 1998, the Partnership held 11 franchises.  These 
franchises, all of which are non-exclusive, provide for the payment of fees 
to the issuing authority.  Annual franchise fees imposed on the Partnership 
systems range up to 5% of the gross revenues generated by a system.  The 1984 
Cable Act prohibits franchising authorities from imposing franchise fees in 
excess of 5% of gross revenues and also permits the cable system operator to 
seek renegotiation and modification of franchise requirements if warranted by 
changed circumstances.

          The following table groups the franchises of the Partnership's 
cable television systems by date of expiration and presents the number of 
franchises for each group of franchises and the approximate number and 
percentage of homes subscribing to cable service (as a percentage of its 
Partnership total) for each group as of December 31, 1998.
<TABLE>
<CAPTION>
                                               Number of       Percentage of
                  Year of         Number of      Basic             Basic
           Franchise Expiration  Franchises   Subscribers       Subscribers
           --------------------  ----------   -----------      -------------
           <S>                    <C>          <C>               <C>
           Prior to 2000              4          3,515             39.6%
           2000 - 2004                5          4,704             53.1%
           2005 and after             2            219              2.5%
                                     --          -----             ----
           Total                     11          8,438             95.2%
                                     --          -----             ----
                                     --          -----             ----
</TABLE>

          The Partnership operates cable television systems which serve 
multiple communities and, in some circumstances, portions of such systems 
extend into jurisdictions for which the Partnership believes no franchise is 
necessary.  In the aggregate, approximately 429 customers, comprising 
approximately 4.8% of the Partnership's customers, are served by unfranchised 
portions of such systems. In certain instances, where a single franchise 
comprises a large percentage of the customers in an operating region, the 
loss of such franchise could decrease the economies of scale achieved by the 
Partnership's clustering strategy.  The Partnership has never had a franchise 
revoked for any of its systems and believes that it has satisfactory 
relationships with substantially all of its franchising authorities.


                                      -9-

<PAGE>

          The 1984 Cable Act provides, among other things, for an orderly 
franchise renewal process in which franchise renewal will not be unreasonably 
withheld or, if renewal is denied and the franchising authority acquires 
ownership of the system or effects a transfer of the system to another 
person, the operator generally is entitled to the "fair market value" for the 
system covered by such franchise, but no value may be attributed to the 
franchise itself.  In addition, the 1984 Cable Act, as amended by the 1992 
Cable Act, establishes comprehensive renewal procedures which require that an 
incumbent franchisee's renewal application be assessed on its own merit and 
not as part of a comparative process with competing applications. See 
"Legislation and Regulation."

COMPETITION

          Cable television systems compete with other communications and 
entertainment media, including over-the-air television broadcast signals 
which a viewer is able to receive directly using the viewer's own television 
set and antenna.  The extent to which a cable system competes with 
over-the-air broadcasting depends upon the quality and quantity of the 
broadcast signals available by direct antenna reception compared to the 
quality and quantity of such signals and alternative services offered by a 
cable system.  Cable systems also face competition from alternative methods 
of distributing and receiving television signals and from other sources of 
entertainment such as live sporting events, movie theaters and home video 
products, including videotape recorders and videodisc players.  In recent 
years, the FCC has adopted policies providing for authorization of new 
technologies and a more favorable operating environment for certain existing 
technologies that provide, or may provide, substantial additional competition 
for cable television systems.  The extent to which cable television service 
is competitive depends in significant part upon the cable television system's 
ability to provide an even greater variety of programming than that available 
over the air or through competitive alternative delivery sources.

          Individuals presently have the option to purchase home satellite 
dishes, which allow the direct reception of satellite-delivered broadcast and 
nonbroadcast program services formerly available only to cable television 
subscribers. Most satellite-distributed program signals are being 
electronically scrambled to permit reception only with authorized decoding 
equipment for which the consumer must pay a fee.  The 1992 Cable Act enhances 
the right of cable competitors to purchase nonbroadcast satellite-delivered 
programming.  See "Legislation and Regulation-Federal Regulation."

          Television programming is now also being delivered to individuals 
by high-powered direct broadcast satellites ("DBS") utilizing video 
compression technology.  This technology has the capability of providing more 
than 100 channels of programming over a single high-powered DBS satellite 
with significantly higher capacity available if, as is the case with DIRECTV, 
multiple satellites are placed in the same orbital position.  Unlike cable 
television systems, however, DBS satellites are limited by law in their 
ability to deliver local broadcast signals.  One DBS provider, EchoStar, has 
announced plans to deliver a limited number of local broadcast signals in a 
limited number of markets and has initiated efforts to have the practice 
legalized. Legislation has been introduced in Congress which would permit DBS 
operators to elect to provide local broadcast signals to their customers 
under the Copyright Act.  If DBS providers are ultimately permitted to 
deliver local broadcast signals, cable television systems would lose a 
significant competitive advantage.  DBS service can be received virtually 
anywhere in the continental United States through the installation of a small 
rooftop or side-mounted antenna, and it is more accessible than cable 
television service where cable plant has not been constructed or where it is 
not cost effective to construct cable television facilities.  DBS service is 
being heavily marketed on a nationwide basis by several service providers.  
In addition, medium-power fixed-service satellites can be used to deliver 
direct-to-home satellite services over small home satellite dishes, and one 
provider, PrimeStar, currently provides service to subscribers using such a 
satellite.  DIRECTV has recently agreed to purchase PrimeStar.


                                      -10-

<PAGE>

          Multichannel multipoint distribution systems ("wireless cable") 
deliver programming services over microwave channels licensed by the FCC and 
received by subscribers with special antennas.  Wireless cable systems are 
less capital intensive, are not required to obtain local franchises or to pay 
franchise fees, and are subject to fewer regulatory requirements than cable 
television systems.  To date, the ability of wireless cable services to 
compete with cable television systems has been limited by channel capacity 
(35-channel maximum) and the need for unobstructed line-of-sight over-the-air 
transmission. Although relatively few wireless cable systems in the United 
States are currently in operation or under construction, virtually all 
markets have been licensed or tentatively licensed.  The use of digital 
compression technology, and the FCC's recent amendment to its rules, which 
permits reverse path or two-way transmission over wireless facilities, may 
enable wireless cable systems to deliver more channels and additional 
services.

          Private cable television systems compete to service condominiums, 
apartment complexes and certain other multiple unit residential developments. 
The operators of these private systems, known as satellite master antenna 
television ("SMATV") systems, often enter into exclusive agreements with 
apartment building owners or homeowners' associations which preclude 
franchised cable television operators from serving residents of such private 
complexes. However, the 1984 Cable Act gives franchised cable operators the 
right to use existing compatible easements within their franchise areas upon 
nondiscriminatory terms and conditions.  Accordingly, where there are 
preexisting compatible easements, cable operators may not be unfairly denied 
access or discriminated against with respect to the terms and conditions of 
access to those easements.  There have been conflicting judicial decisions 
interpreting the scope of the access right granted by the 1984 Cable Act, 
particularly with respect to easements located entirely on private property. 
Under the 1996 Telecom Act, SMATV systems can interconnect non-commonly owned 
buildings without having to comply with local, state and federal regulatory 
requirements that are imposed upon cable systems providing similar services, 
as long as they do not use public rights of way.

          The FCC has initiated a new interactive television service which 
will permit non-video transmission of information between an individual's 
home and entertainment and information service providers. This service, which 
can be used by DBS systems, television stations and other video programming 
distributors (including cable television systems), is an alternative 
technology for the delivery of interactive video services.  It does not 
appear at the present time that this service will have a material impact on 
the operations of cable television systems.

          The FCC has allocated spectrum in the 28 GHz range for a new 
multichannel wireless service that can be used to provide video and 
telecommunications services.  The FCC recently completed the process of 
awarding licenses to use this spectrum via a market-by-market auction.  It 
cannot be predicted at this time whether such a service will have a material 
impact on the operations of cable television systems.

          Cable systems generally operate pursuant to franchises granted on a 
non-exclusive basis.  In addition, the 1992 Cable Act prohibits franchising 
authorities from unreasonably denying requests for additional franchises and 
permits franchising authorities to build and operate their own cable systems. 
Municipally-owned cable systems enjoy certain competitive advantages such as 
lower-cost financing and exemption from the payment of franchise fees.

          The 1996 Telecom Act eliminates the restriction against ownership 
(subject to certain exceptions) and operation of cable systems by local 
telephone companies within their local exchange service areas.  Telephone 
companies are now free to enter the retail video distribution business 
through any means, such as DBS, wireless cable, SMATV or as traditional 
franchised cable system operators.  Alternatively, the 1996 Telecom Act 
authorizes local telephone companies to operate "open video systems" (a 
facilities-based distribution system, like a cable system, but which is 
"open," i.e., also available for use by programmers other than the owner of 
the facility) without obtaining a local cable franchise, although telephone 
companies operating such systems can be required to make payments to local 
governmental bodies in lieu of cable franchise fees.  Up to two-thirds of the 
channel capacity on an "open video system" must be available to 


                                      -11-

<PAGE>

programmers unaffiliated with the local telephone company. As a result of the 
foregoing changes, well financed businesses from outside the cable television 
industry (such as public utilities that own the poles to which cable is 
attached) may become competitors for franchises or providers of competing 
services.  The 1996 Telecom Act, however, also includes numerous provisions 
designed to make it easier for cable operators and others to compete directly 
with local exchange telephone carriers in the provision of traditional 
telephone service and other telecommunications services.

          Other new technologies, including Internet-based services, may 
become competitive with services that cable television systems can offer.  
The 1996 Telecom Act directed the FCC to establish, and the FCC has adopted, 
regulations and policies for the issuance of licenses for digital television 
("DTV") to incumbent television broadcast licensees.  DTV is expected to 
deliver high definition television pictures, multiple digital-quality program 
streams, as well as CD-quality audio programming and advanced digital 
services, such as data transfer or subscription video.  The FCC also has 
authorized television broadcast stations to transmit textual and graphic 
information useful both to consumers and businesses.  The FCC also permits 
commercial and noncommercial FM stations to use their subcarrier frequencies 
to provide nonbroadcast services including data transmission.  The cable 
television industry competes with radio, television, print media and the 
Internet for advertising revenues.  As the cable television industry 
continues to offer more of its own programming channels, e.g., Discovery and 
USA Network, income from advertising revenues can be expected to increase.

          Recently a number of Internet service providers, commonly known as 
ISPs, have requested local authorities and the FCC to provide rights of 
access to cable television systems' broadband infrastructure in order that 
they be permitted to deliver their services directly to cable television 
systems' customers.  In a recent report, the FCC declined to institute a 
proceeding to examine this issue, and concluded that alternative means of 
access are or soon will be made to a broad range of ISPs.  The FCC declined 
to take action on ISP access to broadband cable facilities, and the FCC 
indicated that it would continue to monitor this issue.  Several local 
jurisdictions also are reviewing this issue.

          Telephone companies are accelerating the deployment of Asymmetric 
Digital Subscriber Line technology, known as ADSL.  These companies report 
that ADSL technology will allow Internet access to subscribers at peak data 
transmission speeds equal or greater than that of modems over conventional 
telephone lines.  Several of the Regional Bell Operating Companies have 
requested the FCC to fully deregulate packet-switched networks (a type of 
data communication in which small blocks of data are independently 
transmitted and reassembled at their destination) to allow them to provide 
high-speed broadband services, including interactive online services, without 
regard to present service boundaries and other regulatory restrictions.  The 
Partnership cannot predict the likelihood of success of the online services 
offered by these competitors, (ISP attempts to gain access to the cable 
industry's broadband facilities), or the impact on the Partnership's business.

          Premium programming provided by cable systems is subject to the 
same competitive factors which exist for other programming discussed above.  
The continued profitability of premium services may depend largely upon the 
continued availability of attractive programming at competitive prices.

          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 competitive effect that 
ongoing or future developments might have on the cable industry.  See 
"Legislation and Regulation."


                                      -12-


<PAGE>
                          LEGISLATION AND REGULATION

          The cable television industry is regulated by the FCC, some state 
governments and substantially all local governments. In addition, various 
legislative and regulatory proposals under consideration from time to time by 
Congress and various federal agencies have in the past materially affected, 
and may in the future materially affect, the Partnership and the cable 
television industry. The following is a summary of federal laws and 
regulations affecting the growth and operation of the cable television 
industry and a description of certain state and local laws. The Partnership 
believes that the regulation of its industry remains a matter of interest to 
Congress, the FCC and other regulatory authorities. There can be no assurance 
as to what, if any, future actions such legislative and regulatory 
authorities may take or the effect thereof on the Partnership.

FEDERAL REGULATION

          The primary federal statute dealing with the regulation of the 
cable television industry is the Communications Act of 1934 (the 
"Communications Act"), as amended. The three principal amendments to the 
Communications Act that shaped the existing regulatory framework for the 
cable television industry were the 1984 Cable Act, the 1992 Cable Act and the 
1996 Telecom Act. 

          The FCC, the principal federal regulatory agency with jurisdiction 
over cable television, has promulgated regulations to implement the 
provisions contained in the Communications Act. The FCC has the authority to 
enforce these 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. A brief summary of certain of these federal regulations as 
adopted to date follows. 

          RATE REGULATION

          The 1992 Cable Act replaced the FCC's previous standard for 
determining "effective competition," under which most cable systems were not 
subject to local rate regulation, with a statutory provision that resulted in 
nearly all cable television systems becoming subject to local rate regulation 
of basic service. The 1996 Telecom Act, however expanded the definition of 
effective competition to include situations where a local telephone company 
or an affiliate, or any multichannel video provider using telephone company 
facilities, offers comparable video service by any means except DBS. A 
finding of effective competition exempts both basic and nonbasic tiers from 
regulation. Additionally, the 1992 Cable Act required the FCC to adopt a 
formula, enforceable by franchising authorities, to assure that basic cable 
rates are reasonable; allowed the FCC to review rates for nonbasic service 
tiers (other than per-channel or per-program services) in response to 
complaints filed by franchising authorities and/or cable customers; 
prohibited cable television systems from requiring subscribers to purchase 
service tiers above basic service in order to purchase premium services if 
the system is technically capable of doing so; required the FCC to adopt 
regulations to establish, on the basis of actual costs, the price for 
installation of cable service, remote controls, converter boxes and 
additional outlets; and allowed the FCC to impose restrictions on the 
retiering and rearrangement of cable services under certain limited 
circumstances. The 1996 Telecom Act limits the class of complainants 
regarding nonbasic tier rates to franchising authorities only and ends FCC 
regulation of nonbasic tier rates on March 31, 1999.

          The FCC's regulations contain standards for the regulation of basic 
and nonbasic cable service rates (other than per-channel or per-program 
services). Local franchising authorities and/or the FCC are empowered to 
order a reduction of existing rates which exceed the maximum permitted level 
for either basic and/or nonbasic cable services and associated equipment, and 
refunds can be required. The rate regulations adopt a benchmark price cap 
system for measuring the reasonableness of existing basic and nonbasic 
service rates. Alternatively, cable operators have the opportunity to make 
cost-of-service showings which, in some cases, may justify rates above the 
applicable benchmarks. The rules also require that charges for cable-related 
equipment (E.G., converter boxes and remote control devices) and installation 
services be unbundled from the provision of


                                     -13-

<PAGE>

cable service and based upon actual costs plus a reasonable profit. The 
regulations also provide that future rate increases may not exceed an 
inflation-indexed amount, plus increases in certain costs beyond the cable 
operator's control, such as taxes, franchise fees and increased programming 
costs. Cost-based adjustments to these capped rates can also be made in the 
event a cable operator adds or deletes channels. In addition, new product 
tiers consisting of services new to the cable system can be created free of 
rate regulation as long as certain conditions are met, such as not moving 
services from existing tiers to the new tier. These provisions currently 
provide limited benefit to the Partnership's systems due to the lack of 
channel capacity previously discussed. There is also a streamlined 
cost-of-service methodology available to justify a rate increase on basic and 
regulated nonbasic tiers for "significant" system rebuilds or upgrades. 

          Franchising authorities have become certified by the FCC to 
regulate the rates charged by the Partnership for basic cable service and for 
installation charges and equipment rental.  The Partnership has had to bring 
its rates and charges into compliance with the applicable benchmark or 
equipment and installation cost levels in substantially all of its systems.  
This has had a negative impact on the Partnership's revenues and cash flow.

          FCC regulations adopted pursuant to the 1992 Cable Act require 
cable systems to permit customers to purchase video programming on a per 
channel or a per program basis without the necessity of subscribing to any 
tier of service, other than the basic service tier, unless the cable system 
is technically incapable of doing so. Generally, an exemption from compliance 
with this requirement for cable systems that do not have such technical 
capability is available until a cable system obtains the capability, but not 
later than December 2002.  At the present time, the Partnership's systems are 
unable to comply with this requirement.

          CARRIAGE OF BROADCAST TELEVISION SIGNALS

          The 1992 Cable Act adopted new television station carriage 
requirements. These rules allow commercial television broadcast stations 
which are "local" to a cable system, I.E., the system is located in the 
station's Area of Dominant Influence, to elect every three years whether to 
require the cable system to carry the station, subject to certain exceptions, 
or whether the cable system will have to negotiate for "retransmission 
consent" to carry the station. Local non-commercial television stations are 
also given mandatory carriage rights, subject to certain exceptions, within 
the larger of: (i) a 50-mile radius from the station's city of license; or 
(ii) the station's Grade B contour (a measure of signal strength). Unlike 
commercial stations, noncommercial stations are not given the option to 
negotiate retransmission consent for the carriage of their signal. In 
addition, cable systems must obtain retransmission consent for the carriage 
of all "distant" commercial broadcast stations, except for certain 
"superstations," I.E., commercial satellite-delivered independent stations, 
such as WGN. The Partnership has thus far not been required to pay cash 
compensation to broadcasters for retransmission consent or been required by 
broadcasters to remove broadcast stations from the cable television channel 
line-ups. The Partnership has, however, agreed to carry some services in 
specified markets pursuant to retransmission consent arrangements which it 
believes are comparable to those entered into by most other large cable 
operators, and for which it pays monthly fees to the service providers, as it 
does with other satellite providers. The second election between must-carry 
and retransmission consent for local commercial television broadcast stations 
was October 1, 1996, and the Partnership has agreed to carry one new service 
in specified markets pursuant to these retransmission consent arrangements. 
The next election between must-carry and retransmission consent for local 
commercial television broadcast stations will be October 1, 1999. 

          The FCC is currently conducting a rulemaking proceeding regarding 
the carriage responsibilities of cable television systems during the 
transition of broadcast television from analog to digital transmission. 
Specifically, the FCC is exploring whether to amend the signal carriage rules 
to accommodate the carriage of digital broadcast television signals.  The 
Partnership is unable to predict the ultimate outcome of this proceeding or 
the impact of new carriage requirements on the operations of its cable 
systems.


                                      -14-

<PAGE>

          NONDUPLICATION OF NETWORK PROGRAMMING

          Cable television systems that have 1,000 or more customers must, 
upon the appropriate request of a local television station, delete the 
simultaneous or nonsimultaneous network programming of certain lower priority 
distant stations affiliated with the same network as the local station. 

          DELETION OF SYNDICATED PROGRAMMING

          FCC regulations enable television broadcast stations that have 
obtained exclusive distribution rights for syndicated programming in their 
market to require a cable system to delete or "black out" such programming 
from certain other television stations which are carried by the cable system. 
The extent of such deletions will vary from market to market and cannot be 
predicted with certainty. However, it is possible that such deletions could 
be substantial and could lead the cable operator to drop a distant signal in 
its entirety. 

          PROGRAM ACCESS

          The 1992 Cable Act contains provisions that are intended to foster 
the development of competition to traditional cable systems by regulating the 
access of competing multichannel video providers to vertically integrated, 
satellite-distributed cable programming services.  Consequently, with certain 
limitations, the federal law generally precludes any satellite distributed 
programming service affiliated with a cable company from favoring an 
affiliated company over competitors; requires such programmers to sell their 
programming to other multichannel video providers; and limits the ability of 
such satellite program services to offer exclusive programming arrangements 
to their affiliates.

          FRANCHISE FEES

          Franchising authorities may impose franchise fees, but such 
payments cannot exceed 5% of a cable system's annual gross revenues. Under 
the 1996 Telecom Act, franchising authorities may not exact franchise fees 
from revenues derived from telecommunications services. 

          RENEWAL OF FRANCHISES

          The 1984 Cable Act established renewal procedures and criteria 
designed to protect incumbent franchisees against arbitrary denials of 
renewal. While these formal procedures are not mandatory unless timely 
invoked by either the cable operator or the franchising authority, they can 
provide substantial protection to incumbent franchisees. Even after the 
formal renewal procedures are invoked, franchising authorities and cable 
operators remain free to negotiate a renewal outside the formal process. 
Nevertheless, renewal is by no means assured, as the franchisee must meet 
certain statutory standards. Even if a franchise is renewed, a franchising 
authority may impose new and more onerous requirements such as upgrading 
facilities and equipment, although the municipality must take into account 
the cost of meeting such requirements. 

          The 1992 Cable Act makes several changes to the process under which 
a cable operator seeks to enforce his renewal rights, which could make it 
easier in some cases for a franchising authority to deny renewal. While a 
cable operator must still submit its request to commence renewal proceedings 
within thirty to thirty-six months prior to franchise expiration to invoke 
the formal renewal process, the request must be in writing and the 
franchising authority must commence renewal proceedings not later than six 
months after receipt of such notice. The four-month period for the 
franchising authority to grant or deny the renewal now runs from the 
submission of the renewal proposal, not the completion of the public 
proceeding. Franchising authorities may consider the "level" of programming 
service provided by a cable operator in deciding whether to renew. For 
alleged franchise violations occurring after December 29, 1984, franchising 
authorities are no longer precluded from denying renewal based on failure to 
substantially comply with the material terms of the franchise where the 
franchising authority has "effectively acquiesced" to such past violations. 
Rather, the franchising authority is estopped if,


                                      -15-

<PAGE>

after giving the cable operator notice and opportunity to cure, it fails to 
respond to a written notice from the cable operator of its failure or 
inability to cure. Courts may not reverse a denial of renewal based on 
procedural violations found to be "harmless error." 

          CHANNEL SET-ASIDES

          The 1984 Cable Act permits local franchising authorities to require 
cable operators to set aside certain channels for public, educational and 
governmental access programming. The 1984 Cable Act further requires cable 
television systems with thirty-six or more activated channels to designate a 
portion of their channel capacity for commercial leased access by 
unaffiliated third parties. While the 1984 Cable Act allowed cable operators 
substantial latitude in setting leased access rates, the 1992 Cable Act 
requires leased access rates to be set according to a formula determined by 
the FCC.

          COMPETING FRANCHISES

          The 1992 Cable Act prohibits franchising authorities from 
unreasonably refusing to grant franchises to competing cable television 
systems and permits franchising authorities to operate their own cable 
television systems without franchises. 

          OWNERSHIP

          The 1996 Telecom Act repealed the 1984 Cable Act's prohibition 
against local exchange telephone companies ("LECs") providing video 
programming directly to customers within their local telephone exchange 
service areas. However, with certain limited exceptions, a LEC may not 
acquire more than a 10% equity interest in an existing cable system operating 
within the LEC's service area. The 1996 Telecom Act also authorized LECs and 
others to operate "open video systems".  A recent judicial decision 
overturned various parts of the FCC's open video rules, including the FCC's 
restriction preventing local governmental authorities from requiring open 
video system operators to obtain a franchise. The Partnership expects the FCC 
to modify its open video rules to comply with the federal court's decision, 
but is unable to predict the impact any rule modifications may have on the 
Partnership's business and operations. See "Business-Competition." 

          The 1984 Cable Act and the FCC's rules prohibit the common 
ownership, operation, control or interest in a cable system and a local 
television broadcast station whose predicted grade B contour (a measure of a 
television station's signal strength as defined by the FCC's rules) covers 
any portion of the community served by the cable system. The 1996 Telecom Act 
eliminates the statutory ban and directs the FCC to review its rule within 
two years.  Such a review is presently pending.  Finally, in order to 
encourage competition in the provision of video programming, the FCC adopted 
a rule prohibiting the common ownership, affiliation, control or interest in 
cable television systems and wireless cable facilities having overlapping 
service areas, except in very limited circumstances. The 1992 Cable Act 
codified this restriction and extended it to co-located SMATV systems. 
Permitted arrangements in effect as of October 5, 1992 are grandfathered. The 
1996 Telecom Act exempts cable systems facing effective competition from the 
wireless cable and SMATV restriction. In addition, a cable operator can 
purchase a SMATV system serving the same area and technically integrate it 
into the cable system. The 1992 Cable Act permits states or local franchising 
authorities to adopt certain additional restrictions on the ownership of 
cable television systems. 

          Pursuant to the 1992 Cable Act, the FCC has imposed limits on the 
number of cable systems which a single cable operator can own. In general, no 
cable operator can have an attributable interest in cable systems which pass 
more than 30% of all homes nationwide. Attributable interests for these 
purposes include voting interests of 5% or more (unless there is another 
single holder of more than 50% of the voting stock), officerships, 
directorships, general partnership interests and limited partnership 
interests (unless the limited partners have no material involvement in the 
limited partnership's business). These rules are under review by the 


                                      -16-

<PAGE>

FCC.  The FCC has stayed the effectiveness of these rules pending the outcome 
of the appeal from a U.S. District Court decision holding the multiple 
ownership limit provision of the 1992 Cable Act unconstitutional.

          The FCC has also adopted rules which limit the number of channels 
on a cable system which can be occupied by programming in which the entity 
which owns the cable system has an attributable interest. The limit is 40% of 
the first 75 activated channels. 

          The FCC also recently commenced a rulemaking proceeding to examine, 
among other issues, whether any limitations on cable-DBS cross-ownership are 
warranted in order to prevent anticompetitive conduct in the video services 
market. 

          FRANCHISE TRANSFERS

          The 1992 Cable Act requires franchising authorities to act on any 
franchise transfer request submitted after December 4, 1992 within 120 days 
after receipt of all information required by FCC regulations and by the 
franchising authority. Approval is deemed to be granted if the franchising 
authority fails to act within such period. 

          TECHNICAL REQUIREMENTS

          The FCC has imposed technical standards applicable to the cable 
channels on which broadcast stations are carried, and has prohibited 
franchising authorities from adopting standards which are in conflict with or 
more restrictive than those established by the FCC. Those standards are 
applicable to all classes of channels which carry downstream National 
Television System Committee (the "NTSC") video programming. The FCC also has 
adopted additional standards applicable to cable television systems using 
frequencies in the 108-137 MHz and 225-400 MHz bands in order to prevent 
harmful interference with aeronautical navigation and safety radio services 
and has also established limits on cable system signal leakage. Periodic 
testing by cable operators for compliance with the technical standards and 
signal leakage limits is required and an annual filing of the results of 
these measurements is required. The 1992 Cable Act requires the FCC to 
periodically update its technical standards to take into account changes in 
technology. Under the 1996 Telecom Act, local franchising authorities may not 
prohibit, condition or restrict a cable system's use of any type of 
subscriber equipment or transmission technology. 

          The FCC has adopted regulations to implement the requirements of 
the 1992 Cable Act designed to improve the compatibility of cable systems and 
consumer electronics equipment. Among other things, these regulations 
generally prohibit cable operators from scrambling their basic service tier. 
The 1996 Telecom Act directs the FCC to set only minimal standards to assure 
compatibility between television sets, VCRs and cable systems, and to rely on 
marketplace competition to best determine which features, functions, 
protocols, and product and service options meet the needs of consumers.

          Pursuant to the 1992 Cable Act, the FCC has adopted rules to assure 
the competitive availability to consumers of customers premises equipment, 
such as converters, used to access the services offered by cable television 
systems and other multichannel video programming distributions ("MVPD"). 
Pursuant to those rules, consumers are given the right to attach compatible 
equipment to the facilities of their MVPD so long as the equipment does not 
harm the network, does not interfere with the services purchased by other 
customers, and is not used to receive unauthorized services. As of July 1, 
2000, MVPDs (other than DBS operators) are required to separate security from 
non-security functions in the customer premises equipment which they sell or 
lease to their customers and offer their customers the option of using 
component security modules obtained from the MVPD with set-top units 
purchased or leased from retail outlets. As of January 1, 2005, MVPDs will be 
prohibited from distributing new set -top equipment integrating both security 
and non-security functions to their customers. 


                                      -17-

<PAGE>

          POLE ATTACHMENTS

          The FCC currently regulates the rates and conditions imposed by 
certain public utilities for use of their poles unless state public service 
commissions are able to demonstrate that they regulate the rates, terms and 
conditions of cable television pole attachments. The state of Illinois, in 
which the Partnership operates cable systems, has certified to the FCC that 
it regulates the rates, terms and conditions for pole attachments. In the 
absence of state regulation, the FCC administers such pole attachment rates 
through use of a formula which it has devised.  The 1996 amendments to the 
Communications Act modified the FCC's pole attachment regulatory scheme by 
requiring the FCC to adopt new regulations.  These regulations become 
effective in 2001 and govern the charges for pole attachments used by 
companies, including cable operators, that provide telecommunications 
services by immediately permitting certain providers of telecommunications 
services to rely upon the protections of the current law until the new rate 
formula becomes effective in 2001, 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.  In adopting 
its new attachment regulations, the FCC concluded, in part, that a cable 
operator providing Internet service on its cable system is not providing a 
telecommunications service for purposes of the new rules.

          The new rate formula adopted by the FCC and which is applicable for 
any party, including cable systems, which offer telecommunications services 
will result in significantly higher attachment rates for cable systems which 
choose to offer such services.  Any resulting increase in attachment rates as 
a result of the FCC's new rate formula will be phased in over a five-year 
period in equal annual increments, beginning in February 2001.  Several 
parties have requested the FCC to reconsider its new regulations and several 
parties have challenged the new rules in court.  A federal district court 
recently upheld the constitutionality of the new statutory provision, and the 
utilities involved in that litigation have appealed the lower court's 
decision.  The FCC also has initiated a proceeding to determine whether it 
should adjust certain elements of the current rate formula.  If adopted, 
these adjustments could increase rates for pole attachments and conduit 
space.  The Partnership is unable to predict the outcome of this current 
litigation or the ultimate impact of any revised FCC rate formula or of any 
new pole attachment rate regulations on its business and operations.

          OTHER MATTERS

          Other matters subject to FCC regulation include certain 
restrictions on a cable system's carriage of local sports programming; rules 
governing political broadcasts; customer service standards; obscenity and 
indecency; home wiring; equal employment opportunity; privacy; closed 
captioning; sponsorship identification; system registration; and limitations 
on advertising contained in nonbroadcast children's programming. 

          COPYRIGHT

          Cable television systems are subject to federal copyright licensing 
covering carriage of broadcast signals. In exchange for making semi-annual 
payments to a federal copyright royalty pool and meeting certain other 
obligations, cable operators obtain a statutory license to retransmit 
broadcast signals. The amount of this royalty payment varies, depending on 
the amount of system revenues from certain sources, the number of distant 
signals carried, and the location of the cable system with respect to 
over-the-air television stations. Any future adjustment to the copyright 
royalty rates will be done through an arbitration process supervised by the 
U.S. Copyright Office. 

          Cable operators are liable for interest on underpaid and unpaid 
royalty fees, but are not entitled to collect interest on refunds received 
for overpayment of copyright fees. 

          Copyrighted music performed in programming supplied to cable 
television systems by pay cable networks (such as HBO) and basic cable 
networks (such as USA Network) is licensed by the networks through private 
agreements with the American Society of Composers and Publishers ("ASCAP") 
and BMI, Inc. ("BMI"), 


                                      -18-

<PAGE>

the two major performing rights organizations in the United States. As a 
result of extensive litigation, both ASCAP and BMI now offer "through to the 
viewer" licenses to the cable networks which cover the retransmission of the 
cable networks' programming by cable systems to their customers.  Payment for 
music performed in programming offered on a per program basis remains 
unsettled. The Partnership recently participated in a settlement with BMI for 
payment of fees in connection with the Request pay-per-view network.  
Industry litigation of this issue with ASCAP is likely.

          Copyrighted music transmitted by cable systems themselves, E.G., on 
local origination channels or in advertisements inserted locally on cable 
networks, must also be licensed. Cable industry negotiations with ASCAP, BMI 
and SESAC, Inc. (a third and smaller performing rights organization) are in 
progress. 

LOCAL REGULATION

          Because a cable television system uses local streets and 
rights-of-way, cable television systems generally are operated pursuant to 
nonexclusive 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 franchise operator fails 
to comply with material provisions. Although the 1984 Cable Act provides for 
certain procedural protections, there can be no assurance that renewals will 
be granted or that renewals will be made on similar terms and conditions. 
Upon receipt of a franchise, the cable system owner usually is subject to a 
broad range of obligations to the issuing authority directly affecting the 
business of the system. The terms and conditions of franchises vary 
materially from jurisdiction to jurisdiction, and even from city to city 
within the same state, historically ranging from reasonable to highly 
restrictive or burdensome. The specific terms and conditions of a franchise 
and the laws and regulations under which it was granted directly affect the 
profitability of the cable television system. Cable franchises generally 
contain provisions governing charges for basic cable television services, 
fees to be paid to the franchising authority, length of the franchise term, 
renewal, sale or transfer of the franchise, territory of the franchise, 
design and technical performance of the system, use and occupancy of public 
streets and the number and types of cable services provided. The 1996 Telecom 
Act prohibits a franchising authority from either requiring or limiting a 
cable operator's provision of telecommunications services. 

          The 1984 Cable Act places certain limitations on a franchising 
authority's ability to control the operation of a cable system operator, and 
the courts have from time to time reviewed the constitutionality of several 
general franchise requirements, including franchise fees and access channel 
requirements, often with inconsistent results. On the other hand, the 1992 
Cable Act prohibits exclusive franchises, and allows franchising authorities 
to exercise greater control over the operation of franchised cable television 
systems, especially in the area of customer service and rate regulation. 
Moreover, franchising authorities are immunized from monetary damage awards 
arising from regulation of cable television systems or decisions made on 
franchise grants, renewals, transfers and amendments. 

          Existing federal regulations, copyright licensing and, in many 
jurisdictions, state and local franchise requirements, currently are the 
subject of a variety of judicial proceedings, legislative hearings and 
administrative and legislative proposals which could change, in varying 
degrees, the manner in which cable television systems operate. Neither the 
outcome of these proceedings nor their impact upon the cable television 
industry can be predicted at this time. 

ITEM 2.   PROPERTIES

          The Partnership owns or leases parcels of real property for signal 
reception sites (antenna towers and headends), microwave facilities and 
business offices, and owns or leases its service vehicles.  The Partnership 
believes that its properties, both owned and leased, are in good condition 
and are suitable and adequate for the Partnership's business operations.


                                      -19-

<PAGE>

          The Partnership owns substantially all of the assets related to its 
cable television operations, including its program production equipment, 
headend (towers, antennas, electronic equipment and satellite earth 
stations), cable plant (distribution equipment, amplifiers, customer drops 
and hardware), converters, test equipment and tools and maintenance equipment.

ITEM 3.   LEGAL PROCEEDINGS

          The Partnership is periodically a party to various legal 
proceedings. Such legal proceedings are ordinary and routine litigation 
proceedings that are incidental to the Partnership's business and management 
believes that the outcome of all pending legal proceedings will not, in the 
aggregate, have a material adverse effect on the financial condition of the 
Partnership.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.


                                      -20-

<PAGE>

                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S EQUITY SECURITIES AND RELATED SECURITY
          HOLDER MATTERS

LIQUIDITY

          While the Partnership's equity securities, which consist of units 
of limited partnership interests, are publicly held, there is no established 
public trading market for the units and it is not expected that a market will 
develop. The approximate number of equity security holders of record was 774 
as of December 31, 1998. In addition to restrictions on the transferability 
of units contained in the partnership agreement, the transferability of units 
may be affected by restrictions on resales imposed by federal or state law.

          Pursuant to documents filed with the Securities and Exchange 
Commission on February 12, 1999, Madison Liquidity Investors 104, LLC 
("Madison") initiated a tender offer to purchase up to approximately 9.9% of 
the outstanding units for $225 per unit.  On February 19, 1999, the 
Partnership filed a Recommendation Statement on Schedule 14D-9 and 
distributed a letter to unitholders recommending that unitholders reject 
Madison's offer.

DISTRIBUTIONS

          The amended partnership agreement generally provides that all cash 
distributions (as defined) be allocated 1% to the general partners and 99% to 
the limited partners until the limited partners have received aggregate cash 
distributions equal to their original capital contributions ("Capital 
Payback"). The partnership agreement also provides that all partnership 
profits, gains, operational losses, and credits (all as defined) be allocated 
1% to the general partners and 99% to the limited partners until the limited 
partners have been allocated net profits equal to the amount of cash flow 
required for Capital Payback.  After the limited partners have received cash 
flow equal to their initial investments, the general partners will receive a 
1% allocation of cash flow from sale or liquidation of a system until the 
limited partners have received an annual simple interest return of at least 
18% of their initial investments less any distributions from previous system 
sales and cash distributions from operations after Capital Payback.  
Thereafter, the respective allocations will be made 15% to the general 
partners and 85% to the limited partners. Any losses from system sales or 
exchanges shall be allocated first to all partners having positive capital 
account balances (based on their respective capital accounts) until all such 
accounts are reduced to zero and thereafter to the Corporate General Partner. 
All allocations to individual limited partners will be based on their 
respective limited partnership ownership interests.

          Upon the disposition of substantially all of the partnership 
assets, gain shall be allocated first to the limited partners having negative 
capital account balances until their capital accounts are increased to zero, 
next equally among the general partners until their capital accounts are 
increased to zero, and thereafter as outlined in the preceding paragraph.  
Upon dissolution of the Partnership, any negative capital account balances 
remaining after all allocations and distributions are made must be funded by 
the respective partners.

          The policy of the Corporate General Partner (although there is no 
contractual obligation to do so) is to cause the Partnership to make cash 
distributions on a quarterly basis throughout the operational life of the 
Partnership, assuming the availability of sufficient cash flow from 
Partnership operations.  The amount of such distributions, if any, will vary 
from quarter to quarter depending upon the Partnership's results of 
operations and the Corporate General Partner's determination of whether 
otherwise available funds are needed for the Partnership's ongoing working 
capital and liquidity requirements. However, on February 22, 1994, the FCC 
announced significant amendments to its rules implementing certain provisions 
of the 1992 


                                       -21-

<PAGE>

Cable Act.  Compliance with these rules has had a negative impact on the 
Partnership's revenues and cash flow.

          The Partnership began making periodic cash distributions to limited 
partners from operations during 1986.  No distributions were made during 
1996, 1997 or 1998.  As a result of its liquidity requirements, management 
has concluded that it is not prudent for the Partnership to resume paying 
distributions at this time.

          The Partnership's ability to pay distributions, the actual level of 
distributions and the continuance of distributions, if any, will depend on a 
number of factors, including the amount of cash flow from operations, 
projected capital expenditures, provision for contingent liabilities, 
availability of bank refinancing, regulatory or legislative developments 
governing the cable television industry, and growth in customers.  Some of 
these factors are beyond the control of the partnership, and consequently, no 
assurances can be given regarding the level or timing of future distributions.





                                      -22-
<PAGE>

Item 6. SELECTED FINANCIAL DATA

          Set forth below is selected financial data of the Partnership for 
the five years ended December 31, 1998.  This data should be read in 
conjunction with the Partnership's financial statements included in Item 8 
hereof and "Management's Discussion and Analysis of Financial Condition and 
Results of Operations" included in Item 7.

<TABLE>
<CAPTION>
                                                                                  As of December 31,
                                               ---------------------------------------------------------------------------------
OPERATIONS STATEMENT DATA                            1994             1995             1996             1997             1998
                                               --------------     -------------    -------------    -------------    ------------
<S>                                            <C>                <C>              <C>              <C>              <C>
 Revenues                                      $   2,985,500      $  3,126,900     $  3,510,300     $  3,836,000     $  3,968,300
 Costs and expenses                               (1,757,700)       (1,792,100)      (1,943,600)      (2,094,100)      (2,219,000)
 Depreciation and amortization                    (1,000,700)         (924,600)        (927,400)        (706,300)        (671,100)
                                               --------------     -------------    -------------    -------------    ------------
 Operating income                                    227,100           410,200          639,300        1,035,600        1,078,200
 Interest expense                                    (74,300)          (81,700)         (58,400)         (22,300)         (15,300)
 Interest income                                      24,300            73,400           84,800          129,000          175,100
 Gain (loss) on disposal of cable assets                -                1,100           (3,200)          -                (1,500)
                                               --------------     -------------    -------------    -------------    ------------
 Net income                                    $     177,100      $    403,000     $    662,500     $  1,142,300     $  1,236,500
                                               --------------     -------------    -------------    -------------    ------------
                                               --------------     -------------    -------------    -------------    ------------
PER UNIT OF LIMITED
  PARTNERSHIP INTEREST:
    Net income                                 $        5.87      $      13.35     $      21.95     $      37.85     $      40.97
                                               --------------     -------------    -------------    -------------    ------------
                                               --------------     -------------    -------------    -------------    ------------
OTHER OPERATING DATA

 Net cash provided by operating activities     $     979,500      $  1,415,300     $  1,698,800     $  2,062,900     $  1,671,300
 Net cash used in investing activities              (167,400)         (699,100)      (1,110,800)        (952,200)        (281,800)
 Net cash used in financing activities                (2,400)               --         (483,700)              --               --
 EBITDA (1)                                        1,227,800         1,334,800        1,566,700        1,741,900        1,749,300
 EBITDA to revenues                                     41.1%             42.7%            44.6%            45.4%            44.1%
 Total debt to EBITDA                                     .4x               .4x              --               --               --
 Capital expenditures                          $     142,600      $    674,000     $  1,084,000     $    930,600     $    273,000

                                                                                  As of December 31,
                                               ---------------------------------------------------------------------------------
BALANCE SHEET DATA                                   1994             1995             1996             1997             1998
                                               --------------     -------------    -------------    -------------    ------------
<S>                                            <C>                <C>              <C>              <C>              <C>
 Total assets                                  $   4,551,900      $  5,026,700     $  5,340,100     $  6,649,400     $  7,797,300

 Total debt                                          483,700           483,700               --               --               --

 General partners' deficit                           (36,200)          (32,200)         (25,600)         (14,200)          (1,800)

 Limited partners' capital                         3,783,800         4,182,800        4,838,700        5,969,600        7,193,700

</TABLE>

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

          (1) EBITDA is calculated as operating income before depreciation and 
amortization.  Based on its experience in the cable television industry, the 
Partnership believes that EBITDA and related measures of cash flow serve as 
important financial analysis tools for measuring and comparing cable 
television companies in several areas, such as liquidity, operating 
performance and leverage.  EBITDA is not a measurement determined under GAAP 
and does not represent cash generated from operating activities in accordance 
with GAAP. EBITDA should not be considered by the reader as an alternative to 
net income as an indicator of the Partnership's financial performance or as 
an alternative to cash flows as a measure of liquidity.  In addition, the 
Partnership's definition of EBITDA may not be identical to similarly titled 
measures used by other companies.

                                       -23-

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

INTRODUCTION

          The 1992 Cable Act required the FCC to, among other things, 
implement extensive regulation of the rates charged by cable television 
systems for basic and programming service tiers, installation, and customer 
premises equipment leasing.  Compliance with those rate regulations has had a 
negative impact on the Partnership's revenues and cash flow.  The 1996 
Telecom Act substantially changed the competitive and regulatory environment 
for cable television and telecommunications service providers.  Among other 
changes, the 1996 Telecom Act provides that the regulation of CPST rates will 
terminate on March 31, 1999. There can be no assurance as to what, if any, 
further action may be taken by the FCC, Congress or any other regulatory 
authority or court, or the effect thereof on the Partnership's business.  
Accordingly, the Partnership's historical financial results as described 
below are not necessarily indicative of future performance.

          This Report includes certain forward looking statements regarding, 
among other things, future results of operations, regulatory requirements, 
competition, capital needs and general business conditions applicable to the 
Partnership.  Such forward looking statements involve risks and uncertainties 
including, without limitation, the uncertainty of legislative and regulatory 
changes and the rapid developments in the competitive environment facing 
cable television operators such as the Partnership, as discussed more fully 
elsewhere in this Report.

RESULTS OF OPERATIONS

          1998 COMPARED TO 1997

          The Partnership's revenues increased from $3,836,000 to $3,968,300, 
or by 3.4%, for the year ended December 31, 1998 as compared to 1997.  Of the 
$132,300 increase, $149,100 was due to increases in regulated service rates 
that were implemented by the Partnership in 1997, and $42,100 was due to 
increases in other revenue producing items.  The increases were partially 
offset by a $58,900 decrease due to decreases in the number of subscriptions 
for premium, tier and equipment rental services.  As of December 31, 1998, 
the Partnership had approximately 8,900 basic subscribers and 1,800 premium 
service units.

          Service costs increased from $1,194,500 to $1,252,000, or by 4.8%, 
for the year ended December 31, 1998 as compared to 1997.  Service costs 
represent costs directly attributable to providing cable services to 
customers.  The increase was primarily due to decreases in capitalization of 
labor and overhead costs resulting from reductions in 1998 rebuild 
construction activity in the Jerseyville, Illinois franchise area.  Higher 
programming fees also contributed to the increase.  Programming expense 
increased primarily as a result of higher rates charged by program suppliers.

          General and administrative expenses increased from $361,100 to 
$405,500, or by 12.3%, for the year ended December 31, 1998 as compared to 
1997, primarily due to higher audit fees and bad debt expense.

          Management fees and reimbursed expenses increased from $538,500 to 
$561,500, or by 4.3%, for the year ended December 31, 1998 as compared to 
1997. Management fees increased in direct relation to increased revenues as 
described above.  Reimbursed expenses increased primarily due to higher 
allocated personnel costs resulting from staff additions.

                                       -24-

<PAGE>

          Depreciation and amortization expense decreased from $706,300 to 
$671,100, or by 5.0%, for the year ended December 31, 1998 as compared to 
1997 due to certain plant assets in Missouri becoming fully depreciated in 
the fourth quarter of 1997.

          Operating income increased from $1,035,600 to $1,078,200, or by 
4.1%, for the year ended December 31, 1998 as compared to 1997, due primarily 
to increases in revenues and decreases in depreciation and amortization as 
described above.

          Interest income, net of interest expense, increased from $106,700 
to $159,800, or by 49.8%, for the year ended December 31, 1998 as compared to 
1997, primarily due to higher average cash balances available for investment 
during 1998.

          Due to the factors described above, the Partnership's net income 
increased from $1,142,300 to $1,236,500 for the year ended December 31, 1998 
as compared to 1997.

          EBITDA is calculated as operating income before depreciation and 
amortization.  See footnote 1 to "Selected Financial Data."  EBITDA as a 
percentage of revenues decreased from 45.4% during 1997 to 44.1% in 1998.  
The decrease was primarily due to decreases in capitalization of labor and 
overhead costs and increases in programming fees.  EBITDA increased from 
$1,741,900 to $1,749,300, or by less than 1.0%, as a result.

          1997 COMPARED TO 1996

          The Partnership's revenues increased from $3,510,300 to $3,836,000, 
or by 9.3%, for the year ended December 31, 1997 as compared to 1996.  Of the 
$325,700 increase, $307,300 was due to increases in regulated service rates 
that were implemented by the Partnership in the second and fourth quarters of 
1996 and the fourth quarter of 1997, $37,600 was due to the July 1, 1996 
restructuring of The Disney Channel from a premium channel to a tier channel 
and $11,600 was due to increases in the number of subscriptions for basic and 
premium services.  These increases were partially offset by a $30,800 
decrease in other revenue producing items, including incentive fees from 
programmers, installation revenue and advertising sales revenue.  As of 
December 31, 1997, the Partnership had approximately 8,900 basic subscribers 
and 2,100 premium service units.

          Service costs increased from $1,078,100 to $1,194,500, or by 10.8%, 
for the year ended December 31, 1997 as compared to 1996.  Service costs 
represent costs directly attributable to providing cable services to 
customers. Programming fees, copyright fees and franchise fees accounted for 
the majority of the increase.  Programming expense increased primarily as a 
result of higher rates charged by program suppliers while copyright fees and 
franchise fees increased due to increases in revenues as described above.

          General and administrative expenses decreased from $389,700 to 
$361,100, or by 7.3%, for the year ended December 31, 1997 as compared to 
1996, primarily due to a decrease in insurance premiums and lower personnel 
costs.

          Management fees and reimbursed expenses increased from $475,800 to 
$538,500, or by 13.2%, for the year ended December 31, 1997 as compared to 
1996. Management fees increased in direct relation to increased revenues as 
described above.  Reimbursed expenses increased primarily due to higher 
allocated personnel costs resulting from staff additions and wage increases.

          Depreciation and amortization expense decreased from $927,400 to 
$706,300, or by 23.8%, for the year ended December 31, 1997 as compared to 
1996 due to certain plant assets becoming fully depreciated in 1996.

                                       -25-

<PAGE>

          Operating income increased from $639,300 to $1,035,600, or by 
62.0%, for the year ended December 31, 1997 as compared to 1996, due 
primarily to increases in revenues as described above.

          Interest expense decreased from $58,400 to $22,300, or by 61.8%, 
for the year ended December 31, 1997 as compared to 1996, due to the 
repayment of the Partnership's note payable in August 1996.

          Interest income increased from $84,800 to $129,000, or by 52.1%, 
for the year ended December 31, 1997 as compared to 1996, primarily due to 
higher cash balances available for investment.

          Due to the factors described above, the Partnership's net income 
increased from $662,500 to $1,142,300 for the year ended December 31, 1997 as 
compared to 1996.

          EBITDA is calculated as operating income before depreciation and 
amortization.  See footnote 1 to "Selected Financial Data."  EBITDA as a 
percentage of revenues increased from 44.6% during 1996 to 45.4% in 1997.  
The increase was primarily caused by increased revenues.  EBITDA increased 
from $1,566,700 to $1,741,900, or by 11.2%, as a result.

LIQUIDITY AND CAPITAL RESOURCES

          The Partnership's primary objective, having invested its net 
offering proceeds in cable systems, is to distribute to its partners all 
available cash flow from operations and proceeds from the sale of cable 
systems, if any, after providing for expenses, debt service and capital 
requirements relating to the expansion, improvement and upgrade of its cable 
systems.

          Based on its belief that the market for cable systems has generally 
improved, the Corporate General Partner is evaluating strategies for 
liquidating the Partnership.  These strategies include the potential sale of 
substantially all of the Partnership's assets to third parties and/or 
affiliates of the Corporate General Partner, and the subsequent liquidation 
of the Partnership. The Corporate General Partner expects to complete its 
evaluation within the next several months and intends to advise unitholders 
promptly if it believes that commencing a liquidating transaction would be in 
the best interests of unitholders.

          At December 31, 1998, the Partnership had no debt outstanding.  The 
Partnership relies upon the availability of cash generated from operations to 
fund its ongoing expenses and capital requirements.  The Partnership is 
required to rebuild its Jerseyville, Illinois cable system at an estimated 
total cost of approximately $94,800 under a provision of its franchise 
agreement.  The Partnership is also rebuilding portions of its cable systems 
in surrounding communities at an estimated additional cost of approximately 
$1,968,900.  The Partnership spent approximately $102,400 during 1998 on both 
rebuild projects. Project costs related to the required rebuild in 
Jerseyville approximated $90,200 from inception through December 31, 1998 and 
rebuild costs in the surrounding communities amounted to $1,873,500 from 
inception through December 31, 1998.  The Partnership is budgeted to spend 
approximately $100,000 in 1999 to complete the two projects.  Other capital 
expenditures budgeted for 1999 include $486,800 for replacement and upgrade 
of other assets.  Additionally, the Partnership is required to upgrade its 
cable plant in Malden, Missouri at an estimated cost of approximately 
$1,800,000, the start of which is dependent upon obtaining a renewal of the 
franchise agreement for that community.  The Partnership also has tentative 
plans for a project in 2001 to upgrade its Pana, Illinois cable system at an 
estimated cost of approximately $1.1 million.

          The Corporate General Partner believes that cash flow from 
operations will be adequate to meet the Partnership's current liquidity 
requirements, including the funding for capital expenditures discussed above. 
However, as a result of such liquidity requirements, the Corporate General 
Partner has concluded that it is not prudent for the Partnership to resume 
paying distributions at this time.

                                       -26-

<PAGE>

          Beginning in August 1997, the Corporate General Partner elected to 
self-insure the Partnership's cable distribution plant and subscriber 
connections against property damage as well as possible business 
interruptions caused by such damage.  The decision to self-insure was made 
due to significant increases in the cost of insurance coverage and decreases 
in the amount of insurance coverage available.

          In October 1998, FCLP reinstated third party insurance coverage for 
all of the cable television properties owned or managed by FCLP to cover 
damage to cable distribution plant and subscriber connections and against 
business interruptions resulting from such damage.  This coverage is subject 
to a significant annual deductible which applies to all of the cable 
television properties owned or managed by FCLP.

          Approximately 72% of the Partnership's subscribers are served by 
its system in Hillsboro, Illinois and neighboring communities.  Significant 
damage to the system due to seasonal weather conditions or other events could 
have a material adverse effect on the Partnership's liquidity and cash flows. 
 The Partnership continues to purchase insurance coverage in amounts its 
management views as appropriate for all other property, liability, 
automobile, workers' compensation and other types of insurable risks.

          During the fourth quarter of 1998, FCLP, on behalf of the Corporate 
General Partner, continued its identification and evaluation of the 
Partnership's Year 2000 business risks and its exposure to computer systems, 
to operating equipment which is date sensitive and to the interface systems 
of its vendors and service providers.  The evaluation has focused on 
identification and assessment of systems and equipment that may fail to 
distinguish between the year 1900 and the year 2000 and, as a result, may 
cease to operate or may operate improperly when dates after December 31, 1999 
are introduced.  

          Based on a study conducted in 1997, FCLP concluded that certain of 
the Partnership's information systems were not Year 2000 compliant and 
elected to replace such software and hardware with applications and equipment 
certified by the vendors as Year 2000 compliant.  FCLP installed a number of 
the new systems in January 1999.  The remaining systems are expected to be 
installed by mid-1999.  The total anticipated cost, including replacement 
software and hardware, will be borne by FCLP.  FCLP is utilizing internal and 
external resources to install the new systems.  FCLP does not believe that 
any other significant information technology ("IT") projects affecting the 
Partnership have been delayed due to efforts to identify and address Year 
2000 issues.

          Additionally, FCLP has continued to inventory the Partnership's 
operating and revenue generating equipment to identify items that need to be 
upgraded or replaced and has surveyed cable equipment manufacturers to 
determine which of their models require upgrade or replacement to become Year 
2000 compliant. Identification and evaluation, while ongoing, are 
substantially completed and a plan is being developed to remediate 
non-compliant equipment prior to January 1, 2000.  FCLP expects to complete 
its planning process by the end of May 1999.  Upgrade or replacement, testing 
and implementation will be performed thereafter.  The cost of such 
replacement or remediation, currently estimated at $10,700, is not expected 
to have a material effect on the Partnership's financial position or results 
of operations. The Partnership had not incurred any costs related to the Year 
2000 project as of December 31, 1998. FCLP plans to inventory, assess, 
replace and test equipment with embedded computer chips in a separate segment 
of its project, presently scheduled for the second half of 1999.

          FCLP has continued to survey the Partnership's significant third 
party vendors and service suppliers to determine the extent to which the 
Partnership's interface systems are vulnerable should those third parties 
fail to solve their own Year 2000 problems on a timely basis.  Among the most 
significant service providers upon which the Partnership relies are 
programming suppliers, power and telephone companies, various banking 
institutions and the Partnership's customer billing service.  A majority of 
these service suppliers either have not responded to FCLP's inquiries 
regarding their Year 2000 compliance programs or have responded that they are 
unsure if they will become compliant on a timely basis.  Consequently, there 
can be no assurance that the systems of other companies on which the 
Partnership must rely will be Year 2000 compliant on a timely basis.  

                                       -27-

<PAGE>

          FCLP expects to develop a contingency plan in 1999 to address 
possible situations in which various systems of the Partnership, or of third 
parties with which the Partnership does business, are not compliant prior to 
January 1, 2000. Considerable effort will be directed toward distinguishing 
between those contingencies with a greater probability of occurring from 
those whose occurrence is considered remote.  Moreover, such a plan will 
necessarily focus on systems whose failure poses a material risk to the 
Partnership's results of operations and financial condition.

          The Partnership's most significant Year 2000 risk is an 
interruption of service to subscribers, resulting in a potentially material 
loss of revenues. Other risks include impairment of the Partnership's ability 
to bill and/or collect payment from its customers, which could negatively 
impact its liquidity and cash flows.  Such risks exist primarily due to 
technological operations dependent upon third parties and to a much lesser 
extent to those under the control of the Partnership.  Failure to achieve 
Year 2000 readiness in either area could have a material adverse impact on 
the Partnership.  The Partnership is unable to estimate the possible effect 
on its results of operations, liquidity and financial condition should its 
significant service suppliers fail to complete their readiness programs prior 
to the Year 2000.  Depending on the supplier, equipment malfunction or type 
of service provided, as well as the location and duration of the problem, the 
effect could be material.  For example, if a cable programming supplier 
encounters an interruption of its signal due to a Year 2000 satellite 
malfunction, the Partnership will be unable to provide the signal to its 
cable subscribers, which could result in a loss of revenues, although the 
Partnership would attempt to provide its customers with alternative program 
services for the period during which it could not provide the original 
signal.  Due to the number of individually owned and operated channels the 
Partnership carries for its subscribers, and the packaging of those channels, 
the Partnership is unable to estimate any reasonable dollar impact of such 
interruption. 

          1998 VS. 1997

          Operating activities provided $391,600 less cash in the year ended 
December 31, 1998 than in 1997.  Changes in accounts receivable, prepaid 
expenses and other assets used $182,600 more cash in 1998 than in 1997 due to 
differences in the timing of receivable collections and in the payment of 
prepaid expenses.  The Partnership used $255,600 more cash to pay liabilities 
owed to affiliates and third-party creditors in 1998 due to differences in 
the timing of payments.

          The Partnership used $670,400 less cash in investing activities in 
1998 than in 1997 due to a $657,600 decrease in expenditures for tangible 
assets and a $12,800 decrease in spending for intangible assets.

                                       -28-

<PAGE>

          1997 VS. 1996

          Operating activities provided $364,100 more cash in the year ended 
December 31, 1997 than in 1996.  Changes in accounts receivable, prepaid 
expenses and other assets provided $75,100 more cash in 1997 than in 1996 due 
to differences in the timing of receivable collections and in the payment of 
prepaid expenses.  The Partnership used $32,400 less cash to pay liabilities 
owed to affiliates and third-party creditors in 1997 due to differences in 
the timing of payments.

          The Partnership used $158,600 less cash in investing activities in 
1997 than in 1996, primarily due to a $153,400 decrease in expenditures for 
tangible assets and a $5,900 decrease in spending for intangible assets. 
Financing activities used $483,700 less cash in 1997 due to the repayment of 
the Partnership's debt in August 1996.

NEW ACCOUNTING PRONOUNCEMENT

          In 1998, the American Institute of Certified Public Accountants 
issued Statement of Position 98-5, "Reporting on Costs of Start-Up 
Activities."  The new standard, which becomes effective for the Partnership 
on January 1, 1999, requires costs of start-up activities to be expensed as 
incurred.  The Partnership believes that adoption of this standard will not 
have an impact on the Partnership's financial position or results of 
operations.

INFLATION

          Certain of the Partnership's expenses, such as those for wages and 
benefits, equipment repair and replacement, and billing and marketing 
generally increase with inflation.  However, the Partnership does not believe 
that its financial results have been, or will be, adversely affected by 
inflation in a material way, provided that Partnership is able to increase 
its service rates periodically, of which there can be no assurance.  See 
"Legislation and Regulation." 

ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          The Partnership is not exposed to material market risks associated 
with its financial instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The financial statements and related financial information required 
to be filed hereunder are indexed on Page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

          Not applicable.

                                       -29-

<PAGE>
                                       
                                     PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The General Partners of the Partnership may be considered, for 
certain purposes, the functional equivalents of directors and executive 
officers.  The Corporate General Partner is Enstar Communications 
Corporation, and Robert T. Graff, Jr. is the Individual General Partner. As 
part of Falcon Cablevision's September 30, 1988 acquisition of the Corporate 
General Partner, Falcon Cablevision received an option to acquire Mr. Graff's 
interest as Individual General Partner of the Partnership and other 
affiliated cable limited partnerships that he previously co-sponsored with 
the Corporate General Partner, and Mr. Graff received the right to cause 
Falcon Cablevision to acquire such interests.  These arrangements were 
modified and extended in an amendment dated September 10, 1993 pursuant to 
which, among other things, the Corporate General Partner obtained the option 
to acquire Mr. Graff's interest in lieu of the purchase right described above 
which was originally granted to Falcon Cablevision.  Since its incorporation 
in Georgia in 1982, the Corporate General Partner has been engaged in the 
cable/telecommunications business, both as a general partner of 15 limited 
partnerships formed to own and operate cable television systems and through a 
wholly-owned operating subsidiary.  As of December 31, 1998 the Corporate 
General Partner managed cable television systems with approximately 91,000 
basic subscribers.

          On September 30, 1998, FHGLP acquired ownership of the Corporate 
General Partner from Falcon Cablevision.  FHGI is the sole general partner of 
FHGLP.  FHGLP controls the general partners of 15 limited partnerships which 
operate under the Enstar name (including the Partnership).  Although these 
limited partnerships are affiliated with FHGLP, their assets are owned by 
legal entities separate from the Partnership.

          Set forth below is certain general information about the Directors 
and Executive Officers of the Corporate General Partner:

<TABLE>
<CAPTION>

<S>                      <C>
NAME                     POSITION
----                     --------

Marc B. Nathanson        Director, Chairman of the Board and Chief Executive Officer

Frank J. Intiso          Director, President and Chief Operating Officer

Stanley S. Itskowitch    Director, Executive Vice President and General Counsel 

Michael K. Menerey       Director, Executive Vice President, Chief Financial Officer and Secretary

Joe A. Johnson           Executive Vice President - Operations

Thomas J. Hatchell       Executive Vice President - Operations

Abel C. Crespo           Vice President, Corporate Controller

</TABLE>

MARC B. NATHANSON, 53, has been Chairman of the Board and Chief Executive 
Officer of FHGI and its predecessors since 1975, and prior to September 19, 
1995 also served as President.  He has been Chairman of the Board and Chief 
Executive Officer of Enstar Communications Corporation since October 1988, 
and also served as its President prior to September 1995.  Prior to 1975, Mr. 
Nathanson was Vice President of Marketing for Teleprompter Corporation, then 
the largest cable operator in the United States. He also held executive 
positions with Warner Cable and Cypress Communications Corporation. He is a 
former President of the California Cable Television Association and a member 
of Cable Pioneers. He is currently a director of the National Cable 
Television Association ("NCTA") and will Chair its 1999 National Convention. 
At the 1986 NCTA convention, Mr. Nathanson was honored by being named the 
recipient of the Vanguard Award for outstanding contributions to the growth 
and development of the cable television industry. Mr. Nathanson is a 30-year 
veteran of the cable television industry. He is a founder of the Cable 
Television Administration and Marketing Society ("CTAM") and the Southern 
California Cable Television Association. Mr. Nathanson is an Advisory Board 
member of TVA, (Brazil) and also Chairman of the Board and Chief Executive 
Officer of Falcon International

                                       -30-

<PAGE>

Communications, LLC. Mr. Nathanson was appointed by President Clinton on 
November 1, 1998 as Chair of the Board of Governors for the International 
Bureau of Broadcasting which oversees Voice of America, Radio/TV Marti, Radio 
Free Asia, Radio Free Europe and Radio Liberty. Mr. Nathanson is a trustee of 
the Annenburg School of Communications at the University of Southern 
California and a member of the Board of Visitors of the Anderson School of 
Management at UCLA. In addition, he serves on the Board of the UCLA 
Foundation and the UCLA Center for Communications Policy and is on the Board 
of Governors of AIDS Project Los Angeles and Cable Positive. 

FRANK J. INTISO, 52, was appointed President and Chief Operating Officer of 
FHGI in September 1995. Between 1982 and September 1995, Mr. Intiso held the 
positions of Executive Vice President and Chief Operating Officer, with 
responsibility for the day-to-day operations of all cable television systems 
under the management of Falcon. He has been President and Chief Operating 
Officer of Enstar Communications Corporation since September 1995, and 
between October 1988 and September 1995 held the positions of Executive Vice 
President and Chief Operating Officer. Mr. Intiso has a Masters Degree in 
Business Administration from UCLA and is a Certified Public Accountant. He 
currently serves as Immediate Past Chair of the California Cable Television 
Association and is on the boards of the Cable Advertising Bureau, Cable in 
the Classroom, and the California Cable Television Association. He is a 
member of the American Institute of Certified Public Accountants, the 
American Marketing Association, the American Management Association and the 
Southern California Cable Television Association. 

STANLEY S. ITSKOWITCH, 60, has been a Director of FHGI and its predecessors 
since 1975. He served as Senior Vice President and General Counsel of FHGI 
from 1987 to 1990 and has been Executive Vice President and General Counsel 
since February 1990.  Mr. Itskowitch has been Executive Vice President and 
General Counsel of Enstar Communications Corporation since October 1988. He 
has been President and Chief Executive Officer of F.C. Funding, Inc. 
(formerly Fallek Chemical Company), which is a marketer of chemical products, 
since 1980. He is a Certified Public Accountant and a former tax partner in 
the New York office of Touche Ross & Co. (now Deloitte & Touche LLP). He has 
a J.D. Degree and an L.L.M. Degree in Tax from New York University School of 
Law. Mr. Itskowitch is also Executive Vice President and General Counsel of 
Falcon International Communications, LLC.

MICHAEL K. MENEREY, 47, has been Executive Vice President, Chief Financial 
Officer and Secretary of FHGI and Enstar Communications Corporation since 
February 1998 and was Chief Financial Officer and Secretary of FHGI and its 
predecessors between 1984 and 1998 and of Enstar Communications Corporation 
since October 1988. Mr. Menerey is a Certified Public Accountant and is a 
member of the American Institute of Certified Public Accountants and the 
California Society of Certified Public Accountants, and he was formerly 
associated with BDO Seidman.

JOE A. JOHNSON, 54, has been Executive Vice President of Operations of FHGI 
since September 1995, and was a Divisional Vice President of FHGI between 
1989 and 1992. He has been Executive Vice President-Operations of Enstar 
Communications Corporation since January 1996. From 1982 to 1989, he held the 
positions of Vice President and Director of Operations for Sacramento Cable 
Television, Group W Cable of Chicago and Warner Amex. From 1975 to 1982, Mr. 
Johnson held Cable System and Regional Manager positions with Warner Amex and 
Teleprompter. Mr. Johnson is also a member of the Cable Pioneers. 

THOMAS J. HATCHELL, 49, has been Executive Vice President of Operations of 
FHGI and Enstar Communications Corporation since February 1998. From October 
1995 to February 1998, he was Senior Vice President of Operations of Falcon 
International Communications, L.P. and its predecessor company and was a 
Senior Vice President of FHGI from January 1992 to September 1995. Mr. 
Hatchell was a Divisional Vice President of FHGI between 1989 and 1992. From 
1981 to 1989, he served as Vice President and Regional Manager for the San 
Luis Obispo, California region owned by an affiliate of FHGI. He was Vice 
President of Construction of an affiliate of FHGI from June 1980 to June 1981.

                                       -31-

<PAGE>

ABEL C. CRESPO, 39, has been Vice President, Corporate Controller of FHGI and 
Enstar Communications Corporation since March 1999.  He previously had served 
as Controller since January 1997. Mr. Crespo joined Falcon in December 1984, 
and has held various accounting positions during that time. Mr. Crespo holds 
a Bachelor of Science degree in Business Administration from California State 
University, Los Angeles. 

OTHER OFFICERS OF FALCON

          The following sets forth certain biographical information with 
respect to certain additional members of FHGI management. 

LYNNE A. BUENING, 45, has been Vice President of Programming of FHGI since 
November 1993. From 1989 to 1993, she served as Director of Programming for 
Viacom Cable, a division of Viacom International Inc. Prior to that, Ms. 
Buening held programming and marketing positions in the cable, broadcast and 
newspaper industries. 

OVANDO COWLES, 45, has been Vice President of Advertising Sales and 
Production of FHGI since January 1992. From 1988 to 1991, he served as 
Director of Advertising Sales and Production at Cencom Cable Television in 
Pasadena, California.  From 1985 to 1988, he was an Advertising Sales Account 
Executive at Choice TV, an affiliate of FHGI.

HOWARD J. GAN, 52, has been Vice President of Regulatory Affairs of FHGI and 
its predecessors since 1988. Prior to joining FHGI, he was General Counsel at 
Malarkey-Taylor Associates, a Washington, D.C.-based telecommunications 
consulting firm, from 1986 to 1988, and was Vice President and General 
Counsel at CTIC Associates from 1978 to 1983. In addition, he was an attorney 
and an acting Branch Chief of the Federal Communications Commission's Cable 
Television Bureau from 1973 to 1978. 

R.W. ("SKIP") HARRIS, 51, has been Vice President of Marketing of FHGI since 
June 1991. Mr. Harris was National Director of Affiliate Marketing for The 
Disney Channel from 1985 to 1991. He was also a sales manager, regional 
marketing manager and director of marketing for Cox Cable Communications from 
1978 to 1985. 

MARTIN B. SCHWARTZ, 39, has been Vice President of Corporate Development of 
FHGI since March 1999.  Mr. Schwartz joined Falcon in November 1989 and has 
held various finance, planning and corporate development positions during 
that time, most recently that of Director of Corporate Development.  Mr. 
Schwartz has a Masters Degree in Business Administration from UCLA.

JOAN SCULLY, 63, has been Vice President of Human Resources of FHGI and its 
predecessors since May 1988. From 1987 to May 1988, she was self-employed as 
a management consultant to cable and transportation companies. She served as 
Director of Human Resources of a Los Angeles-based cable company from 1985 
through 1987. Prior to that time, she served as a human resource executive in 
the entertainment and aerospace industries. Ms. Scully holds a Masters Degree 
in Human Resources Management from Pepperdine University. 

RAYMOND J. TYNDALL, 51, has been Vice President of Engineering of FHGI since 
October 1989. From 1975 to September 1989, he held various technical 
positions with Choice TV and its predecessors. From 1967 to 1975, he held 
various technical positions with Sammons Communications. He is a certified 
National Association of Radio and Television Engineering ("NARTE") engineer 
in lightwave, microwave, satellite and broadband and is a member of the Cable 
Pioneers. 

          In addition, FHGI has six Divisional Vice Presidents who are based 
in the field.  They are G. William Booher, Daniel H. DeLaney, Ron L. Hall, 
Ronald S. Hren, Michael E. Kemph and Michael D. Singpiel.

                                       -32-

<PAGE>

          Each director of the Corporate General Partner is elected to a 
one-year term at the annual shareholder meeting to serve until the next 
annual shareholder meeting and thereafter until his respective successor is 
elected and qualified.  Officers are appointed by and serve at the discretion 
of the directors of the Corporate General Partner.

Item 11.  EXECUTIVE COMPENSATION

MANAGEMENT FEE

          The Partnership has a management agreement (the "Management 
Agreement") with Enstar Cable Corporation, a wholly owned subsidiary of the 
Corporate General Partner (the "Manager"), pursuant to which Enstar Cable 
Corporation manages the Partnership's systems and provides all operational 
support for the activities of the Partnership.  For these services, the 
Manager receives a management fee of 5% of the Partnership's gross revenues, 
excluding revenues from the sale of cable television systems or franchises, 
calculated and paid monthly. In addition, the Partnership reimburses the 
Manager for certain operating expenses incurred by the Manager in the 
day-to-day operation of the Partnership's cable systems.  The Management 
Agreement also requires the Partnership to indemnify the Manager (including 
its officers, employees, agents and shareholders) against loss or expense, 
absent negligence or deliberate breach by the Manager of the Management 
Agreement.  The Management Agreement is terminable by the Partnership upon 
sixty (60) days written notice to the Manager.  The Manager has engaged FCLP 
to provide certain management services for the Partnership and pays FCLP a 
portion of the management fees it receives in consideration of such services 
and reimburses FCLP for expenses incurred by FCLP on its behalf.  
Additionally, the Partnership receives certain system operating management 
services from an affiliate of the Manager in lieu of directly employing 
personnel to perform such services.  The Partnership reimburses the affiliate 
for its allocable share of the affiliate's operating costs.  The Corporate 
General Partner also performs certain supervisory and administrative services 
for the Partnership, for which it is reimbursed.

          For the fiscal year ended December 31, 1998, the Manager charged 
the Partnership management fees of approximately $198,400 and reimbursed 
expenses of $363,100.  The Partnership also reimbursed an affiliate 
approximately $68,000 for system operating management services.  In addition, 
certain programming services are purchased through FCLP.  The Partnership 
paid FCLP approximately $879,500 for these programming services for fiscal 
year 1998.

PARTICIPATION IN DISTRIBUTIONS

          The General Partners are entitled to share in distributions from, 
and profit and losses in, the Partnership.  See Item 5., "Market for 
Registrant's Equity Securities and Related Security Holder Matters."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND    MANAGEMENT

          As of March 1, 1999, the only persons known by the Partnership to 
own beneficially or that may be deemed to own beneficially more than 5% of 
the units were:

<TABLE>
<CAPTION>

                                                       Name and Address              Amount and Nature of             Percent
               Title of Class                        of Beneficial Owner             Beneficial Ownership            of Class
-------------------------------------          -----------------------------         ---------------------         ----------
<S>                                            <C>                                   <C>                           <C>
 Units of Limited Partnership Interest         Paul Isaacs                                 1,736(1)                    5.8%
 Interest                                      7 Douglas Lane
                                               Larchmont, NY  10538

 Units of Limited Partnership Interest         Madison/AG Partnership Value                2,330(2)                    7.8%

</TABLE>

                                       -33-

<PAGE>


<TABLE>
<CAPTION>

                                                       Name and Address              Amount and Nature of             Percent
               Title of Class                        of Beneficial Owner             Beneficial Ownership            of Class
-------------------------------------          -----------------------------         ---------------------         ----------
<S>                                            <C>                                   <C>                           <C>
 Interest                                      Partners III
                                               ISA Partnership Liquidity
                                               Investors
                                               Grammercy Park Investments, LP
                                               P.O. Box 7533
                                               Incline Village, NV  89452

 Units of Limited Partnership Interest         Everest Cable Investors LLC                 2,354(1)                    7.9%
 Interest                                      199 South Los Robles Ave.,
                                               Suite 440
                                               Pasadena, CA  91101
</TABLE>

(1)  As reported to the Partnership by its transfer agent, Gemisys Corporation.

(2)  As reported in a Schedule 13G dated February 18, 1999 and filed with the
     Securities and Exchange Commission by Madison/AG Partnership Value Partners
     III ("AG III"), ISA Partnership Liquidity Investors ("ISA") and Grammercy
     Park Investments, LP ("Grammercy Park") as members of a group.  The
     Schedule 13G states that AG III has sole voting and dispositive power with
     respect to 1,451 units, that ISA has sole voting and dispositive power with
     respect to 891 units and that Grammercy Park has sole voting and
     dispositive power with respect to 60 units.

          The Corporate General Partner is a wholly-owned subsidiary of 
FHGLP. FHGI owns a 10.6% interest in, and is the general partner of, FHGLP.  
As of March 3, 1999, the common stock of FHGI was owned as follows: 78.5% by 
Falcon Cable Trust, a grantor trust of which Marc B. Nathanson is trustee and 
he and members of his family are beneficiaries; 20% by Greg A. Nathanson; and 
1.5% by Stanley S. Itskowitch. Greg A. Nathanson is Marc B. Nathanson's 
brother.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONFLICTS OF INTEREST

          On September 30, 1998, FHGLP acquired ownership of Enstar 
Communications Corporation from Falcon Cablevision and FCLP assumed the 
management services operations of FHGLP.  FCLP now manages the operations of 
the partnerships of which Enstar Communications Corporation is the Corporate 
General Partner, including the Partnership.  FCLP began receiving management 
fees and reimbursed expenses which had previously been paid by the 
Partnership, as well as other affiliated entities, to FHGLP.  The day-to-day 
management of FCLP is substantially the same as that of FHGLP, which serves 
as the managing partner of FCLP.

          Certain members of management of the Corporate General Partner have 
also been involved in the management of other cable ventures.  FCLP may enter 
into other cable ventures, including ventures similar to the Partnership.

          The Partnership relies upon the Corporate General Partner and 
certain of its affiliates to provide general management services, system 
operating services, supervisory and administrative services and programming.  
See Item 11., "Executive Compensation."

          Conflicts of interest involving acquisitions and dispositions of 
cable television systems could adversely affect Unitholders.  For instance, 
the economic interests of management in other affiliated

                                       -34-

<PAGE>

partnerships are different from those in the Partnership and this may create 
conflicts relating to which acquisition opportunities are preserved for which 
entities.

          These affiliations subject FCLP, FHGLP and the Corporate General 
Partner and their management to certain conflicts of interest.  Such 
conflicts of interest relate to the time and services management will devote 
to the Partnership's affairs and to the acquisition and disposition of cable 
television systems.  Management or its affiliates may establish and manage 
other entities which could impose additional conflicts of interest. 

          FCLP, FHGLP and the Corporate General Partner will resolve all 
conflicts of interest in accordance with their fiduciary duties.

FIDUCIARY RESPONSIBILITY AND INDEMNIFICATION OF THE GENERAL PARTNERS

          A general partner is accountable to a limited partnership as a 
fiduciary and consequently must exercise good faith and integrity in handling 
partnership affairs.  Where the question has arisen, some courts have held 
that a limited partner may institute legal action on his own behalf and on 
behalf of all other similarly situated limited partners (a class action) to 
recover damages for a breach of fiduciary duty by a general partner, or on 
behalf of the partnership (a partnership derivative action) to recover 
damages from third parties. Section 14-9-1001 of the Georgia Revised Uniform 
Limited Partnership Act also allows a partner to maintain a partnership 
derivative action if general partners with authority to do so have refused to 
bring the action or if an effort to cause those general partners to bring the 
action is not likely to succeed. Certain cases decided by federal courts have 
recognized the right of a limited partner to bring such actions under the 
Securities and Exchange Commission's Rule 10b-5 for recovery of damages 
resulting from a breach of fiduciary duty by a general partner involving 
fraud, deception or manipulation in connection with the limited partner's 
purchase or sale of partnership units. 

          The partnership agreement provides that the General Partners will 
be indemnified by the Partnership for acts performed within the scope of 
their authority under the partnership agreement if such general partners (i) 
acted in good faith and in a manner that it reasonably believed to be in, or 
not opposed to, the best interests of the Partnership and the partners, and 
(ii) had no reasonable grounds to believe that their conduct was negligent.  
In addition, the partnership agreement provides that the General Partners 
will not be liable to the Partnership or its limited partners for errors in 
judgment or other acts or omissions not amounting to negligence or 
misconduct.  Therefore, limited partners will have a more limited right of 
action than they would have absent such provisions.  In addition, the 
Partnership maintains, at its expense and in such reasonable amounts as the 
Corporate General Partner shall determine, a liability insurance policy which 
insures the Corporate General Partner, FHGI and its affiliates (which include 
FCLP), officers and directors and such other persons as the Corporate General 
Partner shall determine, against liabilities which they may incur with 
respect to claims made against them for certain wrongful or allegedly 
wrongful acts, including certain errors, misstatements, misleading 
statements, omissions, neglect or breaches of duty.  To the extent that the 
exculpatory provisions purport to include indemnification for liabilities 
arising under the Securities Act of 1933, it is the opinion of the Securities 
and Exchange Commission that such indemnification is contrary to public 
policy and therefore unenforceable.

                                       -35-

<PAGE>

                                       PART IV

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


(a)       1.   Financial Statements

               Reference is made to the Index to Financial
               Statements on page F-1.



(a)       2.   Financial Statement Schedules

               Reference is made to the Index to Financial
               Statements on page F-1.



(a)       3.   Exhibits

               Reference is made to the Index to Exhibits
               on Page E-1.



(b)            Reports on Form 8-K

               None.

                                       -36-


<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, on 
March 29, 1999.

                                     ENSTAR INCOME PROGRAM II-2, L.P.
                                     By:  Enstar Communications Corporation,
                                          Corporate General Partner


                                          By: /s/    Marc B. Nathanson
                                              ------------------------------
                                              Marc B. Nathanson 
                                              Chairman of the Board and
                                               Chief Executive Officer



          Pursuant to the requirements of the Securities Exchange Act of 
1934, this report has been signed by the following persons on behalf of the 
Registrant and in the capacities indicated on the 29th day of March 1999.
<TABLE>
<CAPTION>
          Signatures                                        Title(*)
      -----------------                 -------------------------------------------------
     <S>                                 <C>
     /s/ Marc B. Nathanson               Chairman of the Board and Chief Executive Officer
     --------------------------           (Principal Executive Officer)
     Marc B. Nathanson 


     /s/ Michael K. Menerey              Executive Vice President, Chief Financial Officer, 
     --------------------------           Secretary and Director
     Michael K. Menerey                   (Principal Financial and Accounting Officer)


     /s/ Frank J. Intiso                 President, Chief Operating Officer
     -------------------------             and Director
     Frank J. Intiso


     /s/ Stanley S. Itskowitch           Executive Vice President, General Counsel
     -------------------------            and Director
     Stanley S. Itskowitch
</TABLE>

(*) Indicates position(s) held with Enstar Communications Corporation, the
    Corporate General Partner of the Registrant.


                                       -37-

<PAGE>

                            INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
Report of Independent Auditors                                              F-2

Balance Sheets - December 31, 1997 and 1998                                 F-3

Financial Statements for each of the three years 
  in the period ended December 31, 1998:

    Statements of Operations                                                F-4

    Statements of Partnership Capital (Deficit)                             F-5

    Statements of Cash Flows                                                F-6

Notes to Financial Statements                                               F-7
</TABLE>

All schedules have been omitted because they are either not required, not 
applicable or the information has otherwise been supplied.


                                      F-1

<PAGE>


                           REPORT OF INDEPENDENT AUDITORS


Partners
Enstar Income Program  II-2, L.P.  (A Georgia Limited Partnership)


We have audited the accompanying balance sheets of Enstar Income Program 
II-2, L.P. (A Georgia Limited Partnership) as of December 31, 1997 and 1998, 
and the related statements of operations, partnership capital (deficit), and 
cash flows for each of the three years in the period ended December 31, 1998. 
These financial statements are the responsibility of the Partnership's 
management. Our responsibility is to express an opinion on these financial 
statements based on our audits. 

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 provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Enstar Income Program II-2, 
L.P. at December 31, 1997 and 1998, and the results of its operations and its 
cash flows for each of the three years in the period ended December 31, 1998, 
in conformity with generally accepted accounting principles.


                              /s/   ERNST & YOUNG LLP


Los Angeles, California
March 12, 1999


                                      F-2

<PAGE>

                           ENSTAR INCOME PROGRAM II-2, L.P.

                                    BALANCE SHEETS
                             ----------------------------
                             ----------------------------
<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                         ---------------------------
                                                                             1997           1998
                                                                         -----------     -----------
<S>                                                                      <C>             <C>
ASSETS:
 Cash and cash equivalents                                               $ 3,078,800     $ 4,468,300

 Accounts receivable, less allowance of $12,500 and 
   $3,400 for possible losses                                                 54,300          87,900

 Prepaid expenses and other assets                                           190,500         306,100

 Property, plant and equipment, less accumulated 
   depreciation and amortization                                           3,040,000       2,758,600

 Franchise cost, net of accumulated
   amortization of $1,174,800 and $1,225,900                                 271,700         169,000

 Deferred charges, net                                                        14,100           7,400
                                                                         -----------     -----------
                                                                         $ 6,649,400     $ 7,797,300
                                                                         -----------     -----------
                                                                         -----------     -----------

                           LIABILITIES AND PARTNERSHIP CAPITAL

LIABILITIES:
  Accounts payable                                                       $   466,000    $    273,100
  Due to affiliates                                                          228,000         332,300
                                                                         -----------     -----------
      TOTAL LIABILITIES                                                      694,000         605,400
                                                                         -----------     -----------
 COMMITMENTS AND CONTINGENCIES

 PARTNERSHIP CAPITAL (DEFICIT):
   General partners                                                          (14,200)         (1,800)
   Limited partners                                                        5,969,600       7,193,700
                                                                         -----------     -----------

      TOTAL PARTNERSHIP CAPITAL                                            5,955,400       7,191,900
                                                                         -----------     -----------

                                                                         $ 6,649,400     $ 7,797,300
                                                                         -----------     -----------
                                                                         -----------     -----------
</TABLE>

                  See accompanying notes to financial statements.


                                       F-3

<PAGE>
                          ENSTAR INCOME PROGRAM II-2, L.P.
                                          
                              STATEMENTS OF OPERATIONS
                            ----------------------------
                            ----------------------------
<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                           -----------------------------------------
                                              1996           1997           1998
                                           ------------   -----------   ------------
<S>                                        <C>            <C>           <C>
REVENUES                                   $  3,510,300   $ 3,836,000   $  3,968,300
                                           ------------   -----------   ------------
OPERATING EXPENSES:
 Service costs                                1,078,100     1,194,500      1,252,000
 General and administrative expenses            389,700       361,100        405,500
 General Partner management fees
  and reimbursed expenses                       475,800       538,500        561,500
 Depreciation and amortization                  927,400       706,300        671,100
                                           ------------   -----------   ------------
                                              2,871,000     2,800,400      2,890,100
                                           ------------   -----------   ------------
 Operating income                               639,300     1,035,600      1,078,200
                                           ------------   -----------   ------------
OTHER INCOME (EXPENSE):
 Interest expense                               (58,400)      (22,300)       (15,300)
 Interest income                                 84,800       129,000        175,100
 Loss on sale of cable assets                    (3,200)       -              (1,500)
                                           ------------   -----------   ------------
                                                 23,200       106,700        158,300
                                           ------------   -----------   ------------
NET INCOME                                 $    662,500   $ 1,142,300   $  1,236,500
                                           ------------   -----------   ------------
                                           ------------   -----------   ------------

Net income allocated to General Partners   $      6,600   $    11,400   $     12,400
                                           ------------   -----------   ------------
                                           ------------   -----------   ------------

Net income allocated to Limited Partners   $    655,900   $ 1,130,900   $  1,224,100
                                           ------------   -----------   ------------
                                           ------------   -----------   ------------

NET INCOME PER UNIT OF LIMITED
  PARTNERSHIP INTEREST                     $      21.95   $     37.85   $      40.97
                                           ------------   -----------   ------------
                                           ------------   -----------   ------------

WEIGHTED AVERAGE LIMITED PARTNERSHIP
  UNITS OUTSTANDING DURING THE YEAR              29,880        29,880         29,880
                                           ------------   -----------   ------------
                                           ------------   -----------   ------------
</TABLE>

                  See accompanying notes to financial statements.

                                       F-4

<PAGE>


                          ENSTAR INCOME PROGRAM II-2, L.P.

                     STATEMENTS OF PARTNERSHIP CAPITAL (DEFICIT)
                     -------------------------------------------
                     -------------------------------------------
<TABLE>
<CAPTION>
                                          General       Limited
                                         Partners       Partners      Total
                                      ------------   -----------   -----------
<S>                                    <C>           <C>           <C>
PARTNERSHIP CAPITAL (DEFICIT),
 January 1, 1996                       $  (32,200)   $ 4,182,800   $ 4,150,600

   Net income for year                      6,600        655,900       662,500
                                       ----------    -----------   -----------
PARTNERSHIP CAPITAL (DEFICIT),
 December 31, 1996                        (25,600)     4,838,700     4,813,100

 Net income for year                       11,400      1,130,900     1,142,300
                                       ----------    -----------   -----------
PARTNERSHIP CAPITAL (DEFICIT),
 December 31, 1997                        (14,200)     5,969,600     5,955,400

   Net income for year                     12,400      1,224,100     1,236,500
                                       ----------    -----------   -----------
PARTNERSHIP CAPITAL (DEFICIT),
 December 31, 1998                     $   (1,800)  $  7,193,700   $ 7,191,900
                                       ----------    -----------   -----------
                                       ----------    -----------   -----------
</TABLE>

                   See accompanying notes to financial statements.

                                       F-5

<PAGE>

                          ENSTAR INCOME PROGRAM II-2, L.P.

                               STATEMENTS OF CASH FLOWS
                          --------------------------------
                          --------------------------------
<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                       ------------------------------------------
                                                           1996           1997           1998
                                                       -----------     -----------    -----------
<S>                                                    <C>             <C>            <C>
Cash flows from operating activities:
Net income                                             $   662,500     $ 1,142,300    $ 1,236,500
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                            927,400         706,300        671,100
  Amortization of deferred loan costs                       12,800          13,900            -
  Loss on sale of cable assets                               3,200             -            1,500
  Increase (decrease) from changes in:
  Accounts receivable, prepaid expenses and
    other assets                                           (41,700)         33,400       (149,200)
  Accounts payable and due to affiliates                   134,600         167,000        (88,600)
                                                       -----------     -----------    -----------

    Net cash provided by operating activities            1,698,800       2,062,900      1,671,300
                                                       -----------     -----------    -----------

Cash flows from investing activities:
 Capital expenditures                                   (1,084,000)       (930,600)      (273,000)
 Increase in intangible assets                             (27,500)        (21,600)        (8,800)
 Proceeds from sale of property, plant
  and equipment                                                700             -             -
                                                       -----------     -----------    -----------

    Net cash used in investing activities               (1,110,800)       (952,200)      (281,800)
                                                       -----------     -----------    -----------

Cash flows from financing activities:
Repayment of debt                                         (483,700)           -              -
                                                       -----------     -----------    -----------

Net increase in cash and cash equivalents                  104,300       1,110,700      1,389,500

Cash and cash equivalents at beginning of year           1,863,800       1,968,100      3,078,800
                                                       -----------     -----------    -----------

Cash and cash equivalents at end of year               $ 1,968,100     $ 3,078,800    $ 4,468,300
                                                       -----------     -----------    -----------
                                                       -----------     -----------    -----------
</TABLE>

                  See accompanying notes to financial statements.

                                      F-6



<PAGE>
                                       
                       ENSTAR INCOME PROGRAM II-2, L.P.

                        NOTES TO FINANCIAL STATEMENTS

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


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

FORM OF PRESENTATION

          Enstar Income Program II-2, L.P., a Georgia limited partnership 
(the "Partnership"), owns and operates cable television systems in rural 
areas of Illinois and Missouri.

          The financial statements do not give effect to any assets that the 
partners may have outside of their interest in the Partnership, nor to any 
obligations, including income taxes of the partners.

CASH EQUIVALENTS

          For purposes of the statements of cash flows, the Partnership 
considers all highly liquid debt instruments purchased with an initial 
maturity of three months or less to be cash equivalents.  The carrying value 
of cash and cash equivalents approximates fair value due to the short 
maturity of these instruments.

          Cash equivalents at December 31, 1996 include $1,870,000 of 
short-term investments in commercial paper.

PROPERTY, PLANT, EQUIPMENT AND DEPRECIATION AND AMORTIZATION

          Property, plant and equipment are stated at cost.  Direct costs 
associated with installations in homes not previously served by cable are 
capitalized as part of the distribution system, and reconnects are expensed 
as incurred.  For financial reporting, depreciation and amortization is 
computed using the straight-line method over the following estimated useful 
lives:

<TABLE>
          <S>                          <C>
          Cable television systems        5-15 years
          Vehicles                           3 years
          Furniture and equipment          5-7 years
          Leasehold improvements       Life of lease
</TABLE>

FRANCHISE COST

          The excess of cost over the fair values of tangible assets and 
customer lists of cable television systems acquired represents the cost of 
franchises.  In addition, franchise cost includes capitalized costs incurred 
in obtaining new franchises and the renewal of existing franchises.  These 
costs are amortized using the straight-line method over the lives of the 
franchises, ranging up to 15 years. The Partnership periodically evaluates 
the amortization periods of these intangible assets to determine whether 
events or circumstances warrant revised estimates of useful lives.  Costs 
relating to unsuccessful franchise applications are charged to expense when 
it is determined that the efforts to obtain the franchise will not be 
successful.  The Partnership is in the process of negotiating the renewal of 
expired franchise agreements for two of the Partnership's 11 franchises.

DEFERRED CHARGES 

          Deferred charges are amortized using the straight-line method over 
two years.


                                     F-7

<PAGE>

                                       
                       ENSTAR INCOME PROGRAM II-2, L.P.

                        NOTES TO FINANCIAL STATEMENTS

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


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

RECOVERABILITY OF ASSETS

          The Partnership assesses on an ongoing basis the recoverability of 
intangible and capitalized plant assets based on estimates of future 
undiscounted cash flows compared to net book value.  If the future 
undiscounted cash flow estimate were less than net book value, net book value 
would then be reduced to estimated fair value, which would generally 
approximate discounted cash flows.  The Partnership also evaluates the 
amortization periods of assets, including franchise costs and other 
intangible assets, to determine whether events or circumstances warrant 
revised estimates of useful lives.

REVENUE RECOGNITION

          Revenues from customer fees, equipment rental and advertising are 
recognized in the period that services are delivered.  Installation revenue 
is recognized in the period the installation services are provided to the 
extent of direct selling costs.  Any remaining amount is deferred and 
recognized over the estimated average period that customers are expected to 
remain connected to the cable television system.

INCOME TAXES

          As a partnership, Enstar Income Program II-2, L.P. pays no income 
taxes. All of the income, gains, losses, deductions and credits of the 
Partnership are passed through to its partners.  The basis in the 
Partnership's assets and liabilities differs for financial and tax reporting 
purposes.  At December 31, 1998, the book basis of the Partnership's net 
assets exceeded its tax basis by $1,031,600.

          The accompanying financial statements, which are prepared in 
accordance with generally accepted accounting principles, differ from the 
financial statements prepared for tax purposes due to the different treatment 
of various items as specified in the Internal Revenue Code.  The net effect 
of these accounting differences is that net income for 1998 in the financial 
statements is $304,400 more than tax income of the Partnership for the same 
period, caused principally by timing differences in depreciation expense.

COSTS OF START-UP ACTIVITIES

          In 1998, the American Institute of Certified Public Accountants 
issued Statement of Position 98-5, "Reporting on Costs of Start-Up 
Activities."  The new standard, which becomes effective for the Partnership 
on January 1, 1999, requires costs of start-up activities to be expensed as 
incurred.  The Partnership believes that adoption of this standard will not 
have an impact on the Partnership's financial position or results of 
operations.

ADVERTISING COSTS

          All advertising costs are expensed as incurred.


                                     F-8

<PAGE>

                                       
                       ENSTAR INCOME PROGRAM II-2, L.P.

                        NOTES TO FINANCIAL STATEMENTS

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


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER UNIT OF LIMITED PARTNERSHIP INTEREST 

          Earnings and losses have been allocated 99% to the limited partners 
and 1% to the general partners. Earnings and losses per unit of limited 
partnership interest is based on the weighted average number of units 
outstanding during the year.  The General Partners do not own units of 
Partnership interest in the Partnership, but rather hold a participation 
interest in the income, losses and distributions of the Partnership.

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 amounts reported in the financial 
statements and accompanying notes. Actual results could differ from those 
estimates. 

NOTE 2 - PARTNERSHIP MATTERS

          The Partnership was formed on July 3, 1984 to acquire, construct, 
improve, develop and operate cable television systems in various locations in 
the United States.  The partnership agreement provides for Enstar 
Communications Corporation (the "Corporate General Partner") and Robert T. 
Graff, Jr. to be the general partners and for the admission of limited 
partners through the sale of interests in the Partnership.

          On September 30, 1988, Falcon Cablevision, a California limited 
partnership, purchased all of the outstanding capital stock of the Corporate 
General Partner.  On September 30, 1998, Falcon Holding Group, L.P., a 
Delaware limited partnership ("FHGLP"), acquired ownership of the Corporate 
General Partner from Falcon Cablevision.  Simultaneously with the closing of 
that transaction, FHGLP contributed all of its existing cable television 
system operations to Falcon Communications, L.P. ("FCLP"), a California 
limited partnership and successor to FHGLP.  FHGLP serves as the managing 
partner of FCLP.  The Corporate General Partner has contracted with FCLP and 
its affiliates to provide management services for the Partnership.

          The Partnership was formed with an initial capital contribution of 
$1,100 comprising $1,000 from the Corporate General Partner and $100 from the 
initial limited partner.  Sale of interests in the Partnership began in 
January 1985, and the initial closing took place in October 1985.  The 
Partnership continued to raise capital until $7,500,000 (the maximum) was 
sold by January 1986.

          The amended partnership agreement generally provides that all cash 
distributions (as defined) be allocated 1% to the general partners and 99% to 
the limited partners until the limited partners have received aggregate cash 
distributions equal to their original capital contributions ("Capital 
Payback"). The partnership agreement also provides that all partnership 
profits, gains, operational losses, and credits (all as defined) be allocated 
1% to the general partners and 99% to the limited partners until the limited 
partners have been allocated net profits equal to the amount of cash flow 
required for Capital Payback.  After the limited partners have received cash 
flow equal to their initial investments, the general partners will receive a 
1% allocation of cash flow from sale or liquidation of a system until the 
limited partners have received an annual simple interest return of at least 
18% of their initial investments less any distributions from previous system 
sales and cash distributions from operations. Thereafter, the respective 
allocations will be made 15% 


                                       F-9

<PAGE>

                       ENSTAR INCOME PROGRAM II-2, L.P.

                        NOTES TO FINANCIAL STATEMENTS

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


NOTE 2 - PARTNERSHIP MATTERS (CONTINUED)

to the general partners and 85% to the limited partners. Any losses from 
system sales or exchanges shall be allocated first to all partners having 
positive capital account balances (based on their respective capital 
accounts) until all such accounts are reduced to zero and thereafter to the 
Corporate General Partner.  All allocations to individual limited partners 
will be based on their respective limited partnership ownership interests.

          Upon the disposition of substantially all of the Partnership 
assets, gains shall be allocated first to the limited partners having 
negative capital account balances until their capital accounts are increased 
to zero, next equally among the general partners until their capital accounts 
are increased to zero, and thereafter as outlined in the preceding paragraph. 
Upon dissolution of the Partnership, any negative capital account balances 
remaining after all allocations and distributions are made must be funded by 
the respective partners.

          The partnership agreement limits the amount of debt the Partnership 
may incur.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

          Property, plant and equipment consist of:

<TABLE>
<CAPTION>
                                                    December 31,
                                             --------------------------
                                                1997           1998
                                             -----------    -----------
<S>                                          <C>            <C>
Cable television systems                     $10,258,700    $ 9,850,600
Vehicles, furniture and equipment,  
 and leasehold improvements                      348,700        398,400
                                             -----------    -----------
                                              10,607,400     10,249,000

Less accumulated depreciation
 and amortization                             (7,567,400)    (7,490,400)
                                             -----------    -----------

                                             $ 3,040,000    $ 2,758,600
                                             -----------    -----------
                                             -----------    -----------
</TABLE>

NOTE 4 - NOTE PAYABLE

          The Partnership had a $2,250,000 revolving credit facility with a 
bank.  On August 9, 1996, the Partnership repaid the balance of $483,700, 
which terminated the facility.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

          The Partnership leases buildings and tower sites associated with 
the systems under operating leases expiring in various years through 2012.


                                      F-10

<PAGE>


                       ENSTAR INCOME PROGRAM II-2, L.P.

                        NOTES TO FINANCIAL STATEMENTS

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


NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

          Future minimum rental payments under noncancelable operating leases
that have terms in excess of one year as of December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                       Year                                Amount
                    ----------                             -------
                    <S>                                    <C>
                    1999                                   $ 5,300
                    2000                                     5,300
                    2001                                     5,300
                    2002                                     5,300
                    2003                                     5,300
                    Thereafter                              12,100
                                                           -------
                                                           $38,600
                                                           -------
                                                           -------
</TABLE>

          Rentals, other than pole rentals, charged to operations amounted to 
$10,200, $8,500 and $7,900 in 1996, 1997 and 1998, respectively.  Pole 
rentals were $33,700, $35,300 and $42,900 in 1996, 1997 and 1998, 
respectively.

          Other commitments include approximately $100,000 at December 31, 
1998 to complete the rebuild of the Partnership's cable system in 
Jerseyville, Illinois and the surrounding communities.

          The Partnership is subject to regulation by various federal, state 
and local government entities. The Cable Television Consumer Protection and 
Competition Act of 1992 (the "1992 Cable Act") provides for, among other 
things, federal and local regulation of rates charged for basic cable 
service, cable programming service tiers ("CPSTs") and equipment and 
installation services. Regulations issued in 1993 and significantly amended 
in 1994 by the Federal Communications Commission (the "FCC") have resulted in 
changes in the rates charged for the Partnership's cable services.  The 
Partnership believes that compliance with the 1992 Cable Act has had a 
significant negative impact on its operations and cash flow.  It also 
believes that any potential future liabilities for refund claims or other 
related actions would not be material. The Telecommunications Act of 1996 
(the "1996 Telecom Act") was signed into law on February 8, 1996.  As it 
pertains to cable television, the 1996 Telecom Act, among other things, (i) 
ends the regulation of certain CPSTs in 1999; (ii) expands the definition of 
effective competition, the existence of which displaces rate regulation; 
(iii) eliminates the restriction against the ownership and operation of cable 
systems by telephone companies within their local exchange service areas; and 
(iv) liberalizes certain of the FCC's cross-ownership restrictions.

          Beginning in August 1997, the Corporate General Partner elected to 
self-insure the Partnership's cable distribution plant and subscriber 
connections against property damage as well as possible business 
interruptions caused by such damage.  The decision to self-insure was made 
due to significant increases in the cost of insurance coverage and decreases 
in the amount of insurance coverage available.


                                     F-11

<PAGE>

                       ENSTAR INCOME PROGRAM II-2, L.P.

                        NOTES TO FINANCIAL STATEMENTS

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


NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

          In October 1998, FCLP reinstated third party insurance coverage for 
all of the cable television properties owned or managed by FCLP to cover 
damage to cable distribution plant and subscriber connections and against 
business interruptions resulting from such damage.  This coverage is subject 
to a significant annual deductible which applies to all of the cable 
television properties owned or managed by FCLP.

          Approximately 72% of the Partnership's subscribers are served by 
its system in Hillsboro, Illinois and neighboring communities.  Significant 
damage to the system due to seasonal weather conditions or other events could 
have a material adverse effect on the Partnership's liquidity and cash flows. 
The Partnership continues to purchase insurance coverage in amounts its 
management views as appropriate for all other property, liability, 
automobile, workers' compensation and other types of insurable risks.

NOTE 6 - EMPLOYEE BENEFIT PLAN

          The Partnership has a cash or deferred profit sharing plan (the 
"Profit Sharing Plan") covering substantially all of its employees.  The 
Profit Sharing Plan provides that each participant may elect to make a 
contribution in an amount up to 15% of the participant's annual compensation 
which otherwise would have been payable to the participant as salary. The 
Partnership's contribution to the Profit Sharing Plan, as determined by 
management, is discretionary but may not exceed 15% of the annual aggregate 
compensation (as defined) paid to all participating employees.  There were no 
contributions charged against operations of the Partnership for the Profit 
Sharing Plan in 1996, 1997 or 1998.

NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES

          The Partnership has a management and service agreement with a 
wholly owned subsidiary of the Corporate General Partner (the "Manager") for 
a monthly management fee of 5% of gross receipts, as defined, from the 
operation of the Partnership.  Management fee expense was $175,500, $191,800 
and $198,400 in 1996, 1997 and 1998, respectively.

          In addition to the monthly management fee, the Partnership 
reimburses the Manager for direct expenses incurred on behalf of the 
Partnership and for the Partnership's allocable share of operational costs 
associated with services provided by the Manager.  All cable television 
properties managed by the Corporate General Partner and its subsidiaries are 
charged a proportionate share of these expenses.  The Corporate General 
Partner has contracted with FCLP and its affiliates to provide management 
services for the Partnership.  Corporate office allocations and district 
office expenses are charged to the properties served based primarily on the 
respective percentage of basic customers or homes passed (dwelling 


                                      F-12


<PAGE>

                       ENSTAR INCOME PROGRAM II-2, L.P.

                        NOTES TO FINANCIAL STATEMENTS

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


NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (CONTINUED)

units within a system) within the designated service areas.  Reimbursed 
expenses were $300,300, $346,700 and $363,100 in 1996, 1997 and 1998, 
respectively.

          The Partnership also receives certain system operating management 
services from an affiliate of the Corporate General Partner in addition to 
the Manager, due to the fact that there are no such employees directly 
employed by the Partnership's cable systems.  The Partnership reimburses the 
affiliate for its allocable share of the affiliate's operational costs.  The 
total amount charged to the Partnership for these costs approximated $38,800, 
$68,700 $68,000 in 1996, 1997 and 1998, respectively.  No management fee is 
payable to the affiliate by the Partnership and there is no duplication of 
reimbursed expenses and costs paid to the Manager.

          Substantially all programming services have been purchased through 
FCLP.  FCLP, in the normal course of business, purchases cable programming 
services from certain program suppliers owned in whole or in part by 
affiliates of an entity that became a general partner of FCLP on September 
30, 1998.  Such purchases of programming services are made on behalf of the 
Partnership and the other partnerships managed by the Corporate General 
Partner as well as for FCLP's own cable television operations.  FCLP charges 
the Partnership for these costs based on an estimate of what the Corporate 
General Partner could negotiate for such programming services for the 15 
partnerships managed by the Corporate General Partner as a group.  
Programming fee expense was $732,700, $817,100 and $879,500 in 1996, 1997 and 
1998, respectively.  Programming fees are included in service costs in the 
statements of operations.

NOTE 8 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 

          During the years ended December 31, 1996, 1997 and 1998, cash paid 
for interest amounted to $58,900, $22,300 and $15,300, respectively.


                                      F-13

<PAGE>


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER       DESCRIPTION
-------      -----------
<S>          <C>
   3         Second Amended and Restated Agreement of Limited Partnership of
             Enstar Income Program II-2, L.P., dated as of August 1, 1988.(3)

   3.1       Amendment to Section 5.3.1 dated December 17, 1992.  Incorporated
             by reference to the exhibits to the Registrant's Current Report on
             Form 8-K dated December 17, 1992.

  10.1       Management Agreement between Enstar Income Program II-2 and Enstar
             Cable Corporation.(1)

  10.2       Credit Facility dated January 9, 1987 between Enstar Income Program
             II-2 and The Indiana National Bank.(2)

  10.3       Franchise Ordinance and related documents thereto granting a 
             non-exclusive community antenna television franchise for the City of
             Hillsboro, IL.(2)

  10.4       Franchise Ordinance and related documents thereto granting a 
             non-exclusive community antenna television franchise for the City of
             Jerseyville, IL.(2) 

  10.5       Franchise Ordinance and related documents thereto granting a 
             non-exclusive community antenna television franchise for the  City of
             Nokomis, IL.(2)

  10.6       Franchise Ordinance and related documents thereto granting a 
             non-exclusive community antenna television franchise for the City of
             Witt, IL.(2) 

  10.7       Franchise Ordinance and related documents thereto granting a 
             non-exclusive community antenna television franchise for the City of
             Malden, MO.(2) 

  10.8       Franchise Ordinance and related documents thereto granting a 
             non-exclusive community antenna television franchise for the City of
             Campbell, MO.(2) 

  10.9       Service Agreement between Enstar Communications Corporation, Enstar
             Cable Corporation, and Falcon Holding Group, Inc. dated as of
             October 1, 1988.(3)

  10.10      Ordinance No. 1162 of the City of Pana, Illinois authorizing an
             extension of a cable television franchise and authorizing and
             renewing an agreement between the City of Pana, Illinois and Enstar
             Cable.  Passed and approved February 8, 1993.(4)

  10.11      Franchise Agreement between the City of Pana, Illinois and Enstar
             Communications Corporation and Enstar Income Program II-2.(5)

  10.12      A resolution of the City Council of Malden, Missouri extending the
             Cable Television Franchise of Enstar Income Program II-2.  Passed
             and approved September 2, 1993.(6)

  10.13      A resolution of the City Council of Witt, Illinois extending the
             Cable Television Franchise of Enstar Income Program II-2.  Passed
             and adopted September 10, 1993.(6)

  10.14      Loan Agreement between Enstar Income Program II-2 and Kansallis-
             Osake-Pankki dated December 9, 1993.(7)


  10.15      Franchise Agreement and related documents thereto granting a 
             non-exclusive community antenna television system franchise for the
             City of Jerseyville.(8)

  21.1       Subsidiaries: None
</TABLE>


                                       E-1

<PAGE>

                                 FOOTNOTE REFERENCES

(1)  Incorporated by reference to the exhibits to the Registrant's Annual 
     Report on Form 10-K, File No. 0-14505 for the fiscal year ended 
     December 31, 1986. 

(2)  Incorporated by reference to the exhibits to the Registrant's Annual 
     Report on Form 10-K, File No. 0-14505 for the fiscal year ended 
     December 31, 1987. 

(3)  Incorporated by reference to the exhibits to the Registrant's Annual 
     Report on Form 10-K, File No. 0-14505 for the fiscal year ended 
     December 31, 1988. 

(4)  Incorporated by reference to the exhibits to the Registrant's Annual 
     Report on Form 10-K, File No. 0-14505 for the fiscal year ended 
     December 31, 1992.

(5)  Incorporated by reference to the exhibits to the Registrant's Quarterly
     Report on Form 10-Q, File No. 0-14505 for the quarter ended June 30, 1993.

(6)  Incorporated by reference to the exhibits to the Registrant's Quarterly
     Report on Form 10-Q, File No. 0-14505 for the quarter ended September 30,
     1993. 

(7)  Incorporated by reference to the exhibits to the Registrant's Annual 
     Report on Form 10-K, File No. 0-14505 for the fiscal year ended 
     December 31, 1993.
     
(8)  Incorporated by reference to the exhibits to the Registrant's Quarterly
     Report on Form 10-Q, File No. 0-14505 for the quarter ended June 30, 1994.


                                       E-2