<PAGE>
 
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                            _______________________

                                   FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended October 31, 1996

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period                      to                      
                               --------------------    -------------------

                        COMMISSION FILE NUMBER 1-10880

                              BET HOLDINGS, INC.
                              ------------------
            (Exact name of registrant as specified in its charter)

         DELAWARE                                           52-1742995
         --------                                           ----------
(State or other jurisdiction of                          (I.R.S. Employer 
 incorporation or organization)                       Identification Number)
                                        
                                 ONE BET PLAZA
               1900 W PLACE, N.E., WASHINGTON, D.C.  20018-1211
               ------------------------------------------------
                   (Address of principal executive offices)

                                (202) 608-2000
                                --------------
               (Registrant's phone number, including area code)


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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

                                         Shares outstanding at
                                           November 29, 1996
                                         ---------------------
           Class A Common Stock               10,097,605
           Class B Common Stock                1,831,600
           Class C Common Stock                4,820,000

================================================================================
<PAGE>
 
                              BET HOLDINGS, INC.
                                   FORM 10-Q
                FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1996

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                    Page
                                                                    ----
<S>                                                                 <C>
PART I  FINANCIAL INFORMATION

Item 1. Financial Statements:

        Consolidated Balance Sheets as of October
          31, 1996 and July 31, 1996...............................   1

        Consolidated Statements of Income for the
          Three Months ended October 31, 1996 and 1995.............   3

        Consolidated Statements of Cash Flows for
          the Three Months ended October 31, 1996 and 1995.........   4

        Notes to Consolidated Financial Statements.................   5

Item 2. Management's Discussion and Analysis of Results of 
          Operations and Financial Condition.......................   6

PART II OTHER INFORMATION..........................................  12
</TABLE>
<PAGE>
 
BET HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

<TABLE>
<CAPTION>
 
In thousands of dollars

ASSETS                                            October 31, 1996   July 31, 1996
                                                  ----------------   -------------
<S>                                               <C>                <C>
CURRENT ASSETS                                     
    Cash and cash equivalents                        $    5,012       $   4,147
    Marketable securities                                   100             100
    Accounts receivable, less allowance for        
     doubtful accounts of $1,536 and $1,543              29,976          27,635
     at October 31, 1996 and July 31, 1996,        
     respectively                                  
    Inventories                                           3,037           3,060
    Prepaid expenses and other assets                     5,738           6,363
    Current portion of programming rights, net            2,943           2,972
    Deferred tax benefit                                  2,184           1,775
                                                  ----------------   -------------
TOTAL CURRENT ASSETS                                     48,990          46,052
                                                  ================   ============= 
PROPERTY AND EQUIPMENT                             
    Land                                                  1,884           1,884
    Buildings and leasehold improvements                 32,438          32,386
    Broadcasting and other equipment                     28,452          27,844
    Satellite transponders                               32,782          32,782
    Construction in progress                              6,952           5,032
                                                  ----------------   -------------
    Total                                               102,508          99,928
    Less:  Accumulated depreciation                     (24,856)        (23,146)
                                                  ----------------   -------------
PROPERTY AND EQUIPMENT, NET                              77,652          76,782
                                                  ================   =============
Notes receivable                                          9,943           7,235
Investments in and advances to                            2,969           3,147
unconsolidated affiliates                          
Programming rights, less current portion                    976           1,077
Goodwill and other intangibles, net                      13,343          13,669
Other assets                                              2,800           2,769
                                                  ----------------   -------------
TOTAL ASSETS                                         $  156,673       $ 150,731
                                                  ================   =============  
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       1
<PAGE>
 
BET HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS  (UNAUDITED)

<TABLE>
<CAPTION>
 
 
In thousands of dollars

LIABILITIES AND SHAREHOLDERS' EQUITY               October 31, 1996   July 31, 1996
                                                   ----------------   -------------     
<S>                                                <C>                <C>
CURRENT LIABILITIES
   Accounts payable and accrued expenses                $   10,207       $   6,857
   Current portion of programming rights payable             4,250           4,155
   Deferred revenue                                          3,297           3,231
   Accrued compensation                                      4,070           5,318
   Current maturities of long-term debt                      2,158           2,067
                                                   ----------------   -------------     
TOTAL CURRENT LIABILITIES                                   23,982          21,628
                                                   ================   ============= 
Long term debt, less current maturities                     56,710          58,493
Programming rights payable, less current portion                 -             308
Deferred income taxes                                        2,828           2,504
Other liabilities                                              920           1,049
                                                   ----------------   -------------     
TOTAL LIABILITIES                                           84,440          83,982
                                                   ================   =============
SHAREHOLDERS' EQUITY                                 
Preferred stock; $.01 par value,                     
 15,000,000 shares authorized, no                                
 shares issued or outstanding                                    -               -

Common stock; $.02 par value:                           
   Class A; 50,000,000 shares authorized,               
   12,820,805 and 12,805,605 shares                    
   issued and 10,097,605 and 10,115,805                          
   shares outstanding at October 31, 1996              
   and July 31, 1996, respectively                             257             257 

   Class B; 15,000,000 shares authorized,               
   3,349,900 shares issued, 1,831,600                             
   shares outstanding                                           67              67 

   Class C; 15,000,000 shares authorized,               
   4,820,000 shares issued and outstanding                      96              96

Additional paid-in capital                                  45,481          45,156
Retained earnings                                          104,312          98,207
Cost of 2,723,200 Class A and 1,518,300              
 Class B common shares held in treasury              
 at October 31, 1996 and 2,689,800                         
 Class A and 1,518,300 Class B common                
 shares held in treasury at July 31,                 
 1996                                                      (77,980)        (77,034) 
                                                   ----------------   -------------     
TOTAL SHAREHOLDERS' EQUITY                                  72,233          66,749
                                                   ================   ============= 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $  156,673       $ 150,731
                                                   ================   =============  
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>
 
BET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME  (UNAUDITED)

<TABLE>
<CAPTION>
 
In thousands, except per share amounts

Three Months Ended October 31,               1996        1995
                                          ---------   ---------         
<S>                                       <C>         <C>
OPERATING REVENUES
Advertising                               $  19,662   $  16,668
Subscriber                                   15,954      14,547
Other                                           458       1,535
                                          ---------   ---------         
TOTAL OPERATING REVENUES                     36,074      32,750
                                          =========   =========
OPERATING EXPENSES
Production and programming                   11,237      10,248
Marketing                                     6,121       5,216
General and administrative                    5,113       4,266
Depreciation and amortization of              
 intangibles                                  2,034       1,963
                                          ---------   ---------         
TOTAL OPERATING EXPENSES                     24,505      21,693
                                          =========   =========
INCOME FROM OPERATIONS                       11,569      11,057
                                          =========   =========
NONOPERATING INCOME (EXPENSE)
Interest income                                 331         300
Interest expense                             (1,011)       (912)
Other, net                                     (502)       (464)
                                          =========   =========
INCOME BEFORE INCOME TAXES                   10,387       9,981
Provision for income taxes                   (4,282)     (4,231)
                                          ---------   ---------         
NET INCOME                                $   6,105   $   5,750
                                          =========   =========
NET INCOME PER COMMON SHARE               $     .35   $     .29
                                          =========   =========
WEIGHTED AVERAGE SHARES OUTSTANDING          17,525      19,716
                                          =========   =========
 
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
 
BET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
 
In thousands of dollars

Three Months Ended October 31,                             1996       1995
                                                         --------   --------
<S>                                                      <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES                    
Net income                                               $  6,105   $  5,750
Adjustments to reconcile net income to net cash 
 provided by operating activities:                                            
    Depreciation and amortization of other intangibles      2,034      1,963
    Amortization of programming rights                        795        723
    Equity in losses of unconsolidated affiliates             371        524  
    Loss on disposition of property and equipment               -         63
    Deferred income taxes                                     (85)     1,014
    Income tax benefit from exercise                           
     of common stock options                                   55          -
    Increase in accounts receivable                        (2,341)    (3,819)
    Decrease in other current assets                          648        775
    Increase in deferred revenue                               66        129
    Increase in other liabilities                           1,760        941
                                                         --------   --------
NET CASH PROVIDED BY OPERATING ACTIVITIES                   9,408      8,063
                                                         ========   ========
CASH FLOWS FROM INVESTING ACTIVITIES                    
Redemption of marketable securities, net                        -     (9,252)
Capital expenditures                                       (2,581)      (471)
Acquisition of programming rights                            (665)    (3,925)
Additions to notes receivable                              (3,208)         -
Collection of notes receivable                                500          2
Investment in and advances to                                
 unconsolidated affiliates                                   (193)      (451)
Increase in other assets                                      (28)      (104)
                                                         --------   --------
NET CASH USED IN INVESTING ACTIVITIES                      (6,175)   (14,203)
                                                         ========   ========
CASH FLOWS FROM FINANCING ACTIVITIES                    
Principal payments of long-term debt                       (5,192)      (573)
Borrowings                                                  3,500          -
Proceeds from issuance of common stock                        270          -
Repurchase of common stock                                   (946)         -
                                                         --------   --------
NET CASH USED IN FINANCING ACTIVITIES                      (2,368)      (573)
                                                         ========   ========
Net increase (decrease) in cash and                           
 cash equivalents                                             865     (6,713)
Cash and cash equivalents, beginning of period              4,147     13,984
                                                         --------   --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                 $  5,012   $  7,271
                                                         ========   ========
                                                        
</TABLE>                                                
The accompanying notes are an integral part of these financial statements.
                                                        

                                       4
<PAGE>
 
BET HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1:  BASIS OF PRESENTATION

The unaudited consolidated financial statements of BET Holdings, Inc. (the
"Company") included herein have been prepared pursuant to instructions for Form
10-Q and Rule 10-01 of Regulation S-X.  Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted or
condensed where permitted by regulation.  In management's opinion, all
adjustments, which were of a normal recurring nature, and disclosures necessary
for a fair presentation of the interim periods have been made.

These financial statements and notes should be read in conjunction with the
audited financial statements and notes thereto contained in the Company's Form
10-K for the fiscal year ended July 31, 1996.  The results of operations for the
three months ended October 31, 1996 are not necessarily indicative of the
results that may be expected for future interim periods or for the year ending
July 31, 1997.


NOTE 2:  CAPITAL STOCK

During the three months ended October 31, 1996, the Company repurchased 33,400
shares of its outstanding Class A common stock at an aggregate cost of $.9
million.

                                       5
<PAGE>
 
BET HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION


RESULTS OF OPERATIONS

GENERAL

BET Holdings, Inc. (the "Company") operates predominantly in the cable
television programming industry.  Its cable television programming operations
are conducted through Black Entertainment Television ("BET"), BET on Jazz:  The
Cable Jazz Channel ("BET on Jazz") and Action Pay-Per-View ("Action").  Both BET
and BET on Jazz are basic cable networks with revenues derived primarily from
sales of advertising time and monthly subscribership fees.  Action provides
programming on a pay-per-view basis.  Ancillary businesses established to
leverage and expand the BET brand name include the sale of consumer products,
including the Color Code line of skin care products, by the Company's BET Direct
subsidiary and publication of Emerge magazine.  Additionally, the Company has
equity ownership interests in certain affiliated companies, which are accounted
for under the equity method, including a joint venture with the New York Daily
News, which publishes BET Weekend, a Sunday newspaper supplement, and BET Film
Productions and BET Pictures, joint ventures which produce low-budget feature
length motion pictures.  Prior to September 30, 1996, the Company published
Young Sisters and Brothers (YSB) magazine.

CONSOLIDATED RESULTS OF OPERATIONS

The Company's consolidated results of operations  were as follows (unaudited):
<TABLE>
<CAPTION>
 
In thousands of dollars, except per
 share amounts
--------------------------------------------------------------
Three months ended October  31,             1996       1995
--------------------------------------------------------------
<S>                                       <C>        <C>
Operating revenues                        $36,074    $32,750
--------------------------------------------------------------
Income from operations                     11,569     11,057
--------------------------------------------------------------
Income before income taxes                 10,387      9,981
--------------------------------------------------------------
Net income                                $ 6,105    $ 5,750
--------------------------------------------------------------
 
Net income per common share               $   .35    $   .29
--------------------------------------------------------------
 
Weighted average shares outstanding        17,525     19,716
--------------------------------------------------------------
 
</TABLE>

Operating and net income margins reported for the quarter ended October 31, 1996
decreased as compared to the prior year primarily due to operating losses
incurred by BET on Jazz, which was launched in January 1996, and losses
resulting from BET Direct's May 1996 retail launch of the Color Code line of
skin care products.

                                       6
<PAGE>
 
OPERATING RESULTS BY BUSINESS UNIT

Summarized results of operations by each of the Company's significant business
units were as follows (unaudited):
<TABLE>
<CAPTION>
 
In thousands of dollars
------------------------------------------------------
Three months ended October 31,       1996       1995
------------------------------------------------------
<S>                               <C>         <C>
OPERATING REVENUES
------------------------------------------------------
BET                               $  32,387   $ 29,225
------------------------------------------------------
Action                                2,262      1,940
------------------------------------------------------
BET on Jazz                              87         -
------------------------------------------------------
BET Direct                              380        415
------------------------------------------------------
Emerge Magazine                         797        691
------------------------------------------------------
Other                                   161        479
======================================================
TOTAL                             $  36,074   $ 32,750
======================================================
INCOME (LOSS) FROM OPERATIONS
------------------------------------------------------
BET                               $  15,037   $ 11,992
------------------------------------------------------
Action                                   (4)      (131)
------------------------------------------------------
BET on Jazz                          (1,506)        -
------------------------------------------------------
BET Direct                             (993)         9
------------------------------------------------------
Emerge Magazine                        (295)      (286)
------------------------------------------------------
Other                                  (670)      (527)
======================================================
TOTAL                             $  11,569   $ 11,057
======================================================
 
</TABLE>

Income (loss) from operations presented in the preceding table does not reflect
the allocation of certain overhead and administrative costs incurred by BET
which relate to all of the Company's business units.

OPERATING REVENUE

Components of consolidated operating revenue were as follows (unaudited):
<TABLE>
<CAPTION>
 
In thousands of dollars
--------------------------------------------------------------
Three months ended October 31,              1996       1995
--------------------------------------------------------------
<S>                                       <C>        <C>
BET
--------------------------------------------------------------
Advertising                               $  18,952  $  15,965
--------------------------------------------------------------
Subscriber                                   13,389     12,174
--------------------------------------------------------------
Other                                            46      1,086
==============================================================
TOTAL BET                                    3,2387     29,225
==============================================================
OTHER BUSINESS UNITS
--------------------------------------------------------------
Advertising                                     710        703
--------------------------------------------------------------
Subscriber                                    2,565      2,373
--------------------------------------------------------------
Other                                           412        449
==============================================================
TOTAL OTHER BUSINESS UNITS                    3,687      3,525
==============================================================
TOTAL CONSOLIDATED OPERATING REVENUE      $  36,074  $  32,750
==============================================================
</TABLE> 

                                       7
<PAGE>
 
BET
 
     Advertising Revenue
 
Components of BET's advertising revenue were as follows (unaudited):

<TABLE> 
<CAPTION> 

In thousands of dollars
--------------------------------------------------------------
Three months ended October 31,                 1996       1995
--------------------------------------------------------------
<S>                                       <C>        <C> 
National Spot                             $  12,408  $  10,488
--------------------------------------------------------------
Infomercial                                   5,611      4,306
--------------------------------------------------------------
Direct Response                                 933      1,171
==============================================================
TOTAL                                     $  18,952  $  15,965
==============================================================
 
</TABLE>

BET's national spot advertising revenues increased 18%, to $12.4 million, during
the quarter ended October 31, 1996 as compared to the prior year comparable
period.  This increase resulted from rate increases, increased viewership and an
increase in the amount of broadcast time devoted to more profitable spot
advertising  (which was primarily made available by a corresponding reduction in
the amount of broadcast time devoted to direct response advertising).

BET's infomercial advertising revenues increased 30%, to $5.6 million, during
the quarter ended October 31, 1996 as compared to the prior year comparable
period.  This increase was primarily attributable to a scheduled contractual 22%
increase in the rate charged to the largest purchaser of infomercial advertising
time on BET.  The Company's long-term contract with its largest purchaser of
infomercial advertising provides for rate increases of 10% in fiscal years 1998
and 1999.

BET's direct response advertising revenues decreased 20%, to $.9 million, during
the quarter ended October 31, 1996 as compared to the prior year comparable
period.  This decline was primarily due to a reduction in broadcast time made
available for direct response advertising in favor of more profitable national
spot and infomercial advertising, which was partially offset by increases in
rates charged to direct response advertisers.

  Subscriber Revenue

BET's subscriber revenues increased 10%, to $13.4 million, during the quarter
ended October 31, 1996 as compared to the prior year comparable period.  This
increase was due to continuing increases in BET's subscriber base.  The monthly
subscriber fee was 11c in calendar year 1995 and remains at 11c for calendar
year 1996. The monthly subscriber fee will increase to 12c for calendar year
1997. For the quarter ended October 31, 1996, BET Cable Network's
subscriber base increased by 1 million subscribers to 42.4 million subscribers,
as compared to July 31, 1996.  The average number of subscribers reported to BET
by its affiliates for the quarter ended October 31, 1996 increased 9% to 41.9
million, as compared to the quarter ended October 31, 1995.

  Other Revenue

BET's other operating revenue decreased substantially during the quarter ended
October 31, 1996 as compared to the prior year comparable period primarily due
to the loss of revenues related to the lease of excess transponder capacity
prior to the launch of BET on Jazz.  Reduced studio rental income and reduced
revenues related to syndication of originally produced programming also
contributed to the decrease in other operating revenues.

Other Business Units

  Advertising Revenue

Advertising revenue earned by the Company's other business units for the quarter
ended October 31, 1996 was essentially flat as compared to the prior year
comparable period, reflecting a drop in revenues resulting from the
discontinuance of YSB 

                                       8
<PAGE>
 
in September 1996 offset by increased advertising revenues earned by Emerge and
$.1 million of advertising revenue earned by BET on Jazz.

  Subscriber Revenue

Subscriber revenue earned by the Company's other business units increased 11%,
to $2.6 million, for the quarter ended October 31, 1996 as compared to the prior
year comparable period, reflecting a 17% increase in subscriber revenue reported
by Action, offset by a decrease in subscriber revenue related to the
discontinuance of YSB.

At October 31, 1996, Action was available to approximately 9 million addressable
homes, representing a 23% increase as compared to October 31, 1995.  Monthly
subscriber revenues resulted from a monthly "buy rate" of approximately 4.7% for
the quarter ended October 31, 1996 as compared to a "buy rate" of 4.8% for the
prior year  comparable period.

BET on Jazz did not earn any subscriber revenue for the quarter ended October
31, 1996, reflecting the economics of launching a new programming service in a
highly competitive environment.  While BET on Jazz's rate card provides for a
monthly per subscriber fee of 5c, BET on Jazz's affiliation agreements provide
for a free carriage period of up to two years.  Accordingly, BET on Jazz is not
expected to earn significant subscriber revenue in the near future.

OPERATING EXPENSES

Components of consolidated operating expenses were as follows (unaudited):
<TABLE>
<CAPTION>
 
In thousands of dollars
------------------------------------------------------------
Three months ended October 31,            1996       1995
------------------------------------------------------------
<S>                                     <C>        <C>
BET
------------------------------------------------------------
Production and Programming              $   7,693  $   7,841
------------------------------------------------------------
Marketing                                   4,468      4,326
------------------------------------------------------------
General and Administrative                  4,009      3,699
------------------------------------------------------------
Other                                       1,180      1,367
============================================================
TOTAL BET                                  17,350     17,233
============================================================
OTHER BUSINESS UNITS
------------------------------------------------------------
Production and Programming                  3,544      2,407
------------------------------------------------------------
Marketing                                   1,653        890
------------------------------------------------------------
General and Administrative                  1,104        567
------------------------------------------------------------
Other                                         854        596
============================================================
TOTAL OTHER BUSINESS UNITS                  7,155      4,460
============================================================
TOTAL CONSOLIDATED OPERATING EXPENSE    $  24,505  $  21,693
============================================================
 
</TABLE>
BET

  Production and Programming

BET's production and programming expenses for the quarter ended October 31, 1996
were essentially flat as compared to the prior year comparable period, primarily
due to a reduction in special event programming, which typically is more
expensive than regularly scheduled programming broadcast by BET.  Additionally,
a reduction in the amount of programming produced by BET for syndication helped
keep programming costs flat.

                                       9
<PAGE>
 
  Marketing

BET's marketing expenses for the quarter ended October 31, 1996 were essentially
flat as compared to the prior year comparable period primarily due to personnel
levels remaining constant and the absence of major new marketing campaigns.

  General and Administrative

General and administrative expenses increased 8% during the quarter ended
October 31, 1996 as compared to the prior year comparable period, primarily due
to business development related costs.

Other Business Units

Total operating expenses incurred by the Company's other business units during
the quarter ended October 31,  1996 increased 60%, to $7.2 million, as compared
to the prior year comparable period.  This increase primarily resulted from
programming and marketing expenses incurred by BET on Jazz, which was launched
in January 1996, and marketing costs incurred by BET Direct related to promotion
of the Color Code line of skin care products, which was launched in May 1996.

  Production and Programming

Production and programming costs incurred by the Company's other business units
increased 47%, to $3.5 million, during the quarter ended October 31, 1996 as
compared to the prior year comparable period.  This increase was primarily due
to programming costs incurred by BET on Jazz.

  Marketing

Marketing costs incurred by the Company's other business units increased 86%, to
$1.7 million, during the quarter  ended October 31, 1996 as compared to the
prior year comparable period .  This increase was primarily due to marketing
costs related to BET Direct's launch of the Color Code product line and
marketing costs incurred by BET on Jazz.

  General and Administrative

General and administrative costs incurred by the Company's other business units
increased 95%, to $1.1 million, during the quarter ended October 31, 1996 as
compared to the prior year comparable period, primarily due to costs incurred by
BET Direct and BET on Jazz.

NONOPERATING EXPENSES

Net nonoperating expenses for the quarter ended October 31, 1996 increased
slightly as compared to the prior year comparable period, primarily due to
increased interest expense resulting from increased borrowings related to the
repurchase of a significant amount of the Company's common stock in December
1995.


FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal source of working capital is internally generated cash
flow from operations.  As reported in its consolidated statements of cash flow,
the Company generated net cash from operating activities of $9.4 million and
$8.1 million during the quarter ended October 31, 1996 and 1995, respectively.
At October 31, 1996, the Company's cash and temporary investments aggregated
$5.1 million and the Company had an excess of current assets over current
liabilities of $25 million.  At October 31, 1996, $36.5 million was available
under the Company's $75 million revolving credit facility.

                                       10
<PAGE>
 
During the quarter ended October 31, 1996, the Company provided significant
operational funding to BET on Jazz and BET Direct.  This level of funding is
expected to continue until the viability of BET on Jazz and the Color Code line
of skin care products is attained, which is not expected within the Company's
1997 fiscal year ending July 31, 1997.

During September 1996, the Company and Encore Media Corporation announced that
they would jointly launch BET Movies/Starz!3, a Black-oriented pay movie channel
devoted to showcasing Black film artists. The Company currently estimates that
it will be required to provide BET Movies/Starz!3, which will be launched in
February 1997, with operational funding of up to $24 million through the end of
calendar year 1998.

As part of its ongoing strategic plan, the Company plans to continue to invest
significant amounts of capital in compatible media and other businesses reaching
the Black consumer marketplace.  In this regard, the Company is currently
committed to funding a prototype entertainment themed restaurant targeted to
Black patrons and is considering pursuing other investment opportunities in the
restaurant and entertainment industry.

The Company expects that cash flow from BET's operations, as supplemented by
additional credit facilities, if necessary, will be sufficient to fund its
operations, debt service and capital expenditures for the foreseeable future.

CAPITAL STOCK

During the three months ended October 31, 1996, the Company repurchased 33,400
shares of its outstanding Class A common stock at an aggregate cost of $.9
million.

                                       11
<PAGE>
 
PART II:  OTHER INFORMATION

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

Exhibit
 Number            Description
-------            -----------
   27              Financial Data Schedule


(b)  Reports on Form 8-K.  No reports on Form 8-K were filed during the three 
     months ended October 31, 1996.



                                      12


<PAGE>
 
SIGNATURES


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


                                             BET Holdings, Inc.
                                             ------------------
                                             (Registrant)


     Date:  December 12, 1996                 /s/ Debra L. Lee
                                              ------------------------------
                                               Debra L. Lee, President and
                                                 Chief Operating Officer


     Date:  December 12, 1996                  /s/ William T. Gordon
                                               -----------------------------
                                               William T. Gordon, III,
                                                 Executive Vice President,
                                                 Finance; Chief Financial
                                                 Officer and Treasurer
                                                 (Chief Accounting Officer)

 

                                       13