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                            September 30, 1996
                                                          ------------------

                                       OR

[X]  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     33-98434


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


              Delaware                                   04-3289279
-------------------------------------      -------------------------------------
   (State or other jurisdiction of                     (IRS Employer
    incorporation or organization)                  Identification No.)


     18 Newbury Street, Boston, MA                           02116
----------------------------------------       ---------------------------------
(Address of principal executive offices)                  (Zip code)


Registrant's telephone number, including area code         (617) 369-7755
                                                       ----------------------

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  [ ]

As of September 30, 1996,  the Company had the following  outstanding  shares of
common stock:  1,209,077  shares of Class B-1 Common Stock,  6,158,211 shares of
Class B-2 Common Stock and 876,917 shares of Class C Common Stock. The Company's
Common  Stock is not  publicly  traded and does not have a  quantifiable  market
value.


                               Page 1 of 22 pages


 
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (SEE NOTE 1)

               SULLIVAN BROADCAST HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                                      The Company
                                                     Predecessor        ----------------------------------------
                                                  December 31, 1995     December 31, 1995     September 30, 1996
                                                  -----------------     -----------------     ------------------
                                                                                                 (unaudited)

<S>                                                   <C>                   <C>                   <C>
ASSETS
Current assets:
  Cash and cash equivalents                           $   3,584             $      --             $   8,046
  Restricted cash                                            --               162,599                    --
  Accounts receivable, net of allowance for 
   doubtful accounts of $983 and $1,472                  28,943                    --                21,537
  Current portion of programming rights                   8,943                    --                21,829
  Current deferred tax asset                                 --                    --                 8,223
  Prepaid expenses and other current assets                 213                    --                 1,154
                                                      -----------------------------------------------------
      Total current assets                               41,683               162,599                60,789

Property and equipment, net                              20,399                    --                45,830

Programming rights, net of current portion               10,852                    --                27,182

Deferred loan costs, net of accumulated 
 amortization of $2,219, $31 and $1,495                   3,769                11,016                14,396

Deferred tax asset                                        7,326                   349                    --

Other assets and intangible assets, net                  50,797                    --               600,185
                                                      -----------------------------------------------------
      Total assets                                    $ 134,826             $ 173,964             $ 748,382
                                                      =====================================================
</TABLE>



The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.



               SULLIVAN BROADCAST HOLDINGS, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS (cont.)
                (dollars in thousands, except per share amounts)



<TABLE>
<CAPTION>
                                                                                      The Company
                                                     Predecessor        ----------------------------------------
                                                  December 31, 1995     December 31, 1995     September 30, 1996
                                                  -----------------     -----------------     ------------------
                                                                                                 (unaudited)

<S>                                                   <C>                   <C>                   <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Current portion of programming contracts 
   payable                                            $  12,788             $      --             $  22,110
  Current portion of senior debt                         24,078                    --                15,252
  Current income taxes payable                            1,961                    14                 1,805
  Interest payable                                          515                   485                10,974
  Due to related parties                                     --                 2,847                    --
  Accounts payable                                        1,482                    --                 2,520
  Accrued expenses                                        4,239                 5,163                 2,985
                                                      -----------------------------------------------------

      Total current liabilities                          45,063                 8,509                55,646

Senior debt, net of current portion                      38,898                    --               204,748
Borrowings under revolving line of credit                    --                    --                51,500
Subordinated debt                                       100,000               154,407               154,788
Programming contracts payable, net of 
 current portion                                         12,542                    --                25,009
Deferred tax liability and other liabilities                450                    --                88,575
                                                      -----------------------------------------------------
      Total liabilities                                 196,953               162,916               580,266
                                                      -----------------------------------------------------

Preferred stock (Predecessor)                            26,386                    --               105,207

15% Cumulative redeemable preferred stock, 
 non-voting, $.001 par value-authorized 
 10,000,000 shares; 1,150,000 shares issued
 and outstanding                                             --                    --                    --
                                                      -----------------------------------------------------
Commitments and contingencies Shareholders' 
 equity (deficit):
  Common stock (Predecessor)                                 16                    --                    --
  Class B-1 common stock, $.001 par value; 
   25,000,000 shares authorized; 1,209,077 
   shares issued and outstanding                             --                     1                     1
  Class B-2 common stock, $.001 par value; 
   25,000,000 shares authorized; 6,158,211 
   shares issued and outstanding                             --                     1                     6
  Class C common stock, $.001 par value; 
   5,000,000 shares authorized; 876,917 
   shares issued and outstanding                             --                    --                     1
  Additional paid-in capital                              3,767                12,570                83,212
  Accumulated deficit                                   (92,296)               (1,524)              (20,311)
                                                      -----------------------------------------------------

      Total shareholders' equity (deficit)              (88,513)               11,048                62,909
                                                      -----------------------------------------------------

      Total liabilities and shareholders' 
       equity (deficit)                               $ 134,826             $ 173,964             $ 748,382
                                                      =====================================================
</TABLE>


The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.



               SULLIVAN BROADCAST HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       (Unaudited - dollars in thousands)


<TABLE>
<CAPTION>
                                                 Three Months Ended            Nine Months Ended
                                                 September 30, 1996              September 30,
                                               -----------------------      -----------------------
                                               Predecessor    Company       Predecessor    Company
                                                  1995          1996           1995          1996
                                               -----------    --------      -----------    --------

<S>                                             <C>           <C>            <C>           <C>
Revenues (excluding barter)                     $ 25,457      $ 29,643       $ 74,786      $ 87,513
  Less - commissions                              (4,492)       (4,929)       (13,198)      (14,588)
                                                ---------------------------------------------------

Net revenues (excluding barter)                   20,965        24,714         61,588        72,925
Barter revenues                                    1,689         3,765          5,199        10,798
                                                ---------------------------------------------------

Total net revenues                                22,654        28,479         66,787        83,723
                                                ---------------------------------------------------

Expenses

  Operating expenses                               2,954         3,875          7,980        11,774
  Selling, general and administrative              5,361         5,393         16,131        16,656
  Amortization of programming rights               3,992         7,004         12,415        19,020
  Depreciation and amortization                    2,670        14,266          8,807        36,337
                                                ---------------------------------------------------

                                                  14,977        30,538         45,333        83,787
                                                ---------------------------------------------------

  Operating income (loss)                          7,677        (2,059)        21,454           (64)

Interest expense, including amortization 
 of debt discount and deferred loan costs          4,445        10,820         13,415        30,022
Other expenses (income)                              205           100            233           100
                                                ---------------------------------------------------

  Income (loss) before income taxes                3,027       (12,979)         7,806       (30,186)

Income tax (expense) benefit                        (345)        5,961           (799)       11,399
                                                ---------------------------------------------------


  Net income (loss)                             $  2,682      $ (7,018)      $  7,007      $(18,787)
                                                ===================================================
</TABLE>


The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.



               SULLIVAN BROADCAST HOLDINGS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                        (Unaudited-dollars in thousands)



<TABLE>
<CAPTION>
                         Class B-1             Class B-2           Class C
                        Common Stock          Common Stock        Common Stock
                     ------------------    -----------------   -----------------
                                                                                                                       Total
                                                                                      Additional     Accumulated     Equity for
                      Shares     Amount    Shares     Amount   Shares     Amount   Paid-in Capital     Deficit      Shareholders
                     ---------   ------   ---------   ------   -------    ------   ---------------   ------------   ------------

<C>                  <C>           <C>    <C>           <C>    <C>          <C>        <C>             <C>             <C>
Balance at 
 December 31,
 1995 (Company)        560,000     $ 1      697,243     $ 1         --       --        $ 12,570        $  (1,524)      $ 11,048

Issuance of
 Class B-1
 common stock          651,577      --           --      --         --       --           6,516               --          6,516

Repurchase of
 Class B-1
 common stock           (2,500)     --           --      --         --       --             (25)              --            (25)

Issuance of
 Class B-2
 common stock               --      --    5,460,968       5         --       --          54,605               --         54,610

Issuance of
 Class C common
 stock                      --      --           --      --    924,292      $ 1             528               --            529

Repurchase of
 Class C common
 stock                      --      --           --      --    (47,375)      --             (27)              --            (27)

Issuance of
 common stock
 purchase
 warrants                   --      --           --      --         --       --          24,063               --         24,063

Accretion of
 Preferred Stock            --      --           --      --         --       --         (15,018)              --        (15,018)

Net loss 
 (unaudited)                --      --           --      --         --       --              --          (18,787)       (18,787)
                     ----------------------------------------------------------------------------------------------------------

Balance at
 September 30,
 1996                1,209,077     $ 1    6,158,211     $ 6    876,917      $ 1        $ 83,212        $ (20,311)      $ 62,909
                     ==========================================================================================================
</TABLE>


The accompanying notes to Consolidated Financial Statements are an integral part
of these financial statements.




               SULLIVAN BROADCAST HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (Unaudited-dollars in thousands)


<TABLE>
<CAPTION>
                                                                        Nine Months Ended September 30,
                                                                        -------------------------------
                                                                        Predecessor      Company
                                                                           1995            1996
                                                                        -----------     ----------

<S>                                                                      <C>            <C>
Cash flows from operating activities:
  Net Income (loss)                                                      $  7,007       $ (18,787)
  Adjustments to reconcile net income (loss) to net cash provided
   by operating activities:
    Deferred income taxes                                                      --         (11,399)
    Depreciation of property, plant and equipment                           2,154           5,612
    Amortization of intangible assets                                       6,654          30,725
    Amortization of programming rights (excluding barter)                   7,438           8,861
    Payments for programming rights                                        (6,731)         (6,583)
    Amortization of debt discount and deferred loan costs                     666           1,662
    Loss on disposal of fixed assets                                           19              --
    Changes in assets and liabilities:
      Decrease in accounts receivable                                       6,619           7,442
      Decrease (increase) in prepaid expenses and other assets                 75          (1,118)
      Increase in intangible assets                                        (7,419)             --
      Decrease in due to related parties                                       --          (2,717)
      Increase (decrease) in income taxes payable                             134            (962)
      Increase in interest payable                                             --          10,506
      Increase (decrease) in accounts payable and other accrued 
       liabilities                                                          2,674          (6,680)
                                                                         ------------------------

Net cash provided by operating activities                                  19,290          16,562
                                                                         ------------------------

Cash flows from investing activities:
  Decrease in restricted cash                                                  --         162,599
  Acquisition of Act III Broadcasting, Inc., net of cash acquired              --        (550,045)
  Payment for purchase options                                                 --          (2,800)
  Acquisition of WFXV assets                                                   --            (650)
  Acquisition of WMSN                                                          --         (26,500)
  Acquisition of WUXP                                                          --         (26,950)
  Capital expenditures                                                     (4,918)         (2,228)
                                                                         ------------------------

Net cash used for investing activities                                     (4,918)       (446,574)
                                                                         ------------------------

Cash flows from financing activities:
  Payment of principal amounts                                            (13,235)             --
  Proceeds from term debt                                                      --         220,000
  Proceeds from revolver borrowings                                            --          51,500
  Proceeds from issuance of common stock                                       --          61,603
  Repurchase of common stock                                                   --              --
  Debt and preferred stock issuance costs                                      --          (5,649)
  Proceeds from issuance of preferred stock, net                               --         115,000
  Advance buydown of programming rights                                        --          (4,396)
                                                                         ------------------------

Net cash (used) provided by financing activities                          (13,235)        438,058

Net increase in cash and cash equivalents                                   1,137           8,046
Cash and cash equivalents, beginning of period                              3,295              --
                                                                         ------------------------
Cash and cash equivalents, end of period                                 $  4,432       $   8,046
                                                                         ========================
</TABLE>


For supplemental disclosures of cash flow information see Note 5 to Consolidated
Financial Statements.


The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.




SULLIVAN BROADCAST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION

On  January  4,  1996,  all  of  the  outstanding   capital  stock  of  Act  III
Broadcasting, Inc. ("Act III" or the "Predecessor") was purchased by and Act III
was merged with and into A-3 Acquisition,  Inc. ("A-3"),  with Act III surviving
such  merger  (the  "Acquisition").  Act III then  changed  its name to Sullivan
Broadcasting  Company,  Inc.  (together  with  its  subsidiaries,  the  "SBC"  a
wholly-owned subsidiary of Sullivan Broadcast Holdings, Inc. the "Company"). The
Acquisition was accounted for by the purchase method of accounting.  The results
of operations of Act III for the period from January 1, 1996 through  January 4,
1996 have been included in the results of operations of the Company for the nine
months  ended  September  30, 1996 due to the  immateriality  of such results in
relation to the Company's  financial  statements taken as a whole.  Such results
are as follows:


<TABLE>

          <S>                                           <C>
          Net revenues                                  $ 832,000
          Operating expenses                              178,000
          Selling, general & administrative expenses      219,000
          Operating income                                435,000
</TABLE>

The  accompanying  consolidated  financial  statements have been prepared by the
Company,  without audit, pursuant to the rules and regulations of the Securities
and Exchange  Commission.  Certain information and footnote disclosures normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been omitted pursuant to such rules and regulations.
However,  the Company believes that the disclosures herein are adequate and that
the  information  presented  is  not  misleading.  It is  suggested  that  these
consolidated  financial  statements  be read in  conjunction  with the financial
statements and the notes thereto  included in A-3's latest annual report on Form
10-K for the year ended December 31, 1995 and the Company's  quarterly report on
Form  10-Q for the  quarters  ended  March  31,  1996 and  June  30,  1996.  The
information  furnished  reflects  all  adjustments  (consisting  only of normal,
recurring  adjustments)  which are, in the opinion of  management,  necessary to
make a fair  statement of the results for the interim  period.  Certain  amounts
recorded  in  connection  with  accounting  for the  Acquisition  are subject to
adjustment  based upon the final  valuation  of certain  assets and  liabilities
acquired.  Such  adjustments are not expected to be material to the consolidated
financial statements.  The results for these interim periods are not necessarily
indicative  of results to be expected for the full fiscal year,  due to seasonal
factors, among others.


For  comparative  purposes,  the December 31, 1995 balance sheet of both Act III
and A-3 have been included.  In addition,  the results of operations and of cash
flows for the nine months  ended  September  30, 1995 for Act III have also been
presented.  A-3 was not  incorporated  until  June  1995  and did not  have  any
operations for a comparable nine month period ended September 30, 1995.


2. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                                              December 31,      September 30,
                                                                  1995              1996
                                                              ------------      -------------

    <S>                                                       <C>               <C>
    Land                                                      $  1,771,000      $  1,366,000
    Broadcasting equipment                                      32,335,000        38,816,000
    Buildings and improvements                                   8,006,000         5,750,000
    Furniture and other equipment                                4,144,000         2,979,000
    Construction in progress                                     1,457,000         2,531,000
                                                              ------------------------------
                                                                47,713,000        51,442,000
    Less:  Accumulated depreciation and amortization           (27,314,000)       (5,612,000)
                                                              ------------------------------
                                                              $ 20,399,000      $ 45,830,000
                                                              ==============================
</TABLE>


3. INTANGIBLE ASSETS

    Intangible assets consisted of the following:

<TABLE>
<CAPTION>
                                             Amortization      December 31,     September 30,
                                                Period             1995             1996
                                             ------------      ------------     -------------

    <S>                                      <C>               <C>              <C>
    Goodwill                                 40 Years          $ 25,919,000     $ 222,122,000
    Affiliation agreements                   10 Years            18,260,000        98,447,000
    Non-competition agreements               5 - 10 Years        20,875,000                --
    Canadian cable rights                    10 Years            22,826,000        59,000,000
    Commercial advertising contracts         15 years                    --       139,273,000
    FCC licenses                             15 years                    --        81,264,000
    Other intangible assets                  5 - 15 Years        21,931,000        30,584,000
                                                               ------------------------------
                                                                109,811,000       630,690,000

    Less: Accumulated amortization                              (59,157,000)      (30,725,000)
                                                               ------------------------------
                                                               $ 50,654,000     $ 599,965,000
                                                               ==============================
</TABLE>


4. LONG TERM DEBT

On  January 4, 1996,  concurrent  with the  Acquisition,  the  Company  borrowed
$220,000,000  under a term loan and $4,000,000 under a revolving credit facility
to finance the Acquisition. Both the term loan and the revolving credit facility
bear interest at LIBOR plus an applicable margin determined quarterly based upon
the Company's leverage ratio for the preceding quarter.

The revolving  credit  facility  provides for borrowings up to  $30,000,000  for
working capital  purposes,  and is due on December 31, 2003 or upon repayment of
the term loan.  At September  30, 1996,  there were  $25,000,000  in  borrowings
outstanding on the revolving line of credit.

The term loan is payable in varying quarterly  installments  beginning  December
31, 1996 through 2003. The future repayments of the term loan are as follows:

<TABLE>

                   <C>                   <C>
                   1996                  $   5,500,000
                   1997                     13,002,000
                   1998                     21,010,000
                   1999                     33,000,000
                   2000                     44,000,000
                   Thereafter              103,488,000
</TABLE>

In addition,  certain mandatory prepayments of the term loan are required if the
Company  achieves  certain  financial  results at the end of the fiscal year. No
such mandatory prepayments are payable at September 30, 1996.

In January  1996,  the Company  entered into various  interest  rate  protection
agreements  based upon LIBOR rates and a notional value equal to the anticipated
outstanding term debt levels through the year 2000.

In connection with the term loan and the revolving credit facility,  the Company
also  has a  $75,000,000  line  of  credit  available  for  future  acquisitions
(collectively,  the "Senior Credit Facility"). At September 30, 1996, there were
26,500,000 in borrowings outstanding on the acquisition line of credit.

The  Senior  Credit  Facility  requires  the  Company  to  comply  with  certain
covenants.  At  September  30,  1996,  the  Company was in  compliance  with all
covenants.

5. INCOME TAXES

The  provisions  for taxes for the interim  periods were based on projections of
total year pre-tax income.

As discussed in Note 1, the Acquisition was accounted for by the purchase method
of accounting which requires that all assets acquired and liabilities assumed be
recorded  at their  fair  value.  For tax  purposes,  the  assets  acquired  and
liabilities   assumed  retain  their  historical  basis  resulting  in  a  basis
differential.  The resulting basis  differential and acquired net operating loss
carryforwards  together with changes in deferred tax assets and  liabilities for
the period and net operating losses generated during the period give rise to the
net deferred tax asset and liability recorded at September 30, 1996.

At the date of the Acquisition, the Company had net operating loss carryforwards
of  approximately  $94,344,000  for federal  income tax  purposes,  available to
reduce future taxable income. To the extent not used, federal net operating loss
carryforwards  expire in varying  amounts  beginning in 2002.  In addition,  the
Company had net operating loss  carryforwards of  approximately  $79,189,000 for
state and local income tax purposes in various jurisdictions.

An entity that undergoes a "change in ownership"  pursuant to Section 382 of the
Internal  Revenue  Code is  subject  to  limitations  on the  amount  of its net
operating loss  carryforwards  which may be used in the future.  The Acquisition
resulted  in a change in  ownership  pursuant  to Section  382.  Management  has
estimated that the limitation on the net operating loss  carryforwards  will not
have a material adverse impact on the Company's  consolidated financial position
or results of operation.

6. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

The Company paid interest of $9,075,000 and $17,863,000 during the periods ended
September 30, 1995 and September 30, 1996, respectively.

During the periods ended September 30, 1995 and September 30, 1996,  programming
rights increased $12,820,000 and $11,719,000 respectively, due to the assumption
of programming liabilities.

During the periods ended  September 30, 1995 and September 30, 1996, the Company
paid  approximately  $685,000 and $1,209,000  respectively,  for state and local
income taxes.

7. COMMITMENTS AND CONTINGENCIES

The Company has executed contracts for programming rights totaling approximately
$21,905,000  and  $15,589,000  at December  31,  1995 and  September  30,  1996,
respectively,  for which the broadcast  period has not begun.  Accordingly,  the
asset and related liability are not recorded at such dates.

The Company has  operating  lease  agreements  for land,  office  space,  office
equipment and other property which expire on various dates through 2005.  Rental
expense was $503,000 and $289,000 for the periods ending  September 30, 1995 and
September 30, 1996, respectively.

The Company has no postretirement or postemployment benefit plans.

8. RELATED PARTY TRANSACTIONS

The Company reimburses ABRY Partners,  Inc. ("ABRY"),  an entity related through
common  ownership,  approximately  $5,000 per month,  representing the Company's
allocated share of rent paid by ABRY under its lease and other general  expenses
including utilities,  property insurance and supplies. In addition,  the Company
has a management  agreement with ABRY whereby the Company pays ABRY a management
fee of $250,000 annually.  Such amounts have been included in "Selling,  general
and  administrative"  expenses  in  the  Company's  consolidated  statements  of
operations.

9. SIGNIFICANT EVENTS

On February 7, 1996, the Company executed an asset purchase agreement to acquire
certain assets of Mohawk Valley  Broadcasting,  Inc. and Acme T.V.  Corporation,
the owners/operators of two television stations in Utica, NY. The total purchase
price of this acquisition was $400,000. In addition, the Company paid $2,600,000
for the  option  to  purchase  the  remaining  assets of the  stations  upon FCC
approval.  The  Company  concurrently  executed a Time  Brokerage  Agreement  to
operate the stations  pending FCC approval of the  acquisition.  On June 24,1996
the acquisition of the remaining assets was consumated subsequent to the receipt
of FCC approval and the payment of $250,000.

On February 22,  1996,  the Company  executed a Time  Brokerage  Agreement  with
Central  Tennessee  Broadcasting  Corporation  pursuant  to  which  the  Company
programs  WXMT-TV in Nashville,  TN. In  conjunction  with this  agreement,  the
Company also paid $200,000 for an option to purchase  certain  assets of Central
Tennessee  Broadcasting  Corporation,  with an option to buy the station  should
applicable FCC  regulations  allow dual  ownership in a single  market.  In July
1996, the acquisition of these certain assets was completed for $26,950,000.

On February 28, 1996, the Company  executed a definitive  purchase  agreement to
acquire all the assets of Channel 47 Limited  Partnership  in Madison,  WI for a
total purchase  price of  $26,500,000,  pending FCC approval.  Subsequent to FCC
approval, this acquisition was consummated on July 1, 1996.

10. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

The following unaudited pro forma consolidated financial data are based upon the
historical  results of  operations  of Act III for the nine month  period  ended
September  30,  1995  adjusted to give  effect to the  Acquisition  as if it had
occurred on January 1, 1995:

<TABLE>

                    <S>                           <C>
                    Net revenue                   $ 67,606
                    Net loss                        25,251
</TABLE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS


General

          The Company's revenues are derived principally from local and national
advertisers.  Additional  revenues are derived from  commercial  production  and
rental of broadcast towers.  Increased ratings and strong advertiser demand have
contributed to the Company's  successful  revenue growth.  Also, the Company has
developed  sales  marketing  programs,  implemented  to enhance the image of the
Company's television stations (the "Stations"),  including local "Kids Expos"
and live remote broadcasts, promotional advertising print supplements and joint
marketing events with local businesses and radio stations.

          The Company's  operating  revenues are generally highest in the fourth
quarter of each year.  This  seasonality is primarily  attributable to increased
expenditures  by advertisers in  anticipation  of holiday retail spending and an
increase in viewership  during the  Fall/Winter  season.  Accordingly,  accounts
receivable  balances as of the end of each of the first three calendar  quarters
are  generally  substantially  less than the balances as of the end of the year.
Each of the Company's  Stations  generates positive Broadcast Cash Flow, defined
as  operating  income  plus  depreciation,  amortization,  barter  expenses  and
corporate expenses less payments for programming rights and barter revenue.

          The Company's  principal costs of operations are employee salaries and
commissions,  programming,  production,  promotion and other  expenses  (such as
maintenance,   supplies,   insurance,  rent  and  utilities).  The  Company  has
historically  experienced net losses  primarily as a result of non-cash  charges
attributable to  amortization  of intangibles  that were recorded at the time of
the purchase of the Stations.  The Company's  amortization of programming rights
has historically  exceeded the Company's  payments for programming rights due to
the  write-up  of   programming   assets  which  occurred  upon  the  respective
acquisitions  of the  Stations.  This  historic  trend  will  continue  with the
write-up of such assets in conjunction with the January 4, 1996 Acquisition.  In
addition,  the Company has paid in advance of scheduled programming  liabilities
certain excess  programming  rights  acquired as a result of the  aforementioned
Acquisition.

Results of Operations

Three  Months  Ended  September  30, 1995 of Act III (the "1995  Three  Months")
Compared to Three  Months  Ended  September  30, 1996 of the Company  (the "1996
Three Months")

Set forth below are selected  consolidated  financial  data for the three months
ended  September  30, 1995 of Act III and  September 30, 1996 of the Company and
the percentage changes between the periods.

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                  September 30,
                                                           --------------------------
                                                           Predecessor       Company      Percentage
                                                               1995            1996         Change
                                                           -----------      ---------     ----------
                                                                  (in thousands)

<S>                                                        <C>              <C>             <C>
Net revenues (excluding barter)                            $ 20,965         $ 24,714          17.9%
Barter revenues                                               1,689            3,765         122.9
Total net revenues                                           22,654           28,479          25.7
Operating expenses                                            2,954            3,875          31.2
Selling, general and administrative expenses                  5,361            5,393           0.6
Depreciation and amortization                                 6,662           21,270         219.3
Operating income (loss)                                       7,677           (2,059)       (126.8)
Interest expense                                              4,445           10,820         143.4
Net income (loss)                                             2,682           (8,599)       (420.6)
Payments for programming rights                               2,070            2,314          11.8
Broadcast Cash Flow                                          10,648           13,984          31.3
</TABLE>

        Net revenues  (excluding  barter) are net of  commissions  and primarily
include  local  and  national/Canadian  spot  advertising  sales.  Net  revenues
(excluding  barter)  increased  to  $24,714,000  in the 1996 Three  Months  from
$20,965,000 in the 1995 Three Months,  an increase of $3,749,000 or 17.9%.  This
increase is due to reduced national sales representative  commission rates which
commenced concurrent with the Acquisition and increasing advertising spot rates.
Advertising  revenues  for the 1996 Three  Months were  comprised  of 48.3% from
local advertising sales and 51.7% from national/ Canadian advertising sales.

        Local revenues  include gross revenues before  commissions from local or
regional advertisers or their representative  agencies. Local and regional areas
encompass  a station's  designated  market area and its  outlying  areas.  Local
revenues  increased to $14,129,000 in the 1996 Three Months from  $10,852,000 in
the 1995 Three Months,  an increase of $3,277 ,000,  or 30.2%.  The increase was
primarily due to increased ratings as well as strong advertising demand.

        National/Canadian  revenues  include gross revenues  before  commissions
from  national  and  Canadian  advertisers  or  their  representative  agencies.
National  advertisers  are  advertisers  outside of a station's  local market or
region.  National/Canadian  revenues  increased to $15,117,000 in the 1996 Three
Months from  $14,206,000 in the 1995 Three Months,  an increase of $911,000,  or
6.4%. As with local revenues, national/Canadian revenues increased primarily due
to improved ratings and strong advertising demand.

        Barter  revenues  increased to  $3,765,000 in the 1996 Three Months from
$1,689,000 in the 1995 Three Months, an increase of $2,076,000,  or 122.9%. This
increase was  primarily  due to the increase in the value of barter  programming
rights related to the purchase  accounting and resulting increase in the revenue
recognized therefrom.

        Operating   expenses   include   engineering,   promotion,   production,
programming  operations  and trade  expenses.  Operating  expenses  increased to
$3,875,000 in the 1996 Three Months from $2,954,000 in the 1995 Three Months, an
increase of $921,000.  The increase is due to the WXLV  affiliation  switch from
Fox Broadcasting Company to the American Broadcasting Company, Inc. in September
1995,  as the  Company  is now  producing  local news at WXLV,  which  increased
operating expenses by $437,000 during the 1996 Three Months.  Additionally,  due
to the  acquisitions  made during the period and the  execution  of the Time
Brokerage Agreement in February 1996, operating expenses were further increased
as compared to the 1995 Three Months.

        Selling,  general and  administrative expenses include sales,  salaries,
commissions,  insurance,  supplies  and general  management  salaries.  Selling,
general and  administrative  expenses  increased to $5,393,000 in the 1996 Three
Months from  $5,361,000  in the 1995 Three  Months,  an increase of $32,000,  or
0.6%.  This  increase  is the  result of higher  salary  costs due to an overall
headcount increase, offset somewhat by reduced corporate overhead.

        Depreciation  and  amortization  includes  depreciation  of property and
equipment,  amortization of programming  rights and amortization of intangibles.
Depreciation and amortization  increased to $21,270,000 in the 1996 Three Months
from $6,662,000 in the 1995 Three Months, an increase of $14,608,000, or 219.3%,
due to the  increase  in value  of all  fixed  assets,  programming  rights  and
intangible assets in conjunction with the Acquisition, and other acquisitions
made during the period.

        Operating  income  decreased to a loss of  $2,059,000  in the 1996 Three
Months compared to income of $7,677,000 in the 1995 Three Months,  a decrease of
$9,736,000, due to the reasons discussed above.

        Interest expense  includes  interest charged on all outstanding debt and
the  amortization  of debt issuance costs over the life of the underlying  debt.
The $6,375,000  increase for the 1996 Three Months as compared to the 1995 Three
Months is the result of interest costs incurred on the debt utilized to fund the
Acquisition and additional borrowings to fund other acquisitions made during the
period.

        Net  income  decreased  to a net loss of  $8,599,000  in the 1996  Three
Months compared to net income of $2,682,000 in the 1995 Three Months, a decrease
of $11,281,000, due to the reasons discussed above.

        Payments for  programming  rights  increased to  $2,314,000  in the 1996
Three Months from  $2,070,000 in the 1995 Three Months,  a decrease of $244,000,
or 11.8%.  This increase is attributable to the acquisition of certain  stations
in 1996, offset somewhat by a reduction in the amount of programming required to
be  paid  by the  Company  due to the  buydown  of  certain  excess  programming
liabilities  in  conjunction  with the  Acquisition,  increased  Fox and  United
Paramount network  programming,  and an overall decrease in the cost per program
due to the competitive pricing of programming.

        Broadcast  Cash Flow  increased to  $13,984,000 in the 1996 Three Months
from $10,648,000 in the 1995 Three Months, an increase of $3,336,000,  primarily
due to the  aforementioned  increases  in  revenue  with a smaller  proportional
increase in operating, selling, general and administrative expenses in the
aggregate. The Company believes  that  Broadcast  Cash Flow is  important in
measuring  the  Company's financial  results and its  ability to pay  principal
and  interest on its debt because  broadcasting  companies  traditionally  have
large amounts of non-cash expense attributable to amortization of  programming
rights and other intangibles. Broadcast Cash Flow does not purport to represent
cash provided by operating  activities  as  reflected  in the  Company's
consolidated  financial statements,  is not a measure of financial  performance
under generally accepted accounting principles, and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with generally accepted accounting principles.

Nine  Months  Ended  September  30,  1995 of Act III (the  "1995  Nine  Months")
Compared to Nine Months Ended  September 30, 1996 of the Company (the "1996 Nine
Months")

Set forth below are  selected  consolidated  financial  data for the nine months
ended  September  30, 1995 of Act III and  September 30, 1996 of the Company and
the percentage changes between the periods.

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                                 September 30,
                                                           --------------------------
                                                           Predecessor       Company       Percentage
                                                              1995             1996          Change
                                                           -----------      ---------      ----------
                                                                  (in thousands)

<S>                                                        <C>              <C>             <C>
Net revenues (excluding barter)                            $ 61,588         $ 72,925          18.4%
Barter revenues                                               5,199           10,798         107.7
Total net revenues                                           66,787           83,723          25.4
Operating expenses                                            7,980           11,774          47.5
Selling, general and administrative expenses                 16,131           16,656           3.3
Depreciation and amortization                                21,222           55,357         160.8
Operating income (loss)                                      21,454              (64)       (100.3)
Interest expense                                             13,415           30,022         123.8
Net income (loss)                                             7,007          (20,368)       (390.7)
Payments for programming rights                               6,731            6,583          (2.2)
Broadcast Cash Flow                                          30,953           40,524          30.9
</TABLE>

        Net revenues  (excluding  barter) are net of  commissions  and primarily
include  local  and  national/Canadian  spot  advertising  sales.  Net  revenues
(excluding  barter)  increased  to  $72,925,000  in the 1996  Nine  Months  from
$61,588,000 in the 1995 Nine Months,  an increase of $11,337,000 or 18.4%.  This
increase is due to reduced national sales representative  commission rates which
commenced concurrent with the Acquisition and increasing advertising spot rates.
Advertising revenues for the 1996 Nine Months were comprised of 47.6% from local
advertising sales and 52.4% from national/Canadian advertising sales.

        Local  revenues include  gross revenues before commissions from local or
regional advertisers or their representative  agencies. Local and regional areas
encompass  a station's  designated  market area and its  outlying  areas.  Local
revenues  increased to $41,021,000  in the 1996 Nine Months from  $32,045,000 in
the 1995 Nine  Months,  an increase of  $8,976,000,  or 28.0%.  The increase was
primarily due to increased ratings as well as strong advertising demand.

        National/Canadian  revenues  include gross revenues  before  commissions
from  national  and  Canadian  advertisers  or  their  representative  agencies.
National  advertisers  are  advertisers  outside of a station's  local market or
region.  National/Canadian  revenues  increased to  $45,098,000 in the 1996 Nine
Months from  $41,312,000  in the 1995 Nine Months,  an increase of $3,786,000 or
9.2%. As with local revenues, national/Canadian revenues increased primarily due
to improved ratings and strong advertising demand.

        Barter  revenues  increased to  $10,798,000 in the 1996 Nine Months from
$5,199,000 in the 1995 Nine Months, an increase of $5,599,000,  or 107.7%.  This
increase was  primarily  due to the increase in the value of barter  programming
rights related to the application of purchase  accounting and resulting increase
in the revenue recognized therefrom.

        Operating   expenses   include   engineering,   promotion,   production,
programming  operations and barter  expenses.  Operating  expenses  increased to
$11,774,000 in the 1996 Nine Months from $7,980,000 in the 1995 Nine Months,  an
increase of $3,794,000. The increase is due to the WXLV affiliation switch from
Fox Broadcasting Company to the American Broadcasting Company, Inc. in September
1995,  as the  Company  is now  producing  local news at WXLV,  which  increased
operating expenses by $1,339,000 during the 1996 Nine Months. Additionally,  due
to the  acquisitions  made during the period and the  execution  of the Time
Brokerage Agreement in February 1996, operating expenses were further increased
as compared to the 1995 Nine Months.

        Selling,  general and  administrative expenses include sales,  salaries,
commissions,  insurance,  supplies  and general  management  salaries.  Selling,
general and  administrative  expenses  increased to $16,656,000 in the 1996 Nine
Months from  $16,131,000  in the 1995 Nine Months,  an increase of $525,000, or
3.3 %. This  increase  is the  result of higher  salary  costs due to an overall
headcount increase, offset somewhat by reduced corporate overhead.

        Depreciation  and amortization  includes  depreciation  of  property and
equipment,  amortization of programming  rights and amortization of intangibles.
Depreciation and  amortization  increased to $55,357,000 in the 1996 Nine Months
from $21,222,000 in the 1995 Nine Months, an increase of $34,135,000, or 160.8%,
due to the  increase  in value  of all  fixed  assets,  programming  rights  and
intangible assets in conjunction with the Acquisition, and other acquisitions
made during the period.

        Operating  income decreased to a loss of $64,000 in the 1996 Nine Months
compared  to income  of  $21,454,000  in the 1995 Nine  Months,  a  decrease  of
$21,518,000, due to the reasons discussed above.

        Interest expense  includes  interest charged on all outstanding debt and
the  amortization  of debt issuance costs over the life of the underlying  debt.
The  $16,607,000  increase for the 1996 Nine Months as compared to the 1995 Nine
Months is the result of interest costs incurred on the debt utilized to fund the
Acquisition and additional borrowings to fund other acquisitions made during
the period.

        Net  income  decreased  to a net loss of  $20,368,000  in the 1996  Nine
Months compared to net income of $7,007,000 in the 1995 Nine Months,  a decrease
of $27,375,000, due to the reasons discussed above.

        Payments for programming rights decreased to $6,583,000 in the 1996 Nine
Months from $6,731,000 in the 1995 Nine Months, a decrease of $148,000, or 2.2%.
This  decrease  is  attributable  to a  reduction  in the amount of  programming
required  to be  paid  by the  Company  due to the  buydown  of  certain  excess
programming  liabilities in conjunction with the Acquisition,  increased Fox and
United Paramount  network  programming,  and an overall decrease in the cost per
program due to the competitive pricing of programming.

        Broadcast  Cash Flow  increased to  $40,524,000  in the 1996 Nine Months
from $30,953,000 in the 1995 Nine Months,  an increase of $9,571,000,  primarily
due to the  aforementioned  increases  in  revenue  with a smaller  proportional
increase in operating, selling, general and administrative expenses in the
aggregate. The Company believes  that  Broadcast  Cash Flow is  important in
measuring  the  Company's financial  results and its  ability to pay  principal
and  interest on its debt because  broadcasting  companies  traditionally  have
large amounts of non-cash expense attributable to amortization of programming
rights and other intangibles. Broadcast Cash Flow does not purport to represent
cash provided by operating  activities  as  reflected  in the  Company's
consolidated  financial statements,  is not a measure of financial  performance
under generally accepted accounting principles, and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance  with generally accepted accounting principles.


Liquidity and Capital Resources

          The  Company's  primary  source  of  liquidity  is  cash  provided  by
operations.  Cash  provided  by  operations  during  the 1996  Nine  Months  was
$16,562,000 compared to $19,290,000 in the 1995 Nine Months. The decrease in the
Company's  cash flow is  attributable  primarily  due to an increase in interest
expense  partially  offset by the Company's  improved  operating  results,  with
revenue increases proportionally higher than cash expense increases.

          Cash provided by operations is after payments for programming  rights,
which amounted to $6,583,000  and  $6,731,000,  respectively,  for the 1996 Nine
Months and the 1995 Nine  Months.  The Company has program  payment  commitments
(including   contracts  not  yet  recordable  as  assets  and  excluding  barter
contracts) of  $44,262,000,  which are payable in  installments of $5,182,000 in
1996,  $12,305,000 in 1997,  $10,747,000 in 1998, $8,596,000 in 1999, $5,044,000
in 2000 and $2,388,000 thereafter.

          The  Company's  primary  capital  requirements  have been for  capital
expenditures and acquisitions.  Capital  expenditures totaled $2,228,000 for the
1996 Nine Months  compared to  $4,918,000  for the 1995 Nine Months.  The larger
expenditures in 1995 includes the construction of a news facility at WXLV.

          As of September 30, 1996,  the Company had  outstanding a $220,000,000
senior  debt  facility  (the  "Senior  Credit  Agreement"),  with a  $30,000,000
revolving  credit  facility  (the  "Revolving   Credit   Facility"),   of  which
$25,000,000 was outstanding,  and a $75,000,000 acquisition credit facility (the
"Acquisition Credit Facility") (collectively,  the "Senior Credit Facility"), of
which  $26,500,000  was  outstanding at September 30, 1996. The interest rate on
all  borrowings  under the Senior Credit  Agreement  vary  depending upon either
LIBOR or Prime rates, as selected by the Company,  with a margin ranging between
0.0% and 1.5% for Prime  borrowings  and  1.25%  and 2.75% for LIBOR  borrowings
added based upon the Company's leverage ratio for the past quarter.  The Company
has entered into various  interest rate protection  agreements  based upon LIBOR
rates and a notional  amount equal to the full value of the senior debt facility
to protect against significant  fluctuations in interest rates through 2000. The
Company also has outstanding  $125,000,000 of 10-1/4% senior  subordinated notes
due December  2005, and  $35,000,000  of 13-1/4%  senior accrual  debentures due
2006.

          The  Company  believes  that it will  be  able  to meet  its  required
principal payments in the future through funds generated from its operations. If
the funds generated from the Company's  operations are  insufficient to meet its
required   principal   payments,   the  Company  will  explore  other  financing
alternatives.

          The indenture to the senior  subordinated  notes,  Company's preferred
stock,  the Senior  accrual  debentures  and the Senior  Credit  Facility of the
Company  contain  covenants  which,  among  other   restrictions,   require  the
maintenance of certain financial ratios  (including cash flow ratios),  restrict
asset purchases and the encumbrances of existing assets, require lender approval
for proposed acquisitions,  and limit the incurrence of additional  indebtedness
and the payment of dividends.

          Based upon current  operations,  the Company anticipates the cash flow
from  operations  combined  with the cash on hand will be  adequate  to meet its
requirements  for  current  and  foreseeable  levels of  operation.  There  can,
however,  be no assurance that future  developments  or economic trends will not
adversely affect the Company's operations.


SULLIVAN BROADCAST HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION


ITEM 6.   EXHIBITS AND REPORTS ON FORM 10-Q

(a)       Exhibits

                 The  following  exhibits  are  filed as part of this  Quarterly
Report on Form 10-Q.

Exhibit
Number         Exhibit
-------        -------

 10.1          Second  Amendment  to Credit  Agreement  and  Limited  Waiver and
               Consent  dated  as  of  July  10,  1996  by  and  among  Sullivan
               Broadcasting   Company,   Inc.  as  sucessor  to  A-3,   Holding,
               NationsBank of Texas, N.A. and certain other lenders.



                                    SIGNATURE

          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.


                                        SULLIVAN BROADCASTING COMPANY, INC.
                                        (Registrant)


November 14, 1996                       By:  /s/ Patrick Bratton
                                            ------------------------------------
                                            Patrick Bratton
                                            Vice President - Finance
                                            (Principal Financial and 
                                             Chief Accounting Officer)