UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE 
    ACT OF 1934
                  For the fiscal year ended: November 30, 1996
                                       or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                        For the transition period from to

                        Commission file Number: 000-21623

                             OBIE MEDIA CORPORATION
                 (Name of small business issuer in its charter)

Oregon                                                          93-0966515
(State of incorporation)                                     (I.R.S. Employer
                                                             Identification No.)
                                1010 Obie Street
                              Eugene, Oregon 97402
                    (Address of principal executive offices)

                    Issuer's telephone number: (541) 686-8401

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, without par value
                                (Title of class)

        Check  whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 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
         ---

        Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this Form 10-KSB,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

        State issuer's revenues for its most recent fiscal year: $10,897,890

        State  the   aggregate   market  value  of  the  voting  stock  held  by
nonaffiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within 60
days  prior to the  date of  filing:  $9,654,225  aggregate  market  value as of
December 31, 1996, based on the price at which the stock was sold.

        Indicate  the  number  of  shares  outstanding  of each of the  issuer's
classes of common equity, as of the latest practicable date: 3,500,000 shares of
Common Stock, without par value, on February 20, 1997.

                       DOCUMENTS INCORPORATED BY REFERENCE

        Part III of this Form 10-KSB incorporates  information from the issuer's
definitive  proxy statement for the annual meeting of shareholders to be held on
April 17, 1997.

        Transitional Small Business Disclosure Format (Check One): Yes ; No  X
                                                                           ----
<PAGE>
                                TABLE OF CONTENTS
                                                                         Page
                                                                         ----
Part I

Item 1.  Description of Business..........................................  1
Item 2.  Description of Properties........................................  8
Item 3   Legal Proceedings................................................  9
Item 4.  Submission of Matters to a Vote of Security Holders..............  9


Part II

Item 5.  Market for Common Stock and Related
                  Shareholder Matters.....................................  9
Item 6.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.............................. 10
Item 7.  Financial Statements............................................. 16
Item 8.  Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure.................. 16


Part III

(Items 9, 10, 11 and 12 are incorporated  herein by reference from
the Company's definitive Proxy Statement for its 1997 annual 
meeting of shareholders.)

Item 9.  Directors, Executive Offices, Promoters
                  and Control Persons; Compliance with Section 16(a)
                  of the Exchange Act..................................... 16
Item 10. Executive Compensation........................................... 16
Item 11. Security Ownership of Certain Beneficial
                  Owners and Management................................... 17
Item 12. Certain Relationships and Related Transactions................... 17


Part IV

Item 13. Exhibits and Reports on Form 8-K................................. 17

Signatures................................................................ 20

Financial Statements...................................................... F-1



<PAGE>
                                   FORM 10-KSB


     THIS  ANNUAL  REPORT  INCLUDES  CERTAIN  FORWARD-LOOKING  INFORMATION  THAT
INVOLVES A NUMBER OF RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS.  FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THE FOLLOWING: A DECLINE IN THE DEMAND
FOR  ADVERTISING  IN THE AREAS  WHERE  THE  COMPANY  CONDUCTS  ITS  BUSINESS;  A
DETERIORATION  OF  BUSINESS  CONDITIONS  GENERALLY  IN SUCH  AREAS;  SLOWER THAN
EXPECTED  ACCEPTANCE  OF THE  COMPANY'S  UNIQUE  DISPLAY  PRODUCTS;  COMPETITIVE
FACTORS,  INCLUDING  INCREASED  COMPETITION  AND  PRICE  PRESSURES;  CHANGES  IN
REGULATORY OR OTHER EXTERNAL FACTORS; AND OTHER FACTORS LISTED FROM TIME TO TIME
IN THE COMPANY'S SEC REPORTS,  INCLUDING BUT NOT LIMITED TO, ITS "RISK  FACTORS"
DISCUSSION IN THE REGISTRATION STATEMENT IT FILED IN CONNECTION WITH ITS INITIAL
PUBLIC OFFERING (THE "IPO").

PART I

ITEM 1.   DESCRIPTION OF BUSINESS


Company Overview

     Obie Media  Corporation  ("Obie Media" or the  "Company")is  an out-of-home
media company which markets  advertising space on outdoor  advertising  displays
("billboards")  and transit vehicles  (primarily  passenger buses).  The Company
owns and operates  approximately  685 advertising  faces on outdoor  advertising
structures located in Washington, Oregon, California and Idaho. The Company also
has agreements with seven local government  transit districts  pursuant to which
the Company has the exclusive  right, for a number of years, to sell advertising
on nearly  1,200  district-owned  transit  vehicles.  The  Company  also  leases
building  walls in urban areas for  wallscape  displays,  and the  Company  owns
approximately 700 transit benches on which it sells advertising.

     The  Company,  formed  in  1987,  traces  its  origins  to Obie  Industries
Incorporated ("Obie Industries"),  a family-owned outdoor advertising  business,
founded in 1960. In 1979, all the outdoor advertising assets of Obie Industries,
consisting  of over  1,700  advertising  display  faces,  were  sold to 3M Media
Corporation. Brian B. Obie, the Company's President and Chief Executive Officer,
has worked for Obie Industries since 1962,  serving as its President since 1968.
In November 1996, to facilitate  the IPO, the Company  separated from its parent
corporation (Obie Industries), with the Company then being owned directly by the
shareholders of Obie Industries (the "Spin-Off").

                                       1

<PAGE>
Company Growth Strategy

     The Company  intends to expand its  presence in other  geographic  areas in
both transit and outdoor advertising.

     The  Company  intends  to  expand  by  obtaining  agreements  with  transit
districts  in new  markets  and by  acquiring  or  building  additional  outdoor
displays  in  new  and  existing  markets.  The  Company  intends  to  establish
additional   geographic   "hubs"  in  which  sales,   design,   production   and
administrative  capabilities  are  positioned  to serve both transit and outdoor
advertising displays in a geographic region, in the same manner as the Company's
operations in Eugene, Oregon serve its current markets. Management believes this
strategy will result in increased  operating  efficiencies,  greater  geographic
diversification and increased market penetration.

     Management  believes the Company has a  competitive  advantage in obtaining
agreements  with  transit  districts  due to the  Company's  unique  advertising
products  and sales  strategy,  which  create a greater  revenue  potential  per
vehicle.  Expansion of billboards,  urban wallscapes and other out-of-home media
products  will be  concentrated  in markets  being served by the company at that
time, or through acquisitions.

Industry Background

     The  out-of-home  media industry  includes  outdoor  advertising  displays,
displays on buses, trains,  taxis,  subways,  transit benches and shelters,  and
wallscapes on urban buildings,  as well as displays in shopping centers,  malls,
airports,  stadiums,  movie theaters and  supermarkets.  The  out-of-home  media
industry  generates  annual  revenues  in excess of $3.0  billion  in the United
States and has experienced  increased  advertiser interest and revenue growth in
recent years.

     Advertisers  purchase  out-of-home  advertising  for a number  of  reasons.
Out-of-home   advertising   offers   repetitive   impact  at  a  relatively  low
cost-per-thousand-impressions, a commonly used media measurement, as compared to
television,  radio, newspapers,  magazines and direct mail marketing. Because of
its cost-effective  nature,  out-of-home  advertising is a good vehicle to build
"mass  market"  support.  In addition,  out-of-home  advertising  can be used to
target a defined audience in a specific location and,  therefore,  can be relied
upon by local businesses  concentrating on a particular geographic area or where
customers have specific demographic characteristics.

     The out-of-home media industry has enjoyed increased consumer exposure at a
time when the audiences of broadcast  media have been  fragmenting as the number
of radio and television

                                       2
<PAGE>
networks and other narrowly  targeted formats has increased.  Out-of-home  media
has  experienced  significant  changes  in  recent  years.  First,   out-of-home
advertising  has  expanded to include many media,  such as those  listed  above.
Second,   the  industry  has  benefitted   significantly  from  improvements  in
production technology, including the use of computer printing, vinyl advertising
copy and improved  lighting  techniques,  which have facilitated a more dynamic,
colorful and creative use of the medium. Lastly, the growth in automobile travel
time for business and leisure due to increased highway  congestion and continued
demographic  shifts of  residences  and  businesses  from the cities to outlying
suburbs has increased the exposure for out-of-home advertising.

Products and Markets

     Obie Media offers  advertisers a wide range of out-of-home  media products,
including transit advertising displays,  outdoor advertising displays,  building
wallscapes,  and transit bench displays. This not only provides advertisers with
significant  flexibility in their advertising  programs,  but it also allows the
Company  to  cross-sell  multiple  products  and  to  leverage  its  design  and
production capabilities.

     Transit  Advertising.   The  Company  has  agreements  with  seven  transit
districts in Oregon (3),  California (3), and Washington (1).  Pursuant to these
agreements,  the Company is the exclusive  seller of  advertising on the transit
vehicles operated by those transit districts. In Sacramento, the Company has the
exclusive  advertising  rights only to light rail vehicles;  another company has
exclusive rights to that district's buses.

     Agreements  with  transit  districts  are  awarded  through  a  competitive
process.  Each  transit  district  evaluates  proposals  based  on a  number  of
criteria, primarily on the basis of minimum revenues which the bidder guarantees
to pay to the district.  The Company's  agreements  typically have terms of from
three to five years,  with renewals or  extensions  either  unilaterally  at the
discretion of the transit  district or upon the mutual agreement of the district
and the Company.





                                       3
<PAGE>
     Approximately  37% and 38% of the Company's  gross revenues for fiscal 1996
and  1995,   respectively,   were  derived  from  customers  purchasing  transit
advertising on vehicles owned by Tri-County Metropolitan Transportation District
of Oregon ("Tri-Met") in Portland,  Oregon. The Company's agreement with Tri-Met
has a scheduled  expiration date in 2001.  Tri-Met has the right to unilaterally
renew the agreement for an additional  three-year  period,  or may terminate the
agreement  earlier if it determines that  termination is in the public interest.
The Company  expects  its  agreement  with  Tri-Met to continue to account for a
substantial portion of the Company's revenues for the foreseeable future.

     Outdoor   Advertising   Structures.   The  Company  has  approximately  685
advertising  faces on outdoor  advertising  structures  in  Washington,  Oregon,
California  and Idaho.  The Company  leases the property  underlying its outdoor
advertising  structures,  generally  pursuant  to 10-year  leases  that give the
Company  the  right to renew for two  additional  five-year  periods.  More than
two-thirds of the Company's structures are illuminated.

     Wallscapes  and Other  Advertising  Displays.  In  addition  to transit and
outdoor  displays,  the Company  also leases  building  walls in urban areas for
wallscape   displays.   The  Company   currently  leases  6  building  walls  in
Seattle/Tacoma, and owns a 50% interest in a corporation that leases 16 building
walls in Portland.  The Company also owns  approximately  700 transit benches in
the Portland area on which the Company sells advertising.

Sales and Service

     Obie Media  maintains  an active  sales force in each of its  markets.  The
Company's  intensive  sales and service efforts are a key component in achieving
occupancy levels that management  believes are higher than industry averages for
both transit and outdoor advertising.

         The  Company  views its  aggressive  sales and  service  efforts  as an
important part of its culture. In hiring its sales force, the Company vigorously
screens  applicants and typically hires college  graduates who have demonstrated
their  suitability and aptitude to excel in the Company's  unique sales culture.
New sales employees  undergo  extensive  training and are supervised by regional
sales  managers  with  substantial  advertising  sales  experience.  Each  sales
representative  and the Company  jointly  establish sales targets for that sales
representative,  and  the  Company  has  monthly  sales  meetings  with  all its
salespeople to acknowledge  and reward  individuals who are meeting or exceeding
their targets.




                                       4
<PAGE>
     The Company works directly with companies and with advertising  agencies in
coordinating the marketing, production and installation of advertising displays.
The Company's  sales personnel also serve as customer  service  representatives,
maintaining  frequent  and  regular  contact  with  the  Company's   advertising
customers to resolve customer concerns in the field.


Design, Production and Installation

     The  Company  has a  fully  staffed  and  equipped  design  and  production
department  located in Eugene,  Oregon.  These  services  are used  primarily by
direct sales  customers that are not  represented by advertising  agencies.  The
design department works with these advertisers and the sales  representatives to
create  advertising copy, design and layout.  The staff of the design department
uses technologically  advanced computer hardware and software to create original
design copy and, increasingly,  to exchange work product with customers or their
advertising agencies via modem or the Internet. Advertisers that are represented
by  advertising  agencies  generally  use  preprinted  designs that require only
installation.

     A local advertiser can purchase  customized design and production  services
from the Company,  in addition to display  space,  and typically pays for all of
the services as part of a single monthly rate. For the convenience of customers,
the charge to clients for design and  production is typically  added to the cost
of the space and billed over the life of the advertising  contract.  The Company
believes  that  the  skills  of  its  design   department,   combined  with  its
technological  capabilities,  provide a significant competitive advantage in its
direct sales to local advertisers.

     The  Company has  separate  production  facilities  for transit and outdoor
advertising   displays.   The  Company  views  transit  advertising  design  and
production  as  a  distinct   activity  and  attempts  to  achieve   independent
profitability in this operation. The Company uses computer-aided vinyl lettering
or hand paints almost all of its transit and outdoor advertising  displays.  The
Company outsources its high-pictorial, computer-generated production.

     The Company  uses  self-adhesive  vinyl for its transit  displays  and soft
roll-up vinyl for substantially all its outdoor advertising displays. Due to its
nearly exclusive use of vinyl, the Company can maintain  centralized  production
facilities,  can easily ship the  displays to its  trained  installers,  and has
greatly simplified the installation process. The Company

                                       5
<PAGE>
continues to have a few outdoor  advertising  structures  that have not yet been
converted  to vinyl  installation.  Displays on these  structures  require  more
expensive shipping and more labor-intensive installation.

Customers

     A key  component  of the  Company's  sales  and  marketing  strategy  is to
aggressively market its services to local advertisers.  Accordingly, the Company
focuses its direct sales efforts primarily on local companies. Local advertisers
tend to have smaller  advertising  budgets and rely on the Company's  design and
production department for their advertising copy. Local advertisers also require
the Company to expend more effort on educating  customers regarding the benefits
of transit and outdoor advertising and helping potential customers develop their
advertising   strategy.   Although   the   Company's   direct   sales  are  more
labor-intensive  than  its  sales  through  advertising  agencies,  the  Company
believes its direct sales focus is largely  responsible  for its high  occupancy
and renewal rates.

     The  Company  also   maintains  a  broad  base  of  regional  and  national
advertising  customers,  most of which are represented by advertising  agencies.
Advertising  agencies  generally  are  responsible  for the artistic  design and
written content of their customers'  advertising and will plan and implement the
overall  advertising  campaign for their  customers,  including the selection of
advertising  media.  The Company's  sales  personnel are trained to work closely
with  the  advertising  agencies  in the  Company's  markets  to  service  these
customers.   Customers   represented   by  advertising   agencies   account  for
approximately 50% of the Company's gross revenues.  Advertising agencies working
with the Company  typically  retain 15% of the gross  advertising  revenues from
their accounts, consistent with standard industry practice.

     Historically,   manufacturers   of  cigarettes   have  been  major  outdoor
advertisers.   In  the  early  1990s,  due  to  increased  regulation,   tobacco
manufacturers  began  substantially  reducing  their  advertising  expenditures.
However,  the Company's revenues have not been materially  affected,  as tobacco
revenues represent less than 1% of sales.

Competition

     The Company competes in each of its markets with other outdoor  advertising
companies and with other transit advertising companies that submit proposals for
the exclusive  agreements with transit districts.  The Company also competes for
revenues with other advertising media, including broadcast and cable television,
radio,  print media,  direct mail  marketers,  displays in shopping  centers and
malls, airports, stadiums, movie theaters

                                       6
<PAGE>
and supermarkets, as well as on taxis, trains and subways.

     Transit.  Transit  advertising is fragmented,  consisting of a few national
transit  advertising  companies with operations in multiple markets and numerous
small companies  operating under one or a few regional  agreements.  Competition
among  transit  advertising  companies is primarily in obtaining  and  retaining
agreements with transit districts. Agreements with transit districts are awarded
primarily  on the basis of the minimum  revenues  the bidder  guarantees  to the
district.  Once an  agreement  is  secured,  the company  awarded the  agreement
generally  becomes the  exclusive  provider of transit  advertising  within that
transit district. The number of competitors for each agreement depends primarily
on the number of vehicles operated by that transit  district.  In several of its
markets,  the Company has competed for transit  agreements with companies having
substantially  greater total  resources than the Company.  The Company  believes
that its unique  products and sales  strategy,  which  create a greater  revenue
potential  per vehicle,  give the Company a  competitive  advantage in obtaining
agreements  with transit  districts.  Thus, the Company is able to  successfully
compete for transit agreements against larger companies.

     Outdoor  Advertising.  Outdoor  advertising  also is fragmented.  There are
several large outdoor advertising  companies with operations in multiple markets
and many more smaller  companies  operating a limited  number of structures in a
single or a few local markets.  Although some  consolidation has occurred in the
industry over the past few years, the Outdoor Advertising Association of America
recently  estimated  that  there  are  approximately  396,000  outdoor  displays
operated  by more than 600  companies.  In several of its  markets,  the Company
encounters  direct  competition from major outdoor media  companies,  which have
larger  national networks and greater  total  resources  than the  Company.  The
Company  believes  its strong  emphasis  on sales and  customer  service and its
position  as a major  provider  of  advertising  services in each of its primary
markets  enables it to compete  effectively  with the other outdoor  advertising
companies, as well as other media, within those markets.


Government Regulation

     The  outdoor  advertising  industry  is subject to  extensive  governmental
regulation.  These laws and regulations limit the growth of outdoor  advertising
companies and operate as a substantial barrier to entry in the industry.

     Construction   of  outdoor   advertising   structures  has  virtually  been
eliminated except in commercial and industrial areas.  Many  jurisdictions  also
have restricted the relocation, location,

                                       7
<PAGE>
height and size of  outdoor  advertising  structures.  Some  jurisdictions  also
restrict  the  ability  to  enlarge  or  upgrade  existing  structures,  such as
converting from wood to steel or from nonilluminated to illuminated  structures,
and/or  restrict  the   reconstruction  of  structures  that  are  substantially
destroyed as a result of storms or other causes.  Most of these laws require the
payment of just compensation  whenever legally erected and maintained structures
are required to be removed.

     Because most of the  Company's  outdoor  advertising  structures  have been
designed  and  installed  within the last eight years,  management  believes its
structures  conform to current laws and  regulations.  When leasing property for
the installation of new outdoor  advertising  structures,  the Company carefully
reviews applicable laws, including building,  sign and zoning ordinances.  While
these laws and ordinances may restrict the location and size of the  structures,
the Company has been successful in strategically  locating its structures beside
major highways and arterials.

     To date, the Company's experience is that the regulatory environment can be
effectively  managed and that the regulations in its markets have not materially
adversely affected its operations.  However, the outdoor advertising industry is
heavily regulated, and no assurance can be given that existing or future laws or
regulations will not have a material adverse effect on the Company.

Employees

     At  November  30,  1996,  the  Company  had 72  full-time  and 6  part-time
employees.  None of the Company's employees is covered by collective  bargaining
agreements,  except  for three  installers  in  Portland,  Oregon.  The  Company
believes it maintains good employee relations.

ITEM 2. DESCRIPTION OF PROPERTIES

     The Company is currently  located in three  separate  facilities in Eugene,
Oregon,  all of which are rented from affiliated  companies.  The Company's rent
payments on these  properties  were $79,000 and $57,000  during  fiscal 1996 and
1995, respectively.  One of these sites is currently being renovated to serve as
the Company's new  headquarters.  The Company expects to spend up to $250,000 on
leasehold  improvements  for the headquarters  building.  The 20,000 square foot
facility will include space for the Company's  centralized design and production
departments,  as  well  as its  accounting,  credit,  marketing  and  management
personnel.  The  renovation  is expected to be completed in April 1997, at which
time the  Company  will  vacate the other two  Eugene  sites.  The  headquarters
building will be leased from



                                       8
<PAGE>
Obie Industries at market rates.

     The  Company  leases  local  operating  offices  for  sales,   service  and
installation in Spokane, Yakima, Bremerton and Seattle, Washington; Portland and
Salem,  Oregon;  and  Monterey  and Lodi,  California.  The Company  also leases
approximately  385 parcels of property beneath outdoor  advertising  structures.
Total  lease  expenses  in fiscal  1996 and 1995  were  $608,000  and  $525,000,
respectively.  The  Company's  site leases are generally for a term of 10 years,
with two five-year renewal options at the Company's discretion.


ITEM 3. LEGAL PROCEEDINGS

     The Company is not currently subject to any material litigation nor, to the
Company's knowledge, is any material litigation threatened against the Company.



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

     During the fourth  quarter of fiscal 1996,  three matters were submitted to
the Company's  sole  shareholder  for approval:  (i) on September 30, 1996,  the
shareholder approved Restated Articles of Incorporation for the Company; (ii) on
October 2, 1996, the  shareholder  approved the Company's  1996 Stock  Incentive
Plan; and (iii) on November 11, 1996, the  shareholder  approved an amendment to
the  Company's  Restated  Articles of  Incorporation.  Each of these actions was
unanimously  approved  pursuant  to consent  minutes  adopted in lieu of special
shareholder meetings.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Price Range of Common Stock


     The Common Stock began  trading on the Nasdaq  SmallCap  Market on November
21, 1996 under the symbol "OBIE." The following  table sets forth for the period
indicated  the high and low bid prices of the Common  Stock as  reported  by the
Nasdaq Stock Market, Inc.

                                        Year ended November 30, 1996
                                              High      Low

         Fourth Quarter (since 11/21/96)       8         7


     As of January 26, 1997,  there were  approximately  45 holders of record of
the Company's Common Stock. The Company believes the number of beneficial owners
is  substantially  greater  than the  number of record  holders  because a large
portion of the Company's

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<PAGE>
outstanding Common Stock is held of record in "street name." The Company has not
paid cash  dividends on its Common  Stock since the IPO and does not  anticipate
doing so in the  foreseeable  future.  The  Company  plans to retain  any future
earnings to finance operations.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

Overview

     The Company has grown  significantly  through the acquisition of additional
agreements  with transit  districts,  particularly  the agreement  with Tri-Met,
which began on January 1, 1994,  as well as the addition of outdoor  advertising
displays in and around  existing  markets and the  improvement  of occupancy and
advertising rates.

     The Company is seeking  agreements  with  additional  transit  districts to
expand its operations.  The Company believes it is also important to its overall
sales  effort to build or acquire  additional  displays in existing  markets and
develop or acquire  new  products,  with  respect to both  transit  and  outdoor
advertising, in order to increase revenues.

     Net  revenues  represent  gross  revenues  derived from outdoor and transit
advertising  displays less  commissions  retained by  advertising  agencies that
contract for the use of advertising  displays on behalf of  advertisers.  Agency
commissions on revenues that are contracted  through  agencies are typically 15%
of gross revenues.  The Company  considers agency  commissions as a reduction in
gross revenues and measures its operating  performance  based on a percentage of
net revenues  rather than gross  revenues.  Approximately  50% of the  Company's
gross  revenues  are  attributable  to  advertising  sold  through   advertising
agencies.

     Direct advertising expenses consist primarily of occupancy,  production and
installation,  and sales  costs.  Occupancy  expense is  primarily  comprised of
payments to transit  districts for the use of space on their  vehicles and lease
payments  to owners  of  property  underlying  outdoor  advertising  structures.
Occupancy  expense also includes the cost of illuminating  outdoor  displays and
property taxes on the outdoor advertising structures.  

         Production and installation  expenses consist primarily of the costs of
producing,  shipping and installing  the  advertising  displays.  Sales expenses
consist primarily of the cost of staffing the Company's sales force.


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<PAGE>
     General and administrative expenses include costs related to the individual
market  territories,  as well as  corporate  expenses.  Expenses  related to the
individual  market  territories  include the personnel and facility  required to
administer that market.  Corporate general and administrative expenses represent
staff and facility costs for the executive  offices and  centralized  accounting
function.

Results of Operations-Comparison of Years Ended November 30, 1996
and 1995

     The following table sets forth certain statement of operations  information
for the Company for the periods indicated as a percentage of net revenues:

                                                 Year Ended
                                                 November 30,
                                               ----------------
                                                1996      1995
                                               ------    ------

Net revenues . . . . . . . . . . . . . . . . . 100.0%    100.0%
                                               ------    ------ 
Operating expenses:
   Direct advertising expenses . . . . . . . .  58.7      58.1
   General and administrative expenses . . . .  16.7      15.8
   Depreciation and amortization . . . . . . .   5.1       6.4
                                               ------    ------ 
     Total operating expenses. . . . . . . . .  80.5      80.3
                                            
   Operating income  . . . . . . . . . . . . .  19.5      19.7
   Interest expense  . . . . . . . . . . . . . (14.7)    (17.3)
   Other income  . . . . . . . . . . . . . . .   1.8
                                               ------    ------ 
   Income before income taxes  . . . . . . . .   6.6       2.4
   Income tax benefit (expense)  . . . . . . .   (.3)      9.4
                                               ------    ------ 
   Income before extra ordinary item . . . . .   6.3      11.8
   Extraordinary item  . . . . . . . . . . . .  (5.4)
                                               ------    ------ 
   Net income                                     .9%     11.8%
                                               ======    ======

     Net revenues increased 22% to $10.1 million in the current fiscal year from
$8.3 million in fiscal 1995.  Gross revenues from outdoor  advertising  displays
increased  13% from $4.2 million in 1995 to $4.7 million in 1996,  primarily due
to higher rates and increased  occupancy.  Increased occupancy was the result of
the Company's  focused sales efforts and relocation of  under-utilized  displays
into more attractive markets. Gross revenues from transit displays increased 30%
from $4.7  million in 1995 to $6.2 million in 1996,  primarily  due to increased
occupancy and rates in most transit districts,  including approximately $700,000
of increased revenues in Portland and revenues from operations in

                                       11
<PAGE>
Monterey which began in August 1995. 

     Direct advertising expenses increased 23% from $4.8 million in 1995 to $5.9
million in 1996,  primarily due to the 22% increase in net revenues.  Other than
increased business,  the increase in costs was due to increased costs of transit
advertising production,  primarily from greater costs of subcontracting portions
of production to meet delivery  schedules,  and additional  occupancy costs from
renewing the Eugene transit agreement. These increased costs were offset in part
by slower  growth in sales costs as a result of a change in the  composition  of
the sales force.  Direct  advertising  expenses increased as a percentage of net
revenues to 58.7% in 1996 from 58.1% in 1995.

     General and  administrative  expenses  increased  30%, from $1.3 million in
1995 to $1.7 million in 1996,  primarily due to increased payroll costs. General
and  administrative  expenses  increased as a percentage of net  revenues,  from
15.8% in 1995 to 16.7% in 1996. The Company  expects the total amount of general
and  administrative  expenses to increase in fiscal 1997,  as compared to fiscal
1996. The 1997 increase is expected to be caused primarily by increases in lease
and other ongoing expenses of operating in the Company's renovated  headquarters
building,  as well  as the  one-time  expenses  the  Company  will  incur  as it
consolidates  its  Eugene,   Oregon  operations  from  three  locations  to  the
headquarters facility.

     Depreciation and amortization expense decreased 3% from $529,000 in 1995 to
$514,000 in 1996.  Depreciation and amortization  decreased,  as a percentage of
net revenues,  from 6.4% in 1995 to 5.1% in 1996.  This decrease as a percentage
of revenue should  continue as revenue is growing faster than  depreciation  and
amortization expense.

     Interest expense increased 3%, from $1.4 million in 1995 to $1.5 million in
1996,  primarily  due to increased  borrowing to fund working  capital needs and
capital expenditures.  Interest expense should decline both in total expense and
as a percentage of revenue due to the repayment of debt from the net proceeds of
the IPO and the  refinancing  of the primary term debt of the  Company.  See the
"Liquidity and Capital Resources" discussion below.

     Other income of $188,000 in 1996 resulted primarily from the disposition of
an outdoor advertising structure in the state of Washington.

     The  income tax  benefit  of  $778,000  for 1995 was  primarily  due to the
recognition  of net  deferred  tax assets for which a  valuation  allowance  had
previously been provided. The income tax expense of $31,000 for 1996 was reduced
by $221,000 due to  recognizing  the income tax benefit of the  carryforward  of
prior  year's net  operating  losses.  

     During 1996, the Company incurred an  extraordinary  expense as a result of
prepayment  penalties  related to the early  payment of debt and for  previously
capitalized loan costs that were written off. The extraordinary expense totaled


                                       12
<PAGE>
approximately $543,000, net of the related income tax benefit of $342,000.

Liquidity and Capital Resources

     The  Company's  working  capital was  $380,000 and $273,000 at November 30,
1996 and 1995, respectively.  The increase in working capital resulted primarily
from the prodeeds of the Company's IPO net of debt repayment. Traditionally, the
Company satisfied its working capital requirements with cash from operations and
revolving credit borrowings.

     Net cash provided by operating activities increased to $1,296,000 in fiscal
1996 from  $758,000 in fiscal 1995.  The increase in cash  provided by operating
activities was primarily due to increased operating income of $336,000 and other
income  of  $188,000  primarily  from the sale of a  structure  under  threat of
condemnation.

     The  Company's  net cash used in investing  activities  was  $1,127,000  in
fiscal 1996 and $528,000 in fiscal 1995,  substantially  all of which related to
capital expenditures for the development and construction of outdoor advertising
structures. The Company intends to continue to develop new structures.  Prior to
the IPO the  construction  of outdoor  advertising  structures has been financed
primarily  with  borrowed   funds.   The  Company   intends  to  finance  future
construction primarily from earnings.

     The  Company's  net cash  provided by (used in)  financing  activities  was
$252,000 in fiscal 1996 and  $(256,000)  in fiscal  1995.  The cash  provided by
financing  activities  in  fiscal  1996 was  primarily  from the IPO net of debt
repayments.  The cash  used in  financing  activities  in  fiscal  1995 was used
primarily to repay long-term borrowings and advances to affiliates.

     At  November  30,  1996,   the  Company  had   outstanding   borrowings  of
approximately  $7.3  million,  all of which were  pursuant to  long-term  credit
agreements.

     Until October 31, 1996, the Company had two revolving  lines of credit with
Centennial Bank. The maximum available under one of the lines was $600,000, with
the  available  amount  being  subject to a borrowing  formula  based on certain
accounts  receivable  which were pledged as collateral for the line. The maximum
available on the other line was $850,000,  and it was  collateralized by outdoor
advertising  structures and contracts.  The interest rate on these lines was set
at the prime  rate  (8.25% at  October  31,  1996)  plus  1.5%.  The lines  were
guaranteed by Brian B. Obie.



                                       13
<PAGE>
     Until October 31, 1996, the Company's long-term debt was primarily pursuant
to a credit  arrangement  established  in 1988 with  Capital  Consultants,  Inc.
("CCI").  Notes were issued when the Company  borrowed  from CCI; the notes were
collateralized  by  outdoor  advertising   structures  and  contracts  and  were
guaranteed  by Brian B. Obie.  For the first  five  years of each note,  monthly
payments were interest  only,  interest was 11% fixed plus  additional  interest
based on a percentage of outdoor  advertising  revenues.  The effective interest
rate for fiscal 1996 (through October 31) was 12.25%. Monthly principal payments
began in the sixth  year of each note on a  20-year-level-payment  basis  with a
balloon payment after 15 years of principal  payments.  Additional  interest was
required  to be paid on each note for a minimum of 10 years even if the note was
prepaid.  Terms of the credit  agreement  required  the Company to maintain  net
worth on a fair value basis, without  consideration of estimated income taxes on
asset appreciation, of not less than $5.2 million.

     On October 31, 1996,  United States  National Bank of Oregon  ("USNB") made
certain loans to the Company.  The Company used the proceeds from the USNB loans
to repay the Company's borrowings from CCI and Centennial Bank. Each of the USNB
loans was guaranteed by Obie  Industries and Brian B. Obie. They were due at the
earlier of demand by USNB,  completion  of the IPO, or April 30, 1997.  Included
among such loans was a $12 million  six-month bridge loan, the proceeds of which
were used to repay  substantially  all of the Company's term debt at October 31,
1996.  Interest on the bridge loan was based, at the Company's  option from time
to time,  on IBOR plus 2%, or USNB's  prime rate plus .5%.  The Company  used $5
million of the IPO proceeds to repay a portion of the bridge  loan.  At November
30, 1996,  the Company had long-term  debt with USNB of $7 million with interest
based  partially on the bank's prime rate plus .5% (8.75%) and partially on IBOR
plus 2% (7.375%).  On February 12, 1997,  the Company  converted  the $7 million
bridge  loan to a  seven-year  term  loan  with  interest  to be  based,  at the
Company's option, on USNB's prime rate plus .5%, or IBOR plus 2%.

     On October 31,  1996,  USNB also  provided  the Company with a $1.5 million
operating  line of credit at USNB's prime rate.  As of November 30, 1996,  there
were no borrowings on this line of credit, and the Company's available borrowing
capacity based on collaterized  accounts was $988,000.  This line of credit will
be reviewed at April 30, 1997.

     On October 31, 1996,  USNB also  provided an $800,000  outdoor  advertising
construction  loan at USNB's  prime rate plus .5%.  The  proceeds of the outdoor
advertising construction loan were used to repay a revolving construction credit
line with Centennial Bank. The USNB construction loan was repaid with funds from
the IPO. 

     The Company anticipates that total capital expenditures for

                                       14
<PAGE>
fiscal 1997 will be approximately  $1.1 million,  of which $850,000 will be used
to develop new billboard  sites and build or relocate  approximately  30 outdoor
advertising  structures,   and  up  to  $250,000  will  be  used  for  leasehold
improvements in connection with the renovation of the Company's headquarters and
other  necessary  capital  expenditures.  In  addition,  the  Company  may spend
$698,000  if it elects to  exercise  the option to acquire  outdoor  advertising
structures currently leased from MO Partners, an affiliated entity.

     The Company  believes that cash  generated  from  operations  and available
borrowings  under its  credit  agreements  will be  sufficient  to  finance  the
Company's operations, including anticipated capital expenditures, through fiscal
1997.


Seasonality

     The Company's  transit  advertising  revenues have exhibited some degree of
seasonality.  Typically,  the Company  experiences  its highest  revenues in the
fourth fiscal quarter and its lowest revenues in the first fiscal  quarter.  The
Company  expects this trend to continue.  A reduction in revenues in any quarter
is likely to result in a period-to-period  decline in operating  performance and
net income.

New Accounting Pronouncements

     New  accounting  pronouncements  are  discussed  in  Note  1  of  Notes  to
Consolidated Financial Statements.


ITEM 7. FINANCIAL STATEMENTS

     The financial  statements and supplementary  data required by this Item are
included on pages F-1 to F-16 of this Annual Report.



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE


         Not applicable.


PART III

                                       15
<PAGE>
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND
        CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
        EXCHANGE ACT

     Information  with respect to directors and  executive  officers is included
under  "Election  of  Directors"  and  "Executive  Officers"  in  the  Company's
definitive  proxy  statement for its 1997 Annual Meeting of  Shareholders  to be
filed not later than 120 days after the end of the fiscal  year  covered by this
Annual Report, and such information is incorporated herein by reference.

     Information with respect to Section 16(a) of the Securities Exchange Act is
included under "Compliance with Section 16(a)of the Securities  Exchange Act" in
the  Company's  definitive  proxy  statement  for its  1997  Annual  Meeting  of
Shareholders  to be filed not later  than 120 days  after the end of the  fiscal
year covered by this Annual Report, and such information is incorporated  herein
by reference.

ITEM 10. EXECUTIVE COMPENSATION

     Information  with  respect to  executive  compensation  is  included  under
"Executive  Compensation"  in the Company's  definitive  proxy statement for its
1997 Annual Meeting of Shareholders filed or to be filed not later than 120 days
after  the end of the  fiscal  year  covered  by this  Annual  Report,  and such
information is incorporated herein by reference.
















                                       16
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT

     Information with respect to security ownership of certain beneficial owners
and  management  is  included  under  "Principal   Shareholders  and  Management
Ownership"  in the  Company's  definitive  proxy  statement  for its 1997 Annual
Meeting of Shareholders to be filed not later than 120 days after the end of the
fiscal year covered by this Annual Report,  and such information is incorporated
herein by reference.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information with respect to certain  relationships and related transactions
with  management  is included  under  "Certain  Transactions"  in the  Company's
definitive  proxy  statement for its 1997 Annual Meeting of  Shareholders  to be
filed not later than 120 days after the end of the fiscal  year  covered by this
Annual Report, and such information is incorporated herein by reference.


PART IV


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)     Financial Statements.  The Financial Statements are
           listed in the Index to Consolidated Financial
           Statements on page F-1 of this Annual Report.

(a)(2)     Exhibits:

           Exhibit     Description

           3.1         Restated Articles of Incorporation(1)

           3.2         Amendment to Restated Articles of Incorporation(2)

           3.3         Restated Bylaws(1)

           3.4         Amendment to Restated Bylaws(2)

           4.1         See Articles 3, 4 and 8 of Exhibit 3.1 and
                       Articles 1, 2, 5, 6 and 7 of Exhibit 3.3(1)

           10.1*       Restated 1996 Stock Incentive Plan(2)

           10.2*       Form of Nonqualified Stock Option Agreement for
                       use with Restated 1996 Stock Incentive Plan(2)



                                       17
<PAGE>
           10.3*       Form of Incentive Stock Option Agreement for use
                       with Restated 1996 Stock Incentive Plan(2)

           10.4        Form of Indemnification Agreement between the
                       Company and its directors(1)

           10.5        Form of Indemnification Agreement between the
                       Company and its officers(1)

           10.6        Tri-County Metropolitan Transportation District
                       of Oregon Professional Services Contract for
                       Transit Advertising Services between Tri-Met and
                       the Company, dated July 1, 1996, and related
                       documents(1)

           10.7        Lease between Obie Industries Incorporated and
                       the Company, dated November 12, 1996(2)

           10.8        Loan Agreement, dated October 31, 1996, among
                       the Company, United States National Bank of
                       Oregon, Obie Industries Incorporated and Brian
                       Obie, and related documents(2)

           10.9        Amendments,  dated  December 31, 1996 and February
                       12,  1997,  to Loan  Agreement  dated  October 31,
                       1996,  among the Company,  United States  National
                       Bank of Oregon,  Obie Industries  Incorporated and
                       Brian Obie, and related documents

           10.10       Option Agreement between MO Partners and the
                       Company, dated effective October 1, 1996(2)

           20.1        Portions of Definitive Proxy Statement for 1997
                       Annual Shareholder Meeting(3)

           21.1        List of Subsidiaries(1)

           27.1        Financial Data Schedule(4)
-------------
           *  Management contract or compensatory plan or arrangement.


                 (1)  Incorporated   herein  by  reference  from  the  Company's
                      Registration  Statement  on Form  SB-2  (Registration  No.
                      333-5728-LA)   filed  with  the  Securities  and  Exchange
                      Commission on October 3, 1996.



                                       18
<PAGE>
                 (2)  Incorporated   herein  by  reference  from  the  Company's
                      Amendment No. 1 to the Registration Statement on Form SB-2
                      (Registration No.  333-5728-LA)  filed with the Securities
                      and Exchange Commission on November 15, 1996.

                 (3)  To be filed with the  Securities  and Exchange  Commission
                      within 120 days after the end of the fiscal  year  covered
                      by this Annual Report.

                 (4)  This schedule has been  submitted in the  electronic  form
                      prescribed by EDGAR.

(b)        Reports on Form 8-K.  During the quarter ended
           November 30, 1996, the Company filed no reports on
           Form 8-K.
















                                       19
<PAGE>
                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.



                                                    OBIE MEDIA CORPORATION


Dated:  February 24, 1997                         By/s/ Brian B. Obie
                                                    -----------------
                                                    Brian B. Obie
                                                    President

     In accordance  with the  Securities  Exchange Act of 1934,  this report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated.

                                       PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:



Dated:  February 24, 1997                        By/s/ Brian B. Obie
                                                   -----------------
                                                   Brian B. Obie, President,
                                                   Chief Executive Officer and
                                                   Director



         PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:



Dated:  February 25, 1997                        By/s/ James W. Callahan
                                                   ---------------------
                                                   James W. Callahan, Chief
                                                   Financial Officer and
                                                   Treasurer








                                       20
<PAGE>
         DIRECTORS:



Dated:  February 24, 1997                        By/s/ Delores M. Mord 
                                                   ---------------------
                                                   Delores M. Mord, Director



Dated:  February 24, 1997                        By/s/ Randall C. Pape
                                                   ---------------------
                                                   Randall C. Pape, Director



Dated:  February 24, 1997                       By/s/ Stephen A. Wendell
                                                   ---------------------
                                                   Stephen A. Wendell, Director



Dated:  February 24, 1997                        By/s/ Richard C. Williams
                                                   ---------------------
                                                   Richard C. Williams, Director














                                       21
<PAGE>










                             Obie Media Corporation
                   Index to Consolidated Financial Statements
                                     -------




                                                                    Page
                                                                    ----
Report of Independent Accountants                                    F-2

Consolidated Balance Sheet as of November 30, 1996                   F-3

Consolidated Statements of Income for the years ended
     November 30, 1996 and 1995                                      F-4

Consolidated Statements of Changes in Shareholders' Equity
     (Deficit) for the years ended November 30, 1996 and 1995        F-5

Consolidated Statements of Cash Flows for the years ended
     November 30, 1996 and 1995                                      F-6

Notes to Consolidated Financial Statements                           F-7




                                      F-1
<PAGE>






Report of Independent Accountants




Board of Directors
Obie Media Corporation:


We have  audited  the  accompanying  consolidated  balance  sheet of Obie  Media
Corporation as of November 30, 1996, and the related consolidated  statements of
income,  changes in shareholders'  equity (deficit) and cash flows for the years
ended  November  30,  1996  and  1995.   These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Obie  Media
Corporation  as of November 30, 1996,  and the results of their  operations  and
their cash flows for the years ended  November  30, 1996 and 1995 in  conformity
with generally accepted accounting principles.




COOPERS & LYBRAND L.L.P.
/S/Coopers & Lybrand L.L.P.



Eugene, Oregon
January 22, 1997, except for Note 6, as
   to which the date is February 12, 1997





                                      F-2
<PAGE>
Obie Media Corporation
Consolidated Balance Sheet


                                                              November 30,
                                                                  1996

                                     ASSETS

Current assets:
   Cash                                                      $    474,940
   Accounts receivable, net of allowance for doubtful
        accounts of $90,000                                     1,550,193
   Prepaid expenses and other current assets                      812,450
   Deferred tax assets                                            709,000
                                                             -------------
            Total current assets                                3,546,583


Property and equipment, net                                     8,458,014
Other assets                                                      147,987
Deferred tax assets                                               380,000
                                                             $ 12,532,584
                                                             =============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Current portion of long-term debt                         $    743,973
   Accounts payable                                               757,020
   Accrued expenses                                             1,070,440
   Deferred revenue                                               595,302
                                                             -------------
            Total current liabilities                           3,166,735

Long-term debt, less current portion                            6,554,587
                                                             -------------
            Total liabilities                                   9,721,322
                                                             -------------

Minority interest in subsidiary                                    27,407

Commitments (Note 9)


Shareholders' equity:
   Preferred stock, without par value, 10,000,000 shares
        authorized, no shares issued and outstanding               -
   Common stock, without par value; 20,000,000 shares
        authorized, 3,500,000 shares issued and outstanding     6,161,992
   Accumulated deficit                                         (3,378,137)
                                                             -------------
            Total shareholders' equity                          2,783,855
                                                             -------------
            Total liabilities and shareholders' equity       $ 12,532,584
                                                             -------------





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

                                      F-3
<PAGE>
Obie Media Corporation
Consolidated Statements of Income



                                                            Year Ended
                                                            November 30
                                                    ---------------------------
                                                         1996          1995

Revenues:
   Outdoor advertising                              $  4,747,634  $  4,199,649
   Transit advertising                                 6,150,256     4,733,065
   Less agency commissions                              (827,632)     (674,075)
                                                    ------------- -------------
            Net revenues                              10,070,258     8,258,639


Operating expenses:
   Direct advertising expenses                         5,907,038     4,801,118
   General and administrative                          1,685,135     1,300,738
   Depreciation and amortization                         513,775       528,853
            Operating income                           1,964,310     1,627,930


Other (income) expense:
   Interest expense                                    1,480,237     1,432,183
   Minority interest in subsidiary                         2,138        12,308
   Other                                                (188,365)      (11,437)
                                                    ------------- -------------
            Income before income taxes and
                 extraordinary item                      670,300       194,876

(Provision) benefit for income taxes                     (31,000)      778,000
                                                    ------------- -------------
            Income before extraordinary item             639,300       972,876


Extraordinary item - early debt payoff penalty
     and write-off of loan fees, net of income
     tax benefit of $342,000                            (543,355)
                                                    ------------- -------------

            Net income                              $     95,945  $    972,876
                                                    ============= =============


Income per share before extraordinary item                $ .25         $ .39
Extraordinary item, net of tax                             (.21)           -
                                                          ------        ------

Net earnings per share                                    $ .04         $ .39
                                                          ======        ======

Weighted average number of common
     shares outstanding                                2,526,480     2,500,000
                                                       =========     =========







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



                                      F-4
<PAGE>
Obie Media Corporation
Consolidated Statements of Changes in Shareholders' Equity (Deficit)




<TABLE>
<CAPTION>

                                                                 Receivable
                                                                    From
                                                                 Affiliates,    Accumulated
                                      Shares         Amount          Net          Deficit         Total
Balances at December 1,
<S>                                 <C>          <C>           <C>             <C>            <C>
     1994                           2,500,000    $   250,000   $ (1,021,748)   $ (2,694,478)  $ (3,466,226)

   Net income                                                                       972,876        972,876
   Net withdrawals                                                  (158,174)                     (158,174)
                                    ---------    -------------  -------------  -------------  -------------

Balances at November 30,
     1995                           2,500,000         250,000     (1,179,922)    (1,721,602)    (2,651,524)

   Issuance of common stock
        on November 21, 1996        1,000,000       5,911,992                                    5,911,992
   Net income                                                                        95,945         95,945
   Net withdrawals                                                  (572,558)                     (572,558)
   Distributions                                                   1,752,480     (1,752,480)
                                    ---------    -------------  -------------  -------------  -------------

Balances at November 30,
     1996                           3,500,000    $  6,161,992   $      -       $ (3,378,137)  $  2,783,855
                                    =========    =============  =============  =============  =============


















The  accompanying  notes are an integral  part of these  consolidated  financial statements.
</TABLE>

                                      F-5

<PAGE>
Obie Media Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>


                                                                     Year Ended
                                                                     November 30
                                                             ---------------------------
                                                                 1996            1995
<S>                                                          <C>            <C>
Cash flows from operating activities:
   Net income                                                $    95,945    $   972,876
   Adjustments to reconcile net income to net cash
        provided by operating activities:
      Depreciation and amortization                              513,775        528,853
      Extraordinary item                                         885,355
      Gain on disposition of property and equipment             (183,175)
      Deferred income taxes                                     (311,000)      (778,000)
      Minority interest in subsidiary                              2,138         12,308
      Change in assets and liabilities:
         (Increase) decrease in:
            Accounts receivable                                 (208,940)      (197,365)
            Prepaid expenses and other assets                   (321,451)       (96,079)
         Increase (decrease) in:
            Accounts payable                                     262,529         48,325
            Accrued expenses                                     524,416         87,055
            Deferred revenue                                      36,304        180,145
                                                             ------------   ------------
            Net cash provided by operating activities          1,295,896        758,118

Cash flows from investing activities:

   Capital expenditures                                       (1,363,131)      (533,001)
   Proceeds from disposition of property and equipment           235,700          5,300
                                                             ------------   ------------
           Net cash used in investing activities              (1,127,431)      (527,701)
                                                             ------------   ------------

Cash flows from financing activities:

   Proceeds from issuance of common stock                      7,000,000
   Cost to issue common stock                                 (1,088,008)
   Net payments on lines of credit                               (88,429)      (184,744)
   Book overdraft                                               (378,043)       378,043
   Proceeds from long-term borrowings                         12,000,000        732,406
   Payments on long-term debt                                (15,917,001)    (1,024,018)
   Net advances to affiliates                                   (572,558)      (158,174)
   Early debt payoff penalty                                    (704,054)
                                                             ------------   ------------

            Net cash provided by (used in) financing
                 activities                                      251,907       (256,487)
                                                             ------------   ------------

Net increase (decrease) in cash                                  420,372        (26,070)
Cash, beginning of year                                           54,568         80,638
                                                             ------------   ------------
Cash, end of year                                            $   474,940    $    54,568
                                                             ============   ============

Supplemental Disclosures of Cash Flow Information:

Noncash investing and financing activities:
   Interest capitalized                                      $    45,439    $    24,435
   Accrued loan fees capitalized                                  90,938
   Acquisition of vehicle with capital lease obligation           28,901
   Distribution of receivable to affiliates                    1,752,480

Cash paid for interest                                         1,470,967      1,445,630

The  accompanying  notes are an integral  part of these  consolidated  financial statements.
</TABLE>

                                      F-6

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements



  1.   Summary of Significant Accounting Policies:

       Company:  Obie Media  Corporation (the "Company"),  formerly Obie Outdoor
       Advertising, Inc., is a full service out-of-home advertising company with
       agreements with transit districts in Oregon,  Washington,  and California
       and outdoor advertising structures in Washington,  Oregon, California and
       Idaho.

       On November 21, 1996, the Company  completed an initial  public  offering
       (the  "Offering")  of one  million  shares of its common  stock,  raising
       $5,911,992,  net of expenses of $1,088,008. The net proceeds were used to
       reduce previously outstanding debt (see Note 6).

       Spin Off:  Prior to November  20, 1996,  the Company was a subsidiary  of
       Obie Industries Incorporated. To facilitate the Offering, the Company was
       spun-off as a separate entity.

       Basis of Presentation:  The consolidated financial statements include the
       Company and its  subsidiary.  All significant  intercompany  accounts and
       transactions  between the Company and its subsidiary have been eliminated
       in consolidation.

       The Company engaged in various  transactions with affiliates under common
       control. These transactions primarily include advances of working capital
       needs  for  a  discontinued  business  and  capital  expenditures.   Such
       transactions   resulted  in  a  net  receivable   consisting  of  amounts
       receivable from and payable to affiliated companies.  As part of the spin
       off,  the  net  receivable  from  affiliates   totaling   $1,752,480  was
       distributed by the declaration of a dividend and, accordingly,  increased
       the Company's accumulated deficit.

       There  are  common   administrative   costs  of  Obie   Industries,   its
       subsidiaries and the Company. General and administrative expenses include
       the Company's  portion of such costs  totaling  $326,839 and $547,942 for
       the years ended November 30, 1996 and 1995, respectively.

       Use of Estimates: The preparation of consolidated financial statements in
       conformity  with  generally  accepted   accounting   principles  requires
       management  to make  estimates and  assumptions  that affect the reported
       amounts of assets and liabilities and disclosure of contingent assets and
       liabilities  at the date of the  financial  statements  and the  reported
       amounts of revenues  and expenses  during the  reporting  period.  Actual
       results could differ from those estimates.

       Revenue  Recognition:   The  Company  has  contracts  to  provide  future
       advertising to its customers.  Advertising  revenue is recognized ratably
       over the period the  advertising  is  displayed.  Payments  received  for
       advertising  revenue in advance of display are deferred.  Costs  incurred
       for the  production and  installation  of outdoor  advertising  displays,
       which are not specifically  recoverable in the event the related contract
       is canceled, are expensed as incurred.  Costs incurred for the production
       and installation of displays for transit advertising,  which are paid for
       by the customer ratably over the term of the advertising contract and are
       specifically  recoverable in the event the related  contract is canceled,
       are  deferred  and  recognized  as  expense  as the  related  revenue  is
       recognized over the life of respective contracts.


Continued

                                      F-7
<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



  1.   Summary of Significant Accounting Policies, Continued:

       Concentration  of Credit Risk:  Financial  instruments  that  potentially
       subject the Company to concentrations of credit risk consist  principally
       of cash and accounts  receivable.  The Company  places its cash with high
       credit quality financial institutions. Concentrations of credit risk with
       respect  to  accounts  receivable  are not  significant  due to the large
       number of customers, and their dispersion across different industries and
       geographic areas.

       At November  30,  1996,  the Company had  agreements  with seven  transit
       districts.  Customers  advertising  on transit  vehicles  owned by one of
       these  districts  represented 37% and 38% of the Company's total revenues
       for the years ended  November  30, 1996 and 1995,  respectively.  Transit
       agreements range from one to five years and are subject to renewal either
       at the discretion of the transit district or upon the mutual agreement of
       the Company and the transit district. Generally, these agreements require
       the Company to pay the transit  district the greater of a  percentage  of
       the  related  advertising  revenues,  net of the  advertising  production
       charges, or a guaranteed minimum amount.

       Fair Value of Financial Instruments: The fair value of current assets and
       current  liabilities are estimated to be equal to their reported carrying
       value.  The carrying value of long-term debt  approximates  fair value on
       discounted  future  cash flows.  The  resulting  estimates  of fair value
       require  subjective  judgments  and are  approximations.  Changes  in the
       methodologies and assumptions could significantly affect the estimates.

       Cash: Cash consists of demand deposits with two federally  insured banks.
       At times, balances may exceed amounts insured.

       Property  and  Equipment:  Property  and  equipment  are  stated at cost.
       Depreciation is provided on the  straight-line  method over the estimated
       useful lives.  Normal repairs and  maintenance  are expensed as incurred.
       The cost and accumulated depreciation of assets sold or otherwise retired
       are  removed  from  the  accounts  and  the  resulting  gain  or  loss is
       recognized.  Interest is capitalized in connection with the  construction
       of properties and equipment.

       Other Assets:  Other assets  consist  primarily of loan costs,  which are
       stated at cost and amortized over the life of the loan.

       Income Taxes:  The Company uses the liability  method to record  deferred
       tax assets and liabilities  that are based on the difference  between the
       tax bases of  assets  and  liabilities  and their  carrying  amounts  for
       financial reporting purposes. These temporary differences result from the
       use of  different  accounting  methods for  financial  statement  and tax
       reporting purposes.


Continued

                                      F-8

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



  1.   Summary of Significant Accounting Policies, Continued:

       Income Per Share:  Income per common  share is computed  on the  weighted
       average  number of common  shares  outstanding  during the  period  after
       consideration of the dilutive effect of stock options.  Such amounts have
       been  retroactively  adjusted  to reflect  the  10-for-1  stock  split as
       discussed in Note 8, and the granting of stock options.

                                                               November 30
                                                           --------------------
                                                              1996       1995

         Issued and outstanding shares (weighted average)  2,524,657  2,500,000
         Stock options                                         1,823
                                                           ---------  ---------

                                                           2,526,480  2,500,000
                                                           =========  =========


       New Accounting  Pronouncements:  The Financial Accounting Standards Board
       has issued SFAS No. 121,  "Accounting  for the  Impairment  of Long-Lived
       Assets and for Long-Lived  Assets to be Disposed of", which established a
       new  accounting  principle for  accounting  for the impairment of certain
       loans,  certain  investments  in debt and equity  securities,  long-lived
       assets  that  will be  held  and  used,  including  certain  identifiable
       intangibles and goodwill  related to those assets and long-lived  assets,
       and certain identifiable intangibles to be disposed of. This Statement is
       effective for fiscal years beginning after December 15, 1995.  Management
       believes  that  adoption  of the  Statement  will not have a  significant
       impact on the Company's financial position and results of operations.

       The  Financial  Accounting  Standards  Board also  issued  SFAS No.  123,
       "Accounting  for Stock- Based  Compensation",  also  effective for fiscal
       years  beginning  after December 15, 1995. The new Statement  encourages,
       but does not require,  companies to measure stock-based compensation cost
       using the fair value  method,  rather  than the  intrinsic  value  method
       prescribed  by the  Accounting  Principles  Board  (APB)  Opinion No. 25.
       Companies choosing to continue to measure stock-based  compensation using
       the  intrinsic  value  method  must  disclose  on a pro  forma  basis net
       earnings  per share as if the fair  value  method  were  used.  While the
       Company is reviewing  the adoption and impact of SFAS No. 123, it expects
       to adopt the disclosure-only alternative and, accordingly,  this Standard
       will have no material  impact on the  Company's  results of operations or
       financial position.


                                      F-9

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



  2.   Prepaid Expenses and Other Current Assets:

       Prepaid expenses and other current assets consist of the following:

                                                                   November 30,
                                                                       1996

         Prepaid leases                                            $  291,149
         Transit advertising production costs                         394,290
         Other                                                        127,011
                                                                   -----------
                                                                   $  812,450
                                                                   ===========


  3.   Property and Equipment:

       Property and equipment consist of the following:

                                                     November 30,        Asset
                                                         1996            Lives

         Outdoor advertising structures              $ 9,860,227      20 years
         Other equipment and leaseholds                1,431,589    5-20 years
                                                     ------------
                                                      11,291,816
         Less accumulated depreciation                 2,833,802
                                                     -----------
                                                     $ 8,458,014
                                                     ===========


       Assets  acquired  during 1996 included an acquisition of bus benches that
       display advertisements.  The total cost of these assets was approximately
       $180,000.

       The Company also disposed of a billboard during the year,  resulting in a
       gain of approximately $183,000, which is included in other income.


  4.   Other Assets:

       Other assets consist of the following:

                                                                   November 30,
                                                                      1996

         Loan fees                                                 $   90,938
         Other                                                         57,049
                                                                   -----------
                                                                   $  147,987
                                                                   ===========

F-10

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



  5.   Accrued Expenses:

       Accrued expenses consist of the following:

                                                                   November 30,
                                                                      1996

         Transit district fees                                     $   552,538
         Payroll and related items                                     425,044
         Other                                                          92,858
                                                                   ------------
                                                                   $ 1,070,440
                                                                   ============


  6.   Long-term Debt:

       Long-term debt consists of the following:

                                                                   November 30
                                                                      1996

         Note payable to United States National Bank, as
         described below                                           $ 7,000,000

         Note payable in annual  payments of $12,000 plus
         interest at 10%, with collateral of outdoor 
         advertising structures, due October 1999                       36,000

         Note payable in monthly payments of $5,900 including
         interest at 10%, guaranteed by Brian B. Obie, due
         April 2000                                                    202,698

         Notes payable in monthly payments of $2,219
         including interest ranging from 9% to 9.98%, with
         collateral of several vehicles, maturing through
         November 2002                                                  59,862
                                                                   ------------
                                                                     7,298,560
         Less current portion                                          743,973
                                                                   ------------
                                                                   $ 6,554,587
                                                                   ============



Continued

F-11

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



  6.   Long-term Debt, Continued:

       The  aggregate  principal  payments due on the above debt  subsequent  to
       November 30, 1996 are:

                      1997                                         $   743,973
                      1998                                             858,993
                      1999                                           1,161,166
                      2000                                           1,131,820
                      2001                                           1,105,496
                      Thereafter                                     2,297,112
                                                                   ------------
                                                                   $ 7,298,560


       In October  1996,  the Company  received a  $12,000,000  bridge loan from
       United  States  National  Bank  of  Oregon  ("USNB")  which  was  used to
       refinance  substantially  all of the  Company's  then  existing  debt. In
       connection with  refinancing of the long-term debt, the Company  incurred
       an extraordinary  expense of $885,355 for prepayment penalties related to
       the early  extinguishment  of debt and for  previously  capitalized  loan
       costs that were written off.

       Upon the completion of the Offering, the outstanding balance on this loan
       was reduced to $7,000,000.  Effective  February 12, 1997, the outstanding
       loan balance was converted to a seven-year term loan, due April 30, 2004,
       with interest to be based, at the Company's  option, on USNB's prime rate
       plus .5%, or the  Inter-Bank  Offering Rate ("IBOR") plus 2%. The loan is
       collateralized by substantially all of the Company's assets. The weighted
       average interest rate for short-term  borrowings  outstanding at year end
       is approximately 8.5%.

       The Company also has a $1,500,000 operating line of credit with USNB. The
       interest rate is at USNB's prime rate (8.25% at November 30, 1996) and it
       is collateralized by receivables.  The operating line will be reviewed on
       April 30, 1997.  There was no outstanding  balance on this line of credit
       at November 30, 1996.


  7.   Income Taxes:

       The components of the income tax provision (benefit) before extraordinary
       item are as follows:

                                                             Year Ended
                                                             November 30
                                                     --------------------------
                                                         1996          1995

         Deferred:
            Federal                                   $   25,200   $  (637,000)
            State                                          5,800      (141,000)
                                                      -----------  ------------
                                                      $   31,000   $  (778,000)
                                                      ===========  ============


Continued

F-12

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



  7.   Income Taxes, Continued:

       The  components  of the income tax benefit  related to the  extraordinary
       item are as follows:

                                                                   Year Ended
                                                                   November 30,
                                                                   ------------
                                                                       1996

         Deferred:
            Federal                                                $  (280,000)
            State                                                      (62,000)
                                                                   ------------
                                                                   $  (342,000)


       The tax effects of temporary  differences  that give rise to deferred tax
       assets and liabilities are as follows:

                                                             Year Ended
                                                             November 30
                                                     --------------------------
                                                         1996          1995

         Current deferred tax assets:
            Deferred revenue                          $  417,000    $  257,000
            Prepaid commissions                          225,000       259,000
            Allowance for uncollectible accounts          35,000        23,000
            Net operating loss carryforwards             176,000
            Accrued expenses and other                    37,000
                                                      -----------   -----------

                     Total current deferred tax assets   890,000       539,000

         Current deferred tax liabilities:
            Prepaid fees                                (181,000)      (32,000)
                                                      -----------   -----------
                                                      $  709,000    $  507,000
                                                      ===========   ===========
         Noncurrent deferred tax assets:
            Property and equipment                    $  145,000    $  271,000
            Net operating loss carryforwards             235,000
                                                      -----------   -----------

                                                      $  380,000    $  271,000
                                                      ===========   ===========


       Based on management's assessment, it is more likely than not that the net
       deferred tax assets will be realized through future taxable earnings. The
       Company  has net  operating  loss  carryforwards  totaling  approximately
       $1,140,000, which are available to offset future taxable income, of which
       approximately  $600,000  was  previously  expected  to be  used  by  Obie
       Industries  prior to or in connection  with the spin-off  transaction  as
       discussed in Note 1. These carryovers expire as follows:  2003 - $25,000;
       2004 - $421,000;  2005 - $130,000;  2006 - $6,000; 2007 - $27,000; 2008 -
       $15,000; and 2011 - $516,000.

Continued

                                      F-13

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



 7.   Income Taxes, Continued:

       Income tax expense  (benefit)  for the years ended  November 30, 1995 and
       1996  differs  from the amounts  computed by  applying  the U.S.  federal
       income tax rate of 34% to pretax  income,  considering  the effect of the
       extraordinary item as follows:
<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                      November 30
                                                                ------------------------
                                                                    1996         1995

<S>                                                             <C>          <C>       
         Computed "expected" tax expense (benefit)              $  (73,119)  $   66,260
         Increase (reduction) in income taxes resulting from:
            Change in beginning of the year balance of the
                 valuation allowance for deferred tax assets                   (857,855)
            Increase in net operating losses available to the
               Company as discussed above                         (220,986)
            State and local taxes, net of federal income tax
                 benefit                                           (13,638)       7,015
            Other differences, net                                  (3,257)       6,580
                                                                -----------  -----------
                     Actual income tax expense (benefit)        $ (311,000)  $ (778,000)
                                                                ===========  ===========
</TABLE>



  8.   Shareholders' Equity:

       The  Company's   Restated  Articles  of  Incorporation  (the  "Articles")
       authorize  the  issuance of up to  20,000,000  shares of Common Stock and
       10,000,000  shares of  preferred  stock  issuable  in series  ("Preferred
       Stock").

       In connection  with the  Company's  Offering,  the Company's  Articles of
       Incorporation were amended and restated on October 1, 1996 to authorize a
       10-for-1  stock  split.  All  share  and  per  share  amounts  have  been
       retroactively adjusted to reflect the stock split.

       Preferred  Stock:  The Board of Directors is authorized,  without further
       shareholder authorization, to issue Preferred Stock in one or more series
       and to fix the terms and  provisions of each series,  including  dividend
       rights and  preferences,  conversion  rights,  voting rights,  redemption
       rights,  and rights on  liquidation,  including  preferences  over Common
       Stock.

       Common Stock:  Holders of Common Stock are entitled to one vote per share
       on all  matters on which  holders of Common  Stock are  entitled to vote.
       Holders of Common  Stock are  entitled to receive  dividends  when and as
       declared by the Board of Directors  out of any funds  lawfully  available
       therefore and, in the event of liquidation or distribution of assets, are
       entitled  to  participate  ratably  in the  distribution  of such  assets
       remaining  after  payment  of  liabilities,  in each case  subject to any
       preferential  rights  granted to any series of  Preferred  Stock that may
       then be outstanding.

Continued

                                      F-14

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued



  8.   Shareholders' Equity, Continued:

       1996 Stock  Incentive  Plan: On October 2, 1996,  the Company's  Board of
       Directors and shareholder  adopted the 1996 Stock  Incentive Plan,  which
       provides for the issuance of 300,000  shares of Common Stock  pursuant to
       incentive stock options  ("ISOs"),  nonqualified  stock options ("NQOs"),
       stock bonuses and stock sales to key managers,  employees,  directors and
       consultants  of the Company.  ISOs may be issued only to employees of the
       Company and will have a maximum  term of 10 years from the date of grant.
       The exercise  price for ISOs may not be less than 100% of the fair market
       value of the  Common  Stock at the time of the grant,  and the  aggregate
       fair  market  value (as  determined  at the time of the  grant) of shares
       issuable upon the exercise of ISOs for the first time in any one calendar
       year may not exceed  $100,000.  In the case of ISOs granted to holders of
       more than 10% of the voting power of the Company,  the exercise price may
       not be less than 110% of the fair market value of the Common Stock at the
       time of the grant,  and the term of the option may not exceed five years.
       NQOs may be granted at not less than 85% of the fair market  value of the
       Common Stock at the date of grant. Options become exercisable in whole or
       in part from time to time as  determined by the  Compensation  Committee,
       which  will  administer  the 1996 Stock  Incentive  Plan.  Stock  options
       covering  116,500  shares of Common  Stock  options were  outstanding  at
       November  30,  1996,  with an  exercise  price of $6.65 per share.  As of
       November 30, 1996, no options were exercisable.


  9.   Commitments:

       Operating Leases: The Company leases outdoor advertising  structures from
       an affiliated partnership.  The lease agreement requires monthly payments
       of a  minimum  base rent plus  additional  rent  equal to 5% of the gross
       revenues  derived from  advertising  displayed on the structures.  Future
       minimum base rent  payments are $8,500 per month through  December  1996,
       and increase to $9,000 per month for the  following  calendar  year.  The
       lease expires  December 31, 1997.  Total lease  expense  pursuant to this
       lease was $107,945 and $101,784 for the years ended November 30, 1996 and
       1995, respectively.

       The Company also rents office and production space from affiliates.  Such
       rents totaled  $78,897 and $56,900 for the years ended  November 30, 1996
       and 1995, respectively.

       The  Company  leases  parcels of  property  beneath  outdoor  advertising
       structures.  These  leases are  generally  for a term of up to ten years,
       with two  five-year  renewal  options at the  Company's  discretion.  The
       Company also leases  facilities for sales,  service and  installation for
       its operating  offices.  Total rent expense  pursuant to these leases was
       $607,566  and  $524,904  for the years ended  November 30, 1996 and 1995,
       respectively.  Future  minimum  lease  payments  for these leases for the
       years ending November 30 are as follows:

Continued

                                      F-15

<PAGE>
Obie Media Corporation
Notes to Consolidated Financial Statements, Continued




  9.   Commitments, Continued:

                      1997                                         $  498,852
                      1998                                            454,492
                      1999                                            376,279
                      2000                                            316,687
                      2001                                            266,128
                      Thereafter                                      655,793


       Debt  Guarantees:  The Company has  guaranteed  the debt of an affiliated
       partnership totaling $423,514 at November 30, 1996.



10.   Employee Benefit Plan:

       Substantially  all  of the  Company's  employees  who  have  met  vesting
       requirements  participate  in a defined  contribution  benefit plan which
       provides for discretionary  annual  contributions by the Company.  During
       1996 the  Company  accrued  $51,020 as a  contribution  to the plan.  The
       Company  intends to  contribute  5,000  shares of its common stock to the
       plan and the balance in cash. During 1995 the Company contributed $41,733
       in cash to the Obie Industries plan that covered the Company's employees.















                                      F-16
<PAGE>
                                  EXHIBIT INDEX

Exhibit*

10.9                                       Amendments,  dated December  31, 1996
                                           and  February  12, 1997,    to   Loan
                                           Agreement    dated October 31,  1996,
                                           among the Company, United      States
                                           National  Bank  of Oregon,       Obie
                                           Industries  Incorporated   and  Brian
                                           Obie,   and related documents

27.1                                       Financial Data Schedule

-----------

* See Item 13(a)(2) of this Annual Report for a list of all exhibits,  including
those incorporated by reference.