----

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**SECURITIES AND EXCHANGECOMMISSION****Washington,D.C. 20549**

**FORM 10-Q**

**(Mark One)**

| ý | **Quarterly report pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934**                                                                           |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                   |
|   | **For  the quarterly period ended June 30, 2001.**                                                                                                                     |
|   |                                                                                                                                                                   |
| **o**  | **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 333-62077**

**Jones Media Networks, Ltd.**Exact name of registrant as specified incharter

|                                          | **Colorado**          |   | ** #84-1470911**       |
|-----------------------------------------------|-----------------------|--------|-----------------------------|
|                                          | State of organization |   |  I.R.S. employer I.D.# |
|                                          |                  |
| **9697  East Mineral Avenue, Colorado 80112** |                  |
| Address of principal  executive office        |                  |
|                                          |                  |
| **(303)  792-3111**                           |                  |
| Registrant's telephone  number                |                  |
|                                               |                       |        |                             |  |

Indicateby check mark whether the registrant (l) has filed all reports required to befiled by Section l3 or l5(d) of the Securities Exchange Act of l934 during thepreceding l2 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.
| Yes |   | ý | No |   | o |
|-----|--------|--------|----|--------|---|

----

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**JONES MEDIA NETWORKS, LTD. ANDSUBSIDIARIES**

**INDEX**

 

|                           |
|--------------------------------|
| PART I. FINANCIAL  INFORMATION |
|                           |   |
|                           | Item 1. Financial  Statements |
|                           |   |
|                           | Unaudited  Consolidated Statements of Financial Position |
|                           | as  of December 31, 2000 and June 30, 2001 |
|                           |   |
|                           | Unaudited  Consolidated Statements of Operations |
|                           | for  the Three and Six Months Ended June 30, 2000 and 2001 |
|                           |   |
|                           | Unaudited  Consolidated Statements of Cash Flows |
|                           | for  the Six Months Ended June 30, 2000 and 2001 |
|                           |   |
|                           | Notes  to Unaudited Consolidated Financial Statements |
|                           |   |
|                           | Item  2. Management’s Discussion and Analysis |
|                           | of  Financial Condition and Results of Operations |
|                           |   |
|                           |   |
| PART II. OTHER  INFORMATION    |
|                           |   |
|                           |   |
|                           | Item  3. Quantitative and Qualitative Disclosures About Market Risk |
|                           | Item 5.  Other Materially Important Events |
|                           | Item 6.  Exhibits and Reports on Form 8-K |
|                           |   |
|                                |  |  |  |  |  |

**JONES MEDIA NETWORKS, LTD. ANDSUBSIDIARIES**

**UNAUDITED CONSOLIDATEDSTATEMENTS OF FINANCIAL POSITION**
|                                                                  | **December 31,**                                                     |        | **June 30,** |             |
|-----------------------------------------------------------------------|----------------------------------------------------------------------|-------------|-------------------|------------------|
|                                                                  | **2000**                                                             |        | **2001**          |             |
|                                                                  | ****                                                                 |        | ****              |             |
| CURRENT ASSETS:                                                       |                                                                 |        |              |             |
| Cash and cash equivalents                                             | $                                                                    | 14,900,333  |              | $                | 11,599,229 |   |
| Available for sale securities                                         | 3,711,739                                                            |        | 565,961           |             |
| Accounts  receivable, net of allowance for doubtful accounts of       |                                                                 |        |              |             |
|                                                                  | $  2,017,478 and $2,112,706, respectively                            | 15,991,148  |              | 14,899,661       |   |
| Prepaid expenses                                                      | 415,769                                                              |        | 593,986           |             |
| Other current assets                                                  | 915,157                                                              |        | 1,211,254         |             |
|                                                                  |                                                                      |        |                   |             |
|                                                                  | Total current assets                                                 | 35,934,146  |              | 28,870,091       |   |
|                                                                  |                                                                 |             |              |                  |   |
| Property and equipment, net                                           | 20,832,993                                                           |        | 19,247,269        |             |
| Intangible assets, net                                                | 59,822,488                                                           |        | 59,337,651        |             |
| Debt  offering costs, net of accumulated amortization of              |                                                                 |        |              |             |
|                                                                  | $  1,735,429 and $2,109,190, respectively                            | 3,363,347   |              | 2,989,586        |   |
| Other non-current assets                                              | 1,587,156                                                            |        | 1,774,551         |             |
|                                                                  |                                                                      |        |                   |             |
|                                                                  | Total assets                                                         | $           | 121,540,130       |             | $ | 112,219,148 |   |
|                                                                  |                                                                 |             |              |                  |   |
|                                                                  |                                                                 |        |              |             |   |
| **LIABILITIES AND SHAREHOLDERS’ DEFICIT**                        |                                                                 | ** **  |              | ** **       |
|                                                                  |                                                                 |        |              |             |
| CURRENT LIABILITIES:                                                  |                                                                 |        |              |             |
| Accounts payable—trade                                           | $                                                                    | 6,077,876   |              | $                | 6,047,375 |   |
| Producers’ fees payable                                          | 5,351,664                                                            |        | 6,114,488         |             |
| Cable programming distribution payments  payable                      | 2,238,934                                                            |        | 4,442,950         |             |
| Accrued liabilities and other current  liabilities                    | 3,195,484                                                            |        | 2,270,509         |             |
| Accounts payable—Jones International,  Ltd.                      | 232,260                                                              |        | 432,429           |             |
| Interest payable                                                      | 5,875,000                                                            |        | 5,875,000         |             |
| Deferred revenues                                                     | 657,536                                                              |        | 1,356,234         |             |
|                                                                  |                                                                      |        |                   |             |
|                                                                  | Total current liabilities                                            | 23,628,754  |              | 26,538,985       |   |
|                                                                  |                                                                 |             |              |                  |   |
| LONG-TERM LIABILITIES:                                                |                                                                 |        |              |             |
| Customer deposits and deferred revenues                               | 601,026                                                              |        | 611,332           |             |
| Other long-term liabilities                                           | 1,026,131                                                            |        | 1,164,259         |             |
| Senior secured notes                                                  | 100,000,000                                                          |        | 100,000,000       |             |
|                                                                  |                                                                      |        |                   |             |
|                                                                  | Total long-term liabilities                                          | 101,627,157 |              | 101,775,591      |   |
|                                                                  |                                                                      |        |                   |             |
| MINORITY INTEREST IN                                                  |                                                                 |        |              |             |
|                                                                  | CONSOLIDATED  SUBSIDIARIES                                           | 297,874     |              | (810,268         | ) |
|                                                                  |                                                                 |             |              |                  |   |
| COMMITMENTS AND CONTINGENCIES (NOTE 5)                                |                                                                 |        |              |             |
| COMMON STOCK SUBJECT  TO PUT, Class A Common Stock,                   |                                                                 |        |              |             |
|                                                                  | $.01 par value:  136,540 shares issued and outstanding, respectively | 1,310,784   |              | 1,310,784        |   |
|                                                                  |                                                                 |             |              |                  |   |
| SHAREHOLDERS’ DEFICIT:                                           |                                                                 |        |              |             |
| Series  A Preferred Stock, $.01 par value: 1,918,000 shares           |                                                                 |        |              |             |
|                                                                  | authorized,  issued and outstanding                                  | 23,975,000  |              | 23,975,000  |   |
| Class A Common Stock,  $.01 par value: 100,000,000 shares authorized; |                                                                 |        |              |             |
|                                                                  | 5,329,463 shares  issued and outstanding, respectively               | 53,295      |              | 53,295           |   |
| Class B Common Stock,  $.01 par value: 2,231,400 shares               |                                                                 |        |              |             |
|                                                                  | authorized, issued and  outstanding                                  | 22,314      |              | 22,314           |   |
| Additional paid-in capital                                            | 28,453,436                                                           |        | 28,453,436        |             |
| Accumulated other comprehensive loss                                  | (2,299                                                               | )           | 4,831             |             |
| Accumulated deficit                                                   | (57,826,185                                                          | )           | (69,104,820       | )                |
|                                                                  |                                                                      |        |                   |             |
|                                                                  | Total shareholders’ deficit                                     | (5,324,439  | )                 | (16,595,944      | ) |
|                                                                  |                                                                 |             |              |                  |   |
|                                                                  | Total liabilities and shareholders’  (deficit)                  | $           | 121,540,130       |             | $ | 112,219,148 |   |
|                                                                  |                                                                      |        |                   |             |
|                                                                       |                                                                      |             |                   |                  |  |  |  |  |  |  |

 

Theaccompanying notes to these unaudited consolidated financial statementsare an integral part of these consolidated financial statements.

**JONES MEDIA NETWORKS, LTD. ANDSUBSIDIARIES**

**UNAUDITED CONSOLIDATEDSTATEMENTS OF OPERATIONS**
|                                                                                                                                                                                                                                                                                            |                                    | **Three Months Ended June 30,** |       | **Six Months Ended June 30,** |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|---------------------------------|------------|-------------------------------|------------|
|                                                                                                                                                                                                                                                                                            |                                    | **2000**                        |       | **2001**                      |       | **2000** |   | **2001** |   |
|                                                                                                                                                                                                                                                                                            |                                    | ****                            |       | ****                          |       | **** |   | **** |   |
|                                                                                                                                                                                                                                                                                            |                                    |                            |       |                          |       |   |   |   |   |
| Revenues,  including revenues from affiliated         entities of $813,246, $342,385,  $1,944,041         and $685,704, respectively  (Note 2)                                                                  | $                                       | 20,494,341                      |       | $                             | 21,082,666 |   | $ | 40,661,243 |   | $ | 39,826,735 |   |
| Operating  expenses, including charges from         affiliated entities of  $1,532,783,          $1,517,346, $3,222,431 and  $3,165,132,         respectively (Note 2): |                                    |                            |       |                          |       |   |   |   |
|                                                                                                                                                                                                                                                                                            | Operations                              | 13,459,177                      |       | 16,854,951                    |       | 26,484,867 |   | 32,516,821 |   |
|                                                                                                                                                                                                                                                                                            | Selling and marketing                   | 2,502,199                       |       | 2,747,800                     |       | 4,850,246 |   | 5,357,672 |   |
|                                                                                                                                                                                                                                                                                            | General and administrative              | 510,215                         |       | 507,773                       |       | 1,256,628 |   | 1,103,488 |   |
|                                                                                                                                                                                                                                                                                            | Depreciation and amortization           | 3,587,083                       |       | 3,622,924                     |       | 6,980,171 |   | 7,196,277 |   |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
|                                                                                                                                                                                                                                                                                            | Total operating expenses                | 20,058,674                      |       | 23,733,448                    |       | 39,571,912 |   | 46,174,258 |   |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
| OPERATING INCOME (LOSS)                                                                                                                                                                                                                                                                         | 435,667                                 |                            | (2,650,782 | )                             | 1,089,331  |   | (6,347,523 | ) |
|                                                                                                                                                                                                                                                                                            |                                         |                            |            |                          |            |   |  |   |
| OTHER (INCOME) EXPENSE:                                                                                                                                                                                                                                                                         |                                    |                            |       |                          |       |   |   |   |
|                                                                                                                                                                                                                                                                                            | Interest expense (Note 2)               | 3,143,338                       |       | 3,124,381                     |       | 6,286,677 |   | 6,248,761 |   |
|                                                                                                                                                                                                                                                                                            | Interest income                         | (247,801                        | )          | (147,649                      | )          | (474,176 | ) | (377,933 | ) |
|                                                                                                                                                                                                                                                                                            | Equity in loss (income) of subsidiaries | 31,097                          |       | —                        |       | (2,225 | ) | — |   |
|                                                                                                                                                                                                                                                                                            | Other expense (income)                  | (118,188                        | )          | (26,758                       | )          | (128,451 | ) | 140,960 |   |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
|                                                                                                                                                                                                                                                                                            | Total other expense, net                | 2,808,446                       |       | 2,949,974                     |       | 5,681,825 |   | 6,011,788 |   |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
| LOSS BEFORE INCOME  TAXES                                                                                                                                                                                                                                                                       |                                    |                            |       |                          |       |   |   |   |
|                                                                                                                                                                                                                                                                                            | AND MINORITY INTEREST                   | (2,372,779                      | )          | (5,600,756                    | )          | (4,592,494 | ) | (12,359,311 | ) |
|                                                                                                                                                                                                                                                                                            | Income tax provision                    | 12,247                          |       | 623                           |       | 44,747 |   | 27,466 |   |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
| LOSS BEFORE MINORITY INTEREST                                                                                                                                                                                                                                                                   | (2,385,026                              | )                               | (5,601,379 | )                             | (4,637,241 | ) | (12,386,777 | ) |
|                                                                                                                                                                                                                                                                                            | Minority interest in  net income (loss) |                            |       |                          |       |   |   |   |   |
|                                                                                                                                                                                                                                                                                            | of consolidated  subsidiaries           | 262,053                         |       | (674,911                      | )          | 588,418 |   | (1,108,142 | ) |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
| NET LOSS                                                                                                                                                                                                                                                                                        | $                                       | (2,647,079                      | )          | $                             | (4,926,468 | ) | $ | (5,225,659 | ) | $ | (11,278,635 | ) |
|                                                                                                                                                                                                                                                                                            |                                         |                            |            |                          |            |   |  |   |
|                                                                                                                                                                                                                                                                                            |                                    |                            |       |                          |       |   |   |   |   |
| ADJUSTMENTS TO ARRIVE  AT COMPREHENSIVE LOSS                                                                                                                                                                                                                                                    | (10,824                                 | )                               | (3,303     | )                             | (12,574    | ) | (7,130 | ) |
|                                                                                                                                                                                                                                                                                            |                                         |                            |            |                          |            |   |  |   |
|                                                                                                                                                                                                                                                                                            |                                    |                            |       |                          |       |   |   |   |
| COMPREHENSIVE LOSS                                                                                                                                                                                                                                                                              | $                                       | (2,636,255                      | )          | $                             | (4,923,165 | ) | $ | (5,213,085 | ) | $ | (11,271,505 | ) |
|                                                                                                                                                                                                                                                                                            |                                         |                            |            |                          |            |   |  |   |
|                                                                                                                                                                                                                                                                                            |                                    |                            |       |                          |       |   |   |   |   |
| NET LOSS PER COMMON SHARE:                                                                                                                                                                                                                                                                      |                                    |                            |       |                          |       |   |   |   |
|                                                                                                                                                                                                                                                                                            | Basic                                   | $                               | (0.35      | )                             | $          | (0.64 | ) | $ | (0.68 | ) | $ | (1.47 | ) |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
|                                                                                                                                                                                                                                                                                            | Fully diluted                           | $                               | (0.35      | )                             | $          | (0.64 | ) | $ | (0.69 | ) | $ | (1.48 | ) |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
| WEIGHTED AVERAGE COMMON SHARES:                                                                                                                                                                                                                                                                 |                                    |                            |       |                          |       |   |   |   |
|                                                                                                                                                                                                                                                                                            | Basic                                   | 7,671,117                       |       | 7,697,403                     |       | 7,656,187 |   | 7,697,403 |   |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
|                                                                                                                                                                                                                                                                                            | Fully diluted                           | 7,630,531                       |       | 7,640,131                     |       | 7,615,601 |   | 7,640,131 |   |
|                                                                                                                                                                                                                                                                                            |                                    |                                 |       |                               |       |  |   |  |   |
|                                                                                                                                                                                                                                                                                                 |                                         |                                 |            |                               |            |  |  |  |  |  |  |  |  |  |  |  |

 

Theaccompanying notes to these unaudited consolidated financial statementsare an integral part of these consolidated financial statements.

**JONES MEDIA NETWORKS, LTD. ANDSUBSIDIARIES**

**UNAUDITED CONSOLIDATEDSTATEMENTS OF CASH FLOWS**
|                                            | **For the Six Months Ended**                                                              |       |
|-------------------------------------------------|-------------------------------------------------------------------------------------------|------------|
|                                            | **June 30,**                                                                         |       |
|                                            | **2000**                                                                                  |       | **2001** |   |
|                                            |                                                                                           |       |  |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:           |                                                                                      |       |   |   |
|                                            | Net loss                                                                                  | $          | (5,225,659 | ) | $ | (11,278,635 | ) |
|                                            | Adjustment to reconcile net loss to net  cash provided by (used in) operating activities: |       |   |   |   |
|                                            | Depreciation and amortization                                                             | 6,980,171  |   | 7,196,277 |   |
|                                            | Amortization of debt offering costs                                                       | 401,592    |   | 373,761 |   |
|                                            | Distribution received                                                                     | 405,992    |   | — |   |
|                                            | Equity in income of subsidiaries                                                          | (2,225     | ) | — |   |
|                                            | Gain on distributions from affiliates                                                     | (142,650   | ) | — |   |
|                                            | Write-offs of equipment and intangibles  assets                                           | 65,380     |   | 195,015 |   |
|                                            | Minority interest in net income (loss)  of consolidated subsidiaries                      | 588,418    |   | (1,108,142 | ) |
|                                            | Net change in assets and liabilities:                                                     |       |   |   |   |
|                                            | Decrease (increase) in receivables                                                        | (408,869   | ) | 1,119,391 |   |
|                                            | Decrease in receivables from affiliates                                                   | 473,759    |   | — |   |
|                                            | Increase in prepaid expenses and other  current assets                                    | (548,026   | ) | (509,133 | ) |
|                                            | Increase in other assets                                                                  | (18,315    | ) | (49,267 | ) |
|                                            | Increase (decrease) in accounts payable                                                   | 59,743     |   | (14,824 | ) |
|                                            | Increase (decrease) in producers’ fees  payable                                      | (239,652   | ) | 762,824 |   |
|                                            | Increase in accounts payable to Jones  International, Ltd.                                | 749,358    |   | 200,169 |   |
|                                            | Increase in deferred revenues                                                             | 589,809    |   | 698,698 |   |
|                                            | Decrease in accrued and other  liabilities                                                | (226,289   | ) | (924,975 | ) |
|                                            | Increase in customer deposits                                                             | 50,099     |   | 10,306 |   |
|                                            |                                                                                      |            |   |  |   |
|                                            | Net cash provided by (used in)  operating activities                                      | 3,552,636  |   | (3,328,535 | ) |
|                                            |                                                                                      |            |   |  |   |
|                                            |                                                                                      |       |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:           |                                                                                      |       |   |   |
|                                            | Purchase of property and equipment                                                        | (1,221,080 | ) | (1,535,157 | ) |
|                                            | Proceeds from sale of available for  sale securities                                      | 1,687,910  |   | 3,152,908 |   |
|                                            | Cable programming distribution  agreements payments                                       | (4,850,267 | ) | (1,367,510 | ) |
|                                            | Purchases of intangible assets and  programming                                           | (743,784   | ) | (222,810 | ) |
|                                            | Distributions of capital from  affiliates                                                 | 15,000     |   | — |   |
|                                            |                                                                                      |            |   |  |   |
|                                            | Net cash provided by (used in)  investing activities                                      | (5,112,221 | ) | 27,431 |   |
|                                            |                                                                                      |            |   |  |   |
|                                            |                                                                                      |       |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:           |                                                                                      |       |   |   |
|                                            | Payments for equity offering costs                                                        | (315,619   | ) | — |   |
|                                            |                                                                                      |            |   |  |   |
|                                            | Net cash used in financing activities                                                     | (315,619   | ) | — |   |
|                                            |                                                                                      |            |   |  |   |
|                                            |                                                                                      |       |   |   |
| DECREASE IN CASH AND CASH EQUIVALENTS           | (1,875,204                                                                                | )          | (3,301,104 | ) |
|                                            |                                                                                      |       |   |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF  PERIOD | 13,270,784                                                                                |       | 14,900,333 |   |
|                                            |                                                                                           |       |  |   |
|                                            |                                                                                      |       |   |   |
| CASH AND CASH EQUIVALENTS, END OF  PERIOD       | 11,395,580                                                                                |       | $ | 11,599,229 |   |
|                                            |                                                                                           |       |   |  |   |
|                                            |                                                                                      |       |   |   |
| SUPPLEMENTAL CASH FLOW DISCLOSURES:             |                                                                                      |       |   |   |
|                                            | Class A Common Stock issued for radio  programs                                           | $          | 671,865 |   | $ | — |   |
|                                            |                                                                                      |       |  |   |   |  |   |
|                                            | Interest paid                                                                             | $          | 5,875,000 |   | $ | 5,875,000 |   |
|                                            |                                                                                      |       |  |   |   |  |   |
|                                            | Income tax paid                                                                           | $          | 44,747 |   | $ | 27,466 |   |
|                                            |                                                                                      |       |  |   |   |  |   |
|                                                 |                                                                                           |            |  |  |  |  |  |  |  |  |  |

 

The accompanying notesto these unaudited consolidated financial statementsare an integral part of these consolidated financial statements.

**JONES MEDIA NETWORKS, LTD. ANDSUBSIDIARIES**

**NOTES TO UNAUDITED CONSOLIDATEDFINANCIAL STATEMENTS**

**(1) BASIS OF PRESENTATION ANDSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

         This Form 10-Q is being filed by JonesMedia Networks, Ltd. and its subsidiaries (the “Company”).  The accompanying consolidated statements offinancial position as of December 31, 2000 and June 30, 2001, theconsolidated statements of operations for the three and six months endedJune 30, 2000 and 2001, and the statements of cash flows for the sixmonths ended June 30, 2000 and 2001, are unaudited.  This Form 10-Q is being filed in conformitywith the SEC requirements for unaudited financial statements and does notcontain all of the necessary footnote disclosures required for a completepresentation of the consolidated statements of financial position, consolidatedstatements of operations and consolidated statements of cash flows inconformity with generally accepted accounting principles.  However, in the opinion of management, thesestatements include all adjustments, consisting of normal recurring accruals,necessary for the fair presentation of results for these interim periods. Theresults of operations for the three months ended June 30, 2001 arenot necessarily indicative of results to be expected for the entire year, orfor any other interim period.

         *OtherComprehensive Loss (Income)*—Adjustments to other comprehensive loss(income) represent the net change in unrealized losses (gains) on available forsale securities.

         *MinorityInterest*—As of June 30, 2001, the Company is reflecting negativeminority interest in consolidated subsidiaries on the accompanying balancesheets due to the accumulated net losses generated by the Product InformationNetwork Venture, (“PIN Venture”) in excess of Cox Communications’ netinvestment in PIN Venture.

         *NewAccounting Pronouncements*— In June 2001, the Financial AccountingStandards Board issued Statement of Financial Accounting Standard No. 142,“Goodwill and Other Intangible Assets” (“SFAS 142”).  With the adoption of SFAS 142, goodwill will no longer be subjectto amortization over its estimated useful life.  Rather, goodwill will be subject to at least an annual assessmentfor impairment by applying a fair-value-based test.  Adoption of the new standard is required on January 1, 2002.  This standard will significantly impact theCompany’s financial statements in 2002 and beyond by presenting earningswithout goodwill amortization expense.

         *Useof Estimates*—The preparation of financial statements in conformitywith generally accepted accounting principles requires the Company to makeestimates and assumptions that affect the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimates.

*         Reclassifications*—Certainprior period amounts have been reclassified to conform to the currentpresentation.

**(2) TRANSACTIONS WITHAFFILIATED ENTITIES**

         The Company is a subsidiary of JonesInternational, Ltd. (“Jones International”), a holding company with ownershipin several companies involved in various industries. Jones International iswholly owned by the Company’s Chairman, Glenn R. Jones, who is Chairman andChief Executive Officer of Jones International and various of its subsidiaries.Certain officers or directors of the Company are also officers or directors ofthese affiliated entities and, from time to time, the Company may havetransactions with these entities. Certain expenses are paid by affiliatedentities on behalf of the Company and are allocated at cost based on specificidentification or other methods which management believes are reasonable.  Principal recurring transactions withaffiliates are described below.

*         Revenues*—JonesEarth Segment, Inc. (“Earth Segment”), a wholly owned subsidiary of theCompany, provides playback, editing, duplication, trafficking and uplinkingservices to its network radio and cable programming network affiliates and tothird parties.  Earth Segment chargesaffiliates for its services using rates which are calculated to achieve aspecified rate of return on its investment. For the three months ended June 30, 2000 and 2001, EarthSegment charged its affiliates approximately $428,000 and $141,000respectively, for these services.  Forthe six months ended June 30, 2000 and 2001, Earth Segment chargedits affiliates approximately $1,174,000 and $284,000 respectively, for these services.

         In addition, Jones Space Holdings, Inc.(“Space Holdings”), a subsidiary of the Company, subleases satellitetransponder capacity to certain of its affiliates.  Satellite transponder lease revenues of approximately $385,000and $201,000, were received from its affiliates for the three months endedJune 30, 2000 and 2001, respectively.  Satellite transponder lease revenues of approximately $770,000and $402,000, were received from its affiliates for the six months endedJune 30, 2000 and 2001, respectively.

         *OperatingExpenses*—The PIN Venture is owned by the Company and owned by CoxCommunications.  The PIN Venture paysout a significant portion of the revenues generated by its infomercialprogramming in the form of system rebates to cable systems which enter intoagreements to air such programming.  Forthe three months ended June 30, 2000 and 2001, the PIN Venture paidrebates to Cox Communications of approximately $882,000 and $1,037,000, respectively,for system rebates.  For the six monthsended June 30, 2000 and 2001, the PIN Venture paid rebates to CoxCommunications of approximately $1,840,000 and $2,180,000, respectively, forsystem rebates.

         The Company leases office space inEnglewood, Colorado from an affiliate of Jones International.  For the three months endedJune 30, 2000 and 2001, the Company paid this affiliate approximately$131,000 and $96,000, respectively, for rent and associated expenses.  For the six months ended June 30, 2000and 2001, the Company paid this affiliate approximately $239,000 and $192,000,respectively, for rent and associated expenses.

         An affiliate of Jones Internationalprovides computer hardware and software support services to the Company.  For the three months endedJune 30, 2000 and 2001, the Company paid the affiliate approximately$336,000 and $191,000, respectively, for such services.  For the six months endedJune 30, 2000 and 2001, the Company paid the affiliate approximately$690,000 and $390,000, respectively, for such services.

         The Company and its consolidatedsubsidiaries reimburse Jones International and its affiliates for certainallocated administrative expenses. These expenses generally consist ofsalaries, related benefits and other related costs. Allocations of personnelcosts are generally based on actual time spent by affiliated associates withrespect to the Company. For the three months ended June 30, 2000 and2001, the Company reimbursed Jones International and its affiliatesapproximately $184,000 and $193,000, respectively.  For the six months ended June 30, 2000 and 2001, theCompany reimbursed Jones International and its affiliates approximately$384,000 and $403,000, respectively.

         Galactic Radio, Inc. (“GalacticRadio”), a wholly owned subsidiary of the Company, had a transponder leaseagreement with Jones Satellite Holdings, Inc. (“Satellite Holdings”), anaffiliate of Jones International, for the use of the sub-carriers on anon-preemptible satellite transponder. Galactic Radio terminated this agreementon January 31, 2000.  This agreementallowed Galactic Radio to use a portion of the transponder to distribute itsaudio programming.  The Company paidSatellite Holdings approximately $58,000 for this service.

         An affiliate of Jones Internationalcharged the Company approximately $11,000 during the three and six months endedJune 30, 2000 for the allocated costs of its airplane, which was usedby the Company in connection with a proposed equity offering.  No such costs were incurred during the threeand six month periods ended June 30, 2001.

         In the normal course of business, JonesInternational (1) remits funds on behalf of the Company to third parties andaffiliates in payment of products and services purchased by the Company, and(2) receives funds on behalf of the Company in payment for products andservices provided by the Company.  Theseamounts are reimbursed from or to Jones International on a monthly basis.  The outstanding payable to Jones Internationaland related parties at June 30, 2001 was approximately $432,000.**(3) NETLOSS PER COMMON SHARE**
         Basic earnings per share("EPS") is computed by dividing the net earnings applicable to commonshares by the weighted average number of common shares outstanding during theperiod. Diluted EPS adjusts the basic weighted average of common sharesoutstanding by the assumed redemption of shares subject to put in the periodsin which such effect would have been dilutive. Prior period amounts have beenadjusted to reflect the effect of the 5-for-4 stock split which was effectiveon January 28, 2000. The table below presents a reconciliation ofweighted average shares used in the calculation of basic and diluted EPS:
 For the Three Months  ended   June 30, For the Six Months  ended   June 30,    2000 2001 2000 2001   Weighted average shares for basic EPS7,671,117 7,697,403 7,656,187 7,697,403 Less: shares subject to put40,586 57,272 40,586 57,272      Weighted average shares for diluted EPS7,630,531 7,640,131 7,615,601 7,640,131      
**(4) COMMITMENTS ANDCONTINGENCIES**

*         GAC EquityAgreement*—In 1998, Great AmericanCountry and the Company entered into an equity affiliate agreement with amultiple cable system operator (“MSO”). Pursuant to the terms of the agreement, the Company agreed to issueshares of Class A Common Stock to this MSO in return for this MSO providingGreat American Country’s programming to no less than 550,000 of the MSO’ssubscribers by May 31, 1998 and an additional 150,000 subscribers byDecember 31, 1999.  The totalnumber of shares of Class A Common Stock issued was based on the number ofsubscribers provided by this MSO.  As ofJune 30, 2001, 136,540 shares of Class A Common Stock had beenissued.  No additional shares of Class ACommon Stock are required to be issued to this MSO.   The value of the Class A Common Stock was recorded as anintangible asset upon execution of the affiliate agreements and upon issuanceof the Class A Common Stock.  Thisintangible is being amortized using the straight-line method over the life ofthe contract (approximately 10 years). Because of a put option granted to this MSO, the shares issued to thisMSO are presented above the Shareholders’ Deficit section of the Statements ofFinancial Position.  The difference inthe value of the shares issued to the put option value at the exercise date isnot significant.

         As noted above, this MSO was granted aput option on the Class A Common Stock issued, whereby, if as ofDecember 31, 2001, the Company or its successor has not completed apublic offering of its securities, the MSO would have the option within 60 daysof such date to require the Company to buy back its Class A Common Stock at aprice equal to all or a portion of the license fees that were paid during theperiod between the date of the agreement and December 1, 2000.  The purchase price is based on the totalnumber of MSO subscribers receiving the Great American Country service as ofDecember 31, 1999.  Based onthe number of subscribers receiving the Great American Country service atDecember 31, 1999, the estimated purchase price of the Class A CommonStock in the event the put option is exercised would be approximately $951,000.

**(6) UNAUDITED CONDENSEDCONSOLIDATING FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS**

         The Notes are fully and unconditionallyguaranteed, jointly and severally, on a senior unsecured basis by the followingwholly-owned subsidiaries of the Company: JPN, Inc., Jones Direct, Ltd., JonesSpace Holdings, Inc., Jones Earth Segment, Inc., Jones Infomercial Networks,Inc., Jones Radio Holdings, Inc., Great American Country, Inc., Jones GalacticRadio, Inc., Jones Infomercial Network Ventures, Inc., Jones Galactic RadioPartners, Inc., Jones Radio Networks, Ltd., Jones Radio Network, Inc., JonesAudio Services, Inc., Jones Radio Network Ventures, Inc., Jones MediaAmerica,Inc., Jones Broadcast Programming, Inc., Jones MatchMedia, Inc.,  and Jones MAI Radio, Inc.  The only existing subsidiary of the Companythat did not guarantee the Notes is the PIN Venture (the "Non-GuarantorSubsidiary").  Superaudio andJones/Capstar were subsidiaries of the Company that did not guarantee theNotes.  Superaudio ceased distributingits programming and all other operating activities on January 31, 2000.Jones Radio Network, Inc. purchased all Jones/Capstar assets on April 1, 2000and now produces and distributes its programming.  Assets and liabilities that were transferred to Jones RadioNetwork, Inc. are now reported under the “Subsidiary Guarantors.”

         The Company has not provided separatecomplete financial statements and other disclosures of the respectiveSubsidiary Guarantors because management has determined that such informationis not material to investors.  There areno significant contractual restrictions on distributions from each of theSubsidiary Guarantors to the Company.

         Investments in subsidiaries are requiredto be accounted for by investors on the equity method for purposes of thesupplemental condensed consolidating financial statement presentation.  Under this method, investments are recordedat cost and adjusted for the investor company’s ownership share of thesubsidiaries’ cumulative results of operations.  In addition, investments increase in the amount of contributionsto subsidiaries and decrease in the amount of distributions fromsubsidiaries.  The elimination entriesnecessary for consolidation purposes eliminate the equity method accounting forthe investment in subsidiaries and the equity in earnings of subsidiaries,intercompany payables and receivables and other transactions betweensubsidiaries including contributions and distributions.

         Sections 13 and 15(d) of the SecuritiesExchange Act of 1934 require presentation of the following supplementalcondensed consolidating financial statements. Presented below is condensed consolidating financial information for theCompany and its subsidiaries as of and for the six months endedJune 30, 2000 and 2001.

**Unaudited CondensedConsolidating Statements of Operations – For the Six Months Ended June 30,2000:(in thousands)**
     **Non-**      **The** **Subsidiary** **Guarantor** **Elimination**    **Company** **Guarantors** **Subsidiaries** **Entries** **Reported**  **** **** **** **** **** Revenues$— $28,463 $13,068 $(870)$40,661 Operating expenses:           Operations— 16,085 11,270 (870)26,485  Selling and marketing— 4,398 452 — 4,850  General and administrative1,257 — — — 1,257  Depreciation and amortization27 6,887 66 — 6,980         Total operating expenses1,284 27,370 11,788 (870)39,572         OPERATING INCOME (LOSS)(1,284)1,093 1,280 — 1,089        OTHER EXPENSE (INCOME):           Interest expense6,286 — — — 6,286  Interest income(300)(76)(98)— (474) Equity share of loss (income) of  subsidiaries(2,055)2,780 — (727)(2) Other expense (income), net11 (201)62 — (128)        Total other expense (income)3,942 2,503 (36)(727)5,682         Income (loss) before income taxes and  minority interest(5,226)(1,410)1,316 727 (4,593) Income tax provision— 44 1 — 45         Income (loss) before minority interest(5,226)(1,454)1,315 727 (4,638) Minority  interest in net income of           consolidated  subsidiaries— — — 588 588        NET INCOME (LOSS)$(5,226)$(1,454)$1,315 $139 $(5,226)           
**Unaudited CondensedConsolidating Cash Flows – For the Six Months Ended June 30, 2000:****(inthousands)**
 **The  Company** **Subsidiary  Guarantors****Non- Guarantor Subsidiaries****Elimination  Entries** **Reported**    **** **** **** **** **** CASH FLOWS FROM OPERATING ACTIVITIES:           Net income (loss) $(5,226)$(1,454)$1,315 $139 $(5,226) Adjustment to reconcile net income  (loss)            to net cash provided by (used in) operating activities:           Non-cash expenses2,242 6,065 129 (139)8,297  Net change in assets and liabilities(799)310 971 — 482         Net cash provided by (used in)  operating activities(3,783)4,921 2,415 — 3,553        CASH FLOWS FROM INVESTING ACTIVITIES:           Purchase of property and equipment(2)(1,088)(131)— (1,221) Proceeds from purchase of investments2,579 13 (904)— 1,688  Purchase of intangible assets(9)(5,585)— — (5,594) Distributions of capital from  affiliates— 15 — — 15         Net cash used in investing activities2,568 (6,645)(1,035)— (5,112)       CASH FLOWS FROM FINANCING ACTIVITIES:           Payments for equity offering costs(316)— — — (316)        Net cash used in financing activities(316)— — — (316)       INCREASE  (DECREASE) IN CASH            AND  CASH EQUIVALENTS(1,531)(1,724)1,380 — (1,875)CASH  AND CASH EQUIVALENTS,           BEGINNING  OF PERIOD7,889 2,708 2,674 — 13,271        CASH AND CASH EQUIVALENTS, END OF  PERIOD$6,358 $984 $4,054 $— $11,396            
**Unaudited CondensedConsolidating Statements of Financial Position – As of June 30, 2001:(in thousands)**
     **Non-**      **The** **Subsidiary** **Guarantor** **Elimination**    **Company** **Guarantors** **Subsidiaries** **Entries** **Reported**  **** **** **** **** **** **ASSETS:** ** ** ** ** ** ** ** ** ** **Cash and cash equivalents$10,230 $883 $486 $— $11,599 Available for sale securities566 — — — 566 Accounts receivable, net— 14,301 599 — 14,900 Other current assets98 1,666 41 — 1,805        Total current assets10,894 16,850 1,126 — 28,870        Property and equipment33 18,884 330 — 19,247 Intangible assets2,997 56,374 — — 59,371 Other long-term assets28,296 (22,760)— (805)4,731        Total assets$42,220 $69,348 $1,456 $(805)$112,219             **LIABILITIES AND SHAREHOLDERS’** ** ** ** ** ** ** ** ** ** ** **EQUITY (DEFICIT):**          Accounts payable$1,125 $2,563 $2,359 $— $6,047 Producers’ fees payable— 6,115 — — 6,115 Accrued liabilities6,152 6,007 862 — 13,021 Other current liabilities(50,935)52,245 46 — 1,356        Total current liabilities(43,658)66,930 3,267 — 26,539        Senior secured notes100,000 — — — 100,000 Other long-term liabilities1,164 612 — — 1,776        Total long-term liabilities101,164 612 — — 101,776        Minority interest— — — (810)(810)Class A Common Stock subject to put1,311 — — — 1,311 Shareholders’ equity (deficit):           Series A Preferred Stock23,975 — — — 23,975  Class A Common Stock53 — — — 53  Class B Common Stock22 — — — 22  General Partners’ Contributions— — 350 (350)—  Additional paid-in capital28,453 — — — 28,453  Accumulated other comprehensive income5 — — — 5  Retained earnings (deficit)(69,105)1,806 (2,161)355 (69,105)       Total shareholders’ equity (deficit)(16,597)1,806 (1,811)5 (16,597)       Total  liabilities and shareholders’                equity  (deficit)$42,220 $69,348 $1,456 $(805)$112,219             
**Unaudited CondensedConsolidating Statements of Operations – For the Six Months Ended June 30,2001:(in thousands)**
 **The  Company****Subsidiary  Guarantors****Non-  Guarantor Subsidiaries****Elimination  Entries****Reported**  **** **** **** **** ****            Revenues$— $30,075 $11,978 $(2,226)$39,827 Operating expenses:           Operations— 20,623 14,120 (2,226)32,517  Selling and marketing— 5,054 304 — 5,358  General and administrative1,104 — — — 1,104  Depreciation and amortization69 7,050 77 — 7,196         Total operating expenses1,173 32,727 14,501 (2,226)46,175         OPERATING INCOME (LOSS)(1,173)(2,652)(2,523)— (6,348)      OTHER EXPENSE (INCOME):           Interest expense6,249 — — — 6,249  Interest income(273)(59)(46)— (378) Equity share of loss (income) of  subsidiaries4,130 (2,761)— (1,369)—  Other expense (income), net— 141 — — 141         Total other expense (income)10,106 (2,679)(46)(1,369)6,012         Income (loss) before income taxes and  minority interest(11,279)27 (2,477)1,369 (12,360) Income tax provision— 27 — — 27         Income (loss) before minority interest(11,279)— (2,477)1,369 (12,387) Minority interest in net loss of  consolidated subsidiaries— — — (1,108)(1,108)       NET INCOME (LOSS)$(11,279)$— $(2,477)$2,477 $(11,279)      
**Unaudited CondensedConsolidating Cash Flows – For the Six Months Ended June 30, 2001:(in thousands)**
 **The  Company****Subsidiary Guarantors****Non-  Guarantor Subsidiaries****Elimination Entries****Reported**  **** **** **** **** **** CASH FLOWS FROM OPERATING ACTIVITIES:           Net income (loss)$(11,279)$— $(2,477)$2,477 $(11,279) Adjustment  to reconcile net income (loss) to            net  cash provided by (used in) operating activities:           Non-cash expenses4,870 4,187 77 (2,477)6,657  Net change in assets and liabilities1,722 (1,363)934 — 1,293         Net cash provided by (used in)  operating activities(4,687)2,824 (1,466)— (3,329)       CASH FLOWS FROM INVESTING ACTIVITIES:           Purchase of property and equipment(8)(1,483)(44)— (1,535) Proceeds from the sale of available for  sale securities2,747 5 401 — 3,153  Cable programming distribution  agreements payments— (1,367)— — (1,367) Purchase of intangible assets— (223)— — (223)        Net cash provided by (used in)  investing activities2,739 (3,068)357 — 28        INCREASE  (DECREASE) IN CASH           AND  CASH EQUIVALENTS(1,948)(244)(1,109)— (3,301)CASH  AND CASH EQUIVALENTS,           BEGINNING  OF PERIOD12,178 1,127 1,595 — 14,900        CASH AND CASH EQUIVALENTS, END OF  PERIOD$10,230 $883 $486 $— $11,599       
** (7) REPORTABLE SEGMENTS**

         During the three and six months endedJune 30, 2000 and 2001, the Company had five reportable segments:network radio, cable television programming, Internet advertising salesservices, satellite services and general and administrative-corporate.  The Company’s reportable segments have beendetermined in accordance with the Company’s internal management structure.  The Company evaluates performance based onmany factors, one of the primary measures is EBITDA.  EBITDA represents operating income (loss) plus depreciation andamortization minus the EBITDA attributable to the minority interests in the PINVenture, a consolidated 55.3%-owned subsidiary.

         The following tables set forth theCompany's financial results by operating segments.  The presentation of reportable segments has been changed fromthat presented in the prior periods to combine the results of operations fromInternet websites related to the Company’s radio programming with the networkradio segment and the results of operations from Internet websites related toone of the Company's cable television networks with the cable televisionprogramming segment.  Because of thecomplementary nature of the Company’s Internet websites to their respectiveradio program and cable television network counterparts, the Company hasdecided to include the results of operations of these companion websites in theCompany's respective network radio and cable television programmingoperations.  In addition, the Companyhas combined the presentation of its radio programming content and radioadvertising sales services segments into the network radio segment.  Management believes that this presentationprovides a more meaningful analysis of the Company's business segments.
 Three Months Ended Six Months Ended  June 30, June 30,  2000 2001 2000 2001       (in thousands)          Revenues:         Network radio$10,872 $11,698 $20,647 $21,615  Cable television programming8,310 8,514 16,992 16,506  Internet advertising sales services1 57 1 78  Satellite services1,311 814 3,021 1,628      Total revenues$20,494 $21,083 $40,661 $39,827     EBITDA:         Network radio$2,960 $2,496 $5,346 $3,401  Cable television programming663 (1,265)1,699 (1,762) Internet advertising sales services(278)(529)(379)(1,169) Satellite services1,188 778 2,661 1,482      Segment EBITDA4,533 1,480 9,327 1,952  Reconciliation to operating income:         General and administrative – Corporate(510)(508)(1,257)(1,104) Depreciation and amortization(3,587)(3,623)(6,980)(7,196)     Total operating income (loss)$436 $(2,651)$1,090 $(6,348)     Reconciliation of segment EBITDA to  total EBITDA:         Segment total$4,533 $1,480 $9,327 $1,952  General and administrative – Corporate(510)(508)(1,257)(1,104) Adjustment related to minority interest  EBITDA(252)661 (602)1,094      Total EBITDA$3,771 $1,633 $7,468 $1,942       Three Months Ended Six Month Ended  June 30, June 30,  2000 2001 2000 2001       (in thousands) Depreciation and amortization:         Network radio$1,694 $1,794 $3,297 $3,511  Cable television programming910 837 1,708 1,696  Internet advertising sales services6 18 8 27  Satellite services957 936 1,940 1,893                Segment total3,567 3,585 6,953 7,127  General and administrative – Corporate20 38 27 69                Total depreciation and amortization$3,587 $3,623 $6,980 $7,196              Capital expenditures         Network radio$463 $810 $764 $1,002  Cable television programming182 60 286 124  Internet advertising sales services– 18 119 32  Satellite services43 30 50 369                Segment total688 918 1,219 1,527  General and administrative – Corporate– – 2 8                Total capital expenditures$688 $918 $1,221 $1,535        Cable programming distribution  agreements payments:   Cable television programming$2660 $78 $4,850 $1,368      
 
 As of June 30, 2000 2001   (in thousands)Total assets:    Network radio$36,939 $37,930 Cable television programming21,569 17,246 Internet advertising sales services242 267 Satellite services17,543 14,556    Segment total76,293 69,999 General and administrative – Corporate47,459 42,220      Total assets$123,752 $112,219   
         Segment EBITDA excludes intersegmenttransactions between the satellite services and cable programming segments forthe satellite services provided to the PIN Venture and Great American Countryfor $940,000, and $1,180,000, for the three months ended June 30, 2000and 2001, respectively.  For the sixmonths ended June 30, 2000 and 2001, inter-segment charges to the PINVenture and Great American Country totaled $1,897,000, and $2,226,000, respectively.  In addition, segment EBITDA excludesintersegment transactions among advertising sales services, radio programmingand Internet programming segments for the sale of radio airtime to Internet forapproximately $94,000 and $538,000 for the three and six months endedJune 30, 2000, respectively. Segment EBITDA differs from operating income (loss) of each of thesegments by the amount of depreciation and amortization expenses of eachsegment.

**ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS**

         The following discussion of results ofthe Company’s financial condition and results of operations contains, inaddition to historical information, forward-looking statements that are basedupon certain assumptions and are subject to a number of risks anduncertainties.  The Company’s actualresults may differ significantly from the results described in suchforward-looking statements.

**Results of Operations**

         The following table sets forth theamount of, and percentage relationship to total net revenues of, certain itemsincluded in the Company’s historical unaudited consolidated statements ofoperations for the three and six months ended June 30, 2000 and 2001:
 Three Months Ended June 30, Six Months Ended June 30,  2000 2001 2000 2001       (in thousands)Revenues:   * *   * *   * *   * * Network radio$10,872 *53**%*$11,698 *56**%*$20,647 *51**%*$21,615 *54**%* Cable television programming8,310 *41** *8,514 *40** *16,992 *42** *16,506 *42** * Internet advertising sales services1 *–** *57 *–** *1 *–** *78 *–** * Satellite services1,311 *6** *814 *4** *3,021 *7** *1,628 *4** *  **  **  **  **    * *   * *   * *   * * Total revenues20,494 *100** *21,083 *100** *40,661 *100** *39,827 *100** *  **  **  **  **    * *   * *   * *   * *Operating expenses:   * *   * *   * *   * * Network radio9,606 *47** *10,996 *52** *18,598 *46** *21,725 *55** * Cable television programming8,557 *42** *10,616 *50** *17,001 *42** *19,964 *50** * Internet advertising sales services285 *1** *604 *3** *388 *1** *1,274 *3** * Satellite services1,080 *5** *972 *5** *2,300 *5** *2,039 *5** *  **  **  **  **    * *   * *   * *   * * Segment total19,528 *95** *23,188 *110** *38,287 *94** *45,002 *113** *General and administrative530 *3** *546 *3** *1,284 *3** *1,173 *3** *  **  **  **  **    * *   * *   * *   * * Total operating expenses20,058 *98** *23,734 *113** *39,571 *97** *46,175 *116** *  **  **  **  **    * *   * *   * *   * * Operating income436 *2** *(2,651)*(13**)*1,090 *3** *(6,348)*(16**)*  **  **  **  **    * *   * *   * *   * *Interest expense, net2,896 *14** *2,977 *14** *5,813 *14** *5,871 *15** *Other expense (income), net(87)*–** *(27)*–** *(131)*–** *141 *–** *Income tax provision12 *–** *1 *–** *45 *–** *27 *–** *Minority interest262 *1** *(675)*(3**)*588 *2** *(1,108)*(3**)*    **  **  **    * *   * *   * *   * *Net loss$(2,647*)**(13**)%*$(4,927)*(24**)%*$(5,225*)**(13**)%*$(11,279)*(28**)%*  **       
         The following table sets forth EBITDA forthe three and six months ended June 30, 2000 and 2001. EBITDA isunaudited and represents operating income (loss) plus depreciation and amortizationand adjusted for EBITDA attributable to the minority interest in the PINVenture, a consolidated 55.3%–owned subsidiary. Management acknowledgesthat EBITDA is not a measure of performance or liquidity calculated inaccordance with generally accepted accounting principles. However, EBITDA is ameasure widely used by analysts and investors in the media industry todetermine a company's operating performance and ability to service and incurdebt. EBITDA should not be considered in isolation or as a substitute for netincome (loss), cash flows from operating activities or other consolidatedincome or cash flow statement data prepared in accordance with generallyaccepted accounting principles or as a measure of profitability or liquidity.
 For The Three Months Ended For The Six Months Ended  June 30, June 30,  2000 2001 2000 2001       (in thousands) EBITDA:         Network radio$2,960 $2,496 $5,346 $3,401  Cable television programming663 (1,265)1,699 (1,762) Internet advertising sales services(278)(529)(379)(1,169) Satellite services1,188 778 2,661 1,482       Segment EBITDA4,533 1,480 9,327 1,952  General and administrative – Corporate(510)(508)(1,257)(1,104) Adjustment related to minority interest  EBITDA(252)661 (602)1,094       Total  EBITDA$3,771 $1,633 $7,468 $1,942      
**Three Months Ended June 30, 2000 Compared to ThreeMonths ended June 30, 2001**

**Total Revenues. **Total revenues increased $0.6 million, or 3%,from $20.5 million for the three months ended June 30, 2000 to$21.1 million for the three months ended June 30, 2001. Thisincrease was due to increased revenues in our network radio and cabletelevision programming segments. Network radio revenues increased due to revenue generated fromprogramming launched in late 2000 and during first half of 2001, which waspartially offset by lower the sell-out percentages prevailing in the secondquarter of 2001.  Cable televisionprogramming revenues increased due to increases in GAC’s national advertisingsales and license fees revenues in the second quarter of 2001 as compared to2000.  These increases were offset by adecrease in satellite services revenues due to lower fees charged to affiliatedparties and termination by an affiliated party of certain of its remainingsatellite services in December 2000.

**Total Operating Expenses. **Total operating expenses increased $3.4 million, or 25%, from$13.5 million for the three months ended June 30, 2000 to$16.9 million for the three months ended June 30, 2001.  This increase resulted from the greater expenditures fornew network radio and cable television programs and products offered beginningin mid-year 2000 to early 2001, as well as increased operating expenses todevelop our Internet advertising sales business.  In addition, cable television programming expenses increased dueto an increase in rebates paid by PIN to cable system and Direct BroadcastSatellite (“DBS”) operators, because of a 56% increase in PIN’s full-timeequivalent subscribers (“FTREs”).  Asa percentage of total revenues, total operating expenses increased from 66% forthe three months ended June 30, 2000 to 80% for the three monthsended June 30, 2001.

**Selling and Marketing. **Selling and marketing expenses increased $0.3 million, or 10%, from$2.5 million for the three months ended June 30, 2000 to$2.8 million for the three months ended June 30, 2001. This increase is dueprimarily to increased expenditures to attract additional radio and cabletelevision affiliates and increased selling and marketing expenses incurred tolaunch, promote and support new radio programs.

**General and Administrative. **General and administrative expenses remained relatively flat at$0.5 million for the three months ended June 30, 2000 and 2001.

**Depreciation and Amortization. **Depreciation and amortization expenses remained relatively flat at$3.6 million for the three months ended June 30, 2000 and 2001.

**Total Operating Income (Loss). **Operating income (loss) decreased $3.1 million, from operatingincome of $0.4 million for the three months ended June 30, 2000to an operating loss of $(2.7) million for the three months endedJune 30, 2001, as a result of the factors stated above.

**Total EBITDA. **EBITDA decreased $2.2 million, or 57%, from$3.8 million for the three months ended June 30, 2000, to$1.6 million for the three months ended June 30, 2001, as aresult of the factors stated above.

**Total Other Expense. **Total other expense increased $0.1 million, or5%, from $2.8 million for the three months ended June 30, 2000to $2.9 million for the three months ended June 30, 2001. The increase is dueprimarily to $0.1 million decrease in interest income.

**Total Net Loss. **Net loss increased $2.3 million, or 86%, from$(2.6) million for the three months ended June 30, 2000 to$(4.9) million for the three months ended June 30, 2001, as aresult of the factors stated above.

**Network Radio**

*Revenues.*  Networkradio revenues increased $0.8 million, or 8%, from $10.9 million forthe three months ended June 30, 2000 to $11.7 million for thethree months ended June 30, 2001. This increase was due to revenue generated from programming launched inlate 2000 and during the first half of 2001, which was partially offset by thelower sell-out percentages existing during in the second quarter of 2001 ascompared to the similar quarter in 2000, and a contraction in audience, and, incertain cases, elimination of some of our program offerings.  We are currently experiencing a softernetwork radio advertising market in 2001 as compared to 2000, due to a slowingeconomy and a lack of Internet company advertising, which caused lower sell-outpercentages.  During the first half of2000, we benefited from very strong network radio advertising demand, drivenprimarily by strong economic conditions, which demand was further enhanced by asignificant increase in the volume of network radio advertising by Internetcompanies.  Due to the very strongdemand for network radio advertising in 2000, our network radio business hadachieved virtually 100% inventory sell-out percentages.

*Expenses.*  Networkradio expenses increased $1.4 million, or 14%, from $9.6 million forthe three months ended June 30, 2000 to $11.0 million for thethree months ended June 30, 2001. This increase was primarily due to:
 •$0.8 million increase  in operating expenses due to the increase in the number of radio programs and  products we offered, including increased license fees for certain  programming, as well as an increase in the number of our radio station  affiliates;    •$0.2 million  increase in selling and marketing expenses to increase the number of radio  stations receiving our existing programming and to promote the launch of new  programs;    •$0.2 million  increase in producer fees for certain programming added in late 2000;    •$0.1 million increase  in management, support costs and other; and    •$0.1  million increase in depreciation and amortization expenses related to new  equipment purchased for the upgrades of certain radio programming studios and  purchase of new satellite receivers.
         As a percentage of network radiorevenues, network radio expenses increased from 88% for the three months endedJune 30, 2000 to 94% for the three months endedJune 30, 2001.  The increasein network radio expenses as a percentage of network radio revenues is dueprimarily to higher costs incurred to license and distribute new radio programswe offer, as well as the softer advertising market experienced in 2001 incomparison to 2000, which has resulted in relatively small revenue growth inthe second quarter of 2001.

*OperatingIncome (Loss).* Operatingincome decreased $0.6 million from an operating income of $1.3 million for the three months endedJune 30, 2000 to an operating income of $0.7 million for the three months endedJune 30, 2001 as a result of the factors stated above.

*SegmentEBITDA.*  SegmentEBITDA decreased $0.5 million, or 16%, from $3.0 million for the three months endedJune 30, 2000, to $2.5 million for the three months ended June 30, 2001 as a result ofthe factors stated above.

**Cable Television Programming**

*Revenues. *Cable television programming revenues increased$0.2 million, or 2%, from $8.3 million for the three months endedJune 30, 2000 to $8.5 million for the three months endedJune 30, 2001.  This increasewas due primarily to a increase in GAC’s revenues.
 •In the second quarter  of 2001, PIN added a number of significant cable television systems and  advertising markets including Columbus, Portland, Manatee, Syracuse, and  Baton Rouge.  In addition, PIN was  launched on The DISH Network during the first quarter. While PIN’s FTREs grew  56%, revenues remained relatively flat due to lower rates that PIN charged  for its infomercial advertising inventory.   The decrease in PIN’s infomercial rates is due to a lack of new  infomercials, a decreasing number of infomercial suppliers and a slowing  economy resulting in decreased response rates, which is having a significant  negative impact on the infomercial marketplace.    •GAC’s revenues  increased $0.2 million, or 7%, as a result of a $0.1 million, or  6%, increase in advertising revenues driven by increases in national  advertising revenues and a $0.1 million, or 12%, increase in license  fees charged to cable system operators who distribute GAC’s programming.  Advertising revenues increased due to  greater national advertising revenues in the second quarter of 2001 as  compared to 2000, reflecting an increase of GAC subscribers (as reported by  cable and DBS operators) of 8% at the end of the second quarter of 2001 as  compared to 2000.     We anticipate that we  will continue to experience a weak cable television advertising market  through the remainder of 2001.
*Expenses. *Cable television programming expenses rose$2.1 million, or 24%, from $8.5 million for the three months endedJune 30, 2000 to $10.6 million for the three months endedJune 30, 2001.  This was primarily due to:
 •an  increase of $1.8 million, or 38%, in rebates paid to cable systems receiving  PIN, driven by a 56% increase in the number of FTREs receiving PIN;    •an  increase of $0.3 million as a result of new associates hired in late 2000 to  sell GAC advertising;    •an  increase of $0.1 million in programming expenses incurred to enhance GAC’s  programming and to secure an additional satellite feed needed temporarily in  order to provide PIN programming to a DBS provider;    •a  decrease of $0.1 million in depreciation and amortization expenses primarily  related to a decrease in amortization of cable programming distribution  agreement payments caused by a decrease in the number of GAC’s subscribers in  latter part of 2000 and the first quarter of 2001 as compared to similar  period in 2000.
         As a percentage of cable televisionprogramming revenues, cable television programming expenses increased from 103%for the three months ended June 30, 2000 to 125% for the three monthsended June 30, 2001. The increase in cable television programmingexpenses as a percentage of cable television programming revenues is dueprimarily to higher PIN rebate costs and the weak advertising marketexperienced in 2001, which has resulted in a decrease in rates charged forinfomercial advertising inventory.

         For the three months endedJune 30, 2000 and 2001, PIN made rebates of approximately 75% and104%, respectively, of its revenues to operators receiving itsprogramming.  This increase in rebatesrelative to revenues was due to a significant decrease in PIN revenues per subscriberdriven by poor infomercial advertising market conditions during the secondquarter of 2001.  In addition, rebatesincreased due to a 56% increase in PIN’s FTREs at the end of the second quarterof 2001 as compared to 2000.  In acontinuing effort to restore PIN to profitability during this difficultadvertising market, PIN has been actively working to reduce rebate coststhrough negotiating lower rebate rates with PIN’s cable television systemaffiliates.  To date, PIN hasre-negotiated lower rebate rates with affiliates representing 55% of its FTREdistribution, with an approximate cost savings of $800,000 to $900,000anticipated in 2001.  While we arecontinuing to take certain measures to further decrease PIN rebate costs bynegotiating lower rebates with cable system operators as their carriageagreements come up for renewal, there can be no assurance that we will be ableto reduce these costs to the mid 70% range we have achieved in the past unlessand until the long-form advertising market improves significantly.

         PIN entered into a short-term agreementwith Echostar to distribute PIN’s programming on Echostar’s DISH Networkbeginning in March 2001.  PIN launchedon The DISH Network in March 2001 on a secondary satellite feed established toisolate and test the economic potential to PIN of distribution through a DBSprovider.  Due to the launch of anadditional PIN satellite feed needed temporarily to provide programming toEchostar, cable television programming expenses (including rebates paid toEchostar) increased from approximately $200,000 beginning in March 2001 toapproximately $300,000 in June 2001. To date, because of the worseninginfomercial market, PIN has incurred losses under this agreement, as revenuesgenerated have been inadequate to cover PIN’s rebate and satellite deliverycosts.  As a result, PIN elected toterminate the existing agreement effective August 7, 2001.

         As part ofour efforts to increase GAC subscribers, GAC entered into a digital satellitedistribution agreement with AT&T’s Headend in the Sky, Inc. (“HITS”), whichwill enable GAC to broadcast its programming on the HITS digital platform tocable systems which elect to carry GAC on their digital programming tiers. As aresult, digital satellite distribution expenses increased approximately $40,000per month beginning in November 2000.

         GACentered into an agreement with Echostar to distribute GAC’s programming onEchostar’s DISH Network beginning in May 2001. As a result of GAC’s launch on The Dish Network, as well as other addedcable distribution, GAC’s subscribers (as reported by cable and DBS operators) increased 8% to14.6 million subscribers at the end of the second quarter of 2001 as comparedto 13.6 million in 2000.  Our ability tocontinue to increase GAC distribution is largely dependent on our ability to persuade cableoperators to carry GAC on their digital programming tiers and our ability tosecure carriage with another broadcast satellite provider.  We anticipate GAC’s subscriber distributionwill continue to grow modestly for the remainder of 2001.

         In 1999, we developed and enhanced a companion website tothe GAC network. Internet programming and content expenses for this companionwebsite commenced in the fourth quarter of 1999 and increased throughout 2000.This website generated e-commerce revenues by selling products to websitevisitors; however, we did not generate significant e-commerce revenues fromthis website.  Given the lack ofmeaningful e-commerce revenues generated and unfavorable product margins, wehave ceased substantially all e-commerce efforts at the end of the secondquarter of 2001 in order to reduce costs and re-direct resources to moreefficiently promote the GAC network via the Internet.  In June 2001, costs decreased approximately $20,000 per month asa result of these efforts.  Weanticipate that such costs will continue to decrease for the remainder of 2001.

*OperatingIncome (Loss). *Operating loss increased $1.8million from an operating loss of $(0.3) millionfor the three months ended June 30, 2000 to an operating loss of$(2.1) million for the three months ended June 30, 2001 as a resultof the factors stated above.

*SegmentEBITDA. *Segment EBITDA, beforeadjusting for the EBITDA attributable to the PIN Venture’s minority interest,decreased $1.9 million from $0.7 millionfor the three months ended June 30, 2000, to $(1.2) million for the three months endedJune 30, 2001 as a result of the factors stated above.

**Internet Advertising Sales**

         In 2000,we began offering Internet advertising sales services with a focus on streamingmedia advertising.  Operating expensesfor Internet advertising services increased beginning in January 2000 andcontinued to increase throughout 2000, as we built a sales and technologyinfrastructure.

* Revenues*. Wegenerated $0.1 million of Internet advertising sales revenues for thethree months ended June 30, 2001 and we did not generate anysignificant revenue for the three months ended June 30, 2000.

* Expenses. *Internet advertising sales expenses increased$0.3 million, or 112%, from $0.3 million for the three months endedJune 30, 2000 to $0.6 million for the three months endedJune 30, 2001 asa result of new associates hired in late 2000 to sell and support our streamingmedia advertising efforts.

* Operating Loss*.  Operating loss increased $0.3 millionfrom $(0.3) million for the three months ended June 30, 2000 to$(0.6) million for the three months ended June 30, 2001.

* Segment EBITDA*.  Segment negative EBITDA increased$0.2 million from $(0.3) million for the three months endedJune 30, 2000 to $(0.5) million for the three months endedJune 30, 2001.

         In 2000, we beganoffering Internet advertising sales services with initial focus on streamingmedia advertising.  We developed a salesand technology infrastructure to seek to grow this business as this newadvertising medium appeared to gain momentum. The success of this business is highly dependent upon our ability toreach a sufficient audience and to aggregate, target and accurately measure suchaudience (through still-emerging technologies) in a way that is attractive tonational advertisers.  In addition thereare a number of recent developments which adversely affect streaming mediaadvertising.  One such event is recentclaims by two important unions that radio stations who stream advertisingproduced by union talent are liable for royalties separate from thoseapplicable to the radio broadcast of such advertising.  These claims have led many major radiostation operators to cease streaming of their programming.  Other factors include the current economicslowdown, advertisers’ reluctance to spend advertising funds in non-traditionalmedia given the existing advertising environment, the continued financialchallenges faced by streaming companies and the changing technology needed toaggregate, target and accurately measure streaming audiences.  Due to these factors, we significantlyreduced our Internet advertising sales business in the second quarter of2001.  Starting in June, we estimate thatInternet advertising sales expenses will be approximately $30,000 permonth.  Further, we expect to furtherreduce or eliminate this business entirely in the third quarter of 2001.

**Satellite Services**

*Revenues. *Satellite services revenuesdecreased $0.5 million, or 38%, from $1.3 million for the threemonths ended June 30, 2000 to $0.8 million for the three monthsended June 30, 2001. This decrease was primarily due to a decrease insatellite services fees charged to affiliated parties and a one-time terminationpayment made in December 2000 by an affiliated party for all of its remainingsatellite services commitments.

*Expenses. *Satellite services expenses decreased$0.1 million, or 10%, from $1.1 million for the three months endedJune 30, 2000 to $1.0 million for the three months endedJune 30, 2001. This decrease is primarily due to cost savingsrealized as a result of the affiliated party ceasing all programming operationsin early 2000.  As a percentage of satellite servicesrevenues, satellite services expenses increased from 82% for the three monthsended June 30, 2000 to 119% for the three months endedJune 30, 2001.  Because asignificant portion of the costs of our satellite services is fixed, when wedecrease our utilization of the excess capacity on our Satcom C-3 transponder,the percentage of satellite services expenses in relation to the satelliteservices revenues increases.  Theleasing of capacity on our transponder is subject to a numbers of factors,including cable network demand and general availability of transponderspace.  There can be no assurance thatwe will be successful in leasing our excess satellite transponder capacity.

* Operating Income (Loss)*.  Operatingincome (loss) decreased $0.4 million from an operating income of $0.2 million for the three months endedJune 30, 2000 to an operating loss of $(0.2) million for the three months endedJune 30, 2001 as a result of the factors stated above.

*SegmentEBITDA. *Segment EBITDA decreased $0.4 million,or 35%, from $1.2 million for thethree months ended June 30, 2000, to $0.8 million for the three months endedJune 30, 2001 as a result of the factors stated above.

**Six Months Ended June 30,2000 Compared to Six Months ended June 30, 2001**

**Total Revenues. **Total revenues decreased $0.8 million, or 2%,from $40.6 million for the six months ended June 30, 2000 to$39.8 million for the six months ended June 30, 2001. Thisdecrease was the result of a decrease in satellite services revenues due to adecrease in fees charged to an affiliated party because of reduced servicelevels required by the affiliate (which ceased network operations at the end ofthe first quarter of 2000), as well as the termination of certain of itsremaining satellite services in December 2000. In addition, cable television programming revenues decreased in thefirst half of 2001 as compared to comparable period in 2000.  These decreases were partially offset by anincrease in network radio revenues.

**Total Operating Expenses. **Total operating expenses increased $6.0 million,or 23%, from $26.5 million for the six months endedJune 30, 2000 to $32.5 million for the six months endedJune 30, 2001.  These increases resultedfrom the greater expenditures for new network radio and cable televisionprograms and products offered beginning in mid-year 2000 and early 2001, aswell as increased operating expenses to develop our Internet advertising salesbusiness.  In addition, cable televisionprogramming expenses increased due to an increase in rebates paid by PIN tocable system and Direct Broadcast Satellite (“DBS”) operators, because of a 56%increase in PIN’s FTREs.  As apercentage of total revenues, total operating expenses increased from 65% forthe six months ended June 30, 2000 to 82% for the six months endedJune 30, 2001.

**Selling and Marketing. **Selling and marketing expenses increased$0.5 million, or 10%, from $4.9 million for the six months endedJune 30, 2000 to $5.4 million for the six months endedJune 30, 2001. This increase is due primarily to increased expenditures to attractadditional radio and cable television affiliates and increased selling andmarketing expenses incurred to launch, promote and support new radio programs.

**General andAdministrative. **General and administrative expenses decreased$0.2 million, or 12%, from $1.3 million for the six months endedJune 30, 2000 to $1.1 million for the six months endedJune 30, 2001.  This changewas due to decreases in Internet-related support expenses and other expenses.

**Depreciation andAmortization. **Depreciation and amortization expenses increased$0.2 million, or 3%, from $7.0 million for the six months endedJune 30, 2000 to $7.2 million for the six months endedJune 30, 2001.  This increase is dueprimarily to increase in depreciation expenses related to new equipmentpurchased.

**Total Operating Income(Loss). **Operating income (loss) decreased $7.4 million,from operating income of $1.1 million for the six months endedJune 30, 2000 to an operating loss of $(6.3) million for the sixmonths ended June 30, 2001, as a result of the factors stated above.

**Total EBITDA. **EBITDA decreased $5.5 million, or 74%, from$7.5 million for the six months ended June 30, 2000, to$2.0 million for the six months ended June 30, 2001, as a resultof the factors stated above.

**Total Other Expense.**Total other expense increased $0.3 million, or6%, from $5.7 million for the six months ended June 30, 2000 to$6.0 million for the six months ended June 30, 2001. The increase is dueprimarily to $0.2 million increase in other expense related to write-offs ofdisposed equipment and intangible assets in 2001 and a decrease of$0.1 million in interest income.

**Total Net Loss.**Net loss increased $6.1 million, or 116%, from$(5.2) million for the six months ended June 30, 2000 to$(11.3) million for the six months ended June 30, 2001, as aresult of the factors stated above.

**Network Radio**

*Revenues. *Network radio revenues increased $1.0 million,or 5%, from $20.6 million for the six months ended June 30, 2000to $21.6 million for the six months ended June 30, 2001.  This increase was due to revenue generatedfrom programming launched in late 2000 and during first quarter 2001, which waspartially  offset by the lower sell-outpercentages prevailing during first half of 2001 as compared to the similarperiod in 2000, and a contraction in audience, and, in certain cases,elimination of some of our program offerings. We are currently experiencing a softer network radio advertising marketin 2001 as compared to 2000, due to a slowing economy and a lack of Internetcompany advertising, which caused lower sell-out percentages.  During the first half of 2000, we benefitedfrom very strong network radio advertising demand, driven primarily by strongeconomic conditions, which demand was further enhanced by a significantincrease in the volume of network radio advertising by Internet companies.  Due to the very strong demand for networkradio advertising in 2000, our network radio business had achieved virtually 100%inventory sell-out percentages.

*Expenses. *Network radio expenses increased $3.1 million,or 17%, from $18.6 million for the six months endedJune 30, 2000 to $21.7 million for the six months endedJune 30, 2001.  This increasewas primarily due to:
 •$1.6 million increase  in operating expenses due to the increase in the number of radio programs and  products we offered, including increased license fees for certain  programming, as well as an increase in the number of our radio station  affiliates;    •$0.6 million  increase in selling and marketing expenses to increase the number of radio  stations receiving our existing programming and to promote the launch of new  programs;    •$0.4 million  increase in producer fees for certain programming added in late 2000;    •$0.3 million increase  in management, support costs and other; and    •$0.2  million increase in depreciation and amortization expenses related to new  equipment purchased for the upgrades of certain radio programming studios and  purchase of new satellite receivers.
         As a percentage of network radiorevenues, network radio expenses increased from 90% for the six months endedJune 30, 2000 to 101% for the six months endedJune 30, 2001.  The increasein network radio expenses as a percentage of network radio revenues is due primarilyto higher costs incurred to license and distribute new radio programs we offer,as well as the softer advertising market experienced in 2001 in comparison to2000, which has resulted in relatively small revenue growth in the first halfof 2001.

*OperatingIncome (Loss). *Operating income (loss)decreased $2.1 million from an operating income of $2.0 million for the six months endedJune 30, 2000 to an operating loss of $(0.1) million for the six months endedJune 30, 2001 as a result of the factors stated above.

*SegmentEBITDA. *Segment EBITDA decreased $1.9 million,or 36%, from $5.3 million forthe six months ended June 30, 2000, to $3.4 million for the six months endedJune 30, 2001 as a result of the factors stated above.

** Cable Television Programming**

*Revenues. *Cable television programming revenues decreased$0.5 million, or 3%, from $17.0 million for the six months endedJune 30, 2000 to $16.5 million for the six months endedJune 30, 2001.  This decreasewas due primarily to a decrease in PIN’s revenues, which were partially offsetby an increase in GAC's revenues.
 •In the first half of  2001, PIN added a number of significant cable television systems and  advertising markets including Baltimore, Pittsburgh, Union, Lebanon,  Columbus, Portland, Manatee, Syracuse, Baton Rouge and others.  In addition, PIN was launched on  Echostar’s DISH Network during the first quarter. While PIN’s full-time  equivalent subscribers (“FTRE”) grew 56%, revenues decreased $1.1 million,  or 8%, due to lower rates that PIN charged for its infomercial advertising  inventory.  The decrease in PIN’s  infomercial rates is due to a lack of new infomercials, a decreasing number  of infomercial suppliers and a slowing economy resulting in decreased  response rates.  Combined, these factors  have had a significant negative impact on the infomercial marketplace.    •GAC’s revenues  increased $0.6 million, or 16%, as a result of a $0.3 million, or  11%, increase in advertising revenues driven by increases in national  advertising revenues and a $0.3 million, or 31%, increase in license  fees charged to cable system operators who distribute GAC’s programming.  Advertising revenues increased due to  greater national advertising revenues in the first half of 2001 as compared  to 2000, reflecting an increase of GAC subscribers (as reported by cable  system and direct broadcast satellite (“DBS”) operators) of 8% at the end of  the second quarter of 2001 as compared to 2000.     We anticipate that we  will continue to experience a weak cable television advertising market  through the remainder of 2001.
*Expenses. *Cable television programming expenses rose$3.0 million, or 17%, from $17.0 million for the six months endedJune 30, 2000 to $20.0 million for the six months endedJune 30, 2001.  This was primarily due to:
 •an  increase of $2.5 million, or 25%, in rebates paid to cable systems receiving  PIN, driven by a 56% increase in the number of FTREs receiving PIN;    •an  increase of $0.4 million as a result of new associates hired late in 2000 to  sell GAC traditional spot advertising;    •an  increase of $0.2 million in programming expenses incurred to enhance GAC’s  programming and to secure an additional satellite feed needed temporarily in  order to provide PIN programming to a DBS provider; and    •a  decrease of $0.1 million in PIN’s selling and marketing expenses.
         As a percentage of cable televisionprogramming revenues, cable television programming expenses increased from 100%for the six months ended June 30, 2000 to 121% for the six monthsended June 30, 2001. The increase in cable television programmingexpenses as a percentage of cable television programming revenues is dueprimarily to higher PIN rebate costs and weak advertising market experienced in2001, which has resulted in a decrease in rates charged for advertisinginventory, particularly infomercial advertising inventory.

         For the six months endedJune 30, 2000 and 2001, PIN made rebates of approximately 75% and105%, respectively, of its revenues to cable system and DBS operators receivingits programming.  This increase inrebates relative to revenues was due to a significant decrease in PIN revenuesdriven by poor infomercial advertising market conditions during the first halfof 2001.  In addition, rebates increaseddue to a 56% increase in total PIN FTREs at the end of the second quarter of2001 as compared to 2000.  In acontinuing effort to restore PIN to profitability during this difficultadvertising market, PIN has been actively working to reduce rebate costs throughnegotiating lower rebate rates with PIN’s cable television systemaffiliates.  To date, PIN hasre-negotiated lower rebate rates with affiliates representing 55% of its FTREdistribution, with an approximate cost savings of $800,000 to $900,000 in 2001.  While we are continuing to take certainmeasures to decrease PIN rebate costs, including negotiating lower rebates withcable system operators as their carriage agreements come up for renewal, therecan be no assurance that we will be able to reduce these costs to the mid 70%range we have achieved in the past unless and until the long-form advertisingmarketing improves significantly.

         PIN entered into a short-term agreementwith Echostar to distribute PIN’s programming on Echostar’s DISH Networkbeginning in March 2001.  PIN launchedon The DISH Network in March 2001 on a secondary satellite feed established toisolate and test the economic potential to PIN of distribution through a DBSprovider.  Due to the launch of anadditional PIN satellite feed needed temporarily to provide programming toEchostar, cable television programming expenses (including rebates paid toEchostar) increased from approximately $200,000 beginning in March 2001 toapproximately $300,000 in June 2001. To date, because of the worseninginfomercial market, PIN has incurred losses under this agreement, as revenuesgenerated have been inadequate to cover PIN’s rebate and satellite deliverycosts.  As a result, PIN elected toterminate the existing agreement effective August 7, 2001.

         As part ofour efforts to increase GAC subscriber distribution, GAC entered into a digitalsatellite distribution agreement with AT&T’s Headend in the Sky, Inc.(“HITS”), which will enable GAC to broadcast its programming on the HITSdigital platform to cable systems which elect to carry GAC on their digitalprogramming tiers. As a result, digital satellite distribution expensesincreased approximately $40,000 per month beginning in November 2000.

         GACentered in an agreement with Echostar to distribute GAC’s programming onEchostar’s DISH Network beginning in May 2001. As a result of GAC’s launch on The Dish Network as well as other addedcable distribution, GAC’s subscribers (as reported by cable and DBS operators) increased 8% to14.6 million subscribers at the end of the second quarter of 2001 as comparedto 13.6 million subscribers in 2000. Our ability to continue to increase GAC distribution is largely dependent on our ability to persuade cableoperators to carry GAC on their digital programming tiers and our ability tosecure carriage with another broadcast satellite provider.  We anticipate GAC’s subscriber distributionwill continue to grow modestly for the remainder of 2001.

         In 1999, we developed and enhanced a companion website tothe GAC network. Internet programming and content expenses for this companionwebsite commenced in the fourth quarter of 1999 and increased throughout 2000.This website generated e-commerce revenues by selling products to websitevisitors; however, we did not generate significant e-commerce revenues fromthis website.  Given the lack ofmeaningful e-commerce revenues generated and unfavorable product margins, wehave ceased substantially all e-commerce efforts at the end of the secondquarter of 2001 in order to reduce costs and re-direct resources to moreefficiently promote the GAC network via the Internet.  In June 2001, costs decreased approximately $20,000 per month asa result of these efforts.  Weanticipate that such costs will continue to decrease for the remainder of 2001.

*OperatingIncome (Loss). *Operating income (loss)decreased $3.5 million from breaking-even for the six months endedJune 30, 2000 to an operating loss of $(3.5) million for the sixmonths ended June 30, 2001 as a result of the factors stated above.

*SegmentEBITDA. *Segment EBITDA, beforeadjusting for the EBITDA attributable to the PIN Venture’s minority interest,decreased $3.5 million from $1.7 millionfor the six months ended June 30, 2000, to $(1.8) million for the six months ended June 30, 2001as a result of the factors stated above.

**Internet Advertising Sales**

         In 2000,we began offering Internet advertising sales services with a focus on streamingmedia advertising.  Operating expensesfor Internet advertising services increased beginning in January 2000 andcontinued to increase throughout 2000, as we built a sales and technologyinfrastructure.

* Revenues*. Wegenerated $0.1 million in Internet advertising sales services revenue forthe six months ended June 30, 2001.  Wedid not generate significant Internet advertising sales revenues for the sixmonths ended June 30, 2000.

* Expenses. *Internet advertising sales expenses increased$0.9 million, or 228%, from $0.4 million for the six months endedJune 30, 2000 to $1.3 million for the six months endedJune 30, 2001 asa result of new associates hired in late 2000 to sell and support our streamingmedia advertising.

* Operating Loss*.  Operating loss increased $0.8 millionfrom $(0.4) million for the six months ended June 30, 2000 to$(1.2) million for the six months ended June 30, 2001 as a result of the factors stated above.

* Segment EBITDA*.  Segment negative EBITDA increased$0.8 million from $(0.4) million for the six months endedJune 30, 2000 to $(1.2) million for the six months ended June 30,2001 as a result of the factors statedabove.

         In 2000, we beganoffering Internet advertising sales services with initial focus on streamingmedia advertising.  We developed a salesand technology infrastructure to seek to grow this business as this newadvertising medium appeared to gain momentum. The success of this business is highly dependent upon our ability toreach a sufficient audience and to aggregate, target and accurately measuresuch audience (through still-emerging technologies) in a way that is attractiveto national advertisers.  In additionthere are a number of recent developments which adversely affect streamingmedia advertising.  One such event isrecent claims by two important unions that radio stations who streamadvertising produced by union talent are liable for royalties separate fromthose applicable to the radio broadcast of such advertising.  These claims have led many major radiostation operators to cease streaming of their programming.  Other factors include the current economicslowdown, advertisers’ reluctance to spend advertising funds in non-traditionalmedia given the existing advertising environment, the continued financialchallenges faced by streaming companies and the changing technology needed toaggregate, target and accurately measure streaming audiences.  Due to these factors, we significantlyreduced our Internet advertising sales business in the second quarter of2001.  Starting in June, we estimatethat Internet advertising sales expenses will be approximately $30,000 permonth.  Further, we expect to furtherreduce or eliminate this business entirely in the third quarter of 2001.

**Satellite Services**

* Revenues. *Satellite services revenues decreased$1.4 million, or 46%, from $3.0 million for the six months endedJune 30, 2000 to $1.6 million for the six months endedJune 30, 2001. This decrease was primarily due to:
•$1.2  million decrease in satellite services fees charged to affiliated parties  when one affiliated party ceased its network operations at the end of the  first quarter of 2000 and another affiliated party  made a one-time termination payment in December 2000 for all of  its remaining satellite services commitments; and  •the  termination in January 2000 of a third party satellite services agreement,  which generated $0.2 million in satellite services revenues for the six  months ended June 30, 2000.
*Expenses. *Satellite services expenses decreased$0.3 million, or 11%, from $2.3 million for the six months endedJune 30, 2000 to $2.0 million for the six months endedJune 30, 2001. This decrease is primarily due to cost savingsrealized as a result of the affiliated party ceasing all programming operationsin the first half of 2000.  As a percentage ofsatellite services revenues, satellite services expenses increased from 76% forthe six months ended June 30, 2000 to 125% for the six months endedJune 30, 2001.  Because asignificant portion of the costs of our satellite services is fixed, when wedecrease our utilization of the excess capacity on our Satcom C-3 transponder,the percentage of satellite services expenses in relation to the satelliteservices revenues increases.  Theleasing of capacity on our transponder is subject to a numbers of factors,including cable network demand and general availability of transponderspace.  There can be no assurance thatwe will be successful in leasing our excess satellite transponder capacity.

* Operating Income (Loss)*.  Operatingincome (loss) decreased $1.1 million from an operating income of $0.7 million for the six months endedJune 30, 2000 to an operating loss of $(0.4) million for the six months endedJune 30, 2001 as a result of the factors stated above.

*SegmentEBITDA. *Segment EBITDA decreased $1.2 million,or 44%, from $2.7 million forthe six months ended June 30, 2000, to $1.5 million for the six months endedJune 30, 2001 as a result of the factors stated above.

**Liquidityand Capital Resources**

         Since ourinception, we have incurred net losses, primarily as a result of expensesassociated with developing and launching our programming networks as well asfinancing costs. For the six months ended June 30, 2000 and 2001, weincurred net losses of $(5.2) million and $(11.3) million, respectively.  Net cash provided by (used in) operatingactivities for the six months ended June 30, 2000 and 2001 was$3.6 million and $(3.3) million, respectively.

         Theimplementation of our growth strategies depends on a number of factors,including the availability of cash generated from operations and available cashbalances, and may require additional equity and/or debt financings,particularly to fund any significant cable programming distribution agreementpayments or to make significant acquisitions. The indenture of our 113⁄4% notescurrently permits secured borrowings of up to $20.0 million. Currently, we donot have a credit facility in place.  Wehad cash and cash equivalents and available for sale securities of $12.2million as of June 30, 2001.

         We willcontinue to depend significantly upon the earnings and cash flows of, anddividends and distributions from, our subsidiaries to pay our expenses, meetour obligations and pay interest and principal on our Senior Notes and ourother indebtedness as it may exist from time-to-time. While the terms of thePIN Venture generally require the mutual consent of ourselves and our jointventure partner to distribute or advance funds to ourselves, there are nosignificant contractual restrictions on distributions from our subsidiaries.

         We havetaken a number of steps to help mitigate the challenging advertising marketconditions affecting our businesses in 2001 in an effort to improve ourfinancial results.  Steps taken or inthe process of being taken this year to improve our EBITDA margins and cashflow include:
•A  reduction in our annual salary costs by approximately $2.8 million or 12%  through the winding down of our Internet advertising sales business, the  scaling back of our Internet content efforts, the re-alignment of certain  operational functions in our network radio and cable television businesses,  and through other company-wide initiatives.  •We  have eliminated several unprofitable radio programs over the last 9 months  that no longer fit the company’s longer-term strategy, resulting in annual  EBITDA improvement of approximately $600,000 to $700,000.  •We  have also taken steps to significantly decrease our marketing and promotional  expenditures across all of the Company’s divisions, representing  approximately $2.6 million in 2001 cost savings as compared to our 2001  operating plan.  •In  addition, we have made company-wide reductions in other back-office, travel  and administrative operating expenses.  •And,  with regard to capital expenditures, we have eliminated or delayed the  purchase of capital expenditures totaling approximately $1 million from what  was originally planned in 2001.  
         As aresult of these aggressive cost savings measures, the Company anticipatesrealizing cost reductions (excluding depreciation & amortization) totalingover $9 million for the year in comparison to our 2001 operating plan,representing a cost decrease from plan of 10%.

         Inaddition to these cost reductions, we are also implementing other measures inan effort to improve our EBITDA margins for the second half of the year andinto 2002.  We anticipate such measureswill result in annual EBITDA savings of approximately $1.4 million.

         Based onthese cost reductions and other measures, and assuming there is no significantfurther deterioration in the advertising marketplace beyond what managementcurrently expects, we believe that our cash balances, available for salesecurities and operating cash flow, including the cash flows of and dividendsand distributions from our subsidiaries, will be sufficient to fund ouroperating cash flow requirements through the remainder of 2001, as well as ourJanuary 1, 2002 bond interest payment.
**InvestingActivities**

         For thesix months ended June 30, 2000 and 2001, net cash provided by (usedin) investing activities was $(5.1) million and $0.0 million,respectively.

          Our investing activities for the six monthsended June 30, 2001 consisted primarily of the following:
 •$3.2  million proceeds from the sale of available for sale securities;    •$(1.4)  million in cable programming distribution agreement payments for GAC;    •$(1.5)  million for the purchase of property and equipment; and    •$(0.2)  million to purchase certain radio programs and other intangible assets.
 

         Our investing activities for the sixmonths ended June 30, 2000 consisted primarily of the following:
 •$1.7 million  proceeds from the sale of available for sale securities;    •$(4.9) million in  cable programming distribution agreement payments for GAC;    •$(0.7) million to  purchase certain radio programs; and    •$(1.2) million  for the purchase of property and equipment.
         Totalcapital expenditures for the balance of 2001 are estimated to be approximately$1.2 million, which will be used primarily to upgrade certain cabletelevision and radio related earth station equipment, satellite receivers andto purchase computer hardware and software. Total cable programming distribution agreement payments for GAC for thebalance of 2001 are estimated to be approximately $5.5 million.

**FinancingActivities**

         For the six months endedJune 30, 2000 and 2001, net cash used in financing activities was$(0.3) million and $0 million, respectively.

         Further,we are also currently evaluating other options to increase our liquidity andenable our core businesses to continue to grow the top line and expand theirEBITDA margins longer-term.  Suchoptions include transactions with strategic partners or others, that couldprovide to the Company additional programming, additional distribution for ourprogramming, and/or additional capital. There can be no assurance we will be successful in these efforts or thatfinancing will be available on terms we view as acceptable.

**Guidance for Third Quarter 2001**

         Thefollowing information provided below represents guidance on anticipated operatingresults of the Company and its businesses for the third quarter endingSeptember 30, 2001. The following guidance represents “forward-lookingstatements” within the meaning of the federal securities laws and is subject tothe safe harbor under those laws. Forward-looking statements are not statementsof historical facts, but rather reflect our current expectations as to ourfuture business plans, results of operations and/or financial condition. Ourexpectations for the Company's future necessarily involve a number ofassumptions and estimates, and various risk factors, many of which are beyondour ability to control or predict and that could cause actual results to differmaterially from these expectations. These risk factors include distribution ofour radio and television programming, intense competition in our industry, ourdependence upon earnings and cash flow of our subsidiaries, dependence onadvertising relationships and revenues, our outstanding debt and therestrictions imposed by an indenture governing our existing debt, businessexpansion issues, and the other risks described in the most recent AnnualReport on Form 10-K filed with the SEC. Accordingly, forward-looking statementsare not guarantees of future performance, and should not be unduly relied upon.The forward-looking statements made herein are based on expectations existingon the date of this report, and we assume no obligation to update theseforward-looking statements following the date of such report.
 **3rd  Quarter**  ****  (in thousands)    **Revenues:**     Network Radio$9,700 Cable Television Programming9,100 Internet advertising sales services- Satellite  Services800       Total  Revenues$19,600   **EBITDA ****:**     Network Radio$1,000 Cable Television Programming*500 Satellite Services800 Corporate G&A(500)      Total Core EBITDA$1,800    Internet advertising sales services(100)      Total EBITDA$1,700   *Reflects EBITDA effect net of PIN  minority interest   **Other Disclosures**:     Capital expenditures$800     Cable programming distribution payments$4,400 
**ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK**

         Market risk represents the risk of lossthat may impact our financial position, results of operations, or cash flowsdue to adverse changes in financial market prices. We are exposed to marketrisk through interest rates. This exposure is directly related to our normalfunding and investing activities.

         As of June 30, 2001, none of ourcurrent liabilities was subject to changes in interest rates.

**ITEM 5: OTHER MATERIALLYIMPORTANT EVENTS**

         On August 9, 2001, Standard &Poor's lowered its rating for the Company's senior secured notes as well as theCompany's corporate credit rating of "B" to a rating of "CCCwith a Negative Outlook."

**ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K**
 a)Exhibits    None     b)Reports on Form 8-K    None 
SIGNATURES

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

         JONES MEDIA NETWORKS, LTD.
 By:                   /s/ Jeffery C. Wayne        Jeffery C. Wayne    President         Dated:  August  13, 2001              By:                   /s/ Jay B Lewis        Jay B. Lewis    Group Vice  President/Finance    (Principal Financial  Officer)         Dated:  August 13, 2001