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                                    FORM 10-K
                         ------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
         (Mark One)
            [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                 FOR THE FISCAL YEAR ENDED

                                DECEMBER 31, 1997

                                       OR
            [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                 FOR THE TRANSITION PERIOD FROM  ___________ TO ____________

                        Commission file number 333-30745

                       COMCAST CABLE COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)


                DELAWARE                                       23-2175755
     (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                       Identification No.)

      1105 N. Market Street, Wilmington, Delaware                19801
       (Address of principal executive offices)                (Zip Code)

       Registrant's telephone number, including area code: (302) 427-8991
                        --------------------------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE
                          ----------------------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                      NONE
                          ----------------------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.
               Yes  X                                   No ____
                           --------------------------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K.
                                                          [Not applicable]
                           --------------------------

As of January 30, 1998, there were 1,000 shares of Common Stock outstanding.

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

The Registrant  meets the conditions set forth in General  Instructions  I(1)(a)
and (b) of Form  10-K  and is  therefore  filing  this  form  with  the  reduced
disclosure format.

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

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE

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

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<PAGE>
                       COMCAST CABLE COMMUNICATIONS, INC.
                          1997 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I

Item 1    Business...........................................................1
Item 2    Properties........................................................11
Item 3    Legal Proceedings.................................................11
Item 4    Submission of Matters to a Vote of Security Holders...............11

                                     PART II

Item 5    Market for the Registrant's Common Equity and
              Related Stockholder Matters...................................12
Item 6    Selected Financial Data...........................................12
Item 7    Management's Discussion and Analysis of
              Financial Condition and Results of Operations.................13
Item 8    Financial Statements and Supplementary Data.......................17
Item 9    Changes in and Disagreements with
              Accountants on Accounting and Financial Disclosure............34

                                    PART III

Item 10   Directors and Executive Officers of the Registrant................34
Item 11   Executive Compensation............................................34
Item 12   Security Ownership of Certain Beneficial
              Owners and Management.........................................34
Item 13   Certain Relationships and Related Transactions....................34

                                     PART IV

Item 14   Exhibits, Financial Statement Schedules and Reports
              on Form 8-K...................................................35
SIGNATURES..................................................................37

This Annual  Report on Form 10-K for the year ended  December 31,  1997,  at the
time of  filing  with the  Securities  and  Exchange  Commission,  modifies  and
supersedes  all prior  documents  filed pursuant to Sections 13, 14 and 15(d) of
the  Securities  Exchange Act of 1934 for purposes of any offers or sales of any
securities after the date of such filing pursuant to any Registration  Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference this Annual Report.

This  Annual  Report on Form  10-K  contains  forward  looking  statements  made
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform Act of 1995.  Readers are cautioned that such forward looking  statements
involve  risks and  uncertainties  which  could  significantly  affect  expected
results  in the  future  from  those  expressed  in  any  such  forward  looking
statements  made by, or on behalf of the  Company.  Certain  factors  that could
cause actual  results to differ  materially  include,  without  limitation,  the
effects of  legislative  and  regulatory  changes;  the  potential for increased
competition;  technological  changes; the need to generate substantial growth in
the subscriber base by successfully launching,  marketing and providing services
in  identified  markets;  pricing  pressures  which could affect  demand for the
Company's services; the Company's ability to expand its distribution; changes in
labor, programming, equipment and capital costs; the Company's continued ability
to  create  or  acquire  programming  and  products  that  customers  will  find
attractive;  future  acquisitions,   strategic  partnerships  and  divestitures;
general business and economic conditions;  and other risks detailed from time to
time in the Company's  periodic  reports filed with the  Securities and Exchange
Commission.
<PAGE>
                                     PART I

ITEM 1 BUSINESS

Comcast  Cable  Communications,  Inc.,  a wholly  owned  subsidiary  of  Comcast
Corporation  ("Comcast"),  and  subsidiaries  (the  "Company") is engaged in the
development,  management and operation of hybrid  fiber-coaxial  broadband cable
networks. The Company's systems served approximately 4.4 million subscribers and
passed more than 7.1 million  homes as of December  31,  1997.  The Company is a
Delaware  corporation  organized in 1981 and has its principal executive offices
at 1105 North Market Street, Wilmington, Delaware, 19801, (302) 427-8991.

                        GENERAL DEVELOPMENTS OF BUSINESS

Senior Notes Offering
In May 1997, the Company sold $1.7 billion  principal amount of senior debt with
interest  rates  ranging from 8 1/8% to 8 7/8% and  maturity  dates from 2004 to
2027.  The Company  used the net proceeds  from the  offering to repay  existing
borrowings  by  its  subsidiaries  (see  Note 4 to  the  Company's  consolidated
financial statements).

                      DESCRIPTION OF THE COMPANY'S BUSINESS

Technology and Capital Improvements
The Company's  broadband  networks,  which  receive  signals by means of special
antennae,  microwave relay systems,  earth stations and fiber optic cable lines,
distribute a variety of video, telecommunications and data services to consumers
and businesses.

The Company is continuing to upgrade most of its cable systems,  deploying fiber
optic cable and upgrading the technical  quality of its broadband  network.  The
result is an increase in channel capacity and system  reliability,  facilitating
the delivery of additional video programming and other services such as enhanced
video,   high-speed   Internet   access  and  telephony.   The  Company's  cable
communications  systems have bandwidth  capacities  ranging from 300-MHz to 860-
MHz,  which permits  carriage of 37 to 112 analog  channels.  As of December 31,
1997,  approximately  85% of the  Company's  broadband  network  had at  least a
62-channel  capacity.  During 1997,  the Company began field testing its digital
converter cable service in Southern California.  Digital compression will enable
the Company to increase the channel capacity of its cable communications systems
to more than 100 channels,  as well as to improve picture  quality.  The Company
has entered into  agreements  with suppliers of digital  converters for delivery
commencing in 1998.

In October 1997, the Company  entered into a "social  contract" with the Federal
Communications  Commission ("FCC") (see "Legislation and Regulation").  Pursuant
to this agreement,  the Company has committed that by March 31, 1999, 80% of the
Company's  cable  subscribers  will be served by a system  with a capacity of at
least 550-MHz and at least 60% of the Company's cable subscribers will be served
by a system with a capacity of at least  750-MHz.  In addition,  the Company has
agreed to provide free cable  service  connections,  modems and modem service to
schools  and  to  250  public   libraries  in  communities   where  the  Company
commercially deploys cable modem service to residential customers.

Franchises
Cable  communications  systems are constructed and operated under  non-exclusive
franchises  granted  by  state  or local  governmental  authorities.  Franchises
typically  contain many conditions,  such as time limitations on commencement or
completion of construction; conditions of service, including number of channels,
types of programming  and provision of free services to schools and other public
institutions;  and the  maintenance  of insurance  and  indemnity  bonds.  Cable
franchises are subject to the Cable Communications Policy Act of 1984 (the "1984
Cable Act"),  the Cable  Television  Consumer  Protection and Competition Act of
1992 (the "1992 Cable  Act," and  together  with the 1984 Cable Act,  the "Cable
Acts") and the  Telecommunications Act of 1996 (the "1996 Telecom Act"), as well
as FCC, state and local regulations (see "Legislation and Regulation").

The  Company's  franchises  typically  provide for  periodic  payment of fees to
franchising  authorities of up to 5% of "revenues" (as defined by each franchise
agreement), which fees may generally be passed on to subscribers. Franchises are
generally  non-transferable  without the consent of the governmental  authority.
Many of the Company's  franchises  were granted for an initial term of 15 years.
Although  franchises  historically  have been renewed and, under the Cable Acts,
should continue to be renewed for companies that have provided  adequate service
and have  complied  generally  withfranchise  terms,  renewals  may include less
favorable  terms and conditions.  Furthermore,  the  governmental  authority may
choose to award  additional  franchises  to competing  companies at any time. In
addition, under the 1996 Telecom

<PAGE>

Act,  certain  providers  of  programming  services  may be  exempt  from  local
franchising requirements (see "Competition" and "Legislation and Regulation").

Revenue Sources
The Company's cable communications systems offer varying levels of service for a
monthly fee. These fees may be for a grouping (i.e. "package") of channels (i.e.
"product tier"),  equipment  rentals,  modem services and for other products and
services. Packages of channels may consist of television signals of all national
television networks;  local and distant  independent,  specialty and educational
television  stations;   satellite-delivered   non-broadcast  channels;   locally
originated  programs;   educational  programs;  audio  programming;   electronic
retailing  and public  service  announcements.  The Company  also offers and may
receive  an  additional  monthly  fee  for one or more  premium  services  ("Pay
Cable"),  such  as  Home  Box  Office(R),  Cinemax(R),  Showtime(R),  The  Movie
Channel(TM)  and  Encore(R),   which   generally   offer,   without   commercial
interruption,  feature motion pictures, live and taped sporting events, concerts
and other special  features.  The charge for Pay Cable services  varies with the
type and level of  service  selected  by the  subscriber.  Monthly  service  and
equipment  rates and related charges vary in accordance with the type of service
selected by the  subscriber.  Subscribers  typically  pay on a monthly basis and
generally  may  discontinue   services  at  any  time  (see   "Legislation   and
Regulation").

In addition to recurring monthly  subscription  fees, the Company also generates
revenues from advertising sales, pay-per- view services,  installation services,
commissions from electronic retailing (see Note 6 to the Company's  consolidated
financial statements) and other services.  The Company derives revenues from the
sale of advertising time to local, regional and national advertisers on networks
such as ESPN, MTV and USA.  Pay-per-view  services permit a subscriber to order,
for a separate  fee,  individual  feature  motion  pictures  and  special  event
programs.

In December 1996, the Company began  marketing At Home  Corporation's  ("@Home")
high-speed cable modem services in areas served by certain of its cable systems.
The @Home service  allows  residential  subscribers  to connect  their  personal
computers via cable modems to a new high-speed  national  network  developed and
managed by @Home.  This service enables  subscribers to receive access to online
information,  including the Internet, at faster speeds than that of conventional
or Integrated  Service  Digital Network  ("ISDN")  modems.  For businesses,  the
Company, through @Home, provides a platform for Internet,  intranet and extranet
connectivity  solutions  and  networked  business  applications.  @Home  and the
Company aggregate  content,  sell advertising to businesses and provide services
to @Home  subscribers.  As of December 31, 1997,  the Comcast  @Home service was
available to be marketed to over 865,000  homes in six markets and had more than
9,700 customers.

The Company's sales efforts are primarily directed toward increasing penetration
and  incremental  revenues in its franchise  areas.  The Company sells its cable
communications   services  through   telemarketing,   direct  mail  advertising,
promotional   campaigns,   door-to-door  selling,   local  media  and  newspaper
advertising.

Programming
The Company  generally pays either a monthly fee per subscriber per channel or a
percentage  of  certain   revenues  for  programming   purchased  from  Comcast.
Programming costs increase in the ordinary course of the Company's business as a
result of  increases  in the number of  subscribers,  expansion of the number of
channels  provided to customers and contractual  rate increases from programming
suppliers.  On behalf  of the  Company,  Comcast  seeks  and  secures  long-term
programming  contracts with  suppliers,  some of which provide  volume  discount
pricing structures and/or offer marketing support and incentives to the Company.
The Company's programming contracts are generally for a fixed period of time and
are subject to negotiated renewal.  The Company anticipates that future contract
renewals will result in programming costs exceeding current levels, particularly
for sports programming.

Comcast  charges each of the Company's  subsidiaries  for programming on a basis
which  generally  approximates  the amount  that each such  subsidiary  would be
charged if it purchased such programming directly from the supplier,  subject to
limitations  imposed by debt  facilities for certain  subsidiaries,  and did not
benefit from the purchasing power of Comcast's consolidated operations.

Management Contracts
Comcast, through management agreements,  manages the operations of the Company's
subsidiaries.  The  management  agreements  generally  provide that Comcast will
supervise  the  management  and  operations  of  the  cable  systems  (including
expansions or rebuilding of the Company's  cable  systems),  and arrange for and
supervise (but not necessarily perform

                                      - 2 -
<PAGE>
itself) certain administrative functions. As compensation for such services, the
agreements  provide for Comcast to charge  management  fees of up to 6% of gross
revenues.

Customer Service
The  Company is  currently  consolidating  the  majority  of its local  customer
service call centers into large regional  operations,  consistent with its focus
on  clustering  operations.  These  regional  call centers have  technologically
advanced  telephone systems that provide the capability for 24-hour per day call
answering,  telemarketing  and other  services.  These  centers  will  allow the
Company  to better  serve its  customer  base,  as well as to  cross-market  new
products and services to  subscribers.  As of December 31, 1997,  eight of these
call centers were in operation,  serving  approximately 2.1 million subscribers.
The Company  intends to expand the number of call  centers in operation to 10 in
1998,  bringing  the total  number  of  subscribers  served by a call  center to
approximately 2.6 million by December 31, 1998.  Customer service is provided to
subscribers in the remaining cable systems primarily through local  system-based
representatives.

Company's Systems
The table  below sets forth a summary of Homes  Passed,  Cable  Subscribers  and
Cable Penetration  information for the Company's cable communications systems as
of December 31 (homes and subscribers in thousands):
<TABLE>
<CAPTION>
                                                     1997        1996 (4)       1995       1994 (5)       1993
<S>                                                 <C>          <C>          <C>          <C>          <C>  
Homes Passed (1)                                     7,138        6,975        5,570        5,491        4,211
Cable Subscribers (2)                                4,366        4,280        3,407        3,307        2,648
Cable Penetration (3)                                61.2%        61.4%        61.2%        60.2%        62.9%
---------------
<FN>
(1)  A home is deemed "passed" if it can be connected to the distribution system
     without further extension of the transmission lines.
(2)  A  dwelling  with one or more  television  sets  connected  to a system  is
     counted as one Cable Subscriber.
(3)  Cable Subscribers as a percentage of Homes Passed.
(4)  In November 1996, the Company acquired the cable  television  operations of
     The E.W. Scripps Company.
(5)  In December 1994, the Company acquired the US cable  television  operations
     of Maclean Hunter Limited.
</FN>
</TABLE>

System Clusters
The Company  manages  the  majority  of its  systems in  geographic  clusters to
increase operating  efficiencies.  Clustering permits an increased emphasis upon
more uniform,  efficient  and cost  effective  delivery of customer  service and
support. The following table is a summary of Homes Passed, Cable Subscribers and
Cable  Penetration  for the  Company's  ten largest  regional  cable  television
clusters as of December 31, 1997 (homes and subscribers in thousands):

Geographic Cluster          Homes       Cable      Cable
                           Passed   Subscribers  Penetration
New Jersey                  940.0       596.6      63.5%
Florida                     912.9       553.0      60.6%
Michigan                    964.9       492.3      51.0%
Baltimore Area              661.7       453.2      68.5%
Philadelphia Area           499.7       302.9      60.6%
Southern California         508.6       271.9      53.5%
Tennessee                   426.7       262.1      61.4%
Sacramento                  458.2       236.1      51.5%
Indianapolis                365.8       227.7      62.2%
Alabama                     315.8       210.5      66.7%
                          -------     -------  
                          6,054.3     3,606.3      59.6%
Other Systems             1,083.8       759.9      70.1%
                          -------     -------  

Total                     7,138.1     4,366.2      61.2%
                          =======     =======  

Competition
Cable  communications  systems  face  competition  from  alternative  methods of
receiving and  distributing  television  signals and from other sources of news,
information and entertainment such as off-air television broadcast programming,

                                      - 3 -
<PAGE>
newspapers,  movie theaters,  live sporting events,  interactive online computer
services and home video products,  including videotape cassette  recorders.  The
extent to which a cable  communications  system is competitive depends, in part,
upon the cable system's ability to provide,  at a reasonable price to consumers,
a greater  variety of  programming  and other  communications  services than are
available  off-air  or  through  other  alternative  delivery  sources  and upon
superior technical performance and customer service.

The 1996 Telecom Act makes it easier for local  exchange  carriers  ("LECs") and
others to provide to  subscribers a wide variety of video  services  competitive
with services  provided by cable systems.  Various LECs are currently  providing
video  services  within and outside  their  telephone  service  areas  through a
variety of  distribution  methods,  including the deployment of broadband  cable
networks and the use of wireless transmission facilities. LECs in various states
have either  announced  plans,  obtained local franchise  authorizations  or are
currently competing with certain of the Company's cable communications  systems.
An affiliate of Ameritech Corporation  ("Ameritech") has obtained  approximately
13 cable franchises in its telephone  service areas that are currently served by
the Company and competes  directly  with the Company to provide  video and other
broadband  services  to  subscribers.  LECs and  other  companies  also  provide
facilities  for the  transmission  and  distribution  to homes and businesses of
interactive computer-based services, including the Internet, as well as data and
other  non-video  services.  Cable  systems  could be  placed  at a  competitive
disadvantage if the delivery of video and interactive  online computer  services
by  LECs  becomes  widespread  since  LECs  are  not  required,   under  certain
circumstances,  to obtain local  franchises to deliver such video services or to
comply with the variety of  obligations  imposed upon cable  systems  under such
franchises.  Issues of  cross-subsidization by LECs of video, data and telephony
services  also pose  strategic  disadvantages  for cable  operators  seeking  to
compete with LECs which provide such  services.  The Company  cannot predict the
likelihood of success of such video or broadband service ventures by LECs or the
impact  on the  Company  of such  competitive  ventures  (see  "Legislation  and
Regulation").

Cable  communications  systems  operate  pursuant  to  franchises  granted  on a
non-exclusive basis. The 1992 Cable Act prohibits  franchising  authorities from
unreasonably denying requests for additional  franchises and permits franchising
authorities to operate cable systems.  Well-financed businesses from outside the
cable industry (such as public  utilities that own certain of the poles to which
cable is  attached)  may become  competitors  for  franchises  or  providers  of
competing services (see "Legislation and Regulation").

Congress has enacted  legislation  and the FCC has adopted  regulatory  policies
providing  a  more  favorable   operating   environment  for  new  and  existing
technologies  that  provide,  or have  the  potential  to  provide,  substantial
competition to cable systems.  These technologies include,  among others, Direct
Broadcast Satellite ("DBS") service whereby signals are transmitted by satellite
to receiving  facilities located on customer premises.  Programming is currently
available to individual households, condominiums, apartment and office complexes
through conventional,  medium and high-power satellites. DBS providers can offer
more  than 100  channels  to their  subscribers.  Several  major  companies  are
offering  or  are  currently  developing  nationwide  high-power  DBS  services,
including  DirecTV,   EchoStar  Communications   Corporation  and  American  Sky
Broadcasting   LLC   ("ASkyB").    Additionally,    Primestar   Partners,   L.P.
("Primestar"), a DBS provider in which Comcast holds a 10.4% general and limited
partnership interest, offers video programming from a medium-power DBS satellite
system.  DBS systems use video  compression  technology  to increase the channel
capacity  of their  systems  to provide  movies,  broadcast  stations  and other
program services comparable to those of cable systems. Digital satellite service
("DSS")  offered by DBS  systems  currently  has certain  advantages  over cable
systems with respect to  programming  capacity and digital  quality,  as well as
certain current  disadvantages that include high up-front customer equipment and
installation  costs and a lack of local  programming  and  service.  The FCC and
Congress  are  presently  considering  proposals  to enhance  the ability of DBS
providers to gain access to additional programming and to authorize DBS carriers
to transmit local signals to local markets.

The  availability  of  reasonably-priced  home  satellite  dish  earth  stations
("HSDs")   also   enables   individual   households   to  receive  many  of  the
satellite-delivered   program   services   formerly   available  only  to  cable
subscribers.  Furthermore, the 1992 Cable Act contains provisions, which the FCC
has implemented with regulations, to enhance the ability of cable competitors to
purchase and make  available  to HSD owners  certain  satellite-delivered  cable
programming  at  competitive  costs.  The 1996  Telecom Act and FCC  regulations
implementing that law preempt certain local  restrictions on the use of HSDs and
roof-top antennae to receive satellite programming and over-the-air broadcasting
services (see "Legislation and Regulation").

Cable  operators  face  additional  competition  from private  satellite  master
antenna  television  ("SMATV")  systems that serve  condominiums,  apartment and
office complexes and private residential developments. The 1996 Telecom Act

                                      - 4 -
<PAGE>
broadens  the  definition  of SMATV  systems  not  subject  to  regulation  as a
franchised  cable  communications  service.  SMATV  systems  offer both improved
reception of local television stations and many of the same  satellite-delivered
programming services offered by franchised cable communications  systems.  SMATV
operators  often  enter  into  exclusive  agreements  with  building  owners  or
homeowners'  associations,  although  some states have  enacted  laws to provide
franchised  cable systems access to such private  complexes.  The 1984 Cable Act
also gives a franchised  cable  operator  the right to use  existing  compatible
easements within its franchise area under certain circumstances. These laws have
been challenged in the courts with varying results. In addition,  some companies
are developing and/or offering packages of telephony, data and video services to
private residential and commercial  developments.  The ability of the Company to
compete for  subscribers in residential  and commercial  developments  served by
SMATV operators is uncertain.  The Company is developing competitive packages of
services (video, data and telephony) to offer to such developments.

Cable  communications  systems also compete with wireless  program  distribution
services such as multichannel,  multipoint  distribution services ("MMDS") which
use low-power microwave  frequencies to transmit video programming  over-the-air
to subscribers.  There are MMDS operators which are authorized to provide or are
providing broadcast and satellite  programming to subscribers in areas served by
the  Company's  cable  systems.   Additionally,   the  FCC  adopted  regulations
allocating  frequencies in the 28-GHz band for a new multichannel wireless video
service called Local Multipoint Distribution Service ("LMDS") that is similar to
MMDS.  The FCC initiated  spectrum  auctions for LMDS licenses in February 1998.
The Company is unable to predict  whether  wireless  video  services will have a
material impact on its operations.

Competition in the online  services area is significant.  Recently,  a number of
large  corporations  in  the   telecommunications   and  technology  industries,
including the Regional Bell  Operating  Companies  ("RBOCs"),  GTE  Corporation,
Microsoft  Corporation,  Compaq  Computer  Corporation  and  Intel  Corporation,
announced  the  formation of a working  group to  accelerate  the  deployment of
Asymmetric Digital Subscriber Line ("ADSL")  technology.  It is anticipated that
ADSL  technology  will allow Internet  access at peak data  transmission  speeds
equal to or  greater  than that of modems  over  conventional  telephone  lines.
Several   RBOCs   have   recently   requested   the  FCC  to  fully   deregulate
packet-switched  networks to allow it to provide high-speed  broadband services,
including online services, without regard to present Local Access Transport Area
("LATA") boundaries and other regulatory restrictions. Competitors in the online
services area include existing Internet service  providers,  LECs, long distance
carriers  and  others,  many of whom have more  substantial  resources  than the
Company.  The Company  cannot  predict the  likelihood  of success of the online
services  offered by the Company's  competitors  or the impact on the Company of
such competitive ventures.

Other  new  technologies  may  become   competitive  with  services  that  cable
communications  systems can offer. The FCC has authorized  television  broadcast
stations to transmit  textual and graphic  information  useful both to consumers
and businesses.  The FCC also permits  commercial and non-commercial FM stations
to use their subcarrier  frequencies to provide non-broadcast services including
data  transmissions.  The FCC established an over-the-air  Interactive Video and
Data  Service  that  will  permit  two-way   interaction   with  commercial  and
educational  programming along with  informational  and data services.  Personal
communications services ("PCS") license holders,  including cable operators, are
able to provide competitive voice and data services.

Advances in communications  technology as well as changes in the marketplace and
the regulatory and legislative environment are constantly occurring. Thus, it is
not  possible to predict the effect that  ongoing or future  developments  might
have on the cable communications industry or on the operations of the Company.

                           LEGISLATION AND REGULATION

The Cable Acts and the 1996 Telecom Act amended the  Communications  Act of 1934
(as amended,  the  "Communications  Act") and  established a national  policy to
guide the development  and regulation of cable systems.  The 1996 Telecom Act is
the most comprehensive reform of the nation's  telecommunications laws since the
Communications  Act.  Although the long-term  goal of the 1996 Telecom Act is to
promote   competition   and  decrease   regulation  of  various   communications
industries, in the short-term the law delegates to the FCC (and in some cases to
the  states)  broad  new  rulemaking  authority.  Principal  responsibility  for
implementing  the  policies  of the  Cable  Acts  and the  1996  Telecom  Act is
allocated  between the FCC and state or local franchising  authorities.  The FCC
and state regulatory  agencies are required to conduct  numerous  rulemaking and
regulatory  proceedings to implement the 1996 Telecom Act, and such  proceedings
may  materially  affect the cable  communications  industry.  The following is a
summary of federal laws and

                                      - 5 -
<PAGE>

regulations   materially  affecting  the  growth  and  operation  of  the  cable
communications industry and a description of certain state and local laws.

Rate Regulation
The 1992 Cable Act authorized rate regulation for cable communications  services
and equipment in communities that are not subject to "effective competition," as
defined by federal  law.  Most cable  communications  systems are now subject to
rate  regulation for basic cable service and equipment by local  officials under
the oversight of the FCC, which has prescribed  detailed  criteria for such rate
regulation. The 1992 Cable Act also requires the FCC to resolve complaints about
rates for cable  programming  service tiers  ("CPSTs")  (other than  programming
offered on a per channel or per program basis,  which programming is not subject
to rate regulation) and to reduce any such rates found to be  unreasonable.  The
1996  Telecom  Act  eliminates  the  right  of  individuals  to file  CPST  rate
complaints  with the FCC and  requires  the FCC to issue a final order within 90
days after receipt of CPST rate complaints  filed by any franchising  authority.
The 1992 Cable Act limits the ability of cable television systems to raise rates
for basic and certain cable programming services  (collectively,  the "Regulated
Services").

FCC  regulations  govern rates that may be charged to subscribers  for Regulated
Services.  The FCC uses a  benchmark  methodology  as the  principal  method  of
regulating rates for Regulated  Services.  Cable operators are also permitted to
justify rates using a cost-of-service  methodology,  which contains a rebuttable
presumption of an industry-wide 11.25% after tax rate of return on an operator's
allowable rate base. Franchising authorities are empowered to regulate the rates
charged  for  monthly  basic  service,   for  additional  outlets  and  for  the
installation,  lease and sale of equipment  used by  subscribers  to receive the
basic cable service tier, such as converter boxes and remote control units.  The
FCC's rules require franchising authorities to regulate these rates on the basis
of actual cost plus a reasonable  profit, as defined by the FCC. Cable operators
required  to  reduce  rates may also be  required  to  refund  overcharges  with
interest.  In July 1994, the Company reduced rates for Regulated Services in the
majority of its cable systems to comply with the FCC's regulations.  The FCC has
also adopted  comprehensive and restrictive  regulations  allowing  operators to
modify  their  regulated  rates on a quarterly  or annual  basis  using  various
methodologies  that  account  for changes in the number of  regulated  channels,
inflation and increases in certain  external costs,  such as franchise and other
governmental fees, copyright and retransmission consent fees, taxes, programming
fees and franchise-related  obligations.  The Company cannot predict whether the
FCC will modify these "going forward" regulations in the future.

The 1996  Telecom Act  provides  for rate  deregulation  of CPSTs by March 1999,
although  legislation  has  been  proposed  to  extend  the  regulatory  period.
Deregulation  will occur sooner for systems in markets  where  comparable  video
programming services,  other than DBS, are offered by local telephone companies,
or their  affiliates,  or by third parties using the local  telephone  company's
facilities, or where "effective competition" is established under the 1992 Cable
Act. The 1996 Telecom Act also  modifies the uniform rate  provision of the 1992
Cable Act by prohibiting  regulation of nonpredatory bulk discount rates offered
to subscribers in commercial and residential  developments and permits regulated
equipment  rates to be  computed by  aggregating  costs of broad  categories  of
equipment at the franchise, system, regional or company level.

In December 1995, the FCC adopted an order approving a negotiated  settlement of
CPST rate complaints  pending against the Company which provided $6.6 million in
refunds,  plus  interest,  given in the form of bill credits during 1996, to 1.3
million of the Company's  cable  subscribers.  The FCC and the Company  recently
negotiated  a "social  contract"  in which the  Company  committed  to  complete
certain system  upgrades and  improvements  by March 1999 in return for which it
may move a limited number of currently regulated programming services in certain
cable systems to a single  migrated  product tier on each system that may become
an  unregulated  new product tier after December 1997 (see  "Description  of the
Company's  Businesses - Technology  and Capital  Improvements").  The Company is
also  currently in  negotiations  to settle  pending  proceedings  involving the
Company's  basic  service  rates in certain of its  systems.  While the  Company
cannot  predict  the  outcome of this  action,  the  Company  believes  that the
ultimate  resolution of this proceeding will not have a material  adverse impact
on the Company's financial position, results of operations or liquidity.

"Anti-Buy Through" Provisions
The 1992 Cable Act  requires  cable  systems to permit  subscribers  to purchase
video  programming  offered by the  operator  on a per  channel or a per program
basis without the necessity of  subscribing  to any tier of service,  other than
the basic cable service tier, unless the system's lack of addressable  converter
boxes  or  other  technological  limitations  do not  permit  it to do  so.  The
statutory  exemption  for  cable  systems  that do not  have  the  technological
capability  to offer  programming  in the  manner  required  by the  statute  is
available until a system obtains such capability, but not later than December

                                      - 6 -
<PAGE>
2002.  The FCC may waive such time  periods,  if deemed  necessary.  Many of the
Company's systems do not have the technological  capability to offer programming
in the  manner  required  by the  statute  and thus are  currently  exempt  from
complying with the requirement.

Must Carry/Retransmission Consent
The 1992 Cable Act contains  broadcast signal carriage  requirements  that allow
local commercial  television  broadcast stations to elect once every three years
to require a cable system to carry the station,  subject to certain  exceptions,
or to  negotiate  for  "retransmission  consent" to carry the  station.  A cable
system generally is required to devote up to one-third of its activated  channel
capacity for the carriage of local commercial  television  stations  pursuant to
the requirements of the 1992 Cable Act. Local non-commercial television stations
are also given mandatory carriage rights;  however,  such stations are not given
the option to negotiate retransmission consent for the carriage of their signals
by  cable   systems.   Additionally,   cable  systems  are  required  to  obtain
retransmission  consent for all "distant" commercial television stations (except
for commercial  satellite-delivered  independent  "superstations"  such as WGN),
commercial radio stations and certain low-power  television  stations carried by
such systems.  In March 1997,  the United States ("US") Supreme Court upheld the
constitutional  validity  of the 1992  Cable  Act's  mandatory  signal  carriage
requirements.  The FCC will conduct a  rulemaking  in the future to consider the
requirements,  if any, for mandatory carriage of digital television signals. The
Company cannot  predict the ultimate  outcome of such a rulemaking or the impact
of new carriage requirements on the Company or its business.

Designated Channels
The  Communications  Act  permits  franchising   authorities  to  require  cable
operators to set aside certain channels for public, educational and governmental
access  programming.  The 1984 Cable Act also requires a cable system with 36 or
more  channels to  designate a portion of its channel  capacity  for  commercial
leased  access by third  parties to provide  programming  that may compete  with
services  offered by the cable operator.  The FCC has adopted rules  regulating:
(i) the maximum  reasonable  rate a cable operator may charge for commercial use
of the designated channel capacity; (ii) the terms and conditions for commercial
use of such channels;  and (iii) the procedures for the expedited  resolution of
disputes concerning rates or commercial use of the designated channel capacity.

Franchise Procedures
The 1984 Cable Act affirms the right of franchising authorities (state or local,
depending on the practice in individual  states) to award one or more franchises
within their  jurisdictions and prohibits  non-grandfathered  cable systems from
operating  without  a  franchise  in such  jurisdictions.  The  1992  Cable  Act
encourages   competition   with   existing   cable   systems  by  (i)   allowing
municipalities  to operate  their own cable  systems  without  franchises;  (ii)
preventing  franchising  authorities from granting exclusive  franchises or from
unreasonably  refusing to award additional franchises covering an existing cable
system's  service area;  and (iii)  prohibiting  (with limited  exceptions)  the
common ownership of cable systems and co-located MMDS or SMATV systems.  The FCC
has relaxed its  restrictions  on ownership  of SMATV  systems to permit a cable
operator to acquire SMATV systems in the operator's  existing  franchise area so
long as the programming  services  provided through the SMATV system are offered
according to the terms and conditions of the cable  operator's  local  franchise
agreement.  The 1996 Telecom Act provides that the  cable/SMATV  and  cable/MMDS
cross-ownership  rules do not apply in any  franchise  area  where the  operator
faces "effective competition" as defined by federal law.

The Cable Acts also  provide  that in  granting or  renewing  franchises,  local
authorities  may  establish   requirements  for  cable-related   facilities  and
equipment,  but not for video programming or information  services other than in
broad  categories.  The Cable Acts limit the payment of franchise  fees to 5% of
revenues  derived from cable  operations and permit the cable operator to obtain
modification of franchise  requirements  by the franchise  authority or judicial
action if warranted by changed circumstances. The Company's franchises typically
provide for periodic  payment of fees to franchising  authorities of up to 5% of
"revenues" (as defined by each franchise agreement), which fees may be passed on
to subscribers. Recently, a federal appellate court held that a cable operator's
gross revenue includes all revenue received from subscribers, without deduction,
and overturned an FCC order which had held that a cable operator's gross revenue
does not include money collected from subscribers that is allocated to pay local
franchise  fees.  The Company  cannot  predict the ultimate  resolution of these
matters. The 1996 Telecom Act generally prohibits  franchising  authorities from
(i)  imposing  requirements  in the  cable  franchising  process  that  require,
prohibit  or  restrict  the  provision  of  telecommunications  services  by  an
operator, (ii) imposing franchise fees on revenues derived by the operator from
providing   telecommunications   services  over  its  cable  system,   or  (iii)
restricting  an  operator's   use  of  any  type  of  subscriber   equipment  or
transmission technology.

                                      - 7 -
<PAGE>
The 1984 Cable Act contains  renewal  procedures  designed to protect  incumbent
franchisees  against  arbitrary  denials  of  renewal.  The 1992  Cable Act made
several  changes  to the  renewal  process  which  could  make it  easier  for a
franchising  authority  to deny  renewal.  Moreover,  even if the  franchise  is
renewed,  the  franchising  authority  may seek to impose  new and more  onerous
requirements  such  as  significant  upgrades  in  facilities  and  services  or
increased franchise fees as a condition of renewal.  Similarly, if a franchising
authority's  consent is required  for the  purchase or sale of a cable system or
franchise,  such  authority  may  attempt to impose more  burdensome  or onerous
franchise   requirements   in  connection  with  a  request  for  such  consent.
Historically,  franchises  have  been  renewed  for  cable  operators  that have
provided  satisfactory  services  and  have  complied  with  the  terms of their
franchises.  The Company  believes  that it has  generally  met the terms of its
franchises and has provided quality levels of service.  The Company  anticipates
that its future franchise renewal prospects generally will be favorable.

Various courts have considered  whether  franchising  authorities have the legal
right to limit the number of franchises awarded within a community and to impose
certain  substantive  franchise  requirements  (e.g. access channels,  universal
service  and  other   technical   requirements).   These   decisions  have  been
inconsistent and, until the US Supreme Court rules  definitively on the scope of
cable  operators' First Amendment  protections,  the legality of the franchising
process generally and of various specific franchise requirements is likely to be
in a state of flux.

Ownership Limitations
Pursuant  to the 1992 Cable Act,  the FCC  adopted  rules  prescribing  national
subscriber limits and limits on the number of channels that can be occupied on a
cable system by a video  programmer  in which the  operator has an  attributable
interest.  The  effectiveness of these FCC horizontal  ownership limits has been
stayed  because a federal  district  court found the statutory  limitation to be
unconstitutional.  An appeal of that decision has been consolidated with appeals
challenging the FCC's regulatory ownership restrictions and is pending. The 1996
Telecom  Act  eliminates  the  statutory  prohibition  on the common  ownership,
operation or control of a cable system and a television broadcast station in the
same  service area and directs the FCC to review its  broadcast-cable  ownership
restrictions.  Pursuant  to the  mandate  of  the  1996  Telecom  Act,  the  FCC
eliminated its regulatory  restriction on  cross-ownership  of cable systems and
national  broadcasting networks and has initiated a formal inquiry to review its
broadcast-cable cross-ownership restriction.

LEC Ownership of Cable Systems
The 1996 Telecom Act made  far-reaching  changes in the  regulation of LECs that
provide cable services.  The 1996 Telecom Act eliminated  federal legal barriers
to  competition  in the local  telephone  and cable  communications  businesses,
preempted  legal barriers to competition  that  previously  existed in state and
local laws and regulations,  and set basic standards for  relationships  between
telecommunications  providers.  The 1996 Telecom Act  eliminated  the  statutory
telephone company/cable television cross-ownership prohibition, thereby allowing
LECs to offer video services in their telephone  service areas. LECs may provide
service as traditional  cable operators with local franchises or they may opt to
provide their  programming over  unfranchised  "open video systems,"  subject to
certain  conditions,  including,  but not limited to, setting aside a portion of
their  channel  capacity  for  use by  unaffiliated  program  distributors  on a
non-discriminatory basis. The 1996 Telecom Act generally limits acquisitions and
prohibits  certain joint ventures  between LECs and cable  operators in the same
market.  The  FCC  adopted   regulations   implementing  the  1996  Telecom  Act
requirement that LECs open their telephone  networks to competition by providing
competitors  interconnection,  access to unbundled  network  elements and retail
services at wholesale rates.  Numerous parties appealed these  regulations.  The
U.S.  Court  of  Appeals  for  the  Eighth  Circuit,   where  the  appeals  were
consolidated,  recently vacated key portions of the FCC's regulations, including
the FCC's pricing and nondiscrimination rules. In January 1998, the U.S. Supreme
Court agreed to review the Eighth Circuit's decision. The Company cannot predict
the outcome of this litigation or the FCC  rulemakings,  and the ultimate impact
of any  final  FCC  regulations  on the  Company  or its  businesses  cannot  be
determined at this time.

Pole Attachment
The  Communications  Act  requires  the FCC to  regulate  the  rates,  terms and
conditions  imposed by public  utilities for cable  systems' use of utility pole
and conduit space unless state  authorities can demonstrate that they adequately
regulate pole  attachment  rates,  as is the case in certain states in which the
Company operates.  In the absence of state regulation,  the FCC administers pole
attachment  rates on a formula  basis.  In some cases,  utility  companies  have
increased pole attachment fees for cable systems that have installed fiber optic
cables  and that  are  using  such  cables  for the  distribution  of  non-video
services. The FCC has concluded that, in the absence of state regulation, it has
jurisdiction to determine  whether utility companies have justified their demand
for  additional  rental  fees and that the  Communications  Act does not  permit
disparate  rates  based  on the type of  service  provided  over  the  equipment
attached to the utility's pole. The

                                      - 8 -
<PAGE>
FCC's existing pole attachment rate formula,  which may be modified by a pending
rulemaking,  governs  charges for utilities for  attachments by cable  operators
providing only cable services.  The 1996 Telecom Act and the FCC's  implementing
regulations modify the current pole attachment  provisions of the Communications
Act by immediately  permitting certain providers of telecommunications  services
to rely upon the  protections of the current law and by requiring that utilities
provide cable  systems and  telecommunications  carriers with  nondiscriminatory
access to any pole, conduit or right-of-way  controlled by the utility.  The FCC
recently adopted new regulations to govern the charges for pole attachments used
by companies providing  telecommunications  services, including cable operators.
These new pole attachment  rate  regulations  will become  effective in February
2001. Any resulting  increase in attachment rates will be phased in equal annual
increments  over a period of five years beginning in February 2001. The ultimate
impact  of any  revised  FCC rate  formula  or of any new pole  attachment  rate
regulations on the Company or its businesses cannot be determined at this time.

Other Statutory Provisions
The 1992  Cable Act,  the 1996  Telecom  Act and FCC  regulations  preclude  any
satellite video  programmer  affiliated  with a cable company,  or with a common
carrier providing video programming  directly to its subscribers,  from favoring
an affiliated  company over  competitors  and requires such  programmers to sell
their programming to other  multichannel  video  distributors.  These provisions
limit the ability of program  suppliers  affiliated with cable companies or with
common carriers  providing  satellite-delivered  video  programming  directly to
their  subscribers  to  offer  exclusive   programming   arrangements  to  their
affiliates. In December 1997, the FCC initiated a rulemaking to address a number
of possible  changes to its program access rules.  Among the issues on which the
FCC has sought comment is whether the FCC has jurisdiction to extend its program
access rules to terrestrially-delivered  programming,  such as Comcast SportsNet
(a 24-hour  regional sports  programming  network in which Comcast holds a 46.4%
equity  interest),  and if it does have  such  jurisdiction,  whether  it should
expand the rules in this fashion.  This rulemaking is pending at the FCC and the
Company cannot predict the ultimate outcome of this proceeding.

The 1992 Cable Act  requires  cable  operators to block fully both the video and
audio portion of sexually explicit or indecent  programming on channels that are
primarily  dedicated to sexually oriented  programming or alternatively to carry
such programming only at "safe harbor" time periods currently defined by the FCC
as the hours  between 10 p.m. to 6 a.m.  The  Communications  Act also  includes
provisions,  among others, concerning horizontal and vertical ownership of cable
systems,  customer  service,  subscriber  privacy,  marketing  practices,  equal
employment opportunity, obscene or indecent programming, regulation of technical
standards and equipment compatibility.

Other FCC Regulations
The FCC  recently  revised  its  cable  inside  wiring  rules to  provide a more
specific  procedure for the disposition of internal cable wiring that belongs to
an incumbent  cable operator that is forced to terminate its cable services in a
multiple  dwelling unit ("MDU")  building by the building owner. The FCC is also
considering additional rules relating to MDU inside wiring that, if adopted, may
disadvantage   incumbent  cable  operators.   The  FCC  has  various  rulemaking
proceedings  pending  that will  implement  the 1996  Telecom  Act;  it also has
adopted  regulations  implementing  various provisions of the 1992 Cable Act and
the  1996   Telecom   Act  that  are  the   subject  of   petitions   requesting
reconsideration  of various  aspects of its  rulemaking  proceedings.  There are
other FCC  regulations  covering  such  areas as equal  employment  opportunity,
syndicated  program  exclusivity,   network  program   non-duplication,   closed
captioning of video programming,  registration of cable systems,  maintenance of
various  records  and  public  inspection  files,   microwave  frequency  usage,
origination  cablecasting  and  sponsorship  identification,  antenna  structure
notification,   marking  and  lighting,   carriage  of  local  sports  broadcast
programming, application of rules governing political broadcasts, limitations on
advertising  contained  in  non-broadcast   children's   programming,   consumer
protection and customer  service,  indecent  programming,  programmer  access to
cable systems, programming agreements, technical standards, consumer electronics
equipment  compatibility  and DBS  implementation.  The FCC has the authority to
enforce its  regulations  through  the  imposition  of  substantial  fines,  the
issuance  of  cease  and  desist   orders   and/or  the   imposition   of  other
administrative  sanctions,  such as the  revocation  of FCC  licenses  needed to
operate  certain  transmission  facilities  often used in connection  with cable
operations.

Other bills and administrative proposals pertaining to cable communications have
previously  been  introduced  in Congress or  considered  by other  governmental
bodies over the past several years. It is probable that further attempts will be
made by Congress and other  governmental  bodies  relating to the  regulation of
communications services.

                                      - 9 -
<PAGE>
Copyright
Cable communications systems are subject to federal copyright licensing covering
carriage of  television  and radio  broadcast  signals.  In exchange  for filing
certain  reports and  contributing  a percentage of their  revenues to a federal
copyright  royalty  pool,  cable  operators  can obtain  blanket  permission  to
retransmit  copyrighted  material on broadcast signals. The nature and amount of
future payments for broadcast  signal carriage cannot be predicted at this time.
In a report to Congress,  the Copyright  Office  recommended  that Congress make
major revisions to both the cable television and satellite  compulsory  licenses
to make them as simple as possible to administer,  to provide  copyright  owners
with  full  compensation  for  the  use  of  their  works,  and to  treat  every
multichannel  video  delivery  system  the  same,  except  to  the  extent  that
technological  differences or differences in the regulatory  burdens placed upon
the  delivery  system  justify  different  copyright  treatment.   The  possible
simplification,  modification or elimination of the compulsory copyright license
is the subject of continuing  legislative review. The elimination or substantial
modification  of  the  cable  compulsory  license  could  adversely  affect  the
Company's  ability  to  obtain  suitable  programming  and  could  substantially
increase the cost of programming that remains  available for distribution to the
Company's   subscribers.   The  Company  cannot  predict  the  outcome  of  this
legislative activity.

Cable operators distribute programming and advertising that use music controlled
by  the  two  principal  major  music  performing  rights   organizations,   the
Association  of  Songwriters,  Composers,  Artists and  Producers  ("ASCAP") and
Broadcast Music, Inc. ("BMI"). In October 1989, the special rate court of the US
District  Court for the Southern  District of New York imposed  interim rates on
the cable  industry's use of  ASCAP-controlled  music. The same federal district
court  established  a  special  rate  court  for  BMI.  BMI and  cable  industry
representatives  concluded  negotiations  for  a  standard  licensing  agreement
covering  the  performance  of BMI  music  contained  in  advertising  and other
information  inserted by operators into cable  programming  and on certain local
access  and  origination  channels  carried  on  cable  systems.  The  Company's
settlement with BMI did not have a significant impact on the Company's financial
position,   results  of  operations  or  liquidity.  ASCAP  and  cable  industry
representatives  have met to discuss  the  development  of a standard  licensing
agreement  covering  ASCAP-controlled  music in  local  origination  and  access
channels and pay-per- view programming.  Although the Company cannot predict the
ultimate  outcome of these  industry  negotiations  or the amount of any license
fees it may be  required  to pay for past  and  future  use of  ASCAP-controlled
music,  it does  not  believe  such  license  fees  will be  significant  to the
Company's financial position, results of operations or liquidity.

State and Local Regulation
Because a cable  communications  system uses local  streets  and  rights-of-way,
cable  systems  are  subject to state and local  regulation,  typically  imposed
through the franchising  process.  Cable  communications  systems  generally are
operated pursuant to non-exclusive franchises,  permits or licenses granted by a
municipality or other state or local government entity. Franchises generally are
granted for fixed terms and in many cases are terminable if the franchisee fails
to comply with material provisions.  The terms and conditions of franchises vary
materially from jurisdiction to jurisdiction.  Each franchise generally contains
provisions governing cable service rates, franchise fees, franchise term, system
construction and maintenance  obligations,  system channel capacity,  design and
technical  performance,  customer service standards,  franchise renewal, sale or
transfer of the franchise,  territory of the franchisee,  indemnification of the
franchising  authority,  use and occupancy of public  streets and types of cable
services provided.  A number of states subject cable  communications  systems to
the  jurisdiction  of centralized  state  governmental  agencies,  some of which
impose regulation of a character  similar to that of a public utility.  Attempts
in other states to regulate cable communications  systems are continuing and can
be expected to increase.  To date,  those  states in which the Company  operates
that have enacted such state level  regulation are  Connecticut,  New Jersey and
Delaware.  State and local franchising  jurisdiction is not unlimited,  however,
and  must be  exercised  consistently  with  federal  law.  The 1992  Cable  Act
immunizes  franchising  authorities  from monetary  damage  awards  arising from
regulation  of cable  communications  systems  or  decisions  made on  franchise
grants, renewals, transfers and amendments.

The  foregoing  does not purport to describe all present and  proposed  federal,
state, and local regulations and legislation affecting the cable industry. Other
existing federal regulations,  copyright licensing,  and, in many jurisdictions,
state and local  franchise  requirements,  are currently the subject of judicial
proceedings,  legislative  hearings  and  administrative  proposals  which could
change,  in varying degrees,  the manner in which cable  communications  systems
operate.  Neither the  outcome of these  proceedings  nor their  impact upon the
cable communications industry or the Company can be predicted at this time.

                                     - 10 -
<PAGE>
                                    EMPLOYEES

As of December 31, 1997,  the Company had  approximately  8,200  employees.  The
Company believes that its relationships with its employees are good.

ITEM 2 PROPERTIES

The principal  physical  assets of a cable  communications  system  consist of a
central receiving apparatus,  distribution cables, converters, regional customer
service call centers and local business offices.  The Company owns or leases the
receiving and distribution  equipment for each system and owns or leases parcels
of real property for the receiving sites, regional customer service call centers
and local  business  offices.  The physical  components of cable  communications
systems require  maintenance and periodic  upgrading and rebuilding to keep pace
with technological advances.

The Company's  management believes that substantially all of its physical assets
are in good operating condition.

ITEM 3 LEGAL PROCEEDINGS

The  Company is  subject to legal  proceedings  and  claims  which  arise in the
ordinary  course of its business.  In the opinion of  management,  the amount of
ultimate  liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of the Company.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Information  for this  Item is  omitted  pursuant  to  Securities  and  Exchange
Commission ("SEC") General Instruction I to Form 10-K.

                                     - 11 -
<PAGE>
                                     PART II

ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
       MATTERS

Common Stock

Absence of Trading Market
The common stock of the Company is not publicly traded.  Therefore,  there is no
established  public trading market for the common stock, and none is expected to
develop in the foreseeable future.

Holder
All of the shares of common stock of the Company,  $1.00 par value, are owned by
Comcast.

Dividends
None.

ITEM 6 SELECTED FINANCIAL DATA

Information  for this item is omitted  pursuant to SEC General  Instruction I to
Form 10-K.

                                     - 12 -

<PAGE>

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

Information  for this  item is  omitted  pursuant  to  Securities  and  Exchange
Commission ("SEC") General Instruction I to Form 10-K, except as noted below.

Results of Operations

Comcast Cable Communications, Inc. (the "Company"), a wholly owned subsidiary of
Comcast Corporation  ("Comcast"),  is a holding company that conducts all of its
operations  through its  subsidiaries.  The Company has experienced  significant
growth in recent years  through both  strategic  acquisitions  and growth in its
existing business. The effects of the Company's recent acquisitions,  as well as
increased levels of capital  expenditures,  were to increase  significantly  the
Company's  revenues  and  expenses,  resulting in  substantial  increases in its
operating  income  before  depreciation  and  amortization.  As a result  of the
increases in depreciation and amortization  expense and interest expense,  it is
expected that the Company will continue to recognize  significant losses for the
foreseeable future.

Summarized  consolidated  financial  information  for the  Company for the years
ended  December  31,  1997 and 1996 is as follows  (dollars  in  millions,  "NM"
denotes percentage is not meaningful):
<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                    December 31,         Increase / (Decrease)
                                                                1997          1996           $          %
<S>                                                           <C>           <C>           <C>         <C>  
Service income ........................................       $2,073.0      $1,641.0      $432.0      26.3%
Operating, selling, general and administrative expenses        1,363.6       1,034.4       329.2      31.8
                                                              --------      --------      ------    

Operating income before depreciation and
   amortization (1) ...................................          709.4         606.6       102.8      16.9
Depreciation and amortization .........................          626.1         420.3       205.8      49.0
                                                              --------      --------      ------    
Operating income ......................................           83.3         186.3      (103.0)    (55.3)
                                                              --------      --------      ------    
Interest expense ......................................          227.9         228.4        (0.5)     (0.2)
Interest expense on notes payable to affiliates .......           37.3          32.1         5.2      16.2
Investment income .....................................           (5.1)        (25.9)      (20.8)    (80.3)
Other .................................................           (0.1)          0.5        (0.6)       NM
Income tax benefit ....................................          (43.6)         (4.5)       39.1        NM
Minority interest .....................................          (21.0)        (21.7)       (0.7)     (3.2)
Extraordinary items ...................................          (16.7)                     16.7        NM
                                                              --------      --------      ------    
Net loss ..............................................        ($128.8)       ($22.6)     $106.2        NM
                                                              ========      ========      ======  
---------------
<FN>
(1)  Operating income before  depreciation and amortization is commonly referred
     to in the cable communications business as "operating cash flow." Operating
     cash flow is a measure of a company's  ability to generate  cash to service
     its obligations, including debt service obligations, and to finance capital
     and other expenditures.  In part due to the capital intensive nature of the
     cable  communications  business  and the  resulting  significant  level  of
     non-cash  depreciation  and  amortization  expense,  operating cash flow is
     frequently  used as one of the bases for comparing  businesses in the cable
     communications  industry,  although the Company's measure of operating cash
     flow may not be comparable to similarly titled measures of other companies.
     Operating  cash flow does not purport to  represent  net income or net cash
     provided  by  operating  activities,  as  those  terms  are  defined  under
     generally accepted accounting  principles,  and should not be considered as
     an  alternative  to such  measurements  as an  indicator  of the  Company's
     performance.
</FN>
</TABLE>
                                     - 13 -
<PAGE>
In November 1996,  Comcast  acquired the cable television  operations  ("Scripps
Cable") of the E.W. Scripps Company and contributed Scripps Cable to the Company
(the "Scripps  Contribution")  at Comcast's  historical cost. As a result of the
Scripps Contribution,  the Company commenced consolidating the financial results
of Scripps Cable effective November 1, 1996. The increases in service income and
operating,  selling,  general and administrative  expenses from 1996 to 1997 are
primarily attributable to the Scripps Contribution. The following table presents
actual financial  information for the year ended December 31, 1997 and pro forma
financial  information  for the year ended  December  31, 1996 as if the Scripps
Contribution  occurred on January 1, 1996.  Pro forma  financial  information is
presented  herein for  purposes  of  analysis  and may not  reflect  what actual
operating  results  would have been had the Company  owned  Scripps  Cable since
January 1, 1996 (dollars in millions):
<TABLE>
<CAPTION>
                                                       Year Ended
                                                       December 31,              Increase
                                                               Pro Forma
                                                     1997         1996          $         %
<S>                                                <C>          <C>          <C>         <C> 
Service income ............................        $2,073.0     $1,893.8     $179.2      9.5%
Operating, selling, general and
     administrative expenses ..............         1,363.6      1,237.0      126.6     10.2
                                                   --------     --------     ------    
Operating income before depreciation
     and amortization (a) .................          $709.4       $656.8      $52.6      8.0%
                                                   ========     ========     ======   
<FN>
(a) See footnote (1) on page 13.
</FN>
</TABLE>

Of the $179.2  million  increase  in service  income  from 1996 to 1997 on a pro
forma basis as if the Scripps  Contribution  occurred on January 1, 1996,  $38.1
million is attributable to subscriber growth,  $122.8 million relates to changes
in rates, $11.0 million is attributable to growth in cable advertising sales and
$7.3 million relates to other product offerings.

Of the $126.6 million increase in operating, selling, general and administrative
expenses  from 1996 to 1997 on a pro forma basis as if the Scripps  Contribution
occurred on January 1, 1996, $34.7 million is attributable to an increase in the
costs of cable programming as a result of subscriber growth,  additional channel
offerings and changes in rates,  $19.2 million is attributable to an increase in
costs associated with customer  service,  $7.7 million is attributable to growth
in cable  advertising  sales and $65.0  million  results from an increase in the
costs of labor,  other volume  related  expenses and costs  associated  with new
product  offerings.   It  is  anticipated  that  the  Company's  cost  of  cable
programming will increase in the future as cable  programming rates increase and
additional sources of cable programming become available.

Comcast, on behalf of the Company,  has an affiliation  agreement with QVC, Inc.
("QVC"), an electronic  retailer and a majority-owned and controlled  subsidiary
of Comcast,  to carry its  programming.  In return for carrying QVC programming,
the  Company  receives  incentive  payments  based on the number of  subscribers
receiving  the QVC  channel.  In  addition,  the Company  receives an  allocated
portion,  based upon market share,  of a percentage of net sales of  merchandise
sold to QVC customers located in the Company's service area. For the years ended
December 31, 1997 and 1996, the Company's  service income includes $10.2 million
and $8.3 million, respectively, relating to QVC.

Comcast, through management agreements,  manages the operations of the Company's
subsidiaries,   including  rebuilds  and  upgrades.  The  management  agreements
generally  provide that Comcast will  supervise the management and operations of
the cable systems and arrange for and  supervise  (but not  necessarily  perform
itself) certain administrative functions. As compensation for such services, the
agreements  provide for Comcast to charge  management  fees of up to 6% of gross
revenues.  Comcast charged the Company's subsidiaries  management fees of $119.3
million and $93.2  million  during the years ended  December  31, 1997 and 1996,
respectively.  These  management  fees are  included  in  selling,  general  and
administrative expenses in the Company's consolidated statement of operations.

On behalf  of the  Company,  Comcast  seeks and  secures  long-term  programming
contracts that  generally  provide for payment based on either a monthly fee per
subscriber per channel or a percentage of certain subscriber  revenues.  Comcast
charges each of the  Company's  subsidiaries  for  programming  on a basis which
generally  approximates the amount that each such subsidiary would be charged if
it purchased such programming directly from the supplier, subject to limitations
imposed by debt  facilities for certain  subsidiaries,  and did not benefit from
the purchasing power of Comcast's  consolidated  operations.  Amounts charged to
the Company by Comcast for programming (the "Programming Charges")

                                     - 14 -
<PAGE>
are included in operating  expenses in the Company's  consolidated  statement of
operations.  The Company purchases certain other services,  including  insurance
and employee  benefits,  from Comcast under  cost-sharing  arrangements on terms
that reflect Comcast's actual cost. The Company  reimburses  Comcast for certain
other expenses (primarily salaries) under cost-reimbursement arrangements. Under
all of these arrangements, the Company incurred total expenses of $673.3 million
and $505.0 million,  including  $560.3 million and $417.0 million of Programming
Charges,  during the years ended December 31, 1997 and 1996,  respectively.  The
Programming  Charges  include $46.7  million and $26.2 million  during the years
ended  December  31,  1997  and  1996,  respectively,  relating  to  programming
purchased by the Company, through Comcast, from suppliers in which Comcast holds
an equity interest.

The $205.8 million increase in depreciation  and amortization  expense from 1996
to 1997 is primarily attributable to the effects of the Scripps Contribution and
the effects of capital  expenditures.  Depreciation and amortization expense for
the year ended  December  31, 1997  includes  the effects of the final  purchase
price allocation relating to the Scripps Contribution.

Interest  expense did not change  significantly  from 1996 to 1997.  The Company
anticipates  that,  for  the  foreseeable  future,  interest  expense  will be a
significant  cost to the Company and will have a significant  adverse  effect on
the  Company's  ability to realize net  earnings.  The Company  believes it will
continue to be able to meet its obligations through its ability both to generate
operating  income before  depreciation  and  amortization and to obtain external
financing.

The $20.8 million decrease in investment income from 1996 to 1997 is principally
due  to  the  gain  recognized  upon  the  exchange  of  the  shares  of  Turner
Broadcasting  System,  Inc.  ("TBS")  held by the Company for Time  Warner,  Inc
("Time  Warner")  common  stock in 1996 as a result of the merger of Time Warner
and TBS in October 1996.

The $39.1  million  increase  in income tax  benefit for the period from 1996 to
1997 is  primarily  attributable  to the increase in the  Company's  loss before
income tax benefit, minority interest and extraordinary items.

Extraordinary  items  for the year  ended  December  31,  1997 of $16.7  million
consist of unamortized debt acquisition costs and debt  extinguishment  costs of
$27.1  million,  net of the related tax  benefit of $10.4  million,  expensed in
connection with the  refinancing,  redemption and optional  repayment of certain
subsidiary  indebtedness  principally with the proceeds from the offering of the
Company's $1.7 billion aggregate principal amount senior notes.

For the years ended  December 31, 1997 and 1996, the Company's  earnings  before
extraordinary  items, income tax benefit and fixed charges (interest expense and
interest  expense on notes payable to affiliates) were $109.5 million and $233.4
million,  respectively.  Such  earnings were not adequate to cover the Company's
fixed charges of $265.2  million and $260.5 million for the years ended December
31, 1997 and 1996,  respectively.  The Company's fixed charges include  non-cash
interest  expense of $2.6 million and $8.2 million for the years ended  December
31, 1997 and 1996, respectively. The inadequacy of these earnings to cover fixed
charges is primarily due to the substantial  non-cash  charges for  depreciation
and amortization expense.

The Company  believes that its losses and  inadequacy of earnings to cover fixed
charges will not  significantly  affect the  performance of its normal  business
activities   because  of  its  existing  cash,  cash   equivalents,   short-term
investments  and cash held by an  affiliate,  its ability to generate  operating
income before  depreciation  and amortization and its ability to obtain external
financing.

The  Company  believes  that  its  operations  are not  materially  affected  by
inflation.

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

Year 2000 Issue

The Year 2000 Issue is the result of computer  programs  being written using two
digits rather than four to define the applicable year.  Certain of the Company's
computer programs that have  date-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000 (the "Year 2000 Issue"). If this
situation   occurs,   the  potential  exists  for  computer  system  failure  or
miscalculations   by  computer   programs,   which  could  cause  disruption  of
operations.

                                     - 15 -
<PAGE>
Based on an inventory  conducted in 1997,  the Company has  identified  computer
systems that will require modification or replacement so that they will properly
utilize dates beyond December 31, 1999. The Company presently believes that with
modifications  to existing  software and  conversions to new software,  the Year
2000 Issue can be mitigated.  However, if such modifications and conversions are
not made,  or are not  completed  within an adequate  time frame,  the Year 2000
Issue could have a material impact on the operations of the Company.

The Company has initiated  communications  with all of its significant  software
suppliers and service  bureaus to determine their plans for remediating the Year
2000  Issue in their  software  which  the  Company  uses or  relies  upon.  The
Company's  estimate to complete the remediation plan includes the estimated time
associated  with  mitigating  the Year  2000  Issue for  third  party  software.
However,  there can be no guarantee that the systems of other companies on which
the Company  relies will be  converted on a timely  basis,  or that a failure to
convert  by  another  company  would  not have  material  adverse  effect on the
Company.

The Company  continues to use both internal and external  resources to reprogram
or replace software for Year 2000 modifications.  Management of the Company will
also continue to periodically  report the progress of its Year 2000  remediation
plan to the Audit Committee of Comcast's  Board of Directors.  The Company plans
to complete the Year 2000 mitigation in 1999. The costs directly attributable to
the Year 2000 Issue are not expected to have a material  effect on the Company's
results of operations.

The costs of the project and the date on which the Company plans to complete the
Year  2000  modifications  and  replacements  are  based  on  management's  best
estimates,  which were derived using  assumptions of future events including the
continued   availability  of  resources  and  the  reliability  of  third  party
modification plans. However, there can be no guarantee that these estimates will
be  achieved  and actual  results  could  differ  materially  from those  plans.
Specific factors that might cause such material differences include, but are not
limited to, the availability  and cost of personnel with  appropriate  necessary
skills, the ability to locate and correct all relevant computer code and similar
uncertainties.

                                     - 16 -
<PAGE>

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholder
Comcast Cable Communications, Inc.
Wilmington, Delaware

We have audited the  accompanying  consolidated  balance  sheet of Comcast Cable
Communications,  Inc. (a wholly owned  subsidiary  of Comcast  Corporation)  and
subsidiaries  as of  December  31, 1997 and 1996,  and the related  consolidated
statements of operations,  stockholder's  equity  (deficiency) and of cash flows
for each of the  three  years in the  period  ended  December  31,  1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of Comcast Cable Communications,  Inc.
and  subsidiaries  as of December  31,  1997 and 1996,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

As discussed in Note 2 to the consolidated  financial  statements,  on April 24,
1997, Comcast Corporation completed a restructuring of the legal organization of
certain of its subsidiaries.  The Company's  consolidated  financial  statements
have  been  presented  giving  effect  to the  reorganization  for  all  periods
presented in a manner similar to a pooling of interests.

/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
February 27, 1998


                                     - 17 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(Dollars in millions, except share data)
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                            1997            1996
<S>                                                                                         <C>               <C>  
ASSETS
CURRENT ASSETS
   Cash and cash equivalents....................................................            $40.7             $38.4
   Short-term investments.......................................................              0.4              21.5
   Cash held by an affiliate....................................................             56.6              53.5
   Accounts receivable, less allowance for doubtful
     accounts of $16.7 and $12.0................................................             72.8              70.4
   Inventories..................................................................             31.3              28.1
   Other current assets.........................................................             18.0              19.8
                                                                                         --------          --------
       Total current assets.....................................................            219.8             231.7
                                                                                         --------          --------
PROPERTY AND EQUIPMENT..........................................................          2,667.3           2,401.6
   Accumulated depreciation.....................................................         (1,021.2)           (856.1)
                                                                                         --------          --------
   Property and equipment, net..................................................          1,646.1           1,545.5
                                                                                         --------          --------
DEFERRED CHARGES
   Franchise acquisition costs..................................................          3,818.0           3,812.9
   Excess of cost over net assets acquired and other............................          1,914.3           1,775.0
                                                                                         --------          --------
                                                                                          5,732.3           5,587.9
   Accumulated amortization.....................................................         (1,540.4)         (1,151.8)
                                                                                         --------          --------
   Deferred charges, net........................................................          4,191.9           4,436.1
                                                                                         --------          --------
                                                                                         $6,057.8          $6,213.3
                                                                                         ========          ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
   Accounts payable and accrued expenses........................................           $239.9            $230.7
   Accrued interest.............................................................             26.6              25.5
   Current portion of long-term debt............................................             52.8             115.7
   Current portion of notes payable to affiliates...............................                                2.6
   Due to affiliates............................................................            170.2             152.3
                                                                                         --------          --------
       Total current liabilities................................................            489.5             526.8
                                                                                         --------          --------
LONG-TERM DEBT, less current portion............................................          2,554.9           3,068.3
                                                                                         --------          --------
MINORITY INTEREST AND OTHER.....................................................            208.5             246.3
                                                                                         --------          --------
NOTES PAYABLE TO AFFILIATES, less current portion...............................            650.6             404.5
                                                                                         --------          --------
DUE TO AFFILIATE................................................................            398.8             291.8
                                                                                         --------          --------
DEFERRED INCOME TAXES, due to affiliate.........................................          1,488.4           1,580.3
                                                                                         --------          --------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY
   Common stock, $1 par value - authorized and issued, 1,000 shares.............
   Additional capital...........................................................          3,066.2           3,050.6
   Accumulated deficit..........................................................         (2,799.1)         (2,124.0)
   Unrealized loss on marketable securities.....................................                               (1.4)
   Notes receivable from affiliate..............................................                             (829.9)
                                                                                         --------          --------
       Total stockholder's equity...............................................            267.1              95.3
                                                                                         --------          --------
                                                                                         $6,057.8          $6,213.3
                                                                                         ========          ========
</TABLE>
See notes to consolidated financial statements.

                                     - 18 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in millions)
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1997              1996             1995
<S>                                                                     <C>              <C>               <C>     
SERVICE INCOME................................................          $2,073.0         $1,641.0          $1,454.9
                                                                        --------         --------          --------

COSTS AND EXPENSES
   Operating..................................................             884.1            667.8             598.8
   Selling, general and administrative........................             479.5            366.6             313.7
   Depreciation and amortization..............................             626.1            420.3             376.2
                                                                        --------         --------          --------
                                                                         1,989.7          1,454.7           1,288.7
                                                                        --------         --------          --------

OPERATING INCOME..............................................              83.3            186.3             166.2

OTHER (INCOME) EXPENSE
   Interest expense...........................................             227.9            228.4             245.6
   Interest expense on notes payable to affiliates............              37.3             32.1              28.2
   Investment income..........................................              (5.1)           (25.9)             (9.2)
   Other......................................................              (0.1)             0.5               0.2
                                                                        --------         --------          --------
                                                                           260.0            235.1             264.8
                                                                        --------         --------          --------

LOSS BEFORE INCOME TAX BENEFIT, MINORITY
   INTEREST AND EXTRAORDINARY ITEMS...........................            (176.7)           (48.8)            (98.6)

INCOME TAX BENEFIT............................................             (43.6)            (4.5)            (24.9)
                                                                        --------         --------          --------

LOSS BEFORE MINORITY INTEREST AND
   EXTRAORDINARY ITEMS........................................            (133.1)           (44.3)            (73.7)

MINORITY INTEREST.............................................             (21.0)           (21.7)            (24.8)
                                                                        --------         --------          --------

LOSS BEFORE EXTRAORDINARY ITEMS...............................            (112.1)           (22.6)            (48.9)

EXTRAORDINARY ITEMS...........................................             (16.7)                              (2.4)
                                                                        --------         --------          --------

NET LOSS......................................................           ($128.8)          ($22.6)           ($51.3)
                                                                        ========         ========          ========
</TABLE>

See notes to consolidated financial statements.

                                     - 19 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                         1997              1996             1995
<S>                                                                      <C>               <C>               <C>    
OPERATING ACTIVITIES
   Net loss.........................................................     ($128.8)          ($22.6)           ($51.3)
   Adjustments to reconcile net loss to net cash provided
    by operating activities:
     Depreciation and amortization..................................       626.1            420.3             376.2
     Non-cash interest expense......................................         1.4              2.0               1.9
     Non-cash interest expense on notes payable to affiliates.......         1.2              6.2               5.9
     Deferred expenses charged by an affiliate......................       107.0             66.6             103.3
     Payment of deferred expenses charged by an affiliate...........                                         (115.8)
     Loss (gain) on sale of investments.............................         1.6            (19.8)
     Minority interest..............................................       (21.0)           (21.7)            (24.8)
     Extraordinary items............................................        16.7                                2.4
     Deferred income tax benefit, due to affiliate..................       (49.7)           (44.6)            (49.4)
                                                                        --------           ------            ------ 
                                                                           554.5            386.4             248.4

     Increase in accounts receivable, net...........................        (2.4)            (5.8)            (12.0)
     Increase in inventories........................................        (3.2)            (2.6)             (5.6)
     Decrease (increase) in other current assets....................         1.8             (3.5)             (0.5)
     Increase (decrease) in accounts payable and accrued expenses...        10.1             (2.2)            (53.0)
     Increase (decrease) in accrued interest........................         1.1             12.6              (7.6)
     (Decrease) increase in other non-current liabilities...........       (12.4)            15.1               6.5
                                                                        --------           ------            ------ 
       Net cash provided by operating activities....................       549.5            400.0             176.2
                                                                        --------           ------            ------ 

FINANCING ACTIVITIES
   Proceeds from borrowings.........................................     1,805.8            448.0             720.0
   Repayments of long-term debt.....................................    (2,395.1)          (284.5)           (665.6)
   Proceeds from notes payable to affiliates........................       690.6             59.7              50.9
   Repayment of notes payable to affiliates.........................      (140.8)            (1.4)             (7.0)
   Capital contributions............................................                          0.3               1.4
   Net transactions with affiliates.................................        17.9             92.5              10.9
   Deferred financing costs and other...............................       (15.8)            (3.0)             (4.1)
                                                                        --------           ------            ------ 
     Net cash (used in) provided by financing activities............       (37.4)           311.6             106.5
                                                                        --------           ------            ------ 

INVESTING ACTIVITIES
   Acquisitions.....................................................        (7.1)            (5.0)            (11.3)
   Sale of short-term investments...................................        21.6
   Capital expenditures.............................................      (497.8)          (298.2)           (238.5)
   Increase in cash held by an affiliate............................        (3.1)           (26.6)            (26.9)
   Increase in notes receivable from affiliates.....................                       (340.0)            (52.2)
   Additions to deferred charges and other..........................       (23.4)           (15.0)            (14.7)
                                                                        --------           ------            ------ 
       Net cash used in investing activities........................      (509.8)          (684.8)           (343.6)
                                                                        --------           ------            ------ 

INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS......................................................         2.3             26.8             (60.9)

CASH AND CASH EQUIVALENTS, beginning of year........................        38.4             11.6              72.5
                                                                        --------           ------            ------ 

CASH AND CASH EQUIVALENTS, end of year..............................       $40.7            $38.4             $11.6
                                                                        ========           ======            ====== 
</TABLE>

See notes to consolidated financial statements.

                                     - 20 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIENCY)
(Dollars in millions)
<TABLE>
<CAPTION>
                                                                                         Unrealized    Notes
                                                                                           Loss on  Receivable
                                                        Common     Additional Accumulated Marketable    from
                                                         Stock       Capital    Deficit   Securities  Affiliate    Total
<S>                                                     <C>       <C>          <C>               <C>       <C>         <C>     
BALANCE, JANUARY 1, 1995............................... $         $1,431.3     ($2,050.1)        $5.4      ($344.7)    ($958.1)
   Net loss............................................                            (51.3)                                (51.3)
   Capital contributions...............................                6.3                                                 6.3
   Unrealized gain on marketable securities, net of
     deferred taxes of $2.3............................                                           4.3                      4.3
   Interest income on notes receivable from affiliates.               40.1                                   (40.1)
   Income taxes on interest income on notes
     receivable from affiliates........................              (14.0)                                              (14.0)
   Increase in notes receivable from affiliates, net                                                         (52.2)      (52.2)
                                                        ------    --------     ---------         ----      -------     ------- 
BALANCE, DECEMBER 31, 1995.............................            1,463.7      (2,101.4)         9.7       (437.0)   (1,065.0)
   Net loss............................................                            (22.6)                                (22.6)
   Capital contributions...............................            1,552.5                                             1,552.5
   Unrealized loss on marketable securities, net of
     deferred taxes of ($6.0)..........................                                         (11.1)                   (11.1)
   Interest income on notes receivable from affiliate..               52.9                                   (52.9)
   Income taxes on interest income on notes receivable
     from affiliate....................................              (18.5)                                              (18.5)
   Increase in notes receivable from affiliate.........                                                     (340.0)     (340.0)
                                                        ------    --------     ---------         ----      -------     ------- 
BALANCE, DECEMBER 31, 1996.............................            3,050.6      (2,124.0)        (1.4)      (829.9)       95.3
   Net loss............................................                           (128.8)                               (128.8)
   Change in unrealized loss on marketable securities,
     net of deferred taxes of $0.7.....................                                           1.4                      1.4
   Interest income on notes receivable from affiliate..               23.9                                   (23.9)
   Income taxes on interest income on notes receivable
     from affiliate....................................               (8.3)                                               (8.3)
   Exchange of outstanding notes payable to and
     notes receivable from affiliates..................                                                      307.5       307.5
   Elimination of outstanding notes receivable from
     affiliate through a non-cash dividend to Comcast..                           (546.3)                    546.3
                                                        ------    --------     ---------         ----      -------     ------- 
BALANCE, DECEMBER 31, 1997............................. $         $3,066.2     ($2,799.1)        $         $            $267.1
                                                        ======    ========     =========         ====      =======     ======= 
</TABLE>

See notes to consolidated financial statements.

                                     - 21 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1.   BUSINESS

     Comcast   Cable   Communications,   Inc.,  a  Delaware   corporation,   and
     subsidiaries  (the  "Company")  is a wholly  owned  subsidiary  of  Comcast
     Corporation  ("Comcast").  The Company and its  subsidiaries are engaged in
     the development, management and operation of hybrid-fiber coaxial broadband
     cable  networks.  The Company's  systems served  approximately  4.4 million
     subscribers and passed more than 7.1 million homes as of December 31, 1997.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and  all  wholly  owned  or  controlled   subsidiaries.   All   significant
     intercompany  accounts and transactions  among  consolidated  entities have
     been eliminated.

     Reorganization
     On  April  24,  1997,  Comcast  completed  a  restructuring  of  the  legal
     organization of certain of its  subsidiaries  (the  "Reorganization").  The
     Reorganization  involved Comcast's contribution to the Company of ownership
     interests in certain of its  consolidated  subsidiaries,  all of which were
     under   Comcast's   direct   or   indirect   control   (the    "Contributed
     Subsidiaries").  The  Reorganization  has  been  accounted  for in a manner
     similar to a pooling of interests.  Accordingly, the Company's consolidated
     financial  statements include the accounts of the Contributed  Subsidiaries
     for all periods presented.

     In addition,  certain expenses directly related to the Company's operations
     which were  historically paid by Comcast on behalf of the Company have been
     reflected in the Company's  consolidated  statement of  operations  for all
     periods presented.

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

     Fair Values
     The estimated fair value amounts  presented in these notes to  consolidated
     financial  statements  have been  determined by the Company using available
     market  information and appropriate  methodologies.  However,  considerable
     judgment is required in  interpreting  market data to develop the estimates
     of  fair  value.  The  estimates   presented  herein  are  not  necessarily
     indicative  of the  amounts  that the  Company  could  realize in a current
     market exchange.  The use of different market assumptions and/or estimation
     methodologies  may have a  material  effect  on the  estimated  fair  value
     amounts.  Such fair  value  estimates  are based on  pertinent  information
     available to management as of December 31, 1997 and 1996, and have not been
     comprehensively  revalued  for  purposes  of these  consolidated  financial
     statements since such dates.

     A reasonable  estimate of fair value of the amounts due to/from  affiliates
     in the Company's  consolidated  balance sheet is not  practicable to obtain
     because of the related  party  nature of these items and the lack of quoted
     market prices.

     Cash Equivalents, Short-term Investments and Cash Held by an Affiliate
     Cash  equivalents   principally  consist  of  repurchase   agreements  with
     maturities of three months or less when purchased.  Short-term  investments
     consist of  certificates  of deposit with  maturities of greater than three
     months  when  purchased.   The  carrying  amounts  of  the  Company's  cash
     equivalents  and short-term  investments,  classified as available for sale
     securities, approximate their fair values.

                                     - 22 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     As of December 31, 1996, short-term  investments also include the Company's
     investment in Time Warner,  Inc.  ("Time  Warner")  Common Stock (the "Time
     Warner Stock"). The Company received 552,014 shares of Time Warner Stock in
     exchange (the "Exchange") for all of the shares of the Turner  Broadcasting
     System,  Inc.  ("TBS")  Stock (the "TBS  Stock")  held by the  Company as a
     result of the merger of Time Warner and TBS in October 1996. As a result of
     the Exchange, the Company recognized a pre-tax gain of $19.8 million in the
     fourth quarter of 1996,  representing the difference  between the Company's
     historical  cost basis in the TBS Stock and the new basis for the Company's
     investment  in Time Warner Stock of $22.8  million,  which was based on the
     closing  price of the Time  Warner  Stock on the merger date of $41.375 per
     share. As of December 31, 1996, the shares of Time Warner Stock held by the
     Company  were  recorded  at their  fair  value of  $20.7  million  and were
     included in short-term  investments in the Company's  consolidated  balance
     sheet.  The unrealized loss on this investment of $2.1 million was reported
     in the Company's December 31, 1996 consolidated balance sheet as a decrease
     in  stockholder's  equity,  net of  deferred  income  tax  benefit  of $0.7
     million.  In January  1997,  the Company  sold its entire  interest in Time
     Warner  for $21.2  million.  In  connection  with this  sale,  the  Company
     recognized a pre-tax loss of $1.6 million,  which is included in investment
     income in the Company's  consolidated  statement of operations for the year
     ended December 31, 1997.

     Cash held by an affiliate  consists of cash held by a subsidiary of Comcast
     under a cash management program (see Note 6).

     Inventories
     Inventories,  which include  materials and supplies,  are stated at average
     cost which is less than market.

     Property and Equipment
     Property and  equipment are stated at cost.  Depreciation  is provided on a
     straight-line basis over estimated useful lives as follows:

              Buildings and improvements ........................  15-40 years
              Operating facilities...............................   5-20 years
              Other equipment....................................   2-10 years

     Improvements  that extend asset lives are  capitalized;  other  repairs and
     maintenance  charges  are  expensed  as  incurred.  The  cost  and  related
     accumulated  depreciation  applicable to assets sold or retired are removed
     from the accounts and the gain or loss on  disposition  is  recognized as a
     component of depreciation expense.

     In connection  with the rebuild and upgrade of cable  systems,  the Company
     depreciates  the  remaining net book value of the assets over the estimated
     rebuild  or  upgrade  period.  Under  this  policy,  the  Company  recorded
     additional  depreciation expense of $32.4 million,  $20.3 million and $14.2
     million  during  the  years  ended  December  31,  1997,   1996  and  1995,
     respectively.

     Deferred Charges
     Franchise  acquisition  costs are amortized on a  straight-line  basis over
     their legal or estimated useful lives of 12 to 40 years. The excess of cost
     over the  fair  value  of net  assets  acquired  is  being  amortized  on a
     straight-line  basis over  estimated  useful lives of 20 to 40 years.  Debt
     acquisition  costs are being  amortized on a  straight-line  basis over the
     term of the related debt.

     Valuation of Long-Lived Assets
     The Company  periodically  evaluates the  recoverability  of its long-lived
     assets,  including  property  and  equipment  and deferred  charges,  using
     objective  methodologies.  Such methodologies  include evaluations based on
     the cash flows generated by the underlying assets or other  determinants of
     fair value.

                                     - 23 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Notes Receivable from Affiliate
     The notes  receivable from affiliate (the "Notes  Receivable") are due from
     Comcast and are presented in the Company's  consolidated balance sheet as a
     component of  stockholder's  equity due to their  related party nature (see
     Note 5). The Notes Receivable are increased by interest due under the terms
     of the notes and any  additional  amounts loaned to Comcast and are reduced
     by any cash payments of interest or principal. Interest due under the terms
     of the Notes Receivable, net of any related income taxes, has been recorded
     as an increase in additional capital.

     Revenue Recognition
     Service income is recognized as service is provided. Credit risk is managed
     by disconnecting services to customers who are delinquent.

     Postretirement and Postemployment Benefits
     The estimated costs of retiree benefits and benefits for former or inactive
     employees, after employment but before retirement, are accrued and recorded
     as a charge to operations  during the years the employees provide services.
     The Company's  retiree benefit  obligation is unfunded and all benefits are
     provided and paid by Comcast.  Accordingly,  the  Company's  liability  for
     these costs is included in due to affiliates.

     A wholly owned subsidiary of the Company has agreements with certain former
     key  executives  that provide for  supplemental  retirement  benefits.  The
     actuarial present value of benefits payable under these agreements has been
     accrued.

     Investment Income
     Investment income includes interest income and gains, net of losses, on the
     sale or exchange of long-term investments.  Gross realized gains and losses
     are recognized using the specific identification method.

     Income Taxes
     The Company  recognizes  deferred tax assets and  liabilities for temporary
     differences  between the financial reporting basis and the tax basis of the
     Company's  assets and  liabilities  and expected  benefits of utilizing net
     operating  loss  carryforwards.  The impact on deferred taxes of changes in
     tax rates and laws,  if any,  applied to the years during  which  temporary
     differences are expected to be settled,  are reflected in the  consolidated
     financial statements in the period of enactment.

     Derivative Financial Instruments
     The Company uses derivative financial instruments,  including interest rate
     exchange  agreements  ("Swaps"),  interest rate cap agreements ("Caps") and
     interest  rate collar  agreements  ("Collars"),  to manage its  exposure to
     fluctuations  in interest rates.  Swaps,  Caps and Collars are matched with
     either fixed or variable  rate debt and periodic  cash payments are accrued
     on a settlement  basis as an adjustment to interest  expense.  Any premiums
     associated  with  these  instruments  are  amortized  over  their  term and
     realized gains or losses as a result of the  termination of the instruments
     are deferred and amortized over the remaining term of the underlying  debt.
     Unrealized gains and losses as a result of these instruments are recognized
     when the underlying hedged item is extinguished or otherwise terminated.

     Those  instruments  that have been  entered  into by the  Company  to hedge
     exposure to interest rate risk are periodically  examined by the Company to
     ensure that the instruments are marked with underlying liabilities,  reduce
     the Company's risks relating to interest rates,  and,  through market value
     and  sensitivity  analysis,  maintain a high  correlation  to the  interest
     expense  of the hedged  item.  For those  instruments  that do not meet the
     above criteria,  variations in their fair value are  marked-to-market  on a
     current basis in the Company's consolidated statement of operations.

     The Company does not hold or issue any derivative financial instruments for
     trading purposes and is not a party to leveraged  instruments (see Note 4).
     The  credit  risks  associated  with  the  Company's  derivative  financial
     instruments  are  controlled  through the  evaluation and monitoring of the
     creditworthiness of the counterparties. Although the

                                     - 24 -

<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Company  may be  exposed  to losses in the event of  nonperformance  by the
     counterparties,  the  Company  does not expect such  losses,  if any, to be
     significant.

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1997.

3.   ACQUISITION

     Scripps Cable
     In  November  1996,  Comcast  acquired  the  cable  television   operations
     ("Scripps Cable") of The E.W. Scripps Company ("E.W.  Scripps") in exchange
     for 93.048 million shares of Comcast's  Class A Special Common Stock valued
     at $1.552 billion (the "Scripps  Acquisition").  Comcast  accounted for the
     Scripps  Acquisition  under the  purchase  method.  Following  the  Scripps
     Acquisition, Comcast contributed Scripps Cable to the Company (the "Scripps
     Contribution") at Comcast's  historical cost. The Scripps  Contribution was
     recorded  as an  increase  in  additional  capital  and  Scripps  Cable was
     consolidated  with the Company  effective  November 1, 1996. As the Scripps
     Contribution was a non-cash  transaction,  it had no significant  impact on
     the Company's consolidated statement of cash flows.

     During the second quarter of 1997, the Company  recorded the final purchase
     price  allocation  relating to the Scripps  Contribution.  The terms of the
     Scripps Acquisition provide for, among other things, the indemnification of
     the  Company  by  E.W.  Scripps  for  certain  liabilities,  including  tax
     liabilities, relating to Scripps Cable prior to the acquisition date.

     Unaudited Pro Forma Information
     The following  unaudited pro forma information for the years ended December
     31, 1996 and 1995 has been  presented  as if the Scripps  Contribution  had
     occurred on January 1, 1995. This unaudited pro forma  information is based
     on historical results of operations  adjusted for acquisition costs and, in
     the  opinion  of  management,  is not  necessarily  indicative  of what the
     results  would  have been had the  Company  operated  Scripps  Cable  since
     January 1, 1995 (dollars in millions).

                                                 Year Ended
                                                December 31,
                                             1996         1995
     Service income ....................  $1,893.8      $1,734.4
     Loss before extraordinary items....    (118.3)       (145.7)
     Net loss ..........................    (118.3)       (148.1)

                                     - 25 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


4.   LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                        1997              1996
                                                                                          (Dollars in millions)
<S>                                                                                   <C>             <C>  
     Notes payable to banks and insurance companies,
         due in installments through 2003.......................................         $915.7         $3,054.1
     8 1/8% Senior notes, due 2004..............................................          299.7
     8 3/8% Senior notes, due 2007..............................................          596.3
     8 7/8% Senior notes, due 2017..............................................          545.5
     8 1/2% Senior notes, due 2027..............................................          249.6
     10% Subordinated Debentures, due 2003,
         net of unamortized discount of $12.7...................................                           126.6
     Other debt, due in installments principally through 2007...................            0.9              3.3
                                                                                       --------         --------
                                                                                        2,607.7          3,184.0
     Less current portion.......................................................           52.8            115.7
                                                                                       --------         --------
                                                                                       $2,554.9         $3,068.3
                                                                                       ========         ========
</TABLE>

     Maturities of long-term  debt  outstanding  as of December 31, 1997 for the
     four years after 1998 are as follows (dollars in millions):

         1999.................................................         $108.1
         2000.................................................          120.1
         2001.................................................          235.1
         2002.................................................          250.1

     In addition to the Company's outstanding long-term debt as presented in the
     table  above,  the Company had an  aggregate  of $650.6  million and $407.1
     million of notes  payable  to  Comcast  and  Comcast's  subsidiaries  as of
     December 31, 1997 and 1996, respectively (see Note 5).

     Senior Notes Offering
     In May 1997,  the  Company  completed  the sale of $1.7  billion  principal
     amount of notes  (the  "Senior  Notes")  through a  private  offering  with
     registration rights. The Senior Notes were issued in four tranches:  $300.0
     million principal amount of 8 1/8% Notes due 2004 (the "Seven-Year Notes"),
     $600.0  million  principal  amount of 8 3/8% Notes due 2007 (the  "Ten-Year
     Notes"),  $550.0  million  principal  amount of 8 7/8%  Notes due 2017 (the
     "Twenty-Year  Notes") and $250.0 million  principal  amount of 8 1/2% Notes
     due 2027 (the "Thirty-Year  Notes").  The Company used substantially all of
     the net proceeds  from the offering of the Senior Notes to repay certain of
     its  subsidiaries'  notes  payable  to  banks  with  the  balance  used for
     subsidiary general purposes. Collectively, the offering of the Senior Notes
     and the repayment of the aforementioned notes payable with the net proceeds
     from the  offering  of the  Senior  Notes  are  referred  to  herein as the
     "Refinancing."

     Interest on the Senior Notes is payable  semiannually on May 1 and November
     1 of each year,  commencing  November 1, 1997.  The Seven-Year  Notes,  the
     Ten-Year Notes and the  Twenty-Year  Notes are  redeemable,  in whole or in
     part,  at the option of the Company at any time and the  Thirty-Year  Notes
     are  redeemable,  in whole or in part,  at the option of the Company at any
     time after May 1, 2009,  in each case at a  redemption  price  equal to the
     greater  of (i) 100% of  their  principal  amount,  plus  accrued  interest
     thereon to the date of redemption, or (ii) the sum of the present values of
     the  remaining   scheduled  payments  of  principal  and  interest  thereon
     discounted to the date of redemption on a semiannual  basis at the Adjusted
     Treasury  Rate (as defined),  plus accrued  interest on the Senior Notes to
     the date of redemption.  Each holder of the  Thirty-Year  Notes may require
     the Company to repurchase all or a portion of the  Thirty-Year  Notes owned
     by such  holder on May 1,  2009 at a  purchase  price  equal to 100% of the
     principal amount thereof.

                                     - 26 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     The  Senior  Notes are  unsecured  and  unsubordinated  obligations  of the
     Company  and rank pari passu with all other  unsecured  and  unsubordinated
     indebtedness  and other  obligations  of the Company.  The Senior Notes are
     effectively  subordinated to all liabilities of the Company's subsidiaries,
     including trade payables.

     The  indenture  for  the  Senior  Notes,   among  other  things,   contains
     restrictions  (with certain  exceptions)  on the ability of the Company and
     its Restricted  Subsidiaries (as defined) to: (i) make dividend payments or
     other  restricted  payments;  (ii)  create  liens  or enter  into  sale and
     leaseback transactions;  and (iii) enter into mergers,  consolidations,  or
     sales of all or substantially all of their assets.

     In October  1997,  the Company  completed an exchange of 100% of the Senior
     Notes for new notes (having the terms described above) registered under the
     Securities Act of 1933, as amended.

     Debt Repayments
     In June 1997, the Company  redeemed all of its outstanding 10% Subordinated
     Debentures, due 2003 (the "10% Debentures").  An aggregate principal amount
     of $139.3 million of the 10% Debentures was redeemed at a redemption  price
     of 100% of the principal  amount  thereof,  together with accrued  interest
     thereon.  As of the  redemption  date,  the 10%  Debentures had an accreted
     value of $127.7 million.  The Company  redeemed the 10% Debentures with the
     proceeds from the issuance of a $141.0 million note payable to a subsidiary
     of Comcast which bears interest at a rate of 8.50%, payable quarterly,  and
     is due in 2002 (see Note 5).

     In July 1997, the Company made an optional debt repayment of $435.0 million
     with the proceeds  from the issuance of a $437.3  million note payable to a
     subsidiary  of Comcast  which bears  interest  at a rate of 7.25%,  payable
     quarterly, and is due in 2002 (see Note 5).

     Extraordinary Items
     In connection  with the  Refinancing,  the redemption of the 10% Debentures
     and the optional  repayment of certain  indebtedness,  the Company expensed
     unamortized debt acquisition costs and incurred debt  extinguishment  costs
     of $27.1 million,  resulting in extraordinary  losses, net of tax, of $16.7
     million during the year ended December 31, 1997.

     During  the year  ended  December  31,  1995,  the  Company  incurred  debt
     extinguishment   costs  totaling  $3.6  million  in  connection   with  the
     refinancing  of  certain  indebtedness  of a  subsidiary,  resulting  in an
     extraordinary loss, net of tax, of $2.4 million.

     Debt Assumption
     During 1996, a wholly owned  subsidiary of Comcast  assumed a $27.0 million
     note payable to a bank and $0.6  million of accrued  interest  thereon.  In
     return, the Company became liable under a $27.6 million note payable to the
     subsidiary of Comcast.  In connection with the  Refinancing,  Comcast Cable
     Funding Inc., a wholly owned subsidiary of the Company, assumed the note.

     Interest Rates
     Fixed  interest  rates on notes  payable to banks and  insurance  companies
     range from 8.6% to 10.57%.  Bank debt interest rates vary based upon one or
     more of the following rates at the option of the Company:

         Base Rate  (higher  of federal  funds rate plus 0.5% or prime  rate) to
         Base Rate plus 0.75%;
         London Interbank Offered Rate ("LIBOR") plus 0.375% to LIBOR plus 1.75%

     As of December 31, 1997 and 1996, the Company's  effective weighted average
     interest rate on its  outstanding  variable rate notes payable to banks was
     6.97% and 6.58%, respectively.

                                     - 27 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Interest Rate Risk Management
     The Company is exposed to market risk including  changes in interest rates.
     To manage the volatility  relating to these  exposures,  the Company enters
     into various derivative  transactions pursuant to the Company's policies in
     areas such as counterparty  exposure and hedging  practices.  Positions are
     monitored using techniques including market value and sensitivity analyses.

     The use of interest rate risk management  instruments,  such as Swaps, Caps
     and  Collars,  is  required  under the terms of  certain  of the  Company's
     outstanding  debt  agreements.  The Company's  policy is to manage interest
     costs using a mix of fixed and variable rate debt. Using Swaps, the Company
     agrees to exchange,  at specified  intervals,  the difference between fixed
     and variable  interest  amounts  calculated by reference to an  agreed-upon
     notional principal amount. Caps are used to lock in a maximum interest rate
     should  variable  rates rise, but enable the Company to otherwise pay lower
     market rates.  Collars  limit the  Company's  exposure to and benefits from
     interest rate  fluctuations on variable rate debt to within a certain range
     of rates.

     The following table  summarizes the terms of the Company's  existing Swaps,
     Caps and Collars as of December 31, 1997 and 1996 (dollars in millions):
<TABLE>
<CAPTION>
                                                         Notional                         Average       Estimated
                                                          Amount      Maturities       Interest Rate   Fair Value
     As of December 31, 1997
<S>                                                         <C>        <C>               <C>              <C> 
     Variable to Fixed Swaps.........................       $100.0     1998-1999           5.67%            $0.1
     Caps............................................        150.0       1998              6.67%
     Collar..........................................         50.0       1998           7.00%/4.90%

     As of December 31, 1996
     Variable to Fixed Swaps.........................       $530.0     1997-1999           6.14%           ($1.2)
     Caps............................................        250.0       1997              8.55%
     Collars.........................................        400.0     1997-1998        7.09%/5.04%          0.2
</TABLE>

     The  notional  amounts of interest  rate  instruments,  as presented in the
     above table, are used to measure interest to be paid or received and do not
     represent the amount of exposure to credit loss.  The estimated  fair value
     approximates  the  proceeds  (costs) to settle the  outstanding  contracts.
     While Swaps,  Caps and Collars  represent an integral part of the Company's
     interest rate risk management program, their incremental effect on interest
     expense  for the  years  ended  December  31,  1997,  1996 and 1995 was not
     significant.

     Estimated Fair Value
     The Company's  long-term  debt had estimated  fair values of $2.862 billion
     and $3.215  billion as of  December  31, 1997 and 1996,  respectively.  The
     estimated fair value of the Company's  publicly traded debt is based on the
     quoted  market  price for that  debt.  Interest  rates  that are  currently
     available  to the  Company  for  issuance  of debt with  similar  terms and
     remaining  maturities  are used to estimate  fair value for debt issues for
     which quoted market prices are not available.

     Debt Covenants
     Certain of the Company's  subsidiaries' loan agreements contain restrictive
     covenants which,  among other things,  limit the Company's ability to enter
     into  arrangements  for the  acquisition  or  disposition  of property  and
     equipment,  investments,  mergers and the  incurrence of  additional  debt.
     Certain  of these  agreements  require  that  certain  ratios and cash flow
     levels be maintained and contain certain restrictions on dividend payments,
     payment of management fees and advances of funds to affiliated entities and
     the Company.  The Company and its subsidiaries were in compliance with such
     restrictive covenants for all periods presented.  In addition, the stock of
     certain subsidiary companies is pledged as collateral for the notes payable
     to banks and insurance companies.

                                     - 28 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     As of December 31, 1997, a portion of the Company's cash, cash equivalents,
     short-term  investments  and cash held by an affiliate is restricted to use
     by subsidiaries of the Company under  contractual  arrangements,  including
     subsidiary credit agreements.

     Restricted net assets of the Company's subsidiaries were approximately $2.8
     billion as of December 31, 1997. The restricted net assets of  subsidiaries
     exceeds the Company's  consolidated  net assets as certain of the Company's
     subsidiaries have a stockholder's deficiency.

     Lines and Letters of Credit
     As of January  30,  1998,  certain  subsidiaries  of the Company had unused
     lines of credit of $670.0 million. The availability and use of these unused
     lines  of  credit  is  restricted  by the  covenants  of the  related  debt
     agreements and to subsidiary general purposes and dividend declaration. The
     Company  continually  evaluates  its debt  structure  with the intention of
     reducing its debt service requirements when desirable.

     As of January 30,  1998,  the Company and certain of its  subsidiaries  had
     unused  irrevocable  standby  letters of credit  totaling $105.9 million to
     cover potential fundings associated with several projects.

5.   NOTES PAYABLE TO AND NOTES RECEIVABLE FROM AFFILIATES

     During the year ended  December  31,  1997,  the Company (i) repaid  $140.8
     million of its notes payable to affiliates  (the "Notes  Payable") with the
     proceeds from drawdowns  under  subsidiaries'  existing  credit  facilities
     ($55.0  million) and existing  cash held by an affiliate  ($85.8  million),
     (ii)   completed  the  exchange  of  affiliate   notes  payable  and  notes
     receivable,  and the accrued interest thereon, between the Company, Comcast
     and certain of their subsidiaries resulting in a reduction in the Company's
     Notes  Payable of $307.5  million,  with a  corresponding  reduction in the
     Company's  notes  receivable from affiliate (the "Notes  Receivable"),  and
     (iii) eliminated the remaining Notes  Receivable,  and the accrued interest
     thereon  (aggregating  $546.3  million),  through a  non-cash  dividend  to
     Comcast.  During the years ended  December  31, 1996 and 1995,  the Company
     repaid $1.4 million and $7.0  million  principal  amount of Notes  Payable,
     respectively.

     As of December 31, 1997 and 1996,  Notes Payable include $650.6 million and
     $383.4 million  principal amount of Notes Payable to Comcast and certain of
     its wholly owned subsidiaries. During the year ended December 31, 1997, the
     Company  borrowed  $690.6  million  from  Comcast and certain of its wholly
     owned subsidiaries, the proceeds of which were used primarily to redeem the
     10% Debentures  and make the optional debt  repayment  described in Note 4.
     Such  borrowings also included a $72.3 million note payable to a subsidiary
     of Comcast which bears interest at a rate of 8.50%, payable quarterly,  and
     is due 2007. During the years ended December 31, 1996 and 1995, the Company
     borrowed  $87.3 million and $50.9 million,  respectively,  from Comcast and
     certain wholly owned  subsidiaries of Comcast.  The 1996 borrowings include
     $27.6 million associated with the debt assumption  described in Note 4. The
     remaining  borrowings  in 1996 and the  1995  borrowings  were  used by the
     Company for debt service requirements and general purposes.

     The Notes  Payable bear interest at rates ranging from 7.25% to 8.50% as of
     December 31, 1997 (weighted  average interest rate of 7.66% and 9.31% as of
     December 31, 1997 and 1996, respectively). As of December 31, 1996, accrued
     interest  relating  to such  Notes  Payable of $23.7  million  was added to
     principal.

6.   RELATED PARTY TRANSACTIONS

     Comcast, on behalf of the Company,  has an affiliation  agreement with QVC,
     Inc. ("QVC"),  an electronic  retailer and a majority-owned  and controlled
     subsidiary of Comcast, to carry its programming. In return for carrying QVC
     programming, the Company receives incentive payments based on the number of
     subscribers receiving the QVC channel. In addition, the Company receives an
     allocated portion, based upon market share, of a percentage of net sales of
     merchandise  sold to QVC customers  located in the Company's  service area.
     For the years ended December

                                     - 29 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     31, 1997,  1996 and 1995,  the  Company's  service  income  includes  $10.2
     million, $8.3 million and $7.9 million, respectively, relating to QVC.

     Comcast,  through  management  agreements,  manages the  operations  of the
     Company's  subsidiaries,  including  rebuilds and upgrades.  The management
     agreements generally provide that Comcast will supervise the management and
     operations  of the cable  systems and arrange  for and  supervise  (but not
     necessarily   perform  itself)   certain   administrative   functions.   As
     compensation  for such  services,  the  agreements  provide  for Comcast to
     charge  management fees of up to 6% of gross revenues.  Comcast charged the
     Company's subsidiaries management fees of $119.3 million, $93.2 million and
     $83.5 million in 1997, 1996 and 1995,  respectively.  These management fees
     are  included  in  selling,  general  and  administrative  expenses  in the
     Company's  consolidated  statement  of  operations.  Comcast  has agreed to
     permit certain subsidiaries of the Company to defer payment of a portion of
     these  expenses with the deferred  portion being treated as a  subordinated
     long-term  liability  due to  affiliate  which  will not be paid  until the
     subsidiaries'  existing long-term debt is retired. In addition,  payment of
     certain of these  expenses has been deferred  until the  California  Public
     Employees'  Retirement  System  ("CalPERS")  no longer has an  interest  in
     Comcast MHCP Holdings,  LLC (the "LLC"), a majority owned subsidiary of the
     Company (see Note 9).  Management fees deferred in 1997, 1996 and 1995 were
     $4.7  million,  $4.3 million and $45.2  million,  respectively.  In 1995, a
     subsidiary  of the Company  repaid  $14.9  million of  previously  deferred
     management  fees.  Deferred  management fees were $136.9 million and $132.2
     million as of December 31, 1997 and 1996, respectively.

     On behalf of the Company,  Comcast seeks and secures long-term  programming
     contracts that generally  provide for payment based on either a monthly fee
     per subscriber per channel or a percentage of certain subscriber  revenues.
     Comcast  charges each of the Company's  subsidiaries  for  programming on a
     basis which  generally  approximates  the amount that each such  subsidiary
     would  be  charged  if it  purchased  such  programming  directly  from the
     supplier,  subject to  limitations  imposed by debt  facilities for certain
     subsidiaries,  and did not benefit from the  purchasing  power of Comcast's
     consolidated  operations.  Amounts  charged to the  Company by Comcast  for
     programming (the "Programming  Charges") are included in operating expenses
     in  the  Company's  consolidated  statement  of  operations.   The  Company
     purchases  certain  other  services,   including   insurance  and  employee
     benefits,  from  Comcast  under  cost-sharing  arrangements  on terms  that
     reflect Comcast's actual cost. The Company  reimburses  Comcast for certain
     other costs  (primarily  salaries) under  cost-reimbursement  arrangements.
     Under all of these  arrangements,  the Company  incurred  total expenses of
     $673.3  million,  $505.0  million  and  $439.4  million,  including  $560.3
     million, $417.0 million and $368.3 million of Programming Charges, in 1997,
     1996 and 1995, respectively. The Programming Charges include $46.7 million,
     $26.2  million  and $21.7  million  in 1997,  1996 and 1995,  respectively,
     relating to programming  purchased by the Company,  through  Comcast,  from
     suppliers in which Comcast holds an equity interest.

     Comcast has agreed to permit certain of the Company's subsidiaries to defer
     payment of a portion of the Programming  Charges with the deferred  portion
     being treated as a subordinated  long-term liability due to affiliate which
     will not be payable  until the  subsidiaries'  existing  long-term  debt is
     retired.  In addition,  payment of certain of the  Programming  Charges has
     been  deferred  until  CalPERS  no  longer  has an  interest  in  the  LLC.
     Programming  Charges  deferred in 1997,  1996 and 1995 were $102.3 million,
     $62.3 million and $58.1 million, respectively. In 1995, subsidiaries of the
     Company repaid $89.2 million of previously  deferred  Programming  Charges.
     Deferred  Programming  Charges were $261.9 million and $159.6 million as of
     December 31, 1997 and 1996, respectively.

     Current due to  affiliates  in the  Company's  consolidated  balance  sheet
     primarily  consists of amounts due to Comcast and its affiliates  under the
     cost-sharing  arrangements  described  above and amounts payable to Comcast
     and its  affiliates  as  reimbursement  for payments  made, in the ordinary
     course of business, by such affiliates on behalf of the Company.

     The Company has entered into a custodial  account  arrangement with Comcast
     Financial  Agency  Corporation  ("CFAC"),  a  wholly  owned  subsidiary  of
     Comcast, under which CFAC provides cash management services to the Company.
     Under this arrangement,  the Company's cash receipts are deposited with and
     held by CFAC, as custodian

                                     - 30 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     and agent,  which invests and disburses  such funds at the direction of the
     Company. As of December 31, 1997 and 1996, $56.6 million and $53.5 million,
     respectively,  of the Company's  cash was held by CFAC.  These amounts have
     been classified as cash held by an affiliate in the Company's  consolidated
     balance sheet. During the years ended December 31, 1997, 1996 and 1995, the
     Company  recognized  investment income of $3.9 million,  $4.1 million,  and
     $0.5 million, respectively, on cash held by CFAC.

7.   INCOME TAXES

     The Company and its 80% or more owned subsidiaries (the "Cable Consolidated
     Group")  join with  Comcast  in filing a  consolidated  federal  income tax
     return.  Comcast  allocates income tax expense or benefit to the Company as
     if the Company  was filing a separate  federal  income tax return.  Comcast
     Communications  Properties,   Inc.  ("CCP"),  an  indirect  majority  owned
     subsidiary of the Company, files a separate consolidated federal income tax
     return. Tax benefits from both losses and tax credits are made available to
     the Company as it is able to realize  such  benefits  on a separate  return
     basis.  The Company  pays  Comcast for income  taxes an amount equal to the
     amount of tax it would pay if it filed a separate tax return.

     The LLC is treated as a partnership  for income tax purposes.  As such, any
     taxable  income or loss  attributable  to the LLC,  excluding any income or
     loss from its subsidiaries,  flows through to the Company and CalPERS based
     on their respective ownership percentages.

     Income  tax  benefit  consists  of the  following  components  (dollars  in
     millions):
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996              1995
<S>                                                                 <C>                <C>             <C>    
     Current expense
     Federal..............................................           $                 $32.8            $19.7
     State................................................             6.1               7.3              4.8
                                                                    ------             -----           ------ 
                                                                       6.1              40.1             24.5
                                                                    ------             -----           ------ 
     Deferred (benefit) expense
     Federal..............................................           (48.2)            (48.3)           (49.9)
     State................................................            (1.5)              3.7              0.5
                                                                    ------             -----           ------ 
                                                                     (49.7)            (44.6)           (49.4)
                                                                    ------             -----           ------ 
     Income tax benefit...................................          ($43.6)            ($4.5)          ($24.9)
                                                                    ======             =====           ====== 
</TABLE>

     The effective  income tax benefit of the Company differs from the statutory
     amount because of the effect of the following items (dollars in millions):
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996              1995
<S>                                                                 <C>               <C>              <C>    
     Federal tax at statutory rate........................          ($61.8)           ($17.1)          ($34.5)
     Non-deductible depreciation and amortization.........            21.5              12.5             11.1
     State income taxes, net of federal benefit...........             3.1               7.2              3.4
     Interest income, taxable to CalPERS..................            (6.7)             (5.9)            (5.3)
     Other................................................             0.3              (1.2)             0.4
                                                                    ------             -----           ------ 
     Income tax benefit...................................          ($43.6)            ($4.5)          ($24.9)
                                                                    ======             =====           ====== 
</TABLE>

                                     - 31 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Deferred income tax benefit resulted from the following differences between
     financial and income tax reporting (dollars in millions):
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996              1995
<S>                                                                 <C>               <C>              <C>    
     Depreciation and amortization........................          ($87.5)           ($54.9)          ($50.4)
     Accrued expenses not currently deductible............                              (1.0)
     Deductible costs accrued in prior years..............             2.8               6.5              2.2
     Change in temporary differences associated
         with sale or exchange of securities..............            (6.9)              6.9
     Change in net operating loss carryforwards...........            44.6              (4.4)            (2.7)
     Change in valuation allowance and other..............            (2.7)              2.3              1.5
                                                                    ------             -----           ------ 
     Deferred income tax benefit..........................          ($49.7)           ($44.6)          ($49.4)
                                                                    ======             =====           ====== 
</TABLE>

     Significant  components  of the Company's net deferred tax liability are as
     follows (dollars in millions):
<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                      1997              1996
<S>                                                                                  <C>              <C>    
     Deferred tax assets:
         Net operating loss carryforwards.......................................      $132.9           $176.9
         Less valuation allowance...............................................       (97.5)           (97.5)
                                                                                    --------         --------
                                                                                        35.4             79.4
     Deferred tax liabilities, principally differences between book
         and tax basis of property and equipment and deferred charges...........     1,523.8          1,659.7
                                                                                    --------         --------
         Net deferred tax liability.............................................    $1,488.4         $1,580.3
                                                                                    ========         ========
</TABLE>

     The Company's  valuation  allowance  against  deferred tax assets  includes
     approximately $60.0 million for which any subsequent tax benefit recognized
     will be  allocated  to  reduce  goodwill  and other  noncurrent  intangible
     assets. For income tax reporting purposes, the Cable Consolidated Group and
     CCP have net operating  loss  carryforwards  for which  deferred tax assets
     have  been  recorded  of   approximately   $75  million  and  $25  million,
     respectively, which would expire on a separate return basis through 2011.

8.   STATEMENT OF CASH FLOWS-SUPPLEMENTAL INFORMATION

     The Company made cash payments for interest on its long-term debt of $225.4
     million,  $214.4  million  and  $251.3  million  in 1997,  1996  and  1995,
     respectively.  The Company  made cash  payments  for  interest on the Notes
     Payable of $36.1 million, $25.9 million and $22.3 million in 1997, 1996 and
     1995, respectively.

     The Company made cash payments to Comcast for federal income taxes of $32.9
     million,   $19.9  million  and  $5.1  million  in  1997,   1996  and  1995,
     respectively. The Company made cash payments to the respective state taxing
     authorities  for state income taxes of $7.0 million,  $6.6 million and $7.1
     million in 1997, 1996 and 1995, respectively.

9.   COMMITMENTS AND CONTINGENCIES

     Commitments
     At any time after  December  18, 2001,  CalPERS may elect to liquidate  its
     interest in the LLC, a 55% owned indirect  subsidiary of the Company (which
     holds the United  States  cable  television  operations  formerly  known as
     Maclean  Hunter  Limited) in which CalPERS owns the remaining 45% interest,
     at a price  based  upon the fair  value of  CalPERS'  interest  in the LLC,
     adjusted,  under certain  circumstances,  for certain performance  criteria
     relating to the fair value of the LLC or to Comcast's common stock.  Except
     in certain limited circumstances, Comcast, at its option,

                                     - 32 -
<PAGE>
COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Concluded)

     may satisfy this liquidity  arrangement by purchasing CalPERS' interest for
     cash, by issuing its common stock  (subject to certain  limitations)  or by
     selling the LLC.

     In December  1996,  an indirect  majority  owned  subsidiary of the Company
     entered into an operating lease agreement granting certain rights of use of
     certain  non-cable  assets to the  counterparty for a period of five years,
     subject to certain  conditions.  Pursuant  to this  agreement,  the Company
     received  an  advance  payment  of $17.0  million,  representing  the total
     minimum lease  payments to be received over the lease term. The Company has
     recorded this amount in other  long-term  liabilities  in its  consolidated
     balance  sheet and is  amortizing  such  amount to service  income over the
     lease term on a straight-line basis.

     Minimum  annual rental  commitments  for office space and  equipment  under
     noncancelable operating leases are as follows (dollars in millions):

              1998...........................................         $8.7
              1999...........................................          6.6
              2000...........................................          5.9
              2001...........................................          5.5
              2002...........................................          4.6
              Thereafter.....................................         15.2

     Pole  rentals  have  been  excluded  from the  above  schedule  as they are
     generally cancelable after an initial period by either party upon notice.

     Rental expense (including pole rentals) of $22.6 million, $19.7 million and
     $17.8  million  has been  charged  to  operations  in 1997,  1996 and 1995,
     respectively.

     Contingencies
     The Company is subject to legal  proceedings  and claims which arise in the
     ordinary course of its business.  In the opinion of management,  the amount
     of ultimate  liability  with respect to these  actions will not  materially
     affect the  financial  position,  results of operations or liquidity of the
     Company.

     In December 1995, the Federal Communications  Commission ("FCC") adopted an
     order approving a negotiated  settlement of rate complaints pending against
     the Company for cable  programming  service tiers  ("CPSTs") which provided
     $6.6 million in refunds,  plus interest,  given in the form of bill credits
     during 1996, to 1.3 million of the Company's cable subscribers. The FCC and
     the Company  recently  negotiated a "social  contract" in which the Company
     has committed to complete certain system upgrades and improvements by March
     1999 in  return  for  which  it may  move a  limited  number  of  currently
     regulated  programming  services  in  certain  cable  systems  to a  single
     migrated  product  tier on each system that may become an  unregulated  new
     product  tier  after  December  1997.  The  Company  is also  currently  in
     negotiations  to settle pending  proceedings  involving the Company's basic
     service rates in certain of its systems.  While the Company  cannot predict
     the  outcome  of this  action,  the  Company  believes  that  the  ultimate
     resolution of this  proceeding  will not have a material  adverse impact on
     the Company's financial position, results of operations or liquidity.

                                     - 33 -
<PAGE>

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

     Not applicable.

                                    PART III

The information  called for by Item 10, Directors and Executive  Officers of the
Registrant,  Item 11,  Executive  Compensation,  Item 12, Security  Ownership of
Certain Beneficial Owners and Management, and Item 13, Certain Relationships and
Related Transactions,  is omitted pursuant to Securities and Exchange Commission
General Instruction I of Form 10-K.


                                     - 34 -

<PAGE>

PART IV

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

(a)       The  following  consolidated  financial  statements of the Company are
          included in Part II, Item 8:

          Independent Auditors' Report.......................................17
          Consolidated Balance Sheet--December 31, 1997 and 1996.............18
          Consolidated Statement of Operations--Years
           Ended December 31, 1997, 1996 and 1995............................19
          Consolidated Statement of Cash Flows--Years
           Ended December 31, 1997, 1996 and 1995............................20
          Consolidated Statement of Stockholder's Equity
           (Deficiency) Years Ended December 31, 1997, 1996 and 1995.........21
          Notes to Consolidated Financial Statements.........................22

(b)(i)    The following  financial  statement  schedules required to be filed by
          Items 8 and 14(d) of Form 10-K are included in Part IV:

          Schedule  I  -   Condensed   Financial   Information   of   Registrant
          Unconsolidated (Parent Only)
          Schedule II - Valuation and Qualifying Accounts

          All other schedules are omitted  because they are not applicable,  not
          required or the required  information is included in the  consolidated
          financial statements or notes thereto.

(c)       Reports on Form 8-K

          (i)  Comcast Cable Communications, Inc. filed a Current Report on Form
               8-K under Item 1 on October  27,  1997  relating to the change in
               control of the Registrant.

(d)       Exhibits required to be filed by Item 601 of Regulation S-K:

         3.1       Certificate   of   Incorporation   filed  on  April  2,  1981
                   (incorporated by reference to Exhibit 3.1(a) to the Company's
                   Registration  Statement  S-4, as amended,  filed on September
                   22, 1997).

         3.2       By-laws  (incorporated  by  reference  to Exhibit  3.2 to the
                   Company's  Registration  Statement S-4, as amended,  filed on
                   September 22, 1997).

         4.1(a)    Indenture  dated as of May 1, 1997 by and between the Company
                   and Bank of Montreal Trust Company (incorporated by reference
                   to Exhibit 4.1(a) to the Company's  Registration Statement S-
                   4, as amended, filed on September 22, 1997).

         4.1(b)    Form of Notes  relating to the  Company's 8 1/8% Senior Notes
                   due 2004,  8 3/8% Senior  Notes due 2007, 8 7/8% Senior Notes
                   due 2017 and 8 1/2% Senior  Notes due 2027  (incorporated  by
                   reference  to Exhibit  4.1(b) to the  Company's  Registration
                   Statement S-4, as amended, filed on September 22, 1997).

         10.1      Tax Sharing  Agreement,  dated as of December 2, 1992,  among
                   Storer Communications, Inc., TKR Cable I, Inc., TKR Cable II,
                   Inc., TKR Cable III, Inc., Tele-Communications, Inc., Comcast
                   Corporation and each of the Departing  Subsidiaries  that are
                   signatories  thereto  (incorporated by reference to Exhibit 4
                   to Comcast  Corporation's Current Report on Form 8-K filed on
                   December  17,  1992,  as amended  by Form 8 filed  January 8,
                   1993).

         10.2      Tax  Sharing  Agreement,  dated  December  2,  1992,  between
                   Comcast Corporation and Comcast Storer, Inc. (incorporated by
                   reference  to  Exhibit  9 to  Comcast  Corporation's  Current
                   Report on Form 8-K filed on December 17, 1992,  as amended by
                   Form 8 filed January 8, 1993).

         10.3      Comcast MHCP Holdings,  L.L.C.  Amended and Restated  Limited
                   Liability Company  Agreement,  dated as of December 18, 1994,
                   among  the  Company,   The   California   Public   Employees'
                   Retirement System and, for certain limited purposes,  Comcast
                   Corporation  (incorporated  by  reference  to Exhibit 10.1 to
                   Comcast  Corporation's  Current  Report  on Form 8-K filed on
                   January 6, 1995).

                                     - 35 -
<PAGE>
         10.4      Credit  Agreement,  dated  as of  December  22,  1994,  among
                   Comcast MH  Holdings,  Inc.,  the banks listed  therein,  The
                   Chase Manhattan Bank (National  Association),  NationsBank of
                   Texas,  N.A.  and the  Toronto-Dominion  Bank,  as  Arranging
                   Agents,  The  Bank of New  York,  The  Bank  of Nova  Scotia,
                   Canadian  Imperial Bank of Commerce and Morgan Guaranty Trust
                   Company of New York, as Managing  Agents and  NationsBank  of
                   Texas,  N.A.,  as  Administrative   Agent   (incorporated  by
                   reference  to Exhibit 10.2 to Comcast  Corporation's  Current
                   Report on Form 8-K filed on January 6, 1995).

         10.5      Pledge  Agreement,  dated as of December  22,  1994,  between
                   Comcast MH Holdings,  Inc. and NationsBank of Texas, N.A., as
                   the secured party  (incorporated by reference to Exhibit 10.3
                   to Comcast  Corporation's Current Report on Form 8-K filed on
                   January 6, 1995).

         10.6      Pledge  Agreement  dated as of  December  22,  1994,  between
                   Comcast  Communications  Properties,  Inc. and NationsBank of
                   Texas, N.A., as the Secured Party  (incorporated by reference
                   to Exhibit 10.4 to Comcast  Corporation's  Current  Report on
                   Form 8-K filed on January 6, 1995).

         10.7      Affiliate   Subordination  Agreement  (as  the  same  may  be
                   amended, modified, supplemented, waived, extended or restated
                   from time to time,  this  "Agreement"),  dated as of December
                   22, 1994,  among  Comcast  Corporation,  Comcast MH Holdings,
                   Inc.  (the  "Borrower"),  any  affiliate of the Borrower that
                   shall have become a party thereto and  NationsBank  of Texas,
                   N.A.,  as  Administrative  Agent  under the Credit  Agreement
                   dated as of December 22, 1994, among the Borrower,  the Banks
                   listed   therein,   The  Chase   Manhattan   Bank   (National
                   Association),    NationsBank   of   Texas,   N.A.   and   The
                   Toronto-Dominion  Bank, as Arranging Agents.  The Bank of New
                   York,  The Bank of Nova  Scotia,  Canadian  Imperial  Bank of
                   Commerce and Morgan  Guaranty  Trust  Company of New York, as
                   Managing Agents, and the Administrative  Agent  (incorporated
                   by reference to Exhibit 10.5 to Comcast Corporation's Current
                   Report on Form 8-K filed on January 6, 1995).

         10.8      Registration Rights and Price Protection Agreement,  dated as
                   of December 22, 1994, by and between Comcast  Corporation and
                   The   California   Public   Employees'    Retirement   System
                   (incorporated   by  reference  to  Exhibit  10.8  to  Comcast
                   Corporation's  Current Report on Form 8-K filed on January 6,
                   1995).

         10.9      Management  Agreement,  dated as of April 24,  1997,  between
                   Comcast Cable  Communications,  Inc. and Comcast  Corporation
                   (incorporated  by reference to Exhibit 10.11 to the Company's
                   Registration  Statement  S-4, as amended,  filed on September
                   22, 1997).

         10.10     Promissory Note,  dated as of June 30, 1997,  between Comcast
                   Cable   Communications,    Inc.   and   Comcast   Corporation
                   (incorporated  by reference to Exhibit 10.12 to the Company's
                   Registration  Statement  S-4, as amended,  filed on September
                   22, 1997).

         10.11     Promissory  Note,  dated as of July 2, 1997,  between Comcast
                   Cable   Communications,    Inc.   and   Comcast   Corporation
                   (incorporated  by reference to Exhibit 10.13 to the Company's
                   Registration  Statement  S-4, as amended,  filed on September
                   22, 1997).

         10.12     Credit  Agreement,  dated  as of  November  15,  1996,  among
                   Comcast  SCH  Holdings,   Inc.,  the  banks  listed  therein,
                   Nationsbank of Texas, N.A., as Documentation Agent, The Chase
                   Manhattan Bank, as Syndication  Agent,  The Bank of New York,
                   The Chase Manhattan Bank and  Nationsbank of Texas,  N.A., as
                   Managing Agents,  and The Bank of New York, as Administrative
                   Agent  (incorporated by reference to Exhibit 10.35 to Comcast
                   Corporation's Form 10-K filed on March 3, 1998).

         12.1      Statement  re:  Computation  of  Ratio of  Earnings  to Fixed
                   Charges.

         27.1      Financial Data Schedule.

                                     - 36 -
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf  by  the   undersigned,   thereunto  duly  authorized  in   Philadelphia,
Pennsylvania on March 25, 1998.

                                       Comcast Cable Communications, Inc.



                                       By: /s/ Brian L. Roberts
                                           --------------------------
                                           Brian L. Roberts
                                           Vice Chairman and Director

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


SIGNATURE                       TITLE                                 DATE

/s/ Ralph J. Roberts
---------------------
Ralph J. Roberts          Chairman; Director                    March 25, 1998


/s/ Julian A. Brodsky
---------------------
Julian A. Brodsky         Vice Chairman; Director               March 25, 1998


/s/ Brian L. Roberts
---------------------
Brian L. Roberts          Vice Chairman; Director (Principal    March 25, 1998
                          Executive Officer)

/s/ Lawrence S. Smith
---------------------
Lawrence S. Smith         Executive Vice President              March 25, 1998
                         (Principal Accounting Officer)

/s/ John R. Alchin
---------------------
John R. Alchin            Senior Vice President, Treasurer      March 25, 1998
                         (Principal Financial Officer)

/s/ Stanley L. Wang
---------------------
Stanley L. Wang           Senior Vice President, Secretary;     March 25, 1998
                          Director

                                     - 37 -

<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholder
Comcast Cable Communications, Inc.
Wilmington, Delaware


We  have  audited  the  consolidated   financial  statements  of  Comcast  Cable
Communications,  Inc. (a wholly owned subsidiary of Comcast Corporation) and its
subsidiaries  as of December 31, 1997 and 1996,  and for each of the three years
in the period ended  December 31, 1997, and have issued our report thereon dated
February 27,  1998;  such report is included  elsewhere  in this Form 10-K.  Our
audits  also  included  the  financial  statement  schedules  of  Comcast  Cable
Communications,  Inc. and its  subsidiaries,  listed in Item 14. These financial
statement  schedules are the  responsibility  of the Company's  management.  Our
responsibility  is to express an opinion  based on our audits.  In our  opinion,
such financial  statement  schedules,  when  considered in relation to the basic
consolidated  financial  statements  taken as a  whole,  present  fairly  in all
material respects the information set forth therein.


/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
February 27, 1998

                                     - 38 -
<PAGE>
               COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

                 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF

                     REGISTRANT UNCONSOLIDATED (PARENT ONLY)

                             CONDENSED BALANCE SHEET

                    (Dollars in millions, except share data)
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                           1997             1996
<S>                                                                                          <C>               <C> 
ASSETS
CURRENT ASSETS
   Other current assets.........................................................             $0.2              $2.7
                                                                                         --------            ------
       Total current assets.....................................................              0.2               2.7
                                                                                         --------            ------

Investments in and amounts due to/from subsidiaries eliminated
   upon consolidation, net......................................................            307.5             265.4

Notes receivable from affiliate.................................................          1,783.5

Deferred income taxes...........................................................                                7.5

Deferred charges, net...........................................................             17.1
                                                                                         --------            ------
                                                                                         $2,108.3            $275.6
                                                                                         ========            ======

LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
   Accrued interest and other...................................................            $24.1              $1.4
                                                                                         --------            ------
       Total current liabilities................................................             24.1               1.4
                                                                                         --------            ------
   Long-term debt...............................................................          1,691.1
                                                                                         --------            ------
   Notes payable to affiliates..................................................             72.3             178.9
                                                                                         --------            ------
   Taxes payable, due to affiliates.............................................             51.9
                                                                                         --------            ------
   Other long-term liabilities .................................................              1.8
                                                                                         --------            ------

Stockholder's equity
   Common stock, $1 par value - authorized and issued, 1,000 shares.............
   Additional capital...........................................................          3,066.2           3,050.6
   Accumulated deficit..........................................................         (2,799.1)         (2,124.0)
   Unrealized loss on marketable securities held by a subsidiary................                               (1.4)
   Notes receivable from affiliate held by subsidiaries.........................                             (829.9)
                                                                                         --------            ------
       Total stockholder's equity...............................................            267.1              95.3
                                                                                         --------            ------
                                                                                         $2,108.3            $275.6
                                                                                         ========            ======
</TABLE>

                                     - 39 -
<PAGE>
               COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

                SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF

                     REGISTRANT UNCONSOLIDATED (PARENT ONLY)

            CONDENSED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT

                                  (In millions)
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1997              1996             1995
<S>                                                                        <C>             <C>               <C> 
AMORTIZATION..................................................              $1.0         $                 $
                                                                       ---------        ---------         --------- 

OPERATING LOSS................................................               1.0

OTHER (INCOME) EXPENSE
   Interest (income) expense on affiliate notes, net..........             (93.3)            16.4              14.1
   Interest expense (income), net.............................              96.5             (0.6)             (1.1)
   Equity in net losses of affiliates.........................             117.9              5.1              36.3
                                                                       ---------        ---------         --------- 
                                                                           121.1             20.9              49.3

LOSS BEFORE INCOME TAX EXPENSE................................            (122.1)           (20.9)            (49.3)

INCOME TAX EXPENSE............................................               6.7              1.7               2.0
                                                                       ---------        ---------         --------- 

NET LOSS......................................................            (128.8)           (22.6)            (51.3)

ACCUMULATED DEFICIT
   Beginning of year..........................................          (2,124.0)        (2,101.4)         (2,050.1)
   Elimination of outstanding notes receivable from
     affiliate through a non-cash dividend to Comcast.........            (546.3)
                                                                       ---------        ---------         --------- 

   End of year................................................         ($2,799.1)       ($2,124.0)        ($2,101.4)
                                                                       =========        =========         ========= 
</TABLE>

                                     - 40 -
<PAGE>
               COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

                SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF

                     REGISTRANT UNCONSOLIDATED (PARENT ONLY)

                        CONDENSED STATEMENT OF CASH FLOWS

                                  (In millions)
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                         1997              1996             1995
<S>                                                                      <C>               <C>               <C>    
OPERATING ACTIVITIES
   Net loss...................................................           ($128.8)          ($22.6)           ($51.3)
   Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
     Amortization.............................................               1.0
     Equity in net losses of affiliates.......................             117.9              5.1              36.3
     Deferred income tax (benefit) expense ...................              (1.5)            (4.3)              0.2
                                                                        --------             ----             ----- 
                                                                           (11.4)           (21.8)            (14.8)

     Decrease (increase) in other current assets..............               4.6              2.0              (1.6)
     Increase in accrued interest and other...................              22.7              0.2
     Increase in taxes payable, due to affiliates ............              51.9
     Increase in other long-term liabilities .................               1.8
                                                                        --------             ----             ----- 
       Net cash provided by (used in) operating activities....              69.6            (19.6)            (16.4)
                                                                        --------             ----             ----- 

FINANCING ACTIVITIES
   Proceeds from borrowings...................................           1,691.1
   Proceeds from notes payable to affiliate...................              72.3                               48.2
   Repayment of notes payable to affiliates...................             (45.0)
   Deferred financing costs...................................             (18.1)             0.3               1.4
                                                                        --------             ----             ----- 
     Net cash provided by financing activities................           1,700.3              0.3              49.6
                                                                        --------             ----             ----- 

INVESTING ACTIVITIES
   Net transactions with affiliates...........................          (1,769.9)            14.8             (41.3)
                                                                        --------             ----             ----- 
     Net cash (used in) provided by investing activities......          (1,769.9)            14.8             (41.3)
                                                                        --------             ----             ----- 

DECREASE IN CASH AND CASH EQUIVALENTS.........................                               (4.5)             (8.1)

CASH AND CASH EQUIVALENTS, beginning of year..................                                4.5              12.6
                                                                        --------             ----             ----- 

CASH AND CASH EQUIVALENTS, end of year........................          $                    $                 $4.5
                                                                        ========             ====             ===== 
</TABLE>

                                     - 41 -
<PAGE>
               COMCAST CABLE COMMUNICATIONS, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                  (In millions)

<TABLE>
<CAPTION>
                                                                                  Additions
                                                       Balance at                Charged to   Deductions      Balance
                                                        Beginning    Effect of    Costs and      from         at End
                                                         of Year   Acquisitions   Expenses    Reserves(A)     of Year

Allowance for Doubtful Accounts
<S>                                                      <C>           <C>        <C>          <C>           <C>  
   1997.....................................             $12.0         $           $18.4        $13.7         $16.7

   1996.....................................              10.7          1.4         15.7         15.8          12.0

   1995.....................................               8.4                      23.3         21.0          10.7

</TABLE>

(A) Uncollectible accounts written off.

                                     - 42 -