<PAGE>   1
===============================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

  [x]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
                 
                                      OR

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

          For the transition period from ___________ to__________

          Commission File Number:  0-18495

                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


            GEORGIA                                        58-1754588
-------------------------------                       ----------------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                        Identification Number)

 10900 WILSHIRE BOULEVARD - 15TH FLOOR
        LOS ANGELES, CALIFORNIA                                90024
---------------------------------------               ----------------------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:         (310)824-9990

Securities registered pursuant to Section 12 (b) of the Act:     NONE

Securities registered pursuant to Section 12 (g) of the Act:


                                                      Name of each exchange
         Title of Each Class                           on which registered
         -------------------                          ---------------------
UNITS OF LIMITED PARTNERSHIP INTEREST                          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
amendment to this Form 10-K.  [X]

         State the aggregate market value of the voting equity securities held
by non-affiliates of the registrant - all of the registrant's 36,626 units of
limited partnership interests, its only class of equity securities, are held by
non-affiliates.  There is no public trading market for the units, and transfers
of units are subject to certain restrictions; accordingly, the registrant is
unable to state the market value of the units held by non-affiliates.
===============================================================================
                   The Exhibit Index is located at Page E-1.
<PAGE>   2
                                     PART I

ITEM 1.          BUSINESS

INTRODUCTION

                 Enstar Income/Growth Program Six-B, L.P., a Georgia limited
partnership (the "Partnership"), is engaged in the ownership, operation and
development, and, when appropriate, sale or other disposition, of cable
television systems in small to medium-sized communities.  The Partnership was
formed on September 23, 1987. The general partners of the Partnership are
Enstar Communications Corporation, a Georgia corporation (the "Corporate
General Partner"), and Robert T. Graff, Jr. (the "Individual General Partner"
and, together with the Corporate General Partner, the "General Partners"). On
September 30, 1988, ownership of the Corporate General Partner was acquired by
Falcon Cablevision, a California limited partnership that has been engaged in
the ownership and operation of cable television systems since 1984 ("Falcon
Cablevision"). The general partner of Falcon Cablevision is Falcon Holding
Group, L.P. ("FHGLP"), which provides certain management services to the
Partnership.  The general partner of FHGLP is Falcon Holding Group, Inc., a
California corporation ("FHGI").  See Item 13., "Certain Relationships and
Related Transactions."  The General Partner, FHGLP and affiliated companies are
responsible for the day to day management of the Partnership and its
operations.  See "Employees" below.

                 A cable television system receives television, radio and data
signals at the system's "headend" site by means of over-the-air antennas,
microwave relay systems and satellite earth stations.  These signals are then
modulated, amplified and distributed, primarily through coaxial and fiber optic
distribution systems, to customers who pay a fee for this service.  Cable
television systems may also originate their own television programming and
other information services for distribution through the system.  Cable
television systems generally are constructed and operated pursuant to
non-exclusive franchises or similar licenses granted by local governmental
authorities for a specified term of years.

                 The Partnership's cable television systems, (the "systems")
offer customers various levels (or "tiers") of cable services consisting of
broadcast television signals of local network, independent and educational
stations, a limited number of television signals from so-called "super
stations" originating from distant cities (such as WTBS and WGN), various
satellite-delivered, non-broadcast channels (such as Cable News Network
("CNN"), MTV:  Music Television ("MTV"), the USA Network ("USA"), ESPN, Turner
Network Television ("TNT") and The Disney Channel), programming originated
locally by the cable television system (such as public, educational and
governmental access programs) and informational displays featuring news,
weather, stock market and financial reports and public service announcements.
A number of the satellite services are also offered in certain packages. For an
extra monthly charge, the systems also offer "premium" television services to
their customers.  These services (such as Home Box Office ("HBO"), Showtime and
selected regional sports networks) are satellite channels that consist
principally of feature films, live sporting events, concerts and other special
entertainment features, usually presented without commercial interruption.  See
"Legislation and Regulation."

                 A customer generally pays an initial installation charge and
fixed monthly fees for basic, expanded basic, other tiers of satellite services
and premium programming services.  Such monthly service fees constitute the
primary source of revenues for the systems.  In addition to customer revenues,
the systems receive revenue from additional fees paid by customers for
pay-per-view programming of movies and special events and from the sale of
available advertising spots on advertiser-supported programming. The systems
also offer to their customers home shopping services, which pay the systems a
share of revenues from sales of products in the systems' service areas, in
addition to paying the systems a separate fee in return for carrying their
shopping service. Certain other new channels have also recently offered the
cable systems managed by FHGLP, including those of the Partnership, fees in
return for carrying their service.  Due to a lack of channel capacity available
for adding new channels, the Partnership's management cannot predict the impact
of such


                                       -2-
                                                                        
<PAGE>   3
potential payments on the Partnership's business.  See Item 7., "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."

                 During January 1990, the Partnership began its cable
television business operations with the acquisition of a small cable television
system providing service to approximately 200 customers in the city of Ivins,
Utah.  During 1990, two additional acquisitions were completed serving the
communities in and around Fisk, Missouri and Villa Rica, Georgia.  As of
December 31, 1996, the Partnership served approximately 7,000 homes subscribing
to cable service.  The Partnership does not expect to make any additional
material acquisitions during the remaining term of the Partnership.

                 FHGLP receives a management fee and reimbursement of expenses
from the Corporate General Partner for managing the Partnership's cable
television operations.  See Item 11., "Executive Compensation."

                 The Chief Executive Officer of FHGLP is Marc B. Nathanson.
Mr. Nathanson has managed FHGLP or its predecessors since 1975.  Mr. Nathanson
is a veteran of more than 27 years in the cable industry and, prior to forming
FHGLP's predecessors, held several key executive positions with some of the
nation's largest cable television companies.  The principal executive offices
of the Partnership, the Corporate General Partner and FHGLP are located at
10900 Wilshire Boulevard, 15th Floor, Los Angeles, California 90024, and their
telephone number is (310) 824-9990.  See Item 10., "Directors and Executive
Officers of the Registrant."

BUSINESS STRATEGY

                 Historically, the Partnership has followed a systematic
approach to acquiring, operating and developing cable television systems based
on the primary goal of increasing operating cash flow while maintaining the
quality of services offered by its cable television systems.  The Partnership's
business strategy has focused on serving small to medium-sized communities.
The Partnership believes that given a similar technical profile, its cable
television systems generally involve less risk of increased competition than
systems in large urban cities. In the Partnership's markets, consumers have
access to only a limited number of over-the-air broadcast television signals.
In addition, these markets typically offer fewer competing entertainment
alternatives than large cities.  As a result, the Partnership's cable
television systems generally have a more stable customer base than systems in
large cities.  Nonetheless, the Partnership believes that all cable operators
will face increased competition in the future from alternative providers of
multi-channel video programming services.  See "Competition."

                 Adoption of rules implementing certain provisions of the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act") by the Federal Communications Commission (the "FCC") has had a negative
impact on the Partnership's revenues and cash flow.  These rules are subject to
further amendment to give effect to the Telecommunications Act of 1996 (the
"1996 Telecom Act").  See "Legislation and Regulation" and Item 7.,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

                 Clustering

               The Partnership has sought to acquire cable television
operations in communities that are proximate to other owned or affiliated
systems in order to achieve the economies of scale and operating efficiencies
associated with regional "clusters."  The Partnership believes clustering can
reduce marketing and personnel costs and can also reduce capital expenditures
in cases where cable service can be delivered through a central headend
reception facility.





                                        -3-
                                                                         
<PAGE>   4
                 Capital Expenditures

                 As noted in "Technological Developments", the Partnership's
systems have almost no available channel capacity with which to add new
channels or to further expand their use of pay-per-view offerings to customers.
As a result, significant amounts of capital for future upgrades will be
required in order to increase available channel capacity, improve quality of
service and facilitate the expansion of new services such as advertising,
pay-per-view, new unregulated tiers of satellite-delivered services and home
shopping, so that the systems remain competitive within the industry.

                 The Partnership's management has selected a technical standard
that incorporates a 750 MHz fiber to the feeder architecture for the majority
of all its systems that are to be rebuilt.  A system built to a 750 MHz
standard can provide approximately 95 channels of analog service.  Such a
system will also permit the Partnership to introduce high speed data
transmission and telephony services in the future after incurring incremental
capital expenditures related to these services.

                 The Partnership has budgeted capital expenditures of
approximately $687,000 in 1997.  The Partnership's future capital expenditure
plans are, however, all subject to the availability of adequate capital on
terms satisfactory to the Partnership, of which there can be no assurance.  As
discussed in prior reports, the Partnership postponed a number of rebuild and
upgrade projects that were planned for 1994, 1995 and 1996 because of the
uncertainty related to implementation of the 1992 Cable Act and the negative
impact thereof on the Partnership's business and access to capital.  As a
result, the Partnership's systems will be significantly less technically
advanced than had been expected prior to the implementation of re-regulation.
The Partnership believes that the delays in upgrading its systems will, under
present market conditions, most likely have an adverse effect on the value of
those systems compared to systems that have been rebuilt to a higher technical
standard.  See "Legislation and Regulation" and Item 7., "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."

                 Decentralized Management

                 The Corporate General Partner manages the Partnership's
systems on a decentralized basis. The Corporate General Partner believes that
its decentralized management structure, by enhancing management presence at the
system level, increases its sensitivity to the needs of its customers, enhances
the effectiveness of its customer service efforts, eliminates the need for
maintaining a large centralized corporate staff and facilitates the maintenance
of good relations with local governmental authorities.

                 Marketing

                 The Partnership has made substantial changes in the way in
which it packages and sells its services and equipment in the course of its
implementation of the FCC's rate regulations promulgated under the 1992 Cable
Act.  Historically, the Partnership had offered programming packages in its
systems.  These packages combined services at a lower rate than the aggregate
rates for such services purchased individually on an "a la carte" basis.  The
new rules require that charges for cable-related equipment (e.g., converter
boxes and remote control devices) and installation services be unbundled from
the provision of cable service and based upon actual costs plus a reasonable
profit.  On November 10, 1994, the FCC announced the adoption of further
significant amendments to its rules.  One amendment allows cable operators to
create new tiers of program services which the FCC has chosen to exclude from
rate regulation, so long as the programming is new to the system.  However, in
applying this new policy to packages such as those already offered by the
Partnership and numerous other cable operators, the FCC decided that where only
a few services were moved from regulated tiers to a non-premium "new product
tier" package, the package will be treated as if it were a tier of new program
services as discussed above.  Substantially all of the new product tier
packages offered by the Partnership have received this desirable treatment.  In
addition, the FCC decided that discounted packages of non-premium programming
services will be subject to rate





                                        -4-
                                                                         
<PAGE>   5
regulation in the future.  These amendments to the FCC's rules have allowed the
Partnership to resume its core marketing strategy and reintroduce programmed
service packaging.  As a result, in addition to the basic service package,
customers in substantially all of the systems may purchase an expanded group of
regulated services, additional unregulated packages of satellite-delivered
services and premium services on either an a la carte or a discounted packaged
basis. See "Legislation and Regulation."

                 The Partnership has employed a variety of targeted marketing
techniques to attract new customers by focusing on delivering value, choice,
convenience and quality. The Partnership employs direct mail, radio and local
newspaper advertising, telemarketing and door-to- door selling utilizing
demographic "cluster codes" to target specific messages to target audiences. In
certain systems, the Partnership offers discounts to customers who purchase
premium services on a limited trial basis in order to encourage a higher level
of service subscription. The Partnership also has a coordinated strategy for
retaining customers that includes televised retention advertising to reinforce
the initial decision to subscribe and encourage customers to purchase higher
service levels.

                 Customer Service and Community Relations

                 The Partnership places a strong emphasis on customer service
and community relations and believes that success in these areas is critical to
its business. FHGLP has developed and implemented a wide range of monthly
internal training programs for its employees, including its regional managers,
that focus on FHGLP's operations and employee interaction with customers. The
effectiveness of FHGLP's training program as it relates to the employees'
interaction with customers is monitored on an ongoing basis, and a portion of
the regional managers' compensation is tied to achieving customer service
targets. FHGLP conducts an extensive customer survey for the Partnership on a
periodic basis and uses the information in its efforts to enhance service and
better address the needs of the Partnership customers. In addition, the
Partnership is participating in the industry's Customer Service Initiative
which emphasizes an on-time guarantee program for service and installation
appointments. FHGLP's corporate executives and regional managers lead the
Partnership's involvement in a number of programs benefiting the communities
the Partnership serves, including, among others, Cable in the Classroom, Drug
Awareness, Holiday Toy Drive and the Cystic Fibrosis Foundation. Cable in the
Classroom is the cable television industry's public service initiative to
enrich education through the use of commercial-free cable programming. In
addition, a monthly publication, Cable in the Classroom magazine provides
educational program listings by curriculum area, as well as feature articles on
how teachers across the country use the programs.





                                        -5-
                                                                         
<PAGE>   6
DESCRIPTION OF THE PARTNERSHIP'S SYSTEMS

                 The table below sets forth certain operating statistics for
the Partnership's cable systems as of December 31, 1996.

<TABLE>
<CAPTION>
                                                                                          Average
                                                                                          Monthly
                                                                                          Revenue
                                  Homes                                                   Per Home
                               Subscribing                   Premium                    Subscribing
                     Homes      to Cable        Basic        Service        Premium       to Cable
 System             Passed(1)    Service     Penetration(2)   Units(3)    Penetration(4)  Service(5)   Subscribers(6)
 ------             ------       -------     -----------      -----       -----------     -------      -----------
 <S>                <C>       <C>            <C>           <C>           <C>            <C>            <C>
 Ivins, UT            725           281          38.8%           112         39.9%         $30.56         1,642

 Fisk, MO             770           390          50.6%           133         34.1%         $21.27           364

 Villa Rica, GA     9,345         6,355          68.0%         1,829         28.8%         $31.54         7,449
                    -----         -----                        -----                                      -----

 Total              10,840        7,026          64.8%         2,074         29.5%         $30.90         9,455
                    ======        =====                        =====                                      =====
</TABLE>

--------------
         (1) Homes passed refers to estimates by the Partnership of the
approximate number of dwelling units in a particular community that can be
connected to the distribution system without any further extension of principal
transmission lines.  Such estimates are based upon a variety of sources,
including billing records, house counts, city directories and other local
sources.

         (2) Homes subscribing to cable service as a percentage of homes passed
by cable.

         (3) Premium service units include only single channel services offered
for a monthly fee per channel and do not include tiers of channels offered as a
package for a single monthly fee.  Prior to July 1, 1996, The Disney Channel
was offered as a premium service.  Effective July 1, 1996, it was offered as
part of an unregulated tier of services.  As a result, the number of reported
premium service units was artificially reduced by this service offering change.
The number of Disney Channel premium service units at June 30, 1996 was 78.

         (4) Premium service units as a percentage of homes subscribing to cable
service.  A customer may purchase more than one premium service, each of which
is counted as a separate premium service unit.  This ratio may be greater than
100% if the average customer subscribes for more than one premium service.

         (5) Average monthly revenue per home subscribing to cable service has
been computed based on revenue for the year ended December 31, 1996.

         (6) The Partnership reports subscribers for the systems on an
equivalent subscriber basis and, unless otherwise indicated, the term
"SUBSCRIBERS" means equivalent subscribers, calculated by dividing aggregate
basic service revenues by the average basic service rate within an operating
entity, adjusted to reflect the impact of regulation. Basic service revenues
include charges for basic programming, bulk and commercial accounts and certain
specialized "packaged programming" services, including the appropriate
components of new product tier revenue, and excluding premium television and
non-subscription services. Consistent with past practices, Subscribers is an
analytically derived number which is reported in order to provide a basis of
comparison to previously reported data. The computation of Subscribers has been
impacted by changes in service offerings made in response to the 1992 Cable Act.





                                        -6-
                                                                         
<PAGE>   7
CUSTOMER RATES AND SERVICES

                 The Partnership's cable television systems offer customers
packages of services that include the local area network, independent and
educational television stations, a limited number of television signals from
distant cities, numerous satellite-delivered, non- broadcast channels (such as
CNN, MTV, USA, ESPN, TNT and The Disney Channel) and certain information and
public access channels.  For an extra monthly charge, the systems provide
certain premium television services, such as HBO, Showtime and regional sports
networks.  The Partnership also offers other cable television services to its
customers, including pay-per-view programming and, in certain test markets, the
Sega Channel. For additional charges, in most of its systems, the Partnership
also rents remote control devices and VCR compatible devices (devices that make
it easier for a customer to tape a program from one channel while watching a
program on another).

                 The service options offered by the Partnership vary from
system to system, depending upon a system's channel capacity and viewer
interests.  Rates for services also vary from market to market and according to
the type of services selected.

                 Prior to the adoption of the 1992 Cable Act, the systems
generally were not subject to any rate regulation, i.e., they were adjudged to
be subject to effective competition under then-effective FCC regulations. The
1992 Cable Act, however, substantially changed the statutory and FCC rate
regulation standards. Under the definition of effective competition provided
for in the 1992 Cable Act, nearly all cable television systems in the United
States have become subject to local rate regulation of basic service. The 1996
Telecom Act expanded the definition of effective competition to include
situations in which a local telephone company, or anyone using its facilities,
offers comparable video service by any means except direct broadcast satellite
("DBS"). In addition, the 1992 Cable Act eliminated the 5% annual basic rate
increases previously allowed by the 1984 Cable Act without local approval;
allows the FCC to review rates for non-basic service tiers other than premium
services in response to complaints filed by franchising authorities and/or
cable customers; prohibits cable television systems from requiring customers to
purchase service tiers above basic service in order to purchase premium
services if the system is technically capable of doing so; and adopted
regulations to establish, on the basis of actual costs, the price for
installation of cable television service, remote controls, converter boxes, and
additional outlets. The FCC implemented these rate regulation provisions on
September 1, 1993, affecting all of the Partnership's systems not deemed to be
subject to effective competition under the FCC's definition. The FCC
substantially amended its rate regulation rules on February 22, 1994 and again
on November 10, 1994. The FCC is in the process of conducting a number of
additional rulemaking proceedings in order to implement many of the provisions
of the 1996 Telecom Act. See "Legislation and Regulation."

                 At December 31, 1996, the Partnership's monthly rates for
basic cable service for residential customers, excluding special senior citizen
discount rates, ranged from $16.99 to $21.21 and premium service rates ranged
from $9.50 to $11.95, excluding special promotions offered periodically in
conjunction with the Partnership's marketing programs.  A one-time installation
fee, which the partnership may wholly or partially waive during a promotional
period, is usually charged to new customers. Prior to September 1, 1993, the
Partnership generally charged monthly fees for additional outlets, converters,
program guides and descrambling and remote control tuning devices.  As
described above, these charges have either been eliminated or altered by the
implementation of rate regulation.  Substantially all the Partnership's
customers received a decrease in their monthly charges in July 1994 upon
implementation of the FCC's amended rules.  Commercial customers, such as
hotels, motels and hospitals, are charged a negotiated, non-recurring fee for
installation of service and monthly fees based upon a standard discounting
procedure.  Most multi-unit dwellings are offered a negotiated bulk rate in
exchange for single-point billing and basic service to all units.  These rates
are also subject to regulation.





                                        -7-
                                                                         
<PAGE>   8
EMPLOYEES

                 The Partnership has no employees.  The various personnel
required to operate the Partnership's business are employed by the Corporate
General Partner, its subsidiary corporation and FHGLP. The cost of such
employment is allocated and charged to the Partnership for reimbursement
pursuant to the partnership agreement and management agreement.  Other
personnel required to operate the Partnership's business are employed by
affiliates of the Corporate General Partner.  The cost of such employment is
allocated and charged to the Partnership.  The amounts of these reimbursable
costs are set forth below in Item 11., "Executive Compensation."

TECHNOLOGICAL DEVELOPMENTS

                 As part of its commitment to customer service, the Partnership
seeks to apply technological advances in the cable television industry to its
cable television systems on the basis of cost effectiveness, capital
availability, enhancement of product quality and service delivery and
industry-wide acceptance. Currently, the Partnership systems have an average
channel capacity of 39 in systems that serve 94% of its customers and an
average channel capacity of 12 in systems that serve 6% of its customers and on
average utilize 100% of such systems' respective channel capacity.  The
Partnership believes that system upgrades would enable it to provide customers
with greater programming diversity, better picture quality and alternative
communications delivery systems made possible by the introduction of fiber
optic technology and by the possible future application of digital compression.
The implementation of the Partnership's capital expenditure plans is, however,
dependent in part on the availability of adequate capital on terms satisfactory
to the Partnership, of which there can be no assurance.  Also, as a result of
the uncertainty created by recent regulatory changes, the Partnership has
deferred all plant rebuilds and upgrades.  See "Legislation and Regulation" and
Item 7., "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

                 The use of fiber optic cable as an alternative to coaxial
cable is playing a major role in expanding channel capacity and improving the
performance of cable television systems.  Fiber optic cable is capable of
carrying hundreds of video, data and voice channels and, accordingly, its
utilization is essential to the enhancement of a cable television system's
technical capabilities.  The Partnership's current policy is to utilize fiber
optic technology in substantially all rebuild projects which it undertakes. The
benefits of fiber optic technology over traditional coaxial cable distribution
plant include lower per mile rebuild costs due to a reduction in the number of
required amplifiers, the elimination of headends, lower ongoing maintenance and
power costs and improved picture quality and reliability.

                 As of December 31, 1996, approximately 4% of the customers of
the Partnership's systems were served by systems that utilize addressable
technology. Addressable technology permits the cable operator to activate from
a central control point the cable television services to be delivered to a
customer if that customer has also been supplied with an addressable converter
box. To date, the Partnership has supplied addressable converter boxes to
customers of the systems utilizing addressable technology who subscribe to one
or more premium services and, in selected regions, to customers who subscribe
to certain new product tiers.  As a result, if the system utilizes addressable
technology and the customer has been supplied with an addressable converter
box, the Partnership can upgrade or downgrade services immediately, without the
delay or expense associated with dispatching a technician to the home.
Addressable technology also reduces pay service theft, is an effective
enforcement tool in collecting delinquent payments and allows the Partnership
to offer pay-per-view services.





                                        -8-
                                                                         
<PAGE>   9
DIGITAL COMPRESSION

                 The Partnership has been closely monitoring developments in
the area of digital compression, a technology which is expected to enable cable
operators to increase the channel capacity of cable television systems by
permitting a significantly increased number of video signals to fit in a cable
television system's existing bandwidth. The Partnership believes that the
utilization of digital compression technology in the future could enable its
systems to increase channel capacity in certain systems in a manner that could
be more cost efficient than rebuilding such systems with higher capacity
distribution plant. The use of digital compression in its systems also could
expand the number and types of services these systems offer and enhance the
development of current and future revenue sources. Equipment vendors are
beginning to market products to provide this technology, but the Partnership's
management has no plans to install it at this time based on the current
technological profile of its systems and its present understanding of the costs
as compared to the benefits of the digital equipment currently available.  This
issue is under frequent management review.

PROGRAMMING

                 The Partnership purchases basic and premium programming for
its systems from Falcon Cablevision.  In turn, Falcon Cablevision charges the
Partnership for these costs based on an estimate of what the Corporate General
Partner could negotiate for such services for the 15 partnerships managed by
the Corporate General Partner as a group (approximately 94,300 homes
subscribing to cable service at December 31, 1996), which is generally based on
a fixed fee per customer or a percentage of the gross receipts for the
particular service.  Certain other new channels have also recently offered
Cablevision and the Partnership's systems fees in return for carrying their
service.  Due to a lack of channel capacity available for adding new channels,
the Partnership's management cannot predict the impact of such potential
payments on its business.  Falcon Cablevision's programming contracts are
generally for a fixed period of time and are subject to negotiated renewal.
Falcon Cablevision does not have long-term programming contracts for the supply
of a substantial amount of its programming. Accordingly, no assurance can be
given that its, and correspondingly the Partnership's, programming costs will
not increase substantially in the near future, or that other materially adverse
terms will not be added to Falcon Cablevision's programming contracts.
Management believes, however, that Falcon Cablevision's relations with its
programming suppliers generally are good.

                 The Partnership's cable programming costs have increased in
recent years and are expected to continue to increase due to additional
programming being provided to basic customers, requirements to carry channels
under retransmission carriage agreements entered into with certain programming
sources, increased costs to produce or purchase cable programming generally,
inflationary increases and other factors.  The 1996 retransmission carriage
agreement negotiations resulted in the Partnership agreeing to carry one new
service in its Villa Rica system, for which it will receive reimbursement of
certain costs related to launching the service.  All other negotiations were
completed with essentially no change to the previous agreements.  Under the FCC
rate regulations, increases in programming costs for regulated cable services
occurring after the earlier of March 1, 1994, or the date a system's basic
cable service became regulated, may be passed through to customers.  See
"Legislation and Regulation - Federal Regulation - Carriage of Broadcast
Television Signals." Generally, programming costs are charged among systems on
a per customer basis.

FRANCHISES

                 Cable television systems are generally constructed and
operated under non-exclusive franchises granted by local governmental
authorities.  These franchises typically contain many conditions, such as time
limitations on commencement and completion of construction; conditions of
service, including number of channels, types of programming and the provision
of free service to schools and certain other public institutions; and the
maintenance of insurance and indemnity bonds.  The provisions of local
franchises are subject to federal regulation under the 1984 Cable Act, the 1992
Cable Act and the 1996 Telecom Act.  See "Legislation and Regulation."





                                        -9-
                                                                        
<PAGE>   10
               As of December 31, 1996, the Partnership held 10 franchises.
These franchises, all of which are non-exclusive, provide for the payment of
fees to the issuing authority.  Annual franchise fees imposed on the
Partnership systems range up to 5% of the gross revenues generated by a system.
The 1984 Cable Act prohibits franchising authorities from imposing franchise
fees in excess of 5% of gross revenues and also permits the cable system
operator to seek renegotiation and modification of franchise requirements if
warranted by changed circumstances.

                 The following table groups the franchises of the Partnership's
cable television systems by date of expiration and presents the number of
franchises for each group of franchises and the approximate number and
percentage of homes subscribing to cable service for each group as of December
31, 1996.

<TABLE>
<CAPTION>
                                                         Number of                 Percentage of
                                                            Homes                      Homes
         Year of                Number of              Subscribing to             Subscribing to
  Franchise Expiration         Franchises               Cable Service              Cable Service 
  --------------------         -----------             ---------------            ---------------
 <S>                          <C>                      <C>                      <C>
 Prior to 1998                       4                     4,502                       64.1%
 1998-2002                           3                       493                        7.0%
 2003 and after                      3                     1,853                       26.4%
                                     -                     -----                       ----

 Total                              10                     6,848                       97.5%
                                    ==                     =====                       ====
</TABLE>

                 The Partnership operates cable television systems which serve
multiple communities and, in some circumstances, portions of such systems
extend into jurisdictions for which the Partnership believes no franchise is
necessary.  In the aggregate, approximately 178 customers, comprising
approximately 2.5% of the Partnership's customers, are served by unfranchised
portions of such systems.  In certain instances, where a single franchise
comprises a large percentage of the customers in an operating region, the loss
of such franchise could decrease the economies of scale achieved by the
Partnership's clustering strategy. The Partnership has never had a franchise
revoked for any of its systems and believes that it has satisfactory
relationships with substantially all of its franchising authorities.

                 The 1984 Cable Act provides, among other things, for an
orderly franchise renewal process in which franchise renewal will not be
unreasonably withheld or, if renewal is withheld, the franchise authority must
pay the operator the "fair market value" for the system covered by such
franchise.  In addition, the 1984 Cable Act establishes comprehensive renewal
procedures which require that an incumbent franchisee's renewal application be
assessed on its own merit and not as part of a comparative process with
competing applications. See "Legislation and Regulation."

COMPETITION

                 Cable television systems compete with other communications and
entertainment media, including over-the-air television broadcast signals which
a viewer is able to receive directly using the viewer's own television set and
antenna.  The extent to which a cable system competes with over-the-air
broadcasting depends upon the quality and quantity of the broadcast signals
available by direct antenna reception compared to the quality and quantity of
such signals and alternative services offered by a cable system. In many areas,
television signals which constitute a substantial part of basic service can be
received by viewers who use their own antennas. Local television reception for
residents of apartment buildings or other multi-unit dwelling complexes may be
aided by use of private master antenna services. Cable systems also face
competition from alternative methods of distributing and receiving television
signals and from other sources of entertainment such as live sporting events,
movie theaters and home video products, including videotape recorders and
videodisk players.  In recent years, the FCC has adopted policies providing for
authorization of new technologies and a more favorable operating environment
for certain





                                        -10-
                                                                         
<PAGE>   11
existing technologies that provide, or may provide, substantial additional
competition for cable television systems. The extent to which cable television
service is competitive depends in significant part upon the cable television
system's ability to provide an even greater variety of programming than that
available over the air or through competitive alternative delivery sources.  In
addition, certain provisions of the 1992 Cable Act and the 1996 Telecom Act are
expected to increase competition significantly in the cable industry. See
"Legislation and Regulation."

                 Individuals presently have the option to purchase earth
stations, which allow the direct reception of satellite-delivered program
services formerly available only to cable television subscribers. Most
satellite-distributed program signals are being electronically scrambled to
permit reception only with authorized decoding equipment for which the consumer
must pay a fee. From time to time, legislation has been introduced in Congress
which, if enacted into law, would prohibit the scrambling of certain
satellite-distributed programs or would make satellite services available to
private earth stations on terms comparable to those offered to cable systems.
Broadcast television signals are being made available to owners of earth
stations under the Satellite Home Viewer Copyright Act of 1988, which became
effective January 1, 1989 for an initial six-year period.  This Act establishes
a statutory compulsory license for certain transmissions made by satellite
owners to home satellite dishes, for which carriers are required to pay a
royalty fee to the Copyright Office. This Act has been extended by Congress
until December 31, 1999.  The 1992 Cable Act enhances the right of cable
competitors to purchase nonbroadcast satellite-delivered programming.  See
"Legislation and Regulation-Federal Regulation."

                 Television programming is now also being delivered to
individuals by high-powered direct broadcast satellites ("DBS") utilizing video
compression technology.  This technology has the capability of providing more
than 100 channels of programming over a single high-powered DBS satellite with
significantly higher capacity available if multiple satellites are placed in
the same orbital position.  Video compression technology may also be used by
cable operators in the future to similarly increase their channel capacity.
DBS service can be received virtually anywhere in the United States through the
installation of a small rooftop or side-mounted antenna, and it is more
accessible than cable television service where cable plant has not been
constructed or where it is not cost effective to construct cable television
facilities.  DBS service is being heavily marketed on a nationwide basis by
several service providers.

                 Multichannel multipoint distribution systems ("MMDS") deliver
programming services over microwave channels licensed by the FCC received by
subscribers with special antennas.  MMDS systems are less capital intensive,
are not required to obtain local franchises or to pay franchise fees, and are
subject to fewer regulatory requirements than cable television systems.  To
date, the ability of these so-called "wireless" cable services to compete with
cable television systems has been limited by channel capacity and the need for
unobstructed line-of- sight over-the-air transmission.  Although relatively few
MMDS systems in the United States are currently in operation or under
construction, virtually all markets have been licensed or tentatively licensed.
The FCC has taken a series of actions intended to facilitate the development of
MMDS and other wireless cable systems as alternative means of distributing
video programming, including reallocating certain frequencies to these services
and expanding the permissible use and eligibility requirements for certain
channels reserved for educational purposes.  The FCC's actions enable a single
entity to develop an MMDS system with a potential of up to 35 channels that
could compete effectively with cable television.  The use of digital
compression technology may enable MMDS systems to deliver even more channels.
MMDS systems qualify for the statutory compulsory copyright license for the
retransmission of television and radio broadcast stations.  Several of the
Regional Bell Operating Companies have begun to enter the MMDS business as a
way of breaking into video programming delivery.

                 Additional competition may come from private cable television
systems servicing condominiums, apartment complexes and certain other multiple
unit residential developments.  The operators of these private systems, known
as satellite master antenna television ("SMATV") systems, often enter into
exclusive agreements with apartment building owners or homeowners' associations
which





                                        -11-
                                                                         
<PAGE>   12
preclude franchised cable television operators from serving residents of such
private complexes.  However, the 1984 Cable Act gives franchised cable
operators the right to use existing compatible easements within their franchise
areas upon nondiscriminatory terms and conditions.  Accordingly, where there
are preexisting compatible easements, cable operators may not be unfairly
denied access or discriminated against with respect to the terms and conditions
of access to those easements.  There have been conflicting judicial decisions
interpreting the scope of the access right granted by the 1984 Cable Act,
particularly with respect to easements located entirely on private property.
Further, while a franchised cable television system typically is obligated to
extend service to all areas of a community regardless of population density or
economic risk, a SMATV system may confine its operation to small areas that are
easy to serve and more likely to be profitable.  Under the 1996 Telecom Act,
SMATV systems can interconnect non-commonly owned buildings without having to
comply with local, state and federal regulatory requirements that are imposed
upon cable systems providing similar services, as long as they do not use
public rights-of-way.  In some cases, SMATV operators may be able to charge a
lower price than could a cable system providing comparable services and the
FCC's regulations implementing the 1992 Cable Act limit a cable operator's
ability to reduce its rates to meet this competition. Furthermore, the U.S.
Copyright Office has tentatively concluded that SMATV systems are "cable
systems" for purposes of qualifying for the compulsory copyright license
established for cable systems by federal law.

                 The FCC has initiated a new interactive television service
which will permit non-video transmission of information between an individual's
home and entertainment and information service providers. This service will
provide an alternative means for DBS systems and other video programming
distributors, including television stations, to initiate the new interactive
television services.  This service may also be used by the cable television
industry.

                 The FCC also has a pending rulemaking proceeding looking
toward the allocation of frequencies in the 28 Ghz range for a new multichannel
wireless video service which could make 98 video channels available in a single
market.  It cannot be predicted at this time whether competitors will emerge
utilizing such frequencies or whether such competition would have a material
impact on the operations of cable television systems.

                 The 1996 Telecom Act eliminates the restriction against
ownership and operation of cable systems by local telephone companies within
their local exchange service areas.  Telephone companies are now free to enter
the retail video distribution business through any means, such as DBS, MMDS,
SMATV or as traditional franchised cable system operators.  Alternatively, the
1996 Telecom Act authorizes local telephone companies to operate "open video
systems" without obtaining a local cable franchise, although telephone
companies operating such systems can be required to make payments to local
governmental bodies in lieu of cable franchise fees.  Up to two-thirds of the
channel capacity on an "open video system" must be available to programmers
unaffiliated with the local telephone company.  The open video system concept
replaces the FCC's video dialtone rules.  The 1996 Telecom Act also includes
numerous provisions designed to make it easier for cable operators and others
to compete directly with local exchange telephone carriers.  With certain
limited exceptions, neither a local exchange carrier nor a cable operator can
acquire more than 10% of the other entity operating within its own service
area.

                 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 industry.  The ability of cable
systems to compete with present, emerging and future distribution media will
depend to a great extent on obtaining attractive programming.  The availability
and exclusive use of a sufficient amount of quality programming may in turn be
affected by developments in regulation or copyright law.  See "Legislation and
Regulation."





                                        -12-
                                                                         
<PAGE>   13
                 The cable television industry competes with radio, television
and print media for advertising revenues.  As the cable television industry
continues to develop programming designed specifically for distribution by
cable, advertising revenues may increase.  Premium programming provided by
cable systems is subject to the same competitive factors which exist for other
programming discussed above. The continued profitability of premium services
may depend largely upon the continued availability of attractive programming at
competitive prices.





                                        -13-
                                                                         
<PAGE>   14
                           LEGISLATION AND REGULATION

                 The cable television industry is regulated by the FCC, some
state governments and substantially all local governments.  In addition,
various legislative and regulatory proposals under consideration from time to
time by the Congress and various federal agencies have in the past, and may in
the future, materially affect the Partnership and the cable television
industry.  The following is a summary of federal laws and regulations affecting
the growth and operation of the cable television industry and a description of
certain state and local laws.  The Partnership believes that the regulation of
its industry remains a matter of interest to Congress, the FCC and other
regulatory authorities.  There can be no assurance as to what, if any, future
actions such legislative and regulatory authorities may take or the effect
thereof on the Partnership.

CABLE COMMUNICATIONS POLICY ACT OF 1984

                 The 1984 Cable Act became effective on December 29, 1984.
This federal statute, which amended the Communications Act of 1934 (the
"Communications Act"), created uniform national standards and guidelines for
the regulation of cable television systems.  Violations by a cable television
system operator of provisions of the Communications Act, as well as of FCC
regulations, can subject the operator to substantial monetary penalties and
other sanctions.  Among other things, the 1984 Cable Act affirmed the right of
franchising authorities (state or local, depending on the practice in
individual states) to award one or more franchises within their jurisdictions.
It also prohibited non-grandfathered cable television systems from operating
without a franchise in such jurisdictions.  In connection with new franchises,
the 1984 Cable Act provides that in granting or renewing franchises,
franchising authorities may establish requirements for cable- related
facilities and equipment, but may not establish or enforce requirements for
video programming or information services other than in broad categories.  The
1984 Cable Act grandfathered, for the remaining term of existing franchises,
many but not all of the provisions in existing franchises which would not be
permitted in franchises entered into or renewed after the effective date of the
1984 Cable Act.

CABLE TELEVISION CONSUMER PROTECTION AND COMPETITION ACT OF 1992

                 On October 5, 1992, Congress enacted the 1992 Cable Act.  This
legislation has effected significant changes to the legislative and regulatory
environment in which the cable industry operates. It amends the 1984 Cable Act
in many respects.  The 1992 Cable Act became effective on December 4, 1992,
although certain provisions, most notably those dealing with rate regulation
and retransmission consent, became effective at later dates.  The legislation
required the FCC to conduct a number of rulemaking proceedings to implement
various provisions of the statute.  The 1992 Cable Act allows for a greater
degree of regulation of the cable industry with respect to, among other things:
(i) cable system rates for both basic and certain nonbasic services; (ii)
programming access and exclusivity arrangements; (iii) access to cable channels
by unaffiliated programming services; (iv) leased access terms and conditions;
(v) horizontal and vertical ownership of cable systems; (vi) customer service
requirements; (vii) franchise renewals; (viii) television broadcast signal
carriage and retransmission consent; (ix) technical standards; (x) customer
privacy; (xi) consumer protection issues; (xii) cable equipment compatibility;
(xiii) obscene or indecent programming; and (xiv) requiring subscribers to
subscribe to tiers of service other than basic service as a condition of
purchasing premium services.  Additionally, the legislation encourages
competition with existing cable television systems by allowing municipalities
to own and operate their own cable television systems without having to obtain
a franchise; preventing franchising authorities from granting exclusive
franchises or unreasonably refusing to award additional franchises covering an
existing cable system's service area; and prohibiting the common ownership of
cable systems and co-located MMDS or SMATV systems. The 1992 Cable Act also
precludes video programmers affiliated with cable television companies from
favoring cable operators over competitors and requires such programmers to sell
their programming to other multichannel video distributors.





                                        -14-
                                                                         
<PAGE>   15
                 A constitutional challenge to the must-carry provisions of the
1992 Cable Act is still ongoing. On April 8, 1993, a three-judge district
court panel granted summary judgment for the government upholding the
must-carry provisions.  That decision was appealed directly to the U.S. Supreme
Court which remanded the case back to the district court to determine whether
there was adequate evidence that the provisions were needed and whether the
restrictions chosen were the least intrusive.  On December 12, 1995, the
district court again upheld the must-carry provisions. The Supreme Court is
reviewing the district court's decision.

                 On September 16, 1993, a constitutional challenge to the
balance of the 1992 Cable Act provisions was rejected by the U.S. District
Court in the District of Columbia which upheld the constitutionality of all but
three provisions of the statute (multiple ownership limits for cable operators,
advance notice of free previews for certain programming services and channel
set-asides for DBS operators).  On August 30, 1996, the U.S. Court of Appeals
for the District of Columbia Circuit sustained the constitutionality of all
provisions except for the multiple ownership limits and the limits on the
number of channels which can be occupied by programmers affiliated with the
cable operator, both of which are being challenged in a separate appeal.

TELECOMMUNICATIONS ACT OF 1996

                 On February 8, 1996, the President signed the 1996 Telecom Act
into law. This statute substantially amended the Communications Act by, among
other things, removing barriers to competition in the cable television and
telephone markets and reducing the regulation of cable television rates. As it
pertains to cable television, the 1996 Telecom Act, among other things, (i) ends
the regulation of certain nonbasic programming services in 1999; (ii) expands
the definition of effective competition, the existence of which displaces rate
regulation; (iii) eliminates the restriction against the ownership and operation
of cable systems by telephone companies within their local exchange service
areas; and (iv) liberalizes certain of the FCC's cross-ownership restrictions.
The FCC is in the process of conducting a number of additional rulemaking
proceedings in order to implement many of the provisions of the 1996 Telecom
Act. See "Business - Competition" and "Federal Regulation-Rate Regulation."

FEDERAL REGULATION

                 The FCC, the principal federal regulatory agency with
jurisdiction over cable television, has heretofore promulgated regulations
covering such areas as the registration of cable television systems,
cross-ownership between cable television systems and other communications
businesses, carriage of television broadcast programming, consumer education
and lockbox enforcement, origination cablecasting and sponsorship
identification, children's programming, the regulation of basic cable service
rates in areas where cable television systems are not subject to effective
competition, signal leakage and frequency use, technical performance,
maintenance of various records, equal employment opportunity, and antenna
structure notification, marking and lighting.  The FCC has the authority to
enforce these 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.  The 1992 Cable Act required the FCC to adopt additional
regulations covering, among other things, cable rates, signal carriage,
consumer protection and customer service, leased access, indecent programming,
programmer access to cable television systems, programming agreements,
technical standards, consumer electronics equipment compatibility, ownership of
home wiring, program exclusivity, equal employment opportunity, and various
aspects of direct broadcast satellite system ownership and operation.  The 1996
Telecom Act requires certain changes to various of these regulations.  A brief
summary of certain of these federal regulations as adopted to date follows.





                                        -15-
                                                                        
<PAGE>   16
                 RATE REGULATION

                 The 1984 Cable Act codified existing FCC preemption of rate
regulation for premium channels and optional nonbasic program tiers.  The 1984
Cable Act also deregulated basic cable rates for cable television systems
determined by the FCC to be subject to effective competition.  The 1992 Cable
Act substantially changed the previous statutory and FCC rate regulation
standards.  The 1992 Cable Act replaced the FCC's old standard for determining
effective competition, under which most cable systems were not subject to local
rate regulation, with a statutory provision that resulted in nearly all cable
television systems becoming subject to local rate regulation of basic service.
The 1996 Telecom Act expands the definition of effective competition to cover
situations where a local telephone company or its affiliate, or any
multichannel video provider using telephone company facilities, offers
comparable video service by any means except DBS.  Satisfaction of this test
deregulates both basic and nonbasic tiers. Additionally, the 1992 Cable Act
required the FCC to adopt a formula, for franchising authorities to enforce, to
assure that basic cable rates are reasonable; allowed the FCC to review rates
for nonbasic service tiers (other than per-channel or per-program services) in
response to complaints filed by franchising authorities and/or cable customers;
prohibited cable television systems from requiring subscribers to purchase
service tiers above basic service in order to purchase premium services if the
system is technically capable of doing so; required the FCC to adopt
regulations to establish, on the basis of actual costs, the price for
installation of cable service, remote controls, converter boxes and additional
outlets; and allows the FCC to impose restrictions on the retiering and
rearrangement of cable services under certain limited circumstances.  The 1996
Telecom Act limits the class of complainants regarding nonbasic tier rates to
franchising authorities only and ends FCC regulation of nonbasic tier rates on
March 31, 1999.

                 The FCC adopted rules designed to implement the 1992 Cable
Act's rate regulation provisions on April 1, 1993, and then significantly
amended them on February 22 and November 10, 1994.  The FCC's regulations
contain standards for the regulation of basic and nonbasic cable service rates
(other than per-channel or per-program services). The rules have been further
amended several times.  Local franchising authorities and/or the FCC are
empowered to order a reduction of existing rates which exceed the maximum
permitted level for either basic and/or nonbasic cable services and associated
equipment, and refunds can be required.  The rate regulations adopt a benchmark
price cap system for measuring the reasonableness of existing basic and
nonbasic service rates.  Alternatively, cable operators have the opportunity to
make cost-of-service showings which, in some cases, may justify rates above the
applicable benchmarks. The rules also require that charges for cable-related
equipment (e.g., converter boxes and remote control devices) and installation
services be unbundled from the provision of cable service and based upon actual
costs plus a reasonable profit.  The regulations also provide that future rate
increases may not exceed an inflation-indexed amount, plus increases in certain
costs beyond the cable operator's control, such as taxes, franchise fees and
increased programming costs. Cost-based adjustments to these capped rates can
also be made in the event a cable operator adds or deletes channels.  In
addition, new product tiers consisting of services new to the cable system can
be created free of rate regulation as long as certain conditions are met such
as not moving services from existing tiers to the new tier. These provisions
currently provide limited benefit to the Partnership's systems due to the lack
of channel capacity previously discussed.  There is also a streamlined
cost-of-service methodology available to justify a rate increase on basic and
regulated nonbasic tiers for "significant" system rebuilds or upgrades.

                 Franchising authorities have become certified by the FCC to
regulate the rates charged by the Partnership for basic cable service and for
associated basic cable service equipment.

                 The Partnership has adjusted its regulated programming service
rates and related equipment and installation charges in substantially all of
its systems so as to bring these rates and charges into compliance with the
applicable benchmark or equipment and installation cost levels.  The
Partnership also





                                        -16-
                                                                         
<PAGE>   17
implemented a program in substantially all of its systems under which a number
of the Partnership's satellite-delivered and premium services are now offered
individually on a per channel (i.e., a la carte) basis, or as a group at a
discounted price.  A la carte services were not subject to the FCC's rate
regulations under the rules originally issued to implement the 1992 Cable Act.

                 The FCC, in its reconsideration of the original rate
regulations, stated that it was going to take a harder look at the regulatory
treatment of such a la carte packages on an ad hoc basis.  Such packages which
are determined to be evasions of rate regulation rather than true enhancements
of subscriber choice will be treated as regulated tiers and, therefore, subject
to rate regulation.  There have been no FCC rulings related to systems owned by
the Partnership.  There have been three rulings, however, on such packages
offered by affiliated partnerships managed by FHGLP.  In one case, the FCC's
Cable Services Bureau ruled that a nine-channel a la carte package was an
evasion of rate regulation and ordered this package to be treated as a
regulated tier.  In the second case, a seven-channel a la carte package was
ordered to be treated as a regulated tier.  In the third case, a six-channel
package was held not to be an evasion, but rather is to be considered an
unregulated new product tier under the FCC's November 10, 1994 rule amendments.
The deciding factor in all of the FCC's decisions related to a la carte tiers
appears to be the number of channels moved from regulated tiers, with six or
fewer channels being deemed not to be an evasion.  Almost all of the
Partnership's systems moved six or fewer channels to a la carte packages. Under
the November 10, 1994 amendments, any new a la carte package created after that
date will be treated as a regulated tier, except for packages involving
traditional premium services (e.g., HBO).

                 On March 11, 1993, the FCC adopted regulations pursuant to the
1992 Act which require cable systems to permit customers to purchase video
programming on a per channel or a per program basis without the necessity of
subscribing to any tier of service, other than the basic service tier, unless
the cable system is technically incapable of doing so.  Generally, this
exemption from compliance with the statute for cable systems that do not have
such technical capability is available until a cable system obtains the
capability, but not later than December 2002.

                 CARRIAGE OF BROADCAST TELEVISION SIGNALS

                 The 1992 Cable Act contained new signal carriage requirements.
These rules allow commercial television broadcast stations which are "local" to
a cable system, i.e., the system is located in the station's Area of Dominant
Influence, to elect every three years whether to require the cable system to
carry the station, subject to certain exceptions, or whether the cable system
will have to negotiate for "retransmission consent" to carry the station.
Local non-commercial television stations are also given mandatory carriage
rights, subject to certain exceptions, within the larger of:  (i) a 50 mile
radius from the station's city of license; or (ii) the station's Grade B
contour (a measure of signal strength).  Unlike commercial stations,
noncommercial stations are not given the option to negotiate retransmission
consent for the carriage of their signal.  In addition, cable systems will have
to obtain retransmission consent for the carriage of all "distant" commercial
broadcast stations, except for certain "superstations," i.e., commercial
satellite-delivered independent stations such as WTBS.  The Partnership has
thus far not been required to pay cash compensation to broadcasters for
retransmission consent or been required by broadcasters to remove broadcast
stations from the cable television channel line-ups.  The Partnership has,
however, agreed to carry some services in specified markets pursuant to
retransmission consent arrangements which it believes are comparable to those
entered into by most other large cable operators, and for which it pays monthly
fees to the service providers, as it does with other satellite providers.  The
second election between must-carry and retransmission consent for local
commercial television broadcast stations was October 1, 1996, and the
Partnership has agreed to carry one new service in specified markets pursuant
to these retransmission consent arrangements.  The next election between must-
carry and retransmission consent for local commercial television broadcast
stations will be October 1, 1999.





                                        -17-
                                                                         
<PAGE>   18
                 NONDUPLICATION OF NETWORK PROGRAMMING

                 Cable television systems that have 1,000 or more customers
must, upon the appropriate request of a local television station, delete the
simultaneous or nonsimultaneous network programming of a distant station when
such programming has also been contracted for by the local station on an
exclusive basis.

                 DELETION OF SYNDICATED PROGRAMMING

                 FCC regulations enable television broadcast stations that have
obtained exclusive distribution rights for syndicated programming in their
market to require a cable system to delete or "black out" such programming from
other television stations which are carried by the cable system. The extent of
such deletions will vary from market to market and cannot be predicted with
certainty. However, it is possible that such deletions could be substantial and
could lead the cable operator to drop a distant signal in its entirety.  The
FCC also has commenced a proceeding to determine whether to relax or abolish
the geographic limitations on program exclusivity contained in its rules, which
would allow parties to set the geographic scope of exclusive distribution
rights entirely by contract, and to determine whether such exclusivity rights
should be extended to noncommercial educational stations.  It is possible that
the outcome of these proceedings will increase the amount of programming that
cable operators are requested to black out.  Finally, the FCC has declined to
impose equivalent syndicated exclusivity rules on satellite carriers who
provide services to the owners of home satellite dishes similar to those
provided by cable systems.

                 FRANCHISE FEES

                 Although franchising authorities may impose franchise fees
under the 1984 Cable Act, such payments cannot exceed 5% of a cable system's
annual gross revenues.  Under the 1996 Telecom Act, franchising authorities may
not exact franchise fees from revenues derived from telecommunications
services.  Franchising authorities are also empowered in awarding new
franchises or renewing existing franchises to require cable operators to
provide cable-related facilities and equipment and to enforce compliance with
voluntary commitments.  In the case of franchises in effect prior to the
effective date of the 1984 Cable Act, franchising authorities may enforce
requirements contained in the franchise relating to facilities, equipment and
services, whether or not cable-related. The 1984 Cable Act, under certain
limited circumstances, permits a cable operator to obtain modifications of
franchise obligations.

                 RENEWAL OF FRANCHISES

                 The 1984 Cable Act established renewal procedures and criteria
designed to protect incumbent franchisees against arbitrary denials of renewal.
While these formal procedures are not mandatory unless timely invoked by either
the cable operator or the franchising authority, they can provide substantial
protection to incumbent franchisees.  Even after the formal renewal procedures
are invoked, franchising authorities and cable operators remain free to
negotiate a renewal outside the formal process. Nevertheless, renewal is by no
means assured, as the franchisee must meet certain statutory standards.  Even
if a franchise is renewed, a franchising authority may impose new and more
onerous requirements such as upgrading facilities and equipment, although the
municipality must take into account the cost of meeting such requirements.

                 The 1992 Cable Act makes several changes to the process under
which a cable operator seeks to enforce his renewal rights which could make it
easier in some cases for a franchising authority to deny renewal. While a cable
operator must still submit its request to commence renewal proceedings within
thirty to thirty-six months prior to franchise expiration to invoke the formal
renewal process, the request must be in writing and the franchising authority
must commence renewal proceedings not later than six months after receipt of
such notice.  The four-month period for the franchising authority to grant or
deny the





                                        -18-
                                                                         
<PAGE>   19
renewal now runs from the submission of the renewal proposal, not the
completion of the public proceeding. Franchising authorities may consider the
"level" of programming service provided by a cable operator in deciding whether
to renew.  For alleged franchise violations occurring after December 29, 1984,
franchising authorities are no longer precluded from denying renewal based on
failure to substantially comply with the material terms of the franchise where
the franchising authority has "effectively acquiesced" to such past violations.
Rather, the franchising authority is estopped if, after giving the cable
operator notice and opportunity to cure, it fails to respond to a written
notice from the cable operator of its failure or inability to cure. Courts may
not reverse a denial of renewal based on procedural violations found to be
"harmless error."

                 CHANNEL SET-ASIDES

                 The 1984 Cable Act permits local franchising authorities to
require cable operators to set aside certain channels for public, educational
and governmental access programming.  The 1984 Cable Act further requires cable
television systems with thirty-six or more activated channels to designate a
portion of their channel capacity for commercial leased access by unaffiliated
third parties.  While the 1984 Cable Act allowed cable operators substantial
latitude in setting leased access rates, the 1992 Cable Act requires leased
access rates to be set according to a formula determined by the FCC.

                 COMPETING FRANCHISES

                 Questions concerning the ability of municipalities to award a
single cable television franchise and to impose certain franchise restrictions
upon cable television companies have been considered in several recent federal
appellate and district court decisions.  These decisions have been somewhat
inconsistent and, until the U.S. Supreme Court rules definitively on the scope
of cable television's First Amendment protections, the legality of the
franchising process and of various specific franchise requirements is likely to
be uncertain.  It is not possible at the present time to predict the
constitutionally permissible bounds of cable franchising and particular
franchise requirements.  However, the 1992 Cable Act, among other things,
prohibits franchising authorities from unreasonably refusing to grant
franchises to competing cable television systems and permits franchising
authorities to operate their own cable television systems without franchises.

                 OWNERSHIP

                 The 1996 Telecom Act repealed the 1984 Cable Act's prohibition
against local exchange telephone companies ("LECs") providing video programming
directly to customers within their local telephone exchange service areas.
However, with certain limited exceptions, a LEC may not acquire more than a 10%
equity interest in an existing cable system operating within the LEC's service
area.  The 1996 Telecom Act also authorized LECs and others to operate "open
video systems" without obtaining  a local cable franchise.  See "Competition."

                 The 1984 Cable Act and the FCC's rules prohibit the common
ownership, operation, control or interest in a cable system and a local
television broadcast station whose predicted grade B contour (a measure of a
television station's signal strength as defined by the FCC's rules) covers any
portion of the community served by the cable system. The 1996 Telecom Act
eliminates the statutory ban and directs the FCC to review its rule within two
years. Common ownership or control has historically also been prohibited by the
FCC (but not by the 1984 Cable Act) between a cable system and a national
television network.  The 1996 Telecom Act eliminated this prohibition. Finally,
in order to encourage competition in the provision of video programming, the
FCC adopted a rule prohibiting the common ownership, affiliation, control or
interest in cable television systems and MMDS facilities having overlapping
service areas, except in very limited circumstances.  The 1992 Cable Act
codified this restriction and extended it to co-located SMATV systems.
Permitted arrangements in effect as of October 5, 1992 are grandfathered.  The
1996 Telecom Act





                                        -19-
                                                                        
<PAGE>   20
exempts cable systems facing effective competition from the MMDS and SMATV
restriction.  In addition, a cable operator can purchase a SMATV system serving
the same area and technically integrate it into the cable system.  The 1992
Cable Act permits states or local franchising authorities to adopt certain
additional restrictions on the ownership of cable television systems.

                 Pursuant to the 1992 Cable Act, the FCC has imposed limits on
the number of cable systems which a single cable operator can own.  In general,
no cable operator can have an attributable interest in cable systems which pass
more than 30% of all homes nationwide.  Attributable interests for these
purposes include voting interests of 5% or more (unless there is another single
holder of more than 50% of the voting stock), officerships, directorships and
general partnership interests.  The FCC has stayed the effectiveness of these
rules pending the outcome of the appeal from the U.S. District Court decision
holding the multiple ownership limit provision of the 1992 Cable Act
unconstitutional.

                 The FCC has also adopted rules which limit the number of
channels on a cable system which can be occupied by programming in which the
entity which owns the cable system has an attributable interest.  The limit is
40% of the first 75 activated channels.

                 EEO

                 The 1984 Cable Act includes provisions to ensure that
minorities and women are provided equal employment opportunities within the
cable television industry.  The statute requires the FCC to adopt reporting and
certification rules that apply to all cable system operators with more than
five full-time employees. Pursuant to the requirements of the 1992 Cable Act,
the FCC has imposed more detailed annual EEO reporting requirements on cable
operators and has expanded those requirements to all multichannel video service
distributors.  Failure to comply with the EEO requirements can result in the
imposition of fines and/or other administrative sanctions, or may, in certain
circumstances, be cited by a franchising authority as a reason for denying a
franchisee's renewal request.

                 PRIVACY

                 The 1984 Cable Act imposes a number of restrictions on the
manner in which cable system operators can collect and disclose data about
individual system customers.  The statute also requires that the system
operator periodically provide all customers with written information about its
policies regarding the collection and handling of data about customers, their
privacy rights under federal law and their enforcement rights.  In the event
that a cable operator is found to have violated the customer privacy provisions
of the 1984 Cable Act, it could be required to pay damages, attorneys' fees and
other costs. Under the 1992 Cable Act, the privacy requirements are
strengthened to require that cable operators take such actions as are necessary
to prevent unauthorized access to personally identifiable information.

                 FRANCHISE TRANSFERS

                 The 1992 Cable Act requires franchising authorities to act on
any franchise transfer request submitted after December 4, 1992 within 120 days
after receipt of all information required by FCC regulations and by the
franchising authority. Approval is deemed to be granted if the franchising
authority fails to act within such period.

                 REGISTRATION PROCEDURE AND REPORTING REQUIREMENTS

                 Prior to commencing operation in a particular community, all
cable television systems must file a registration statement with the FCC
listing the broadcast signals they will carry and certain other information.
Additionally, cable operators periodically are required to file various
informational reports with the FCC.





                                        -20-
                                                                        
<PAGE>   21
                 TECHNICAL REQUIREMENTS

                 Historically, the FCC has imposed technical standards
applicable to the cable channels on which broadcast stations are carried, and
has prohibited franchising authorities from adopting standards which were in
conflict with or more restrictive than those established by the FCC.  The FCC
has revised such standards and made them applicable to all classes of channels
which carry downstream National Television System Committee (NTSC) video
programming. The FCC also has adopted additional standards applicable to cable
television systems using frequencies in the 108-137 Mhz and 225-400 Mhz bands
in order to prevent harmful interference with aeronautical navigation and
safety radio services and has also established limits on cable system signal
leakage. Periodic testing by cable operators for compliance with the technical
standards and signal leakage limits is required and an annual filing of the
results of these measurements is required.  The 1992 Cable Act requires the FCC
to periodically update its technical standards to take into account changes in
technology. Under the 1996 Telecom Act, local franchising authorities may not
prohibit, condition or restrict a cable system's use of any type of subscriber
equipment or transmission technology.

                 The FCC has adopted regulations to implement the requirements
of the 1992 Cable Act designed to improve the compatibility of cable systems
and consumer electronics equipment. These regulations, inter alia, generally
prohibit cable operators from scrambling their basic service tier and from
changing the infrared codes used in their existing customer premises equipment.
This latter requirement could make it more difficult or costly for cable
operators to upgrade their customer premises equipment and the FCC has been
asked to reconsider its regulations.  The 1996 Telecom Act directs the FCC to
set only minimal standards to assure compatibility between television sets,
VCRs and cable systems, and to rely on the marketplace. The FCC must adopt
rules to assure the competitive availability to consumers of customer premises
equipment, such as converters, used to access the services offered by cable
systems and other multichannel video programming distributors.

                 POLE ATTACHMENTS

                 The FCC currently regulates the rates and conditions imposed
by certain public utilities for use of their poles unless state public service
commissions are able to demonstrate that they regulate the rates, terms and
conditions of cable television pole attachments.  A number of states and the
District of Columbia have certified to the FCC that they regulate the rates,
terms and conditions for pole attachments.  In the absence of state regulation,
the FCC administers such pole attachment rates through use of a formula which
it has devised.  The 1996 Telecom Act directs the FCC to adopt a new rate
formula for any attaching party, including cable systems, which offer
telecommunications services.  This new formula will result in significantly
higher attachment rates for cable systems which choose to offer such services.

                 OTHER MATTERS

                 FCC regulation pursuant to the Communications Act, as amended,
also includes matters regarding a cable system's carriage of local sports
programming; restrictions on origination and cablecasting by cable system
operators; application of the fairness doctrine and rules governing political
broadcasts; customer service; obscenity and indecency; home wiring and
limitations on advertising contained in nonbroadcast children's programming.

                 The 1996 Telecom Act establishes a process for the creation
and implementation of a "voluntary" system of ratings for video programming
containing sexual, violent or other "indecent" material and directs the FCC to
adopt rules requiring most television sets manufactured in the United States or
shipped in interstate commerce to be technologically capable of blocking the
display of programs with a common rating.  The 1996 Telecom Act also requires
video programming distributors to employ technology to restrict the reception
of programming by persons not subscribing to those channels.  In the case of





                                        -21-
                                                                         
<PAGE>   22
channels primarily dedicated to sexually-oriented programming, the distributor
must fully block reception of the audio and video portion of the channels; a
distributor that is unable to comply with this requirement may only provide
such programming during a "safe harbor" period when children are not likely to
be in the audience, as determined by the FCC.  This provision has been
temporarily stayed while certain programmers seek Supreme Court review on
constitutional grounds.  With respect to other kinds of channels, the 1996
Telecom Act only requires that the audio and video portions of the channel be
fully blocked, at no charge, upon request of the person not subscribing to the
channel.

                 COPYRIGHT

                 Cable television systems are subject to federal copyright
licensing covering carriage of broadcast signals.  In exchange for making
semi-annual payments to a federal copyright royalty pool and meeting certain
other obligations, cable operators obtain a statutory license to retransmit
broadcast signals. The amount of this royalty payment varies, depending on the
amount of system revenues from certain sources, the number of distant signals
carried, and the location of the cable system with respect to over-the-air
television stations.  Any future adjustment to the copyright royalty rates will
be done through an arbitration process supervised by the U.S. Copyright Office.

                 Cable operators are liable for interest on underpaid and
unpaid royalty fees, but are not entitled to collect interest on refunds
received for overpayment of copyright fees.

                 The Copyright Office has commenced a proceeding aimed at
examining its policies governing the consolidated reporting of commonly owned
and contiguous cable television systems.  The present policies governing the
consolidated reporting of certain cable television systems have often led to
substantial increases in the amount of copyright fees owed by the systems
affected.  These situations have most frequently arisen in the context of cable
television system mergers and acquisitions.  While it is not possible to
predict the outcome of this proceeding, any changes adopted by the Copyright
Office in its current policies may have the effect of reducing the copyright
impact of certain transactions involving cable company mergers and cable
television system acquisitions.

                 Various bills have been introduced into Congress over the past
several years that would eliminate or modify the cable television compulsory
license.  Without the compulsory license, cable operators would have to
negotiate rights from the copyright owners for all of the programming on the
broadcast stations carried by cable systems.  Such negotiated agreements would
likely increase the cost to cable operators of carrying broadcast signals.  The
1992 Cable Act's retransmission consent provisions expressly provide that
retransmission consent agreements between television broadcast stations and
cable operators do not obviate the need for cable operators to obtain a
copyright license for the programming carried on each broadcaster's signal.

                 Copyrighted music performed in programming supplied to cable
television systems by pay cable networks (such as HBO) and basic cable networks
(such as USA Network) is licensed by the networks through private agreements
with the American Society of Composers and Publishers ("ASCAP") and BMI, Inc.
("BMI"), the two major performing rights organizations in the United States.
As a result of extensive litigation, both ASCAP and BMI now offer "through to
the viewer" licenses to the cable networks which cover the retransmission of
the cable networks' programming by cable systems to their customers.

                 Copyrighted music performed by cable systems themselves on
local origination channels, in advertisements inserted locally on cable
networks, et cetera, must also be licensed.  A blanket license is available
from BMI.  Cable industry negotiations with ASCAP are still in progress.





                                        -22-
                                                                        
<PAGE>   23
STATE AND LOCAL REGULATION

                 Because a cable television system uses local streets and
rights-of-way, cable television systems are subject to state and local
regulation, typically imposed through the franchising process.  State and/or
local officials are usually involved in franchise selection, system design and
construction, safety, service rates, consumer relations, billing practices and
community related programming and services.

                 Cable television systems generally are operated pursuant to
nonexclusive 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 franchise operator fails to
comply with material provisions. Although the 1984 Cable Act provides for
certain procedural protections, there can be no assurance that renewals will be
granted or that renewals will be made on similar terms and conditions.
Franchises usually call for the payment of fees, often based on a percentage of
the system's gross customer revenues, to the granting authority.  Upon receipt
of a franchise, the cable system owner usually is subject to a broad range of
obligations to the issuing authority directly affecting the business of the
system.  The terms and conditions of franchises vary materially from
jurisdiction to jurisdiction, and even from city to city within the same state,
historically ranging from reasonable to highly restrictive or burdensome.  The
1984 Cable Act places certain limitations on a franchising authority's ability
to control the operation of a cable system operator and the courts have from
time to time reviewed the constitutionality of several general franchise
requirements, including franchise fees and access channel requirements, often
with inconsistent results.  On the other hand, the 1992 Cable Act prohibits
exclusive franchises, and allows franchising authorities to exercise greater
control over the operation of franchised cable television systems, especially
in the area of customer service and rate regulation.  The 1992 Cable Act also
allows franchising authorities to operate their own multichannel video
distribution system without having to obtain a franchise and permits states or
local franchising authorities to adopt certain restrictions on the ownership of
cable television systems.  Moreover, franchising authorities are immunized from
monetary damage awards arising from regulation of cable television systems or
decisions made on franchise grants, renewals, transfers and amendments.

                 The specific terms and conditions of a franchise and the laws
and regulations under which it was granted directly affect the profitability of
the cable television system.  Cable franchises generally contain provisions
governing charges for basic cable television services, fees to be paid to the
franchising authority, length of the franchise term, renewal, sale or transfer
of the franchise, territory of the franchise, design and technical performance
of the system, use and occupancy of public streets and number and types of
cable services provided.  The 1996 Telecom Act prohibits a franchising
authority from either requiring or limiting a cable operator's provision of
telecommunications services.

                 Various proposals have been introduced at the state and local
levels with regard to the regulation of cable television systems, and a number
of states have adopted legislation subjecting cable television systems to the
jurisdiction of centralized state governmental agencies, some of which impose
regulation of a character similar to that of a public utility.

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





                                        -23-
                                                                        
<PAGE>   24
ITEM 2.          PROPERTIES

                 The Partnership owns or leases parcels of real property for
signal reception sites (antenna towers and headends), microwave facilities and
business offices, and owns or leases its service vehicles.  The Partnership
believes that its properties, both owned and leased, are in good condition and
are suitable and adequate for the Partnership's business operations.

                 The Partnership owns substantially all of the assets related
to its cable television operations, including its program production equipment,
headend (towers, antennae, electronic equipment and satellite earth stations),
cable plant (distribution equipment, amplifiers, customer drops and hardware),
converters, test equipment and tools and maintenance equipment.


ITEM 3.          LEGAL PROCEEDINGS

                 The Partnership is a party to various legal proceedings.  Such
legal proceedings are ordinary and routine litigation proceedings that are
incidental to the Partnership's business and management believes that the
outcome of all pending legal proceedings will not, in the aggregate, have a
material adverse effect on the financial condition of the Partnership.


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

                 None.





                                        -24-
                                                                         
<PAGE>   25
                                    PART II

ITEM 5.          MARKET FOR THE REGISTRANT'S EQUITY SECURITIES AND RELATED
                 SECURITY HOLDER MATTERS

LIQUIDITY

                 While the Partnership's equity securities, which consist of
units of limited partnership interests, are publicly held, there is no
established public trading market for the units and it is not expected that a
market will develop in the future.  The approximate number of equity security
holders of record was 1,102 as of December 31, 1996.  In addition to
restrictions on the transferability of units contained in the partnership
agreement, the transferability of units may be affected by restrictions on
resales imposed by federal or state law.

DISTRIBUTIONS

                 The amended Partnership Agreement generally provides that all
cash distributions, as defined, be allocated 1% to the general partners and 99%
to the limited partners until the limited partners have received aggregate cash
distributions equal to their original capital contributions.  The Partnership
Agreement also provides that all Partnership operating profits be allocated to
the partners in the same proportion as cash flow distributions are made.
However, even after the limited partners have received cash flow equal to their
initial investment, the general partners will only receive a 1% distribution of
proceeds from a disposition or refinancing of a system until the limited
partners have received an annual simple interest return of at least 8% of their
initial investment less any distributions from previous dispositions or
refinancing of systems. Thereafter, proceeds from a disposition or refinancing
of a system shall be distributed 80% to the limited partners and 20% to the
general partners.  Gains from dispositions of systems are first allocated in
the same manner as the proceeds from such dispositions.  This occurs until the
dispositions result in the aggregate fair market value of the Partnership's
remaining system(s) being less than or equal to 50% of the aggregate
contributions to the capital of the Partnership by the partners.  Once this
level of dispositions has occurred, gain is allocated to the partners so that
distributions upon liquidation of the Partnership in accordance with capital
account balances will result in the same amounts being distributed to the
partners as if distributions were made in the same manner as they are prior to
a liquidation.

                 Any losses, whether resulting from operations or the sale or
disposition of a system, are allocated 99% to the limited partners and 1% to
the general partners until the limited partners' capital account balances are
equal to or less than zero.  Thereafter, all losses are allocated to the
Corporate General Partner.

                 Upon dissolution of the Partnership, distributions are to be
made to the partners in accordance with their capital account balances.  No
partners other than general partners shall be obligated to restore any negative
capital account balance existing upon dissolution of a partnership.  All
allocations to individual limited partners will be based on their respective
limited partnership ownership interests.

                 The policy of the Corporate General Partner (although there is
no contractual obligation to do so) is to cause the Partnership to make cash
distributions on a monthly basis throughout the operational life of the
Partnership, assuming the availability of sufficient cash flow from Partnership
operations.  The amount of such distributions, if any, will vary from month to
month depending upon the Partnership's results of operations and the General
Partners' determination of whether otherwise available funds are needed for the
Partnership's ongoing working capital and other liquidity requirements. On
February 22, 1994, the FCC announced significant amendments to its rules
implementing certain provisions of the 1992 Cable Act.  Compliance with these
rules has had a negative impact on the Partnership's revenues and cash flow.





                                        -25-
                                                                         
<PAGE>   26
                 The Partnership began making periodic cash distributions from
operations in January 1990 and discontinued distributions in July 1994.  In
1994, the Partnership distributed an aggregate of $256,400 ($7.00 per unit) to
limited partners.  No distributions were made during 1995 and 1996.

                 The Partnership's ability to pay distributions, the actual
level of distributions and the continuance of distributions, if any, will
depend on a number of factors, including the amount of cash flow from
operations, projected capital expenditures, provision for contingent
liabilities, availability of bank financing, regulatory or legislative
developments governing the cable television industry, and growth in customers.
Some of these factors are beyond the control of the Partnership, and
consequently, no assurance can be given regarding the level or timing of future
distributions, if any. See Item 7., "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."





                                        -26-
                                                                         
<PAGE>   27
ITEM 6.          SELECTED FINANCIAL DATA

                 Set forth below is selected financial data of the Partnership
for the five years ended December 31, 1996. This data should be read in
conjunction with the Partnership's financial statements included in Item 8
hereof and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Item 7.

<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                               --------------------------------------------------------------------------- 
 OPERATIONS STATEMENT DATA                        1992             1993            1994            1995            1996
                                               ----------       ----------      ----------      ----------     -----------
 <S>                                           <C>              <C>             <C>              <C>            <C>
  Revenues                                     $1,561,700       $1,797,000      $2,007,800      $2,211,900      $2,524,700

  Costs and expenses                            1,067,700        1,167,800       1,293,600       1,291,200       1,461,100

  Depreciation and amortization                   875,500          915,200       1,004,200         976,400       1,054,200
                                               ----------       ----------      ----------      ----------      -----------
  Operating income (loss)                        (381,500)        (286,000)       (290,000)        (55,700)          9,400

  Interest expense                               (126,300)        (150,500)       (161,300)       (195,400)       (147,700)

  Interest income                                     700            5,200           1,500           4,300           8,000
                                               ----------       ----------      ----------      ----------      ---------- 
  Net loss                                     $ (507,100)      $ (431,300)     $ (449,800)     $ (246,800)     $ (130,300)
                                               ==========       ==========      ==========      ==========      ===========
  Distributions to partners                    $  443,900       $  443,900      $  259,000      $        -      $        -
                                               ==========       ==========      ==========      ==========      ===========


 PER UNIT OF LIMITED
  PARTNERSHIP INTEREST:
  Net loss                                     $   (13.71)      $   (11.66)     $   (12.16)     $    (6.67)     $    (3.52)
                                               ==========       ==========      ==========      ==========      ===========
  Distributions                                $    12.00       $    12.00      $     7.00      $        -      $       -
                                               ==========        =========      ==========      ==========      ===========

 OTHER OPERATING DATA

  Net cash provided by operating               
    activities                                 $  586,300       $  654,800      $  850,300      $  676,600      $1,361,100
  
  EBITDA(1)                                       494,000          629,200         714,200         920,700       1,063,600

  EBITDA to revenues                                 31.6%            35.0%           35.6%           41.6%           42.1%

  Total debt to EBITDA                                3.2x             3.2x            2.7x            1.8x            1.2x

  Capital expenditures                         $  379,900       $  578,500      $  438,400      $  526,700      $  673,300
</TABLE>


<TABLE>
<CAPTION>
                                                                              As of December 31,
                                               ---------------------------------------------------------------------------
 BALANCE SHEET DATA                               1992             1993            1994            1995            1996
                                               ----------       ---------       ----------      ----------      ----------
  <S>                                          <C>                <C>           <C>             <C>             <C>
  Total assets                                 $7,766,100       $7,539,800      $7,027,700      $6,765,700      $6,656,500

  Total debt                                    1,563,200        2,013,200       1,907,500       1,630,700       1,288,400

  General partners' deficit                       (17,600)         (26,300)        (33,400)        (35,900)        (37,200)

  Limited partners' capital                     5,522,100        4,655,600       3,953,900       3,709,600       3,580,600
</TABLE>


___________________________
 (1) Operating income before depreciation and amortization. The Partnership
measures its financial performance by its EBITDA, among other items. Based on
its experience in the cable television industry, the Partnership believes that
EBITDA and related measures of cash flow serve as important financial analysis
tools for measuring and comparing cable television companies in several areas,
such as liquidity, operating performance and leverage. This is evidenced by
the covenants in the primary debt instruments of the Partnership, in which
EBITDA-derived calculations are used as a measure of financial performance.
EBITDA should not be considered by the reader as an alternative to net income,
as an indicator of the Partnership's financial performance or as an alternative
to cash flows as a measure of liquidity.





                                        -27-
                                                                         
<PAGE>   28
ITEM 7.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                 AND RESULTS OF OPERATIONS

INTRODUCTION

                 On February 8, 1996, President Clinton signed into law the
1996 Telecom Act.  This statute substantially changed the competitive and
regulatory environment for telecommunications providers by significantly
amending the Communications Act, including certain of the rate regulation
provisions previously imposed by the 1992 Cable Act.  Compliance with those
rate regulations has had a negative impact on the Partnership's revenues and
cash flow.  However, in accordance with the FCC's regulations, the Partnership
will be able to increase regulated service rates in the future in response to
inflation and specified historical and anticipated cost increases, although
certain costs may continue to rise at a rate in excess of that which the
Partnership will be permitted to pass on to its customers.  The 1996 Telecom
Act provides that certain of the rate regulations will be phased-out altogether
in 1999. Further, the regulatory environment will continue to change pending,
among other things, the outcome of legal challenges and FCC rulemaking and
enforcement activity in respect of the 1992 Cable Act and the 1996 Telecom Act.
There can be no assurance as to what, if any, future action may be taken by the
FCC, Congress or any other regulatory authority or court, or the effect thereof
on the Partnership's business.  Accordingly, the Partnership's historical
financial results as described below are not necessarily indicative of future
performance.

                 This Report includes certain forward looking statements
regarding, among other things, future results of operations, regulatory
requirements, competition, capital needs and general business conditions
applicable to the Partnership.  Such forward looking statements involve risks
and uncertainties including, without limitation, the uncertainty of legislative
and regulatory changes and the rapid developments in the competitive
environment facing cable television operators such as the Partnership, as
discussed more fully elsewhere in this Report.

RESULTS OF OPERATIONS

                 1996 COMPARED TO 1995

                 The Partnership's revenues increased from $2,211,900 to
$2,524,700, or by 14.1%, for the year ended December 31, 1996 as compared to
1995.  Of the $312,800 increase in revenues for the year ended December 31,
1996 as compared to 1995, $154,600 was due to increases in the number of
subscriptions for basic and premium services, $126,300 was due to increases in
regulated service rates that were implemented by the Partnership in the second
and fourth quarters of 1996, $29,200 was due to the restructuring of The Disney
Channel from a premium channel to an unregulated tier channel effective July 1,
1996 and $2,700 was due to increases in other revenue producing items. As of
December 31, 1996, the Partnership had approximately 7,000 homes subscribing to
cable service and 2,100 premium service units.

                 Service costs increased from $705,000 to $825,200, or by
17.0%, for the year ended December 31, 1996 as compared to 1995.  Service costs
represent costs directly attributable to providing cable services to customers.
Of the $120,200 increase in service costs for the year ended December 31, 1996
as compared to 1995, $81,000 related to increases in programming fees
(including primary satellite fees), $14,800 was due to an increase in property
taxes, $11,600 was due to an increase in franchise fees and $8,900 was due to
an increase in copyright fees. The increase in programming fees was due to
higher rates charged by programming suppliers, increases in the number of
subscriptions for services and a $9,400 increase related to the restructuring
of The Disney Channel discussed above. The increase in property taxes for the
year ended December 31, 1996 was due to non-recurring credits taken against
expense in the second quarter of 1995 to adjust estimated property taxes to
reflect actual tax assessments in Georgia.





                                        -28-
                                                                        
<PAGE>   29
                 General and administrative expenses increased from $383,500 to
$404,500, or by 5.5%, for the year ended December 31, 1996 as compared to 1995.
Of the $21,000 increase for the year ended December 31, 1996 as compared to
1995, $8,900 was due to an increase in bad debt expense, $5,100 was due to a
decrease in capitalization of labor and overhead expense, $5,100 was due to an
increase in compliance costs associated with reregulation by the FCC, $4,800
was due to higher insurance premiums, $2,400 was due to an increase in postage
and messenger expense and $2,000 was due to an increase in customer billing
expense. These increases were partially offset by an  $11,500 decrease in
professional fees.

                 Management fees and reimbursed expenses increased from
$202,700 to $231,400, or by 14.2%, for the year ended December 31, 1996 as
compared to 1995.  Of the $28,700 increase for the year ended December 31, 1996
as compared to 1995, management fees increased by $15,600 in direct relation to
increased revenues as described above and reimbursed expenses increased by
$13,100 primarily due to higher  allocated personnel costs, rent expense, dues
and subscription expense, professional service fees and compliance costs
associated with reregulation by the FCC.

                 Depreciation and amortization expense increased from $976,400
to $1,054,200, or by 8.0%, for the year ended December 31, 1996 as compared to
1995, primarily due to a reduction in the estimated remaining life of existing
plant which will be rebuilt in 1998 and 1999. The increase in depreciation was
partially offset by decreased amortization expense due to the effect of certain
intangible assets becoming fully amortized in December 1995.

                 The Partnership generated operating income of $9,400 for the
year ended December 31, 1996 as compared to an operating loss of $55,700 in
1995, primarily due to increases in revenues as described above.

                 Interest expense, net of interest income, decreased from
$191,100 to $139,700, or by 26.9%, for the year ended December 31, 1996 as
compared to 1995 primarily due to lower average interest rates (9.17% during
1996 versus 9.71% during 1995) and due to a decrease in average borrowings from
$1,779,900 in 1995 to $1,501,400 in 1996.

                 Due to the factors described above, the Partnership's net loss
decreased from $246,800 to $130,300, or by 47.2%, for the year ended December
31, 1996 as compared to 1995.

                 1995 COMPARED TO 1994

                 The Partnership's revenues increased from $2,007,800 to
$2,211,900, or by 10.2%, for the year ended December 31, 1995 compared to 1994.
Of the $204,100 increase in revenues, $189,500 was due to increases in the
number of subscriptions for services, $74,300 was due to increases in regulated
service rates permitted under the 1992 Cable Act that were implemented by the
Partnership in April 1995, $25,700 was due to increases in other revenue
producing items consisting primarily of advertising sales revenue and $17,800
was due to increases in unregulated rates charged for premium services
implemented during the fourth quarter of 1994. These increases were partially
offset by rate decreases implemented in September 1994 to comply with the 1992
Cable Act, estimated by the Partnership to be approximately $103,200. As of
December 31, 1995, the Partnership had approximately 6,600 homes subscribing to
cable service and 1,200 premium service units.

                 Service costs increased from $669,200 to $705,000, or by 5.4%,
for the year ended December 31, 1995 compared to 1994. Service costs represent
costs directly attributable to providing cable services to customers.  Of the
$35,800 increase, $53,900 related to increases in programming fees (including
primary satellite fees), which was partially offset by a $17,700 decrease in
property taxes. The increase in programming fees resulted from higher rates
charged by programming suppliers and from expanded programming usage relating
to channel line-up restructuring and to retransmission consent arrangements
implemented to comply with the 1992 Cable Act.





                                        -29-
                                                                         
<PAGE>   30
                 General and administrative expenses decreased from $414,000 to
$383,500, or by 7.4%, for the year ended December 31, 1995 compared with 1994.
Of the $30,500 decrease, $25,500 was due to an increase in capitalization of
labor and overhead costs resulting from more capital projects in 1995, and
$17,100 was due to decreases in professional fees. These decreases were
partially offset by a $12,200 increase in personnel costs.

                 Management fees and reimbursed expenses decreased from
$210,400 to $202,700, or by 3.7%, for the year ended December 31, 1995 compared
with 1994.  Of the $7,700 decrease, $17,900 was due to decreases in
reimbursable expenses allocated by the General Partner including lower
allocated personnel costs, property taxes, office rent, telephone costs and
postage expense. Management fees increased by $10,200, or by 10.2%, in direct
relation to increased revenues as described above.

                 Depreciation and amortization expense decreased from
$1,004,200 to $976,400, or by 2.8%, for the year ended December 31, 1995
compared to 1994, due to the effect of certain intangible assets becoming fully
amortized.

                 Operating loss decreased from $290,000 to $55,700, or by
80.8%, primarily due to increases in revenues as described above.

                 Interest expense, net of interest income, increased from
$159,800 to $191,100, or by 19.6%, for the year ended December 31, 1995
compared to 1994 due to higher average interest rates (9.71% during 1995 versus
7.89% during 1994), partially offset by a decrease in average borrowings from
$1,959,700 in 1994 to $1,779,900 in 1995.

                 Due to factors described above, the Partnership's net loss
decreased from $449,800 to $246,800, or by 45.1%, for the year ended December
31, 1995 compared to 1994.

                 DISTRIBUTIONS TO PARTNERS

                 As provided in the Partnership Agreement, distributions to
partners are funded from such amounts after providing for working capital and
other liquidity requirements including debt service and capital expenditures
not otherwise funded by borrowings.  The Partnership made distributions to its
partners of $259,000 in 1994.  The Partnership discontinued distributions to
partners in July 1994 due to liquidity requirements and financial market
conditions.

LIQUIDITY AND CAPITAL RESOURCES

                 The Partnership's primary objective, having invested its net
offering proceeds in cable systems, is to distribute to its partners all
available cash flow from operations and proceeds from the sale of cable
systems, if any, after providing for expenses, debt service and capital
requirements relating to the expansion, improvement and upgrade of its cable
systems. The Partnership currently relies exclusively on the availability of
cash generated from operations to fund its ongoing expenses, debt service and
capital requirements.  In general, these requirements involve expansion,
improvement and upgrade of the Partnership's existing cable systems.   As of
the date of this Report, substantially all of the available channel capacity in
the Partnership's systems is being utilized and each of such systems requires
rebuilding. The desired rebuild program is presently estimated to require
aggregate capital expenditures of approximately $7.2 million, although the
majority of the total is not planned to be spent until 1998 and 1999.  These
rebuilds cover seven franchise areas in Georgia and are required by two
existing franchise agreements, while two of the remaining five franchise
agreements are under negotiation for renewal.  The cost to rebuild the two
franchise areas is estimated to be approximately $1.8 million and must be
completed by February 1999.  The Partnership's management believes that the
Partnership's cash flow and other sources of capital will be adequate to meet
its current liquidity requirements, which include necessary capital
expenditures of approximately $687,000 in





                                        -30-
                                                                         
<PAGE>   31
1997, $223,000 of which is to extend the Partnership's systems to pass new
serviceable homes in their franchise areas. To incur this level of capital
expenditures, however, the Partnership will be required to continue to defer
the payment of a portion of its previously deferred management fees.  As of
December 31, 1996, the Partnership owed the Corporate General Partner $999,300
for deferred management fees and reimbursable expenses, and also owed an
affiliate in excess of $566,200 for programming fees.  Failure to rebuild the
cable systems in a timely fashion could have a material adverse effect on the
value of those systems compared to systems that have been rebuilt to a higher
technical standard.  The Partnership's term loan agreement restricts capital
expenditures to $700,000 in 1996 and thereafter.  Funding rebuild capital
expenditures beyond 1997 will, therefore, most likely require refinancing of
the Partnership's credit arrangements, and there can be no assurance that the
Partnership will be able to obtain such a refinancing on terms acceptable to
the Partnership.  Refinancing will be required in order for the Partnership to
perform substantially all of its planned rebuild construction, although
refinancing alone may still not permit all the rebuilds to be completed due to
limitations on indebtedness imposed by the partnership agreement, which is
discussed below.

                 As previously disclosed, in response to the FCC's amended rate
regulation rules and the Partnership's capital expenditure requirements,
distributions to Unitholders were discontinued in July 1994.  As stated at the
time of the announcement of this decision, management believes that it is
critical for the Partnership to preserve its liquidity through the retention of
cash.  As a result, and because of the pending rebuild requirements discussed
above, the Partnership does not anticipate paying distributions at any time in
the foreseeable future.

                 On December 31, 1996, the outstanding balance of the
Partnership's term loan was $1,288,400 and is payable in quarterly installments
ranging from $105,700 to $161,000, plus interest. The term loan agreement
requires principal payments of $422,800 in 1997, $543,600 in 1998 and $322,000
in 1999.  The Partnership made its scheduled 1996 principal repayments as
required.

                 The Partnership's term loan agreement contains certain
financial tests and other covenants including, among others, restrictions
relating to acquisitions of cable systems and capital expenditures.  The
Partnership believes that it was in compliance with its debt covenants as of
December 31, 1996.

                 The partnership agreement provides that without the approval
of a majority of interests of limited partners, the Partnership may not incur
any borrowings unless the amount of such borrowings together with all
outstanding borrowings does not exceed 33% of the original capital raised by
the Partnership, or a maximum of $3,052,500 permitted debt outstanding.  As
discussed above, in order to obtain the appropriate amount of capital to
rebuild and upgrade the Partnership's systems, this provision of the
partnership agreement would need to be amended to increase the Partnership's
leverage.  There can be no assurance that the Partnership will be able to
effect such an amendment to the partnership agreement.

                 1996 VS. 1995

                 Cash provided by operating activities increased by $684,500
from $676,600 to $1,361,100 for the year ended December 31, 1996 as compared to
1995.  This increase was primarily due to a $387,900 reduction in receivable
balances that resulted, in part, from an insurance settlement for storm damage
to the Partnership's Georgia cable systems.  Partnership operations generated
$190,400 more cash in 1996 after adding back non-cash depreciation and
amortization charges.  The Partnership used $101,800 less cash by deferring the
payment of liabilities owed to the Corporate General Partner and third party
creditors.

                 The Partnership used $152,000 more cash in investing
activities during 1996 than in 1995 due to increases of $146,600 in
expenditures for tangible assets and $5,700 for intangible assets.  Financing
activities used $65,500 more cash in 1996 than in 1995 primarily due to a
$65,400 increase in debt repayments.





                                        -31-
                                                                         
<PAGE>   32
                 Operating income before depreciation and amortization (EBITDA)
as a percentage of revenues increased from 41.6% during 1995 to 42.1% in 1996.
The change was primarily due to increased revenues.  EBITDA increased from
$920,700 to $1,063,600, or by 15.5%, for the year ended December 31, 1996
compared to 1995.

                 1995 VS. 1994

                 Cash provided by operating activities decreased by $173,700
from $850,300 to $676,600 for the year ended December 31, 1995 as compared to
1994.  The decrease was primarily due to a $313,400 increase in receivable
balances resulting from an insurance claim for storm damage to the
Partnership's Georgia cable systems.  The Partnership used $40,800 more cash to
pay amounts owed to the Corporate General Partner and third party creditors.
Partnership operations generated $180,200 more cash in 1995 after adding back
non-cash depreciation and amortization charges.

                 The Partnership used $100,200 more cash in investing
activities during 1995 than 1994 due to increases of $88,300 in expenditures
for tangible assets and $11,900 for intangible assets.  Financing activities
used $83,500 less cash in 1995 than in 1994 due to the elimination of $259,000
in partner distributions, partially offset by a $171,100 increase in debt
repayments and a $4,400 increase in deferred loan costs related to the
Partnership's term loan agreement.

                 Operating income before depreciation and amortization (EBITDA)
as a percentage of revenues increased from 35.6% during 1994 to 41.6% in 1995.
The change was primarily due to increased revenues. EBITDA increased from
$714,200 to $920,700, or by 28.9%, for the year ended December 31, 1995
compared to 1994.

RECENT ACCOUNTING PRONOUNCEMENTS

                 In March 1995, the FASB issued Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. In such cases, impairment losses are to be
recorded based on estimated fair value, which would generally approximate
discounted cash flows. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of.  The Partnership adopted
Statement 121 in the first quarter of 1996, the effects of which were not
material.

INFLATION

                 Certain of the Partnership's expenses, such as those for
equipment repair and replacement, billing and marketing generally increase with
inflation.  However, the Partnership does not believe that its financial
results have been, or will be, adversely affected by inflation in a material
way, provided that it is able to increase its service rates periodically, of
which there can be no assurance. See "Legislation and Regulation."

ITEM 8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                 The financial statements and related financial information
required to be filed hereunder are indexed on Page F-1.

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

                 Not applicable.





                                        -32-
                                                                         
<PAGE>   33
                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                 The General Partners of the Partnership may be considered, for
certain purposes, the functional equivalents of directors and executive
officers.  The Corporate General Partner is Enstar Communications Corporation,
and Robert T. Graff, Jr. is the Individual General Partner.  As part of Falcon
Cablevision's September 30, 1988 acquisition of the Corporate General Partner,
Falcon Cablevision received an option to acquire Mr. Graff's interest as
Individual General Partner of the Partnership and other affiliated cable
limited partnerships that he previously co-sponsored with the Corporate General
Partner, and Mr. Graff received the right to cause Falcon Cablevision to
acquire such interests.  These arrangements were modified and extended in an
amendment dated September 10, 1993 pursuant to which, among other things, the
Corporate General Partner obtained the option to acquire Mr. Graff's interest
in lieu of the purchase right described above which was originally granted to
Falcon Cablevision.  Since its incorporation in Georgia in 1982, the Corporate
General Partner has been engaged in the cable/telecommunications business, both
as a general partner of 15 limited partnerships formed to own and operate cable
television systems and through a wholly-owned operating subsidiary.  As of
December 31, 1996, the Corporate General Partner managed cable television
systems which had approximately 125,000 Subscribers.

                 Falcon Cablevision was formed in 1984 as a California limited
partnership and has been engaged in the ownership and operation of cable
television systems since that time.  Falcon Cablevision is a wholly-owned
subsidiary of FHGLP.  FHGI is the sole general partner of FHGLP.  FHGLP
currently operates cable systems through a series of subsidiaries and also
controls the general partners of the 15 limited partnerships which operate
under the Enstar name (including the Partnership). Although these limited
partnerships are affiliated with FHGLP, their assets are owned by legal
entities separate from the Partnership.

                 Set forth below is certain general information about the
Directors and Executive Officers of the Corporate General Partner:

<TABLE>
<CAPTION>
NAME                              POSITION
----                              --------
<S>                               <C>
Marc B. Nathanson                 Director, Chairman of the Board and Chief Executive Officer

Frank J. Intiso                   Director, President and Chief Operating Officer

Stanley S. Itskowitch             Director, Executive Vice President and General Counsel

Michael K. Menerey                Director, Chief Financial Officer and Secretary

Joe A. Johnson                    Executive Vice President - Operations

Jon W. Lunsford                   Vice President - Finance and Corporate Development

Abel C. Crespo                    Controller
</TABLE>

MARC B. NATHANSON, 51, has been Chairman of the Board and Chief Executive
Officer of FHGI and its predecessors since 1975, and prior to September 19,
1995 also served as President.  He has been Chairman of the Board and Chief
Executive Officer of Enstar Communications Corporation since October 1988, and
also served as its President prior to September 1995.  Prior to 1975, Mr.
Nathanson was Vice President of Marketing for Teleprompter Corporation, at that
time the largest multiple-system cable operator in the United States.  He also
held executive positions with Warner Cable and Cypress Communications
Corporation.  He is a former President of the California Cable Television
Association and a member of Cable Pioneers.  He is currently a Director of the
National Cable Television Association ("NCTA") and serves on its Executive
Committee.  At the 1986 NCTA convention, Mr. Nathanson was honored by being
named the recipient of the Vanguard Award for outstanding contributions to the
growth and development of





                                        -33-
                                                                         
<PAGE>   34
the cable television industry.  Mr. Nathanson is a 27-year veteran of the cable
television industry.  He is a founder of the Cable Television Administration
and Marketing Society ("CTAM") and the Southern California Cable Television
Association.  Mr. Nathanson is also a Director of TV Por Cable Nacional, S.A.
de C.V.  Mr. Nathanson is also Chairman of the Board and Chief Executive
Officer of Falcon International Communications, LLC ("FIC").  Mr. Nathanson was
appointed by President Clinton and confirmed by the U.S. Senate for a three
year term on the Board of Governors of International Broadcasting of the United
States Information Agency.

FRANK J. INTISO, 50, was appointed President and Chief Operating Officer of
FHGI in September 1995, and between 1982 and that date held the positions of
Executive Vice President and Chief Operating Officer.  He has been President
and Chief Operating Officer of Enstar Communications Corporation since
September 1995, and between October 1988 and September 1995 held the positions
of Executive Vice President and Chief Operating Officer.  Mr. Intiso is
responsible for the day-to-day operations of all cable television systems under
the management of FHGI.  Mr.  Intiso has a Masters Degree in Business
Administration from the University of California, Los Angeles, and is a
Certified Public Accountant.  He serves as chair of the California Cable
Television Association, and is on the boards of Cable Advertising Bureau, Cable
In The Classroom, Community Antenna Television Association and California Cable
Television Association.  He is a member of the American Institute of Certified
Public Accountants, the American Marketing Association, the American Management
Association, and the Southern California Cable Television Association.

STANLEY S. ITSKOWITCH, 58, has been a Director of FHGI and its predecessors
since 1975, and Senior Vice President and General Counsel from 1987 to 1990 and
has been Executive Vice President and General Counsel since February 1990.  He
has been Executive Vice President and General Counsel of Enstar Communications
Corporation since October 1988.  He has been President and Chief Executive
Officer of F.C. Funding, Inc.  (formerly Fallek Chemical Company), which is a
marketer of chemical products, since 1980.  He is a Certified Public Accountant
and a former tax partner in the New York office of Touche Ross & Co. (now
Deloitte & Touche).  He has a J.D. Degree and an L.L.M. Degree in Tax from New
York University School of Law.  Mr. Itskowitch is also Executive Vice President
and General Counsel of FIC.

MICHAEL K. MENEREY, 45, has been Chief Financial Officer and Secretary of FHGI
and its predecessors since 1984.  He has been Chief Financial Officer and
Secretary of Enstar Communications Corporation since October 1988.  Mr. Menerey
is a Certified Public Accountant and is a member of the American Institute of
Certified Public Accountants and the California Society of Certified Public
Accountants.

JOE A. JOHNSON, 52, has been Executive Vice President - Operations of FHGI
since September 1995, and between January 1992 and that date was Senior Vice
President.  He has been Executive Vice President-Operations of Enstar
Communications Corporation since January 1996.  He was a Divisional Vice
President of FHGI between 1989 and 1992.  From 1982 to 1989, he held the
positions of Vice President and Director of Operations for Sacramento Cable
Television, Group W Cable of Chicago and Warner Amex.  From 1975 to 1982, Mr.
Johnson held cable system and regional manager positions with Warner Amex and
Teleprompter.

JON W. LUNSFORD, 37, has been Vice President - Finance and Corporate
Development FHGI since September 1994.  He has been Vice President-Finance and
Corporate Development of Enstar Communications Corporation since January 1996.
From 1991 to 1994 he served as Director of Corporate Finance at Continental
Cablevision, Inc.  Prior to 1991, Mr. Lunsford was a Vice President with
Crestar Bank.

ABEL C. CRESPO, 37, has been Controller of FHGI since January 1997.  Mr. Crespo
joined Falcon in December 1984, and has held various accounting positions
during that time, most recently that of Senior Assistant Controller.  Mr.
Crespo holds a Bachelor of Science degree in Business Administration from
California State University, Los Angeles.





                                        -34-
                                                                         
<PAGE>   35
CERTAIN KEY PERSONNEL

                 The following sets forth, as of December 31, 1996,
biographical information about certain officers of FHGI and Falcon Cable Group,
a division of FHGLP, who share certain responsibilities with the officers of
the Corporate General Partner with respect to the operation and management of
the Partnership.

LYNNE A. BUENING, 43, has been Vice President of Programming of Falcon Cable
Group since November 1993.  From 1989 to 1993, she served as Director of
Programming for Viacom Cable, a division of Viacom International Inc.  Prior to
that, Ms. Buening held programming and marketing positions in the cable,
broadcast, and newspaper industries.

OVANDO COWLES, 43, has been Vice President of Advertising Sales and Production
of Falcon Cable Group since January 1992.  From 1988 to 1991, he served as a
Director of Advertising Sales and Production at Cencom Cable Television in
Pasadena, California.  He was an Advertising Sales Account Executive at Choice
Television from 1985 to 1988.  From 1983 to 1985, Mr. Cowles served in various
sales and advertising positions.

HOWARD J. GAN, 50, has been Vice President of Regulatory Affairs of FHGI and
its predecessors since 1988 and Vice President of Regulatory Affairs of Falcon
Cable Group since its inception.  He was General Counsel at Malarkey-Taylor
Associates, a Washington, DC based telecommunications consulting firm, from
1986 to 1988.  He was Vice President and General Counsel at the Cable
Television Information Center from 1978 to 1983.  In addition, he was an
attorney and an acting Branch Chief of the Federal Communications Commission's
Cable Television Bureau from 1975 to 1978.

R.W. ("SKIP") HARRIS, 49, has been Vice President of Marketing of Falcon Cable
Group since June 1991. He is a member of the CTAM Premium Television Committee.
Mr. Harris was National Director of Affiliate Marketing for The Disney Channel
from 1985 to 1991.  He was also a sales manager, regional marketing manager and
director of marketing for Cox Cable Communications from 1978 to 1985.

JOAN SCULLY, 61, has been Vice President of Human Resources of FHGI and its
predecessors since May 1988 and Vice President of Human Resources of Falcon
Cable Group since its inception.  From 1987 to May 1988, she was self-employed
as a Management Consultant to cable and transportation companies. She served as
Director of Human Resources of a Los Angeles based cable company from 1985
through 1987.  Prior to that time she served as a human resource executive in
the entertainment and aerospace industries. Ms. Scully holds a Masters Degree
in Human Resources Management from Pepperdine University.

MICHAEL D. SINGPIEL, 49, was appointed Vice President of Operations of Falcon
Cable Group in March 1996. Mr. Singpiel joined Falcon in October 1992 as
Divisional Vice President of Falcon's Eastern Division. From 1990 to 1992, Mr.
Singpiel was Vice President of C-Tec Cable Systems in Michigan. Mr. Singpiel
held various positions with Comcast in New Jersey and Michigan from 1980 to
1990.

RAYMOND J. TYNDALL, 49, has been Vice President of Engineering of Falcon Cable
Group since October 1989.  From 1975 to September 1989 he held various
technical positions with Choice TV and its predecessors.  From 1967 to 1975, he
held various technical positions with Sammons Communications. He is a certified
National Association of Radio and Television Engineering ("NARTE") engineer in
lightwave, microwave, satellite and broadband.

                 In addition, Falcon Cable Group has six Divisional Vice
Presidents who are based in the field. They are Ron L. Hall, Michael E. Kemph,
Nicholas A. Nocchi, Larry L. Ott, Robert S. Smith and Victor A. Wible.





                                        -35-
                                                                         
<PAGE>   36
                 Each director of the Corporate General Partner is elected to a
one-year term at the annual shareholder meeting to serve until the next annual
shareholder meeting and thereafter until his respective successor is elected
and qualified.  Officers are appointed by and serve at the discretion of the
directors of the Corporate General Partner.

ITEM 11.         EXECUTIVE COMPENSATION

MANAGEMENT FEE

                 The Partnership has a management agreement (the "Management
Agreement") with Enstar Cable Corporation, a wholly owned subsidiary of the
Corporate General Partner (the "Manager"), pursuant to which Enstar Cable
Corporation manages the Partnership's systems and provides all operational
support for the activities of the Partnership.  For these services, the Manager
receives a management fee of 5% of the Partnership's gross revenues, excluding
revenues from the sale of cable television systems or franchises, calculated
and paid monthly.  In addition, the Partnership reimburses the Manager for
certain operating expenses incurred by the Manager in the day-to-day operation
of the Partnership's cable systems.  The Management Agreement also requires the
Partnership to indemnify the Manager (including its officers, employees, agents
and shareholders) against loss or expense, absent negligence or deliberate
breach by the Manager of the Management Agreement.  The Management Agreement is
terminable by the Partnership upon sixty (60) days written notice to the
Manager.  The Manager has engaged FHGLP to provide certain management services
for the Partnership and pays FHGLP a portion of the management fees it receives
in consideration of such services and reimburses FHGLP for expenses incurred by
FHGLP on its behalf.  Additionally, the Partnership receives certain system
operating management services from affiliates of the Manager in lieu of
directly employing personnel to perform such services.  The Partnership
reimburses the affiliates for its allocable share of their operating costs.
The Corporate General Partner also performs certain supervisory and
administrative services for the Partnership, for which it is reimbursed.

                 For the fiscal year ended December 31, 1996, the Manager
charged the Partnership management fees of approximately $126,200 and
reimbursed expenses of $105,200, the payment of which was entirely deferred at
December 31, 1996.  The Partnership reimbursed affiliates approximately
$243,000 for system operating management services.  In addition, certain
programming services are purchased through Falcon Cablevision.  The Partnership
recorded approximately $451,900 due to Falcon Cablevision for these programming
services for fiscal year 1996, of which $121,000 was paid and the balance
deferred.  See Note 8 to financial statements.

PARTICIPATION IN DISTRIBUTIONS

                 The General Partners are entitled to share in distributions
from, and profit and losses in, the Partnership.  See Item 5., "Market for
Registrant's Equity Securities and Related Security Holder Matters."


ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                 As of March 3, 1997, the common stock of FHGI was owned as
follows: 78.5 % by Falcon Cable Trust, a grantor trust of which Marc B.
Nathanson is trustee and he and members of his family are beneficiaries; 20% by
Greg A. Nathanson; and 1.5% by Stanley S. Itskowitch.  In 1989, FHGI issued to
Hellman & Friedman Capital Partners, A California Limited Partnership ("H&F"),
a $1,293,357 convertible debenture due 1999 convertible under certain
circumstances into ten percent of the common stock of FHGI and entitling H&F to
elect one director to the board of directors of FHGI.  H&F elected Marc B.
Nathanson pursuant to such right.  In 1991 FHGI issued to Hellman & Friedman
Capital Partners II, A California Limited Partnership ("H&FII"), additional
convertible debentures due 1999 in the aggregate amount of $2,006,198





                                        -36-
                                                                         
<PAGE>   37
convertible under certain circumstances into approximately 6.3% of the common
stock of FHGI and entitling H&FII to elect one director to the board of
directors of FHGI.  As of March 3, 1997, H&FII had not exercised this right.
FHGLP also held 12.1% of the interests in the General Partner, and Falcon Cable
Trust, Frank Intiso and H&FII held 58.9%, 12.1% and  16.3% of the General
Partner, respectively.  Such interests entitle the holders thereof to an
allocable share of cash distributions and profits and losses of the General
Partner in proportion to their ownership.  Greg A. Nathanson is Marc B.
Nathanson's brother.

                 As of March 3, 1997, Marc B. Nathanson and members of his
family owned, directly or indirectly, outstanding partnership interests
(comprising both general partner interests and limited partner interests)
aggregating approximately 0.46% of Falcon Classic Cable Income Properties, L.P.
and 2.58% of Falcon Video Communications.  In accordance with the respective
partnership agreements of the partnerships mentioned above, after the return of
capital to and the receipt of certain preferred returns by the limited partners
of such partnerships, FHGLP and certain of its officers and directors had
rights to future profits greater than their ownership interests of capital in
such partnerships.

ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONFLICTS OF INTEREST

                 In March 1993, FHGLP, a new entity, assumed the management
services operations of FHGI. Effective March 29, 1993, FHGLP began receiving
management fees and reimbursed expenses which had previously been paid by the
Partnership, as well as the other affiliated entities mentioned above, to FHGI.
The management of FHGLP is substantially the same as that of FHGI.

                 FHGLP also manages the operations of Falcon Classic Cable
Income Properties, L.P., Falcon Video Communications, L.P., and, through its
management of the operation of Falcon Cablevision (a subsidiary of FHGLP), the
partnerships of which Enstar Communications Corporation is the Corporate
General Partner, including the Partnership.  On September 30, 1988, Falcon
Cablevision acquired all of the outstanding stock of Enstar Communications
Corporation.  Certain members of management of the Corporate General Partner
have also been involved in the management of other cable ventures.  FHGLP
contemplates entering into other cable ventures, including ventures similar to
the Partnership.

                 Conflicts of interest involving acquisitions and dispositions
of cable television systems could adversely affect Unitholders.  For instance,
the economic interests of management in other affiliated partnerships are
different from those in the Partnership and this may create conflicts relating
to which acquisition opportunities are preserved for which partnerships. See
Item 7., "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."

                 These affiliations subject FHGLP and the Corporate General
Partner and their management to certain conflicts of interest.  Such conflicts
of interest relate to the time and services management will devote to the
Partnership's affairs and to the acquisition and disposition of cable
television systems.  Management or its affiliates may establish and manage
other entities which could impose additional conflicts of interest.

                 FHGLP and the Corporate General Partner will resolve all
conflicts of interest in accordance with their fiduciary duties.





                                        -37-
                                                                        
<PAGE>   38
FIDUCIARY RESPONSIBILITY AND INDEMNIFICATION OF THE GENERAL PARTNERS

                 A general partner is accountable to a limited partnership as a
fiduciary and consequently must exercise good faith and integrity in handling
partnership affairs.  Where the question has arisen, some courts have held that
a limited partner may institute legal action on his own behalf and on behalf of
all other similarly situated limited partners (a class action) to recover
damages for a breach of fiduciary duty by a general partner, or on behalf of
the partnership (a partnership derivative action) to recover damages from third
parties.  Section 14-9-1001 of the Georgia Revised Uniform Limited Partnership
Act also allows a partner to maintain a partnership derivative action if
general partners with authority to do so have refused to bring the action or if
an effort to cause those general partners to bring the action is not likely to
succeed. Certain cases decided by federal courts have recognized the right of a
limited partner to bring such actions under the Securities and Exchange
Commission's Rule 10b-5 for recovery of damages resulting from a breach of
fiduciary duty by a general partner involving fraud, deception or manipulation
in connection with the limited partner's purchase or sale of partnership units.

                 The partnership agreement provides that the General Partners
will be indemnified by the Partnership for acts performed within the scope of
their authority under the partnership agreement if such general partner (i)
acted in good faith and in a manner that it reasonably believed to be in, or
not opposed to, the best interests of the Partnership and the partners, and
(ii) had no reasonable grounds to believe that its conduct was negligent.  In
addition, the partnership agreement provides that the General Partners will not
be liable to the Partnership or its limited partners for errors in judgment or
other acts or omissions not amounting to negligence or misconduct.  Therefore,
limited partners will have a more limited right of action than they would have
absent such provisions.  In addition, the Partnership maintains insurance on
behalf of the General Partner, and such other persons as the General Partner
shall determine against any liability that may be asserted against or expense
that may be incurred by such person and against which the Partnership would be
entitled to indemnify such person pursuant to the Partnership Agreement.  To
the extent that the exculpatory provisions purport to include indemnification
for liabilities arising under the Securities Act of 1933, it is the opinion of
the Securities and Exchange Commission that such indemnification is contrary to
public policy and therefore unenforceable.





                                        -38-
                                                                        
<PAGE>   39
                                    PART IV

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

(a)            1.  Financial Statements

                   Reference is made to the Index to Financial
                   Statements on page F-1.



(a)            2.  Financial Statement Schedules

                   Reference is made to the Index to Financial
                   Statements on page F-1.



(a)            3.  Exhibits

                   Reference is made to the Index to Exhibits
                   on Page E-1.



(b)                Reports on Form 8-K

                   None.





                                        -39-
                                                                        
<PAGE>   40
                                   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, on March
25, 1997.



                                       ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                                       By:  Enstar Communications Corporation,
                                            Corporate General Partner


                                            By: /s/    Marc B. Nathanson
                                                --------------------------------
                                                       Marc B. Nathanson
                                                       Chairman of the Board and
                                                         Chief Executive Officer



               Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of the
Registrant and in the capacities indicated on the 25th day of March 1997.

<TABLE>
<CAPTION>
          Signatures                             Title(*)
          ----------                             --------
<S>                           <C>
/s/ Marc B. Nathanson          Chairman of the Board and Chief Executive
-------------------------      Officer (Principal Executive Officer)
Marc B. Nathanson                



/s/ Michael K. Menerey        Chief Financial Officer, Secretary and
-------------------------     Director (Principal Financial and Accounting
Michael K. Menerey            Officer)



/s/ Frank J. Intiso           President, Chief Operating Officer
-------------------------     and Director
Frank J. Intiso

/s/ Stanley S. Itskowitch     Executive Vice President, General Counsel
-------------------------      and Director
Stanley S. Itskowitch          
</TABLE>



(*)  Indicates position(s) held with Enstar Communications Corporation, the
Corporate General Partner of the Registrant.





                                       -40-
                                                                         
<PAGE>   41
                         INDEX TO FINANCIAL STATEMENTS





<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
Report of Independent Auditors                                                          F-2

Balance Sheets - December 31, 1995 and 1996                                             F-3

Financial Statements for each of
  the three years in the period
  ended December 31, 1996:

    Statements of Operations                                                            F-4

    Statements of Partnership Capital (Deficit)                                         F-5

    Statements of Cash Flows                                                            F-6

Notes to Financial Statements                                                           F-7
</TABLE>


All schedules have been omitted because they are either not required, not
applicable or the information has otherwise been supplied.





                                        F-1
                                                                         
<PAGE>   42
                         REPORT OF INDEPENDENT AUDITORS




Partners
Enstar Income/Growth Program Six-B, L.P. (A Georgia Limited Partnership)


We have audited the accompanying balance sheets of Enstar Income/Growth Program
Six-B, L.P. (a Georgia limited partnership) as of December 31, 1995 and 1996,
and the related statements of operations, partnership capital (deficit), and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Partnership'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, the financial statements referred to above present fairly, in
all material respects, the financial position of Enstar Income/Growth Program
Six-B, L.P. at December 31, 1995 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.



                                       /s/   ERNST & YOUNG LLP



Los Angeles, California
February 21, 1997





                                       F-2
                                                                         
<PAGE>   43
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                                 BALANCE SHEETS
                          ---------------------------

<TABLE>
<CAPTION>
                                                                 December 31,
                                                         -----------------------------
                                                            1995               1996
                                                         -----------       -----------
<S>                                                      <C>               <C>        
ASSETS:
 Cash and cash equivalents                               $    39,800       $   353,500

 Accounts receivable less allowance of $4,600 and
        $1,900 for possible losses                            88,200            67,200

 Insurance claims receivable                                 306,300           250,500

 Cable materials, equipment, supplies
        and other                                             57,300            61,600

 Property, plant and equipment, less accumulated
         depreciation and amortization                     3,567,700         3,593,400

 Franchise cost, net of accumulated
         amortization of $1,897,700 and $2,256,400         2,400,700         2,053,300

 Intangible costs, net of accumulated amortization
         of $280,800 and $322,300                            305,700           277,000
                                                         -----------       -----------

                                                         $ 6,765,700       $ 6,656,500
                                                         ===========       ===========

                LIABILITIES AND PARTNERSHIP CAPITAL


LIABILITIES:
 Accounts payable                                        $   186,400       $   145,700
 Due to affiliates                                         1,274,900         1,679,000
 Note payable                                              1,630,700         1,288,400
                                                         -----------       -----------

        TOTAL LIABILITIES                                  3,092,000         3,113,100
                                                         -----------       -----------

COMMITMENTS AND CONTINGENCIES

PARTNERSHIP CAPITAL (DEFICIT):
 General partners                                            (35,900)          (37,200)
 Limited partners                                          3,709,600         3,580,600
                                                         -----------       -----------

        TOTAL PARTNERSHIP CAPITAL                          3,673,700         3,543,400
                                                         -----------       -----------


                                                         $ 6,765,700       $ 6,656,500
                                                         ===========       ===========
</TABLE>

                See accompanying notes to financial statements.


                                    F-3
                                                                           

<PAGE>   44
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                            STATEMENTS OF OPERATIONS

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


<TABLE>
<CAPTION>

                                                       Year Ended December 31,
                                          -----------------------------------------------
                                             1994               1995              1996
                                          -----------       -----------       -----------
<S>                                       <C>               <C>               <C>        
REVENUES                                  $ 2,007,800       $ 2,211,900       $ 2,524,700
                                          -----------       -----------       -----------
OPERATING EXPENSES:
 Service costs                                669,200           705,000           825,200
 General and administrative expenses          414,000           383,500           404,500
 General Partner management fees
   and reimbursed expenses                    210,400           202,700           231,400
 Depreciation and amortization              1,004,200           976,400         1,054,200
                                          -----------       -----------       -----------

                                            2,297,800         2,267,600         2,515,300
                                          -----------       -----------       -----------

         Operating income (loss)             (290,000)          (55,700)            9,400
                                          -----------       -----------       -----------

 OTHER INCOME (EXPENSE):
   Interest expense                          (161,300)         (195,400)         (147,700)
   Interest income                              1,500             4,300             8,000
                                          -----------       -----------       -----------

                                             (159,800)         (191,100)         (139,700)
                                          -----------       -----------       -----------

NET LOSS                                  $  (449,800)      $  (246,800)      $  (130,300)
                                          ===========       ===========       ===========

NET LOSS PER UNIT OF LIMITED
  PARTNERSHIP INTEREST                    $    (12.16)      $     (6.67)      $     (3.52)
                                          ===========       ===========       ===========



WEIGHTED AVERAGE LIMITED
  PARTNERSHIP UNITS OUTSTANDING
  DURING THE YEAR                              36,626            36,626            36,626
                                          ===========       ===========       ===========
</TABLE>



                See accompanying notes to financial statements.
    
                                    F-4
                                                                          
<PAGE>   45
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                   STATEMENTS OF PARTNERSHIP CAPITAL (DEFICIT)


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


<TABLE>
<CAPTION>
                                     General          Limited
                                    Partners         Partners           Total
                                    --------       -----------       -----------
<S>                                 <C>            <C>               <C>        
PARTNERSHIP CAPITAL (DEFICIT),
  January 1, 1994                   $(26,300)      $ 4,655,600       $ 4,629,300

   Distributions to partners          (2,600)         (256,400)         (259,000)
   Net loss for year                  (4,500)         (445,300)         (449,800)
                                    --------       -----------       -----------

PARTNERSHIP CAPITAL (DEFICIT),
   December 31, 1994                 (33,400)        3,953,900         3,920,500

     Net loss for year                (2,500)         (244,300)         (246,800)
                                    --------       -----------       -----------

PARTNERSHIP CAPITAL (DEFICIT),
   December 31, 1995                 (35,900)        3,709,600         3,673,700

     Net loss for year                (1,300)         (129,000)         (130,300)
                                    --------       -----------       -----------

PARTNERSHIP CAPITAL (DEFICIT)
   December 31, 1996                $(37,200)      $ 3,580,600       $ 3,543,400
                                    ========       ===========       ===========
</TABLE>


                See accompanying notes to financial statements.


                                       F-5
                                                                          



<PAGE>   46
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                            STATEMENTS OF CASH FLOWS


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


<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                                    ----------------------------------------------
                                                                        1994            1995              1996
                                                                    -----------       ---------       -----------
<S>                                                                 <C>               <C>             <C>         
Cash flows from operating activities:
       Net loss                                                     $  (449,800)      $(246,800)      $  (130,300)
       Adjustments to reconcile net loss to net
        cash provided by operating activities:
              Depreciation and amortization                           1,004,200         976,400         1,054,200
              Amortization of deferred loan costs                           200           5,200             1,300
              Increase (decrease) from changes in:
               Accounts receivable and other assets                       2,300        (311,100)           76,800
               Cable materials, equipment, supplies
                 and other                                               (9,000)         (8,700)           (4,300)
               Accounts payable and due to affiliates                   302,400         261,600           363,400
                                                                    -----------       ---------       -----------

                     Net cash provided by operating activities          850,300         676,600         1,361,100
                                                                    -----------       ---------       -----------

Cash flows from investing activities:
       Capital expenditures                                            (438,400)       (526,700)         (673,300)
       Increase in intangible assets                                     (9,500)        (21,400)          (27,100)
       Proceeds from sale of property, plant
         and equipment                                                      -               -                 300
                                                                    -----------       ---------       -----------

                       Net cash used in investing activities           (447,900)       (548,100)         (700,100)
                                                                    -----------       ---------       -----------

Cash flows from financing activities:
       Repayment of debt                                               (105,700)       (276,800)         (342,200)
       Deferred loan costs                                                 (600)         (5,000)           (5,100)
       Distributions to partners                                       (259,000)            -                 -
                                                                    -----------       ---------       -----------

                        Net cash used in financing activities          (365,300)       (281,800)         (347,300)
                                                                    -----------       ---------       -----------

Net increase (decrease) in cash and cash equivalents                     37,100        (153,300)          313,700

Cash and cash equivalents at beginning of year                          156,000         193,100            39,800
                                                                    -----------       ---------       -----------

Cash and cash equivalents at end of year                            $   193,100       $  39,800       $   353,500
                                                                    ===========       =========       ===========
</TABLE>


                See accompanying notes to financial statements.


                                       F-6
                                                                          



<PAGE>   47
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                         NOTES TO FINANCIAL STATEMENTS


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


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

FORM OF PRESENTATION

        Enstar Income/Growth Program Six-B, L.P., a Georgia limited partnership
(the "Partnership"), owns and operates cable television systems in rural areas
of Georgia, Utah and Missouri.

        The financial statements do not give effect to any assets that the
partners may have outside of their interest in the Partnership, nor to any
obligations, including income taxes of the partners.

CASH EQUIVALENTS

        For purposes of the statements of cash flows, the Partnership considers
all highly liquid debt instruments purchased with an initial maturity of three
months or less to be cash equivalents.

        Cash equivalents at December 31, 1996 include $277,000 of short-term
investments in commercial paper.

PROPERTY, PLANT, EQUIPMENT AND DEPRECIATION AND AMORTIZATION

        Property, plant and equipment are stated at cost. Direct costs
associated with installations in homes not previously served by cable are
capitalized as part of the distribution system, and reconnects are expensed as
incurred. For financial reporting, depreciation and amortization is computed
using the straight-line method over the following estimated useful lives:

<TABLE>
         <S>                                     <C>       
         Cable television systems                   5-15 years
         Vehicles                                      3 years
         Furniture and equipment                     5-7 years
         Leasehold improvements                  Life of lease
</TABLE>

FRANCHISE COST

        The excess of cost over the fair values of tangible assets and customer
lists of cable television systems acquired represents the cost of franchises. In
addition, franchise cost includes capitalized costs incurred in obtaining new
franchises. These costs (primarily legal fees) are direct and incremental to the
acquisition of the franchise and are amortized using the straight-line method
over the lives of the franchises, ranging up to 15 years. The Partnership
periodically evaluates the amortization periods of these intangible assets to
determine whether events or circumstances warrant revised estimates of useful
lives. Costs relating to unsuccessful franchise applications are charged to
expense when it is determined that the efforts to obtain the franchise will not
be successful.

INTANGIBLE COSTS

        Intangible costs include covenants-not-to-compete and deferred charges
which are amortized using the straight-line method over two years or the life of
the covenant and certain fees paid to the Corporate General Partner and other
system acquisition costs which are amortized using the straight-line method over
five to 25 years. Costs related to borrowings are capitalized and amortized to
interest expense over the life of the related loan.


                                       F-7
                                                                           
<PAGE>   48
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


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


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONCLUDED)

RECOVERABILITY OF ASSETS

        The Partnership assesses on an ongoing basis the recoverability of
intangible assets, including goodwill, and capitalized plant assets based on
estimates of future undiscounted cash flows compared to net book value. If the
future undiscounted cash flow estimate were less than net book value, net book
value would then be reduced to estimated fair value, which would generally
approximate discounted cash flows. The Partnership also evaluates the
amortization periods of assets, including goodwill and other intangible assets,
to determine whether events or circumstances warrant revised estimates of useful
lives.

REVENUE RECOGNITION

        Revenues from cable services are recognized as the services are
provided.

INCOME TAXES

        As a partnership, Enstar Income/Growth Program Six-B, L.P. pays no
income taxes. All of the income, gains, losses, deductions and credits of the
Partnership are passed through to its partners. The basis in the Partnership's
assets and liabilities differs for financial and tax reporting purposes. At
December 31, 1996, the book basis of the Partnership's net assets exceeds its
tax basis by $2,647,200.

EARNINGS PER UNIT OF LIMITED PARTNERSHIP INTEREST

        Earnings and losses are allocated 99% to the limited partners and 1% to
the general partners. Earnings and losses per unit of limited partnership
interest are based on the weighted average number of units outstanding during
the year.

RECLASSIFICATIONS

        Certain prior year amounts have been reclassified to conform to the 1996
presentation.

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE 2 - PARTNERSHIP MATTERS

        The Partnership was formed on September 23, 1987 to acquire, construct,
improve, develop and operate cable television systems in various locations in
the United States. The partnership agreement provides for Enstar Communications
Corporation (the "Corporate General Partner") and Robert T. Graff, Jr. to be the
general partners and for the admission of limited partners through the sale of
interests in the Partnership.


                                      F-8
                                                                          
<PAGE>   49
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


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


NOTE 2 - PARTNERSHIP MATTERS (CONCLUDED)

        On September 30, 1988, Falcon Cablevision, a California limited
partnership, purchased all of the outstanding capital stock of the Corporate
General Partner.

        The Partnership was formed with an initial capital contribution of
$1,100 comprised of $1,000 from the Corporate General Partner and $100 from the
initial limited partner. Sale of interests in the Partnership began November
1988, and the initial closing took place in January 1989. The Partnership
continued to raise capital until November 1989, at which time the Partnership
had raised a total of $9,156,400. The Partnership began its cable television
business operations in January 1990 with the acquisition of its first cable
television property.

        The amended partnership agreement generally provides that all cash
distributions, as defined, be allocated 1% to the general partners and 99% to
the limited partners until the limited partners have received aggregate cash
distributions equal to their original capital contributions. The amended
partnership agreement also provides that all partnership operating profits be
allocated to the partners in the same proportion as cash flow distributions are
made. However, even after the limited partners have received cash flow equal to
their initial investment, the general partners will only receive a 1%
distribution of proceeds from a disposition or refinancing of a system until the
limited partners have received an annual simple interest return of at least 8%
of their initial investment less any distributions from previous dispositions or
refinancing of systems. Thereafter, proceeds from a disposition or refinancing
of a system shall be distributed 80% to the limited partners and 20% to the
general partners. Gains from dispositions of systems are first allocated in the
same manner as the proceeds from such dispositions. This occurs until the
dispositions result in the aggregate fair market value of the Partnership's
remaining system(s) being less than or equal to 50% of the aggregate
contributions to the capital of the Partnership by the partners.

        Any losses, whether resulting from operations or the sale or disposition
of a system, are allocated 99% to the limited partners and 1% to the general
partners until the limited partners' capital account balances are equal to zero.
Thereafter, all losses are allocated to the Corporate General Partner.

        Upon dissolution of the Partnership, distributions are to be made to the
partners in accordance with their capital account balances. No partners other
than general partners shall be obligated to restore any negative capital account
balance existing upon dissolution of the Partnership. All allocations to
individual limited partners will be based on their respective limited
partnership ownership interests.

        The amended partnership agreement limits the amount of debt the
Partnership may incur.

NOTE 3 - INSURANCE CLAIMS RECEIVABLE

        Insurance claims receivable at December 31, 1995 represents uncollected
insurance claims arising from storm related system damage which occurred in 1994
and 1995. The claim relating to damage sustained in 1994 was settled and
collected in 1996. The claim relating to damage sustained in 1995 was partially
collected in 1996. Management believes the remaining $250,500 balance due at
December 31, 1996 is collectible.

                                       F-9
                                                                          
<PAGE>   50
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


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



NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of:


    

<TABLE>
<CAPTION>
                                            December 31,
                                   -----------------------------
                                       1995              1996
                                   -----------       -----------
<S>                                <C>               <C>        
Cable television systems           $ 5,396,500       $ 6,041,600
Vehicles, furniture and
  equipment, and leasehold
  improvements                         162,200           173,300
                                   -----------       -----------

                                     5,558,700         6,214,900

Less accumulated depreciation
  and amortization                  (1,991,000)       (2,621,500)
                                   -----------       -----------

                                   $ 3,567,700       $ 3,593,400
                                   ===========       ===========
</TABLE>

NOTE 5 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

        The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value:

Cash and Cash Equivalents

        The carrying amount approximates fair value due to the short maturity of
those instruments.

Note Payable

        The carrying amount approximates fair value due to the variable rate
nature of the note payable.


NOTE 6 - NOTE PAYABLE

        On December 14, 1990, the Partnership entered into a $3,000,000
revolving line of credit agreement with a bank. On December 31, 1993, the line
of credit converted to a term loan with payments commencing on March 31, 1994
and continuing through June 30, 1999. The agreement provides for annual
interest, at the Partnership's option, at .75% over the bank's prime rate or 2%
over the Eurodollar rate. Interest is payable quarterly. The agreement is
collateralized by substantially all of the Partnership's assets and is
guaranteed by the Corporate General Partner.

        The agreement contains various requirements and restrictions including
maintenance of minimum operating results, required financial reporting,
restrictions on capital expenditures, sales of assets and limitations on
investments, loans and advances. Management believes that the Partnership was in
compliance with all loan covenants at December 31, 1996. 


                                      F-10
                                                                         



<PAGE>   51
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


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

NOTE 6 - NOTE PAYABLE (CONCLUDED)

        Principal maturities of the note payable as of December 31, 1996 are as
follows:



<TABLE>
<CAPTION>
      Year                   Amount
      ----                   ------
      <S>                    <C>       
      1997                   $  422,800
      1998                      543,600
      1999                      322,000
                             ----------
                             $1,288,400
                             ==========
</TABLE>
     

NOTE 7 - COMMITMENTS AND CONTINGENCIES

        The Partnership leases tower sites associated with its systems under
operating leases expiring in various years through 2002. Future minimum rental
payments under non-cancelable operating leases that have remaining terms in
excess of one year as of December 31, 1996 are immaterial.

        Rentals, other than pole rentals, charged to operations approximated
$15,900, $13,800 and $17,300 in 1994, 1995 and 1996, respectively. Pole rentals
approximated $38,100, $41,300 and $40,800 in 1994, 1995 and 1996, respectively.

        The Partnership is subject to regulation by various federal, state
and local government entities. The Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act") provides for, among other things,
federal and local regulation of rates charged for basic cable service, cable
programming services and equipment installation services. Regulations issued in
1993 and significantly amended in 1994 by the Federal Communications Commission
(the "FCC") have resulted in changes in the rates charged for the Partnership's
cable services. The Partnership believes that compliance with the 1992 Cable Act
has had a significant negative impact on its operations and cash flow. It also
believes that any potential future liabilities for refund claims or other
related actions would not be material. The Telecommunications Act of 1996 (the
"1996 Telecom Act") was signed into law on February 8, 1996. This statute
contains a significant overhaul of the federal regulatory structure. As it
pertains to cable television, the 1996 Telecom Act, among other things, (i) ends
the regulation of certain non-basic programming services in 1999; (ii) expands
the definition of effective competition, the existence of which displaces rate
regulation; (iii) eliminates the restriction against the ownership and operation
of cable systems by telephone companies within their local exchange service
areas; and (iv) liberalizes certain of the FCC's cross-ownership restrictions.
The FCC is in the process of conducting a number of additional rulemaking
proceedings in order to implement many of the provisions of the 1996 Telecom
Act.


        Capital expenditures of approximately $1,800,000 will be necessary to
rebuild an existing cable television system by February 1999 as required by two
franchise agreements. Management believes that the Partnership's cash flow and
other sources of capital will be adequate to meet its expenditure requirements
in 1997. Financing for capital expenditures required beyond 1997 is not
currently available under the Partnership's term loan agreement. The term loan
agreement restricts capital expenditures to $700,000 in 1996 and thereafter.
Refinancing of the Partnership's credit arrangements will be necessary in order
to meet its rebuild requirements. There can be no assurance that the Partnership
will be able to obtain such a refinancing, or on terms acceptable to the
Partnership. Refinancing alone may still not permit the Partnership to complete
all of its planned rebuild construction due to


                                    F-11
                                                                           



<PAGE>   52
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                  (CONTINUED)

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



NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONCLUDED)

limitations on indebtedness imposed by the partnership agreement. The desired
rebuild program is presently estimated to require aggregate capital expenditures
of approximately $7,200,000. The partnership agreement provides that without the
approval of a majority of interests of limited partners, the Partnership may not
incur any borrowings unless the amount of such borrowings together with all
outstanding borrowings does not exceed 33% of the original capital raised by the
Partnership, or a maximum of $3,052,500 permitted debt outstanding. In order to
obtain the appropriate amount of capital to rebuild and upgrade the
Partnership's systems, this provision of the partnership agreement would need to
be amended to increase the Partnership's leverage. There can be no assurance
that the Partnership will be able to effect such an amendment to the partnership
agreement.

NOTE 8 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES

        The Partnership has a management and service agreement (the "Agreement")
with a wholly owned subsidiary of the Corporate General Partner (the "Manager")
for a monthly management fee of 5% of gross receipts, as defined, from the
operations of the Partnership. Management fee expense was $100,400, $110,600 and
$126,200 in 1994, 1995 and 1996, respectively.

        In addition to the monthly management fee, the Partnership reimburses
the Manager for direct expenses incurred on behalf of the Partnership, and for
the Partnership's allocable share of operational costs associated with services
provided by the Manager. All cable television properties managed by the
Corporate General Partner and its subsidiaries are charged a proportionate share
of these expenses. Corporate office allocations and district office expenses are
charged to the properties served based primarily on the respective percentage of
basic customers or homes passed (dwelling units within a system) within the
designated service areas. Reimbursed expenses were $110,000, $92,100 and
$105,200 in 1994, 1995 and 1996, respectively.

        Payments of management fees and reimbursed expenses of approximately
$148,300, $194,800 and $82,800 were deferred in 1994, 1995 and 1996,
respectively. The cumulative amount deferred as of December 31, 1994, 1995 and
1996 amounted to approximately $721,700, $916,500 and $999,300, respectively.
The Partnership will be obligated to pay these deferred management fees and
reimbursed expenses at the point in time that liquidity improves.

        The Partnership also receives certain system operating management
services from affiliates of the Corporate General Partner in addition to the
Manager due to the fact that there are no such employees directly employed by
the Partnership. The Partnership reimburses the affiliates for its allocable
share of the affiliates' operational costs. The total amount charged to the
Partnership for these costs approximated $234,000, $243,900 and $243,000 in
1994, 1995 and 1996, respectively. No management fee is payable to the
affiliates by the Partnership and there is no duplication of reimbursed expenses
and costs paid to the Manager.

        Certain programming services have been purchased through Falcon
Cablevision. Falcon Cablevision charges the Partnership for these costs based on
an estimate of what the Corporate General Partner could negotiate for such
programming services for the 15 partnerships managed by the Corporate General
Partner as a group. Programming fee expense was $317,000, $370,900 and $451,900
in 1994, 1995 and 1996, respectively. As of December 31, 1996, the Partnership
owed Falcon Cablevision in excess of $566,200 for programming fees. Programming
fees are included in service costs in the statements of operations.


                                    F-12
                                                                          



<PAGE>   53
                    ENSTAR INCOME/GROWTH PROGRAM SIX-B, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                  (CONCLUDED)

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


NOTE 9 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

        During the years ended December 31, 1994, 1995 and 1996, cash paid for
interest amounted to $120,600, $237,900 and $148,700, respectively.


                                    F-13
                                                                          



<PAGE>   54
                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
      EXHIBIT
      NUMBER                    DESCRIPTION
      ------                    -----------

        <S>     <C>     
        3       Amended and Restated Agreement of Limited Partnership of Enstar
                Income/Growth Program Six-B, L.P. dated January 5, 1989(1)

        10.1    Management Agreement between Enstar Income/Growth Program Six-B
                and Enstar Cable Corporation(1)

        10.2    Service agreement between Enstar Communication Corporation,
                Enstar Cable Corporation and Falcon Holding Group, Inc. dated as
                of October 1, 1988(1)

        10.3    Franchise ordinance and related documents thereto granting a
                non-exclusive community antenna television system for the City
                of Ivins, Utah(1)

        10.4    Franchise Ordinance 86-7 and related documents thereto granting
                a non-exclusive community antenna television franchise for the
                City of Ivins, Utah.(2)

        10.5    Franchise Ordinance 90-2 establishing the uniform franchise tax
                on all public utilities of the Town of Ivins, Utah.(2)

        10.6    Franchise Ordinance 210 and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                City of Fisk, Missouri.(2)

        10.7    Franchise Ordinance 121 and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                City of Qulin, Missouri.(2)

        10.8    Franchise Ordinance and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                City of Buchanan, Georgia.(2)

        10.9    Franchise Ordinance and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                City of Temple, Georgia.(2)

        10.10   Franchise Ordinance and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                County of Carroll, Georgia.(2)

        10.11   Franchise Ordinance and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                City of Bowdon, Georgia.(2)

        10.12   Franchise Resolution and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                County of Haralson, Georgia.(2)

        10.13   Franchise Agreement and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                City of Bremen, Georgia.(2)

        10.14   Franchise ordinance and related documents thereto granting a
                non-exclusive community antenna television franchise for the
                City of Villa Rica, Georgia.(2)

        10.15   Credit and Term Loan Agreement dated December 14, 1990 by and
                between Enstar Income/Growth Program Six-B and The First
                National Bank of Boston.(2)

        10.16   Amendment No. 1 to Credit Agreement dated December 14, 1990
                between Enstar Income/Growth Program Six-B and the First
                National Bank of Boston, dated March 23, 1993.(3)

        10.17   Amendment No. 2 to Credit Agreement dated December 14, 1990
                between Enstar Income/Growth Program Six-B and the First
                National Bank of Boston, dated March 22, 1994.(4)

        10.18   Amendment No. 3 to Credit Agreement dated December 14, 1990
                between Enstar Income/Growth Program Six-B and the First
                National Bank of Boston, dated August 11, 1994.(5)
</TABLE>

                                      E-1

                                                                           
<PAGE>   55
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
        EXHIBIT
        NUMBER  DESCRIPTION
        ------  -----------
        <S>     <C>                            
        10.19   Franchise ordinance and related documents thereto granting a
                non-exclusive community antenna franchise for the City of Villa
                Rica, Georgia.(7)

        10.20   Franchise ordinance and related documents thereto granting a
                non-exclusive community antenna franchise for the city of
                Temple, Georgia. (7)

        10.21   Amendment No. 4 to Credit Agreement dated December 14, 1990
                between Enstar Income/Growth Program Six-B and the First
                National Bank of Boston, dated September 29, 1995.(8)

        10.22   Amendment No. 5 to Credit Agreement dated December 14, 1990
                between Enstar Income/Growth Program Six-B and the First
                National Bank of Boston, dated March 28, 1996.(9)

        16.1    Report of change in accountants. (6)

        21.1    Subsidiaries: None.
</TABLE>

                               FOOTNOTE REFERENCES

(1)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-18495 for the fiscal year ended December
        31, 1989.

(2)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-18495 for the fiscal year ended December
        31, 1990.

(3)     Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-18495 for the quarter ended March 31,
        1993.

(4)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-18495 for the fiscal year ended December
        31, 1993.

(5)     Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-18495 for the quarter ended September
        30, 1994.

(6)     Incorporated by reference to the exhibit to the Registrant's Current
        Report on Form 8-K, File No. 0-18495 dated October 17, 1994. .

(7)     Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-18495 for the quarter ended March 31,
        1995.

(8)     Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-18495 for the quarter ended September
        30, 1995.

(9)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-18495 for the fiscal year ended December
        31, 1995.


                                      E-2