<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C.  20549

                                   FORM 10-K/A

/XX/ 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 1-10321


                            THE ACKERLEY GROUP, INC.
             (Exact name of Registrant as specified in its charter)

          Delaware                                           91-1043807    
----------------------------                      ----------------------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification No.)


1301 Fifth Avenue, Suite 4000
Seattle, Washington                                            98101      
----------------------------                      ----------------------------
(Address of principal executive offices)                    (Zip code)

Registrant's telephone number, including area code: (206) 624-2888
                                                    --------------

Securities registered pursuant to Section 12(b) of the Act: Common Stock
                                                            ------------

Securities registered pursuant to Section 12(g) of the Act: None
                                                            ----

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.                                                                      
                                                                            / / 

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  
                         ---                ---

Aggregate market value of voting Common Stock held by nonaffiliates of
Registrant as of March 14, 1997:  $120,030,253.

Number of shares of common stock, $.01 par value, outstanding as of March 14,
1997:  19,813,002 Common Stock and 11,353,810 Class B Common Stock.

Documents incorporated by reference and parts of Form 10-K into which
incorporated:  Registrant's Definitive Proxy Statement for May 5, 1997 Annual
Meeting--Part III
<PAGE>

                                     PART I

                           ITEM 3 - LEGAL PROCEEDINGS

     LAMBERT V. ACKERLEY.  In December 1994, six former employees of certain
subsidiaries of the Company filed a complaint in King County Superior Court
against Seattle SuperSonics, Inc. and Full House Sports and Entertainment, Inc.,
both wholly-owned subsidiaries of the Company, and two of their officers, Barry
A. Ackerley and William N. Ackerley (collectively, "Defendants").  The Complaint
alleged various violations of applicable wage and hour laws and breaches of
employment contracts.  The Plaintiffs sought unspecified damages and injunctive 
relief.

     On or about January 10, 1995, those claims were removed on motion by the
defendants to the U.S. District Court for the Western District of Washington in
Seattle.  On September 5, 1995, the Plaintiffs amended the claims (1) to specify
violations of Washington and U.S. federal labor laws and (2) to seek additional
relief, including liquidated and punitive damages under the U.S. Fair Labor
Standards Act and double damages under Washington law for willful refusal to pay
overtime and minimum wages.

     On February 29, 1996, the jury rendered a verdict finding that the
Defendants had wrongfully terminated Plaintiffs' employment under Washington law
and U.S. federal laws, and awarding compensatory damages of approximately $1.0
million for the Plaintiffs and punitive damages against the Defendants of $12.0
million.  Following post-trial motions, the Court reduced the punitive damages
award to $4,182,000, comprised of $1,394,000 against each of Barry A. Ackerley
and William N. Ackerley, and $1,394,000 against the corporate defendants
collectively.  

     On November 22, 1996, the defendants filed their Notice of Appeal from the
U.S. District Court to the Ninth Circuit Court of Appeals in San Francisco.  In
early 1997, the defendants filed their opening brief with the Ninth Circuit.  No
additional action has occurred with respect to the appeal. 

     GENERAL.  The Company becomes involved from time to time in various claims
and lawsuits incidental to the ordinary course of its operations, including such
matters as contract and lease disputes and complaints alleging employment
discrimination.  In addition, the Company participates in various governmental
and administrative proceedings relating to, among other things, condemnation of
outdoor advertising structures without payment of just compensation, disputes
regarding airport franchises and matters affecting the operation of broadcasting
facilities.  Other than as indicated above, the Company believes that the
outcome of any such pending claims or proceedings, individually or in the
aggregate, will not have a material adverse effect upon its business or
financial condition.


                                        1
<PAGE>

     The NBA regularly becomes involved in litigation with present or former
players, league employees, persons with interests in franchises and others.  The
Company is unaware of any pending or threatened litigation which would have a
material adverse effect upon the business or financial condition of the NBA or
any of its members, including the SuperSonics.


                                        2
<PAGE>

                                     PART II

                        ITEM 6 - SELECTED FINANCIAL DATA

     The following selected consolidated financial data with respect to the
Company for the years ended December 31, 1992 through 1996 have been derived
from the audited consolidated financial statements of the Company. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the "Consolidated Financial Statements" and Notes thereto included elsewhere in
this report.

<TABLE>
<CAPTION>

                                                                               YEAR END DECEMBER 31, 
                                               -----------------------------------------------------------------------------------
                                                    1996               1995         1994              1993             1992 
                                                    ----               ----         ----              ----             ----
                                                                     (In thousands except per share data) 
<S>                                            <C>                <C>            <C>               <C>             <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA: 
Revenue                                        $ 279,662          $ 235,820      $ 211,728         $ 192,958        $ 187,295
  Less agency commissions and discounts          (32,364)           (28,423)       (25,626)          (22,341)         (22,769) 
                                              ----------         ----------     ----------        ----------       ----------
Net revenue                                      247,298            207,397        186,102           170,617          164,526   
Expenses and other income 
  Operating expenses                             186,846            156,399        143,469           132,774          125,441   
  Disposition of assets                              ---                ---         (2,506)              759           (2,147) 
  Depreciation and Amortization                   16,996             13,243         10,883            12,018           13,915 
  Interest expense                                24,461             25,010         25,909            22,431           23,809
  Litigation expense                                 ---             14,200            ---               ---              ---
  Other (Income) expense                             108                (56)          (657)             (458)              13
                                              ----------         ----------     ----------        ----------       ----------
    Total expenses and other income              228,411            208,796        177,098           167,524          161,031
                                              ----------         ----------     ----------        ----------       ----------
Income (loss) before income taxes 
  and extraordinary item                          18,887             (1,399)         9,004             3,093            3,495 
Income taxes                                       2,758              1,515             73               133            1,188
                                              ----------         ----------     ----------        ----------       ----------
Income (loss) before extraordinary  item          16,129             (2,914)         8,931(1)          2,960            2,307
Extraordinary item - loss on 
   extinguishment of debt in 1996, 1994 and 
   1993; utilization of tax loss carry 
   forward in 1992                                  (355)               ---         (2,009)             (625)           1,188
                                              ----------         ----------     ----------        ----------       ----------
                                           
Net income (loss) applicable to  
  common shares                                 $ 15,774          $  (2,914)     $   6,832         $   2,335        $   3,495
                                              ----------         ----------     ----------        ----------       ----------
                                              ----------         ----------     ----------        ----------       ----------
Per common share: 
  Income (loss) before 
    extraordinary item                         $     .51          $    (.09)     $     .28         $     .09        $     .07 
  Extraordinary item                                (.01)               ---           (.06)             (.02)             .04
                                              ----------         ----------     ----------        ----------       ----------
                                              ----------         ----------     ----------        ----------       ----------
  Net income (loss)                            $     .50          $    (.09)     $     .22         $     .07        $     .11
                                              ----------         ----------     ----------        ----------       ----------
                                              ----------         ----------     ----------        ----------       ---------- 
  Dividends                                    $     .02          $    .015      $     ---         $     ---        $     ---
                                              ----------         ----------     ----------        ----------       ----------
                                              ----------         ----------     
  Common shares used in per 
    share computation                             31,760             31,545         31,483            31,204           30,900 
CONSOLIDATED BALANCE SHEET
  DATA (AT END OF PERIOD): 
Working capital                                $  11,154      $      15,110     $   16,783        $    7,970        $ (17,375) 
Total assets                                     224,912            189,882        170,783           160,491          165,824 
Total long-term debt                             229,350            215,328        225,613           213,165          195,448 
Total debt                                       235,141            220,147        228,646           224,080          233,617 
Stockholder's deficiency                         (83,839)           (99,093)       (95,958)         (102,852)        (105,228) 

</TABLE>

---------------
(1)  See Note 2 to Consolidated Financial Statements.


                                        3
<PAGE>

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

OVERVIEW

     The Company reported net income of $15.8 million in 1996, a net loss of
$2.9 million in 1995, and net income of $6.8 million in 1994.  Historically, the
Company has sought to expand its businesses through acquisitions.  This
acquisition strategy has led the Company to incur substantial depreciation and
amortization expense and interest expense on long-term debt.  Financial results
for the past three years reflect the decreased acquisition activity of the early
1990s combined with the increased profitability of the Company's existing
operations.

     On February 17, 1995, the Company completed a refinancing of its senior
indebtedness (the "1995 Refinancing") to obtain more favorable interest rates
and repayment terms respecting its senior bank indebtedness.  In connection with
the 1995 Refinancing, the Company entered into a credit agreement with a new
group of bank lenders (the "1995 Credit Agreement") providing for up to $65
million in borrowings including up to $7.5 million dollars in standby letters of
credit.  The net proceeds from the initial borrowing under the 1995 Credit
Agreements were used to repay all outstanding indebtedness of approximately
$51.3 million under the 1993 Credit Agreement.

     On April 2, 1996, the Company purchased for approximately $7.8 million
television station KFTY, licensed to the market of Santa Rosa, California.  On
April 24, 1996, the Company entered into a local marketing agreement ("LMA")
with Harron Television of Monterey, the owner of television station KION
(formerly KCCN) licensed to the market of Monterey, California.  The Company
provides programming and sales services to KION and makes a monthly payment to
Harron in exchange for the right of the Company to receive all revenues from
network compensation and advertising sold on the station.  In conjunction with
the transaction, the Company paid Harron Television approximately $5.6 million
dollars for an option to purchase the station.  All of the above transactions
were financed through its credit facilities.

     On September 30, 1996, the Company entered into an Amended and Restated
Credit Agreement with the senior bank lenders (the "1996 Credit Agreement"),
increasing the aggregate principal amount under the lending facility from $65.0
million to $77.5 million.

     On October 1, 1996, the Company amended its Certificate of Incorporation to
change its name from Ackerley Communications, Inc. to The Ackerley Group, Inc.
and implemented a new marketing plan for its businesses.

     On October 15, 1996, the Company effected a two-for-one stock split of its
outstanding common stock, including its outstanding Class B Common Stock, for
the shareholders of record at the close of business on October 4.  In order to
effect the split, the Company amended its Certificate of Incorporation on
September 26 to increase the number of shares of its authorized capital stock
from 59,972,230 to 61,406,510 shares, including the number of shares of its
Class B Common


                                        4
<PAGE>

Stock from 6,972,230 to 11,406,510 shares.  The stock split resulted in the
issuance of 15,582,794 additional shares.

     In November 1996, the Company purchased for approximately $13.0 million 60
billboard faces and three land parcels in the Boston area.

     Certain subsidiaries of the Company and two of its executive officers were
defendants in a wrongful termination suit brought by former employees.  On
February 29, 1996, a jury issued a verdict awarding the plaintiffs compensatory
and punitive damages of approximately $13.0 million.  The Company has recorded
an accrual of $14.2 million related to the verdict including an estimate for
additional legal costs.  The Company is appealing the verdict.

     In addition, during the past three years, the Company maintained growth in
net revenue, completed the development of a new sports arena,  purchased
television station KFTY in Santa Rosa, California, and continued the cost
containment program initiated in 1991.  One by-product of the cost containment
effort that has remained an important part of the Company's operating strategy
is increased scrutiny of expenses.  Rather than concentrating solely on
maximizing revenues, the Company focuses on maximizing the Operating Cash Flow
of each of its business segments.  Proposed expenses are evaluated in light of
the enhancements to revenue anticipated to flow from such expenditures.

     As with many media companies that have grown through acquisitions, the
Company's acquisitions and dispositions of television and radio stations have
resulted in significant non-cash and non-recurring charges to income.  For this
reason, in addition to net income (loss), management believes that Operating
Cash Flow (defined as net revenue less operating expenses plus other income
before amortization, depreciation, interest expense, litigation expense and
disposition of assets) is an appropriate measure of the Company's financial
performance.  This measure excludes expenses consisting of depreciation,
amortization, interest, litigation expense, and disposition of assets because
these expenses are not considered by the Company to be costs of ongoing
operations.  The Company uses Operating Cash Flow to pay interest and principal
on its long-term debt as well as to finance capital expenditures.  Operating
Cash Flow, however, is not to be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to cash flows
as a measure of the Company's liquidity.

     The regional markets the Company serves, from time to time, experience
varying degrees of recessionary influences.  Management cannot presently
determine the potential negative impact of such recessionary influences on the
Company's operations and its financial condition.   


                                        5
<PAGE>

RESULTS OF OPERATIONS

     The following tables set forth certain historical financial and operating
data of the Company for the three-year period ended December 31, 1996, including
separate net revenue, operating expense and other income and Operating Cash Flow
information by segment:
      
<TABLE>
<CAPTION>

                                                                          YEAR ENDED DECEMBER 31,
                                               ---------------------------------------------------------------------------------
                                                       1996                        1995                           1994
                                               ---------------------------------------------------------------------------------
                                                             AS %                          AS %                          AS %
                                                             OF NET                        OF NET                        OF NET
                                               AMOUNT       REVENUE         AMOUNT        REVENUE        AMOUNT         REVENUE
                                               ------       -------         ------        -------        ------         -------
                                                                                (In thousands)
<S>                                            <C>          <C>            <C>           <C>            <C>            <C>
Net revenue. . . . . . . . . . . . . . . . .   $247,298      100.0%        $207,397       100.0%        $186,102        100.0%

Operating expenses and other 
 (income) expenses:
   Operating expenses. . . . . . . . . . . .    186,846       75.6          156,399        75.4          143,469         77.1
   Other (income) expense, net . . . . . . .        108       (0.0)             (56)       (0.0)            (657)        (0.4)
                                                -------                     -------                      -------
      Total operating expenses and 
        other income . . . . . . . . . . . .    186,954       75.6          156,343        75.4          142,812         76.7
                                                -------                     -------                      -------
Operating Cash Flow. . . . . . . . . . . . .     60,344       24.4           51,054        24.6           43,290         23.3
Other expenses: 
   Depreciation and amortization . . . . . .     16,996        6.9           13,243         6.4           10,883          5.8
   Interest expense. . . . . . . . . . . . .     24,461        9.9           25,010        12.1           25,909         13.9
                                                -------                     -------                      -------
      Total other expenses . . . . . . . . .     41,457       16.8           38,253        18.5           36,792         13.9
Income before disposition of assets, income
 taxes, and litigation expense, and
 extraordinary item  . . . . . . . . . . . .     18,887        7.6           12,801         6.1            6,498          3.5
  Litigation expense . . . . . . . . . . . .       ---        ---           14,200         6.8              ---          ---
   Disposition of assets . . . . . . . . . .       ---        ---              ---         ---           (2,506)         1.3
   Income tax expense. . . . . . . . . . . .      2,758        1.1            1,515         0.7               73          ---
                                                -------                     -------                      -------
Income (loss) before extraordinary item. . .     16,129        6.5           (2,914)       (1.4)           8,931          4.8
Extraordinary item . . . . . . . . . . . . .       (355)      (0.1)             ---         ---           (2,099)        (1.1)
                                                -------                     -------                      -------
Net income (loss). . . . . . . . . . . . . .   $ 15,774        6.4        $  (2,914)       (1.4)         $ 6,832          3.7
                                                -------                     -------                      -------
                                                -------                     -------                      -------
</TABLE>


                                        6
<PAGE>

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                            -------------------------------------------
                                                                1996            1995          1994
                                                            -------------------------------------------
                                                                       (Dollars in thousands)
<S>                                                         <C>              <C>            <C>
NET REVENUE:
   Out-of-home media.. . . . . . . . . . . . . . . . .        $ 99,833       $ 93,177       $ 85,436
   Broadcasting. . . . . . . . . . . . . . . . . . . .         118,171         94,108         83,463
   Other . . . . . . . . . . . . . . . . . . . . . . .          29,294         20,112         17,203
                                                              --------       --------      ---------
       Total net revenue . . . . . . . . . . . . . . .        $247,298       $207,397       $186,102
                                                              --------       --------      ---------
                                                              --------       --------      ---------
   
OPERATING EXPENSE AND OTHER INCOME:
   Out-of-home media.. . . . . . . . . . . . . . . . .        $ 63,924       $ 61,199       $ 58,409
   Broadcasting. . . . . . . . . . . . . . . . . . . .          69,291         54,601         49,901
   Other . . . . . . . . . . . . . . . . . . . . . . .          53,739         40,543         34,502
                                                              --------       --------      ---------
       Total operating expenses and other income . . .        $186,954       $156,343       $142,812
                                                              --------       --------      ---------
                                                              --------       --------      ---------
OPERATING CASH FLOW:
   Out-of-home media.. . . . . . . . . . . . . . . . .        $ 35,909       $ 31,978       $ 27,027
   Broadcasting. . . . . . . . . . . . . . . . . . . .          48,880         39,507         33,562
   Other.. . . . . . . . . . . . . . . . . . . . . . .         (24,445)       (20,431)       (17,299)
                                                              --------       --------      ---------
       Total Operating Cash Flow.. . . . . . . . . . .        $ 60,344       $ 51,054       $ 43,290
                                                              --------       --------      ---------
                                                              --------       --------      ---------
   
CHANGE IN NET REVENUE FROM PRIOR PERIODS:
   Out-of-home media.. . . . . . . . . . . . . . . . .             7.1%           9.1%          14.1%
   Broadcasting. . . . . . . . . . . . . . . . . . . .            25.6           12.8            7.9
   Other.. . . . . . . . . . . . . . . . . . . . . . .            45.7           16.9           (6.6)
       Change in total net revenue . . . . . . . . . .            19.2           11.4            9.1
   
OPERATING DATA AS A PERCENTAGE
 OF NET REVENUE: 
   Operating expenses and other income:
       Out-of-home media.. . . . . . . . . . . . . . .            64.0%          65.7%          68.4%
       Broadcasting. . . . . . . . . . . . . . . . . .            58.6           58.0           59.8
       Other . . . . . . . . . . . . . . . . . . . . .           183.4          201.6          200.6
          Total operating expenses and other income. .            75.6           75.4           76.7
   Operating Cash Flow:
       Out-of-home media.. . . . . . . . . . . . . . .            36.0%          34.3%          31.6%
       Broadcasting. . . . . . . . . . . . . . . . . .            41.4           42.0           40.2
       Other . . . . . . . . . . . . . . . . . . . . .           (83.4)        (101.6)        (100.6)
          Total Operating Cash Flow. . . . . . . . . .            24.4           24.6           23.3
</TABLE>

                                        7
<PAGE>

1996 COMPARED WITH 1995

     NET REVENUE.  Net revenue for 1996 increased by $39.9 million, or 19.2%, to
$247.3 million from $207.4 million in 1995.  Net revenue in the Company's out-
of-home media segment increased by $6.7 million, or 7.1%, in 1996 from 1995. 
This increase was due to increased sales volume reflecting a strengthening
market for national advertising. The net revenue of the Company's broadcasting
segment increased $24.1 million or 25.6% resulting from local broadcast revenue
related to sports operations, the addition of KFTY, and increased rates and sale
volumes.  The Company's other businesses segment's net revenue increased $9.1
million or 45.7% mainly due to the SuperSonics participating in 21 games of the
1996 NBA playoffs compared to 4 games in 1995.

     OPERATING EXPENSES AND OTHER INCOME.  Operating expenses and other income
increased $30.6 million, or 19.6%, to $186.9 million from $156.3 million in
1995.  In 1996, the Company's out-of-home media operating expenses and other
income increased $2.7 million or 4.5%, from the previous year's level due to
expenses related to increased business activity.  Operating expenses and other
income in the Company's broadcasting segment increased $14.7 million or 26.9% to
$64.3 million due to broadcast expenses related to sports operations,  the
addition of KFTY, the addition of the KION LMA and higher programming,
promotion, and production expenses.  Operating expenses and other income from
the Company's other segment increased $13.2 million to $53.7 million or 32.5%
mainly from increased basketball operating expenses related to the SuperSonics
participating in 17 more NBA playoff games in 1996 than in 1995.

     OPERATING CASH FLOW.  Because the increase in revenues exceeded the
increase in operating expenses and other income for the same period, Operating
Cash Flow increased by $9.3 million or 18.2% in 1996 from 1995. The increase in
Operating Cash Flow in the out-of-home media and broadcasting segments more than
offset the decrease in the other businesses segment's Operating Cash Flow. 
Operating Cash Flow as a percentage of net revenue slightly decreased to 24.4%
in 1996 from 24.6% in 1995.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expenses
increased by $3.8 million, or 28.3%, to $17.0 million in 1996 as compared to
$13.2 million in 1995. The increase is mainly the result of depreciation expense
related to the Key Arena leasehold improvements in October 1995 and the addition
of KFTY in April 1996.

     INTEREST EXPENSE.  Interest expense for 1996 decreased by $0.5 million, or
2.2%, to $24.5 million from $25.0 million in 1995.  This decrease was due mainly
to a combination of lower average debt balances in 1996 and to favorable
interest rate contracts in 1996.    

     LITIGATION EXPENSE.  In 1995, the Company recorded an accrual for a
litigation expense of $14.2 million.  There was no such accrual in 1996.

     INCOME TAX EXPENSE.  In 1996, the Company incurred $2,758,000 of income tax
expense the majority of which was for state income taxes ($1,088,000) related to
a pending settlement of


                                        8
<PAGE>

certain prior year tax returns and for the federal alternative minimum tax
($1,561,000).  Management anticipates that the Company will continue to incur
income tax expense under the alternative minimum tax until operating loss
carryforwards are substantially reduced.  The Company will also incur income tax
expense in certain states in which it operates.

     EXTRAORDINARY ITEM. As a result of the 1996 Amended and Restated Credit
Agreement, the Company wrote off in 1996 deferred costs of $0.4 million related
to the 1995 Credit Agreement.  There were no extraordinary items for 1995.

     NET INCOME (LOSS). Net income for 1996 was $15.8 million, an increase of
$18.7 million from the net loss of $2.9 million in 1995.  The increase was
mainly due to the effect of recording an accrual for a litigation expense in
1995.  Net income as a percentage of net revenue increased to 6.4% in 1996 from
(1.4%) in 1995.

1995 COMPARED WITH 1994

     NET REVENUE.  Net revenue for 1995 increased by $21.3 million, or 11.4%, to
$207.4 million from $186.1 million in 1994.  Net revenue in the Company's out-
of-home media segment increased by $7.7 million, or 9.1%, in 1995 from 1994. 
This increase was due to increased sales volume reflecting a strengthening
market for national advertising.  The Company's broadcasting segment showed an
increase in net revenue of $10.6 million, or 12.8%, for 1995 mainly due to
increased rates and sales volumes.  Year-to-date net revenue for the Company's
other businesses segment increased $2.9 million, or 16.9%, in 1995 as compared
with the same period in the previous year, mainly due to increased ticket sales
from SuperSonics home games.

     OPERATING EXPENSES AND OTHER INCOME.  Operating expenses and other income
increased $13.5 million, or 9.5%, to $156.3 million from $142.8 million in 1994.
However, operating expenses and other income as a percentage of net revenue
decreased to 75.4% for 1995 from 76.7% for 1994.  In 1995, the Company's out-of-
home media operating expenses and other income increased $2.8 million or 4.8%,
from the previous year's level due to expenses related to increased business
activity.  Operating expenses and other income in the Company's broadcasting
segment increased by $4.7 million or 9.4% to $54.6 million in 1995 from $49.9
million in 1994, mainly because of the addition of the operations of KUBE(FM). 
The other businesses segment's operating expenses and other income increased
$6.0 million, or 17.5%, to $40.5 million in 1995 from $34.5 million in 1994
principally because of increases in SuperSonics player compensation.

     OPERATING CASH FLOW.  Because the increase in revenues exceeded the
increase in operating expenses and other income for the same period, Operating
Cash Flow increased by $7.8 million or 17.9% in 1995 from 1994. The increase in
Operating Cash Flow in the out-of-home media and broadcasting segments more than
offset the decrease in the other businesses segment's Operating Cash Flow.  As a
result, Operating Cash Flow as a percentage of net revenue slightly increased to
24.6% in 1995 from 23.3% in 1994.


                                        9
<PAGE>

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expenses
increased by $2.4 million, or 21.7%, to $13.2 million in 1995 as compared to
$10.9 million in 1994.  The majority of this increase resulted from the
amortization of film broadcasting rights.  Depreciation and amortization
expenses were further increased by a full year's depreciation and amortization
of the assets of radio station KUBE(FM) which was purchased in July 1994.

     INTEREST EXPENSE.  Interest expense for 1995 decreased by $0.9 million, or
3.5%, to $25.0 million from $25.9 million in 1994.  This decrease was due mainly
to a combination of lower average interest rates and a slightly lower average
debt level during 1995 compared to 1994.

     LITIGATION EXPENSE.  In 1995, the Company recorded an accrual for a
litigation expense of $14.2 million.  There was no such accrual in 1994.

     INCOME TAX EXPENSE.  In 1995, the Company's income tax expense increased to
$1.5 million from $0.1 million in 1994 mainly due to the settlement of a state
income tax matter and the effects of alternative minimum taxes.  The Company
benefited from its ability to utilize operating loss carryforwards to minimize
income tax expense in 1995 and anticipates to continue to incur income tax
expense under the alternative minimum tax until operating loss carryforwards are
substantially reduced.

     EXTRAORDINARY ITEM. As a result of the 1995 Refinancing, the Company wrote
off deferred costs of $2.1 million related to the 1993 Credit Agreement in 1994.
There were no extraordinary items for 1995.

     NET INCOME (LOSS). Net loss for 1995 was $2.9 million, a decrease of $9.7
million from the net income in 1994.  This was mainly due to the effect of
recording an accrual for a litigation expense.  Net income as a percentage of
net revenue decreased to (1.4%) in 1995 from 3.7% in 1994.

LIQUIDITY AND CAPITAL RESOURCES

     On February 17, 1995, the Company completed the 1995 Refinancing to obtain
more favorable interest rates and repayment terms respecting its senior bank
indebtedness.  In connection with the 1995 Refinancing, the Company entered into
the 1995 Credit Agreement, initially providing for up to $65 million in
borrowings including up to $7.5 million dollars in standby letters of credit. 
The net proceeds from the initial borrowing under the 1995 Credit Agreements
were used to repay all outstanding indebtedness of approximately $51.3 million
under the 1993 Credit Agreement.

     On September 30, 1996, the Company entered into an Amended and Restated
Credit Agreement with the senior bank lenders, increasing the aggregate
principal amount under the lending facility from $65.0 million to $77.5 million.


                                       10
<PAGE>

     Under the 1996 Credit Agreement, the Company presently has approximately
$18.0 million available for borrowing under the revolving credit facility.  The
1996 Credit Agreement and Subordinated Note Agreements require the consent of
the banks and other lenders prior to any material expansion of the Company's
operations.

     Borrowings under the 1996 Credit Agreement bear annual interest at either
the prime rate plus 0.75% or LIBOR plus 2.00% for up to $77.5 million.  The
Credit Agreement also provides for up to $7.5 million in a letter of credit
facility, which constitutes part of the $77.5 million maximum borrowings and
incurs 2% annual fees.  These borrowings and the Senior Notes are subject to the
Company's compliance with certain financial covenants and are secured by a
pledge of stock of the Company's subsidiaries.

     The Company's working capital decreased to $11.2 million at December 31,
1996 from $15.1 million at December 31, 1995.  Cash from operating activities
was used to finance capital expenditures in the amount of $14.4 million in 1996.

     The Company's working capital decreased to $15.1 million at December 31,
1995 from $16.8 million at December 31, 1994.  Cash from operating activities
was used to finance capital expenditures in the amount of $15.1 million in 1995.

     For the periods presented, the Company has financed its working capital
needs from cash provided by operating activities.  Historically, the Company's
long-term liquidity needs for acquisitions have been financed through additions
to its long-term debt, principally through bank borrowings or private placements
of subordinated debt.  Capital expenditures for new property and equipment have
been financed with both cash provided by operating activities and long-term
debt.  Cash provided by operating activities for 1996 decreased to $23.2 million
from $36.7 million in 1995 mainly due to advance payments made in 1996 related
to SuperSonic players' contracts.

     At December 31, 1996, the Company's capital resources consisted of $2.9
million in cash and cash equivalents and $21.0 million available under the 1996
Credit Agreement.

     The Company expended $8.8 million, $13.1 million and $14.4 million for
capital additions in 1994, 1995 and 1996, respectively.  The Company anticipates
that 1997 capital expenditures consisting primarily of construction and
maintenance of billboard structures,  broadcasting equipment, and other capital
additions will be between $13.0 million and $16.0 million.

     On April 2, 1996, the Company purchased for approximately $7.8 million
television station KFTY, licensed to the market of Santa Rosa, California.  On
April 24, 1996, the Company entered into a local marketing agreement with Harron
Television of Monterey, the owner of television station KION licensed to the
market of Monterey, California.  The Company provides programming and sales
services to KION and makes a monthly payment to Harron in exchange for the right
of the Company to receive all revenues from network compensation and advertising
sold on the station.  In conjunction with the transaction, the Company paid
Harron Television


                                       11
<PAGE>

approximately $5.6 million dollars for an option to purchase the station and has
guaranteed  a Harron debt totaling $4.8 million.  No impact on liquidity is
expected from this guarantee.  All of the above transactions were financed
through its credit facilities.

     In November 1996, the Company purchased for approximately $13.0 million 60
billboard faces and three land parcels in the Boston area.

     On March 9, 1994, the Company sold radio station WAXY(FM), in Fort
Lauderdale, Florida, to Clear Channel Radio, Inc.  for approximately $14.0
million in cash, of which $13.0 million was for the assets of the radio station
and $1.0 million was for a prepaid outdoor advertising contract.  At the date of
sale, the net book value of WAXY(FM) was approximately $10.5 million.  The funds
received from the sale were used to reduce long-term debt.

     On February 4, 1994, the Company entered into an agreement with Century
Management, Inc. which resulted in the formation of New Century Seattle
Partners, L.P. (the "Partnership") for the purpose of owning and operating the
assets of KJR(AM), KJR(FM) and KUBE(FM).   On July 14, 1994, the Partnership
purchased certain assets of KUBE(FM) from affiliated companies of Cook Inlet,
Inc., an Alaska-based native American corporation.  In order to effect the
purchase, the Partnership incurred approximately $18.1 million of debt.

QUARTERLY VARIATIONS

     The Company's results of operations may vary from quarter to quarter due in
part to the timing of acquisitions and to seasonal variations in the operations
of the broadcasting segment.  In particular, the Company's net revenue and
Operating Cash Flow historically have been affected positively during the NBA
basketball season (the first, second and fourth quarters) and by increased
advertising activity in the second and fourth quarters.

TAXES

     At December 31, 1996 the Company had a net operating loss carryforward for
federal income tax purposes of approximately $59.5 million and an investment tax
credit carryforward of approximately $1.3 million.  These carryforwards expire
during the years 1997 to 2007.

INFLATION

     The effects of inflation on the Company's costs generally have been offset
by the Company's ability to correspondingly increase its rate structure.


                                       12
<PAGE>

             ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Information called for by this item is included in Item 14, pages F-1
through F-21.


                                       13
<PAGE>

                                    PART III

                     ITEM 12 - SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information, including the
beneficial ownership of shares of Common Stock and Class B Common Stock as of
March 14, 1997, with respect to the nominees for director, current directors,
the executive officers named in the table appearing under "Executive
Compensation" below, persons known to the Company to beneficially own more than
five (5) percent of the outstanding Common Stock on March 14, 1997, and by the
directors and executive officers of the Company as a group.  All share amounts
reflect a two-for-one stock split that was effective on October 15, 1996.

<TABLE> 
<CAPTION> 

------------------------------------------------------------------------------------------------------------------------------------
 Name, Age and                                                     Shares of the Company's Common Stock 
 Principal Occupation                                              and Class B Common Stock and Percent 
 During Past Five Years                                            of Class Beneficially Owned (1) 
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Class B
                                                              Common Stock          Percent          Common Stock        Percent 
                                                              ------------          -------          ------------        -------
<S>                                                          <C>                    <C>             <C>                  <C>
 Barry A. Ackerley, 62                                       10,779,476 (2)          54.4%          11,217,619(2)         99.3%
 Chairman and Chief Executive Officer of the 
 Company; Company Director since 1975 

 Gail A. Ackerley, 59                                        10,779,476 (3)          54.4%          11,217,619(3)         99.3%
 Co-Chairman of the Company 
 Chairman of Ackerley Corporate Giving (Company's 
 charitable  activities); 
 Company Director since 1995 

 Richard P. Cooley, 73                                           4,631                 *                 -0-                *
 Retired, Chairman (1988-April 1994) 
 and Chief Executive Officer (1988-1991), Seattle-First 
 National Bank; director, Egghead Software Inc.; 
 Director since 1995 

 M. Ian G. Gilchrist, 47                                         1,491                 *                 -0-                * 
 Managing Director (May 1995-present), Salomon Brothers 
 Inc.; Managing Director (February 1992-May 1995), CS First 
 Boston Corporation (investment banking - 
 media/telecommunications); 
 Company Director since 1995 

</TABLE>

                                         14
<PAGE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
 Name, Age and                                                     Shares of the Company's Common Stock 
 Principal Occupation                                              and Class B Common Stock and Percent 
 During Past Five Years                                            of Class Beneficially Owned (1) 
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Class B
                                                              Common Stock          Percent          Common Stock        Percent 
                                                              ------------          -------          ------------        -------
<S>                                                          <C>                    <C>             <C>                  <C>

 Michel C. Thielen, 62                                           1,491                 *                 -0-                * 
 Chairman of the Board and President, Thielen & 
 Associates (advertising agency);  
 Vice President, Executive Wings, Inc. (airport 
 operations company); Company Director since 1979 

 William N. Ackerley, 36                                         23,430                *              24,783 (4)            * 
 President and Chief Operating Officer of the Company 
 
 Denis M. Curley, 49                                               2                   *                 -0-                * 
 Executive Vice President and Chief Financial Officer, 
 Treasurer and Secretary of the Company 

 Keith W. Ritzmann, 44                                            802                  *                 200                * 
 Vice President and Controller 
 of the Company 

 Gabelli Funds, Inc. (5% shareholder)                          2,323,400             11.7%               -0-                * 
 One Corporate Center 
 Rye, NY  10580 

 All Directors and Executive                                   10,811,323            54.6%            11,296,602          99.5% 
 Officers as a group (8 persons) 

</TABLE>

---------------
(1)  Unless otherwise indicated, represents shares over which each nominee
     exercises sole voting or investment power.
(2)  Barry Ackerley and Gail Ackerley are husband and wife.  Includes 7,264
     shares of Common Stock and 264 shares of Class B Common Stock held by Gail
     A. Ackerley, of which Mr. Ackerley disclaims beneficial ownership.
(3)  Barry Ackerley and Gail Ackerley are husband and wife.  The amount shown
     includes 10,772,212 shares of Common Stock and 11,271,355 shares of Class B
     Common Stock held by Barry A. Ackerley, of which Mrs. Ackerley disclaims
     beneficial ownership.
(4)  Includes 14,330 shares of Class B Common Stock held by his minor children,
     for which William Ackerley exercises sole voting and investment power as
     custodian under the Washington Uniform Transfer to Minor Act.

*    Indicates amounts equal to less than 1% of the outstanding shares.
       
       As of March 14, 1997, Barry A. Ackerley and Gabelli Funds, Inc. were the
only persons to the Company's knowledge owning beneficially more than 5% of the
outstanding shares of Common Stock and Class B Common Stock.  


                                       15
<PAGE>

                                     PART IV

               ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
                             AND REPORTS ON FORM 8-K
      
(a)(1) and (2)  FINANCIAL STATEMENTS AND SCHEDULES.
      
     The following documents are being filed as part of this Report:
      
                          INDEX TO FINANCIAL STATEMENTS
                                                                            Page
                                                                          Number
                                                                          ------

Report of Ernst & Young, LLP, independent auditors . . . . . . . . . . .     F-1
      
Consolidated balance sheets as of December 31, 1996
  and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     F-2
      
Consolidated statements of operations for the
  years ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . .     F-3
      
Consolidated statements of stockholders' deficiency
  for the years ended December 31, 1996, 1995 and 1994 . . . . . . . . .     F-4
      
Consolidated statements of cash flows for the years
  ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . .     F-5
      
Notes to consolidated financial statements . . . . . . . . . . . . . . .     F-6
      
Schedules are omitted for the reason that they are not required or are not
applicable, or the required information is shown in the consolidated financial
statements or notes thereto. Columns omitted from schedules filed have been
omitted because the information is not applicable.


                                       16
<PAGE>

                                    SIGNATURE
      
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the 13th
day of March, 1998.

                                             THE ACKERLEY GROUP, INC.
     
     
                                             By:  /s/ Keith W. Ritzmann
                                                  ---------------------
                                                  Keith W. Ritzmann
                                                  Vice President and Controller


                                       17
<PAGE>

                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


The Board of Directors
The Ackerley Group, Inc.


We have audited the accompanying consolidated balance sheets of The Ackerley
Group, Inc. as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' deficiency, and cash flows for each of
the three years in the period ended December 31, 1996.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Ackerley Group, Inc. at December 31, 1996 and 1995, and the consolidated 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.


                              


Seattle, Washington
February 28, 1997
<PAGE>

                            THE ACKERLEY GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS

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

                                     ASSETS
<TABLE>
<CAPTION>

                                                           December 31,
                                                       1996           1995
                                                       -----          ----
                                                          (In thousands)
<S>                                              <C>             <C>
Current assets:
     Cash and cash equivalents                   $     2,910     $    6,421
     Accounts receivable, net                         43,754         43,590
     Current portion of broadcast rights               5,656          5,779
     Prepaid and other current assets                 16,845          9,423
                                                 -----------     ----------
          Total current assets                        69,165         65,213

Property and equipment, net                           88,136         81,368
Intangibles                                           41,856         31,412
Other assets                                          25,755         11,889
                                                 -----------     ----------
          Total assets                           $   224,912     $  189,882
                                                 -----------     ----------
                                                 -----------     ----------

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Accounts payable                            $     5,019     $    4,284
     Accrued interest                                  3,959          3,628
     Other accrued liabilities                        16,160         12,958
     Deferred revenue                                 20,050         18,269
     Current portion of broadcasting
      obligations                                      7,032          6,145
     Current portion of long-term debt                 5,791          4,819
                                                 -----------     ----------
          Total current liabilities                   58,011         50,103
     
Long-term debt                                       229,350        215,328
Litigation accrual                                    13,248         14,200
Other long-term liabilities                            8,142          9,344
                                                 -----------     ----------
          Total liabilities                          308,751        288,975
     
Stockholders' deficiency:
     Common stock, par value $.01 per
     share--authorized 50,000,000 shares;
     issued 21,186,724 and 20,777,012
     shares at December 31, 1996 and 1995
     respectively; and outstanding
     19,811,778  and 19,402,066 shares 
     at December 31, 1996 and 1995
     respectively                                        212            208
     
     Class B common stock, par value
     $.01 per share--authorized
     11,406,510 shares; issued and
     outstanding 11,353,810 and
     11,731,522 shares at December 31, 1996
     and 1995 respectively                               114            117
     
     Capital in excess of par value                    3,195          3,093
     Deficit                                         (77,271)       (92,422)
     Less common stock in treasury, at cost          (10,089)       (10,089)
                                                 -----------     ----------
          Total stockholders' deficiency             (83,839)       (99,093)
                                                 -----------     ----------
          Total liabilities and
           stockholders' deficiency              $   224,912     $  189,882
                                                 -----------     ----------
                                                 -----------     ----------
</TABLE>

                             See accompanying notes


                                       F-2
<PAGE>

                            THE ACKERLEY GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
 
                                                                                            Year Ended December 31, 
                                                                       ------------------------------------------------------------
                                                                           1996                         1995               1994 
                                                                           ----                         ----               ----
                                                                                              (In thousands, except
                                                                                                 per share amounts)

<S>                                                                    <C>                          <C>                 <C>
 Revenue                                                               $ 279,662                    $ 235,820           $ 211,728   
 Less Agency commissions and discounts                                    32,364                       28,423              25,626   
                                                                       ---------                    ---------           ---------
 Net Revenue                                                             247,298                      207,397             186,102   
 
 Expenses and other income: 
      Operating expenses                                                 186,846                      156,399             143,469   
      Amortization                                                         6,404                        5,734               3,794   
      Depreciation                                                        10,592                        7,509               7,089   
      Interest expense                                                    24,461                       25,010              25,909   
      Other (income) expense                                                 108                          (56)               (657) 
      Litigation expense                                                     ---                       14,200                 --- 
      Disposition of assets                                                  ---                          ---              (2,506) 
                                                                       ---------                    ---------           ---------
 Total expenses and other income                                         228,411                      208,796             177,098

 Income (loss) before income taxes 
      and extraordinary items                                             18,887                       (1,399)              9,004   
 Income taxes                                                              2,758                        1,515                  73   
                                                                       ---------                    ---------           ---------
 Income (loss) before extraordinary items                                 16,129                       (2,914)              8,931   
 Extraordinary items: loss on debt 
      extinguishment in 1996 and 1994                                       (355)                         ---              (2,099) 
                                                                       ---------                    ---------           ---------
 Net income (loss)                                                      $ 15,774                    $  (2,914)          $   6,832
                                                                       ---------                    ---------           ---------
                                                                       ---------                    ---------           ---------
 Income (loss) per common share, 
      before extraordinary items                                       $     .51                    $    (.09)          $     .28
 Extraordinary items                                                        (.01)                         ---                (.06)
                                                                       ---------                    ---------           ---------
 Net income (loss) per common share                                    $     .50                    $    (.09)          $     .22 
                                                                       ---------                    ---------           ---------
                                                                       ---------                    ---------           ---------

 Weighted average number of shares                                        31,760                       31,545              31,483

</TABLE>


                             See accompanying notes


                                       F-3
<PAGE>

                            THE ACKERLEY GROUP, INC.
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

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


<TABLE>
<CAPTION>
                                                                                                                           Common
                                                                        Class B         Capital in                        stock in 
                                                      Common            common        excess of par                       treasury
                                                      stock              stock           value            Deficit         (at cost)
                                                    ---------         ----------      -------------   ------------       -----------
<S>                                                <C>                <C>             <C>             <C>                <C>
 Balance, January 1, 1994                          $    204           $   118          $  2,789         $(95,876)        $ (10,089)
 
 Exercise of stock options and stock                      1               ---                62              ---               ---
 conversions 
 
 Net income                                             ---               ---               ---            6,832               ---
                                                   --------           -------          --------         --------          --------
 Balance, December 31, 1994                             205               118             2,851          (89,044)          (10,089)
 
 Exercise of stock options and stock 
 conversions                                              3                (1)              242              ---               --- 
 
 Cash dividend, $0.015 per share                        ---               ---               ---             (464)              --- 

 Net income                                             ---               ---               ---           (2,914)              ---
                                                   --------           -------          --------         --------          ---------
 
 Balance, December 31, 1995                             208               117             3,093          (92,422)          (10,089) 
 
 Exercise of stock options and stock 
 conversions                                              4                (3)              102              ---               --- 
 
 Cash dividend, $0.02 per share                         ---               ---               ---             (623)              --- 
 
 Net income                                             ---               ---               ---           15,774               --- 
                                                   --------           -------          --------         --------          --------
 Balance, December 31, 1996                        $    212           $   114          $  3,195         $(77,271)         $(10,089)
                                                   --------           -------          --------         --------          --------
                                                   --------           -------          --------         --------          --------
</TABLE>


                             See accompanying notes


                                       F-4
<PAGE>

<TABLE>
<CAPTION>
                            THE ACKERLEY GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

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

                                                 Year ended December 31,
                                             ----------------------------------
                                              1996           1995        1994
                                              ----           ----        ----
                                                     (In thousands)
<S>                                         <C>           <C>        <C>
Cash flows from operating activities:
  Cash received from customers              $ 238,209     $ 215,321   $ 178,524
  Cash paid to suppliers and employees       (193,518)     (154,564)   (144,073)
  Interest paid, net of amount capitalized    (21,524)      (24,032)    (22,784)
                                            ---------     ---------   ---------
    Net cash provided by operating
     activities                                23,167        36,725      11,667

Cash flows from investing activities:
  Proceeds from the sale of properties          1,474           478      13,306
  Payments from acquisitions                  (20,445)          ---     (17,397)
  Capital expenditures                        (13,124)      (15,098)     (8,794)
  Other, net                                   (7,524)         (457)     (6,162)
                                            ---------     ---------   ---------
    Net cash used in investing activities     (39,619)      (15,077)    (19,047)

Cash flows from financing activities:
  Borrowings from Credit Agreements            38,000        64,379      30,126
  Payments under Credit Agreements            (21,907)      (79,695)    (27,180)
  Dividends paid                                 (623)         (464)        ---
  Other, net                                   (2,529)       (1,735)        (10)
                                            ---------     ---------   ---------
    Net cash provided (used in)
     financing activities                      12,941       (17,515)      2,936
                                            ---------     ---------   ---------

Net increase (decrease) in cash and
 cash equivalents                              (3,511)        4,133      (4,444)
Cash and cash equivalents at beginning
  of period                                     6,421         2,288       6,732
                                            ---------     ---------   ---------
    Cash and cash equivalents at
     end of period                          $   2,910     $   6,421   $   2,288
                                            ---------     ---------   ---------
                                            ---------     ---------   ---------

Reconciliation of net income to net
 cash provided by operating activities:
  Net income (loss) applicable to common
    shares                                  $  15,774     $  (2,914)  $   6,832
  Adjustment to reconcile net income to
    net cash provided by
    operating activities:
     Litigation expense                          ---         14,200         ---
     Disposition of assets                       ---            ---      (2,506)
     Loss on debt extinguishment                 355            ---       2,099
     Depreciation and amortization            16,996         13,243      10,883
     Gain on sale of property and equipment     (423)           (50)       (209)
     NBA expansion proceeds                   (3,132)         5,165         ---
  Changes in assets and liabilities, net      (6,403)         7,081      (5,432)
                                            ---------     ---------   ---------
  Net cash provided by operating activities $  23,167     $  36,725   $  11,667
                                            ---------     ---------   ---------
                                            ---------     ---------   ---------

Supplemental disclosure of noncash
 transactions:
  Broadcast rights acquired and
    broadcast obligations assumed               9,165     $  10,337   $   6,020
  Assets acquired through barter transactions   1,342         1,065         479
  Capitalized leases                              ---         7,982         ---
</TABLE>
                             See accompanying notes

                                       F-5
<PAGE>


                            THE ACKERLEY GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  ORGANIZATION - The Ackerley Group, Inc. (formerly know as Ackerley
Communications, Inc.) and its subsidiaries (the "Company") is a diversified
communications company that engages in three principal business:  (i) out-of-
home media, including outdoor and airport advertising; (ii) television and radio
broadcasting; and (iii) other businesses consisting principally of professional
basketball through ownership of the Seattle SuperSonics, a franchise of the
National Basketball Association, and professional indoor soccer through
ownership of the Seattle Sea Dogs, a franchise of the Continental Indoor Soccer
League.  Outdoor advertising operations are conducted principally in the
Seattle, Portland, Boston, Miami, Ft. Lauderdale, and West Palm Beach markets,
whereas airport advertising operations are conducted in airports throughout the
United States.  The markets served by the Company's television stations and
their affiliations are as follows:  Syracuse, New York (ABC affiliate); Colorado
Springs, Colorado (CBS affiliate); Santa Rosa, California (independent),
Bakersfield, California (NBC affiliate); Salinas/Monterey, California (FOX
affiliate and CBS affiliate through a local management agreement); and
Bellingham, Washington/Vancouver, British Columbia (independent).  Radio
broadcasting consists of one AM and two FM stations serving the Seattle/Tacoma
area.

     (b)  PRINCIPLES OF CONSOLIDATION - The accompanying financial statements
consolidate the accounts of The Ackerley Group, Inc. and its subsidiaries,
substantially all of which are wholly owned.  Minority interest is not material.
All significant intercompany transactions have been eliminated in consolidation.

     (c)  REVENUE RECOGNITION - Display advertising revenue is recognized
ratably on a monthly basis over the period in which advertisement displays are
posted on the advertising structures or in the display units.  Broadcast revenue
is recognized in the period in which the advertisements are aired.  Payments
from clients, which are received in excess of one month's advertising, are
recorded as deferred revenue.  Ticket payments are recorded as deferred revenue
when received and recognized as revenue ratably as home basketball and soccer
games are played.

     (d)  BARTER TRANSACTIONS - The Company engages in nonmonetary transactions
in which it provides advertising in exchange for goods or services.  The barter
transactions are recorded at the estimated fair value of the asset or service
received in accordance with Financial Standards Board Statement No. 29,
"Accounting for Nonmonetary Transactions."  Revenue is recognized when the
advertising is provided and assets or expenses are recorded when assets are
received or services used.  Advertising provided for which goods or services
have not yet been received is recorded in prepaid and other current assets.
Goods and services received for which advertising has not yet been provided are
recorded in other accrued liabilities.


                                       F-6

<PAGE>

     (e)  PROPERTY AND EQUIPMENT - Property and equipment are carried on the
basis of cost.  Maintenance, repairs, and renewals, which neither materially add
to the value of the property nor appreciably prolong its life, are charged to
expense as incurred.  When operating property and equipment are retired or sold,
any funds received are credited to an asset pool with no gain or loss
recognized, unless all assets in the pool are fully depreciated.  Depreciation
of property and equipment, including the cost of assets recorded under capital
lease agreements, is provided on the straight-line and accelerated methods over
the estimated useful lives of  the assets or lease terms.

     (f)  INTANGIBLE ASSETS - Intangible assets are carried on the basis of cost
and are amortized principally on the straight-line method over estimated useful
lives, ranging from 1 to 40 years.  Franchises are recorded at cost and
represent the acquisition cost of the rights to operate display units in
airports.  Goodwill represents the cost of acquired businesses in excess of
amounts assigned to certain tangible and intangible assets at the dates of
acquisition.

     (g)  BROADCAST RIGHTS AND OBLIGATIONS - Television films and syndication
rights acquired under license agreements (broadcast rights) and the related
obligations incurred are recorded as assets and liabilities at the time the
rights are available for broadcasting based upon the gross amount of the
contract.  The capitalized costs are amortized on an accelerated basis over the
contract period or the estimated number of showings, whichever results in the
greater aggregate monthly amortization.  Broadcast rights are carried at the
lower of unamortized cost or net realizable value.  The estimated cost of
broadcast rights to be amortized during the next year has been classified as a
current asset.

     (h)  DEFERRED COMPENSATION - Certain player and other personnel contracts
include deferred compensation provisions.  The present value of such deferred
compensation is recorded as an obligation and charged to operating expenses
ratably over the contract period.

     (i)  STOCK BASED COMPENSATION   ---  The Company grants stock options for a
fixed number of shares to employees with an exercise price equal to the fair
value at the date of grant.  The Company has elected to account for stock option
grants in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations, and recognized no compensation expense
for the stock option grants.

     (j)  STOCK SPLIT - In October, 1996, the Company declared a two-for-one
stock split.  All share, per share, and exercise price information has been
restated to reflect the increase in stock shares and decrease in exercise price
caused by the split.

     (k)  INCOME PER COMMON SHARE -  Income per common share is calculated by
dividing net income by the weighted average number of shares of common stock,
Class B common stock, and if dilutive, common stock equivalents outstanding
during the period.


                                       F-7
<PAGE>


     (l)  CASH EQUIVALENTS - The Company considers investments in highly liquid
debt instruments with a maturity of three months or less when purchased to be
cash equivalents.

     (m)  CONCENTRATION OF CREDIT RISK AND FINANCIAL INSTRUMENTS - The Company
sells advertising to local and national companies throughout the United States.
The Company performs ongoing credit evaluations of its customers and generally
does not require collateral.  The Company maintains an allowance for doubtful
accounts at a level which management believes is sufficient to cover potential
credit losses.  The Company invests its excess cash in short-term investments
with major banks.  The Company has not experienced any losses on these
investments.  The carrying value of financial instruments, which include cash,
receivables, payables, and long-term debt, approximates market value at December
31, 1996.

     The Company uses interest rate swap and cap agreements to modify the
interest rate characteristics of its long-term debt and attempts to effectively
maintain a portion of the debt with floating interest rates.  These agreements
generally involve the exchange of fixed or floating rate payment obligations
without an exchange of the underlying principal amount.  The differential to be
paid or received is accrued as interest rates change and is recognized as an
adjustment to interest expense related to the debt.  The related amount payable
to or receivable from counterparties is included in other current liabilities or
assets.  The fair values of the swap and cap agreements are not recognized in
the financial statements.

     (n)  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.

     (o)  RECLASSIFICATIONS  -  Certain prior years' amounts have been
reclassified to conform to the 1996 presentation.

2.   INVESTMENT IN RADIO PARTNERSHIP

     The Company entered into an agreement with Century Management, Inc., which
resulted in the  formation of New Century Seattle Partners, L.P. (the
"Partnership") for the purpose of owning and operating the assets of this radio
stations in the Seattle market.  Upon the venture's approval by the Federal
Communications Commission ("FCC") on July 14, 1994, the Company contributed the
assets of two stations, with a book value of $5.5 million, to the Partnership.
Also in July 1994, the Partnership purchased the assets of a third station for
approximately $17.7 million financed by bank borrowings.

     Century Management, Inc. is the general partner of the Partnership and KJR
Radio, Inc., a wholly owned subsidiary of the Company, is a limited partner in
the Partnership.


                                       F-8
<PAGE>


     The following table summarizes on an unaudited, pro forma basis the
consolidated results of operations of the Company for 1994 giving pro forma
effect to the investment in New Century Seattle Partners, L.P. as if the
investment had been made at the beginning of the years presented.  These pro
forma consolidated statements do not necessarily reflect the results of
operations which would have occurred had such investment taken place on the date
indicated.  The result of the partnership's operations after the actual date of
investment are included in the Company's financial statements.  Minority
interests are not material.  (In thousands except per share amounts):

<TABLE>
<CAPTION>
                                                    1994
                                                   -----
     <S>                                        <C>
     Net revenue                                $ 188,945
     Operating expenses                           182,762
     Income before extraordinary items              8,282
     Net income applicable to common shares         6,183
     Net income per common share                      .20
</TABLE>

3.   ALLOWANCE FOR DOUBTFUL ACCOUNTS

     The allowance for doubtful accounts is summarized as follows (in
     thousands):

 <TABLE>
 <CAPTION>

                                                1996        1995         1994
                                                ----        ----         ----
 <S>                                       <C>         <C>           <C>
 Balance at beginning of year              $   1,163   $   1,160     $     941
 Additions charged to operating expense        1,386         979         1,375
 Write-offs of receivables, net of
  recoveries                                  (1,123)       (976)       (1,156)
                                             -------     -------       -------
 Balance at end of year                    $   1,426   $   1,163     $   1,160
                                             -------     -------       -------
                                             -------     -------       -------
</TABLE>

4.   CURRENT ASSETS AND CURRENT LIABILITIES

     At December 31, 1996 and 1995, prepaid and other current assets consist of
the following (in thousands):
<TABLE>
<CAPTION>

                                 1996        1995
                                 ----        ----
      <S>                      <C>         <C>
      Prepaid assets           $ 13,336    $ 7,421
      Other current assets        3,509      2,002
                                 ------      -----
                               $ 16,845    $ 9,423
                                 ------      -----
                                 ------      -----
</TABLE>


                                       F-9
<PAGE>


     At December 31, 1996 and 1995, other accrued lilabilities consist of the
following (in thousands):
<TABLE>
<CAPTION>

                                      1996        1995
                                      ----        ----
      <S>                           <C>         <C>
      Accrued wages                 $  3,969    $ 1,861
      Other accrued liabilities       12,191     11,097
                                    --------    -------
                                    $ 16,160    $12,958
                                    --------    -------
                                    --------    -------
</TABLE>

5.   PROPERTY AND EQUIPMENT

     At December 31, 1996 and 1995, property and equipment consisted of the
following (in thousands):

<TABLE>
<CAPTION>
                                                                 Estimated
                                         1996       1995        useful life
                                       --------   --------      ------------
     <S>                               <C>        <C>           <C>
     Land                              $  6,976   $  6,906
     Advertising structures              82,325     76,904       9-15 years
     Broadcast equipment                 52,712     49,635         10 years
     Building and improvements           33,264     29,959      20-40 years
     Office furniture and equipment      22,738     19,170         10 years
     Transportation and other equipment   9,238      9,964       5-15 years
     Equipment under capital leases       7,982      7,982         10 years
                                       --------   --------
                                        215,235    200,520
     Less accumulated depreciation      127,099    119,152
                                       --------   --------

                                       $ 88,136   $ 81,368
                                       --------   --------
                                       --------   --------
</TABLE>


6.   INTANGIBLES

     At December 31, 1996 and 1995, intangibles consisted of the following (in
thousands):
<TABLE>
<CAPTION>
                                                                 Estimated
                                         1996       1995        useful life
                                       --------   --------      ------------
     <S>                               <C>        <C>           <C>
     Goodwill                          $48,923    $32,660       3-40 years
     Favorable leases and contracts     15,294     15,294       1-10 years
     Broadcasting licenses and
      agreements                         7,083      7,083       1-10 years
     Other                               4,250      4,302       1-30 years
                                       -------    -------
                                        75,550     59,339
     Less accumulated amortization      33,694     27,927
                                       -------    -------
                                       $41,856    $31,412
                                       -------    -------
                                       -------    -------
</TABLE>


                                      F-10
<PAGE>


     Cost represents the net assets' appraised value or management's best
estimate of the fair value at the dates of acquisition.

     During 1996, the majority of the additions to Intangible Assets came from
two acquisitions:  $4,482,000 from the Santa Rosa, California television
station, and $11,274,000 from billboards and three land parcels in the Boston
area.  The Company does not consider the acquisitions' operating results to have
a material impact on the Company's consolidated results.

7.   DEBT

     Long-term debt at December 31, 1996 and 1995 reflected the following (in
thousands):
<TABLE>
<CAPTION>

                                             1996               1995
                                             ----               ----
     <S>                                <C>                <C>
     Credit Agreement                   $   55,000         $   35,000
     Senior notes                          120,000            120,000
     Subordinated notes payable             35,000             35,000
     Partnership debt                       13,903             16,879
     Capital lease obligation                7,268              7,982
     Deferred employment compensation,
       net of imputed interest discount of
       $1,395 in 1996 and $955 in 1995       3,378              4,137
     Other                                     592              1,149
                                         ---------          ---------
                                           235,141            220,147
     Less amounts classified as current      5,791              4,819
                                         ---------          ---------
                                         $ 229,350          $ 215,328
                                         ---------          ---------
                                         ---------          ---------
</TABLE>


     Aggregate annual payments of long-term debt during the next five years are
as follows (in thousands):
<TABLE>
<CAPTION>
                           Credit Agreement               Deferred
                           And Subordinated            Compensation
                                Notes                    And Other
                           ----------------            -------------
        <S>                <C>                         <C>
        1997                  $  5,125                    $   740
        1998                    15,610                        520
        1999                    29,406                        963
        2000                    29,149                        271
        2001                    19,414                        594
</TABLE>


                                      F-11
<PAGE>



        Future minimum payments under the capitalized lease obligation are as
follows (in thousands):
<TABLE>
<CAPTION>
                                                                Capitalized
                                                                   Lease
                                                                -----------
     <S>                                                        <C>
     1997                                                       $  1,237
     1998                                                          1,237
     1999                                                          1,237
     2000                                                          1,237
     2001                                                          1,237
     Later years                                                   2,937
                                                                --------
                                                                   9,122
     Less amount representing interest                             1,854
                                                                --------
     Present value of lease payments                               7,268
     Less amount classified as current                               750
                                                                --------
          Long-term capitalized lease obligation                $  6,518
                                                                --------
                                                                --------
</TABLE>


     On September 30, 1996, the Company entered into an Amended and Restated
Credit Agreement (the "Credit Agreement") with the senior bank lenders
increasing the aggregate principal amount under the lending facility from $65.0
million to $77.5 million.  Losses of $355,000 related to the amendment of Credit
Agreement are reflected as an extraordinary item in the 1996 statement of
operations.  Losses of $2,099,000 related to refinancing the Company's senior
bank debt in 1994 are reflected as an extraordinary item in 1994.

     At December 31, 1996, the Credit Agreement provided for borrowings up to
$77.5 million from five banks which includes the availability of up to $7.5
million of a letter of credit facility.  Usage of the letter of credit facility
reduces total available borrowings.  At December 31, 1996, $55.0 million of
borrowings were outstanding, and $1.5 million of the letter of credit facility
was utilized.  Interest on borrowings is payable quarterly based on either the
prime rate or LIBOR, at the discretion of the Company, plus a margin determined
by the Company's total leverage ratio, as defined in the Credit Agreement.  At
December 31, 1996, interest on borrowings was payable at LIBOR (5.6875% at
December 31, 1996) plus 2.00%.  The fee on the letter of credit facility is
payable quarterly at  a rate determined by the Company's total leverage ratio.
At December 31, 1996, the fee on the letter of credit facility was payable at
2.00%.   Based on the balance outstanding, principal payments are due quarterly
from March 31, 1998, through March 31, 2002.  The Credit Agreement has certain
restrictive covenants which require, among other things, that the Company
maintain certain debt coverage ratios.  In addition, the Company is restricted
as to borrowings, the amount of dividend payments on common stock, stock
repurchases, and sales of assets.

     The Company has $120 million borrowed at December 31, 1996 under senior
secured notes, with an effective interest rate of 10.75%.  Interest payments are
due semiannually in April and October.  All principal is due in a single payment
of $120 million on October 1, 2003.


                                      F-12
<PAGE>


The senior notes include certain restrictive covenants similar to the Credit
Agreement mentioned above.

     All outstanding stock of the Company's subsidiaries is pledged as
collateral for the Credit Agreement and senior notes.  In addition, the Company
and its subsidiaries are subject to restrictions on the transfer of assets by
the Company's senior debt covenants.

     The Company has $35 million borrowed at December 31, 1996 from several
insurance companies under various subordinated notes payable agreements, with
effective interest rates ranging from 10.48% to 11.2%.  Interest payments are
due quarterly.  Principal payments of $2.5 million, $12.5 million, $10 million,
and $10 million are due in 1997 through 2000, respectively.  The subordinated
notes payable agreements include certain restrictive covenants similar to the
Credit Agreement mentioned above.

     Partnership debt is related to the Company's interest in the New Century
Seattle Partners, L.P., and includes the following:

     A senior term loan of $7,300,000 bearing interest at the election of the
     Partnership of either prime plus 1.25% or the Eurodollar rate plus 2.5%.
     Principal and interest is payable quarterly through September 30, 2000.
     The loan requires additional payments from excess cash flow, and includes
     certain penalties if repaid prior to July 15, 1997.  A senior term loan of
     $1,000,000 due December 31, 2000 bearing interest at the election of the
     Partnership of either prime plus 3.75% or the Eurodollar rate plus 5.0%.
     Substantially all of the Partnership's assets are pledged as collateral for
     these senior term loans.

     Subordinated notes payable of $5,602,847 bearing interest at 18.0% per
     annum due July 7, 2001.  The notes can be repaid without penalty after July
     15, 1998.

     Miscellaneous contracts payable of $333,274.

          At December 31, 1996, the Company had outstanding an interest rate
contract with a financial institution which involves the exchange of fixed for
floating rate of LIBOR (5.625% at December 27, 1996) on a notional principal
amount of $30 million.  The Company's risk in this transaction is the cost of
replacing, at current market rates, the contract in the event of default by the
counterparty.  At December 31, 1996, the fair value of the contract, as quoted
by the counterparty, was $110,000.  Management believes the risk of incurring a
loss as a result of non-performance by the counterparty is remote as the
contract is with a major financial institution.


                                      F-13
<PAGE>


8.   INCOME TAXES

     At December 31, 1996, the Company has net operating loss carryforwards of
approximately $59.5 million that expire in the years 2002 through 2007 and
investment tax credit carryforwards of approximately $1.3 million that expire in
the years 1997 through 2000.

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.  At December 31, 1996 and
1995 significant components of the Company's deferred tax liabilities and assets
are as follows (in thousands):

<TABLE>
<CAPTION>

                                                             1996          1995
                                                             ----          ----
 <S>                                                   <C>           <C>
 Deferred tax liabilities:
      Tax over book depreciation                       $    8,701    $    8,265
      Prepaid player compensation                           4,457             0
                                                       ----------    ----------
 Total deferred tax liabilities                            13,158         8,265

 Deferred tax assets:
      Net operating loss carryforwards                     22,752        25,793
      Book over tax amortization                            5,210         1,990
      Tax credit carryforwards                                951         2,116
      Deferred compensation agreements                      1,293         1,582
      Litigation accrual                                    5,067         5,432
      Deferred NBA expansion revenue                        1,958         3,166
      Other                                                 3,129         2,657
                                                       ----------    ----------
 Total deferred tax assets                                 40,360        42,736
 Valuation allowance for deferred tax assets              (27,202)      (34,471)
                                                       ----------    ----------
 Net deferred tax assets                                   13,158         8,265
                                                       ----------    ----------

 Net deferred taxes                                    $        0    $        0
                                                       ----------    ----------
                                                       ----------    ----------
</TABLE>

     Significant components of the provision for income taxes attributable to
continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>

                                             1996          1995          1994
                                           ------       -------         ------
     <S>                                   <C>          <C>             <C>
     Current:
        Federal                            $ 1,561      $    422        $  68
        State                                1,197         1,093            5
                                           -------      --------        -----
       Provision for income taxes          $ 2,758      $  1,515        $  73
                                           -------      --------        -----
                                           -------      --------        -----
</TABLE>

     At December 31, 1996, 1995, and 1994 the reconciliation of income taxes
attributable to continuing operations computed at the U.S. federal statutory tax
rate to income tax expense is as follows (in thousands):


                                      F-14
<PAGE>

<TABLE>
<CAPTION>

                                                1996         1995         1994
                                                ----         ----         ----
 <S>                                         <C>        <C>           <C>
 Tax at U.S. statutory rate (34%)            $  6,422   $     (476)   $   2,348
 State income taxes and other                   1,732        1,569          283
 Net operating loss carryforwards              (7,004)         ---       (2,626)
 Alternative minimum tax                        1,608          422           68
                                             --------     --------    ---------
 Provision for income taxes                  $  2,758     $  1,515    $      73
                                             --------     --------    ---------
                                             --------     --------    ---------
</TABLE>


     The Company made income tax payments of  $2,157,000 in 1996, $538,000 in
1995, and $1,302,000 in 1994.

9.   EMPLOYEE BENEFIT PLAN

     The Company has a voluntary defined contribution 401(k) savings and
retirement plan for the benefit of its nonunion employees, who may contribute
from 2% to 15% of their compensation.  This amount, plus a matching amount up to
4% provided by the Company, is contributed to the plan ($1,058,000 in 1996,
$831,000 in 1995, and $700,000 in 1994).  The Company may also make an
additional voluntary contribution to the plan.

10.  STOCKHOLDERS' DEFICIENCY

     On September 19, 1996, the Board of Directors declared an increase of all
classes of its common stock which the Company is authorized to issue from
56,972,230 shares to 61,406,510 shares.  In conjunction with this increase, the
Board also declared a two-for-one stock split effective October 15 for
stockholders of record on October 4.  The stock split resulted in the issuance
of 15,582,794 additional shares.

     The Class B common stock has the same rights as common stock, except that
the Class B common stock has ten times the voting rights of common stock and is
restricted as to its transfer.  The Class B common stock may be converted into
common stock at any time at the option of the stockholder.  Giving effect to the
stock split in 1996, the amount of authorized shares of Class B on December 31,
1995 was 11,784,222 shares.

     Between January and June 1981, the Company agreed to sell shares of its
common stock and Class B common stock to key employees and officers at fair
market value at the time the agreements were executed.  The stock is issued upon
payment to the Company of the agreed purchase price.  At December 31, 1995 and
1996, rights to purchase 52,500 shares of common stock and Class B common stock
were outstanding at $2.00 per share (an aggregate of $105,000).  In 1995, rights
to purchase 82,500 shares of common and 82,500 shares of Class B common were
exercised at an average price of $0.9287 per share.  No rights were exercised in
1996.

     The Company's Employee Stock Option Plan (the "Plan") was approved by the
Board of Directors and the stockholders of the Company in 1983.  In 1994, the
Plan was amended to


                                      F-15
<PAGE>


extend the term of the plan and to increase the amount of common stock reserved
for issuance to 1,000,000 shares.  Under the Plan, the exercise price of the
options equal the market price of the Company's stock on the date of grant and
the options' maximum life is 10 years.  The options vest at the end of five
years of continuous employment.

     As required by FASB Statement 123, the pro forma information regarding net
income and earnings per share has been calculated as if the Company had
accounted for its employee stock options under the fair value method of that
Statement.  The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following weighted-
average assumptions used for grants in 1995 (there were no option grants in
1996):  Dividend yield of 0%; expected volatility of 55%; risk-free interest
rate of 6%; and a weighted-average expected life of the options of 7.5 years.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period.  The Company's
pro forma information is as follows (in thousands except earnings per share
information):

<TABLE>
<CAPTION>

                        1996                  1995                1994
                ------------------  --------------------   -----------------
<S>             <C>                 <C>                    <C>
As Reported     $ 15,774   $  0.50  $  (2,914)  $  (0.09)  $  6,832  $  0.22
Pro Forma       $ 15,554   $  0.49  $  (2,972)  $  (0.09)  $  6,832  $  0.22
</TABLE>


                                      F-16

<PAGE>


     A summary of the Company's stock option activity and related information
for the years ended December 31 follows:

<TABLE>
<CAPTION>
                                                1996                              1995                                1994
                                    ------------------------          -------------------------          ---------------------------
 
                                                  Weighted                          Weighted                            Weighted
                                                  Average                            Average                             Average
                                                  Exercise                       Exercise Price                      Exercise Price
                                    Options        Price              Options                            Options
<S>                                <C>            <C>                 <C>        <C>                     <C>         <C>    
 Options outstanding at
 beginning of year                     690,000      $   2.97             512,000       $   0.97             562,000        $   0.94
 Granted                                   --                            300,000           5.67                 --
 Exercised                            (32,000)          3.23            (40,000)           4.50                 --
 Canceled                                  --            --             (82,000)           0.69            (50,000)            0.69
                                      -------                           -------                            -------
 Options outstanding at end
 of year                              658,000       $   2.96            690,000        $   2.97            512,000          $  0.97
                                      -------                           -------                            -------
                                      -------                           -------                            -------
 Exercisable at end of year
                                           --                            20,000                             60,000
 Weighted average fair
 value of options granted
 during the year                           --                             $3.67                                --
                                           
</TABLE>


     Exercise prices for options outstanding as of December 31, 1996 ranged from
$0.69 to $7.63. The weighted-average remaining contractual life of those options
is 7.0 years.

     A summary of stock options outstanding at December 31, 1996 is as follows:

<TABLE>
<CAPTION>

                        Options         Weighted-Average
 Range of Exercise      Outstanding at  Remaining          Weighted-Average
 Price                  12/31/96        Contractual Life   Exercise Price
 -----                  --------        ----------------   --------------
 <S>                    <C>             <C>                <C>
 $0.00 - $0.69          358,000         5.7 years          $0.69
  0.70 -  3.44          160,000         8.1                 3.44
  3.45 -  7.63          140,000         9.0                 7.63
                        -------
 $0.00 - $7.63          658,000         7.0 years          $2.96
</TABLE>

11.  COMMITMENTS AND CONTINGENCIES

     The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its operations, including such
matters as contract and lease



                                      F-17
<PAGE>


disputes and complaints alleging employment discrimination.  In addition, the
Company participates in various governmental and administrative proceedings
relating to, among other things, condemnation of outdoor advertising structures
without payment of just compensation, disputes regarding airport franchises and
matters affecting the operation of broadcasting facilities.  Other than as
indicated above, the Company believes that the outcome of any such pending
claims or proceedings, individually or in the aggregate, will not have a
material adverse effect upon its business or financial condition.

     The Company incurred expenses of $457,000 in 1996, $290,000 in 1995, and
$288,000 in 1994, for legal services provided by a law firm, one of whose
partners is an officer of the Company.  The Company has incurred transportation
costs of $2,041,000 and made advance payments of $38,000 at December 31, 1996,
to a company controlled by the Company's major stockholder.

     The Company has employment contracts extending beyond December 31, 1996.
Most of these contracts require that payments continue to be made if the
individual should be unable to perform because of death or disability.  Future
minimum obligations under these contracts are as follows (in thousands):
<TABLE>
<CAPTION>
          <S>                                                 <C>
          1997                                                $    29,121
          1998                                                     32,015
          1999                                                     23,418
          2000                                                     22,726
          2001                                                     22,487
          Later years                                              44,350
                                                              -----------
                                                              $   174,117
                                                              -----------
                                                              -----------
</TABLE>

     The Company is required to make the following minimum operating lease
payments for equipment and facilities under non-cancelable lease agreements,
guaranteed display advertising franchises, and broadcasting obligations which
expire in more than one year as follows (in thousands):

<TABLE>
<CAPTION>

                                                                    Broadcast
                  Equipment/Facilities       Franchises            Obligations
                  --------------------       ----------            -----------
 <S>              <C>                        <C>                   <C>
 1997                 $    4,675             $ 11,937               $  5,363
 1998                      4,297                7,325                  2,384
 1999                      3,819                5,087                  1,105
 2000                      3,133                4,252                    285
 2001                      2,876                2,624                    133
 Later years              13,864                  704                      0
                      ----------            ---------               --------
                      $   32,664            $  31,929               $  9,270
                      ----------            ---------               --------
                      ----------            ---------               --------
</TABLE>

     Rent expense for operating leases aggregated $4,513,000 in 1996, $3,167,000
in 1995, and $2,609,000 in 1994.  Franchise fee expense aggregated $16,116,000
in 1996, $17,236,000 in


                                      F-18
<PAGE>


1995, and $17,551,000 in 1994.  Broadcasting film and programming expense
aggregated $8,205,000 in 1996, $6,679,000 in 1995, and $7,507,000 in 1994.

     At December 31, 1996, in conjunction with a time brokerage agreement with a
FCC licensee, the Company has guaranteed a bank loan obligation of the licensee
which had an aggregate principal amount of $4,825,000 maturing in April 1999.
The Company began making payment under this guarantee in January 1997.  No
revenue is being recognized as part of this guarantee agreement.

12.  LITIGATION ACCRUAL

     The Company and two of its executive officers were defendants in a wrongful
termination suit brought by former employees.  On February 29, 1996, a jury
issued a verdict awarding the plaintiffs compensatory and punitive damages of
approximately $13.0 million.  The Company recorded an accrual of $14.2 million
related to the verdict which also included an estimate for additional legal
costs.  The verdict is currently under appeal.  The appeal will likely defer
settlement of the liability beyond 1997, and therefore, it is classified as non-
current.

13.  SUPPLEMENT CASH FLOW INFORMATION

The following table summarizes the change in operating assets and liabilities
(in thousands):

<TABLE>
<CAPTION>

                                             1996           1995         1994
                                         ----------    -----------   ---------
 <S>                                     <C>            <C>           <C>
 Accounts receivable                     $     (164)    $   (1,037)   $ (6,691)
 Other current assets                        (7,422)           965         315
 Accounts payable and accruals                3,937            818      (2,821)
 Accrued interest                               331         (1,171)        820
 Deferred revenue                             1,781          4,574       2,191
 Other, net                                  (4,866)         2,932         754
                                          ---------       --------   ---------
   Changes in operating assets and
   liabilities, net                       $  (6,403)      $  7,081   $  (5,432)
                                          ---------       --------   ---------
                                          ---------       --------   ---------
</TABLE>

14.  INDUSTRY SEGMENT INFORMATION

     The Company is engaged in three business segments:  Out-of-home media,
Broadcasting, and Other.  Selected financial information for these segments for
the years ended December 31, 1996, 1995 and 1994 is presented as follows (in
thousands):


                                      F-19
<PAGE>

<TABLE>
<CAPTION>

                                                           Out-of-home       Broad-
                                                               media         casting        Other      Consolidated
                                                           -----------    ----------     ----------    ------------
<S>                                                        <C>            <C>            <C>           <C>
1996:
-----
Net revenue                                                $  99,833      $   118,171    $   29,294    $   247,298
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------
Operating cash flow before expenses listed below:          $  35,909      $    48,880    $  (24,445)        60,344
     Depreciation and amortization                            (5,615)         (10,273)       (1,108)       (16,996)
                                                           ---------      -----------    ----------    -----------
Income (loss) before expenses listed below:                $  30,294      $    38,607     $ (25,553)        43,348
                                                           ---------      -----------    ----------  
                                                           ---------      -----------    ----------  
Interest expense                                                                                            24,461
                                                                                                       -----------
Income before taxes and extraordinary item                                                             $    18,887
                                                                                                       -----------
                                                                                                       -----------


Identifiable assets                                        $  67,918      $   124,656    $   32,238    $   224,912
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------
Capital expenditures, net of proceeds from
     retirements and disposals                             $   4,590      $     5,214    $    1,846    $    11,650
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------

1995:
-----
Net revenue                                                $  93,177      $    94,108    $   20,112    $   207,397
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------
Operating cash flow before expenses listed below:          $  31,978      $    39,507    $  (20,431)        51,054
     Depreciation and amortization                            (5,226)          (7,223)         (794)       (13,243)
                                                           ---------      -----------    ----------    -----------
Income (loss) before expenses listed below:                $  26,752      $    32,284    $  (21,225)        37,811
                                                           ---------      -----------    ----------    
                                                           ---------      -----------    ----------    
Litigation expense                                                                                          14,200
Interest expense                                                                                            25,010
                                                                                                       -----------
Loss before taxes and extraordinary item                                                               $    (1,399)
                                                                                                       -----------
                                                                                                       -----------
Identifiable assets                                        $  53,281      $   112,430    $   24,171    $   189,882
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------

Capital expenditures, net of proceeds from
     retirements and disposals                             $   2,631      $    19,098    $      873    $    22,602
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------

                                                           Out-of-home       Broad-
                                                               media         casting        Other      Consolidated
                                                           -----------    ----------     ----------    ------------
1994:
-----
Net revenue                                                $  85,436      $    83,463    $   17,203    $   186,102
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------
Operating cash flow before gain (expenses) listed below:   $  27,028       $   33,561    $  (17,299)        43,290
     Disposition of assets                                       ---            2,506           ---          2,506
     Depreciation and amortization                            (5,297)          (4,954)         (632)       (10,883)
                                                           ---------      -----------    ----------    -----------

Income (loss) before expenses listed below:                $  21,731      $    31,113    $  (17,931)        34,913
                                                           ---------      -----------    ----------    
                                                           ---------      -----------    ----------   
Interest expense                                                                                            25,909
                                                                                                       -----------
Income before taxes and extraordinary item                                                             $     9,004
                                                                                                       -----------
                                                                                                       -----------
Identifiable assets                                        $  54,291      $    86,952    $   29,540    $   170,783
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------

Capital expenditures, net of proceeds from
    retirements and disposals                              $   2,709      $     2,036    $    3,990    $     8,735
                                                           ---------      -----------    ----------    -----------
                                                           ---------      -----------    ----------    -----------
</TABLE>

The Other segment consists of basketball operations (other than the basketball
team's TV, radio, and related operations which are included in the
"Broadcasting" segment), soccer operations, and the Corporate office in 1996,
1995, and 1994.  Net revenue for the Other segment consists principally of
revenues from the sports ticket sales.


                                      F-20
<PAGE>


15.  SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)

     The Company's results of operations may vary from quarter to quarter due in
part to the timing of acquisitions and to seasonal variations in the operations
of the broadcasting segment.  In particular, the Company's net revenue and
operating cash flow historically have been affected positively during the NBA
basketball season (the first, second, and fourth quarters) and by increased
advertising activity in the second and fourth quarters.

     The following table sets forth a summary of the quarterly results of
operations for the years ended December 31, 1996 and 1995 (in thousands, except
per share information):

<TABLE>
<CAPTION>

                                                    First             Second           Third      Fourth 
                                                   Quarter            Quarter         Quarter     Quarter
                                                   -------            -------         -------     -------
<S>                                                <C>                <C>             <C>         <C>
1996
----
Net revenue                                        $62,927            $68,235         $45,842     $70,294
Operating cash flow before depreciation,
  amortization, and interest expense                12,674             19,986          11,255      16,428
Income before extraordinary item                     3,123              9,147             379       3,480
Extraordinary loss                                     ---                ---             ---         355
Net income                                           3,123              9,147             379       3,125
Net income per share before extraordinary item         .10                .29             .01         .11
Net income per share                                   .10                .29            . 01         .10

1995
----
Net revenue                                        $56,791            $49,404         $40,548     $60,654
Operating cash flow before depreciation,
  amortization, litigation, and interest expense     9,480             13,947          10,199      17,428
Net income (loss)                                      434              3,689           1,079     *(8,116)
Net income (loss) per share                            .01                .12             .03        (.25)
</TABLE>

----------------
* Reflects litigation accrual discussed in Note 12.



                                      F-21