<PAGE>

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

                                    FORM 10-Q


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

      For the quarter ended March 31, 2002



                       COMMISSION FILE NUMBER: 333-12995

                          ABC FAMILY WORLDWIDE, INC.


              DELAWARE                                  95-4596247
   (State or other jurisdiction of                   (I.R.S. Employer
   incorporation or organization)                   Identification No.)

                          500 SOUTH BUENA VISTA STREET
                           BURBANK, CALIFORNIA 91521

      Registrant's Telephone Number, Including Area Code: (818) 560-1000

     Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

     YES |X| NO |_|

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of May 1, 2002, there
were 160,000 shares of Class A Common Stock outstanding and 15,840,000 shares of
Class B Common Stock outstanding.

<PAGE>


                           PART I. FINANCIAL INFORMATION

                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                       CONDENSED CONSOLIDATED BALANCE SHEETS
                    (unaudited; in thousands, except share data)

<TABLE>
<CAPTION>
<S>                                             <C>            <C>
                                                 March 31,     September 30,
                                                    2002          2001
                                                ------------   -----------
Assets:
Cash and cash equivalents.......................$    62,412    $   78,453
Restricted cash.................................      8,229         8,227
Accounts receivable.............................    155,238       147,122
Amounts receivable from related parties.........     13,950       126,213
Programming costs...............................    393,116       656,795
Property and equipment, net.....................     35,412        44,760
Deferred income taxes...........................     44,577         3,228
Intangible assets, net..........................  1,410,275     1,430,536
Other assets....................................     29,030        34,367
                                                 ------------  -----------

  Total assets..................................$ 2,152,239    $2,529,701
                                                 ============  ===========

Liabilities and stockholders' deficit:
Accounts and taxes payable......................$    91,359    $   97,415
Accrued liabilities ............................    123,887       134,024
Accrued programming costs.......................    153,863       146,959
Deferred revenues...............................     38,763        33,928
Accrued participations..........................     31,358        33,337
Deferred income taxes...........................     44,577        17,591
Bank and other debt.............................  1,039,200     1,507,071
Amounts payable to related parties..............    946,238       400,949
                                                ------------  -----------
  Total liabilities.............................$ 2,469,245   $ 2,371,274
                                                ------------  -----------


Commitments and contingencies:

Series A Mandatorily  Redeemable Preferred
Stock, $0.001 par value;
  500,000 shares authorized; 345,000
  shares issued and outstanding at
  September 30, 2001 and March 31, 2002,
  respectively
  ($1,000 per share liquidation value) .........    345,000       345,000
                                                ------------  -----------

Minority interest...............................     50,195        48,841
                                                ------------  -----------

Stockholders' deficit:
  Preferred   Stock,   $0.001  par  value;
   2,000,000  shares  authorized  of which
   500,000   shares  are   designated   as
   Series A  Preferred  Stock;  no  shares
   issued or outstanding........................         --           --
  Class A Common Stock,  $0.001 par value;
      2,000,000 shares
   authorized;  160,000  shares issued and
   outstanding  at September  30, 2001 and
   March 31, 2002, respectively.................         --           --
  Class B Common Stock,  $0.001 par value;
      16,000,000 shares
   authorized,  15,840,000  shares  issued
   and  outstanding  at September 30, 2001
   and March 31, 2002, respectively.............         16           16
  Contributed capital...........................     78,671       78,671
  Accumulated other comprehensive loss..........     (9,076)      (8,618)
  Deficit.......................................   (781,812)    (305,483)
                                                ------------  -----------
   Total stockholders' deficit..................   (712,201)    (235,414)
                                                ------------  -----------
   Total liabilities and stockholders' deficit..$ 2,152,239   $ 2,529,701
                                                ============  ===========

</TABLE>




              See notes to condensed consolidated financial statements

<PAGE>


                            ABC FAMILY WORLDWIDE, INC.,
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             (unaudited; in thousands)
<TABLE>
<CAPTION>
<S>                              <C>          <C>         <C>         <C>

                                      Three Months             Six Months
                                     Ended March 31,         Ended March 31,
                                  ---------------------   ---------------------
                                    2002        2001        2002        2001
                                  ---------   ---------   ---------   ---------
 Revenues                         $ 112,134   $ 179,500   $ 246,867   $ 364,426

 Costs and expenses:
   Production and programming...    (53,385)    (82,177)   (109,487)   (151,500)

   Selling, general and
    administrative..............    (47,404)    (51,919)   (123,173)   (104,495)
    Depreciation................     (1,229)     (2,297)     (4,118)     (5,005)
    Amortization of intangible
     assets.....................    (10,131)    (10,131)    (20,261)    (20,261)
    Acquisition charges.........    (55,564)         --    (363,789)         --
 Interest expense, net..........    (42,671)    (42,467)    (86,139)    (85,219)
 Equity in earnings of affiliates.      374        (362)        606       1,551
 Minority interests...............      (29)        684      (1,353)       (208)
                                   ---------  ---------   ---------   ---------
 Loss before income taxes........   (97,905)     (9,169)   (460,847)       (711)
 Income taxes....................        --          --          --          --
                                   ---------  ---------   ----------  ---------
 Net loss........................  $(97,905)  $  (9,169)  $(460,847)  $    (711)
                                   =========  =========   =========   =========

</TABLE>

              See notes to condensed consolidated financial statements

<PAGE>


                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (unaudited; in thousands)

<TABLE>
<CAPTION>
<S>                                                     <C>          <C>
                                                           Six Months Ended
                                                               March 31,
                                                        -----------------------
                                                            2002         2001
                                                         ---------   ---------
OPERATING ACTIVITIES:
Net loss..........................................      $ (460,847)  $    (711)

Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation.................................           4,118       5,005
     Amortization of intangibles..................          20,261      20,261
     Non-cash acquisition charges.................         315,784          --
     Equity in earnings of affiliates.............            (606)     (1,551)
     Minority interest in share of earnings.......           1,353         208
     Other........................................              (5)         (6)
     Changes in operating assets and liabilities:
        Accounts receivable.......................          (3,373)    (40,731)
        Amounts receivable from related parties...          89,591     (63,244)
        Additions to production and programming costs.     (41,213)     (1,380)
        Other assets..............................           5,493       5,665
        Accounts   and  taxes   payable   and  accrued
          liabilities.............................         (28,836)     41,557
        Accrued programming costs.................          14,391     (15,787)
        Accrued participations....................          (1,979)     (5,557)
        Deferred income taxes.....................         (14,363)         --
        Deferred revenues.........................           4,835       6,719
                                                        -----------  ----------
            Net cash used in operating activities.         (95,396)    (49,552)
                                                        -----------  ----------

INVESTING ACTIVITIES:
Purchase of property and equipment................          (1,001)     (4,113)
Other.............................................              (7)     (2,021)
                                                        -----------  ----------
            Net cash used in investing activities.          (1,008)     (6,134)
                                                        -----------  ----------

FINANCING ACTIVITIES:
Proceeds from bank borrowings.....................             339      26,427
Paydown on bank borrowings........................        (467,000)       (437)
Paydown on NAI Bridge Loan........................              --        (134)
Dividends on Preferred Stock......................         (15,482)    (15,483)
Paydowns on Senior Notes and Senior Discount Notes          (5,455)         --
Advances from related parties.....................         567,961         757
                                                        -----------  ----------
        Net cash provided by financing activities.          80,363      11,130
                                                        -----------  ----------

Decrease in cash and cash equivalents.............         (16,041)    (44,556)
Cash and cash equivalents at beginning of period..          78,453     112,664
                                                        -----------  ----------
Cash and cash equivalents at end of period........      $   62,412   $  68,108
                                                        ===========  ==========
</TABLE>













              See notes to condensed consolidated financial statements

<PAGE>


                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              (unaudited; in thousands)


1. The accompanying unaudited condensed consolidated financial statements of ABC
Family Worldwide, Inc., formerly known as Fox Family Worldwide, Inc. (the
Company) have been prepared in accordance with accounting principles generally
accepted in the United States (GAAP) for interim financial information and in
accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by GAAP for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Certain prior-year amounts have been
reclassified to conform to the current year presentation. Operating results for
the six-month period ended March 31, 2002 are not necessarily indicative of the
results that may be expected for the year ending September 30, 2002.

     As discussed in Note 2, the Company was acquired by The Walt Disney Company
(Disney) on October 24, 2001. These interim unaudited condensed consolidated
financial statements continue to reflect the Company's historical cost basis of
accounting and do not reflect the push-down of any fair value adjustments made
by Disney in its accounting for the acquisition. The Company continues to have
outstanding publicly traded debt securities and, accordingly, continues to
report its financial statements prepared on a basis consistent with periods
prior to the acquisition by Disney.

     These interim unaudited condensed consolidated financial statements and the
notes thereto should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended June 30, 2001, and the Company's Transition
Report on Form 10-Q for the transition period from July 1, 2001 to September 30,
2001.

     The preparation of the unaudited condensed consolidated financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the unaudited condensed
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates. Management periodically reviews and revises its
estimates of future broadcast airings and revenues, as necessary, which may
result in revised amortization of its programming costs. Results of operations
may be significantly affected by the periodic adjustments in such amortization.

2. On October 24, 2001, Disney completed its previously announced acquisition of
all of the outstanding common stock of the Company.

     In connection with the acquisition by Disney, the Company repaid $467.0
million of borrowings under its credit facility and the facility was terminated.
This payment was funded by an advance from Disney totaling $522.4 million.
Additionally, Disney repaid certain subordinated borrowings that the Company had
with one of its former shareholders totaling $394.3 million.

     In addition, pursuant to the closing of the acquisition and in accordance
with the terms of their respective employment agreements, the Company made cash
payments totaling $74.1 million to Company stock option holders for the vested
option shares held by each option holder. There are no more options outstanding.
The stock option expense related to these options had been previously recorded
by the Company.

<PAGE>


                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              (unaudited; in thousands)


     Immediately following the closing of the acquisition, the Company ceased to
broadcast the Fox Kids Network (FKN), which is now operated by Fox Broadcasting
Company (Fox). The Company is providing, under a licensing fee agreement,
certain programming to Fox for the 2001-2002 broadcast season for broadcast on
FKN.

     On October 24, 2001, Moody's Investor Service announced that it had
upgraded the Company's senior unsecured notes due in 2007 to Baa1 from B1
following the completion of the acquisition of the company by Disney. In
addition, Standard & Poor's announced that it had raised the Company's senior
unsecured debt rating from B to A-, following the completion of the acquisition.
As a result of these ratings upgrades, certain debt covenants no longer apply.

     During the six months ended March 31, 2002, the Company recorded
acquisition charges totaling $363.8 million, due primarily to changes in its
strategic direction resulting from the acquisition by Disney. The charges were
primarily for write-offs of programming that, under Disney management, will not
be utilized. Management is in the process of finalizing its review of the
Company's operations and additional acquisition charges may be recorded.
Additionally, the charges included employee related severance costs, one-time
acquisition bonuses to certain Company executives, fixed asset write-downs and
leasehold termination costs for facilities that will not be used.

     The Company will now file consolidated federal income tax returns with
Disney. The Company determines its federal tax liability principally on a
separate company basis and pays any liability to Disney. State tax returns are
filed on an individual company basis except for certain states where they are
filed on a combined basis with Disney. The Company determines its state tax
liability for those combined states on a separate company basis and pays any
liability to Disney.

3. As of March 31, 2002, the Company had amounts payable to Disney totaling
$946.2 million. These amounts represent subordinated borrowings that the Company
had with one of its former shareholders that were repaid by Disney and amounts
owed to Disney under certain revolving credit agreements. The revolving credit
agreements provide for borrowings totaling $700 million and expire in
fiscal 2007. As of March 31, 2002, there were $545 million of borrowings
outstanding under the revolving credit agreements.  Interest expense for both
the subordinated and revolving borrowings totaled $28.2 million reflecting an
effective interest rate of approximately 7%.

4. The operating segments reported below are the segments of the Company for
which separate financial information is available and for which segment
operating income or loss amounts are evaluated regularly by management in
deciding how to allocate resources and in assessing performance.
<TABLE>
<CAPTION>
<S>                                 <C>         <C>        <C>        <C>

                                        Three Months            Six Months
                                       Ended March 31,       Ended March 31,
                                    --------------------  ---------------------
                                      2002        2001        2002       2001
                                    --------    --------   ---------  ---------
Revenues:
   Broadcasting                     $  82,658   $  98,072  $ 195,564  $ 239,261
   Production and Distribution         29,476      81,428     51,303    125,165
                                     --------    --------   --------   --------
                                    $ 112,134   $ 179,500  $ 246,867  $ 364,426
                                     ========    ========   ========   ========
Segment operating income (loss):
   Broadcasting                     $  14,631   $   8,035  $  29,775  $  53,301
   Production and Distribution         (2,509)     34,362    (15,757)    49,166
                                     --------    --------   --------   --------
                                    $  12,122   $  42,397  $  14,018  $ 102,467
                                     ========    ========   ========   ========
</TABLE>

<PAGE>
                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             (unaudited; in thousands)

     The Company evaluates the performance of its operating segments based on
segment operating income. A reconciliation of segment operating income to income
before income taxes is as follows:
<TABLE>
<CAPTION>
<S>                              <C>          <C>        <C>          <C>

                                      Three Months           Six Months
                                     Ended March 31,       Ended March 31,
                                  --------------------   --------------------
                                     2002       2001        2002        2001
                                  ---------   --------   --------    --------
Segment operating income          $  12,122   $ 42,397   $  14,018   $ 102,467
Corporate and unallocated
 shared expenses                     (2,006)       710      (3,929)        959
Amortization of intangible assets   (10,131)   (10,131)    (20,261)    (20,261)
Interest expense, net               (42,671)   (42,467)    (86,139)    (85,219)
Acquisition charges                 (55,564)         -    (363,789)          -
Equity in earnings of affiliates        374       (362)        606       1,551
Minority interests                      (29)       684      (1,353)       (208)
                                  ---------   --------    --------    --------
Loss before income taxes          $ (97,905)  $ (9,169)  $(460,847)  $    (711)
                                  =========   ========    ========    ========
</TABLE>

5.    Comprehensive  loss for the three months and six months ended March 31,
2002 and 2001, are as follows:
<TABLE>
<CAPTION>
<S>                                  <C>         <C>        <C>         <C>

                                          Three Months            Six Months
                                        Ended March 31,         Ended March 31,
                                     ---------------------  --------------------
                                        2002        2001        2002       2001
                                     ---------   ---------   ---------  --------

Net loss                             $ (97,905)  $ (9,169)   $(460,847) $  (711)

Foreign currency translation
 adjustment                               (188)       577         (458)     101
                                      --------   ---------    ---------  -------
Comprehensive loss                   $ (98,093)  $ (8,592)   $(461,305) $  (610)
                                      =========  =========    =========  =======

</TABLE>

6.  In July 2001, the Financial  Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141, Business  Combinations (SFAS 141) and
Statement  of  Financial  Accounting  Standards  No.  142,  Goodwill  and  Other
Intangible  Assets  (SFAS 142).  The Board also issued  Statement  of  Financial
Accounting  Standards No. 143,  Accounting for  Obligations  Associated with the
Retirement  of  Long-Lived   Assets  (SFAS  143),  and  Statement  of  Financial
Accounting  Standards  No. 144,  Accounting  for the  Impairment  or Disposal of
Long-Lived Assets (SFAS 144), in August and October 2001, respectively.

     SFAS 141 requires all business  combinations  initiated after June 30, 2001
to be accounted for under the purchase  method.  SFAS 141 superseded APB Opinion
No. 16, Business  Combinations,  and Statement of Financial Accounting Standards
No. 38, Accounting for Preacquisition Contingencies of Purchased Enterprises.

     SFAS 142 addresses the financial accounting and reporting for acquired
goodwill and other intangible assets. Under the new rules, the Company is no
longer required to amortize goodwill and other intangible assets with indefinite
lives but will be subject to periodic testing for impairment. SFAS 142
supersedes APB Opinion No. 17, Intangible Assets. Effective October 1, 2002, the
Company will adopt SFAS 142 and is evaluating the effect that such adoption may
have on its consolidated results of operations and financial position. However,
the Company expects that a substantial amount of its intangible assets will no
longer be amortized.

     SFAS 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated asset
retirement cost.  It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets.  SFAS 143 is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted.  The Company expects that the provisions of SFAS 143 will not have a
material impact on its consolidated results of operations and financial position
upon adoption.  The Company plans to adopt SFAS 143 effective October 1, 2002.

<PAGE>
                           ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)


     SFAS 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS 144
superseded Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
and APB Opinion No. 30, Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions. The provisions of SFAS 144 are
effective in fiscal years beginning after December 15, 2001, with early adoption
permitted and, in general, are to be applied prospectively. The Company adopted
SFAS 144 effective October 1, 2001 and such adoption did not have a material
impact on its consolidated results of operations and financial position.


                   ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   SEASONALITY

     The Company's businesses are subject to the effects of seasonality.
Consequently, the operating results for the quarter and six months ended March
31, 2002 for each business segment, and for the Company as a whole, are not
necessarily indicative of results to be expected for the full year.

     Broadcasting revenues are influenced by advertiser demand and the seasonal
nature of programming, and generally peak in the spring and fall.

     Production and distribution revenues fluctuate based upon the timing of the
release of product. Release dates are determined by several factors, including
product availability, timing of vacation and holiday periods and competition in
the market.

Results of Operations

     Three months ended March 31, 2002 as compared with three months ended March
31, 2001

     Revenues for the quarter decreased 37.5%, or $67.4 million, to $112.1
million compared to the prior-year quarter. The decrease was driven by declines
of $15.4 million and $52.0 million in broadcasting and production and
distribution, respectively. Decreased broadcasting revenues were primarily due
to the fact that the Company ceased to broadcast the Fox Kids Network upon the
close of the acquisition by Disney, which reduced revenues by $9.8 million, and
lower domestic advertising sales and domestic cable revenues. Decreased
production and distribution revenues reflected lower domestic syndication
revenues due to a large non-recurring deal in the prior year and lower foreign
syndication revenues due to decreased production activity and several
non-recurring deals in the prior year.

     Production and programming costs decreased 35%, or $28.8 million, to $53.4
million. Production and programming costs as a percentage of total revenues
increased to 47.6% for the current period from 45.8% for the prior-year quarter.
The increase in production and programming costs as a percentage of revenues is
primarily due to higher amortization rates for the Company's film library due to
programming mix.

     Selling, general and administrative expenses decreased 8.7%, or $4.5
million, to $47.4 million as compared to the prior-year quarter, reflecting
lower marketing costs for the ABC Family Channel and decreases due to the
transfer of the Fox Kids Network to Fox, partially offset by higher bad debt
expenses and increased costs from international broadcast operations due to
expansion.

     During the quarter, the Company recorded acquisition charges totaling $55.6
million due primarily to changes in its strategic direction resulting from the
acquisition by Disney. The charges were primarily for write-offs of programming
that, under Disney management, will not be utilized and employee severance
costs. Management is in the process of finalizing its review of Company
operations and additional acquisition related charges may be recorded.

<PAGE>


                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

     Net loss for the quarter was $97.9 million, compared to a net loss of $9.2
million for the prior-year quarter. The current period loss was driven by
acquisition charges and decreased revenues, partially offset by lower production
and programming costs. The Company has not provided for any income tax provision
or benefit during the current or prior-year period. The combination of current
losses and prior-year loss carry forwards resulted in no income tax liability
and accordingly no provision. The Company has not recorded any income tax
benefit as it is not certain that those benefits will be realized.

     Six months ended March 31, 2002 as compared with six months ended March 31,
2001

     Revenues for the six-month period decreased 32.3%, or $117.6 million, to
$246.9 million compared to the prior-year six-month period. Revenues for the
broadcast and production and distribution segments decreased $43.7 million and
$73.9 million, respectively. Decreased broadcasting revenues were primarily due
to the termination of Fox Kids Network broadcasts following the acquisition by
Disney, which reduced revenues by $28.0 million, and lower domestic advertising
sales and domestic cable revenues. The decrease in production and distribution
revenues reflected lower domestic syndication revenues due to a large
non-recurring deal in the prior year, lower merchandising and toy royalty
revenue for certain licensed properties and lower foreign syndication revenues
due to decreased production activity and several non-recurring deals in the
prior year.

     Production and programming costs decreased 27.7%, or $42.0 million, to
$109.5 million. Production and programming costs as a percentage of total
revenues increased to 44.4% for the current six-month period from 41.6% for the
prior-year period. The increase in production and programming costs as a
percentage of revenues is primarily due to higher amortization rates for the
Company's film library due to programming mix and increased airings of higher
cost off-network programming on the ABC Family Channel.

     Selling, general and administrative expenses increased 17.9%, or $18.7
million, to $123.2 million as compared to the prior-year six-month period,
reflecting higher legal and bad debt expenses and increased costs from
international broadcast operations due to expansion, partially offset by
decreases due to the transfer of the Fox Kids Network to Fox.

     During the six-month period, the Company recorded acquisition charges
totaling $363.8 million due primarily to changes in its strategic direction
resulting from the acquisition by Disney. The charges were primarily for
write-offs of programs that, under Disney Management, will not be utilized.
Management is in the process of finalizing its review of the Company's
operations and additional acquisition charges may be recorded. Additionally, the
charges included one-time acquisition bonuses to certain Company executives,
employee-related severance costs, fixed asset write-downs and leasehold
termination costs for facilities that will no longer be used.

     Net loss for the six-month period was $460.8 million, compared to a net
loss of $ 0.7 million for the prior-year period. The current period loss was
driven by acquisition charges, decreased revenues and higher selling, general
and administrative costs, partially offset by lower production and programming
costs. The Company has not provided for any income tax provision or benefit
during the current or prior-year period. The combination of current losses and
prior-year loss carry forwards resulted in no income tax liability and
accordingly no provision. The Company has not recorded any income tax benefit as
it is not certain that those benefits will be realized.

<PAGE>

                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Liquidity and Capital Resources

     Net cash used in operating activities for the current six month period was
$95.4 million, compared to $49.6 million for the prior-year six-month period,
primarily due to lower earnings, the timing of the payments of accounts payable
and accrued liabilities and stock option payments made in conjunction with the
Disney acquisition, partially offset by the collection of related party
receivables.

     Net cash used in investing activities was $1.0 million and $6.1 million for
the current and prior-year six-month periods, respectively, and was primarily
for property and equipment purchases.

     Net cash provided by financing activities was $80.4 million and $11.1
million for the current and prior-year six-month periods, respectively. In
connection with the acquisition, all outstanding debt under the credit facility
($467.0 million) was repaid and the credit facility was terminated. This
repayment was funded by an advance from Disney totaling $522.4 million. During
the quarter ended March 31, 2002, Disney advanced an additional $45.5 million to
the Company representing cash for operating requirements and interest and other
charges. Additionally, during the current six-month period, the Company paid
$15.5 million in preferred dividends and repaid $5.5 million of its senior notes
and senior discount notes.

     On November 1, 2001, the Company made an election to change the payment
terms on its 10 1/4% senior discount notes. Whereas interest on this debt
accrued semi-annually to the principal balance to be paid at maturity, on
November 1, 2001, the Company elected to change to semi-annual cash interest
payments with the first payment being due May 1, 2002.

     Commitments to purchase broadcast programming were approximately $679
million at March 31, 2002. The Company expects to continue to enter into
commitments to purchase broadcast programming rights.

     Management believes that cash flow from operations, cash on hand and
funding from Disney, should be sufficient to fund its operations and service its
debt for the foreseeable future.

OTHER MATTERS

Accounting Policies and Estimates

     We believe that the application of the following accounting policies, which
are important to our financial position and results of operations, requires
significant judgments and estimates on the part of management. For a summary of
all of our accounting policies, including the accounting policies discussed
below, see Note 2 of the Consolidated Financial Statements in the Annual Report
on Form 10K for the year ended June 30, 2001.

     Film and television revenues and costs

     We expense the cost of film and television production and participations
over the applicable product life cycle based upon the ratio of the current
period's gross revenues to the estimated remaining total gross revenues. These
estimates are calculated on an individual production basis for film and
television and on an individual contract basis for sports rights. Estimates of
total gross revenues can change due to a variety of factors, including the level
of market acceptance, advertising rates and subscriber fees.

<PAGE>

                           ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

     Broadcast rights for theatrical movies, series and other programs are
charged to expense based on the number of times the program is expected to be
shown. Estimates of usage may change based on competition and audience
acceptance. Accordingly, revenue estimates and planned usage are reviewed
periodically and are revised if necessary. A change in revenue projections or
planned usage could have an impact on our results of operations.

     Costs of film and television productions and programming costs for our
television and cable networks are subject to valuation adjustments pursuant to
the applicable accounting rules. Estimated values are based upon assumptions
about future demand and market conditions. If actual demand or market conditions
are less favorable than our projections, film, television and programming cost
write-downs may be required.

     Goodwill, Intangible Assets, Long-lived Assets and Investments

     We continuously monitor and evaluate the realizability of goodwill and
intangible assets, to determine whether their carrying values have been
impaired. In evaluating the value and future benefits of existing assets, their
carrying value is compared to our best estimate of undiscounted future cash
flows expected to result from the use of the assets and their eventual
disposition. We also consider events or changes in circumstances, such as
changes in the number of subscribers, which indicate that assets may not be
recoverable. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying value of the assets
exceeds the estimated fair value of the assets. If these estimates or related
projections change in the future, we may be required to record impairment
charges for these assets.

     Long-lived assets include certain long-term investments. The fair value of
the long-term investments is dependent on the performance of the companies we
invest in, as well as volatility inherent in the external markets for these
investments. In assessing potential impairment for these investments, we will
consider these factors as well as forecasted financial performance of our
investees. If these forecasts are not met, impairment charges may be required.

     Contingencies and Litigation

     We are currently involved in certain legal proceedings and, as required,
have accrued our estimate of the probable costs for the resolution of these
claims. This estimate has been developed in consultation with outside counsel
and is based upon an analysis of potential results, assuming a combination of
litigation and settlement strategies. It is possible, however, that future
results of operations for any particular quarterly or annual period could be
materially affected by changes in our assumptions or the effectiveness of our
strategies related to these proceedings.

Accounting Changes

     In July 2001, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 141, Business  Combinations  (SFAS 141) and
Statement  of  Financial  Accounting  Standards  No.  142,  Goodwill  and  Other
Intangible Assets (SFAS 142). They also issued Statement of Financial Accounting
Standards No. 143, Accounting for Obligations  Associated with the Retirement of
Long-Lived  Assets (SFAS 143), and Statement of Financial  Accounting  Standards
No. 144,  Accounting for the  Impairment or Disposal of Long-Lived  Assets (SFAS
144), in August and October 2001, respectively.

<PAGE>


                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

     SFAS 141 requires all business  combinations  initiated after June 30, 2001
be accounted for under the purchase method.  SFAS 141 superseded APB Opinion No.
16, Business  Combinations,  and Statement of Financial Accounting Standards No.
38, Accounting for Preacquisition Contingencies of Purchased Enterprises.


     SFAS 142 addresses the financial accounting and reporting for acquired
goodwill and other intangible assets. Under the new rules, the Company is no
longer required to amortize goodwill and other intangible assets with indefinite
lives but will be subject to periodic testing for impairment. SFAS 142
supersedes APB Opinion No. 17, Intangible Assets. Effective October 1, 2002, the
Company will adopt SFAS 142 and is evaluating the effect that such adoption may
have on its consolidated results of operations and financial position. However,
the Company expects that a substantial amount of its intangible assets will no
longer be amortized.

     FAS 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated asset
retirement cost. It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets. SFAS 143 is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted. The Company expects that the provisions of SFAS 143 will not have a
material impact on its consolidated results of operations and financial position
upon adoption. The Company plans to adopt SFAS 143 effective October 1, 2002.

     SFAS 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS 144
superseded Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
and APB Opinion No. 30, Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions. The provisions of SFAS 144 are
effective in fiscal years beginning after December 15, 2001, with early adoption
permitted and, in general, are to be applied prospectively. The Company adopted
SFAS 144 effective October 1, 2001 and such adoption did not have a material
impact on its consolidated results of operations and financial position.

MARKET RISK

     The Company's primary market risks include fluctuations in interest rates,
variability in interest rate spread relationships (i.e., prime to LIBOR spreads)
and exchange rate variability. On occasion, the Company may choose to manage
these market risks by using derivative financial instruments in accordance with
established policies and procedures. Currently, the Company does not use
derivative financial instruments for trading purposes. Additionally, the Company
maintains a mix of fixed and floating debt to mitigate its exposure to interest
rate fluctuations.

     The Company had no interest rate swaps, foreign exchange or other material
financial instruments outstanding at March 31, 2002.

     The Company's management believes that fluctuations in interest rates and
currency exchange rates in the near term would not materially affect the
Company's consolidated operating results, financial position or cash flows as
the Company has limited risks related to interest rate and currency exchange
rate fluctuations.

<PAGE>


                             ABC FAMILY WORLDWIDE, INC.
                       (FORMERLY FOX FAMILY WORLDWIDE, INC.)

                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)


                             PART II. OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

     The Company currently and from time to time is engaged in litigation in the
ordinary course of its business. The Company is not currently a party to any
lawsuit or proceeding which, in the opinion of management, if decided adversely
to the Company, would be likely to have a material adverse effect on the
Company's financial condition and results of operations.

<PAGE>


                                       SIGNATURE



       Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        ABC FAMILY WORLDWIDE, INC.




Date: May 15, 2002                      /s/ Mel Woods
                                        Mel Woods
                                        President, Chief Operating Officer and
                                        Chief Financial Officer (Principal
                                        Financial Officer)