U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended                  May 31, 1999
                               -------------------------------------------------

       [ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT

 For the transition period from ___________________to___________________________

                        Commission File Number 000-21623

                             OBIE MEDIA CORPORATION
--------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

         OREGON                                               93-0966515
--------------------------------------------------------------------------------
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                             Identification No.)


4211 West 11th Ave., Eugene, Oregon                  97402
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

     541-686-8400                                          FAX 541-345-4339
--------------------------------------------------------------------------------
                           (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or 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 [ ].

     As of June 30, 1999, 4,322,949 shares of the issuer's common stock were
outstanding.

     This  report  contains 12 pages.



<PAGE>


                             OBIE MEDIA CORPORATION
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                     ASSETS

                                                           May 31,        November 30,
                                                            1999             1998
                                                    ----------------  ----------------
<S>                                                     <C>               <C>
CURRENT ASSETS:
    Cash                                                $    78,409       $   326,140
    Accounts receivable, net                              6,835,552         6,719,218
    Prepaids and other current assets                     1,674,176         1,156,061
    Deferred income taxes                                   758,832           758,832
                                                    ----------------  ----------------
        Total current assets                              9,346,969         8,960,251

PROPERTY AND EQUIPMENT, NET                              10,846,089        10,493,174
GOODWILL, NET                                             7,425,899         7,696,394
OTHER ASSETS, NET                                           523,260           497,512
                                                    ----------------  ----------------
                                                        $28,142,217       $27,647,331
                                                    ================  ================


                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                      $2,466,444        $1,511,276
  Line of credit                                          2,825,092         1,414,877
  Accounts payable                                        1,187,229           780,268
  Accrued expenses                                          911,013         2,674,287
  Income taxes payable                                      145,344           299,090
  Deferred revenue                                        1,550,542         1,247,470
                                                    ----------------  ----------------
      Total current liabilities                           9,085,664         7,927,268

DEFERRED INCOME TAXES                                       783,502           783,502
LONG-TERM DEBT, LESS CURRENT PORTION                     11,720,144        13,354,395
                                                    ----------------  ----------------
       Total liabilities                                 21,589,310        22,065,165
                                                    ----------------  ----------------

MINORITY INTEREST IN SUBSIDIARY                              35,424            35,424

SHAREHOLDERS' EQUITY:
  Preferred stock, without par value, 10,000,000 shares
      authorized, no shares issued or outstanding
  Common stock, without par value; 20,000,000 shares
      authorized, 4,322,949 and 4,315,728 shares
      issued and outstanding, respectively                6,952,905         6,851,053
  Options issued for common stock                           211,763           211,763
  Foreign currency translation                               (1,843)                -
  Accumulated deficit                                      (645,342)       (1,516,074)
                                                    ----------------  ----------------
      Total shareholders' equity                          6,517,483         5,546,742
                                                    ----------------  ----------------
                                                        $28,142,217       $27,647,331
                                                    ================  ================
</TABLE>

See accompanying notes


<PAGE>


                             OBIE MEDIA CORPORATION
                        Consolidated Statements of Income
<TABLE>
<CAPTION>

                                        Quarter Ended May 31,                Six Months Ended May 31,
                                    -------------------------------      -------------------------------
                                        1999             1998                1999                1998
                                    --------------  ---------------      --------------  ---------------
<S>                                    <C>              <C>                <C>               <C>
REVENUES:
  Transit advertising                  $8,549,308       $3,573,776         $14,574,216       $6,398,688
  Outdoor advertising                   1,451,664        1,412,918           2,813,393        2,757,853
  Less - Agency commissions            (1,031,326)        (448,531)         (1,657,735)        (799,016)
                                    --------------  ---------------      --------------  ---------------
      Net revenues                      8,969,646        4,538,163          15,729,874        8,357,525

OPERATING EXPENSES:
  Direct advertising expenses           6,275,871        2,764,939          11,296,100        5,262,902
  General and administrative            1,151,126          765,202           2,311,728        1,453,568
  Contract settlement                           -                -            (885,941)               -
  Start-up costs                          190,103           25,313             295,782           43,553
  Depreciation and amortization           367,173          176,241             722,896          353,680
                                    --------------  ---------------      --------------  ---------------
      Operating income                    985,373          806,468           1,989,309        1,243,822

OTHER (INCOME) EXPENSE:
  Interest expense                        284,412          165,064             561,885          331,242
  Minority interest in subsidiary               -           28,439                   -           32,201
                                    --------------  ---------------      --------------  ---------------
     Income before income taxes           700,961          612,965           1,427,424          880,379

PROVISION FOR INCOME TAXES                266,109          232,927             556,692          334,544
                                    --------------  ---------------      --------------  ---------------
NET INCOME                               $434,852         $380,038            $870,732         $545,835
                                    ==============  ===============      ==============  ===============

Earnings per share:
  Basic                                     $0.10            $0.09               $0.20            $0.13
  Diluted                                   $0.10            $0.09               $0.20            $0.13



See accompanying notes
</TABLE>



<PAGE>


                             OBIE MEDIA CORPORATION
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                  Six Months Ended May 31,
                                                               ------------------------------
                                                                    1999            1998
                                                               --------------   -------------
<S>                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                      $870,732         $ 545,835
  Depreciation and amortization                                    722,896           353,680
  Contract settlement                                             (335,941)               -
  Minority interest in subsidiary                                       -             32,201
  Changes in assets and liabilities                             (1,416,731)         (611,324)
                                                               --------------   -------------
    Net cash provided by (used in) operating activities           (159,044)          320,392
                                                               --------------   -------------

CASH FLOWS FROM INVESTING:
  Capital expenditures                                            (810,713)         (603,253)
  Other                                                            (21,108)                -
                                                               --------------   -------------
    Net cash used in investing activities                         (831,821)         (603,253)
                                                               --------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                            16,221                 -
  Net borrowings on lines of credit                              1,410,215           589,548
  Checks outstanding in excess of cash deposits                                       54,812
  Payments on long-term debt                                      (679,083)         (420,319)
  Other                                                             (2,376)           58,820
                                                               --------------   -------------
    Net cash provided by financing activities                      744,977           282,861
                                                               --------------   -------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                             (1,843)                -
                                                               --------------   -------------

NET DECREASE IN CASH                                              (247,731)                -
CASH, BEGINNING OF PERIOD                                          326,140                 -
                                                               --------------   -------------
CASH, END OF PERIOD                                                $78,409         $       -
                                                               ==============   =============

SUPPLEMENTAL DISCLOSURE:
  Issuance of stock to employee benefit plan                       $85,928                 -
  Note issued to acquire advertising structures                          -         $ 698,000
  Interest capitalized                                               7,979             6,142

Cash Paid for Interest                                             475,778           326,650

Cash Paid for Taxes                                                892,909                 -


See accompanying notes
</TABLE>



<PAGE>
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation

     The  interim  financial   statements  have  been  prepared  by  Obie  Media
Corporation  (the "Company")  without audit.  In the opinion of management,  the
accompanying unaudited financial statements contain all adjustments necessary to
present fairly the financial position of the Company as of May 31, 1999, and the
results of operations and cash flows of the Company for the three and six months
ended May 31, 1999 and 1998, as applicable. The condensed consolidated financial
statements  include the  accounts of the Company and its  subsidiaries,  and all
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed  or omitted as permitted  by rules and  regulations  of the
Securities  and  Exchange  Commission.  The  organization  and  business  of the
Company,  accounting  policies followed by the Company and other information are
contained in the notes to the Company's  financial  statements  filed as part of
the Company's  November 30, 1998 Form 10-KSB.  This  quarterly  report should be
read in  conjunction  with such  annual  report.  Operating  results for the six
months ended May 31, 1999 are not necessarily indicative of the results that may
be expected for any future period.

2.   Contract Settlement

     We have a contract to provide  advertising sales services to the Tri-County
Metropolitan  Transit District  ("Tri-Met") in Portland,  Oregon,  which, by its
terms, was scheduled to expire in June 2001. We originally began serving Tri-Met
in January 1994, pursuant to a five-year agreement, which was later extended for
an additional  two years.  The Federal  Transit  Administration  ("FTA"),  which
provides  substantial monies to transit  districts,  has taken the position that
transit  advertising  contracts  may not exceed  five  years in  length.  At the
request of the FTA,  Tri-Met and we agreed that our agreement with Tri-Met would
terminate on June 30, 1999. However,  Tri-Met has informed us that our agreement
with it will now  terminate  on July 30, 1999 or 10 days after  notification  by
Tri-Met of its award of a new agreement,  whichever is later.  In December 1998,
Tri-Met  agreed  pursuant to a settlement  agreement to  compensate us for early
termination  of the  existing  contract.  Under  the  terms  of  the  settlement
agreement,  we received a one-time cash payment and related  financial  benefits
which resulted in a pre-tax gain of $886,000  during the first quarter of fiscal
1999.  The agreement  further  provides that we will sell to Tri-Met for $80,000
the transit  benches on which we sell  advertising.  If we are not successful in
obtaining  the new Portland  contract,  we will receive  additional  lesser cash
payments and other  financial  benefits,  and will receive for a period of up to
one year 20% of the net billings received from unexpired  advertising  contracts
which extend beyond June 30, 1999.

3.   Long Term Borrowings

     The Company's  Term Loan Agreement  contains  certain  covenants  including
maintenance of a cash flow leverage  ratio and cash flow  coverage.  The Company
was in compliance with these covenants as of May 31, 1999.
<PAGE>
4.   Earnings Per Share

     Basic earnings per share is computed  based on the weighted  average number
of common shares  outstanding  during the periods and diluted earnings per share
is computed  using the  weighted  average  number of common  shares and dilutive
common equivalent shares  outstanding.  All share and per-share  information has
been  adjusted  to give  retroactive  effect to an  11-for-10  stock split which
occurred in November  1998. The following is a  reconciliation  of the basic and
diluted shares used in the per share calculations:
<TABLE>
                                      Quarter Ended           Six Months Ended
                                         May 31,                   May  31,
                                  ---------------------------------------------------
                                      1999         1998         1999         1998
                                  ------------ ------------  ----------- ------------
<S>                                 <C>          <C>          <C>          <C>
Basic shares (weighted average)     4,322,574    4,241,032    4,321,951    4,241,032
Dilutive effect of stock options       74,266       72,980       94,313       69,792
                                  ------------ ------------  ----------- ------------
Diluted shares                      4,396,840    4,314,012    4,416,264    4,310,824
                                  ============ ============  =========== ============
</TABLE>

5.   Newly Issued Financial Accounting Pronouncements

     In June 1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  No. 130  "Reporting  Comprehensive
Income"  ("SFAS 130").  This statement  establishes  standards for reporting and
displaying  comprehensive  income  and its  components  in a full set of general
purpose financial  statements.  The objective of SFAS 130 is to report a measure
of all changes in equity of an  enterprise  that result  from  transactions  and
other economic  events of the period other than  transactions  with owners.  The
Company adopted SFAS 130 during the first quarter of fiscal 1999.  Comprehensive
income did not  differ  materially  from  currently  reported  net income in the
periods presented.

     Effective in its fiscal year ending  November 30, 1999, the Company will be
required to adopt SFAS No. 131 "Disclosures  about Segments of an Enterprise and
Related Information." SFAS No. 131 changes current practice under SFAS No. 14 by
establishing a new framework on which to base segment reporting  (referred to as
the  "management"  approach)  and also  requires  interim  reporting  of segment
information.  Management  does not expect  that the impact of  adoption  of this
pronouncement will be material to the Company's financial position or results of
operations.

     In June 1998, the Financial  Accounting Standards Board issued SFAS No. 133
"Accounting   for  Derivative   Instruments  and  Hedging   Activities,"   which
establishes  accounting and reporting standards for all derivative  instruments.
SFAS No. 133 was to be effective for fiscal years beginning after June 15, 1999.
In June 1999,  the FASB issued SFAS No. 137 as an  amendment  to SFAS No.133 and
deferred the effective date of SFAS No. 133 to fiscal years beginning after June
15, 2000. The Company  currently has no derivative  instruments and,  therefore,
the adoption of SFAS 133 will have no impact on the Company's financial position
or results of operations.





<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

     The following discussion includes certain  forward-looking  statements that
involve a number of risks and uncertainties.  The Company's actual results could
differ materially from the forward-looking statements.  Factors that could cause
or  contribute  to  such  differences  include:  a  decline  in the  demand  for
advertising   in  the  areas  where  the  Company   conducts  its  business;   a
deterioration  of  business  conditions  generally  in such  areas;  slower that
expected  acceptance of the Company's  innovative display products;  competitive
factors,  including  increased  competition  and  price  pressures;  changes  in
regulatory  or  other  external  factors;   failure  to  successfully   conclude
negotiations  on pending  transactions or to  successfully  assimilate  expanded
operations,  inability  to generate  advertising  revenues  to meet  contractual
guarantees,  and  cancellation or  interruption  of contracts with  governmental
agencies,  as well as those  factors  listed from time to time in the  Company's
filings with the SEC,  including,  but not limited to, the factors  discussed in
Exhibit 99.1 filed in connection with the Company's Annual Report of Form 10-KSB
for the year ended  November  30,  1998,  and the factors  discussed in the Risk
Factors section of the Company's Registration Statement of Form S-1, as amended,
filed with the SEC on May 26, 1999 which are incorporated herein by reference.

New Transit Contracts

     During  the six  months  ended May 31,  1999,  we began  operating  transit
advertising displays on more than 600 additional  vehicles.  In January 1999, we
began operating transit  advertising  displays for transit districts in Madison,
Wisconsin;  Spokane,  Washington;  and London,  Ontario (representing a total of
approximately  500  vehicles).  In February  1999,  we began  operating  transit
advertising displays for a transit district in Yakima,  Washington (representing
approximately 20 vehicles). In April 1999, we entered into a transit advertising
agreement with Gray Line of Victoria (covering  approximately 80 vehicles) under
which we began  operating in May 1999.  Also in April 1999,  we began  operating
transit advertising displays for St. Catharines,  a transit district in Ontario,
Canada (representing approximately 50 vehicles). In May 1999, we began operating
displays  for  a  transit   district  in  Niagara   Falls,   Ontario   (covering
approximately 25 vehicles).

Comparison of the Six Months Ended May 31, 1999 and 1998

     Gross revenues  increased $8.2 million,  or 89.9%, to $17.4 million for the
six months  ended May 31,  1999 from $9.2  million for the same period in fiscal
1998.  This  increase  was  principally  due  to  transit  advertising  revenues
associated  with the  operations  of P & C Media ("P & C") (which we acquired in
September  1998),  as well as the addition of new districts,  including  British
Columbia (which we began  operating in August 1998) and Austin,  Texas (which we
began  operating in June 1998).  Transit  revenues  increased  $8.2 million,  or
127.8%, to $14.6 million for the six months ended May 31, 1999 from $6.4 million
for the same  period in fiscal  1998.  Outdoor  advertising  revenues  were $2.8
million in each of the six months  periods  ended May 31, 1999 and 1998.  Agency
commissions  increased  $859,000,  or 107.5%, to $1.7 million for the six months
ended May 31,  1999 from  $799,000  for the same  period  in fiscal  1998.  As a
percentage of gross revenues,  agency  commission  increased to 9.5% for the six
months  ended May 31,  1999 from 8.7% for the same  period in fiscal  1998.  The
increase in agency  discounts,  in both dollar  amounts and as a  percentage  of
gross revenues,  is primarily due to the large  proportion of agency business in
our new markets.  As a result of the foregoing  reasons,  net revenues increased
$7.4 million,  or 88.2%,  to $15.7 million for the six months ended May 31, 1999
from $8.4 million for the same period in fiscal 1998.

     Direct  advertising  expenses  increased $6.0 million,  or 114.6%, to $11.3
million  for the six months  ended May 31,  1999 from $5.3  million for the same
period in fiscal 1998.  This  increase was  primarily  the result of  activities
required to support an increased level of business.  Direct advertising expenses
increased,  as a  percentage  of gross  revenues,  from  57.5% for the first six
months of fiscal 1998 to 65.0% for the same period in fiscal 1999, primarily due
to  the  faster  growth  of  the  transit  advertising  business,  where  costs,
especially occupancy costs, are higher than in the outdoor advertising business.
<PAGE>
     General and administrative  expenses increased $858,000,  or 59.0%, to $2.3
million  for the six months  ended May 31,  1999 from $1.5  million for the same
period in fiscal 1998. The increase resulted  primarily from the increased costs
of administering new transit districts,  including districts under contract with
P & C. General and administrative  expenses,  as a percentage of gross revenues,
decreased to 13.3% for the six months ended May 31, 1999 from 15.9% for the same
period in fiscal 1998.

     During the six months ended May 31, 1999, we recognized a one-time  pre-tax
gain of $886,000 associated with our contract settlement with Tri-Met. (See Note
2 to our consolidated financial statements.)

     In  anticipation  of the  termination  of our transit  district  agreement,
Tri-Met  solicited  proposals for the operation of the Portland transit district
by means of a  competitive  bidding  process.  We were not  awarded the right to
continue  to operate in Portland in that  bidding  process.  The results of that
initial  process  were  contested  and  Tri-Met  requested   submission  of  new
proposals. We submitted a revised bid to Tri-Met in response.  Tri-Met is in the
process of selecting the new operator  under the contract to be awarded.

     Start-up costs  increased to $296,000 for the six months ended May 31, 1999
from $44,000 for the same period in fiscal 1998,  primarily due to our increased
response to requests for  proposals  for transit  district  contracts.  Start-up
costs  include  expenses  incurred in new markets  prior to the time the Company
begins its sales operations,  as well as costs incurred in competing for transit
district contracts. These costs vary depending on the number and size of transit
districts that become  available for proposal  during the period and our success
in obtaining new contracts.

     Depreciation and amortization  expenses increased  $369,000,  or 104.4%, to
$723,000 for the six months ended May 31, 1999 from $354,000 for the same period
in fiscal 1998,  primarily due to the  amortization of goodwill  associated with
the P & C acquisition as well as our investments in equipment in new markets and
our  upgrading  of  computer  capabilities  in  our  existing  markets.  We  are
amortizing  goodwill of $7.8  million from the P & C  acquisition  over 15 years
using the straight-line method of amortization.

     Due to the above factors, operating income increased $745,000, or 59.9%, to
$2.0  million for the six months  ended May 31,  1999 from $1.2  million for the
same period in fiscal 1998.

     Interest  expense  increased  $231,000,  or 69.6%,  to $562,000 for the six
months  ended May 31, 1999 from  $331,000  for the same  period in fiscal  1998,
primarily due to the indebtedness incurred in connection with the acquisition of
P & C.

     Provision for income taxes  increased  $222,000,  or 66.4%, to $557,000 for
the six months  ended May 31, 1999 from  $335,000  for the same period in fiscal
1998.  The increase in the provision for income taxes is greater,  in percentage
terms,  than the  increase  in  income  before  income  taxes  due to  increased
operations in higher tax rate jurisdictions, including Canada.

     As a result of the foregoing  factors,  net income increased  $325,000,  or
59.5%,  to $871,000 for the six months ended May 31, 1999 from  $546,000 for the
same period in fiscal 1998.

Comparison of the Three Months Ended May 31, 1999 and 1998

     Gross revenues increased $5.0 million,  or 100.6%, to $10.0 million for the
three  months ended May 31, 1999 from $5.0 million for the same period in fiscal
1998.  This  increase  was  principally  due  to  transit  advertising  revenues
associated  with  the  operations  of P & C,  as  well  as the  addition  of new
districts,  including  British  Columbia  and Austin,  Texas.  Transit  revenues
increased  $5.0 million,  or 139.2%,  to $8.5 million for the three months ended
May 31,  1999 from $3.6  million  for the same  period in fiscal  1998.  Outdoor
<PAGE>
advertising  revenues  increased  to $1.5 million for the three months ended May
31,  1999  from  $1.4  million  for the  same  period  in  fiscal  1998.  Agency
commissions  increased $583,000, or 129.9%, to $1.0 million for the three months
ended May 31,  1999 from  $449,000  for the same  period  in fiscal  1998.  As a
percentage of gross revenues, agency commission increased to 10.3% for the three
months  ended May 31,  1999 from 9.0% for the same  period in fiscal  1998.  The
increase in agency  discounts,  in both dollar  amounts and as a  percentage  of
gross revenues,  is primarily due to the large  proportion of agency business in
our new markets.  As a result of the foregoing  reasons,  net revenues increased
$4.4 million,  or 97.6%, to $9.0 million for the three months ended May 31, 1999
from $4.5 million for the same period in fiscal 1998.

     Direct  advertising  expenses  increased $3.5 million,  or 127.0%,  to $6.3
million for the three  months  ended May 31, 1999 from $2.8 million for the same
period in fiscal 1998.  This  increase was  primarily  the result of  activities
required to support an increased level of business.  Direct advertising expenses
increased,  as a  percentage  of gross  revenues,  to 62.8% for the three months
ended May 31, 1998 from 55.4% for the same period in fiscal 1999,  primarily due
to  the  faster  growth  of  the  transit  advertising  business,  where  costs,
especially occupancy costs, are higher than in the outdoor advertising business.

     General and administrative  expenses increased $386,000,  or 50.4%, to $1.2
million  for the three  months  ended May 31,  1999 from  $765,000  for the same
period in fiscal 1998. The increase resulted  primarily from the increased costs
of administering new transit districts,  including districts under contract with
P & C. General and administrative  expenses,  as a percentage of gross revenues,
decreased  to 11.5% for the three  months  ended May 31, 1999 from 15.3% for the
same period in fiscal 1998.

     Start-up  costs  increased  to $190,000  for the three months ended May 31,
1999 from  $25,000  for the same  period in fiscal  1998;  primarily  due to our
increased  response to requests for  proposals for transit  district  contracts.
Start-up  costs include  expenses  incurred in new markets prior to the time the
Company begins its sales operations,  as well as costs incurred in competing for
transit district contracts. These costs vary depending on the number and size of
transit  districts that become  available for proposal during the period and our
success in obtaining new contracts.

     Depreciation and amortization  expenses increased  $191,000,  or 108.3%, to
$367,000  for the three  months  ended May 31, 1999 from  $176,000  for the same
period in fiscal 1998,  primarily due to the amortization of goodwill associated
with  the P & C  acquisition  as well as our  investments  in  equipment  in new
markets and our upgrading of computer  capabilities in our existing markets.  We
are amortizing goodwill of $7.8 million from the P & C acquisition over 15 years
using the straight-line method of amortization.

     Due to the above factors, operating income increased $179,000, or 22.2%, to
$985,000  for the three  months  ended May 31, 1999 from  $806,000  for the same
period in fiscal 1998.

     Interest expense  increased  $119,000,  or 72.3%, to $284,000 for the three
months  ended May 31, 1999 from  $165,000  for the same  period in fiscal  1998,
primarily due to the indebtedness incurred in connection with the acquisition of
P & C.

     Provision for income taxes increased $33,000, or 14.2%, to $266,000 for the
three  months  ended May 31,  1999 from  $233,000  for the same period in fiscal
1998.

     As a result of the foregoing  factors,  net income  increased  $55,000,  or
14.4%, to $435,000 for the three months ended May 31, 1999 from $380,000 for the
same period in fiscal 1998.
<PAGE>
Liquidity and Capital Resources

     We have historically  satisfied our working capital  requirements with cash
from operations and revolving credit borrowings.  Our working capital at May 31,
1999 and  November 30, 1998 was $261,000  and $1.0  million,  respectively.  The
decrease in working capital is primarily the result of capital  expenditures and
payments on long-term  debt,  which were funded from  borrowings  on our line of
credit.

     Net cash used in operating  activities  was $159,000  during the six months
ended May 31, 1999  compared to net cash  provided by  operating  activities  of
$320,000  during the same period in fiscal 1998. The decrease from the first six
months of fiscal 1998 to the first six months of fiscal 1999 was  primarily  due
to reductions in liabilities for transit  district fees and income taxes,  which
were partially offset by increases in accounts payable and deferred revenue.

     Net cash used in investing  activities was $832,000 and $603,000 during the
six months ended May 31, 1999 and 1998,  respectively.  These  expenditures were
principally  related  to the  cost of  building  outdoor  advertising  displays,
upgrading our computer  capabilities and capital expenditures related to opening
new offices.

     Net cash provided by financing  activities was $745,000 and $283,000 during
the six months ended May 31, 1999 and 1998,  respectively,  which was  primarily
the  result of  borrowings  under  the our  operating  line of credit  offset by
payments of long-term  debt. As of May 31, 1999, we had  borrowings on this line
of  credit  of  $2.8  million  and  available  borrowing   capacity,   based  on
collateralized accounts, of $1.2 million.

     We expect to pursue a policy of  continued  growth  through  obtaining  new
transit district  agreements,  acquiring  out-of-home  advertising  companies or
assets and constructing new outdoor advertising  displays.  We intend to finance
our future  expansion  activities  using a combination  of internal and external
sources.  We believe that  internally  generated  funds and funds  available for
borrowing  under our bank credit  facilities  will be  sufficient to satisfy all
debt  service  obligations  and to finance our  existing  operations,  including
anticipated capital expenditures,  but excluding possible acquisitions,  for the
next twelve months.  We may require  additional debt or equity  financing in the
event of possible future  acquisitions,  if any, or if we obtain significant new
transit advertising agreements.

     In May 1999, we filed a  registration  statement  with the  Securities  and
Exchange  Commission to register for sale to the public  1,750,000 shares of our
common stock (assuming no exercise of the underwriters'  overallotment  option),
including  1,000,000 shares to be offered by us. The proposed offering price for
the  shares  has not yet been  determined.  If  completed,  we intend to use the
proceeds  from  the sale  received  by us to repay  bank  borrowings,  including
borrowings  used to finance the  acquisition of P & C. There can be no assurance
that the offering will be completed.

Seasonality

     Obie Media's revenues and operating results historically have fluctuated by
season. Typically, our results of operations are strongest in the fourth quarter
and  weakest in the first  quarter of our fiscal year  ending  November  30. Our
transit  advertising  operations are more seasonal than our outdoor  advertising
operations  because our outdoor  advertising  display space,  unlike our transit
advertising  display space, is and has been sold nearly  exclusively by means of
12-month  contracts.  We  believe  that  the  seasonality  of our  revenues  and
operating results will increase as our transit  advertising  operations continue
to  expand  more  rapidly  than  our  outdoor   advertising   operations.   This
seasonality,  together  with  fluctuations  in  general  and  regional  economic
conditions and the timing and expenses related to acquisitions, the obtaining of
new transit  agreements  and other actions we have taken to implement our growth
strategy,  have contributed to fluctuations in our periodic  operating  results.
These fluctuations likely will continue.  Accordingly, our results of operations
in any period may not be indicative of the results to be expected for any future
period.
<PAGE>
Market Risk

     We have  not  entered  into  derivative  financial  instruments.  We may be
exposed to future  interest  rate changes on our debt.  We do not believe that a
hypothetical 10% change in interest rates would have a material effect on
our cash flows.

Year 2000 Compliance

     The Year 2000 problem is the result of the inability of some  computers and
computer software programs to accurately recognize,  for dates after 1999, dates
which are often  expressed as a two-digit  number.  The  inability to accurately
recognize  date  information  could  adversely  affect  computer  operations and
calculations or cause computer systems and computer-dependent mechanical systems
not to operate at all.

     We  are  in  various  stages  of  assessing  our  internal   technical  and
non-technical  systems to ascertain whether they are Year 2000 compliant.  After
conducting  certain tests, we have identified one information  processing system
that is not Year 2000 compliant and have  determined  that the cost of replacing
or  updating  the  system  should  not  exceed  $25,000.  We  believe  that  our
information  processing systems used in financial  reporting and record-keeping,
and the majority of our incidental software systems,  are Year 2000 compliant or
can be made  compliant on a timely basis  without  material  cost. We are in the
process of phasing out all of our personal  computer  workstations  that are not
Year 2000  compliant.  We do not believe that a material  number of workstations
will  need  to  be  replaced.   We  have  only  generally   assessed  our  other
non-technical  systems,  including copiers and facsimile  machines,  in order to
identify systems that are not Year 2000 compliant.

     We have engaged the services of a full-time information  processing manager
to,  among other  duties,  assist in  identifying  any Year 2000 issues that may
arise in our  technical  and  non-technical  systems and implement any necessary
modifications. We intend to be Year 2000 compliant by November 30, 1999.

     We have only generally  assessed our relationships with third parties whose
inability to achieve timely Year 2000 compliance  could have a material  adverse
effect on our financial condition or results of operations.  These third parties
are primarily transit districts, advertising agencies, vendors, banks, utilities
and freight companies whose failure to achieve timely Year 2000 compliance could
delay customer  orders for our services,  delay receipt of payments by customers
for services rendered and disrupt other aspects of our operations.  We expect to
continue to evaluate Year 2000 issues with regard to our material  relationships
with third parties  through  1999.  Certain of such third parties are subject to
stringent   regulations  which  mandate  that  they  achieve  timely  Year  2000
compliance.  We do not believe that the  commodities  and services upon which we
rely  are of a kind or  nature  which is  particularly  sensitive  to Year  2000
issues. In addition,  we believe that our diversified customer and supplier base
should  prevent one or a few of our  vendors' or  customers'  failure to be Year
2000 compliant from having a material adverse effect on our financial  condition
or results of operations.

     We  have  yet to  determine  the  total  estimated  cost of our  Year  2000
compliance program.  Expenditures through May 31, 1999 are immaterial. We do not
expect that Year 2000 compliance  will have a material  adverse effect on us. We
believe that a reasonably  likely worst case  scenario as to the effect on us of
the Year 2000  compliance  issue is that several of our large  customers fail to
become Year 2000 compliant,  thus delaying their advertising orders and reducing
our revenues.

     We have not  developed  a  contingency  plan in the  event we or any of the
third parties with which we have a material  relationship fail to achieve timely
Year 2000  compliance.  We may develop a Year 2000 contingency plan depending on
the results of our internal and external assessment of Year 2000 issues. We will
continue  to update  our  assessment  of our Year 2000  readiness  as we receive
updated information from our Year 2000 compliance program.




<PAGE>
                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The former  operator of transit  advertising  displays for the Bi-State
Development Agency of the  Missouri-Illinois  Metropolitan District ("Bi-State")
in  metropolitan  St.  Louis  (including  St.  Clair  County,  Illinois),  Heard
Communications, Inc., doing business as Gateway Outdoor Advertising ("Gateway"),
is contesting  both  judicially  and  administratively  Bi-State's  award of the
transit advertising agreement for St. Louis to us. We began operating under such
agreement in July 1999.

         In the judicial  proceeding before the United States District Court for
the Eastern  District of  Missouri  commenced  June 30,  1999,  Gateway  seeks a
declaratory  judgment and an injunction  prohibiting  Bi-State  from  performing
under  the  contract.  We have  intervened  in the  proceeding  as a  defendant.
Gateway's challenge is primarily based on its claim that its final bid documents
relating to the contract  were  mishandled  after being sent to Bi-State in late
April 1999.  The court  denied a motion by Gateway  for a temporary  restraining
order which would have delayed the award of the contract to us.

         In the  administrative  proceeding  before  Bi-State  commenced July 2,
1999,  Gateway  alleges  that its bid  guaranteed  greater  minimum  revenue  to
Bi-State  over the term of the St. Louis  contract than did our bid and protests
Bi-State's  award of the  contract  to us. In each of the above  actions,  among
other remedies,  Gateway seeks to have our contract with Bi-State terminated and
bidding for the St. Louis  contract  reopened.  These actions are in preliminary
stages.  We intend to vigorously  defend  against  termination  of our St. Louis
contract.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits
    (27)Financial Data Schedule*

(b) No reports on Form 8-K were filed by the Company during the six months ended
May 31, 1999.

--------------------------
*  Incorporated  by reference to Amendement No. 1 to the Company's  Registration
   Statement on Form S-1 (Registration No. 333-79367) filed July 13, 1999.

Signature

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                              Obie Media Corporation


Date July 15, 1999                           By: /s/ James W. Callahan
                                                 James W. Callahan
                                                 Chief Financial Officer

Date July 15, 1999                           By: /s/ Michael E. Hubbard
                                                 Michael E. Hubbard
                                                 Corporate Controller