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                 August 31, 1998
                              --------------------------------------------------
       [ ] 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 September  27, 1998,  3,921,188  shares of the issuer's  common stock
were outstanding.

    This  report  contains 11 pages.  The only  exhibit  is the  Financial  Data
Schedule.
<PAGE>
<TABLE>
<CAPTION>
                             OBIE MEDIA CORPORATION
                           Consolidated Balance Sheets

                                     ASSETS

                                                                  August 31,              November 30,
Current Assets:                                                      1998                     1997
                                                            -----------------------  -------------------------
                                                                  (Unaudited)
<S>                                                         <C>                      <C>                 
       Cash                                                 $              90,895    $                  -0-
       Accounts receivable, net                                         3,433,357                2,878,360
       Prepaid expenses and other current assets                        1,157,193                  790,234
       Deferred income taxes                                              644,997                1,105,240
                                                            -----------------------  -----------------------

               Total current assets                                     5,326,442                4,773,834

Property and equipment, net                                            10,017,554                9,264,855
Other assets                                                              403,705                  245,733
                                                            -----------------------  -----------------------

               Total assets                                 $          15,747,701    $          14,284,422
                                                            =======================  =======================

                                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

       Checks outstanding in excess of cash deposits        $             224,552    $             173,611
       Current portion of long-term debt                                1,182,039                  859,323
       Line of credit                                                   1,527,198                  742,864
       Accounts payable                                                   177,661                  403,449
       Accrued expenses                                                 1,283,680                1,166,883
       Deferred revenue                                                   889,567                  781,204
                                                            -----------------------  -----------------------

               Total current liabilities                                5,284,697                4,127,334

Deferred income taxes                                                     733,103                  630,551
                                                            -----------------------  -----------------------

Long-term debt, less current portion                                    5,434,227                5,695,219
                                                            -----------------------  ----------------------- 

               Total liabilities                                       11,452,027               10,453,104

Minority interest in subsidiary                                            77,993                   35,424
                                                            -----------------------  -----------------------

Shareholders' equity:

Preferred stock, without par value, 10,000,000 shares
   authorized, no shares issued and outstanding                                -0-                      -0-

Common stock, without par value, 20,000,000 shares
   authorized, 3,871,188 and 3,855,484 shares issued and                6,316,864                6,173,967
   outstanding, respectively

Accumulated deficit                                                    (2,099,183)              (2,378,073)
                                                            -----------------------  -----------------------

               Total shareholders' equity                               4,217,681                3,795,894

               Total liabilities and shareholders' equity   $          15,747,701    $          14,284,422
                                                            =======================  =======================
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
                             OBIE MEDIA CORPORATION
                        Consolidated statements of Income

                                               Quarter Ended                   Nine Months Ended
                                                 August 31                         August 31
                                        ----------------------------      ----------------------------
                                           1998             1997             1998             1997
                                                (Unaudited)                       (Unaudited)
<S>                                     <C>              <C>              <C>              <C>
Revenues:
    Outdoor advertising                 $1,494,239       $1,378,664       $4,252,092       $3,928,437
    Transit advertising                  4,220,716        2,663,737       10,619,404        5,896,053
                                        -----------      -----------      -----------      -----------

    Gross revenues                       5,714,955        4,042,401       14,871,496        9,824,490

    Less agency commissions               (609,988)        (365,983)      (1,409,004)        (840,489)
                                        -----------      -----------      -----------      -----------

            Net revenues                 5,104,967        3,676,418       13,462,492        8,984,001

Operating expenses:
    Direct advertising expenses          3,293,890        2,265,809        8,556,792        5,333,420
    General and administrative             768,584          563,330        2,222,152        1,512,282
    Start up costs                          55,641           76,390           99,194          230,067
    Depreciation and amortization          227,898          159,497          581,578          477,961
                                        -----------      -----------      -----------      -----------

            Operating income               758,954          611,392        2,002,776        1,430,271

Other (income) expense:
    Interest expense                       148,100          134,370          479,342          424,970
    Minority interest in subsidiary         10,368             (725)          42,569           11,949
    Other                                       -0-         (11,000)              -0-         (51,492)
                                        -----------      -----------      -----------      -----------

            Income before taxes            600,486          488,747        1,480,865        1,044,844

Provision for taxes                        228,251          187,923          562,795          403,599


Net income                                $372,235         $300,824         $918,070         $641,245
                                        ===========      ===========      ===========      ===========

Basic earnings per share                     $0.10            $0.08            $0.24            $0.17

Shares used in basic per share
calculations                             3,867,199        3,853,152        3,859,419        3,851,048

Diluted earnings per share                   $0.09            $0.08            $0.23            $0.17

Shares used in diluted per share
calculations                             3,942,294        3,870,614        3,927,593        3,874,674
</TABLE>

See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
                             Obie Media Corporation
                      Consolidated Statements of Cash Flows


                                                Three Months Ended                   Nine Months Ended
                                          August 31,       August 31,           August 31,      August 31,
                                             1998             1997                 1998            1997
                                         ---------------------------------     -------------------------------
                                                   (Unaudited)                          (Unaudited)
Cash flows from operating activities:
<S>                                      <C>              <C>                  <C>              <C>          
     Net income                          $     372,235    $     300,824        $     918,070    $     641,245

     Adjustments to reconcile net
     income to net cash provided 
     by operating activities:

     Depreciation and amortization             227,898          159,497              581,578         477,961
     Changes in operating assets
        and liabilities                        151,274         (491,083)            (427,849)       (808,276)
                                         ---------------- ----------------     ---------------- --------------

          Net cash provided by (used in)
               operating activities            751,407          (30,762)           1,071,799         310,930
                                         ---------------- ----------------     ---------------- --------------

Cash flows from investing activities:

     Capital expenditures                     (647,644)        (313,121)          (1,250,897)     (1,117,401)
                                         ---------------- ----------------     ---------------- --------------

          Net cash used in investing
               activities                     (647,644)        (313,121)          (1,250,897)     (1,117,401)
                                         ---------------- ----------------     ---------------- --------------

Cash flows from financing activities:

     Proceeds from common stock
        issuance                                52,575               -0-              52,575              -0-
     Net payments on long-term debt           (215,957)        (198,544)            (636,276)       (535,424)
     Credit line borrowing, net                194,786          822,721              784,334         885,457
     Other financing activities                (44,272)        (235,412)              69,360          26,380
                                         ---------------- ----------------     ---------------- --------------

          Net cash provided by (used in)
               financing activities            (12,868)         388,765              269,993         376,413
                                         ---------------- ----------------     ---------------- --------------


Net increase (decrease) in cash                 90,895           44,882               90,895        (430,058)
Cash, beginning of period                           -0-              -0-                  -0-        474,940
                                         ---------------- ----------------     ---------------- --------------

Cash, end of period                      $      90,895    $      44,882        $      90,895    $     44,882
                                         ================ ================     ================ ==============

Supplemental disclosure of cash flow information:

Interest capitalized                     $        4,287   $         530         $     10,428     $     9,000
Cash paid for interest                          163,727         311,670              490,377         448,010
Cash paid for taxes                              73,910               -               73,910               -
Note payable issued to purchase outdoor
    advertising structures                            -               -              698,000               -
Issuance of stock to employee benefit plan       71,903          36,875               71,903          36,875
Income tax benefit of non-qualified              28,419               -               28,419               -
    stock option exercise
</TABLE>

See accompanying notes
<PAGE>
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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 August 31,  1998,  and the
results of  operations  and cash flows of the Company for the nine months  ended
August 31,  1998 and 1997.  During the  quarter  ended  August 31,  1998,  a new
subsidiary,  Obie Media Limited,  began operations in British Columbia,  Canada.
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, 1997 Form 10-KSB.  This  quarterly  report should be
read in conjunction with such annual report.


2.  Long-Term Borrowings

The  Company's  Term  Loan  Agreement   contains  certain  covenants   including
maintenance  of a cash flow coverage.  The Company was in compliance  with these
covenants at August 31, 1998.  The Company's  loan  agreements  were modified on
September 1, 1998.  See "Subsequent Events."


3.    Earnings Per Share

Earnings per common share is computed  based on the weighted  average  number of
common shares outstanding during the periods after consideration of the dilutive
effect of stock options.  All share and per share  information has been adjusted
to give retroactive  effect to an 11 - 10 stock split effected in November 1997.
In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings  Per Share." This
standard revises the disclosure  requirements of earnings per share,  simplifies
the  computation  of  earnings  per share and  increases  the  comparability  of
earnings per share on an  international  basis. The Company adopted SFAS No. 128
in the period  ended  February  28,  1998.  The earnings per share under the new
standard do not differ from those calculated under the previous standard.
<TABLE>
<CAPTION>
                                             Three Months Ended                      Nine Months Ended
                                             ------------------                      -----------------
                                   August 31, 1998     August 31, 1997     August 31, 1998     August 31,1997
                                   ---------------     ---------------     ---------------     --------------
<S>                                      <C>                 <C>                 <C>                <C>      
Basic shares (weighted average)          3,867,199           3,853,152           3,859,419          3,851,048
Dilutive effect of stock options            75,095              17,462              68,174             23,626
Diluted shares                           3,942,294           3,870,614           3,927,593          3,874,674
</TABLE>


<PAGE>
4.    Newly Issued Financial Accounting Pronouncements

Effective  in its fiscal year ending  November  30,  1999,  the Company  will be
required to adopt SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131
"Disclosures about Segments of an Enterprise and Related  Information." SFAS No.
130 established  standards for reporting and display of comprehensive income and
its components in a full set of general-purpose  financial statements.  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 these  pronouncements  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
established  accounting and reporting standards for all derivative  instruments.
SFAS No. 133 is effective for fiscal years  beginning  after June 15, 1999.  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.

5.    Related Party Transaction

In December,  1997, the Company exercised its option to purchase several outdoor
advertising  structures  from an  affiliated  partnership.  The  structures  had
previously been leased by the Company from the  partnership.  The purchase price
was $698,000. In accordance with generally accepted accounting  principles,  the
Company  recorded  only the book value  carried  on the books of the  affiliated
partnership at the date of purchase.  The difference  between the net book value
of these  assets and the  purchase  price has been  recorded  as an  addition to
accumulated deficit. The Company financed this purchase with an expansion of its
existing loan agreement with its lender.

6.    Subsequent Events

On September 1, 1998,  the Company  closed the  acquisition  of the stock of P&C
Media. P&C Media sells advertising in 20 transit districts in the Eastern United
States.  The Company  paid $7.5 million  cash,  ($6.0  million  current and $1.5
million deferred),  issued 50,000 shares of its common stock and is contingently
liable to issue another 75,000 shares  depending on the performance of P&C Media
in 1999 and 2000.  The  acquisition  will  be  accounted  for under the purchase
method of accounting, with the  Company  recording  most of the  purchase  price
as goodwill. Future periods will reflect the amortization of this goodwill.

On September 1, 1998,  the Company  borrowed an  additional  $7 million under an
expanded credit agreement with its lender.  These funds were used to pay the P&C
purchase  price and reduce  borrowings  under the  Company's  revolving  line of
credit. The revolving line of credit was increased from a limit of $2 million to
a limit of $4 million.


<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS

         The  following  discussion  of the  financial  condition and results of
operations of the Company  should be read in conjunction  with the  consolidated
financial  statements  included  elsewhere  in this Form 10-QSB.  The  following
discussion  contains certain  forward-looking  statements that involve 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 the following:  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 than  expected  acceptance  of the
Company's  non-traditional  display  products;  competitive  factors,  including
increased  competition  and price  pressures;  changes  in  regulatory  or other
external  factors;  and other factors  listed from time to time in the Company's
SEC reports,  including but not limited to, its "Risk Factors" discussion in the
Registration  Statement it filed in connection  with its initial public offering
(the "IPO").

New Transit Contracts

         On April 6,  1998,  the  Company  entered  into a  contract  to provide
advertising services to Capital Metropolitan  Transportation Authority "Austin",
in Austin,  Texas. Austin operates  approximately 300 vehicles.  The contract is
for two years with two additional  one-year options at the discretion of Austin.
The Company  agreed to pay Austin $1.4 million over the four-year  period or 53%
of net space revenues on the vehicles, whichever is greater.

         On June 23,  1998,  the Company was  informed by BC Transit that it had
been selected to provide transit  advertising  services to substantially  all of
the  transit  districts  in  British  Columbia,   Canada.  BC  Transit  operates
approximately 1,400 vehicles in these districts. The Company expects to sign two
separate  contracts to provide these services,  one covering  approximately  900
vehicles  in the city of  Vancouver,  British  Columbia,  and  another  contract
covering approximately 500 vehicles in the remainder of the province,  including
Vancouver  Island.  Both contracts are for a total term of seven years including
option years.  The Company expects to guarantee BC Transit CDN$37.7 million over
the  seven-year  period or 51% of net space revenue,  whichever is greater.  The
Company  established  a  wholly  owned  subsidiary,  Obie  Media  Limited,  a BC
corporation,  to conduct  Canadian  operations.  On August 3, 1998,  the Company
began  operations in British  Columbia.  The final terms of the  contract(s) are
still being negotiated.

Acquisition

         On June 10, 1998,  the Company signed a letter of intent to acquire the
stock of P&C Media. P&C Media sells transit  advertising under contracts with 20
transit  agencies  in  the  Eastern  and  Midwestern  United  States,  including
Cleveland and Cincinnati, Ohio; Milwaukee, Wisconsin; Hartford, Connecticut; and
Ft.  Lauderdale,  Florida.  The transit districts under agreement with P&C Media
operate approximately 3,000 vehicles.  The Company agreed to pay a cash purchase
price of $7.5  million,  plus up to 125,000  shares of Obie Media common  stock,
depending  on P&C  Media's  future  earnings.  P&C  Media's  president  and sole
shareholder,  Mr. Wayne P. Schur,  will serve as president of the  Company's P&C
Media subsidiary and will become an Executive Vice President of the Company.  On
September 1, 1998,  the Company  completed  the  acquisition  of P&C Media.  See
footnote 6 above.


<PAGE>
Three Months Ended August 31, 1998 Compared to the Three Months Ended August 31,
1997

         Gross revenues  increased $1.7 million,  or 41.4%,  to $5.7 million for
the three  months  ended  August 31, 1998  compared to $4.0 million for the same
period in 1997.  This increase was  principally due to revenues from new transit
districts.  Agency  discounts  increased  $244,000,  or 66.7%,  to $610,000 from
$366,000,  primarily due to the large  proportion of existing agency business in
the new markets.

         Direct advertising  expenses increased $1.0 million,  or 45.4%, to $3.3
million for the three months ended August 31, 1998  compared to $2.3 million for
the  comparable  period in 1997.  This  increase  was  primarily  the  result of
increased  revenues.  Direct  advertising  expenses increased as a percentage of
gross  revenues due to the faster growth of the transit  business,  where costs,
especially occupancy costs, are higher than in the outdoor business.

         The Company  incurred start up costs of $56,000 in the third quarter of
1998 and $76,000 in the comparable  period in 1997 associated with attempting to
obtain new transit district  agreements and pre-opening costs in locations where
the Company has new transit agreements. The Company will incur start-up costs in
the future.  The amount  will vary,  both in total cost and as a  percentage  of
revenues,  depending on the complexity and number of proposals for new districts
and the success of the Company in obtaining contracts for new districts.

         General and  administrative  expense increased  $205,000,  or 36.4%, to
$769,000  for the quarter  ended  August 31, 1998 from  $563,000 for the quarter
ended August 31, 1997.  The increase in general and  administrative  expenses is
less,  in  percentage  terms,  than the increase in revenues.  As the  Company's
revenues grow, general and administrative costs will grow, but should decline as
a percentage of revenues.

         Depreciation and amortization expense increased $68,000, or 42.9%, from
$159,000  for the  three  months  ended  August  31,  1997 to  $228,000  for the
comparable  period in 1998,  primarily due to investments in office equipment in
new markets and  upgrading the computer  capability  in the  Company's  existing
operations.

         Due to the above  factors,  operating  income  increased  $148,000,  or
24.1%, to $759,000 for the three months ended August, 31, 1998 from $611,000 for
the same period in 1997.

         Interest  expense  remained  relatively  constant  between the periods,
increasing  $14,000,  or 10.2%,  from  $134,000 in the third quarter of 1997, to
$148,000 in the third quarter of 1998. Due to the  acquisition of P&C Media (See
"Acquisition"  above),  interest  expense  is  expected  to  increase  in future
periods.

         Provision for income taxes increased  proportionate  to the increase in
income before tax.

         As a result of the foregoing  factors,  net income for the three months
ended August 31, 1998 increased  $71,000 to $372,000 as compared to $301,000 for
the same period in 1997.



<PAGE>
Nine Months Ended August 31, 1998  Compared  to the Nine Months Ended August 31,
1997

         Gross revenues  increased $5.0 million,  or 51.4%, to $14.9 million for
the nine  months  ended  August 31, 1998  compared to $9.8  million for the same
period in 1997. This increase was principally due to increased  transit revenues
from new districts,  such as British Columbia,  and transit districts  operating
less  than a full  nine  months  in 1997,  primarily  Dallas.  Agency  discounts
increased  $569,000  or 67.6% to $1.4  million in the first nine  months of 1998
from  $840,000  in the  comparable  period in 1997,  primarily  due to the large
proportion of existing agency business in the new markets.

         Direct advertising  expenses increased $3.2 million,  or 60.4%, to $8.6
million for the nine months ended  August 31, 1998  compared to $5.3 million for
the  comparable  period in 1997.  This  increase  was  primarily  the  result of
increased  revenues.  Direct  advertising  expenses increased as a percentage of
gross  revenues due to the faster growth of the transit  business,  where costs,
especially occupancy costs, are higher than in the outdoor business.

         The Company incurred start up costs of $99,000 in the first nine months
of 1998 and $230,000 in the comparable period in 1997 associated with attempting
to obtain new transit  district  agreements and  pre-opening  costs in locations
where the Company has new transit  agreements.  The Company will incur  start-up
costs  in the  future.  The  amount  will  vary,  both in  total  cost  and as a
percentage of revenues,  depending on the complexity and number of proposals for
new  districts  and the success of the Company in  obtaining  contracts  for new
districts.

         General and  administrative  expense increased  $710,000,  or 46.9%, to
$2.2 million for the nine months ended August 31, 1998 from $1.5 million for the
nine  months  ended  August 31,  1997.  The  increase  resulted  primarily  from
increased costs of administering  new districts and districts which operated for
less than nine  months in 1997.  The  increase  in  general  and  administrative
expenses is less, in  percentage  terms,  than the increase in revenues.  As the
Company's revenues grow, general and administrative  costs will grow, but should
decline as a percentage of revenues.

         Depreciation and amortization  expense  increased  $104,000,  or 21.7%,
from  $478,000  for the nine months  ended  August 31, 1997 to $582,000  for the
comparable  period in 1998,  primarily  due to  investments  in equipment in new
markets  and  upgrading  the  computer  capability  in  the  Company's  existing
operations.

         Due to the above  factors,  operating  income  increased  $573,000,  or
40.0%,  to $2.0  million for the nine months  ended  August,  31, 1998 from $1.4
million for the same period in 1997.

         Interest expense remained relatively constant between the periods.  Due
to the acquisition of P&C Media (See  "Acquisition"  above) interest  expense is
expected to increase in future periods.

         Provision for income taxes increased  proportionate  to the increase in
income before tax.

         As a result of the  foregoing  factors,  net income for the nine months
ended August 31, 1998 increased $277,000 as compared to the same period in 1997.

<PAGE>
Liquidity and Capital Resources

         The  Company's  working  capital at August 31,  1998 was  $42,000.  The
decrease in working  capital  during the quarter was  primarily due to increased
working capital needs from the Company's  growth net of refinancing a short-term
note payable with long-term borrowings.

         For the nine  months  ended  August  31,  1998,  net cash  provided  by
operating  activities  was  $1.1  million,  an  increase  of  $761,000  from the
corresponding  period in 1997,  primarily due to the increase in net income. Net
cash used in  investing  activities  increased to $1.3 million in the first nine
months of 1998 from $1.1 million in the comparable period in 1997, primarily due
to the purchase of real  property in Vancouver,  British  Columbia in connection
with beginning  operations in Canada. Net cash provided by financing  activities
was  $270,000  in the first three  quarters of 1998  compared to $376,000 in the
first  three  quarters  of 1997.  Financing  cash  was  provided  previously  by
borrowings on the Company's line of credit, net of repayments of long-term debt.

         At August 31,  1998,  the Company had  outstanding  borrowings  of $8.1
million, of which $6.6 million was pursuant to long-term credit agreements,  and
$1.5  million  was  pursuant  to the  Company's  operating  line of  credit.  On
September 1, 1998, in connection with the acquisition of P&C Media,  the Company
expanded  its credit  arrangements  with its  lender.  The  Company  borrowed an
additional $7 million,  using such funds to pay the P&C Media purchase price and
to reduce borrowings under the Company's  operating line of credit. In addition,
on September 1, 1998, the Company's  operating line of credit was increased from
a maximum  of $2  million  to a maximum of $4  million.  At  September  1, 1998,
borrowings of $627,000 were outstanding  under the expanded line of credit,  and
the  Company's   available   borrowing   capacity  under  the  line,   based  on
collateralized accounts, was $3.2 million.

         The Company believes that cash generated from operations and borrowings
under  its  credit  agreements  will be  sufficient  to  finance  the  Company's
operations, including anticipated capital expenditures, through fiscal 1998.

Seasonality

         The Company's transit  advertising  revenues have exhibited some degree
of seasonality.  Typically,  the Company  experiences its lowest revenues during
the first quarter of each year.  The Company  expects this trend to continue.  A
reduction  in revenues in any quarter is likely to result in a  period-to-period
decline in operating performance and net income.

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 affect  computer  operations and
calculations or cause computer systems and computer-dependent mechanical systems
not to operate at all.


<PAGE>
         The Company is in various  stages of assessing  its internal  technical
and  non-technical  systems to ascertain  whether they are Year 2000  compliant.
After conducting  tests,  the Company has identified one information  processing
system  which is not Year 2000  compliant  and has  determined  that the cost of
replacing or updating the system should not exceed $25,000. The Company believes
that  its  information  processing  systems  used  in  financial  reporting  and
record-keeping, and the majority of its incidental software systems, are, or can
be made  without  material  cost,  Year 2000  compliant.  The  Company is in the
process of phasing out all of its personal  computer work stations which are not
Year 2000  compliant.  It does not  believe  that a material  number of its work
stations  will  need to be  replaced.  The  Company  has  not  yet  definitively
determined  the  extent  to which its  information  processing  systems  used in
designing and producing art work are Year 2000 compliant.  Further,  the Company
has only  generally  assessed its  non-technical  systems which may be dependent
upon computer  components,  including telephone and voice-mail systems, in order
to identify systems that are not Year 2000 compliant

         The  Company  has  engaged  the  services  of a  full-time  information
processing  manager to, among other duties,  assist in identifying any Year 2000
issues which may arise in its technical and non-technical  systems and implement
any  necessary  modifications.  The Company  expects to  complete  its Year 2000
assessment of its internal technical and non-technical systems by May 31, 1999.

         The Company has only generally  assessed its  relationships  with third
parties  whose  inability to achieve  timely Year 2000  compliance  could have a
material  adverse  effect on the  Company's  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 the
Company's services, delay receipt of payments by customers for services rendered
and disrupt other aspects of the Company's operations.  The Company expects that
its  general  assessment  of  Year  2000  issues  with  regard  to its  material
relationships with third parties will continue through 1999. However, certain of
such third parties are subject to stringent  regulations which mandate that they
achieve timely Year 2000 compliance.  Further, the Company does not believe that
the  commodities and services upon which it relies are of a kind or nature which
is particularly sensitive to Year 2000 issues. In addition, the Company believes
that its  diversified  customer and supplier base should prevent one or a few of
its  vendors'  or  customers'  failure to be Year 2000  compliant  from having a
material adverse effect on its financial condition or results of operations.

         The Company has yet to determine the total  estimated  cost of its Year
2000 compliance program. Expenditures through August 31, 1998 are immaterial.

         The Company believes that a reasonably likely worst case scenario as to
the effect on it of the Year 2000 compliance  issue is that several of its large
customers fail to become Year 2000  compliant  thus delaying  their  advertising
orders and reducing the Company's  revenues.  In addition,  the Company could be
required to replace its  information  processing  systems used in designing  and
producing  art work with  systems  which are Year 2000  compliant.  The  Company
believes  that  its  replacement  of such  systems  would  result  in a  capital
expenditure by it of not more than $50,000.

         The  Company  has not  developed  a  contingency  plan in the event the
Company or any of the third  parties  with which it has a material  relationship
fail to achieve timely Year 2000 compliance. The Company may develop a Year 2000
contingency plan after it has completed its internal and external  assessment of
Year 2000 issues  which may affect it. The Company  will  continue to update its
assessment of its Year 2000 readiness as it receives  updated  information  from
its Year 2000 compliance program.


<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders

         The Company held its annual meeting of  shareholders  on April 3, 1998.
At the meeting,  Brian B. Obie,  Delores M. Mord,  Randall C. Pape',  Stephen A.
Wendell and Richard C.  Williams  were  reelected to the Board of Directors  for
one-year terms. Voting on the election of directors was as follows:

                                  Votes            Votes           Broker
                                   For            Withheld        Non-Votes

         Brian B. Obie             2,988,088              0           0
         Delores M. Mord           2,988,088              0           0
         Randall C. Pape'          2,988,088              0           0
         Stephen a. Wendell        2,988,088              0           0
         Richard C. Williams       2,987,858            150           0

Item 6. Exhibits and Reports on Form 8-K

(a)   Exhibits
     (27)          Financial Data Schedule


(b)   A report  on Form 8-K was  filed  by the  Company  on  September  1,  1998
reporting the acquisition of P&C Media.



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    Octoer 14, 1998        By: /s/ James W. Callahan
    ----------------------         ---------------------      
                                   James W. Callahan
                                   Chief Financial Officer

                                   Signing on behalf of the registrant and
                                   as principal financial and accounting officer