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 September 30, 1996

                      Commission File No. 0-17342

                        LIVE ENTERTAINMENT INC.
        (Exact name of Registrant as specified in its charter)


                 Delaware                           95-4178252
      (State or other jurisdiction of            (I.R.S. Employer
       incorporation or organization)           Identification No.)

   15400 Sherman Way, Van Nuys, California             91406
   (Address of principal executive offices)          (Zip Code)

  Registrant's telephone number, including area code:  (818) 988-5060


     Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
                            Yes  X   No    

     Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
                            Yes  X   No    

     As of October 11, 1996, there were 2,448,267 shares of the
Registrant's Common Stock, 3,819,802 shares of the Registrant's Series
B Cumulative Convertible Preferred Stock and 15,000 shares of the
Registrant's Series C Convertible Preferred Stock outstanding.




<PAGE>
               LIVE ENTERTAINMENT INC. AND SUBSIDIARIES



                                 INDEX




PART I - FINANCIAL INFORMATION                                    Page


 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED):

         Condensed Consolidated Balance Sheets at
          September 30, 1996 and December 31, 1995 . . . .          1

         Condensed Consolidated Statements of
          Operations for the three and nine months ended
          September 30, 1996 and 1995. . . . . . . . . . .          2

         Condensed Consolidated Statements of
          Cash Flows for the nine months ended
          September 30, 1996 and 1995. . . . . . . . . . .          3

         Notes to Condensed Consolidated Financial
          Statements . . . . . . . . . . . . . . . . . . .        4-7


 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS. . . . . . . . . . . . . . . . . .       8-13




PART II - OTHER INFORMATION


 ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . .      14-15


 ITEM 3(b).DEFAULTS UPON SENIOR SECURITIES - DIVIDEND
          ARREARAGE ON PREFERRED STOCK . . . . . . . . . .         15


 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . .      15-16




<PAGE>
                          PART I - FINANCIAL INFORMATION

                     LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                              (Amounts in Thousands)


                                                     September 30, December 31,
                                                         1996          1995   
ASSETS

Cash and cash equivalents, including restricted
 cash of $284 and $1,352 . . . . . . . . . . . . . . .  $ 13,012      $ 49,487 
Accounts receivable, less allowances of $16,171
 in 1996 . . . . . . . . . . . . . . . . . . . . . .      15,940            -- 
Inventories. . . . . . . . . . . . . . . . . . . . . .     6,582         4,813 
Property and Equipment, net. . . . . . . . . . . . . .       972         1,145 
Film Costs, net of accumulated amortization
 of $546,380 and $519,604. . . . . . . . . . . . . . .    73,680        66,700 
Other Assets . . . . . . . . . . . . . . . . . . . . .     1,993         1,353 
Goodwill, net of accumulated amortization of
 $42,985 and $40,042 . . . . . . . . . . . . . . . . .    23,004        25,947 
                                                        $135,183     $ 149,445 

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable . . . . . . . . . . . . . . . . . . .    $6,733     $   6,675 
Accrual for returns and advertising net of accounts
 receivable of $15,447 in 1995 . . . . . . . . . . . .        --         3,430 
Accrued expenses . . . . . . . . . . . . . . . . . . .    15,191        12,451 
Notes payable. . . . . . . . . . . . . . . . . . . . .     5,866         8,333 
Increasing Rate Senior Subordinated Notes due
 1999, including capitalized interest of
 $9,175 and $13,184. . . . . . . . . . . . . . . . . .    49,175        53,184 
Film obligations . . . . . . . . . . . . . . . . . . .    10,261        18,559 
Dividends payable. . . . . . . . . . . . . . . . . . .     3,780         2,309 
Income taxes payable and deferred income taxes . . . .     7,146         6,484 
 Total liabilities . . . . . . . . . . . . . . . . . .    98,152       111,425 

Stockholders' Equity:
Series B Cumulative Convertible Preferred Stock--
 authorized 9,000,000 shares; $1.00 par value;
$38,198,000 and $41,970,000 liquidation preference; 
3,819,000 and 4,197,000 shares outstanding . . . . . .     3,819         4,197 
Series C Convertible Preferred Stock--15,000 shares
 authorized and outstanding; $1.00 par value;
 $17,637,000 liquidation preference. . . . . . . . . .        15            15 
Common Stock -- authorized 24,000,000 shares; $0.01
 par value; 2,448,267 and 2,418,424 shares outstanding        24            24 
Additional paid-in capital . . . . . . . . . . . . . .   125,138       129,668 
Retained deficit . . . . . . . . . . . . . . . . . . .   (91,965)      (95,884)
                                                          37,031        38,020 
                                                        $135,183     $ 149,445 


            See notes to condensed consolidated financial statements.
            
<PAGE>
                  LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                  (Amounts in Thousands, Except Per Share Data)

                                           Three Months Ended Nine Months Ended
                                               September 30,    September 30,
                                              1996      1995   1996      1995 

 Net Sales . . . . . . . . . . . . . . . . . $36,440 $40,060  $109,262 $107,021 
Cost of goods sold . . . . . . . . . . . . .  30,091  36,814    89,779   88,749 
   GROSS PROFIT. . . . . . . . . . . . . . .   6,349   3,246    19,483   18,272 
Operating Expenses:
 Selling, general and administrative expenses  4,087   3,778    12,145   10,546 
 Amortization of goodwill. . . . . . . . . .     981     981     2,943    2,943 
                                               5,068   4,759    15,088   13,489 
                                               1,281  (1,513)    4,395    4,783 
Disposal of VCL/Carolco Communications GmbH:
 Net Sales . . . . . . . . . . . . . . . . .      --   5,261        --   16,143 
 Costs and Expenses. . . . . . . . . . . . .      --   5,261        --   16,143 
   . . . . . . . . . . . . . . . . . . . . .      --      --        --       -- 
 Gain on disposal of VCL . . . . . . . . . .      --   2,913        --    2,913 
                                                  --   2,913        --    2,913 
   OPERATING PROFIT  . . . . . . . . . . . .   1,281   1,400     4,395    7,696 
 Interest and other income . . . . . . . . .     229     723     1,541    1,816 
 Interest expense. . . . . . . . . . . . . .    (301)   (528)   (1,113)  (1,355)
   INCOME BEFORE INCOME TAXES. . . . . . . .   1,209   1,595     4,823    8,157 
 Income tax expense. . . . . . . . . . . . .      --      --       904      600 
   NET INCOME  . . . . . . . . . . . . . . .  $1,209 $ 1,595   $ 3,919  $ 7,557 

Net income (loss) per common share:
   Primary . . . . . . . . . . . . . . . . .  $ 0.08  $(0.15)  $  0.45  $   .49 
   Fully diluted . . . . . . . . . . . . . .  $ 0.08  $(0.15)  $  0.29  $   .49 

Weighted average number of shares outstanding:
   Primary . . . . . . . . . . . . . . . . .   2,570   2,442     2,598    2,435 
   Fully diluted . . . . . . . . . . . . . .   2,570   2,442    13,482    2,435 



            See notes to condensed consolidated financial statements.
            
<PAGE>
                  LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                              (Amounts in Thousands)


                                                        Nine Months Ended
                                                           September 30,
                                                        1996          1995   
OPERATING ACTIVITIES:
 Net income. . . . . . . . . . . . . . . . . . . . . .   $ 3,919       $ 7,557 
 Adjustments to reconcile net income to net cash
 (used for) provided by operating activities:
 Depreciation and amortization of property
  and equipment. . . . . . . . . . . . . . . . . . . .       467           532 
 Amortization of goodwill. . . . . . . . . . . . . . .     2,943         2,943 
 Amortization of and adjustments to film costs . . . .    59,669        48,098 
 Income taxes payable and deferred income taxes. . . .       662          (352)
 (Increase) decrease in operating assets:
   Accounts receivable . . . . . . . . . . . . . . . .   (19,370)       (5,199)
   Inventories . . . . . . . . . . . . . . . . . . . .    (1,769)         (118)
   Assets held for sale. . . . . . . . . . . . . . . .         --       13,572 
   Other assets. . . . . . . . . . . . . . . . . . . .      (640)          348 
 Increase (decrease) in operating liabilities:
   Accounts payable and accrued expenses . . . . . . .     2,798         2,366 
   Liabilities related to assets held for sale . . . .        --       (13,542)
   Film cost additions . . . . . . . . . . . . . . . .   (66,649)      (27,051)
   Payments on film obligations. . . . . . . . . . . .    (8,298)       (2,924)
    Cash (used for) provided by operating activities     (26,268)       26,230 
INVESTING ACTIVITIES:
 Acquisition of property and equipment . . . . . . . .      (294)         (399)
     Cash (used for) investing activities. . . . . . .      (294)         (399)
FINANCING ACTIVITIES:
 Issuance of long-term obligations . . . . . . . . . .        --        10,000 
 Payments on long-term obligations . . . . . . . . . .    (6,476)       (7,850)
 Repurchase of Series B Cumulative Convertible
   Preferred Stock . . . . . . . . . . . . . . . . . .    (2,332)       (5,460)
 Dividends paid on Series B Cumulative Convertible
   Preferred Stock . . . . . . . . . . . . . . . . . .    (1,273)       (2,325)
   Issuance of Common Stock. . . . . . . . . . . . . .       168            -- 
    Cash (used for) financing activities . . . . . . .    (9,913)       (5,635)
    (Decrease) increase in cash and cash equivalents     (36,475)       20,196 
    Cash and cash equivalents at beginning
     of period . . . . . . . . . . . . . . . . . . . .    49,487        24,264 
    Cash and cash equivalents at end of period . . . .  $ 13,012     $  44,460 




            See notes to condensed consolidated financial statements.
            
<PAGE>
             LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
                        September 30, 1996

Note 1 - Summary of Significant Accounting Policies

   Background and Operations:  LIVE Entertainment Inc. ("LIVE" or
the "Company") was formed in 1988 and its largest ongoing
businesses are LIVE Film & Mediaworks Inc. ("LFM") (formerly LIVE
Home Video Inc.) and LIVE International ("LI"), which primarily
acquire rights to produce and distribute theatrical motion
pictures, children's films and special interest programs (including
CD-ROM) which they market and distribute in all media to
wholesalers, retailers and consumers in the United States and
Canada (LFM) and internationally (LI).  As part of its
international activities, the Company also owned an 81% interest in
VCL/Carolco Communications GmbH ("VCL"), a home video distribution
and marketing company headquartered in Munich, Germany.  VCL's
year-end is November 30.  In November 1995, LIVE completed a sales
transaction providing for the disposal of its interest in VCL.  The
Company's continuing operations are principally in a single
business segment, the production, distribution and retail sale of
a broad variety of film related entertainment software products.

   Basis of Presentation:  The accompanying consolidated financial
statements and footnotes are unaudited and are condensed, as
contemplated by the Securities and Exchange Commission under Rule
10-01 of Regulation S-X.  Accordingly, they do not contain all
disclosures required by generally accepted accounting principles,
but in the opinion of management of LIVE, include all adjustments
(consisting only of normal recurring accruals) necessary to fairly
state the financial position and results of operations of LIVE. 
The financial statements include the accounts of LIVE and its
subsidiaries - LFM, LI and VCL (1995) and have been restated to
account for VCL as a disposal of a portion of a line of business. 
All significant intercompany balances and transactions have been
eliminated.

  LIVE suggests that these condensed consolidated financial
statements be read in conjunction with its consolidated financial
statements for the year ended December 31, 1995 and related notes
thereto included on Form 10-K filed with the Securities and
Exchange Commission.

   Certain reclassifications of 1995 amounts have been made in
order to conform with the 1996 financial statement presentation.

<PAGE>
Net Income Per Common Share: 

Primary:

   Per share information has been determined on the basis of
2,570,177 and 2,598,017 weighted average number of shares
outstanding for the three and nine months ended September 30, 1996
and 2,441,584 and 2,435,054 weighted average number of shares
outstanding for the three and nine months ended September 30, 1995,
respectively.  The net income per common share for the three and
nine months ended September 30, 1996 and 1995 gives effect to
dividends of $1,006,000 and $2,744,000, and $696,000 and
$2,271,000, respectively, on both the Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock") and the
Series C Convertible Preferred Stock ("Series C Preferred Stock"). 
The net income for the three and nine months ended September 30,
1995 gives effect to the accretion of the redemption value of the
Series B Preferred Stock of $1,259,000 and $4,089,000,
respectively.

Fully Diluted:

   Per share information has been determined on the basis of
13,481,331 weighted average number of shares outstanding for the
nine months ended September 30, 1996, assuming conversion of the
Series B Preferred Stock and the Series C Preferred Stock.  Such
conversion was not assumed for the three months ended September 30,
1996 and the three and nine months ended September 30, 1995,
because the effect thereof would have been antidilutive.


Note 2 - Equity Rationalization

    On August 21, 1996 the Company filed a Schedule 13E-4 with the
Securities and Exchange Commission which outlined a proposed
exchange offer and equity recapitalization plan (the "Equity
Rationalization").  The Company expects to offer to exchange a
combination of cash and common stock, or all common stock, for the
Company's existing outstanding Series B Preferred Stock and Series
C Preferred Stock.  In addition, the Company is seeking to replace
its existing $30 million working capital facility with a larger
working capital facility, and to refinance its current outstanding
$40 million Increasing Rate Senior Subordinated Notes due 1999 (the
"Increasing Rate Notes").   The Company believes that the Equity
Rationalization, if completed, will simplify its existing complex
capital structure, provide additional liquidity for growth and
expansion, and reduce the cash dividend cost of its existing equity
securities.

<PAGE>
    Failure of the Company to consummate the Equity Rationalization
at this time would require the Company to begin accumulating cash
to retire the Increasing Rate Notes, of which $20 million are due
in 1998 and the remaining $20 million in 1999, and would therefore
reduce the funds available for the Company's operations.

   The completion of the Equity Rationalization is subject to
obtaining satisfactory commitments for refinancing sources of
senior and subordinated debt, approval by the Company's
shareholders and regulatory agencies, completion of legal
documentation, and acceptance of the tender offer if and when made. 
As such, no assurances can be given that the Company's efforts will
be successful.

Note 3 - Series B Preferred Stock

    The Series B Preferred Stock has a liquidation value of $10.00
per share.  Holders of the Series B Preferred Stock are entitled to
an annual dividend, payable quarterly, of 10% ($1.00 per share) if
paid in cash and 12% if paid in kind.  Dividends of $818,000 ($0.21
per share) were accrued on the Series B Preferred Stock for the
quarter ending September 30, 1996.  The Company may redeem the
Series B Preferred Stock at any time at 100% of the liquidation
value.

   Although LIVE has no obligation to redeem any Series B Preferred
Stock, subject to the availability of funds and the prior approval
of its Board of Directors and its lenders, LIVE may acquire shares
of its Series B Preferred Stock from time to time, either through
private purchases or through open market purchases.  In March 1996
the Company purchased 377,500 shares of the Series B Preferred
Stock at an average price of approximately $6.00 per share.

Note 4 - Commitments

   The Company has certain existing and potential commitments for
film acquisitions, theatrical prints, advertising and release costs
which will require the use of a substantial portion of the existing
cash balances on-hand over the next fiscal quarter of 1996. 

Note 5 - Litigation

   LIVE had been the defendant in two purported class action law
suits that were filed in 1992.  The Company had requested the U.S.
District Court to dismiss both cases for non-prosecution due to the
fact that the plaintiffs had taken no action in either of these
cases for over one year. On April 8, 1996, the U.S. District Court
granted LIVE's request and dismissed both cases.

<PAGE>
   In May 1994, a breach of contract claim was filed against a
subsidiary of the Company, claiming nonpayment of royalties from
licensing of films in foreign territories and deprivation of
royalty payments as a result of misallocation of certain values
asserted with licensed film properties.  Films subject to the
complaint were contained in the assets of Vestron, Inc. purchased
by the Company in July 1991, and the period covered included the
license periods both prior to, and subsequent to, the acquisition
date by the Company.  The Company filed a reply brief (including a
Motion to Dismiss) on October 5, 1994, and such Motion to Dismiss
was granted on the grounds of forum non conviens.  Plaintiff filed
a complaint in New York on March 22, 1995.  The Company filed its
answer, affirmative defenses and counterclaim on April 20, 1995. 
Plaintiff filed a motion for class certification on September 8,
1995 to which the Company filed its opposition to the motion on
November 6, 1995.  After limited pre-trial discovery, a motion for
class certification was argued on December 6, 1995.  By order dated
June 21, 1996 and filed on June 25, 1996, the Court in this action
determined that the action should be maintained as a class action
under the provisions of Section 901(a) of the New York Civil Practice Law
and Rules.

   The Company filed an appeal from the Order granting class
certification on July 19, 1996 and filed a Motion for
Decertification of the class on July 24, 1996.  A hearing on the
motion was heard on September 4, 1996 and is currently under
submission before the Court.

   Management and counsel to LIVE are unable to predict the
ultimate outcome of the above-described action at this time. 
However, LIVE and the other defendants believe that this lawsuit is
without merit and intend to defend it vigorously.  Accordingly, no
provision for any liability which may result has been made in
LIVE's consolidated financial statements.  In the opinion of
management, this action, when finally concluded and determined,
will not have a material adverse effect upon LIVE's financial
position or results of operations.

   Other than as described above, there are no material legal
proceedings to which LIVE or any of its subsidiaries are a party
other than ordinary routine litigation in the ordinary course of
business.  In the opinion of management (which is based in part on
the advice of outside counsel), resolution of these matters will
not have a material adverse impact on LIVE's financial position or
results of operations.

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

Results of Operations

    Three Months Ended September 30, 1996 Compared to Three Months
   Ended September 30, 1995

Continuing Operations

   Net sales of LIVE decreased to $36,440,000 during 1996 compared
to $40,060,000 during 1995.  The decrease of $3,620,000, or 9.0%,
is primarily attributable to the successful sell-through release of
Stargate in the third quarter of 1995, for which there was no
comparable sell-through title released in 1996.  The decrease in
revenue was partially offset by increases in international and
theatrical sales including sales of The Arrival and The Substitute
and increases in video rental and sublicense revenue.

  Gross profits of LIVE increased $3,103,000, or 95.6%, to
$6,349,000 during 1996 compared to $3,246,000 during 1995.  As a
percentage of sales, gross profit increased to 17.4% during 1996
from 8.1% during 1995.  The increase in gross profit dollars and as
a percentage of sales is primarily due to increased video rental
sales and lower costs associated with international royalty
overages, television sales and sublicense revenue received in 1996.

   Selling, general and administrative expenses of LIVE increased
$309,000, or 8.2%, to $4,087,000 during 1996 compared to $3,778,000
during 1995.  As a percentage of sales, the amount increased to
11.2% during 1996 from 9.4% during 1995.  The dollar increase is
primarily a result of increased overhead costs associated with
expansion of the Company's business into theatrical, international
and television operations.  The percentage increase is primarily
due to the decrease in sales.

   Interest and other income decreased $494,000 or 68.3% to
$229,000 during 1996 compared to $723,000 during 1995.  This
decrease was primarily the result of interest earned on lower cash
balances on-hand during the third quarter of 1996 compared to the
third quarter of 1995.

  Interest expense of LIVE decreased $227,000, or 43.0%, to
$301,000 during 1996 compared to $528,000 during 1995.  Included in
interest expense for the three months ended September 30, 1995 is
$186,000 related to the increase in the interest rate on the
Increasing Rate Senior Subordinated Notes due 1999 (the "Increasing
Rate Notes") from 10% to 12% per annum, which was provided for in
an amendment to the Indenture governing the Increasing Rate Notes. 
<PAGE>
The interest rate increase on the Increasing Rate Notes was to
occur in March, 1996, and such interest from and after that date is
included in the carrying value of the Increasing Rate Notes in
accordance with Financial Accounting Standards Board Statement No.
15, Accounting for Debtors and Creditors for Troubled Debt
Restructuring and therefore not included in interest expense.

   Preferred dividends of $1,006,000 in 1996 and $696,000 in 1995
represent the 5% cash dividend accrued on the Series B Preferred
Stock through May 1996, with 10% being accrued thereafter, and the
5% cash dividend accrued on the Series C Preferred Stock, as well
as, in the case of the Series C Preferred Stock, additional 5%
dividends on accrued but unpaid dividends.

  Nine Months Ended September 30, 1996 Compared to Nine Months
  Ended September 30, 1995

Continuing Operations

   Net sales of LIVE increased to $109,262,000 during 1996 compared
to $107,021,000 during 1995.  The increase of $2,241,000, or 2.1%,
is primarily attributable to theatrical and international sales
including sales of The Substitute and The Arrival and increased
sublicense revenue in 1996.  The increase in revenue was offset by
decreased rental and sell-through video sales in 1996 which is
attributable to the successful video rental and sell-through
release of Stargate in 1995, for which there was no comparable
video title released in 1996.

  Gross profits of LIVE increased $1,211,000, or 6.6%, to
$19,483,000 during 1996 compared to $18,272,000 during 1995.  As a
percentage of sales, gross profit increased to 17.8% during 1996
from 17.1% during 1995.  The increase in gross profit dollars and
as a percentage of sales is primarily due to lower costs associated
with international royalty overages, television sales and
sublicense revenue received in 1996.

   Selling, general and administrative expenses of LIVE increased
$1,599,000, or 15.2%, to $12,145,000 during 1996 compared to
$10,546,000 during 1995.  As a percentage of sales, the amount
increased to 11.1% during 1996 from 9.9% during 1995.  The dollar
increase and percentage increase is primarily a result of increased
overhead costs associated with expansion of the Company's business
into theatrical, international and television operations.

  Interest and other income decreased $275,000 or 15.1% to
$1,541,000 during 1996 compared to $1,816,000 during 1995, which
was primarily the result of interest earned on lower cash balances
on-hand during 1996.

<PAGE>
  Interest expense of LIVE decreased $242,000, or 17.9%, to
$1,113,000 during 1996 compared to $1,355,000 during 1995. 
Included in interest expense for the nine months ended September
30, 1995 is $383,059 related to the increase in the interest rate
on the Increasing Rate Senior Subordinated Notes due 1999
("Increasing Rate Notes") from 10% to 12% per annum, which was
provided for in an amendment to the Indenture governing the
Increasing Rate Notes.  The interest rate increase on the
Increasing Rate Notes was to occur in March, 1996, and such
interest from and after that date is included in the carrying value
of the Increasing Rate Notes in accordance with Financial
Accounting Standards Board Statement No. 15, Accounting for Debtors
and Creditors for Troubled Debt Restructuring and therefore not
included in interest expense.

   Preferred dividends of $2,744,000 in 1996 and $2,271,000 in 1995
represents the 5% cash dividend accrued on the Series B Preferred
Stock through May of 1996, with 10% being accrued thereafter, and
the 5% cash dividend accrued on the Series C Preferred Stock, as
well as, in the case of the Series C Preferred Stock, additional 5%
dividends on accrued but unpaid dividends.

Liquidity and Capital Resources

  Historically, the Company has funded its operations through a
combination of cash generated from operations, bank borrowings,
advances from distributors under distribution agreements and the
proceeds from the issuance of debt instruments.  For the nine
months ending September 30, 1996, the Company generated negative
cash flow from operations of $26,268,000 primarily due to increases
in accounts receivable and film costs associated with the releases
of The Substitute and The Arrival.

   On May 27, 1995, LIVE entered into a three year extension of its
distribution agreement with Warner-Elektra-Atlantic Corporation
("WEA").  Under the terms of the agreement, WEA advanced
$10,000,000 to LIVE, recoupable from distribution revenues during
the three year term of the agreement at $277,778 per month, plus
interest at LIBOR plus 0.2%.   On October 21, 1996 LIVE amended the
distribution agreement, to be effective May 7, 1996, whereby LIVE
assumed responsibility of all sales and sales solicitation services
which were previously the responsibility of WEA.  The amendment
also included a reduction in certain distribution fees charged by
WEA, as a result of the shift in sales and sales solicitation
responsibility, and an additional advance to LIVE of $10,000,000. 
The additional advance is recoupable from distribution revenues
during the remaining term of the agreement at $476,190 per month
plus interest at LIBOR + 0.2%.  In order to obtain the advances,
LIVE granted WEA a second priority security interest in
substantially all of LIVE's assets.  As of September 30, 1996,
there was $5,833,000 outstanding under the advance, and the
interest rate on the advance at September 30, 1996 was 5.7%.

   Investing activities generated a negative cash flow of $294,000
during the nine months ended September 30, 1996, primarily as a
result of the acquisition of property and equipment at LIVE. 

   LIVE and its affiliates are a party to a three-year $30,000,000
revolving credit facility with Foothill Capital Corporation (the
"Foothill Credit Facility") that expires in November 1997. 
Borrowings available under the Foothill Credit Facility are limited
to $27,500,000 until additional participant lenders are added to
the Facility, at which time the borrowings available will be
increased to a maximum $30,000,000.  Borrowings under the Foothill
Credit Facility are secured by substantially all of the assets of
LIVE and its affiliates.  Outstanding borrowings under the Foothill
Credit Facility bear interest at the rate of 2% per annum above the
highest of the Bank of America, Mellon Bank or Citibank prime rate,
payable monthly.  In no event will interest under the Foothill
Credit Facility be less than 7% per annum.  The Foothill Credit
Facility provided for a closing fee of $500,000, an annual facility
fee of 1/4 of 1% and a commitment fee of 1/4 of 1% on any unused
amount.  The Foothill Credit Facility also requires LIVE to meet
certain financial ratios, and as of September 30, 1996 the Company
was in compliance with all such financial ratios.  There were no
amounts outstanding under the Foothill Credit Facility as of
September 30, 1996.

   The Company has not borrowed any funds under the Foothill Credit
Facility since it was obtained in November 1994, and, as noted, the
Company has had substantial cash balances throughout the 1995
fiscal year and through September of 1996.  As a result of the
Company's upcoming cash expenditures relating to theatrical
releases and production/acquisition schedules for the remainder of
1996 and 1997, it is anticipated that the cash balances on hand
will be utilized and the Company will have to draw funds against
its credit facility to meet its anticipated future cash
expenditures.  This will reduce the liquidity of the Company in
1996 and 1997 when compared to the 1995 cash and borrowing
positions.

   Dividends on the Series C Preferred Stock, at the rate of 5% per
annum on the unreturned $15,000,000 liquidation value of the Series
C Preferred Stock, are due on June 30 and December 31 of each year. 
Although the dividends scheduled to be paid on June 30 and December
31 of 1993, 1994, 1995 and June 30, 1996 were accrued by LIVE,
those dividends were not paid due to restrictions imposed on LIVE
by the terms of the Series B Preferred Stock, which prohibit the
payment of dividends on the Series C Preferred Stock unless the
aggregate amount of such dividends, together with all cash
dividends paid on the Series B Preferred Stock, does not exceed the
net income of LIVE (adding back specified net worth exclusions)
since the March 23, 1993 date of issuance of the Series B Preferred
Stock and Series C Preferred Stock.  LIVE has had a cumulative
consolidated net loss for the period subsequent to March 23, 1993. 
Thus, pursuant to the terms of the Series B Preferred Stock, LIVE
was prohibited from paying the June 30 and December 31, 1993, 1994,
1995 and June 30, 1996 cash dividends on the Series C Preferred
Stock which, together with accrued and unpaid dividends thereon,
totaled $2,637,000 as of September 30, 1996.

  The unpaid Series C Preferred Stock dividend itself bears a
dividend of 5% per annum, and is due on the next regularly
scheduled dividend payment date for the Series C Preferred Stock. 
LIVE intends to pay the June 30 and December 31, 1993, 1994, 1995
and June 30, 1996 dividends, plus the additional dividends thereon,
as soon as it has sufficient net income to permit such payment to
occur or as soon as the Series B Preferred Stock has been redeemed,
provided that such payment does not impair the capital of LIVE and
is permitted under the Delaware General Corporation Law ("DGCL").

   LIVE experienced negative cash flows from financing activities
of $9,913,000 during the nine months ended September 30, 1996
primarily due to the repurchase of 377,500 shares of the Company's
Series B Preferred Stock, interest and principal  payments on long
term obligations and payment of dividends on the Series B Preferred
Stock. 

   As of September 30, 1996, the aggregate redemption price for the
Series B Preferred Stock was $38,198,000 ($10.00 per share). 

   Although LIVE has no obligation to redeem any Series B Preferred
Stock, subject to the availability of funds and the prior approval
of its Board of Directors and its lenders, LIVE may acquire shares
of its Series B Preferred Stock from time to time, either through
private purchases or through open market purchases.  Through
September 30, 1996, LIVE acquired, and subsequently retired, a
total of 2,177,500 shares of the Series B Preferred Stock at an
average price of $4.27 per share.

   On August 21, 1996 the Company filed a Schedule 13E-4 with the
Securities and Exchange Commission which outlined a proposed
exchange offer and equity recapitalization plan (the "Equity
Rationalization").  The Company expects to offer to exchange a
combination of cash and common stock, or all common stock, for the
Company's existing outstanding Series B Preferred Stock and Series
C Preferred Stock.  In addition, the Company is seeking to replace
its existing $30 million working capital facility with a larger
working capital facility, and to refinance its current outstanding
$40 million Increasing Rate Notes.   The Company believes that the
Equity Rationalization, if completed, will simplify its existing
complex capital structure, provide additional liquidity for growth
and expansion, and reduce the cash dividend cost of its existing
equity securities.

<PAGE>
    Failure of the Company to consummate the Equity Rationalization
at this time would require the Company to begin accumulating cash
to retire the Increasing Rate Notes, of which $20 million are due
in 1998 and the remaining $20 million in 1999, and would therefore
reduce the funds available for the Company's operations.

   The completion of the Equity Rationalization is subject to
obtaining satisfactory commitments for refinancing sources of
senior and subordinated debt, approval by the Company's
shareholders and regulatory agencies, completion of legal
documentation, and acceptance of the tender offer if and when made. 
As such, no assurances can be given that the Company's efforts will
be successful.
<PAGE>
                   PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

  LIVE had been the defendant in two purported class action law
suits that were filed in 1992.  The Company had requested the U.S.
District Court to dismiss both cases for non-prosecution due to the
fact that the plaintiffs had taken no action in either of these
cases for over one year. On April 8, 1996, the U.S. District Court
granted LIVE's request and dismissed both cases.

  In May 1994, a breach of contract claim was filed against a
subsidiary of the Company, claiming nonpayment of royalties from
licensing of films in foreign territories and deprivation of
royalty payments as a result of misallocation of certain values
asserted with licensed film properties.  Films subject to the
complaint were contained in the assets of Vestron, Inc. purchased
by the Company in July 1991, and the period covered included the
license periods both prior to, and subsequent to, the acquisition
date by the Company.  The Company filed a reply brief (including a
Motion to Dismiss) on October 5, 1994, and such Motion to Dismiss
was granted on the grounds of forum non conviens.  Plaintiff filed
a complaint in New York on March 22, 1995.  The Company filed its
answer, affirmative defenses and counterclaim on April 20, 1995. 
Plaintiff filed a motion for class certification on September 8,
1995 to which the Company filed its opposition to the motion on
November 6, 1995.  After limited pre-trial discovery, a motion for
class certification was argued on December 6, 1995.  By order dated
June 21, 1996 and filed on June 25, 1996, the Court in this action
determined that the action should be maintained as a class action
under the provisions of Section 901(a) of the New York Civil Practice 
Law and Rules.

  The Company filed an appeal from the Order granting class
certification on July 19, 1996 and filed a Motion for
Decertification of the class on July 24, 1996.  A hearing on the
motion was heard on September 4, 1996 and is currently under
submission before the Court.

  Management and counsel to LIVE are unable to predict the ultimate
outcome of the above-described action at this time.  However, LIVE
and the other defendants believe that this lawsuit is without merit
and intends to defend it vigorously.  Accordingly, no provision for
any liability which may result has been made in LIVE's consolidated
financial statements.  In the opinion of management, this action,
when finally concluded and determined, will not have a material
adverse effect upon LIVE's financial position or results of
operations.

<PAGE>
  Other than as described above, there are no material legal
proceedings to which LIVE or any of its subsidiaries are a party
other than ordinary routine litigation in the ordinary course of
business.  In the opinion of management (which is based in part on
the advice of outside counsel), resolution of these matters will
not have a material adverse impact on LIVE's financial position or
results of operations.


ITEM 3(b).DEFAULTS UPON SENIOR SECURITIES - DIVIDEND ARREARAGE ON
PREFERRED STOCK

   Dividends on the Series C Preferred Stock, at the rate of 5% per
annum on the unreturned $15,000,000 liquidation value of the Series
C Preferred Stock, are due on June 30 and December 31 of each year. 
Although the dividends scheduled to be paid on June 30 and December
31, 1993, 1994, 1995 and June 30, 1996 were accrued by LIVE, those
dividends were not paid due to restrictions imposed on LIVE by the
terms of the Series B Preferred Stock, which prohibit the payment
of dividends on the Series C Preferred Stock unless the aggregate
amount of such dividends, together with all cash dividends paid on
the Series B Preferred Stock, does not exceed the net income of
LIVE (adding back specified net worth exclusions) since the March
23, 1993 date of issuance of the Series B Preferred Stock and
Series C Preferred Stock.  LIVE has had a cumulative consolidated
net loss for the period subsequent to March 23, 1993.  Thus,
pursuant to the terms of the Series B Preferred Stock, LIVE was
prohibited from paying the June 30 and December 31, 1993, 1994, 
1995 and June 30, 1996 cash dividends on the Series C Preferred
Stock which, together with accrued and unpaid dividends thereon,
totaled $2,637,000 as of September 30, 1996.

   The unpaid Series C Preferred Stock dividend itself bears a
dividend of 5% per annum, and is due on the next regularly
scheduled dividend payment date for the Series C Preferred Stock. 
LIVE intends to pay the June 30 and December 31, 1993, 1994, 1995
and June 30, 1996 dividends, plus the additional dividends thereon,
as soon as it has sufficient net income to permit such payment to
occur or as soon as the Series B Preferred Stock has been redeemed,
provided that such payment does not impair the capital of LIVE and
is permitted under the DGCL.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

Exhibits:

10.93  Employment Agreement, dated as of August 15, 1996, for the
       services of Ronald B. Cushey.

10.94  Employment Agreement, dated as of August 15, 1996, for the
       services of Paul S. Almond.

10.95  Employment Agreement, dated as of August 15, 1996, for the
       services of Elliot Slutzky.

10.96  Fifth Amendment to License and Distribution Agreement dated
       as of May 7, 1996 between LIVE Film and Mediaworks Inc.
       (formerly LIVE Home Video Inc. and successor in interest to
       LIVE Film and Mediaworks Inc., a California corporation),
       LIVE America Inc. and Vestron Inc. and Warner-Elektra-Atlantic 
       Corporation.

10.97  Agreement dated March 14, 1996 between Carreden Group Inc.
       and LIVE Entertainment Inc. (Incorporated herein by
       reference to Exhibit 13 to the Registrant's Schedule 13E-4
       filed on August 21, 1996).

10.98  Employment Agreement Deal Memo, dated as of September 12,
       1996, for the services of Ann Dubinet.

11 Computation of Income (Loss) Per Common Share (Unaudited).

27 Financial Data Schedule (Electronic Filing Only).

        Reports on Form 8-K:  None.



                            SIGNATURES

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

                                   LIVE ENTERTAINMENT INC.



Dated: October 30, 1996         By: /s/   RONALD B. CUSHEY        
                                          Ronald B. Cushey
                                          Chief Financial Officer

<PAGE>
                          EXHIBIT INDEX


10.93  Employment Agreement, dated as of August 15, 1996, for the
       services of Ronald B. Cushey.

10.94  Employment Agreement, dated as of August 15, 1996, for the
       services of Paul S. Almond.

10.95  Employment Agreement, dated as of August 15, 1996, for the
       services of Elliot Slutzky.

10.96  Fifth Amendment to License and Distribution Agreement dated
       as of May 7, 1996 between LIVE Film and Mediaworks Inc.
       (formerly LIVE Home Video Inc. and successor in interest to
       LIVE Film and Mediaworks Inc., a California corporation),
       LIVE America Inc. and Vestron Inc. and Warner-Elektra-Atlantic 
       Corporation.

10.97  Agreement dated March 14, 1996 between Carreden Group Inc.
       and LIVE Entertainment Inc. (Incorporated herein by
       reference to Exhibit 13 to the Registrant's Schedule 13E-4
       filed on August 21, 1996).

10.98  Employment Agreement Deal Memo, dated as of September 12,
       1996, for the services of Ann Dubinet.

11 Computation of Income (Loss) Per Common Share (Unaudited).

27 Financial Data Schedule (Electronic Filing Only).