##### 



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

FORM 10-Q

|     |  |                                                                                   
|---- |  | ----------------------------------------------------------------------------------
|[X]  |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|     |  |                                                                                   
|     |  | For the quarterly period ended February 28, 2003                                  
|     |  |                                                                                   
|     |  | OR                                                                                
|     |  |                                                                                   
|[  ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|     |  |                                                                                   
|     |  | For the transition period from _________________ to _________________             
|     |  |                                                                                   
|     |  | Commission file number 0-9385                                                     

Bull Run Corporation
(Exact name of registrant as specified in its charter)

|                        |  |                    
|----------------------- |  | -------------------
|Georgia                 |  | 58-2458679         
|(State of incorporation |  | (I.R.S. Employer   
|or organization)        |  | Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|4370 Peachtree Road, N.E., Atlanta, GA   |  | 30319     
|(Address of principal executive offices) |  | (Zip Code)

(404) 266-8333
(Registrants telephone number, including area code)

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 the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: 39,653,885 shares of Common
Stock, par value $.01 per share, were outstanding as of March 31, 2003.





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##### 



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BULL RUN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)

|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |         |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------- | ------------ | ------- | ---------- | ------- | ------- | ------- | 
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         | February 28, |         | August 31,
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         | 2003         |         | 2002      
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |           
|ASSETS                                                                                                                                                          |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|Current assets:                                                                                                                                                 |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                | Cash and cash equivalents                                                                                                                                                                                                                                    |                            | $       | 739          |         |            | $       | 397     |        
|                                                                                                                                                                | Accounts receivable, net of allowance of $527 and $514 as of
February 28, 2003 and August 31, 2002, respectively                                                                                                                                             |                            |         | 18,472       |         |            |         | 13,502  |        
|                                                                                                                                                                | Inventories                                                                                                                                                                                                                                                  |                            |         | 809          |         |            |         | 1,005   |        
|                                                                                                                                                                | Prepaid costs and expenses                                                                                                                                                                                                                                   |                            |         | 2,021        |         |            |         | 1,559   |        
|                                                                                                                                                                | Net current assets of discontinued segment                                                                                                                                                                                                                   |                            |         |              |         |            |         | 106     |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              | Total current assets       |         |              | 22,041  |            |         |         | 16,569  | 
|Property and equipment, net                                                                                                                                     |                                                                                                                                                                                                                                                              |                            | 4,665   |              |         |            | 5,171   |        
|Investment in affiliated companies                                                                                                                              |                                                                                                                                                                                                                                                              |                            | 18,023  |              |         |            | 25,013  |        
|Goodwill                                                                                                                                                        |                                                                                                                                                                                                                                                              |                            | 57,862  |              |         |            | 57,862  |        
|Customer base and trademarks                                                                                                                                    |                                                                                                                                                                                                                                                              |                            | 16,666  |              |         |            | 16,999  |        
|Deferred income taxes                                                                                                                                           |                                                                                                                                                                                                                                                              |                            | 20,302  |              |         |            | 21,381  |        
|Other assets                                                                                                                                                    |                                                                                                                                                                                                                                                              |                            | 7,231   |              |         |            | 8,818   |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              | $                          | 146,790 |              |         | $          | 151,813 |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                            |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|Current liabilities:                                                                                                                                            |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                | Current portion of long-term debt                                                                                                                                                                                                                            |                            | $       | 87,165       |         |            | $       | 19,850  |        
|                                                                                                                                                                | Accounts payable                                                                                                                                                                                                                                             |                            |         | 7,137        |         |            |         | 6,558   |        
|                                                                                                                                                                | Deferred revenue                                                                                                                                                                                                                                             |                            |         | 7,669        |         |            |         | 13,616  |        
|                                                                                                                                                                | Accrued and other liabilities                                                                                                                                                                                                                                |                            |         | 17,170       |         |            |         | 8,797   |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              | Total current liabilities  |         |              | 119,141 |            |         |         | 48,821  | 
|Long-term debt                                                                                                                                                  |                                                                                                                                                                                                                                                              |                            | 19,082  |              |         |            | 93,091  |        
|Deferred income                                                                                                                                                 |                                                                                                                                                                                                                                                              |                            | 614     |              |         |            | 1,284   |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              | Total liabilities          |         |              | 138,837 |            |         |         | 143,196 | 
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|Commitments
and contingencies                                                                                                                                  
|Redeemable Series B convertible preferred stock, $.01 par value, (authorized 100
shares; issued and outstanding 5.4 shares; $5,400
aggregate liquidation value) |                                                                                                                                                                                                                                                              |                            | 5,400   |              |         |            | 5,400   |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|Stockholders equity:                                                                                                                                           |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                | Series C convertible preferred stock, $.01 par value (authorized 100 shares;
issued and outstanding 7.1 shares with $7,097 aggregate liquidation value
as of February 28, 2003 and 4.1 shares with $4,097 aggregate liquidation
value as of August 31, 2002) |                            |         | 7,097        |         |            |         | 4,097   |        
|                                                                                                                                                                | Common stock, $.01 par value (authorized 100,000 shares; issued 39,537 and
38,548 shares as of February 28, 2003 and August 31, 2002,
respectively)                                                                                                          |                            |         | 395          |         |            |         | 385     |        
|                                                                                                                                                                | Additional paid-in capital                                                                                                                                                                                                                                   |                            |         | 78,810       |         |            |         | 79,101  |        
|                                                                                                                                                                | Treasury stock, at cost (542 shares as of August 31, 2002)                                                                                                                                                                                                   |                            |         |              |         |            |         | (1,393  | )      
|                                                                                                                                                                | Other comprehensive accumulated loss                                                                                                                                                                                                                         |                            |         |              |         |            |         | (2,050  | )      
|                                                                                                                                                                | Retained earnings (accumulated deficit)                                                                                                                                                                                                                      |                            |         | (83,749      | )       |            |         | (76,923 | )      
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              | Total stockholders equity |         |              | 2,553   |            |         |         | 3,217   | 
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              | $                          | 146,790 |              |         | $          | 151,813 |        
|                                                                                                                                                                |                                                                                                                                                                                                                                                              |                            |         |              |         |            |         |        

The accompanying notes are an integral part of these condensed consolidated financial statements.

2



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##### 



BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except per share data)

|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |        |       |        |  
|------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ------ | ------------------ | ------ | ---------------- | ------ | ----- | ------ | ------ | ------ | ----- | ------ | ------ | ------ | ----- | ------ | -
|                                                                          |                                                                             |                                                                                       |                                                                                  |        | Three Months Ended |        | Six Months Ended
|                                                                          |                                                                             |                                                                                       |                                                                                  |        | February 28,       |        | February 28,    
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                 
|                                                                          |                                                                             |                                                                                       |                                                                                  |        | 2003               |        | 2002             |        | 2003  |        | 2002  
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |       
|Revenue from services rendered                                            |                                                                             | $                                                                                     | 17,626                                                                           |        |                    | $      | 24,029           |        |       | $      | 48,735 |        |       | $      | 59,747 |       
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|Operating costs and expenses:                                             |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          | Direct operating costs for services rendered                                |                                                                                       |                                                                                  | 12,779 |                    |        |                  | 19,321 |       |        |        | 30,845 |       |        |        | 46,550 |      
|                                                                          | Selling, general and administrative                                         |                                                                                       |                                                                                  | 6,303  |                    |        |                  | 7,235  |       |        |        | 12,734 |       |        |        | 15,622 |      
|                                                                          | Amortization of acquisition intangibles                                     |                                                                                       |                                                                                  | 304    |                    |        |                  | 453    |       |        |        | 608    |       |        |        | 657    |      
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             |                                                                                       | Total operating costs and expenses                                               |        |                    | 19,386 |                  |        |       | 27,009 |        |        |       | 44,187 |        |        |       | 62,829 |  
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             |                                                                                       | Income (loss) from operations                                                    |        |                    | (1,760 | )                |        |       | (2,980 | )      |        |       | 4,548  |        |        |       | (3,082 | )
|Other income (expense):                                                   |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          | Equity in earnings (losses) of affiliated companies                         |                                                                                       |                                                                                  | (366   | )                  |        |                  | (676   | )     |        |        | 213    |       |        |        | (884   | )    
|                                                                          | Net change in value of certain derivative instruments                       |                                                                                       |                                                                                  | (189   | )                  |        |                  | (1,347 | )     |        |        | (1,863 | )     |        |        | (2,859 | )    
|                                                                          | Loss on issuance of shares by affiliate                                     |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        | (2,339 | )     |        |        |        |      
|                                                                          | Gain (loss) on investment dispositions and
investment valuation adjustments |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        | (977   | )     |        |        | 3,064  |      
|                                                                          | Interest expense                                                            |                                                                                       |                                                                                  | (2,138 | )                  |        |                  | (2,023 | )     |        |        | (4,331 | )     |        |        | (4,735 | )    
|                                                                          | Debt issue cost amortization                                                |                                                                                       |                                                                                  | (610   | )                  |        |                  | (720   | )     |        |        | (1,154 | )     |        |        | (1,542 | )    
|                                                                          | Other income, net                                                           |                                                                                       |                                                                                  | 21     |                    |        |                  | 55     |       |        |        | 23     |       |        |        | 246    |      
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             |                                                                                       | Loss before income taxes and extraordinary
item and cumulative effect adjustment |        |                    | (5,042 | )                |        |       | (7,691 | )      |        |       | (5,880 | )      |        |       | (9,792 | )
|Income tax benefit                                                        |                                                                             |                                                                                       |                                                                                  |        |                    |        | 2,935            |        |       |        |        |        |       |        | 3,671  |       
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             |                                                                                       | Loss before extraordinary item and
cumulative effect adjustment                  |        |                    | (5,042 | )                |        |       | (4,756 | )      |        |       | (5,880 | )      |        |       | (6,121 | )
|Proportionate share of affiliates extraordinary loss                     |                                                                             |                                                                                       |                                                                                  |        |                    |        | (627             | )      |       |        | (406   | )      |       |        | (627   | )     
|Proportionate share of affiliates cumulative effect
of accounting change |                                                                             |                                                                                       |                                                                                  |        |                    |        | (2,620           | )      |       |        |        |        |       |        | (2,620 | )     
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             |                                                                                       | Net loss                                                                         |        |                    | (5,042 | )                |        |       | (8,003 | )      |        |       | (6,286 | )      |        |       | (9,368 | )
|Preferred dividends                                                       |                                                                             |                                                                                       | (281                                                                             | )      |                    |        | (121             | )      |       |        | (540   | )      |       |        | (188   | )     
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             |                                                                                       | Net loss available to common stockholders                                        |        | $                  | (5,323 | )                |        | $     | (8,124 | )      |        | $     | (6,826 | )      |        | $     | (9,556 | )
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|Loss per share available to common stockholders, basic
and diluted:       |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             | Loss available to common stockholders before
extraordinary item and cumulative effect |                                                                                  | $      | (0.14              | )      |                  | $      | (0.13 | )      |        | $      | (0.17 | )      |        | $      | (0.17 | )     
|                                                                          |                                                                             | Extraordinary loss                                                                    |                                                                                  |        |                    |        |                  |        | (0.02 | )      |        |        | (0.01 | )      |        |        | (0.02 | )     
|                                                                          |                                                                             | Cumulative effect of accounting change                                                |                                                                                  |        |                    |        |                  |        | (0.07 | )      |        |        |       |        |        |        | (0.07 | )     
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|                                                                          |                                                                             | Net loss available to common stockholders                                             |                                                                                  | $      | (0.14              | )      |                  | $      | (0.22 | )      |        | $      | (0.18 | )      |        | $      | (0.26 | )     
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       
|Weighted average number of common shares
outstanding, basic and diluted   |                                                                             |                                                                                       | 38,671                                                                           |        |                    |        | 36,444           |        |       |        | 38,491 |        |       |        | 36,234 |       
|                                                                          |                                                                             |                                                                                       |                                                                                  |        |                    |        |                  |        |       |        |        |        |       |        |        |       

The accompanying notes are an integral part of these condensed consolidated
financial statements.

3



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##### 



BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS EQUITY (Unaudited)
(Amounts in thousands)

|                                     |  |            |       |           |  |              |       |         |  |         |        |   |  |            |     |   |  |   |        |  
|------------------------------------ |  | ---------- | ----- | --------- |  | ------------ | ----- | ------- |  | ------- | ------ | - |  | ---------- | --- | - |  | - | ------ | -
|                                     |  | Redeemable |       |           |  |              |       |         |  |         |        |   |  |            |     |   |  |  
|                                     |  | Series B   |       | Series C  |  |              |       |         |  |         |        |   |  | Additional
|                                     |  | Preferred  |       | Preferred |  | Common Stock |       | Paid-In
|                                     |  | Stock      |       | Stock     |  | Shares       |       | Amount  |  | Capital
|                                     |  |            |       |           |  |              |       |         |  |        
|As of September 1, 2002              |  | $          | 5,400 |           |  | $            | 4,097 |         |  |         | 38,548 |   |  | $          | 385 |   |  | $ | 79,101 |  
|Issuance of Series C preferred stock |  |            |       |           |  |              | 3,000 |         |  |         |        |   |  |            |     |   |  |   |        |  
|Cancellation of common stock         |  |            |       |           |  |              |       |         |  |         | (542   | ) |  |            | (5  | ) |  |   | (1,388 | )
|Issuance of common stock             |  |            |       |           |  |              |       |         |  |         | 1,531  |   |  |            | 15  |   |  |   | 1,097  |  
|                                     |  |            |       |           |  |              |       |         |  |         |        |   |  |            |     |   |  |   |        |  
|As of February 28, 2003              |  | $          | 5,400 |           |  | $            | 7,097 |         |  |         | 39,537 |   |  | $          | 395 |   |  | $ | 78,810 |  
|                                     |  |            |       |           |  |              |       |         |  |         |        |   |  |            |     |   |  |   |        |  

|                                     |  |          |        |             |  |               |        |               |  |       |         |   |  |   |        |  
|------------------------------------ |  | -------- | ------ | ----------- |  | ------------- | ------ | ------------- |  | ----- | ------- | - |  | - | ------ | -
|                                     |  |          |        |             |  | Other         |        | Retained      |  |       |         |  
|                                     |  |          |        |             |  | Comprehensive |        | Earnings      |  | Total
|                                     |  | Treasury |        | Accumulated |  | (Accumulated  |        | Stockholders'
|                                     |  | Stock    |        | Loss        |  | Deficit)      |        | Equity       
|                                     |  |          |        |             |  |               |        |              
|As of September 1, 2002              |  | $        | (1,393 | )           |  | $             | (2,050 | )             |  | $     | (76,923 | ) |  | $ | 3,217  |  
|Issuance of Series C preferred stock |  |          |        |             |  |               |        |               |  |       |         |   |  |   | 3,000  |  
|Issuance of common stock             |  |          |        |             |  |               |        |               |  |       |         |   |  |   | 1,112  |  
|Other comprehensive income (loss)    |  |          |        |             |  |               | 2,050  |               |  |       |         |   |  |   | 2,050  |  
|Preferred dividends                  |  |          |        |             |  |               |        |               |  |       | (540    | ) |  |   | (540   | )
|Cancellation of treasury stock       |  |          | 1,393  |             |  |               |        |               |  |       |         |   |  |   |       |  
|Net loss                             |  |          |        |             |  |               |        |               |  |       | (6,286  | ) |  |   | (6,286 | )
|                                     |  |          |        |             |  |               |        |               |  |       |         |   |  |   |        |  
|As of February 28, 2003              |  | $        |       |             |  | $             |       |               |  | $     | (83,749 | ) |  | $ | 2,553  |  
|                                     |  |          |        |             |  |               |        |               |  |       |         |   |  |   |        |  

The accompanying notes are an integral part of these condensed consolidated
financial statements.

4



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##### 



BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)

|                                                                  |                                                                      |                                       |        |                  |        |      |         |        |        |  
|----------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------- | ------ | ---------------- | ------ | ---- | ------- | ------ | ------ | -
|                                                                  |                                                                      |                                       |        | Six Months Ended
|                                                                  |                                                                      |                                       |        | February 28,    
|                                                                  |                                                                      |                                       |        |                 
|                                                                  |                                                                      |                                       |        | 2003             |        | 2002
|                                                                  |                                                                      |                                       |        |                  |        |     
|Cash flows from operating activities:                             |                                                                      |                                       |        |                  |        |      |         |       
|Net loss                                                          |                                                                      | $                                     | (6,286 | )                |        | $    | (9,368  | )     
|Adjustments to reconcile net loss to net cash used in operations: |                                                                      |                                       |        |                  |        |      |         |       
|                                                                  | Extraordinary loss                                                   |                                       |        | 406              |        |      |         | 627    |       
|                                                                  | Cumulative effect of accounting change                               |                                       |        |                  |        |      |         | 2,620  |       
|                                                                  | Provision for bad debts                                              |                                       |        | 235              |        |      |         | 180    |       
|                                                                  | Depreciation and amortization                                        |                                       |        | 2,390            |        |      |         | 3,008  |       
|                                                                  | Equity in (earnings) losses of affiliated companies                  |                                       |        | (213             | )      |      |         | 884    |       
|                                                                  | Dividends received from affiliated company                           |                                       |        | 81               |        |      |         | 81     |       
|                                                                  | Gain (loss) on dispositions of investments and valuation adjustments |                                       |        | 1,032            |        |      |         | (3,064 | )     
|                                                                  | Net change in value of certain derivative instruments                |                                       |        | 1,863            |        |      |         | 2,859  |       
|                                                                  | Loss on issuance of shares by affiliate                              |                                       |        | 2,339            |        |      |         |        |       
|                                                                  | Deferred income taxes                                                |                                       |        |                  |        |      |         | (3,671 | )     
|                                                                  | Change in operating assets and liabilities:                          |                                       |        |                  |        |      |         |        |       
|                                                                  |                                                                      | Accounts receivable                   |        |                  | (5,205 | )    |         |        | 7,240  |  
|                                                                  |                                                                      | Inventories                           |        |                  | 196    |      |         |        | (115   | )
|                                                                  |                                                                      | Prepaid costs and expenses            |        |                  | (405   | )    |         |        | (3,619 | )
|                                                                  |                                                                      | Accounts payable and accrued expenses |        |                  | 2,121  |      |         |        | 1,430  |  
|                                                                  |                                                                      | Other long-term liabilities           |        |                  | (585   | )    |         |        | (384   | )
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Net cash used in continuing operations                            |                                                                      |                                       | (2,031 | )                |        |      | (1,292  | )     
|Net cash provided by (used in) discontinued operations            |                                                                      |                                       | 106    |                  |        |      | (175    | )     
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Net cash used in operating activities                             |                                                                      |                                       | (1,925 | )                |        |      | (1,467  | )     
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Cash flows from investing activities:                             |                                                                      |                                       |        |                  |        |      |         |       
|Capital expenditures                                              |                                                                      |                                       | (121   | )                |        |      | (310    | )     
|Proceeds on sale of investments                                   |                                                                      |                                       | 6,764  |                  |        |      | 16,803  |       
|Investment in affiliated companies                                |                                                                      |                                       |        |                  |        |      | (455    | )     
|Decrease (increase) in other assets                               |                                                                      |                                       | 197    |                  |        |      | (80     | )     
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Net
cash provided by continuing operation investing activities    |                                                                      |                                       | 6,840  |                  |        |      | 15,958  |       
|Net cash used in discontinued operation investing activities      |                                                                      |                                       |        |                  |        |      | (113    | )     
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Net cash provided by investing activities                         |                                                                      |                                       | 6,840  |                  |        |      | 15,845  |       
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Cash flows from financing activities:                             |                                                                      |                                       |        |                  |        |      |         |       
|Borrowings from revolving lines of credit                         |                                                                      |                                       | 175    |                  |        |      | 15,450  |       
|Repayments on revolving lines of credit                           |                                                                      |                                       |        |                  |        |      | (13,700 | )     
|Repayments on long-term debt                                      |                                                                      |                                       | (6,767 | )                |        |      | (19,743 | )     
|Debt issue costs                                                  |                                                                      |                                       | (981   | )                |        |      | (140    | )     
|Issuance of preferred stock                                       |                                                                      |                                       | 3,000  |                  |        |      | 2,400   |       
|Issuance of common stock                                          |                                                                      |                                       |        |                  |        |      | 350     |       
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Net cash used in financing activities                             |                                                                      |                                       | (4,573 | )                |        |      | (15,383 | )     
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Net
increase (decrease) in cash and
cash equivalents              |                                                                      |                                       | 342    |                  |        |      | (1,005  | )     
|Cash and cash equivalents, beginning of period                    |                                                                      |                                       | 397    |                  |        |      | (1,051  | )     
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       
|Cash and cash equivalents,
end of period                          |                                                                      | $                                     | 739    |                  |        | $    | (2,056  | )     
|                                                                  |                                                                      |                                       |        |                  |        |      |         |       

The accompanying notes are an integral part of these condensed consolidated
financial statements.

5



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BULL RUN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts)

1.     BASIS OF PRESENTATION

In managements opinion, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting solely of normal,
recurring adjustments) necessary to present fairly the financial position and
results of operations for the transition and comparative period reported.
These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements contained in the Annual Report on
Form 10-K of Bull Run Corporation for the fiscal year ended June 30, 2002.

On December 17, 1999, Bull Run Corporation (Bull Run) acquired the stock of
Host Communications, Inc. (Host or Host Communications), Universal Sports
America, Inc. and Capital Sports Properties, Inc. not previously owned,
directly or indirectly, by Bull Run (the Host-USA Acquisition). All
operations of the acquired entities are now combined under Host.

The accompanying condensed consolidated financial statements include the
accounts of Bull Run and its wholly owned subsidiaries (collectively, unless
the context otherwise requires, the Company), after elimination of
intercompany accounts and transactions.

In 2002, the Company changed its fiscal year end from June 30 to August 31, and
filed with the U.S. Securities and Exchange Commission a Form 10-Q for the
transition period July 1, 2002 to August 31, 2002. Condensed consolidated
operating results and cash flows for the quarterly and six-month period ended
February 28, 2002 are presented herein for comparative purposes.

Unless otherwise indicated, amounts provided in these notes to the consolidated
financial statements pertain to continuing operations.

2.     DISCONTINUED OPERATION

On September 29, 2000, the Company consummated the sale of the inventories,
property and equipment and intangible assets of Datasouth Computer Corporation
(Datasouth), a wholly owned subsidiary, for cash and an installment note
payable. Accordingly, the operating results and net assets associated with
Datasouths computer printer manufacturing business have been reported as
discontinued operations in the accompanying financial statements. To the
extent actual proceeds ultimately received on the sale differ from estimates
that are reported as of August 31, 2002, such differences will be reported as
discontinued operations in future periods.

3.     SUPPLEMENTAL CASH FLOW DISCLOSURES

Supplemental cash flow information follows:

|                                            |                                                                                     |   |                  |     |      |   |       |       | 
|------------------------------------------- | ----------------------------------------------------------------------------------- | - | ---------------- | --- | ---- | - | ----- | ----- | 
|                                            |                                                                                     |   | Six Months Ended
|                                            |                                                                                     |   | February 28,    
|                                            |                                                                                     |   |                 
|                                            |                                                                                     |   | 2003             |     | 2002
|                                            |                                                                                     |   |                  |     |     
|Interest paid                               |                                                                                     | $ | 4,480            |     |      | $ | 5,677 |      
|Income taxes paid (recovered)               |                                                                                     | $ | 9                |     |      | $ | (354  | )    
|Noncash investing and financing activities: |                                                                                     |   |                  |     |      |   |       |      
|                                            | Issuance of common stock primarily in
connection with debt issuance costs           |   | $                | 919 |      |   | $     | 1,449 | 
|                                            | Issuance of common stock to a retirement plan
and as a component of directors fees |   | $                | 146 |      |   |       |       | 

6



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4.     INVESTMENT IN AFFILIATED COMPANIES

The Companys investment in affiliated companies is comprised of the following:

|                                      |  |                   |        |                 |  |        |      |         |  |   |        |  |  |  |      |  
|------------------------------------- |  | ----------------- | ------ | --------------- |  | ------ | ---- | ------- |  | - | ------ |  |  |  | ---- | -
|                                      |  | February 28, 2003 |        | August 31, 2002
|                                      |  |                   |        |                
|                                      |  | Amount            |        | Voting%         |  | Amount |      | Voting%
|                                      |  |                   |        |                 |  |        |      |        
|Gray Television, Inc.                 |  | $                 | 16,930 |                 |  |        | 18.0 | %       |  | $ | 19,102 |  |  |  | 26.1 | %
|Rawlings Sporting Goods
Company, Inc. |  |                   |        |                 |  |        |      |         |  |   | 4,377  |  |  |  | 10.1 | %
|iHigh, Inc.                           |  |                   | 1,093  |                 |  |        | 35.1 | %       |  |   | 1,534  |  |  |  | 35.1 | %
|                                      |  |                   |        |                 |  |        |      |         |  |   |        |  |  |  |      |  
|                                      |  | $                 | 18,023 |                 |  |        |      |         |  | $ | 25,013 |  |  |  |      |  
|                                      |  |                   |        |                 |  |        |      |         |  |   |        |  |  |  |      |  

The Company accounts for its investments in Gray Television, Inc. (Gray), and
iHigh, Inc. (iHigh) using the equity method. Grays two classes of common
stock are publicly traded on the New York Stock Exchange under the symbols
GTN.A and GTN. The Company accounted for its investment in Rawlings
Sporting Goods Company, Inc. (Rawlings) as an available-for-sale marketable
security until it was sold in its entirety in December 2002. As a result, the
Companys carrying value of its investment in Rawlings was based on the closing
price of Rawlings common stock as quoted on the Nasdaq Stock Market, and was
included as a component of Investment in affiliated companies. The cash
proceeds on the December 2002 sale of the Companys investment in Rawlings of
$6,764 were used to reduce the Companys bank debt. A loss on the Rawlings
investment of $1,032 that had been previously reported as other comprehensive
accumulated loss (a component of the Companys stockholders equity) was
expensed in the six months ended February 28, 2003, reported as an investment
valuation adjustment in the Companys results of operations.

In October 2002, Gray completed a public offering of 30,000 shares of its
common stock for net proceeds of approximately $231,200, and in November 2002,
Gray issued 4,500 additional shares for additional proceeds of approximately
$34,900. Such cumulative proceeds were used in part by Gray to finance an
October 2002 acquisition of a company that owns television stations, and
finance an acquisition of an additional television station in December 2002.
As a result of these transactions by Gray, the Companys ownership of Grays
outstanding common stock was reduced from 12.9% to 4.0%, representing a decline
in the Companys voting power in Gray from 26.1% to 18.0%. Since Grays net
proceeds per share of issued common stock was an amount which was less than the
Companys carrying value per share of Gray common stock owned prior to such
transactions, a loss of $2,339 on the issuance of shares by Gray was reported
by the Company for the three months ended November 30, 2002. Certain executive
officers of Gray and certain directors of Gray are also executive officers and
directors of the Company; therefore the Company will continue to account for
its investment in Gray under the equity method subsequent to the issuance of
shares by Gray, despite the dilution of the Companys voting power to less than
20%, since the Company continues to have significant influence in Gray.

The aggregate operating results of Gray and iHigh, affiliated companies in
which the Companys investments are accounted for using the equity method, were
as follows:

|                       |  |                    |        |                  |  |      |         |      |  |   |         |  |  |   |         |  
|---------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | -
|                       |  | Three Months Ended |        | Six Months Ended
|                       |  | February 28,       |        | February 28,    
|                       |  |                    |        |                 
|                       |  | 2003               |        | 2002             |  | 2003 |         | 2002
|                       |  |                    |        |                  |  |      |         |     
|Net revenue            |  | $                  | 66,492 |                  |  | $    | 37,712  |      |  | $ | 133,142 |  |  | $ | 79,478  |  
|Income from operations |  |                    | 7,046  |                  |  |      | 4,439   |      |  |   | 33,130  |  |  |   | 9,942   |  
|Net income (loss)      |  |                    | (4,068 | )                |  |      | (42,061 | )    |  |   | 3,103   |  |  |   | (44,439 | )

In the six months ended February 28, 2003 and 2002, the Company recognized
extraordinary losses of $406 and $627, respectively, as its proportionate share
of extraordinary losses reported by Gray in connection with Grays early
extinguishment of debt. In the six months ended February 28, 2002, the Company
also recognized a $2,620 charge for the cumulative effect of accounting change
representing its

7



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proportionate share of a cumulative effect adjustment reported by Gray, due to
Grays adoption of FASB Statement No. 142 and the resulting reduction in Grays
previously unamortized goodwill and purchased intangibles.

5.     LONG-TERM DEBT

As amended in October 2002, the Companys bank credit agreement provides for
(a) two term loans (the Term Loans) for borrowings totaling $67,165 as of
February 28, 2003, bearing interest at either the banks prime rate plus .75%
or the London Interbank Offered Rate (LIBOR) plus 3.75%, currently requiring
minimum aggregate principal payments of $3,236 by April 15, 2003 and $5,000 by
July 15, 2003, with all amounts outstanding under the Term Loans due on
September 30, 2003; and (b) a revolving loan commitment (the Revolver) for
borrowings of up to $20,000 until maturity on September 30, 2003, bearing
interest at either the banks prime rate plus .75% or LIBOR plus 3.75%. In
order to facilitate funding the remaining principal payment obligation of
$3,236 by April 15, 2003, the Company currently plans to sell some or all of
its investment in warrants to purchase Gray common stock to an affiliated party
at its appraised value, thereby applying proceeds of at least $3,236 to its
outstanding Term Loans. In order to facilitate the funding of the $5,000
principal payment obligation due by July 15, 2003, the Company will likely be
required to (a) sell certain other investment assets held by the Company; or
(b) issue and sell equity securities of the Company, which may include the
Companys preferred stock; or (c) a combination thereof. Although there is no
assurance that the Company will be able to effect the foregoing potential
transactions or generate sufficient cash from these potential transactions
within a time frame required to make such scheduled payments, on the basis of
preliminary discussions with third parties, including affiliates, with whom
such transactions may be consummated, the Company believes that it will be able
to fund the scheduled principal payments in accordance with the terms of the
amended bank credit facility. The Companys debt to the banks is
collateralized by a lien on all of the Companys assets. The Company expects
to negotiate the terms of a long-term refinancing of the credit facility for
execution prior to the current facilitys maturity date of September 30, 2003.
Although the Company believes that it will be successful in negotiating a
long-term refinancing of the credit facility, there is no assurance that it
will be able to do so.

Interest on amounts borrowed from the banks is payable monthly. Borrowings
under the Revolver are allowed to exceed 100% of eligible accounts receivable,
however amounts borrowed exceeding such threshold will bear an additional
amount of interest at a rate of 2% per annum. As of February 28, 2003 and
August 31, 2002, borrowings of $67,165 and $73,932 were outstanding under the
Term Loans, respectively, borrowings of $20,000 and $19,825, respectively, were
outstanding under the Revolver. Since all amounts outstanding under the bank
credit agreement are due and payable on the September 30, 2003 maturity date,
all such amounts are classified as a current liability as of February 28, 2003.
As of February 28, 2003, all borrowings under the bank credit agreement were
subject to an interest rate of 5.0%.

The bank credit agreement, as amended, contains certain financial covenants,
including the maintenance of a minimum amount of net worth at all times, and
maintenance of minimum profitability thresholds determined quarterly beginning
November 30, 2002. The Company complied with all such financial covenants
during the periods ended November 30, 2002 and February 28, 2003. All debt
outstanding under the bank credit agreement is collateralized by all of the
Companys assets, including all of its investments in affiliated companies.

In connection with the Companys bank credit facilities, the Companys Chairman
entered into a guarantee agreement in favor of the banks, for which he receives
compensation from the Company from time to time in the form of restricted
shares of the Companys common stock. The agreement provides for the
Chairmans personal guarantee of up to approximately $84,750 of the Companys
outstanding bank debt. The guaranteed amount reduces dollar for dollar,
subject to certain limitations, as the aggregate outstanding amount under the
Term Loans is reduced. The guarantee agreement provides that if the Company
defaults on its bank loan, the banks have the right to require the Chairman to
repay the amount of such loan to the banks up to the maximum amount of his
personal guarantee. Under the terms of his guarantee, if the banks exercise
their rights to demand repayment from the guarantor, the Chairman has the
option to purchase the entire loan from the banks, and thereby becoming the
holder of the Companys debt currently payable to the

8



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banks as a secured creditor. During the six months ended February 28, 2003,
the Company issued 1,191 restricted shares of its common stock then valued at
approximately $919 to the Companys Chairman as compensation for his guarantee.

In connection with the Host-USA Acquisition, the Company currently has
outstanding 8% subordinated notes having an aggregate face value of $18,492.
Interest is payable quarterly and the notes mature beginning in 2005. The
Company also has 9% subordinated notes having an aggregate outstanding balance
of $590 due in March 2004. Payment of interest and principal on all
subordinated notes is subordinate to the Companys bank credit agreement.

The Company has been a party to two interest rate swap agreements. The first
agreement, which terminated on December 31, 2002, involved the exchange of
interest at a fixed rate of 6.08% for interest at a variable rate, determined
quarterly, equal to the 90-day LIBOR rate, without an exchange of the $20,000
notional amount upon which the payments are based. The second agreement,
terminating on December 31, 2004, involves the exchange of interest at a fixed
rate of 6.71% for interest at a variable rate, determined quarterly, equal to
the 90-day LIBOR rate, without an exchange of the $25,000 notional amount upon
which the payments are based. The differential paid or received as interest
rates change is settled quarterly and is accrued and recognized as an
adjustment of interest expense related to the debt.

6.     INCOME TAXES

The principal differences between the federal statutory tax rate of 34% and the
effective tax rates are nondeductible amortization of acquisition intangible
assets and state income taxes, and for the six months ended February 28, 2003,
an increase in the valuation allowance for potentially non-realizable deferred
tax assets of $2,025.

7.     PREFERRED STOCK ISSUANCE

In September 2002, the Companys Chairman invested $3,000 for 3 shares of the
Companys Series C convertible preferred stock (Series C Preferred Stock)
having an aggregate face amount of $3,000, which was used by the Company for
working capital purposes. Each share of the Series C Preferred Stock is
convertible at the holders option into 1,000 shares of the Companys common
stock beginning two years after the date of issuance. The holder of Series C
Preferred Stock is entitled to receive dividends at an annual rate of $90.00
per share in cash or in shares of the Companys common stock at the holders
option, except that, until the second anniversary of the date of issuance of
the preferred stock, the Company may, at its option, pay such dividends in cash
or in shares of the Companys common stock. The Company has an option to
redeem shares of Series C Preferred Stock at any time, but does not currently
have the intent or ability to do so. The liquidation and redemption price of
the preferred stock is $1,000 per share.

8.     OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is as follows:

|                            |                                                                                |   |                    |     |                  |   |        |   |      |   |        |       |  |   |        |   | 
|--------------------------- | ------------------------------------------------------------------------------ | - | ------------------ | --- | ---------------- | - | ------ | - | ---- | - | ------ | ----- |  | - | ------ | - | 
|                            |                                                                                |   | Three Months Ended |     | Six Months Ended
|                            |                                                                                |   | February 28,       |     | February 28,    
|                            |                                                                                |   |                    |     |                 
|                            |                                                                                |   | 2003               |     | 2002             |   | 2003   |   | 2002
|                            |                                                                                |   |                    |     |                  |   |        |   |     
|Net loss                    |                                                                                | $ | (5,042             | )   |                  | $ | (8,003 | ) |      | $ | (6,286 | )     |  | $ | (9,368 | )
|Other comprehensive loss:   |                                                                                |   |                    |     |                  |   |        |   |      |   |        |       |  |   |        |  
|                            | Change in the valuation of available-for-sale
investments, net of deferred tax |   |                    | 366 |                  |   |        |   |      |   |        | 2,050 |  |   |        |   | 
|                            |                                                                                |   |                    |     |                  |   |        |   |      |   |        |       |  |   |        |  
|Comprehensive income (loss) |                                                                                | $ | (4,676             | )   |                  | $ | (8,003 | ) |      | $ | (4,236 | )     |  | $ | (9,368 | )
|                            |                                                                                |   |                    |     |                  |   |        |   |      |   |        |       |  |   |        |  

9



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The change in the valuation of available-for-sale investments results from the
accounting for the Companys investment in Rawlings as an available-for-sale
marketable security. Changes in the market value of the Companys investment
in Rawlings common stock, as determined by the closing price per share of
Rawlings common stock quoted on the Nasdaq Stock Market as of the beginning and
end of each fiscal period, results in comprehensive income or loss until
December 2002, when the investment was sold. During the six months ended
February 28, 2003, $1,032 of the unrealized loss on the Rawlings investment
that had been previously reported as other comprehensive accumulated loss was
expensed, and included as a component of the net loss for that period.

9.     EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted earnings
(loss) per share:

|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |        |  
|--------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | - | ------------------ | ------ | ---------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                                                                                |                                                                                       |   | Three Months Ended |        | Six Months Ended
|                                                                                                                |                                                                                       |   | February 28,       |        | February 28,    
|                                                                                                                |                                                                                       |   |                    |        |                 
|                                                                                                                |                                                                                       |   | 2003               |        | 2002             |   | 2003   |        | 2002
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |     
|Loss before extraordinary item and cumulative
effect adjustment                                                 |                                                                                       | $ | (5,042             | )      |                  | $ | (4,756 | )      |      | $ | (5,880 | )      |   | $ | (6,121 | )     
|Preferred dividends                                                                                             |                                                                                       |   | (281               | )      |                  |   | (121   | )      |      |   | (540   | )      |   |   | (188   | )     
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                                                                                                | Loss available to common stockholders before
extraordinary item and cumulative effect |   |                    | (5,323 | )                |   |        | (4,877 | )    |   |        | (6,420 | ) |   |        | (6,309 | )
|                                                                                                                | Extraordinary loss                                                                    |   |                    |        |                  |   |        | (627   | )    |   |        | (406   | ) |   |        | (627   | )
|                                                                                                                | Cumulative effect adjustment                                                          |   |                    |        |                  |   |        | (2,620 | )    |   |        |        |   |   |        | (2,620 | )
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                                                                                                | Net loss available to common stockholders                                             |   | $                  | (5,323 | )                |   | $      | (8,124 | )    |   | $      | (6,826 | ) |   | $      | (9,556 | )
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|Weighted average number of common shares
outstanding for basic earnings (loss) per share                        |                                                                                       |   | 38,671             |        |                  |   | 36,444 |        |      |   | 38,491 |        |   |   | 36,234 |       
|Effect of dilutive employee stock options                                                                       |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|Adjusted weighted average number of common
shares and assumed conversions for diluted
earnings (loss) per share |                                                                                       |   | 38,671             |        |                  |   | 36,444 |        |      |   | 38,491 |        |   |   | 36,234 |       
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|Loss per share (basic and diluted):                                                                             |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                                                                                                | Loss available to common stockholders before
extraordinary item and cumulative effect |   | $                  | (0.14  | )                |   | $      | (0.13  | )    |   | $      | (0.17  | ) |   | $      | (0.17  | )
|                                                                                                                | Extraordinary loss                                                                    |   |                    |        |                  |   |        | (0.02  | )    |   |        | (0.01  | ) |   |        | (0.02  | )
|                                                                                                                | Cumulative effect adjustment                                                          |   |                    |        |                  |   |        | (0.07  | )    |   |        |        |   |   |        | (0.07  | )
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                                                                                                | Net loss available to common stockholders                                             |   | $                  | (0.14  | )                |   | $      | (0.22  | )    |   | $      | (0.18  | ) |   | $      | (0.26  | )
|                                                                                                                |                                                                                       |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       

10



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10.     SEGMENT INFORMATION

The Company has four business segments associated with its continuing
operations that provide different products or services: (a) marketing and
production services, which primarily include services rendered in connection
with college athletics (Collegiate Marketing and Production Services); (b)
event management and marketing services (Affinity Events); (c) association
management services (Affinity Management Services) and (d) consulting
services (Consulting).

Information for each of the Companys segments is presented below:

|                         |                                              |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |        |  
|------------------------ | -------------------------------------------- | - | ------------------ | ------ | ---------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                         |                                              |   | Three Months Ended |        | Six Months Ended
|                         |                                              |   | February 28,       |        | February 28,    
|                         |                                              |   |                    |        |                 
|                         |                                              |   | 2003               |        | 2002             |   | 2003   |        | 2002
|                         |                                              |   |                    |        |                  |   |        |        |     
|Net revenues:            |                                              |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                         | Collegiate Marketing and Production Services |   | $                  | 15,238 |                  |   | $      | 20,401 |      |   | $      | 37,018 |   |   | $      | 47,087 |  
|                         | Affinity Events                              |   |                    | 568    |                  |   |        | 1,075  |      |   |        | 2,352  |   |   |        | 4,196  |  
|                         | Affinity Management Services                 |   |                    | 1,820  |                  |   |        | 2,547  |      |   |        | 4,098  |   |   |        | 8,453  |  
|                         | Consulting                                   |   |                    |        |                  |   |        | 6      |      |   |        | 5,267  |   |   |        | 11     |  
|                         |                                              |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                         |                                              | $ | 17,626             |        |                  | $ | 24,029 |        |      | $ | 48,735 |        |   | $ | 59,747 |       
|                         |                                              |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|Operating income (loss): |                                              |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                         | Collegiate Marketing and Production Services |   | $                  | 103    |                  |   | $      | (735   | )    |   | $      | 2,649  |   |   | $      | 1,283  |  
|                         | Affinity Events                              |   |                    | (1,513 | )                |   |        | (1,386 | )    |   |        | (2,749 | ) |   |        | (3,221 | )
|                         | Affinity Management Services                 |   |                    | 280    |                  |   |        | (44    | )    |   |        | 676    |   |   |        | 586    |  
|                         | Consulting                                   |   |                    |        |                  |   |        | 6      |      |   |        | 5,267  |   |   |        | 11     |  
|                         | Amortization of acquisition intangibles      |   |                    | (304   | )                |   |        | (453   | )    |   |        | (608   | ) |   |        | (657   | )
|                         | Unallocated general and administrative costs |   |                    | (326   | )                |   |        | (368   | )    |   |        | (687   | ) |   |        | (1,084 | )
|                         |                                              |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                         |                                              | $ | (1,760             | )      |                  | $ | (2,980 | )      |      | $ | 4,548  |        |   | $ | (3,082 | )     
|                         |                                              |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       

In the six months ended February 28, 2003, the Company realized $4,810 of
previously deferred consulting fee income in connection with services provided
to Gray in connection with Grays acquisition of a company that owns television
stations. The Company also defers the recognition of consulting income on a
portion of fees received from Gray, due to the Companys ownership interest in
Gray. When the Companys percentage ownership on Gray decreases, a
proportionate amount of the previously deferred income becomes realizable. As a
result of the dilution in the Companys investment in Gray resulting from
Grays issuance of its common stock during the same period, previously deferred
consulting fee income of $457 was realized.

As further discussed in Managements Discussion and Analysis of Financial
Condition and Results of Operations, certain of the Companys contractual
relationships changed effective September 1, 2002, which resulted in a
significant decrease of revenues and direct operating costs in the Collegiate
Marketing and Production Services segment subsequent to that date. These
changes also had a favorable impact on the operating results of the segment for
the three and six months ended February 28, 2003.

11



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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Bull Run Corporation (Bull Run or the Company), based in Atlanta, Georgia,
is a sports and affinity marketing and management company through its primary
operating business, Host Communications, Inc. (Host). Hosts Collegiate
Marketing and Production Services business segment provides sports marketing
and production services to a number of collegiate conferences and universities,
and for and on behalf of the National Collegiate Athletic Association (NCAA).
Hosts Affinity Events business segment produces and manages individual
events and several events series, including NBA Hoop-It-Up® (the National
Basketball Associations official 3-on-3 basketball tour) and the Got Milk?
3v3 Soccer Shootout (a 3-on-3 soccer tour). Hosts Affinity Management
Services business segment provides associations such as the National Tour
Association and Quest (the J.D. Edwards users group association), with services
ranging from member communication, recruitment and retention, to conference
planning, Internet web site management, marketing and administration.

The Company also has significant investments in other sports, media and
marketing companies, including Gray Television, Inc. (Gray), the owner and
operator of 29 television stations, four newspapers and other media and
communications businesses; iHigh, Inc. (iHigh), an Internet and marketing
company focused on high school students; and until December 2002, Rawlings
Sporting Goods Company, Inc. (Rawlings), a supplier of team sports equipment.
The Company sold its investment in Rawlings in December 2002. The Company has
provided consulting services to Gray in connection with certain of Grays
acquisitions and dispositions.

The Company sold the inventories, property and equipment and intangible assets
of Datasouth Computer Corporation (Datasouth), a wholly owned subsidiary, in
September 2000. Accordingly, the operating results and net assets associated
with Datasouths computer printer manufacturing business have been reported as
discontinued operations in the accompanying condensed consolidated financial
statements.

In September 2002, the Company changed its fiscal year end from June 30 to a
new fiscal year end of August 31. As a result of this change, the Companys
quarterly reporting periods are, subsequent to this transition period from July
1, 2002 to August 31, 2002, comprised of three calendar months ending November
30, February 28 (or 29), May 31 and August 31.

CERTAIN RELATIONSHIPS

J. Mack Robinson, Chairman of the Board of the Company, is Chief Executive
Officer, Chairman and a director of Gray, and the beneficial owner of Gray
common stock representing approximately 37.2% of the combined voting power of
Grays two classes of common stock as of February 28, 2003. Robert S. Prather,
Jr., President, Chief Executive Officer and a director of the Company, is
President, Chief Operating Officer and a director of Gray, and the beneficial
owner of Gray common stock representing approximately 27.4% of the combined
voting power of Grays two classes of common stock as of February 28, 2003.
Hilton H. Howell, Jr., the Companys Vice President and Secretary, is Vice
Chairman and a director of Gray, and the beneficial owner of Gray common stock
representing approximately 31.0% of the combined voting power of Grays two
classes of common stock as of February 28, 2003. Each of Messrs. Robinson,
Prather and Howells beneficial ownership percentages includes the Companys
beneficial ownership of approximately 25.5% of the combined voting power of
Grays two classes of common stock as of February 28, 2003. Beneficial
ownership percentages noted above include warrants and options to acquire
shares of Gray common stock that were exercisable on, or within 60 days after,
February 28, 2003.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
judgments and estimations that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates. The Company considers the following accounting policies to be
critical policies that require judgments or

12



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estimations in their application where variances in those judgments or
estimations could make a significant difference to future reported results.

Goodwill and Other Intangible Assets 
Effective July 1, 2001, the Company adopted Financial Accounting Standards
Board Statement No. 142, Accounting for Goodwill and Other Intangible Assets,
(FAS 142) which prescribes the Companys accounting for goodwill and certain
other intangible assets acquired in the Host-USA Acquisition. In accordance
with FAS 142, the Company is required to periodically assess the carrying value
of goodwill and trademarks associated with each of five distinct business units
that comprise three business segments of the Company to determine if impairment
in value has occurred. As of June 30, 2002, the Company accelerated
amortization of $6,582,000 of its customer base intangible asset, due to a
significant change in a certain underlying customer relationship. The
remaining carrying value assigned to this specific customer relationship is
being amortized on a straight-line basis through August 31, 2004, resulting in
amortization expense during that period of approximately $536,000 per year.
Other customer relationships are being amortized over a 16-year average life,
at a rate of approximately $680,000 per year. The use of a 16-year average
life of customer relationships amortized on a straight-line method is not
materially different than using the estimated life of each individual
relationship using a systematic allocation method. Goodwill and intangible
assets, net of accumulated amortization, were $74,528,000 as of February 28,
2003 and $74,861,000 as of August 31, 2002, of which, goodwill was $57,862,000
as of both dates.

The carrying value of the Companys investment in Gray of $16,930,000 as of
February 28, 2003 is largely dependent on Grays continuing assessment of the
value of Grays goodwill, broadcast licenses, network affiliation agreements
and other intangible assets. Impairment in Grays carrying value of its
intangible assets could have a significant impact on the Companys carrying
value of its investment in Gray.

Deferred Income Taxes 
Deferred income tax liabilities or assets at the end of each period are
determined using the tax rate expected to be in effect when the taxes are
actually paid or recovered. A valuation allowance is recognized on certain
deferred tax assets if it is more likely than not that some or all of these
deferred tax assets will not be realized. As of February 28, 2003 the Company
has a net deferred tax asset of $20,302,000, primarily due to a net operating
loss carryforward for federal tax purposes that expires beginning in 2017, net
of a valuation allowance of approximately $5,150,000. The Company believes it
will generate adequate taxable income from operations and/or the sale or other
disposition of appreciated investment assets in an amount sufficient to realize
the deferred tax asset.

Derivative Instruments and Hedging Activities

The Company reports the value of certain derivative instruments (i.e., warrants
to purchase additional shares of Gray common stock and interest rate swap
agreements) on the balance sheet at fair value pursuant to Financial Accounting
Standards Boards Statement No. 133, Accounting for Derivative Investments and
Hedging Activities(FAS 133). The fair value of derivative instruments of
$2,588,000 and $4,451,000 as of February 28, 2003 and August 31, 2002,
respectively, is included in the Companys balance sheet as a component of
Other assets. Changes in the estimated fair value of derivatives that do not
meet the specific criteria in FAS 133 for hedge accounting (and none of the
Companys derivative instruments have been determined to qualify for hedge
accounting treatment) are included in the earnings (losses) reported for the
period of the change. Management estimates the fair value of the warrants
based on independent appraisals received on a quarterly basis, and estimates
the fair value of interest rate swap agreements based on estimated market
values provided by the counterparties to the swap agreements.

Valuation of Investments in Affiliated
Companies 
The Company accounts for its investments in Gray and iHigh, and until December
31, 2001, Rawlings, by the equity method. If management determines that the
carrying value of investments accounted for by the equity method become
permanently impaired in whole or in part, the estimated amount of the permanent
impairment would be charged to the earnings (losses) reported for the period in
which that determination was made. Management has made such permanent
impairment determinations in prior years, and accordingly in the period of such
determination, the Company reduced the carrying value of the investment and
reported an associated charge in its Statement of Operations. Effective
December 31, 2001, the Company began accounting for its investment in Rawlings
as an available-for-sale marketable security.

13



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As a result, the Companys carrying value of its investment in Rawlings was
based on the closing price of Rawlings common stock as quoted on the Nasdaq
Stock Market, and was reported on the balance sheet as a component of
Investment in affiliated companies prior to the investments sale in December
2002. At November 30, 2002, the Company adjusted the unrealized loss in its
investment in Rawlings, previously reported as Other comprehensive accumulated
loss, by $1,032,000, thereby reducing the remaining unrealized loss, net of
deferred tax, to $(366,000). During the three months ended February 28, 2003,
this remaining unrealized loss was further reduced to zero, as a result of
appreciation in the quoted market value of the Rawlings common stock from
November 30, 2002 through the date the investment was sold in December 2002.

LIQUIDITY AND CAPITAL RESOURCES

Credit Arrangements 
As of February 28, 2003, the Companys indebtedness to its bank lenders was
$87,165,000. Under an amended and restated credit agreement dated October 11,
2002, the Company and its bank lenders amended the Companys bank credit
agreement to modify borrowing capacity restrictions, revise certain financial
covenants, provide for certain scheduled principal payments, revise the
maturity date of the obligations under the bank credit facility to September
30, 2003, and reduce the interest rate charged on outstanding borrowings, among
other changes. Under the amended agreement, the Company is required to make
scheduled payments on its term loans of at least $5,000,000 by each of January
15, 2003, April 15, 2003 and July 15, 2003. The amended agreement also
requires the Company to maintain a minimum net worth amount at all times and
requires the maintenance of minimum profitability thresholds determined
quarterly, beginning November 30, 2002. In December 2002, the Company sold its
investment in Rawlings and used the proceeds to make principal payments of
$6,764,000. As a result, the Company met the requirement to make aggregate
principal payments of at least $5,000,000 by January 15, 2003, and has reduced
the principal payment due by April 15, 2003 from $5,000,000 to $3,236,000. In
order to facilitate funding the principal payment obligation of $3,236,000 by
April 15, 2003, the Company currently plans to sell some or all of its
investment in warrants to purchase Gray common stock to an affiliated party at
its appraised value, thereby applying proceeds of at least $3,236 to its
outstanding Term Loans. In order to facilitate the funding of the $5,000
principal payment obligation due by July 15, 2003, the Company will likely be
required to (a) sell certain other investment assets held by the Company; or
(b) issue and sell equity securities of the Company, which may include the
Companys preferred stock; or (c) a combination thereof. Although there is no
assurance that the Company will be able to effect the foregoing potential
transactions or generate sufficient cash from these potential transactions
within a time frame required to make such scheduled payments, on the basis of
preliminary discussions with third parties, including affiliates, with whom
such transactions may be consummated, the Company believes that it will be able
to fund the scheduled principal payments in accordance with the terms of the
amended bank credit facility. The Companys debt to the banks is
collateralized by a lien on all of the Companys assets. The Company expects
to negotiate the terms of a long-term refinancing of the credit facility for
execution prior to the current facilitys maturity date of September 30, 2003.
Although the Company believes that it will be successful in negotiating a
long-term refinancing of the credit facility, there is no assurance that it
will be able to do so.

The Companys credit agreement currently provides for (a) two term loans for
borrowings currently totaling $67,165,000, bearing interest at either the
banks prime rate plus .75% or the London Interbank Offered Rate (LIBOR) plus
3.75%, requiring minimum aggregate principal payments as previously described,
with all amounts outstanding under the term loans due on September 30, 2003;
and (b) a revolving loan commitment (the Revolver) for borrowings of up to
$20,000,000 until maturity on September 30, 2003, bearing interest at either
the banks prime rate plus .75% or LIBOR plus 3.75%. Borrowings under the
Revolver are allowed to exceed 100% of eligible accounts receivable, however
amounts borrowed exceeding such threshold will bear an additional amount of
interest at a rate of 2% per annum. As of February 28, 2003, the $20,000,000
borrowing capacity under the Revolver was fully utilized, and no additional
borrowing capacity was available. The Company believes that it is in its best
interests to maintain the $20,000,000 outstanding balance under the Revolver at
all times, due to certain terms of the credit agreement that potentially limit
future borrowings under the Revolver. The Company anticipates that it will
continue to utilize fully the availability under the Revolver and invest excess
cash on hand, if any, in highly liquid investments.

14



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In September 2002, the Companys Chairman invested $3,000,000 for 3,000 shares
of Series C convertible preferred stock, which was used by the Company for
working capital purposes. Under the terms of the amended credit agreement, up
to $12,500,000 in funding for working capital purposes, if necessary, may be
provided by the issuance of equity securities, including shares of the
Companys redeemable preferred stock, or by the issuance of subordinated debt.
Through February 28, 2003, the Company had received a total of $7,097,000 in
cash for working capital purposes from the previously discussed issuances of
preferred stock to the Companys Chairman and his affiliates. Therefore, the
Company has the capacity to source an additional $5,403,000 of cash to use for
working capital purposes from the issuance of equity or debt securities during
the remaining term of the credit facility.

The Companys Chairman personally guarantees substantially all of the debt
outstanding under the current credit facility, and if the Company is unable to
meet its principal payment obligations under the recently amended credit
facility, it is likely that the bank lenders would call the guarantee, thereby
requiring the Chairman to repay the amount of the loan to the banks. Under the
terms of his guarantee, the Chairman has the option to purchase the entire loan
from the banks, and thereby become the holder of the debt currently payable to
the banks and the related lien on the Companys assets. The guarantee amount
will reduce in the future as principal payments are made to the bank lenders on
the outstanding term loans.

In connection with the Host-USA Acquisition, the Company issued 8% subordinated
notes, having an aggregate face value of $18,492,000 as of February 28, 2003.
Interest is payable quarterly, and the notes mature beginning in 2005. Payment
of interest and principal on all subordinated notes is subordinate to the
Companys bank credit agreement.

The Companys capital expenditures are not expected to exceed $600,000 for the
fiscal year ending August 31, 2003. Although there is no borrowing capacity
currently available under its revolving credit facility, the Company believes
that the cash flow anticipated from operations will be sufficient to fund the
Companys working capital, capital spending and interest payment requirements
up to the September 30, 2003 maturity date of the bank credit facility. As
previously discussed, the Company anticipates that the required principal
payments to its bank lenders prior to September 30, 2003 will be made with
proceeds from the sale of investment securities, issuance of equity securities
or a combination thereof. The Companys bank credit agreement, as amended,
provides the Company the ability to issue additional subordinated debt or
equity securities for cash proceeds of up to $5,403,000 without requiring an
associated reduction in its outstanding debt to the banks.

Historical Cash Flow Information 
Summary 
The following summarizes the Companys historical cash flow activities (amounts
in 000s):

|                                                     |                                             |   |                  |        |      |   |         |        |  
|---------------------------------------------------- | ------------------------------------------- | - | ---------------- | ------ | ---- | - | ------- | ------ | -
|                                                     |                                             |   | Six Months Ended
|                                                     |                                             |   | February 28,    
|                                                     |                                             |   |                 
|                                                     |                                             |   | 2003             |        | 2002
|                                                     |                                             |   |                  |        |     
|Cash flows from operating activities:                |                                             |   |                  |        |      |   |         |       
|                                                     | Continuing operations                       |   | $                | (2,031 | )    |   | $       | (1,292 | )
|                                                     | Discontinued operations                     |   |                  | 106    |      |   |         | (175   | )
|Cash flows from investing activities:                |                                             |   |                  |        |      |   |         |       
|                                                     | Continuing operation investing activities   |   |                  | 6,840  |      |   |         | 15,958 |  
|                                                     | Discontinued operation investing activities |   |                  |        |      |   |         | (113   | )
|Cash flows from financing activities                 |                                             |   | (4,573           | )      |      |   | (15,383 | )     
|                                                     |                                             |   |                  |        |      |   |         |       
|Net increase (decrease) in cash and cash equivalents |                                             | $ | 342              |        |      | $ | (1,005  | )     
|                                                     |                                             |   |                  |        |      |   |         |       

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Historical Cash Flow Information  Cash
Flows from Operating Activities 
The following summarizes the Companys historical cash flows from operating
activities (amounts in 000s):

|                                                      |  |                  |        |      |  |   |        |  
|----------------------------------------------------- |  | ---------------- | ------ | ---- |  | - | ------ | -
|                                                      |  | Six Months Ended
|                                                      |  | February 28,    
|                                                      |  |                 
|                                                      |  | 2003             |        | 2002
|                                                      |  |                  |        |     
|Operating income (loss)                               |  | $                | 4,548  |      |  | $ | (3,082 | )
|Depreciation and amortization included in operations  |  |                  | 1,229  |      |  |   | 1,461  |  
|Interest expense, net of interest and dividend income |  |                  | (4,322 | )    |  |   | (4,696 | )
|Net change in operating assets and liabilities        |  |                  | (3,643 | )    |  |   | 4,732  |  
|Other changes in operating cash flows                 |  |                  | 157    |      |  |   | 293    |  
|                                                      |  |                  |        |      |  |   |        |  
|Total cash flows from continuing operations           |  |                  | (2,031 | )    |  |   | (1,292 | )
|Cash flows from discontinued operating activities     |  |                  | 106    |      |  |   | (175   | )
|                                                      |  |                  |        |      |  |   |        |  
|Total cash flows from operating activities            |  | $                | (1,925 | )    |  | $ | (1,467 | )
|                                                      |  |                  |        |      |  |   |        |  

The Collegiate Marketing and Production Services segment primarily generates
revenues during the collegiate football and basketball seasons. In the six
months ended February 28, the segment primarily derives revenues from projects
and services associated with college football and basketball. The Affinity
Events segment consists primarily of participatory sports tours that generally
begin in March and end in September each year. Therefore, this segment
generates a proportionately low amount of revenues during the six months ended
February 28. In comparison with the same period last year, revenues and direct
costs associated with the Collegiate Marketing and Production Services segment
are significantly lower due to the termination of Hosts contract with the NCAA
on August 31, 2002 (the Host-NCAA Contract). In the prior year periods, as a
result of the Host-NCAA Contract, the Company generated a significant amount of
revenue from NCAA corporate licensing and sponsorship rights and incurred a
significant amount of guaranteed rights fee expense.

Operating income for the six months ended February 28, 2003 includes consulting
fees of $5,267,000, which were received as cash in a prior period and reported
as deferred revenues at that time. As a result, an increase in accounts
receivable of $4,970,000 during this period was not substantially offset by
what would otherwise have been a similarly significant increase in accounts
payable and accrued expenses. Therefore, the total cash flow from operating
activities for the six months ended February 28, 2003, was significantly
affected by the net change in operating assets and liabilities of $(3,643,000)
and interest expense, which combined, exceeded operating income before non-cash
depreciation and amortization expense. The Companys total cash flows from
continuing operations for the six months ended February 28, 2002 was
unfavorably affected by interest expense and the Companys operating loss
before depreciation and amortization expense. Operating income provided by
Host Communications, Bull Runs wholly-owned operating company, improved by
over $1,900,000 for the six months ended February 28, 2003 compared to the same
period in the prior year, on total revenues of $43,468,000 compared to
$59,747,000, respectively.

Other changes in operating cash flows for the three months ended February 28,
2002 included the income on Grays option to purchase the Companys former
investment in Sarkes Tarzian, Inc. (Tarzian) of $233,000. The option was
exercised by Gray in December 2001 and no additional option income was
recognized subsequent to exercise.

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Historical Cash Flow Information  Cash
Flows from Investing Activities
The following summarizes the Companys historical cash flows from investing
activities (amounts in 000s):

|                                                                |  |                  |       |      |  |   |        |  
|--------------------------------------------------------------- |  | ---------------- | ----- | ---- |  | - | ------ | -
|                                                                |  | Six Months Ended
|                                                                |  | February 28,    
|                                                                |  |                 
|                                                                |  | 2003             |       | 2002
|                                                                |  |                  |       |     
|Capital expenditures                                            |  | $                | (121  | )    |  | $ | (310   | )
|Proceeds from sale of investments, net                          |  |                  | 6,764 |      |  |   | 16,348 |  
|Decrease (increase) in other assets                             |  |                  | 197   |      |  |   | (80    | )
|                                                                |  |                  |       |      |  |   |        |  
|Total cash flows from continuing operation investing activities |  |                  | 6,840 |      |  |   | 15,958 |  
|Cash flows from discontinued operation investing activities     |  |                  |       |      |  |   | (113   | )
|                                                                |  |                  |       |      |  |   |        |  
|Total cash flows from investing activities                      |  | $                | 6,840 |      |  | $ | 15,845 |  
|                                                                |  |                  |       |      |  |   |        |  

In the six months ended February 28, 2003, the Company sold all of its shares
of Rawlings common stock to an unrelated company for $6,764,000. In the six
months ended February 28, 2002, the Company sold all of its remaining shares of
Gray preferred stock to a company affiliated with the Companys Chairman for
cash of $6,803,000, and sold all of its investment in Tarzian to Gray for
$10,000,000.

Historical Cash Flow Information  Cash
Flows from Financing Activities
The following summarizes the Companys historical cash flows from financing
activities (amounts in 000s):

|                                                        |  |                  |        |      |  |   |         |  
|------------------------------------------------------- |  | ---------------- | ------ | ---- |  | - | ------- | -
|                                                        |  | Six Months Ended
|                                                        |  | February 28,    
|                                                        |  |                 
|                                                        |  | 2003             |        | 2002
|                                                        |  |                  |        |     
|Net borrowings (repayments) on revolving line of credit |  | $                | 175    |      |  | $ | 1,750   |  
|Net proceeds (repayments) on long-term debt             |  |                  | (6,767 | )    |  |   | (19,743 | )
|Proceeds on issuance of preferred stock                 |  |                  | 3,000  |      |  |   | 2,400   |  
|Other financing cash flows                              |  |                  | (981   | )    |  |   | 210     |  
|                                                        |  |                  |        |      |  |   |         |  
|Total cash flows from financing activities              |  | $                | (4,573 | )    |  | $ | (15,383 | )
|                                                        |  |                  |        |      |  |   |         |  

In the six months ended February 28, 2003, the Company reduced its long-term
debt by $6,767,000 primarily with the proceeds from the sale of its investment
in Rawlings. In the six months ended February 28, 2002, the Company
reduced its long-term debt by $19,743,000 in part with the proceeds from the
sale of Gray preferred stock, the proceeds received from Gray on Grays
exercise of its option to purchase the Companys investment in Tarzian, and
proceeds received on the issuance of the Companys preferred stock.

CONTRACTUAL OBLIGATIONS

The following summarizes the Companys contractual obligations as of February
28, 2003 (amounts in 000s):

|                            |       |       |                                                |         |  |           |           |           |  |         |        |        |  |   |       |       |           |   |       |       | 
|--------------------------- | ----- | ----- | ---------------------------------------------- | ------- |  | --------- | --------- | --------- |  | ------- | ------ | ------ |  | - | ----- | ----- | --------- | - | ----- | ----- | 
|                            |       |       | Payments Due by Period as of February 28, 2003
|                            |       |       |                                               
|                            |       |       |                                                |         |  |           | Less than |           |  |         |        |        |  |   |       |       | More than
|Contractual Obligations     |       | Total |                                                | 1 Year  |  | 1-3 Years |           | 3-5 Years |  | 5 Years
|                            |       |       |                                                |         |  |           |           |           |  |        
|Long-term debt obligations  |       | $     | 106,247                                        |         |  | $         | 87,165    |           |  | $       | 19,082 |        |  | $ |       |       |           | $ |       |      
|Operating lease obligations |       |       | 5,640                                          |         |  |           | 2,073     |           |  |         | 2,419  |        |  |   | 520   |       |           |   | 628   |      
|Purchase obligations        |       |       | 40,814                                         |         |  |           | 15,283    |           |  |         | 23,121 |        |  |   | 2,410 |       |           |   |       |      
|Redeemable preferred stock  |       |       | 5,400                                          |         |  |           |           |           |  |         |        |        |  |   |       |       |           |   | 5,400 |      
|                            |       |       |                                                |         |  |           |           |           |  |         |        |        |  |   |       |       |           |   |       |      
|                            | Total |       | $                                              | 158,101 |  |           | $         | 104,521   |  |         | $      | 44,622 |  |   | $     | 2,930 |           |   | $     | 6,028 | 
|                            |       |       |                                                |         |  |           |           |           |  |         |        |        |  |   |       |       |           |   |       |      

Purchase obligations primarily consist of future guaranteed rights fee
commitments to associations or institutions under multi-year contractual
arrangements.

17



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##### 



RESULTS OF CONTINUING OPERATIONS  THREE MONTHS ENDED FEBRUARY 28, 2003
COMPARED TO THREE MONTHS ENDED FEBRUARY 28, 2002

Results Derived from Operating Businesses

Total revenues for the three months ended February 28, 2003 and 2002 are
summarized as follows (amounts in 000s):

|                                             |  |                    |        |      |  |   |        | 
|-------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | 
|                                             |  | Three Months Ended
|                                             |  | February 28,      
|                                             |  |                   
|                                             |  | 2003               |        | 2002
|                                             |  |                    |        |     
|Collegiate Marketing and Production Services |  | $                  | 15,238 |      |  | $ | 20,401 | 
|Affinity Events                              |  |                    | 568    |      |  |   | 1,075  | 
|Affinity Management Services                 |  |                    | 1,820  |      |  |   | 2,547  | 
|Consulting                                   |  |                    |        |      |  |   | 6      | 
|                                             |  |                    |        |      |  |   |        | 
|                                             |  | $                  | 17,626 |      |  | $ | 24,029 | 
|                                             |  |                    |        |      |  |   |        | 

Total revenues and operating results for the Collegiate Marketing and
Production Services segment were impacted in the three months ended February
28, 2003 by the termination of most of the Companys contracts with NCAA
corporate sponsors as of or prior to June 30, 2002. In the three months ended
February 28, 2002, the Company recognized revenues of approximately $5,958,000
in connection with NCAA corporate sponsorships. No such revenue was recognized
in the three months ended February 28, 2003.

Total revenues in the Affinity Events segment declined due to the elimination
of certain non-profitable tours and events prior to the current fiscal year.
The principal tours and events currently operated within the Affinity Events
segment generally take place during the months of March through September;
therefore, this segment would generally be expected to produce proportionately
low revenue and a loss from operations during the three months ended February
28.

Total revenues for the Affinity Management Services segment declined due to the
termination of certain contracts prior to the current fiscal year, which also
caused a similar decline in the Companys direct operating costs.

The Company believes that its revenues and operating results for the fiscal
periods prior to August 31, 2002 were significantly impacted by general market
conditions, i.e., the significant decline in corporate advertising and
sponsorship spending during Hosts peak selling period from September 2001
through February 2002, and the expiration of the Host-NCAA Contract on August
31, 2002. The Company believes that NCAA corporate sponsors strongly preferred
multi-year renewable commitments to single-year commitments, given the required
time that it takes for a corporate sponsor to activate promotional programs
related to an NCAA corporate sponsorship. It was therefore very difficult for
the Company, in the final year of the Host-NCAA Contract, to attract and sign
new NCAA corporate sponsors or replace NCAA corporate sponsors whose contracts
had expired. The Company expects that total revenues derived by the Collegiate
Marketing and Production Services segment subsequent to June 30, 2002 will be
significantly less than total revenues derived in comparable prior year
periods, as will direct operating costs of services rendered, due to a
significant reduction in guaranteed rights fees that were incurred in prior
years to acquire such licensing rights.

Total operating costs and expenses for the three months ended February 28, 2003
and 2002 are summarized as follows (amounts in 000s):

|                                            |  |                    |        |      |  |   |        | 
|------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | 
|                                            |  | Three Months Ended
|                                            |  | February 28,      
|                                            |  |                   
|                                            |  | 2003               |        | 2002
|                                            |  |                    |        |     
|Direct operating costs of services rendered |  | $                  | 12,779 |      |  | $ | 19,321 | 
|Selling, general and administrative         |  |                    | 6,303  |      |  |   | 7,235  | 
|Amortization of acquisition intangibles     |  |                    | 304    |      |  |   | 453    | 
|                                            |  |                    |        |      |  |   |        | 
|                                            |  | $                  | 19,386 |      |  | $ | 27,009 | 
|                                            |  |                    |        |      |  |   |        | 

18



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##### 



Direct operating costs of services rendered decreased for the three months
ended February 28, 2003 from the same period in the prior year due to (a) the
elimination of guaranteed rights fee expense associated with the Host-NCAA
Contract, which amounted to $4,540,000 for the three months ended February 28,
2002, plus (b) a decrease in events management and other production costs of
$717,000, plus (c) decreases in other rights fees and profit split expenses of
$1,528,000. As noted above, the Company anticipates that direct operating
costs will be significantly less subsequent to June 30, 2002 than in the
previous year due to the termination of the Host-NCAA Contract and the
elimination of non-profitable tours and events.

Selling, general and administrative costs declined for the three months ended
February 28, 2003 from the prior fiscal year due primarily to a reduction in
the Companys workforce. During the prior fiscal year, the Company reduced its
workforce by eliminating certain positions, reorganizing certain
responsibilities and terminating certain projects that were not currently or
expected to generate an adequate operating profit. Total employee compensation
costs included in selling, general and administrative expense were $3,811,000
for the three months ended February 28, 2003 compared to $4,424,000 for the
same period in the prior year.

Operating income (loss) for the three months ended February 28, 2003 and 2002
is summarized as follows (amounts in 000s):

|                                             |  |                    |        |      |  |   |        |  
|-------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                             |  | Three Months Ended
|                                             |  | February 28,      
|                                             |  |                   
|                                             |  | 2003               |        | 2002
|                                             |  |                    |        |     
|Collegiate Marketing and Production Services |  | $                  | 103    |      |  | $ | (735   | )
|Affinity Events                              |  |                    | (1,513 | )    |  |   | (1,386 | )
|Affinity Management Services                 |  |                    | 280    |      |  |   | (44    | )
|Consulting                                   |  |                    |        |      |  |   | 6      |  
|Amortization of acquisition intangibles      |  |                    | (304   | )    |  |   | (453   | )
|Unallocated general and administrative costs |  |                    | (326   | )    |  |   | (368   | )
|                                             |  |                    |        |      |  |   |        |  
|                                             |  | $                  | (1,760 | )    |  | $ | (2,980 | )
|                                             |  |                    |        |      |  |   |        |  

Results Derived from Investments and
Derivative Instruments 
Equity in earnings (losses) of affiliated companies, totaling $(366,000) for
the three months ended February 28, 2003 and $(676,000) for the three
months ended February 28, 2002 included (a) the Companys proportionate share
of the earnings or losses of (i) Gray; (ii) iHigh; and (iii) until December 31,
2001, Rawlings. Subsequent to December 31, 2001, and until its disposal in
December 2002, the Company accounts for its investment in Rawlings as an
available-for-sale marketable security (see Note 8 to the Condensed
Consolidated Financial Statements).

The net change in the value of certain derivative instruments, consisting of
warrants to purchase Gray common stock and interest rate swap agreements, was
$(189,000) for the three months ended February 28, 2003 primarily due to a
decrease in the value of warrants; and $(1,347,000) for the three months ended
February 28, 2002, due to a decrease in the value of the warrants, less an
increase in the value of the interest rate swap agreements.

In the three months ended February 28, 2002, the Company recognized an
extraordinary loss of $(627,000), as its proportionate share of an
extraordinary loss recognized by Gray related to Grays early extinguishment of
debt.

In the three months ended February 28, 2002, the Company recognized the
cumulative effect of an accounting change of $(2,620,000), as its proportionate
share of a cumulative effect adjustment recognized by Gray in January 2002 in
connection with a change in Grays accounting for goodwill and other intangible
assets.

Interest Expense and Debt Related Costs 
Interest expense increased slightly to $2,138,000 for the three months ended
February 28, 2003 from $2,023,000 for the same period in the prior year, as a
result of (a) higher average amounts outstanding under the Revolver in the
current year; and (b) amortization in the prior year period of a gain on a
modification in an interest rate swap agreement that terminated in December
2002, net of (c) a reduction in

19



---



##### 



variable interest rates in effect during the period and (d) lower amounts
outstanding under the Term Loans in the current year.

Debt issue cost amortization was $610,000 and $720,000 for the three months
ended February 28, 2003 and 2002, respectively. Debt issue costs consist of
(a) amounts paid in connection with obtaining bank financing amortized over the
remaining term of the bank credit facility; and (b) the value of shares of the
Companys common stock issued to the Companys Chairman to compensate him for
his personal guarantee of the Companys debt under its bank credit agreement.
The value of the shares issued is amortized over the period for which the
shares provide compensation, and approximately $349,000 and $406,000 of such
amortization is included in debt issue cost amortization for the three months
ended February 28, 2003 and 2002, respectively.

Income Taxes 
The principal differences between the federal statutory tax rate of 34% and the
effective tax rate are nondeductible intangibles amortization expense, state
income taxes and, for the three months ended February 28, 2003, a change in the
amount of a valuation allowance for potentially non-realizable deferred tax
assets.

RESULTS OF CONTINUING OPERATIONS  SIX MONTHS ENDED FEBRUARY 28, 2003 COMPARED
TO SIX MONTHS ENDED FEBRUARY 28, 2002

Results Derived from Operating Businesses

Total revenues for the six months ended February 28, 2003 and 2002 are
summarized as follows (amounts in 000s):

|                                             |  |                  |        |      |  |   |        | 
|-------------------------------------------- |  | ---------------- | ------ | ---- |  | - | ------ | 
|                                             |  | Six Months Ended
|                                             |  | February 28,    
|                                             |  |                 
|                                             |  | 2003             |        | 2002
|                                             |  |                  |        |     
|Collegiate Marketing and Production Services |  | $                | 37,018 |      |  | $ | 47,087 | 
|Affinity Events                              |  |                  | 2,352  |      |  |   | 4,196  | 
|Affinity Management Services                 |  |                  | 4,098  |      |  |   | 8,453  | 
|Consulting                                   |  |                  | 5,267  |      |  |   | 11     | 
|                                             |  |                  |        |      |  |   |        | 
|                                             |  | $                | 48,735 |      |  | $ | 59,747 | 
|                                             |  |                  |        |      |  |   |        | 

Total revenues and operating results for the Collegiate Marketing and
Production Services segment were impacted in the six months ended February 28,
2003 by the termination of most of the Companys contracts with NCAA corporate
sponsors as of or prior to June 30, 2002. In the six months ended February 28,
2002, the Company recognized revenues of approximately $11,502,000 in
connection with NCAA corporate sponsorships. No such revenue was recognized in
the six months ended February 28, 2003.

Total revenues in the Affinity Events segment declined due to the elimination
of certain non-profitable tours and events prior to the current fiscal year.
The tours and events currently operated within the Affinity Events segment
generally take place during the months of March through September; therefore,
this segment would generally be expected to produce proportionately low revenue
and a loss from operations during the six months ended February 28. The
segments loss from operations for the six months ended February 28, 2003 is
less than the same period in the prior year due to the elimination of the
certain events and tours, and an overall reduction in selling, general and
administrative costs of the segment.

Total revenues for the Affinity Management Services segment declined due to the
termination of certain contracts prior to the current fiscal year, which also
caused a similar decline in the Companys direct operating costs.

Refer to the paragraph under the heading
Results of Continuing Operations 
Three Months Ended February 28, 2003 Compared To Three Months Ended February
28, 2002  Results Derived From Operating Business for a discussion on the
impact of the Host-NCAA Contract expiration, and the resulting decline in total
revenues in comparison with prior fiscal year periods.

20



---



##### 



Prior to September 1, 2002, the Company received a $5,000,000 consulting fee
from Gray for services performed in connection with Grays acquisition of
Stations Holding Company, Inc. (Stations), which was consummated in October
2002. Also in October 2002, Gray completed a public offering of its common
stock, and in November 2002, Gray issued additional shares of its common stock.
These issuances of common stock by Gray resulted in a reduction of the
Companys equity investment in Grays outstanding common stock from 12.9% to
4.0% (representing 18.0% of the voting rights). As a result of these
transactions by Gray, the Company recognized deferred consulting fee income of
$4,810,000 in the six months ended February 28, 2003 attributable to Grays
acquisition of Stations, plus an additional $457,000 of previously deferred
consulting fee income as a result of the reduction in the Companys
proportionate ownership of Gray following Grays issuances of common stock.
The Company does not anticipate receiving any additional consulting fees from
Gray in the future. As a result of the Companys 4.0% equity investment in
Gray as of February 28, 2003, approximately 4.0% of consulting fee income on
fees charged to Gray in prior years is deferred and will be recognized as
income by the Company when Gray chooses to amortize or otherwise reduce the
book value of its goodwill, or when the Companys proportionate ownership of
Gray common stock decreases.

Total operating costs and expenses for the six months ended February 28, 2003
and 2002 are summarized as follows (amounts in 000s):

|                                            |  |                  |        |      |  |   |        | 
|------------------------------------------- |  | ---------------- | ------ | ---- |  | - | ------ | 
|                                            |  | Six Months Ended
|                                            |  | February 28,    
|                                            |  |                 
|                                            |  | 2003             |        | 2002
|                                            |  |                  |        |     
|Direct operating costs of services rendered |  | $                | 30,845 |      |  | $ | 46,550 | 
|Selling, general and administrative         |  |                  | 12,734 |      |  |   | 15,622 | 
|Amortization of acquisition intangibles     |  |                  | 608    |      |  |   | 657    | 
|                                            |  |                  |        |      |  |   |        | 
|                                            |  | $                | 44,187 |      |  | $ | 62,829 | 
|                                            |  |                  |        |      |  |   |        | 

Direct operating costs of services rendered decreased for the six months ended
February 28, 2003 from the same period in the prior year due to (a) the
elimination of guaranteed rights fee expense associated with the Host-NCAA
Contract, which amounted to $7,593,000 for the six months ended February 28,
2002, plus (b) a decrease in events management and other production costs of
$2,680,000, less (c) decreases in other rights fees and profit split expenses
of $5,361,000.

Selling, general and administrative costs declined for the six months ended
February 28, 2003 from the prior fiscal year due to a reduction in the
Companys workforce and a decrease in travel costs. During the prior fiscal
year, the Company reduced its workforce by eliminating certain positions,
reorganizing certain responsibilities and terminating certain projects that
were not currently or expected to generate an adequate operating profit. Total
employee compensation costs included in selling, general and administrative
expense were $7,764,000 for the six months ended February 28, 2003 compared to
$9,534,000 for the same period in the prior year. Travel costs were
substantially reduced through efforts to operate more efficiently and control
travel spending. As a result, total travel expense included in selling,
general and administrative expense declined to $441,000 for the six months
ended February 28, 2003 compared to $637,000 for the same period in the prior
year.

Operating income (loss) for the six months ended February 28, 2003 and 2002 is
summarized as follows (amounts in 000s):

|                                             |  |                  |        |      |  |   |        |  
|-------------------------------------------- |  | ---------------- | ------ | ---- |  | - | ------ | -
|                                             |  | Six Months Ended
|                                             |  | February 28,    
|                                             |  |                 
|                                             |  | 2003             |        | 2002
|                                             |  |                  |        |     
|Collegiate Marketing and Production Services |  | $                | 2,649  |      |  | $ | 1,283  |  
|Affinity Events                              |  |                  | (2,749 | )    |  |   | (3,221 | )
|Affinity Management Services                 |  |                  | 676    |      |  |   | 586    |  
|Consulting                                   |  |                  | 5,267  |      |  |   | 11     |  
|Amortization of acquisition intangibles      |  |                  | (608   | )    |  |   | (657   | )
|Unallocated general and administrative costs |  |                  | (687   | )    |  |   | (1,084 | )
|                                             |  |                  |        |      |  |   |        |  
|                                             |  | $                | 4,548  |      |  | $ | (3,082 | )
|                                             |  |                  |        |      |  |   |        |  

21



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##### 



Results Derived from Investments and
Derivative Instruments 
Equity in earnings (losses) of affiliated companies, totaling $213,000 for the
six months ended February 28, 2003 and $(884,000) for the six months ended
February 28, 2002 included (a) the Companys proportionate share of the
earnings or losses of (i) Gray; (ii) iHigh; and (iii) until December 31, 2001,
Rawlings. In the six months ended February 28, 2003, a portion of the
unrealized loss on the Rawlings investment that had been previously reported as
other comprehensive accumulated loss (a component of stockholders equity)
was expensed, resulting in an investment valuation charge of $1,032,000.

As a result of Grays issuance of common stock in October and November 2002 for
average net proceeds to Gray of approximately $7.72 per share, and since the
Companys carrying value of its investment in Gray common stock prior to Grays
issuance exceeded $7.72 per share, the Company reported a non-cash loss on
Grays issuance of shares in the six months ending November 30, 2002 of
$(2,339,000).

In the six months ended February 28, 2002, the Company sold the remainder of
its investment in Gray preferred stocks, resulting in a gain of $3,064,000.

The net change in the value of certain derivative instruments, consisting of
warrants to purchase Gray common stock and interest rate swap agreements, was
$(1,863,000) for the six months ended February 28, 2003 primarily due to a
decrease in the value of warrants; and $(2,859,000) for the six months ended
February 28, 2002, due to a decrease in the value of the warrants, plus a
decrease in the value of the interest rate swap agreements.

In the six months ended February 28, 2003 and 2002, the Company recognized
extraordinary losses of $(406,000) and $(627,000), respectively, as its
proportionate share of extraordinary losses recognized by Gray related to
charges resulting from Grays early extinguishment of debt.

In the six months ended February 28, 2002, the Company recognized the
cumulative effect of an accounting change of $(2,620,000), as its proportionate
share of a cumulative effect adjustment recognized by Gray in January 2002 in
connection with a change in Grays accounting for goodwill and other intangible
assets.

Interest Expense and Debt Related Costs 
Interest expense decreased to $4,331,000 for the six months ended February 28,
2003 from $4,735,000 for the same period in the prior year, as a result of a
reduction in long-term debt and declines in variable interest rates to which a
significant amount of the debt is subject.

Debt issue cost amortization was $1,154,000 and $1,542,000 for the six months
ended February 28, 2003 and 2002, respectively. Debt issue costs consist of
(a) amounts paid in connection with obtaining bank financing amortized over the
remaining term of the bank credit facility; and (b) the value of shares of the
Companys common stock issued to the Companys Chairman to compensate him for
his personal guarantee of the Companys debt under its bank credit agreement.
The value of the shares issued is amortized over the period for which the
shares provide compensation, and approximately $714,000 and $812,000 of such
amortization is included in debt issue cost amortization for the six months
ended February 28, 2003 and 2002, respectively.

Income Taxes 
The principal differences between the federal statutory tax rate of 34% and the
effective tax rate are nondeductible intangibles amortization expense, state
income taxes and, for the six months ended February 28, 2003, a change in the
amount of a valuation allowance for potentially non-realizable deferred tax
assets.

INTEREST RATE AND MARKET RATE RISK

The Company is exposed to changes in interest rates due to the Companys
financing of its acquisitions, investments and operations. Interest rate risk
is present with both fixed and floating rate debt. The Company uses interest
rate swap agreements (as described in Note 5 to the Condensed Consolidated
Financial Statements) to manage its debt profile.

22



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##### 



Interest rate swap agreements generally involve exchanges of underlying face
(notional) amounts of designated hedges. The Company continually evaluates the
credit quality of counterparties to interest rate swap agreements and does not
believe there is a significant risk of nonperformance by any of the
counterparties to the agreements.

Based on the Companys debt profile as of February 28, 2003 and 2002, a 1%
increase in market interest rates would increase interest expense and decrease
the income before income taxes (or alternatively, increase interest expense and
increase the loss before income taxes) by $139,000 and $113,000 for the three
months ended February 28, 2003 and 2002, respectively, and by $261,000 and
$258,000 for the six months ended February 28, 2003 and 2002, respectively.
These amounts were determined by calculating the effect of the hypothetical
interest rate on the Companys floating rate debt, after giving effect to the
Companys interest rate swap agreements. These amounts do not include the
effects of certain potential results of increased interest rates, such as a
reduced level of overall economic activity or other actions management may take
to mitigate the risk. Furthermore, this sensitivity analysis does not assume
changes in the Companys financial structure that could occur if interest rates
were higher.

The Company holds investments in certain common stocks and warrants to purchase
common stock, and previously held investments in Gray preferred stock. The
Company is exposed to changes in market values of these investments, some of
which are publicly traded common stocks. In the case of the Companys
investment in Grays two classes of common stock, where there exists a quoted
market price for the publicly-traded securities in which the Company holds
investments, the investment is accounted for under the equity method, whereby
changes in the quoted market price of the security do not impact the carrying
value of the investment. However, fluctuations in market prices of investments
could ultimately affect the amounts the Company might realize upon a disposal
of some or all of its investments. Based on managements estimates of the
aggregate fair value of the Companys investments in affiliated companies (as
described in Note 4 to the Condensed Consolidated Financial Statements), a 10%
change in the aggregate market value of such investments would increase or
decrease such aggregate market value by approximately $3,700,000 as of February
28, 2003 and $4,500,000 as of August 31, 2002.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. When used
in this Report, the words believes, expects, anticipates, estimates and
similar words and expressions are generally intended to identify
forward-looking statements. Statements that describe the Companys future
strategic plans, goals or objectives are also forward-looking statements.
Readers of this Report are cautioned that any forward-looking statements,
including those regarding the intent, belief or current expectations of the
Company or management, are not guarantees of future performance, results or
events, and involve risks and uncertainties. The forward-looking statements
included in this Report are made only as of the date hereof. The Company
undertakes no obligation to update such forward-looking statements to reflect
subsequent events or circumstances. Actual results and events may differ
materially from those in the forward-looking statements as a result of various
factors including, but not limited to the following: (i) the Companys and
Grays leverage may adversely affect their ability to obtain financing, thereby
impairing their ability to withstand economic downturns or competitive
pressures; (ii) Grays business depends, in part, on sales of advertising time
and space and on its relationships with, and success of, its national network
affiliates; (iii) significant segments of the Companys business are seasonal;
(iv) the Companys business depends on short term contracts and the inability
to renew or extend these contracts could adversely affect its business; (v)
the Company may lose money on some of its contracts, because it guarantees
certain payments thereunder; (vi) war or acts of terrorism or a continued
domestic economic downturn or recession could materially adversely impact
corporate discretionary spending, such as sponsorships and advertising sold by
the Company and Gray.

23



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##### 



Item 4. Controls and Procedures

Based on the evaluation of the effectiveness of the design and operation of the
Companys disclosure controls and procedures performed pursuant to Rule 13a-15
under the Securities Exchange Act of 1934 as amended, the Companys Chief
Executive Officer and its Chief Financial Officer have concluded that there
were no material weakness in such controls as of February 28, 2003.

There were no significant changes to the Companys internal controls or in
other factors that could significantly affect these controls during the
quarterly period ended February 28, 2003.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In January 1999, the Company acquired shares of Sarkes Tarzian, Inc.
(Tarzian) common stock, $4.00 par value, (the Tarzian Shares) from the
Estate of Mary Tarzian (the Estate) for $10.0 million. In March 1999, the
Company and Gray entered into an option agreement whereby Gray purchased an
option to acquire the Tarzian Shares from the Company, and in December 2001,
Gray exercised such option, purchasing the Tarzian Shares from the Company for
$10.0 million. During the option period, the Company received fees from Gray
in the aggregate amount of $3.2 million.

On February 12, 1999, Tarzian filed suit in the United States District Court
for the Southern District of Indiana against U.S. Trust Company of Florida
Savings Bank as Personal Representative of the Estate, claiming that Tarzian
had a binding and enforceable contract to purchase the Tarzian Shares from the
Estate. On February 3, 2003, the Court entered judgment on a jury verdict in
favor of Tarzian for breach of contract and awarding Tarzian $4.0 million in
damages. The Estate has filed a renewed motion for judgment as a matter of
law, and alternatively, for a new trial on the issue of liability. Tarzian has
filed a motion to amend the judgment, requesting that the court award Tarzian
specific performance of the contract and title to the Tarzian Shares, or, in
the alternative, award pre-judgment interest on the $4.0 million damage award.
The Company cannot predict when the final resolution of this litigation will
occur.

On March 7, 2003, Tarzian filed suit in the United States District Court for
the Northern District of Georgia against Gray and the Company for tortious
interference with contract and conversion. The lawsuit alleges that Bull Run
and Gray purchased the Tarzian Shares with actual knowledge that Tarzian had a
binding agreement to purchase the stock from the Estate. The lawsuit seeks
damages in an amount equal to the liquidation value of the interest in Tarzian
that the stock represents, which Tarzian claims to be as much as $75 million,
as well as attorneys fees, expenses, and punitive damages. The lawsuit also
seeks an order requiring Gray and the Company to turn over the Tarzian Shares
to Tarzian and relinquish all claims to the stock. The stock purchase
agreement with the Estate would permit the Company to make a claim against the
Estate in the event that title to the Tarzian Shares is ultimately awarded to
Tarzian. The Company has not filed an answer or other responsive pleading in
the lawsuit; however, the Company believes it has meritorious defenses and
intends to vigorously defend the lawsuit. The Company cannot predict when the
final resolution of this litigation will occur.

24



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##### 



Item 4. Submission of Matters to a Vote of Security Holders

An annual meeting of the Companys shareholders was held in Atlanta, Georgia on
February 13, 2003. All of the proposals considered by shareholders were
approved, as follows:



|(1) |  | Proposal to elect J. Mack Robinson, Gerald N. Agranoff, James W. Busby,
W. James Host, Hilton H. Howell, Jr., Monte C. Johnson and Robert S.
Prather, Jr. as directors:
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|          |  |  |            | 
|--------- |  |  | ---------- | 
|For:      |  |  | 34,282,273 | 
|Withhold: |  |  | 145,526    | 



|(2) |  | Proposal to authorize an amendment to the Companys Articles of
Incorporation to effect a stock combination (reverse stock split) and
decrease the authorized number of shares of common stock, if such
amendment is necessary to maintain compliance with Nasdaq continued
listing requirements:
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|         |  |  |            | 
|-------- |  |  | ---------- | 
|For:     |  |  | 33,562,201 | 
|Against: |  |  | 800,523    | 
|Abstain: |  |  | 65,075     | 



|(3) |  | Proposal to confirm the appointment of PricewaterhouseCoopers LLP as the
independent auditors:
|--- |  | ----------------------------------------------------------------------------------------------

|         |  |  |            | 
|-------- |  |  | ---------- | 
|For:     |  |  | 34,274,338 | 
|Against: |  |  | 138,502    | 
|Abstain: |  |  | 14,959     | 

Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits                                           
|--- |  | ---------------------------------------------------
|   
|    |  | 99.1 Certifications Pursuant to U.S.C. Section 1350
|   
|(b) |  | Reports on Form 8-K                                
|   
|    |  | None                                               

SIGNATURES

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

|                     |  |     |  |                                                                                                         
|-------------------- |  | --- |  | --------------------------------------------------------------------------------------------------------
|                     |  |     |  | BULL RUN CORPORATION                                                                                    
|                    
|                     |  |     |  |                                                                                                         
|                    
|Date: April 11, 2003 |  | By: |  | /s/ FREDERICK J. ERICKSONFrederick J. Erickson
Vice President-Finance, Treasurer
and Assistant Secretary

25



---



##### 



CERTIFICATION

I, Robert S. Prather, Jr., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Bull Run
Corporation (Registrant);                                                                                                                                                                                                                                    
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The Registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the Registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The Registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit
committee of the Registrants board of directors:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrants ability to
record, process, summarize and report financial data and have
identified for the Registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrants
internal controls; and                                                                                                                                        



|6. |  | The Registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|        |  |                                                                                       
|------- |  | --------------------------------------------------------------------------------------
|Date:   |  | April 11, 2003                                                                        
|       
|        |  |                                                                                       
|       
|Signed: |  | /s/ ROBERT S. PRATHER, JR.Robert S. Prather, Jr.
President and Chief Executive Officer

26



---



##### 



CERTIFICATION

I, Frederick J. Erickson, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Bull Run
Corporation (Registrant);                                                                                                                                                                                                                                    
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The Registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the Registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The Registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit
committee of the Registrants board of directors:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrants ability to
record, process, summarize and report financial data and have
identified for the Registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrants
internal controls; and                                                                                                                                        



|6. |  | The Registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|        |  |                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------
|Date:   |  | April 11, 2003                                                                                     
|       
|        |  |                                                                                                    
|       
|Signed: |  | /s/ FREDERICK J. ERICKSONFrederick J. Erickson
Vice President - Finance and Chief Financial Officer

27