<PAGE>   1
                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 SEPTEMBER 30, 1998

                                       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                                  91-1117599
       (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: 22,283,267 shares of Common
Stock, par value $.01 per share, were outstanding as of October 30, 1998.


<PAGE>   2



                          PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                              BULL RUN CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                          
                                                                          SEPTEMBER 30,   DECEMBER 31,
                                                                              1998           1997       
                                                                          -------------   ------------
<S>                                                                       <C>             <C>         
                                ASSETS

 Current assets:
    Cash and cash equivalents .........................................    $    204,678   $    142,097
    Accounts receivable ...............................................       5,168,335      4,599,548
    Inventories .......................................................       5,846,626      3,757,437
    Other .............................................................         303,981        193,013
                                                                           ------------   ------------
         Total current assets .........................................      11,523,620      8,692,095
 Property and equipment, net ..........................................       2,790,655      2,637,652
 Investment in affiliated companies ...................................      75,743,239     61,550,777
 Goodwill .............................................................       6,953,363      3,589,110
 Other assets .........................................................         197,420        362,548
                                                                           ------------   ------------

                                                                           $ 97,208,297   $ 76,832,182
                                                                           ============   ============

               LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
    Notes payable and current portion of long-term debt ...............   $  3,700,000    $  2,500,000
    Accounts payable ..................................................      2,689,453       2,462,276
    Accrued and other liabilities:
       Employee compensation and related taxes ........................        560,889         430,397
       Interest .......................................................        628,149         552,720
       Other ..........................................................        399,329         233,166
                                                                          ------------    ------------
         Total current liabilities ....................................      7,977,820       6,178,559
                                                                          ------------    ------------
 Long-term debt .......................................................     53,948,659      41,998,483
                                                                          ------------    ------------
 Deferred income taxes ................................................      4,945,653       3,599,267
                                                                          ------------    ------------

 Stockholders' equity:
    Common stock ($.01 par value, authorized 100,000,000 shares; issued
       22,836,227 shares as of September 30, 1998 and 22,582,727 shares
       as of December 31, 1997) .......................................        228,362         225,827
    Additional paid-in capital ........................................     21,594,165      20,800,566
    Retained earnings .................................................      9,975,130       7,217,650
    Treasury stock, at cost (552,960 shares as of September 30, 
       1998 and 1,286,510 shares as of December 31, 1997) .............     (1,461,492)     (3,188,170)
                                                                          ------------    ------------
          Total stockholders' equity ..................................     30,336,165      25,055,873
                                                                          ------------    ------------

                                                                          $ 97,208,297    $ 76,832,182
                                                                          ============    ============
</TABLE>




     See accompanying notes to condensed consolidated financial statements.


<PAGE>   3



                              BULL RUN CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              AND RETAINED EARNINGS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                     THREE MONTHS ENDED             NINE MONTHS ENDED
                                                        SEPTEMBER 30                   SEPTEMBER 30
                                                     -------------------           -------------------
                                                     1998           1997           1998           1997
                                                     ----           ----           ----           ----

<S>                                             <C>            <C>            <C>             <C>         
Revenue from printer operations .............   $ 7,219,825    $ 5,545,313    $ 21,377,437    $ 16,112,030
Cost of goods sold ..........................     5,371,280      3,979,577      16,007,417      11,704,636
                                                -----------    -----------    ------------    ------------
    Gross profit ............................     1,848,545      1,565,736       5,370,020       4,407,394
                                                -----------    -----------    ------------    ------------

Consulting fee income .......................       964,130         71,130       1,615,790         678,406
                                                -----------    -----------    ------------    ------------

Operating expenses:
    Research and development ................       608,612        692,083       1,762,785       1,786,613
    Selling, general and administrative .....     1,526,911      1,024,091       4,640,717       3,279,778
                                                -----------    -----------    ------------    ------------
                                                  2,135,523      1,716,174       6,403,502       5,066,391
                                                -----------    -----------    ------------    ------------

Income (loss) from operations ...............       677,152        (79,308)        582,308          19,409

Other income (expense):
    Equity in earnings (losses) of affiliated
        companies ...........................     6,825,956       (173,213)      6,679,880        (321,238)
    Interest and dividend income ............       288,628        275,260         850,750         826,341
    Interest expense ........................    (1,079,611)      (693,537)     (3,188,867)     (1,942,996)
                                                -----------    -----------    ------------    ------------

Income (loss) before income taxes ...........     6,712,125       (670,798)      4,924,071      (1,418,484)

Income tax benefit (provision) ..............    (2,672,482)       297,002      (2,166,591)        595,778
                                                -----------    -----------    ------------    ------------

Net income (loss) ...........................     4,039,643       (373,796)      2,757,480        (822,706)

Retained earnings, beginning of period ......     5,935,487      8,541,732       7,217,650       8,990,642
                                                -----------    -----------    ------------    ------------

Retained earnings, end of period ............   $ 9,975,130    $ 8,167,936    $  9,975,130    $  8,167,936
                                                ===========    ===========    ============    ============



Earnings (loss) per share:
   Basic ....................................   $       .18    $      (.02)   $        .12    $       (.04)
   Diluted ..................................   $       .17    $      (.02)   $        .12    $       (.04)
</TABLE>




     See accompanying notes to condensed consolidated financial statements.


<PAGE>   4




                              BULL RUN CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED
                                                                        SEPTEMBER 30     
                                                                    ---------------------
                                                                    1998            1997
                                                                    ----            ----
<S>                                                            <C>             <C>         
Cash flows from operating activities:
    Net income (loss) ......................................   $  2,757,480    $   (822,706)
    Adjustments to reconcile net income (loss) to net cash
      used in operating activities:
         Depreciation and amortization .....................        908,089         722,654
         Equity in (earnings) losses of affiliated companies     (6,679,880)        321,238
         Accrued preferred dividend income .................       (174,692)       (225,000)
         Change in operating assets and liabilities:
             Accounts receivable ...........................       (265,507)         44,145
             Inventories ...................................       (890,303)        184,093
             Other current assets ..........................       (158,800)        (27,708)
             Accounts payable and accrued expenses .........        214,737          53,928
             Deferred income taxes .........................      2,078,000        (430,000)
                                                               ------------    ------------
         Net cash used in operating activities .............     (2,210,876)       (179,356)
                                                               ------------    ------------

Cash flows from investing activities:
    Capital expenditures ...................................       (314,983)       (441,847)
    Investment in affiliated companies .....................     (8,723,737)     (2,006,616)
    Acquisitions of printer manufacturer and printer product
           rights, net of cash acquired ....................     (2,715,814)
    Redemption of preferred stock investment ...............      1,304,692
    Dividends received from affiliated companies ...........         81,155         975,307
                                                               ------------    ------------
         Net cash used in investing activities .............    (10,368,687)     (1,473,156)
                                                               ------------    ------------

Cash flows from financing activities:
    Borrowings on revolving lines of credit ................     13,762,000      10,879,886
    Borrowings on notes payable ............................      1,200,000       1,400,000
    Repayments on revolving lines of credit ................    (14,286,506)     (8,780,339)
    Proceeds from long-term debt ...........................     12,974,682
    Repayments on long-term debt ...........................     (1,030,844)
    Repurchase of common stock .............................         (2,125)     (1,750,841)
    Exercise of incentive stock options ....................         24,937         256,359
                                                               ------------    ------------
         Net cash provided by financing activities .........     12,642,144       2,005,065
                                                               ------------    ------------

Net increase in cash and cash equivalents ..................         62,581         352,553
Cash and cash equivalents, beginning of period .............        142,097          81,291
                                                               ------------    ------------

Cash and cash equivalents, end of period ...................   $    204,678    $    433,844
                                                               ============    ============

Supplemental cash flow disclosures:
    Interest paid ..........................................   $  2,717,804    $  1,612,115
    Income taxes paid (received) ...........................              0         (57,899)

Treasury stock issued in connection with acquisition of
    printer manufacturer, a noncash investing and
    financing activity .....................................   $  2,500,000
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


<PAGE>   5




                              BULL RUN CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


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 interim periods 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 year ended December 31, 1997.

The accompanying condensed consolidated financial statements include the
accounts of Bull Run Corporation and its wholly-owned subsidiary, Datasouth
Computer Corporation (collectively, unless the context otherwise requires, the
"Company"), after elimination of intercompany accounts and transactions.


2.  ACQUISITIONS

Effective January 2, 1998, the Company acquired all of the outstanding common
stock of CodeWriter Industries, Inc. and all of the outstanding membership
interests of its affiliate, CW Technologies, LLC (collectively referred to as
"CodeWriter"), in a transaction valued at approximately $6.2 million, including
the issuance of treasury stock valued at $2.5 million and future consideration.
CodeWriter designs and manufactures a line of direct thermal and thermal
transfer desktop and portable bar code label printers. The acquisition has been
accounted for under the purchase method of accounting, whereby the results of
operations of the acquired business are included in the accompanying condensed
consolidated financial statements as of its acquisition date. The assets and
liabilities of the acquired business are included based on an allocation of the
purchase price.

On September 25, 1998, the Company purchased the assets, consisting primarily of
inventories, associated with the Sigma-Data 7200 high speed Automated Ticket /
Boarding Pass Version 2 printer from a Japanese company, in a transaction valued
at approximately $750,000. Effective October 1, 1998, the Company purchased a
United Kingdom-based sales organization from its UK parent, for an amount to be
determined based on future sales volume. The UK organization, which has been
selling the Company's products and the Sigma- Data 7200 printer to computer
reservation systems and airlines throughout the world, will serve as the
Company's European sales office and stocking facility.


3.  INVESTMENT IN AFFILIATED COMPANIES

The Company accounts for its investments in Gray Communications Systems, Inc.
("Gray"), Host Communications, Inc. ("HCI"), Capital Sports Properties, Inc.
("CSP") and Rawlings Sporting Goods Company, Inc. ("Rawlings") using the equity
method. The excess of the Company's investments in Gray, HCI, CSP and Rawlings
over the underlying equity thereof is being amortized over 40 years, with such
amortization (totaling $583,000 and $458,000 in the nine months ended September
30, 1998 and 1997, respectively) reported as a reduction in the Company's equity
in earnings (losses) of affiliated companies.

The Company provides consulting services to Gray from time to time in connection
with Gray's acquisitions and dispositions. Income on a portion of such fees is
deferred and recognized over 40 years as a result of the Company's 16.8% equity
investment position in Gray as of September 30, 1998 (with such position
representing a 27.4% voting interest in Gray). Gray is a communications company
headquartered in Albany, Georgia which currently


<PAGE>   6



operates 10 television stations, three daily newspapers, advertising weekly
shoppers, a satellite broadcasting operation and a paging business.

On July 31, 1998, Gray disposed of a television station and recognized an
after-tax gain of approximately $43 million in connection with the disposition.
As a result, the Company's equity in Gray's earnings was favorably impacted by
approximately $6.9 million, and the Company's net income was favorably impacted
by approximately $4.0 million, in the three months and nine months ended
September 30, 1998.

The Company's direct common equity ownership in HCI, combined with the Company's
indirect common equity ownership in HCI through its investment in CSP, was 32.6%
as of September 30, 1998. Additionally, the Company owns indirectly, through
CSP, 51.5% of HCI's 8% series B preferred stock having a liquidation value of
$3,750,000. HCI, based in Lexington, Kentucky, and its 33.8%-owned affiliate,
Universal Sports America, Inc. ("USA"), provide media and marketing services to
universities, athletic conferences and various associations representing
collegiate sports and, in addition, market and operate amateur participatory
sporting events. The Company recognizes its equity in earnings of HCI on a six
month lag basis, in order to align HCI's fiscal year ending June 30 with the
Company's fiscal year. In June 1998, the Company announced its intention to sell
its investments in HCI and USA (which would be preceded by the merger of CSP and
HCI) to Thomas O. Hicks, owner of the Texas Rangers baseball team and the Dallas
Stars hockey team, for approximately $5.8 million, plus a 3.34% equity position
in a new entity comprised of Mr. Hicks' sports holdings. In connection with the
proposed sale, HCI would also redeem all of its preferred stock and pay all
accrued dividends, resulting in additional proceeds to the Company of
approximately $2.7 million. The transaction, subject to the approval of various
sports organizations and certain other conditions, is currently expected to
close by early 1999.

In November 1997, the Company entered into an Investment Purchase Agreement with
Rawlings, a leading supplier of team sports equipment based near St. Louis,
Missouri. Pursuant to this agreement, the Company acquired warrants to purchase
approximately 10% of Rawlings' common stock, and has the right, under certain
circumstances, to acquire additional warrants. Fifty percent of the purchase
price, or $1,421,000, was paid to Rawlings upon execution of the agreement. The
remaining fifty percent, plus interest at 7% per annum through the date of
payment, will be due on the earlier of the exercise date and the expiration date
of the warrants. In addition, under the terms of the agreement, the Company
purchased approximately 10.4% of Rawlings' outstanding common stock in the open
market from November 1997 through January 1998. Effective January 15, 1998, the
date on which a representative of the Company was elected to Rawlings' Board of
Directors, the Company has accounted for its investment in Rawlings by the
equity method on a one month lag basis, in order to align Rawlings' fiscal
quarters ending November 30, February 28, May 31 and August 31 with the
Company's fiscal quarters.

Aggregate operating results of affiliated companies (reflecting, for 1998, Gray
and CSP for the three months and nine months ended September 30, 1998, combined
with HCI for the three months and nine months ended March 31, 1998 and Rawlings
for the three months and nine months ended August 31, 1998; and reflecting, for
1997, Gray and CSP for the three months and nine months ended September 30,
1997, combined with HCI for the three months and nine months ended March 31,
1997) were as follows:

<TABLE>
<CAPTION>
                         THREE MONTHS ENDED    THREE MONTHS ENDED
                         SEPTEMBER 30, 1998    SEPTEMBER 30, 1997
                         ------------------    ------------------

<S>                          <C>                 <C>         
Operating revenue            $ 88,764,000        $ 44,016,000
Income from operations          4,716,000           5,678,000
Net income (loss)              41,152,000            (389,000)
</TABLE>




<PAGE>   7




<TABLE>
<CAPTION>
                            NINE MONTHS ENDED     NINE MONTHS ENDED
                            SEPTEMBER 30, 1998    SEPTEMBER 30, 1997
                            ------------------    ------------------
<S>                          <C>                     <C>          
Operating revenue            $ 267,502,000           $ 107,928,000
Income from operations          30,295,000              17,054,000
Net income                      46,943,000                 441,000
</TABLE>

Unaudited pro forma results for the three and nine month periods ended September
30, 1998 and 1997, assuming the acquisition of CodeWriter and the investment in
Rawlings had occurred on January 1, 1997, are presented below. This unaudited
pro forma data does not purport to represent the Company's actual results of
operations had the CodeWriter acquisition and the Rawlings' investment occurred
on January 1, 1997, and should not serve as a forecast of the Company's
operating results for any future periods. The pro forma adjustments, including
(a) the elimination of certain expenses pertaining to the former owners and
members of CodeWriter; (b) adjustments to the Company's equity in earnings
(losses) for the Company's proportionate share of Rawlings' net income; (c) the
increase in interest expense in connection with acquisition debt incurred; (d)
adjustments for the income tax effects of the pro forma adjustments; and (e) the
increase in the number of outstanding shares of the Company's common stock to
reflect the treasury shares issued to the former shareholders and members of
CodeWriter, are based solely upon certain assumptions that management believes
are reasonable under the circumstances at this time.

<TABLE>
<CAPTION>
                                   THREE MONTHS ENDED   THREE MONTHS ENDED
                                   SEPTEMBER 30, 1998   SEPTEMBER 30, 1997
                                   ------------------   ------------------

<S>                                   <C>                  <C>        
Revenue from printer operations       $ 7,220,000          $ 7,008,000
Consulting fee income                     964,000               71,000
Net income (loss)                       4,040,000             (405,000)
Net income (loss) per share:
    Basic                             $       .18          $      (.02)
    Diluted                           $       .17          $      (.02)
</TABLE>


<TABLE>
<CAPTION>
                                     NINE MONTHS ENDED    NINE MONTHS ENDED
                                     SEPTEMBER 30, 1998   SEPTEMBER 30, 1997
                                     ------------------   ------------------

<S>                                   <C>                    <C>         
Revenue from printer operations       $ 21,377,000           $ 19,702,000
Consulting fee income                    1,616,000                678,000
Net income (loss)                        2,777,000               (708,000)
Net income (loss) per share:
    Basic                             $        .13           $       (.03)
    Diluted                           $        .12           $       (.03)
</TABLE>


4.  INVENTORIES

Inventories associated with the Company's printer manufacturing operations
consisted of the following:

<TABLE>
<CAPTION>
                       SEPTEMBER 30,         DECEMBER 31,
                           1998                 1997
                       -------------         -----------       

<S>                     <C>                  <C>        
Raw materials           $ 3,832,544          $ 2,734,387
Work-in-process             810,317              711,068
Finished goods            1,203,765              311,982
                        -----------          -----------
                        $ 5,846,626          $ 3,757,437
                        ===========          ===========
</TABLE>




<PAGE>   8



5.  NOTES PAYABLE AND LONG-TERM DEBT

In 1998, the Company amended all of its long-term debt agreements. One of such
bank agreements, which was amended on February 20, 1998 (the "February
Agreement"), provides for:

   (a) a $5,000,000 term note, payable $250,000 per quarter beginning March 31,
1998, bearing interest at the London Interbank Offered Rate ("LIBOR") plus
2.75%; and

   (b) a revolving bank credit facility for borrowings of up to $5,000,000
expiring February, 2001, bearing interest at LIBOR plus 2.75%, with a mandatory
reduction in February 1999 to $4,000,000 in available borrowings, under which
$4,805,000 was outstanding at September 30, 1998. This revolving bank credit
facility replaced a similar $5,500,000 facility under which $5,472,000 was
outstanding at December 31, 1997.

Another bank agreement, which was amended on March 20, 1998 (the "March
Agreement"), provides for:

   (a) term notes for borrowings of up to $42,900,000 requiring no principal
payments prior to maturity on January 1, 2003, bearing interest at LIBOR plus
1.75%, under which $42,318,000 was outstanding at September 30, 1998 and
$34,343,000 was outstanding at December 31, 1997; and

   (b) a revolving bank credit facility for borrowings of up to $3,500,000
expiring May 1, 1999, bearing interest at the bank's prime rate, under which
$3,326,000 was outstanding at September 30, 1998 and $3,183,000 was outstanding
at December 31, 1997.

The Company also has two demand bank loans bearing interest at the bank's prime
rate, under which $2,700,000 was outstanding as of September 30, 1998, and
$1,500,000 was outstanding as of December 31, 1997.

In 1998, the Company executed two interest rate swap agreements which
effectively modify the interest characteristics of $24,000,000 of its
outstanding long-term debt. The agreements involve the exchange of amounts based
on a fixed interest rate for amounts based on variable interest rates over the
life of the agreements, without an exchange of the notional amount upon which
the payments are based. The differential to be paid or received as interest
rates change will be accrued and recognized as an adjustment of interest expense
related to the debt. The Company effectively converted $20,000,000 and
$4,000,000 of floating rate debt to a fixed rate basis under two separate
agreements, one of which was modified in September 1998. Under the first
agreement, $20,000,000 of long-term debt is subject to a one-year forward swap
agreement, whereby beginning January 1, 1999 and for the following nine years,
the Company will be subject to a fixed rate of 7.83%, instead of LIBOR plus
1.75%, the rate in effect until then. Under the second agreement, $4,000,000 of
long-term debt is subject to a fixed rate of 8.635% beginning September 30, 1998
through December 31, 2004, instead of LIBOR plus 2.75%, the rate in effect until
then. In aggregate, the estimated cost of terminating the swap agreements, if
the Company elected to do so, is approximately $1.6 million as of September 30,
1998.


6.  INCOME TAXES

The principal differences between the federal statutory tax rate of 34% and the
effective tax rates are nondeductible goodwill amortization and state income
taxes.




<PAGE>   9



7.  EARNINGS (LOSS) PER SHARE

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

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED        THREE MONTHS ENDED
                                                 SEPTEMBER 30, 1998        SEPTEMBER 30, 1997
                                                 ------------------        ------------------

<S>                                                  <C>                      <C>          
Net income (loss)                                    $ 4,039,643              $   (373,796)
                                                     ===========              ============

Weighted average shares for basic earnings
     (loss) per share                                 22,282,528                21,269,565
Effect of dilutive employee stock options              1,002,717                         0
                                                     -----------              ------------
Adjusted weighted average shares and
     assumed conversions for diluted earnings
     (loss) per share                                 23,285,245                21,269,565
                                                     ===========              ============

Basic earnings (loss) per share                      $       .18              $       (.02)
Diluted earnings (loss) per share                    $       .17              $       (.02)
</TABLE>


<TABLE>
<CAPTION>
                                                 NINE MONTHS ENDED     NINE MONTHS ENDED
                                                 SEPTEMBER 30, 1998    SEPTEMBER 30, 1997
                                                 ------------------    ------------------

<S>                                                  <C>                  <C>          
Net income (loss)                                    $ 2,757,480          $   (822,706)
                                                     ===========          ============

Weighted average shares for basic earnings
     (loss) per share                                 22,159,411            21,292,830
Effect of dilutive employee stock options              1,056,764                     0
                                                     -----------          ------------
Adjusted weighted average shares and
     assumed conversions for diluted earnings
     (loss) per share                                 23,216,175            21,292,830
                                                     ===========          ============

Basic earnings (loss) per share                      $       .12          $       (.04)
Diluted earnings (loss) per share                    $       .12          $       (.04)
</TABLE>








<PAGE>   10
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS -
THIRD QUARTER 1998 AS COMPARED TO THIRD QUARTER 1997

     Total revenue for the three months ended September 30, 1998, primarily from
the Company's printer manufacturing operations (including CodeWriter, which was
acquired on January 2, 1998 as discussed in note 2 to the condensed consolidated
financial statements), was $8,184,000, compared to $5,616,000 for the same
period in 1997. Printer sales to the Company's largest customer, including sales
of the Company's new airline ticket printer introduced in December 1997, were
approximately $2.3 million in 1998 compared to $1.8 million in 1997. Short term
revenue trends in the Company's printer business fluctuate due to variable
ordering patterns of large customers. The increase in 1998 revenue compared to
1997 was also due in part to approximately $1.3 million contributed by the sale
of CodeWriter products in 1998, and an $893,000 increase in consulting fee
income in 1998 compared to 1997.

     Gross profit from printer operations for the three months ended September
30, 1998 of 25.6%, decreased from 28.2% during the same period in 1997 due to a
different mix of products sold and overhead costs incurred during 1998
associated with new product introductions.

     The Company provides consulting services to Gray Communications Systems,
Inc. ("Gray") in connection with Gray's acquisitions and dispositions. The
Company invoiced Gray for consulting fees totaling $1,200,000 during the three
months ended September 30, 1998. As a result of the Company's equity ownership
of Gray, $238,000 of such fees have been deferred for future revenue recognition
over a 40 year period. Total deferred consulting fees were $764,000 as of
September 30, 1998. The Company invoiced Gray for consulting fees totaling
$100,000 during the three months ended September 30, 1997. There can be no
assurance that the Company will provide any additional consulting services in
the future.

     Operating expenses of $2,136,000 for the three months ended September 30,
1998 represented a 24% increase over operating expenses for the same period last
year, due primarily to (a) an increase in sales and marketing personnel
attributable to the Company's expanded printer product line; (b) an increase in
advertising expenses relating to the introduction of new products in 1998; and
(c) goodwill amortization expense in 1998 associated with the purchase of
CodeWriter. The Company's operating expenses include goodwill amortization of
$122,000 for the third quarter of 1998, compared to $75,000 for the third
quarter of 1997.

     Equity in earnings (losses) of affiliated companies, totaling $6,826,000
and $(173,000) for the three months ended September 30, 1998 and 1997,
respectively, included the Company's proportionate share of the earnings of
Gray, Host Communications, Inc. ("HCI"), Capital Sports Properties, Inc.
("CSP"), and in 1998 only, Rawlings Sporting Goods Company, Inc. ("Rawlings"),
net of goodwill amortization totaling $194,000 and $152,000 for the respective
periods. On July 31, 1998, Gray disposed of WALB-TV, its NBC affiliate in
Albany, Georgia, fulfilling a Federal Communications Commission divestiture
order. Gray recognized an after-tax gain of approximately $43 million in
connection with the disposition. As a result, the Company's equity in Gray's
earnings was favorably impacted by approximately $6.9 million in the quarter
ended September 30, 1998.

     Interest expense, net of dividends accrued on the Company's investment in
Gray's series A and series B preferred stock, totaling $791,000 and $419,000 for
the three months ended September 30, 1998 and 1997, respectively, was
attributable to bank term loans,


<PAGE>   11



borrowings on the Company's revolving bank credit facilities and other bank
notes payable. The increase in interest expense was attributable to an increase
in bank debt used to fund the Company's investments in Rawlings, additional
investments in Gray and HCI, and the purchase of CodeWriter.

     The principal differences between the federal statutory tax rate of 34% and
the effective tax rates for each period are nondeductible goodwill amortization
and state income taxes.


RESULTS OF OPERATIONS -
NINE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO NINE MONTHS ENDED 
SEPTEMBER 30, 1997

     Total revenue for the nine months ended September 30, 1998, primarily from
the Company's printer manufacturing operations (including CodeWriter, which was
acquired on January 2, 1998), was $22,993,000, compared to $16,790,000 for the
same period in 1997. Printer sales to the Company's largest customer, including
sales of the Company's new airline ticket printer introduced in December 1997,
were approximately $6.6 million in 1998 compared to $5.3 million in 1997. Short
term revenue trends in the Company's printer business fluctuate due to variable
ordering patterns of large customers. The increase in 1998 revenue compared to
1997 was due in part to approximately $3.4 million contributed by the sale of
CodeWriter products in 1998, and a $937,000 increase in consulting fee income in
1998 compared to 1997.

     Gross profit from printer operations for the nine months ended September
30, 1998 of 25.1% decreased from 27.3% during the same period in 1997 due to (a)
a different mix of products sold; (b) manufacturing overhead costs associated
with CodeWriter's operation incurred during the first and second quarters of
1998 prior to the integration of CodeWriter's printer manufacturing into the
Company's existing manufacturing facility; and (c) nonrecurring overhead costs
incurred during 1998 associated with new product introductions.

     The Company invoiced Gray for consulting fees totaling $1,980,000 during
the nine months ended September 30, 1998 in connection with services rendered to
Gray by the Company related to Gray's acquisitions and dispositions of
television stations, of which, fees of $371,000 have been deferred for future
revenue recognition over a 40 year period. During the nine month period ended
September 30, 1997, the Company invoiced fees of $800,000, of which $126,000 was
deferred for future recognition.

     Operating expenses of $6,404,000 for the nine months ended September 30,
1998 represented a 26% increase over operating expenses for the same period last
year, due primarily to (a) the Company's investment in additional sales and
marketing personnel for its expanded printer product line; (b) an increase in
the Company's advertising expenses relating to the introduction of new products
in 1998; and (d) goodwill amortization expense in 1998 associated with the
purchase of CodeWriter. The Company's operating expenses include goodwill
amortization of $363,000 for the nine months ended September 30, 1998, compared
to $226,000 for the same period last year.

     Equity in earnings (losses) of affiliated companies, totaling $6,680,000
and $(321,000) for the nine months ended September 30, 1998 and 1997,
respectively, included the Company's proportionate share of the earnings of
Gray, HCI, CSP, and in 1998 only, Rawlings, net of goodwill amortization
totaling $583,000 and $457,000 for the respective periods. On July 31, 1998,
Gray disposed of a television station, and recognized an after-tax gain of
approximately $43 million in connection with the disposition. As a result, the
Company's equity in Gray's earnings was favorably impacted by approximately $6.9
million


<PAGE>   12



in the nine months ended September 30, 1998.

     Interest expense, net of dividends accrued on the Company's investment in
Gray's series A and series B preferred stock, totaling $2,338,000 and $1,116,000
for the nine months ended June 30, 1998 and 1997, respectively, was attributable
to bank term loans, borrowings on the Company's revolving bank credit facilities
and other bank notes payable. The increase in interest expense was attributable
to an increase in bank debt, used to fund the Company's investments in Rawlings,
additional investments in Gray and HCI, and the purchase of CodeWriter.

     The principal differences between the federal statutory tax rate of 34% and
the effective tax rates for each period are nondeductible goodwill amortization
and state income taxes.


LIQUIDITY AND CAPITAL RESOURCES

     The Company amended all of its long-term debt agreements with two banks
during the first quarter of 1998. Under an agreement amended February 20, 1998,
the Company entered into a $5.0 million term loan payable to a bank in quarterly
installments of $250,000 through December 2002, bearing interest payable monthly
at the London Interbank Offered Rate ("LIBOR") plus 2.75%, and a revolving bank
credit facility for borrowings of up to $5.0 million expiring February 2001,
bearing interest payable monthly at LIBOR plus 2.75%, with a mandatory reduction
in February 1999 to $4.0 million in available borrowings. Under an agreement
amended March 20, 1998, the Company has outstanding two term notes for bank
borrowings of up to $42.9 million (the "Term Notes") requiring no principal
payments prior to maturity in January 2003, bearing interest at LIBOR plus
1.75%, and a revolving bank credit facility for borrowings of up to $3.5 million
expiring May 1, 1999, bearing interest at the bank's prime rate. As of September
30, 1998, the Company had $42,317,000 outstanding under the Term Notes and
$8,131,000 outstanding under the two revolving bank credit facilities. The
Company also has $2.7 million in demand bank notes outstanding as of September
30, 1998, bearing interest at the bank's prime rate.

     In 1998, the Company executed two interest rate swap agreements which
effectively modify the interest characteristics of $24,000,000 of its
outstanding long-term debt. The agreements involve the exchange of amounts based
on a fixed interest rate for amounts based on variable interest rates over the
life of the agreements, without an exchange of the notional amount upon which
the payments are based. The differential to be paid or received as interest
rates change will be accrued and recognized as an adjustment of interest expense
related to the debt. The Company effectively converted $20,000,000 and
$4,000,000 of floating rate debt to a fixed rate basis under two separate
agreements, one of which was modified in September 1998. Under the first
agreement, $20,000,000 of long-term debt is subject to a one-year forward swap
agreement, whereby beginning January 1, 1999 and for the following nine years,
the Company will be subject to a fixed rate of 7.83%, instead of LIBOR plus
1.75%, the rate in effect until then. Under the second agreement, $4,000,000 of
long-term debt is subject to a fixed rate of 8.635% beginning September 30, 1998
through December 31, 2004, instead of LIBOR plus 2.75%, the rate in effect until
then. In aggregate, the estimated cost of terminating the swap agreements, if
the Company elected to do so, is approximately $1.6 million as of September 30,
1998.

     Dividends on the series B preferred stock of Gray owned by the Company are
payable in cash at an annual rate of $600 per share or, at Gray's option,
payable in additional shares of series B preferred stock. Through June 30, 1998,
all dividends on the series B preferred stock had been paid in the form of
additional shares. However, during the third quarter of 1998, Gray redeemed $1.3
million of its series B preferred stock held by the Company and


<PAGE>   13



paid the third quarter 1998 series B preferred stock dividend in cash. The
Company currently anticipates that dividends on the series B preferred stock
will be paid in cash in the future.

     The Company has in effect a stock repurchase program authorized by its
Board of Directors for the repurchase of up to 2,000,000 shares of its common
stock. Repurchases may be made from time to time in the open market or directly
from shareholders at prevailing market prices, and may be discontinued at any
time. During the first nine months of 1998, 500 shares were repurchased under
the program, at a cost of $2,000. During the first nine months of 1997, the
Company repurchased 726,010 shares at a total cost of $1,751,000.

     Inventories as of September 30, 1998 increased to $5,847,000 from
$3,757,000 as of December 31, 1997, as a result of (a) the purchase of
CodeWriter, which added inventories of $538,000 at the acquisition date; (b) an
increase in raw materials on hand associated with the Company's new airline
ticket printer; and (c) the purchase of assets, consisting primarily of
inventories, associated with the Sigma-Data 7200 high speed Automated Ticket /
Boarding Pass Version 2 printer from a Japanese company on September 25, 1998,
in a transaction valued at approximately $750,000. The Company's total working
capital increased to $3,546,000 as of September 30, 1998 from $2,513,000 as of
December 31, 1997, primarily as a result of (a) the CodeWriter purchase, which
added $409,000 in working capital as of the acquisition date; (b) the increase
in raw materials noted above; and (c) an increase in accounts receivable as a
result of the increase in other Datasouth product sales in 1998, net of (x) an
increase in the current portion of long-term debt attributable to the CodeWriter
acquisition financing; and (y) an increase in accounts payable attributable to
an increase in raw materials.

     The purchase price for CodeWriter was paid in the form of $2.5 million in
cash and $2.5 million in the Company's common stock. In addition, the Company is
obligated to pay to the members of CW Technologies, LLC, within 45 days
following the end of each calendar quarter through December 31, 2001, an amount
equal to 4% of revenue generated by the Company from CodeWriter products and
services during the immediately preceding calendar quarter, but in no event will
such payment be less than $50,000 in any quarter, and in no event will the
aggregate amount of such payments exceed $1.2 million. These quarterly payments
are, and will continue to be, accounted for as additional purchase price. The
initial $2.5 million cash acquisition price was financed under the $5.0 million
term note previously described.

     In November 1997, the Company entered into an Investment Purchase Agreement
with Rawlings. Pursuant to this agreement, the Company acquired warrants to
purchase 925,804 shares of Rawlings' common stock, and has the right, under
certain circumstances, to purchase additional warrants. The Company's total cost
to purchase the warrants pursuant to this agreement (excluding the additional
warrants) was $2,842,000. Fifty percent of the purchase price, or $1,421,000,
was paid to Rawlings in 1997. The remaining fifty percent of the purchase price,
plus interest at 7% per annum from November 21, 1997 until the date of payment,
will be due on the earlier of the date of exercise and the date of expiration of
the warrants. In the event of a partial exercise of the warrants, a pro rata
portion of the purchase price with interest accrued thereon will be payable. The
warrants have a four year term and an exercise price of $12.00 per share, but
are exercisable only if Rawlings' common stock closes at or above $16.50 for 20
consecutive trading days during the four year term. In addition, under the terms
of the agreement, the Company purchased approximately 10.4% of the outstanding
shares of Rawlings' common stock in the open market from November 1997 through
January 1998 (of which, 5.4% was acquired in 1998 at a cost of $4,953,000).
Investments in Rawlings were financed with borrowings under the $42.9 million
Term Notes previously described.

     The Company previously announced its intention to sell its investments in
HCI and


<PAGE>   14



USA (which would be preceded by the merger of CSP and HCI) to Thomas O. Hicks,
owner of the Texas Rangers baseball team and the Dallas Stars hockey team, for
approximately $5.8 million, plus a 3.34% equity position in a new entity
comprised of Mr. Hicks' sports holdings. In connection with the proposed sale,
HCI would also redeem all of its preferred stock and pay all accrued dividends,
resulting in additional proceeds to the Company of approximately $2.7 million.
The transaction is subject to the approval of various sports organizations and
certain other conditions, and is currently expected to close by early 1999.

     The Company anticipates that its current working capital, funds available
under its bank revolving credit facilities, quarterly cash dividends on the Gray
series A and series B preferred stock and Gray class A common stock, and cash
flow from operations will be sufficient to fund its debt service, working
capital requirements and capital spending requirements for at least the next 12
months. Any capital required for potential additional business acquisitions
would have to be funded by issuing additional securities or by entering into
other financial arrangements.


IMPACT OF YEAR 2000

     Some of the Company's older computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs have time- sensitive software that recognize a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. The Company has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter. The most significant computer systems, which pertain to the
Company's manufacturing and financial accounting systems, has been upgraded and
is currently Year 2000 compliant. Management does not expect the cost of any
necessary modifications or replacements will have a material impact on the
results of any future financial reporting period. The project is estimated to be
completed not later than December 31, 1998, which is prior to any anticipated
impact on the Company's operating systems.




<PAGE>   15



                           PART II. OTHER INFORMATION


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)     Exhibits
                      Exhibit 27 - Financial Data Schedule

          (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:  November 12, 1998          By:  /s/ FREDERICK J. ERICKSON             
                                       --------------------------------------
                                       Frederick J. Erickson
                                       Vice President-Finance, Treasurer
                                       and Assistant Secretary