<PAGE>   1
===============================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------

                                    FORM 10-Q
                                QUARTERLY REPORT
                                      UNDER
                               SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                 ---------------

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13D OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                      For the quarter ended March 31, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

           For the transition period from ____________ to ____________

                         Commission File Number 1-10321

                            THE ACKERLEY GROUP, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                91-1043807
(State or other jurisdiction of          (IRS Employer Identification No.)
 incorporation or organization)

                                1301 FIFTH AVENUE
                                   SUITE 4000
                            SEATTLE, WASHINGTON 98101
                                 (206) 624-2888
               (Address, including zip code, and telephone number,
        including area code, of Registrant's principal executive offices)

     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 periods 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.

               ============================================================

              Title of Class                          Outstanding at May 1, 2001
              --------------                          --------------------------
     Common Stock, $.01 par value                          24,020,548 shares
     Class B Common Stock, $.01 par value                  11,039,588 shares
===============================================================================


<PAGE>   2


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
PART I -  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

          CONSOLIDATED BALANCE SHEETS
          MARCH 31, 2001 AND DECEMBER 31, 2000...........................    1

          CONSOLIDATED STATEMENTS OF OPERATIONS
          THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000..............    2

          CONSOLIDATED STATEMENTS OF CASH FLOWS
          THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000..............    3

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.....................    4

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................    7



PART II - OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K...............................    13

          SIGNATURES.....................................................    14

</TABLE>





                                       i

<PAGE>   3


                         PART I - FINANCIAL INFORMATION
                          ITEM 1 - FINANCIAL STATEMENTS
                            THE ACKERLEY GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 ---------------
                                     ASSETS
<TABLE>
<CAPTION>
                                                                                    (Unaudited)
                                                                                      March 31,     December 31,
                                                                                        2001           2000
                                                                                        ----           ----
                                                                                           (In thousands)
<S>                                                                                  <C>            <C>
Current assets:
      Cash and cash equivalents                                                      $   3,292       $   4,687
      Accounts receivable, net of allowance                                             56,913          60,742
      Current portion of broadcast rights                                                7,151           9,023
      Prepaid expenses                                                                  10,450          14,345
      Deferred tax asset                                                                10,877           1,619
      Other current assets                                                              12,075           6,879
                                                                                     ---------       ---------
           Total current assets                                                        100,758          97,295

Property and equipment, net                                                            171,594         170,473
Goodwill, net                                                                          206,868         210,961
Other intangibles, net                                                                 139,702         142,171
Investment in affiliates                                                                20,196          19,896
Other assets                                                                            24,121          26,511
                                                                                     ---------       ---------
           Total assets                                                              $ 663,239       $ 667,307
                                                                                     =========       =========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable                                                               $   9,323       $   7,426
      Accrued interest                                                                   4,221           8,950
      Accrued wages and commissions                                                      4,902           6,398
      Other accrued liabilities                                                         19,906          21,595
      Deferred revenue                                                                   7,725          19,022
      Current portion of broadcasting obligations                                        7,487           9,564
      Current portion of long-term debt                                                 21,627           9,232
                                                                                     ---------       ---------
           Total current liabilities                                                    75,191          82,187

Long-term debt, less current portion                                                   403,153         385,439
Other long-term liabilities                                                             23,806          23,701
                                                                                     ---------       ---------
           Total liabilities                                                           502,150         491,327

Stockholders' equity:
      Common stock, par value $.01 per share--authorized 50,000,000 shares;
        issued March 31, 2001 - 25,395,494 and December 31, 2000 - 25,342,929
        shares; and outstanding March 31, 2001 - 24,020,548 and December 31,
        2000 - 23,967,983 shares                                                           254             253

      Class B common stock, par value $.01 per share--authorized 11,406,510
        shares; issued and outstanding March 31, 2001 - 11,039,588 and December
        31, 2000 - 11,051,200 shares                                                       111             111

      Capital in excess of par value                                                    58,311          57,967
      Retained earnings                                                                112,502         127,738
      Less common stock in treasury, at cost                                           (10,089)        (10,089)
                                                                                     ---------       ---------
          Total stockholders' equity                                                   161,089         175,980
                                                                                     ---------       ---------
           Total liabilities and stockholders' equity                                $ 663,239       $ 667,307
                                                                                     =========       =========

</TABLE>
                 See Notes to Consolidated Financial Statements

                                       1
<PAGE>   4


                            THE ACKERLEY GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                    UNAUDITED
                                 ---------------

<TABLE>
<CAPTION>
                                                                             For the Three Month
                                                                           Periods Ended March 31,
                                                                           2001               2000
                                                                           ----               ----
                                                                            (In thousands, except
                                                                              per share amounts)

<S>                                                                     <C>               <C>
Revenue                                                                 $  52,117         $  54,885
Less agency commissions and discounts                                      (7,244)           (8,116)
                                                                        ---------         ---------
Net revenue                                                                44,873            46,769

Expenses (other income):
      Operating expenses                                                   47,878            40,289
      Amortization expense                                                  6,577             4,351
      Depreciation expense                                                  4,281             3,167
      Interest expense                                                      9,548             5,065
      Net gain on dispositions of assets                                      ---          (281,357)
      Stock compensation expense                                               25                10
                                                                        ---------         ---------
Total expenses (other income)                                              68,309          (228,475)
                                                                        ---------         ---------

Income (loss) from continuing operations before income taxes              (23,436)          275,244
Income tax expense (benefit)                                               (8,200)          110,567
                                                                        ---------         ---------
Income (loss) from continuing operations                                  (15,236)          164,677
Income from discontinued operations, net of taxes 2001 - $0, and
      2000 - $269                                                             ---               574
                                                                        ---------         ---------
Net income (loss)                                                       $ (15,236)        $ 165,251
                                                                        =========         =========
Earnings per Common Share:
Income (loss) from continuing operations                                $   (0.43)        $    4.71
Discontinued operations                                                       ---               .02
                                                                        ---------         ---------
Net income (loss)                                                       $   (0.43)        $    4.73
                                                                        =========         =========
Earnings per Common Share - Assuming Dilution:
Income (loss) from continuing operations                                    (0.43)        $    4.70
Discontinued operations                                                       ---               .02
                                                                        ---------         ---------
Net income (loss) assuming dilution                                     $   (0.43)        $    4.72
                                                                        =========         =========
Dividends per common share                                              $     ---         $    0.02
                                                                        =========         =========
Dividends per common share, diluted                                     $     ---         $    0.02
                                                                        =========         =========
Weighted average number of common shares                                   35,058            34,970
Weighted average number of common shares - diluted                         35,058            35,023
</TABLE>


                 See Notes to Consolidated Financial Statements


                                       2
<PAGE>   5

                            THE ACKERLEY GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    UNAUDITED
                                 --------------

<TABLE>
<CAPTION>
                                                                                For the Three Month
                                                                              Periods Ended March 31,
                                                                                2001            2000
                                                                                ----            ----
<S>                                                                          <C>           <C>
Cash flows from operating activities:                                               (In thousands)

Net income (loss)                                                             $ (15,236)      $ 165,251
Adjustments to reconcile net income (loss) to net cash used in operating
  activities:
           Depreciation and amortization                                         11,313           8,112
           Net gain on dispositions of assets                                        --        (281,357)
           Amortization of broadcast rights                                       3,102           2,596
           Deferred tax expense (benefit)                                        (8,198)        110,953
           Stock compensation expense                                                25              10
           Amortization of deferred financing costs                               1,000             422
           Income from barter transactions                                         (993)           (283)
           Amortization of deferred gain on termination of interest rate
              swap agreements
                                                                                   (809)           (223)
      Change in assets and liabilities:
           Accounts receivable                                                    3,829             982
           Prepaid expenses                                                       3,895           2,406
           Other current assets and other assets                                 (7,570)            442
           Accounts payable, accrued interest, and accrued wages and
              commissions
                                                                                 (4,328)         (6,302)
           Other accrued liabilities and other long-term liabilities              2,810              29
           Litigation accrual                                                        --          (7,911)
           Deferred revenues                                                    (11,297)        (12,418)
           Current portion of broadcast obligations                              (3,207)         (3,317)
                                                                              ---------       ---------
      Net cash used in operating activities                                     (25,664)        (20,608)

Cash flows from investing activities
      Proceeds from dispositions of assets                                           --         307,692
      Payments for acquisitions                                                      --         (56,199)
      Capital expenditures                                                       (5,789)         (7,521)
      Payments for investments                                                     (300)        (17,000)
                                                                              ---------       ---------
      Net cash provided by (used in) investing activities                        (6,089)        226,972

Cash flows from financing activities:
      Borrowings under credit agreements                                         31,000          43,000
      Payments under credit agreements                                               --        (196,496)
      Payments under capital lease obligation                                      (779)           (235)
      Proceeds from employee stock purchase plan                                    137              34
                                                                              ---------       ---------
      Net cash provided by (used in) financing activities                        30,358        (153,697)

Net increase (decrease) in cash and cash equivalents                             (1,395)         52,667
Cash and cash equivalents at beginning of period                                  4,687           2,808
                                                                              ---------       ---------
Cash and cash equivalents at end of period                                    $   3,292       $  55,475
                                                                              =========       =========

      Supplemental cash flow information:
           Interest paid, net of capitalized interest                         $  14,730       $  12,361
           Income taxes paid                                                  $     176       $      14
           Noncash transactions:
                Broadcast rights acquired and broadcast obligations
                   assumed                                                    $      37       $   1,024
                Property and equipment acquired through barter                $      83       $     103


</TABLE>
                     See Notes to Consolidated Financial Statements


                                       3
<PAGE>   6


                            THE ACKERLEY GROUP, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1.   BASIS OF PRESENTATION

          The accompanying unaudited consolidated financial statements of The
Ackerley Group, Inc. and its subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. The balance sheet at December 31, 2000 has been derived from the audited
consolidated financial statements at that date. The accompanying consolidated
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all normal and recurring adjustments
necessary for a fair presentation of the financial position and the results of
operations for such periods have been included. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.

          The results of operations for any interim period are not necessarily
indicative of anticipated results for the full year. The Company's results of
operations may vary from quarter to quarter due in part to the timing of
acquisitions and to seasonal variations in the operations of the outdoor
advertising, television broadcasting, and radio broadcasting segments. In
particular, the Company's net revenue and net income historically have been
affected positively by increased advertising activity in the second and fourth
quarters.

          Certain prior year's amounts have been reclassified to conform to the
2001 presentation.

NOTE 2.   DISCONTINUED OPERATIONS

          On December 8, 2000 (the "measurement date"), the Company executed a
letter of intent to sell substantially all of the assets of its sports &
entertainment operations (the "Sonics Sale") to The Basketball Club of Seattle,
LLC for $200.0 million in cash and the assumption of certain liabilities. These
operations consist principally of the Seattle SuperSonics National Basketball
Association franchise, operating rights to the Seattle Storm, a Woman's National
Basketball Association franchise, and Full House Sports & Entertainment, the
Company's sports marketing business. A definitive purchase agreement was signed
on January 11, 2001 and the transaction closed on April 2, 2001. In addition,
the Company is seeking to sell separately its Boeing 727 aircraft used by the
Seattle SuperSonics for transportation to and from away games. The sale of the
aircraft is anticipated to be for cash and is anticipated to be completed by
approximately the end of the third quarter of 2001.

          The loss from operations of the sports & entertainment operations from
the measurement date through March 31, 2001 was $7.4 million, which included
$43.8 million in net revenue. Included in these totals is a loss of $4.5 million
and net revenue of $35.4 million relating to the first quarter of 2001. These
losses from operations are recorded in other current assets and will be
recognized in the second quarter of 2001 as a reduction of the net gain from the
Sonics Sale. Continuing costs associated with the Boeing 727 aircraft will be
recognized as a reduction of the combined net gain anticipated from the Sonics
Sale and sale of the Boeing 727. Net revenue included in discontinued operations
was $35.5 million for the first quarter of 2000.

          At March 31, 2001, assets of the sports & entertainment operations to
be sold, including the aircraft, consisted primarily of property and equipment
amounting to approximately $35.5 million. The remaining assets of the sports &
entertainment operations at March 31, 2001 consist principally of


                                       4
<PAGE>   7

receivables, prepaid expenses, and intangible assets. Liabilities at March 31,
2001 consisted primarily of a capital lease obligation and long-term debt
amounting to approximately $14.5 million.

          Interest expense included in discontinued operations is comprised of
interest on obligations related to the assets to be sold as well as interest
allocated to the sports & entertainment operations. Such interest is allocated
based on the Company's incremental borrowing rate applied to the initial
acquisition price of the Seattle SuperSonics franchise. Total interest expense
included in discontinued operations was approximately $0.6 million for the first
quarter of 2000.

NOTE 3.   DEBT

          To accommodate recent acquisitions, particularly KGPE (TV), and the
timing of the sale of the sports & entertainment operations (as discussed in
Note 2 to the Consolidated Financial Statements), the Company amended its 1999
Credit Agreement to provide waivers of compliance with, and to change the
requirements of, certain restrictive covenants effective for the period June 30,
2000 through April 15, 2001. On April 2, 2001, the Company utilized net proceeds
from the sale of its sports & entertainment operations, aggregating the
approximately $192.0 million, to repay fully the $51.3 million outstanding
principal amount under term loan facility of the 1999 Credit Agreement and the
remaining $140.7 million of the net proceeds were used to reduce amounts
outstanding under the revolving credit facility (Revolver) of the 1999 Credit
Agreement. After this repayment, the total outstanding principal amount under
the Revolver was $15.3 million. In conjunction with this repayment, total
available borrowings under the Revolver were reduced to $75.0 million.

          On May 14, 2001, the Company executed a provisional waiver and
standstill agreement with its lenders. Under this agreement, certain restrictive
covenants and requirements of the 1999 Credit Agreement are waived through
August 14, 2001. In addition, borrowings under the Revolver are limited to $25.0
million through August 14, 2001. Subject to certain conditions, this limit will
increase effective July 13, 2001 to $33.5 million. The Company anticipates that
by August 14, 2001 it will either be in compliance with these covenants (as
waived or further amended), or will have extended the waivers.

NOTE 4.   TELEVISION BROADCAST GROUP RESTRUCTURING

          On April 6, 1999, the Company announced the launch of Digital
CentralCasting, a digital broadcasting system which allows the Company to
consolidate back-office functions such as operations, programming, advertising
scheduling, and accounting for all of the television stations within a regional
group at one station. To implement this strategy, the Company has organized
sixteen of the television stations it owns and/or programs into the following
three regional station groups: New York (WIXT, WOKR, WIVT, WBGH-CA, WUTR, WETM,
and WWTI), Central California (KCOY, KKFX-CA, KGPE, and KGET), and North Coast
(KCBA, KION, KMTR, KVIQ, and KFTY).

          The Company completed substantially the implementation of Digital
CentralCasting for all of its television station groups in the first quarter of
2001. The Company recorded a $1.1 million restructuring charge in the second
quarter of 1999 relating to the implementation of Digital CentralCasting. This
restructuring charge consisted primarily of costs associated with employee staff
reductions, contract terminations, legal, and other costs associated directly
with the restructuring. As of March 31, 2001, termination benefits of
approximately $0.5 million, representing 50 employees, and other restructuring
costs of $0.5 million had been paid and charged to the restructuring accrual. At
March 31, 2001, the remaining accrual was approximately $80,000, which consists
of obligations under noncancellable software system contracts expiring in
December 2002.



                                       5
<PAGE>   8

NOTE 5.   INDUSTRY SEGMENT INFORMATION

          The Company organizes its segments based on the products and services
from which revenues are generated. The Company evaluates segment performance and
allocates resources based on Segment Operating Cash Flow, which is defined as
EBITDA before corporate overhead The Company defines EBITDA as net revenue less
operating expenses before amortization, depreciation, interest, stock
compensation expenses, and net gain on dispositions of assets.

          Selected financial information for these segments for the three month
periods ended March 31, 2001 and 2000 is presented as follows:

<TABLE>
<CAPTION>
                                               OUTDOOR          TELEVISION            RADIO           INTERACTIVE
                                                MEDIA          BROADCASTING       BROADCASTING           MEDIA        CONSOLIDATED
                                                -----          ------------       ------------           -----        ------------
                                                                                 (in thousands)
<S>                                         <C>                <C>                <C>                <C>               <C>
THREE MONTH PERIOD ENDED
MARCH 31, 2001:
Net revenue                                 $    17,245        $    22,874        $     4,733        $        21        $    44,873
Segment operating expenses                      (12,705)           (23,604)            (5,378)              (355)           (42,042)
                                            -----------        -----------        -----------        -----------        -----------
Segment Operating Cash Flow                 $     4,540        $      (730)       $      (645)       $      (334)       $     2,831
                                            ===========        ===========        ===========        ===========        ===========
Segment assets                              $   107,000        $   379,709        $    60,775        $     1,477        $   548,961
Capital expenditures                        $     1,188        $     2,442        $       400        $       421        $     4,451

THREE MONTH PERIOD ENDED
MARCH 31, 2000:
Net revenue                                 $    17,717        $    22,525        $     6,527        $       ---        $    46,769
Segment operating expenses                      (11,788)           (18,903)            (4,260)               ---            (34,951)
                                            -----------        -----------        -----------        -----------        ------------
Segment Operating Cash Flow                 $     5,929        $     3,622        $     2,267        $       ---        $    11,818
                                            ===========        ===========        ===========        ===========        ===========
Segment assets                              $   104,021        $   287,123        $    58,686        $       ---        $   449,830
Capital expenditures                        $     1,247        $     3,177        $       402        $       ---        $     4,826
</TABLE>

          A reconciliation from the segment information to the consolidated
balances for Segment Operating Cash Flow, segment assets, and segment capital
expenditures is set forth below (in thousands):

<TABLE>
<CAPTION>
                                                                                      THREE MONTH PERIOD ENDED
                                                                                             MARCH 31,
                                                                                        2001                2000
                                                                                        ----                ----
<S>                                                                                 <C>                 <C>
Segment Operating Cash Flow...............................................          $       2,831       $      11,818
Corporate overhead........................................................                 (5,836)             (5,338)
                                                                                    -------------       -------------
EBITDA....................................................................                 (3,005)              6,480
Depreciation and amortization.............................................                (10,858)             (7,518)
Interest expense..........................................................                 (9,548)             (5,065)
Net gain on dispositions of assets........................................                    ---             281,357
Stock compensation expense................................................                    (25)                (10)
                                                                                    -------------       -------------
Income (loss) from continuing operations before income taxes..............          $     (23,436)      $     275,244
                                                                                    =============       =============

Segment assets............................................................          $     548,961       $     449,830
Corporate assets..........................................................                 43,352             100,290
Assets of discontinued operations.........................................                 70,926              64,044
                                                                                    -------------       -------------
Consolidated total assets.................................................          $     663,239       $     614,164
                                                                                    =============       =============
Segment capital expenditures..............................................          $       4,451       $       4,826
Corporate capital expenditures............................................                    257               2,308
Capital expenditures of discontinued operations...........................                  1,081                 387
                                                                                    -------------       -------------
Consolidated capital expenditures.........................................          $       5,789       $       7,521
                                                                                    =============       =============

</TABLE>



                                       6
<PAGE>   9


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

OVERVIEW

          We reported a net loss of $15.2 million for the first three months of
2001, compared to net income of $165.3 million for the first three months of
2000. However, our net income for 2000 includes a net pre-tax gain on
dispositions of assets of $281.3 million and income from discontinued operations
of $0.6 million, net of taxes. Net revenue for the first three months of 2001
decreased over the same period last year by $1.9 million, or 4%, while our
EBITDA (as defined below) decreased by $9.5 million, to a loss of $3.0 million.

          In January 2001, we entered into an agreement to sell our sports &
entertainment operations for $200.0 million in cash and the assumption of
certain liabilities. The transaction closed on April 2, 2001 and we expect to
recognize a gain on the transaction of approximately $135 to $140 million.
Accordingly, our sports & entertainment operations are reflected in our
financial statements as a discontinued operation for all periods presented. This
transaction is discussed more fully in Note 2 to the Consolidated Financial
Statements.

          As with many media companies, our acquisitions and dispositions have
resulted in significant non-cash and non-recurring charges to income. For this
reason, in addition to net income, our management believes that EBITDA (defined
as net revenue less operating expenses before amortization, depreciation,
interest, net gain on dispositions of assets, and stock compensation expense) is
an appropriate measure of our financial performance. Similarly, we believe that
Segment Operating Cash Flow (defined as EBITDA before corporate overhead) is an
appropriate measure of our segments' financial performance. These measures
exclude certain expenses that management does not consider to be costs of
ongoing operations. We use EBITDA to pay interest and principal on our long-term
debt as well as to finance capital expenditures. EBITDA and Segment Operating
Cash Flow, however, are not to be considered alternatives to net income as an
indicator of our operating performance or to cash flows as a measure of our
liquidity.

RESULTS OF OPERATIONS

          The following tables set forth certain historical financial and
operating data for the three month periods ended March 31, 2001 and 2000,
including net revenue, operating expenses, and Segment Operating Cash Flow
information by segment:

<TABLE>
<CAPTION>
                                                                                   THREE MONTH PERIODS ENDED MARCH 31,
                                                                 ------------------------------------------------------------------
                                                                             2001                                2000
                                                                 ----------------------------       -------------------------------
                                                                                          (DOLLARS IN THOUSANDS)
                                                                                     AS % OF                              AS % OF
                                                                   AMOUNT          NET REVENUE         AMOUNT           NET REVENUE
                                                                 ------------      -----------       ------------       -----------
<S>                                                              <C>               <C>               <C>                <C>
Net revenue...........................................           $     44,873        100.0%          $     46,769         100.0%
Segment operating expenses............................                 42,042         93.7%                34,951          74.7%
Corporate overhead....................................                  5,836         13.0%                 5,338          11.4%
                                                                 ------------                        ------------
          Total operating expenses....................                 47,878        106.7%                40,289          86.1%
                                                                 ------------                        ------------
EBITDA................................................                 (3,005)        (6.7%)                6,480          13.9%
</TABLE>



                                       7
<PAGE>   10

<TABLE>
<CAPTION>
                                                                                   THREE MONTH PERIODS ENDED MARCH 31,
                                                                 ------------------------------------------------------------------
                                                                             2001                                2000
                                                                 ----------------------------       -------------------------------
                                                                                          (DOLLARS IN THOUSANDS)
<S>                                                              <C>               <C>               <C>                <C>
Other expenses (income):
    Depreciation and amortization expense.............                 10,858         24.2%                 7,518          16.1%
    Interest expense..................................                  9,548         21.3%                 5,065          10.8%
    Net gain on dispositions of assets................                     --           --               (281,357)       (601.6%)
    Stock compensation expense                                             25          0.1%                    10           0.0%
                                                                 ------------                        ------------
          Total other expenses (income)...............                 20,431         45.5%              (268,764)       (574.7%)
                                                                 ------------                            --------
Income (loss) from continuing operations before income
  tax.................................................                (23,436)       (52.2%)              275,244         588.5%
Income tax expense (benefit)..........................                 (8,200)       (18.3%)              110,567         236.4%
                                                                 ------------                             -------
Income (loss) from continuing operations..............                (15,236)       (34.0%)              164,677         352.1%
Income from discontinued operations, net
   of tax.............................................                    ---           --                    574           1.2%
                                                                 ------------                        ------------
Net income (loss).................................               $    (15,236)       (34.0%)         $    165,251         353.3%
                                                                 ============                        ============
</TABLE>


<TABLE>
<CAPTION>
                                                                                 THREE MONTH PERIODS ENDED
                                                                                         MARCH 31,
                                                                                2001                 2000
                                                                                ----                 ----
                                                                                  (DOLLARS IN THOUSANDS)
<S>                                                                        <C>                 <C>
Net revenue:
   Outdoor media....................................................       $   17,245          $   17,717
   Television broadcasting..........................................           22,874              22,525
   Radio broadcasting...............................................            4,733               6,527
   Interactive media................................................               21                 ---
                                                                           ----------          ----------
           Total net revenue........................................       $   44,873          $   46,769
                                                                           ==========          ==========

Segment operating expenses:
   Outdoor media....................................................       $   12,705          $   11,788
   Television broadcasting..........................................           23,604              18,903
   Radio broadcasting...............................................            5,378               4,260
   Interactive media................................................              355                 ---
                                                                           ----------          ----------
           Total segment operating expenses.........................       $   42,042          $   34,951
                                                                           ==========          ==========

Segment Operating Cash Flow and EBITDA:
   Outdoor media....................................................       $    4,540          $    5,929
   Television broadcasting..........................................             (730)              3,622
   Radio broadcasting...............................................             (645)              2,267
   Interactive media................................................             (334)                ---
                                                                           ----------          ----------
           Total Segment Operating Cash Flow........................            2,831              11,818
   Corporate overhead...............................................           (5,836)             (5,338)
                                                                           ----------          ----------
           Total EBITDA.............................................       $   (3,005)         $    6,480
                                                                           ===========         ==========

Change in net revenue from prior periods:
   Outdoor media....................................................           (2.7%)             (11.4%)
   Television broadcasting..........................................            1.5%               38.6%
   Radio broadcasting...............................................          (27.5%)              25.0%
   Interactive media................................................           --                      --
           Change in total net revenue..............................           (4.1%)              12.8%
</TABLE>

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<PAGE>   11

<TABLE>
<CAPTION>
                                                                                 THREE MONTH PERIODS ENDED
                                                                                         MARCH 31,
                                                                                2001               2000
                                                                                ----               ----
<S>                                                                        <C>                   <C>
Segment operating expenses as a % of segment net revenue:
   Outdoor media....................................................           73.7%               66.5%
   Television broadcasting..........................................          103.2%               83.9%
   Radio broadcasting...............................................          113.6%               65.3%
   Interactive media................................................        1,690.5%               --
           Total segment operating expenses as a % of total net
               revenue..............................................           93.7%               74.7%

Segment Operating Cash Flow as a % of segment net revenue:
   Outdoor media....................................................           26.3%               33.5%
   Television broadcasting..........................................           (3.2%)              16.1%
   Radio broadcasting...............................................          (13.6%)              34.7%
   Interactive media................................................       (1,590.5%)              --
           Total Segment Operating Cash Flow as a % of
              total net revenue.....................................            6.3%               25.3%
EBITDA as a % of total net revenue..................................           (6.7%)              13.9%
</TABLE>

THREE MONTH PERIOD ENDED MARCH 31, 2001 COMPARED WITH THREE MONTH PERIOD ENDED
MARCH 31, 2000

          Net Revenue. Our net revenue for the first quarter of 2001 was $44.9
million. This represented a decrease of $1.9 million, or 4%, compared to $46.8
million in the first quarter of 2000. Changes in net revenue were as follows:

     o    Outdoor Media. Our net revenue from our outdoor media segment for the
          first quarter of 2001 decreased by $0.5 million, or 3%, compared to
          the first quarter of 2000. This decrease resulted primarily from a
          decrease in national sales, particularly in the dot-com and automotive
          advertising categories. While our local sales were also impacted
          negatively by declines in dot-com advertising, they were largely
          replaced by increases in a variety of other advertising categories.

     o    Television Broadcasting. Net revenue for the first quarter of 2001
          from our television broadcasting segment increased by $0.4 million, or
          2%, compared to the first quarter of 2000. This increase was due
          mainly to the addition of television stations WETM and WBGH in
          February 2000, KKFX in May 2000, WWTI in June 2000, and KGPE in August
          2000. Excluding these transactions, net revenue for the first quarter
          of 2001 from our television broadcasting segment decreased $2.9
          million, or 13%, compared to the first quarter of 2000. This decrease
          was due primarily to a decrease in gross sales from political and
          automotive advertising of approximately $3.3 million in 2001. These
          declines impacted primarily our national sales. By contrast, our local
          sales increased approximately 9% from the prior year on a same station
          basis.

     o    Radio Broadcasting. Net revenue for the first quarter of 2001 from our
          radio broadcasting segment decreased by $1.8 million, or 28%, compared
          to the first quarter of 2000. This decrease was due primarily to a
          decrease in both national and local sales and is consistent with
          industry trends. Approximately $0.5 million of this decline was from
          the dot-com advertising category. In addition, net revenue was
          impacted negatively by a format change in the fourth quarter of 2000
          of one of our FM stations. Recent market data indicates that this
          station has gained market share with its new format. However, this
          will likely not result in substantial revenue increases until the
          second half of 2001.

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<PAGE>   12

          Segment Operating Expenses. Our segment operating expenses (which
exclude corporate overhead) for the first quarter of 2001 were $42.0 million.
This represented an increase of $7.0 million, or 20%, compared to $35.0 million
for the first quarter of 2000. Changes in segment operating expenses were as
follows:

     o    Outdoor Media. Operating expenses for the first quarter of 2001 from
          our outdoor media segment increased by $0.9 million, or 8%, compared
          to the first quarter of 2000. This increase was due primarily to
          higher lease costs for our advertising structures, employee costs, and
          the acquisition of an outdoor advertising company in New Jersey on
          March 31, 2000.

     o    Television Broadcasting. Operating expenses for the first quarter of
          2001 from our television broadcasting segment increased by $4.7
          million, or 25%, compared to the first quarter of 2000. This increase
          was due in part to the addition of stations WETM and WBGH in February
          2000, KKFX in May 2000, WWTI in June 2000, and KGPE in August 2000.
          Excluding these transactions, operating expenses for the first quarter
          of 2001 from our television broadcasting segment increased by $1.5
          million, or 8%, compared to the first quarter of 2000. This increase
          was due primarily to employee, programming, and fiber optic connection
          costs.

     o    Radio Broadcasting. Operating expenses for the first quarter of 2001
          from our radio broadcasting segment increased by $1.1 million, or 26%,
          compared to the first quarter of 2000. This increase was due primarily
          to increased costs associated with increased costs of on-air talent
          and costs associated with the promotion of a new programming format of
          one of our FM stations.

          Corporate Overhead Expenses. Our corporate overhead expenses for the
first quarter of 2001 were $5.8 million. This represented an increase of $0.5
million, or 9%, compared to the first quarter of 2000. This increase was
primarily a result of costs associated with the disposal of a company aircraft.

          EBITDA. Our EBITDA for the first quarter of 2001 was a $3.0 million
loss. This represented a decrease of $9.5 million, or 146%, compared to positive
EBITDA of $6.5 million for the first quarter of 2000.

          Depreciation and Amortization Expenses. Our depreciation and
amortization expenses were $10.9 million for the first quarter of 2001. This
represented an increase of $3.3 million, or 43%, compared to $7.6 million for
the first quarter of 2000. This increase resulted primarily from depreciation
and amortization expenses relating to our business acquisitions during 2000, as
well as depreciation expense from the construction of a new operating facility
for our radio broadcasting operations and our corporate technology group.

          Interest Expense. Our interest expense was $9.5 million for the first
quarter of 2001. This represented an increase of $4.4 million, or 89%, compared
to the first quarter of 2000. This increase was due primarily to higher average
debt balances during the first quarter of 2001, which resulted primarily from
borrowings to fund our business acquisitions. In addition, our debt balances for
the first quarter of 2000 were lower due to the application of proceeds from the
sale of our Florida outdoor advertising operations in January 2000.

          Net Gain on Dispositions of Assets. We recognized a net gain on
disposition of assets of $281.4 million for the first quarter of 2000 due to the
sale of our Florida outdoor advertising operations and television station KCBA
in California in January 2000. There were no such transactions in the first
quarter of 2001.

          Income Tax Expense. We recognized income tax benefit of $8.2 million
for the first quarter of 2001 based on our loss from continuing operations
before income taxes of $23.4 million. For the first



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<PAGE>   13

quarter of 2000, we recorded an income tax expense of $110.6 million, primarily
as a result of the gain on dispositions of assets.

          Net Income (Loss). Our net loss was $15.2 million for the first
quarter of 2001, compared to our net income of $165.3 million for the first
quarter of 2000. This decrease was due primarily to the gain related to the sale
of our Florida outdoor advertising operations and television station KCBA in
January 2000 and the decreases in Segment Operating Cash Flow described above.

LIQUIDITY AND CAPITAL RESOURCES

          Cash used in operating activities was $25.7 million in the first
quarter of 2001 compared to $20.6 million in the first quarter of 2000. The
increase was due mainly to funding the operating losses and liquidity needs of
our discontinued sports & entertainment operations and the decline in our
operating results in the first quarter of 2001 compared to the first quarter of
2000.

          Our working capital increased by $10.5 million to $25.6 million at
March 31, 2001 from $15.1 million at December 31, 2000 primarily due to an
increase in deferred tax assets and deferred losses from our discontinued sports
& entertainment operations and decreases in accrued interest and deferred
revenue. These were offset partially by the increase in the current portion of
our long-term debt.

          We expended $5.8 million for capital expenditures in the first quarter
of 2001, compared to $7.5 million in the corresponding quarter in 2000. Capital
expenditures in the first quarter of 2001 were primarily for equipment to
complete our Digital CentralCasting implementation, automated news production
systems and news sets, upgrades to our operating facilities for television
station KGPE in Fresno, California and our outdoor advertising operations in
Portland, Oregon, and for outdoor advertising structures in Washington.

          For the periods presented, we financed our working capital and
long-term liquidity needs, including for acquisitions and capital expenditures,
primarily from proceeds from the sale of our Florida outdoor advertising
operations and television station KCBA in January 2001 and bank borrowings.

          To accommodate recent acquisitions, particularly KGPE (TV), and the
timing of the sale of our sports & entertainment operations (as discussed in
Note 2 to the Consolidated Financial Statements), we amended our 1999 Credit
Agreement to provide waivers of compliance with, and to change the requirements
of, certain restrictive covenants effective for the period of June 30, 2000
through April 15, 2001. On April 2, 2001, we utilized net proceeds from the sale
of our sports & entertainment operations, aggregating approximately $192.0
million to repay fully the $51.3 million outstanding principal amount under the
term loan facility of the 1999 Credit Agreement and the remaining $140.7 million
of the net proceeds were used to reduce amounts outstanding under the revolving
credit facility (Revolver) of the 1999 Credit Agreement. After this repayment,
the total outstanding principal amount under the Revolver was $15.3 million. In
conjunction with this repayment, total available borrowings under the Revolver
were reduced to $75.0 million. We anticipate utilizing approximately $45.0
million of borrowings to fund our 2001 income tax liabilities in the third and
fourth quarters.

          On May 14, 2001, we executed a provisional waiver and standstill
agreement with our lenders. Under this agreement, certain restrictive covenants
and requirements of the 1999 Credit Agreement are waived through August 14,
2001. In addition, borrowings under the Revolver are limited to $25.0 million
through August 14, 2001. Subject to certain conditions, this limit will increase
effective July 13, 2001 to $33.5 million. We anticipate that by August 14, 2001
we will either be in compliance with these covenants (as waived or further
amended), or will have extended the waivers, by August 14, 2001.

          To address the slowing national economy and its effects on our revenue
and liquidity, as well as provide funds for a $9.0 million interest payment due
July 15, 2001 on our senior subordinated notes, we



                                       11
<PAGE>   14

are evaluating our current cost structure. All of our operating divisions and
our corporate offices have already identified and implemented measures to reduce
operating expenses for the remainder of the year and into 2002. This process is
ongoing and we expect it to be substantially complete by the end of the second
quarter of 2001. Currently, we anticipate these cost reductions will be
approximately $10.0 million from our original planned operating expenses for
2001. However, if the magnitude and duration of the current national sales
trends are greater than anticipated, our liquidity may be impacted negatively to
the extent we are unable to offset such trends by increased local sales and cost
reductions.

          Under the 1999 Credit Agreement, we can choose to have interest
calculated at rates based on either a base rate or LIBOR plus defined margins
which vary based on our total leverage ratio. As of March 31, 2001, the annual
interest rate of borrowings under the 1999 Credit Agreement was approximately
8.74%.

          We have pledged substantially all of our subsidiaries' outstanding
stock and assets as collateral for amounts due under the 1999 Credit Agreement.
Thus, if we default under the 1999 Credit Agreement, the lenders may take
possession of and sell some or substantially all of our subsidiaries or their
assets.

          In addition, the 1999 Credit Agreement and the Indenture for the 9%
Senior Subordinated Notes restrict, among other things, our ability to borrow,
pay dividends, repurchase outstanding shares of our stock, and sell or transfer
our assets. They also contain restrictive covenants requiring us to maintain
certain financial ratios. As of March 31, 2001, we were in compliance with, or
had received waivers for, all such ratios and covenants.



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<PAGE>   15


                           PART II - OTHER INFORMATION

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

(a)  Exhibits:

     None.

(b)  Reports on Form 8-K:

     (1)  Current Report on Form 8-K, filed January 18, 2001, relating to the
          announcement of the signing of a Purchase Agreement, dated January 11,
          2001, to sell our Seattle SuperSonics NBA franchise and related assets
          for $200 million, as described in Item 2.














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<PAGE>   16


                                   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.

                                         THE ACKERLEY GROUP, INC.


DATED:  May 14, 2001                     By:  /s/ Kevin E. Hylton
                                              -------------------
                                              Kevin E. Hylton
                                              Senior Vice President,
                                              Chief Financial Officer and
                                              Assistant Secretary












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