UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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|QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|---------------------------------------------------------------------------------------
|For the quarterly period ended: June 30, 2005                                          

Commission file number: 1-11106

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PRIMEDIA Inc.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)       |  | 13-3647573(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------------- |  | ----------------------------------------------
|745 Fifth Avenue, New York, New York(Address of principal executive offices)
|10151(Zip Code)                                                             
|Registrant's telephone number, including area code(212) 745-0100            

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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, and (2) has been subject to such filing requirements for the past 90 days.



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



Number of shares of common stock, par value $.01 per share, of PRIMEDIA Inc. outstanding as of July 29, 2005: 262,445,465.



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PRIMEDIA Inc.INDEX

|                               |         |                                                                                                               |                                                                                       | PAGE
|------------------------------ | ------- | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ----
|Part I. Financial Information: |         |                                                                                                              
|                               | Item 1. |                                                                                                               | Financial Statements                                                                  |     
|                               |         | Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2005 and December 31, 2004                   |                                                                                       | 2   
|                               |         | Condensed Statements of Consolidated Operations (Unaudited) for the three months ended June 30, 2005 and 2004 |                                                                                       | 3   
|                               |         | Condensed Statements of Consolidated Operations (Unaudited) for the six months ended June 30, 2005 and 2004   |                                                                                       | 4   
|                               |         | Condensed Statements of Consolidated Cash Flows (Unaudited) for the six months ended June 30, 2005 and 2004   |                                                                                       | 5   
|                               |         | Notes to Condensed Consolidated Financial Statements (Unaudited)                                              |                                                                                       | 6-26
|                               | Item 2. |                                                                                                               | Management's Discussion and Analysis of Financial Condition and Results of Operations |     
|                               | Item 3. |                                                                                                               | Quantitative and Qualitative Disclosures About Market Risk                            |     
|                               | Item 4. |                                                                                                               | Controls and Procedures                                                               |     
|Part II. Other Information:    |         | 59                                                                                                           
|                               | Item 6. |                                                                                                               | Exhibits                                                                              |     
|                               |         | Signatures                                                                                                    |                                                                                       | 60  

1

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)        (dollars in thousands, except share amounts)

|                                                                                                                   |                                                                                                                                                                                                               | June 30, 2005                                  |           | December 31, 2004 |          
|------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | --------- | ----------------- | ---------
|ASSETS                                                                                                             |                                                                                                                                                                                                               |                                                |           |                   |          
|Current assets:                                                                                                    |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   | Cash and cash equivalents                                                                                                                                                                                     |                                                | $         | 7,685             |          
|                                                                                                                   | Accounts receivable, net                                                                                                                                                                                      |                                                |           | 141,088           |          
|                                                                                                                   | Inventories                                                                                                                                                                                                   |                                                |           | 19,067            |          
|                                                                                                                   | Prepaid expenses and other                                                                                                                                                                                    |                                                |           | 35,718            |          
|                                                                                                                   | Assets held for sale                                                                                                                                                                                          |                                                |           | 189,919           |          
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   |                                                                                                                                                                                                               | Total current assets                           |           |                   | 393,477  
|Property and equipment (net of accumulated depreciation and amortization of $214,527 in 2005 and $274,830 in 2004) |                                                                                                                                                                                                               |                                                | 62,847    |                   |          
|Other intangible assets, net                                                                                       |                                                                                                                                                                                                               |                                                | 213,833   |                   |          
|Goodwill                                                                                                           |                                                                                                                                                                                                               |                                                | 794,015   |                   |          
|Other non-current assets                                                                                           |                                                                                                                                                                                                               |                                                | 41,955    |                   |          
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   |                                                                                                                                                                                                               | Total Assets                                   |           | $                 | 1,506,127
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|LIABILITIES AND SHAREHOLDERS' DEFICIENCY                                                                           |                                                                                                                                                                                                               |                                                |           |                   |          
|Current liabilities:                                                                                               |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   | Accounts payable                                                                                                                                                                                              |                                                | $         | 45,004            |          
|                                                                                                                   | Accrued expenses and other                                                                                                                                                                                    |                                                |           | 126,131           |          
|                                                                                                                   | Deferred revenues                                                                                                                                                                                             |                                                |           | 139,630           |          
|                                                                                                                   | Current maturities of long-term debt                                                                                                                                                                          |                                                |           | 21,822            |          
|                                                                                                                   | Liabilities of businesses held for sale                                                                                                                                                                       |                                                |           | 44,743            |          
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   |                                                                                                                                                                                                               | Total current liabilities                      |           |                   | 377,330  
|Long-term debt                                                                                                     |                                                                                                                                                                                                               |                                                | 1,533,912 |                   |          
|Shares subject to mandatory redemption                                                                             |                                                                                                                                                                                                               |                                                | 211,739   |                   |          
|Deferred revenues                                                                                                  |                                                                                                                                                                                                               |                                                | 15,304    |                   |          
|Deferred income taxes                                                                                              |                                                                                                                                                                                                               |                                                | 81,321    |                   |          
|Other non-current liabilities                                                                                      |                                                                                                                                                                                                               |                                                | 57,094    |                   |          
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   |                                                                                                                                                                                                               | Total Liabilities                              |           |                   | 2,276,700
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|Shareholders' deficiency:                                                                                          |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   | Common stock ($.01 par value, 350,000,000 shares authorized at June 30, 2005 and December 31, 2004 and 271,472,765 shares and 270,893,102 shares issued at June 30, 2005 and December 31, 2004,
respectively) |                                                |           | 2,715             |          
|                                                                                                                   | Additional paid-in capital (including warrants of $31,690 at June 30, 2005 and December 31, 2004)                                                                                                             |                                                |           | 2,358,495         |          
|                                                                                                                   | Accumulated deficit                                                                                                                                                                                           |                                                |           | (3,055,739        | )        
|                                                                                                                   | Accumulated other comprehensive loss                                                                                                                                                                          |                                                |           | (167              | )        
|                                                                                                                   | Common stock in treasury, at cost (8,442,409 shares at June 30, 2005 and December 31, 2004)                                                                                                                   |                                                |           | (75,877           | )        
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   |                                                                                                                                                                                                               | Total shareholders' deficiency                 |           |                   | (770,573 
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          
|                                                                                                                   |                                                                                                                                                                                                               | Total Liabilities and Shareholders' Deficiency |           | $                 | 1,506,127
|                                                                                                                   |                                                                                                                                                                                                               |                                                |           |                   |          

See
notes to condensed consolidated financial statements (unaudited).

2

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)        (dollars in thousands, except share and per share amounts)

|                                                                                                                               |                                                                   | Three Months Ended June 30, |            
|------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------- | --------------------------- | -----------
|
|Revenues, net:                                                                                                                 |                                                                   |                             |            
|                                                                                                                               | Advertising                                                       |                             | $          
|                                                                                                                               | Circulation                                                       |                             |            
|                                                                                                                               | Other                                                             |                             |            
|                                                                                                                               |                                                                   |                             |            
|                                                                                                                               | Total revenues, net                                               |                             |            
|Operating costs and expenses:                                                                                                  |                                                                   |                             |            
|                                                                                                                               | Cost of goods sold                                                |                             |            
|                                                                                                                               | Marketing and selling                                             |                             |            
|                                                                                                                               | Distribution, circulation and fulfillment                         |                             |            
|                                                                                                                               | Editorial                                                         |                             |            
|                                                                                                                               | Other general expenses                                            |                             |            
|                                                                                                                               | Corporate administrative expenses                                 |                             |            
|                                                                                                                               | Depreciation of property and equipment                            |                             |            
|                                                                                                                               | Amortization of intangible assets and other                       |                             |            
|                                                                                                                               | Non-cash compensation                                             |                             |            
|                                                                                                                               | Provision for severance, closures and restructuring related costs |                             |            
|                                                                                                                               | Loss on sale of businesses and other, net                         |                             |            
|                                                                                                                               |                                                                   |                             |            
|Operating income                                                                                                               |                                                                   |                             | 43,477     
|Other expense:                                                                                                                 |                                                                   |                             |            
|                                                                                                                               | Provision for impairment of investments                           |                             |            
|                                                                                                                               | Interest expense                                                  |                             |            
|                                                                                                                               | Interest on shares subject to mandatory redemption                |                             |            
|                                                                                                                               | Amortization of deferred financing costs                          |                             |            
|                                                                                                                               | Other income (expense), net                                       |                             |            
|                                                                                                                               |                                                                   |                             |            
|Loss from continuing operations before provision for income taxes                                                              |                                                                   |                             | (1,733     
|Provision for income taxes                                                                                                     |                                                                   |                             | (2,317     
|                                                                                                                               |                                                                   |                             |            
|Loss from continuing operations                                                                                                |                                                                   |                             | (4,050     
|Discontinued operations (including gain (loss) on sale of businesses, net of ($716) and $4,178 in 2005 and 2004, respectively) |                                                                   |                             | 9,061      
|                                                                                                                               |                                                                   |                             |            
|Net income                                                                                                                     |                                                                   |                             | 5,011      
|Preferred stock dividends                                                                                                      |                                                                   |                             |           
|                                                                                                                               |                                                                   |                             |            
|Income (loss) applicable to common shareholders                                                                                |                                                                   | $                           | 5,011      
|                                                                                                                               |                                                                   |                             |            
|Basic and diluted income (loss) per common share:                                                                              |                                                                   |                             |            
|                                                                                                                               | Continuing operations                                             |                             | $          
|                                                                                                                               | Discontinued operations                                           |                             |            
|                                                                                                                               |                                                                   |                             |            
|                                                                                                                               | Income (loss) applicable to common shareholders                   |                             | $          
|                                                                                                                               |                                                                   |                             |            
|Basic and diluted common shares outstanding                                                                                    |                                                                   |                             | 262,973,160
|                                                                                                                               |                                                                   |                             |            

See
notes to condensed consolidated financial statements (unaudited).

3

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)        (dollars in thousands, except share and per share amounts)

|                                                                                                                           |                                                                   | Six Months Ended June 30, |            
|-------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------- | -----------
|
|Revenues, net:                                                                                                             |                                                                   |                           |            
|Advertising                                                                                                                |                                                                   | $                         | 329,266    
|Circulation                                                                                                                |                                                                   |                           | 121,682    
|Other                                                                                                                      |                                                                   |                           | 80,103     
|                                                                                                                           |                                                                   |                           |            
|                                                                                                                           | Total revenues, net                                               |                           |            
|Operating costs and expenses:                                                                                              |                                                                   |                           |            
|                                                                                                                           | Cost of goods sold                                                |                           |            
|                                                                                                                           | Marketing and selling                                             |                           |            
|                                                                                                                           | Distribution, circulation and fulfillment                         |                           |            
|                                                                                                                           | Editorial                                                         |                           |            
|                                                                                                                           | Other general expenses                                            |                           |            
|                                                                                                                           | Corporate administrative expenses                                 |                           |            
|                                                                                                                           | Depreciation of property and equipment                            |                           |            
|                                                                                                                           | Amortization of intangible assets and other                       |                           |            
|                                                                                                                           | Severance related to separated senior executives                  |                           |            
|                                                                                                                           | Non-cash compensation                                             |                           |            
|                                                                                                                           | Provision for severance, closures and restructuring related costs |                           |            
|                                                                                                                           | Provision for unclaimed property                                  |                           |            
|                                                                                                                           | Loss on sale of businesses and other, net                         |                           |            
|                                                                                                                           |                                                                   |                           |            
|Operating income                                                                                                           |                                                                   |                           | 70,046     
|Other income (expense):                                                                                                    |                                                                   |                           |            
|                                                                                                                           | Provision for impairment of investments                           |                           |            
|                                                                                                                           | Interest expense                                                  |                           |            
|                                                                                                                           | Interest on shares subject to mandatory redemption                |                           |            
|                                                                                                                           | Amortization of deferred financing costs                          |                           |            
|                                                                                                                           | Other income (expense), net                                       |                           |            
|                                                                                                                           |                                                                   |                           |            
|Loss from continuing operations before provision for income taxes                                                          |                                                                   |                           | (19,979    
|Provision for income taxes                                                                                                 |                                                                   |                           | (6,150     
|                                                                                                                           |                                                                   |                           |            
|Loss from continuing operations                                                                                            |                                                                   |                           | (26,129    
|Discontinued operations (including gain on sale of businesses, net of $382,462 and $42,287 in 2005 and 2004, respectively) |                                                                   |                           | 396,653    
|                                                                                                                           |                                                                   |                           |            
|Net income                                                                                                                 |                                                                   |                           | 370,524    
|Preferred stock dividends                                                                                                  |                                                                   |                           |           
|                                                                                                                           |                                                                   |                           |            
|Income applicable to common shareholders                                                                                   |                                                                   | $                         | 370,524    
|                                                                                                                           |                                                                   |                           |            
|Basic and diluted income (loss) per common share:                                                                          |                                                                   |                           |            
|                                                                                                                           | Continuing operations                                             |                           | $          
|                                                                                                                           | Discontinued operations                                           |                           |            
|                                                                                                                           |                                                                   |                           |            
|                                                                                                                           | Income applicable to common shareholders                          |                           | $          
|                                                                                                                           |                                                                   |                           |            
|Basic and diluted common shares outstanding                                                                                |                                                                   |                           | 262,817,408
|                                                                                                                           |                                                                   |                           |            

See
notes to condensed consolidated financial statements (unaudited).

4

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)        (dollars in thousands)

|                                                 |                                                                              | Six Months Ended June 30,                                             |                                                    
|------------------------------------------------ | ---------------------------------------------------------------------------- | --------------------------------------------------------------------- | ---------------------------------------------------
|
|Operating activities:                            |                                                                              |                                                                       |                                                    
|                                                 | Net income                                                                   |                                                                       | $                                                  
|                                                 | Adjustments to reconcile net income to net cash used in operating activities |                                                                       |                                                    
|                                                 | Changes in operating assets and liabilities                                  |                                                                       |                                                    
|                                                 |                                                                              |                                                                       |                                                    
|                                                 |                                                                              |                                                                       | Net cash used in operating activities              
|                                                 |                                                                              |                                                                       |                                                    
|Investing activities:                            |                                                                              |                                                                       |                                                    
|                                                 | Additions to property, equipment and other, net                              |                                                                       |                                                    
|                                                 | Proceeds from sales of businesses and other                                  |                                                                       |                                                    
|                                                 | Payments for businesses acquired, net of cash acquired                       |                                                                       |                                                    
|                                                 | Proceeds from sale of other investments                                      |                                                                       |                                                    
|                                                 |                                                                              |                                                                       |                                                    
|                                                 |                                                                              |                                                                       | Net cash provided by investing activities          
|                                                 |                                                                              |                                                                       |                                                    
|Financing activities:                            |                                                                              |                                                                       |                                                    
|                                                 | Borrowings under credit agreements                                           |                                                                       |                                                    
|                                                 | Repayments of borrowings under credit agreements                             |                                                                       |                                                    
|                                                 | Payments for repurchase of 75/8% Senior Notes                                |                                                                       |                                                    
|                                                 | Proceeds from issuance of Senior Floating Rate Notes                         |                                                                       |                                                    
|                                                 | Proceeds from issuances of common stock, net                                 |                                                                       |                                                    
|                                                 | Redemption of Series D and F Exchangeable Preferred Stock                    |                                                                       |                                                    
|                                                 | Deferred financing costs paid                                                |                                                                       |                                                    
|                                                 | Capital lease obligations                                                    |                                                                       |                                                    
|                                                 | Other                                                                        |                                                                       |                                                    
|                                                 |                                                                              |                                                                       |                                                    
|                                                 |                                                                              |                                                                       | Net cash provided by (used in) financing activities
|                                                 |                                                                              |                                                                       |                                                    
|(Decrease) increase in cash and cash equivalents |                                                                              |                                                                       | (5,315                                             
|Cash and cash equivalents, beginning of period   |                                                                              |                                                                       | 13,000                                             
|                                                 |                                                                              |                                                                       |                                                    
|Cash and cash equivalents, end of period         |                                                                              | $                                                                     | 7,685                                              
|                                                 |                                                                              |                                                                       |                                                    
|Supplemental information:                        |                                                                              |                                                                       |                                                    
|                                                 | Cash interest paid, including interest on capital and restructured leases    |                                                                       | $                                                  
|                                                 |                                                                              |                                                                       |                                                    
|                                                 | Cash interest paid on shares subject to mandatory redemption                 |                                                                       | $                                                  
|                                                 |                                                                              |                                                                       |                                                    
|                                                 | Cash taxes paid, net of refunds received                                     |                                                                       | $                                                  
|                                                 |                                                                              |                                                                       |                                                    
|                                                 | Cash paid for severance, closures and restructuring related costs            |                                                                       | $                                                  
|                                                 |                                                                              |                                                                       |                                                    
|                                                 | Non-cash activities:                                                         |                                                                       |                                                    
|                                                 |                                                                              | Payments of dividends-in-kind on Series J Convertible Preferred Stock |                                                    
|                                                 |                                                                              |                                                                       |                                                    

See
notes to condensed consolidated financial statements (unaudited).

5

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PRIMEDIA Inc.    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)    (dollars in thousands, except share and per share amounts)

1.Summary of Significant Accounting Policies

Basis of Presentation

PRIMEDIA Inc., together with its subsidiaries, is herein referred to as either "PRIMEDIA" or the "Company." In the opinion of the Company's management, the
condensed consolidated financial statements present fairly the consolidated financial position of the Company as of June 30, 2005 and December 31, 2004 and the consolidated results of
operations of the Company for the three and six month periods ended June 30, 2005 and 2004, and consolidated cash flows of the Company for the six months ended June 30, 2005 and 2004 and
all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated balance sheet as of December 31, 2004 has
been derived from the Company's audited consolidated balance sheet included in Form 10-K for the year ended December 31, 2004. All intercompany accounts and transactions have been
eliminated in consolidation. These statements should be read in conjunction with the Company's annual consolidated financial statements and related notes for the year ended December 31, 2004,
which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2004. The operating results for the three and six months ended June 30,
2005 are not necessarily indicative of the results that may be expected for a full year. Certain amounts in the prior periods' condensed consolidated financial statements and related notes have been
reclassified to conform to the presentation as of and for the three and six month periods ended June 30, 2005.

Stock Based Compensation

The Company has a stock-based employee compensation plan. Effective January 1, 2003, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation", as amended by SFAS 148, "Accounting for Stock-Based CompensationTransition and Disclosure", using the
prospective method. Upon adoption, the Company began expensing the fair value of stock-based compensation for all grants, modifications and settlements made on or after January 1, 2003. As a
result of the adoption of SFAS 123, the Company recorded a non-cash compensation charge of $586 and $778, relating to stock options and the PRIMEDIA Employee Stock Purchase Plan,
for the three months ended June 30, 2005 and 2004, respectively, and $1,152 and $1,368 for the six months ended June 30, 2005 and 2004, respectively.

The
following table illustrates the effect on net income (loss) applicable to common shareholders and basic and diluted income per common share as if the Company had applied the fair
value

6

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recognition
provisions of SFAS 123 to all stock-based employee compensation grants for all periods presented:

|                                                                                                                |  | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|--------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | -
|
|Reported net income (loss) applicable to common shareholders                                                    |  | $                           | 5,011  |                           | $
|Add: Stock-based employee compensation expense included in reported net income (loss)                           |  |                             | 586    |                           |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards |  |                             | (1,701 | )                         |  
|                                                                                                                |  |                             |        |                           |  
|Pro forma net income (loss) applicable to common shareholders                                                   |  | $                           | 3,896  |                           | $
|                                                                                                                |  |                             |        |                           |  
|Per Common Share:                                                                                               |  |                             |        |                           |  
|Reported basic and diluted income (loss)                                                                        |  | $                           | 0.02   |                           | $
|Pro forma basic and diluted income (loss)                                                                       |  | $                           | 0.01   |                           | $

Pro
forma information regarding net income and earnings per share is required by SFAS 123, and has been determined as if the Company had accounted for its employee stock options
granted on or before December 31, 2002 under the fair value method of SFAS 123. The fair value of these options was estimated at the date of grant using the Black-Scholes pricing model.
For the three months ended June 30, 2005 and 2004, respectively, the following weighted-average assumptions were used: risk-free interest rates of 3.76% and 2.83%; dividend yields
of 0.0% and 0.0%; volatility factors of the expected market price of the Company's common stock of 72% and 85%, and a weighted-average expected life of the options of three years. For the six months
ended June 30, 2005 and 2004, respectively, the following weighted-average assumptions were used: risk-free interest rates of 3.76% and 2.81%; dividend yields of 0.0% and 0.0%;
volatility factors of the expected market price of the Company's common stock of 72% and 85%, and a weighted-average expected life of the options of three years. The estimated fair value of options
granted during the three months ended June 30, 2005 and 2004 was $716 and $310, respectively, and $737 and $318 during the six months ended June 30, 2005 and 2004, respectively.

The
Black-Scholes pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee stock options.

In
December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (revised 2004) ("SFAS 123(R)"). Upon the effective date, SFAS 123(R)
replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees. See
the Recent Accounting Pronouncements section below for further discussion.

7

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Recent Accounting Pronouncements

SFAS 151, "Inventory Costs"

In November 2004, the FASB issued SFAS 151, which is an amendment of Accounting Research Bulletin ("ARB") 43, Chapter 4. SFAS 151 clarifies
that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production
overheads to inventory based on the normal capacity of the production facilities. This SFAS is effective for inventory costs incurred for annual periods beginning after June 15, 2005. The
Company does not anticipate any material impact on its consolidated financial statements upon the adoption of this standard.

SFAS 123 (revised 2004)," Share-Based Payment"

In December 2004, the FASB issued SFAS 123(R), which replaces SFAS 123 and supersedes APB 25. The FASB has concluded that companies may adopt
the new standard in one of two ways: the modified prospective transition method or the modified retrospective transition method. The modified prospective transition method requires recognition of
compensation expense from the beginning of the fiscal period in which the recognition provisions are first applied as if the fair-value-based accounting method had been used to account for
all employee awards granted, modified, or settled after the effective date and to any awards that were not fully vested as of the effective date. The modified retrospective method requires recognition
of compensation expense for periods presented prior to the adoption of the fair value based accounting method for share-based payment; that is, an entity would recognize employee compensation cost for
prior periods presented in the amounts reported in the pro forma disclosures provided in accordance with SFAS 123. The Company is planning
to adopt SFAS 123(R) using the modified prospective method effective January 1, 2006, which will result in an increase in non-cash compensation expense. The Company is still
evaluating the impact of the adoption of this standard on its consolidated financial statements.

SFAS 153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29"

In December 2004, the FASB issued SFAS 153, which amends APB 29 to eliminate the exception for nonmonetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements.

SFAS 154, "Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3"

In May 2005, the FASB issued SFAS 154 which replaces APB 20 and SFAS 3. This statement provides guidance on the accounting for and reporting of
accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of
explicit transition requirements specific to the newly adopted accounting principle. This statement also provides guidance for determining whether retrospective application of a change in accounting
principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS 154 is effective for accounting changes and correction of errors made in fiscal years
beginning after December 15, 2005.

8

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2.Divestitures

The Company has classified the results of certain divested entities as discontinued operations in accordance with SFAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets".

In
January 2004, the Company completed the sale ofNew Yorkmagazine, part of the Enthusiast Media segment, the results of which
have been classified as discontinued operations for all periods presented. Proceeds from the sale of $55,000, subject to standard post-closing adjustments, were used to pay down the
Company's borrowings under its bank credit facilities with JPMorgan Chase Bank, Bank of America, N.A., The Bank of New York and The Bank of Nova Scotia, as agents (the "bank credit facilities"). The
Company recorded a gain on the sale ofNew Yorkmagazine of approximately $38,000 in discontinued operations for the three months ended June 30,
2004. Additionally, the Company finalized a working capital settlement with the purchaser ofSeventeenand its companion teen properties, resulting in a
payment to the purchaser of $3,379 in January 2004.

In
February 2004, the Company completed the sale of Kagan World Media, part of the Business Information segment, the results of which have been classified as discontinued
operations for all periods presented. Proceeds from the sale were approximately $2,200, subject to standard post-closing adjustments.

In
April 2004, the Company sold About Web Services, the Web hosting business of About Inc., the results of which have been classified as discontinued operations for all
periods presented. Proceeds from the sale were approximately $12,200, subject to standard post-closing adjustments.

In
August 2004,FolioandCirculation Managementwere contributed to a venture with
a third party, under which the Company will not have a significant continuing involvement in the operations and the Company's share of associated cash flows is not expected to be significant.
Additionally,American Demographicswas sold in November 2004. The operating results of these properties have been reclassified as discontinued
operations for all periods presented.

In
September 2004, the Company announced that it was exploring the sale of its Workplace Learning division, excluding Interactive Medical Network ("IMN"). Workplace Learning was
part of the
Education segment (formerly known as the Education and Training segment) which was renamed to reflect the classification of Workplace Learning as a discontinued operation. On March 31, 2005,
the Company completed the sale of Bankers Training & Consulting Company, the financial services division of Workplace Learning. Proceeds from the sale were approximately $21,300, subject to
standard post-closing adjustments and the Company recorded a net gain of approximately $18,700 in discontinued operations in 2005. On April 1, 2005, the Company sold the remaining
net assets of Workplace Learning for the assumption of liabilities, resulting in a loss in carrying value of $15,100. The operating results of Workplace Learning, excluding IMN, have been reclassified
as discontinued operations for all periods presented.

On
March 18, 2005, the Company completed the sale of About.com, part of the Enthusiast Media segment, the results of which have been classified as discontinued operations for all
periods presented. Gross proceeds from the sale of approximately $410,000 were used to reduce the Company's borrowings under its revolving bank credit facility and for general corporate purposes. The
Company recorded a net gain on the sale of About.com of approximately $378,900 in discontinued operations in 2005.

In
the second quarter of 2005, the Company decided to actively pursue the sale of its Business Information segment with the exception of Ward's Automotive Group ("Ward's), which has been
transferred to the Enthusiast Media segment for all periods presented. The operating results of the Business Information segment, excluding Ward's, have been classified as discontinued operations for
all periods presented and the associated assets and liabilities were classified as held for sale as of June 30, 2005. (See Subsequent Events Note 18 for further discussion)

9

---



Total
revenues, net, and income before provision for income taxes included in discontinued operations for the three and six months ended June 30, 2005 and 2004 on the accompanying
condensed statements of consolidated operations are as follows:

Included in Discontinued Operations

Three Months Ended
June 30,

Six Months Ended
June 30,2005

2004

2005

2004Total revenues, net

$
61,038

$
77,570

$
130,646

$
154,586Income before provision for income taxes (including gain (loss) on sale of business)

$
9,338

$
10,732

$
397,155

$
42,977


Balance Sheet of Businesses Held for Sale

The assets and liabilities of businesses which the Company has initiated plans to sell, but had not sold, as of June 30, 2005 and December 31, 2004
have been reclassified to held for sale on the accompanying condensed consolidated balance sheets as follows:

June 30,
2005

December 31,
2004ASSETSAccounts receivable, net

$
29,549

$
5,114Inventories


5,882


1,524Prepaid expenses and other


2,555


588Property and equipment, net


9,536


18,991Other intangible assets, net


32,952


Goodwill


109,267


Other non-current assets


178


14,057Assets held for sale

$
189,919

$
40,274LIABILITIESAccounts payable

$
15,434

$
2,371Accrued expenses and other


10,274


4,177Deferred revenuescurrent


16,216


5,545Current portion of capital lease obligations


588


1,076Non-current deferred revenues


888


Long-term portion of capital lease obligations


599


13,811Other non-current liabilities


744


Liabilities of businesses held for sale

$
44,743

$
26,980


10

---



3.Accounts Receivable, Net

Accounts receivable, net, consisted of the following:

June 30,
2005

December 31,
2004Accounts receivable

$
152,448

$
192,126Less: Allowance for doubtful accounts


8,326


10,526Allowance for returns and rebates


3,034


2,595$
141,088

$
179,005


4.Inventories

Inventories consisted of the following:

June 30,
2005

December 31,
2004Raw materials

$
12,117

$
15,097Work in process


161


98Finished goods


6,789


7,501$
19,067

$
22,696


5.Goodwill, Other Intangible Assets and Other

Since the adoption of SFAS 142, "Goodwill and Other Intangible Assets", on January 1, 2002, the Company assesses goodwill and indefinite lived
intangible assets for impairment at least once a year. The Company has established October 31 as the annual impairment test date. In addition to the annual impairment test, an assessment is
also required whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the six months ended June 30, 2005 and 2004, there were no
events or changes in circumstances requiring the Company to perform an impairment test related to goodwill, intangible assets or other finite lived assets, and accordingly, there were no impairments
recorded.

Historically,
the Company did not need a valuation allowance for the portion of the tax effect of net operating losses equal to the amount of deferred tax liabilities related to
tax-deductible goodwill and trademark amortization expected to occur during the carryforward period of the net operating losses based on the timing of the reversal of these taxable
temporary differences. With the adoption of SFAS 142, the Company no longer amortizes the book basis in the indefinite-lived intangibles, but continues to amortize these intangibles for tax
purposes. For the three months ended June 30, 2005 and 2004, income tax expense primarily consisted of deferred income taxes of $2,228 and $4,250, respectively, and for the six months ended
June 30, 2005 and 2004, $5,991 and $8,473, respectively. The Company expects that it will record a total of approximately $8,000 to increase deferred tax liabilities during the remaining six
months of 2005.

In
addition, since amortization of tax-deductible goodwill and trademarks ceased on January 1, 2002, the Company will have deferred tax liabilities that will arise
each quarter as these assets continue to be amortized for tax purposes. As a result of the adoption of SFAS 142, the Company records a valuation allowance in excess of its net deferred tax
assets to the extent the differences between the book and tax basis of indefinite-lived intangible assets is not expected to reverse during the expiration period of the Company's net operating loss
carryforwards and other tax deductible temporary differences.

11

---



In April 2005, the Consumer Guides segment acquired the assets of a collection of new home guides for $15,800 in cash and $619 in assumed liabilities. The purchase price and its
allocation is subject to routine post-closing adjustments. The Company allocated the purchase price of the acquisition to the following intangible asset classes:

Asset Class

Amortization Period

Amount AllocatedGoodwill



$
9,150Non-Compete Agreements

5 years


382Advertiser Lists

10 years


5,791Other




1,096Total



$
16,419


In
addition, the Company acquired the net assets of certain other smaller consumer guides related businesses for $9,554 in the first six months of 2005. The results of operations of
these acquisitions did not have a material impact on the Company's results for the three and six months ended June 30, 2005.

Changes
in the carrying amount of goodwill for the six months ended June 30, 2005, by operating segment, are as follows:

|                                                           |  | Enthusiast
Media |         | Consumer
Guides |   | Business
Information |  | Total |         
|---------------------------------------------------------- |  | ---------------- | ------- | --------------- | - | -------------------- |  | ----- | --------
|Balance as of January 1, 2005                              |  | $                | 688,911 |                 | $ | 96,001               |  | $     | 117,667 
|Inter-segment Transfers(1)                                 |  |                  | 8,400   |                 |   |                      |  |       | (8,400  
|Goodwill classified as held-for-sale                       |  |                  |         |                 |   |                      |  |       | (109,267
|Goodwill acquired related to the acquisition of businesses |  |                  | 38      |                 |   | 16,095               |  |       |         
|Goodwill written off related to the sale of businesses     |  |                  | (15,430 | )               |   |                     |  |       |        
|                                                           |  |                  |         |                 |   |                      |  |       |         
|Balance as of June 30, 2005                                |  | $                | 681,919 |                 | $ | 112,096              |  | $     |        
|                                                           |  |                  |         |                 |   |                      |  |       |         

---

Intangible
assets subject to amortization in accordance with SFAS 142 consist of the following:

|                                          |  |      |  | June 30, 2005 |         | December 31, 2004
|----------------------------------------- |  | ---- |  | ------------- | ------- | -----------------
|
|Trademarks                                |  |     |  | $             |        |                  
|Membership, subscriber and customer lists |  | 2-20 |  |               | 183,508 |                  
|Non-compete agreements                    |  | 1-10 |  |               | 91,086  |                  
|Trademark license agreements              |  | 2-15 |  |               | 328     |                  
|Copyrights                                |  | 3-20 |  |               | 3,325   |                  
|Databases                                 |  | 2-12 |  |               | 814     |                  
|Advertiser lists                          |  | 5-20 |  |               | 94,106  |                  
|Distribution agreements                   |  |     |  |               | 10,410  |                  
|Other                                     |  | 1-5  |  |               | 917     |                  
|                                          |  |      |  |               |         |                  
|                                          |  |      |  | $             | 384,494 |                  
|                                          |  |      |  |               |         |                  

12

---



Intangible
assets not subject to amortization had a carrying value of $181,325 and $208,516 at June 30, 2005 and December 31, 2004, respectively, and consisted primarily of
trademarks. Amortization expense for other intangible assets still subject to amortization was $2,050 and $3,022 for the three months ended June 30, 2005 and 2004, respectively, and $4,034 and
$5,981 for the six months ended June 30, 2005 and 2004, respectively. Amortization of deferred wiring costs of $350 and $414 for the three months ended June 30, 2005 and 2004,
respectively, and $694 and $777 for the six months ended June 30, 2005 and 2004, respectively, have also been included in amortization of intangible assets and other on the accompanying
condensed statements of consolidated operations. At June 30, 2005, estimated future amortization expense of other intangible assets still subject to amortization, excluding deferred wiring
costs, is as follows: approximately $4,000 for the remaining six months of 2005 and approximately $6,000, $5,000, $4,000 and $3,000 for 2006, 2007, 2008 and 2009, respectively.

6.Accrued Expenses and Other

Accrued expenses and other current liabilities consisted of the following:

June 30,
2005

December 31,
2004Payroll, commissions and related employee benefits

$
31,438

$
41,143Rent and lease liabilities


5,786


7,781Retail display costs and allowances


13,606


14,620Royalties


2,565


2,273Circulation costs


5,845


6,531Professional fees


4,014


4,288Taxes


14,551


12,843Deferred purchase price


1,975


565Interest payable


15,231


17,549Interest payable on shares subject to mandatory redemption


4,567


10,947Other


26,553


24,572$
126,131

$
143,112


7.Long-term Debt

Long-term debt consisted of the following:

June 30,
2005

December 31,
2004Borrowings under bank credit facilities

$
457,920

$
480,40675/8% Senior Notes Due 2008


145,822


225,58187/8% Senior Notes Due 2011


470,695


470,3908% Senior Notes Due 2013


300,000


300,000Senior Floating Rate Notes Due 2010


175,000


175,0001,549,437


1,651,377Obligation under capital leases and other


6,297


9,5061,555,734


1,660,883Less: Current maturities of long-term debt


21,822


24,919$
1,533,912

$
1,635,964


Upon
redemption of the Series D and Series F Exchangeable Preferred Stock on May 11, 2005 (see Note 8), the Company repaid its outstanding term loan A and
term loan B in aggregate principal amounts of $5,000 and $35,000, respectively, and permanently reduced its total revolving loan

13

---



commitments
in an aggregate amount of $30,000. In addition, on May 11, 2005 the Company redeemed $80,000 aggregate principal amount of its 75/8% Senior Notes Due 2008. The
75/8% Senior Notes were redeemed at 101.271% of the principal amount plus accrued interest. As a result, the Company recorded a loss of $1,940 in the other income (expense), net line on
the accompanying condensed statements of consolidated operations for the three and six months ended June 30, 2005 related to the premium paid on the redemption as well as the
write-off of unamortized deferred financing costs and bond discount.

Under
the most restrictive covenants as defined in the bank credit facilities agreement, the Company must maintain a minimum interest coverage ratio, as defined, of 2.25 to 1 and a
minimum fixed charge coverage ratio, as defined, of 1.05 to 1. The maximum allowable debt leverage ratio, as defined in the bank credit facilities, is 6.25 to 1 and decreases to 6.00 to 1, 5.75 to 1,
5.50 to 1, 5.25 to 1, 5.00 to 1, 4.75 to 1, and 4.50 to 1 on October 1, 2005, July 1, 2006, October 1, 2006, April 1, 2007, October 1, 2007,
April 1, 2008 and July 1, 2008, respectively. The Company is in compliance with all of the financial and operating covenants of its financing arrangements.

With
the exception of the term loans B and C, the amounts borrowed under the bank credit facilities bear interest, at the Company's option, at either the base rate plus an applicable
margin ranging from 0.125% to 1.5% or LIBOR plus an applicable margin ranging from 1.125% to 2.5%. The term loan B bears interest at the base rate plus 1.75% or LIBOR plus 2.75%. The term loan C bears
interest at the base rate plus 3.375% or LIBOR plus 4.375%. At June 30, 2005 and December 31, 2004, the weighted average variable interest rate on all outstanding borrowings under the
bank credit facilities was 6.0% and 5.0%, respectively.

The
Senior Floating Rate Notes bear interest equal to three-month LIBOR plus 5.375% per year.

8.Shares Subject to Mandatory Redemption (the Company's Series D Exchangeable Preferred Stock, Series F Exchangeable
Preferred Stock and Series H Exchangeable Preferred Stock)

Shares subject to mandatory redemption consist of the following:

|                                                                                                                                                                              |  | June 30,
2005 |         | December 31,
2004
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | -----------------
|$10.00 Series D Exchangeable Preferred Stock ($.01 par value, 2,000,000 shares authorized and 1,674,867 shares issued and outstanding at December 31, 2004)                   |  | $             |        |                  
|$9.20 Series F Exchangeable Preferred Stock ($.01 par value, 1,250,000 shares authorized and 953,328 shares issued and outstanding at December 31, 2004)                      |  |               |        |                  
|$8.625 Series H Exchangeable Preferred Stock ($.01 par value, 2,500,000 shares authorized and 2,117,391 shares issued and outstanding at June 30, 2005 and December 31, 2004) |  |               | 211,739 |                  
|                                                                                                                                                                              |  |               |         |                  
|                                                                                                                                                                              |  | $             | 211,739 |                  
|                                                                                                                                                                              |  |               |         |                  

On
May 11, 2005, the Company redeemed of all of its outstanding shares of $10.00 Series D Exchangeable Preferred Stock (with an aggregate liquidation preference of
$167,487) and all of its outstanding shares of $9.20 Series F Exchangeable Preferred Stock (with an aggregate liquidation preference of $95,333).

The
Series D Exchangeable Preferred Stock was called at 101% of the liquidation preference thereof plus accrued but unpaid dividends and, the Series F Exchangeable
Preferred Stock was callable at par plus accrued but unpaid dividends.

14

---



In the second quarter of 2005, the Company recorded a loss of $4,300 in the other income (expense), net line on the accompanying condensed statements of consolidated operations for the
three and six months ended June 30, 2005 in connection with these preferred stock redemptions. This charge represents the write-offs of unamortized deferred financing costs and the
premiums paid on the redemption of the Series D preferred shares.

9.Common Stock and Related Options

The following table summarizes information about stock options outstanding and exercisable at June 30, 2005:

|Range of
Exercise Prices |  | Number
Outstanding at
6/30/05 |  | Number
Exercisable at
6/30/05 |  | Weighted Average
Remaining
Contractual Life |  | Weighted Average
Exercise Price for
Outstanding Options |       | Weighted Average
Exercise Price of
Exercisable Options
|------------------------ |  | ----------------------------- |  | ----------------------------- |  | ------------------------------------------- |  | ------------------------------------------------------- | ----- | ------------------------------------------------------
|$0.08 - $0.43            |  | 47,279                        |  | 47,279                        |  | 2                                           |  | $                                                       | 0.24  |                                                       
|$1.20 - $1.98            |  | 525,786                       |  | 412,150                       |  | 5                                           |  |                                                         | 1.85  |                                                       
|$2.02 - $2.98            |  | 1,548,763                     |  | 561,670                       |  | 4                                           |  |                                                         | 2.79  |                                                       
|$3.09 - $3.80            |  | 2,264,000                     |  | 544,625                       |  | 6                                           |  |                                                         | 3.15  |                                                       
|$4.00 - $5.95            |  | 7,272,545                     |  | 6,114,295                     |  | 5                                           |  |                                                         | 4.72  |                                                       
|$6.00 - $9.83            |  | 3,395,003                     |  | 2,485,003                     |  | 6                                           |  |                                                         | 6.56  |                                                       
|$10.13 - $19.81          |  | 7,552,209                     |  | 7,552,209                     |  | 4                                           |  |                                                         | 13.24 |                                                       
|$20.00 - $36.52          |  | 83,727                        |  | 83,435                        |  | 5                                           |  |                                                         | 25.57 |                                                       
|                         |  |                               |  |                               |  |                                             |  |                                                         |       |                                                       
|Total                    |  | 22,689,312                    |  | 17,800,666                    |  | 5                                           |  | $                                                       | 7.54  |                                                       
|                         |  |                               |  |                               |  |                                             |  |                                                         |       |                                                       

In
the second quarter of 2005, the company granted four board members an aggregated total of 200,000 options to purchase shares of the company's common stock. The exercise price of these
stock options is $3.77. These options vest annually over a three-year period following the date of grant.

10.Non-Cash Compensation

|                                                                                                                          |  | Three Months Ended
June 30, |       | Six Months Ended
June 30,
|------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ----- | -------------------------
|
|Restricted stock(1)                                                                                                       |  | $                           | 617   |                          
|Stock Based Compensation (SFAS 123)(2)                                                                                    |  |                             | 586   |                          
|Amortization of the intrinsic value of unvested "in-the-money" options issued in connection with the About acquisition(3) |  |                             |      |                          
|                                                                                                                          |  |                             |       |                          
|Total                                                                                                                     |  | $                           | 1,203 |                          
|                                                                                                                          |  |                             |       |                          

---

15

---



11.Senior Executives Severance and Provision for Severance, Closures and Restructuring Related Costs

Senior Executives Severance

Through June 30, 2004, the Company finalized and recorded $658 of severance related to the separation of the former Interim Chief Executive Officer and
President and the former Chief Executive Officer.

Provision for Severance, Closures and Restructuring Related Costs

Through the second quarter of 2005, the Company continued cost reduction initiatives previously announced to streamline operations, reduce layers of management
and consolidate real estate.

Details
of the initiatives implemented and the payments made in furtherance of these plans during the six months ended June 30, 2005 and 2004 are presented in the following
tables:

|                                                 |  | Liability as of
January 1, 2005 |        | Net Provision for the
Six Months Ended
June 30, 2005 |   | Payments during the
Six Months Ended
June 30, 2005 |     | Liability as of
June 30, 2005
|------------------------------------------------ |  | ------------------------------- | ------ | ---------------------------------------------------- | - | -------------------------------------------------- | --- | -----------------------------
|Severance and closures:                          |  |                                 |        |                                                      |   |                                                    |     |                              
|Employee-related termination costs               |  | $                               | 1,501  |                                                      | $ | 1,381                                              |     | $                            
|Termination of leases related to office closures |  |                                 | 34,450 |                                                      |   | (81                                                | )   |                              
|                                                 |  |                                 |        |                                                      |   |                                                    |     |                              
|Total severance and closures                     |  | $                               | 35,951 | (1)                                                  | $ | 1,300                                              | (2) | $                            
|                                                 |  |                                 |        |                                                      |   |                                                    |     |                              

|                                                 |  | Liability as of
January 1, 2004 |        | Net Provision for the
Six Months Ended
June 30, 2004 |   | Payments during the
Six Months Ended
June 30, 2004 |     | Liability as of
June 30, 2004
|------------------------------------------------ |  | ------------------------------- | ------ | ---------------------------------------------------- | - | -------------------------------------------------- | --- | -----------------------------
|Severance and closures:                          |  |                                 |        |                                                      |   |                                                    |     |                              
|Employee-related termination costs               |  | $                               | 4,433  |                                                      | $ | 1,127                                              |     | $                            
|Termination of leases related to office closures |  |                                 | 35,230 |                                                      |   | 4,507                                              |     |                              
|                                                 |  |                                 |        |                                                      |   |                                                    |     |                              
|Total severance and closures                     |  | $                               | 39,663 | (1)                                                  | $ | 5,634                                              | (2) | $                            
|                                                 |  |                                 |        |                                                      |   |                                                    |     |                              

---

The
remaining costs, comprised primarily of real estate lease commitments for space that the Company no longer occupies, are expected to be paid through 2015. To reduce the lease related
costs, the Company has aggressively pursued subleases of its available office space. These leases have been recorded at their net present value amounts and are net of estimated sublease income
amounts. If the Company is successful in subleasing the restructured office space at a different rate, or is unable to sublease the space by the prescribed date used in the initial calculation, the
reserve will be adjusted accordingly. The Company evaluates the appropriateness of its reserves on a quarterly basis.

16

---



As
a result of the implementation of these plans, the Company has closed and consolidated 23 office locations and has notified a total of 2,071 individuals that they would be terminated
under these plans. As of June 30, 2005, 2,069 of these individuals have been terminated.

Liabilities
of $4,976 and $7,501 representing the current portion of the provision for severance, closures and restructuring related costs are included in accrued expenses and other on
the condensed consolidated balance sheets as of June 30, 2005 and December 31, 2004, respectively. Liabilities of $27,238 and $28,450 representing the non-current portion of
the provision for severance, closures and restructuring related costs are included in other non-current liabilities on the condensed consolidated balance sheets as of June 30, 2005
and December 31, 2004, respectively.

For
purposes of the Company's bank credit facility and Senior Note agreements, the provision for severance, closures and restructuring related costs is excluded from the Company's
calculation of consolidated EBITDA.

12.Provision for Unclaimed Property

Based on an initial assessment at the end of 2003, the Company believed that certain business units may have had unclaimed property that should have been remitted
to one or more states under their respective escheatment requirements. The property in question related primarily to unused advertising credits and outstanding accounts payable checks. The Company
hired an outside consultant to assist in estimating the potential risk. It was premature to estimate the extent of the financial risk at the end of 2003, but the Company believed that the risk would
not have a material impact on its results of operations or financial position. Upon completion of the initial phase of this assessment, the Company recorded an estimated provision for unclaimed
property of $3,862, relating to continuing operations, plus $1,638 relating to operations subsequently classified as discontinued operations in the six months ended June 30, 2004. The
calculation of this provision represents the recording of a correction of an error for unclaimed property transactions which occurred during the years 1991 to 2003; however, the amount of the
provision, applicable to any year within this period, is not material to the results of
operations for each of the respective years, nor is the total provision in relation to the estimated results of operations for 2004 considered material.

The
Company has entered the next phase of the assessment whereby the consultant is assisting in refining the estimated provision and in negotiating settlements under voluntary disclosure
agreements with the relevant states.

13.Comprehensive Income

Comprehensive income for the three and six months ended June 30, 2005 and 2004 are presented in the following table:

|                                   |                                          | Three Months Ended
June 30, |       | Six Months Ended
June 30, |  
|---------------------------------- | ---------------------------------------- | --------------------------- | ----- | ------------------------- | -
|
|Net income                         |                                          | $                           | 5,011 |                           | $
|Other comprehensive income (loss): |                                          |                             |       |                           |  
|                                   | Foreign currency translation adjustments |                             |       |                          |  
|                                   |                                          |                             |       |                           |  
|Total comprehensive income         |                                          | $                           | 5,011 |                           | $
|                                   |                                          |                             |       |                           |  

17

---



14.Income (loss) per Common Share

Income (loss) per common share for the three and six months ended June 30, 2005 and 2004 has been determined based on net income (loss) available to common
shareholders, divided by the weighted average number of common shares outstanding for all periods presented.

Potentially
dilutive common shares include the effect of stock options, warrants and convertible preferred stock. The securities that could potentially dilute basic earnings per share in
the future consist of approximately 32,600,000 of stock options and warrants and 62,400,000 of stock options, warrants and Series J Convertible Preferred Stock at June 30, 2005 and 2004,
respectively. These securities were not included in the computation of diluted income (loss) per share because the effect of their inclusion would be antidilutive.

15.Contingencies

The Company is involved in ordinary and routine litigation incidental to its business. In the opinion of management, there is no pending legal proceeding that
would have a material adverse effect on the condensed consolidated financial statements of the Company.

16.Business Segment Information

The Company's products compete, primarily in the United States, in three principal segments: Enthusiast Media, Consumer Guides and Education. PRIMEDIA believes
that this structure better aligns its businesses to provide a clearer sense of its strategic focus and operating performance.

The
Enthusiast Media segment produces and distributes content through magazines and via the Internet to consumers in various niche and enthusiast markets. It includes the Company's
consumer magazine brands, their related Web sites, events, licensing and merchandising.

The
Consumer Guides segment is the nation's largest publisher and distributor of free publications, includingApartment Guide, New Home
GuideandAuto Guide.

The
Education segment consists of the businesses that provide content for schools, universities, government and other public institutions as well as training. It includes Channel One,
Films Media Group and IMN, a continuing education business for medical professionals.

The
information presented below includes certain intersegment transactions and is, therefore, not necessarily indicative of the results had the operations existed as stand-alone
businesses. Intersegment transactions represent intercompany advertising and other services, which are billed at what management believes are prevailing market rates. These intersegment transactions,
which represent transactions between operating units in different business segments, are eliminated in consolidation.

Information
regarding the operations of the Company by business segment is set forth below based primarily on the nature of the targeted audience. Corporate represents items not
allocated to other business segments. PRIMEDIA evaluates performance based on several factors, of which the primary financial measure is segment earnings before interest, taxes, depreciation,
amortization and other (income) charges ("Segment EBITDA"). Other (income) charges include severance related to separated

18

---



senior
executives, non-cash compensation, provision for severance, closures and restructuring related costs, provision for unclaimed property and (gain) loss on sale of businesses and
other, net.

|                                                                  |                                                    | Three Months Ended
June 30, |        | Six Months Ended
June 30, |        
|----------------------------------------------------------------- | -------------------------------------------------- | --------------------------- | ------ | ------------------------- | -------
|
|Revenues, net:                                                    |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 180,806                   |        
|                                                                  | Consumer Guides                                    |                             |        | 79,471                    |        
|                                                                  | Education                                          |                             |        | 18,352                    |        
|                                                                  | Intersegment Eliminations                          |                             |        | (70                       | )      
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        | $                         | 278,559
|                                                                  |                                                    |                             |        |                           |        
|Segment EBITDA(1):                                                |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 41,053                    |        
|                                                                  | Consumer Guides                                    |                             |        | 17,912                    |        
|                                                                  | Education                                          |                             |        | 2,713                     |        
|                                                                  | Corporate Overhead                                 |                             |        | (7,136                    | )      
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        | $                         | 54,542 
|                                                                  |                                                    |                             |        |                           |        
|Depreciation, amortization and other charges(2):                  |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 5,052                     |        
|                                                                  | Consumer Guides                                    |                             |        | 2,707                     |        
|                                                                  | Education                                          |                             |        | 1,989                     |        
|                                                                  | Corporate                                          |                             |        | 1,317                     |        
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        | $                         | 11,065 
|                                                                  |                                                    |                             |        |                           |        
|Operating income (loss):                                          |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 36,001                    |        
|                                                                  | Consumer Guides                                    |                             |        | 15,205                    |        
|                                                                  | Education                                          |                             |        | 724                       |        
|                                                                  | Corporate                                          |                             |        | (8,453                    | )      
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        |                           | 43,477 
|Other income (expense)                                            |                                                    |                             |        |                           |        
|                                                                  | Provision for impairment of investments            |                             |        |                          |        
|                                                                  | Interest expense                                   |                             |        | (32,778                   | )      
|                                                                  | Interest on shares subject to mandatory redemption |                             |        | (6,409                    | )      
|                                                                  | Amortization of deferred financing costs           |                             |        | (1,184                    | )      
|                                                                  | Other income (expense), net                        |                             |        | (4,839                    | )      
|                                                                  |                                                    |                             |        |                           |        
|Loss from continuing operations before provision for income taxes |                                                    | $                           | (1,733 | )                         | $      
|                                                                  |                                                    |                             |        |                           |        

---

19

---





17.Financial Information for Guarantors of the Company's Debt

The information that follows presents condensed consolidating financial information as of June 30, 2005 and December 31, 2004 and for the six months
ended June 30, 2005 and 2004 for a) PRIMEDIA Inc. (as the Issuer), b) the guarantor subsidiaries, which are with limited exceptions, the restricted subsidiaries, represent
the core PRIMEDIA businesses and exclude investment and other development properties included in the unrestricted category, c) the non-guarantor subsidiaries (primarily representing
Internet assets and businesses, new launches and other properties under evaluation for turnaround or shutdown and foreign subsidiaries), which are with limited exceptions, the unrestricted
subsidiaries, d) elimination entries and e) the Company on a consolidated basis. During the six months ended June 30, 2005, there have been no reclassifications between restricted
and unrestricted subsidiaries.

The
condensed consolidating financial information includes certain allocations of revenues, expenses, assets and liabilities based on management's best estimates which are not
necessarily indicative of the financial position, results of operations and cash flows that these entities would have achieved on a stand-alone basis and should be read in conjunction with the
consolidated financial statements of the Company. The intercompany balances in the accompanying condensed consolidating financial statements include cash management activities, management fees, cross
promotional activities and other intercompany charges between Corporate and the business units and among the business units. The non-guarantor subsidiary results of operations include:
Internet operations, foreign operations, certain distribution operations, certain start-up magazine businesses, revenues and related expenses derived from the licensing of certain products
of guarantor subsidiaries and expenses associated with the cross promotion by the guarantor subsidiaries of the activities of the non-guarantor subsidiaries. The transactions described
above are billed, by the Company, at what the Company believes are prevailing market rates. All intercompany related activities are eliminated in consolidation.

20

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED CONSOLIDATING BALANCE SHEET        June 30, 2005  (dollars in thousands)

|                                           |                                         | PRIMEDIA Inc.                                  |           | Guarantor
Subsidiaries |           | Non-Guarantor
Subsidiaries |          | Eliminations |        | PRIMEDIA Inc.
and Subsidiaries |           
|------------------------------------------ | --------------------------------------- | ---------------------------------------------- | --------- | ---------------------- | --------- | -------------------------- | -------- | ------------ | ------ | ------------------------------ | ----------
|ASSETS                                     |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|Current assets:                            |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           | Cash and cash equivalents               |                                                | $         | 1,003                  |           | $                          | 6,079    |              | $      | 603                            |           
|                                           | Accounts receivable, net                |                                                |           |                       |           |                            | 134,065  |              |        | 7,023                          |           
|                                           | Intercompany receivables                |                                                |           |                       |           |                            |         |              |        |                               |           
|                                           | Inventories                             |                                                |           |                       |           |                            | 18,374   |              |        | 693                            |           
|                                           | Prepaid expenses and other              |                                                |           | 5,175                  |           |                            | 13,062   |              |        | 17,481                         |           
|                                           | Assets held for sale                    |                                                |           |                       |           |                            | 172,801  |              |        | 17,118                         |           
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           |                                         | Total current assets                           |           |                        | 6,178     |                            |          | 344,381      |        |                                | 42,918    
|Property and equipment, net                |                                         |                                                | 4,378     |                        |           | 48,324                     |          |              | 10,145 |                                |           
|Investment in and advances to subsidiaries |                                         |                                                | 250,601   |                        |           |                           |          |              |       |                                |           
|Other intangible assets, net               |                                         |                                                |          |                        |           | 203,630                    |          |              | 10,203 |                                |           
|Goodwill                                   |                                         |                                                |          |                        |           | 754,079                    |          |              | 39,936 |                                |           
|Other non-current assets                   |                                         |                                                | 6,084     |                        |           | 34,695                     |          |              | 1,176  |                                |           
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           |                                         | Total Assets                                   |           | $                      | 267,241   |                            | $        | 1,385,109    |        | $                              | 104,378   
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|LIABILITIES AND SHAREHOLDERS' DEFICIENCY   |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|Current liabilities:                       |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           | Accounts payable                        |                                                | $         | 3,862                  |           | $                          | 39,839   |              | $      | 1,303                          |           
|                                           | Intercompany payables                   |                                                |           | (903,068               | )         |                            | (567,753 | )            |        | 1,470,821                      |           
|                                           | Accrued expenses and other              |                                                |           | 46,543                 |           |                            | 71,773   |              |        | 7,815                          |           
|                                           | Deferred revenues                       |                                                |           | 1,738                  |           |                            | 132,291  |              |        | 5,601                          |           
|                                           | Current maturities of long-term debt    |                                                |           | 19,995                 |           |                            | 1,813    |              |        | 14                             |           
|                                           | Liabilities of businesses held for sale |                                                |           |                       |           |                            | 43,605   |              |        | 1,138                          |           
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           |                                         | Total current liabilities                      |           |                        | (830,930  | )                          |          | (278,432     | )      |                                | 1,486,692 
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|Long-term debt                             |                                         |                                                | 1,530,608 |                        |           | 3,215                      |          |              | 89     |                                |           
|Shares subject to mandatory redemption     |                                         |                                                | 211,739   |                        |           |                           |          |              |       |                                |           
|Intercompany notes payable                 |                                         |                                                |          |                        |           | 2,526,378                  |          |              |       |                                |           
|Deferred revenues                          |                                         |                                                | 15,300    |                        |           | 4                          |          |              |       |                                |           
|Deferred income taxes                      |                                         |                                                | 81,321    |                        |           |                           |          |              |       |                                |           
|Other non-current liabilities              |                                         |                                                | 29,776    |                        |           | 26,557                     |          |              | 761    |                                |           
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           |                                         | Total Liabilities                              |           |                        | 1,037,814 |                            |          | 2,277,722    |        |                                | 1,487,542 
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|Shareholders' deficiency:                  |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           | Common stock                            |                                                |           | 2,715                  |           |                            |         |              |        |                               |           
|                                           | Additional paid-in capital              |                                                |           | 2,358,495              |           |                            |         |              |        |                               |           
|                                           | Accumulated deficit                     |                                                |           | (3,055,739             | )         |                            | (892,607 | )            |        | (1,383,003                     | )         
|                                           | Accumulated other comprehensive loss    |                                                |           | (167                   | )         |                            | (6       | )            |        | (161                           | )         
|                                           | Common stock in treasury, at cost       |                                                |           | (75,877                | )         |                            |         |              |        |                               |           
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           |                                         | Total shareholders' deficiency                 |           |                        | (770,573  | )                          |          | (892,613     | )      |                                | (1,383,164
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           
|                                           |                                         | Total Liabilities and Shareholders' Deficiency |           | $                      | 267,241   |                            | $        | 1,385,109    |        | $                              | 104,378   
|                                           |                                         |                                                |           |                        |           |                            |          |              |        |                                |           

21

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS        For the Six Months Ended June 30, 2005  (dollars in thousands)

|                                                             |                                                                   | PRIMEDIA Inc. |         | Guarantor
Subsidiaries |   | Non-Guarantor
Subsidiaries |         | Eliminations |         | PRIMEDIA Inc.
and
Subsidiaries |  
|------------------------------------------------------------ | ----------------------------------------------------------------- | ------------- | ------- | ---------------------- | - | -------------------------- | ------- | ------------ | ------- | ------------------------------ | -
|Revenues, net                                                |                                                                   | $             |        |                        | $ | 459,954                    |         | $            | 80,618  |                                | $
|Operating costs and expenses:                                |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|                                                             | Cost of goods sold                                                |               |         |                       |   |                            | 107,753 |              |         | 6,473                          |  
|                                                             | Marketing and selling                                             |               |         |                       |   |                            | 93,006  |              |         | 10,094                         |  
|                                                             | Distribution, circulation and fulfillment                         |               |         |                       |   |                            | 66,539  |              |         | 33,712                         |  
|                                                             | Editorial                                                         |               |         |                       |   |                            | 37,479  |              |         | 3,985                          |  
|                                                             | Other general expenses                                            |               |         | 25                     |   |                            | 33,977  |              |         | 41,576                         |  
|                                                             | Corporate administrative expenses                                 |               |         | 10,940                 |   |                            |        |              |         | 2,700                          |  
|                                                             | Depreciation of property and equipment                            |               |         | 1,365                  |   |                            | 10,993  |              |         | 1,477                          |  
|                                                             | Amortization of intangible assets and other                       |               |         |                       |   |                            | 2,826   |              |         | 1,902                          |  
|                                                             | Non-cash compensation                                             |               |         | 2,404                  |   |                            |        |              |         |                               |  
|                                                             | Provision for severance, closures and restructuring related costs |               |         | (669                   | ) |                            | 1,878   |              |         | 91                             |  
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Operating income (loss)                                      |                                                                   |               | (14,065 | )                      |   | 105,503                    |         |              | (21,392 | )                              |  
|Other income (expense):                                      |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|                                                             | Interest expense                                                  |               |         | (65,154                | ) |                            | (781    | )            |         | (36                            | )
|                                                             | Interest on shares subject to mandatory redemption                |               |         | (17,354                | ) |                            |        |              |         |                               |  
|                                                             | Amortization of deferred financing costs                          |               |         | (566                   | ) |                            | (1,754  | )            |         | (198                           | )
|                                                             | Equity in losses of subsidiaries                                  |               |         | 401,465                |   |                            |        |              |         |                               |  
|                                                             | Intercompany management fees and interest                         |               |         | 76,147                 |   |                            | (69,002 | )            |         | (7,145                         | )
|                                                             | Other income (expense), net                                       |               |         | (3,586                 | ) |                            | (589    | )            |         | (7                             | )
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Income (loss) from continuing operations before income taxes |                                                                   |               | 376,887 |                        |   | 33,377                     |         |              | (28,778 | )                              |  
|Provision for income taxes                                   |                                                                   |               | (5,991  | )                      |   | (154                       | )       |              | (5      | )                              |  
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Income (loss) from continuing operations                     |                                                                   |               | 370,896 |                        |   | 33,223                     |         |              | (28,783 | )                              |  
|Discontinued operations                                      |                                                                   |               | (372    | )                      |   | 394,379                    |         |              | 2,646   |                                |  
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Net income (loss)                                            |                                                                   | $             | 370,524 |                        | $ | 427,602                    |         | $            | (26,137 | )                              | $
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  

22

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED STATEMENT OF CONSOLIDATING CASH FLOWS        For the Six Months Ended June 30, 2005  (dollars in thousands)

|                                                 |                                                                                                   | PRIMEDIA Inc.                                       |        | Guarantor
Subsidiaries |          | Non-Guarantor
Subsidiaries |          | Eliminations |     | PRIMEDIA Inc.
and
Subsidiaries |        
|------------------------------------------------ | ------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------ | ---------------------- | -------- | -------------------------- | -------- | ------------ | --- | ------------------------------ | -------
|Operating activities:                            |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|                                                 | Net income (loss)                                                                                 |                                                     | $      | 370,524                |          | $                          | 427,602  |              | $   | (26,137                        | )      
|                                                 | Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |                                                     |        | (461,380               | )        |                            | (288,491 | )            |     | 7,334                          |        
|                                                 | Changes in operating assets and liabilities                                                       |                                                     |        | (23,385                | )        |                            | (15,557  | )            |     | (16,628                        | )      
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|                                                 |                                                                                                   | Net cash provided by (used in) operating activities |        |                        | (114,241 | )                          |          | 123,554      |     |                                | (35,431
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|Investing activities:                            |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|                                                 | Additions to property, equipment and other, net                                                   |                                                     |        | (127                   | )        |                            | (9,763   | )            |     | (3,615                         | )      
|                                                 | Proceeds from sales of businesses and other                                                       |                                                     |        |                       |          |                            | 410,000  |              |     | 21,306                         |        
|                                                 | Payments for businesses acquired, net of cash acquired                                            |                                                     |        |                       |          |                            | (1,541   | )            |     | (25,420                        | )      
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|                                                 |                                                                                                   | Net cash provided by (used in) investing activities |        |                        | (127     | )                          |          | 398,696      |     |                                | (7,729 
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|Financing activities:                            |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|                                                 | Intercompany activity                                                                             |                                                     |        | 480,017                |          |                            | (523,926 | )            |     | 43,909                         |        
|                                                 | Borrowings under credit agreements                                                                |                                                     |        | 196,150                |          |                            |         |              |     |                               |        
|                                                 | Repayments of borrowings under credit agreements                                                  |                                                     |        | (219,136               | )        |                            |         |              |     |                               |        
|                                                 | Payments for repurchase of 75/8% Senior Notes                                                     |                                                     |        | (81,017                | )        |                            |         |              |     |                               |        
|                                                 | Proceeds from issuances of common stock, net                                                      |                                                     |        | 1,320                  |          |                            |         |              |     |                               |        
|                                                 | Redemption of Series D and F Exchangeable Preferred Stock                                         |                                                     |        | (264,494               | )        |                            |         |              |     |                               |        
|                                                 | Deferred financing costs paid                                                                     |                                                     |        |                       |          |                            | (50      | )            |     | (12                            | )      
|                                                 | Capital lease obligations                                                                         |                                                     |        | (964                   | )        |                            | (1,574   | )            |     | (159                           | )      
|                                                 | Other                                                                                             |                                                     |        |                       |          |                            | (101     | )            |     |                               |        
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|                                                 |                                                                                                   | Net cash provided by (used in) financing activities |        |                        | 111,876  |                            |          | (525,651     | )   |                                | 43,738 
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|(Decrease) increase in cash and cash equivalents |                                                                                                   |                                                     | (2,492 | )                      |          | (3,401                     | )        |              | 578 |                                |        
|Cash and cash equivalents, beginning of period   |                                                                                                   |                                                     | 3,495  |                        |          | 9,480                      |          |              | 25  |                                |        
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        
|Cash and cash equivalents, end of period         |                                                                                                   | $                                                   | 1,003  |                        | $        | 6,079                      |          | $            | 603 |                                | $      
|                                                 |                                                                                                   |                                                     |        |                        |          |                            |          |              |     |                                |        

23

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PRIMEDIA INC. AND SUBSIDIARIES        CONSOLIDATING BALANCE SHEET        December 31, 2004  (dollars in thousands)

|                                           |                                         | PRIMEDIA Inc.                                  |           | Guarantor Subsidiaries |            | Non-Guarantor
Subsidiaries |          | Eliminations |         | PRIMEDIA Inc.
and Subsidiaries |           
|------------------------------------------ | --------------------------------------- | ---------------------------------------------- | --------- | ---------------------- | ---------- | -------------------------- | -------- | ------------ | ------- | ------------------------------ | ----------
|ASSETS                                     |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|Current assets:                            |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           | Cash and cash equivalents               |                                                | $         | 3,495                  |            | $                          | 9,480    |              | $       | 25                             |           
|                                           | Accounts receivable, net                |                                                |           |                       |            |                            | 171,143  |              |         | 7,862                          |           
|                                           | Inventories                             |                                                |           |                       |            |                            | 22,553   |              |         | 143                            |           
|                                           | Prepaid expenses and other              |                                                |           | 4,851                  |            |                            | 20,535   |              |         | 4,037                          |           
|                                           | Assets held for sale                    |                                                |           |                       |            |                            |         |              |         | 40,274                         |           
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           |                                         | Total current assets                           |           |                        | 8,346      |                            |          | 223,711      |         |                                | 52,341    
|Property and equipment, net                |                                         |                                                | 5,613     |                        |            | 64,731                     |          |              | 9,462   |                                |           
|Investment in and advances to subsidiaries |                                         |                                                | 713,005   |                        |            |                           |          |              |        |                                |           
|Other intangible assets, net               |                                         |                                                |          |                        |            | 242,389                    |          |              | 495     |                                |           
|Goodwill                                   |                                         |                                                |          |                        |            | 886,534                    |          |              | 16,045  |                                |           
|Other non-current assets                   |                                         |                                                | 9,322     |                        |            | 36,138                     |          |              | 3,921   |                                |           
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           |                                         | Total Assets                                   |           | $                      | 736,286    |                            | $        | 1,453,503    |         | $                              | 82,264    
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|LIABILITIES AND SHAREHOLDERS' DEFICIENCY   |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|Current liabilities:                       |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           | Accounts payable                        |                                                | $         | 13,036                 |            | $                          | 68,708   |              | $       | 2,988                          |           
|                                           | Intercompany payables                   |                                                |           | (441,488               | )          |                            | (554,146 | )            |         | 995,634                        |           
|                                           | Accrued expenses and other              |                                                |           | 56,726                 |            |                            | 83,128   |              |         | 3,258                          |           
|                                           | Deferred revenues                       |                                                |           | 1,738                  |            |                            | 147,397  |              |         | 8,179                          |           
|                                           | Current maturities of long-term debt    |                                                |           | 22,221                 |            |                            | 2,648    |              |         | 50                             |           
|                                           | Liabilities of businesses held for sale |                                                |           |                       |            |                            |         |              |         | 26,980                         |           
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           |                                         | Total current liabilities                      |           |                        | (347,767   | )                          |          | (252,265     | )       |                                | 1,037,089 
|Long-term debt                             |                                         |                                                | 1,631,786 |                        |            | 4,178                      |          |              |        |                                |           
|Shares subject to mandatory redemption     |                                         |                                                | 474,559   |                        |            |                           |          |              |        |                                |           
|Intercompany notes payable                 |                                         |                                                |          |                        |            | 2,486,489                  |          |              | 401,955 |                                |           
|Deferred revenues                          |                                         |                                                | 16,150    |                        |            | 943                        |          |              |        |                                |           
|Deferred income taxes                      |                                         |                                                | 75,172    |                        |            |                           |          |              |        |                                |           
|Other non-current liabilities              |                                         |                                                | 31,206    |                        |            | 32,570                     |          |              | 247     |                                |           
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           |                                         | Total Liabilities                              |           |                        | 1,881,106  |                            |          | 2,271,915    |         |                                | 1,439,291 
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|Shareholders' deficiency:                  |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           | Common stock                            |                                                |           | 2,709                  |            |                            |         |              |         |                               |           
|                                           | Additional paid-in capital              |                                                |           | 2,354,778              |            |                            |         |              |         |                               |           
|                                           | Accumulated deficit                     |                                                |           | (3,426,263             | )          |                            | (818,406 | )            |         | (1,356,866                     | )         
|                                           | Accumulated other comprehensive loss    |                                                |           | (167                   | )          |                            | (6       | )            |         | (161                           | )         
|                                           | Common stock in treasury, at cost       |                                                |           | (75,877                | )          |                            |         |              |         |                               |           
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           |                                         | Total shareholders' deficiency                 |           |                        | (1,144,820 | )                          |          | (818,412     | )       |                                | (1,357,027
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           
|                                           |                                         | Total Liabilities and Shareholders' Deficiency |           | $                      | 736,286    |                            | $        | 1,453,503    |         | $                              | 82,264    
|                                           |                                         |                                                |           |                        |            |                            |          |              |         |                                |           

24

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED STATEMENT OF CONSOLIDATING OPERATIONS        For the Six Months Ended June 30, 2004  (dollars in thousands)

|                                                             |                                                                   | PRIMEDIA Inc. |         | Guarantor
Subsidiaries |   | Non-Guarantor
Subsidiaries |         | Eliminations |         | PRIMEDIA Inc.
and Subsidiaries |  
|------------------------------------------------------------ | ----------------------------------------------------------------- | ------------- | ------- | ---------------------- | - | -------------------------- | ------- | ------------ | ------- | ------------------------------ | -
|Revenues, net                                                |                                                                   | $             |        |                        | $ | 483,804                    |         | $            | 47,933  |                                | $
|Operating costs and expenses:                                |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|                                                             | Cost of goods sold                                                |               |         |                       |   |                            | 107,209 |              |         | 3,561                          |  
|                                                             | Marketing and selling                                             |               |         |                       |   |                            | 88,017  |              |         | 11,213                         |  
|                                                             | Distribution, circulation and fulfillment                         |               |         |                       |   |                            | 73,245  |              |         | 23,700                         |  
|                                                             | Editorial                                                         |               |         |                       |   |                            | 35,743  |              |         | 2,693                          |  
|                                                             | Other general expenses                                            |               |         | 111                    |   |                            | 51,589  |              |         | 23,643                         |  
|                                                             | Corporate administrative expenses                                 |               |         | 11,553                 |   |                            |        |              |         | 3,084                          |  
|                                                             | Depreciation of property and equipment                            |               |         | 1,364                  |   |                            | 9,703   |              |         | 2,756                          |  
|                                                             | Amortization of intangible assets and other                       |               |         |                       |   |                            | 6,193   |              |         | 565                            |  
|                                                             | Severance related to separated senior executives                  |               |         | 658                    |   |                            |        |              |         |                               |  
|                                                             | Non-cash compensation                                             |               |         | 3,486                  |   |                            |        |              |         |                               |  
|                                                             | Provision for severance, closures and restructuring related costs |               |         | 2,229                  |   |                            | 3,405   |              |         |                               |  
|                                                             | Provision for unclaimed property                                  |               |         | 56                     |   |                            | 3,806   |              |         |                               |  
|                                                             | Loss on sales of businesses and other, net                        |               |         | 37                     |   |                            |        |              |         |                               |  
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Operating income (loss)                                      |                                                                   |               | (19,494 | )                      |   | 104,894                    |         |              | (23,282 | )                              |  
|Other income (expense):                                      |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|                                                             | Provision for impairment of investments                           |               |         | (804                   | ) |                            |        |              |         |                               |  
|                                                             | Interest expense                                                  |               |         | (56,109                | ) |                            | (1,923  | )            |         | (48                            | )
|                                                             | Interest on shares subject to mandatory redemption                |               |         | (21,890                | ) |                            |        |              |         |                               |  
|                                                             | Amortization of deferred financing costs                          |               |         | (671                   | ) |                            | (1,633  | )            |         | (15                            | )
|                                                             | Equity in income of subsidiaries                                  |               |         | 49,624                 |   |                            |        |              |         |                               |  
|                                                             | Intercompany management fees and interest                         |               |         | 70,027                 |   |                            | (69,460 | )            |         | (567                           | )
|                                                             | Other income (expense), net                                       |               |         | 43                     |   |                            | 98      |              |         |                               |  
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Income (loss) from continuing operations before income taxes |                                                                   |               | 20,726  |                        |   | 31,976                     |         |              | (23,912 | )                              |  
|Provision for Income taxes                                   |                                                                   |               | (8,775  | )                      |   | 202                        |         |              | (17     | )                              |  
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Income (loss) from continuing operations                     |                                                                   |               | 11,951  |                        |   | 32,178                     |         |              | (23,929 | )                              |  
|Discontinued operations                                      |                                                                   |               |        |                        |   | 51,143                     |         |              | (8,494  | )                              |  
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  
|Net income (loss)                                            |                                                                   | $             | 11,951  |                        | $ | 83,321                     |         | $            | (32,423 | )                              | $
|                                                             |                                                                   |               |         |                        |   |                            |         |              |         |                                |  

25

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PRIMEDIA INC. AND SUBSIDIARIES        CONDENSED STATEMENT OF CONSOLIDATING CASH FLOWS        For the Six Months Ended June 30, 2004  (dollars in thousands)

|                                                 |                                                                                            | PRIMEDIA Inc.                                       |        | Guarantor
Subsidiaries |          | Non-Guarantor
Subsidiaries |          | Eliminations |      | PRIMEDIA Inc.
and
Subsidiaries |        
|------------------------------------------------ | ------------------------------------------------------------------------------------------ | --------------------------------------------------- | ------ | ---------------------- | -------- | -------------------------- | -------- | ------------ | ---- | ------------------------------ | -------
|Operating activities:                            |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|                                                 | Net income                                                                                 |                                                     | $      | 11,951                 |          | $                          | 83,321   |              | $    | (32,423                        | )      
|                                                 | Adjustments to reconcile net income to net cash provided by (used in) operating activities |                                                     |        | (103,012               | )        |                            | 56,325   |              |      | 4,260                          |        
|                                                 | Changes in operating assets and liabilities                                                |                                                     |        | (27,970                | )        |                            | (912     | )            |      | (8,499                         | )      
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|                                                 |                                                                                            | Net cash provided by (used in) operating activities |        |                        | (119,031 | )                          |          | 138,734      |      |                                | (36,662
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|Investing activities:                            |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|                                                 | Additions to property, equipment and other, net                                            |                                                     |        | (449                   | )        |                            | (9,492   | )            |      | (3,633                         | )      
|                                                 | Proceeds from sale of businesses and other                                                 |                                                     |        |                       |          |                            | 68,176   |              |      | 2,101                          |        
|                                                 | Payments for businesses acquired, net of cash acquired                                     |                                                     |        |                       |          |                            | (1,270   | )            |      |                               |        
|                                                 | Proceeds from sale of (payments for) other investments, net                                |                                                     |        | (10                    | )        |                            | 684      |              |      |                               |        
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|                                                 |                                                                                            | Net cash provided by (used in) investing activities |        |                        | (459     | )                          |          | 58,098       |      |                                | (1,532 
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|Financing activities:                            |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|                                                 | Intercompany activity                                                                      |                                                     |        | 150,900                |          |                            | (188,981 | )            |      | 38,081                         |        
|                                                 | Borrowings under credit agreements                                                         |                                                     |        | 231,500                |          |                            |         |              |      |                               |        
|                                                 | Repayments of borrowings under credit agreements                                           |                                                     |        | (378,500               | )        |                            |         |              |      |                               |        
|                                                 | Proceeds from issuance of Senior Floating Rate Notes                                       |                                                     |        | 175,000                |          |                            |         |              |      |                               |        
|                                                 | Proceeds from issuances of common stock, net                                               |                                                     |        | 701                    |          |                            |         |              |      |                               |        
|                                                 | Deferred financing costs paid                                                              |                                                     |        | 3                      |          |                            | (5,562   | )            |      |                               |        
|                                                 | Capital lease obligations                                                                  |                                                     |        | (960                   | )        |                            | (3,118   | )            |      | (200                           | )      
|                                                 | Other                                                                                      |                                                     |        |                       |          |                            | (139     | )            |      |                               |        
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|                                                 |                                                                                            | Net cash provided by (used in) financing activities |        |                        | 178,644  |                            |          | (197,800     | )    |                                | 37,881 
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|(Decrease) increase in cash and cash equivalents |                                                                                            |                                                     | 59,154 |                        |          | (968                       | )        |              | (313 | )                              |        
|Cash and cash equivalents, beginning of period   |                                                                                            |                                                     | 345    |                        |          | 7,668                      |          |              | 672  |                                |        
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        
|Cash and cash equivalents, end of period         |                                                                                            | $                                                   | 59,499 |                        | $        | 6,700                      |          | $            | 359  |                                | $      
|                                                 |                                                                                            |                                                     |        |                        |          |                            |          |              |      |                                |        

18.Subsequent Events

On
August 8, 2005, the Company announced an agreement to sell its Business Information segment to Wasserstein & Co., LP for $385 million in cash. The sale
will take place following standard U.S. regulatory approval and satisfaction of other normal conditions. The transaction is expected to close in the fourth quarter of 2005.

26

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Introduction

PRIMEDIA Inc., together with its subsidiaries, is herein referred to as either "PRIMEDIA" or the "Company."

The
following discussion and analysis summarizes the financial condition and operating performance of the Company and its business segments and should be read in conjunction with the
unaudited condensed consolidated financial statements and notes thereto.

Executive Summary

Our Business

The Company's revenues are generated from advertising (print and online), circulation (subscriptions and single copy sales) and other sources (events, third party
distribution, television, list rental, brand licensing and merchandising). PRIMEDIA's operating expenses include cost of goods sold (principally paper and printing); marketing and selling;
distribution, circulation and fulfillment; editorial; and other general and corporate administrative expenses (collectively referred to as "operating expenses").

The
Company has three reportable segments which best enable it to execute key investment and organic growth initiatives. Those segments are Enthusiast Media, Consumer Guides and
Education.

Background

Historically, PRIMEDIA was a broad based media enterprise built primarily from a series of acquisitions and comprised of numerous disparate assets. During the
past few years, the Company has been opportunistically divesting selective properties in order to better focus on its core businesses and reduce debt and shares subject to mandatory redemption. The
Company is positioning itself as a highly focused targeted media company which is investing in its businesses to drive growth.

Additionally,
over the past few years, to counter the effects of the weakness in the overall advertising environment, the Company aggressively attacked its cost structure. The Company
also realigned and reorganized its management structure to better reflect its emphasis on delivering exceptional products and brands to the marketplace to achieve organic growth. These initiatives
resulted in charges for severance, closures and restructuring related costs to integrate Company operations and consolidate many back office functions and facilities, resulting in a significant
reduction in the number of employees and office space, creating operational and financial efficiencies.

Overall,
these actions have continued to strengthen the balance sheet and improve liquidity as the Company becomes a more efficient organization.

Business Trends

The media industry continues to be adversely affected by an overall soft advertising environment, particularly print, which has recovered more slowly than
anticipated, declining single copy sales of consumer magazines and budgetary constraints in the education markets. Low interest rates have facilitated apartment dwellers becoming homeowners and high
apartment vacancy rates have pressured the advertising budgets of property managers. Additionally, recent high levels of condominium conversions have eliminated existing and potential customers from
our markets.

27

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In
2005, most of PRIMEDIA's businesses grew despite soft industry trends. The Company continues to capitalize on trends impacting markets where it has a large presence, including the
general trend of
marketers seeking to better target their advertising, the growth of free publications, strong growth in online advertising and the increasing popularity of avocations and leisure activities.
Additionally, the Company continues to take many actions to lower costs and improve profitability, including consolidating, selling or shutting down certain properties.

Company Strategy

The Company's strategy is to focus on its core targeted media businesses and grow by leveraging and expanding its market-leading brands. Since the beginning of
2004, the Company has made organic growth its top priority, while still diligently controlling its cost structure. PRIMEDIA is well positioned to capitalize on the shift away from mass advertising to
targeted media.

The
Company is implementing its organic growth strategy through various actions, including:



The
Company's continuing implementation of this strategy is yielding successful results in initiatives at each of its business segments which are highlighted in the segment discussions
below and in the Results of Operations section.

Summary of Consolidated Results for the three months ended June 30, 2005

In 2005, revenues were $278,559, up $12,192 from $266,367 in 2004. The revenue gain of 4.6% was driven by double digit gains in Consumer Guides as well as
improved results in Education and Enthusiast Media. In 2005, operating expenses were $224,017, up 5.7% compared to 2004. In 2005, operating income was $43,477, improved from $38,923 in 2004 primarily
due to lower restructuring related costs and amortization expense. Net income was $5,011 in 2005 compared to $2,154 in 2004.

Forward-Looking Information

This report contains certain forward-looking statements concerning the Company's operations, economic performance and financial condition. These statements are
based upon a number of assumptions and estimates, which are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business
decisions, which are subject to change. Some of the assumptions may not materialize and unanticipated events will occur which can affect the Company's results.

Why We Use The Term Segment EBITDA

Segment EBITDA represents the segment's earnings before interest, taxes, depreciation, amortization and other charges (income) ("Segment EBITDA"). Other charges
(income) include severance related to separated senior executives, non-cash compensation, provision for severance,

28

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closures
and restructuring related costs, provision for unclaimed property and (gain) loss on sale of businesses and other, net. PRIMEDIA believes that Segment EBITDA is the most accurate indicator of
its segments' results, because it focuses on revenue and operating cost items driven by each operating managers' performance, and excludes items largely outside of the operating managers' control.
Internally, the Company's chief operating decision maker, who is the President and CEO, and the executive team measure performance primarily based on Segment EBITDA.

Segment
EBITDA is not intended to represent cash flows from operating activities and should not be considered as an alternative to net income or loss, as determined in conformity with
accounting principles generally accepted in the United States of America, as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. Segment EBITDA may not be
available for the Company's discretionary use as there are requirements to redeem shares subject to mandatory redemption and repay debt, among other payments. Segment EBITDA as presented may not be
comparable to similarly titled measures reported by other companies since not all companies necessarily calculate Segment EBITDA in an identical manner, and therefore, is not necessarily an accurate
measure of comparison between companies. For more information, see the reconciliation of Segment EBITDA to operating income (loss) for the Company's three segments in their respective segment
discussions below.

Why We Use The Term Free Cash Flow

Free Cash Flow is defined as net cash provided by (used in) operating activities adjusted for additions to property, equipment and other, net and capital lease
obligations ("Free Cash Flow").

The
Company believes that the use of Free Cash Flow enables the Company's chief operating decision maker, who is the President and CEO, and the executive team to make decisions based on
the Company's cash resources. Free Cash Flow is also considered to be an indicator of the Company's liquidity, including its ability to reduce debt and shares subject to mandatory redemption and make
strategic investments.

Free
Cash Flow is not intended to represent cash flows from operating activities as determined in conformity with accounting principles generally accepted in the United States of
America. Free Cash Flow as presented may not be comparable to similarly titled measures reported by other companies since not all companies necessarily calculate Free Cash Flow in an identical manner,
and therefore, is not necessarily an accurate measure of comparison between companies. For more information, see reconciliation of Free Cash Flow to cash provided by (used in) operating activities in
the Free Cash Flow section.

Intersegment Transactions

The information presented below includes certain intersegment transactions and is, therefore, not necessarily indicative of the results had the operations existed
as stand-alone businesses. Intersegment transactions represent intercompany advertising and other services which are billed at what management believes are prevailing market rates. These intersegment
transactions, which represent transactions between operating units in different business segments, are eliminated in consolidation.

Reclassifications due to Discontinued Operations

In accordance with Statement of Financial Accounting Standards ("SFAS") 144, "Accounting for the Disposal of Long-Lived Assets", the Company's results
reflect the reclassification in 2004 to discontinued operations of About Web Services, theFolio, Circulation Managementand American Demographicsproperties, Workplace Learning, excluding Interactive Medical Network ("IMN"), and six magazines in the Enthusiast Media segment,
which were shut down and discontinued in the fourth

29

---



quarter
of 2004. About.com, which was sold in March 2005, was classified as discontinued operations for all periods presented.

On
March 31, 2005, the Company completed the sale of Bankers Training & Consulting Company, the financial services division of Workplace Learning. On April 1, 2005,
the Company sold the remaining net assets of Workplace Learning for the assumption of liabilities.

During
the second quarter of 2005, the Company decided to pursue the sale of its Business Information segment with the exception of the Ward's Automotive Group ("Ward's") which has been
transferred to the Enthusiast Media segment. The operating results of the Business Information
segment, excluding Ward's, have been classified as discontinued operations for all periods presented. See Recent Developments section.

30

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Segment Data

The following table presents the results of the Company's three operating segments and Corporate for the three and six months ended June 30, 2005 and 2004:

|                                                                  |                                                    | Three Months Ended
June 30, |        | Six Months Ended
June 30, |        
|----------------------------------------------------------------- | -------------------------------------------------- | --------------------------- | ------ | ------------------------- | -------
|
|Revenues, net:                                                    |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 180,806                   |        
|                                                                  | Consumer Guides                                    |                             |        | 79,471                    |        
|                                                                  | Education                                          |                             |        | 18,352                    |        
|                                                                  | Intersegment Eliminations                          |                             |        | (70                       | )      
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        | $                         | 278,559
|                                                                  |                                                    |                             |        |                           |        
|Segment EBITDA(1):                                                |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 41,053                    |        
|                                                                  | Consumer Guides                                    |                             |        | 17,912                    |        
|                                                                  | Education                                          |                             |        | 2,713                     |        
|                                                                  | Corporate Overhead                                 |                             |        | (7,136                    | )      
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        | $                         | 54,542 
|                                                                  |                                                    |                             |        |                           |        
|Depreciation, amortization and other charges(2):                  |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 5,052                     |        
|                                                                  | Consumer Guides                                    |                             |        | 2,707                     |        
|                                                                  | Education                                          |                             |        | 1,989                     |        
|                                                                  | Corporate                                          |                             |        | 1,317                     |        
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        | $                         | 11,065 
|                                                                  |                                                    |                             |        |                           |        
|Operating income (loss):                                          |                                                    |                             |        |                           |        
|                                                                  | Enthusiast Media                                   |                             | $      | 36,001                    |        
|                                                                  | Consumer Guides                                    |                             |        | 15,205                    |        
|                                                                  | Education                                          |                             |        | 724                       |        
|                                                                  | Corporate                                          |                             |        | (8,453                    | )      
|                                                                  |                                                    |                             |        |                           |        
|                                                                  |                                                    | Total                       |        |                           | 43,477 
|Other income (expense):                                           |                                                    |                             |        |                           |        
|                                                                  | Provision for impairment of investments            |                             |        |                          |        
|                                                                  | Interest expense                                   |                             |        | (32,778                   | )      
|                                                                  | Interest on shares subject to mandatory redemption |                             |        | (6,409                    | )      
|                                                                  | Amortization of deferred financing costs           |                             |        | (1,184                    | )      
|                                                                  | Other income (expense), net                        |                             |        | (4,839                    | )      
|                                                                  |                                                    |                             |        |                           |        
|Loss from continuing operations before provision for income taxes |                                                    |                             | (1,733 | )                         |        
|Provision for income taxes                                        |                                                    |                             | (2,317 | )                         |        
|                                                                  |                                                    |                             |        |                           |        
|Loss from continuing operations                                   |                                                    |                             | (4,050 | )                         |        
|Discontinued operations(3)                                        |                                                    |                             | 9,061  |                           |        
|                                                                  |                                                    |                             |        |                           |        
|Net income                                                        |                                                    | $                           | 5,011  |                           | $      
|                                                                  |                                                    |                             |        |                           |        

---

31

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Results of Operations

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004:

Consolidated Results:

Revenues, Net

Consolidated revenues were $278,559 in 2005 compared to $266,367 in 2004:

Three Months Ended
June 30,Percent
Change2005

2004Revenues, net:Advertising

$
173,394

$
165,067

5.0Circulation


62,868


64,993

(3.3
)Other


42,297


36,307

16.5Total

$
278,559

$
266,367

4.6


Advertising
revenues increased by $8,327 in the second quarter of 2005 compared to 2004 due to increases of $2,094 and $6,109 at the Enthusiast Media and Consumer Guides segments,
respectively. Circulation revenues, which are generated entirely by the Enthusiast Media segment, decreased $2,125 in 2005 due to continued weakness in single copy sales. Other revenues increased
$5,990 in 2005 compared to 2004 due to increases at each of the Company's segments with Enthusiast Media, Consumer Guides and Education increasing $2,013, $2,277 and $1,700, respectively. Revenue
trends within each segment are further detailed in the segment discussions below.

32

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Operating Income

Operating income was $43,477 in 2005 compared to $38,923 in 2004. The improvement in operating income in 2005 was primarily due to a decrease in restructuring
related costs and amortization expenses as increased revenues were offset by increased operating expenses due to investment expenses at Consumer Guides and paper price increases.

Net Income (Loss)

The Company had net income in 2005 of $5,011 compared to $2,154 in 2004. The increase in net income was primarily due to the improvement in operating income.

Interest
expense increased $2,942, or 9.9%, in 2005 to $32,778 from $29,836 in 2004. The increase in interest expense is due to higher interest rates.

SFAS 144
requires sales or disposals of long-lived assets that meet certain criteria to be classified on the statement of consolidated operations as discontinued
operations and to reclassify prior periods accordingly. During 2004, the Company soldNew Yorkmagazine, Kagan World Media, American Demographicsand About
Web Services. In August 2004,FolioandCirculation Managementwere contributed to a venture with a third party and during the fourth quarter of 2004 the Company shut down six magazines in the
Enthusiast Media segment.

In
March 2005, the Company completed the sale of About.com and the Bankers Training & Consulting Company, the financial services division of Workplace Learning. During the
second quarter of 2005, the Company completed the sale of the remaining net assets of Workplace Learning for the assumption of liabilities.

In
addition, during the second quarter of 2005, the Company decided to pursue the sale of its Business Information segment with the exception of Ward's which has been transferred to the
Enthusiast Media segment.

In
accordance with SFAS 144, the financial results of these operations have been reclassified into discontinued operations on the condensed statements of consolidated operations
for all periods presented. For the three months ended June 30, 2005 and 2004, discontinued operations includes a net gain (loss) on sale of businesses of ($716) and $4,178, respectively.

Segment Results:

Enthusiast Media Segment (includes Consumer Automotive, Performance Automotive, International Automotive, Outdoors, Action Sports, Marine,
Soaps, Equine, History, Crafts, Home Technology, Ward's Automotive Group, their related Web sites, events, licensing and merchandising)

33

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Revenues, Net

Enthusiast Media revenues were $180,806 or 64.9% and $178,860 or 67.1% of the Company's consolidated revenues for 2005 and 2004, respectively. Enthusiast Media
revenues increased $1,946 or 1.1% in 2005 compared to 2004 as follows:

Three Months Ended
June 30,Percent
Change2005

2004Revenues, net:Advertising

$
98,628

$
96,534

2.2Circulation


62,868


64,993

(3.3
)Other


19,240


17,227

11.7Intersegment revenues


70


106

Total

$
180,806

$
178,860

1.1


Growth
in Enthusiast Media revenue was led by strong results in the Performance Automotive and Consumer Automotive categories, which, as expected, bounced back after a decline in the
first quarter. Improvements were somewhat offset by the expected continued decline in the International Automotive category. Consistent with previous guidance, the International Automotive category is
expected to decline for the full year, as the market currently suffers from the absence of any new 'tuner' platforms and a consolidation of aftermarket suppliers. While International Automotive
continues to have positive Segment EBITDA, it reduced Segment advertising growth in the quarter and was the single largest contributor to the decline in circulation revenue. Other revenue, which is
largely comprised of events, licensing, and merchandising, continued its significant growth as the Company leverages its brands in non-print areas.

The Company continued to execute on its operating priorities for the Enthusiast Media segment to invest in and build its market leading brands
by:

Improving product quality

The Company is continuing a significant editorial upgrade, with particular emphasis on cover design to enhance newsstand results. A comprehensive new cover
testing system, the Company's first, was introduced this quarter, providing editors the opportunity to use consumer feedback more systematically in their cover selection. Eighty percent of the
Company's approximately thirty redesigns scheduled for 2005 will appear in the second half of the year.

Improvement Online

The product improvement program extends to the Company's websites, with the latest makeover coming at Intellichoice, a site that serves
new car buyers. Now fully integrated intoMotor Trendand other
consumer websites, the site post-redesign has delivered increases of more than 40% in both page views and lead delivery. This is the start of a plan to more aggressively participate in the
fast-growing market for online lead generation for new car purchases.

Extending Brands to New Products

The Company's strategy of actively developing brand extensions drove strong growth in Other revenue this quarter, including events, such as the creation of a new
OffRoad Trucking Event; television programs, such as the debut of a new fishing program on the Outdoor Channel; licensing, such as the expansion of the Collegiate Challenge at Hot Rod University; and
branded products, such as the toys manufactured by Funline, Maisto and Revell-Monogram.

34

---



Addition of Ward's to Enthusiast Media Segment

Further developing the Company's leading position across the spectrum of information services for both buyers and sellers in the automotive industry is a key
element of the Company's strategy. Consistent with this strategy, the Ward's Automotive Group franchise was moved to the Enthusiast Media segment and not included in the potential divestiture of the
Business Information segment. Ward's provides insight, analysis and intelligence for the automotive industry, complementing the marketing channel provided by the Company's publications, websites, and
events. The franchise, which consists ofWard's Business Information, the market-leading subscription news and analysis website for the automotive
industry, as well as the publicationsWard's Dealer BusinessandWard's Automotive, and the event Auto
Interiors Expo, had 2004 revenue of approximately $7,300 and Segment EBITDA of approximately $1,000. The results for Ward's have been transferred to the Enthusiast Media segment for all reporting
periods presented.

35

---



Segment EBITDA

Enthusiast Media Segment EBITDA increased 1.9% to $41,053 in 2005 from $40,285 in 2004. This increase is primarily due to higher revenue partially offset by the
impact of previously announced paper price increases. As a result, Segment EBITDA margin increased slightly to 22.7% in 2005 from 22.5% in 2004.

Below
is a reconciliation of Enthusiast Media Segment EBITDA to operating income for the three months ended June 30, 2005 and 2004:

Three Months Ended
June 30,2005

2004Segment EBITDA

$
41,053

$
40,285Depreciation of property and equipment


3,747


3,060Amortization of intangible assets and other


497


1,314Provision for severance, closures and restructuring related costs


808


3,231Operating income

$
36,001

$
32,680


Operating Income (Loss)

Operating income was $36,001 in 2005 compared to $32,680 in 2004, an increase of $3,321 or 10.2%. This increase was driven by decreases in the provision for
severance, closures and restructuring related costs and amortization expenses in 2005 as well as the improvement in Segment EBITDA.

Discontinued Operations

In accordance with SFAS 144, the operating results of About.com, About Web Services, the six shut down magazines andNew
Yorkmagazine have been reclassified to discontinued operations on the condensed statements of consolidated operations for all periods presented.

Enthusiast
Media revenues exclude revenues from discontinued operations $10,614 for the three months ended June 30, 2004. Enthusiast Media segment operating income excludes
operating income (loss) from discontinued operations of ($145) and $6,674 for the three months ended June 30, 2005 and 2004, respectively. For the three months ended June 30, 2004,
discontinued operations includes a net gain on sale of businesses of $4,300.

36

---



Consumer Guides Segment (includesApartment Guide, New Home GuideandAuto Guidepublications and their
related Web sites, and the DistribuTech distribution business)

Revenues, Net

Consumer Guides revenues were $79,471 or 28.5% and $71,085 or 26.7% of the Company's consolidated revenues for 2005 and 2004, respectively. Consumer Guides
revenues increased $8,386 or 11.8% in 2005 compared to 2004 as follows:

Three Months Ended
June 30,Percent
Change2005

2004Revenues, net:Advertising

$
65,402

$
59,293

10.3Other


14,069


11,792

19.3Total

$
79,471

$
71,085

11.8


Double-digit
growth in Consumer Guides revenue was fueled primarily by investment, expansion, and organic growth of the Company'sNew Home Guide, Auto
Guide,and DistribuTech businesses.

Apartment Guide

Apartment Guide, the Segment's largest product, continues its market leadership in the most difficult market
conditions in the business' thirty-year history.Apartment Guideremains stable despite unprecedented levels of condominium conversions that
eliminate existing and potential
customers fromApartment Guidemarkets. During the quarter, the addition of new advertisers kept pace with losses to condominium conversions, evidence
of advertisers' continued appreciation of the valueApartment Guidedelivers.ApartmentGuide.comgrew
unique users 9.1% in the quarter, and continues to be the most recognized on-line brand in the apartment rental industry.Apartment Guide'scombined offering of best in class print and Internet media, 'Apartment Guide Printernet' provided over two million leads to customers in the quarter.
The Company attributesApartment Guide'sstability in adverse market conditions to its brand leadership both in print and online, client retention rate
driven by verifiable leads and leases that create what the Company believes to be one of the most cost effective advertising channels available, and its widespread, high visibility distribution
through the Company's DistribuTech business.

New Home Guide

New Home Guide,now with 25 publications, is the largest player in the category and uniquely positioned to provide
large home builders with national reach.New Home Guidegrew revenue 61% in the quarter, launching a publication in Washington D.C., and acquiring
publications in the Seattle, Portland, Jacksonville, Atlanta, and Nashville markets. Existing publication revenue grew 31%. With these new publications,New Home
Guidehas met its target of growing to 25 publications in 2005.

Auto Guide

TheAuto Guidedivision, which was launched just over a year ago, has grown rapidly, expanding to twelve
publications with a $13,000 annualized revenue run rate at the end of June. In the second quarter,Auto Guidelaunched in Orlando, Orange County, and
San Diego. With recent acquisitions of five automotive publications in New England,Auto Guidenow has twelve publications, exceeding the division's
goal of having ten publications by the end of 2005.

37

---



DistribuTech

All of PRIMEDIA's guides continue to benefit from the Company's dominant distribution business, DistribuTech, with greater distribution than all other
distributors combined. DistribuTech's dominance in high-value locations and added distribution drove high-teens growth in other revenue. In the second quarter, DistribuTech
expanded into new retail distribution programs
including QFC in the Northwest and increased penetration in current programs, supporting continued growth for the Company's three guides. The segment's other revenue is entirely from DistribuTech.

Segment EBITDA

Consumer Guides Segment EBITDA decreased $2,601 or 12.7% in 2005 to $17,912. The decrease is due to increased operating expenses which are consistent with the
Company's 2005 guidance of an estimated $15,000 to $20,000 of investments associated with distribution renewals, distribution expansion, and new publication launches. As a result, Segment EBITDA
margin decreased to 22.5% in 2005 compared to 28.9% in 2004.

Below
is a reconciliation of Consumer Guides Segment EBITDA to operating income for the three months ended June 30, 2005 and 2004:

Three Months Ended
June 30,2005

2004Segment EBITDA

$
17,912

$
20,513Depreciation of property and equipment


2,029


2,018Amortization of intangible assets and other


678


824Operating income

$
15,205

$
17,671


Operating Income (Loss)

Operating income decreased $2,466 or 14.0% in 2005. This decrease was driven by the decline in Segment EBITDA.

Education Segment (includes Channel One, Films Media Group and Interactive Medical Network ("IMN"))

Revenues, Net

Education revenues were $18,352 or 6.6% and $16,564 or 6.2% of the Company's consolidated revenues for 2005 and 2004, respectively. Education revenues increased
$1,788 or 10.8% in 2005 compared to 2004 as follows:

Three Months Ended
June 30,Percent
Change2005

2004Revenues, net:Advertising

$
9,363

$
9,239

1.3Other


8,989


7,289

23.3Intersegment revenues





36

Total

$
18,352

$
16,564

10.8


Both
revenue and Segment EBITDA grew in the second quarter of 2005 for the second consecutive quarter after several years of declines. Education advertising revenues, which are generated

38

---



entirely
by Channel One, increased $124 in 2005 primarily driven by new advertisers and increases from existing advertisers in the wireless, health and beauty, and video game categories.

Growth
in other revenue reflects the turnarounds at IMN and Films Media Group. Having transformed product delivery from analog to digital and implementing a host of operational
improvements, Films Media Group delivered its fourth consecutive quarter of revenue growth after thirteen quarters of declines, with revenue up 9.4%.

Segment EBITDA

Education Segment EBITDA increased $2,322 to $2,713 for the three months ended June 30, 2005 primarily due to the improved revenue as discussed above.
Segment EBITDA margin increased in 2005 to 14.8% compared to 2.4% in 2004.

Below
is a reconciliation of Education Segment EBITDA to operating income (loss) for the three months ended June 30, 2005 and 2004:

Three Months Ended
June 30,2005

2004Segment EBITDA

$
2,713

$
391Depreciation of property and equipment


764


894Amortization of intangible assets and other


1,225


1,298Provision for severance, closures and restructuring related costs





52Operating income (loss)

$
724

$
(1,853
)


Operating Income (Loss)

Education segment operating income for the three months ended June 30, 2005 was $724 compared to a loss of $1,853 in 2004. The improvement is due to the
increase in Segment EBITDA.

Discontinued Operations

In March 2005, the Company completed the sale of Bankers Training & Consulting Company, the financial services division of Workplace Learning. In
addition, on April 1, 2005, the Company sold the remaining portion of Workplace Learning.

Education
segment revenues exclude revenues from discontinued operations of $8,750 for the three months ended June 30, 2004. Education segment operating results exclude the
operating loss from discontinued operations of $731 and $2,605 for the three months ended June 30, 2005 and 2004,
respectively. The Company recorded a loss on sale of businesses within discontinued operations of $740 in 2005.

Corporate:

Corporate Overhead

Corporate overhead increased to $7,136 in 2005 from $6,669 in 2004 primarily due to increased outside auditor fees.

Operating Income (Loss)

Corporate operating loss decreased $1,122 in 2005 to $8,453 from $9,575 in 2004 principally driven by decreases in the provision for severance, closures and
restructuring related costs and non-cash compensation expense. The Company recorded $1,203 of stock-based compensation expense in 2005 compared to $1,567 in 2004.

39

---



Business Information Segment Discontinued Operations

During the second quarter of 2005, the Company decided to pursue the sale of its Business Information segment with the exception of Ward's which has been
transferred to the Enthusiast Media segment. During the second quarter 2005, the Company classified the operating results of the Business Information segment, excluding Ward's, as discontinued
operations for all periods presented in accordance with SFAS 144. See Recent Developments section.

PRIMEDIA
revenues exclude revenues from Business Information discontinued operations of $61,038 and $56,561 for the three months ended June 30, 2005 and 2004, respectively.
PRIMEDIA operating results exclude the operating income from Business Information discontinued operations $10,669 and $7,552 for the three months ended June 30, 2005 and 2004, respectively.

In
accordance with SFAS 144, the results of Kagan World Media,Folio, Circulation ManagementandAmerican
Demographichad previously been reclassified to discontinued operations in 2004. Business Information revenues above exclude revenues from these discontinued operations of
$1,645 for the three months ended June 30, 2004. Business Information segment operating results above exclude the operating income (loss) from these discontinued operations of $24 and ($515)
for the three months ended June 30, 2005 and 2004, respectively. For the three months ended June 30, 2005 and 2004, these discontinued operations included a net gain (loss) on sale of
businesses of $24 and ($121), respectively.

Results of Operations

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004:

Consolidated Results:

Revenues, Net

Consolidated revenues were $531,051 in 2005 compared to $519,492 in 2004:

|               |             | Six Months Ended
June 30, |   |         |        
|-------------- | ----------- | ------------------------- | - | ------- | -------
|
|
|Revenues, net: |             |                           |   |         |        
|               | Advertising |                           | $ | 329,266 |        
|               | Circulation |                           |   | 121,682 |        
|               | Other       |                           |   | 80,103  |        
|               |             |                           |   |         |        
|               |             | Total                     |   | $       | 531,051
|               |             |                           |   |         |        

Advertising
revenues increased by $7,592 in 2005 compared to 2004 primarily due to an increases of $8,334 at the Consumer Guides, partially offset by a decline of $1,048 at the
Enthusiast Media segment. Circulation revenues, which are generated entirely by the Enthusiast Media segment,
decreased $6,444 in 2005 due to continued weakness in single copy sales. Other revenues increased $10,411 in 2005 compared to 2004 due to increases at each of the Company's segments with Enthusiast
Media, Consumer Guides and Education increasing of $2,796, $4,313 and $3,302, respectively.Revenue trends within each segment are further detailed in
the segment discussions below.

Operating Income (Loss)

Operating income was $70,046 in 2005 compared to $62,118 in 2004. The improvement in operating income in 2005 was primarily due to increased revenues, reduced
restructuring related expenses and a provision for unclaimed property recorded in 2004 as a result of the Company completing the initial phase of its internal assessment regarding compliance with
escheatment

40

---



requirements
for unclaimed property in certain states. In addition, lower amortization and non-cash compensation were partially offset by increased operating expenses due to investment
expenses at Consumer Guides and paper price increases.

Net Income (Loss)

The Company had net income in 2005 of $370,524 compared to $13,225 in 2004. The increase in net income was primarily due to the gain on the sale of About.com of
approximately $378,900 recorded in discontinued operations in 2005. The Company recorded a gain on the sale ofNew Yorkmagazine of approximately
$38,000 in discontinued operations during the first quarter of 2004.

Interest
expense increased $7,891 or 13.6% in 2005 to $65,971 from $58,080 in 2004. The increase in interest expense is due to higher interest rates.

SFAS 144
requires sales or disposals of long-lived assets that meet certain criteria to be classified on the statement of consolidated operations as discontinued
operations and to reclassify prior periods accordingly. During 2004, the Company soldNew Yorkmagazine, Kagan World Media, American Demographicsand About
Web Services. In August 2004,Folioand Circulation Managementwere contributed to a venture with a third party and during the fourth quarter of 2004
the Company shut down six magazines in the
Enthusiast Media segment.

In
the first quarter of 2005, the Company completed the sale of About.com and the Bankers Training & Consulting Company, the financial services division of Workplace Learning. On
April 1, 2005, the Company completed the sale of the remaining net assets of Workplace Learning for the assumption of liabilities.

In
addition, during the second quarter of 2005, the Company decided to pursue the sale of its Business Information segment with the exception of Ward's which has been transferred to the
Enthusiast Media segment.

In
accordance with SFAS 144, the financial results of these operations have been reclassified into discontinued operations on the condensed statements of consolidated operations
for all periods presented. For the six months ended June 30, 2005 and 2004, discontinued operations includes a net gain on sale of businesses of $382,462 and $42,287, respectively.

Segment Results:

Enthusiast Media Segment (includes Consumer Automotive, Performance Automotive, International Automotive, Outdoors, Action Sports, Marine,
Soaps, Equine, History, Crafts, Home Technology, Ward's Automotive Group, their related Web sites, events, licensing and merchandising)

41

---



Revenues, Net

Enthusiast Media revenues were $338,865 or 63.8% and $343,614 or 66.1% of the Company's consolidated revenues for 2005 and 2004, respectively. Enthusiast Media
revenues decreased $4,749 or 1.4% in 2005 compared to 2004 as follows:

|               |                       | Six Months Ended
June 30, |   |         |        
|-------------- | --------------------- | ------------------------- | - | ------- | -------
|
|
|Revenues, net: |                       |                           |   |         |        
|               | Advertising           |                           | $ | 182,028 |        
|               | Circulation           |                           |   | 121,682 |        
|               | Other                 |                           |   | 35,010  |        
|               | Intersegment revenues |                           |   | 145     |        
|               |                       |                           |   |         |        
|               |                       | Total                     |   | $       | 338,865
|               |                       |                           |   |         |        

The
decline in Enthusiast Media revenue is primarily due to a decline in the International Automotive category in 2005 compared to 2004 due to softness in the tuner market. The 2005
revenue decline in the category follows a sharp decline in the fourth quarter of last year after several years of strong growth. The category is expected to decline for the full year, as the market
currently suffers from the absence of any new "tuner' platforms and a consolidation of aftermarket suppliers.

Strong
advertising growth in the Performance Automotive category in 2005 was offset by the declines in International Automotive advertising.

Two
of the segment's eleven categories comprised nearly the entire circulation decline: the International Automotive category and the Soaps category. The Soaps category has been affected
by reduced viewership of soap operas. To address the decline, the Company is eliminating inefficient
distribution points and building retail promotions with leading retailers such as Wal-Mart.

Reflecting
continued progress in the execution of the Company's operating strategies, revenue grew in three of the segment's largest categories, Performance Automotive, Crafts and
Outdoor. The segment's third largest category, Consumer Automotive, rebounded with double digit growth during the second quarter and continues to be on track for growth in 2005 despite a difficult
first quarter. The biggest challenges in this segment are the International Automotive and Soaps categories, which the Company is diligently addressing.

Other
revenue benefited from the continued strong growth in licensing and events revenue in 2005.

Segment EBITDA

Enthusiast Media Segment EBITDA decreased 5.8% to $64,859 in 2005 from $68,859 in 2004. This decline is primarily due to lower revenue and the impact of
previously announced paper price increases, partially offset by lower operating expenses. As a result, Segment EBITDA margin decreased to 19.1% in 2005 from 20.0% in 2004.

42

---



Below
is a reconciliation of Enthusiast Media Segment EBITDA to operating income for the six months ended June 30, 2005 and 2004:

|                 |                                                                   | Six Months Ended
June 30,
|---------------- | ----------------------------------------------------------------- | -------------------------
|
|Segment EBITDA   |                                                                   | $                        
|                 | Depreciation of property and equipment                            |                          
|                 | Amortization of intangible assets and other                       |                          
|                 | Provision for severance, closures and restructuring related costs |                          
|                 | Provision for unclaimed property                                  |                          
|                 |                                                                   |                          
|Operating income |                                                                   | $                        
|                 |                                                                   |                          

Operating Income (Loss)

Operating income was $54,913 in 2005 compared to $53,165 in 2004, an increase of $1,748. This increase was principally driven by the decline in provision for
severance, closures and restructuring related costs, amortization expense as well as the absence of a provision for unclaimed property in 2005.

Discontinued Operations

In accordance with SFAS 144, the operating results of About.com, About Web Services, the six shut down magazines andNew
Yorkmagazine have been reclassified to discontinued operations on the condensed statements of consolidated operations for all periods presented.

Enthusiast
Media revenues exclude revenues from discontinued operations of $8,711 and $22,318 for the six months ended June 30, 2005 and 2004, respectively. Enthusiast Media
segment operating income excludes operating income from discontinued operations of $380,966 and $42,411 for the six months ended June 30, 2005 and 2004, respectively. For the six months ended
June 30, 2005 and 2004, discontinued operations includes a net gain on sale of businesses of $378,907 and $41,494, respectively.

43

---



Consumer Guides Segment (includesApartment Guide, New Home GuideandAuto Guidepublications and their related Web sites, and the DistribuTech distribution business)

Revenues, Net

Consumer Guides revenues were $155,118 or 29.2% and $142,471 or 27.4% of the Company's consolidated revenues for 2005 and 2004, respectively. Consumer Guides
revenues increased $12,647 or 8.9% in 2005 compared to 2004 as follows:

Six Months Ended
June 30,Percent
Change2005

2004Revenues, net:Advertising

$
127,719

$
119,385

7.0Other


27,399


23,086

18.7Total

$
155,118

$
142,471

8.9


Consumer
Guides advertising revenue grew by $8,334 or 7.0% in 2005 versus 2004, driven primarily byNew Home Guide, Auto Guideand online advertising programs.

Apartment Guide

Apartment Guidecontinued its market leadership despite ongoing soft apartment rental market and with continued
conversions of rental properties to condominiums. The Company attributesApartment Guide'ssuccess in an adverse market to its unmatched distribution in
high-value locations and its ability to prove to advertisers that their combined print and online advertisements are delivering superior results at low costs. ApartmentGuide.com grew
unique users 12.6% in 2005, and, as the most recognized brand in the apartment rental industry, provided approximately 4.4 million leads to customers through print and via the Internet.

New Home Guide

New Home Guide'sadvertising revenue from existing publications continued to grow in 2005, reflecting increased
penetration in the Company's print markets and improved marketing and sales programs.New Home Guide'snewly redesigned national website,
NewHomeGuide.com, was combined with the American Home Guides websites, acquired in February 2005, to create one of the most powerful online advertising channels in the new home market.

On
May 3, 2005, the Company announced its launch of a new home guide in Washington, D.C., creating synergies with its nearby Baltimore guide by providing significantly increased
options for the D.C.-Baltimore region's new home buyers, homebuilders, and advertisers. On May 4, 2005, the Company announced its acquisition of NHU Publishing LLC, adding the Atlanta,
Jacksonville, Nashville, Puget Sound, and Portland, Oregon markets to the segment's new home guides portfolio, and augmenting the Company's existingNew Home
Guidein Charlotte, North Carolina. The Company expects that by upgrading and optimizing NHU's operations to the standards of Consumer Guides' proven model and by leveraging
the power of the Company's DistribuTech distribution business, the Company will make significant improvements in NHU's results. This launch and acquisition brings the Company's total number of new
home guides to 25.

Auto Guide

In the first quarter,Auto Guidewas launched in the 'Triangle', North Carolina market with a $1 million
annualized revenue run rate, compared to its two previous launches ('Triad', North Carolina and Charlotte, North Carolina), which reached the same $1 million annualized revenue run rate in 5

44

---



and
29 weeks, respectively. With the acquisitions of theAtlanta Cars Magazinein the first quarter, five automotive publications in New England during
the second quarter as well as second quarter launches in Orlando, Orange County and San Diego, Auto Guide expanded to twelve publications.

As
the Company's launch strategy is proving out in each newAuto Guidemarket, it is confident that a third product line has been
successfully added to the Consumer Guides Segment. Given that the market for used cars is significantly larger than the apartment rental market, the Company is optimistic about the long term growth
opportunities of scaling theAuto Guideproduct line.

DistribuTech

Consumer Guides other revenue increased $4,313 or 18.7%. In the first quarter, the Company's DistribuTech business expanded into several new retail distribution
programs and made significant expansions of its retail distribution network with new store programs in Portland, Oregon, Seattle, New England, and across the Southeast. In addition during the second
quarter, DistribuTech expanded into new retail distribution programs including QFC in the Northwest and increased penetration in current programs.

Segment EBITDA

Consumer Guides Segment EBITDA decreased $3,998 or 10.0% in 2005 to $36,156. The decrease is due to increased operating expenses which are primarily the result of
investments made to launch new publications (New HomeandAuto Guide); higher distribution costs
including more widespread distribution; and increased paper prices. As a result, Segment EBITDA margin decreased to 23.3% in 2005 compared to 28.2% in 2004.

Below
is a reconciliation of Consumer Guides Segment EBITDA to operating income for the six months ended June 30, 2005 and 2004:

Six Months Ended
June 30,2005

2004Segment EBITDA

$
36,156

$
40,154Depreciation of property and equipment


3,965


4,059Amortization of intangible assets and other


1,289


1,647Provision for severance, closures and restructuring related costs





38Provision for unclaimed property





7Operating income

$
30,902

$
34,403


Operating Income (Loss)

Operating income decreased $3,501 or 10.2% in 2005. This decrease is primarily driven by the decline in Segment EBITDA.

Discontinued Operations

In accordance with SFAS 144, the results of RealEstate.com have been reclassified to discontinued operations on the condensed statements of consolidated
operations for the six months ended June 30, 2004.

Consumer
Guides revenues exclude revenues from discontinued operations of $458 for the six months ended June 30, 2004. Consumer Guides segment operating income excludes operating
losses from discontinued operations of $252 for the six months ended June 30, 2004. In 2004, discontinued

45

---



operations
includes a loss on sale of business of $519 due to post closing adjustments related to the sale of RealEstate.com.

Education Segment (includes Channel One, Films Media Group and Interactive Medical Network ("IMN"))

Revenues, Net

Education revenues were $37,236 or 7.0% and $33,755 or 6.5% of the Company's consolidated revenues for 2005 and 2004, respectively. Education revenues increased
$3,481 or 10.3% in 2005 compared to 2004 as follows:

Six Months Ended
June 30,Percent
Change2005

2004Revenues, net:Advertising

$
19,519

$
19,213

1.6Other


17,694


14,392

22.9Intersegment revenues


23


150

Total

$
37,236

$
33,755

10.3


Education
advertising revenues, which are generated entirely by Channel One, increased $306 in 2005 as compared to 2004. Growth at Channel One News, which reaches nearly 8 million
teens, was primarily driven by new advertisers and network television programming promotion as well as increases from existing advertisers in the wireless, video game and military recruitment
categories.

During
the first quarter, PRIMEDIA announced the appointment of Judy L. Harris as President and CEO of Channel One. The Company is optimistic that Ms. Harris' track record of
success at PBS, Discovery and Hallmark will help the segment deliver on its target of showing year-over-year revenue growth. On April 12, 2005, Channel One won a Peabody
Award for news coverage, its second. The George Foster Peabody Awards recognize distinguished achievement and meritorious public service, and are widely considered the most prestigious awards in
electronic media.

Growth
in other revenue reflects the turnarounds at IMN and Films Media Group. Having transformed product delivery from analog to digital and implementing a host of operational
improvements, Films Media Group delivered its fourth consecutive quarter of revenue growth after thirteen quarters of declines, with revenue up 11.1% in 2005. IMN has more than doubled 2004 revenues
in 2005.

Segment EBITDA

Education Segment EBITDA increased $2,852 to $4,962 for the six months ended June 30, 2005 due to the improved revenue as discussed above. Segment EBITDA
margin increased in 2005 to 13.3% compared to 6.3% in 2004.

46

---



Below
is a reconciliation of Education Segment EBITDA to operating income (loss) for the six months ended June 30, 2005 and 2004:

Six Months Ended
June 30,2005

2004Segment EBITDA

$
4,962

$
2,110Depreciation of property and equipment


1,522


1,755Amortization of intangible assets and other


2,445


2,548Provision for severance, closures and restructuring related costs





52Provision for unclaimed property





628Operating income (loss)

$
995

$
(2,873
)


Operating Income (Loss)

Education segment operating income for the six months ended June 30, 2005 was $995 compared to a loss of $2,873 in 2004. The improvement is due to the
increase in Segment EBITDA and by the absence of a provision for unclaimed property in 2005.

Discontinued Operations

In March 2005, the Company completed the sale of Bankers Training & Consulting Company, the financial services division of Workplace Learning. In
addition, on April 1, 2005, the Company sold the remaining portion of Workplace Learning.

Education
segment revenues exclude revenues from discontinued operations of $9,367 and $18,332 for the six months ended June 30, 2005 and 2004, respectively. Education segment
operating results exclude the operating income (loss) from discontinued operations of $3,788 and ($6,230) for the six months ended June 30, 2005 and 2004, respectively. The Company recorded a
gain on sale of businesses within discontinued operations of $3,557 in 2005.

Corporate:

Corporate Overhead

Corporate overhead decreased to $13,664 in 2005 from $14,747 in 2004 primarily due to reduced compensation expense resulting from headcount reduction.

Operating Income (Loss)

Corporate operating loss decreased $5,813 in 2005 to $16,764 from $22,577 in 2004 principally driven by the reduction in corporate overhead and decreases in the
provision for severance, closures and restructuring related costs and non-cash compensation expense. The Company recorded $2,404 of stock-based compensation expense in 2005 compared to
$3,486 in 2004.

Business Information Segment Discontinued Operations

During the second quarter of 2005, the Company decided to pursue the sale of its Business Information segment with the exception of Ward's which has been
transferred to the Enthusiast Media segment. During the second quarter 2005, the Company classified the operating results of the Business Information segment, excluding Ward's, as discontinued
operations for all periods presented in accordance with SFAS 144.

47

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PRIMEDIA revenues exclude revenues from Business Information discontinued operations of $112,568 and $109,508 for the six months ended June 30, 2005 and 2004, respectively.
PRIMEDIA operating results exclude the operating income from Business Information discontinued operations of $13,486 and $7,670 for the six months ended June 30, 2005 and 2004, respectively.

In
accordance with SFAS 144, the results of Kagan World Media,Folio, Circulation ManagementandAmerican
Demographichad previously been reclassified to discontinued operations in 2004. Business Information revenues above exclude revenues from these discontinued operations of
$3,970 for the six months ended June 30, 2004. Business Information segment operating results above exclude the operating income (loss) from these discontinued operations of ($2) and $129 for
the six months ended June 30, 2005 and 2004, respectively. For the six months ended June 30, 2005 and 2004, these discontinued operations included a net gain (loss) on sale of businesses
of ($2) and $1,312, respectively.

Recent Developments

On August 8, 2005, the Company announced an agreement to sell its Business Information segment to Wasserstein & Co., LP for $385 million in
cash. The sale will take place following standard U.S. regulatory approval and satisfaction of other normal conditions. The transaction is expected to close in the fourth quarter of 2005.

Risk Factors

Set forth below are risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements
contained in this Quarterly Report.

General economic trends, as well as trends in advertising spending and competition, may reduce our advertising and circulation revenues.

Our advertising revenues are subject to the risks arising from adverse changes in domestic and global economic conditions and possible shifting of advertising
spending amongst media. A decline in the level of business activity of certain of our advertisers has had an adverse effect on our revenues and profit margins. Additionally, high apartment vacancy
rates have pressured the advertising budgets of property owners and recent high levels of condominium conversions have eliminated existing and potential customers, constraining growth in one of our
segments. Because of economic conditions in the United States, many advertisers have reduced advertising expenditures. Any further adverse impact of economic conditions, high vacancy rates and
condominium conversions on the Company is difficult to predict, but it may result in further reductions in advertising revenue. Additionally, if geopolitical events negatively impact the economy or
advertising spending patterns change, our results of operations may be adversely affected. The Company believes that the targeted nature of its products together with its diversification of
advertising vehicles, including print, on-line, events and television, would minimize the effects of shifting advertising spending.

Our
circulation revenues are subject to the risks arising from our ability to institute price increases for our print products and are affected by: competition from other publications
and other forms of media available in the Company's various markets; changing consumer lifestyles resulting in decreasing amounts of free time; declining frequency of regular magazine buying among
young people and increasing costs of circulation acquisition.

We have substantial indebtedness and other monetary obligations, which consume a substantial portion of the cash flow that we generate.

A substantial portion of our cash flow is dedicated to the payment of interest on indebtedness and interest on shares subject to mandatory redemption which
reduces funds available for capital

48

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expenditures
and business opportunities and may limit our ability to respond to adverse developments in our business or in the economy.

Our debt instruments limit our business flexibility by imposing operating and financial restrictions on our operations.

The agreements and indentures governing our indebtedness impose specific operating and financial restrictions on us. These restrictions impose limitations on our
ability to, among other things:



Our
failure to comply with the terms and covenants in our indebtedness could lead to a default under the terms of those documents, which would entitle the lenders to accelerate the
indebtedness and declare all amounts owed due and payable. Moreover, the instruments governing almost all of our indebtedness contain cross-default provisions so that a default under any of our
indebtedness may result in a default under our other indebtedness. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and
payable. If that happens, we would not be able to satisfy our debt obligations, which would have a substantial adverse effect on our ability to continue as a going concern. We may not be able to
comply with these restrictions in the future, or in order to comply with these restrictions we may have to forgo opportunities that might otherwise be beneficial to us. Under the terms of our debt
instruments, we have the ability to make significant additional investments in our unrestricted subsidiaries.

Kohlberg Kravis Roberts & Co. L.P., or KKR, has control of our common stock and has the power to elect all the members of our board of directors and to approve any
action requiring stockholder approval.

As of June 30, 2005, approximately 60% of the shares of our common stock were held by investment partnerships, of which KKR Associates, L.P., a New York
limited partnership ("KKR Associates"), and KKR GP 1996 LLC, a Delaware limited liability company ("KKR GP 1996"), each an affiliate of KKR, are the general partners. KKR Associates and KKR GP 1996
have sole voting and investment power with respect to these shares. Consequently, KKR Associates and KKR GP 1996 and their respective general partners and members, three of whom are also our
directors, control us and have the power to elect all of our directors and approve any action requiring stockholder approval, including adopting amendments to our certificate of incorporation and
approving mergers or sales of all or substantially all of our assets. KKR Associates and KKR GP 1996 will also be able to prevent or cause a change of control at any time.

Increases in paper and postage costs may have an adverse impact on our future financial results.

The price of paper is a significant expense relating to our print products and direct mail solicitations. The first paper price increases across all paper grades
in four years became effective in 2004. The Company incurred paper price increases in the first six months of 2005, and anticipates additional increases for the remainder of 2005. For 2005, we
estimate an additional $12 million to $16 million in increased paper costs. Postage for product distribution and direct mail solicitations is

49

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also
a significant expense. We use the U.S. Postal Service for distribution of many of our products and marketing materials. Under existing legislation, postal rates will remain stable until 2006 when
rates are expected to increase. Paper and postage cost increases may have an adverse effect on our future results. We may not be able to pass these cost increases through to our customers.

Incompatible financial systems limit the Company's ability to operate efficiently.

PRIMEDIA is the result of numerous acquisitions since its inception in 1989. Many of the companies acquired had financial systems which were incompatible.
Incompatible financial systems across PRIMEDIA had negatively impacted the Company's ability to more efficiently analyze data and respond to business opportunities on a timely basis. During the last
few years, the Company has been engaged in upgrading its key financial systems, which are designed to make the financial reporting and analysis functions more efficient. To address management's
concerns regarding the lack of compatible financial systems across the Company and the demands surrounding increased financial disclosure, the Company has installed an integrated
enterprise-wide general ledger system across all business units. During 2004, the Company spent $910 to implement a significant upgrade to its consolidation and financial reporting system,
and the Company combined its Enthusiast Media magazines general ledger/financial reporting operations into one location under one financial management which improves efficiency. In the second quarter
of 2005, the Company completed the conversion to a new integrated billing/accounts receivable system across its Enthusiast Media magazines at a total cost of approximately $5,000. The Company
recognizes that there are inherent risks in a system implementation and has taken reasonable steps to mitigate these risks.

We depend on some important employees, and the loss of any of those employees may harm our business.

Our performance is substantially dependent on the performance of our executive officers and other key employees. In addition, our success is dependent on our
ability to attract, train, retain and motivate high quality personnel, especially for our management team. The loss of the services of any of our executive officers or key employees may harm our
business.

Past
declines in revenues necessitated cost cuts including the reduction of financial personnel. Such workforce reductions may impact the ability of remaining personnel to perform their
assigned responsibilities in an efficient manner, primarily due to the increased volume of work being generated in the financial area and to the continuing process of converting certain of our
financial systems. The Company believes that it has in place the necessary financial workforce to analyze data and has put in place additional resources during the period prior to the completion of
the financial systems upgrade to improve the efficiency of financial analysis and mitigate the risk of employee turnover.

The
Company's management also is concerned about the intense competition in this economy for the hiring and retention of qualified financial personnel, the inherent risk in certain
system implementations across the Company and the demands surrounding increased financial disclosure. To mitigate management's concerns regarding the hiring and retention of qualified financial
personnel and to ensure future stability in the financial workforce, the Company continues to upgrade the skill level of its back office financial personnel, consolidate certain back office functions
and cross train individuals
in the performance of multiple job functions. Additionally, the Company continues to aggressively recruit qualified professionals to strengthen and increase its financial personnel.

Liquidity, Capital and Other Resources

As of June 30, 2005, the Company had cash and unused credit facilities of $248,362, as further detailed below under "Financing Arrangements", compared to
$330,761 as of December 31, 2004. The Company's asset sales and investment in organic growth have facilitated its strategy to become a more efficient and better focused company while
strengthening its balance sheet and improving liquidity.

The
Company believes its liquidity, capital resources and cash flow from operations are sufficient to fund planned capital expenditures, working capital requirements, interest and
principal payments on its debt and shares subject to mandatory redemption and other anticipated expenditures for the remainder of 2005. The Company has no significant required debt repayments until
2008.

50

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Working Capital

Consolidated working capital reflects certain industry working capital practices and accounting principles, including the recording of deferred revenue from
subscriptions as a current liability as well as the expensing of certain advertising, editorial and product development costs as incurred. Consolidated working capital, which includes current
maturities of long-term debt, was $16,147 at June 30, 2005 compared to a working capital deficiency of $152,659 at December 31, 2004. The primary driver of the improvement in
working capital compared to December 31, 2004 are certain Business Information segment non-current assets which are classified as assets held for sale in accordance with
SFAS 144 on the condensed consolidated balance sheet at June 30, 2005.

Cash Flow2005 Compared to 2004

Net cash used in operating activities increased $9,159 to $26,118 in 2005 from $16,959 in 2004. This change is primarily due to the replacement of the payment
in-kind Series J Preferred Stock with a lower cost, cash-pay instrument as well as increased divestiture related payment.

Net
cash provided by investing activities increased $334,733 to $390,840 from $56,107 for the six months ended June 30, 2005 and 2004, respectively. Proceeds from the sale of
businesses were $431,306 in 2005 compared to $70,277 in 2004. The driver of the 2005 business sale proceeds was the sale of About.com during the first quarter of 2005 for $410,000. Cash paid for
acquired businesses increased to $26,961 in 2005 from $1,270 in 2004, primarily to the Consumer Guides segment acquisition of the assets of NHU Publishing LLC, a collection of new home guides, during
the second quarter 2005. Net capital expenditures decreased slightly to $13,505 in 2005, compared to $13,574 in 2004. The Company expects capital spending in 2005 to remain consistent with 2004,
however, any potential transaction related to the Company's Business Information segment would reduce the expected 2005 amount.

Net
cash provided by (used) in financing activities was ($370,037) in 2005 compared to $18,725 in 2004 predominantly due to the Company's redemption of its Series D and F
Exchangeable Preferred Stock and a portion of its 75/8% Senior Notes during the second quarter 2005 as detailed below under "Financing Arrangements".

Free Cash Flow

The following table presents the Company's Free Cash Flow for the three and six months ended June 30, 2005 and 2004, respectively:

|                                      |                                                                           | Three Months Ended June 30, |         | Six Months Ended June 30, |        
|------------------------------------- | ------------------------------------------------------------------------- | --------------------------- | ------- | ------------------------- | -------
|
|Net cash used in operating activities |                                                                           | $                           | (30,724 | )                         | $      
|                                      | Additions to property, equipment and other, net                           |                             |         | (7,616                    | )      
|                                      | Capital lease obligations                                                 |                             |         | (624                      | )      
|                                      |                                                                           |                             |         |                           |        
|                                      |                                                                           | Free Cash Flow              |         | $                         | (38,964
|                                      |                                                                           |                             |         |                           |        
|Supplemental information:             |                                                                           |                             |         |                           |        
|                                      | Cash interest paid, including interest on capital and restructured leases |                             | $       | 54,484                    |        
|                                      |                                                                           |                             |         |                           |        
|                                      | Cash interest paid on shares subject to mandatory redemption              |                             | $       | 12,790                    |        
|                                      |                                                                           |                             |         |                           |        
|                                      | Cash taxes paid, net of refunds received                                  |                             | $       | 174                       |        
|                                      |                                                                           |                             |         |                           |        
|                                      | Cash paid for severance, closures and restructuring related costs         |                             | $       | 1,483                     |        
|                                      |                                                                           |                             |         |                           |        

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The
Company's historical pattern is to have negative free cash flow in the first half of the year and positive free cash flow in the second half. Free cash flow in the
quarter was negative $38,964 compared to positive $5,664 in the same period one year ago, primarily due to the timing related to compensation payments; the replacement of the payment
in-kind Series J Preferred Stock with a lower cost, cash-pay instrument; and increased divestiture-related payments. Free cash flow for the six months ended
June 30, 2005 was negative $42,320 versus negative $34,811 in the comparable period last year, primarily due to the replacement of the payment in-kind Series J Preferred
Stock with a lower cost, cash-pay instrument; and increased divestiture-related payments. On May 11, 2005, the Company completed its redemption of certain preferred stock and debt
which will positively affect free cash flow by over $27,000 on an annualized basis. The Company will not realize the full benefit of the reduced interest expense and preferred dividends in 2005.

Financing Arrangements

On April 11, 2005, the Company called for redemption of all of its outstanding shares of $10.00 Series D Exchangeable Preferred Stock (with an
aggregate liquidation preference of $167,487), all of its outstanding shares of $9.20 Series F Exchangeable Preferred Stock (with an aggregate liquidation preference of $95,333) and $80,000
aggregate principal amount of its 75/8% Senior Notes Due 2008. The redemption date in each case was May 11, 2005.

The
Series D Exchangeable Preferred Stock were redeemed at 101% of the liquidation preference thereof plus accrued but unpaid dividends, the Series F Exchangeable Preferred
Stock were redeemed at par plus accrued but unpaid dividends and the 75/8% Senior Notes were redeemed at 101.271% of the principal amount plus accrued interest. As of June 30,
2005, the Company had the remaining $146,000 aggregate principal amount of the 75/8% Senior Notes outstanding.

In
connection with the redemption of the Series D and Series F Exchangeable Preferred Stock, the Company obtained the written consent of its bank lenders and repaid its
outstanding term loans A and term loans B in aggregate principal amounts of $5,000 and $35,000, respectively, and permanently reduced its total revolving loan commitments in an aggregate amount of
$30,000.

In
the second quarter of 2005, the Company recorded a loss of $6,289 in the other income (expense), net line on the accompanying condensed statements of consolidated operations for the
three and six months ended June 30, 2005 in connection with these redemptions. This charge represents the write-off of unamortized deferred financing costs and the premiums paid on
the Company's call for redemption for all of the outstanding shares of its $10.00 Series D Preferred Stock and its $9.20 Series F Preferred Stock and for $80 million of its
75/8% Senior Notes due 2008.

Bank Credit Facilities

On April 29, 2004, the Company amended its credit facilities agreement with various financial institutions with JPMorgan Chase Bank, Bank of America, N.A.,
The Bank of New York, and The Bank of Nova Scotia, as agents (the "bank credit facilities"). The debt under the bank credit facilities agreement, including term loan C, and as otherwise permitted
under the bank credit facilities agreement and the indebtedness relating to the 75/8% Senior Notes, 87/8% Senior Notes, 8% Senior Notes and Senior Floating Rate Notes of
the Company (together referred to as "Senior Notes") is secured by a pledge of the stock of PRIMEDIA Companies Inc., an intermediate holding company, owned directly by the Company, which owns
directly or indirectly all shares of PRIMEDIA subsidiaries that guarantee such debt.

On
May 14, 2004, the Company issued $175,000 principal amount of Senior Floating Rate Notes Due 2010, and entered into a new $100,000 term loan C credit facility with a maturity
date of December 31, 2009. The Senior Floating Rate Notes bear interest equal to three-month LIBOR plus 5.375% per year and the term loan C at LIBOR plus 4.375% per year. The Company applied
the

52

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combined
net proceeds from the Senior Floating Rate Notes offering and the term loan C credit facility to prepay $30,000 of outstanding term loan A commitments and $120,000 of term loan B commitments,
with the remainder used to temporarily pay down all outstanding advances under the revolving credit facility. The purpose of these borrowings was to redeem the Company's Series J Convertible
Preferred Stock, which was completed on July 7, 2004.

Proceeds
from sales of businesses and other investments, when received, were used to reduce revolving credit borrowings under the bank credit facilities agreement and the remaining
proceeds were temporarily invested in cash and cash equivalents. Amounts under the bank credit facilities may be
reborrowed and used for general corporate and working capital purposes as well as to finance certain future acquisitions. The bank credit facilities consisted of the following as of June 30,
2005:

|                              |  | Revolver |         | Term A |   | Term B  |   | Term C |          | Total |  
|----------------------------- |  | -------- | ------- | ------ | - | ------- | - | ------ | -------- | ----- | -
|Bank Credit Facilities        |  | $        | 355,879 |        | $ | 47,143  |   | $      | 216,777  |       | $
|Borrowings Outstanding        |  |          | (95,000 | )      |   | (47,143 | ) |        | (216,777 | )     |  
|Letters of Credit Outstanding |  |          | (20,202 | )      |   |        |   |        |         |       |  
|                              |  |          |         |        |   |         |   |        |          |       |  
|Unused Bank Commitments       |  | $        | 240,677 |        | $ |        |   | $      |         |       | $
|                              |  |          |         |        |   |         |   |        |          |       |  

With
the exception of the term loans B and C, the amounts borrowed bear interest, at the Company's option, at either the base rate plus an applicable margin ranging from 0.125% to 1.5%
or LIBOR plus an applicable margin ranging from 1.125% to 2.5%. The term loan B bears interest at the base rate plus 1.75% or LIBOR plus 2.75%. The term loan C bears interest at the base rate plus
3.375% or LIBOR plus 4.375%. At June 30, 2005 and December 31, 2004, the weighted average variable interest rate on all outstanding borrowings under the bank credit facilities was 6.0%
and 5.0%, respectively.

Under
the bank credit facilities, the Company has agreed to pay commitment fees at a per annum rate of either 0.375% or 0.5%, depending on its debt to EBITDA ratio, as defined in the
bank credit facilities agreement, on the daily average aggregate unutilized commitment under the revolving loan commitment. During the first and second quarter of 2005, the Company's commitment fees
were paid at a weighted average rate of 0.5%. The Company also has agreed to pay certain fees with respect to the issuance of letters of credit and an annual administration fee. From time to time, the
Company may pay amendment fees under its bank credit facilities.

The
commitments under the revolving loan portion of the bank credit facilities are subject to mandatory reductions semi-annually on June 30 and December 31 with
the final reduction on June 30, 2008. The aggregate mandatory reductions of the revolving loan commitments under the bank credit facilities are $19,771 in 2005, $59,313 in 2006, $118,626 in
2007 and a final reduction of $158,169 in 2008. To the extent that the total revolving credit loans outstanding exceed the reduced commitment amount, these loans must be paid down to an amount equal
to or less than the reduced commitment amount. However, if the total revolving credit loans outstanding do not exceed the reduced commitment amount, then there is no requirement to pay down any of the
revolving credit loans. Remaining aggregate term loan payments under the bank credit facilities are $9,986 in 2005, $18,972 in 2006 and 2007, $11,116 in 2008 and $303,874 in 2009.

The
bank credit facilities agreement, among other things, limits the Company's ability to change the nature of its businesses, incur indebtedness, create liens, sell assets, issue stock,
engage in mergers, consolidations or transactions with affiliates, make investments in or loans to certain subsidiaries, issue guarantees and make certain restricted payments including dividend
payments on or repurchases of the Company's common stock in excess of $75,000 in any given year.

The
bank credit facilities and Senior Notes agreements of the Company contain certain customary events of default which generally give the banks or the noteholders, as applicable, the
right to

53

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accelerate
payments of outstanding debt. Under the bank credit facilities agreement, these events include:



The
events of default contained in PRIMEDIA's Senior Notes are similar to, but generally less restrictive than, those contained in the Company's bank credit facilities.

Contractual Obligations

There are no required significant debt repayments until 2008. The following are certain contractual obligations of the Company as of June 30, 2005:

|                                                                                     |  |   |           | Payments Due by Period
|------------------------------------------------------------------------------------ |  | - | --------- | ----------------------
|
|Long-term debt obligations (net of unamortized discount)                             |  | $ | 1,549,437 |                       
|Interest on long-term debt obligations(1)                                            |  |   | 658,561   |                       
|Shares subject to mandatory redemption (Exchangeable Preferred Stock)                |  |   | 211,739   |                       
|Interest on shares subject to mandatory redemption (Exchangeable Preferred Stock)(1) |  |   | 91,312    |                       
|Capital lease obligations                                                            |  |   | 6,297     |                       
|Interest on capital lease obligations                                                |  |   | 849       |                       
|Operating lease obligations(2)                                                       |  |   | 221,304   |                       
|                                                                                     |  |   |           |                       
|Total Contractual Obligations                                                        |  | $ | 2,739,499 |                       
|                                                                                     |  |   |           |                       

---

The
Company currently has $95,000 of borrowings outstanding at June 30, 2005 under the revolving loan portion of the bank credit facilities. The bank credit facilities expire in
2009.

The
Company has other commitments in the form of letters of credit of $20,202 aggregate face value which expire on or before June 30, 2006.

Off Balance Sheet Arrangements

The Company has no variable interest (otherwise known as "special purpose") entities or off balance sheet debt, other than as related to operating leases in the
ordinary course of business as disclosed above.

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Covenant Compliance

As defined in the amended bank credit facilities agreement, the maximum allowable debt leverage ratio was amended to 6.25 to 1 through September 30, 2005.
The maximum debt leverage ratio decreases to 6.00 to 1, 5.75 to 1, 5.50 to 1, 5.25 to 1, 5.00 to 1, 4.75 to 1 and 4.50 to 1 on October 1, 2005, July 1, 2006, October 1, 2006,
April 1, 2007, October 1, 2007, April 1, 2008 and July 1, 2008, respectively. The amendment to the bank credit facilities also set the minimum interest coverage ratio, as
defined in the bank credit facilities, at 2.25 to 1 through maturity. The minimum fixed charge coverage ratio, as defined, remains unchanged at 1.05 to 1 through maturity. The Company is in compliance
with all of the financial and operating covenants of its financing arrangements.

The
Company is herewith providing detailed information and disclosure as to the methodology used in determining compliance with the leverage ratio in the bank credit facility agreement.
Under its bank credit facility and Senior Note agreements, the Company is allowed to designate certain businesses as unrestricted subsidiaries to the extent that the value of those businesses does not
exceed the permitted amounts, as defined in these agreements. The Company has designated certain of its businesses as unrestricted (the "Unrestricted Group"), which primarily represent Internet
businesses, trademark and content licensing and service companies, new launches (including traditional start-ups), other properties under evaluation for turnaround or shutdown and foreign
subsidiaries. Except for those specifically designated by the Company as unrestricted, all businesses of the Company are restricted (the "Restricted Group"). Indebtedness under the bank credit
facility and Senior Note agreements is guaranteed by each of the Company's domestic subsidiaries in the Restricted Group in accordance with the provisions and limitations of the Company's bank credit
facility and Senior Note agreements. The guarantees are full, unconditional and joint and several. The Unrestricted Group does not guarantee the bank credit facility or Senior Notes. For purposes of
determining compliance with certain financial covenants under the Company's bank credit facility, the Unrestricted Group's results (positive or negative) are not reflected in the Consolidated EBITDA
of the Restricted Group which, as defined in the bank credit facility agreement, excludes losses of the Unrestricted Group, non-cash charges and restructuring charges and is adjusted
primarily for the trailing four quarters results of acquisitions and divestitures and estimated savings for acquired businesses.

The
following represents a reconciliation of EBITDA of the Restricted Group for purposes of the leverage ratio as defined in the bank credit facilities agreement to operating income for
the three and twelve months ended June 30, 2005:

For the Three
Months Ended
June 30, 2005

For the Twelve
Months Ended
June 30, 2005EBITDA of the Restricted Group

$
70,963

$
290,418EBITDA loss of the Unrestricted Group


(8,864
)

(40,008
)Divestiture and other adjustments


(7,557
)

(44,675
)Depreciation of property and equipment


(7,195
)

(29,013
)Amortization of intangible assets and other


(2,400
)

(17,185
)Non-cash compensation


(1,203
)

(5,015
)Provision for severance, closures and restructuring related costs


(267
)

(3,920
)Gain on the sales of businesses and other, net





1,002Operating income

$
43,477

$
151,604


55

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The
EBITDA loss of the Unrestricted Group, as defined in the bank credit facilities agreement, is comprised of the following categories:

For the Three
Months Ended
June 30, 2005

For the Twelve
Months Ended
June 30, 2005Internet properties

$
2,924

$
9,524Traditional turnaround and start-up properties


4,501


24,961Related overhead and other charges


1,439


5,523$
8,864

$
40,008


The
Company has established intercompany arrangements that reflect transactions, such as leasing, licensing, sales and related services and cross-promotion, between Company businesses in
the Restricted Group and the Unrestricted Group which management believes are on an arms' length basis and as permitted by the bank credit facilities and Senior Note agreements. These intercompany
arrangements afford strategic benefits across the Company's properties and, in particular, enable the Unrestricted Group to utilize established brands and content, promote brand awareness and increase
traffic and revenue to the properties of the Unrestricted Group. For company-wide consolidated financial reporting, these intercompany transactions are eliminated in consolidation.

The
calculation of the Company's leverage ratio, as required under the bank credit facilities agreement for covenant purposes, is defined as the Company's consolidated debt divided by
the EBITDA of the Restricted Group. At June 30, 2005, this leverage ratio was approximately 5.6 to 1.0.

Other Arrangements

During 2002, the Company's Board of Directors authorized the exchange of up to $165,000 of the Company's Exchangeable Preferred Stock for common stock. As of
June 30, 2005, the Company has exchanged $75,441 liquidation value of Series D Exchangeable Preferred Stock, Series F Exchangeable Preferred Stock and Series H Exchangeable
Preferred Stock (carrying value of $73,874) for 14,360,306 shares of common stock of the Company.

In
addition, the Company's Board of Directors authorized the exchange by the Company of up to $50,000 of Exchangeable Preferred Stock for common stock and the subsequent repurchase of
the common stock issued in connection with the exchange transactions. As of June 30, 2005, the Company has exchanged $25,000 liquidation value of Series D Exchangeable Preferred Stock,
Series F Exchangeable Preferred Stock and Series H Exchangeable Preferred Stock (carrying value of $24,597) for 8,733,842 shares of common stock of the Company and subsequently
repurchased all of the common stock issued in connection with such exchanges.

Contingencies

The Company is involved in ordinary and routine litigation incidental to its business. In the opinion of management, there is no pending legal proceeding that
would have a material adverse affect on the condensed consolidated financial statements of the Company.

Critical Accounting Policies and Estimates

During the first six months of 2005, there were no significant changes related to the Company's critical accounting policies and estimates as disclosed in the
Company's annual report on Form 10-K for the year ended December 31, 2004.

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Recent Accounting Pronouncements

SFAS No. 151, "Inventory Costs"

In November 2004, the FASB issued SFAS 151, which is an amendment of Accounting Research Bulletin ("ARB") No. 43, Chapter 4. SFAS 151
clarifies that abnormal amounts of idle facility expense, freight,
handling costs, and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory based on the normal capacity of
the production facilities. This SFAS is effective for inventory costs incurred for annual periods beginning after June 15, 2005. The Company does not anticipate any material impact on its
consolidated financial statements upon adoption of this standard.

SFAS No. 123 (revised 2004)," Share-Based Payment"

In December 2004, the FASB issued SFAS 123 (revised 2004) ("SFAS 123(R)"). SFAS 123(R) replaces FASB Statement No. 123,
"Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. The FASB has concluded that companies may adopt the new standard in one
of two ways: the modified prospective transition method or the modified retrospective transition method. The modified prospective transition method requires recognition of compensation expense from
the beginning of the fiscal period in which the recognition provisions are first applied as if the fair-value-based accounting method had been used to account for all employee awards
granted, modified, or settled after the effective date and to any awards that were not fully vested as of the effective date. The modified retrospective method requires recognition of compensation
expense for periods presented prior to the adoption of the fair value based accounting method for share-based payment; that is, an entity would recognize employee compensation cost for prior periods
presented in the amounts reported in the pro forma disclosures provided in accordance with SFAS 123. The Company is planning to adopt SFAS 123(R) using the modified prospective method
effective January 1, 2006, which will result in an increase in non-cash compensation expense. The Company is still evaluating the impact of the adoption of this standard on its
consolidated financial statements.

SFAS No. 153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29"

In December 2004, the FASB issued SFAS 153, which amends ARB 29 to eliminate the exception for nonmonetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements.

SFAS 154, "Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3."

In May 2005, the FASB issued SFAS 154, which replaces APB 20 and SFAS 3. This statement provides guidance on the accounting for and
reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the
absence of explicit transition requirements specific to the newly adopted accounting principle. This statement also provides guidance for determining whether retrospective application of a change in
accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS 154 is effective for accounting changes and correction of errors made in
fiscal years beginning after December 15, 2005.

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Impact of Inflation and Other Costs

In 2004, the entire print media industry saw a rise in the cost of paper with additional increases occurring in the first six months of 2005 and expected
thereafter, in 2005. In the first six months of 2005, paper costs were approximately 8% of the Company's total operating costs and expenses. The Company's paper expense increased approximately 2%
during the first six months of 2005 as compared to the same period in 2004. The Company attributes the increase in paper expenses to previously announced paper price increases in 2005, partially
offset by a decrease in the volume of paper used as a result of the smaller folio sizes of magazines and fewer bulk copies. Postage for product distribution and direct mail solicitations is a
significant expense of the Company. The Company uses the U.S. Postal Service for distribution of many of its products and marketing materials. There were no increases in postage rates in 2004 or the
first six months of 2005. Under existing legislation postal rates will remain stable until 2006 when rates are expected to increase. The impact of inflation was immaterial during 2004 and through the
first six months of 2005. In the past, the effects of inflation on operating expenses including postage increases have substantially been offset by PRIMEDIA's ability to increase selling prices. No
assurances can be given that the Company can pass such cost increases through to its customers in the future. In addition to pricing actions, the Company is continuing to examine all aspects of the
manufacturing and purchasing processes to identify ways to offset some of these price increases.

Seasonality

The Company's operations are seasonal in nature. Operating results have historically been stronger in the second half of the year with generally strongest results
generated in the fourth quarter of the year.
The seasonality of the Company's business reflects (i) the relationship between advertising purchases and the retail and school cycles and (ii) subscription promotions and the holiday
season. This seasonality causes, and will likely continue to cause, a variation in the Company's quarterly operating results. Such variations have an effect on the timing of the Company's cash flows
and the reported quarterly results.

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first six months of 2005, there were no significant changes related to the Company's market risk exposure.

Item 4.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, has evaluated the
effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and
reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended.

Changes in Internal Control Over Financial Reporting

During the three month period ended June 30, 2005, there have not been any changes in the Company's internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

During
the first six months of 2005 the Company has taken corrective action with regard to certain significant deficiencies and control deficiencies. During the second quarter of 2005,
the Company
performed procedures regarding certain of the remediations to determine that the remediated controls are operating effectively. The Company plans to complete such procedures on the remaining
remediated controls in the third and fourth quarters of 2005.

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PART II.    OTHER INFORMATION

Item 6.    EXHIBITS

|3.1  |  | Certificate of Incorporation of PRIMEDIA Business Magazines and Media Internet Inc.(*)                                                                                                                                                                                                                                                
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2  |  | By-laws of PRIMEDIA Business Magazines and Media Internet Inc(*)                                                                                                                                                                                                                                                                      
|3.3  |  | Certificate of Incorporation of PRIMEDIA Business Magazines and Media Publications Inc(*)                                                                                                                                                                                                                                             
|3.4  |  | By-laws of PRIMEDIA Business Magazines and Media Publications Inc(*)                                                                                                                                                                                                                                                                  
|10.2 |  | Consent Dated as of April 8, 2005 under the Credit Agreement dated as of June 10, 2001, as amended, among PRIMEDIA Inc., the Lenders thereunder, Bank of America, N.A., as Syndication Agent, The Bank of New York and the Bank of Nova
Scotia, as Co-Documentation Agents, and JP Morgan Chase Bank, N.A., as Administrative Agent(1)
|10.2 |  | Consent Dated as of April 8, 2005 under the Credit Agreement dated as of May 14, 2004 among PRIMEDIA Inc., the Lenders thereunder, Bank of America, N.A., as Syndication Agent, Citicorp North America, Inc., as Co-Syndication Agent,
and JP Morgan Chase Bank, N.A., as Administrative Agent(1)                                     
|31.1 |  | Certification by Kelly P. Conlin Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)                                                                                                                                                                                                                                         
|31.2 |  | Certification by Matthew A. Flynn Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)                                                                                                                                                                                                                                        
|31.3 |  | Certification by Robert J. Sforzo Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)                                                                                                                                                                                                                                        
|32.1 |  | Certification by Kelly P. Conlin Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(*)                                                                                                                                                                                          
|32.2 |  | Certification by Matthew A. Flynn Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(*)                                                                                                                                                                                         
|32.3 |  | Certification by Robert J. Sforzo Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(*)                                                                                                                                                                                         

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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.

|                        |  | PRIMEDIA Inc.
(Registrant)                                                                                                  
|----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------
|Date:    August 9, 2005 |  | /s/KELLY P. CONLIN(Signature) Chief Executive Officer and President
(Principal Executive Officer)                           
|Date:    August 9, 2005 |  | /s/MATTHEW A. FLYNN(Signature) Senior Vice President and Chief Financial Officer
(Principal Financial Officer)              
|Date:    August 9, 2005 |  | /s/ROBERT J. SFORZO(Signature) Senior Vice President,
Chief Accounting Officer and Controller
(Principal Accounting Officer)

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