<PAGE>
                                       
                        SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                   FORM 10-Q

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


  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 Commission File Number 0-21917

                              ____________________

                                    VDI MEDIA
             (Exact name of registrant as specified in its charter)

          California                                    95-4272619
(State of or other jurisdiction of                   (I.R.S. Employer
 incorporation or organization)                       Identification No.)

    6920 Sunset Boulevard,                                 90028
    Hollywood, California                                (Zip Code)
   (Address of principal
    executive offices)

          Registrant's telephone number, including area code  (323) 957-5500

          Securities registered pursuant to Section 12(b) of the Act
                                       None.

          Securities registered pursuant to Section 12(g) of the Act
                             Common Stock, no par value.

                              ____________________

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

As of May 12, 1999, there were 9,203,394 shares of Common Stock outstanding.

<PAGE>


PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS
                                       
                                   VDI MEDIA
                            CONSOLIDATED BALANCE SHEET

                                     ASSETS
<TABLE>
<CAPTION>

                                                            December 31,      March 31,
                                                               1998             1999
                                                            ------------     -----------
                                                                             (Unaudited)
<S>                                                         <C>              <C>
Current assets:
  Cash and cash equivalents                                  $ 2,048,000     $ 1,984,000
  Accounts receivable, net of allowances for doubtful
   accounts of $878,000 and $188,000, respectively            17,329,000      18,232,000
  Inventories                                                    734,000         826,000
  Prepaid expenses and other current assets                      976,000       1,232,000
  Deferred income taxes                                          917,000         522,000
                                                             -----------     -----------
        Total current assets                                  22,004,000      22,796,000

  Property and equipment, net                                 17,655,000      19,241,000
  Other assets, net                                              406,000         408,000
  Goodwill and other intangibles, net                         24,784,000      24,877,000
                                                             -----------     -----------
        Total Assets                                         $64,849,000     $67,322,000
                                                             -----------     -----------
                                                             -----------     -----------
                                       
                               LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                           $ 4,480,000     $ 3,757,000
  Accrued expenses                                             1,528,000       2,045,000
  Income taxes payable                                           548,000          43,000
  Borrowings under revolving credit agreement                    233,000       5,738,000
  Current portion of notes payable                             5,827,000       5,809,000
  Current portion of capital lease obligations                   525,000         408,000
                                                             -----------     -----------
        Total current liabilities                             13,141,000      17,800,000
                                                             -----------     -----------
  Deferred income taxes                                          350,000         359,000
  Notes payable, less current portion                         22,234,000      20,783,000
  Capital lease obligations, less current portion                214,000         168,000

Shareholders' equity:
  Preferred stock; no par value; 5,000,000 authorized;
    none outstanding                                                   -               -
  Common stock; no par value; 50,000,000 authorized; 
    9,776,094 and 9,344,394 shares, respectively, 
    issued and outstanding                                    20,948,000      18,655,000
  Retained earnings                                            7,962,000       9,557,000
                                                             -----------     -----------
        Total shareholders' equity                            28,910,000      28,212,000
                                                             -----------     -----------
                                                             $64,849,000     $67,322,000
                                                             -----------     -----------
                                                             -----------     -----------
</TABLE>

See accompanying notes to consolidated financial statements

                                       2

<PAGE>

                                    VDI MEDIA
                         CONSOLIDATED STATEMENT OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                      March 31,
                                                             ---------------------------
                                                                 1998           1999
                                                             -------------  ------------
<S>                                                          <C>            <C>
Revenues                                                      $11,643,000    $19,784,000
Cost of goods sold                                              7,138,000     11,605,000
                                                               ----------     ----------
Gross profit                                                    4,505,000      8,179,000

Selling, general and administrative expense                     2,523,000      4,975,000
                                                               ----------     ----------
Operating income                                                1,982,000      3,204,000
Interest expense                                                  101,000        504,000
Interest income                                                    14,000          3,000
                                                               ----------     ----------
Income before income taxes                                      1,895,000      2,703,000
Provision for income taxes                                        777,000      1,108,000
                                                               ----------     ----------
Net income                                                     $1,118,000     $1,595,000
                                                               ----------     ----------
                                                               ----------     ----------
Earnings per share:
  Basic:
    Net income per share                                       $     0.12     $     0.17
    Weighted average number of shares                           9,635,199      9,664,531
  Diluted:
    Net income per share                                       $     0.11     $     0.16
    Weighted average number of shares including the dilutive
     effect of stock options (99,506 for 1998 and 65,442 for
     1999)                                                      9,734,705      9,729,973

</TABLE>

See accompanying notes to consolidated financial statements

                                       3

<PAGE>

                                   VDI MEDIA
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                              Three Months Ended March 31,
                                                             ----------------------------
                                                                 1998            1999
                                                             -------------   ------------
<S>                                                          <C>             <C>
Cash flows from operating activities:
  Net income                                                  $ 1,118,000    $ 1,595,000
Adjustment to reconcile net income
 to net cash provided by operating activities:
  Depreciation and amortization                                 1,144,000      1,202,000
  Deferred taxes                                                 (450,000)       404,000
  Provision for doubtful accounts                                 (55,000)       324,000
Changes in assets and liabilities:
  Decrease (increase) in accounts receivable                      998,000     (1,227,000)
  Increase in inventories                                        (220,000)       (92,000)
  Increase in prepaid expenses and other current assets          (105,000)      (256,000)
  Increase in other assets                                       (152,000)        (2,000)
  Increase (decrease) in accounts payable                         496,000       (723,000)
  Decrease (increase) in accrued expenses                      (1,164,000)       517,000
  Decrease in income taxes payable                                      -       (505,000)
                                                              -----------     ----------
Net cash provided by operating activities                       1,610,000      1,237,000
                                                              -----------     ----------

Cash used in investing activities:
  Capital expenditures                                         (1,707,000)    (2,402,000)
  Net cash paid for acquisitions                                 (540,000)      (479,000)
                                                              -----------     ----------
Net cash used in investing activities                          (2,247,000)    (2,881,000)

Cash flows from financing activities:
  Change in revolving credit agreement                          1,086,000      5,505,000
  Proceeds from sale of common stock                            1,060,000              -
  Repurchase of common stock                                            -     (2,293,000)
  Repayment of notes payable                                     (874,000)    (1,469,000)
  Repayment of capital lease obligations                         (307,000)      (163,000)
                                                               ----------     ----------
Net cash provided by financing activities                         965,000      1,580,000

Net increase in cash                                              328,000        (64,000)
Cash at beginning of period                                     2,921,000      2,048,000
                                                               ----------     ----------
Cash at end of period                                          $3,249,000     $1,984,000
                                                               ----------     ----------
                                                               ----------     ----------
Supplemental disclosure of cash flow information:
Cash paid for:
  Interest                                                     $  101,000     $  504,000
                                                               ----------     ----------
                                                               ----------     ----------
  Income tax                                                   $1,227,000     $1,210,000
                                                               ----------     ----------
                                                               ----------     ----------
</TABLE>

See accompanying notes to consolidated financial statements

                                       4



<PAGE>
                                       
                                   VDI MEDIA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999

NOTE 1 -- THE COMPANY

     VDI Media ("VDI" or the "Company") is a leading provider of video and 
film asset management services to owners, producers and distributors of 
entertainment and advertising content.  The Company provides the services 
necessary to edit, master, reformat, archive and ultimately distribute its 
clients' video content.

     The Company provides physical and electronic delivery of commercials, 
movie trailers, electronic press kits, infomercials and syndicated 
programming to thousands of broadcast outlets worldwide. The Company provides 
worldwide electronic distribution, using fiber optics and satellites, through 
its Broadcast One-Registered Trademark- network.  Additionally, the Company 
provides a broad range of video services, including the duplication of video 
in all formats, element storage, standards conversions, closed captioning and 
transcription services and video encoding for air play verification purposes. 
The Company also provides its customers value-added post production and 
editing services.

     The Company seeks to capitalize on growth in demand for the services 
related to the distribution of entertainment content, without assuming the 
production or ownership risk of any specific television program, feature film 
or other form of content.  The primary users of the Company's services are 
entertainment studios and advertising agencies that generally choose to 
outsource such services due to the sporadic demand of any single customer for 
such services and the fixed costs of maintaining a high-volume physical plant.

     Since January 1, 1997, the Company has successfully completed seven 
acquisitions of companies providing similar services. The latest of these 
acquisitions occurred in November 1998 when the Company acquired the assets 
of Dubs, Inc. ("Dubs"), one of the Company's largest direct competitors in 
Hollywood. The Company will continue to evaluate acquisition opportunities to 
enhance its operations and profitability. As a result of these acquisitions, 
VDI believes it is one of the largest and most diversified providers of 
technical and distribution services to the entertainment industry, and is 
therefore able to offer its customers a single source for such services at 
prices that reflect the Company's scale economies.

     The accompanying unaudited financial statements have been prepared in 
accordance with generally accepted accounting principles and the Securities 
and Exchange Commission's rules and regulations for reporting interim 
financial information.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting 
principles for complete financial statements.  In the opinion of management, 
all adjustments (consisting of normal recurring adjustments) considered 
necessary for a fair presentation have been included.  Operating results for 
the three months ended March 31, 1999 are not necessarily indicative of the 
results that may be expected for the year ending December 31, 1999.  These 
financial statements should be read in conjunction with the financial 
statements and related notes contained in the Company's Form 10-K for the 
year ended December 31, 1998, as amended.

NOTE 2 -- STOCK REPURCHASE

     In February 1999, the Company commenced a stock repurchase program.  The 
board of directors authorized the Company to allocate up to $4,000,000 to 
purchase its common stock at suitable market prices.  As of May 12, 1999, the 
Company has repurchased 573,000 shares of the Company's common stock in 
connection with this program.

                                       5

<PAGE>

                                       
                                   VDI MEDIA

                       MANAGEMENT'S DISCUSSION AND ANALYSIS

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

     In connection with the "safe-harbor" provisions of the Private 
Securities Litigation Reform Act of 1995, the Company, in its Annual Report 
on Form 10-K for the year ended December 31, 1998, outlined cautionary 
statements identifying important factors that could cause the Company's 
actual results to differ materially from those projected in forward-looking 
statements made by, or on behalf of, the Company.  Such forward-looking 
statements, as made within this Quarterly Report on Form 10-Q, should be 
considered in conjunction with the information included in the Company's 
Annual Report on Form 10-K for the year ended December 31, 1998, as amended, 
and the risk factors set forth in the Company's Registration Statement on 
Form S-1 filed with the Securities and Exchange Commission on February 19, 
1997 and Registration Statement on Form S-3 filed with the Securities and 
Exchange Commission on June 29, 1998.  Factors that could cause future 
results to differ from the Company's expectations include, but are not 
limited to, the following: competition, customer and industry concentration, 
dependence on technological developments, risks related to expansion and 
acquisition of new businesses, dependence on key personnel, fluctuating 
results and seasonality and control by management.

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 
1998.

     REVENUES.  Revenues increased by $8.1 million or 69.9% to $19.8 million 
for the three month period ended March 31, 1999 compared to $11.6 million for 
the three month period ended March 31, 1998.  This increase in revenue was 
due to increased volume resulting from (i) the acquisitions of All Post, Inc. 
("All Post"), Dubs, and The Dub House ("Dub House") and (ii) substantially 
increased marketing of the Company's media services.

     GROSS PROFIT.  Gross profit increased $3.7 million or 81.6% to $8.2 
million for the three month period ended March 31, 1999 compared to $4.5 
million for the three month period ended March 31, 1998.  As a percent of 
revenues, gross profit increased from 38.7% to 41.4%.  The increase in gross 
profit as a percentage of revenues was due primarily to the lower cost of 
direct materials resulting from scale purchasing discounts.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSE.  Selling, general and 
administrative expense increased $2.5 million, or 97.2%, to $5.0 million for 
the three month period ended March 31, 1999 compared to $2.5 million for the 
three month period ended March 31, 1998.  As a percentage of revenues, 
selling, general and administrative expense increased to 25.1% for the three 
month period ended March 31, 1999 compared to 21.7% for the three month 
period ended March 31, 1998.  This increase was due to higher administrative 
wages at All Post and Dubs as well as increased rent and amortization costs 
associated with acquisitions.

     OPERATING INCOME.  Operating income increased $1.2 million or 61.7% to 
$3.2 million for the three month period ended March 31, 1999 compared to $2.0 
million for the three month period ended March 31, 1998. 

     INTEREST EXPENSE.  Interest expense increased $0.4 million, or 399%, to 
$0.5 million for the three month period ended March 31, 1999 compared to $0.1 
million for the three month period ended March 31, 1998.  This increase was 
due to increased borrowings under the Company's debt agreements related to 
the acquisitions of the Dub House, All Post and Dubs.

     INCOME TAXES. The Company's effective tax rate was 41% for the first 
quarter of 1999 and 1998.

                                       6

<PAGE>

     NET INCOME.  Net Income for the three month period ended March 31, 1999 
increased $0.5 million or 42.7% to $1.6 million compared to $1.1 million for 
the three month period ended March 31, 1998. 

LIQUIDITY AND CAPITAL RESOURCES

     This discussion should be read in conjunction with the notes to the 
financial statements and the corresponding information more fully described 
in the Company's Form 10-K, as amended, for the year ended December 31, 1998.

     At March 31, 1999 the Company's cash and cash equivalents aggregated 
$2.0 million.  The Company's operating activities provided cash of $1.2 
million for the three months ended March 31, 1999.

     The Company's investing activities used cash of $2.9 million for the 
three months ended March 31, 1999.  The Company spent approximately $2.4 
million for the addition and replacement of capital equipment necessary to 
consolidate newly acquired companies, accommodate increased customer demands 
for the Company's services, and for investments in management information 
systems.  The Company's business is equipment intensive, requiring periodic 
expenditures of cash or the incurrence of additional debt to acquire 
additional fixed assets in order to increase capacity or replace existing 
equipment. The Company expects to spend approximately $4.5 million on capital 
expenditures during the last three quarters of 1999 to complete the 
consolidation of newly acquired facilities, upgrade and replace equipment and 
upgrade the Company's management information systems.

     The Company's financing activities provided cash of $1.6 million in the 
three months ended March 31, 1999.  Cash flows from financing activities 
include a $5.5 million increase in the Company's revolving credit agreement 
with Union Bank of California (the "Bank"), used primarily to fund capital 
expenditures related to the integration and consolidation of acquired 
companies and to repurchase the Company's common stock in accordance with the 
Company's stock repurchase program.

     The Company has a $6.0 million revolving credit agreement with the Bank, 
which expires on November 1, 1999. There was $5.7 million outstanding under 
the Union Bank Credit Agreement at March 31, 1999.  The Company also has 
$26.6 million outstanding on a term loan with the Bank at March 31, 1999.  
Management is currently in the process of negotiating an increase in its 
revolving credit agreement to fund capital expenditures necessary to complete 
the integration and consolidation of acquired companies. 

     Management believes that cash generated from its revolving credit 
agreement and its ongoing operations and existing working capital will fund 
necessary capital expenditures and provide adequate working capital for at 
least the next twelve months.

     The Company, from time to time, considers the acquisition of businesses 
complementary to its current operations. Consummation of any such 
acquisition or other expansion of the business conducted by the Company may 
be subject to the Company securing additional financing.

YEAR 2000 COMPLIANCE ISSUE 

     The Company is currently working to resolve the potential impact of the 
Year 2000 problem on its computer systems and computerized equipment. The 
Year 2000 problem is a result of computer programs having been written using 
two rather than four digits to identify an applicable year. Any information 
technology systems that have time-sensitive software may recognize a date 
using "00" as the year 1900 

                                      7

<PAGE>

rather than the year 2000. The problem also extends to non-information 
technology systems that rely on embedded chip systems. 

     The Company has divided the Year 2000 readiness task by the following 
functional areas: IT infrastructure, business systems, operational systems, 
facilities, and business partners. IT infrastructure includes the Company's 
wide area networks, local area networks, servers, desktop computers, and 
telephone systems. Business systems include mainframe and midrange computer 
hardware and applications. Operational systems include equipment used for the 
Company's day-to-day operations in the post-production business and editing 
and graphics equipment. Facilities include fire, life, and safety equipment, 
elevators and alarm systems. Business partners include suppliers and vendors, 
financial institutions, benefit providers, payroll services, and customers. 
The Company has appointed a task force chaired by its chief financial officer 
and coordinated by its information systems director. 

     The Company has developed a four-phase approach to resolving the Year 
2000 issues that are reasonably within its control. The four phases of the 
program include inventory, assessment, remediation and testing, and 
implementation. The inventory phase consists of a company wide inventory of 
computer hardware, software, business applications, and operational and 
facilities equipment. The inventory is then used to generate a master 
assessment list and identify equipment vendors. The assessment phase consists 
of identifying at-risk systems and products and ranking the products by 
criticality to the business. Each product is then assigned to a task force 
member to determine whether the product is in compliance and, if not, whether 
the system should be upgraded or replaced. The remediation and testing phase 
consists of developing a project plan, defining and implementing steps 
required to bring the systems or products into compliance, defining a test 
plan to verify compliance, and documenting the test results. The final phase 
is implementing remediation on systems and products company wide. 

     The Company has been in the process of analyzing and upgrading its 
information technology ("IT") systems (i.e., its IT infrastructure and 
business systems) since early 1998, including upgrading all of its PC 
hardware, operating systems, and office automation software. With respect to 
the remaining IT systems, the Company has completed its inventory phase and 
anticipates completion of its assessment and testing phases by May 30, 1999. 
With respect to non-IT systems, including operational systems and facilities 
systems, the Company has completed its inventory phase and anticipates 
completion of the assessment phase by June 30, 1999. 

     The Company anticipates completion of all phases of its compliance 
program in both IT and non-IT systems by the end of the third quarter of 
1999. 

     THIRD PARTIES. Like every other business, the Company is at risk from 
potential Year 2000 failures on the part of its major business counterparts, 
including suppliers, vendors, financial institutions, benefit providers, 
payroll services, and clients, as well as potential failures in public and 
private infrastructure services, including electricity, water, 
transportation, and communications. The Company has initiated communications 
with significant third party businesses to assess their efforts in addressing 
Year 2000 issues and is in the process of determining the Company's 
vulnerability if these third parties fail to remediate their Year 2000 
problems. There can be no guarantee that the systems of third parties will be 
timely remediated, or that such parties' failure to remediate Year 2000 
issues would not have a material adverse effect on the Company. 

     COSTS. Costs incurred to date in addressing the Year 2000 issue have not 
been material and are being funded through operating cash flows. The Company 
anticipates that it may incur significant costs associated with replacing 
non- compliant systems and equipment. In addition, the Company anticipates 
that it will incur additional costs in the form of redeployment of internal 
resources from other activities. The Company does not expect these 
redeployments to have a material adverse effect on other ongoing business 
operations of the Company. Based upon the information currently available to 
the Company, costs associated with addressing the Year 2000 issue are 
expected to be between $350,000 and $500,000. 

                                       8

<PAGE>

     RISKS. System failures resulting from the Year 2000 problem could 
potentially affect operations and financial results in all aspects of the 
Company's business. For example, failures could affect all aspects of the 
Company's videotape duplication and distribution, post production and 
ancillary operations, as well as inventory records, payroll operations, 
security, billing, and collections. At this time the Company believes that 
its most likely worst case scenario involves potential disruption in areas in 
which the Company's operations must rely on third parties whose systems may 
not work properly after January 1, 2000. As a result of Year 2000 related 
failures of the Company's or third parties' systems, the Company could suffer 
a reduction in its operations. Such a reduction may result in a fluctuation 
in the price of the Company's common stock. 

     CONTINGENCY PLAN. The Company does not currently have a comprehensive 
contingency plan with respect to the Year 2000 problem. However, the Company 
has created a task force comprised of financial and technical employees that 
is prepared to address any Year 2000 issues as they arise. The Company will 
continue to develop its contingency plan during 1999 as part of its ongoing 
Year 2000 compliance effort. 

                                       9

<PAGE>

                            PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

    (a)  EXHIBIT NO.         DESCRIPTION
         -----------         -----------
         <S>                 <C>
             27              Financial Data Schedule
</TABLE>


    (b)  REPORTS ON FORM 8-K

     A report on Form 8-K/A was filed with the Commission on February 2nd and 
February 5th, 1999, each relating to the purchase by the Company of certain 
assets of Dubs, Inc.

                                       10

<PAGE>

                                   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.

                                       VDI MEDIA

DATE:   May 14, 1999                   BY:    /s/ Clarke W. Brewer
     --------------------------           ------------------------------
                                                Clarke W. Brewer
                                            Chief Financial Officer
                                                 and Treasurer
                                          (duly authorized officer and
                                           principal financial officer)

                                        11