UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------
|  | For the quarterly period ended September 30, 2001                                      

OR



|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------
|  | For the transition period from __________ to ___________                                

Commission file number: 333-80523

SUSQUEHANNA MEDIA CO.(Exact name of registrant as specified in its charter)



|DELAWARE                        | 23-2722964         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)

140 East Market Street

York, Pennsylvania 17401

(717) 848-5500(Address, including zip code and telephone number, including

area code, of registrant's principal executive offices)

(Not Applicable)(Former name, former address and former fiscal year, if changed since last report)

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  o

As of November 12, 2001, there were 1,100,000 total shares of common stock, $1.00 par value outstanding.



SUSQUEHANNA MEDIA CO.FORM 10-QTABLE OF CONTENTS

|                               |                                                                                               |                                                      |  
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- | -
|                              
|PART I - FINANCIAL INFORMATION | 1                                                                                            
|                               | ITEM 1. FINANCIAL STATEMENTS                                                                  | 1                                                   
|                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                | 1
|                               |                                                                                               | CONDENSED CONSOLIDATED INCOME STATEMENTS             | 2
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS      | 3
|                               |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 4
|                               | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 8                                                   
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            | 14                                                  
|PART II - OTHER INFORMATION    | 14                                                                                           
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                      | 14                                                  



PART I  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

SUSQUEHANNA MEDIA CO. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share data)



|                                                              |   |         |  |   |        
|------------------------------------------------------------- | - | ------- |  | - | -------
|
|ASSETS                                                       
|Current Assets                                                |   |         |  |   |        
|Cash and cash equivalents                                     | $ | 908     |  | $ |       
|Accounts receivable, net                                      |   | 45,814  |  |   | 51,189 
|Interest receivable from parent                               |   | 5,059   |  |   |       
|Prepaid income taxes                                          |   | 1,561   |  |   | 1,028  
|Other current assets                                          |   | 8,006   |  |   | 4,683  
|                                                              |   |         | 
|Total Current Assets                                          |   | 61,348  |  |   | 56,900 
|Property, Plant, and Equipment, net                           |   | 147,421 |  |   | 140,624
|Intangible Assets, net                                        |   | 319,713 |  |   | 323,578
|Note Receivable from Parent                                   |   | 122,671 |  |   | 108,050
|Investments and Other Assets                                  |   | 43,982  |  |   | 30,305 
|                                                              |   |         | 
|                                                              | $ | 695,135 |  | $ | 659,457
|                                                              |   |         | 
|                                                             
|LIABILITIES AND STOCKHOLDERS' EQUITY                         
|Current Liabilities                                           |   |         |  |   |        
|Cash overdrafts                                               | $ |        |  | $ | 598    
|Accounts payable                                              |   | 12,106  |  |   | 12,859 
|Current portion of long-term debt                             |   | 4,512   |  |   | 62     
|Accrued salaries and benefits                                 |   | 4,044   |  |   | 4,940  
|Accrued ESOP benefit costs                                    |   | 6,700   |  |   |       
|Accrued interest                                              |   | 7,580   |  |   | 3,573  
|Deferred income                                               |   | 3,233   |  |   | 3,044  
|Accrued franchise and licensing fees                          |   | 2,774   |  |   | 2,897  
|Deferred income taxes                                         |   | 2       |  |   | 494    
|Other accrued expenses                                        |   | 6,063   |  |   | 7,462  
|                                                              |   |         | 
|Total Current Liabilities                                     |   | 47,014  |  |   | 35,929 
|                                                              |   |         | 
|Long-Term Debt                                                |   | 511,500 |  |   | 500,600
|                                                              |   |         | 
|Other Liabilities                                             |   | 13,274  |  |   | 5,605  
|                                                              |   |         | 
|Deferred Income Taxes                                         |   | 42,892  |  |   | 38,988 
|                                                              |   |         | 
|Minority Interests                                            |   | 67,046  |  |   | 45,105 
|                                                              |   |         | 
|Stockholders' Equity                                          |   |         |  |   |        
|Preferred stock-voting, 7% cumulative with par value of $100, |   |         |  |   |        
|authorized 110,000 shares, 70,449.21 issued and outstanding   |   | 7,050   |  |   | 7,050  
|Common stock-voting, $1 par value, authorized 1,100,000       |   |         |  |   |        
|shares, 1,100,000 shares issued and outstanding               |   | 1,100   |  |   | 1,100  
|Retained earnings                                             |   | 5,259   |  |   | 25,080 
|                                                              |   |         | 
|Total Stockholders' Equity                                    |   | 13,409  |  |   | 33,230 
|                                                              |   |         | 
|                                                              | $ | 695,135 |  | $ | 659,457
|                                                              |   |         | 

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

1

SUSQUEHANNA MEDIA CO. AND SUBSIDIARIESCONDENSED CONSOLIDATED INCOME STATEMENTS(Dollars in thousands, except per share data)(unaudited)



|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|---------------------------------------- | - | ------ | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                        
|                                        
|                                        
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Revenues                                 |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Radio                                    | $ | 54,773 |   |  | $ | 57,364  |   |  | $ | 147,971 |   |  | $ | 159,778 |  
|Cable                                    |   | 26,596 |   |  |   | 23,544  |   |  |   | 77,004  |   |  |   | 68,796  |  
|Blazenet and Other                       |   | 2,844  |   |  |   | 1,592   |   |  |   | 7,951   |   |  |   | 4,319   |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|Total Revenues                           |   | 84,213 |   |  |   | 82,500  |   |  |   | 232,926 |   |  |   | 232,893 |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Operating Expenses                       |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Operating and programming                |   | 33,193 |   |  |   | 29,934  |   |  |   | 93,595  |   |  |   | 82,931  |  
|Selling                                  |   | 9,672  |   |  |   | 9,036   |   |  |   | 28,089  |   |  |   | 26,704  |  
|General and administrative               |   | 15,395 |   |  |   | 16,408  |   |  |   | 48,368  |   |  |   | 42,856  |  
|Depreciation and amortization            |   | 10,041 |   |  |   | 8,443   |   |  |   | 28,892  |   |  |   | 23,402  |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|Total Operating Expenses                 |   | 68,301 |   |  |   | 63,821  |   |  |   | 198,944 |   |  |   | 175,893 |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Operating Income                         |   | 15,912 |   |  |   | 18,679  |   |  |   | 33,982  |   |  |   | 57,000  |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Other Income (Expense)                   |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Interest Expense, net                    |   | (9,973 | ) |  |   | (10,547 | ) |  |   | (29,645 | ) |  |   | (26,707 | )
|Interest income from loan to Parent      |   | 1,827  |   |  |   | 1,684   |   |  |   | 5,042   |   |  |   | 5,014   |  
|Replacement of cable distribution system |   | (149   | ) |  |   |        |   |  |   | (909    | ) |  |   | (1,261  | )
|Other                                    |   | (446   | ) |  |   | 125     |   |  |   | (548    | ) |  |   | 122     |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|Income Before Income Taxes               |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|And Minority Interests                   |   | 7,171  |   |  |   | 9,941   |   |  |   | 7,922   |   |  |   | 34,168  |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Income Taxes                             |   | 3,355  |   |  |   | 4,052   |   |  |   | 3,658   |   |  |   | 13,928  |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Income Before Minority Interests         |   | 3,816  |   |  |   | 5,889   |   |  |   | 4,264   |   |  |   | 20,240  |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Minority Interests                       |   | (1,061 | ) |  |   | (708    | ) |  |   | (1,705  | ) |  |   | (3,286  | )
|                                         |   |        |   |  |   |         |   |  |   |         |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Net Income                               |   | 2,755  |   |  |   | 5,181   |   |  |   | 2,559   |   |  |   | 16,954  |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Preferred Dividends Declared             |   | (123   | ) |  |   | (123    | ) |  |   | (370    | ) |  |   | (370    | )
|                                         |   |        |   |  |   |         |   |  |   |         |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Net Income Available                     |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|For Common Shares                        | $ | 2,632  |   |  | $ | 5,058   |   |  | $ | 2,189   |   |  | $ | 16,584  |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Basic and Diluted Net Income             |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  
|Per Common Share                         | $ | 2.39   |   |  | $ | 4.60    |   |  | $ | 1.99    |   |  | $ | 15.08   |  
|                                         |   |        |   |  |   |         |   |  |   |         |  
|                                         |   |        |   |  |   |         |   |  |   |         |   |  |   |         |  

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

2

SUSQUEHANNA MEDIA CO. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands)(unaudited)



|                                                    |   |         |   |  |   |          |  
|--------------------------------------------------- | - | ------- | - |  | - | -------- | -
|                                                   
|                                                   
|                                                   
|                                                    |   |         |   |  |   |          |  
|Cash Flows from Operating Activities                |   |         |   |  |   |          |  
|Income before minority interests                    | $ | 4,264   |   |  | $ | 20,240   |  
|Adjustments to reconcile net income to net cash:    |   |         |   |  |   |          |  
|Depreciation and amortization                       |   | 28,892  |   |  |   | 23,402   |  
|Deferred income taxes                               |   | 3,412   |   |  |   | 833      |  
|Equity in earnings of investees                     |   | (1,076  | ) |  |   | (516     | )
|Deferred financing amortization                     |   | 948     |   |  |   | 828      |  
|Investment write-downs                              |   | 1,500   |   |  |   |         |  
|Loss on replacement of cable distribution system    |   | 909     |   |  |   | 1,261    |  
|                                                    |   |         |   |  |   |          |  
|Changes in assets and liabilities:                  |   |         |   |  |   |          |  
|Decrease (increase) in accounts receivable, net     |   | 5,375   |   |  |   | (845     | )
|Increase in other current assets                    |   | (3,340  | ) |  |   | (910     | )
|Increase in interest receivable from parent         |   | (5,042  | ) |  |   | (5,013   | )
|Decrease in accounts payable                        |   | (753    | ) |  |   | (2,134   | )
|Increase in accrued interest                        |   | 4,007   |   |  |   | 3,772    |  
|Increase (decrease) in prepaid/accrued income taxes |   | (533    | ) |  |   | 2,397    |  
|Increase in accrued ESOP benefit costs              |   | 6,570   |   |  |   | 5,558    |  
|Increase (decrease) in other accrued expenses       |   | (2,099  | ) |  |   | 1,495    |  
|Increase in other liabilities                       |   | 7,669   |   |  |   | 6,334    |  
|                                                    |   |         |   |  |  
|Net cash provided by operating activities           |   | 50,703  |   |  |   | 56,702   |  
|                                                    |   |         |   |  |  
|                                                    |   |         |   |  |   |          |  
|Cash Flows from Investing Activities                |   |         |   |  |   |          |  
|Purchase of property, plant, and equipment, net     |   | (21,993 | ) |  |   | (25,758  | )
|Purchase of land and building from Parent           |   | (2,789  | ) |  |   |         |  
|Acquisition                                         |   | (21,300 | ) |  |   | (118,189 | )
|Loan to Parent                                      |   | (14,622 | ) |  |   |         |  
|Increase in investments and other assets            |   | (1,749  | ) |  |   | (2,707   | )
|                                                    |   |         |   |  |  
|Net cash used by investing activities               |   | (62,453 | ) |  |   | (146,654 | )
|                                                    |   |         |   |  |  
|                                                    |   |         |   |  |   |          |  
|Cash Flows from Financing Activities                |   |         |   |  |   |          |  
|Increase in revolving credit facility               |   | 15,400  |   |  |   | 90,900   |  
|Decrease in cash overdraft                          |   | (598    | ) |  |   |         |  
|Payments of preferred dividends                     |   | (370    | ) |  |   | (370     | )
|Non-voting subsidiary common stock transactions     |   | (1,774  | ) |  |   | 502      |  
|                                                    |   |         |   |  |  
|Net cash provided by financing activities           |   | 12,658  |   |  |   | 91,032   |  
|                                                    |   |         |   |  |  
|                                                    |   |         |   |  |   |          |  
|Net Increase in Cash and Cash Equivalents           |   | 908     |   |  |   | 1,080    |  
|                                                    |   |         |   |  |   |          |  
|Cash and Cash Equivalents, beginning                |   |        |   |  |   | 639      |  
|                                                    |   |         |   |  |  
|                                                    |   |         |   |  |   |          |  
|Cash and Cash Equivalents, ending                   | $ | 908     |   |  | $ | 1,719    |  
|                                                    |   |         |   |  |  

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

3





SUSQUEHANNA MEDIA CO. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.     Basis of Presentation

Pursuant to the rules and regulations of the Securities and Exchange Commission, the condensed consolidated interim financial statements included herein have
been prepared, without audit, by Susquehanna Media Co. (the "Company" or "Media"). The financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with
the instructions to the Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The consolidated financial statements included herein should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's December 31, 2000 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The condensed consolidated interim financial statements (the "financial statements") include the accounts of Media and all its subsidiaries. All
significant intercompany accounts and transactions have been eliminated.

In the opinion of management, the accompanying financial statements contain all material adjustments (consisting only of normal recurring adjustments),
necessary to present fairly the consolidated financial position of the Company at September 30, 2001 and the results of its operations for the nine months ended September 30, 2001 and 2000 and its cash flows for the nine months ended September 30,
2001 and 2000.

Interim results are not necessarily indicative of results for the full year or future periods.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

2.     Recent Developments

On June 16, 2001, a Petition for Reconsideration (Petition) from a mutually exclusive applicant was filed challenging a Federal Communications Commission (FCC)
Report and Order that approved the move of radio station WHMA-FM to serve the Atlanta, Georgia metro area. On November 8, 2001, the FCC denied the Petition. Unless a further appeal is made, the FCC's Report and Order will become final. When the
Order becomes final, the Company must pay WHMA-FM's former owners $10.0 million in accordance with the original purchase agreement. Existing credit facilities are expected to be used to fund this payment. The Company commenced operations of WHMA-FM
in College Park, Georgia using the call letters WWWQ-FM in January 2001.

On October 26, 2001, the National Football League (NFL) approved a contract extending KCFX-FM's broadcast rights for the Kansas City Chiefs NFL franchise
through the 2006 football season. The contract, which was effective as of August 1, 2001, requires rights payments ranging

4



from $2.4 million for the 2001 football season to $3.2 million for the 2006 football season. Rights payments totaling $2.2 million were paid and charged against income over the 2000 football season. Rights
payments for the 2001 football season commenced in August 2001.

On August 21, 2001, the Company acquired the assets of River Valley Cable for $8.0 million cash. Existing credit facilities were used to finance the
acquisition. The River Valley cable system serves 3,800 basic customers and is contiguous to the Williamsport, Pennsylvania cable system. The Company plans to eliminate the system's current headend and upgrade the cable plant in 2002. Acquired
intangible assets with indefinite lives are not being amortized.

On August 1, 2001, the Company purchased land and a building located in York, Pennsylvania from Susquehanna Pfaltzgraff Co., its corporate parent (Parent), for
$539,000. The purchase price was based on the assets' carrying value which approximated an independent appraisal. The facilities were formerly leased from the Parent at an annual cost of $109,000.

On July 18, 2001, the Company loaned its Parent $14.6 million at 6.5% repayable in 18 equal annual principal and interest installments of $1.4 million
commencing December 30, 2001. The loan was ultimately used for the Susquehanna Pfaltzgraff Co. ESOP Trust's purchase of additional shares from Parent's shareholders.

On June 27, 2001, the Company purchased land and a building located in Indianapolis, Indiana, from its Parent for $2.3 million. The purchase price was based on
the assets' carrying value which approximated an independent appraisal. The facilities were formerly leased from the Parent at an annual cost of $185,000.

On May 25, 2001, the Company acquired all of the stock of Sunnyside Communications, Inc. for $3.3 million cash. Sunnyside Communications, Inc. owns and operates
WQKC-FM and WZZB-AM serving Seymour, Indiana and WAVG-AM, serving Jeffersonville, Indiana and Louisville, Kentucky. Existing credit facilities were used to finance the acquisition. The purchase price was included in Investments and Other Assets
since an unrelated party is operating the stations under a local marketing agreement.

On February 15, 2001, the Company purchased a forty-percent interest in 1051FM, LLC from Jesscom, Inc. for $10.0 million cash. Existing credit facilities were
used to finance the acquisition. The purchase costs were included in Investments and Other Assets. 1051FM, LLC owned a construction permit to build a Class C-1 radio station with call letters KFME-FM licensed to Garden City, Missouri and which
serves the Kansas City market. Operations commenced June 18, 2001. Under the terms of a joint sales agreement, the Company sells commercial airtime on the station and Jesscom programs and operates the station. The Company must pay 1051FM, LLC's
monthly operating expenses and additional fees. The Company has the option to purchase the remaining sixty-percent interest in 1051FM, LLC during a one-year period beginning February 14, 2004, at fair market value as determined by an independent
appraiser. However, such purchase price may not be less than $15,000,000 nor more than $27,000,000.

During the quarter ended September 30, 2001, we recognized a $1 million charge related to a cost basis investment in an Internet company. In management's
opinion, the investment is no longer realizable. Year-to-date investment write-offs were $1.5 million.

The Company is party to an interest rate swap agreement which effectively changes $50.0 million

5



of variable rate debt to fixed rate debt. The effective interest rate on the $50.0 million notional amount was 6.2% at September 30, 2001. The interest rate swap was recorded at its fair value as of September
30, 2001. Accordingly, charges of $977,000 and $1,482,000 were included in interest expense for the three and nine months ended September 30, 2001, respectively. An offsetting liability was also recorded. The interest rate swap agreement covered
less than 10% of Media's total debt as of September 30, 2001. Although Media has not elected hedge accounting for this contract, hedge accounting may be elected for future contracts.

On April 1, 2001, the second of a three-step change in the valuation basis of Cable's performance share plan and Radio's employee stock plan occurred. As noted
in the Company's December 31, 2000 Annual Report on Form 10-K, valuation basis changes will be completed on April 1, 2002. Second quarter 2001 operating income and Adjusted EBITDA included a $4.2 million charge for this valuation basis change.
Although the change in Radio's employee stock plan has no effect on operating income or Adjusted EBITDA, minority interests increased $22.3 million due to the valuation change. The third and final valuation basis change will occur on April 1, 2002.
It is not possible to reliably estimate the impact of that change at this time.

3.    Recent Accounting Pronouncements

In June 2001, The Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. SFAS No. 142 requires amortization of goodwill no longer be charged against earnings, but instead
be evaluated for impairment.

The adoption of SFAS No. 141 on July 1, 2001 did not have a material impact on our financial position or results of operations.

The Company will adopt SFAS No. 142 on January 1, 2002, as required by the new statement. Upon adoption, the Company will no longer amortize goodwill and other
indefinite lived intangible assets, which consist primarily of FCC licenses and cable franchise operating rights. The Company will be required to test its goodwill and intangible assets that are determined to have an indefinite life for impairment
at least annually. Other than in those periods in which the Company may record an asset impairment, the Company expects that the adoption of SFAS No. 142 will result in increased income as a result of reduced amortization expense. Based on the
Company's preliminary evaluation, the estimated pro forma effect of adoption of SFAS No. 142 would be to decrease amortization expense by approximately $10.2 million for the nine months ended September 30, 2001 and $13.6 million for the year ended
December 31, 2001.

The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," in June 2001. SFAS No. 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. While the Company is currently evaluating the impact
the adoption of SFAS No. 143 will have on its financial position and results of operations, it does not expect such impact to be material.

The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," in August 2001. SFAS No. 144, which addresses
financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of, supersedes SFAS No. 121 and

6



is effective for fiscal years beginning after December 15, 2001. While the Company is currently evaluating the impact the adoption of SFAS No. 144 will have on its financial position and results of
operations, it does not expect such impact will be material.

4.    Segment Information

The Company's business units have separate management teams and infrastructures that offer different products and services. The business units have been
aggregated into three reportable segments; Radio, Cable, and Blazenet and Other. These business segments are consistent with the Company's management of these businesses and the financial reporting structure. Accounting policies, as described in the
Company's most recent audited financial statements, are applied consistently across all segments.

Segment information (in thousands of dollars) follows:



|                                          |  | Radio    |  | Cable      |   |  | Blazenet

and Other |   |  | Consolidated
|----------------------------------------- |  | -------- |  | ---------- | - |  | ------------------- | - |  | ------------
|For the Three Months Ended Sept. 30, 2001 |  |          |  |            |   |  |                     |   |  |             
|Operating income (loss)                   |  | $ 13,151 |  | $    3,563 |   |  | $       (802        | ) |  | $  15,912   
|Interest expense, net                     |  | 2,150    |  | 2,780      |   |  | 5,043               |   |  | 9,973       
|Depreciation and amortization             |  | 2,826    |  | 6,923      |   |  | 292                 |   |  | 10,041      
|Income (loss) before income taxes         |  | 9,906    |  | 635        |   |  | (3,370              | ) |  | 7,171       
|Provision (benefit) for income taxes      |  | 3,919    |  | 111        |   |  | (675                | ) |  | 3,355       
|Identifiable assets                       |  | 344,749  |  | 197,599    |   |  | 152,787             |   |  | 695,135     
|Capital expenditures                      |  | 713      |  | 7,345      |   |  | 246                 |   |  | 8,304       
|                                          |  |          |  |            |   |  |                     |   |  |             
|For the Three Months Ended Sept. 30, 2000 |  |          |  |            |   |  |                     |   |  |             
|Operating income (loss)                   |  | $ 17,211 |  | $    2,713 |   |  | $    (1,245         | ) |  | $  18,679   
|Interest expense, net                     |  | 2,918    |  | 3,861      |   |  | 3,767               |   |  | 10,546      
|Depreciation and amortization             |  | 2,795    |  | 5,449      |   |  | 199                 |   |  | 8,443       
|Income (loss) before income taxes         |  | 13,902   |  | (1,149     | ) |  | (2,812              | ) |  | 9,941       
|Provision (benefit) for income taxes      |  | 5,464    |  | (395       | ) |  | (1,017              | ) |  | 4,052       
|Identifiable assets                       |  | 334,895  |  | 188,008    |   |  | 132,723             |   |  | 655,626     
|Capital expenditures                      |  | 1,106    |  | 7,298      |   |  | 234                 |   |  | 8,638       



|                                         |  | Radio     |  | Cable      |   |  | Blazenet

and Other |   |  | Consolidated
|---------------------------------------- |  | --------- |  | ---------- | - |  | ------------------- | - |  | ------------
|For the Nine Months Ended Sept. 30, 2001 |  |           |  |            |   |  |                     |   |  |             
|Operating income (loss)                  |  | $  29,804 |  | $    7,699 |   |  | $    (3,521         | ) |  | $  33,982   
|Interest expense, net                    |  | 7,388     |  | 9,286      |   |  | 12,971              |   |  | 29,645      
|Depreciation and amortization            |  | 8,527     |  | 19,542     |   |  | 823                 |   |  | 28,892      
|Income (loss) before income taxes        |  | 21,293    |  | (2,495     | ) |  | (10,876             | ) |  | 7,922       
|Provision (benefit) for income taxes     |  | 8,175     |  | (617       | ) |  | (3,900              | ) |  | 3,658       
|Identifiable assets                      |  | 344,749   |  | 197,599    |   |  | 152,787             |   |  | 695,135     
|Capital expenditures                     |  | 6,780     |  | 17,709     |   |  | 293                 |   |  | 24,782      
|                                         |  |           |  |            |   |  |                     |   |  |             
|For the Nine Months Ended Sept. 30, 2000 |  |           |  |            |   |  |                     |   |  |             
|Operating income (loss)                  |  | $  48,263 |  | $    8,779 |   |  | $         (42       | ) |  | $  57,000   
|Interest expense, net                    |  | 5,248     |  | 10,614     |   |  | 10,845              |   |  | 26,707      
|Depreciation and amortization            |  | 6,678     |  | 16,266     |   |  | 458                 |   |  | 23,402      
|Income (loss) before income taxes        |  | 42,621    |  | (3,096     | ) |  | (5,357              | ) |  | 34,168      
|Provision (benefit) for income taxes     |  | 16,751    |  | (1,065     | ) |  | (1,758              | ) |  | 13,928      
|Identifiable assets                      |  | 334,895   |  | 188,008    |   |  | 132,723             |   |  | 655,626     
|Capital expenditures                     |  | 2,806     |  | 22,515     |   |  | 437                 |   |  | 25,758      

7

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

Cautionary Note Regarding Forward-Looking Statements

Some of the statements in this Form 10-Q, as well as statements made by the Company in filings with government regulatory bodies, including the Securities and
Exchange Commission, and in periodic press releases and other public comments and communications, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Certain, but not
necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "believes," "expects," "may," "will," "should," or "anticipates" or
the negative thereof or other variations thereof or comparable terminology, or by discussion of strategies, each of which involves risks and uncertainties. All statements other than of historical facts included herein or therein, including those
regarding market trends, the Company's financial position, business strategy, projected plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors
include, but are not limited to, general economic and business conditions (both nationally and in the Company's markets), terrorists' acts or adverse reactions to United States anti-terrorism activities, acquisition opportunities and the Company's
ability to successfully integrate acquired businesses, properties or other assets and realize the anticipated benefits of such acquisitions, expectations and estimates concerning future financial performance, financing plans and access to capital on
favorable terms, the Company's ability to service its outstanding indebtedness, the impact of competition, existing and future regulations affecting the Company's business, nonrenewal of cable franchises, advances in technology and the Company's
ability to adapt to and capitalize on such advances, decreases in customer advertising and entertainment expenditures and other factors over which the Company may have little or no control.

8



Results of Operations

The following table summarizes Media's consolidated historical results of operations and consolidated historical results of operations as a percentage of
revenues for the three and nine months ended September 30, 2001 and 2000 in millions of dollars.



|                                     | Three Months Ended September 30, |     
|------------------------------------ | -------------------------------- | ----
|                                     | 2001                             |     
|Revenues                             |                                  |     
|Radio                                | $                                | 54.8
|Cable                                |                                  | 26.6
|Blazenet                             |                                  | 2.8 
|                                     |                                  |     
|Total Revenues                       |                                  | 84.2
|                                     |                                  |     
|                                     |                                  |     
|Operating Expenses                   |                                  |     
|Operating and programming            |                                  | 33.2
|Selling, general, and administrative |                                  | 25.1
|Depreciation and amortization        |                                  | 10.0
|                                     |                                  |     
|Total Operating Expenses             |                                  | 68.3
|                                     |                                  |     
|                                     |                                  |     
|Operating Income                     | $                                | 15.9
|                                     |                                  |     
|                                     |                                  |     
|Interest Expense, net                | $                                | 10.0
|                                     |                                  |     
|                                     |                                  |     
|Net Income                           | $                                | 2.8 
|                                     |                                  |     
|                                     |                                  |     
|Adjusted EBITDA                      | $                                | 28.8
|                                     |                                  |     



|                                     | Nine Months Ended September 30, |      
|------------------------------------ | ------------------------------- | -----
|                                     | 2001                            |      
|Revenues                             |                                 |      
|Radio                                | $                               | 148.0
|Cable                                |                                 | 77.0 
|Blazenet                             |                                 | 7.9  
|                                     |                                 |      
|Total Revenues                       |                                 | 232.9
|                                     |                                 |      
|                                     |                                 |      
|Operating Expenses                   |                                 |      
|Operating and programming            |                                 | 93.6 
|Selling, general, and administrative |                                 | 76.4 
|Depreciation and amortization        |                                 | 28.9 
|                                     |                                 |      
|Total Operating Expenses             |                                 | 198.9
|                                     |                                 |      
|                                     |                                 |      
|Operating Income                     | $                               | 34.0 
|                                     |                                 |      
|                                     |                                 |      
|Interest Expense, net                | $                               | 29.6 
|                                     |                                 |      
|                                     |                                 |      
|Net Income                           | $                               | 2.6  
|                                     |                                 |      
|                                     |                                 |      
|Adjusted EBITDA                      | $                               | 70.5 
|                                     |                                 |      

9

Three Months Ended September 30, 2001 Compared to the Three Months Ended September 30, 2000

Revenues. Revenues increased $1.7 million or 2% from 2000 to 2001. Radio revenues decreased $2.6 million or 5% from 2000 to 2001. Radio
revenues decrease was concentrated in our San Francisco properties. The San Francisco marketplace has been significantly affected by the drop in Internet related revenues. Same stations revenues, which exclude the Kansas City stations acquired in
third quarter 2000 and WHMA/WWWQ, which began serving the Atlanta, Georgia market in January 2001, decreased $2.9 million or 6% to $50.4 million. Radio advertising by Internet-related companies dropped $6.4 million from 2000 to 2001. Cable revenues
increased $3.1 million or 13% from 2000 to 2001. Cable's revenue growth was primarily due to basic service rate increases, and to a lesser extent, from increased penetration of digital cable and cable modem services. Blazenet and Other revenues,
that arise from Internet access and web design activities, increased $1.2 million or 75% from 2000 to 2001, primarily attributable to a web design business acquired in October 2000.

Operating income.Operating income decreased $2.8 million or 15% from 2000 to 2001. Radio operating income was $13.2 million, a $4.0
million or 23% decline 2000. Lower revenues in the San Francisco radio properties, increased expenses from the Kansas City stations acquired in third quarter 2000 and expenses incurred for WHMA/ WWWQ, which began serving the Atlanta, Georgia market
in January 2001, were responsible for decreased Radio operating income. Same stations operating income was $15.5 million, $2.3 million or 13% below 2000. Cable operating income was $3.6 million, a $0.9 million or 33% increase from 2000. Cable
operating income increased primarily due to the absence of a $1.9 million charge related to the Cable Performance Share Plan which occurred in July 2000. A similar $2.6 million charge was recognized in second quarter 2001. Operating income for the
Blazenet and Other segment, a $0.8 million operating loss, was a $0.4 million improvement from 2000. The Blazenet and Other segment's 2000 operating income was affected by a $1.2 million charge related to Cable's Performance Share Plan. A similar
$1.6 million charge was recognized in second quarter 2001. Increased expenses related to our web-design operations reduced current year operating income.

Depreciation and amortization.Depreciation and amortization increased $1.5 million or 18% from 2000 to 2001. Acquisitions and completed
phases of cable system rebuilds were responsible for the increase.

Interest expense. Interest expense decreased $0.5 million or 5% from 2000 to 2001. Lower net interest expense was due to lower rates and
cash flow used to reduce borrowings more than offsetting increased borrowings for cable rebuilds and acquisitions occurring after September 30, 2000. Interest expense included a $977,000 charge incident to recording the fair value of an interest
rate swap contract at September 30, 2001 (See Note 2 to the Condensed Consolidated Financial Statement's "Recent Developments").

Net income.Net income decreased $2.4 million or 46% from 2000 to 2001. Decreased net income was due to the drop in operating income as
discussed above. Lower net interest expense, which was $0.5 million or 5% lower than 2000, partially offset the operating income decline.

Adjusted EBITDA.Adjusted EBITDA is defined as net income before income taxes, extraordinary items, interest expense, interest income,
depreciation and amortization, employee stock ownership plan expense, minority interest and any gain or loss on the disposition of assets. Adjusted EBITDA decreased $0.5 million or 2% from 2000 to 2001. Radio Adjusted EBITDA was $17.7 million, an
$3.6 million or

10



17% decrease from third quarter 2000. Same stations Adjusted EBITDA was $18.9 million, a $2.4 million or 11% decrease from third quarter 2000. Radio Adjusted EBITDA decrease was caused by lower
operating income. Cable Adjusted EBITDA was $11.0 million, an increase of $2.4 million or 28% higher than 2000. Cable 2001 Adjusted EBITDA was not affected by the $1.9 million charge related to the Cable Performance Share Plan in 2000. Blazenet and
Other operating loss decreased Adjusted EBITDA, which did not include the $1.2 million charge related to Cable's Performance Share Plan in 2000.

We believe that Adjusted EBITDA provides a meaningful comparison of operating performance because it is commonly used in the radio and
cable television industries to analyze and compare radio and cable television companies on the basis of operating performance, leverage and liquidity. Although the Company believes the calculation is helpful in understanding its performance,
Adjusted EBITDA should not be considered a substitute for net income or cash flow as indicators of the Company's financial performance or its ability to generate liquidity. Adjusted EBITDA as presented may not be comparable to other similarly titled
measures used by other companies.

Nine Months Ended September 30, 2001 Compared to the Nine Months Ended September 30, 2000

Revenues. Revenues were unchanged from 2000 to 2001. Radio revenues decreased $11.8 million or 7% from 2000 to 2001. The decrease in Radio
revenues was due in large part to a significant decrease in advertising by Internet-related companies. Same stations revenues, which exclude the Kansas City stations acquired in third quarter 2000 and WHMA/WWWQ, which began serving the Atlanta,
Georgia market in January 2001, decreased $16.5 million or 11% to $137.3 million. Radio advertising by Internet-related companies dropped $21.0 million from 2000 to 2001. The San Francisco stations were most affected by the drop in advertising by
Internet-related companies. Cable revenues increased $8.2 million or 12% from 2000 to 2001. Cable's revenues growth was primarily due to basic service rate increases and from increased penetration of higher rate digital cable and cable modem
service. BlazeNet and Other revenues, that include Internet access and web design activities, increased $3.6 million or 84% from 2000 to 2001, primarily from a web design business acquired in October 2000.

Operating income.Operating income decreased $23.0 million or 40% from 2000 to 2001. Radio operating income was $29.8 million, a $18.5
million or 38% decline from same period in 2000. Lower revenues, increased expenses from the Kansas City stations acquired during third quarter 2000 and expenses from launching WHMA/WWWQ, which began serving the Atlanta, Georgia market in January
2001, were responsible for decreased Radio operating income. Same stations operating income was $37.6 million, an $11.8 million or 24% decrease from 2000. Cable operating income for the nine months was $7.7 million, an $1.1 million or 13% decrease
from 2000. Cable operating income was impacted by a $2.6 million charge in 2001, as compared to a $1.9 million charge in 2000, related Cable's Performance Share Plan. Operating income for the Blazenet and Other segment dropped $3.5 million from
2000, to a $3.5 million operating loss for the nine months. A $1.6 million charge in 2001 and a $1.2 million charge in 2000 were both related to Cable's Performance Share Plan. Higher expenses related to web-design operations were responsible for
the Blazenet and Other segment's decline.

Depreciation and amortization.Depreciation and amortization increased $5.5 million or 24% from 2000 to 2001. Acquisitions and completed
phases of cable system rebuilds were responsible for the increase.

11


Interest expense. Interest expense increased $2.9 million or 11% from 2000 to 2001. Higher net interest expense was due to borrowings for
acquisitions and cable rebuilds occurring after September 30, 2000 and a $1,482,000 charge related to an interest rate swap agreement (See Note 2 to the Condensed Consolidated Financial Statements "Recent Developments").

Net income.Net income decreased $14.4 million from 2000 to 2001 resulting in net income of $2.6 million. As discussed above, operating
income declines were primarily responsible for the decrease. Higher net interest expense, which was $2.9 million or 11% higher than in 2000 also reduced net income. Higher net interest expense was due to increased debt from acquisitions and cable
rebuilds occurring after September 30, 2000 and a $1,482,000 charge related to the interest rate swap agreement.

Adjusted EBITDA.Adjusted EBITDA is defined as net income before income taxes, extraordinary items, interest expense, interest income,
depreciation and amortization, employee stock ownership plan expense, minority interest and any gain or loss on the disposition of assets. Adjusted EBITDA decreased $15.9 million or 18% from 2000 to 2001. Radio Adjusted EBITDA was $43.4 million, a
$15.9 million or 27% decrease from 2000. The decrease in Radio Adjusted EBITDA was due to lower operating income. Same stations Adjusted EBITDA was $47.6 million, a decrease of $11.8 million or 20% lower than the first nine months of 2000. Cable
Adjusted EBITDA was $28.7 million, an increase of $2.5 million or 10% from 2000. Cable Adjusted EBITDA was impacted by a $4.2 million Cable Performance Share Plan-related charge in 2001 and a $3.1 million charge in 2000.

The Company believes that Adjusted EBITDA provides a meaningful comparison of operating performance because it is commonly used in the
radio and cable television industries to analyze and compare radio and cable television companies on the basis of operating performance, leverage and liquidity. Although the Company believes the calculation is helpful in understanding its
performance, Adjusted EBITDA should not be considered a substitute for net income or cash flow as indicators of the Company's financial performance or its ability to generate liquidity. Adjusted EBITDA as presented may not be comparable to other
similarly titled measures used by other companies.

Liquidity and Capital Resources

The Company's primary sources of liquidity are cash flow from operations and borrowings under its senior credit facilities. The Company's
future needs for liquidity arise primarily from capital expenditures, potential acquisitions of radio stations and cable systems, potential repurchases of its common stock, and interest payable on outstanding indebtedness, including its senior
credit facilities.

Net cash provided by operating activities was $50.7 million for the nine months ended September 30, 2001. The Company's net cash provided
by operating activities was generated by normal operations, and was slightly offset by a $1.5 million write-off related to a cost basis investment in an Internet company.

Net cash used by investing activities was $62.5 million for the nine months ended September 30, 2001. On February 15, 2001, we purchased a
forty percent interest in 1051FM, LLC for $10.0 million cash. On May 25, 2001 we purchased all of the stock of Sunnyside Communications, Inc. for $3.3 million cash. On July 18, 2001 we loaned Susquehanna Pfaltzgraff Co. (Parent) $14.6 million at
6.5% to purchase additional ESOP shares from Parent's shareholders. On August 31, 2001, we purchased the assets of River Valley Communications for $8.0 million cash. (See Note 2 to the Condensed Consolidated Financial Statements "Recent
Developments"). Capital expenditures, excluding

12

acquisitions, were $24.8 million and $25.8 million for the nine months ended September 30, 2001 and 2000, respectively. Capital expenditures were used primarily to upgrade and maintain cable
systems. The Company expects to make capital expenditures of approximately $9 million during the remainder of 2001, primarily for cable systems upgrades. We expect to use existing credit facilities and operating cash flow to fund these cable systems
upgrades.

Net cash generated by financing activities was $12.7 million for the nine months ended September 30, 2001. The revolving credit facility,
which had approximately $84.0 million unused at September 30, 2001, increased by $15.3 million during the nine months. At September 30, 2000, the Company had approximately $366.0 million outstanding under its senior secured credit facility, $50
million notional amount of which is subject to an interest rate swap and has an effective interest rate of 6.2%. The interest rates on the Company's senior secured credit facility ranged from 4.11% to 6.31% at September 30, 2001. During the second
quarter 2001, subsidiary non-voting stock owned by a former employee was repurchased for $1.8 million cash and retired. The transaction was accounted for as a treasury stock transaction.

The Company believes that funds generated from operations and the borrowing availability under its new senior credit facility will be
sufficient to finance its current operations, its debt service obligations, and its planned capital expenditures. From time to time, the Company evaluates potential acquisitions of radio stations and cable television systems. In connection with
future acquisition opportunities, the Company may incur additional debt or issue additional equity or debt securities depending on market conditions and other factors. Except as noted in this Form 10-Q, the Company has no current commitments or
agreements with respect to any material acquisitions.

Recent Accounting Pronouncements

In June 2001, The Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. SFAS No. 142 requires amortization of goodwill no longer be charged
against earnings, but instead be evaluated for impairment.

The adoption of SFAS No. 141 on July 1, 2001 did not have a material impact on our financial position or results of operations.

The Company will adopt SFAS No. 142 on January 1, 2002, as required by the new statement. Upon adoption, the Company will no longer
amortize goodwill and other indefinite lived intangible assets, which consist primarily of FCC licenses and cable franchise operating rights. The Company will be required to test its goodwill and intangible assets that are determined to have an
indefinite life for impairment at least annually. Other than in those periods in which the Company may record an asset impairment, the Company expects that the adoption of SFAS No. 142 will result in increased income as a result of reduced
amortization expense. Based on the Company's preliminary evaluation, the estimated pro forma effect of adoption of SFAS No. 142 would be to decrease amortization expense by approximately $10.2 million for the nine months ended September 30, 2001 and
$13.6 million for the year ended December 31, 2001.

The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," in June 2001. SFAS No. 143 addresses financial
accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for

13


fiscal years beginning after June 15, 2002. While the Company is currently evaluating the impact the adoption of SFAS No. 143 will have on its financial position and results of operations, it
does not expect such impact to be material.

The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," in August 2001. SFAS No. 144,
which addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of, supersedes SFAS No. 121 and is effective for fiscal years beginning after December 15, 2001. While the Company is
currently evaluating the impact the adoption of SFAS No. 144 will have on its financial position and results of operations, it does not expect such impact will be material.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We monitor and evaluate changes in market conditions on a regular basis. Based upon the most recent review, management has determined that
there have been no material developments affecting market risk since the filing of Media's December 31, 2000 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

PART II  OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

None.

(b) The Company filed a Form 8-K on November 2, 2001 under Item 5, Other Events indicating its earnings for the quarter and nine months ended September 30, 2001.

14

SIGNATURE

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



|November 12, 2001 | SUSQUEHANNA MEDIA CO.
|----------------- | ---------------------
|                  |                      
|                  |                      
|                  | By:                  
|                  |                      
|                  |                      
|                  |                      

15