##### Table of Contents



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 June 30, 2003

OR

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

For the transition period from
             to

Commission file number: 333-80523

SUSQUEHANNA MEDIA CO.

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or other jurisdiction of
incorporation or organization) |  | 23-2722964
(I.R.S. Employer
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)

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO [ X]

As of August 12, 2003, there were 1,100,000 total shares of common stock, $1.00
par value outstanding, all of which were owned by Susquehanna Pfaltzgraff Co.





---

TABLE OF CONTENTS



|                                                  |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                   
|                                                  | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                  |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                                                  |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                  |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                  |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                  | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                  | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                  | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II  OTHER INFORMATION                      
|                                                  | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURE                                        
|EX-31.1 SECTION 906 CERTIFICATION OF THE PRES/CEO
|EX-31.2 SECTION 302 CERTIFICATION OF THE VP/CFO  
|EX-32.1 SECTION 906 CERTIFICATION OF THE PRES/CEO
|EX-32.2 SECTION 906 CERTIFICATION OF THE VP/CFO  



---



##### Table of Contents



SUSQUEHANNA MEDIA CO.
FORM 10-Q

TABLE OF CONTENTS

|                               |                                                                                               |                                                      |    |      |     | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- | -- | ---- | --- | 
|PART I  FINANCIAL INFORMATION |                                                                                               |                                                      | 2  |     
|                               | Item 1. Financial Statements                                                                  |                                                      |    | 2    |    
|                               |                                                                                               | Condensed Consolidated Balance Sheets                |    |      | 2   | 
|                               |                                                                                               | Condensed Consolidated Income Statements             |    |      | 3   | 
|                               |                                                                                               | Condensed Consolidated Statements of Cash Flows      |    |      | 4   | 
|                               |                                                                                               | Notes to Condensed Consolidated Financial Statements |    |      | 5-8 | 
|                               | Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations |                                                      |    | 9-13 |    
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                      |    | 14   |    
|                               | Item 4. Controls and Procedures                                                               |                                                      |    | 15   |    
|PART II  OTHER INFORMATION    |                                                                                               |                                                      | 15 |     
|                               | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                      |    | 15   |    
|                               | Signature                                                                                     |                                                      |    | 16   |    





---



##### Table of Contents






PART I  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




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

|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |        |  |  | 
|---------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------ | ------ | ----------- | ------- | ------------ | ------ |  |  | 
|                                   |                                                                                                                             |                            |                                      |        |        | June 30,    |         | December 31,
|                                   |                                                                                                                             |                            |                                      |        |        | 2003        |         | 2002        
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |             
|                                   |                                                                                                                             |                            |                                      |        |        | (Unaudited) |         |             
|                                   |                                                                                                                             |                            |                                      | ASSETS |        |             |         |              |        |  |  | 
|Current Assets                     |                                                                                                                             |                            |                                      |        |        |             |         |             
|                                   | Cash and cash equivalents                                                                                                   |                            | $                                    | 476    |        |             | $       |             |       
|                                   | Accounts receivable, net                                                                                                    |                            |                                      | 52,437 |        |             |         | 49,678       |       
|                                   | Interest receivable from Parent                                                                                             |                            |                                      | 3,445  |        |             |         |             |       
|                                   | Deferred income taxes                                                                                                       |                            |                                      | 6,940  |        |             |         | 6,889        |       
|                                   | Current portion of note receivable from Parent                                                                              |                            |                                      | 4,422  |        |             |         | 4,422        |       
|                                   | Other current assets                                                                                                        |                            |                                      | 5,125  |        |             |         | 5,212        |       
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|                                   |                                                                                                                             | Total Current Assets       |                                      |        | 72,845 |             |         |              | 66,201 | 
|Property, Plant and Equipment, net |                                                                                                                             |                            | 157,499                              |        |        |             | 153,644 |             
|Intangible Assets, net             |                                                                                                                             |                            | 391,775                              |        |        |             | 387,883 |             
|Note Receivable from Parent        |                                                                                                                             |                            | 109,641                              |        |        |             | 109,641 |             
|Investments and Other Assets       |                                                                                                                             |                            | 32,435                               |        |        |             | 29,158  |             
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|                                   |                                                                                                                             | $                          | 764,195                              |        |        | $           | 746,527 |             
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|                                   |                                                                                                                             |                            | LIABILITIES AND STOCKHOLDERS EQUITY |        |        |             |         |              |        |  | 
|Current Liabilities                |                                                                                                                             |                            |                                      |        |        |             |         |             
|                                   | Cash overdrafts                                                                                                             |                            | $                                    |       |        |             | $       | 849          |       
|                                   | Accounts payable                                                                                                            |                            |                                      | 8,596  |        |             |         | 13,035       |       
|                                   | Current portion of long-term debt                                                                                           |                            |                                      | 19,033 |        |             |         | 17,032       |       
|                                   | Accrued interest                                                                                                            |                            |                                      | 4,469  |        |             |         | 2,484        |       
|                                   | Accrued income taxes                                                                                                        |                            |                                      | 11,722 |        |             |         | 9,761        |       
|                                   | Deferred income                                                                                                             |                            |                                      | 1,206  |        |             |         | 1,022        |       
|                                   | Accrued employee-related costs                                                                                              |                            |                                      | 16,649 |        |             |         | 12,757       |       
|                                   | Accrued franchise and licensing fees                                                                                        |                            |                                      | 2,594  |        |             |         | 3,676        |       
|                                   | Contract fee payable                                                                                                        |                            |                                      | 10,000 |        |             |         | 10,000       |       
|                                   | Other accrued expenses                                                                                                      |                            |                                      | 7,517  |        |             |         | 6,536        |       
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|                                   |                                                                                                                             | Total Current Liabilities  |                                      |        | 81,786 |             |         |              | 77,152 | 
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|Long-term Debt                     |                                                                                                                             |                            | 503,088                              |        |        |             | 504,105 |             
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|Other Liabilities                  |                                                                                                                             |                            | 15,179                               |        |        |             | 17,172  |             
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|Deferred Income Taxes              |                                                                                                                             |                            | 61,013                               |        |        |             | 57,152  |             
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|Minority Interests                 |                                                                                                                             |                            | 64,405                               |        |        |             | 66,887  |             
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|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                                                                                                           |                            |                                      | 30,574 |        |             |         | 15,909       |       
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|                                   |                                                                                                                             | Total Stockholders Equity |                                      |        | 38,724 |             |         |              | 24,059 | 
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       
|                                   |                                                                                                                             | $                          | 764,195                              |        |        | $           | 746,527 |             
|                                   |                                                                                                                             |                            |                                      |        |        |             |         |              |       

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

2



---



##### Table of Contents






SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)

|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |         | 
|-------------------------------------------------------- | ----------------------------------- | ------------------------ | ------ | -------------------- | ------ | ------------------ | ------- | ---------- | ------ | ---- | ------ | ------- | ------- | ---------- | ------ | ------- | ------- | 
|                                                         |                                     |                          |        | For the Three Months |        | For the Six Months
|                                                         |                                     |                          |        | Ended June 30,       |        | Ended June 30,    
|                                                         |                                     |                          |        | 2003                 |        | 2002               |         | 2003       |        | 2002
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |     
|                                                         |                                     |                          |        |                      |        |                    |         | (Restated) |        |      |        |         |         | (Restated)
|Revenues                                                 |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |        
|                                                         | Radio                               |                          | $      | 62,567               |        |                    | $       | 57,124     |        |      | $      | 107,484 |         |            | $      | 97,862  |        
|                                                         | Cable                               |                          |        | 34,037               |        |                    |         | 31,260     |        |      |        | 67,027  |         |            |        | 59,470  |        
|                                                         | Internet and other                  |                          |        | 2,513                |        |                    |         | 2,178      |        |      |        | 5,067   |         |            |        | 4,939   |        
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|                                                         |                                     | Total revenues           |        |                      | 99,117 |                    |         |            | 90,562 |      |        |         | 179,578 |            |        |         | 162,271 | 
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|Operating Expenses                                       |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |        
|                                                         | Operating and programming           |                          |        | 37,761               |        |                    |         | 33,882     |        |      |        | 68,846  |         |            |        | 62,573  |        
|                                                         | Selling                             |                          |        | 10,502               |        |                    |         | 10,201     |        |      |        | 19,685  |         |            |        | 19,223  |        
|                                                         | General and administrative          |                          |        | 16,807               |        |                    |         | 20,601     |        |      |        | 33,971  |         |            |        | 35,450  |        
|                                                         | Radio Employee Stock Plan           |                          |        |                     |        |                    |         | 17,065     |        |      |        |        |         |            |        | 17,065  |        
|                                                         | Depreciation and amortization       |                          |        | 6,952                |        |                    |         | 6,963      |        |      |        | 14,858  |         |            |        | 13,257  |        
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|                                                         |                                     | Total operating expenses |        |                      | 72,022 |                    |         |            | 88,712 |      |        |         | 137,360 |            |        |         | 147,568 | 
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|Operating Income                                         |                                     |                          | 27,095 |                      |        |                    | 1,850   |            |        |      | 42,218 |         |         |            | 14,703 |        
|Other Income (Expense)                                   |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |        
|                                                         | Interest expense                    |                          |        | (7,985               | )      |                    |         | (7,609     | )      |      |        | (14,510 | )       |            |        | (14,860 | )      
|                                                         | Interest income from loan to Parent |                          |        | 1,723                |        |                    |         | 1,785      |        |      |        | 3,427   |         |            |        | 3,551   |        
|                                                         | Other                               |                          |        | (329                 | )      |                    |         | (149       | )      |      |        | (524    | )       |            |        | (446    | )      
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|Income (Loss) Before Income Taxes and
Minority Interests |                                     |                          | 20,504 |                      |        |                    | (4,123  | )          |        |      | 30,611 |         |         |            | 2,948  |        
|Provision for Income Taxes                               |                                     |                          | 7,923  |                      |        |                    | 4,929   |            |        |      | 11,651 |         |         |            | 7,600  |        
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|Income (Loss) Before Minority Interests                  |                                     |                          | 12,581 |                      |        |                    | (9,052  | )          |        |      | 18,960 |         |         |            | (4,652 | )      
|Minority Interests                                       |                                     |                          | (3,109 | )                    |        |                    | (856    | )          |        |      | (4,048 | )       |         |            | (1,612 | )      
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|Net Income (Loss)                                        |                                     |                          | 9,472  |                      |        |                    | (9,908  | )          |        |      | 14,912 |         |         |            | (6,264 | )      
|Preferred Dividends Declared                             |                                     |                          | (124   | )                    |        |                    | (124    | )          |        |      | (247   | )       |         |            | (247   | )      
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        
|Net Income (Loss) Available for Common Shares            |                                     | $                        | 9,348  |                      |        | $                  | (10,032 | )          |        | $    | 14,665 |         |         | $          | (6,511 | )      
|                                                         |                                     |                          |        |                      |        |                    |         |            |        |      |        |         |         |            |        |         |        

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

3



---



##### Table of Contents






SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |            |        | 
|----------------------------------------- | ----------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------- | -------- | ------------------------ | ------ | ---- | ------- | ---------- | ------ | 
|                                          |                                                             |                                                  |                                           |          | For The Six Months Ended
|                                          |                                                             |                                                  |                                           |          | June 30,                
|                                          |                                                             |                                                  |                                           |          | 2003                     |        | 2002
|                                          |                                                             |                                                  |                                           |          |                          |        |     
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         | (Restated)
|Cash Flows from Operating Activities      |                                                             |                                                  |                                           |          |                          |        |      |        
|                                          | Net income (loss)                                           |                                                  | $                                         | 14,912   |                          |        | $    | (6,264  | )         
|                                          | Adjustments to reconcile net income (loss) to net cash:     |                                                  |                                           |          |                          |        |      |         |           
|                                          |                                                             | Depreciation and amortization                    |                                           |          | 14,858                   |        |      |         | 13,257     |       
|                                          |                                                             | Deferred income taxes                            |                                           |          | 3,811                    |        |      |         | 4,942      |       
|                                          |                                                             | Minority interests                               |                                           |          | 4,048                    |        |      |         | 1,612      |       
|                                          |                                                             | Radio Employee Stock Plan                        |                                           |          |                         |        |      |         | 17,065     |       
|                                          |                                                             | Equity in earnings of investees                  |                                           |          | 394                      |        |      |         | 81         |       
|                                          |                                                             | Deferred financing amortization                  |                                           |          | 547                      |        |      |         | 664        |       
|                                          | Changes in assets and liabilities:                          |                                                  |                                           |          |                          |        |      |         |           
|                                          |                                                             | Increase in accounts receivable, net             |                                           |          | (2,737                   | )      |      |         | (4,260     | )     
|                                          |                                                             | Decrease in other current assets                 |                                           |          | 87                       |        |      |         | 288        |       
|                                          |                                                             | Increase in interest receivable from Parent      |                                           |          | (3,445                   | )      |      |         | (3,552     | )     
|                                          |                                                             | Increase (decrease) in accounts payable          |                                           |          | (4,439                   | )      |      |         | 1,322      |       
|                                          |                                                             | Increase (decrease) in accrued interest          |                                           |          | 1,985                    |        |      |         | (2,003     | )     
|                                          |                                                             | Increase in accrued income taxes                 |                                           |          | 1,960                    |        |      |         | 3,073      |       
|                                          |                                                             | Increase in other accrued expenses               |                                           |          | 3,972                    |        |      |         | 4,577      |       
|                                          |                                                             | Increase (decrease) in other liabilities         |                                           |          | (1,993                   | )      |      |         | 3,626      |       
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           
|                                          |                                                             |                                                  | Net cash provided by operating activities |          |                          | 33,960 |      |         |            | 34,428 | 
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           
|Cash Flows from Investing Activities      |                                                             |                                                  |                                           |          |                          |        |      |        
|                                          | Purchase of property, plant and equipment, net              |                                                  |                                           | (17,454  | )                        |        |      | (10,193 | )         
|                                          | Cable acquisition                                           |                                                  |                                           | (5,170   | )                        |        |      | (26,659 | )         
|                                          | Advance on WSOX-FM acquisition                              |                                                  |                                           | (2,500   | )                        |        |      |        |           
|                                          | Increase in investments, other assets and intangible assets |                                                  |                                           | (1,734   | )                        |        |      | (2,096  | )         
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           
|                                          |                                                             | Net cash used by investing activities            |                                           |          | (26,858                  | )      |      |         | (38,948    | )     
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           
|Cash Flows from Financing Activities      |                                                             |                                                  |                                           |          |                          |        |      |        
|                                          | Increase (decrease) in revolving credit borrowings          |                                                  |                                           | (140,500 | )                        |        |      | 19,300  |           
|                                          | Long term borrowing                                         |                                                  |                                           | 150,000  |                          |        |      |        |           
|                                          | Repayment of long-term debt                                 |                                                  |                                           | (8,500   | )                        |        |      | (250    | )         
|                                          | Decrease in cash overdraft                                  |                                                  |                                           | (849     | )                        |        |      | (154    | )         
|                                          | Payment of preferred dividends                              |                                                  |                                           | (247     | )                        |        |      | (247    | )         
|                                          | Radio Employee Stock Plan repurchases                       |                                                  |                                           | (6,530   | )                        |        |      | (14,129 | )         
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           
|                                          |                                                             | Net cash provided (used) by financing activities |                                           |          | (6,626                   | )      |      |         | 4,520      |       
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           
|Net Increase in Cash and Cash Equivalents |                                                             |                                                  | 476                                       |          |                          |        |     |        
|Cash and Cash Equivalents, beginning      |                                                             |                                                  |                                          |          |                          |        |     |        
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           
|Cash and Cash Equivalents, ending         |                                                             | $                                                | 476                                       |          |                          | $      |     |        
|                                          |                                                             |                                                  |                                           |          |                          |        |      |         |           

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

4



---



##### Table of Contents






SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES 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 accounting principles generally accepted in the United States
(GAAP) 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 financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted;
however, Media 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 Medias December 31, 2002 Annual
Report on Form 10-K filed with the Securities and Exchange Commission. The
statement of operations for the three and six months ended June 30, 2002 and
the statement of cash flows for the six months ended June 30, 2002 reflect
restated amounts as disclosed in the Form 10-K.

The condensed consolidated 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 condensed consolidated
interim financial statements contain all material adjustments (consisting only
of normal recurring adjustments) necessary to present fairly Medias
consolidated financial position at June 30, 2003 and the results of its
operations for the three and six months ended June 30, 2003 and 2002 and its
cash flows for the six months ended June 30, 2003 and 2002.

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.

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

2. Recent Developments

New Borrowing

On April 23, 2003, Media issued $150.0 million of 7.375% Senior
Subordinated Notes (Notes) due in 2013 at par. Interest is payable
semi-annually, commencing October 15, 2003. The $148.3 million net proceeds
were immediately used to pay down Medias existing revolving credit facility.
In June 2003, the Notes were exchanged for Senior Subordinated Exchange Notes
with the same terms and maturity that were registered with the Securities and
Exchange Commission.

Recent Accounting Pronouncements

Statement of Financial Accounting Standards No. 143 Accounting for Asset
Retirement Obligations (SFAS 143) specifies financial and reporting
obligations pertaining to the retirement of tangible long-lived assets and
associated retirement costs. Media adopted SFAS 143 as of January 1, 2003.
Adoption had no effect on Medias financial position or results of operations.

Statement of Financial Accounting Standards No. 148 Accounting for
Stock-Based Compensation  Transition and Disclosure (SFAS 148) amended SFAS
123 to provide for alternative methods of transitioning to the fair value
method of valuing stock-based compensation. Media is using the fair value
method of valuing stock-based compensation. As of June 30, 2003, the number
and value of stock options granted and outstanding was not material.

5



---



##### Table of Contents



Financial Accounting Standards Board Interpretation No. 45, Guarantors
Accounting and Requirements for Guarantees, Including Guarantees of
Indebtedness of Others (FIN 45), requires a guarantor to disclose its
obligations under certain guarantees that it has issued in interim and annual
financial statements for guarantees issued or modified after December 31, 2002.
For certain guarantees, a guarantor may be required to recognize a liability
for the fair value of the obligation at its inception. FIN 45 does not specify
an approach for subsequently measuring and recording the change in fair value
of the obligation. The interpretations disclosure provisions applied to
interim or annual financial statements for periods ending after December 15,
2002. Media adopted this pronouncement as of January 1, 2003 without
significant impact.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. For enterprises, such as the Company, with a
variable interest in a variable interest entity created before February 1,
2003, the Interpretation is applied to the enterprise no later than the end of
the first interim or annual reporting period beginning after June 15, 2003. The
application of this Interpretation is not expected to have a material effect on
Medias financial position or results of operations.

In April 2003, the FASB issued Statement of Financial Accounting Standard
No. 149 Amendment of Statement 133 on Derivative Instruments and Hedging
Activities (SFAS 149). SFAS 149 amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts entered into or modified after June 30, 2003, for hedging
activities designated after that same date and for certain existing contracts.
Media is assessing the statements impact on its financial position and results
of operations.

In May 2003, the FASB issued Statement of Financial Accounting Standard
No. 150, Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity (SFAS 150). SFAS 150 requires certain financial
instruments previously classified as equity to be classified as liabilities, or
possibly assets, if they have certain characteristics. SFAS 150 is effective
for financial instruments entered into or modified after May 31, 2003. Since
the Companys common stock is not publicly held, SFAS 150 is effective January
1, 2004 for previously issued financial instruments within SFAS 150s limited
scope. SFAS 150s adoption will be accounted for as the cumulative effect of a
change in accounting principle for affected financial instruments issued before
SFAS 150s issuance and outstanding as of January 1, 2004. The Company is
assessing the statements impact on its financial statements.

Interest Rate Swap

At June 30, 2003, Media was party to an interest rate swap agreement,
which effectively changed $20.0 million of variable rate debt to fixed rate
debt. The effective fixed interest rate on the $20.0 million was 4.09% at June
30, 2003. The interest rate swap was recorded at its fair value as of June 30,
2003. Interest expense was increased by $0.6 million due to swaps for the six
months ended June 30, 2003. Although Media has not elected hedge accounting
for this swap contract, hedge accounting may be elected for future contracts.

Acquisition, Commitments and Relocations

On July 10, 2003, Media signed a purchase agreement with RCN Telecom
Services, Inc. to acquire the assets of a cable system serving Carmel, New York
for $120.0 million cash. The cable system serves approximately 29,800 video
subscribers. The agreement contemplates that the cable facilities will be
fully upgraded to 750 MHz and two-way capable before the first quarter 2004
anticipated closing. The system is currently providing digital video,
residential high-speed Internet access and circuit switched telephony over the
rebuilt areas of the cable system. Existing debt facilities were utilized for
the $10 million deposit made on July 10, 2003 and are expected to be utilized
to close the acquisition.

Effective June 30, 2003, Media acquired approximately 2,900 basic cable
subscribers and related assets serving Canton, Mississippi from Galaxy Cable,
Inc. for $5.2 million cash. Existing credit facilities were utilized. The
subscribers will be integrated into the existing Rankin County operation after
rebuild of the cable plant and headend elimination. Media anticipates that the
rebuild and headend elimination will total $2.3 million and be completed within
twelve months.

6



---



##### Table of Contents



On August 1, 2003, Media purchased WSOX-FM, an Oldies radio station,
licensed to Red Lion, Pennsylvania from Lancaster-York Broadcasting, LLC for
$23.0 million cash. Existing credit facilities funded the acquisition. At
June 30, 2003, investments and other assets included a $2.5 million advance for
this acquisition.

In February 2003, Medias Radio and Cable corporate management groups, the
York Cable system customer service and administrative staffs, and the Media
management group moved their offices to a York, Pennsylvania complex developed
by a related party. The offices are located in a Keystone Opportunity Zone.
Related capital expenditures totaled $5.9 million. Media will receive Keystone
Opportunity Zone benefits including certain Pennsylvania and local tax
abatements through 2010.

Radio Employee Stock Plan

In May 2003, Susquehanna Radio Corp. repurchased and retired approximately
$6.5 million of Class B common non-voting shares from employees. Existing
credit facilities were utilized to fund the repurchases.

Contingency

WHMA-FM was moved from Anniston, Alabama to serve the Atlanta, Georgia
metropolitan area based upon a Federal Communications Commission (FCC) Report
and Order. The original purchase agreement provided that if a Final Order was
received by May 2003, Media would pay the sellers an additional $10 million.
Management believed that it was probable that a timely Final Order would be
issued and accordingly recorded a contract fee payable for the $10 million at
December 31, 2002. Although a Final Order has not been issued, it is unclear
whether payment will ultimately be required. As of June 30, 2003, the $10
million contract fee payable remained in current liabilities.

3. 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 Internet
and Other. These business segments are consistent with the Companys management
of these businesses and its 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:

|                                                    |  |       |         |       |  |       |         |       |  |              |         |   |  |   |         |  
|--------------------------------------------------- |  | ----- | ------- | ----- |  | ----- | ------- | ----- |  | ------------ | ------- | - |  | - | ------- | -
|                                                    |  |       |         |       |  |       |         |       |  | Internet and |         |   |  |  
|                                                    |  | Radio |         | Cable |  | Other |         | Total
|                                                    |  |       |         |       |  |       |         |      
|For the Three Months Ended June 30, 2003            |  |       |         |       |  |       |         |       |  |              |         |   |  |   |         |  
|Operating income                                    |  | $     | 18,315  |       |  | $     | 8,542   |       |  | $            | 238     |   |  | $ | 27,095  |  
|Interest expense, net                               |  |       | 1,780   |       |  |       | 2,651   |       |  |              | 3,554   |   |  |   | 7,985   |  
|Depreciation and amortization                       |  |       | 1,400   |       |  |       | 5,478   |       |  |              | 74      |   |  |   | 6,952   |  
|Income (loss) before income taxes                   |  |       | 16,419  |       |  |       | 5,892   |       |  |              | (1,807  | ) |  |   | 20,504  |  
|Provision (benefit) for income taxes                |  |       | 6,278   |       |  |       | 2,262   |       |  |              | (617    | ) |  |   | 7,923   |  
|Identifiable assets                                 |  |       | 407,451 |       |  |       | 221,609 |       |  |              | 135,135 |   |  |   | 764,195 |  
|Capital expenditures                                |  |       | 1,322   |       |  |       | 6,084   |       |  |              | 544     |   |  |   | 7,950   |  
|For the Three Months Ended June 30, 2002 (Restated) |  |       |         |       |  |       |         |       |  |              |         |   |  |   |         |  
|Operating income (loss)                             |  | $     | (495    | )     |  | $     | 4,275   |       |  | $            | (1,930  | ) |  | $ | 1,850   |  
|Interest expense, net                               |  |       | 1,522   |       |  |       | 2,851   |       |  |              | 3,236   |   |  |   | 7,609   |  
|Depreciation and amortization                       |  |       | 1,279   |       |  |       | 5,770   |       |  |              | (86     | ) |  |   | 6,963   |  
|Income (loss) before income taxes                   |  |       | (2,368  | )     |  |       | 1,423   |       |  |              | (3,178  | ) |  |   | (4,123  | )
|Provision (benefit) for income taxes                |  |       | 5,416   |       |  |       | 629     |       |  |              | (1,116  | ) |  |   | 4,929   |  
|Identifiable assets                                 |  |       | 347,183 |       |  |       | 210,845 |       |  |              | 140,525 |   |  |   | 698,553 |  
|Capital expenditures                                |  |       | 604     |       |  |       | 6,448   |       |  |              | 93      |   |  |   | 7,145   |  

7



---



##### Table of Contents



|                                                  |  |       |         |       |  |       |         |       |  |              |         |   |  |   |         | 
|------------------------------------------------- |  | ----- | ------- | ----- |  | ----- | ------- | ----- |  | ------------ | ------- | - |  | - | ------- | 
|                                                  |  |       |         |       |  |       |         |       |  | Internet and |         |   |  |  
|                                                  |  | Radio |         | Cable |  | Other |         | Total
|                                                  |  |       |         |       |  |       |         |      
|For the Six Months Ended June 30, 2003            |  |       |         |       |  |       |         |       |  |              |         |   |  |   |         | 
|Operating income (loss)                           |  | $     | 26,263  |       |  | $     | 16,383  |       |  | $            | (428    | ) |  | $ | 42,218  | 
|Interest expense, net                             |  |       | 3,264   |       |  |       | 4,905   |       |  |              | 6,341   |   |  |   | 14,510  | 
|Depreciation and amortization                     |  |       | 3,046   |       |  |       | 11,687  |       |  |              | 125     |   |  |   | 14,858  | 
|Income (loss) before income taxes                 |  |       | 22,869  |       |  |       | 11,479  |       |  |              | (3,737  | ) |  |   | 30,611  | 
|Provision (benefit) for income taxes              |  |       | 8,669   |       |  |       | 4,323   |       |  |              | (1,341  | ) |  |   | 11,651  | 
|Identifiable assets                               |  |       | 407,451 |       |  |       | 221,609 |       |  |              | 135,135 |   |  |   | 764,195 | 
|Capital expenditures                              |  |       | 2,887   |       |  |       | 13,203  |       |  |              | 1,364   |   |  |   | 17,454  | 
|For the Six Months Ended June 30, 2002 (Restated) |  |       |         |       |  |       |         |       |  |              |         |   |  |   |         | 
|Operating income (loss)                           |  | $     | 6,436   |       |  | $     | 10,041  |       |  | $            | (1,774  | ) |  | $ | 14,703  | 
|Interest expense, net                             |  |       | 3,152   |       |  |       | 5,590   |       |  |              | 6,118   |   |  |   | 14,860  | 
|Depreciation and amortization                     |  |       | 2,596   |       |  |       | 10,610  |       |  |              | 51      |   |  |   | 13,257  | 
|Income (loss) before income taxes                 |  |       | 2,919   |       |  |       | 4,451   |       |  |              | (4,422  | ) |  |   | 2,948   | 
|Provision (benefit) for income taxes              |  |       | 7,364   |       |  |       | 1,968   |       |  |              | (1,732  | ) |  |   | 7,600   | 
|Identifiable assets                               |  |       | 347,183 |       |  |       | 210,845 |       |  |              | 140,525 |   |  |   | 698,553 | 
|Capital expenditures                              |  |       | 942     |       |  |       | 8,861   |       |  |              | 390     |   |  |   | 10,193  | 

8



---



##### Table of Contents






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

Cautionary Note Regarding Forward-Looking Statements

This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including, without limitation, statements
containing the words believes, anticipates, expects, estimates,
intends, plans, projection, will continue and words of similar import.
We have based these forward-looking statements on our current expectations and
projections about future events and trends affecting the financial condition of
our business that may prove to be incorrect. These forward-looking statements
relate to future events, our future financial performance, and involve known
and unknown risks, uncertainties and other factors which may cause our actual
results, performance, achievements or industry results to be materially
different from any future results, performance or achievements expressed or
implied by such forward looking statements. You should specifically consider
the various factors identified in this report and in any other documents filed
by us with the SEC that could cause actual results to differ materially from
our forward-looking statements.

All statements other than of historical facts included herein or therein,
including those regarding market trends, our 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 our actual
results or performance to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. Many, but not all of the factors that may impact actual results
are discussed in the Risk Factors section of the Companys Form 10-K for the
year ended December 31, 2002. You should read these Risk Factors carefully.
Such factors include, but are not limited to:



| |  |  | general economic and business conditions, both nationally and in our markets;                                                                                                     
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | interest rate movements;                                                                                                                                                          
|
| |  |  | terrorists acts or adverse reactions to United States anti-terrorism activities;                                                                                                 
|
| |  |  | expectations and estimates concerning future financial performance;                                                                                                               
|
| |  |  | the amounts and timing of payments required under the
Radio Employee Stock Plan and the Cable Performance Share Plan;                                                             
|
| |  |  | acquisition opportunities and our ability to
successfully integrate acquired businesses, properties or other
assets and realize anticipated benefits of such acquisitions;        
|
| |  |  | financing plans and access to adequate capital on
favorable terms;                                                                                                                
|
| |  |  | our ability to service our outstanding indebtedness and
the impact such indebtedness may have on the way we operate our
businesses;                                               
|
| |  |  | the impact of competition from other radio stations,
media forms and communication service providers;                                                                             
|
| |  |  | the impact of existing and future regulations affecting
our businesses, including radio licensing and ownership rules and
cable television regulations;                           
|
| |  |  | changes in generally accepted accounting principles and
standards, as well as SEC rules and regulations;                                                                          
|
| |  |  | the possible non-renewal of cable franchises;                                                                                                                                     
|
| |  |  | increases in programming costs;                                                                                                                                                   
|
| |  |  | the accuracy of anticipated trends in our businesses,
including those discussed in Managements Discussion and
Analysis of Financial Condition and Results of Operations
herein;
|
| |  |  | advances in technology and our ability to adapt to and capitalize on such advances;                                                                                               
|
| |  |  | decreases in our customers advertising and entertainment expenditures; and                                                                                                       
|
| |  |  | other factors over which we may have little or no control.                                                                                                                        

All forward-looking statements attributable to us or to persons acting on
our behalf are expressly qualified in their entirety by this cautionary
statement. Any forward-looking statement speaks only as of the date it was
made, and, except for our ongoing obligations to disclose material information
as required by the federal securities laws, we undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
report might not transpire.

9



---



##### Table of Contents



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 six-month periods ended June 30,
2003 and 2002. Dollars are in millions.

|                           |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |      |   
|-------------------------- | ----------------------------------- | - | ----- | ---- | ----- |  | -------------------------------- | ---- | ----- | - | ---- | ---- |  |  | ----- | ---- | - | - | --- | --- |  |  | ----- | ---- | - | - | ---- | ---- | - |  | ----- | ---- | --
|                           |                                     |   |       |      |       |  | Three months ended June 30, 2003 |      |       |   |      |      |  |  |      
|                           |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |      
|                           |                                     |   | Radio |      | Cable |  | Internet and Other               |      | Total
|                           |                                     |   |       |      |       |  |                                  |      |      
|Revenues                   |                                     | $ | 62.6  |      |       |  | 100.0                            | %    |       | $ | 34.0 |      |  |  | 100.0 | %    |   | $ | 2.5 |     |  |  | 100.0 | %    |   | $ | 99.1 |      |   |  | 100.0 | %   
|Operating expenses:        |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |     
|                           | Operating and programming,          |   |       | 21.2 |       |  |                                  | 33.9 | %     |   |      | 15.0 |  |  |       | 44.1 | % |   |     | 1.6 |  |  |       | 64.0 | % |   |      | 37.8 |   |  |       | 38.1 | % 
|                           | Selling                             |   |       | 9.3  |       |  |                                  | 14.9 | %     |   |      | .8   |  |  |       | 2.4  | % |   |     | .4  |  |  |       | 16.0 | % |   |      | 10.5 |   |  |       | 10.6 | % 
|                           | General and administrative          |   |       | 12.4 |       |  |                                  | 19.8 | %     |   |      | 4.2  |  |  |       | 12.3 | % |   |     | .2  |  |  |       | 8.0  | % |   |      | 16.8 |   |  |       | 17.0 | % 
|                           | Depreciation and amortization       |   |       | 1.4  |       |  |                                  | 2.2  | %     |   |      | 5.5  |  |  |       | 16.2 | % |   |     |    |  |  |       |     | % |   |      | 6.9  |   |  |       | 7.0  | % 
|                           |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |     
|Total operating expenses   |                                     |   | 44.3  |      |       |  | 70.8                             | %    |       |   | 25.5 |      |  |  | 75.0  | %    |   |   | 2.2 |     |  |  | 88.0  | %    |   |   | 72.0 |      |   |  | 72.7  | %   
|                           |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |     
|Operating income           |                                     | $ | 18.3  |      |       |  | 29.2                             | %    |       | $ | 8.5  |      |  |  | 25.0  | %    |   | $ | .3  |     |  |  | 12.0  | %    |   |   | 27.1 |      |   |  | 27.3  | %   
|                           |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |     
|Other income (expense)     |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |     
|                           | Interest expense                    |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   | (8.0 | )    |   |  | (8.1  | )%  
|                           | Interest income from loan to parent |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      | 1.7  |   |  |       | 1.7  | % 
|                           | Other expense                       |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      | (.3  | ) |  |       | (0.3 | )%
|Provision for income taxes |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   | (7.9 | )    |   |  | (7.9  | )%  
|Minority interests         |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   | (3.1 | )    |   |  | (3.1  | )%  
|                           |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |     
|Net income                 |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   | $ | 9.5  |      |   |  | 9.6   | %   
|                           |                                     |   |       |      |       |  |                                  |      |       |   |      |      |  |  |       |      |   |   |     |     |  |  |       |      |   |   |      |      |   |  |       |     

|                           |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |      |   
|-------------------------- | ----------------------------------- | - | ----- | ---- | ----- |  | ------------------ | ---- | ----- | - | ------------------------------------------- | ---- |  |  | ----- | ---- | - | - | ---- | --- |  |  | ----- | ---- | - | - | ---- | ---- | - |  | ----- | ---- | --
|                           |                                     |   |       |      |       |  |                    |      |       |   | Three months ended June 30, 2002 (Restated) |      |  |  |       |      |   |   |     
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |     
|                           |                                     |   | Radio |      | Cable |  | Internet and Other |      | Total
|                           |                                     |   |       |      |       |  |                    |      |      
|Revenues                   |                                     | $ | 57.1  |      |       |  | 100.0              | %    |       | $ | 31.3                                        |      |  |  | 100.0 | %    |   | $ | 2.2  |     |  |  | 100.0 | %    |   | $ | 90.6 |      |   |  | 100.0 | %   
|Operating expenses:        |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |     
|                           | Operating and programming,          |   |       | 18.4 |       |  |                    | 32.2 | %     |   |                                             | 13.9 |  |  |       | 44.4 | % |   |      | 1.6 |  |  |       | 72.7 | % |   |      | 33.9 |   |  |       | 37.4 | % 
|                           | Selling                             |   |       | 8.8  |       |  |                    | 15.4 | %     |   |                                             | .9   |  |  |       | 2.9  | % |   |      | .5  |  |  |       | 22.8 | % |   |      | 10.2 |   |  |       | 11.3 | % 
|                           | General and administrative          |   |       | 12.0 |       |  |                    | 21.0 | %     |   |                                             | 6.6  |  |  |       | 21.1 | % |   |      | 2.0 |  |  |       | 90.9 | % |   |      | 20.6 |   |  |       | 22.7 | % 
|                           | Radio Employee Stock Plan           |   |       | 17.1 |       |  |                    | 30.0 | %     |   |                                             |     |  |  |       |     |   |   |      |    |  |  |       |     |   |   |      | 17.1 |   |  |       | 18.9 | % 
|                           | Depreciation and amortization       |   |       | 1.3  |       |  |                    | 2.3  | %     |   |                                             | 5.6  |  |  |       | 17.9 | % |   |      |    |  |  |       |     |   |   |      | 6.9  |   |  |       | 7.6  | % 
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |     
|Total operating expenses   |                                     |   | 57.6  |      |       |  | 100.9              | %    |       |   | 27.0                                        |      |  |  | 86.3  | %    |   |   | 4.1  |     |  |  | 186.4 | %    |   |   | 88.7 |      |   |  | 97.9  | %   
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |     
|Operating income (loss)    |                                     | $ | (.5   | )    |       |  | (0.9               | )%   |       | $ | 4.3                                         |      |  |  | 13.7  | %    |   | $ | (1.9 | )   |  |  | (86.4 | )%   |   |   | 1.9  |      |   |  | 2.1   | %   
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |     
|Other income (expense)     |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |     
|                           | Interest expense                    |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      | (7.6 | ) |  |       | (8.4 | )%
|                           | Interest income from loan to parent |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      | 1.8  |   |  |       | 2.0  | % 
|                           | Other expense                       |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      | (.2  | ) |  |       | (0.2 | )%
|Provision for income taxes |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   | (4.9 | )    |   |  | (5.4  | )%  
|Minority interests         |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   | (.9  | )    |   |  | (1.0  | )%  
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |     
|Net loss                   |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   | $ | (9.9 | )    |   |  | (10.9 | )%  
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                             |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |      |      |   |  |       |     

10



---



##### Table of Contents



|                           |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |      |   
|-------------------------- | ----------------------------------- | - | ----- | ---- | ----- |  | ------------------ | ---- | ----- | - | ------------------------------ | ---- |  |  | ----- | ---- | - | - | ---- | --- |  |  | ----- | ---- | - | - | ----- | ----- | - |  | ----- | ---- | --
|                           |                                     |   |       |      |       |  |                    |      |       |   | Six months ended June 30, 2003 |      |  |  |       |      |   |   |      |     |  |  |      
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |      
|                           |                                     |   | Radio |      | Cable |  | Internet and Other |      | Total
|                           |                                     |   |       |      |       |  |                    |      |      
|Revenues                   |                                     | $ | 107.5 |      |       |  | 100.0              | %    |       | $ | 67.0                           |      |  |  | 100.0 | %    |   | $ | 5.1  |     |  |  | 100.0 | %    |   | $ | 179.6 |       |   |  | 100.0 | %   
|Operating expenses:        |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|                           | Operating and programming,          |   |       | 36.6 |       |  |                    | 34.0 | %     |   |                                | 29.1 |  |  |       | 43.4 | % |   |      | 3.1 |  |  |       | 60.8 | % |   |       | 68.8  |   |  |       | 38.3 | % 
|                           | Selling                             |   |       | 17.5 |       |  |                    | 16.3 | %     |   |                                | 1.4  |  |  |       | 2.1  | % |   |      | .8  |  |  |       | 15.7 | % |   |       | 19.7  |   |  |       | 11.0 | % 
|                           | General and administrative          |   |       | 24.1 |       |  |                    | 22.4 | %     |   |                                | 8.4  |  |  |       | 12.5 | % |   |      | 1.5 |  |  |       | 29.4 | % |   |       | 34.0  |   |  |       | 18.9 | % 
|                           | Depreciation and amortization       |   |       | 3.0  |       |  |                    | 2.8  | %     |   |                                | 11.7 |  |  |       | 17.5 | % |   |      | .2  |  |  |       | 3.9  | % |   |       | 14.9  |   |  |       | 8.3  | % 
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Total operating expenses   |                                     |   | 81.2  |      |       |  | 75.5               | %    |       |   | 50.6                           |      |  |  | 75.5  | %    |   |   | 5.6  |     |  |  | 109.8 | %    |   |   | 137.4 |       |   |  | 76.5  | %   
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Operating income (loss)    |                                     | $ | 26.3  |      |       |  | 24.5               | %    |       | $ | 16.4                           |      |  |  | 24.5  | %    |   | $ | (0.5 | )   |  |  | (9.8  | )%   |   |   | 42.2  |       |   |  | 23.5  | %   
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Other income (expense)     |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|                           | Interest expense                    |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       | (14.5 | ) |  |       | (8.1 | )%
|                           | Interest income from loan to parent |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       | 3.4   |   |  |       | 1.9  | % 
|                           | Other expense                       |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       | (.6   | ) |  |       | (0.3 | )%
|Provision for income taxes |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   | (11.6 | )     |   |  | (6.5  | )%  
|Minority interests         |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   | (4.0  | )     |   |  | (2.2  | )%  
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Net income                 |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   | $ | 14.9  |       |   |  | 8.3   | %   
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     

|                           |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |      |   
|-------------------------- | ----------------------------------- | - | ----- | ---- | ----- |  | ------------------ | ---- | ----- | - | ----------------------------------------- | ---- |  |  | ----- | ---- | - | - | ---- | --- |  |  | ----- | ---- | - | - | ----- | ----- | - |  | ----- | ---- | --
|                           |                                     |   |       |      |       |  |                    |      |       |   | Six months ended June 30, 2002 (Restated) |      |  |  |       |      |   |   |     
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |     
|                           |                                     |   | Radio |      | Cable |  | Internet and Other |      | Total
|                           |                                     |   |       |      |       |  |                    |      |      
|Revenues                   |                                     | $ | 97.9  |      |       |  | 100.0              | %    |       | $ | 59.5                                      |      |  |  | 100.0 | %    |   | $ | 4.9  |     |  |  | 100.0 | %    |   | $ | 162.3 |       |   |  | 100.0 | %   
|Operating expenses:        |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|                           | Operating and programming,          |   |       | 32.3 |       |  |                    | 33.0 | %     |   |                                           | 27.0 |  |  |       | 45.4 | % |   |      | 3.3 |  |  |       | 67.4 | % |   |       | 62.6  |   |  |       | 38.6 | % 
|                           | Selling                             |   |       | 16.7 |       |  |                    | 17.1 | %     |   |                                           | 1.6  |  |  |       | 2.7  | % |   |      | .9  |  |  |       | 18.4 | % |   |       | 19.2  |   |  |       | 11.8 | % 
|                           | General and administrative          |   |       | 22.7 |       |  |                    | 23.2 | %     |   |                                           | 10.2 |  |  |       | 17.1 | % |   |      | 2.5 |  |  |       | 51.0 | % |   |       | 35.4  |   |  |       | 21.8 | % 
|                           | Radio Employee Stock Plan           |   |       | 17.1 |       |  |                    | 17.5 | %     |   |                                           |     |  |  |       |     |   |   |      |    |  |  |       |     |   |   |       | 17.1  |   |  |       | 10.5 | % 
|                           | Depreciation and amortization       |   |       | 2.6  |       |  |                    | 2.6  | %     |   |                                           | 10.6 |  |  |       | 17.8 | % |   |      | .1  |  |  |       | 2.0  | % |   |       | 13.3  |   |  |       | 8.2  | % 
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Total operating expenses   |                                     |   | 91.4  |      |       |  | 93.4               | %    |       |   | 49.4                                      |      |  |  | 83.0  | %    |   |   | 6.8  |     |  |  | 138.8 | %    |   |   | 147.6 |       |   |  | 90.9  | %   
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Operating income (loss)    |                                     | $ | 6.5   |      |       |  | 6.6                | %    |       | $ | 10.1                                      |      |  |  | 17.0  | %    |   | $ | (1.9 | )   |  |  | (38.8 | )%   |   |   | 14.7  |       |   |  | 9.1   | %   
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Other income (expense)     |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|                           | Interest expense                    |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       | (14.9 | ) |  |       | (9.2 | )%
|                           | Interest income from loan to parent |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       | 3.5   |   |  |       | 2.2  | % 
|                           | Other expense                       |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       | (.4   | ) |  |       | (0.3 | )%
|Provision for income taxes |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   | (7.6  | )     |   |  | (4.7  | )%  
|Minority interests         |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   | (1.6  | )     |   |  | (1.0  | )%  
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     
|Net loss                   |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   | $ | (6.3  | )     |   |  | (3.9  | )%  
|                           |                                     |   |       |      |       |  |                    |      |       |   |                                           |      |  |  |       |      |   |   |      |     |  |  |       |      |   |   |       |       |   |  |       |     

In certain places in Managements Discussion and Analysis, the 2002 impact
of the Radio Employee Stock Plan and Cable Performance Share Plan revaluations
has been excluded. The Companys management uses measurements excluding the
revaluations to evaluate the operations of the Company and to more accurately
reflect comparative periods. Management believes this presentation is
appropriate and enables investors to compare more accurately the companys
ongoing financial performance over the periods presented. Reconciling amounts
to GAAP measurements are contained in Managements Discussion and Analysis.

11



---



##### Table of Contents



Three Months Ended June 30, 2003 Compared to the Three Months Ended June 30, 2002

Revenues. Consolidated revenues increased $8.5 million or 9% from
2002 to 2003. Radio revenues increased $5.5 million or 10% from 2002 to
2003. Radios revenue growth was primarily in the Dallas, San Francisco
and Cincinnati markets. Results on a same stations basis excludes WHMA-AM
(Anniston) divested in June 2002 and WYGY-FM (Cincinnati) acquired in
August 2002. Same stations revenues were $61.7 million, an increase of $4.6
million or 8% over last year. Cable revenues increased $2.7 million or 9%
from 2002 to 2003. Cables revenue growth was the result of increasing
penetration of cable modem and digital services and basic service rate
increases implemented in the first quarter of 2003. Internet and Other
revenues, from Internet access and web design activities, increased $0.3
million or 14% from 2002 to 2003.

Operating and programming expenses.Operating and programming
expenses increased $3.9 million or 12% from 2002 to 2003. Radio operating
and programming expenses increased $2.8 million or 15% from 2002 to 2003.
Increased Radio operating and programming expenses are primarily due to
revenue growth, the acquisition of WYGYFM and increased promotional
expenses in certain markets. Cable operating and programming expenses
increased $1.1 million or 8% from 2002 to 2003 with the increased revenues.
However, Cable operating and programming expenses increased at a lesser
rate than revenues due to growth in cable modem and digital services that
have lower related operating costs.

General and administrative expenses.General and administrative
expenses decreased $3.8 million or 18% from 2002 to 2003. Approximately
$4.1 million of compensation expense was recognized in second quarter 2002
related to the Cable Performance Share Plan ($2.6 million in the Cable
segment and $1.5 million in the Internet and Other segment). In April
2003, an approximately $0.4 million expense reduction was recognized for a
share value decrease in the Cable Performance Share Plan.

Radio Employee Stock Plan.Non-cash compensation expense of $17.1
million was recognized in second quarter 2002 for the final year of
changing the valuation of the Radio Employee Stock Plan from a formula
value to fair value as determined by the annual ESOP valuation. The April
2003 change in share value was recognized as a component of minority
interests expense.

Operating income. Operating income increased $25.2 million from 2002
to 2003. Excluding the 2002 effects of revaluations for the Radio Employee
Stock Plan and the Cable Performance Share Plan, operating income increased
$4.0 million or 17% from 2002 to 2003. Radio operating income for the
three months was $18.3 million, an $18.8 million increase from second
quarter 2002. Excluding the $17.1 million non-cash compensation charges in
2002 for the Radio Employee Stock Plan, Radio operating income increased
$1.7 million or 10% from 2002 to 2003. Same stations operating income was
$18.4 million, a $1.8 million or 11% increase from 2002, excluding the
charges related to the Radio Employee Stock Plan. Cable operating income
for the second quarter was $8.5 million, a $4.2 million increase over the
second quarter of 2002. Excluding compensation charges related to the
Cable Performance Share Plan, Cables operating income increased $1.6
million or 23% from 2002 to 2003. Growth in revenues from cable modem and
digital services were largely responsible for the increase in Cable
operating income. Internet and Others $0.3 million operating income for
the three months was an increase of $2.2 million from second quarter 2002.
The change in Internet and Others operating income was primarily due to
the recognition of $1.5 million of compensation expense related to the
Cable Performance Share Plan in second quarter 2002.

Interest expense. Interest expense increased $0.4 million or 5% from 2002
to 2003. The issuance of $150.0 million of 7.375% Senior Subordinated Notes
increased the Companys effective interest rate and was largely responsible for
the increased interest expense.

Net income.Increased operating income resulted in a $19.4 million
improvement in net income from a $9.9 million net loss in 2002 to a $9.5
million net income in 2003. Income tax rates for 2003 and 2002 were
comparable after excluding the impact of non-deductible compensation
charges for the Radio Stock Plan.

12



---



##### Table of Contents



Six Months Ended June 30, 2003 Compared to the Six Months Ended June 30, 2002

Revenues. Consolidated revenues increased $17.3 million or 11% from
2002 to 2003. Radios revenue growth was concentrated in the Dallas and
Cincinnati markets. Radio revenues increased $9.6 million or 10% from
2002 to 2003. Results on a same stations basis exclude WHMA-AM (Anniston)
divested in June 2002 and WYGY-FM (Cincinnati) acquired in August 2002.
Same stations revenues were $106.0 million, an increase of $8.1 million or
8% over last year. Cable revenues increased $7.5 million or 13% from 2002
to 2003. Results on a same systems basis excluded the Lawrenceburg,
Indiana cable system acquired in April 2002. Same systems revenues were
$64.0 million, an increase of $5.8 million or 10% from 2002 to 2003.
Cables revenue growth came from increasing penetration of cable modem and
digital services, and basic service rate increases implemented during first
quarter 2003. Internet and Other revenues, from Internet access and web
design activities, increased $0.2 million or 4% from 2002 to 2003.

Operating and programming expenses.Operating and programming
expenses increased $6.2 million or 10%, increasing ratably with revenues
from 2002 to 2003.

General and administrative expenses.General and administrative
expenses decreased $1.4 million or 4% from 2002 to 2003. Approximately
$4.1 million of compensation expense was recognized in second quarter 2002
($2.6 million in the Cable segment and $1.5 million in the Internet and
Other segment) related to the Cable Performance Share Plan. Excluding 2002
compensation expense related to the Cable Performance Share Plan, general
and administrative expenses increased ratably with revenues.

Radio Employee Stock Plan.Non-cash compensation expense of $17.1
million was recognized in second quarter 2002 for the final step of
changing the valuation of the Radio Employee Stock Plan from a formula
value to fair value as determined by the Parents annual ESOP valuation.
The change in Plan stock price for 2003 was recognized as a component of
minority interests.

Operating income.Operating income increased $27.5 million or 187% from
2002 to 2003. Excluding the charges for revaluation of the Radio Employee
Stock Plan and the Cable Performance Share Plan, operating income increased
$6.3 million or 18% from 2002 to 2003. Radio operating income for the six
months was $26.3 million, a $19.8 million increase from the same period in
2002. After excluding the 2002 non-cash compensation charges for the Radio
Stock Plan, Radio operating income increased $2.7 million or 11% between 2002
and 2003. Same stations operating income was $26.6 million, a $3.0 million or
13% increase from 2002, excluding the charges related to the Radio Stock Plan.
Cable operating income for the six months was $16.4 million, a $6.3 million
increase over 2002. Excluding compensation charges related to the Cable
Performance Share Plan, Cables operating income increased $3.7 million or 29%
from 2002 to 2003. Higher Cable revenues from cable modem and digital services
were largely responsible for the increase in Cable operating income. Internet
and Others $0.5 million operating loss for 2003 was an improvement over the
$1.9 million operating loss for 2002. The change in Internet and Others
operating loss was primarily due to a $1.5 million compensation expense related
to the Cable Performance Share Plan in second quarter 2002.

Interest expense. Interest expense decreased $0.4 million or 3% from 2002
to 2003. Reduced interest expense was due to the lower effective interest
rates prior to the issue of the $150.0 million of Senior Subordinated Notes at
7.375% in April 2003.

Net income.Net income increased $21.2 million or 338% from 2002 to 2003.
Increased net income resulted from increased operating income. Income tax
rates for both years were comparable after eliminating the effect of the Radio
Employee Stock Plan. Minority interests expense increased due to improved
operating income and increased Radio Employee Stock Plan share values.

Liquidity and Capital Resources

The Companys primary sources of liquidity are cash flow from
operations, borrowings under its senior credit facilities and other
borrowings. The Company may, from time to time, access the capital markets, as conditions permit, with debt or equity financings. Future needs for
liquidity arise primarily from capital expenditures, potential acquisitions
of radio stations and cable systems, potential repurchases of subsidiary
common stock, and interest payable on outstanding indebtedness and its
senior credit facilities.

13



---



##### Table of Contents



Net cash provided by operating activities was $34.0 million for the
six months ended June 30, 2003. The Companys net cash provided by
operating activities was generated by normal operations.

Net cash used by investing activities was $26.9 million for the six
months ended June 30, 2003. Capital expenditures, excluding acquisitions,
were $17.5 million for the six months ended June 30, 2003. Capital
expenditures were used to upgrade and maintain our cable systems and to
acquire and outfit new offices for the Media, Radio and Cable management
groups. The Company expects to make capital expenditures of $16.0 million
during the remainder of 2003, primarily for cable systems upgrades. Media
expects to use existing credit facilities, funds provided by our new
borrowing and operating cash flow to fund the cable systems upgrades.

Net cash used by financing activities was $6.6 million for the six months
ended June 30, 2003. The revolving credit facility, which had $179.7 million
available at June 30, 2003, was decreased by $140.5 million during the six
months ended June 30, 2003. On April 23, 2003, Media issued $150.0 million of
7.375% Senior Subordinated Notes (Notes) due in 2013 at par. Interest is
payable semi-annually, beginning October 15, 2003. The $148.3 million net
proceeds were immediately used to pay down the existing revolving credit
facility. In June 2003, the Notes were exchanged for Senior Subordinated
Exchange Notes with the same terms and maturity that were registered with the
Securities and Exchange Commission. At June 30, 2003, Media had approximately
$170.7 million available for borrowing under its credit facility.

Media repurchased approximately $6.5 million of Class B Radio
nonvoting shares in May 2003 from employees. Existing credit facilities
were utilized to fund the repurchases.  As of June 30, 2003, accrued
employee-related costs included a $6.5 million estimate for shares
that may be tendered for repurchase in April 2004.

The following tables reflect our contractual cash obligations as of June
30, 2003 in the respective periods in which they are due (in thousands).

|                 |  |               |         |      |  |      |        |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|---------------- |  | ------------- | ------- | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---------- | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|Contractual Cash |  | Total Amounts |         |      |  |      |        |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |  
|Obligations      |  | Committed     |         | 2003 |  | 2004 |        | 2005 |  | 2006 |        | 2007 |  | Thereafter
|                 |  |               |         |      |  |      |        |      |  |      |        |      |  |           
|Long-term debt   |  | $             | 522,121 |      |  | $    | 8,516  |      |  | $    | 21,034 |      |  | $          | 21,037 |  |  | $ | 34,240 |  |  | $ | 89,919 |  |  | $ | 347,375 | 
|Broadcast rights |  |               | 20,742  |      |  |      | 5,592  |      |  |      | 8,900  |      |  |            | 3,050  |  |  |   | 3,200  |  |  |   |       |  |  |   |        | 
|Operating leases |  |               | 34,027  |      |  |      | 2,392  |      |  |      | 4,826  |      |  |            | 4,723  |  |  |   | 4,605  |  |  |   | 3,748  |  |  |   | 13,733  | 
|                 |  |               |         |      |  |      |        |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Total            |  | $             | 576,890 |      |  | $    | 16,500 |      |  | $    | 34,760 |      |  | $          | 28,810 |  |  | $ | 42,045 |  |  | $ | 93,667 |  |  | $ | 361,108 | 
|                 |  |               |         |      |  |      |        |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |         | 

Media believes that funds generated from operations, our new borrowing and
the borrowing availability under our senior credit facility will be sufficient
to finance its current operations, its debt service obligations, and its
planned capital expenditures. From time to time, Media evaluates potential
acquisitions of radio stations and cable television systems. In connection
with future acquisition opportunities, Media 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, Media has no current commitments
or agreements with respect to any material acquisitions.

Media was in compliance with its loan covenants, as each is defined under
the credit facility, as of June 30, 2003. A summary of the most restrictive
covenants, along with the corresponding actual value for these covenants
follows:

|                                                               |  |          |      |              |  |  |      | 
|-------------------------------------------------------------- |  | -------- | ---- | ------------ |  |  | ---- | 
|Covenant Test                                                  |  | Covenant |      | Actual Value
|Fixed charge coverage ratio must be at least 1.05              |  |          | 1.05 |              |  |  | 1.55 | 
|Maximum consolidated senior leverage ratio may not exceed 4.00 |  |          | 4.00 |              |  |  | 1.73 | 
|Debt service coverage ratio must be at least 1.20              |  |          | 1.20 |              |  |  | 2.58 | 




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 through June
30, 2003, there have been no material developments affecting market risk since
the filing of Medias December 31, 2002 Annual Report on Form 10-K filed with
the SEC. On April 23, 2003, Media issued $150.0 million of 7.375% Senior
Subordinated Notes at par.

14



---



##### Table of Contents






ITEM 4. CONTROLS AND PROCEDURES

Pursuant to Rule 15d-15(b) under the Securities Exchange Act of 1934,
Media carried out an evaluation, with the participation of Medias management,
including Medias Chairman, Chief Executive Officer, and Chief Financial
Officer, of the effectiveness of Medias disclosure controls and procedures (as
defined under Rule 15d-15(e) under the Securities Exchange Act of 1934) as of
the end of the period covered by this report. Based upon that evaluation,
Medias Chairman, Chief Executive Officer, and Chief Financial Officer
concluded that Medias disclosure controls and procedures are effective in
timely alerting them to material information relating to Media (including its
consolidated subsidiaries) required to be included in Medias periodic SEC
filings. There has been
no change in Medias internal control over financial reporting during the
quarter ended June 30, 2003 that has materially affected, or is reasonably
likely to materially affect, Medias internal control over financial
reporting.




PART II  OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits Filed Herewith:

|     |  |                                                                                              
|---- |  | ---------------------------------------------------------------------------------------------
|31.1 |  | Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002 by Peter P. Brubaker.
|31.2 |  | Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002 by John L. Finlayson.
|32.1 |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Peter P. Brubaker.
|32.2 |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John L. Finlayson.

(b) Reports on Form 8-K

|      |  |                                                                                                                                                                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)   |  | On April 3, 2003, the Company filed a Form 8-K under Item 9,
Regulation FD Disclosure, and Item 12, Results of Operations and
Financial Condition, providing notification of a conference call to
discuss fourth quarter 2002 results and to report selected operating
results.
|(ii)  |  | The Company filed a Form 8-K on April 9, 2003 under Item 7,
Financial Statements and Exhibits, to provide amendments to the
Companys credit facilities.                                                                                                                       
|(iii) |  | The Company filed a Form 8-K on April 28, 2003 under Item 5, Other
Events, to report its sale of $150 million Senior Subordinated Notes.                                                                                                                                       
|(iv)  |  | The Company filed a Form 8-K on May 13, 2003 under Item 9,
Regulation FD Disclosure, and Item 12, Results of Operations and
Financial Condition, providing notification of a conference call to
discuss first quarter 2003 results and to report selected operating
results.   

15



---



##### Table of Contents






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.

|                |  |                       |  |                                                                
|--------------- |  | --------------------- |  | ---------------------------------------------------------------
|August 12, 2003 |  | SUSQUEHANNA MEDIA CO.
|                |  |                       |  |                                                                
|                |  | By:                   |  | /s/ John L. Finlayson

John L. Finlayson
Vice President and CFO

16