CCA ACQUISITION CORP, S-4/A, 1997-07-09

CCA ACQUISITION CORP
S-4/A, 1997-07-09

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1997

REGISTRATION NO. 333-26853
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

AMENDMENT NO. 1

TO
FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------
CCA HOLDINGS CORP.
CCA ACQUISITION CORP.
CENCOM CABLE ENTERTAINMENT, INC.
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
(Exact Name of Registrants, as Specified in Their Charters)

<TABLE>
<S> <C>
DELAWARE 4841 43-1720013
DELAWARE 4841 43-1696238
DELAWARE 4841 43-1258015
DELAWARE 4841 43-1723475
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Identification Number)
of Incorporation or Classification Code
Organization) Number)
</TABLE>

12444 POWERSCOURT DRIVE, SUITE 400
ST. LOUIS, MISSOURI 63131
(314) 965-0555
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrants' Principal Executive Offices)

----------------
MARCY LIFTON, ESQ. COPIES TO:
CHARTER COMMUNICATIONS, INC. JOEL M. SIMON, ESQ.
12444 POWERSCOURT DRIVE, SUITE 400 PAUL, HASTINGS, JANOFSKY & WALKER
ST. LOUIS, MISSOURI 63131 LLP
(314) 965-0555 399 PARK AVENUE
(Name, Address, Including Zip Code, NEW YORK, NEW YORK 10022
and Telephone Number, (212) 318-6000
Including Area Code, of Agent For
Service)

----------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]

CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Subordinated Notes
due 1999(4).............. $82,000,000 100% $82,000,000 $24,848
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee.
(2) Exclusive of accrued interest.

(3) Previously paid.

(4) Issued by CCA Holdings Corp. and guaranteed by CCA Acquisition Corp.,
Cencom Cable Entertainment, Inc. and Charter Communications Entertainment,
L.P.

The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

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- -------------------------------------------------------------------------------
<PAGE>

CCA HOLDINGS CORP.
CCA ACQUISITION CORP.
CENCOM CABLE ENTERTAINMENT, INC.
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

CROSS-REFERENCE SHEET

PURSUANT TO ITEM 501(B) OF REGULATION S-K AND RULE 404(A)
SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS IN S-4

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND HEADING PROSPECTUS CAPTION
- --------------------------------------- ------------------
<S> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of Forepart of the Registration
Prospectus........................ Statement; Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus............... Inside Front and Outside Back Cover
Pages of Prospectus
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Summary; Risk Factors; Unaudited
Information....................... Summary Historical and Unaudited Pro
Forma Financial Data of CCA and
Subsidiaries; Unaudited Pro Forma
Financial Statements
4. Terms of the Transaction........... Summary; The Exchange Offer
5. Pro Forma Financial Information.... Unaudited Summary Historical and
Unaudited Pro Forma Financial Data of
CCA and Subsidiaries; Unaudited Pro
Forma Financial Statements;
Supplemental Selected Historical
Combined Financial Data
6. Material Contracts with Company
Being Acquired...................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters......... Not Applicable
8. Interests of Named Experts and
Counsel............................. Not Applicable
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities................... Not Applicable
10. Information With Respect to S-3
Registrants......................... Not Applicable
11. Incorporation of Certain
Information by Reference............ Not Applicable
12. Information with Respect to S-2 or
S-3 Registrants..................... Not Applicable
13. Incorporation of Certain
Information by Reference............ Not Applicable
14. Information with Respect to
Registrants Other than Prospectus Summary; Supplemental
S-2 or S-3 Registrants............ Selected Historical Combined Financial
Data; Unaudited Pro Forma Financial
Statements; Management's Discussion
and Analysis of Financial Condition
and Results of Operations; Business
15. Information with Respect to S-3
Companies........................... Not Applicable
16. Information with Respect to S-2 or
S-3 Companies....................... Not Applicable
17. Information with Respect to
Companies Other than S-2 or S-3
Companies......................... Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be
Solicited......................... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Management; Certain Relationships and
Solicited or in an Exchange Related Transactions; The Exchange
Offer............................. Offer
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 8, 1997

CCA HOLDINGS CORP. [LOGO] CHARTER
CCA ACQUISITION CORP. COMMUNICATIONS
CENCOM CABLE ENTERTAINMENT, INC.
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

OFFER TO EXCHANGE
SERIES B SENIOR SUBORDINATED NOTES DUE 1999
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
SERIES A SENIOR SUBORDINATED NOTES DUE 1999

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK TIME, ON , 1997,
UNLESS EXTENDED (THE "EXPIRATION DATE").

CCA Holdings Corp., a Delaware corporation (the "Issuer" or "CCA"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal, as the same may be
amended or supplemented from time to time (which together constitute the
"Exchange Offer"), to issue an aggregate of up to $82,000,000 principal amount
of Series B Senior Subordinated Notes due 1999 (the "New Notes") in exchange
for an identical face amount of outstanding Series A Senior Subordinated Notes
due 1999 (the "Old Notes" and, with the New Notes, the "Notes"). Senior
Subordinated Notes due 1999 of the Issuer ("Original Notes") were issued by the
Issuer to HC Crown Corp. ("HC Crown"), an affiliate of Hallmark Cards,
Incorporated, in connection with the Crown Transaction (as defined below) in
reliance on Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"). Subsequently, the Original Notes were converted into the Old
Notes and the Old Notes were resold through a placement agent to certain
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), including an affiliate of HC Crown, in reliance on Rule 144A under the
Securities Act. See "Prospectus Summary--The Crown Transaction, Issuance of the
Notes and the Subordination Agreement." The terms of the New Notes are
identical in all material respects to the terms of the Old Notes except that
the registration and other rights relating to the exchange of Old Notes for New
Notes and the restrictions on transfer set forth on the face of the Old Notes
will not appear on the New Notes. See "The Exchange Offer." The New Notes are
being offered hereunder in order to satisfy certain obligations of the Issuer
under a letter agreement dated as of November 15, 1996 (the "Letter
Agreement"). Based on an interpretation by the staff of the Securities and
Exchange Commission (the "Commission") set forth in Exxon Capital Holdings
Corp., SEC No-Action Letter (April 13, 1989), Morgan Stanley & Co. Inc., SEC
No-Action Letter (June 5, 1991) and Shearman & Sterling, SEC No-Action Letter
(July 2, 1993), New Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold, and otherwise transferred by a
holder thereof (other than a holder which is an "affiliate" of the Issuer or
any of the Guarantors (as defined below) within the meaning of Rule 405 under
the Securities Act, without compliance with the registration and (except as
provided below) the prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business and such holder has no arrangement with any person to
participate in or is engaged in or is planning to be engaged in the
distribution of such New Notes. See "Prospectus Summary--The Exchange Offer."

The Notes are unsecured obligations of the Issuer and are subordinated in
right and priority of payment to all existing and future indebtedness of the
Issuer, other than indebtedness that by its terms is expressly subordinated to
the Notes. The obligations on the Notes are guaranteed (the "Guarantees") as
set forth herein on a subordinated basis by two subsidiaries ("CAC" and "Cencom
Cable") of the Issuer and by a limited partnership ("CCE, L.P.") in which the
Issuer owns indirect limited and general partnership interests (collectively,
the "Guarantors"). The Issuer and the Guarantors are holding companies that
currently conduct substantially all their business through two limited
partnerships ("CCE-I" and "CCE-II"); the Issuer and one of the Guarantors
control CCE-I (and neither the Issuer nor any of the Guarantors controls CCE-
II). Because the Issuer and the Guarantors currently do not have any other
assets which generate revenue or distributions, the Issuer and the Guarantors
are dependent primarily upon distributions from CCE-I and its subsidiaries to
service the Notes and the Guarantees. The receipt of such distributions by the
Issuer are governed by the terms of the CCE, L.P. Partnership Agreement (as
defined herein). See "CCE, L.P. Transaction--The Partnership Agreements." The
Notes, except under certain limited circumstances, will not have the benefit of
distributions from CCE-II or any other affiliates of the Issuer or the
Guarantors. The Guarantees, by their terms, are limited to the proceeds of
distributions received by the Guarantors from CCE-I. The CCE, L.P. Guarantee
cannot be enforced until the repayment in full and termination of the CCE-I
Credit Facility and the CCE-II Credit Facility (as defined herein), and any
other senior indebtedness of CCE-II and senior indebtedness of New CCE
Subsidiaries (as defined herein). The Guarantees issued by CAC and Cencom Cable
cannot be enforced until the repayment in full and termination of the CCE-I
Credit Facility (as defined herein). As of March 31, 1997, the Issuer's and the
Guarantors' only indebtedness other than the Notes was approximately $55.5
million of deferred income

(Continued on following page)

SEE "RISK FACTORS" BEGINNING ON PAGE 24 FOR A DESCRIPTION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER.
----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is July __, 1997.
<PAGE>

(Continued from previous page)

taxes and $0.5 million of current liabilities. As of March 31, 1997, the
aggregate indebtedness of CCE-I (including current liabilities of
approximately $30.9 million and other long-term liabilities of approximately
$2.8 million) was approximately $489.5 million. Except for certain fees and
expenses payable or which may become payable by the Company (as defined
herein) on an ongoing basis as described herein, the Company will not make any
distributions or advances, by dividend or otherwise, to any of its
shareholders before the Notes are repaid in full. See "Prospectus Summary--The
Company," and "--Organizational Structure."

Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Old Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Issuer has agreed that, for a period of 180 days after the
effective date hereof, it will make the Prospectus available to any broker-
dealer for use in connection with any such resale. See "The Exchange Offer."

The Issuer will not receive any proceeds from the Exchange Offer. HC Crown
will pay all the expenses incident to the Exchange Offer. Tenders of Old Notes
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. If the Issuer terminates the Exchange Offer and does not
accept for exchange any Old Notes, it will promptly return the Old Notes to
the holders thereof. See "The Exchange Offer."

Prior to this Exchange Offer, there has been no public market for the Old
Notes or the New Notes. To the extent that Old Notes are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Notes could
be adversely affected. If a market for the New Notes should develop, the New
Notes could trade at a discount from their principal amount. The Issuer does
not currently intend to list the New Notes on any securities exchange or to
seek approval for quotation through any automated quotation system; however,
the Notes have been designated for trading in the PORTAL market. There can be
no assurance that an active public market for the New Notes will develop. Any
person participating in the Exchange Offer who does not acquire the Old Notes
in the ordinary course of business (i) cannot rely on the no-action letters
referred to above, (ii) cannot tender its Old Notes in the Exchange Offer and
(iii) must comply with the registration and prospectus delivery requirements
of the Securities Act before selling its Old Notes.

The Exchange Agent for the Exchange Offer is Harris Trust and Savings Bank.
<PAGE>

STATEMENT OF AVAILABLE INFORMATION

The Issuer and the Guarantors have filed with the Commission a Registration
Statement on Form S-4 with respect to the New Notes being offered hereby
(including all exhibits and amendments thereto, the "Registration Statement").
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement and
the exhibits and schedules thereto, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission. For further
information with respect to the Issuer and the Guarantors and the securities
offered hereby, reference is made to the Registration Statement and to the
exhibits filed therewith. Statements made in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete and, where applicable reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement is qualified by such reference.

As a result of the filing of the Registration Statement, the Company will
become subject to the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith will be required to file reports and other information with the
Commission. Such reports, the Registration Statement and other information may
be inspected and copied, at prescribed rates, at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at the regional offices of the
Commission located at Seven World Trade Center, New York, New York 10048, and
at 500 West Madison Street, Suite 1400 Northwestern Atrium Center, Chicago,
Illinois 60611. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy statements and other
information regarding registrants, such as the Company, that file
electronically with the Commission. Copies of such material may also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.

The duty to file reports and other information with the Commission will be
automatically suspended as to any fiscal year, after the fiscal year ended
December 31, 1997, during which the Notes are held of record by fewer than 300
persons. In the event the Company is not subject to the reporting requirements
of the Exchange Act at any time following the consummation of the Exchange
Offer, the Company will be required under the Indenture, dated as of February
13, 1997 (the "Indenture"), among the Issuer, the Guarantors and Harris Trust
and Savings Bank, as trustee (the "Trustee"), pursuant to which the Old Notes
were, and the New Notes will be, issued, to deliver to the Trustee and each
holder of $1.0 million or more in unpaid principal amount of the Notes the
following information and reports: (a) within 45 days after the last day of
each quarter (other than the fourth quarter) in each fiscal year, the
unaudited consolidated statement of operations and statement of cash flows of
the Issuer for such quarterly period and for the period from the beginning of
the fiscal year to the end of such quarter and the unaudited consolidated
balance sheet of the Issuer as of the end of such quarter period; and (b)
within 90 days after the end of each fiscal year, the consolidated statements
of operations, shareholders' investment and cash flows of the Issuer for such
fiscal year, and the consolidated balance sheet of the Issuer as of the end of
such fiscal year. Certain other information and reports shall also be
delivered to the Trustee and the holders. Such information will be made
available upon request, which should be directed to the Secretary of the
Company at 12444 Powerscourt Drive, Suite 400, St. Louis, Missouri 63131
(telephone number: (314) 965-0555).

1
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. As used in this Prospectus, unless the context
otherwise requires, the term (i) "Issuer" or "CCA" refers to CCA Holdings Corp.
and (ii) "Company" refers collectively to (a) CCA, and (b) CCA's direct and
indirect consolidated and unconsolidated subsidiaries, including CAC, Cencom
Cable, CCE, L.P., CCE-I, CCE-II and CC Radio. The term "CAC" refers to CCA
Acquisition Corp., "Cencom Cable" refers to Cencom Cable Entertainment, Inc.,
"CCE, L.P." refers to Charter Communications Entertainment, L.P., "CCE-I"
refers to Charter Communications Entertainment I, L.P., "CCE-II" refers to
Charter Communications Entertainment II, L.P., "CC Radio" refers to Charter
Communications Radio St. Louis, LLC, and "CASTL" refers to Cable Advertising
St. Louis, L.L.C. CCE-I and CCE-II are collectively referred to herein as the
"Operating Entities." All of the foregoing entities, excluding CCE-II and any
other affiliated entities that are not controlled by the Issuer or the
Guarantors, but including CCE, L.P., are sometimes collectively referred to as
the "CCE-I Entities." See "Business--Background and Ownership Structure." A
glossary of certain other terms appearing herein has been included in this
Prospectus. See "Glossary."

The Notes will be repaid by distributions to the Issuer from CAC, which CAC
shall receive primarily from Cencom Cable, CCE, L.P. and CCE-I. Distributions
made by Cencom Cable and CCE, L.P. will be made primarily from distributions
received from CCE-I. Subject to certain limited exceptions, CCE-I may only make
distributions once the obligations in respect of the senior credit facility of
CCE-I (including any amendments or extensions or renewals of the commitments
thereunder, the "CCE-I Credit Facility") are indefeasibly paid in full in cash
and all commitments to lend in respect thereof are terminated. Although the
CCE-I Credit Facility restricts CCE-I's ability to incur additional
indebtedness, such restriction can be amended by mutual agreement of the
lenders thereto and the obligors thereunder, without the consent of the
holders. The benefit of distributions from CCE-II, if any, will not be
available until the obligations under both the senior credit facility of CCE-II
(including any amendments or extensions or renewals of the commitments
thereunder, the "CCE-II Credit Facility"), the California Note (as defined
herein), and any other indebtedness of CCE-II are indefeasibly paid in full in
cash and all commitments to lend in respect of the CCE-II Credit Facility and
any other indebtedness of CCE-II are terminated. Therefore, the presentation of
information regarding the Company herein focuses on the CCE-I Entities. Holders
of the Notes may ultimately benefit from distributions from CCE-II, but should
not rely on distributions from CCE-II for payment of principal or interest on
the Notes. Subject to certain restrictions, CCE, L.P. may establish new
subsidiaries (the "New CCE Subsidiaries") from time to time, which could have
financing arrangements that result in the sharing with other creditors of
distributions to CCE, L.P. from CCE-II and/or such New CCE Subsidiaries. See
"The Crown Transaction, Issuance of the Notes and Subordination Agreement--The
Partnership Agreements" and "Certain Relationships and Related Transactions--
The Partnership Agreements," "Description of Notes--General" and "Description
of Notes--Partnership Agreements" and "Description of Notes--Certain
Covenants."

2
<PAGE>

THE COMPANY

The Company's principal business is the ownership, operation and development
of cable television systems, which it currently conducts through two principal
operating entities, CCE-I and CCE-II. CCE-I owns, operates and develops cable
television systems in the St. Louis, Missouri metropolitan area including
southwestern Illinois and in certain rural and suburban areas in Connecticut
and Massachusetts ("CCE-I Systems"). As of March 31, 1997, CCE-I's cable
television systems passed approximately 536,300 homes and served approximately
339,500 basic subscribers in western and northeastern Connecticut,
Massachusetts, eastern Missouri and southwestern Illinois. CCE-II owns,
operates and develops cable television systems in metropolitan areas of
southern California ("CCE-II Systems"). As of March 31, 1997, CCE-II's cable
television systems passed approximately 426,600 homes and served approximately
170,200 basic subscribers in southern California. CCE-I's and CCE-II's
operations are managed by Charter Communications, Inc. ("Charter"), a
privately-held owner and manager of cable television systems. As of March 31,
1997, Charter managed cable television systems which serve approximately
1,011,600 basic subscribers (including the Company's subscribers). Assuming
completion of all publicly announced cable television industry transactions,
management believes that Charter would be among the top ten largest multiple
system operators ("MSOs") in the United States based on number of basic
subscribers. The Company seeks to own and operate cable television systems
serving an increased number of basic subscribers in the regions in which its
cable television systems are presently located.

The Issuer commenced operations in January 1995 in connection with
consummation of the Crown Transaction (as defined herein, see "--The Crown
Transaction, Issuance of the Notes and the Subordination Agreement--The Crown
Transaction"), which included the purchase of the Crown Connecticut Systems (as
defined herein) and the acquisition of Cencom Cable, an existing operator of
cable systems in St. Louis. The cable television systems currently comprising
CCE-I's operations were initially acquired pursuant to the Crown Transaction
and as a result of several additional acquisitions completed in 1995 and 1996.
The financial information contained herein with respect to periods prior to
such acquisitions does not reflect any changes in the operation or management
of such systems that CCE-I or the Company have implemented since the date of
acquisition or that they intend to implement in the future; thus, this
financial information is not necessarily indicative of the results of
operations that would have been achieved had the systems been operated by the
Company during all of the periods with respect to which financial information
is presented herein or which may be achieved in the future.

CCE-I owns and operates cable television systems which lie principally within
two regions: northeastern and western Connecticut and central Massachusetts
(the "Northeast Region"); and eastern Missouri and southwestern Illinois (the
"Central Region" and collectively with the Northeast Region, the "Regions").
CCE-II owns and operates cable television systems which lie principally within
southern California.

The Company's cable television systems in the Northeast Region passed
approximately 139,100 homes and served approximately 115,300 basic subscribers
as of March 31, 1997. The Northeast Region is more diverse geographically than
the Central Region, and consists of (i) the Newtown cluster in Connecticut
(which includes 14 contiguous towns southwest of Hartford, Connecticut), and
tends to be more affluent than other clusters within the Northeast Region, (ii)
the Willimantic cluster, which includes 16 contiguous suburban and rural towns
northeast of Hartford, and (iii) smaller clusters in Massachusetts consisting
of rural communities near and suburbs of the cities of Boston, Springfield and
Worcester, Massachusetts and Providence, Rhode Island.

The Company's cable television systems in the Central Region passed
approximately 397,200 homes and served approximately 224,200 basic subscribers
in suburban St. Louis as of March 31, 1997. The Central Region does not include
the City of St. Louis, but includes contiguous suburbs within other portions of
St. Louis County and neighboring cities in eastern Missouri and southwestern
Illinois. The Company, through CC Radio, owns a radio station in St. Louis. On
January 27, 1997, the Company entered into an agreement to sell its interest in
CC Radio, subject to regulatory approval, and expects to complete the sale in
the third quarter of 1997. Since January 27, 1997, the radio station has been
operated by the purchaser pursuant to a management agreement.

3
<PAGE>

Organizational Structure

The capital stock of the Issuer is owned 85% by Kelso Investment Associates
V, L.P., an investment fund, together with an affiliate (collectively, "Kelso")
and certain other individuals; and 15% by Charter, with distributions on exit
varying depending on the rates of return on the stockholders' equity investment
in the Issuer. Kelso and certain other individuals have invested an aggregate
of $68.0 million and $17.0 million in the Issuer and CCT Holdings Corp.
("CCT"), respectively, and Charter has invested an aggregate of $12.0 million
and $3.0 million in the Issuer and CCT, respectively. Except for management
fees and financial advisory fees and related expenses payable or which may
become payable by the Company to Charter and Kelso & Company (an affiliate of
Kelso) on an on-going basis and investment banking fees payable to such
entities under certain circumstances, the Company will not make any
distributions or advances, by dividend or otherwise, to either Charter or Kelso
before the Notes are repaid in full. See "Certain Relationships and Related
Transactions--Management Agreements-- Transaction Fees" and "Description of
Notes--Transactions with Affiliates." The Issuer holds through CAC a 1% general
partnership interest in CCE, L.P. and a 1.22% general partnership interest in
CCE-I. As of June 30, 1997, the organizational structure of the Company and
certain of its affiliates is as follows:

[ORGANIZATIONAL FLOW CHART]

4
<PAGE>

Priority of CCE-I and CCE-II Distributions

The Company conducts business principally through CCE-I and CCE-II, each of
which maintains a credit facility with certain lenders and is the indirect
obligor under certain promissory notes issued in partial payment of the
purchase price for the acquisition of certain assets as described herein.

After the obligations in respect of the CCE-I Credit Facility are
indefeasibly paid in full in cash and all commitments to lend in respect
thereof are terminated, CCE-I will be permitted to make distributions to CCE,
L.P., which in turn will make distributions of such funds to Cencom Cable and
CAC for distribution to the Issuer. Distributions made by CCE-II will not be
available to repay the Notes until the obligations under the CCE-II Credit
Facility, the California Note (as defined herein) and any other indebtedness of
CCE-II are indefeasibly paid in full in cash and all commitments to lend in
respect of the CCE-II Credit Facility or any other indebtedness of CCE-II are
terminated. Distributions made by CCE-I and CCE-II will be directed to the
Issuer in a manner consistent with the foregoing priorities pursuant to the
agreement of limited partnership of CCE, L.P. (the "CCE, L.P. Partnership
Agreement"). Subject to certain restrictions, the CCE, L.P. Partnership
Agreement may be amended to enable CCE, L.P. to establish New CCE Subsidiaries.
Subject to certain restrictions, CCE, L.P. may establish New CCE Subsidiaries
from time to time, which could have financing arrangements that result in the
sharing with other creditors of distributions to CCE, L.P. from CCE-II and/or
such New CCE Subsidiaries. See "Certain Relationships and Related
Transactions--the Partnership Agreements," "Description of Other Indebtedness,"
"Description of Notes--General," "Description of Notes--Partnership Agreements"
and "Description of Notes--Certain Covenants." In addition, the Guarantee
issued by CCE, L.P. is limited exclusively to funds received by CCE, L.P. from
CCE-I. Except as otherwise described herein, no funds from CCE-II or the New
CCE Subsidiaries will be available should payment be sought under the
Guarantees. See "Description of Notes--Guarantees." Any payment made on the
Guarantee issued by CCE, L.P. (i) would result in an event of default under the
California Note (as defined herein), and such an event of default would result
in a default under the CCE-II Credit Facility and (ii) could result in a
default under any senior credit facility or other financing arrangement of a
New CCE Subsidiary. In addition the Subordination Agreement (as defined herein)
limits the ability of the Guarantees to be enforced. See "--The Crown
Transaction, Issuance of the Notes and the Subordination Agreement" in this
Prospectus Summary.

BUSINESS STRATEGY

Management believes clustered cable television systems offer significant
growth opportunities, and management's principal objective is to increase the
Company's operating cash flow by capitalizing upon such opportunities. To
achieve its objective, the Company has pursued the following business
strategies:

Cluster Through Strategic Acquisitions in Metropolitan Markets

The Company has sought to "cluster" its cable systems in suburban and ex-
urban areas surrounding selected metropolitan markets. Management believes that
such clustering offers significant opportunities to increase operating
efficiencies and to improve operating margins and cash flow by spreading the
Company's fixed costs over an expanding subscriber base. In addition,
management believes that by concentrating its clusters in metropolitan markets,
the Company will be able to generate higher growth in revenues and operating
cash flow. Such metropolitan markets, because of their concentration of
businesses and population, offer greater opportunities for advertising sales
and telecommunications services such as competitive access service. In
addition, because disposable income levels in many areas served by the
Company's cable systems are generally higher than the national average,
management believes that the Company will benefit from the opportunity to
generate enhanced revenues from existing video services, such as pay television
and pay-per-view services, as well as from future services, such as video-on-
demand and Internet access services.

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cable systems become available in the marketplace. Because many of the
Company's operating areas include other significant cable operators with nearby
systems, marketplace availability and pricing may be heavily influenced by the
interest level of other potential purchasers. This strategy is also subject to
the changing competitive telecommunications market.

In determining whether to acquire a particular system, the Company evaluates,
among other things, the (i) location, size and strategic fit of the system with
the Company's existing operations, (ii) technical quality of the system and
anticipated capital expenditure requirements which may be necessary to comply
with franchising requirements or to upgrade systems to satisfy the Company's
operating standards, (iii) demographic trends of the market, (iv) existing and
potential competition in the market, (v) price of the system relative to other
characteristics of the system and (vi) number of years remaining until the
system's franchises must be renewed, along with the seller's relationship with
the relevant franchising authorities. By virtue of its relationship with
Charter, management believes that the Company has increased access to
acquisition opportunities that might otherwise not be available to a company of
comparable size. The Company is not currently a party to any letter of intent
or definitive agreement with respect to any acquisitions. From time to time,
the Company reviews and analyzes potential acquisitions, which may include the
acquisition of other cable systems managed by Charter or as to which Charter
has secured purchase rights. The Company anticipates that future acquisitions
will be financed with additional debt, or, depending on the size and
circumstances of the acquisition, possibly with additional equity.

Realize Operating Efficiencies

Each of the Company's regions has centralized management and offers certain
services that benefit the clusters and all customers within the region. By
establishing such clusters, the Company is typically able to create regional
customer service centers and establish centralized administration and
technological support for local management, which enables the Company to
eliminate duplicative management personnel and operations. After consummating
an acquisition from an independent third party, the Company incorporates the
system within the existing centralized network of operational and
organizational functions. By combining the acquired systems with an existing
cluster, or by adding a new cluster within an existing regional structure, the
Company is able to reduce the operating costs of the system it acquires, and at
the same time, spread its fixed costs over an expanded subscriber base and
thereby improve operating cash flow and margins.

Focus on the Customer

The Company continually seeks to improve its understanding of, and
relationship with, its customers. The Company's emphasis on customer
satisfaction is evident in its customer service policies, marketing,
programming and technological plans. The Company seeks to provide a high level
of customer service by employing a well-trained staff of customer service
representatives and experienced field technicians. Upon acquisition of a new
system, the Company implements a 24-hour customer service hotline, provides
completed repair service in 24 hours (with in excess of 90% of "no picture"
problems solved on the same day as reported) and also offers an installation
and service guarantee within a two-hour window period. The Company's
programming packages offer different pricing options, including special value
packages and add-on services. From a technological standpoint, the Company
focuses on its customers through its emphasis on service reliability, improved
picture quality and expanded channel capacity. In making any operational or
organizational changes, the Company attempts to maintain strong community
relations and enhance customer service. The Company is also working with
Charter to develop a database that will assist management with its evaluation
of the potential demand by existing and prospective customers for home
entertainment, educational services and data transmission. Management believes
this focus on the customer will, over time, increase both subscriber
penetration and revenue per subscriber.

Maximize Benefits Provided by Relationship with Charter

The Company receives significant benefits from its relationship with Charter.
The Company benefits from the financial and operational expertise of Charter's
principals (Barry L. Babcock, Jerald L. Kent and Howard L.

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<PAGE>

Wood) and their familiarity with those of the Company's systems previously
owned by a predecessor entity of the Company (the senior management team of
which such individuals were a part). As of March 31, 1997, a majority of CCE-
I's subscribers were served by systems formerly owned and operated by such
predecessor entity. The Company also benefits from Charter's membership in the
TeleSynergy programming cooperative, which offers its members certain
programming benefits. Charter's prominence as one of the larger MSOs in the
United States has also increased the Company's opportunities to investigate
potential acquisitions, access debt financing and equity capital, and obtain
marketing support and discounts on cable system equipment.

Barry L. Babcock, Jerald L. Kent and Howard L. Wood formerly served as
members of the senior management team of Cencom Cable Associates, Inc., which,
during the nine year period prior to its sale in 1991 to Crown Media, Inc.,
purchased and developed the cable systems formerly owned by Cencom Cable. See
"Business--Business Strategy--Maximize Benefits Provided by Relationship with
Charter." In addition, Kelso and certain other individuals have invested
approximately $68.0 million in the Issuer. As a result of such investment,
Kelso and such individuals own directly or indirectly 85% of the outstanding
equity interests in the Issuer, with distributions on exit varying depending on
the rate of return on the stockholders' equity investment in the Issuer. See
"Risk Factors--Control of the Issuer and the Company by Kelso."

THE CROWN TRANSACTION, ISSUANCE OF THE NOTES AND THE SUBORDINATION AGREEMENT

The Crown Transaction

In January 1995, the Company completed stock and asset acquisitions (the
"Crown Transaction") from HC Crown and certain of its affiliates related to
cable television systems. The cable television systems acquired in the Crown
Transaction serve communities in St. Louis County, Missouri (the "Crown
Missouri Systems") and in western and northeastern Connecticut (the "Crown
Connecticut Systems"). The aggregate purchase price of the Crown Missouri
Systems and the Crown Connecticut Systems was approximately $488.2 million,
including related acquisition fees and expenses, and was a substantial
component of a larger transaction in which HC Crown sold all of its cable
television systems to a group of investors. Upon the completion of the Crown
Transaction, the Crown Connecticut Systems were owned by CAC, a wholly owned
subsidiary of the Issuer, and the Crown Missouri Systems were owned by Cencom
Cable, a wholly owned subsidiary of CAC. The Crown Connecticut Systems and the
Crown Missouri Systems were contributed by CAC and Cencom Cable to CCE-I in
September 1995 concurrently with the consummation of the California Transaction
(as defined herein) and in connection therewith, CCE-I assumed all obligations
under the CCE-I Credit Facility in connection with such Systems being
contributed to CCE-I. The Crown Connecticut Systems and the Crown Missouri
Systems, together with the cable television systems constituting the Illinois
Systems (as defined herein), the UVC Systems (as defined herein), the Park
Hills Systems (as defined herein) and the Masada Systems (as defined herein)
(together, the "Systems"), along with a radio station owned by CC Radio and a
cable advertising business owned by CASTL (both subsidiaries of CCE-I),
constitute the sole operating assets of CCE-I as of the date of this
Prospectus.

Issuance of the Notes and Subordination Agreement

Senior Subordinated Notes due 1999 of the Issuer (the "Original Notes") were
issued by the Issuer to HC Crown as partial payment of the purchase price in
connection with the Crown Transaction, pursuant to the Senior Subordinated Loan
Agreement (the "Original HC Crown Loan Agreement") between the Issuer and HC
Crown dated as of January 18, 1995. In connection with the Original HC Crown
Loan Agreement, HC Crown entered into a Subordination Agreement, dated as of
January 18, 1995 among HC Crown, the Issuer and certain of the lenders under
the CCE-I Credit Facility (as originally executed and delivered and thereafter
amended and restated, the "Subordination Agreement") with respect to the
subordination of obligations under the Notes. In

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<PAGE>

addition, CCE, L.P., CAC and Cencom Cable subsequently issued to HC Crown
guarantees of payment under the Notes; these guarantees are limited to funds
received directly or indirectly from CCE-I by one or more of the Guarantors and
are not enforceable until the CCE-I Credit Facility (and the CCE-II Credit
Facility, any other senior indebtedness of CCE-II and senior indebtedness of
New CCE Subsidiaries, in the case of the guarantee issued by CCE, L.P.) has
been indefeasibly repaid in full in cash and the commitments to lend thereunder
have terminated. See "Certain Relationships and Related Transactions--The
Guarantees," "Description of Notes--The Guarantees" and "Description of Other
Indebtedness." The subordination under the Subordination Agreement is in
addition to the provisions contained in the Original HC Crown Loan Agreement
pursuant to which the Notes are subordinated to all Senior Debt (as defined in
"Description of Notes--Certain Definitions") of the Issuer. The Original HC
Crown Loan Agreement, the three outstanding Guarantees and the Subordination
Agreement were amended and restated as of November 15, 1996. In connection with
the resale of the Notes to "qualified institutional buyers" (as defined in Rule
144A under the Securities Act), the Amended and Restated HC Crown Loan
Agreement and the Notes issued thereunder were converted into an indenture (the
"Indenture") dated as of February 13, 1997 between the Issuer and Harris Trust
and Savings Bank, as trustee (the "Trustee") and Senior Subordinated Notes
issued thereunder containing substantially the same terms and conditions as are
contained in the Amended and Restated HC Crown Loan Agreement and the Notes.

In connection with the Crown Transaction and the establishment of the CCE-I
Credit Facility, the Selling Securityholder agreed to subordinate its rights to
receive payments on and exercise certain remedies with respect to the Notes
prior to the indefeasible repayment in full in cash of and the termination of
commitments to lend under the CCE-I Credit Facility. In particular, the holders
do not have the right to compel payment of the Notes on the Stated Maturity
Date or thereafter or to accelerate the maturity of the Notes upon the
occurrence of a default under the Notes (including a payment default) prior to
the indefeasible payment in full in cash of and termination of commitments to
lend under the CCE-I Credit Facility. In the event the principal of and accrued
interest on the Notes are not paid in full on the Stated Maturity Date, the
annual rate at which interest on the Notes accrues will initially increase to
18% and will increase by an additional 2% on each successive anniversary of the
Stated Maturity Date, up to 26%. A default rate of 3% per annum (the "Default
Rate") may also be added if certain other events of default under the Notes
occur and are continuing. Consequently, the maximum annual rate of interest at
which the Notes may accrue interest is 29%. The CCE-I Credit Facility is
scheduled to expire on December 31, 2004, but may, subject to certain limited
exceptions, be extended or refinanced beyond that date without the consent of
the holders. In connection with the establishment of the CCE-II Credit
Facility, the holder of the California Note (as defined herein) agreed to
subordinate its rights to receive payments on and exercise certain remedies
with respect to the California Note (as defined herein) prior to the
indefeasible repayment in full in cash of and the termination of commitments to
lend under the CCE-II Credit Facility. In addition, distributions from CCE-II
will only be available to service obligations in respect of the Notes after
obligations in respect of the CCE-II Credit Facility, the California Note and
any other indebtedness of CCE-II are indefeasibly paid in full in cash and all
commitments to lend in respect of the CCE-II Credit Facility and any other
indebtedness of CCE-II are terminated. See "Risk Factors--Segregation of
Distributions to Service the Notes and the Guarantees; New CCE Subsidiaries."
The Subordination Agreement has been amended and restated on substantially the
same terms in connection with the issuance of the Notes pursuant to the
Indenture.

California Acquisitions and CCE, L.P. Transactions

1. The California Transaction and the California Note. In November 1994,
Charter began to manage certain cable television systems in the Los Angeles,
California metropolitan area (the "Los Angeles Systems") then owned by Cencom
Cable Television, Inc., an affiliate (the "Gaylord Affiliate") of the Gaylord
Entertainment Company ("Gaylord").

In September 1995, CCT, an affiliate of the Issuer and Charter, purchased the
Los Angeles Systems and certain other cable television systems from the Gaylord
Affiliate (the "California Transaction") as part of a larger transaction. The
Los Angeles Systems were immediately contributed by CCT to CCE, L.P., and by
CCE,

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<PAGE>

L.P. to CCE-II and constitute the sole assets of CCE-II. The consideration for
the California Transaction consisted in part of a $165.7 million promissory
note (the "California Note"), which was issued by CCT pursuant to a Senior
Subordinated Loan Agreement dated as of September 29, 1995 (the "California
Loan Agreement"). The portion of the aggregate purchase price attributable to
the Los Angeles Systems was $340.9 million.

2. New Financings. Concurrently with the consummation of the California
Transaction, CCE-I entered into the CCE-I Credit Facility to borrow up to
$300.0 million, in connection with a corporate reorganization whereby the Crown
Connecticut Systems and the Crown Missouri Systems acquired in the Crown
Transaction were contributed to CCE, L.P., and by CCE, L.P. to the newly formed
CCE-I. The CCE-I Credit Facility replaced the credit facility established to
finance the Crown Transaction. CCE-II originally entered into the CCE-II Credit
Facility to borrow up to $235.0 million. That amount was increased to $375.0
million to facilitate the Long Beach Investment. The CCE-I Credit Facility and
the CCE-II Credit Facility are sometimes referred to herein as the "Credit
Facilities." See "Description of Other Indebtedness."

3. Issuance of the Guarantees. Pursuant to the Original HC Crown Loan
Agreement, in connection with the California Transaction, CCE, L.P., CAC and
Cencom Cable issued the Guarantees to HC Crown. The Guarantees were amended and
restated as of November 15, 1996 and were further amended and restated as of
February 13, 1997 in connection with the issuance of the Notes pursuant to the
Indenture on substantially the same terms as are contained in the Guarantees
which were amended and restated as of November 15, 1996.

The Guarantees, by their terms, are limited to the proceeds of distributions
received by the Guarantors from CCE-I. The CCE, L.P. Guarantee cannot be
enforced until the indefeasible repayment in full of and termination of
commitments to lend under the CCE-I Credit Facility, the CCE-II Credit
Facility, any other senior indebtedness of CCE-II and any senior indebtedness
of New CCE Subsidiaries. In connection with the Long Beach Investment (as
defined herein), CCE-II and Long Beach Acquisition Corp. ("LBAC") (which is an
affiliate of the Issuer and CCE-II) became jointly and severally liable under
the CCE-II Credit Facility, which was increased by $140.0 million upon
consummation of the Long Beach Investment, and CCE-II borrowed $25.0 million
under the CCE-II Credit Facility in order to make the Long Beach Investment.
The CAC Guarantee and the Cencom Cable Guarantee cannot be enforced until the
indefeasible repayment in full of and termination of the commitments to lend
under the CCE-I Credit Facility. See "Certain Relationships and Related
Transactions--The Guarantees," "Description of Notes--The Guarantees" and
"Description of Other Indebtedness."

4. The Partnership Agreements. The partnership agreements of CCE, L.P., CCE-I
and CCE-II each currently provide for, among other things, distributions to
their respective partners in proportion to their respective partnership
interests and, in the case of CCE, L.P., the creation of preferred capital
accounts and preferred distributions related thereto. The effect of these
provisions is (i) to direct any distributions from CCE-I to CCE, L.P. and,
then, to Cencom Cable and CAC which, in turn, will make distributions to the
Issuer for repayment of the Notes, and (ii) to direct any distributions from
CCE-II to CCE, L.P. and, then, to CCT for repayment of the California Note.
Subject to the formation of New CCE Subsidiaries as described below, if the
CCE-II Credit Facility, the California Note and any other indebtedness of CCE-
II and indebtedness of New CCE Subsidiaries is repaid prior to payment in full
of all amounts payable under the Notes, then all further distributions to CCE,
L.P. from both CCE-I and CCE-II will be used to make distributions to CAC and
Cencom Cable for distribution to the Issuer, and if the Notes are repaid prior
to the payment in full of all amounts payable under the California Note, then
all further distributions to CCE, L.P. from both CCE-I and CCE-II will be used
to make distributions to CCT. Subject to certain limitations, the Indenture
permits the formation of New CCE Subsidiaries below CCE, L.P. in the corporate
structure and the contribution of additional assets to existing Subsidiaries
other than CCE-I. New CCE Subsidiaries may engage in the cable television
business or other businesses. In connection with their businesses, New CCE
Subsidiaries, and in connection with such asset contributions to existing
Subsidiaries, such existing Subsidiaries, may establish senior credit
facilities and other financing arrangements (debt and/or equity), which may
establish a basis for a new or revised preferred capital account in CCE, L.P.
Once any applicable financing arrangement of CCE-II or any New CCE Subsidiary is

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<PAGE>

repaid, the existence of the aforementioned new or revised preferred capital
account in CCE, L.P. could result in any further distributions to CCE, L.P.
from CCE-II and/or any New CCE Subsidiaries being shared pro rata between the
Notes and any such new or existing financing arrangements (with such sharing to
be based upon the then outstanding preferred capital accounts in CCE, L.P.).
Holders of the Notes should not rely on any distributions from CCE-II or any
New CCE Subsidiaries for payment of principal or interest on the Notes. In
connection with the creation of New CCE Subsidiaries or the contribution of
additional assets to existing Subsidiaries of CCE, L.P., the CCE, L.P.
Partnership Agreement's distribution provisions may be amended. See
"Description of Notes--Certain Covenants--Limitation on Changes to CCE, L.P.
Partnership Agreement." For example (and without limiting the arrangements
which could be entered into by a New CCE Subsidiary), in the event one or more
New CCE Subsidiaries are formed below CCE, L.P. in the corporate structure in
connection with the acquisition of new assets or equity interests and the
issuance by an affiliate of CCE, L.P. of a note payable to the sellers of such
assets or equity interests (i.e., a purchase money note, as was the case in the
California Transaction and the Crown Transaction), then, the CCE, L.P.
Partnership Agreement can be amended, so that (i) rather than all distributions
to CCE, L.P. from CCE-II being available to service the Notes exclusively after
payment of the California Note, such distributions would instead be available
pro rata based on then outstanding preferred capital accounts (i.e., to service
both the Notes and any new purchase money note owed to such sellers) and (ii)
all cash generated by any New CCE Subsidiary would be used first to repay any
credit facility entered into by such New CCE Subsidiary to accomplish the
related acquisition. Any amounts thereafter distributed by such New CCE
Subsidiary to CCE, L.P. would be used next to repay any new purchase money
note, and after such new purchase money note is repaid, such distributions from
such New CCE Subsidiary to CCE, L.P. would be available pro rata to service the
Notes, the California Note and any other outstanding purchase money notes. See
"Description of the Notes--Certain Covenants--Limitation on Changes to the CCE,
L.P. Partnership Agreement."

Notwithstanding the foregoing, such credit facilities, other financing
arrangements and asset contributions and the existence of new or revised
preferred capital accounts will not affect distributions to the Issuer from
CAC, Cencom Cable, CCE, L.P. (to the extent the funds to be distributed by CCE,
L.P. were obtained from CCE-I) or CCE-I.

UVC Acquisition

In October 1995, CCE-I acquired certain cable television systems serving
communities in western St. Louis County (which augmented the Central Region)
and central and southeastern Massachusetts (which extended the Company's
operations in the Northeast Region) from United Video Cablevision, Inc. (the
"UVC Systems"), for an aggregate purchase price of approximately $96.0 million,
including related acquisition fees and expenses (the "UVC Acquisition"). As of
March 31, 1997, the UVC Systems served approximately 48,600 basic subscribers.

The Park Hills, Missouri Acquisition

In January 1996, CCE-I acquired certain cable television systems serving
communities in the Park Hills, Missouri area from Mineral Area Cable Vision Co.
(the "Park Hills Systems"), for an aggregate purchase price of approximately
$9.4 million, including related acquisition fees and expenses (the "Park Hills
Acquisition"). As of March 31, 1997, the Park Hills Systems served
approximately 6,100 basic subscribers.

Illinois Acquisition

In March 1996, CCE-I acquired certain cable television systems in that
portion of Illinois located within the St. Louis metropolitan area (the
"Illinois Systems") from Cencom Cable Income Partners, L.P., a Delaware limited
partnership ("CCIP") whose general partner is an affiliate of Charter, for an
aggregate purchase price of approximately $82.0 million, including related
acquisition fees and expenses (the "Illinois Acquisition"). As of March 31,
1997, the Illinois Systems served approximately 45,600 basic subscribers. The
Illinois Acquisition

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was part of a larger transaction whereby three Charter affiliates purchased all
of the assets of CCIP and, in accordance with the terms of the partnership
agreement of CCIP, independent appraisals were obtained valuing all of the
assets of CCIP. The aggregate purchase price paid by the three Charter
affiliates exceeded the appraisal value by 5 percent. The purchase price
allocated to the Illinois Systems was determined by the three Charter
affiliates based on the relative value of the Illinois Systems to the total
assets being sold. On October 20, 1995, a purported class action lawsuit on
behalf of the CCIP limited partners was filed in the Chancery Court of New
Castle County, Delaware (the "Action"). The Action named as defendants the
general partner of CCIP, the proposed purchasers of all the systems owned by
CCIP (which includes CCE-I and certain other affiliates of Charter), Charter
and certain individuals, including the directors and executive officers of the
general partner of CCIP. On February 15, 1996, the Court of Chancery of the
State of Delaware in and for New Castle County dismissed all of the plaintiff's
claims for injunctive relief (including that which sought to prevent the
consummation of the Illinois Acquisition); the plaintiff's claims for money
damages which might result from the proposed sale by CCIP of its assets
(including the Illinois Acquisition) remain pending. In October, 1996, the
plaintiff filed a Consolidated Amended Class Action Complaint. The defendants
filed an Answer to the amended complaint in December 1996. In January 1997, the
defendants filed a Motion for Summary Judgment to dismiss all remaining claims
as to all parties in the Action. Based upon, among other things, the advice of
counsel, each of the defendants to the Action believes the Action to be without
merit and is contesting it vigorously. There can be no assurance, however, that
the plaintiff will not be awarded damages, some or all of which may be payable
by CCE-I, in connection with the Action.

Masada Acquisition

On November 29, 1996, CCE-I acquired certain cable television systems serving
suburban and ex-urban communities in Missouri that augment the St. Louis
cluster, from Masada Cable Partners, L.P. (the "Masada Systems"), for an
aggregate purchase price of approximately $23.7 million, before transaction
costs and working capital adjustments (the "Masada Acquisition"). As of March
31, 1997, the Masada Systems served approximately 11,500 basic subscribers.

Long Beach Investment by CCE-II

On May 23, 1997, CCE-II made a $25.0 million investment (the "Long Beach
Investment") in LBAC, in connection with the acquisition of LBAC by an
affiliate of CCE-II and the Issuer. LBAC owns cable television systems (the
"Long Beach Systems") serving communities in Long Beach, California. The Long
Beach Investment was in the form of a note convertible into 27.5% of the stock
of LBAC. In connection with the Long Beach Investment, CCE-II and LBAC became
jointly and severally liable under the CCE-II Credit Facility, which was
increased by $140.0 million upon consummation of the Long Beach Investment, and
CCE-II borrowed $25.0 million under the CCE-II Credit Facility in order to make
the Long Beach Investment. As of March 31, 1997, the Long Beach Systems served
approximately 69,000 basic subscribers. The Notes do not contain any
restrictions on the ability of CCE-II (or any New CCE Subsidiary) to incur
additional indebtedness, including that contemplated in connection with the
Long Beach Investment. The CCE-II Credit Facility restricts the ability of CCE-
II to incur additional indebtedness, although such restriction can be amended
by mutual agreement of the lenders thereto and the obligors thereunder, without
the consent of the holders. See "Risk Factors--High Degree of Leverage." As is
the case with the other assets owned by CCE-II, holders of the Notes should not
rely on the note acquired in the Long Beach Investment or the revenues which
will be generated by them for payment of principal or interest on the Notes.

CERTAIN REGULATORY AND LEGISLATIVE DEVELOPMENTS

The cable television industry is subject to extensive regulation by federal,
local and, in some instances, state government agencies. The Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act")
significantly expanded the scope of cable television regulation on an industry-
wide basis by imposing rate

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regulation, requirements related to the carriage of local broadcast stations,
customer service obligations and other requirements. Under the FCC's initial
rate regulations pursuant to the 1992 Cable Act, regulated cable systems (i.e.,
those systems not subject to effective competition) were required to reduce
their rates by up to 17%. On a going forward basis, regulated cable systems may
be required to justify their rates (including rate increases) under a benchmark
approach, a utility-type cost of service approach, or, if applicable, a small
system cost-of-service showing.

On February 1, 1996, Congress passed the Telecommunications Act of 1996 (the
"Telecommunications Act"). The Telecommunications Act was signed into law by
the President on February 8, 1996, and substantially amends the Communications
Act of 1934 (the "Communications Act") (including the re-regulation of
subscriber rates under the 1992 Cable Act). The Telecommunications Act alters
federal, state and local laws and regulations pertaining to cable television,
telecommunications and other services.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Company. Although the legislation is expected to substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rulemakings
which have been, and which will be undertaken by the FCC, which will interpret
and implement the Telecommunications Act's provisions. In addition, certain
provisions of the Telecommunications Act (such as the deregulation of cable
programming rates) generally are not immediately effective. Furthermore,
certain of the Telecommunications Act's provisions have been, and are likely to
continue to be, judicially challenged. The Company is unable at this time to
predict the outcome of such rulemakings or litigation or the substantive effect
(financial or otherwise) of the new legislation and the rulemakings on the
Company. See "Risk Factors--Potential Negative Effect on Operations due to
Extensive Regulation of the Cable Television Industry" and "Business--
Regulation in the Cable Television Industry."

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<PAGE>

THE EXCHANGE OFFER

Letter Agreement.............. The Old Notes were sold by the Issuer on Janu-
ary 18, 1995 to HC Crown, which resold the Old
Notes on February 10, 1997, through a placement
agent to certain "qualified institutional buy-
ers" (as defined in Rule 144A under the Securi-
ties Act), including an affiliate of HC Crown.
In connection with the resale of the Old Notes,
the Issuer executed and delivered for the bene-
fit of the holders of the Old Notes a letter
agreement dated as of November 15, 1996 (the
"Letter Agreement") providing, among other
things, for the Exchange Offer.

The Exchange Offer............ New Notes are being offered in exchange for a
like principal amount of Old Notes. As of the
date hereof, approximately $82 million aggre-
gate principal amount of Old Notes are out-
standing. The Issuer will issue the New Notes
to holders of Old Notes promptly following the
Expiration Date. See "Risk Factors--Conse-
quences of Failure to Exchange."

Based on interpretations by the staff of the
Commission set forth in Exxon Capital Holdings
Corp., SEC No-Action Letter (April 13, 1989),
Morgan Stanley & Co. Inc., SEC No-Action Letter
(June 5, 1991) and Shearman & Sterling, SEC No-
Action Letter (July 2, 1993) the Issuer be-
lieves that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise trans-
ferred by any holder thereof (other than any
such holder which is an "affiliate" of the Is-
suer or any of the Guarantors within the mean-
ing of Rule 405 under the Securities Act) with-
out compliance with the registration and (ex-
cept as provided in the following sentence)
prospectus delivery provisions of the Securi-
ties Act, provided that such New Notes are ac-
quired in the ordinary course of such holder's
business and that such holder is not engaged
in, and does not intend to engage in, and has
no arrangement or understanding with any person
to participate in, the distribution of such New
Notes. Each broker or dealer that receives New
Notes for its own account in exchange for Old
Notes, where such Old Notes were acquired by
such broker or dealer as a result of market-
making activities or other trading activities,
must acknowledge that it will deliver a pro-
spectus in connection with any resale of such
New Notes. See "Plan of Distribution."

Federal Income Tax Conse- The substitution of New Notes for Old Notes
quences....................... pursuant to the Exchange Offer should not be
treated as a sale, exchange, disposition or
other taxable event with respect to the holders
for Federal income tax purposes. A holder's ba-
sis, holding period, issue price and amount of
original issue discount, if any, with respect
to a Note should not change upon the substitu-
tion. Holders, however, are strongly urged to
consult their own tax advisors. See "Certain
Federal Income Tax Consequences."

13
<PAGE>

Expiration Date............... 5:00 p.m., New York City Time, on ,
1997, unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Of-
fer is extended.

Conditions to the Exchange The Exchange Offer is subject to certain cus-
Offer......................... tomary conditions, which may be waived by the
Company. See "The Exchange Offer--Conditions."

Procedures for Tendering Old
Notes....................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof,
in accordance with the instructions contained
herein and therein, and mail or otherwise de-
liver such Letter of Transmittal, or such fac-
simile, together with the Old Notes and any
other required documentation to the exchange
agent (the "Exchange Agent") at the address set
forth herein. See "The Exchange Offer--Exchange
Agent." Old Notes may be physically delivered,
but physical delivery is not required if a con-
firmation of a book-entry of such Old Notes to
the Exchange Agent's account at The Depository
Trust Company ("DTC" or the "Depositary") is
delivered in a timely fashion. By executing the
Letter of Transmittal, each holder will repre-
sent to the Issuer that, among other things,
the New Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course
of business of the person receiving such New
Notes, whether or not such person is the hold-
er, that neither the holder nor any such other
person is engaged in, or intends to engage in,
or has an arrangement or understanding with any
person to participate in, the distribution of
such New Notes and that neither the holder nor
any such other person is an "affiliate," as de-
fined under Rule 405 of the Securities Act, of
the Issuer or any of the Guarantors. Each bro-
ker or dealer that receives New Notes for its
own account in exchange for Old Notes, where
such Old Notes were acquired by such broker or
dealer as a result of market-making activities
or other trading activities, must acknowledge
that it will deliver a prospectus in connection
with any resale of such New Notes. See "The Ex-
change Offer- Procedures for Tendering" and
"Plan of Distribution."

Special Procedures for Bene- Any beneficial owner whose Old Notes are regis-
ficial Owners............... tered in the name of a broker, dealer, commer-
cial bank, trust company or other nominee and
who wishes to tender should contact such regis-
tered holder promptly and instruct such regis-
tered holder to tender on such beneficial own-
er's behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering the Old
Notes, either make appropriate arrangements to
register ownership of the Old Notes in such
owner's name or obtain a properly completed
bond power from the registered holder. The
transfer of registered ownership may take con-
siderable time. See "The Exchange Offer--Proce-
dures for Tendering."

14
<PAGE>

Guaranteed Delivery Proce- Holders of Old Notes who wish to tender their
dures......................... Old Notes and whose Old Notes are not entirely
available or who cannot deliver their Old
Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal
to the Exchange Agent prior to the Expiration
Date must tender their Old Notes according to
the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery Proce-
dures."

Withdrawal Rights............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expira-
tion Date. See "The Exchange Offer--Withdrawal
of Tenders."

Acceptance of Old Notes and
Delivery of New Notes.......
The Issuer will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New
Notes issued pursuant to the Exchange Offer
will be delivered promptly following the Expi-
ration Date. See "The Exchange Offer-- Terms of
the Exchange Offer."

Exchange Agent................ Harris Trust and Savings Bank is serving as Ex-
change Agent in connection with the Exchange
Offer. See "The Exchange Offer--Exchange
Agent."

15
<PAGE>

THE NEW NOTES

The Exchange Offer applies to approximately $82.0 million aggregate principal
amount of Old Notes outstanding as of the date hereof. The form and the terms
of the New Notes will be identical in all material respects to the form and the
terms of the Old Notes, except that the New Notes will have been registered
under the Securities Act and, therefore, will not contain legends restricting
the transfer thereof. The New Notes evidence the same debt as the Old Notes
exchanged for the New Notes and will be entitled to the benefits of the same
Indenture under which the Old Notes were issued. See "Description of the
Notes." Certain capitalized terms listed below are defined under the caption
"Description of Notes--Certain Definitions."

Notes Offered................. $82,000,000 aggregate principal amount of Se-
nior Subordinated Notes due 1999, plus accrued
interest since January 18, 1995.

Issuer........................
CCA Holdings Corp.

Stated Maturity Date;
Limitations on Payment and
Exercise of Remedies..........
The stated maturity of the Notes is December
31, 1999 (the "Stated Maturity Date"). Pursuant
to the terms of the Subordination Agreement, no
payments are permitted to be made on the Notes
(including on the Stated Maturity Date) until
the indefeasible repayment in full in cash of
and termination of commitments to lend under
the CCE-I Credit Facility. Moreover, under the
terms of the Notes and the Subordination Agree-
ment, the holders do not have the right to com-
pel payment of the Notes on the Stated Maturity
Date or thereafter or to accelerate the matu-
rity of the Notes upon the occurrence of a de-
fault under the Notes (including a payment de-
fault), except as permitted in the Indenture
and the Subordination Agreement. See "Descrip-
tion of Notes--Subordination." The CCE-I Credit
Facility is scheduled to expire on December 31,
2004, but may, subject to certain limited ex-
ceptions, be extended or refinanced beyond that
date without the consent of the holders. If the
Notes are not repaid by the Stated Maturity
Date, then the interest rate thereon will in-
crease (see "Interest" below).

Interest......................
Interest accrues on the Notes at an annual rate
of 13%, compounded semi-annually, until the
Stated Maturity Date. If principal plus accrued
interest on the Notes is not paid at the Stated
Maturity Date, the annual rate at which inter-
est accrues on the Notes will initially in-
crease to 18% and will increase by an addi-
tional 2% on each successive anniversary of the
Stated Maturity Date (up to 26%), compounded
semi-annually, until the Notes are repaid. In
addition, the interest rate on the Notes shall
be increased by an additional 3% per annum if
certain other events of default occur or are
continuing (the "Default Rate"). As of March
31, 1997, accrued interest on the Notes was
$26,250,910. For U.S. Federal income tax pur-
poses, purchasers of the Notes will be required
to include amounts in gross income generally in
advance of the receipt of the cash payments to
which the income is attributable. See "Certain
Federal Income Tax Consequences."

16
<PAGE>

Optional Redemption........... The Notes are redeemable at the Issuer's op-
tion, in whole or in part, at any time without
premium or penalty provided that any such pre-
payment of principal shall include all payments
of accrued interest on the amount prepaid.
There are no mandatory redemption or sinking
fund provisions.

Guarantees.................... The obligations on the Notes are guaranteed on
a subordinated basis by CAC, Cencom Cable and
CCE, L.P. The Guarantees, by their terms, are
limited to the proceeds of distributions re-
ceived by the Guarantors from CCE-I. The CCE,
L.P. Guarantee cannot be enforced until the in-
defeasible repayment in full in cash of and
termination of commitments to lend under the
CCE-I Credit Facility, the CCE-II Credit Facil-
ity, any other senior indebtedness of CCE-II
and senior indebtedness of New CCE Subsidiar-
ies. The CAC Guarantee and the Cencom Cable
Guarantee cannot be enforced until the indefea-
sible repayment in full in cash of and termina-
tion of commitments to lend under the CCE-I
Credit Facility. See "Description of Notes--
General" and "Description of Notes--The Guaran-
tees."

Ranking....................... The Notes and the Guarantees are unsecured ob-
ligations of the Issuer and the Guarantors and
are subordinate in right and priority of pay-
ment to all existing and future indebtedness of
the Issuer and the Guarantors, other than in-
debtedness that by its terms is expressly sub-
ordinated in right and priority of payment to
the Notes and the Guarantees. Except for cer-
tain management fees and financial advisory
fees and related expenses payable or which may
become payable by the Company to Charter and
Kelso & Company on an on-going basis and in-
vestment banking fees payable to such entities
in certain circumstances, the Company will not
make any distributions or advances to either
Charter or Kelso before the Notes are repaid in
full. See "Description of Notes--Certain Cove-
nants--Transactions with Affiliates." The Is-
suer and the Guarantors are holding companies
that currently conduct substantially all of
their business through the Operating Entities.
As a result, all distributions from CCE-I and
CCE-II would be subject to the claims of credi-
tors of CCE-I and CCE-II, respectively, includ-
ing, without limitation, pursuant to the CCE-I
Credit Facility, the CCE-II Credit Facility and
any other indebtedness of CCE-I and CCE-II. The
Issuer and the Guarantors control CCE-I and are
primarily dependent upon distributions from
CCE-I and its subsidiaries to service their ob-
ligations, including the Notes and the Guaran-
tees. See "--Distributions from CCE-I as Pri-
mary Source of Repayment." The current priori-
ties with respect to such distributions are set
forth in the CCE, L.P. Partnership Agreement.
See "Description of Notes--the Partnership
Agreements." Subject to certain restrictions,
the CCE, L.P. Partnership Agreement may be
amended to provide for, among other things, the
creation of New CCE Subsidiaries, which could
have financing arrangements that result in the
sharing with other creditors of

17
<PAGE>

distributions to CCE, L.P. from CCE-II or such
New CCE Subsidiaries. See "Certain Relation-
ships and Related Transactions--the Partnership
Agreements," "Description of Other In-
debtedness," "Description of Notes--General,"
"Description of Notes--Partnership Agreements"
and "Description of Notes--Certain Covenants."

As of March 31, 1997, the Issuer and the Guar-
antors' indebtedness other than the Notes was
approximately $55.5 million of deferred income
taxes and approximately $0.5 million of current
liabilities. As of March 31, 1997, the aggre-
gate indebtedness (including current liabili-
ties in an aggregate amount of approximately
$30.9 million and other long-term liabilities
of approximately $2.8 million) of CCE-I was ap-
proximately $489.5 million and, as of such
date, the aggregate indebtedness (including
current liabilities in an aggregate amount of
approximately $10.3 million, an intercompany
note of $27.9 million and other long-term lia-
bilities of $0.4 million) of CCE-II was approx-
imately $234.4 million.

As of March 31, 1997, approximately $196.8 mil-
lion was outstanding under the California Note.
For financial reporting purposes, the amount of
the California Note is approximately $206.2
million because interest accruing under the
California Note is based on the average rate of
interest over the life of the California Note
(which approximates 15.43%) rather than the
current stated interest rate.

The CCE-I Credit Facility restricts CCE-I's
ability to incur additional indebtedness. The
Indenture does not contain any restriction on
CCE-II's ability to incur additional indebted-
ness. Although the CCE-II Credit Facility re-
stricts the ability of CCE-II to incur addi-
tional indebtedness, such restriction can be
amended by mutual agreement of the lenders
thereto and the obligors thereunder, without
the consent of the holders. See "Description of
Notes--General" and "Risk Factors--High Degree
of Leverage."

Distributions from CCE-I as
Primary Source of Except under certain limited circumstances, the
Repayment.................... Notes will only have the benefit of distribu-
tions from CCE-I. As a result, the presentation
of information regarding the Company focuses on
the CCE-I Entities. Holders of the Notes may
ultimately benefit from the CCE-II assets but
should not rely on such assets or distributions
generated by them for payment of principal or
interest on the Notes.

Certain Covenants............. The Indenture contains certain covenants by the
Issuer, including, but not limited to, cove-
nants with respect to the following matters:
(i) reporting and information requirements;
(ii) limitations on restricted payments by the
Issuer and the Restricted Subsidiaries (as de-
fined in the Indenture); (iii) limitations on
mergers and consolidations; (iv) limitations on
sales of assets; (v) limitations on changes of
control of the Issuer; (vi) limitations on
changes of management of CCE-I's cable televi-
sion properties and of Char-

18
<PAGE>

ter; (vii) maintenance of a minimum Operating
Cash Flow (as defined in the Indenture); (viii)
limitations on Indebtedness (as defined in the
Indenture); (ix) limitations on the use of the
proceeds of the sale of any of the Issuer's ca-
ble television properties; (x) limitations, un-
der certain circumstances, on permitting the
extension of the maturity of the CCE-I Credit
Facility beyond July 17, 2005; (xi) limitations
on change of ownership of Restricted Subsidiar-
ies; (xii) limitations on transfer of assets of
the Issuer and the Restricted Subsidiaries;
(xiii) limitations on certain transactions with
affiliates; (xiv) limitations on Indebtedness
of CCE, L.P.; (xv) limitations of certain af-
filiate payments; (xvi) limitations on changes
to the CCE, L.P. Partnership Agreement; (xvii)
limitations on intercompany indebtedness; and
(xviii) limitation on investing in radio opera-
tions. These covenants are subject to important
exceptions and qualifications. See "Description
of Notes--Certain Covenants."

Charter and Kelso separately have undertaken,
in an agreement with HC Crown which was amended
and restated as of November 15, 1996, to cause
the Issuer to comply with the reporting re-
quirements and dividend, merger, divestiture
and indebtedness restrictions set forth in the
Indenture. However, neither Charter nor Kelso
has issued a guarantee with respect to such
compliance. Holders of Notes should not expect
to rely on either Charter or Kelso for payment
of principal or interest on the Notes. Charter
and Kelso have also undertaken, in that agree-
ment, to maintain their control of the Issuer
while the Notes remain outstanding.

Registration Rights...........
In addition to the rights of the holders under
the Letter Agreement, under the Indenture the
holders are collectively entitled to a single
additional demand registration right, pursuant
to which the Issuer and the Guarantors will use
their reasonable best efforts to cause to be-
come effective a shelf registration statement
(a "Shelf Registration Statement") with respect
to the resale of the Notes and use their rea-
sonable best efforts to keep such shelf regis-
tration statement continuously effective until
nine months after the effective date thereof.
Expenses related to the exercise of such addi-
tional demand registration rights, if exer-
cised, will be borne by the holders of the
Notes so exercising such demand registration
rights.

RISK FACTORS

Prospective purchasers of the Notes should consider carefully all of the
information set forth in this Prospectus before making an investment in the
Notes. In particular, prospective purchasers should consider the risks set
forth under "Risk Factors."

19
<PAGE>

UNAUDITED SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA OF CCA AND
SUBSIDIARIES

The Unaudited Summary Historical and Unaudited Pro Forma Financial Data set
forth below presents (i) summary historical financial and operating data for
the Crown Systems (as defined herein) (CCA's predecessor) through January 1,
1995 (which was the effective date on which the Crown Systems were acquired by
CCA), (ii) summary historical financial and operating data for CCA and its
subsidiaries since January 1, 1995 (the date CCA effectively commenced
operations), and (iii) summary pro forma financial and operating data assuming
certain transactions described in Note (a) below. The financial data set forth
below has been derived from the audited and unaudited historical financial
statements of CCA and the Crown Systems, and from the Unaudited Selected
Historical and Unaudited Pro Forma Financial Data appearing elsewhere in this
Prospectus, and should be read in conjunction with the historical financial
statements and the notes thereto, and reports of independent public
accountants. The unaudited pro forma financial and operating data include data
derived from certain cable systems owned by entities other than CCA prior to
their acquisition by CCA. Accordingly, the financial information contained
herein with respect to periods prior to such acquisition does not reflect any
changes in the operations or management of such systems that CCA has made since
the date of acquisition or that it intends to make in the future; thus, this
financial information is not necessarily indicative of the results of
operations that would have been achieved had the systems been operated by CCA
during all the periods with respect to which financial information is presented
herein or that may be achieved in the future. There are no pro forma
adjustments reflected in the pro forma balance sheet data as all acquisitions
were consummated prior to December 31, 1996.

20
<PAGE>

CCA AND SUBSIDIARIES

UNAUDITED SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA

(NUMBERS IN THOUSANDS, EXCEPT FOR FINANCIAL RATIOS AND SUBSCRIPTION DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR OF CCA CCA
-------------------------------- --------------------------------------------------
THREE MONTHS
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------- ----------------------------- -----------------
PRO
FORMA (a)
1992 1993 1994 1995 1996 1996 1996 1997
-------- -------- -------- -------- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 81,557 $ 85,627 $ 87,623 $ 99,689 $143,023 $151,548 $30,813 $ 40,487
Operating Expenses:
Operating, general and
administrative........ 41,603 43,270 44,164 48,943 71,498 76,026 15,930 20,665
Management fees........ 2,617(b) 2,723(b) 2,781(b) 6,499 5,034 6,138(c) 1,106 1,331
Depreciation and
amortization.......... 47,662 54,804 54,272 51,194 65,757 68,958 15,107 15,218
-------- -------- -------- -------- -------- -------- ------- --------
Total operating
expenses............. 91,882 100,797 101,217 106,636 142,289 151,122 32,143 37,214
-------- -------- -------- -------- -------- -------- ------- --------
Operating Income
(loss)................. (10,325) (15,170) (13,594) (6,947) 734 426 (1,330) 3,273
Interest expense....... (19,547) (12,051) (15,053) (35,461) (46,654) (50,132) (10,446) (12,894)
Interest income........ 66 -- 20 504 164 223 67 1
Other income
(expense)............. 267 8 444 42 (1,058) (1,058) (517) 57
-------- -------- -------- -------- -------- -------- ------- --------
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from
discontinued operation
and minority interest
in loss of subsidiary.. (29,539) (27,213) (28,183) (41,862) (46,814) (50,541) (12,226) (9,563)
Equity in loss of
unconsolidated limited
partnerships.......... -- -- -- (1,402) (6,303) (6,303) (1,838) (1,910)
Provision for income
taxes................. -- -- -- -- -- -- -- --
Loss from discontinued
operation............. -- -- -- -- (1,516) -- -- --
Minority interest in
loss of subsidiary.... -- -- -- 1,503 15,999 17,676 4,112 2,715
-------- -------- -------- -------- -------- -------- ------- --------
Net loss................ $(29,539) $(27,213) $(28,183) $(41,761) $(38,634) $(39,168) $(9,952) $ (8,758)
======== ======== ======== ======== ======== ======== ======= ========
Ratio of earnings to
fixed charges (d)...... -- -- -- -- -- -- -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $666,139 $744,081 $744,081 $732,123
Deferred taxes.......... 55,500 55,500 55,500 55,500
Total debt (including
current maturities).... 447,439 572,843 572,843 576,251
Shareholders' investment
(deficit).............. 38,239 (395) (395) (9,153)
FINANCIAL RATIOS AND
OTHER DATA:
EBITDA (e).............. $ 39,954 $ 42,357 $ 43,459 $ 50,746 $ 71,525 $ 75,522 $14,883 $ 19,822
EBITDA margin (f)....... 49.0% 49.5% 49.6% 50.9% 50.0% 49.8% 48.3% 49.0%
Capital expenditures
(g).................... $ 13,375 $ 19,128 $ 24,513 $ 22,024 $ 33,898 $ 35,461 $ 6,778 $ 7,964
Total debt to EBITDA.... 8.8x 8.0x 7.6x 7.3x
EBITDA to interest
expense................ 1.4x 1.5x 1.5x 1.5x
Cash flows from
operating activities... $ 19,484 $ 28,935 $ 28,329 $ 27,074 $ 37,028 $ 39,984 $ 2,101 $ 6,222
OPERATING STATISTICAL
DATA (AT END OF PERIOD,
EXCEPT AVERAGES):
Homes passed............ 339,142 344,418 350,404 413,930 533,563 533,563 423,757 536,321
Basic subscribers....... 185,767 196,087 206,948 266,119 338,284 338,284 272,581 339,497
Basic penetration....... 54.8% 56.9% 59.1% 64.3% 63.4% 63.4% 64.3% 63.3%
Premium service units... 125,745 126,396 145,967 173,172 194,602 194,602 170,615 184,417
Premium penetration..... 67.7% 64.5% 70.5% 65.1% 57.5% 57.5% 62.6% 54.3%
Average monthly revenue
per basic subscriber
(h).................... $ 36.59 $ 36.39 $ 35.28 $ 36.89 $ 38.20 $ 37.33 $ 37.68 $ 39.75
</TABLE>

21
<PAGE>

- --------
(a) The pro forma statement of operations data assumes the consummation of the
Illinois Acquisition and the Masada Acquisition as if the applicable
transactions had occurred on January 1, 1996. There are no pro forma
adjustments reflected in the pro forma balance sheet data as all
acquisitions were consummated prior to December 31, 1996.
(b) Represents combined management fees for the Crown Systems (during periods
prior to their acquisition by CCA), for those systems which paid management
fees. These fees are not necessarily indicative of the management fees that
would have been charged had the Crown Systems been operated by CCA or that
may be expected for any future periods.

(c) CCE-I pays annual management and financial advisory fees to Charter and
Kelso & Company equal to certain specified contractual amounts set forth in
the management and financial advisory agreements executed with Charter and
Kelso & Company, which amounts increase upon the acquisition of additional
cable television systems and decrease with the disposition of any cable
television systems. As of March 31, 1997, CCE-I pays Charter $4,845,000
annually and Kelso & Company $552,500 annually based upon the current
contracts. In addition, the management agreement with Charter provides for
an annual bonus equal to 30% of the excess, if any, of operating cash flow
(as defined in the management agreement) over the projected operating cash
flow for the year; however, payment of such bonus is deferred until
termination of the CCE-I Credit Facility. The accrued but unpaid bonus as
of March 31, 1997 and December 31, 1996 was $1,755,000 of which $740,000
was recorded during 1996. See "Certain Relationships and Related
Transactions."

(d) The combined earnings of the Crown Systems were inadequate to cover fixed
charges by $29.5 million, $27.2 million and $28.2 million for the years
ended December 31, 1992, 1993 and 1994, respectively. The earnings of CCA
were inadequate to cover fixed charges by $41.8 million and $38.6 million
for the years ended December 31, 1995 and 1996, respectively, and $10.0
million and $8.8 million for the three months ended March 31, 1996 and
1997, respectively.
(e) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss from
discontinued operation and minority interest in loss of subsidiary. EBITDA
is calculated before payment of management fees. Management believes that
EBITDA is a meaningful measure of performance because it is commonly used
in the cable television industry to analyze and compare cable television
companies on the basis of operating performance, leverage and liquidity.
EBITDA is not presented in accordance with generally accepted accounting
principles and should not be considered an alternative to, or more
meaningful than, operating income or operating cash flows as an indicator
of CCA's operating performance. EBITDA does not include CCA's debt
obligations or other significant commitments.
(f) Represents EBITDA as a percent of revenues.
(g) Capital expenditures exclude cash consideration paid in connection with the
acquisition of cable television systems.

(h) Revenues divided by basic subscribers divided by the number of months in
the period.

22
<PAGE>

RISK FACTORS

An investment in the Notes is highly speculative. Prospective investors
should carefully consider the following risk factors in addition to the other
information set forth in this Prospectus.

HIGH DEGREE OF LEVERAGE

The Company is, and will continue to be, highly leveraged as a result of the
substantial indebtedness it has incurred, and intends to incur, to finance
acquisitions and expand its operations. As of March 31, 1997, the Company's
aggregate indebtedness (including current liabilities in an aggregate amount
of approximately $41.7 million, deferred taxes of $55.5 million, an
intercompany note of $27.9 million and other long-term liabilities of $3.2
million) was approximately $888.2 million. As of March 31, 1997, the Issuer's
and the Guarantors' indebtedness other than the Notes was approximately $55.5
million of deferred income taxes and approximately $.5 million of current
liabilities. As of March 31, 1997, the aggregate indebtedness of CCE-I
(including current liabilities in an aggregate amount of approximately $30.9
million and other long-term liabilities of $2.8 million) was approximately
$489.5 million. As of March 31, 1997, the aggregate consolidated indebtedness
of CCE-II (including current liabilities in an aggregate amount of
approximately $10.3 million, an intercompany note of $27.9 million and other
long-term liabilities of $0.4 million) was approximately $234.4 million. The
California Note is a direct obligation of CCT and, therefore, is not treated
as indebtedness of the Company or its subsidiaries; as of March 31, 1997,
CCT's obligation on the California Note, including accrued interest, was
$206.2 million for financial reporting purposes. As of March 31, 1997, the
Company was approaching the maximum levels of indebtedness allowable under the
Original HC Crown Loan Agreement. See "Description of Notes--Certain
Covenants." The lenders under the CCE-II Credit Facility have a first priority
right to the revenues and cash flow generated by and assets of CCE-II. In
connection with the Long Beach Investment, CCE-II and LBAC (which is an
affiliate of the Issuer and CCE-II) became jointly and severally liable under
the CCE-II Credit Facility (approximately $195.8 million outstanding at March
31, 1997), which was increased by $140.0 million upon consummation of the Long
Beach Investment. After the repayment of the obligations under the CCE-II
Credit Facility, distributions from CCE-II shall be directed to CCT for
payments on the California Note. Subject to the creation of New CCE
Subsidiaries and the contribution of additional assets to existing
Subsidiaries of CCE, L.P., if any, once the obligations in respect of the CCE-
II Credit Facility, the California Note and any other indebtedness of CCE-II
are indefeasibly paid in full in cash and all commitments to lend in respect
of the CCE-II Credit Facility and any other indebtedness of CCE-II are
terminated, distributions from CCE-II will be available to service outstanding
obligations under the Notes (on a shared basis with any other purchase money
notes that might be outstanding as described in the third paragraph under
"Risk Factors--Segregation of Distributions to Service the Notes and the
Guarantees; New CCE Subsidiaries" in connection with future acquisition
transactions). The Indenture does not contain any restriction on the ability
of any subsidiary (other than CCE-I and its Restricted Subsidiaries) of CCE,
L.P. including CCE-II to incur indebtedness, including indebtedness incurred
in connection with the Long Beach Investment. See "Business--Description of
the Systems--Long Beach Investment by CCE-II."

The Company anticipates that, in light of the amount of its existing
indebtedness, it will continue to be highly leveraged for the foreseeable
future. The Company's highly leveraged capital structure, combined with the
unavailability of CCE-II distributions until the CCE-II Credit Facility, the
California Note and any other indebtedness of CCE-II are repaid, could
adversely affect the Issuer's ability to service the Notes and could
significantly limit the Company's ability to finance its operations and fund
its capital expenditure requirements, to compete effectively, to expand its
business, to comply with its obligations under its franchise agreements and to
operate under adverse economic conditions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

DEFICIENCY OF EARNINGS AVAILABLE TO COVER FIXED CHARGES

The historical earnings of CCA and the Crown Systems were inadequate to
cover their fixed charges by $28.2 million, $41.8 million and $38.6 million
for the years ended December 31, 1994, 1995 and 1996, respectively, and $10.0
million and $8.8 million for the three months ended March 31, 1996 and 1997,
respectively.

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In addition, the Company expects to service its other indebtedness and to
fund general working capital needs and capital expenditure requirements with
cash generated by CCE-I and borrowings from other sources. In the event that
the Company is unable to meet its working capital needs and capital
expenditure requirements with cash generated from the CCE-I operations or
borrowings from other sources, the Company will have to consider various
options, such as selling certain assets, refinancing outstanding indebtedness
or obtaining additional equity capital. There can be no assurance that the
Company will be able to raise new equity capital, refinance its outstanding
indebtedness, or obtain new financing in the future, or that, if the Company
is able to do so, the terms available will be favorable to the Company.

SEGREGATION OF DISTRIBUTIONS TO SERVICE THE NOTES AND THE GUARANTEES; NEW CCE
SUBSIDIARIES

The CCE, L.P. Partnership Agreement provides, among other things, that while
any amounts remain outstanding under both the Notes and the California Note,
distributions to CCE, L.P. from CCE-I will be distributed by CCE, L.P. to CAC
and Cencom Cable for distribution to the Issuer for use solely to service the
Notes and distributions to CCE, L.P. from CCE-II will be distributed by CCE,
L.P. to CCT for use solely to service the California Note. CCT, on the one
hand, and CAC and Cencom Cable, on the other hand, have agreed to use all
distributions so received to repay the California Note and the Notes,
respectively. If the California Note is repaid prior to payment in full of all
amounts payable under the Notes, then all distributions to CCE, L.P. from both
CCE-I and CCE-II will, subject to the next two paragraphs, be distributed to
service the Notes. If CCE-I is unable to make distributions to CCE, L.P.,
under the terms of the CCE, L.P. Partnership Agreement, CCE, L.P. will not be
able to use any amounts distributed to it by CCE-II to make distributions to
CAC, Cencom Cable and the Issuer until the CCE-II Credit Facility, the
California Note and any other indebtedness of CCE-II are indefeasibly paid in
full in cash and all commitments to lend in respect of the CCE-II Credit
Facility and any other indebtedness of CCE-II are terminated. There can be no
assurance that CCE-I or CCE-II will make any distributions to CCE, L.P.,
particularly since the CCE-I and CCE-II Credit Facilities and any other senior
indebtedness of CCE-II must be indefeasibly repaid in full prior to CCE-I and
CCE-II, respectively, making any distributions to CCE, L.P.

The Guarantees are limited to the proceeds of distributions received by the
Guarantors from CCE-I. Thus, even if CCE, L.P. were receiving distributions
from CCE-II or any New CCE Subsidiary, such distributions would not be
available under any circumstances through a claim on the Guarantees.
Notwithstanding the foregoing, the CCE, L.P. Partnership Agreement provides
for distributions from CCE-II to be applied towards repayment of the Notes, if
the CCE-II Credit Facility, the California Note and any other senior
indebtedness of CCE-II have been indefeasibly repaid in full in cash.

Subject to certain limitations, the Indenture permits the formation of New
CCE Subsidiaries and contributions of additional assets to existing
Subsidiaries of CCE, L.P. New CCE Subsidiaries may engage in the cable
television business or other businesses. In connection with their businesses,
New CCE Subsidiaries, and, in connection with such asset contributions,
existing Subsidiaries of CCE, L.P., may establish senior credit facilities and
other financing arrangements (debt and/or equity), which may establish a basis
for a new or revised preferred capital account in CCE, L.P. The contribution
of assets to existing CCE, L.P. Subsidiaries could establish the basis for
revised preferred capital accounts in CCE, L.P. Until any applicable financing
arrangement of CCE-II or any New CCE Subsidiary is repaid, such arrangement
could result in any distributions to CCE, L.P. from CCE-II and any New CCE
Subsidiaries being shared pro rata between the Notes and any such new or
existing financing arrangement (with such sharing to be based upon the then
outstanding preferred capital accounts in CCE, L.P.). Holders of the Notes
should not rely on any distributions from CCE-II or any New CCE Subsidiaries
for payment of principal or interest on the Notes. In connection with the
creation of New CCE Subsidiaries or the contribution of additional assets to
existing Subsidiaries of CCE, L.P., the CCE, L.P. Partnership Agreement's
distribution provisions may be amended. See "Description of Notes--Certain
Covenants--Limitation on Changes to CCE, L.P. Partnership Agreement." For
example (and without limiting the arrangements which could be entered into by
a New CCE Subsidiary), in the event one or more New CCE Subsidiaries are
formed in connection with the acquisition of new assets or equity interests
and the issuance by

24
<PAGE>

an affiliate of CCE, L.P. of a purchase money note payable to the sellers of
such assets or equity interests (i.e., a purchase money note, as was the case
in the California Transaction and the Crown Transaction), then, the CCE, L.P.
Partnership Agreement can be amended, so that (i) rather than all
distributions to CCE, L.P. from CCE-II being available to service the Notes
after payment of the California Note, such distributions would instead be
available pro rata based on preferred capital accounts to service both the
Notes and any new purchase money note owed to such sellers and (ii) all cash
generated by any New CCE Subsidiary would be used first to repay any senior
credit facility entered into by such New CCE Subsidiary to accomplish the
related acquisition. Any amounts thereafter distributed to CCE, L.P. by such
New CCE Subsidiary would be used next to repay any new purchase money note,
and after such new purchase money note is repaid, such distributions from such
New CCE Subsidiary to CCE, L.P. would be available pro rata to service the
Notes, the California Note and any other outstanding purchase money notes. See
"Description of Notes--Certain Covenants."

Such credit facilities, other financing arrangements and asset contributions
and the existence of new or revised preferred capital accounts will not affect
distributions to the Issuer from CAC, Cencom Cable, CCE, L.P. (to the extent
the funds to be distributed by CCE, L.P. were obtained from CCE-I) or CCE-I.

Holders of the Notes may benefit from distributions from CCE-II (and New CCE
Subsidiaries referred to in the preceding paragraph), but should not rely on
such distributions made by them for payment of principal or interest on the
Notes. Accordingly, the presentation of information regarding the Company
focuses on the CCE-I Entities. Thus, holders of the Notes should not rely on
the assets of CCE-II (or any New CCE Subsidiary) or cash flow generated by
such assets for payment of principal or interest on the Notes. See "Certain
Relationship and Related Transactions--The Partnership Agreements."

LIMITED RIGHTS AND REMEDIES ON DEFAULT; LIMITATION ON ENFORCEMENT OF
GUARANTEES

The holders have limited rights and remedies upon the occurrence of an Event
of Default (as defined in the Indenture; see "Description of Notes--Events of
Default" herein), including the failure to pay the Notes at the Stated
Maturity Date. The holders do not have the right to compel payment on the
Stated Maturity Date or thereafter or to accelerate the Notes or commence a
bankruptcy action against the Issuer. Among such limited rights upon the
occurrence of an Event of Default is the right of the holders to increased
rates of interest on amounts outstanding under the Notes. Until the Stated
Maturity Date, if an Event of Default occurs and shall be continuing for any
reason other than failure to pay principal or interest when due, all
principal, interest and other amounts due from the Issuer shall bear the 13%
per annum stated rate of interest plus the 3% per annum Default Rate of
interest set forth in Section 10.01 of the Indenture. If the Issuer fails to
pay all of the outstanding principal on or prior to the Stated Maturity Date
or all of the accrued and unpaid interest on or prior to the third day
following the Stated Maturity Date, there shall be imposed upon the unpaid
principal amount of each Note, in addition to the 13% per annum stated rate of
interest and the 3% per annum Default Rate of interest, if applicable, a
penalty rate of interest that increases yearly from 2000 to 2004. See
"Description of Notes--Events of Default." Because of the restrictions
contained in the Subordination Agreement, as long as such agreement is in
effect it is expected that if an Event of Default occurs such Default Rate of
interest and/or penalty rate of interest shall accrue but not be currently
payable at such time. See "Description of Notes--Subordination."

The CCE, L.P. Guarantee cannot be enforced until the repayment in full and
termination of the CCE-I Credit Facility, the CCE-II Credit Facility, any
other senior indebtedness of CCE-II and senior indebtedness of New CCE
Subsidiaries. The Indenture prohibits CCE, L.P. from incurring indebtedness
but does not contain any restriction on the ability of any subsidiary of CCE,
L.P. to incur indebtedness (other than CCE-I and its Restricted Subsidiaries,
as defined in the Indenture) or the ability of CCE-II to incur additional
indebtedness, including but not limited to indebtedness incurred pursuant to
the Long Beach Investment in connection with which CCE-II and LBAC became
jointly and severally liable under the CCE-II Credit Facility, which was
increased by $140.0 million upon consummation of the Long Beach Investment.
See "Description of the Systems--Long Beach Investment by CCE-II." The CAC
Guarantee and the Cencom Cable Guarantee cannot be enforced until the
indefeasible repayment in full in cash of and termination of the commitments
to lend under the CCE-I Credit Facility. The CCE-I Credit Facility restricts
CCE-I's ability to incur additional indebtedness.

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<PAGE>

RESTRICTIONS IMPOSED BY LENDERS

The lenders under the CCE-I Credit Facility who have security interests in
all of the assets of CCE-I and CCE-II, respectively, as well as the lenders
under the CCE-II Credit Facility who have security interests in all of the
assets of CCE-II and security interests in the partnership interests of CCE-II
held by certain subsidiaries and affiliates of the Issuer, will have available
to them all of the remedies available to secured creditors under applicable
law. Moreover, the Indenture and the Subordination Agreement (pursuant to
which the holders of the Notes are and will continue to be bound) prohibit any
and all payments on the Notes until all obligations owing under the CCE-I
Credit Facility (including any refinancings thereof) are indefeasibly paid in
full in cash and all commitments to lend in respect thereof are terminated.
The final maturity dates of the CCE-I Credit Facility and the CCE-II Credit
Facility are December 31, 2004 and March 31, 2006 respectively. The final
maturity dates of the Credit Facilities may, subject to certain limited
exceptions, be extended by mutual agreement of the lenders thereto and the
obligors thereunder, without the consent of the holders.

The CCE-I Credit Facility imposes restrictions that, among other things,
limit the amount of additional indebtedness that may be incurred by CCE-I, and
imposes limitations on, among other things, investments, loans and other
payments, certain transactions with affiliates and certain mergers and
acquisitions. In addition, the CCE-I Credit Facility substantially prohibits
CCE-I from making any distributions to CCE, L.P. or to the other partners of
CCE-I. The ability of CCE-I to comply with the applicable covenants and
restrictions contained in the CCE-I Credit Facility can be affected by events
beyond its control, and there can be no assurance that CCE-I will achieve
operating results that would permit compliance with such provisions. The
breach of any of the provisions of the CCE-I Credit Facility would, under
certain circumstances, result in a default thereunder, permitting the lenders
thereunder to accelerate the indebtedness under the CCE-I Credit Facility or
foreclose upon the assets pledged to secure such payment. In such event, the
holders of the Notes might not be able to receive payment until such time as
the payment default is cured or waived, any such acceleration is rescinded or
the obligations owing under the CCE-I Credit Facility are indefeasibly paid in
full in cash and all commitments to lend in respect thereof are terminated.
Any of such events would adversely affect the Issuer's ability to service the
Notes. The CCE-II Credit Facility contains similar restrictions applicable to
CCE-II.

DEPENDENCE ON DISTRIBUTIONS FROM DIRECT AND INDIRECT SUBSIDIARIES

The Issuer is a holding company which has no significant assets, other than
its indirect investments in CCE-I and CCE-II. The Issuer must rely upon
distributions originating from CCE-I to generate the funds necessary to meet
its obligations, including the payment of principal or interest on the Notes.
The Issuer is dependent upon the receipt of distributions from CAC and Cencom
Cable, both of which, in turn, are dependent upon the receipt of distributions
from CCE, L.P., which, in turn, is dependent upon distributions from CCE-I to
provide it with funds. Thus, the Issuer will not have sufficient funds
available to repay the Notes in the event that CAC, Cencom Cable, CCE, L.P. or
CCE-I, as the case may be, is prevented for any reason from making
distributions. In this connection, it should be noted that the CCE-I Credit
Facility substantially prohibits distributions from CCE-I to CCE, L.P., until
the obligations under such credit facility are fully paid. The rights of the
Issuer and its creditors, including the holders of the Notes, to realize upon
the assets of any of the Company's subsidiaries upon any such subsidiary's
bankruptcy, liquidation or reorganization (and the consequent rights of the
holders of the Notes to participate in the realization of those assets), will
be subject to the prior claims of such subsidiary's respective creditors,
including the lenders under the CCE-I Credit Facility and, in the case of CCE-
II, the lenders under the CCE-II Credit Facility, the holder of the California
Note and the lenders under any other indebtedness of CCE-II, and in the case
of any New CCE Subsidiary, any lender to such New CCE Subsidiary. In any such
event, there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes then outstanding. See "Description of Notes--
Subordination" and "Description of Other Indebtedness." The CCE-I Credit
Facility permits CCE-I to incur additional indebtedness under certain
circumstances. See "Description of Notes."

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CONTRACTUAL SUBORDINATION

The Notes are unsecured obligations of the Issuer and by virtue of the terms
of the Subordination Agreement and the terms of the Notes are subordinate in
right and priority of payment to all existing indebtedness of the Issuer,
other than indebtedness that by its terms is expressly subordinated in right
and priority of payment to the Notes. The Issuer conducts its business
principally through the Operating Entities. See "Business--Company's
Background and Ownership Structure."

CONTROL OF THE COMPANY BY KELSO

Kelso and certain other individuals own an 85% interest in the Issuer, which
holds through CAC a 1% general partnership interest in CCE, L.P. and a 1.22%
general partnership interest in CCE-I. Kelso also owns an 85% interest in CCT,
which in turn holds a 1% general partnership interest in CCE, L.P. and a 1%
general partnership interest in CCE-II. Kelso and certain other individuals
own approximately 19.9% of Charter. Because Kelso directly controls the Issuer
and indirectly controls CAC and Cencom Cable, as well as the general partners
of CCE, L.P., CCE-I and CCE-II, Kelso can, subject to applicable law, exercise
effective control over the management and affairs of the Company, CCT and
their subsidiaries.

NONRECOURSE NATURE OF NOTES AS TO KELSO, CHARTER AND OTHERS

The Issuer is the sole obligor under the Notes. Although Charter and Kelso
have agreed to cause certain covenants under the Indenture to be complied
with, none of Charter, Kelso or any of their respective directors, officers,
partners, stockholders, employees or affiliates (other than the Guarantors)
will be an obligor under or guarantor of the Notes. There should be no
expectation that Charter, Kelso or any person other than the Issuer will, in
the future, fund the operations or deficits of the Issuer or any of their
respective subsidiaries. The CCE, L.P. Guarantee cannot be enforced until
repayment in full of and termination of commitments to lend under the CCE-I
Credit Facility, the CCE-II Credit Facility, any other senior indebtedness of
CCE-II and senior indebtedness of new CCE Subsidiaries. The CAC Guarantee and
the Cencom Cable Guarantee cannot be enforced until the repayment in full of
and termination under the CCE-I Credit Facility. See "Description of Notes--
General" and "Description of Notes--The Guarantees."

DEPENDENCE ON CHARTER AND KEY PERSONNEL OF CHARTER; POTENTIAL CONFLICTS OF
INTEREST

The Company's success depends on the management of its cable systems by
Charter and, therefore, on Charter's ability to attract, motivate and retain
highly qualified management, sales and technical personnel. In the event
Charter is unable to continue to do so, the operations and growth prospects of
the Company could be adversely affected. Charter is dependent upon the
services of certain key personnel, including Messrs. Babcock, Kent and Wood.
In the event Charter loses the services of any of Messrs. Babcock, Kent or
Wood, or certain other key personnel, its ability to conduct its business,
including management of the Systems, could be adversely affected. In addition,
in certain circumstances, in the event that the partnership that controls
Charter fails to be Controlled (as defined in the CCE-I Credit Facility) by at
least one of Messrs. Babcock, Kent or Wood, or a majority of the voting equity
and economic interests in such partnership fails to be owned by at least one
of such individuals, an Event of Default (as defined in the CCE-I Credit
Facility) shall occur under the CCE-I Credit Facility.

Furthermore, Charter's management of other cable systems could adversely
affect Charter's ability to manage the Systems by limiting the availability
and accessibility of certain Charter personnel, including the personnel who
service the Systems as well as other Charter-managed systems in the same
operating region (but owned by other legal entities).

In the event the Company's relationship with Charter is terminated for any
reason, the Company will no longer benefit from, among other things,
advantageous programming opportunities, acquisition opportunities and
financing relationships which are made available to the Company through
Charter. See "Business--Business Strategy--Maximize Benefits Provided by
Relationship with Charter." In such event, the Company's operating expenses
and access to capital could be adversely affected.

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<PAGE>

The other cable systems managed by Charter and owned by certain of its
affiliated entities are located principally in Alabama, Georgia, Kentucky,
Louisiana, Missouri, North Carolina, South Carolina, Tennessee and Texas.
Although the Company's acquisition strategy calls for the acquisition of
additional cable systems in the vicinity of the Company's existing operations,
such systems may become available for sale in tandem with systems located in
other portions of the country, for aggregate amounts which exceed the
Company's purchasing ability, or which otherwise do not fit the Company's
business strategy. It is possible, therefore, that systems in close proximity
to the Regions which are identified for sale may be acquired by Charter itself
or other Charter-affiliated entities. There can be no assurance that such
systems, if acquired by Charter or a Charter-affiliated entity, would
ultimately be sold or otherwise transferred to the Company, or that the
Company will be able to take advantage of any other opportunity which becomes
available to Charter or any of its affiliates.

Subject to certain exceptions, the Issuer will not permit CCE-I to engage in
any transaction with an affiliate on terms less advantageous to CCE-I than
would be the case if such transaction were effected on an arm's length basis
with a non-affiliate. This restriction shall not apply to any transaction
(including the payment of fees and expenses) permitted under the CCE-I Credit
Facility from time to time or, after the CCE-I Credit Facility Termination
Date (as defined in "Description of Notes--Certain Definitions"), which is
consistent with past practice.

LIMITED OPERATING HISTORY

The Issuer was formed on November 17, 1994 to consummate the Crown
Transaction in January 1995 and thereafter act as a holding company for CAC
and Cencom Cable. The Company has grown principally through acquisitions. See
"Business--Description of the Systems." Prospective investors, therefore, have
limited historical financial information about the Company and about the
results that can be achieved by Charter in managing the Systems to evaluate
its performance and an investment in the Notes. In addition, as a result of
the Company's rapid growth through acquisitions, past operating history is not
necessarily indicative of future results. Further, there can be no assurance
that the Company will be able to implement successfully its business strategy.

RISKS RELATING TO ACQUISITION STRATEGY

A significant element of the Company's strategy is to expand its operations
by acquiring cable television systems located in reasonable proximity to
existing systems or of a sufficient size to enable the acquired system to
serve as the basis for a new cluster. There can be no assurance that the
Company will be able to identify and acquire such systems or that it will be
able to finance such acquisitions in the future. Furthermore, any acquisition
may have an adverse effect upon the Company's operating results or cash flow,
particularly for acquisitions of new systems which require significant capital
expenditures. Thus, there can be no assurance that the Company will be able to
integrate successfully any acquired business with its existing operations or
realize any efficiencies therefrom, or that any such acquisition will be
profitable or that the Company will be able to obtain any required financing
to acquire additional systems in the future. See "Business--Description of the
Systems" and "Business--Business Strategy."

POTENTIAL NEGATIVE EFFECT ON OPERATIONS DUE TO EXTENSIVE REGULATION OF THE
CABLE TELEVISION INDUSTRY

The cable television industry is subject to extensive regulation by federal,
local and, in some instances, state governmental agencies. The Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act," together with the 1984 Cable Act, the "Cable Acts"), both of which
amended the Communications Act, established a national policy to guide the
development and regulation of cable television systems. The 1992 Cable Act
significantly expanded the scope of cable television regulation on an
industry-wide basis by imposing rate regulation, carriage requirements for
local broadcast stations, customer service obligations and other requirements.
The 1992 Cable Act and the FCC's rules implementing that Act generally have
increased the administrative and operational expenses and in certain instances
required rate reductions for cable television systems and have resulted in
additional regulatory oversight by the FCC and local or state franchise
authorities. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business--Regulation in the

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Cable Television Industry." Under the FCC's initial rate regulations pursuant
to the 1992 Cable Act, many cable systems were required to reduce their rates,
some by 17%. See "Business--Regulation in the Cable Television Industry."

Telecommunications Legislation; Additional Competition

The Telecommunications Act was signed into law by the President on February
8, 1996, and substantially amends the Communications Act by altering federal,
state and local laws and regulations pertaining to cable television,
telecommunications and other services. The Telecommunications Act also
authorizes additional competition in the cable television industry, including
competition from local exchange companies ("LECs"), which include the Regional
Bell Operating Companies ("RBOCs"), and from public utilities. See "--
Competition in the Cable Television Business" and "Business--Regulation in the
Cable Television Industry--Telecommunications Legislation."

Telephone Company Provision of Video Programming; Additional Competition

Under the Telecommunications Act, telephone companies can compete directly
with cable operators in the provisioning of video programming in the telephone
company's service areas, with certain regulatory safeguards. The new
legislation recognizes several multiple entry options for telephone companies
to provide competitive video programming. Local exchange carriers, including
the RBOCs, will be allowed to compete with cable operators both inside and
outside the LECs' telephone service areas with certain limitations, including
limitations on LEC buyouts of cable systems within the LEC's telephone service
area, cable operator buyouts of LEC systems within the cable operator's
franchise area, and joint ventures between cable operators and LECs in the
same markets. However, there are some statutory exceptions, and the FCC may
grant waivers of the buyout provisions in certain cases. See "--Competition in
the Cable Television Business" and "Business--Regulation in the Cable
Television Industry."

Miscellaneous Requirements and Provisions Affecting Cable Operators

The Telecommunications Act also imposes other miscellaneous requirements on
cable operators, including an obligation to fully scramble or block at no
charge the audio and video portion of any channel not specifically subscribed
to by a household. The Telecommunications Act also amends the definition of
"cable system" so that a broader class of entities (including some entities
which may compete with the Company) providing video programming will be exempt
from regulation as a cable system under the Communications Act.

Franchise Expiration; Renewal

A franchise relating to the CCE-I Systems (as defined herein) located in the
State of Connecticut is currently being negotiated to be renewed. Connecticut
regulates cable systems on a statewide basis (as opposed to franchising by the
various municipalities). The Company's franchise for "Area 13" in Connecticut
(the northeastern system) is scheduled to expire in July 1998. The Company
requested the commencement of renewal proceedings in January 1996 with the
Connecticut Department of Public Utility Control ("DPUC"). The DPUC granted
the Company's request for an "informal renewal" and has requested, in
conformance with general procedures, that the Company submit its Proposal for
Renewal as the next step in the process. The DPUC has also undertaken,
pursuant to its customary procedures, a community needs assessment. Management
believes that it generally has a good relationship with the DPUC.

Franchises, including the Connecticut franchise referenced above, covering
an aggregate of approximately 40% of the Company's total subscriber base, are
currently within the three year renewal window provided in the Communications
Act. While there can be no assurance that all of these franchises will be
renewed on commercially reasonable terms, the Company believes that it
maintains generally good relationships with its franchising authorities.

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COMPETITION IN THE CABLE TELEVISION BUSINESS

Cable television systems also face competition from alternative methods of
receiving and distributing television signals and from other sources of home
entertainment. Within the home video programming market, the Company competes
primarily with home satellite and wireless cable providers and, when existing
franchises become available for renewal, with other cable operators. In
addition, the Telecommunications Act allows LECs to provide a wide variety of
video services competitive with services provided by cable systems and to
provide cable services directly to customers in the telephone companies'
service areas, with some regulatory safeguards. In Connecticut, the DPUC
recently granted to a subsidiary of a local telephone company a statewide
franchise. The local telephone company subsidiary proposed to provide cable
television services initially to customers in at least one community currently
served by CCE-I. This new statewide cable franchise is currently being
challenged by a regional cable association. The association filed an appeal in
the Connecticut Superior Court challenging the DPUC's grant of the statewide
franchise on several substantive and procedural grounds. The Company cannot
predict the outcome of this litigation. According to the terms of its
franchise, the service must pass all homes in Connecticut within eleven years.
See "Business--Competition in the Cable Television Business." Management
cannot predict the extent to which competition will materialize in the cable
industry generally from other cable television operators, telephone companies,
other distribution systems for delivering video programming to the home, or
other potential competitors, including those from technologies not yet
available in the marketplace, and, if such competition materializes, the
extent of its effect on the Company. Many of the Company's competitors or
potential competitors have greater technical, financial and other resources
than the Company. See "Business--Competition in the Cable Television
Business."

ORIGINAL ISSUE DISCOUNT CONSEQUENCES OF THE NOTES

Under the Notes, interest is not due and payable until the final maturity of
the Notes. Consequently, the holders of the Notes generally will be required
to include amounts in gross income for Federal income tax purposes in advance
of the receipt of the cash payments to which such income is attributable. See
"Certain Federal Income Tax Consequences" for a more detailed discussion of
the Federal income tax consequences to the holders of the Old Notes of the
acquisition, ownership and disposition (including repayment or redemption) of
the New Notes.

ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON RESALE

There is currently no established public market for the Notes. There can be
no assurance as to (i) the liquidity of any market that may develop, (ii) the
ability of the holders of Notes to sell their Notes or (iii) the price at
which the holders of Notes would be able to sell their Notes. If such a market
were to exist, the Notes could trade at prices that may be higher or lower
than their principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar securities and the
financial performance of the Issuer. The Issuer does not presently intend to
apply for the listing of the Notes on any national securities exchange or on
the National Association of Securities Dealers Automated Quotation System;
however, the Notes have been designated for trading in the PORTAL market.
Accordingly, no assurance can be given as to the development or liquidity of
any market for the Notes.

Under the Indenture, the holders are collectively entitled to a single
additional demand registration right (independent of the registration pursuant
to which this Exchange Offer is being made), which, if exercised, will be at
the expense of the holders of the Notes as described herein. See "Description
of the Notes--Registration Rights."

30
<PAGE>

CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES BY BROKER-DEALERS

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Issuer does not
currently anticipate it will register the Old Notes under the Securities Act,
except in the event that holders of $15 million or more of the Notes request
registration pursuant to the registration right described in Section 12.01(b)
of the Indenture. Based on an interpretation by the staff of the Commission
set forth in no-action letters issued to third parties unrelated to the
Issuer, New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold or otherwise transferred by holders
thereof (other than any such holder which is an "affiliate" of the Issuer or
any of the Guarantors within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such Notes. Each broker-dealer
that receives New Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. The Letter of Transmittal states that, by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Old Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Issuer has agreed that, for a period of 180 days after the
effective date of this Prospectus, it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution." However, to comply with the securities laws of certain
jurisdictions, if applicable, the New Notes may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied
with. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
will be adversely affected.

31
<PAGE>

THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

The Old Notes were sold by the Issuer on January 18, 1995 to HC Crown, which
resold the Old Notes to "qualified institutional buyers" (as defined in Rule
144A under the Securities Act), including an affiliate of HC Crown. In
connection with the sale of the Old Notes, the Issuer and HC Crown entered
into a Letter Agreement dated as of November 15, 1996 (the "Letter Agreement")
pursuant to which the Issuer agreed to file with the Commission a registration
statement (the "Exchange Offer Registration Statement") with respect to an
offer to exchange the Old Notes for New Notes. In addition, the Issuer agreed
to use its best efforts to cause the Exchange Offer Registration Statement to
become effective under the Securities Act and to issue the New Notes pursuant
to the Exchange Offer.

The Exchange Offer is being made pursuant to the Letter Agreement to satisfy
the Issuer's obligations thereunder. The term "holder of Old Notes," with
respect to the Exchange Offer, means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Notes are held of record by the Depository Trust Company (the
"Depositary"). The Issuer is not required to file any registration statement
to register any outstanding Old Notes. Holders of Old Notes who do not tender
their Old Notes or whose Old Notes are tendered but not accepted would have to
rely on exemptions to registration requirements under the securities laws,
including the Securities Act, if they wish to sell their Old Notes.

Based on an interpretation by the staff of the Commission set forth in Exxon
Capital Holdings Corp., SEC No-Action Letter (April 13, 1989), Morgan Stanley
& Co. Inc., SEC No-Action Letter (June 5, 1991) and Shearman & Sterling, SEC
No-Action Letter (July 2, 1993), the Issuer believes that the New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any holder of such New Notes
(other than a person that is an "affiliate" of the Issuer or any of the
Guarantors within the meaning of Rule 405 under the Securities Act and except
as set forth in the next paragraph) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holder's business and
such holder is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of such New Notes.

If any person were to be participating in the Exchange Offer for the purpose
of distributing securities in a manner not permitted by the staff's
interpretation (i) the position of the staff of the Commission enunciated in
interpretive letters would be inapplicable to such person and (ii) such person
would be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."

Except as aforesaid, this Prospectus may not be used for any offer to
resell, resale or other transfer of New Notes.

The Exchange Offer is not being made to, nor will the Exchange Agent accept
surrenders for exchange from, holders of Old Notes in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or Blue Sky laws of such jurisdiction. Prior to the
Exchange Offer, however, the Issuer will use its best efforts to register or
qualify the New Notes for offer and sale under the securities or Blue Sky laws
of such jurisdictions as any such holder requests in writing and do any and
all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the New Notes.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal the Company will accept any and
all Old Notes validly tendered prior to 5:00 p.m., New York time,

32
<PAGE>

on the Expiration Date (as defined below). The Issuer will issue up to $82.0
million aggregate principal amount of New Notes in exchange for a like
principal amount of outstanding Old Notes which are validly tendered and
accepted in the Exchange Offer. Subject to the conditions of the Exchange
Offer described below, the Issuer will accept any and all Old Notes which are
so tendered. Holders may tender some or all of their Old Notes pursuant to the
Exchange Offer.

The form and terms of the New Notes will be the same in all material
respects as the form and terms of the Old Notes, except that the New Notes
will be registered under the Securities Act and hence will not bear legends
restricting the transfer thereof.

Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Issuer intends to conduct the Exchange
Offer in accordance with the provisions of the Letter Agreement. Old Notes
which are not tendered for exchange or are tendered but not accepted in the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Indenture. Under the Indenture, the holders are entitled to a single demand
registration right (in addition to the registration pursuant to which this
Exchange Offer is being made), pursuant to which the Issuer and the Guarantors
will use their reasonable best efforts to cause to become effective a shelf
registration statement with respect to the resale of the Notes and to keep
such shelf registration statement continuously effective until nine months
after the effective date thereof.

The Issuer shall be deemed to have accepted validly tendered Old Notes when,
as and if the Issuer has given oral or written notice thereof to Harris Trust
and Savings Bank acting in its capacity as the exchange agent (the "Exchange
Agent") for the Exchange Offer. The Exchange Agent will act as agent for the
tendering holders for the purpose of receiving the New Notes from the Issuer.

If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.

Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. HC Crown will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; CLOSING

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Issuer, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.

In order to extend the Exchange Offer, the Issuer will notify the Exchange
Agent of any extension by oral or written notice and will announce such
extension on the next business day after the previously scheduled Expiration
Date. Such announcement will state that the Issuer is extending the Exchange
Offer for a specified period of time. Without limiting the manner in which the
Issuer may choose to make a public announcement of any extension of the
Exchange Offer, the Issuer shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.

CONDITIONS

Notwithstanding any other term of the Exchange Offer, the Issuer will not be
required to accept any Old Notes for exchange, or exchange any New Notes for
any Old Notes, and may terminate or amend the Exchange Offer before the
acceptance of any Old Notes for exchange, if the Exchange Offer violates any
applicable law or interpretation by the staff of the Commission.

33
<PAGE>

If the Issuer determines in its sole discretion that the foregoing condition
exists, the Issuer may (i) refuse to accept any Old Notes and return all
tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of holders who tendered such Old Notes
to withdraw their tendered Old Notes, or (iii) waive such condition with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn. If such waiver constitutes a material change to the
Exchange Offer, the Issuer will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the holders, and the Issuer
will extend the Exchange Offer as required by applicable law.

PROCEDURES FOR TENDERING

Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (unless such tender is being effected pursuant to the procedure for
book-entry transfer described below) and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.

Any financial institution that is a participant in the Depositary's Book-
Entry Transfer Facility system may make book-entry delivery of the Old Notes
by causing the Depositary to transfer such Old Notes into the Exchange Agent's
account in accordance with the Depositary's procedure for such transfer.
Although delivery of Old Notes may be effected through book-entry transfer
into the Exchange Agent's account at the Depositary, the Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received or
confirmed by the Exchange Agent at its addresses set forth in "Exchange Agent"
below prior to 5:00 p.m., New York City time, on the Expiration Date. DELIVERY
OF DOCUMENTS TO THE DEPOSITARY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

The tender by a holder of Old Notes will constitute an agreement between
such holder and the Issuer in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.

The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders of Old Notes. Instead of delivery by mail it is recommended that
holders of Old Notes use an overnight or hand delivery service. In all cases
sufficient time should be allowed to assure delivery to the Exchange Agent
before the Expiration Date. No Letter of Transmittal or Old Notes should be
sent to the Issuer. Holders of Old Notes may request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect the tenders
for such Holders.

Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder of Old Notes which has not completed the box entitled
"Special Payment Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. In
the event that signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by a member of a signature guarantee program within the meaning of
Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").

If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, owners of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuer,
evidence satisfactory to the Issuer of their authority to so act must be
submitted with the Letter of Transmittal.

All questions as to the validity, form, eligibility (including time of
receipt) and acceptance and withdrawal of tendered Old Notes will be
determined by the Issuer in its sole discretion, which determination will be
final and binding. The Issuer reserves the absolute right to reject any and
all Old Notes not properly tendered or any

34
<PAGE>

Old Notes the Issuer's acceptance of which would, in the opinion of counsel
for the Issuer, be unlawful. The Issuer also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Old Notes.
The Issuer's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such times as the
Issuer shall determine. Although the Issuer intends to request the Exchange
Agent to notify holders of Old Notes of defects or irregularities with respect
to tenders of Old Notes, neither the Issuer, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects
or irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.

In addition, the Issuer reserves the right in its sole discretion (subject
to limitations contained in the Indenture) (i) to purchase or make offers for
any Old Notes that remain outstanding subsequent to the Expiration Date and
(ii) to the extent permitted by applicable law, purchase Old Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers could differ from the terms of the Exchange Offer.

By tendering, each holder of Old Notes will represent to the Issuer that,
among other things, the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the holder and that neither the
holder nor any such other person (i) has an arrangement or understanding with
any person to participate in the distribution of such New Notes, (ii) is an
"affiliate", as defined in Rule 405 under the Securities Act, of the Issuer or
any of the Guarantors or (iii) is engaged in, or intends to engage in, a
distribution of the New Notes. If the holder is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
such holder by tendering will acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution."

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes and other
required documents to the Exchange Agent, or cannot complete the procedure for
book-entry transfer prior to the Expiration Date, may effect a tender if:

(a) The tender is made through an Eligible Institution;

(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes (if available) and the principal amount of Old Notes
tendered together with a duly executed Letter of Transmittal (or a
facsimile thereof), stating that the tender is being made thereby and
guaranteeing that, within five business days after the Expiration Date, the
certificate(s) representing the Old Notes to be tendered in proper form for
transfer (or a confirmation of a book-entry transfer into the Exchange
Agent's account at the Depositary of Old Notes delivered electronically)
and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and

(c) Such certificate(s) representing all tendered Old Notes in proper
form for transfer (or confirmation of a book-entry transfer into the
Exchange Agent's account at the Depositary of Old Notes delivered
electronically) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three business days
after the Expiration Date.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders of Old Notes who wish to tender their Old Notes according to
the guaranteed delivery procedures set forth above.

35
<PAGE>

WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date,
unless previously accepted for exchange.

To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date, and prior to acceptance for exchange thereof by the
Issuer. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the
Depositor in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Old Notes register the transfer of such
Old Notes into the name of the person withdrawing the tender, and (iv) specify
the name in which any such Old Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be determined by
the Issuer, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly re-tendered. Any Old
Notes which have been tendered but which are not accepted for exchange or
which are withdrawn will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be re-
tendered by following one of the procedures described above under "Procedures
for Tendering" at any time prior to the Expiration Date.

EXCHANGE AGENT

Harris Trust and Savings Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:

By Registered or Certified Mail:
Harris Trust and Savings Bank
c/o Harris Trust Company of New York
Wall Street Station
P.O. Box 1010
New York, NY 10268-1010

Facsimile Transmission Number:
(212) 701-7636
(212) 701-7637

By Hand/Overnight Delivery: Harris Trust and Savings Bank
c/o Harris Trust Company of New York
77 Water Street, 5th Floor
New York, NY 10005

FEES AND EXPENSES

The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by HC Crown. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitation may be
made by telephone, facsimile or other electronic transmission or in person by
officers and regular employees of the Issuer and their affiliates.

The Issuer has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Issuer, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith. HC Crown may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by
them in forwarding

36
<PAGE>

copies of this Prospectus, Letters of Transmittal and related documents to the
beneficial owners of the Old Notes and in handling or forwarding tenders for
exchange. HC Crown will pay the other expenses to be incurred in connection
with the Exchange Offer, including fees and expenses of the Trustee,
accounting and legal fees and printing costs.

HC Crown will pay all transfer taxes, if any, applicable to the exchange of
Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.

CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES

Generally, holders of Old Notes (other than any holder which is an
"affiliate" of the Issuer or any of the Guarantors within the meaning of Rule
405 under the Securities Act) that exchange their Old Notes for New Notes
pursuant to the Exchange Offer may offer such New Notes for resale, resell
such New Notes, and otherwise transfer such New Notes without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided such New Notes are acquired in the ordinary course of the holders'
business, and such holders have no arrangement with any person to participate
in a distribution of such New Notes. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such New Notes. See "Plan of Distribution."
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or register the New Notes prior to offering or
selling such New Notes. Upon request by holders of Old Notes prior to the
Exchange Offer, the Issuer will register or qualify the New Notes in certain
jurisdictions subject to the conditions in the Letter Agreement. If a holder
does not exchange such Old Notes for New Notes pursuant to the Exchange Offer,
such Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. In general the Old Notes may not be offered
or sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. To the extent that Old Notes are not
tendered or are tendered but not accepted in the Exchange Offer, a holder's
ability to sell untendered Old Notes could be adversely affected.

ACCOUNTING TREATMENT

The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Issuer's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Issuer upon the consummation of the Exchange Offer.

FEDERAL INCOME TAX CONSEQUENCES

Under current Federal law, which is subject to retroactive change, the
substitution of New Notes for Old Notes pursuant to the Exchange Offer should
not be treated as a sale, exchange, disposition or other taxable event for the
holders of the Old Notes for Federal income tax purposes. Holders should not
recognize any taxable gain or loss or any interest income as a result of
substituting New Notes for Old Notes pursuant to the Exchange Offer, and a
holder should have the same adjusted tax basis and holding period in the New
Notes as it had in the Old Notes immediately before the substitution and the
New Notes should have the same issue price (and adjusted issue price
immediately after the substitution) and the same amount of original issue
discount, if any, as the Old Notes. Holders, however, are strongly urged to
consult their own tax advisors regarding the consequences of the Exchange
Offer, including the effect under Federal, state, local and any applicable
foreign laws. For federal income tax consequences of ownership of the Notes
generally, see "Certain Federal Income Tax Consequences."

37
<PAGE>

THE COMPANY

The Company's principal business is the ownership, operation and development
of cable television systems. CCE-I owns, operates and develops cable
television systems in the St. Louis, metropolitan area including southwestern
Illinois and in certain rural and suburban areas in Connecticut and
Massachusetts. As of March 31, 1997, the cable television systems owned by
CCE-I passed approximately 536,300 homes and served approximately 339,500
basic subscribers in western and northeastern Connecticut, Massachusetts,
eastern Missouri and southwestern Illinois. In addition, CCE-II owns, operates
and develops cable television systems in metropolitan areas of southern
California. The Company's operations are managed under the direction of
Charter, a privately held owner and manager of cable television systems. As of
March 31, 1997, Charter managed cable television systems which serve
approximately 1,011,600 basic subscribers (including the Company's
subscribers). Assuming completion of all publicly announced cable television
industry transactions, management believes that Charter would be among the top
ten largest MSOs in the United States based on number of basic subscribers.
The Company seeks to own and operate cable television systems serving an
increased number of basic subscribers in the Regions.

Barry L. Babcock, Jerald L. Kent and Howard L.Wood formerly served as
members of the senior management team of Cencom Cable Associates, Inc.
("Cencom"), which, during the nine-year period prior to its sale in 1991 to
Crown Media, Inc. ("Crown Media"), purchased and developed cable television
systems through acquisitions ("Cencom Systems"). See "Business--Business
Strategy--Maximize Benefits Provided by Relationship with Charter." In
addition, Kelso and certain other individuals have invested an aggregate of
approximately $68.0 million in the Issuer. As a result of such investment,
Kelso and such individuals own directly or indirectly 85% of the outstanding
equity interests in the Issuer, with distributions on exit varying depending
on the rates of return on the stockholders' equity investment in the Issuer.
See "Risk Factors--Control of the Issuer and the Company by Kelso."

The principal executive offices of the Issuer are located at 12444
Powerscourt Drive, Suite 400, St. Louis, Missouri 63131. Its telephone number
is (314) 965-0555.

38
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated unaudited capitalization of
the Issuer as of March 31, 1997. This table should be read in conjunction with
the audited and unaudited Financial Statements of the Issuer and the related
Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
UNAUDITED
AS OF MARCH 31,
1997
---------------
ACTUAL
---------------
(IN MILLIONS)
<S> <C>
Debt:
CCE-I Credit Facility...................................... $468.0(a)
Notes (including accrued interest)......................... 108.3
------
Total debt............................................... 576.3
Equity:
Total contributed capital.................................. 80.0
Accumulated losses......................................... (89.2)
------
Total capitalization....................................... $567.1
======
</TABLE>
- --------

(a) As of March 31, 1997, $37.0 million was unused and available for
borrowing, under the CCE-I Credit Facility.

39
<PAGE>

UNAUDITED SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA

The unaudited statements of operations, balance sheets, financial ratios and
other data for the years ended December 31, 1995 and 1996, set forth below
have been derived from the consolidated financial statements of CCA which have
been audited by Arthur Andersen LLP. The unaudited combined statement of
operations, financial ratios and other data for the year ended December 31,
1994, set forth below have been derived from the financial statements of
Cencom Cable Entertainment, Inc.--Missouri System which have been audited by
Arthur Andersen LLP, the financial statements of Crown Media, Inc.--Western
Connecticut and Crown Cable, L.P. acquired from HC Crown (the "Crown Systems")
which have been audited by KPMG Peat Marwick LLP, and represent CCA's
predecessor. The unaudited combined statement of operations, financial ratios
and other data for the year ended December 31, 1993, set forth below has been
derived from the financial statements of Cencom Cable Entertainment, Inc.--
Missouri System, Crown Media, Inc.--Western Connecticut and Crown Cable, L.P.,
which have been audited by KPMG Peat Marwick LLP. The unaudited combined
statement of operations, financial ratios and other data for the year ended
December 31, 1992, set forth below have been derived from the unaudited
financial statements of Cencom Cable Entertainment, Inc.--Missouri System and
the unaudited financial statements of Tele-media Company of Northeastern
Connecticut, L.P., the Housatonic CableVision Company, L.P., the New Milford
CableVision Company and the Mid-Connecticut CableVision Company (which
collectively represent the predecessor of the Crown Systems).

The unaudited financial data for the three month periods ended March 31,
1996 and 1997, include all adjustments, consisting of normal recurring
adjustments, which management considers necessary for the fair presentation of
the financial position and the results of operations of CCA for such periods.
The results for the three month periods are not necessarily indicative of the
results to be expected for the full year. The data set forth below should be
read in conjunction with the historical financial statements and the notes
thereto, reports of the independent public accountants thereto and the other
financial information included elsewhere in the Prospectus.

The unaudited pro forma financial statements are based upon the historical
financial statements of CCA, the Illinois Systems (prior to their acquisition
by CCE-I) and the Masada Systems (prior to their acquisition by CCE-I). The
unaudited pro forma balance sheet and pro forma statement of operations data
has been derived from the audited and unaudited financial statements of
operations included elsewhere in this Prospectus.

The following unaudited pro forma statement of operations data for the year
ended December 31, 1996 gives effect to the applicable pro forma adjustments,
as if such pro forma adjustments had occurred on January 1, 1996. There are no
pro forma adjustments reflected in the pro forma balance sheet data as all
acquisitions were consummated prior to December 31, 1996. The historical
acquisitions have been accounted for under the purchase method of accounting.
The unaudited pro forma financial information may therefore not be indicative
of the actual results of operations of CCA had the transactions been completed
on the dates assumed, nor are such financial statements necessarily indicative
of the results of operations of CCA that may exist in the future. The
unaudited pro forma financial information should be read in conjunction with
the historical financial statements and the related Notes thereto appearing
elsewhere in this Prospectus.

40
<PAGE>

CCA AND SUBSIDIARIES

UNAUDITED SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
(NUMBERS IN THOUSANDS, EXCEPT FOR FINANCIAL RATIOS AND SUBSCRIBER DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR OF CCA CCA
--------------------------------- -----------------------------------------------------
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------- ------------------------------ -------------------
PRO
FORMA (a)
1992 1993 1994 1995 1996 1996 1996 1997
-------- -------- --------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 81,557 $ 85,627 $ 87,623 $ 99,689 $143,023 $151,548 $ 30,813 $ 40,487
Operating Expenses:
Operating, general and
administrative......... 41,603 43,270 44,164 48,943 71,498 76,026 15,930 20,665
Management fees......... 2,617(b) 2,723(b) 2,781(b) 6,499 5,034 6,138(c) 1,106 1,331
Depreciation and
amortization........... 47,662 54,804 54,272 51,194 65,757 68,958 15,107 15,218
-------- -------- --------- --------- -------- -------- -------- ---------
Total operating
expenses............... 91,882 100,797 101,217 106,636 142,289 151,122 32,143 37,214
-------- -------- --------- --------- -------- -------- -------- ---------
Operating Income
(loss)................. (10,325) (15,170) (13,594) (6,947) 734 426 (1,330) 3,273
Interest expense........ (19,547) (12,051) (15,053) (35,461) (46,654) (50,132) (10,446) (12,894)
Interest income......... 66 -- 20 504 164 223 67 1
Other income (expense).. 267 8 444 42 (1,058) (1,058) (517) 57
-------- -------- --------- --------- -------- -------- -------- ---------
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from
discontinued operation
and minority interest
in loss of subsidiary.. (29,539) (27,213) (28,183) (41,862) (46,814) (50,541) (12,226) (9,563)
Equity in loss of
unconsolidated limited
partnerships........... -- -- -- (1,402) (6,303) (6,303) (1,838) (1,910)
Provision for income
taxes.................. -- -- -- -- -- -- -- --
Loss from discontinued
operation.............. -- -- -- -- (1,516) -- -- --
Minority interest in
loss of subsidiary..... -- -- -- 1,503 15,999 17,676 4,112 2,715
-------- -------- --------- --------- -------- -------- -------- ---------
Net loss................ $(29,539) $(27,213) $ (28,183) $ (41,761) $(38,634) $(39,168) $ (9,952) $ (8,758)
======== ======== ========= ========= ======== ======== ======== =========
Ratio of earnings to
fixed
charges (d)............ -- -- -- -- -- -- -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $ 666,139 $744,080 $744,080 $ 732,123
Deferred taxes.......... 55,500 55,500 55,500 55,500
Total debt (including
current maturities).... 447,439 572,843 572,843 576,251
Shareholders' investment
(deficit).............. 38,239 (395) (395) (9,153)
FINANCIAL RATIOS AND
OTHER DATA:
EBITDA (e).............. $ 39,954 $ 42,357 $ 43,459 $ 50,746 $ 71,525 $ 75,522 $ 14,883 $ 19,822
EBITDA margin (f)....... 49.0% 49.5% 49.6% 50.9% 50.0% 49.8% 48.3% 49.0%
Capital expenditures
(g).................... $ 13,375 $ 19,128 $ 24,513 $ 22,024 $ 33,898 35,461 $ 6,778 $ 7,964
Total debt to EBITDA.... 8.8x 8.0x 7.6x 7.3x
EBITDA to interest
expense................ 1.4x 1.5x 1.5x 1.5x
Cash flows from
operating activities... $ 19,484 $ 28,935 $ 28,329 $ 27,074 $ 37,028 $ 39,984 $ 2,101 $ 6,222
OPERATING STATISTICAL
DATA (AT END OF PERIOD,
EXCEPT AVERAGES):
Homes passed............ 339,142 344,418 350,404 413,930 533,563 533,563 423,757 536,321
Basic subscribers....... 185,767 196,087 206,948 266,119 338,284 338,284 272,581 339,497
Basic penetration....... 54.8% 56.9% 59.1% 64.3% 63.4% 63.4% 64.3% 63.3%
Premium service units... 125,745 126,396 145,967 173,172 194,602 194,602 170,615 184,417
Premium penetration..... 67.7% 64.5% 70.5% 65.1% 57.5% 57.5% 62.6% 54.3%
Average monthly revenue
per basic subscriber
(h).................... $ 36.59 $ 36.39 $ 35.28 $ 36.89 $ 38.20 37.33 $ 37.68 $ 39.75
</TABLE>

41
<PAGE>

- --------

(a) The pro forma statement of operations data assumes the consummation of the
Illinois Acquisition and the Masada Acquisition as if the applicable
transactions had occurred on January 1, 1996. There are no pro forma
adjustments reflected in the pro forma balance sheet data as all
acquisitions were consummated prior to December 31, 1996.
(b) Represents combined management fees for the Crown systems during periods
prior to their acquisition by CCA for those systems which paid management
fees. These fees are not necessarily indicative of the management fees that
would have been charged had the Crown systems been operated by CCA or that
may be expected for any future periods.

(c) CCE-I pays annual management and financial advisory fees to Charter and
Kelso & Company equal to certain specified contractual amounts set forth in
the management and financial advisory agreements executed with Charter and
Kelso & Company, such amounts increase upon the acquisition of additional
cable television systems and decrease with the disposition of any cable
television systems. As of March 31, 1997, CCE-I pays Charter $4,845,000
annually and Kelso & Company $552,500 annually based upon the current
contracts. In addition, the management agreement with Charter provides for
an annual bonus equal to 30% of the excess, if any, of operating cash flow
(as defined in the management agreement) over the projected operating cash
flow for the year; however, payment of such bonuses is deferred until
termination of the CCE-I Credit Facility. The accrued but unpaid bonus as
of March 31, 1997 and December 31, 1996 was $1,755,000 of which $740,000
was recorded during 1996. See "Certain Relationships and Related
Transactions" and "Description of Notes."

(d) The combined earnings of the Crown Systems were inadequate to cover fixed
charges by $29.5 million, $27.2 million and $28.2 million for the years
ended December 31, 1992, 1993 and 1994, respectively. The earnings of CCA's
systems were inadequate to cover fixed charges by $41.8 million and $38.6
million for the years ended December 31, 1995 and 1996, respectively, and
$10.0 million and $8.8 million for the three months ended March 31, 1996
and 1997, respectively.
(e) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss from
discontinued operation and minority interest in loss of subsidiary.
Management believes EBITDA is a meaningful measure of performance because
it is commonly used in the cable television industry to analyze and compare
cable television companies on the basis of operating performance, leverage
and liquidity. EBITDA is not presented in accordance with generally
accepted accounting principles and should not be considered an alternative
to, or more meaningful than, operating income or operating cash flows as an
indicator of CCA's operating performance. EBITDA does not include CCA's
debt obligations or significant commitments.
(f) Represents EBITDA as a percent of revenues.
(g) Capital expenditures exclude cash consideration paid in connection with the
acquisition of cable systems.

(h) Revenues divided by basic subscribers divided by the number of months in
the period.

42
<PAGE>

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following unaudited pro forma financial statements are based upon the
historical financial statements of CCA, the Illinois Systems (prior to their
acquisition by CCE-I), and the Masada Systems (prior to their acquisition by
CCE-I). The following unaudited pro forma statement of operations data for the
year ended December 31, 1996, gives effect to the applicable pro forma
adjustments, as if such pro forma adjustments had occurred on January 1, 1996.
There are no pro forma adjustments reflected in the pro forma balance sheet
data as all acquisitions were consummated prior to December 31, 1996. The
acquisitions of the Illinois Systems and the Masada Systems have been
accounted for under the purchase method of accounting. The unaudited pro forma
financial statements may not be indicative of what the results of CCA would
have been had the transactions been completed on the dates assumed, nor are
such financial statements necessarily indicative of the results of operations
of CCA that may exist in the future. The unaudited pro forma financial
statements should be read in conjunction with the Notes thereto and with the
historical financial statements and the related Notes thereto appearing
elsewhere in this Prospectus.

43
<PAGE>

CCA AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENT DATA
(FOR THE YEAR ENDED AND AS OF DECEMBER 31, 1996) (NUMBERS IN THOUSANDS, EXCEPT
FOR FINANCIAL RATIOS AND SUBSCRIBER DATA)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
HISTORICAL HISTORICAL PRO FORMA HISTORICAL
CCA ACQUISITIONS COMBINED ADJUSTMENTS ACQUISITIONS
-------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $143,023 $8,525 (a) $151,548 $ -- $151,548
Operating Expenses:
Operating, general and
administrative........ 71,498 4,528 (a) 76,026 -- 76,026
Management fees........ 5,034 503 (a) 5,537 601(b) 6,138
Depreciation and
amortization.......... 65,757 3,629 (a) 69,386 (428)(c) 68,958
-------- ------ -------- ------- --------
Total operating
expenses............. 142,289 8,660 150,949 173 151,122
-------- ------ -------- ------- --------
Operating Income
(loss)................. 734 (135)(a) 599 (173) 426
Interest expense....... (46,654) (1,610)(a) (48,264) (1,868) (50,132)
Interest income........ 164 59 (a) 223 -- 223
Other income
(expense)............. (1,058) -- (1,058) -- (1,058)
-------- ------ -------- ------- --------
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from dis-
continued operation and
minority interest in
loss of subsidiary..... (46,814) (1,686) (48,500) (2,041) (50,541)
Equity in loss of
unconsolidated limited
partnerships.......... (6,303) -- (6,303) -- (6,303)
Provision for income
taxes................. -- -- -- -- --
Loss from discontinued
operation............. (1,516) 1,516 (i) -- -- --
Minority interest in
loss of subsidiary.... 15,999 -- 15,999 1,677(j) 17,676
-------- ------ -------- ------- --------
Net loss................ $(38,634) $ (170) $(38,804) $ (364) $(39,168)
======== ====== ======== ======= ========
BALANCE SHEET (AT END OF
PERIOD):
Cash and cash equiva-
lents.................. $ 2,935 $ 2,935 $ 2,935
Receivables, net........ 5,466 5,466 5,466
Systems and equipment,
net.................... 206,351 206,351 206,351
Franchise costs, net.... 439,232 439,232 439,232
Other assets............ 10,158 10,158 10,158
Investment in unconsoli-
dated limited partner-
ships.................. 78,070 78,070 78,070
Net assets of discontin-
ued operation.......... 1,869 1,869 1,869
-------- -------- --------
Total assets.......... $744,081 $744,081 $744,081
======== ======== ========
Accounts payable and ac-
crued expenses......... $ 24,678 $ 24,678 $ 24,678
Subscriber deposits and
deferred revenue....... 1,182 1,182 1,182
Deferred taxes.......... 55,500 55,500 55,500
Total debt, including
current maturities of
$5,880................. 572,843 572,843 572,843
Minority interest in
subsidiary............. 90,273 90,273 90,273
-------- -------- --------
Total liabilities..... 744,476 744,476 744,476
Shareholders' investment
(deficit).............. (395) (395) (395)
-------- -------- --------
Total liabilities and
shareholders' invest-
ment (deficit)......... $744,081 $744,081 $744,081
======== ======== ========
FINANCIAL RATIOS AND
OTHER DATA:
EBITDA (e)............. $ 71,525 3,997 $ 75,522 $ 75,522
EBITDA margin (f)...... 50.0% 46.9% 49.8% 49.8%
Capital expenditures
(g)................... $ 33,898 $1,563 $ 35,461 $ 35,461
Cash flow from
operating activities.. $ 37,028 $5,425 $ 42,453 $(2,469) $ 39,984
OPERATING STATISTICAL
DATA (AT END OF PERIOD,
EXCEPT
AVERAGES):
Homes passed............ 533,563 533,563 533,563
Basic subscribers....... 338,284 338,284 338,284
Basic penetration....... 63.4% 63.4% 63.4%
Premium units........... 194,602 194,602 194,602
Premium penetration..... 57.5% 57.5% 57.5%
Monthly revenue per ba-
sic subscriber(h)...... $ 38.20 $32.52 $ 37.33 $ 37.33
</TABLE>

44
<PAGE>

NOTES TO THE UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

(FOR THE YEAR ENDED AND AS OF DECEMBER 31, 1996)
(NUMBERS IN THOUSANDS)

(a) Amounts reflect the historical 1996 results for the following systems
which were acquired during 1996. Certain reclassifications have been made
between operating, general and administrative expenses to conform the
presentation to that of CCA.

<TABLE>
<CAPTION>
MASADA SYSTEMS
ILLINOIS SYSTEMS 1/1/96-
1/1/96-3/28/96 11/29/96 TOTAL
---------------- -------------- --------
<S> <C> <C> <C>
Revenues............................. $4,190 $ 4,335 $8,525
Operating expenses:
Operating, general and
administrative.................... 2,133 2,395 4,528
Management fees.................... 210 293 503
Depreciation and amortization...... 1,010 2,619 3,629
------ ------- --------
Total operating expenses......... 3,353 5,307 8,660
------ ------- --------
Operating income..................... 837 (972) (135)
Interest expense................... (516) (1,094) (1,610)
Interest income.................... 13 46 59
------ ------- --------
Net income........................... $ 334 $(2,020) $ (1,686)
====== ======= ========
</TABLE>

(b) To eliminate the historical management fees expense and to record for the
year ended December 31, 1996 management fee expense pursuant to CCE-I's
management agreement.
(c) To eliminate the historical depreciation and amortization expense and to
record for the year ended December 31, 1996 depreciation and amortization
expense based upon the allocation of purchase price to various categories
of systems equipment and franchises and depreciated using methods and
terms consistent with those utilized by CCE-I. The franchise costs are
being amortized over 15 years.
(d) To eliminate historical interest expense and to record for the year ended
December 31, 1996 interest expense based upon CCE-I's pro forma borrowings
under the CCE-I Credit Facility assuming an average interest rate of
8.05%. Also, includes amortization of all deferred debt issuance costs.
(e) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss
from discontinued operation and minority interest in loss of subsidiary.
EBITDA is calculated before payment of management fees so as to be
consistent with certain financial terms contained in the CCE-I Credit
Facility. Management believes that EBITDA is a meaningful measure of
performance because it is commonly used in the cable television industry
to analyze and compare cable television companies on the basis of
operating performance, leverage and liquidity. EBITDA is not presented in
accordance with generally accepted accounting principles and should not be
considered an alternative to, or more meaningful than, operating income or
operating distributions as an indicator of the CCE-I's operating
performance. EBITDA does not include CCE-I's debt obligations or other
significant commitments.
(f) Represents EBITDA as a percent of revenues.
(g) Capital expenditures exclude cash consideration paid in connection with
the acquisition of cable television systems.
(h) Revenues divided by basic subscribers divided by 12 months.
(i) To eliminate the loss from discontinued operation.
(j) To record minority interest (45%) in the Illinois Systems (January 1, 1996
to March 28, 1996) and the Masada Systems (January 1, 1996 to November 29,
1996).

45
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The Company has operated cable television systems for a limited period of
time and had no operations prior to January 1995. The Company acquired (i) the
Crown Systems as of January 1, 1995 for aggregate consideration of
approximately $488.2 million, (ii) the UVC Systems on October 30, 1995 for
approximately $96.0 million and (iii) the Illinois Systems on March 29, 1996
for approximately $82.0 million (iv) the Masada Systems on November 29, 1996
for approximately $23.7 million (the Crown Systems, the UVC Systems, the
Illinois Systems and the Masada Systems are sometimes referred to herein as
the "CCE-I Systems"). The following discussion of results of operations for
the years ended December 31, 1994, 1995, 1996 and for the three months ended
March 31, 1996 and 1997, is based on the historical results of operations of
CCA and the Crown Systems. Since the Crown Systems were not acquired until
1995, the financial information contained herein with respect to periods prior
to this acquisition does not reflect any changes in the operation or
management of these systems that CCA has made since the date of such
acquisition or that it intends to make in the future; thus, this financial
information is not necessarily indicative of the results of operation that
would have been achieved had the systems been operated by CCA during all of
the periods with respect to which financial information is presented herein or
which may be achieved in the future. Information relating to the payment of
management fees, programming costs and other similar matters for years prior
to the acquisition by CCA of the systems discussed herein is not comparable to
the discussion of such matters after such systems have been fully integrated
with the CCE-I Systems. See "Business--Description of the Systems" for a
description of the CCE-I Systems.

OVERVIEW

The CCE-I Systems generate substantially all of their revenues from monthly
customer fees for basic tier, expanded basic tier, premium and other cable
television services (such as the rental of converters and remote control
devices and installation charges). Additional revenues are generated from pay-
per-view programming and the sale of advertising and commissions from home
shopping networks.

The CCE-I Systems have generated increases in revenues in each of 1994, 1995
and 1996. This growth was accomplished primarily through internal subscriber
growth and the UVC Acquisition in 1995, the Illinois Acquisition and Masada
Acquisition in 1996, which offset the adverse effects of FCC-required rate
rollbacks in certain systems, that became effective in September 1993. Systems
operating, general and administrative expenses have increased during such
three year period due to increased customer growth and expenses related to
implementing rate regulation (pursuant to the 1992 Cable Act and the FCC's
regulations promulgated thereunder). In particular, programming costs, which
comprise a substantial portion of systems operating expenses, have increased
both in dollars and as a percentage of revenues for the past three years. This
increase is due to several factors, including subscriber growth, the provision
of additional channels to customers, the expiration of certain programming
agreements with favorable terms, which were assigned to CCE-I in the Crown
Transaction and industry-wide increases in costs to purchase cable
programming. While CCE-I's retention of Charter as manager of the CCE-I
Systems is expected to result in better control over programming costs, there
can be no assurance that this result will be achieved. Furthermore, management
believes it will be able, under the FCC's existing cable rate regulations, to
increase its rates for cable services to offset increases in the costs of
programming. The high level of depreciation and amortization associated with
the acquisitions and capital expenditures related to continued construction,
upgrade and expansion of the CCE-I Systems, together with interest costs
related to CCE-I's financing activities, have caused the CCE-I Systems to
report net losses. CCE-I believes that such net losses are common for cable
television companies and that such net losses will continue for the
foreseeable future. EBITDA (as defined herein), which is a common industry
measure of performance, has been between 49.6% and 50.9% of revenues during
the years ended December 31, 1994, 1995 and 1996.

CCE-I pays annual management and financial advisory fees to Charter and
Kelso & Company equal to certain specified amounts set forth in the management
and financial advisory agreements executed with Charter

46
<PAGE>

and Kelso & Company; such amounts increase upon the acquisition of additional
cable television systems and decrease with the disposition of any cable
television systems. As of March 31, 1997, CCE-I pays Charter $4,845,000
annually and Kelso & Company $552,500 annually. In addition, the management
agreement with Charter provides for an annual bonus equal to 30% of the
excess, if any, of operating cash flow (as defined in the management
agreement) over the projected operating cash flow for the year; however,
payment of such bonuses is deferred until termination of the CCE-I Credit
Facility. The accrued but unpaid bonus as of March 31, 1997 and December 31,
1996 was $1,755,000, of which $740,000 was recorded during 1996. See "Certain
Relationships and Related Transactions" and "Description of Notes."

47
<PAGE>

<TABLE>
<CAPTION>
PREDECESSOR OF
CCA CCA
------------------ ---------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31, YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------ ------------------------------------- ------------------------------------
1994 1995 1996 1996 1997
------------------ ------------------ ------------------ ----------------- -----------------
% OF % OF % OF % OF % OF
AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES
-------- -------- -------- -------- -------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $ 87,623 100.0% $ 99,689 100.0% $143,023 100.0% $30,813 100.0% $40,487 100.0%
Operating Expenses:
Operating, general and
administrative....... 44,164 50.4% 48,943 49.1% 71,498 50.0% 15,930 51.7% 20,665 51.0%
Management fees(a).... 2,781 3.2% 6,499 6.5% 5,034 3.5% 1,106 3.6% 1,331 3.3%
Depreciation and
amortization......... 54,272 61.9% 51,194 51.4% 65,757 46.0% 15,107 49.0% 15,218 37.6%
-------- ------ -------- ------ -------- ----- ------- ----- ------- -----
Total operating
expense............. 101,217 115.5% 106,636 107.0% 142,289 99.5% 32,143 104.3% 37,214 91.9%
-------- ------ -------- ------ -------- ----- ------- ----- ------- -----
Operating Income
(loss)................ (13,594) (15.5%) (6,947) (7.0%) 734 0.5% (1,330) (4.3%) 3,273 8.1%
Interest expense...... (15,053) (17.2%) (35,461) (35.6%) (46,654) (32.6%) (10,446) (33.9%) (12,894) (31.8%)
Interest income....... 20 0.0% 504 0.5% 164 0.1% 67 0.2% 1 0.0%
Other income
(expense)............ 444 0.5% 42 0.0% (1,058) (0.7%) (517) (1.7%) 57 0.1%
-------- ------ -------- ------ -------- ----- ------- ----- ------- -----
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from
discontinued operation
and minority interest
in loss of
subsidiary............ (28,183) (32.2%) (41,862) (42.0%) (46,814) (32.7%) (12,226) (39.7%) (9,563) (23.6%)
Equity in loss from
unconsolidated
limited
partnerships......... -- -- (1,402) (1.4%) (6,303) (4.4%) (1,838) (6.0%) (1,910) (4.7%)
Provision for income
taxes................ -- -- -- -- -- -- -- -- -- --
Loss from discontinued
operation............ -- -- -- -- (1,516) (1.1%) -- -- -- --
Minority interest in
loss of subsidiary... -- -- 1,503 1.5% 15,999 11.2% 4,112 13.4% 2,715 6.7%
-------- ------ -------- ------ -------- ----- ------- ----- ------- -----
Net loss............... $(28,183) (32.2%) $(41,761) (41.9%) $(38,634) (27.0%) $(9,952) (32.3%) $(8,758) (21.6%)
======== ====== ======== ====== ======== ===== ======= ===== ======= =====
EBITDA(b).............. $ 43,459 49.6% $ 50,746 50.9% $ 71,525 50.0% $14,883 48.3% $19,822 49.0%
</TABLE>
- --------

(a) Represents combined management fees paid by the Crown Systems during
periods prior to the acquisition of the systems by CCA for those systems
which paid management fees. These fees are not necessarily indicative of
the management fees that would have been charged had the Systems been
operated by CCA and that may be expected for any future periods. CCE-I
pays annual management and financial advisory fees to Charter and Kelso &
Company equal to certain specified contractual amounts set forth in the
management agreements executed with Charter and Kelso & Company; such
amounts increase upon the acquisition of additional cable television
systems and decrease with the disposition of any cable television systems.
As of March 31, 1997, CCE-I pays Charter $4,845,000 annually and Kelso &
Company $552,500 annually based upon the current contracts. In addition,
the management agreement with Charter provides for an annual bonus equal
to 30% of the excess, if any, of operating cash flow (as defined in the
management agreement) over the projected operating cash flow for the year;
however, payment of such bonuses is deferred until termination of the
applicable CCE-I Credit Facility. The accrued but unpaid bonus as of March
31, 1997 and December 31, 1996 was $1,755,000, of which $740,000 was
recorded during 1996. See "Certain Relationships and Related Transactions"
and "Description of Notes."
(b) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss
from discontinued operation and minority interest in loss of subsidiary.
Management believes EBITDA is a meaningful measure of performance because
it is commonly used in the cable television industry to analyze and
compare cable television companies on the basis of operating performance,
leverage and liquidity. EBITDA is not presented in accordance with
generally accepted accounting principles and should not be considered an
alternative to, or more meaningful than, operating income or operating
cash flows as an indicator of CCA's operating performance. EBITDA does not
include CCA's debt obligations or significant commitments.

48
<PAGE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31,
1996

Revenues. Revenues increased by $9.7 million, or approximately 31.5%, from
$30.8 million for the three months ended March 31, 1996 to $40.5 million for
the three months ended March 31, 1997. Average monthly revenue per basic
subscriber increased from $37.68 for the three months ended March 31, 1996 to
$39.75, or 5.5%, for the three months ended March 31, 1997. Homes passed
increased 26.6%, from 423,757 at March 31, 1996 to 536,321 at March 31, 1997.
There was a significant increase in homes passed resulting from the
acquisitions of the Illinois Systems in March 1996 and the Masada Systems in
November 1996. Basic service subscribers increased 24.5%, from 272,581 at
March 31, 1996 to 339,497 at March 31, 1997. The basic penetration rate
decreased from 64.3% for three months ended March 31, 1996 to 63.3% for the
three months ended March 31, 1997, as a result of an increase in the number of
homes passed without an equivalent increase in the number of basic
subscribers.

Revenues of the Crown Systems, excluding the activity of any other systems
acquired during the periods, increased by $2.1 million, or approximately 7.5%,
from $27.9 million for the three months ended March 31, 1996 to $30.0 million
for the three months ended March 31, 1997.

Operating, general and administrative expenses. Operating, general and
administrative expenses increased by $4.8 million, or approximately 30.2%,
from $15.9 million for the three months ended March 31, 1996 to $20.7 million
for the three months ended March 31, 1997. These increases were due to
acquisitions of the Illinois Systems in March 1996 and the Masada Systems in
November 1996.

Management fees. Management fees increased by $0.2 million, or approximately
18.2%, from $1.1 million for the three months ended March 31, 1996 to $1.3
million for the three months ended March 31, 1997, representing a decrease, as
a percentage of revenues, from 3.6% for the three months ended March 31, 1996
to 3.3% for the three months ended March 31, 1997.

Depreciation and amortization. Depreciation and amortization expense
increased by $0.1 million, or 0.7%, from $15.1 million for the three months
ended March 31, 1996 to $15.2 million for the three months ended March 31,
1997. There was a significant increase in amortization resulting from the
acquisitions of the Illinois Systems in March 1996 and the Masada Systems in
November 1996. In connection with such acquisitions, the acquired franchises
were recorded at fair market value which resulted in a stepped-up basis upon
acquisition. The increase in amortization was partially offset by the fact
that a covenant-not-to-compete became fully amortized in 1996.

Interest expense. Interest expense increased by $2.5 million, or
approximately 24.0%, from $10.4 million for the three months ended March 31,
1996 to $12.9 million for the three months ended March 31, 1997. This increase
resulted primarily from the additional indebtedness incurred in connection
with the acquisitions of the Illinois Systems in March 1996 and the Masada
Systems in November 1996.

Net Loss. Net loss decreased by approximately $1.2 million from
approximately $10.0 million for the three months ended March 31, 1996 to
approximately $8.8 million for the three months ended March 31, 1997.
Significant increases in operating expenses and interest expense were offset
by increased revenues and an allocation of CCE-I's loss to a minority interest
holder in CCE-I.

The loss prior to allocations for the equity loss in unconsolidated limited
partnerships and the minority interest in subsidiaries decreased by $2.6
million, or approximately 21.3%, from $12.2 million for the three months ended
March 31, 1996 to $9.6 million for the three months ended March 31, 1997.

EBITDA. EBITDA increased by $4.9 million, or approximately 32.9%, from $14.9
million for the three months ended March 31, 1996 to $19.8 million for the
three months ended March 31, 1997, due to an increase in revenues which was
offset by an increase in systems operating expenses. EBITDA, as a percentage of

49
<PAGE>

revenues, increased slightly from 48.3% for the three months ended March 31,
1996 to 49.0% for the three months ended March 31, 1997. Management believes
that EBITDA is a meaningful measure of performance because it is commonly used
in the cable television industry to analyze and compare cable television
companies on the basis of operating performance, leverage and liquidity.
EBITDA does not include debt obligations or other significant commitments.

FISCAL 1996 TO FISCAL 1995

Revenues. Revenues increased by $43.3 million, or approximately 43.4%, from
$99.7 million in fiscal 1995 to $143.0 million in fiscal 1996. Average monthly
revenue per basic subscriber increased 3.6% from $36.89 in fiscal 1995 to
$38.20 in fiscal 1996. Homes passed increased 28.9%, from 413,930 at December
31, 1995 to 533,563 at December 31, 1996. There was a significant increase in
homes passed resulting from the acquisitions of the Illinois Systems in March
1996 and the Masada Systems in November 1996. Basic service subscribers
increased 27.1%, from 266,119 at December 31, 1995 to 338,284 at December 31,
1996. The basic penetration rate decreased from 64.3% in fiscal 1995 to 63.4%
in fiscal 1996, as a result of an increase in the number of homes passed
without an equivalent increase in the number of basic subscribers.

Revenues of the Crown Systems, excluding the activity of any other systems
acquired during the periods, increased by $10.5 million, or approximately
10.9%, from $96.6 million in fiscal 1995 to $107.1 million in fiscal 1996.

Operating, general and administrative expenses. Operating, general and
administrative expenses increased by $22.6 million, or approximately 46.2%,
from $48.9 million in fiscal 1995 to $71.5 million in fiscal 1996. These
increases were due to the acquisitions of the UVC Systems in October 1995, the
Illinois Systems in March 1996 and the Masada Systems in November 1996.

Management fees. Management fees decreased by $1.5 million, or approximately
23.1%, from $6.5 million in fiscal 1995 to $5.0 million in fiscal 1996,
representing a decrease, as a percentage of revenues, from 6.5% in fiscal 1995
to 3.5% in fiscal 1996.

Depreciation and amortization. Depreciation and amortization expense
increased by $14.6 million, or 28.5%, from $51.2 million in fiscal 1995 to
$65.8 million in fiscal 1996. There was a significant increase in amortization
resulting from the acquisitions of the UVC Systems in October 1995 the
Illinois Systems in March 1996 and the Masada Systems in November 1996. In
connection with such acquisitions, the acquired franchises were recorded at
fair market value which resulted in a stepped-up basis upon acquisition. In
addition, the increase in depreciation and amortization expense occurred as a
result of the amortization of certain acquisition-related costs such as legal,
accounting and due diligence expenses and deferred debt costs.

Interest expense. Interest expense increased by $11.2 million, or
approximately 31.5%, from $35.5 million in fiscal 1995 to $46.7 million in
fiscal 1996. This increase resulted primarily from the additional indebtedness
incurred in connection with the acquisitions of the UVC Systems in October
1995, the Illinois Systems in March 1996 and the Masada Systems in November
1996.

Discontinued Operations. The Company acquired and began operating a radio
station in April 1996. The revenues generated by the radio operation from
April 1996 to December 31, 1996 were approximately $1.5 million. The net loss
related to this operation during the same period of time was approximately
$1.5 million and is classified as a discontinued operation. Subsequent to
year-end, the Company entered into an agreement to sell the radio operation.

Net Loss. Net loss decreased by approximately $3.2 million from
approximately $41.8 million in fiscal 1995 to approximately $38.6 million in
fiscal 1996. Significant increases in operating expenses and

50
<PAGE>

interest expense were offset by increased revenues and an allocation of CCE-
I's loss to a minority interest holder in CCE-I.

The increase in revenues that resulted from cable television subscriber
growth was not sufficient to offset the significant costs related to the
acquisitions of the UVC Systems in October 1995, the Illinois Systems in March
1996, and the Masada Systems in November 1996, such acquisitions caused a
substantial increase in interest expense due to increased borrowings.

EBITDA. EBITDA increased by $20.8 million, or approximately 41.0%, from
$50.7 million in fiscal 1995 to $71.5 million in fiscal 1996, due to an
increase in revenues which was offset by an increase in systems operating
expenses. EBITDA, as a percentage of revenues, decreased slightly from 50.9%
in fiscal 1995 to 50.0% in fiscal 1996. Management believes that EBITDA is a
meaningful measure of performance because it is commonly used in the cable
television industry to analyze and compare cable television companies on the
basis of operating performance, leverage and liquidity. EBITDA does not
include debt obligations or other significant commitments.

FISCAL 1995 COMPARED TO FISCAL 1994

Revenues. Revenues increased by $12.1 million, or approximately 13.8%, from
$87.6 million in fiscal 1994 to $99.7 million in fiscal 1995. Average monthly
revenue per basic subscriber increased from $35.28 in fiscal 1994 to $36.89,
or 4.6%, in fiscal 1995. Homes passed increased 18.1% from 350,404 at December
31, 1994 to 413,930 at December 31, 1995. Basic service subscribers increased
28.6%, from 206,948 at December 31, 1994 to 266,119 at December 31, 1995. The
basic penetration rate increased by 5.2% from fiscal 1994 to fiscal 1995 from
59.1% to 64.3%. There was an increase in revenues resulting from the
acquisition of the UVC Systems on October 31, 1995. Revenue growth during 1994
and 1995 was limited by rate rollbacks of up to 17.0% beginning in July 1994
experienced by certain of the CCA Systems (such rate rollbacks have remained
in effect throughout 1995, and have therefore had a more significant effect on
revenue growth in 1995 than 1994). In fiscal 1994 and 1995, however, there
were limited instances of rate increases representing a pass-through of
certain external costs (such as copyright, programming and franchise fees).

Revenues of the Crown Systems, excluding the activity of any other systems
acquired during the periods, increased by $9.0 million, or approximately
10.3%, from $87.6 million in fiscal 1994 to $96.6 million in fiscal 1995.

Operating, general and administrative expenses. Operating, general and
administrative expenses increased by $4.7 million, or approximately 10.6%,
from $44.2 million in fiscal 1994 to $48.9 million in fiscal 1995, and the
expenses, as a percentage of revenues, decreased from 50.4% in fiscal 1994 to
49.1% in fiscal 1995. CCA experienced added costs relating to the UVC
Acquisition on October 31, 1995.

Management fees. Management fees increased by $3.7 million, or approximately
132.1%, from $2.8 million in fiscal 1994 to $6.5 million in fiscal 1995,
representing an increase, as a percentage of revenues, from 3.2% in fiscal
1994 to 6.5% for fiscal 1995. Prior to their acquisition by CCA, the
predecessor paid management fees to Crown.

Depreciation and amortization. Depreciation and amortization expense
decreased by $3.1 million, or approximately 5.7%, from $54.3 million in fiscal
1994 to $51.2 million in fiscal 1995. There was a decrease in amortization due
to the Crown Transaction and the amortization policy used by CCE-I.

Interest expense. Interest expense increased by $20.4 million, or
approximately 135.1%, from $15.1 million in fiscal 1994 to $35.5 million in
fiscal 1995. This increase resulted primarily from the additional indebtedness
incurred in connection with the Crown Transaction and the UVC Transaction in
fiscal 1995.

Other Income. The Crown Systems generated other income of approximately $0.4
million in fiscal 1994 as compared to approximately $42,000 in fiscal 1995.
The 1994 income was due primarily to the settlement of a lawsuit related to
the Crown Missouri Systems. The income represents the reversal of accruals
established in prior years related to such litigation.

51
<PAGE>

Net loss. Net loss increased by $13.6 million, or approximately 48.2%, from
$28.2 million in fiscal 1994 to $41.8 million in fiscal 1995. This increase
resulted primarily from an increase in interest expense due to increased
borrowing. In addition, the net loss was decreased during fiscal 1995 as
approximately $1.5 million of CCE-I's loss was allocated to a minority
interest holder in CCE-I. This amount was offset by an increase in net loss
related to the loss incurred by an unconsolidated limited partnership of which
CCA was allocated approximately $1.4 million of the loss.

The loss prior to these allocations increased by $13.7 million, or
approximately 48.6%, from $28.2 million in fiscal 1994 to $41.9 million in
fiscal 1995.

EBITDA. EBITDA increased by $7.2 million, or approximately 16.6%, from $43.5
million in fiscal 1994 to $50.7 million in fiscal 1995, due to an increase in
revenues which was partially offset by an increase in systems operation
expenses. EBITDA, as a percentage of revenues, increased slightly from 49.6%
in fiscal 1994 to 50.9% in fiscal 1995. Management believes that EBITDA is a
meaningful measure of performance because it is commonly used in the cable
television industry to analyze and compare cable television companies on the
basis of operating performance, leverage and liquidity.

LIQUIDITY AND CAPITAL RESOURCES

The cable television business has substantial ongoing capital requirements
for construction, expansion and maintenance of plant. Historically, the
Company has been able to meet its capital requirements through its operating
cash flow, equity contributions and available borrowings. Subject to the
availability of sufficient financing, the Company intends to continue the
pursuit of a business strategy which includes selective strategic
acquisitions.

The CCE-I Credit Facility was increased by $85.0 million in 1996 in
connection with the UVC Acquisition and by $120.0 million in 1996 in
connection with the Illinois and Masada Acquisitions. As of March 31, 1997,
CCE-I had an aggregate of approximately $468.0 million of indebtedness
outstanding (and $37.0 million unused and available for borrowing) under the
CCE-I Credit Facility. See "Description of Other Indebtedness."

The historical cash flow from operating activities for CCA totaled
approximately $27.1 million and $37.0 million for the years ended December 31,
1995 and 1996, respectively, and $2.1 million and $6.2 million for the three
months ended March 31, 1996, and 1997, respectively.

Distributions provided by operating activities together with third party
borrowings have been historically sufficient to fund CCE-I's debt service,
capital expenditures and working capital requirements. Future distributions
provided by operating activities and availability for borrowings under the
CCE-I Credit Facility are anticipated to be sufficient, during the next 12
months, to meet CCE-I's ongoing debt service, capital expenditures and working
capital needs. The Company anticipates that future acquisitions could be
financed through borrowings, either presently available under the CCE-I Credit
Facility or as a result of amending the CCE-I Credit Facility to allow for
expanded borrowing capacity. Although to date, the Company has been able to
obtain financing on satisfactory terms, there can be no assurance that this
will continue to be the case in the future.

CCE-I manages risk arising from fluctuations in interest rates through the
use of interest rate swap and cap agreements required under the terms of the
CCE-I Credit Facility. Interest rate swap and cap agreements are accounted for
by CCE-I as a hedge of the related debt obligation. As a result, the net
settlement amount of any such swap or cap agreement is recorded as an
adjustment to interest expense in the period incurred. The effects of CCE-I's
hedging practices on its weighted average borrowing rate and on reported
interest expense were not material for the years ended December 31, 1996 and
1995.

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<PAGE>

CCE-I has insurance covering risks incurred in the ordinary course of
business, including general liability, property and business interruption
coverage. As is typical in the cable television industry, CCE-I does not
maintain insurance covering its underground plant, the cost of which
management believes is currently prohibitive. Management believes that CCE-I's
insurance coverage is adequate and intends to monitor the insurance markets to
attempt to obtain coverage for CCE-I underground plants at reasonable and
cost-effective rates.

Capital Expenditures

The capital expenditures for CCE-I and the previous owner of the Crown
Systems (excluding acquisition costs of systems) totaled approximately $24.5
million, $22.0 million and $33.9 million for the years ended December 31,
1994, 1995 and 1996, respectively, and approximately $6.8 million and $8.0
million for the three months ended March 31, 1996 and 1997, respectively.
These expenditures were primarily for expansion and rebuild of cable plant and
rewiring of associated headend equipment, converters, office expansion and
relocation, upgrade and replacement of service vehicles, and routine
maintenance and replacement of cable plant and related equipment. These
capital expenditures were financed through a variety of sources which included
(i) amounts available under credit facilities and (ii) distributions from
operations. Capital expenditures in the future will include maintenance
capital expenditures, expansion of the cable plant, converters, rewiring of
associated electronic equipment, land and building renovation costs, new
vehicles, test equipment and computer equipment. The remaining capital items
will include capitalized labor and capital expenditures required to add new
subscribers and to upgrade plant. CCE-I expects to finance the anticipated
capital expenditures with distributions generated from operations and
additional borrowings under the CCE-I Credit Facility.

The Credit Facilities

As of March 31, 1997, CCE-I had an aggregate of approximately $468.0 million
of indebtedness outstanding ($37.0 million unused and available for borrowing)
under the CCE-I Credit Facility. The CCE-I Credit Facility requires CCE-I to
purchase and maintain interest rate protection on at least 50% of the
outstanding principal under the CCE-I Credit Facility, so that the weighted
average interest rate protection is not less than 18 months at all dates of
determination. CCE-I may enter into interest cap agreements to satisfy this
requirement, provided that the interest rate related thereto shall not exceed
by 2% per annum the United States Treasury rate in effect on the date of the
agreement for the applicable hedge period. For additional information on the
terms of the CCE-I Credit Facility, see the historical financial statements
and the notes thereto included elsewhere herein.

CCE-I intends to utilize the CCE-I Credit Facility as it presently exists or
as amended in the future to fund capital expenditures and working capital, to
acquire additional cable systems and for related strategic acquisitions and
for general corporate purposes. See "Business--Business Strategy." CCE-I
expects that it will be able, during the next 12 months, to meet its debt
service, working capital and capital expenditure requirements through its
operating distributions and borrowings under the CCE-I Credit Facility. See
"Description of Other Indebtedness."

In addition to the CCE-I Credit Facility, CCA holds an indirect 55%
unconsolidated limited partnership interest in CCE-II, which maintains its own
credit facility, the CCE-II Credit Facility. As of March 31, 1997, CCE-II had
an aggregate of approximately $195.8 million of indebtedness outstanding (and
$39.2 million unused and available for borrowing) under the CCE-II Credit
Facility. The Indenture does not contain any restriction on the ability of any
subsidiary of CCE, L.P. to incur indebtedness (other than CCE-I and its
Restricted Subsidiaries (as defined in the Indenture)) or the ability of CCE-
II to incur additional indebtedness, including pursuant to a currently
contemplated investment in which CCE-II and LBAC, which is an affiliate of the
Issuer and CCE-II, became jointly and severally liable under the CCE-II Credit
Facility, which was increased by $140.0 million upon consummation of the Long
Beach Investment. See "Description of the Systems--Long Beach Investment by
CCE-II." CCE-II drew down $25.0 million under the CCE-II Credit Facility in
order to make the Long Beach Investment. This investment was in the form of an
equity interest representing, or a loan convertible into, 27.5% of the stock
of LBAC. See "Description of Other Indebtedness--Charter Communications
Entertainment II, L.P."

53
<PAGE>

THE FOLLOWING DATA HAS NOT BEEN PREPARED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND DOES NOT
COMPLY WITH ARTICLE 11 OF REGULATION S-X

SUPPLEMENTAL SELECTED HISTORICAL
COMBINED FINANCIAL DATA

The supplemental table set forth below has not been prepared in accordance
with generally accepted accounting principles or Article 11 of Regulation S-X.
Since the acquisitions (depicted below) did not meet the specified criteria to
be accounted for under the pooling-of-interests method, the reported
operations of the acquired systems should not be combined and restated as
operations of CCE-I. However, such data is included for the purpose of
providing supplemental information to assist investors.

For financial reporting purposes, CCE-I had no operations prior to its
acquisition of the Crown Systems effective January 1995. The combined
historical results of operations, balance sheet, selected financial ratios and
operating statistical data set forth below (which have been derived by
combining historical results of operations of systems acquired by CCE-I during
1995 and 1996, and which therefore reflect results of periods prior to CCE-I's
management of such systems) do not purport to represent what CCE-I's actual
results of operations would have been had the system been owned by CCE-I
throughout the periods indicated. The combined historical results include the
operations of the Systems prior to their acquisition by CCE-I.

The unaudited combined statement of operations data for the year ended
December 31, 1994 set forth below have been derived from the unaudited
financial statements of the Crown Missouri Systems, Crown Connecticut Systems,
the UVC Systems, the Illinois Systems and the Masada Systems. The unaudited
combined statement of operations data for the year ended December 31, 1995
have been derived from the unaudited financial statements of CCE-I for the
year ended December 31, 1995, the UVC Systems for the 10 months ended October
31, 1995, the Illinois Systems and the Masada Systems for the year ended
December 31, 1995. The unaudited combined statement of operations data for the
year ended December 31, 1996 have been derived from the unaudited financial
statements of CCE-I for the year ended December 31, 1996, the Illinois Systems
for the period ended March 29, 1996 and the Masada Systems for the period
ended November 29, 1996.

The unaudited balance sheet data as of December 31, 1996 set forth below
have been derived from the unaudited financial statements of CCE-I.

The data should be read in conjunction with the historical financial
statements and notes related thereto, the reports of independent auditors, and
the other financial information included elsewhere in this Prospectus.

The unaudited financial data for the three month period ended and as of
March 31, 1997 set forth below have been derived from the unaudited financial
statements of CCE-I.

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<PAGE>

CCE-I SUPPLEMENTAL SCHEDULE

(NUMBERS IN THOUSANDS, EXCEPT FINANCIAL RATIOS AND SUBSCRIBER DATA)

<TABLE>
<CAPTION>
COMBINED HISTORICAL
------------------------------------------------
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- ------------
1994 1995 1996 1997
-------- -------- -------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SUBSCRIBER DATA)
UNAUDITED
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $124,344 $135,409 $151,548 $ 40,487
Operating Expenses:
Operating, general and
administrative............. 62,994 66,639 75,653 20,543
Management fees............. 4,184(a) 8,126(a) 5,537(a) 1,331(a)
Depreciation and
amortization............... 66,482 61,494 69,386 15,218
-------- -------- -------- --------
Total operating expenses.... 133,660 136,259 150,576 37,092
-------- -------- -------- --------
Operating Income (loss)...... (9,316) (850) 972 3,395
Interest expense............ (21,764) (32,256) (35,860) (9,487)
Interest income............. 45 572 223 1
Other income (expense)...... 269 (53) (1,058) 57
Loss from discontinued
operation.................. -- -- (1,516) --
-------- -------- -------- --------
Net loss..................... $(30,766) $(32,587) $(37,239) $ (6,034)
======== ======== ======== ========
Ratio of earnings to fixed
charges(b).................. -- -- -- --
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets................. $666,011 $655,963
Total debt (including current
maturities)................. 468,000 468,000
Partners' capital............ 172,524 166,490
FINANCIAL RATIOS AND OTHER
DATA:
EBITDA(c).................... 61,350 $ 68,770 $ 75,895 $ 19,944
EBITDA margin(d)............. 49.3% 50.8% 50.1% 49.3%
Capital expenditures(e)...... $ 29,876 $ 26,488 $ 35,461 7,964
Total debt to EBITDA......... 6.1x 5.9x
EBITDA to interest expense... 2.1x 2.1x
OPERATING STATISTICAL DATA
(AT END OF PERIOD, EXCEPT
AVERAGES):
Homes passed................. 508,605 515,769 533,563 536,321
Basic subscribers............ 304,685 322,309 338,284 339,497
Basic penetration............ 59.9% 62.5% 63.4% 63.3%
Premium service units........ 209,428 205,535 194,602 184,417
Premium penetration.......... 68.7% 63.7% 57.5% 54.3%
Monthly revenue per basic
subscriber(f)............... $34.01 $35.01 $ 37.33 $ 39.75
</TABLE>
- --------
(a) Represents combined management fees for the CCE-I Systems during periods
prior to their acquisition by CCE-I, for those systems which paid
management fees. These fees are not necessarily indicative of the
management fees that would have been charged had the CCE-I Systems been
operated by CCE-I or that may be expected for any future periods.

(b) The combined earnings of the CCE-I systems were inadequate to cover fixed
charges by $30.8 million, $32.6 million and $37.2 million for the years
ended December 31, 1994, 1995, and 1996 and $6.0 million for the three
months ended March 31, 1997, respectively.
(c) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss
from discontinued operation and minority interest in loss of subsidiary.
Management believes EBITDA is a meaningful measure of performance because
it is commonly used in the cable television industry to analyze and
compare cable television companies on the basis of operating performance,
leverage and liquidity. EBITDA is not presented in accordance with
generally accepted accounting principles and should not be considered an
alternative to, or more meaningful than, operating

55
<PAGE>

income or operating cash flows as an indicator of CCE-I's operating
performance. EBITDA does not include CCE-I's debt obligations or other
significant commitments.
(d) Represents EBITDA as a percent of revenues.
(e) Capital expenditures exclude cash consideration paid in connection with
the acquisition of cable television systems.

(f) Revenues divided by basic subscribers divided by the number of the months
in the period.

56
<PAGE>

BUSINESS

GENERAL

The Company's principal business is the ownership, operation and development
of cable television systems, which it currently conducts through two principal
operating entities, CCE-I and CCE-II. CCE-I owns, operates and develops cable
television systems in the St. Louis, Missouri metropolitan area including
southwestern Illinois and in certain rural and suburban areas in Connecticut
and Massachusetts. As of March 31, 1997, CCE-I's cable television systems
passed approximately 536,300 homes and served approximately 339,500 basic
subscribers in western and northeastern Connecticut, central Massachusetts,
eastern Missouri and southwestern Illinois. CCE-II owns, operates and develops
cable television systems in metropolitan areas of southern California. As of
March 31, 1997, CCE-II's cable television systems passed approximately 426,600
homes and served approximately 170,200 basic subscribers in southern
California. CCE-I's and CCE-II's operations are managed by Charter. As of
March 31, 1997, Charter managed cable television systems which serve
approximately 1,011,600 basic subscribers (including the Company's
subscribers). Assuming completion of all publicly announced cable television
industry transactions, management believes that Charter would be among the top
ten largest multiple system operators in the United States based on number of
basic subscribers. The Company seeks to own and operate cable television
systems serving an increased number of basic subscribers in the regions in
which its cable television systems are presently located.

Barry L. Babcock, Jerald L. Kent and Howard L. Wood formerly served as
members of the senior management team of Cencom Cable Associates, Inc., which,
during the nine year period prior to its sale in 1991 to Crown Media,
purchased and developed through acquisitions the Cencom Systems. See
"Business--Business Strategy--Maximize Benefits Provided by Relationship with
Charter." In addition, Kelso and certain other individuals have invested
approximately $68.0 million in the Issuer. As a result of such investment,
Kelso and such individuals own directly or indirectly 85% of the outstanding
equity interests in the Company. In addition, Kelso and certain other
individuals own approximately 19.9% of Charter. See "Risk Factors--Control of
the Company by Kelso."

CCE-I owns and operates cable television systems which lie principally
within two clusters: northeastern and western Connecticut and central
Massachusetts (the "Northeast Region"); and eastern Missouri and southwestern
Illinois (the "Central Region" and collectively with the Northeast Region, the
"Regions"). CCE-II owns and operates cable television systems which lie
principally within southern California. In all, as of March 31, 1997,
approximately 69.9% of the Company's basic subscribers are served by cable
television systems which were part of the Cencom Systems. As such, management
of the Company has a high degree of familiarity with a substantial portion of
the Systems in the Regions. See "Business--Description of the Systems--
Historical Acquisitions" and "Recent Developments."

The Company has sought to "cluster" its cable systems in concentrated
geographic areas in top metropolitan markets. Management believes that such
clustering offers significant opportunities to increase operating efficiencies
and to improve operating margins and cash flow by spreading the Company's
fixed costs over an expanding subscriber base. By establishing such clusters,
the Company is typically able to create regional customer service centers and
establish centralized administration and technological support for local
management, which enables the Company to eliminate duplicative management
personnel and operations. In addition, management believes that by
concentrating its clusters in top metropolitan markets the Company will be
able to generate higher growth in revenues and operating cash flow. Such
metropolitan markets, because of their concentration of businesses and
population, offer greater opportunities for advertising sales and
telecommunications services such as competitive access service. In addition,
because disposable income levels in the areas served by the CCE-I Systems are
generally higher than the national average, management believes that the
Company will benefit from the opportunity to generate enhanced revenues from
existing video services, such as pay television and pay-per-view

57
<PAGE>

services, as well as from future services, such as video-on-demand and
Internet access services. See "Business--Business Strategy--Realize Operating
Efficiencies" and "The Company."

As part of its commitment to customer service, the Company emphasizes high
technical standards in all of its cable television systems. As of March 31,
1997, CCE-I's cable systems had an average channel capacity of approximately
54 channels, and approximately 89% of CCE-I's subscribers were served by
systems that offered addressable technology. Addressable technology enables
the Company, from its office or at the headend (which processes and combines
signals for distribution within the cable network), to change the premium
channels being delivered to subscribers or to activate pay-per-view services.
The CCE-I Systems are selectively upgraded to increase channel capacity and to
improve picture quality and reliability for the delivery of additional
programming and new services. The Company is currently installing fiber optic
technology (which is capable of carrying significantly more video, data and
voice channels than coaxial technology) in certain of its systems. The Company
believes that the use of fiber optic technology improves system reliability
and lowers operational costs, provides a platform for the further development
and diversification of revenues from existing video services (such as pay-per-
view and home shopping) and advertising sales, and also provides the potential
to develop new and additional services, such as competitive access,
interactive services and data services, such as Internet access. The Company
expects to continue selectively upgrading its systems with fiber optic cable
so that, by the year 2000, average channel capacity in the CCE-I Systems will
increase to approximately 60-70 channels and substantially all of the
Company's customers are expected to be served by systems that offer
addressable technology.

BUSINESS STRATEGY

Management believes clustered cable television systems in major metropolitan
markets offer superior growth opportunities, and management's principal
objective is to increase the Company's operating cash flow by capitalizing
upon such opportunities. To achieve its objective, the Company has pursued the
following business strategies:

Cluster Through Strategic Acquisitions in Metropolitan Markets

The Company has sought to "cluster" its cable systems in suburban and rural
areas surrounding selected metropolitan markets. Management believes that such
clustering offers significant opportunities to increase operating efficiencies
and to improve operating margins and cash flow by spreading the Company's
fixed costs over an expanding subscriber base. In addition, management
believes that by concentrating its clusters in metropolitan markets, the
Company will be able to generate higher growth in revenues and operating cash
flow. Such metropolitan markets, because of their concentration of businesses
and population, offer greater opportunities for advertising sales and
telecommunications services such as competitive access service. In addition,
because disposable income levels in many areas served by the Company's cable
systems are generally higher than the national average, management believes
that the Company will benefit from the opportunity to generate enhanced
revenues from existing video services, such as pay television and pay-per-view
services, as well as from future services, such as video-on-demand and
Internet access services.

Through strategic acquisitions, the Company seeks to enlarge the coverage of
its current areas of operations, and if feasible, develop clusters in new
geographic areas within existing regions. In developing and enhancing cable
system clusters, the Company's acquisition strategy is, by necessity,
opportunistic and depends in large part upon which cable systems become
available in the marketplace. Because many of the Company's operating areas
include other significant cable operators with nearby systems, market place
availability and pricing may be heavily influenced by the interest level of
other potential purchasers. This strategy is also subject to the changing
competitive telecommunications market.

CCE-I owns and operates cable television systems which lie principally
within two regions: the Northeast Region and the Central Region. CCE-II owns
and operates cable television systems which lie principally within southern
California.

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<PAGE>

The Central Region's systems passed approximately 397,200 homes and served
approximately 224,200 basic subscribers in the suburban St. Louis area as of
March 31, 1997. The Central Region does not include the City of St. Louis, but
includes contiguous suburbs in eastern Missouri and southwestern Illinois.

The Northeast Region includes selected areas of Connecticut and
Massachusetts, and its systems passed approximately 139,100 homes and served
approximately 115,300 basic subscribers as of March 31, 1997. The Northeast
Region, which is composed of several clusters, is more diverse geographically
than the Central Region. The Newtown cluster in Connecticut consists of 14
contiguous towns southwest of Hartford, Connecticut, and tends to be more
affluent than other clusters within the region. The Willimantic cluster
consists of 16 contiguous suburban and rural towns northeast of Hartford.
Within Massachusetts, there are five clusters, consisting of rural and
suburban communities surrounding the cities of Boston, Springfield and
Worcester, Massachusetts and Providence, Rhode Island.

In determining whether to acquire a particular system, the Company
evaluates, among other things, the (i) location, size and strategic fit of the
system with the Company's existing operations, (ii) technical quality of the
system and anticipated capital expenditure requirements which may be necessary
to comply with franchising requirements or to upgrade systems to satisfy the
Company's operating standards, (iii) demographic trends of the market, (iv)
existing and potential competition in the market, (v) price of the system
relative to other characteristics of the system and (vi) number of years
remaining until the system's franchises must be renewed, along with the
seller's relationship with the relevant franchising authorities. By virtue of
its relationship with Charter, management believes that the Company has
increased access to acquisition opportunities that might otherwise not be
available to a Company of comparable size. Except as described under
"Description of the Systems--Masada Acquisition," below, the Company is not
currently a party to any letter of intent or definitive agreement with respect
to any acquisitions. From time to time, the Company reviews and analyzes
potential acquisitions, which may include the acquisition of other cable
systems managed by Charter or as to which Charter has secured purchase rights.
The Company anticipates that future acquisitions will be financed with
additional debt, or, depending on the size and circumstances of the
acquisition, possibly with additional equity.

Realize Operating Efficiencies

Each region has centralized management and offers certain services that
benefit the clusters and all customers within the region. By establishing such
clusters, the Company is typically able to create regional customer service
centers and establish centralized administration and technological support for
local management, which enables the Company to eliminate duplicative
management personnel and operations. After consummating an acquisition from an
independent party, the Company incorporates the system within the existing
centralized network of operational and organizational functions. By combining
the acquired systems with an existing cluster, or by adding a new cluster
within an existing regional structure, the Company is able to reduce the
operating costs of the system it acquires, and at the same time, spread its
fixed costs over an expanded subscriber base and thereby improve operating
cash flow and margins.

Focus on the Customer

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<PAGE>

changes, the Company attempts to maintain strong community relations and
enhance customer service. The Company is also working with Charter to develop
a database that will assist management with its evaluation of the potential
demand by existing and prospective customers for home entertainment,
educational services and data transmission. Management believes this focus on
the customer will, over time, increase both subscriber penetration and revenue
per subscriber.

Maximize Benefits Provided by Relationship with Charter

The Company receives significant benefits from its relationship with
Charter. The Company benefits from the financial and operational expertise of
Charter's principals (Messrs. Babcock, Kent and Wood, formerly part of the
senior management team of a predecessor entity of the Company) and their
familiarity with those of the Company's systems previously owned by such
predecessor entity. As of March 31, 1997, a majority of CCE-I's subscribers
were served by systems formerly owned and operated by such predecessor entity.
The Company also benefits from Charter's financial and operational expertise,
and from Charter's membership in the TeleSynergy programming cooperative,
which Charter joined in October 1995 and which offers its members certain
programming benefits. Charter's prominence as one of the larger MSO's has also
increased the Company's opportunities to investigate potential acquisitions,
access debt financing and equity capital and obtain marketing support and
discounts on cable system equipment.

THE CABLE TELEVISION INDUSTRY

Cable television was introduced in the early 1950s to provide television
signals to small or rural towns with little or no available off-air television
signals and to communities with reception difficulties caused by terrain
problems. Since that time, the cable television industry has added non-
broadcast programming, utilized improved technology to increase channel
capacity and expanded its service markets to include more densely populated
areas and those communities in which off-air reception is not problematic.
Enhanced channel capacity has increased the potential number of programming
offerings available to the subscriber and, consequently, increased the
potential revenue available per subscriber. State-of-the-art cable television
systems are currently capable of providing approximately 36 to 108 channels of
programming.

Cable television systems offer customers various levels (or "tiers") of
basic cable service consisting of off-air television signals of local
networks, independent and educational stations, a limited number of television
signals from "superstations" originating from distant cities, various
satellite-delivered, non-broadcast channels and certain programming originated
locally by the cable systems. For an extra monthly charge, cable systems also
typically offer premium television services to their customers, consisting of
satellite-delivered channels generally providing feature films, live sports
events, concerts and other special entertainment features. See""--Marketing,
Programming and Rates."

A cable television system consists of two principal operating components:
one or more signal origination points called "headends," which receive
television, radio and data signals that are transmitted by means of off- air
antennas, microwave relay systems and satellite earth stations, and a signal
distribution system. Each headend includes a tower, antennae or other
receiving equipment at a location favorable for receiving broadcast signals
and one or more earth stations that receives signals transmitted by satellite.
The headend facility also houses the electronic equipment which amplifies,
modifies and modulates the signals, preparing them for passage over the
system's network of cables. Cable television systems may also originate their
own programming and other information services for distribution through the
systems.

The signal distribution system consists of amplifiers and trunk lines which
originate at the headend and carry the signal to various parts of the system,
smaller distribution cables and distribution amplifiers which carry the signal
to the immediate vicinity of the subscriber and drop lines which carry the
signal into the subscriber's home. In the past several years, many cable
operators have utilized fiber optic (in place of co-axial cable) technology to
transmit signals through the primary trunk lines.

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<PAGE>

DESCRIPTION OF THE SYSTEMS

General

The Company acquired the CCE-I Systems in a series of transactions
commencing in January 1995. The CCE-I Systems, generally lie within two
clusters: the Northeast Region in northeastern and western Connecticut and
central Massachusetts; and the Central Region comprising suburbs of St. Louis
in eastern Missouri and southwestern Illinois. As of March 31, 1997, the CCE-I
Systems, passed approximately 536,300 homes and provided service to
approximately 339,500 subscribers.

Demographic Profile

The following table sets forth certain subscriber and comparative
demographic data relating to the Clusters as of March 31, 1997;
<TABLE>
<CAPTION>
1994 MEDIAN
BASIC HOUSEHOLD
CLUSTERS HOMES PASSED SUBSCRIBERS PENETRATION INCOME
-------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
St. Louis County............ 397,200 224,200 56.4% $44,459(a)
Connecticut/Massachusetts... 139,100 115,300 82.9% 48,966(a)
------- -------
Total....................... 536,300 339,500 -- --
======= =======
St. Louis and
Connecticut/Massachusetts
Average.................... -- -- 63.3% $45,981(a)
National Average............ -- -- 65.7% $37,070
</TABLE>
- --------
(a) Based on latest available data from The 1994 County and City Data Book
(the most recent edition) and The 1986 County and City Data Book for the
counties in which CCE-I operates weighted by the number of basic
subscribers in each county.

As set forth in the table above, CCE-I serves subscribers with household
income levels that are substantially higher than the national average. In the
most recent year for which there is public data, the weighted average
household income for subscribers served by CCE-I was $45,981, or 24% above the
national average of $37,070.

Over the last 15 years, the population of the counties comprising the St.
Louis Cluster has grown 4.2% and the population of the counties comprising the
Connecticut/Massachusetts Cluster has grown 6.3%.

The City of St. Louis and its surrounding area is the 20th largest
Designated Market Area ("DMA") and the 16th largest Metropolitan Statistical
Area ("MSA") in the United States. Connecticut and Massachusetts are the 28th
and 13th largest states in the United States ranked by population,
respectively. The term "DMA" is defined by the A.C. Nielsen Company and
reflects rankings based on population. The DMA rankings have been obtained
from BIA Publications, Inc. (1996). The term "MSA" is as defined by the Office
of Management and Budget on December 31, 1992 and as revised through July 1,
1994. The MSA rankings have been obtained from Rand McNally 1996 Commercial
Atlas & Marketing Guide, BIA Publications, Inc. (1996).

Historical Acquisitions

Crown Systems Acquisition. In January 1995, the Company completed the
acquisition of the Crown Missouri Systems and the Crown Connecticut Systems,
for an aggregate purchase price of approximately $488.2 million, including
related acquisition fees and expenses. As of March 31, 1997, the Crown
Missouri Systems and the Crown Connecticut Systems provided service to
approximately 141,100 and 86,500 basic subscribers, respectively.

The Crown Transaction was part of a larger transaction in which HC Crown
sold its cable television systems to a group of investors, including Charter,
the Company and certain affiliates of Charter, for a total purchase price of
approximately $900.0 million. As a result of this transaction, Charter-
affiliated entities acquired certain of the cable television systems owned by
HC Crown, serving approximately 260,000 basic subscribers in Connecticut,
Kentucky, Missouri, North Carolina and South Carolina, adding to Charter's
then-existing subscriber base of approximately 280,000.

61
<PAGE>

UVC Systems Acquisition. In October 1995, the Company, through CCE-I,
purchased the UVC Systems for an aggregate purchase price of approximately
$96.0 million, including related acquisition fees and expenses. As of March
31, 1997, the UVC Systems passed approximately 60,900 homes and served
approximately 48,600 basic subscribers in the western suburbs of St. Louis and
in Massachusetts.

Park Hills, Missouri, Systems Acquisition. In January 1996, the Company,
through CCE-I, purchased the Park Hills Systems for an aggregate purchase
price of approximately $9.4 million, including related acquisition fees and
expenses. As of March 31, 1997, the Park Hills Systems passed approximately
9,600 homes and served approximately 6,100 basic subscribers in the Park
Hills, Missouri area.

Illinois Systems Acquisition. In March 1996, the Company, through CCE-I,
purchased the Illinois Systems from CCIP, whose general partner is an
affiliate of Charter, for an aggregate purchase price of approximately $82.0
million, including related acquisition fees and expenses. As of March 31,
1997, the Illinois Systems passed approximately 75,900 homes and served
approximately 45,600 basic subscribers. The Illinois Acquisition was part of a
larger transaction whereby three Charter affiliates purchased all of the
assets of CCIP and, in accordance with the terms of the partnership agreement
of CCIP, independent appraisals were obtained valuing all of the assets of
CCIP. The aggregate purchase price paid by the three Charter affiliates
exceeded the appraisal value by five percent. The purchase price allocated to
the Illinois Systems was determined by the three Charter affiliates based on
the relative value of the Illinois Systems to the total assets being sold.

On October 20, 1995, a purported class action lawsuit on behalf of the CCIP
limited partners was filed in the Chancery Court of New Castle County,
Delaware. The Action named as defendants the general partner of CCIP, the
proposed purchasers of all of the systems owned by CCIP (which includes CCE-I
and certain other affiliates of Charter), Charter and certain individuals,
including the directors and executive officers of the general partner of CCIP.
On February 15, 1996, the Court of Chancery of the State of Delaware in and
for New Castle County dismissed all of the plaintiff's claims for injunctive
relief (including that which sought to prevent the consummation of the
Illinois Acquisition); the plaintiff's claims for money damages which might
result from the proposed sale by CCIP of its assets (including the Illinois
Acquisition) remain pending. In October, 1996, the plaintiff filed a
Consolidated Amended Class Action Complaint. The defendants filed an Answer to
the amended complaint in December 1996. In January 1997, the defendants filed
a Motion for Summary Judgment to dismiss all remaining claims as to all
parties in the Action. Based upon, among other things, the advice of counsel,
each of the defendants to the Action believes the Action to be without merit
and is contesting it vigorously. There can be no assurance, however, that the
plaintiff will not be awarded damages, some or all of which may be payable by
CCE-I, in connection with the Action.

The California Acquisition. In September 1995, CCT purchased the Los Angeles
Systems and the certain other cable television systems from the Gaylord
Affiliate for an aggregate purchase price of approximately $340.9 million,
including related acquisition fees and expenses. In conjunction with the
California Transaction, the Los Angeles Systems were immediately contributed
to CCE-II; and such other systems were sold to Charter Communications
Properties, Inc. As a result, the Los Angeles Systems constitute the sole
assets of CCE-II.

Masada Acquisition

On November 29, 1996, the Company, through CCE-I, acquired certain cable
television systems serving communities in the St. Louis, Missouri metropolitan
area from Masada Cable Partners, L.P., for an aggregate purchase price of
approximately $23.7 million, before transaction costs and working capital
adjustments. As of March 31, 1997, the Masada Systems served approximately
11,500 basic subscribers.

Long Beach Investment by CCE-II

On May 23, 1997, CCE-II made a $25.0 million investment in LBAC, in
connection with the acquisition of LBAC by an affiliate of CCE-II and the
Issuer. LBAC owns the Long Beach Systems serving communities in

62
<PAGE>

Long Beach, California. The Long Beach Investment was in the form of a note
convertible into 27.5% of the stock of LBAC. In connection with the Long Beach
Investment, CCE-II and LBAC became jointly and severally liable under the CCE-
II Credit Facility, which was increased by $140.0 million upon consummation of
the Long Beach Investment, and CCE-II borrowed $25.0 million under the CCE-II
Credit Facility in order to make the Long Beach Investment. As of March 31,
1997, the Long Beach Systems served approximately 69,000 basic subscribers. As
is the case with the other assets owned by CCE-II, holders of the Notes should
not rely on the note acquired in the Long Beach Investment or the revenues
which will be generated by them for payment of principal or interest on the
Notes.

OPERATIONS AND MANAGEMENT BY CHARTER

Charter manages the Company's operations under a decentralized management
structure that is intended to maximize the Company's presence in each of its
clusters and thereby enhance customer service and strengthen community
relations. Each of the Company's clusters has a regional senior vice president
of operations who is responsible for overseeing the day-to-day operations of
the systems in such manager's cluster, including, in some cases, systems not
owned by the Company. See "Risk Factors--Dependence on Charter and Key
Personnel of Charter; Potential Conflicts of Interest." Regional management
also provides full marketing support and has established a 24-hour customer
service hotline. Regional costs, including personnel and other operating
expenses, are allocated to the Systems and (where applicable) to certain other
systems owned by affiliates of Charter, pro rata based on the number of
subscribers. By spreading such costs over a broader base of subscribers, the
Company experiences lower operating costs per subscriber than it would without
its affiliation with Charter.

The Company relies on Charter for all of its strategic and managerial
advice, as well as administrative support, including accounts payable,
accounts receivable, billing, payroll and human resources. Charter is
dependent upon the services of certain key personnel, including Messrs.
Babcock, Kent and Wood. Charter also coordinates and provides advice with
respect to all programming arrangements, capital expenditure requirements,
engineering planning, and acquisitions and financing of cable television
systems. In the event the Company's relationship with Charter terminates for
any reason, the Company will no longer benefit from, among other things, the
cost savings on programming and access to acquisition opportunities and
financing relationships that are made available to the Company through
Charter. Charter also provides in-house legal support. See "Certain
Relationships and Related Transactions."

MARKETING, PROGRAMMING AND RATES

The Company's marketing programs are based upon offering various packages of
cable services designed to appeal to different market segments. Charter, in
its capacity as manager of the CCE-I Systems, performs and utilizes market
research on selected systems, compares the data to national research and
tailors a marketing program for each individual market. The Company uses a
coordinated array of marketing techniques to attract and retain subscribers,
including door-to-door solicitation, telemarketing, media advertising and
direct mail solicitations. The Company regularly implements these marketing
efforts in order to gain new subscribers and to increase basic and premium
service penetration in the communities served by its systems. In addition, the
Company is in the process of developing a new five channel "customer choice"
tier of programming, adding four new premium channels, enabling "multiplex"
programming, and offering customers the ability to customize programming
packages. The Company is in the process of developing an in-depth customer
profile data base which will result in more targeted direct marketing efforts
and is intended to increase sales per customer. Such information would then
allow the Company to tailor its marketing efforts with respect to the specific
programming.

Charter has entered into various contracts to obtain basic and premium
programming with a number of suppliers. This programming is made available to
the Company for a fixed fee per subscriber. Charter's programming contracts
generally continue for a fixed period of time and are subject to negotiated
renewal. Some program suppliers offer marketing and pricing support. In
particular, Charter has negotiated programming

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<PAGE>

agreements with premium service suppliers that offer cost incentives under
which premium service unit prices decline as certain premium service growth
thresholds are met. In October 1995, Charter joined the TeleSynergy
programming cooperative, which consists of midsize MSOs, and which is expected
to offer its members certain programming benefits.

The Company's aggregate programming costs are expected to increase in the
future due to additional programming being provided to customers, increased
costs to produce or purchase cable programming, inflationary increases and
other factors affecting the cable television industry. Under FCC rate
regulation, opportunities exist for program suppliers to increase their rates,
subject to certain limitations. See "--Regulation in the Cable Television
Industry--Cable Acts and FCC Regulation." Management believes that the
increases in the Company's programming costs which it expects to incur will be
less than the possible increases the Company would otherwise expect to incur
without the benefit of Charter's membership in TeleSynergy. Subject to the
foregoing, management believes the Company will be able to pass-through
expected increases in its programming costs to subscribers, although there can
be no assurance that it will be able to do so. Management believes that the
CCE-I Systems will continue to have access to programming services at
competitive prices, although there can be no assurance that it will continue
to do so.

Although services vary from system to system due to differences in channel
capacity, viewer interests and community demographics, each of the CCE-I
Systems offers a "basic service tier," consisting of local television channels
(network and independent stations) available over-the-air, local public
channels, governmental, home-shopping and leased access channels. Each of the
CCE-I Systems offers, for a monthly fee, an expanded basic tier of
"superstations" originating from distant cities (such as WTBS, WGN and WWOR),
various satellite-delivered, non-broadcast channels (such as Cable News
Network ("CNN"), MTV, Music Television, the USA Network, Entertainment and
Sports Programming Network ("ESPN") and Turner Network Television ("TNT")) and
certain programming originated locally by the cable system (such as public,
governmental and educational access programs) providing information with
respect to news, time, weather and the stock market. In addition to these
services, the CCE-I Systems typically provide four or more premium services
purchased from independent suppliers and combined in different formats to
appeal to the various segments of the viewing audience, such as Home Box
Office ("HBO"), Cinemax, Showtime, The Movie Channel and The Disney Channel.
These services are satellite-delivered channels consisting principally of
feature films, original programming, live sports events, concerts and other
special entertainment features, usually presented without commercial
interruption. Such premium programming services are offered by the CCE-I
Systems both on an a la carte basis and as part of premium service packages
designed to enhance customer value and to enable the CCE-I Systems to take
advantage of programming agreements offering cost incentives based on premium
service unit growth. A "premium service unit" is a single premium service for
which a subscriber must pay an additional monthly fee in order to receive the
service. Subscribers may subscribe for one or more premium service units. The
CCE-I Systems also typically provide one or more pay-per-view services
purchased from independent suppliers such as Request, Viewer's Choice,
Showtime Event Television, etc. These services are satellite-delivered
channels, consisting principally of feature films, live sporting events,
concerts and other special "events," usually presented without commercial
interruption. Such pay-per-view services are offered by the Company on a "per
viewing" basis, with subscribers only paying for programs which they select
for viewing. Additionally, the Company plans to upgrade certain of its systems
with fiber optic cable, which will allow the Company to expand its ability to
use "tiered" packaging strategies for marketing premium services and promoting
niche programming services. Management believes that this ability will
increase basic and premium service penetration as well as revenue per
subscriber.

Rates to subscribers vary from market to market and in accordance with the
type of service selected. As of March 31, 1997, the monthly basic fees for the
basic service tier in the CCE-I Systems ranged from $8.20 to $20.43 for the
Central Region Systems and $11.22 to $13.01 for the Northeast Region Systems
and the monthly fees for the expanded basic service tier in the CCE-I Systems
ranged from $13.64 to $18.23 for the Central Region Systems and $13.50 to
$17.73 for the Northeast Region Systems. These rates reflect reductions
enacted in response to the 1992 Cable Act's re-regulation of cable television
industry rates, and in particular, the FCC's

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<PAGE>

rate regulations which became effective in 1993 and 1994 implementing the 1992
Cable Act. A one-time installation fee, which may be waived in part during
certain promotional periods, is charged to new subscribers. Management
believes that the Company's rate practices are generally consistent with the
current practices in the industry. See "--Regulation in the Cable Television
Industry."

TECHNOLOGICAL DEVELOPMENTS AND STRATEGY

As part of its commitment to customer service, the Company endeavors to
maintain high technical performance standards in all of its cable systems. All
acquired and existing systems are selectively upgraded to increase channel
capacity and improve picture quality and reliability for the delivery of
additional programming and new services. As part of its evaluation process,
management considers a number of factors before initiating a system upgrade.
Such factors include management's assessment of the (i) upgrades that may be
required by a franchising authority in connection with the renewal of one of
the Company's franchises, (ii) programming alternatives offered by competitors
located near the CCE-I Systems and (iii) cost-effectiveness of any such
upgrades.

The following table sets forth certain information regarding the channel
capacities, miles of plant and basic subscribers for CCE-I's existing owned
and operated systems as of March 31, 1997.

<TABLE>
<CAPTION>
37 TO 42 43 TO 54 55 TO 62 63 TO 78*
CHANNELS CHANNELS CHANNELS CHANNELS TOTAL
-------- -------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
OWNED SYSTEMS:
Number of Systems................ 16 2 10 0 28
Miles of Plant................... 1,307 3,888 4,901 196 10,292
Basic Subscribers................ 57,175 133,354 143,683 5,288 339,500
% of Total Basic Subscribers..... 17 39 42 2 100
</TABLE>
- --------
* While the capacity exists to carry this level of channels to the number of
subscribers disclosed, this capability is currently not utilized as portions
of the trunk and distribution plant associated with the headend do not have
this capacity.

The CCE-I Systems have an average capacity of approximately 54 channels and
approximately 89% of CCE-I's subscribers are currently served by systems that
offer addressable technology. Addressable technology enables the Company, from
the office or headend, to change the premium channels being delivered to each
subscriber or to activate pay-per-view services. These service level changes
can be effectuated without the delay or expense associated with dispatching a
technician to the subscriber's home. Addressable technology also reduces
premium service theft and allows Charter automatically to disconnect
delinquent accounts.

The use of fiber optic technology in concert with coaxial cable has
significantly enhanced cable system performance. Fiber optic strands are
capable of carrying hundreds of video, data and voice channels over extended
distances without the extensive signal amplification typically required for
coaxial cable. To date, Charter has used fiber to interconnect headends, to
eliminate headends by installing fiber backbones, and to reduce amplifier
cascades, thereby improving both picture quality and system reliability.

Digital compression and high capacity data modems may become commercially
viable within the next few years. These developments may enable an increase in
system channel capacity and may allow the introduction of alternative
communications delivery systems for data and voice. Management does not
currently plan to deploy digital technology, as it believes such technologies
will not become cost-effective for the CCE-I Systems in the near term.
However, the Company will continue to monitor the development of such
technology and its utilization by other cable operators, and the cost-
effectiveness of such technology.

CUSTOMER SERVICE AND COMMUNITY RELATIONS

The Company is dedicated to providing superior service to its customers. As
part of this effort, the Company emphasizes improving system reliability,
which includes enhancing technology of the systems, increasing the level of
engineering resources and providing the highest level of customer service. The
Company has also emphasized the availability of customer service and technical
support response time by implementing a 24-hour customer service hotline and
offering installation and service guarantees that provide free installation if

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<PAGE>

the Company's installer is late for a scheduled appointment and a $20 credit
if the Company's service technician is late for a service call. As a result of
the Company's clustering of its cable systems, the Company's technicians from
each of the local clusters are able to assist each other as and when
necessary. See "--Properties."

Charter and the Company are also dedicated to fostering strong community
relations in the towns and cities served by the CCE-I Systems. The Company
supports local charities and community causes through marketing promotions.
The Company installs and provides free basic cable service to public schools,
government buildings and not-for-profit hospitals in the communities in which
it operates. Management believes that its relations with the communities in
which the Company operates are generally good.

FRANCHISES

The Company operates pursuant to an aggregate of 123 non-exclusive
franchises, permits or similar authorizations issued by governmental
authorities. Franchises or permits are awarded by a governmental authority and
generally are not transferable without the consent of the authority. Most of
the franchises pursuant to which the CCE-I Systems operate may be terminated
prior to their stated expiration by the granting authority, after due process,
following a breach of a material provision of such franchise. Under the terms
of most of the franchises, a franchise fee of up to 5% of the gross revenues
derived by a cable system from the provision of cable television services (the
maximum amount that may be charged by a franchising authority under the 1984
Cable Act) is payable to the franchising authority.

The table below illustrates the grouping of the franchises of the CCE-I
Systems by date of expiration and sets forth the approximate number and
percentage of basic service customers for each group of franchises as of March
31, 1997.

CCE-I FRANCHISE INFORMATION

<TABLE>
<CAPTION>
PERCENTAGE OF APPROXIMATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF TOTAL
YEAR OF FRANCHISE EXPIRATION FRANCHISES FRANCHISES SUBSCRIBERS SUBSCRIBERS
- ---------------------------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
1997-1998................. 17 14% 113,500 34%
1999-2001................. 45 36% 72,500 21%
After 2001................ 61 50% 153,500 45%
--- ----- ------- -----
Total................... 123 100.0% 339,500 100.0%
=== ===== ======= =====
</TABLE>

The Cable Acts provide for an orderly franchise renewal process in which
franchise renewal may not be unreasonably withheld. If a renewal is withheld
and the franchising authority acquires ownership of the cable system or
effects a transfer of ownership to another party, the franchise authority must
pay the cable operator the "fair market value" for the system covered by such
franchise. The Cable Acts also establish comprehensive renewal procedures
requiring that an incumbent franchisee's renewal application be asserted on
its own merit and not as part of a comparative process with competing
applications. In connection with the franchise renewal process, many
governmental authorities require the cable operator to commit to making
certain technological upgrades to the system, which may require substantial
capital expenditures.

Management believes that the Company generally has good relationships with
the franchising authorities. In the past, all of the material franchises
relating to the CCE-I Systems eligible for renewal have been renewed or
extended at or prior to their stated expirations. The Company's franchise for
"Area 13" in Connecticut (the northeastern system), with 33,000 subscribers as
of March 31, 1997, is scheduled to expire in July 1998. Connecticut regulates
cable systems on a statewide basis (as opposed to franchising by the various
municipalities). The Company requested the commencement of renewal proceedings
in January 1996 with the DPUC. The DPUC granted the Company's request for an
"informal renewal" and has requested, in conformance with general procedures,
that the Company submit its Proposal for Renewal as the next step in the
informal process. The DPUC has also undertaken, pursuant to its customary
procedures, a community needs assessment.

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Management believes that it generally has a good relationship with the DPUC.
No material franchise authority has ever refused to consent to a franchise
transfer to the Company, although there can be no assurance that all franchise
authorities will consent to franchise transfers to the Company in the future,
or that the terms and conditions of any such transfers will be acceptable to
the Company.

COMPETITION IN THE CABLE TELEVISION BUSINESS

Cable television companies generally operate under non-exclusive franchises
granted by local authorities that are subject to renewal and renegotiation
from time to time. The 1992 Cable Act prohibits franchising authorities from
granting exclusive cable television franchises and from unreasonably refusing
to award additional competitive franchises. Cable system operators may
therefore experience competition from other operators building a system in an
existing franchise area (i.e., an "overbuild"). The 1992 Cable Act also
permits municipal authorities to operate cable television systems in their
communities without franchises. There are virtually no overbuilds in the areas
in which the CCE-I Systems are located, although other cable operators may
operate systems in the vicinity of the CCE-I Systems. Cable systems operators
also compete for the right to construct systems in new housing developments
adjoining or otherwise located in proximity to such operator's existing
systems. Management believes that the selection of a cable operator to
construct a system in a new housing development (which may be located near the
cable systems of several different operators) is typically based upon an
evaluation by the real estate developer of the programming and pricing offered
by the different cable operators conducting business in proximity to such
housing development.

Cable television systems also face competition from alternative methods of
receiving and distributing television signals and from other sources of home
entertainment. Within the home video programming market, the Company competes
primarily with other cable franchise holders and with home satellite and
wireless cable providers, and, when existing franchises become available for
renewal (or new franchises become available), with other cable franchise
holders. Management believes that direct broadcast satellite ("DBS"), a
service by which packages of television programming are transmitted to
individual homes which are serviced by a single satellite dish, is currently
the most significant competitive threat to the CCE-I Systems. DBS involves the
transmission of an encoded signal directly from a satellite to the home user.
DBS provides video service using a relatively small dish located at each
subscriber's premises. In 1994, two companies offering high-power DBS video
service utilizing an 18-inch satellite receiver dish, DIRECTV, Inc.
("DIRECTV") and United States Satellite Broadcasting, began operations over
DIRECTV's DBS satellites, and at present, together offer over 150 channels of
programming. PrimeStar Partners, L.P. ("PrimeStar"), which offers 70 channels
of programming, is a medium-power DBS service provider using larger (36-inch)
satellite receiver dishes than high-power DBS providers. DIRECTV requires the
consumer to purchase home dish equipment, while PrimeStar, which is owned
primarily by a consortium of cable television operators (including TCI),
leases its dishes to consumers. Both of these services provide the consumer
with access to most satellite-delivered cable television programming,
including premium channels, pay-per-view and national sporting events. Some of
the services offered by DBS are not available through the Systems, including
special events and packages of Major League Baseball, National Basketball
Association, National Football League and National Hockey League games. The
DBS systems use video compression technology to increase their channel
capacity and are able to use 18-inch or 36-inch dish antennae to receive the
satellite signals directly. Several companies including EchoStar
Communications Corp., a venture between MCI Telecommunications Corporation
("MCI") and The News Corporation Limited ("News"), and PrimeStar have begun or
are scheduled to begin offering high-power DBS services.

Basic DBS service starts at approximately $30 per month nationally and
increases depending on the programming selected. A DBS satellite dish for one
television retails for as low as approximately $100, and recent reports
indicate that prices may be reduced by the latter part of 1997 to as low as
$50. Competition by DBS may suffer from the following factors: (i) lack of
reception of local broadcast signals, (ii) topographical limitations which
limit reception in hilly areas, (iii) high cost of additional outlets, (iv)
the inability to view different channels on other television sets in the home
without purchasing a second receiver, (v) the inability to offer interactive
services and (vi) signal degradation in heavy rain. The lack of reception of
local broadcast

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signals may cause some DBS subscribers to continue their subscriptions to
basic cable service in order to receive these channels, although the DBS
industry is seeking to modify current law in order to retransmit these local
channels to its customers. Recent published reports indicate that there are
now approximately 4.5 million subscribers to DBS services, which reflects a
substantial increase in the number of such subscribers from those reported in
previous years. In addition, many observers are projecting continued growth
for the DBS industry through the end of the decade. Thus, although it is
difficult to assess the ultimate magnitude of the impact that DBS will have on
the cable industry or upon the Company's operations and revenues, DBS services
now pose a significant competitive threat to cable television systems. On June
11, 1997, TCI Satellite Entertainment, Inc. ("TSAT") announced that a binding
letter of intent had been signed for the restructuring of PrimeStar. In
connection with the restructuring, PrimeStar, which is currently owned by
affiliates of the five largest cable companies in the U.S., has entered into
an agreement to combine its assets with ASKyB, a satellite venture formed by
News and MCI, into a single DBS provider. ASKyB has announced that it will
contribute two satellites under construction and 28 frequencies that are
capable of transmitting to the entire continental U.S. This proposed
transaction requires certain federal regulatory approvals. The import of the
proposed transaction on the cable television industry in general and the
Company in particular cannot be predicted at this time.

Cable television systems also compete with wireless program distribution
services such as multichannel multipoint distribution service ("MMDS"), which
uses low power microwave frequencies to transmit video programming over-the-
air to customers. The FCC has amended its regulations to enable MMDS systems
to compete more effectively with cable systems by making available additional
channels to the MMDS industry and by refining the procedures by which MMDS
licenses are granted. The FCC also ruled that wireless cable operators may
increase their channel capacity and service offerings through digital
compression techniques. Such increased capacity and offerings may make
wireless cable a more significant competitor in the video programming
industry. The 1992 Cable Act generally prohibits a cable operator from holding
an FCC MMDS license in its franchised cable service area. However, the
Telecommunications Act allows such common ownership if the cable operator is
subject to "effective competition." Additionally, the FCC allocated
frequencies in the 28 GHz band for a new multichannel wireless video service
similar to MMDS. The Company is unable to predict the economic viability of
wireless video services, such as MMDS, or whether such services will present a
competitive threat to the Company.

Since 1992, a portion of the Los Angeles Systems, located in Riverside
County, California (the "Riverside System"), has faced competition from Cross
Country Wireless, Inc. ("Cross Country"), a major MMDS operator. Although
Cross Country initially caused significant subscriber erosion due to an
aggressive marketing campaign, their subscriber count has been essentially
flat at approximately 40,000 over the past two years. (It should be noted that
Cross Country serves all of Riverside County, including substantial areas not
covered by the Riverside System.) In fact, the Riverside System has since
substantially surpassed the subscriber and cash flow levels enjoyed prior to
Cross Country's entry into the market.

Additional forms of competition for cable systems are master antenna
television ("MATV") and satellite master antenna television systems ("SMATV").
These systems are essentially small, closed cable systems which operate within
specific hotels, apartment or condominium complexes and individual residences.
Due to the widespread availability of earth stations, such private cable
television systems can offer both improved reception of local television
stations and many of the same satellite-delivered program services which are
offered by franchised cable television systems. MATV and SMATV systems
currently benefit from operating advantages not available to franchised cable
television systems, including fewer regulatory burdens and no requirement to
service low density or economically depressed communities. The
Telecommunications Act, which to some extent deregulates or lessens the
regulatory burden on the cable industry, may reduce some of the advantages of
SMATV and MATV systems. However, since SMATV and MATV systems generally do not
fall within the Cable Acts' definition of a "cable system," notwithstanding
the enactment of such legislation, they could still be exempt from other
requirements of the Cable Acts which were not amended. Furthermore, the
Telecommunications Act broadens an exemption from regulation as a "cable
system," which may exempt additional SMATV and MATV systems from regulation
under the Cable Acts.

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Federal cross-ownership restrictions have historically limited entry into
the cable television business by potentially strong competitors such as
telephone companies. The 1984 Cable Act codified the FCC's cross-ownership
regulations, which, in part, prohibited local exchange telephone companies,
including RBOCs (Regional Bell Operating Companies), from providing video
programming directly to subscribers within their local exchange telephone
service areas, except in rural areas or by specific waiver of FCC rules. Among
other reasons, this federal cable television/telephone cross-ownership rule
was particularly important to the cable industry, because these telephone
companies already own certain facilities needed for cable television
operators, such as poles, ducts and associated rights-of-way. The
Telecommunications Act repeals the cable television/telephone cross-ownership
ban adopted in the 1984 Cable Act but contains restrictions on buying out
incumbent cable operations in a telephone company's service area, especially
in suburban and rural markets. Specifically, the Telecommunications Act
authorizes LECs (local exchange companies) to provide a wide variety of video
services competitive with services provided by cable systems and to provide
cable services directly to customers in the telephone companies' service
areas, with some regulatory safeguards. See "--Regulation in the Cable
Television Industry--Telecommunications Legislation."

Various LECs currently are seeking to provide video programming services
within their telephone service areas through a variety of distribution
methods, including both the deployment of broadband wire facilities and the
use of wireless (MMDS) transmission. In Connecticut, the DPUC recently granted
a subsidiary of a local telephone company, The Southern New England
Telecommunications Corporation ("SNET"), a franchise to serve the entire state
of Connecticut. The SNET subsidiary, SNET Personal Vision, Inc. ("Personal
Vision") proposed to offer its services initially to a "primary franchise
area" of several Connecticut communities, including one in which CCE-I
provides cable television service, within its first two years of operation
(beginning by January 1997). Pursuant to the terms of Personal Vision's eleven
year franchise, its services must pass all homes in Connecticut within eleven
years. See "Regulation in the Cable Television Industry." This new statewide
cable franchise is currently being challenged by a regional cable association.
The association filed an appeal in the Connecticut Superior Court challenging
the DPUC's grant of the statewide franchise, on several substantive and
procedural grounds. The Company cannot predict the outcome of this litigation.
Some video programming services provided by telephone companies (e.g., "open
video systems") do not require local franchises. Further, certain of the RBOCs
have already entered the cable television business outside their service
areas. Cable television systems could be placed at a competitive disadvantage
if the delivery of video programming services by LECs becomes widespread. LECs
may not be required, under certain circumstances, to obtain local franchises
to deliver such video services or to comply with the variety of obligations
imposed upon cable television systems under such franchises. Issues of cross-
subsidization by LECs of video and telephony services also pose strategic
disadvantages for cable operators seeking to compete with LECs that provide
video services. Management believes that telephone companies will generally
focus their efforts on cable acquisitions in larger metropolitan areas,
although there can be no assurance that this will be the case.

Other new technologies may become competitive with non-entertainment
services that cable television systems can offer. Advances in communications
technology as well as changes in the marketplace and the regulatory and
legislative environment are constantly occurring. Management cannot predict
the effect that ongoing or future developments might have on the cable
television industry generally or the Company specifically.

REGULATION IN THE CABLE TELEVISION INDUSTRY

The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry. The Cable
Acts, both of which amended the Communications Act, establish a national
policy to guide the development and regulation of cable television systems.
The Communications Act was recently substantially amended by the
Telecommunications Act, which alters federal, state and local laws pertaining
to cable television, telecommunications and other services. Principal
responsibility for implementing the policies of the Cable Acts and the
Telecommunications Act is allocated

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between the FCC and state or local franchising authorities. The FCC and state
regulatory agencies are required to conduct numerous rulemaking and regulatory
proceedings to implement the Telecommunications Act and such proceedings may
materially affect the cable television industry.

Cable Acts and FCC Regulation

The Cable Acts and the FCC's implementing rules establish, among other
things, (i) rate regulations, (ii) "anti-buy through" provisions, (iii) "must
carry" and "retransmission consent" requirements that may require a cable
system under certain circumstances to carry a local broadcast station or
obtain consent to carry a distant or local station, (iv) rules for franchise
renewals and transfers and (v) other regulations covering a variety of
operational areas such as equal employment opportunity, public inspection
files, technical standards, leased access and customer service requirements.

The 1992 Cable Act and the FCC's rules implementing the 1992 Cable Act
generally have increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local (and in some instances, state) franchise authorities. Management
is unable to predict the ultimate effect of the 1992 Cable Act or the ultimate
outcome of various FCC rulemaking proceedings or the litigation challenging
various aspects of the 1992 Cable Act and the FCC's regulations implementing
the 1992 Cable Act. In August 1996, the United States Court of Appeals for the
District of Columbia (the "D.C. Appeals Court") upheld the constitutionality
of several provisions of the Cable Acts against a First Amendment
constitutional challenge in a case that has been pending since 1993. The D.C.
Appeals Court affirmed a lower court decision upholding the constitutionality
of the federal statutory provisions authorizing (i) public, educational and
governmental access channels, (ii) commercial leased access channels, (iii)
rate regulation, (iv) liability for operators carrying obscene programming on
access channels, and (v) municipal immunity from damage claims. The D.C.
Appeals Court reversed the lower court's determination that the federal
statutory provisions authorizing (i) advance subscriber notice for certain
free premium channel previews and associated blocking requirements and (ii)
direct broadcast satellite channel set-aside requirements were
unconstitutional. The D.C. Appeals Court denied a request to review its
decision en banc. The D.C Appeals Court deferred a ruling on the
constitutional challenge to statutory requirements mandating program access
and system ownership restrictions and determined that it will consider the
validity of these provisions in a separate case involving a challenge to the
FCC's regulations implementing these statutory provisions.

Rate Regulation. The Cable Acts and FCC regulations have imposed rate
requirements for basic services and equipment. Under the 1992 Cable Act, a
local franchising authority in a community not subject to "effective
competition" (as defined in the 1992 Cable Act) generally is authorized to
regulate basic cable service rates after certifying to the FCC that, among
other things, it will adopt and administer rate regulations consistent with
FCC rules, and in a manner that will provide a reasonable opportunity to
consider the views of interested parties.

Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to
determine their maximum permitted rates. Those systems with rates which were
above the benchmark on September 30, 1992 were required to reduce their rates
to the benchmark or by 10%, whichever was less. Under revised rate regulations
adopted in February 1994, regulated cable systems were required to reduce
their rates so that regulated revenues per subscriber did not exceed September
30, 1992 levels, reduced by 17% (taking into account the previous 10%
reduction).

At this time, approximately 40% of the franchise authorities (covering
approximately 80% of subscribers of CCE-I as of March 31, 1997) that oversee
the franchises under which the Systems operate are certified to regulate basic
tier rates. Several local franchising authorities are currently in the process
of reviewing the basic service rates charged by certain Systems. However,
because the 1992 Cable Act permits communities to certify at any time, it is
possible that additional localities served by the Systems may choose to
certify and regulate rates in the future.

The Telecommunications Act expands the definition of "effective competition"
to include any franchise area where a local exchange carrier or its affiliate
(or any multichannel video programming distributor using the

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facilities of such carrier or its affiliate) provides video programming
services to subscribers by any means, other than through direct broadcast
satellite. The local exchange carrier must provide "comparable" programming
services in the franchise area. In May 1997, in response to a petition by the
Company, the FCC ruled that the Company is subject to effective competition
(from Cross Country Wireless, Inc.) with respect to the Cable Systems in the
City of Riverside (South) and the City of Riverside (North) and Riverside
County, California. Therefore, the FCC revoked the certifications of those
communities' franchising authorities to regulate basic cable service rates.
However, the FCC denied that effective competition exists in the City of
Norco, California. As a result, the relevant franchising authority in that
community may continue to regulate basic cable rates. In regulating the basic
service rates, certified local franchise authorities have the authority to
order a rate refund of previously paid rates determined to be in excess of the
maximum permitted reasonable rates. With respect to any of the Region's
systems regulated by local authorities that have already been certified,
during the 12 month period ended March 31, 1997, the Company paid no rate
refunds to subscribers as a result of rate orders issued by its franchise
authorities.

Rate regulation of the basic service tier remains subject to regulation by
local franchising authorities under the Telecommunications Act, except in
certain circumstances for certain small cable operators. For a defined class
of "small cable operators," the Telecommunications Act immediately eliminates
regulation of cable programming rates. Rates for the basic tier of small cable
operators are deregulated if the system offered only a single tier of services
as of December 31, 1994. To qualify as a "small cable operator," the operator
(and its affiliates) must serve in the aggregate fewer than one percent of all
U.S. cable television subscribers and have affiliate gross revenues not
exceeding $250 million. The exception applies in any franchise area in which
the operator serves 50,000 or fewer subscribers.

Under the 1992 Cable Act, rates for cable programming services not carried
on the basic tier ("non-basic services") could be regulated by the FCC upon
the filing of a complaint by franchise authorities or subscribers that
indicates the cable operator's rates for these services are unreasonable. Rate
complaints have been filed with the FCC with respect to certain of the
Company's cable programming service tiers. As of the date of this Prospectus,
one complaint with regard to the Missouri System was dismissed and several
complaints were recently resolved adversely to the Company. Specifically, the
FCC ruled that, during 1994, the Company charged in excess of its maximum
permitted rates (under FCC rules) for its cable programming service tiers in
certain systems operating in Connecticut. The FCC ordered the Company to
refund to subscribers in the affected communities the excess amounts paid,
plus interest to the date of the refunds. The Company believes this ruling
will not have a material adverse effect on its business.

The Telecommunications Act eliminates regulation of the cable programming
service tier (non-basic programming) as of March 31, 1999. In the interim,
rate regulation of the cable programming tier is circumscribed, as rate
regulation can only be triggered by a franchising authority complaint to the
FCC. A franchising authority complaint must be based on more than one
subscriber complaint, which must be filed within 90 days after a rate
increase. If the FCC determines that any of the Company's cable programming
service tier rates (other than the 1994 rates for certain Connecticut systems,
as to which the FCC has already ruled) are unreasonable, the FCC has the
authority to order the Company to reduce those cable programming service tier
rates and to refund to customers any overcharges occurring from the filing
date of the rate complaint at the FCC. In jurisdictions that have not yet
chosen to certify, refunds covering a one-year period on basic service may be
ordered upon future certification if the Company is unable to justify its
rates through a benchmark or cost-of-service filing pursuant to FCC rules.
Management is unable to estimate at this time the total amount of refunds that
may be payable by the Company in the event the Systems' rates (other than the
1994 rates for certain Connecticut systems, as to which the FCC has already
ruled) are successfully challenged by franchising authorities or found to be
unreasonable by the FCC, although management does not believe that the amount
of any such refunds would have a material adverse effect on the Company.
Notwithstanding mandated rate reductions, cable operators currently may adjust
their regulated rates to reflect inflation and what the FCC has deemed to be
external costs (such as increases in franchise fees and programming costs).

In November 1994, the FCC adopted the so-called "going-forward rules" which,
among other things, allow cable operators to raise rates over the next three
years by adding channels to the expanded basic tier. Under the

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revised rules, cable operators were allowed to take a per channel markup of up
to 20 cents for each channel added to the expanded basic tier, with an
aggregate cap of $1.20 per subscriber per month. Accordingly, the Company was
permitted to adjust rates on January 1, 1995 for channel additions occurring
after May 14, 1994. In addition to rate adjustments permitted for additional
channels, the "going-forward rules" allowed cable operators to recover an
additional amount of 30 cents in the aggregate per subscriber per month for
license fees associated with adding new channels through 1996. (During the
third year, license fees are subject to the general rate rules.) Thus, through
1996 the allowable rate increases for channel adjustments and license fees
could have totaled up to $1.50 per subscriber per month. Under the "going-
forward rules," in 1997, cable operators may make an additional flat fee
increase of 20 cents per channel per month for channels added during that
year, provided that the rate increases made by cable operators over the three-
year period (exclusive of license fees) do not exceed $1.40 in the aggregate.
For channels added after May 14, 1994, operators electing to take advantage of
the 20 cents per channel adjustment may not take a 7.5% mark-up on programming
cost increases that are otherwise currently permissible under the rate rules.
The "going-forward rules" are scheduled to expire on December 31, 1997. The
Company has incorporated the "going-forward rules" into all filings based on
the benchmark methodology.

The "going-forward rules" also allow cable operators to place channels that
were not offered on the cable system prior to October 1, 1994 on a new
separate unregulated tier as long as the regulated basic and expanded basic
tiers remain intact. Cable operators may offer the same new channels
simultaneously on both an expanded basic tier and a new unregulated tier, and
may at any time move them to the new tier. Thus, operators may build up a
following for new channels by putting them in the expanded basic tier before
moving them to the new unregulated tier. Channels that were in the basic tier
or the expanded basic tier prior to September 30, 1994 may not be moved to the
new tier, nor may such channels be dropped from the basic or expanded basic
tiers and then added to a new tier within the two-year period after the date
upon which any such channel is dropped.

In September 1995, the FCC developed an abbreviated cost-of-service form
that permits cable operators to recover the costs of significant upgrades that
provide benefits to subscribers of regulated cable services. Cable operators
seeking to raise rates to cover the costs of an upgrade would submit only the
costs of the upgrade instead of all current costs. In December 1995 and April
1996, the FCC revised its cost-of-service rules.

In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once per year to reflect inflation and changes in external costs and in the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order also allows
operators to recover increases in additional types of franchise-requirement
costs. Permitted pass-through increases include increases in the costs of
providing institutional networks, video services, data services to or from
governmental and educational institutions, and certain other cost increases.
The Company has made annual benchmark filings where appropriate.

In November 1995, the FCC proposed to provide cable operators with the
option of establishing uniform rates for similar service packages offered in
multiple franchise areas located in the same region. Under the FCC's current
rules, cable operators subject to rate regulation must establish rates on a
franchise-specific basis. The FCC recently adopted an order that will permit a
cable television system operator to submit a proposal to establish uniform
rules across multiple franchise areas. The new rule could lower cable
operators' marketing costs and may also allow operators to better respond to
competition from alternative providers. The Company is unable to predict
whether these rules will be of any benefit to the Systems.

In July 1996, the FCC proposed to give operators more flexibility with
respect to the relative pricing of different tiers of service. Under this
proposal, once an operator has set rates in accordance with existing
regulations, the operator could decrease its basic service tier ("BST") rate
and then take a corresponding increase in its cable programming service tier
("CPST") rate to offset the lost revenue on the BST. In this proceeding, the
FCC has also asked parties to comment on whether it should place a limit on
the amount of any CPST rate increase or otherwise limit the amount by which
the BST and CPST rates may be adjusted.

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The FCC expects that this proposal would give operators rate structure
flexibility enjoyed by alternative providers of video services that are, or
soon will be, attempting to compete with cable operators but are not subject
to the rate regulation imposed by statute on cable operators. The Company is
unable to predict whether these proposed rules will ultimately be promulgated
by the FCC and, if they are promulgated, their effect on the Company.

The uniform rate requirements in the 1992 Cable Act, which required a cable
operator to charge uniform rates throughout its franchise areas, are relaxed
by the Telecommunications Act. Specifically, the Telecommunications Act
clarifies that the uniform rate provision does not apply where a cable
operator faces "effective competition." In addition, bulk discounts to
multiple dwelling units are exempted from the uniform rate requirements.
However, complaints concerning "predatory" pricing (including with respect to
bulk discounts to multiple dwelling units) may be made to the FCC. The
Telecommunications Act also permits cable operators to aggregate, on a
franchise system, regional or company level, its equipment costs in broad
categories. The Telecommunications Act should facilitate the rationalization
of equipment rates across jurisdictional boundaries. However, these cost-
aggregation rules do not apply to the limited equipment used by subscribers
who only receive basic programming.

"Anti-Buy Through" Provisions. The 1992 Cable Act and corresponding FCC
regulations require cable systems to permit customers to be able to purchase
video programming offered by the operator on a per channel or per program
basis without having to subscribe to any tier of service (other than the basic
tier), subject to available technology. The available technology exception
sunsets on October 5, 2002. Although approximately 89% of CCE-I's subscribers
are served by systems that offer addressable technology, most of CCE-I's
subscribers do not currently have the requisite equipment in their homes to
utilize such technology. As a result, most of CCE-I's cable television systems
are currently exempt from complying with the requirements of the 1992 Cable
Act. Management cannot predict the extent to which this provision of the 1992
Cable Act and the corresponding FCC rules may cause customers to discontinue
optional non-basic service tiers in favor of the less expensive basic cable
service.

"Must Carry" Requirements/"Retransmission Consents." Under the 1992 Cable
Act, cable television operators are subject to mandatory broadcast signal
carriage requirements that allow local commercial and non-commercial
television broadcast stations to elect once every three years to require a
cable system to carry the station, subject to certain exceptions, or, in the
case of commercial stations, to negotiate for "retransmission consent" to
carry the station. In addition, there are requirements for cable systems to
obtain retransmission consent for all "distant" commercial television stations
(except for commercial/satellite-delivered independent "superstations" such as
WTBS), commercial radio stations and certain low power television stations
carried by such systems after October 6, 1993. The validity of mandatory
signal carriage requirements was litigated in the United States Supreme Court,
which recently upheld the "must carry" requirements on constitutional grounds.
The carriage requirements remained in effect during the litigation. As a
result of the mandatory carriage rules, some of the CCE-I Systems have been
required to carry television broadcast stations that otherwise would not have
been carried, thereby causing displacement of possibly more attractive
programming. In one proceeding, the FCC ordered the Company's systems in
Uxbridge, Massachusetts to carry a local broadcast channel pursuant to the
must carry rules. The retransmission consent rules have resulted in the
deletion of certain local and distant television broadcast stations which
various Systems were carrying. To the extent retransmission consent fees were
paid for the continued carriage of certain television stations, such costs
were not recoverable. Any future amounts paid in exchange for retransmission
consent, however, may be passed along to subscribers as additional programming
costs.

Franchise Matters. The 1984 Cable Act affirms the right of franchising
authorities (state or local, depending on the practice in the individual
states) to award one or more franchises within their jurisdictions and
prohibits nongrandfathered cable systems from operating without a franchise in
such jurisdictions. The 1992 Cable Act encourages competition with existing
cable systems by (i) allowing municipalities to operate their own cable
systems without franchises, (ii) preventing franchising authorities from
granting exclusive franchises or unreasonably refusing to award additional
franchises covering an existing cable system's service area, and (iii)

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prohibiting (with limited exceptions) the common ownership of cable systems
and co-located MMDS or SMATV systems. In January 1995, the FCC relaxed its
restrictions on ownership of SMATV systems to permit a cable operator to
acquire SMATV systems in the operator's existing franchise area so long as the
programming services provided through the SMATV system are offered according
to the terms and conditions of the cable operator's local franchise agreement.
The Telecommunications Act provides that the cable/SMATV and cable/MMDS cross-
ownership rules do not apply in any franchise area where the cable operator
faces "effective competition" as defined by federal law. The
Telecommunications Act also permits local telephone companies to provide video
programming services as traditional cable operators with local franchises.

The 1984 Cable Act also provides that in granting or renewing franchises,
local authorities may establish requirements for cable-related facilities and
equipment, but not for video programming or information services other than in
broad categories. Among the more significant provisions, the Cable Act limits
franchise fees to 5% of a cable system's annual gross revenues and permits
cable operators to obtain modification of franchise requirements by the
franchising authority or judicial action if warranted by changed
circumstances. The 1984 Cable Act contains franchise renewal procedures
designed to protect incumbent franchisees against arbitrary denials of
renewal. The 1992 Cable Act made several changes to the renewal process that
could make it easier for a franchising authority to deny renewal. Moreover,
even if a franchise is renewed, a franchising authority may seek to impose new
and more onerous requirements, including requiring significant upgrades in
facilities and services or increased franchise fees. If a franchising
authority's consent is required for the purchase or sale of a cable television
system, the franchising authority may also seek to impose new and more onerous
requirements as a condition to the transfer. The acceptance of these new
requirements, however, may not be made a condition of the transfer.
Historically, franchises have been renewed for cable operators that have
provided satisfactory services and have complied with the terms of their
franchises. Although management believes that the Company has generally met
the terms of its franchise agreements, has provided quality levels of service,
and anticipates that the Company's future franchise renewal prospects
generally will be favorable, there can be no assurance that any such
franchises will be renewed or, if renewed, that the franchising authority will
not impose more onerous requirements on the Company than previously existed.
Connecticut regulates cable systems on a statewide basis (as opposed to
franchising by the various municipalities). The Company's franchise for "Area
13" in Connecticut (the northeastern system) is scheduled to expire in July
1998. The Company requested the commencement of renewal proceedings in January
1996 with the DPUC. The DPUC granted the Company's request for an "informal
renewal" and has requested, in conformance with general procedures, that the
Company submit its Proposal for Renewal as the next step in the process. The
DPUC has also undertaken, pursuant to its customary procedures, a community
needs assessment. Management believes that it generally has a good
relationship with the DPUC. In addition, many of the Company's other
franchises are currently or will be in the near future within the three year
renewal window provided in the Communications Act. Those franchises serve
approximately 62% of the Company's total subscriber base. While there can be
no assurance that all of these franchises will be renewed on commercially
reasonable terms, the Company believes that it maintains generally good
relationships with its franchising authorities.

Under the Telecommunications Act, a franchising authority may not require a
cable operator to provide telecommunications service or facilities, other than
an institutional network, as a condition to a grant, renewal, or transfer of a
cable franchise, and franchising authorities are preempted from requiring
cable operators to obtain a franchise to provide telecommunications services.

Various courts have considered whether franchising authorities have the
legal right to limit franchise awards to a single cable operator and to impose
certain substantive franchise requirements (i.e., access channels, universal
service and other technical requirements). These decisions have been somewhat
inconsistent and, until the United States Supreme Court rules definitively on
the scope of cable operators' First Amendment protections, the legality of
certain issues relating to the franchising process and of various specific
franchise requirements is likely to be in a state of flux. It is not possible
at the present time to predict the constitutionally permissible bounds of
cable franchising and particular franchise requirements.

Other FCC Regulations. The Company is subject to a variety of other FCC
rules, covering such diverse areas as equal employment opportunity,
programming, leased access, maintenance of records and public

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inspection of files, technical standards, customer service and cable inside
wiring. The FCC recently released an order regarding, among other things,
inside wiring to multiple dwelling units ("MDUs"). The Company is unable to
predict the impact of the new rules on its business. As required by the 1992
Cable Act, the FCC has adopted rules regulating the maximum reasonable rate a
cable operator may charge for commercial use of the designated channel
capacity for cable systems that have a certain number of channels, including
such systems located at MDUs. The Commission recently reconsidered and revised
its rules governing the rates that operators may charge for this designated
channel capacity as well as its rules governing the use of such channels.
Among other revisions to its rules, operators must compute the rates for these
channels based on an average, rather than on the highest spread between
program costs and subscriber revenues, and, consequently, the rates that
operators will be permitted to charge for these channels will likely decrease.

The FCC has authority to enforce its regulations through the imposition of
substantial fines, the issuance of cease and desist orders and/or the
imposition of other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities often used in
connection with cable operations. Although management believes the Company is
in compliance in all material respects with all applicable FCC requirements,
there can be no assurance that the FCC would not find a violation and impose
sanctions that could adversely affect the Company's operations.

Telecommunications Legislation

On February 1, 1996, Congress passed the Telecommunications Act. The
Telecommunications Act was signed into law by the President on February 8,
1996, and substantially amends the Communications Act (including the re-
regulation of subscriber rates under the 1992 Cable Act). The
Telecommunications Act alters federal, state and local laws and regulations
pertaining to cable television, telecommunications, and other services. In
addition to the amendments previously discussed in this section, the
legislation also allows additional competition in video programming by
telephone companies, and makes other revisions to the Communications Act and
the Cable Acts.

The most far-reaching changes in the communications industry will likely
result from the telephony provisions of the Telecommunications Act. These
provisions promote local exchange competition as a national policy by
eliminating legal barriers to competition in the local telephone business and
setting standards to govern the relationships among telecommunications
providers. The provisions also establish uniform requirements and standards
for entry, competitive carrier interconnection, and unbundling of LEC (local
exchange company) monopoly services. The Telecommunications Act expressly
prohibits any legal barriers to competition in intrastate or interstate
communications service under state and local laws. The Telecommunications Act
empowers the FCC, after notice and an opportunity for comment, to preempt the
enforcement of any statute, regulation or legal requirement that prohibits, or
has the effect of prohibiting, the ability of any entity to provide any
intrastate or interstate telecommunications service.

The Telecommunications Act is intended, in part, to promote substantial
competition in the marketplace for telephone local exchange service and in the
delivery of video and other services, and permits cable television operators
to enter the local telephone exchange market. The cable industry's ability to
offer telephone services competitively may be adversely affected by the degree
and form of regulatory flexibility afforded to LECs and, in part, will depend
upon the outcome of various FCC rulemakings and judicial proceedings,
including the proceedings dealing with the interconnection obligations of
telecommunications carriers. The United States Court of Appeals for the Eighth
Circuit recently stayed implementation of part of the FCC's recently issued
interconnection order, which had been viewed favorably by companies seeking to
compete with LECs in the provisioning of telephony services. Additionally,
whether the cable industry will be able to provide competitive telephone
services will depend, in part, on its ability to obtain access to public
rights of way. The FCC currently is conducting a proceeding that could
determine a franchise authority's scope of authority to impose monetary and
other obligations on cable operators for the use of public rights of way to
provide telecommunications services.

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Telephone Company Provision of Video Programming. Under the
Telecommunications Act, telephone companies can compete directly with cable
operators in the provisioning of video programming. The new legislation
recognizes several multiple entry options for telephone companies to provide
competitive video programming, including over their telephone facilities,
through either common carrier transport or an "open video system," by radio
communications, or as a regular cable system. LECs, including RBOCs, will be
allowed to compete with cable operators both inside and outside the LECs'
telephone service areas. The Telecommunications Act repeals the statutory ban
on telephone company provision of video programming services in the telephone
company's service areas. The FCC's video dialtone regulations have also been
repealed. Pursuant to authority granted to the FCC in the Telecommunications
Act, the FCC ordered that video dialtone operators could only continue to
offer service by electing, by November 6, 1996, one of the four permissible
options for telephone companies to provide video programming which are
described below. Video dialtone operators could apply for extensions to the
November 6, 1996 deadline upon a demonstration of "good cause" for an
extension.

In particular, if a telephone company provides video via radio
communications, it will be regulated under title III of the Communications Act
(the general sections governing use of the airwaves), rather than cable
regulation under title VI. If a telephone company provides common carriage
transport of video programming, it will be subject to the requirements of
title II of the Communications Act (the general common carrier provisions),
rather than title VI cable regulation. Telephone companies providing video
programming through any other means (other than as an "open video system," as
described below) will be regulated under title VI cable regulation.

The Telecommunications Act replaces the FCC's video dialtone rules with an
"open video system" plan by which telephone companies can provide video
programming service in their telephone service areas. Telephone companies that
comply with the FCC's open video system regulations (which must be prescribed
within six months from enactment) will be subject to a relaxed regulatory
scheme. The open video system requirements are in lieu of title II common
carrier regulation. The FCC has certified the operation of open video systems
in various areas of the United States.

The FCC was directed to and has prescribed rules that prohibit open video
systems from discriminating among video programming providers with regard to
carriage, and that ensure that open video system rates, terms and conditions
for service are reasonable and non-discriminatory. Pursuant to the
Telecommunications Act, the FCC has also adopted regulations prohibiting an
open video system operator and its affiliates from occupying more than one-
third of the system's activated channels when demand for channels exceeds
supply. The Telecommunications Act also mandates other open video system
regulations, including channel sharing and sports exclusivity. Open video
systems will be subject to the authority of local governments to manage public
rights-of-way. Local franchising authorities may require open video system
operators to pay franchise-type fees, which may not exceed the rate at which
franchise fees are imposed on any cable operator in the corresponding
franchise area. The FCC's open video system regulations have been appealed.

Buyouts. The Telecommunications Act generally prohibits LEC buyouts of cable
systems (which includes any ownership interest exceeding 10%) within the LEC's
telephone service area, cable operator buyouts of LEC systems within the cable
operator's franchise area, and joint ventures between cable operators and LECs
in the same markets. There are some statutory exceptions, including a rural
exemption which permits buyouts where the purchased system serves an area with
fewer than 35,000 inhabitants outside an urban area. Also, the FCC may grant
waivers of the buyout provisions in cases where (1) the cable operator or LEC
would be subject to undue economic distress; (2) the system or facilities
would not be economically viable; or (3) the anticompetitive effects of the
proposed transaction are clearly outweighed by the effect of the transaction
in meeting community needs. The respective local franchising authority must
approve any such waiver.

Public Utility Competition. The Telecommunications Act also authorizes
another potential competitor, registered utility holding companies and
subsidiaries, to provide video programming services, notwithstanding the
Public Utility Holding Company Act. Utilities must establish separate
subsidiaries and must apply to the FCC

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for operating authority. Several such utilities have been granted broad
authority by the FCC to engage in activities which could include the provision
of video programming.

Cross-Ownership; Reduced Regulations. The Telecommunications Act makes
several other changes to relax ownership restrictions and regulation of cable
systems. It repeals the 1992 Cable Act's three-year holding requirement
pertaining to sales of cable systems. The broadcast/cable cross-ownership
restrictions are eliminated, although the FCC's regulations prohibiting
broadcast/cable common ownership currently remain. The SMATV/cable cross-
ownership and the MMDS/cable cross-ownership restrictions have been eliminated
for cable operators subject to effective competition.

The Telecommunications Act amends the definition of "cable system" so that a
broader class of entities (including some entities which may compete with the
Company) providing video programming will be exempt from regulation as a cable
system under the Communications Act.

Pole Attachments. The 1984 Cable Act requires the FCC to regulate the rates,
terms and conditions imposed by certain public utilities for cable systems'
use of utility pole and conduit space, unless state authorities can
demonstrate under the Federal Pole Attachment Act that they adequately
regulate cable television pole attachment rates, terms and conditions. In some
cases utility companies have increased pole attachment fees for cable systems
that have installed fiber optic cables in connection with the distribution of
non-video services. The FCC recently concluded that, in the absence of state
regulation, it has jurisdiction to determine whether utility companies have
justified their demand for additional rental fees, and that the 1984 Cable Act
does not permit disparate rates based on the type of service provided over the
equipment attached to the utility's pole. Further, in the absence of state
regulation, the FCC administers such pole attachment rates through use of a
formula which it has devised and from time to time revises. The
Telecommunications Act extends the regulation of rates, terms and conditions
of pole attachments to telecommunications service providers, and requires the
FCC to prescribe regulations to govern the charges for pole attachments used
by telecommunications carriers to provide telecommunications services when the
parties fail to resolve the dispute over such charges. The FCC recently
adopted an Order to adopt certain of the Telecommunications Act's pole
attachment provisions. The Telecommunications Act also increases significantly
future pole attachment rates for cable systems which use pole attachments in
connection with the provision of telecommunications services as a result of a
new rate formula charged to telecommunications carriers for the non-useable
space of each pole. These rates are to be phased in after a five-year period.

Miscellaneous Requirements and Provisions. The Telecommunications Act also
imposes other miscellaneous requirements on cable operators, including an
obligation, on request, to fully scramble or block at no charge the audio and
video portion of any channel not specifically subscribed to by a household. In
addition, sexually explicit programming must be scrambled or blocked. If the
cable operator is unable to scramble or block its signal completely, it must
restrict transmission to those hours of the day when children are unlikely to
view the programming, as determined by the FCC. On March 24, 1997, the U.S.
Supreme Court let stand a lower court ruling that allows enforcement of this
provision pending consideration of a constitutional challenge. In response to
this ruling, the FCC has declared that its rules implementing the scrambling
provision will become effective on May 18, 1997. Enforcement of the scrambling
requirement could increase operating expenses for operators of cable
television systems, including the Company, and provide a competitive advantage
to less regulated providers of video programming services. The
Telecommunications Act also directs the FCC to adopt regulations to ensure,
with certain exceptions, that video programming is fully accessible through
closed captioning. The FCC recently released a report to Congress on the level
at which video programming is close captioned and commenced a proceeding to
establish regulations to implement such closed captioning requirements.

Although the new legislation may substantially lessen regulatory burdens,
the cable television industry may be subject to additional competition as a
result thereof. There are numerous rulemakings which have been, and which will
be undertaken by the FCC which will interpret and implement the provisions of
the Telecommunications Act. In addition, certain provisions of the Act (such
as the deregulation of cable programming rates) are not immediately effective.
Further, certain provisions of the Telecommunications Act have been, and are
likely to continue to be, subject to legal challenges. Similarly, certain
provisions of the

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Telecommunications Act could materially affect the Company's ability to sell
the Systems; however, the Company is unable at this time to predict the
outcome of such rulemakings or litigation or the substantive effect (financial
or otherwise) of the new legislation and the rulemakings on the Company.

FCC Implementation. The FCC is presently, and will be, engaged in numerous
proceedings to implement various provisions of the Telecommunications Act. The
FCC adopted cable television equipment cost aggregation rules and adopted open
video system rules. In addition to the proceedings previously discussed
herein, the FCC has also initiated a proceeding to implement most of the Cable
Act reform provisions of the Telecommunications Act.

In this proceeding, the FCC has set forth certain interim rules to govern
while the FCC completes its implementation of the Telecommunications Act.
Among other things, the FCC is requiring on an interim basis that for a LEC to
be deemed to be offering "comparable" programming, such programming must
include the signals of local broadcasters. Cable systems that meet all of the
relevant criteria in the new effective competition test are exempt from rate
regulation as of February 8, 1996 (the date the Telecommunications Act was
signed into law by President Clinton). Cable systems may file a petition with
the FCC at any time for a determination of effective competition.

The FCC has also established interim rules governing the filing of rate
complaints by local franchising authorities. Local franchising authorities may
file rate complaints with the FCC when the local franchising authorities
receive more than one subscriber complaint concerning an operator's rate
increase. If the local franchising authority receives more than one subscriber
complaint within the 90-day period and decides to file its own complaint with
the FCC, it must do so within 180 days after the rate increase became
effective. Before filing a complaint with the FCC, the local franchising
authority must first provide the cable operator written notice of its intent
to do so and must give the operator a minimum of 30 days to file with the
local franchising authority the relevant FCC forms used to justify a rate
increase. The local franchising authority must then forward its complaint and
the operator's response to the FCC within the 180 day deadline. The FCC must
issue a final order within 90 days after it receives a local franchising
authority complaint.

For interim purposes, the FCC has established that an operator serving fewer
than 617,000 subscribers is a "small cable operator" if its annual revenues,
when combined with the total annual revenues of all of its affiliates, do not
exceed $250 million in the aggregate. For interim purposes, "affiliate" will
be defined as a 20% or greater equity interest.

In addition to the interim rules discussed above and other miscellaneous
interim rules, the FCC is also engaged in a rulemaking proceeding to create
and implement final rules relating to the cable reform provisions of the
Telecommunications Act. Among other issues, the FCC is considering whether to
establish a LEC market share that must be satisfied before a LEC will be
deemed to constitute "effective competition" to an incumbent cable operator
(which would free the cable operator from rate regulation). The Company cannot
predict the outcome of this FCC proceeding or what its ultimate effect will be
on the Company's business.

Cable television systems are subject to Federal copyright licensing covering
carriage of television and radio broadcast signals. In exchange for filing
certain reports and contributing a percentage of their revenues to a Federal
copyright royalty pool, cable operators can obtain blanket permission to
retransmit copyrighted material on broadcast signals. The nature and amount of
future copyright payments for broadcast signal carriage cannot be predicted.
The possible simplification, modification or elimination of the compulsory
copyright license is the subject of continuing legislative review. The
elimination or substantial modification of the cable compulsory license could
adversely affect the Company's ability to obtain suitable programming and
could substantially increase the cost of programming that remained available
for distribution to the Company's customers. Management cannot predict the
result of such legislative activity or the effect of such activity on the
Company's condition (financial or otherwise).

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State and Local Regulation

Cable television systems generally are operated pursuant to non-exclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. Franchises generally are granted for fixed terms and
in many cases are terminable if the franchisee fails to comply with material
provisions of its franchise agreement. The terms and conditions of franchises
vary materially from jurisdiction to jurisdiction. A number of states subject
cable television systems to the jurisdiction of centralized state governmental
agencies, some of which impose regulation of a character similar to that of a
public utility. Attempts in other states to regulate cable television systems
are continuing and can be expected to increase. CCE-I's Systems in Connecticut
are regulated on a statewide basis and subject to the jurisdiction of the
DPUC. Management cannot predict whether any of the other states in which the
Company currently operates, or in which it may operate in the future, will
engage in such regulation in the future. State and local franchising
jurisdiction is not unlimited, however, and must be exercised consistently
with Federal law. The 1992 Cable Act immunizes franchising authorities from
monetary damage awards arising from regulation of cable television systems or
decisions made on franchise grants, renewals, transfers and amendments.

The foregoing does not purport to describe all present and proposed federal,
state, and local regulations and legislation affecting the cable industry.
Other existing federal regulations, copyright licensing, and, in many
jurisdictions, state and local franchise requirements, are currently the
subject of judicial proceedings, legislative hearings and administrative and
legislative proposals which could change, in varying degrees, the manner in
which cable systems operate. Neither the outcome of these proceedings nor the
impact on the cable television industry or the Company can be predicted.

BACKGROUND AND OWNERSHIP STRUCTURE

The Issuer was organized in 1994 as a Delaware corporation. Ownership
interests in the Issuer are held by Kelso and certain other individuals, on
the one hand, and Charter, on the other hand, which maintain an 85% and 15%
interest in the Issuer, respectively, with distributions on exit varying
depending on rates of return on the stockholders' equity investment in the
Issuer. Kelso and certain other individuals have invested an aggregate of
$68.0 million in the Issuer. Charter has invested an aggregate of $12.0
million in the Issuer. As a result of its investment, Kelso can exercise
effective control over the management and affairs of the Issuer and the
Company. Kelso and certain other individuals own approximately 19.9% of
Charter and have invested an aggregate of $12.0 million in Charter.

The Issuer has indirect interests in CCE-I and CCE-II, which were formed to
acquire and operate cable television systems. The Issuer holds all equity
interests in CAC, which in turn holds all equity interests in Cencom Cable.
CAC and Cencom Cable each hold limited partnership interests in CCE, L.P. CAC
also holds a 1% general partnership interest in CCE, L.P., a 1.22% general
partnership interest in CCE-I and a 1.22% limited partnership interest in CCE-
II. CCT holds limited partnership interests and a 1% general partnership
interest in CCE, L.P. CCT also holds a 1% general partnership interest in CCE-
II and a 1% limited partnership interest in CCE-I. CCE, L.P. holds a 97.78%
limited partnership interest in each of CCE-I and CCE-II. The primary business
activities engaged in by CCE-I and CCE-II are the ownership, development and
operation of cable television systems and a radio station.

EMPLOYEES

The Company has no employees other than employees of CCE-I and CCE-II. As of
March 31, 1997, CCE-I employed an aggregate of 615 full-time equivalent
employees of which 43 are covered by a collective bargaining arrangement. At
March 31, 1997, CCE-II employed an aggregate of 354.5 full-time equivalent
employees. The Company considers its relationships with its employees to be
good.

Charter acts as the management company for each of CCE-I and CCE-II pursuant
to certain management agreements. See "Certain Relationships and Related
Transactions--Management Agreements." For a discussion of the directors and
executive officers of Charter, see "Management."

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PROPERTIES

The principal physical assets of the Company consist of, among other things,
the components of each of its cable systems, which include a headend,
distribution cables and a local business office. The receiving apparatus is
comprised of a tower and antennas for reception of over-the-air broadcast
television signals and one or more earth stations for reception of satellite
signals. Located near these receiving devices is a building that houses
associated electronic gear and processing equipment. The Company owns the
receiving and distribution equipment of its systems and owns or leases small
parcels of real property for the receiving sites.

Cable is either buried in trenches or is attached to utility poles pursuant
to license agreements with the owners of the poles. The Company owns or leases
the local business office of each system from which it dispatches service
employees, monitors the technical quality of the system, handles customer
service and billing inquiries and administers marketing programs. The office
facilities of some systems include studios for local access program
production, as required under the Company's franchises.

Management believes that the Company's properties are generally in good
condition. The physical components of the Company's cable systems, however,
require maintenance and periodic upgrades to keep pace with technological
advances and to comply with the requirements of certain franchising
authorities. For a discussion of historical capital expenditures, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

INSURANCE

The Company has insurance covering risks incurred in the ordinary course of
business, including general liability, property coverage and business
interruption insurance. As is typical in the cable television industry, the
Company does not maintain insurance covering its underground plant. Management
believes its insurance coverage is adequate.

LEGAL PROCEEDINGS

The Company is involved from time to time in routine legal matters
incidental to its business. Management, after consultation with its legal
counsel, believes that the resolution of such matters will not have a material
adverse effect on the Company's financial position or results of operations.

CCE-I is a named defendant in a purported class action lawsuit filed on
October 20, 1995 on behalf of the CCIP limited partners was filed in the
Chancery Court of New Castle County, Delaware. The Action named as defendants
the general partner of CCIP, the proposed purchasers of all the systems owned
by CCIP (which includes CCE-I and certain other affiliates of Charter),
Charter and certain individuals, including the directors and executive
officers of the general partner of CCIP. On February 15, 1996, the Court of
Chancery of the State of Delaware in and for New Castle County dismissed all
of the plaintiff's claims for injunctive relief (including that which sought
to prevent the consummation of the Illinois Acquisition); the plaintiff's
claims for money damages which might result from the proposed sale by CCIP of
its assets (including the Illinois Acquisition) remain pending. In October,
1996, the plaintiff filed a Consolidated Amended Class Action Complaint. The
defendants filed an Answer to the amended complaint in December 1996. In
January 1997, the defendants filed a Motion for Summary Judgment to dismiss
all remaining claims as to all parties in the Action. Based upon, among other
things, the advice of counsel, each of the defendants to the Action believes
the Action to be without merit and is contesting it vigorously. There can be
no assurance, however, that the plaintiff will not be awarded damages, some or
all of which may be payable by CCE-I, in connection with the Action.

Cencom Cable is a named defendant in two recently filed actions involving an
affiliate of Charter, Cencom Cable Income Partners II, L.P. ("CCIP II"), a
public limited partnership. On April 15, 1997, a complaint was filed, and on
June 19, 1997, an amended complaint was filed, in the Circuit Court of Jackson
County, Missouri by 269 individual plaintiffs who are limited partners of CCIP
II against Cencom Properties II, Inc., the general

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partner of CCIP II, Cencom Partners Inc., the general partner of Cencom
Partners, L.P., an entity in which CCIP II invested, certain named brokerage
firms involved in the original sale of the limited partnership units and
Cencom Cable. Cencom Cable was served on July 2, 1997. Cencom Cable provided
management services to both CCIP II and Cencom Partners, L.P. and also owned
all of the stock of the general partners of each of these partnerships prior
to mid-1994. The plaintiffs allege that the defendants breached fiduciary
duties, committed fraud and made various misrepresentations in the marketing
and sale of the CCIP II limited partnership units. The plaintiffs seek
recovery of the consideration paid for their partnership units, restitution of
all profits received by the defendants in connection with the CCIP II
transaction and punitive damages. On June 10, 1997, a purported class action
was filed in the Court of Chancery of the State of Delaware, in and for New
Castle County on behalf of the limited partners of CCIP II against Cencom
Properties II, Inc., Cencom Cable, Charter, certain other affiliates of
Charter and certain individuals, including officers of Charter or Cencom
Properties II, Inc. The plaintiffs allege that the defendants breached
fiduciary duties and the terms of the CCIP II partnership agreement in
connection with the investment in Cencom Partners, L.P., the management of the
CCIP II assets and the sale of the CCIP II assets. The damages claimed by the
plaintiffs are as yet unspecified, and Cencom Cable has not yet been served in
this action. The Company believes that it has meritorious defenses in both
actions, including defenses based on applicable statutes of limitations. The
Company intends to defend the actions vigorously. The Company is not able at
this early stage to project the expenses which will be associated with the
actions or to predict any potential outcome or exposure.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information, as of July 7, 1997, with
respect to the executive and certain other officers and directors of the
Issuer, CAC (which serves as the general partner of CCE and CCE-I), Cencom
Cable and Charter which, as the manager of the Systems, is responsible for
providing advice with respect to the overall management and operations of the
Company:

<TABLE>
<CAPTION>
NAME AGE POSITIONS AND OFFICES
---- --- ---------------------
<C> <C> <S>
Barry L. Babcock..... 50 Chairman of the Board and Director of Cencom Cable
and Charter, and Chairman of the Executive
Committee of the Issuer and CAC
Senior Vice President of Operations--Urban Regions
David G. Barford..... 38 of Charter and CAC
Mary Pat Blake....... 41 Senior Vice President--Marketing of Charter and CAC
Senior Vice President--Engineering of Charter and
Thomas R. Jokerst.... 48 CAC
Kent D. Kalkwarf..... 37 Senior Vice President and Chief Financial Officer of
the Issuer, CAC, Cencom Cable and Charter
Ralph G. Kelly....... 40 Senior Vice President--Treasurer of the Issuer, CAC,
Cencom Cable and Charter
Jerald L. Kent....... 40 President, Chief Executive Officer and Director of
the Issuer, CAC, Cencom Cable and Charter
Gene F. Knoblauch.... 39 Senior Vice President--Northeast Region of Charter
George E. Matelich... 41 Director of Issuer and CAC
Frank T. Nickell..... 51 Director of Issuer and CAC
Curtis S. Shaw....... 48 Senior Vice President, General Counsel and Secretary
of Issuer, CAC, Cencom Cable and Charter
Glenn M. Stinchcomb.. 70 Director of Charter
Thomas R. Wall, IV... 39 Director of Issuer and CAC
Howard L. Wood....... 58 Vice Chairman of the Board and Director of the
Issuer, CAC, Cencom Cable and Charter
</TABLE>

See "Certain Relationships and Related Transactions--Stockholders'
Agreement" for a description of the contractual agreement between the
shareholders of the Issuer relating to the election of Directors.

The following sets forth certain biographical information with respect to
the persons listed above.

BARRY L. BABCOCK is a co-founder and Chairman of the Board and Director of
Charter. Prior to founding Charter, Mr. Babcock was associated with Cencom,
where he served as the Executive Vice President from February 1986 to
September 1991, and was named Chief Operating Officer in May of 1986. Mr.
Babcock was one of Cencom's founders and, prior to the duties he assumed in
early 1986, was responsible for all of Cencom's in-house legal work, contracts
and governmental relations. Mr. Babcock also serves as a director of
Mercantile Bank--St. Louis and the National Cable Television Association. In
1996, he was appointed Chairman of the Board of Community Telecommunications
Association (CATA), Cable in the Classroom and the St. Louis Civic
Entrepreneur's Organization. Mr. Babcock, an attorney, received his
undergraduate and JD degrees from the University of Oklahoma.

DAVID G. BARFORD is Senior Vice President of Operations-Urban Regions for
Charter. Mr. Barford joined Charter in 1995, and prior to that time served as
Vice President of Operations and New Business Development for Comcast Cable,
where he held various senior marketing and operating roles over an eight year
period. Mr. Barford received a B.A. degree from California State University,
Fullerton and an MBA from National University.

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<PAGE>

MARY PAT BLAKE is Senior Vice President--Marketing of Charter. Ms. Blake
joined Charter in August 1995 and is responsible for all aspects of marketing
and sales. Prior to joining Charter, Ms. Blake was active in the emerging
business sector, and formed Blake Investments, Inc. in September 1993, which
created, operated and sold a branded coffeehouse and bakery. From September
1990 to August 1993, Ms. Blake served as Director--Marketing for Brown Shoe
Company. Ms. Blake has 18 years of experience with senior management
responsibilities in marketing, sales, finance, systems, and general management
with companies such as The West Coast Group, Pepsico Inc.-Taco Bell Division,
General Mills, Inc. and ADP Network Services, Inc. Ms. Blake received a BS
degree from the University of Minnesota, and an MBA degree from the Harvard
Business School.

THOMAS R. JOKERST is Senior Vice President--Engineering of Charter. Mr.
Jokerst joined Charter in December 1993. Mr. Jokerst is responsible for all
aspects of engineering and technology assessment for Charter. Prior to joining
Charter, from March 1991 to March 1993, Mr. Jokerst served as Vice President,
Office of Science & Technology for Cable Television Laboratories in Boulder,
Colorado. From 1979 to March 1993, Mr. Jokerst was employed by Continental
Cablevision of Illinois, Inc., where his responsibilities included the
creation of a Regional Hub and Headend Interconnect for the St. Louis Region
of Continental Cablevision's systems. Mr. Jokerst is a graduate of Ranken
Technical Institute in St. Louis with a degree in Communications Electronics
and Computer Technology and of Southern Illinois University in Carbondale,
Illinois with a degree in Electronics Technology.

KENT D. KALKWARF, a certified public accountant, joined Charter in 1995 and
now serves as Senior Vice President and Chief Financial Officer. Prior to
coming to Charter, Mr. Kalkwarf was a senior tax manager for Arthur Andersen
LLP. Mr. Kalkwarf has a BS degree from Illinois Wesleyan University.

RALPH G. KELLY joined Charter in 1993 as Vice President--Finance, a position
he held until early 1994 when he became Chief Financial Officer of CableMaxx,
Inc., a wireless cable television operator. Mr. Kelly returned as Senior Vice
President--Treasurer of Charter in February 1996 and has overall
responsibility for treasury operations and investor and financial reporting.
Mr. Kelly has worked in the cable industry since 1984 when he joined Cencom as
Controller. Mr. Kelly was promoted to Treasurer of Cencom in 1989, and was
responsible for treasury management, loan compliance, budget administration,
supervision of internal audit and SEC reporting. He has served on the
Accounting Committee of the Board of Directors for National Cable Television
Association. Mr. Kelly is a certified public accountant and was in the audit
division of Arthur Andersen & Co. from 1979 to 1984. Mr. Kelly received his
undergraduate degree in accounting from the University of Missouri--Columbia,
and his MBA from Saint Louis University.

JERALD L. KENT is a co-founder, President and Chief Executive Officer of
Charter. Prior to founding Charter, Mr. Kent was associated with Cencom, where
he served as Executive Vice President and Chief Financial Officer. Mr. Kent
also served Cencom as Senior Vice President of Finance from May 1987, Senior
Vice President of Acquisitions and Finance from July 1988, and Senior Vice
President and Chief Financial Officer from January 1989. Prior to that time,
Mr. Kent was employed by Arthur Andersen & Co., certified public accountants,
where he attained the position of tax manager. Mr. Kent, a certified public
accountant, received his undergraduate and MBA degrees with honors from
Washington University (St. Louis).

GENE F. KNOBLAUCH joined Charter in December 1994 as Senior Vice President
of Northeast Operations. He has primary responsibility for all operations in
the States of Connecticut and Massachusetts owned by Charter. Prior to joining
Charter, Mr. Knoblauch was employed by United Video Cablevision, Inc. as Vice
President--Eastern Region Operations from 1990 to 1994. At United Video
Cablevision, Inc. he was responsible for all day-to-day operations and
administration of system operations located in Maine, Massachusetts, New
Hampshire and New York consisting of 82,000 customers. From 1986 to 1990, he
served as Area Manager for a 40,000 customer system operated by ACT in Durham,
North Carolina. Prior to serving as Area Manager, he received extensive Sales
and Marketing experience in a number of management positions he held at
various locations with ACT dating back to 1982. Mr. Knoblauch received a BA
degree from the State University of New York at Plattsburgh. He has served on
the New England Cable Television Association (NECTA) Executive Committee for
the past three years.

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<PAGE>

GEORGE E. MATELICH has been a director of the Issuer since February 1995.
Mr. Matelich has been a Managing Director of Kelso & Company since 1990. Mr.
Matelich joined Kelso & Company in 1985 as an Associate, and he served as a
Vice President of Kelso & Company from 1986 to 1989. Mr. Matelich is also a
director of CCT, Americold Corporation, Harris Specialty Chemicals, Inc.,
Humphreys Inc., and a Trustee of The University of Puget Sound.

FRANK T. NICKELL has been a director of the Issuer since February 1995. Mr.
Nickell has been President and a director of Kelso & Company, since March
1989. From 1984 to 1989 Mr. Nickell was a general partner of Kelso & Company.
He is also a director of The Bear Stearns Companies Inc., CCT, Earle M.
Jorgensen Company and Tyler Refrigeration Corporation.

CURTIS S. SHAW joined Charter in February 1997 as Senior Vice President,
General Counsel and Secretary, and is responsible for all legal aspects of
Charter's business, including major transactions and the duties of the
corporate secretary. Prior to joining Charter, Mr. Shaw served as corporate
Counsel to NYNEX since 1988. From 1983 until 1988 Mr. Shaw served as Associate
General Counsel for Occidental Chemical Corporation, and, from 1986 until
1988, also as Vice President and General Counsel of its largest operating
division. Mr. Shaw has 24 years of experience as a corporate lawyer,
specializing in mergers and acquisitions, joint ventures, public offerings,
financing, and federal securities and antitrust law. Mr. Shaw received a BA
with honors from Trinity College and JD from Columbia University School of
Law.

GLENN M. STINCHCOMB has been a director of Charter since March 1993. Mr.
Stinchcomb served as Vice President and Treasurer of the Oklahoma Publishing
Company ("OPUBCO") from 1991 until 1995 with continued service as a director
of that company until mid-1996. Mr. Stinchcomb also served as a director of
Gaylord through May 1, 1997 and remains a director of Western Pacific
Airlines, Inc.

THOMAS R. WALL, IV has been a director of the Issuer since February 1995.
Mr. Wall has been a Managing Director of Kelso & Company since 1990. From 1986
to 1989, Mr. Wall was a Vice President of Kelso & Company. Mr. Wall is also a
director of CCT, Mitchell Supreme Fuel Company, Mosler Inc., Peebles Inc.,
Tyler Refrigeration Corporation and AMF Holdings Inc.

HOWARD L. WOOD is a co-founder, Vice Chairman of the Board and Director of
Charter. Prior to founding Charter, Mr. Wood was associated with Cencom. Mr.
Wood joined Cencom in July 1987 as President, Chief Financial Officer and
Director and assumed the additional position of Chief Executive Officer
effective January 1, 1989. Prior to that time, Mr. Wood was employed by Arthur
Andersen & Co., certified public accountants, where he served as Partner-in-
Charge of the St. Louis Tax Division from 1973 until joining Cencom. Mr. Wood
has been involved in the cable industry since 1976 when he assisted Robert A.
Brooks in financing the building of the cable television systems of T.C.
Industries, Inc. Mr. Wood is a certified public accountant and a member of the
American Institute of Certified Public Accountants and serves as a director of
Charter, VanLiner Group, Inc., First State Bank and St. Louis Regional
Commerce and Growth Association. He is also a past Chairman of the Board and
former director of the St. Louis College of Pharmacy. Mr. Wood graduated with
honors from Washington University (St. Louis) School of Business.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

During 1996, none of the executive officers of the Issuer has received any
compensation in his or her capacity as an officer or director of the Issuer or
as an employee of the CCE-I System and none of such individuals expects to
receive any compensation in such capacity at any time in the future. Such
individuals are compensated by Charter in their capacities as officers and
employees of Charter. Charter performs management services for the Company and
other companies pursuant to the terms of management agreements including the
management agreement between Charter and CCE-I. See "Business--Management
Agreements" and "Certain Relationships and Related Transactions."

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<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

THE PARTNERSHIP AGREEMENTS

The Partnership Agreements of CCE-I and CCE-II each provide for, among other
things, distributions to the partners of CCE-I and CCE-II, respectively, in
accordance with their respective interests in such partnerships. Accordingly,
97.78% of all distributions by CCE-I and CCE-II will be made to CCE, L.P. The
Issuer holds through CAC a 1% general partnership interest in CCE, L.P. and a
1.22% general partnership interest in CCE-I. CCT holds a 1% general
partnership interest in CCE, L.P. and a 1% general partnership interest in
CCE-II. Certain distributions as permitted pursuant to the terms of the Credit
Facilities will be made by CCE-I and CCE-II directly to CAC and Cencom Cable,
and such amounts may be distributed by CAC and Cencom Cable to the Issuer in
order to service the Notes.

The Partnership Agreement of CCE, L.P. provides for, among other things, (i)
"Preferred Capital Accounts" for CAC and Cencom Cable, on the one hand, and
CCT, on the other hand, the amounts of which correspond to the amounts owing
pursuant to the Notes and the California Note, respectively (e.g., as of March
31, 1997, CCT's Preferred Capital Account was in the amount of $196,828,377,
which was the principal amount of the California Note plus stated accrued
interest as of such date, and CAC's and Cencom Cable's Preferred Capital
Accounts were in the amounts of $42,098,779 and $66,152,131, respectively,
which amounts total the aggregate principal amounts of the Notes plus accrued
interest thereon from January 18, 1995 through March 31, 1997); (ii)
"Preferred Returns" for those partners with Preferred Capital Accounts, such
Preferred Returns to be equal to the interest accruing during the relevant
period on the Notes and the California Note, respectively; and (iii)
distributions of cash or other property such that (A) to the extent each of
CAC, Cencom Cable and CCT has a positive balance in its Preferred Capital
Account, (1) amounts distributed to CCE, L.P. by CCE-I will be distributed to
CAC and Cencom Cable to the extent of and pro rata in accordance with the
positive balances in their respective Preferred Capital Accounts and (2)
amounts distributed to CCE, L.P. by CCE-II will be distributed to CCT to the
extent of the positive balance in its Preferred Capital Account and (B) to the
extent that any partner in CCE, L.P. has a positive balance in its Preferred
Capital Account, distributions will be made to such partner to the extent of
and in accordance with such positive Preferred Capital Account balance.
Accordingly, while any amounts remain outstanding under both the Notes and the
California Note, distributions to CCE, L.P. from CCE-I will be used solely to
make distributions to CAC and Cencom Cable and distributions to CCE, L.P. from
CCE-II will be used solely to make distributions to CCT. If the California
Note is repaid prior to payment in full of all amounts payable under the
Notes, then all distributions to CCE, L.P. from both CCE-I and CCE-II will be
used to make distributions to CAC and Cencom Cable, and vice versa. Subject to
certain restrictions, CCE, L.P. may establish New CCE Subsidiaries from time
to time, which could have financing arrangements that result in the sharing
with other creditors of distributions to CCE, L.P. from CCE-II and/or such New
CCE Subsidiaries. In connection with the creation of New CCE Subsidiaries, the
CCE, L.P. Partnership Agreement's distribution provisions may be amended. See
"Description of Notes--Certain Covenants--Limitation on Changes to the CCE,
L.P. Partnership Agreement." For financial reporting purposes, CAC's and
Cencom Cable's preferred capital contributions in CCE, L.P. have been
reflected as debt since CCE, L.P. is a guarantor of the Notes. Furthermore,
interest accruing under the California Note is based on the average rate of
interest over the life of the California Note (which approximates 15.43%)
rather than the stated interest rate, which is used in determining the amount
of the Preferred Return. See "Risk Factors--Segregation of Distributions to
Service the Notes and the Guarantees; New CCE Subsidiaries," "Description of
Other Indebtedness," "Description of Notes--General" and "Description of
Notes--the Partnership Agreements." See also "Description of Notes--the
Guarantees" for potential impact of the Guarantees on any distributions.

THE GUARANTEES

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and were further amended and restated on substantially the same terms and
became part of the Indenture immediately prior to the sale of the Old Notes
are limited by their terms to the proceeds of distributions received by the
Guarantors from CCE-I. The CCE, L.P. Guarantee cannot be enforced until the
indefeasible repayment in full in cash of and termination of commitments to
lend under the CCE-I Credit Facility, the CCE-II Credit Facility, any other
senior indebtedness of CCE-II and senior indebtedness of New CCE Subsidiaries.
Thus, unlike the partnership agreement of CCE, L.P. which allows, provided
that the CCE-II Credit Facility is indefeasibly repaid in full, for CCE-II
funds to repay the California Note, the Guarantees do not enable any CCE-II or
New CCE Subsidiaries funds to be applied to the Notes, except as otherwise
provided herein. The CAC Guarantee and the Cencom Cable Guarantee cannot be
enforced until the indefeasible repayment in full of and termination of
commitments to lend under the CCE-I Credit Facility.

STOCKHOLDERS' AGREEMENT

The Issuer, Charter and Kelso have entered into a stockholders' agreement
("Stockholders' Agreement") restricting the transfer by Charter and Kelso of
the common stock of the Issuer held by them except under certain
circumstances. The Stockholders' Agreement provides Charter with certain
rights to sell common stock if Kelso sells common stock to a third party, and
provides Kelso with certain rights to cause Charter to sell its common stock
to a third party if Kelso sells all of its common stock to such third party.
Pursuant to the Stockholders' Agreement, the Issuer has a right of first
refusal to purchase shares in connection with a proposed sale of common stock
by Charter to a third party, and Charter has a right of first negotiation
pursuant to which it may make an offer to purchase common stock owned by Kelso
before Kelso negotiates with a third party with respect to a sale of its
common stock. In the event that the Management Agreement (defined below) is
terminated, or the term of the Management Agreement ends without being
extended by the parties, Charter has the right to cause the Issuer to purchase
its shares of common stock, and the Issuer has the right to cause Charter to
sell its shares of common stock to the Issuer. The Stockholders' Agreement
provides that, in the event of a sale of all of the common stock of the Issuer
by Charter and Kelso, or the sale of all of the assets of the Issuer, any cash
to be paid or distributed to Charter and Kelso shall be allocated based upon
the ownership percentages of Charter and Kelso in the Issuer subject to
certain adjustments based on criteria set forth in the Stockholders'
Agreement.

The Stockholders' Agreement provides that, until the earliest of January 18,
2005, the closing of an initial public offering or the termination of the
Management Agreement, three of the five members of the board of directors of
the Issuer will be chosen by KIA V and two will be chosen by Charter.

REGISTRATION RIGHTS AGREEMENT

The Issuer, Charter and Kelso have entered into a registration rights
agreement ("Registration Rights Agreement") pursuant to which Charter and
Kelso have certain rights with respect to the registration of the shares of
common stock of the Issuer. The Registration Rights Agreement provides that
any stockholder that owns 50% or more of the "Registrable Securities" of the
Issuer (defined as common stock of the Issuer beneficially owned by Charter,
Kelso or their successors or assignees) has the right to make four requests
that the Issuer effect registration under the Securities Act of the
Registrable Securities held by such stockholder. Kelso owns more than 50% of
the stock of the Issuer. The Registration Rights Agreement also provides that
at any time after an initial public offering of equity securities of the
Issuer, Charter will have the right to make up to two requests that the Issuer
effect registration under the Securities Act of any of the Registrable
Securities held by Charter. In the event that the Issuer proposes to register
any of its equity securities under the Securities Act, the Registration Rights
Agreement provides that the Issuer must give notice to all holders of
Registrable Securities and, upon request of any such holder, use its best
efforts to effect the registration of the Registrable Securities held by such
person, subject to customary cut-back provisions.

CONTINGENT PAYMENT AGREEMENT

Pursuant to an agreement entered into among the Gaylord Affiliate, CCE, L.P.
and CCT ("Contingent Payment Agreement") in connection with the California
Note, until such time as the California Note is paid in

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full, the holders of the California Note are entitled to certain protections
upon the occurrence of certain of the following events. The Contingent Payment
Agreement provides for payments to be made to the Gaylord Affiliate if the
California Note remains unpaid and CCT receives a distribution from CCE, L.P.,
CCE-I or CCE-II that is not used by CCT to pay outstanding principal on the
California Note or certain expenses. The Contingent Payment Agreement also
provides that if Kelso or Charter sells any equity securities of CCT, or if
CCT or the Issuer sells any assets, including the partnership interests of
either in subsidiary partnerships, then CCE, L.P. will be required to pay the
Gaylord Affiliate an amount determined according to formulas set forth in the
Contingent Payment Agreement. The ability of CCE, L.P. to make any of the
foregoing payments to the Gaylord Affiliate is limited by the terms of the
Indenture, which preclude certain distributions by CCE, L.P. and CCE-I until
the CCE-I Credit Facility and the Notes are paid in full. See "Description of
the Notes -- Certain Covenants -- Limitation on Restricted Payments." The
Contingent Payment Agreement further provides that upon an initial public
offering by CCT, CCE, L.P. or the Issuer, the Gaylord Affiliate will receive
certain amounts of the publicly-offered securities.

MANAGEMENT AGREEMENTS

Pursuant to certain management agreements entered into between CCE-I and
Charter (the "Management Agreement"), Charter is responsible for managing the
day-to-day operations of the Systems. The term of the Management Agreement is
10 years, subject to earlier termination for Cause (as defined in the
Management Agreement) or upon the sale of the Systems which are the subject of
the Management Agreement. Annual management fees paid to Charter by CCE-I with
respect to the year ended December 31, 1996 were $4.5 million. Management fees
paid to Charter with respect to the three months ended March 31, 1997 were
$1.2 million. In addition, as of March 31, 1997, Charter had earned an accrued
but unpaid bonus of approximately $1.8 million, of which $1.1 million was
recorded during 1995 and $.7 million was recorded during 1996. The payment of
the bonuses is deferred until termination of the CCE-I Credit Facility. The
base amount of annual management fees payable to Charter was $4,845,000 as of
March 31, 1997.

TRANSACTION AND ADVISORY FEES

In connection with specific acquisitions and financing transactions by CCE-
I, Kelso & Company and Charter are typically each paid financial advisory and
investment banking fees. Such fees are calculated as a percentage of the
transaction, based upon the size of the transaction. Kelso & Company received
investment banking fees of approximately $1.1 million with respect to the year
ended December 31, 1996. Charter received investment banking fees of
approximately $1.1 million with respect to the year ended December 31, 1996.
The financial advisory fees paid to Kelso & Company were approximately $0.5
million with respect to the year ended December 31, 1996 and approximately
$0.1 million for the three months ended March 31, 1997. As of March 31, 1997,
Kelso & Company's annual financial advisory fee from CCE-I for fiscal year
1997 was $552,500. In the event New CCE Subsidiaries are formed below CCE,
L.P., Kelso & Company will receive annual financial advisory fees from such
New CCE Subsidiaries.

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PRINCIPAL SECURITYHOLDERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of June 30, 1997, the ownership of the
Issuer. Kelso and certain other individuals, on the one hand, and Charter, on
the other hand, own 85% and 15%, respectively, of the outstanding capital
stock of the Issuer, with distributions on exit varying depending on rates of
return on the stockholders' equity investment in the Issuer. For a more
detailed discussion of certain ownership interests of the Issuer see
"Business--Background and Ownership Structure."

<TABLE>
<CAPTION>
NAME AND ADDRESS % OF
OF BENEFICIAL OWNERS TYPE OF INTEREST COMMON STOCK
- -------------------- ---------------- ------------
<S> <C> <C>
KELSO INVESTMENT ASSOCIATES V, L.P.(1)............ Common Stock 85.0%(2)
320 Park Avenue
24th Floor
New York, New York 10022
CHARTER COMMUNICATIONS, INC....................... Common Stock 15.0%
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
</TABLE>
- --------
(1) The General Partner of KIA V is Kelso Partners V, L.P., the general
partners of which are: Frank T. Nickell, George E. Matelich, Thomas R.
Wall, IV and Joseph S. Schuchert, all of whom may be deemed to
beneficially own all the shares held of record by KIA V, all of whom
disclaim such beneficial ownership, and three of whom, Messrs. Nickell,
Matelich and Wall, are directors of the Issuer.
(2) The percentage of Common Stock includes shares owned by another limited
partnership which is an affiliate of KIA V and certain unaffiliated
designees of KIA V. KIA V does not beneficially own the shares of Common
Stock owned by such designees.

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DESCRIPTION OF NOTES

$82.0 million aggregate principal amount of Old Notes were issued pursuant
to the Indenture dated as of February 13, 1997 between the Issuer and Harris
Trust and Savings Bank, as Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended ("Trust Indenture Act") and in
effect on the Closing Date. The Notes are subject to all such terms, and the
following summary of certain provisions of the Indenture does not purport to
be complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. The definitions
of certain terms used in the following summary are set forth below under "--
Certain Definitions." The Indenture is an exhibit to the Registration
Statement of which this Prospectus is a part.

The terms of the New Notes are identical in all materials respects to the
Old Notes, except that the New Notes will not contain certain transfer
restrictions and registration and other rights relating to the exchange of the
Old Notes for New Notes. The Trustee will authenticate and deliver New Notes
for original issue only in exchange for a like principal amount of Old Notes.
Any Old Notes that remain outstanding after the consummation of the Exchange
Offer, together with the New Notes, will be treated as a single class of
securities under the Indenture.

GENERAL

The Notes are unsecured obligations of the Issuer and are subordinated in
right and priority of payment to all existing and future indebtedness of the
Issuer, other than indebtedness that by its terms is expressly subordinated to
the Notes. The Notes can only be held or transferred in denominations of $1.0
million or more. The obligations on the Notes are guaranteed on a subordinated
basis by two subsidiaries of the Issuer and by CCE, L.P. Initially, the
Trustee will act as Paying Agent and Registrar for the Notes. The Notes may be
presented for registration or transfer and exchange at the offices of the
Registrar, which initially will be at the Trustee's corporate trust office.
The Issuer may change any Paying Agent and Registrar without notice to holders
of the Notes. The Issuer will pay principal, premium, if any, and interest on
the Notes at the Trustee's corporate office in New York, New York. The Notes
will be issued only in fully registered form, without coupons, in
denominations of $1.0 million or more.

The Issuer and the Guarantors are holding companies that currently conduct
substantially all their business through CCE-I and CCE-II. The Issuer and the
Guarantors control CCE-I (but not CCE-II) and are primarily dependent upon
distributions from CCE-I and its subsidiaries to service the Notes and the
Guarantees. The Notes, except under certain limited circumstances, will not
have the benefit of distributions from CCE-II or any other affiliated entities
that are not controlled by the Issuer or the Guarantors. The Guarantees, by
their terms, are limited to the proceeds of distributions received by the
Guarantors from CCE-I. The CCE, L.P. Guarantee cannot be enforced until the
indefeasible repayment in full of and termination of commitments to lend under
both the CCE-I Credit Facility, the CCE-II Credit Facility, any other senior
indebtedness of CCE-II and any senior indebtedness of New CCE Subsidiaries.
The CAC Guarantee and the Cencom Cable Guarantee cannot be enforced until the
indefeasible repayment in full of and termination of commitments to lend under
the CCE-I Credit Facility. The Issuer's and the Guarantors' only indebtedness
other than the Notes was approximately $55.5 million of deferred income taxes
and approximately $0.5 million of current liabilities. As of March 31, 1997,
the aggregate indebtedness of CCE-I (including current liabilities of
approximately $30.9 million and other long-term liabilities of approximately
$2.8 million) was approximately $489.5 million.

Subject to certain limitations, the Indenture permits the formation of New
CCE Subsidiaries below CCE, L.P. in the corporate structure and the
contribution of additional assets to existing Subsidiaries of CCE, L.P. New
CCE Subsidiaries may engage in the cable television business or other
businesses. In connection with their

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businesses, New CCE Subsidiaries and, in connection with such asset
contributions to existing Subsidiaries, such existing Subsidiaries may
establish senior credit facilities and other financing arrangements (debt
and/or equity), which may establish a basis for a new or revised preferred
capital account in CCE, L.P. Once the applicable financing arrangement is
repaid, the existence of the aforementioned new or revised preferred capital
account in CCE, L.P. could result in any further distributions to CCE, L.P.
from CCE-II or any New CCE Subsidiaries being shared pro rata between the
Notes and any such new or existing financing arrangements (with such sharing
to be based upon the then outstanding preferred capital accounts in CCE,
L.P.). Holders of the Notes should not rely on any distributions from CCE-II
or any New CCE Subsidiaries for payment of principal or interest on the Notes.
In connection with the creation of New CCE Subsidiaries or the contribution of
additional assets to existing Subsidiaries of CCE, L.P., the CCE, L.P.
Partnership Agreement's distribution provisions may be amended. For example
(and without limiting the arrangements which could be entered into by a New
CCE Subsidiary), in the event one or more New CCE Subsidiaries are formed
below CCE, L.P. in the corporate structure through the acquisition of new
assets or equity interests and the issuance by an affiliate of CCE, L.P. of a
note payable to the sellers of such assets or equity interests (i.e., a
purchase money note, as was the case in the California Transaction and the
Crown Transaction), then the CCE, L.P. Partnership Agreement can be amended,
so that (i) rather than all distributions to CCE, L.P. from CCE-II being
available to service the Notes after payment of the California Note, such
distributions would instead be available pro rata based on preferred capital
accounts to service both the Notes and any new purchase money note owed to
such sellers and (ii) all cash generated by any New CCE Subsidiary would be
used first to repay any senior credit facility entered into by such New CCE
Subsidiary to accomplish the related acquisition. Any amounts thereafter
distributed to CCE, L.P. would be used next to repay any new purchase money
note, and after such new purchase money note is repaid, such distributions
from such New CCE Subsidiary to CCE, L.P. would be available pro rata to
service the Notes, the California Note and any other outstanding purchase
money notes.

PRINCIPAL, MATURITY AND INTEREST

The Stated Maturity Date of the Notes is December 31, 1999. Interest accrues
on the Notes at an annual rate of 13%, compounded semi-annually, until the
Stated Maturity Date. If principal plus accrued interest on the Notes is not
paid at the Stated Maturity Date, the annual rate at which interest accrues on
the Notes will initially increase to 18% and will increase by an additional 2%
on each successive anniversary of the Stated Maturity Date (up to 26%),
compounded semi-annually, until the Notes are repaid. In addition to the
foregoing, the interest rate on the Notes shall be increased by the Default
Rate of 3% per annum if certain other events of default occur and are
continuing. The maximum interest rate on the Notes is 29% per annum subject to
any applicable legal restrictions. As of March 31, 1997, accrued interest on
the Notes was $26,250,910. For U.S. Federal income tax purposes, purchasers of
the Notes will be required to include amounts in gross income generally in
advance of the receipt of the cash payments to which the income is
attributable. See "Certain Federal Income Tax Consequences."

The Notes are not entitled to the benefit of any mandatory sinking fund.

OPTIONAL REDEMPTION

The Notes are redeemable, at the Issuer's option in whole at any time or in
part from time to time, without premium or penalty, provided that any such
prepayment of principal shall include all accrued interest on the amount
prepaid.

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SUBORDINATION

Subordination Provisions Applicable to All Senior Debt of the Issuer

The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash of all obligations owing in
respect of the Senior Debt. Upon any distribution to creditors upon
dissolution, winding-up, liquidation or reorganization of the Issuer (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Issuer or otherwise), all
obligations due in respect of all Senior Debt will first be paid in full in
cash, before any payment or distribution of any kind or character is made on
the account of any Obligations in respect of the Notes. If any default occurs
and is continuing in the payment when due, whether at maturity, acceleration
or otherwise with respect to any Senior Debt, no payment of any kind or
character shall be made by or on behalf of the Issuer or any of its
Subsidiaries with respect to any Obligations in respect of the Notes or to
acquire any of the Notes for cash or property.

By reason of such subordination, in the event of the insolvency of the
Issuer, creditors of the Issuer who are not holders of Senior Debt, including
the holders of the Notes, may recover less, ratably, than holders of Senior
Debt.

Special Subordination Provisions Relating to CCE-I Credit Facility

The Indenture provides that no holder will exercise any right or remedy
against the Issuer or any of its Subsidiaries with respect to the Indenture or
any Note until after the earlier of the CCE-I Credit Facility Termination Date
and January 18, 2019, provided that:

(a) Upon the election of holders of a majority in principal amount of the
Notes, the holders may exercise the right to pursue a claim of specific
performance or an injunction against the Issuer:

(i) unless expressly permitted by the terms of the Indenture, if the
Issuer merges or consolidates with or permits any Restricted Subsidiary
(other than CCE-I and any of its Subsidiaries) to merge or consolidate
with, any entity and the Issuer or such Restricted Subsidiary is not the
survivor of such merger or consolidation (other than a merger between two
Restricted Subsidiaries, a merger between the Issuer and a Restricted
Subsidiary in which the Issuer is the surviving entity or a merger of a
Restricted Subsidiary with another entity in which either such Restricted
Subsidiary is the surviving entity or such other entity becomes a
Restricted Subsidiary of the Issuer); or

(ii) unless expressly permitted by the terms of the Indenture, if the
Issuer sells, leases or otherwise disposes of, or permits any of its
Restricted Subsidiaries to sell, lease or otherwise dispose of assets
(other than cable television assets sold in exchange for other cable
television assets pursuant to an asset swap transaction or series thereof)
which generate Adjusted Consolidated Annualized Operating Cash Flow
(including all such dispositions by the Issuer and its Restricted
Subsidiaries) representing more than 50% of CCE-I's Adjusted Consolidated
Annualized Operating Cash Flow (as determined by reference to the most
recent audited annual financial statements of the Issuer which are required
to be delivered to the holders under the Indenture prior to such sale,
lease or other disposition) in any transaction or series of transactions
(other than sales in the ordinary course of business); or

(iii) if the Issuer incurs, or permits any Restricted Subsidiary to
incur, Indebtedness for Money Borrowed, which, when consolidated with all
Indebtedness for Money Borrowed of the Issuer on an Adjusted Consolidated
basis (excluding the Indebtedness for Money Borrowed represented by or
otherwise arising in respect of the Notes or the Indenture), causes the
Adjusted Consolidated Indebtedness of the Issuer (other than the
Indebtedness represented by the Notes) to exceed at the end of any calendar
quarter period ending after December 31, 1996, 7.0 times its Adjusted
Consolidated Annualized Operating Cash Flow for such quarter; or

(iv) if the Issuer or its Restricted Subsidiaries (other than CCE-I and
its Subsidiaries) incur Indebtedness for Money Borrowed (other than that
evidenced by the Notes and the Indenture) which is senior

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in right of payment of principal or interest by its terms to the Notes, but
subordinated in right of payment of principal or interest by its terms to
the CCE-I Credit Facility; or

(v) if the Issuer breaches the terms of the covenants referenced under
paragraph (c) of "Certain Covenants--Limitation on Asset Sales"; or
paragraph (a) of "Certain Covenants--Limitation on Restricted Payments"
herein.

(b) Upon the occurrence of an Event of Default, the holders may exercise the
right to cause interest to accrue on the unpaid principal amount of the Notes
at the interest rate then in effect, including, if applicable, the Default
Rate of interest described in Section 10.01 of the Indenture and the penalty
rate of interest described in the proviso in paragraph (b) under the section
entitled "Events of Default."

(c) Under the Subordination Agreement, the payment of all Obligations in
respect of the Notes is subordinated in right of payment to the prior
indefeasible payment in full in cash of all obligations of CCE-I under the
CCE-I Credit Facility. In the event of any dissolution of the Issuer, the
lenders under the CCE-I Credit Facility are entitled to collect and receive
any payments or distributions which may be payable with respect to the Notes.
As long as the obligations under the CCE-I Credit Facility have not been
indefeasibly paid in full in cash and all commitments to lend in respect
thereof have not been terminated, the holders may not, prior to January 18,
2019, compel payment of the Notes, or accelerate the maturity of the Notes
upon the occurrence of a default under the Notes (including a payment
default), nor may the holders commence any proceedings (other than as
permitted under clause (a) above) against the Issuer with respect to the
Obligations under the Notes.

(d) In accordance with the Indenture, by accepting a Note each holder
authorizes and directs the Trustee, on such holder's behalf, to take such
action as may be necessary or appropriate to effectuate, as between the
holders of Senior Debt and the holders, the subordination provided in the
subordination provisions of the Indenture, including executing and delivering
a Subordination Agreement, and appoints the Trustee his attorney-in-fact for
any and all such purposes and acknowledges that such holder will be bound by
such provisions and such agreement.

THE GUARANTEES

Pursuant to the Original HC Crown Loan Agreement, in connection with the
contribution by CAC and Cencom Cable, respectively, of the Crown Systems to
CCE, L.P., and the contribution by CCE, L.P. of the Crown Systems to CCE-I,
each of CAC, Cencom Cable and CCE, L.P. irrevocably guaranteed on a
subordinated basis the obligations on the Notes. The Guarantees, which were
amended and restated as of November 15, 1996 and which were further amended
and restated on substantially the same terms and became part of the Indenture
on February 13, 1997, by their terms, are limited to the proceeds of
distributions received by the Guarantors from CCE-I. The CCE, L.P. Guarantee
cannot be enforced until the indefeasible repayment in full in cash of and
termination of commitments to lend under the CCE-I Credit Facility, the CCE-II
Credit Facility, any other senior indebtedness of CCE-II and senior
indebtedness of New CCE Subsidiaries. The CAC Guarantee and the Cencom Cable
Guarantee cannot be enforced until the indefeasible repayment in full in cash
of and termination of commitments to lend under the CCE-I Credit Facility.

THE PARTNERSHIP AGREEMENTS

By the terms of the partnership agreements of CCE-I, CCE-II and CCE, L.P.,
distributions from CCE-I, when permissible, are to go to CAC and Cencom Cable
and distributions from CCE-II, when permissible, are to go to CCT (or a
subsidiary thereof); provided, however, that if the obligations owing under
the Credit Facilities (including refinancings thereof) are indefeasibly paid
in full in cash and all commitments to lend in respect thereof are terminated,
then (x) if the Notes are outstanding and the California Note has been repaid,
all distributions related to CCE-II are to go to CAC and Cencom Cable to make
payments on the Notes (if the California Note has not been repaid, then such
distributions are to go to CCT to make payments on the California Note) or (y)
if the Notes have been repaid and the California Note is outstanding, all
distributions related to CCE-I are to go to CCT (or a subsidiary thereof) to
make payments on the California Note. Subject to certain limitations, the
Indenture permits the formation of New CCE Subsidiaries below CCE, L.P. in the
corporate

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structure and the contribution of additional assets to existing Subsidiaries
of CCE, L.P. New CCE Subsidiaries may engage in the cable television business
or other businesses. In connection with their businesses, New CCE Subsidiaries
and, in connection with such asset contributions to existing Subsidiaries,
such existing Subsidiaries, may establish senior credit facilities and other
financing arrangements (debt or equity), which may establish a basis for a new
or revised preferred capital account in CCE, L.P. Once the applicable
financing arrangement of CCE-II or any New CCE Subsidiary is repaid, the
existence of the aforementioned new or revised preferred capital account could
result in any further distributions to CCE, L.P. from CCE-II or any New CCE
Subsidiary being shared pro rata between the Notes and any such new or
existing financing arrangements (with such sharing to be based upon the then
outstanding preferred capital accounts in CCE, L.P.). Holders of the Notes
should not rely on any distributions from CCE-II or any New CCE Subsidiaries
for payment of principal or interest on the Notes. Moreover, in connection
with the creation of New CCE Subsidiaries or the contribution of additional
assets to existing Subsidiaries of CCE, L.P., the CCE, L.P. Partnership
Agreement's distribution provisions may be amended. See "Certain Covenants--
Limitation on Changes to CCE, L.P. Partnership Agreement." For example (and
without limiting the arrangements which could be entered into by a New CCE
Subsidiary), in the event one or more New CCE Subsidiaries are formed below
CCE, L.P. in the corporate structure through the acquisition of new assets or
equity interests and the issuance by an affiliate of CCE, L.P. of a note
payable to the sellers of such assets or equity interests (i.e., a purchase
money note, as was the case in the California Transaction and the Crown
Transaction), then, the CCE, L.P. Partnership Agreement can be amended, so
that (i) rather than all distributions to CCE, L.P. from CCE-II being
available to service the Notes after payment of the California Note, such
distributions would instead be available pro rata based on preferred capital
accounts to service both the Notes and any new purchase money note owed to
such sellers and (ii) all cash generated by any New CCE Subsidiary would be
used first to repay any credit facility entered into by such New CCE
Subsidiary to accomplish the related acquisition. Any amounts thereafter
distributed to CCE, L.P. would be used next to repay any new purchase money
note, and after such new purchase money note is repaid, such distributions
from such New CCE Subsidiary to CCE, L.P. would be available pro rata to
service the Notes, the California Note and any other outstanding purchase
money notes.

CERTAIN COVENANTS

The Indenture contains, among others, the following covenants:

Limitation on Additional Indebtedness

(a) The Issuer will not permit the Adjusted Consolidated Indebtedness of the
Issuer (other than any Indebtedness represented by the Notes) at the end of
any calendar quarter after December 31, 1996, to exceed 6.75 times its
Adjusted Consolidated Annualized Operating Cash Flow for such quarter.

(b) The Issuer will not permit any Indebtedness of the Issuer and the
Restricted Subsidiaries (other than that evidenced by the Notes) which is
subordinated to the Senior Debt, whether as to right of payment of principal
or interest or otherwise, to not be subordinated to the Indebtedness evidenced
by the Notes to the same extent that the Indebtedness evidenced by the Notes
is subordinated to the Senior Debt under the subordination provisions of the
Indenture.

(c) The Issuer will not incur any Indebtedness which would be reasonably
expected, in the circumstances at the time of incurrence, to cause the Issuer
to violate the provisions of paragraph (a) of this covenant.

(d) The Issuer will not, on or after the date when the ratio of the Adjusted
Consolidated Indebtedness of the Issuer for Money Borrowed (other than any
Indebtedness represented by the Notes) to its Adjusted Consolidated Annualized
Operating Cash Flow is less than 5.0 to 1, permit the extension of any
maturity date under the CCE-I Credit Facility beyond July 17, 2005 without the
consent of the holders of a majority in principal amount of the Notes.

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Operating Cash Flow

The Issuer will not permit the Adjusted Consolidated Annualized Operating
Cash Flow of the Issuer, for the three months ending on the last day of each
calendar quarter, to be less than 1.2 times its total Adjusted Consolidated
Debt Service for the 12 months ending on such last day.

Limitation on Indebtedness of CCE, L.P.

The Issuer will not permit CCE, L.P. to incur any Indebtedness (including,
without limitation, the issuance of any guarantees) other than (a) the
Guarantee of the Notes issued by CCE, L.P., and (b) Indebtedness to the Issuer
or any of its Subsidiaries to the extent such Indebtedness is subordinate to
CCE, L.P.'s Guarantee of the Notes.

Limitation on Changes to the CCE, L.P. Partnership Agreement

The Issuer will not permit any amendment, modification or other change to
the CCE, L.P. Partnership Agreement, other than amendments, modifications or
other changes (a) which do not alter the priority, amount and timing of
distributions (or remedies with respect thereto) to partners of CCE, L.P. to
be made out of the proceeds of distributions received by CCE, L.P. from its
Subsidiaries (including, without limitation, CCE-I), or (b) in connection with
the creation of one or more New CCE Subsidiaries (and the admission of
additional partners resulting therefrom) or the contribution of additional
assets to an existing Subsidiary of CCE, L.P., provided that (x) no
distributions to CCE, L.P. from such New CCE Subsidiary or CCE-II may be
distributed by CCE, L.P. to its partners other than to repay any outstanding
CCE Purchase Money Indebtedness incurred in connection with acquiring assets
or equity interests owned or to be owned, directly or indirectly, by the New
CCE Subsidiary making the distribution or CCE-II, respectively, and provided
that any such distributions remaining after the payment in full of such CCE
Purchase Money Indebtedness shall be used to repay, on a pro rata basis based
on the aggregate amounts owed, any other CCE Purchase Money Indebtedness
outstanding, and shall thereafter be used to make distributions to CCE, L.P.'s
partners and (y) such amendment, modification or other change does not alter
the priority, amount and timing of distributions (or remedies with respect
thereto) to partners of CCE, L.P. to be made out of the proceeds of
distributions received by CCE, L.P. from CCE-I.

Limitation on Asset Sales

(a) The Issuer will not sell, lease or otherwise dispose of, or permit any
of its Restricted Subsidiaries to sell, lease or otherwise dispose of, an
aggregate (including all such dispositions by the Issuer and its Restricted
Subsidiaries) of more than 10% of CCE-I's assets in any transaction or series
of transactions (other than sales in the ordinary course of business) or sell,
lease or otherwise dispose of any of CCE-I's cable television systems;
provided that (A) the Issuer or any of its Restricted Subsidiaries may
exchange any and all of its cable television systems and related property for
cable television systems and related property of unrelated third parties on
terms that are commercially reasonable to CCE-I; (B) the Issuer and the
Restricted Subsidiaries may make sales of assets but only to the extent they
comply with the paragraph (b) below; (C) the Issuer and its Restricted
Subsidiaries may transfer assets to a "joint venture subsidiary" (defined in
paragraph (c) below) but only to the extent the Issuer complies with the
paragraph (c) below; and (D) the Issuer and the Restricted Subsidiaries may
otherwise make sales if, but only if, the Issuer and the Restricted
Subsidiaries have made arrangements reasonably satisfactory to the holders of
a majority in principal amount of the Notes to apply the entire after-tax
proceeds of any such sale to payment of the outstanding principal of and
accrued interest on the Notes, it being understood that the satisfaction and
discharge of the Indenture in the manner described under "Satisfaction and
Discharge" shall be deemed an arrangement reasonably satisfactory to such
holders for the application of such proceeds pursuant to this clause (D);
provided, further, that, in connection with any such sale, lease or other
disposition of assets by the Issuer or one of its Restricted Subsidiaries to
an Affiliate of such Person (other than a sale, lease or other disposition the
proceeds of which are promptly applied to repay in full in cash all amounts,
including principal and accrued and unpaid interest owing on the Notes,
whether or not then due and payable), such Person shall first obtain an
opinion from an investment banking or brokerage firm which is nationally
recognized for its expertise in the cable television industry to the effect
that such transaction is fair to all holders of Notes from a financial point
of view.

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(b) After the sale by CCE-I of any cable television property owned directly
by it, the Issuer (A) will cause the entire cash net proceeds of such sale to
be used to pay down the Senior Debt and (B) thereafter will maintain the
Senior Debt at a level not in excess of the level to which such Senior Debt
has been paid down plus $20.0 million (the "New Senior Debt Level"); provided
that at any time during the 24 month period following any such sale, the
Issuer may increase the level of Senior Debt beyond the New Senior Debt Level
solely to the extent such increase arises from acquisition borrowings to
acquire cable television properties in any of the Issuer's and its Restricted
Subsidiaries' Areas of Dominant Influence.

(c) Except as permitted under the "Merger or Consolidation" covenant, the
Issuer will not permit the transfer of any or all of the cable television
properties of the Issuer or the Restricted Subsidiaries to one or more
Restricted Subsidiaries which is not wholly owned by the Issuer or such
Restricted Subsidiary (the "joint venture subsidiary(ies)"), unless (A) all
Restricted Subsidiaries of the Issuer which hold an interest in the joint
venture subsidiary or subsidiaries provide a guarantee of, or an assumption
agreement for, the Notes and (B) such transfer does not otherwise materially
disadvantage the holders of the Notes in connection with their rights,
position and powers under the Notes.

Limitation on Restricted Payments

(a) The Issuer will not directly or indirectly, declare or pay any dividend
on, or make any distribution to the holders of any class of its Capital Stock
in respect of such shares of Capital Stock (including pursuant to a merger or
consolidation of the Issuer), other than dividends or distributions payable
solely in Capital Stock of the Issuer. Neither the Issuer nor any of its
Subsidiaries may purchase, redeem or otherwise acquire or retire for value any
of the Capital Stock of the Issuer.

(b) Except for distributions by CCE, L.P. in accordance with the CCE, L.P.
Partnership Agreement, the Issuer will not permit any of its Restricted
Subsidiaries, directly or indirectly, to declare or pay any dividend or make
any distribution other than (i) dividends or distributions to the Issuer or to
another Restricted Subsidiary which declares or pays or distributes the full
amount of any such dividend or makes any such distribution, directly or
indirectly, to the Issuer and the Issuer uses such dividend or distribution
towards the repayment of the Notes, (ii) dividends or distributions by CCE-I
to CCT, as a limited partner of CCE-I, pursuant to the CCE-I Partnership
Agreement and (iii) dividends or distributions by any subsidiary of CCE-I (a
"CCE-I Subsidiary") to CCE-I or another CCE-I Subsidiary that is a parent
company of such CCE-I Subsidiary, provided that the proceeds of such dividends
or distributions in the case of this clause (iii) are (A) retained by CCE-I or
such other CCE-I Subsidiary, (B) used to repay indebtedness of CCE-I or such
other CCE-I Subsidiary or (C) otherwise used in a manner not violative of the
terms of the Indenture.

Change of Control

The Issuer will not, except with the approval of holders of a majority of
the principal amount of the Notes (such approval not to be unreasonably
withheld), suffer, permit or allow to occur any voting arrangement, proxy,
assignment, pledge or other transfer with respect to or of its shares so that
one or more of KIA V and its affiliates, the directors of Kelso & Company and
Charter own and vote directly or indirectly less than 51 percent of the voting
shares (i.e., shares entitled to elect a majority of the directors) of the
Issuer, provided that after the Issuer completes an initial public offering of
the voting shares, such percentage may be less than 51 percent so long as a
majority of the Issuer's directors are nominees of one or more of KIA V and
its affiliates and the directors of Kelso & Company and Charter.

Change of Management

(a) The Issuer will not suffer or permit any company or entity not approved
by the holders of a majority in principal amount of the Notes (such approval
not to be unreasonably withheld), other than Charter to manage any of the
cable television properties of CCE-I. For purposes of this covenant, if one or
more of Howard Wood, Jerald Kent or Barry Babcock (or any other person
reasonably acceptable to the holders of a majority in principal amount of the
Notes) and their heirs at law, collectively, own and vote less than 51 percent
of the voting shares of Charter, the Issuer will be deemed to have violated
this covenant.

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(b) The Issuer will not, without the approval of the holders of a majority
in principal amount of the Notes (such approval not to be unreasonably
withheld), suffer or permit Charter's principal executive or operating
officers not to include at least one of Howard Wood, Barry Babcock or Jerald
Kent.

Change of Ownership of Restricted Subsidiaries

The Issuer will not permit any new investment in a Restricted Subsidiary by
a non-Affiliate, unless such investment is structured in such a way that (x)
there is no adverse impact on the ability of the Issuer to repay the Notes,
(y) the holders of the Notes have an interest as to distributions by such
Restricted Subsidiary arising from the assets created or acquired as a direct
or indirect result of such new investment which is subordinate only to the
CCE-I Credit Facility and the obligations to repay Indebtedness or other forms
of non-Affiliate financing related to such acquisition and (z) the Issuer
continues to Control, directly or indirectly, CCE-I. The Issuer will not and
will not permit any Restricted Subsidiary to dispose of any equity interest,
whether direct or indirect, which it currently holds in CCE-I, other than to
(i) the Issuer, (ii) another Restricted Subsidiary, or (iii) a third party, so
long as such third party contributes cash or other assets to CCE-I and the
equity interest received by such third party in distributions received from
CCE-I will be subordinated to the preferred equity interest of CCE, L.P. in
distributions received from CCE-I.

Transactions with Affiliates

(a) Except as permitted under the "Limitations on Restricted Payments" and
"Merger or Consolidation" covenants and clause (a) of the "Limitation on Asset
Sales" covenant, the Issuer will not permit CCE-I to, at any time engage in
any transaction with an Affiliate, or make an assignment or other transfer of
any of its properties or assets to an Affiliate on terms less advantageous to
CCE-I than would be the case if such transactions had been effected on an
arm's length basis with a non-Affiliate, other than any transaction (including
the payment of fees and expenses) permitted under the CCE-I Credit Facility
from time to time or, after the CCE-I Credit Facility Termination Date,
consistent with past practice. In addition, CCE-I shall receive the full
benefit of any discounts, rebates or special payment terms available to
Charter (in its capacity as manager of the CCE-I Systems) which Charter (in
such capacity) is permitted to pass through to CCE-I.

(b) In addition, the Issuer will not permit any of CCE-I and any of the
Restricted Subsidiaries to make any advance, loan, payment or cash
distribution to Charter or KIA V or any of their respective Affiliates (other
than Restricted Subsidiaries) before all Obligations in respect of the Notes
are paid in full, other than as permitted under paragraph (a) above.

Limitation on Intercompany Indebtedness

The Issuer will not permit any Restricted Subsidiary to incur any
Indebtedness to any Affiliate, other than Indebtedness to another Restricted
Subsidiary or a direct or indirect Restricted Subsidiary of a Restricted
Subsidiary, on terms less advantageous than would be the case if such loan had
been effected on an arm's length basis with a non-Affiliate.

Merger or Consolidation

Except as permitted under clause (a) of the "Limitation on Asset Sales"
covenant, the Issuer will not merge or consolidate with, or permit any
Restricted Subsidiary to merge or consolidate with, any entity (other than a
merger between two Restricted Subsidiaries, a merger between the Issuer and a
Restricted Subsidiary in which the Issuer is the surviving entity or a merger
of a Restricted Subsidiary with another entity in which either such Restricted
Subsidiary is the surviving entity or such other entity becomes a Restricted
Subsidiary of the Issuer).

Restriction on Investing in Radio Operations

The Issuer will neither invest nor permit any Restricted Subsidiary to
invest more than $20.0 million in any Restricted Subsidiary thereof relating
to the operation and ownership of licensed radio station(s) in the St. Louis,
Missouri area.

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Reporting and Information Requirements

To the extent required by law, the Issuer will comply with the requirements
to file reports with the SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and will deliver any
such reports to the Trustee and the holders within 30 days after the filing
thereof with the SEC. If the Issuer does not file any such reports with the
SEC, the Issuer will deliver to the Trustee (which shall make such information
available to securities analysts and prospective purchasers of the Notes) and
the holders, copies of the following: (a) within 45 days after the last day of
each quarter (other than the fourth quarter) in each fiscal year, the
unaudited consolidated statement of operations and statement of cash flows of
the Issuer for such quarterly period and for the period from the beginning of
the fiscal year to the end of such quarter and the unaudited consolidated
balance sheet of the Issuer as of the end of such quarterly period; and (b)
within 90 days after the end of each fiscal year, the consolidated statements
of operations, shareholders' investment and cash flows of the Issuer for such
fiscal year, and the consolidated balance sheet of the Issuer as of the end of
such fiscal year. Certain other information and reports shall also be
delivered to the Trustee and the holders.

EVENTS OF DEFAULT

(a) The following events are defined in the Indenture as "Events of
Default":

(i) The failure to pay, when due, principal of any Note; or

(ii) The failure to pay, when due, interest on any Note, or any other
amount due under the Indenture or under any Note and such failure shall
have continued for a period of three business days; or

(iii) Certain events of bankruptcy, insolvency or reorganization with
respect to the Issuer; or

(iv) A default in the performance or observance of any covenant contained
in the Indenture and which default continues for a period of 30 business
days after notice from any holder to the Issuer; or

(v) A default by the Issuer (as principal or as guarantor or other
surety), unless such default shall have been waived or cured, in any
payment of principal of or interest on any Indebtedness for Money Borrowed
(other than Indebtedness incurred under the Indenture and the Notes) in the
aggregate amount of the lesser of $7.5 million or the amounts provided in
the most nearly comparable provisions of the Senior Debt (the "Senior Debt
Threshold") or, if such obligation or obligations is or are payable or
repayable on demand, shall fail to pay or repay such obligation or
obligations when demanded, in each case allowing any applicable grace
period to lapse, or the Issuer shall default (unless such default has been
waived or cured) in the observance of any covenant, term or condition
contained in any agreement or instrument by which such obligation or
obligations are created, secured or evidenced if the effect of such default
is to cause all or part of such obligation or obligations to become due
before its or their otherwise stated maturity; or

(vi) One or more final judgments for the payment of money shall have been
entered against the Issuer which judgment or judgments in the aggregate
exceed the lesser of $7.5 million or the Senior Debt Threshold in the
aggregate and which remain undischarged for a period (during which
execution shall not be effectively stayed) of 30 days.

(b) The Indenture provides that, subject in all cases to the terms of
Article XIII of the Indenture, if an Event of Default occurs and is continuing
or shall exist, (i) any holder, if an Event of Default occurs under paragraph
(a)(i) or (a)(ii) above or (ii) the holders of a majority in principal amount
of the Notes if an Event of Default occurs and is continuing other than under
paragraph (a)(i) or (a)(ii) above, may, at such holder's option, by written
notice to the Issuer or to the Trustee elect to declare the unpaid principal
amount of the Notes which they hold, interest accrued thereon and all other
amounts owed by the Issuer under the Indenture or under Notes which they hold
to be immediately due and payable. Pursuant to the terms of Article XIII of
the Indenture and the Second Amended and Restated Subordination Agreement made
by the Trustee and dated as of February 13, 1997 (the "Subordination
Agreement"), neither the holders nor the Trustee will be able to take action
to cause the Issuer to make payment of principal or interest upon the
occurrence of an Event of Default until the earlier of January 18, 2019 or
payment in full of all amounts due on all Senior Debt. Until the Stated
Maturity

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Date, if an Event of Default occurs and shall be continuing for any reason
other than under paragraph (a)(i) or (a)(ii) above, all principal, interest
and other amounts due from the Issuer under the Notes shall bear the 13% per
annum stated rate of interest set forth in Section 3.01 of the Indenture plus
the Default Rate of 3% per annum set forth in Section 10.01 of the Indenture.
If the Issuer fails to pay all of the outstanding principal on or prior to the
Stated Maturity Date or all of the accrued and unpaid interest on or prior to
the third day following the Stated Maturity Date, there shall be imposed upon
the unpaid principal amount of each Note (in addition to the 13% per annum
interest rate set forth in Section 3.01 of the Indenture and, for the
applicable period, the 3% per annum Default Rate of interest set forth in
Section 10.01 of the Indenture) a penalty rate of interest as follows (which
shall accrue through the date of repayment and be based on a year of 360
days):

<TABLE>
<CAPTION>
PER ANNUM PENALTY
YEAR ENDING DECEMBER 31, RATE OF INTEREST
------------------------ -----------------
<S> <C>
2000.................................................. 5%
2001.................................................. 7%
2002.................................................. 9%
2003.................................................. 11%
2004 and thereafter................................... 13%
</TABLE>

DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE

In addition to the Issuer's right to redeem the Notes in whole or in part at
the option of the Issuer at any time, without premium or penalty, the Issuer
may, at its option and at any time, elect to have the Obligations of the
Issuer discharged with respect to the outstanding Notes ("defeasance"). Such
defeasance means that the Issuer shall be deemed to have paid and discharged
the entire indebtedness represented by the outstanding Notes and to have
satisfied all other obligations under the Notes and the Indenture, except for
(i) the rights of holders of the outstanding Notes to receive, solely from the
trust fund described below, payments in respect of the principal of and
interest on such Notes when such payments are due, (ii) the Issuer's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes, and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee under the Indenture, and (iv) the defeasance provisions of the
Indenture. In addition, the Issuer may, at its option and at any time, elect
to have its obligations released with respect to certain covenants that are
described in the Indenture ("covenant defeasance") and any omission to comply
with such obligations shall not constitute a Default or an Event of Default
with respect to the Notes. In the event that a covenant defeasance occurs,
certain events (not including non-payment, bankruptcy and insolvency events)
described under "--Events of Default" will no longer constitute Events of
Default with respect to the Notes.

In order to exercise either defeasance or covenant defeasance, (i) the
Issuer will irrevocably (x) select a date for the payment of principal of and
accrued interest on the outstanding Notes and (y) deposit with the Trustee, as
trust funds in trust, for the benefit of the holders of the Notes, cash in
United States dollars, U.S. Government Obligations (as defined in the
Indenture), or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants or a nationally recognized investment banking firm, to pay and
discharge the principal of and interest on the outstanding Notes to redemption
or maturity, as the case may be; (ii) the Issuer will have delivered to the
Trustee an opinion of counsel in the United States to the effect that the
holders of the outstanding Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance or covenant
defeasance as the case may be, and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred (in the
case of defeasance, such opinion must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable Federal income tax
laws); (iii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as clause (iii), under the
first paragraph under "--Events of Default" is concerned, at any time during
the period ending on the 91st day after the date of such deposit; (iv) such
defeasance or covenant defeasance shall not result in a breach or violation
of, or constitute a Default under, the

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Indenture or any other agreement or instrument to which the Issuer is a party
or by which it is bound; (v) the Issuer shall have delivered to the Trustee an
opinion of counsel to the effect that (A) the trust funds will not be subject
to any rights of holders of Indebtedness (other than holders of the Notes) and
(B) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (vi) the Issuer
will have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent under the Indenture to
either defeasance or covenant defeasance, as the case may be, have been
complied with and that no violations under agreements governing any other
outstanding Indebtedness would result therefrom.

SATISFACTION AND DISCHARGE

The Indenture will cease to be of further effect (except as to surviving
rights of registration or transfer or exchange of the Notes, as expressly
provided for in the Indenture) as to all outstanding Notes when (i) either (a)
all the Notes theretofore authenticated and delivered (except lost, stolen or
destroyed Notes which have been replaced or paid) have been delivered to the
Trustee for cancellation or (b) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee an amount in
United States dollars sufficient to pay and discharge the entire indebtedness
on the Notes not theretofore delivered to the Trustee for cancellation, for
the principal of and interest on such Notes to the date of deposit; (ii) the
Issuer has paid or caused to be paid all other sums payable under the
Indenture by the Issuer; and (iii) the Issuer has delivered to the Trustee an
officers' certificate and an opinion of counsel each stating that all
conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.

MODIFICATIONS AND AMENDMENTS

Modifications and amendments of the Indenture or the Notes may be made by
the Issuer and the Trustee with the written consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Notes;
provided, however, that no such modification or amendment may, without the
consent of the holder of each outstanding Note affected thereby: (i) change
the Stated Maturity Date or the time at which the principal of, or interest
on, any Note becomes due and payable, or reduce the principal amount thereof
or the rate of interest thereon, or change the coin or currency in which the
principal of any Note or the interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment when due and payable
(or, in the case of redemption, on or after the redemption date), provided,
however, that this clause (i) shall, in all cases, be subject to the
provisions of clause (d) of "--Certain Covenants--Limitation on Additional
Indebtedness" which, indirectly, could have the effect of changing the time at
which principal of or interest on the Notes becomes due and payable with the
consent of only the holders of a majority in aggregate principal amount of the
Notes; (ii) reduce the percentage in principal amount of outstanding Notes,
the consent of whose holders is required to amend or supplement the Indenture
or the consent of whose holders is required for any waiver of compliance with
certain provisions of the Indenture or certain Defaults thereunder and their
consequences provided for in the Indenture; (iv) modify any of the provisions
relating to supplemental indentures requiring the consent of holders or
relating to the waiver of past defaults or relating to the waiver of certain
covenants, except to increase the percentage of outstanding Notes required for
such actions or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the holder of each Note
affected thereby; (v) except as otherwise permitted under "--Certain
Covenants--Merger or Consolidation", allow the assignment or transfer by the
Issuer of any of its rights and obligations under the Indenture or (vi) modify
or in any other way affect the ranking of the Notes in a manner adverse to the
holders of the Notes.

The holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture.

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THE TRUSTEE

The Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.

The Indenture and, upon issuance of the Exchange Notes or effectiveness of a
shelf registration statement, provisions of the Trust Indenture Act
incorporated by reference therein, contain limitations on the rights of the
Trustee, should it become a creditor of the Issuer, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions with the Issuer or any Affiliate of the
Issuer; provided that if it acquires any conflicting interest (as defined in
the Indenture or in the Trust Indenture Act) it must eliminate such conflict
or resign as trustee.

GOVERNING LAW

The Indenture and the Notes will be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to the conflict
of laws principles thereof.

CERTAIN AGREEMENTS BY CHARTER AND KELSO IN FAVOR OF HC CROWN

Charter and Kelso separately have undertaken, in an agreement with HC Crown,
to cause the Issuer to comply with the reporting requirements and dividend,
merger, divestiture and indebtedness restrictions set forth in the Indenture.
Charter and Kelso have also undertaken, in that agreement, to maintain their
control of the Issuer while the Notes remain outstanding.

BOOK-ENTRY; DELIVERY AND FORM

The Old Notes were deposited on the date of closing of sale of the Old
Notes, and the New Notes will be deposited on the date of closing of the
Exchange Offer, with or on behalf of the Depositary and registered in the name
of Cede & Co., as nominee of the Depositary (such nominee being referred to
herein as the "DTC Nominee").

DTC is (i) a limited purpose trust company organized under the banking laws
of the State of New York (and is a "banking organization" within the meaning
of such laws), (ii) a member of the Federal Reserve System, (iii) a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, as
amended, and (iv) a "Clearing Agency" registered pursuant to Section 17A of
the Exchange Act. DTC was created to hold securities for its participating
organizations (the "participants") and to facilitate the clearance and
settlement of securities transactions between participants through electronic
book-entry changes to the accounts of its participants. DTC's participants
include securities brokers and dealers, commercial banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a
number of its direct participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to DTC's system is also available to other entities such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by or on
behalf of the DTC only through the DTC's direct or indirect participants.

Pursuant to procedures established by the Depositary, (i) upon deposit of
the Global Notes, the Depositary will credit the accounts of participants in
connection with the Notes with portions of the principal amount of the Global
Notes and (ii) ownership of the Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's participants),
the Depositary's participants and the Depositary's indirect participants.

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So long as DTC's Nominee is the registered owner of the Global Notes, DTC or
DTC's Nominee, as the case may be, is considered the sole owner and holder
under the Indenture of the underlying notes. Unless DTC notifies the Issuer
that it is unwilling or unable to continue serving as depositary for such
Notes, DTC ceases to be a clearing agency registered under the Exchange Act,
the Issuer determines to permit the Global Notes to be exchanged for
certificated Notes, or an Event of Default has occurred and is continuing with
respect to the Notes, owners of beneficial interests in the Global Notes will
not be entitled to have the Notes registered in their names, will not receive
or be entitled to receive physical delivery of certificated Notes in
definitive and fully registered form, and will not be considered to be the
owners or holders of any Notes under the Indenture or such Notes for any
purposes. Neither the Issuer nor the Trustee has any responsibility or
liability for any aspect of the records of DTC or for maintaining, supervising
or reviewing any records of DTC relating to the Notes.

Payments in respect of the principal of, premium, if any, and interest on
the Global Notes are payable by the Trustee to DTC or DTC's Nominee, as the
case may be, as the registered holder under the Indenture. Under the terms of
the Indenture, the Issuer and the Trustee may treat the Persons in whose names
Notes are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Issuer nor the Trustee has any
responsibility or liability for the payment of such amounts to beneficial
owners of Notes (including principal, premium, if any, and interest). The
Issuer believes, however, that it is currently the policy of DTC to
immediately credit the accounts of the relevant participants with such
payments, in amounts proportionate to their respective holdings of beneficial
interests in the relevant security as shown by the records
of DTC. Payments by DTC's direct and indirect participants to beneficial
owners of Notes are governed by standing instructions and customary practice
and are the responsibility of DTC's direct and indirect participants.

CERTIFICATED SECURITIES

Subject to certain conditions, any Person having a beneficial interest in
the Global Notes may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Notes. Upon any such issuance,
the Trustee is required to register such Certificated Notes in the name of,
and cause the same to be delivered to, such Person or Persons (or the nominee
of any thereof). In addition, if (i) the Issuer notifies the Trustee in
writing that DTC is no longer willing or able to act as a depositary and the
Issuer is unable to locate a qualified successor within 90 days or (ii) the
Issuer, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in the form of Certificated Notes under the Indenture,
then, upon surrender by DTC's Nominee of its Global Notes, Notes in such form
will be issued to each Person that DTC's Nominee and DTC identify as being the
beneficial owner of the related Notes.

Neither the Issuer nor the Trustee is liable for any delay by DTC or DTC's
Nominee, as the case may be, in identifying the beneficial owners of Notes and
the Issuer and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from DTC or DTC's Nominee for all purposes.

Neither DTC nor DTC's Nominee will consent or vote in any manner with
respect to the Notes. Pursuant to its customary procedures, in the case of any
matter as to which the consent or vote of holders of the Notes is sought, DTC
will mail an Omnibus Proxy to the Issuer as soon as practicable after the
record date for the determination of holders eligible to consent or vote on
the matter to be acted upon. The Omnibus Proxy serves to assign DTC's
Nominee's right to consent or vote to the direct participants whose accounts
it maintains as of the record date.

Notices of redemption and repurchase with respect to Notes held by direct
participants in the DTC system will be forwarded to DTC's Nominee. In the case
of a partial redemption, DTC's practice is to determine, by lot, the amount of
the beneficial interest in the Notes to be redeemed of each of its direct
participants.

Beneficial owners who elect to participate in a tender offer or purchase of
their securities, must provide notice of such election, through its direct or
indirect participant in DTC's system, to the appropriate depositary, tender or
purchase agent, and effect delivery of their Notes by causing the direct
participant in DTC's system to transfer the indirect participant's interest in
the Notes, as reflected in DTC's records, to such depositary, tender

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or purchase agent. The requirement for physical delivery of certificates
evidencing the Notes in connection with the aforementioned transactions will
be deemed satisfied when the beneficial ownership rights in the Global Notes
are transferred by direct participants on DTC's records.

The conveyance of all notices and other communications by DTC to its direct
participants, among DTC's direct and indirect participants and by DTC's direct
and indirect participants to owners of beneficial interests in the Notes is
governed by customary arrangements among them, subject to statutory or
regulatory requirements in effect with respect thereto from time to time.

Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Notes among participants of DTC, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Issuer nor the Trustee
has any responsibility for the performance by DTC or its participants of their
respective obligations under the rules and procedures governing their
operations.

SAME-DAY SETTLEMENT AND PAYMENT

The Indenture requires that payments in respect of the Notes represented by
the Global Notes (including principal, premium, if any, and interest) be made
in immediately available funds. With respect to Certificated
Notes, however, the Company makes all payments of principal, premium, if any,
and interest, by mailing a check to each holder's registered address.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
are eligible to trade in the PORTAL Market and to trade in DTC's Same-Day
Funds Settlement System, and any permitted secondary market trading activity
in such Notes will, therefore, be required by DTC to be settled in immediately
available funds. The Issuer expects that secondary trading in the Certificated
Notes will also be settled in immediately available funds.

REGISTRATION RIGHTS

Immediately prior to sale of the Old Notes, HC Crown, pursuant to the Letter
Agreement, exercised its demand registration rights with respect to the Notes,
with a view toward the Notes being registered under the Securities Act. HC
Crown and the Issuer agreed that the Issuer would use its reasonable best
efforts to cause to become effective a registration statement with respect to
the Exchange Offer.

Under the Indenture the holders are collectively entitled to a single demand
registration right in addition to the registration rights under the Letter
Agreement, pursuant to which the Issuer and the Guarantors will use their
reasonable best efforts to cause to become effective a shelf registration
statement with respect to the resale of the Notes and use their reasonable
best efforts to keep such shelf registration statement continuously effective
until nine months after the effective date thereof. Expenses related to the
exercise of the additional demand registration right, if exercised, will be at
the expense of the holders of the Notes exercising the demand registration
right.

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.

"Adjusted Consolidated" means, with respect to any Person, such Person and
its Subsidiaries (other than Subsidiaries which are not Restricted
Subsidiaries) on a consolidated basis.

"Affiliate" means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.

"Anniversary Date" means December 31 in any year or the next succeeding
Business Day if such date is not a Business Day.

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"Annualized Operating Cash Flow" means an amount equal to Operating Cash
Flow for the calendar quarter specified, multiplied by 4.

"Areas of Dominant Influence" has the meaning set forth in 47 CFR 76.55(e).

"CAC" means CCA Acquisition Corp., a Delaware corporation.

"Capital Stock" of any Person means any and all shares, interests,
participations and other equivalents (however designated) of corporate stock,
equity interests in partnerships or other entities or options, convertible
instruments, rights or warrants to purchase such corporate stock, or equity
interests in partnerships or other entities.

"CCE, L.P. Partnership Agreement" means the Agreement of Limited Partnership
of Charter Communications Entertainment, L.P., dated as of September 29, 1995,
as the same may be amended, restated or modified from time to time in
accordance with the Indenture.

"CCE-I Credit Agreement" means that certain amended and restated loan
agreement dated as of September 29, 1995, by and among CCE-I, the CCE-I Credit
Facility Lenders and Toronto Dominion (Texas), Inc., as administrative agent
for the CCE-I Credit Facility Lenders, as amended as of October 31, 1995,
January 16, 1996, March 29, 1996, May 24, 1996, November 29, 1996 and February
7, 1997, and as the same may be amended, extended, renewed, restated,
supplemented or otherwise modified from time to time.

"CCE-I Credit Facility " means the credit facilities extended to CCE-I
pursuant to the CCE-I Credit Agreement.

"CCE-I Credit Facility Lenders" means Toronto Dominion (Texas), Inc. and The
Chase Manhattan Bank (formerly Chemical Bank), as Documentation Agents;
Toronto Dominion (Texas), Inc., The Chase Manhattan Bank (formerly Chemical
Bank), CIBC Inc., Credit Lyonnais Cayman Island Branch and NationsBank, N.A.,
as Managing Agents; Banque Paribas, Union Bank of California, N.A. (formerly,
Union Bank), Fleet Bank, N.A., CoreStates Bank, N.A., ABN AMRO Bank N.V.,
Societe Generale and The First National Bank of Boston, as Co-Agents; Toronto
Dominion (Texas), Inc., as Administrative Agent; and the financial
institutions party to the CCE-I Credit Agreement, together with their
respective successors and assigns.

"CCE-I Credit Facility Termination Date" means the date on which all
Obligations (as such term is defined in the Subordination Agreement) shall
have been indefeasibly paid in full in cash and all commitments to lend in
respect of the CCE-I Credit Facility shall have been terminated.

"CCE-I Partnership Agreement" means the Agreement of Limited Partnership of
CCE-I, dated as of September 29, 1995, as the same shall be amended, restated
or modified from time to time.

"CCE Purchase Money Indebtedness"means any Indebtedness or any Qualifying
Equity Interest incurred or issued by any partners or future partners of CCE,
L.P. or any Persons (other than Charter, KIA V or any of their respective
Affiliates that are not or do not become direct or indirect partners of CCE,
L.P.) controlling such partners, now outstanding or hereafter incurred or
issued in connection with acquiring assets owned or to be owned, directly or
indirectly, by any Subsidiary of CCE, L.P., and shall (i) include (a) the
Indebtedness evidenced by the Notes and (b) any other Indebtedness to or any
Qualifying Equity Interest owned by a seller of such assets and (ii) exclude
Indebtedness to or any Qualifying Equity Interest owned by Charter, KIA V or
any of their respective Affiliates that are not or do not become direct or
indirect partners of CCE, L.P.

"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person,
whether through ownership of voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings correlative thereto.

"Debt Service" means, without duplication, payment of principal, interest,
fees, premiums and penalties on or with respect to any Indebtedness.

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"GAAP" means generally accepted accounting principles, as in effect in the
U.S. from time to time, consistently applied.

"Holder" means HC Crown or any other holder of a Note or Notes.

"Indebtedness" means, with respect to a Person, (a) all items, which, in
accordance with GAAP would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person, except (i)
accounts payable which by their terms are less than 60 days past due, (ii)
items of partners' equity or capital stock or surplus, or (iii) items of
general contingency or deferred tax reserves, (b) all direct or indirect
obligations secured by any Lien to which any property or asset owned by such
Person is subject (but if the obligation secured thereby shall not have been
assumed, then only to the extent of the higher of the fair market value or the
book value of the property or asset subject to such Lien), (c) all obligations
of such Person with respect to leases constituting part of a sale and lease-
back arrangement, (d) all reimbursement obligations with respect to
outstanding letters of credit, and (e) all obligations of such Person under
Interest Rate Hedge Agreements.

"Indebtedness for Money Borrowed" means, with respect to any Person, money
borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, all Indebtedness upon which
interest charges are customarily paid, and all Indebtedness issued or assumed
as full or partial payment for property or services, whether or not any such
notes, drafts, obligations or Indebtedness represent Indebtedness for money
borrowed. For purposes of this definition, interest which is accrued but not
paid on the original due date for such interest shall be deemed Indebtedness
for Money Borrowed. Where obligations are evidenced by bonds, debentures,
notes or other similar instruments whose face amount exceeds the amount
received by such Person with respect thereto, only the amount received plus
debt discount amortized as of the calculation date need be taken into account
as Indebtedness for Money Borrowed.

"Interest Expense" means, for any period, the aggregate amount of all
interest paid or accrued in respect of Indebtedness for Money Borrowed and the
portion of payments under Capitalized Lease Obligations which constitutes
imputed interest, in each case, of any Person on an Adjusted Consolidated
basis during such period.

"Interest Rate Hedge Agreement" means the obligations of any Person pursuant
to any arrangement with any other person whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated
by applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall also include, without limitation, interest rate swaps, caps,
swaptions, captions, floors, collars and similar agreements.

"Lien" means, with respect to any property, any mortgage, lien, pledge,
assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind
in respect of such property, whether or not choate, vested or perfected.

"Net Income" means, as applied to any Person, for any fiscal period, the
aggregate amount of net income (or net loss) after taxes, for such period for
such Person on an Adjusted Consolidated basis.

"Obligations" means all unpaid principal or interest under the Notes, and
all other obligations of the Issuer to any holder arising under the Indenture.

"Operating Cash Flow" means, for any Person in respect of any quarterly or
annual period, as applicable, without duplication, the remainder of (a) the
sum of Net Income of such Person, plus, to the extent deducted in calculating
Net Income of such Person, (i) Interest Expense of such Person, (ii)
depreciation, (iii) amortization, (iv) management fees and financial advisory
fees paid, (v) income tax expense and (vi) other non-cash items, less (b)
extraordinary income, all as determined in accordance with GAAP.

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"Person" means an individual, corporation, partnership, limited liability
company, trust or unincorporated organization, or a government or any agency
or political subdivision thereof.

"Qualifying Equity Interest" means a preferred equity interest in any Person
which, for at least so long as the Notes are outstanding, (i) shall have a
stated liquidation preference and a stated dividend rate and (ii) shall, if
such preferred equity interest is convertible into a common (or equivalent)
equity interest, contain a provision whereby upon such conversion (a) the
preferred capital account, if any, related to the converted portion of such
preferred equity interest shall terminate and (b) such converted portion of
such preferred equity interest shall no longer be a Qualifying Equity
Interest.

"Restricted Subsidiary" means CAC, Cencom Cable, CCE, L.P., CCE-I, any
Subsidiary of CCE-I and any other direct or indirect Subsidiary of the Issuer
which has, or comes to have in the future, a direct or indirect ownership
interest in CCE-I, or any of its Subsidiaries.

"Semi-Annual Date" means each June 30 or the next succeeding business day if
such date is not abusiness day.

"Senior Debt" means all monetary obligations (whether fixed or contingent
and whether outstanding or hereafter created, incurred or assumed) of the
Issuer, including, without limitation, obligations in respect of principal,
interest (including post-petition interest in any proceeding under bankruptcy
law), reimbursement obligations, indemnities, fees and expenses in respect of
any Indebtedness for Money Borrowed of the Issuer and the Restricted
Subsidiaries, whether currently or afterwards outstanding, unless any
instrument creating or affecting such Indebtedness (a) provides that such
Indebtedness is not superior in right of payment to the principal of and
interest on any of the Notes or (b) provides that such Indebtedness is
subordinate in right of payment to the payment of the principal of and
interest on any other Indebtedness for Money Borrowed of the Issuer and its
Subsidiaries. The fact that certain indebtedness is not secured, or is junior
in security to other Indebtedness, shall not be relevant to the issue of
whether it is Senior Debt. Notwithstanding anything to the contrary in the
foregoing, Senior Debt shall not include (a) indebtedness or amounts owed for
compensation to employees, for goods or materials purchased in the ordinary
course of business or for services, (b) indebtedness of the Issuer or any
Restricted Subsidiary to any Restricted Subsidiary, or any, shareholder,
partner or officer of the Issuer or any Restricted Subsidiary, (c) obligations
for television, program and syndicated series exhibition rights or (d)
payments due under or in connection with a cable television franchise,
including any management fees.

"Subordination Agreement" means, collectively, the Amended and Restated
Subordination Agreement dated as of November 15, 1996 by and between HC Crown
and the Company in favor of the CCE-I Credit Facility Lenders and Toronto
Dominion (Texas), Inc., as administrative agent for the CCE-I Credit Facility
Lenders, and each other Subordination Agreement by and between any holder (or
the trustee under the Indenture, on behalf of any such holder) and the Issuer
in favor of the CCE-I Credit Facility Lenders and Toronto Dominion (Texas),
Inc., as administrative agent for the CCE-I Credit Facility Lenders, as the
same may be amended, replaced, restated, supplemented or otherwise modified
from time to time.

"Subsidiary" means, in respect of any Person, any corporation of which such
Person owns more than 50% of the equity interest and any partnership or other
Person to the extent any Person owns more than 50% of the equity interest in
same.

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain federal income tax consequences
relevant to the acquisition, ownership and disposition of the New Notes by the
holders acquiring New Notes pursuant to the Exchange Offer but does not
purport to be a complete discussion of all potential tax effects. In this
regard, this discussion does not address the tax consequences to subsequent
purchasers or holders of New Notes. The discussion is based upon provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury regulations, rulings and judicial decisions thereunder as of
the date hereof, all of which may be repealed, revoked or modified
retroactively in a manner that could adversely affect a holder of the Notes.

The summary deals only with Notes held as capital assets (generally property
held for investment and not for sale to customers in the ordinary course of a
trade or business) by holders who or which are (i) citizens or residents of
the United States, (ii) domestic corporations, partnerships or other entities
or (iii) otherwise subject to U.S. federal income taxation on a net income
basis in respect of income and gain from the Notes. It does not address all
aspects of the U.S. federal income tax consequences of holding Notes that may
be relevant to a holder's particular circumstances or to holders with special
situations, such as dealers in securities, financial institutions, life
insurance companies, tax-exempt organizations or persons holding Notes as a
position in a "straddle" or "conversion transaction" for tax purposes. The
summary does not address tax consequences of holding Notes under state, local
or foreign tax laws.

Set forth below is a summary of the principal original issue discount
("OID") considerations applicable to holders of the New Notes. The OID rules
are complicated and raise various interpretational questions, and because of
their recent enactment, there remains little authoritative guidance as to
their application in specific factual settings. In addition, the OID rules
depend upon factual inquiries as to which there can be no independent legal
assurance. Accordingly, the precise application of the OID rules to debt
instruments such as the Notes that have complex terms is subject to some
uncertainty. No ruling will be sought from the Internal Revenue Service (the
"IRS") with respect to any of the issues discussed herein. There can be no
assurance that the IRS will not take a different position concerning the
matters discussed below and that such position would not be sustained. Among
other consequences, such an adverse determination could result in the
acceleration of the recognition of, and/or increase in the amount of, OID on
the Notes.

EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF ACQUIRING, OWNING AND DISPOSING OF THE NEW NOTES,
INCLUDING THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.

EXCHANGE OF NOTES

The substitution of New Notes for Old Notes pursuant to the Exchange Offer
should not be treated as a sale, exchange, disposition or other taxable event
with respect to the holders for Federal income tax purposes. Holders should
not recognize any taxable gain or loss or any interest income as a result of
substituting New Notes for Old Notes pursuant to the Exchange Offer, and a
holder should have the same adjusted tax basis and holding period in the New
Notes as it had in the Old Notes immediately before the substitution and the
New Notes should have the same issue price (and adjusted issue price
immediately after the substitution) and the same amount of OID, if any, as the
Old Notes. The following discussion assumes that the substitution of New Notes
for Old Notes pursuant to the Exchange Offer will not be treated as a sale,
exchange, disposition or other taxable event for Federal income tax purposes,
and that the Old Notes and the New Notes will be treated as the same
securities for Federal income tax purposes.

ORIGINAL ISSUE DISCOUNT ON THE NOTES

The Old Notes originally were issued with OID and, as a result, a holder of
the New Notes (including a cash basis holder) will be required to include such
OID in income (to the extent it accrues during such holder's

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period of ownership of the Notes) as interest income on a constant yield to
maturity method basis, generally in advance of the receipt of the cash
payments to which such income is attributable and generally in increasing
amounts until the retirement of the New Notes.

The total amount of OID with respect to a Note is equal to the excess of the
"stated redemption price at maturity" of such Note over the "issue price" of
such Note. The "stated redemption price at maturity" of a Note is equal to the
sum of all payments, whether denominated as interest or principal, required to
be made on such Note other than payments of "qualified stated interest."
Because interest is not payable on the Notes until December 31, 1999, none of
the stated interest payments will be payments of qualified stated interest and
all such payments are included in the stated redemption price at maturity of
the Notes. Because the Old Notes originally were issued in partial
consideration for non-publicly-traded property, and because the Notes provide
for adequate stated interest, the "issue price" of the Notes is the "stated
principal amount" of the Notes, i.e., the aggregate amount of all payments due
under the Notes, excluding any amount of stated interest.

In general, the amount of OID required to be included in a holder's income
for any taxable year (regardless of whether the holder uses the cash or
accrual method of accounting) is the sum of the daily portions of OID with
respect to the Notes for each day during the taxable year or portion of the
taxable year in which the holder holds such Note. The daily portion is
determined by allocating to each day in any "accrual period" a pro rata
portion of the OID allocable to that accrual period. Accrual periods with
respect to a Note may be of any length selected by the holder and may vary in
length over the term of such Note as long as (i) no accrual period is longer
than one year and (ii) each scheduled payment of interest or principal on such
Note occurs on either the first or final day of an accrual period. The amount
of OID allocable to each accrual period generally will be equal to the product
of the adjusted issue price of a Note at the beginning of an accrual period
and the yield to maturity of such Note (determined on the basis of a
compounding assumption that reflects the length of the accrual period). The
adjusted issue price of a Note at the beginning of an accrual period will be
equal to its original issue price increased by all previously accrued OID
(disregarding any reduction on account of acquisition premium described below)
and reduced by the amount of all previous cash payments on such Note. The
yield to maturity is that interest rate, expressed as a constant annual
interest rate, that when used in computing the present value of all payments
of principal and interest to be paid in connection with the Notes produces an
amount equal to the issue price of the Notes. For purposes of calculating the
amount of OID on the Notes, the Issuer intends to determine the yield and
maturity of the Notes by assuming that the Notes will be retired on December
31, 1999, the stated maturity date of the Notes.

The Issuer will provide certain information to the IRS, and will furnish
annually to certain record holders of the Notes information with respect to
OID accruing during the calendar year. See "Backup Withholding." Because this
information is based upon the adjusted issue price of each Note as if the
current holder of each Old Note was the original holder of the instrument,
current holders of the Old Notes who originally purchased the Old Notes for an
amount other than the adjusted issue price and/or on a date other than the end
of an accrual period may be required to determine for themselves the amount of
OID. See "Acquisition Premium and Market Discount." If the New Notes are
offered in physical form, the Issuer will be required to place a legend on the
New Notes providing information with respect to the computation of OID on the
Notes.

The Notes may be determined to be subject to the rules under the Code
regarding "applicable high yield discount obligations" ("AHYDO") because their
yield to maturity exceeds the relevant applicable Federal rate ("AFR") by more
than five percentage points. Under Section 163(e) and 163(i) of the Code, a C
corporation that is an issuer of debt obligations subject to the AHYDO rules
may not deduct any portion of OID on the obligations until such portion is
actually paid. A debt obligation is generally subject to the AHYDO rules if
(i) its maturity date is more than five years from the date of issue, (ii) its
yield to maturity equals or exceeds the sum of the AFR plus five percentage
points and (iii) it has "significant OID." A debt obligation will have
significant OID for this purpose if, as of the close of any accrual period
ending more than five years after issuance, the total amount of income
includable by a holder with respect to the debt instrument exceeds the sum of
(i) the total amount of "interest" paid under the obligation before the close
of such accrual period and (ii) the product of the issue price of the debt
instrument and its yield to maturity. In addition, if the yield to maturity on

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an AHYDO obligation exceeds the sum of the AFR plus six percentage points, a
portion of the OID, equal to the product of the total OID times the ratio of
(a) the excess of the yield to maturity over the sum of the AFR plus six
percentage points to (b) the yield to maturity, will not be deductible by the
issuer and will be treated for some purposes as dividends to the holders of
the obligations (to the extent that such amounts would have been treated as
dividends to the holders if they had been distributions with respect to the
issuer's stock). Amounts treated as dividends will be nondeductible by the
issuer, and may qualify for the dividends received deduction for corporate
U.S. holders, but will be treated as OID and not as dividends for withholding
tax purposes. The Issuer intends to take the position that the Notes are not
subject to the AHYDO rules because the stated maturity date of the Notes is
less than five years from the date of their issuance.

ACQUISITION PREMIUM AND MARKET DISCOUNT

A holder who originally purchased an Old Note for an amount that was greater
than its adjusted issue price as of the purchase date and less than the sum of
all amounts payable on the instrument after its purchase by the holder will be
considered to have purchased such Note at an "acquisition premium." The amount
of OID that such holder must include in its gross income with respect to such
Note for any taxable year is generally reduced by the portion of such
acquisition premium properly allocable to such year.

If a holder originally purchased an Old Note for an amount that was less
than its "revised issue price" as of the purchase date, the amount of the
difference generally will be treated as "market discount," unless such
difference is less than a specified de minimis amount. The Code provides that
the revised issue price of a Note equals its issue price plus the amount of
OID includable in the income of all holders for periods prior to the purchase
date (disregarding any deduction for acquisition premium). Under the market
discount rules generally, a holder will be required to treat any gain
recognized on the sale, exchange, retirement or other disposition of a New
Note as ordinary income to the extent of the market discount that has accrued
while the instrument was held by such holder and that has not previously been
included in income. In addition, the holder may be required to defer, until
the maturity date of a New Note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such New Note.

The New Notes provide for optional prepayment, in whole or part, prior to
maturity. If the New Notes were prepaid, a holder generally would be required
to include in gross income as ordinary income the portion of the gain
recognized on the redemption to the extent of the accrued market discount on
the Notes, if any.

Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of a Note, unless the holder
elects to accrue market discount on a constant interest method. A holder of a
Note may elect to include market discount in income currently as it accrues
(under either the ratable or constant interest method). This election to
include currently, once made, applies to all market discount obligations
acquired in or after the first taxable year to which the election applies and
may not be revoked without the consent of the IRS. If a holder of Notes makes
such an election, the foregoing rules with respect to the recognition of
ordinary income on sales and other dispositions of such instruments, and with
respect to the deferral of interest deductions on debt incurred or maintained
to purchase or carry such debt instruments, would not apply.

ELECTION TO TREAT ALL INTEREST AS OID

A holder of a Note may elect to include all interest that accrues on such
Note in gross income on a constant-yield basis. For purposes of this election,
interest includes stated interest, acquisition discount, OID, de minimis OID,
market discount, de minimis market discount and unstated interest, as adjusted
by any amortizable bond premium or acquisition premium.

In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of such Note will equal the holder's
basis in such Note immediately after its acquisition, the issue date of

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<PAGE>

such Note will be the date of its acquisition by the holder, and no payments
on such Note will be treated as payments of qualified stated interest. The
election will generally apply only to a Note with respect to which it is made
and may not be revoked without the consent of the IRS.

If the election to apply the constant-yield method to all interest on a Note
is made with respect to a Note on which there is market discount, the electing
holder will be treated as having made the election described above under
"Acquisition Premium and Market Discount" to include market discount in income
currently over the life of all debt instruments held or thereafter acquired by
such holder.

SALE, EXCHANGE, REDEMPTION AND RETIREMENT OF NOTES

A holder's adjusted tax basis in a Note will, in general, equal the holder's
cost for such Note, increased by any amounts included in income as OID, market
discount or de minimis market discount which the holder has previously elected
to accrue in gross income on an annual basis and reduced by any cash payments
in respect of such Note. Upon the sale, exchange, redemption, retirement or
other disposition of a New Note, a holder generally will recognize gain or
loss equal to the difference between the amount realized on such sale,
exchange, redemption or retirement (except to the extent of accrued OID on
Notes, which will be taxable as such) and the holder's tax basis in such New
Note. Except as described above regarding market discount, gain or loss
recognized by a holder on the sale, exchange, redemption or retirement of a
New Note will be capital gain or loss and will be long-term capital gain or
loss if such Note had been held for more than one year at the time of such
disposition.

BACKUP WITHHOLDING

In general, information reporting requirements will apply to payments of
principal, the proceeds of a sale before maturity, and the accrual and payment
of OID on a Note with respect to non-corporate holders. "Backup withholding"
at a rate of 31% will apply to such payments if the holder fails to provide an
accurate taxpayer identification number, to report all interest and dividends
required to be shown on its federal income tax returns, or otherwise establish
an exemption. Backup withholding tax is not an additional tax and may be
credited against a holder's regular U.S. federal income tax liability or
refunded, provided appropriate proof is provided under rules established by
the IRS. The amount of OID reported by the Issuer in respect of a Note may not
equal the amount of OID required to be included in income by a holder who
purchased such Note.

THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS DOES
NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR HOLDER'S SITUATION
OR STATUS. THE SUMMARY IS BASED ON THE PROVISIONS OF THE CODE, REGULATIONS,
PROPOSED REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN EFFECT, ALL OF
WHICH ARE SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS. EACH CURRENT
HOLDER OF OLD NOTES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO IT, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS, OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NEW
NOTES.

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DESCRIPTION OF OTHER INDEBTEDNESS

THE CREDIT FACILITIES

Charter Communications Entertainment I, L.P.

CCE-I is the borrower under a credit agreement dated as of September 29,
1995 with a consortium of lenders and Toronto Dominion (Texas), Inc. as the
administrative agent, as amended on October 31, 1995, January 16, 1996, March
29, 1996, May 24, 1996, November 29, 1996 and February 7, 1997 (the "CCE-I
Credit Agreement").

Borrowing Amount

The CCE-I Credit Agreement provides for an eight year term credit facility
in the amount of $280.0 million, an eight year revolving credit facility in
the amount of $140.0 million and a nine year term credit facility in the
amount of $85.0 million. As of March 31, 1997, CCE-I had an aggregate of
approximately $468.0 million of indebtedness outstanding (leaving $37.0
million unused and available for borrowing) under the CCE-I Credit Facility.

Interest Rates

Loans under the CCE-I Credit Facility bear interest at a rate per annum
based upon certain spreads plus a base rate, with the base rate being, at CCE-
I's election, the prime rate of interest, the interest rate on certain
certificates of deposit, or LIBOR. With respect to the eight year term credit
facility and the eight year revolving credit facility, the applicable spreads
are based on the ratio of outstanding amounts under the CCE-I Credit Facility
to annualized operating cash flow with a range of 0 to 1.375%, 1.25 to 2.5%
and 1.125 to 2.375%, respectively. With respect to the nine year term credit
facility, the applicable spreads are 1.75%, 2.875% and 2.75%, respectively. In
addition, a quarterly commitment fee of 0.375% per annum is payable on the
unused portion of the CCE-I Credit Agreement.

Security

The CCE-I Credit Facility is secured by substantially all of the assets of
CCE-I, and a pledge of all partnership interests in CCE-I.

Amortization and Maturity

Commencing with the quarter ending September 30, 1997, quarterly reductions
of the eight year term credit facility and the eight year revolving credit
facility are currently required to be made on the last day of each March,
June, September and December through June 30, 2004. Commencing with the
quarter ending March 31, 1998, quarterly reductions of the nine year term
credit facility are currently required to be made on the last day of each
March, June, September and December through December 31, 2004.

Covenants

The CCE-I Credit Agreement contains certain affirmative and negative
covenants, including, but not limited to, (i) maintenance of ratios of total
debt to annualized operating cash flow, annualized operating cash flow to
fixed charges and annualized operating cash flow to pro forma debt service,
(ii) restrictions on capital expenditures, (iii) limitations on additional
indebtedness, creation of liens and encumbrances, mergers and sales of assets,
acquisitions, investments, guarantees, and operating leases, (iv) restrictions
on payments of management fees (v) limitations on transaction with affiliates
and (vi) limitations on distributions.

Events of Default

The CCE-I Credit Agreement contains certain events of default, including,
but not limited to, failure to perform covenants and payment obligations set
forth in the CCE-I Credit Agreement, commencement of any case or proceeding
pursuant to any Federal or state bankruptcy or insolvency law beyond any
applicable grace

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period, entry of certain judgments, the occurrence of a materially adverse
effect, the occurrence of certain events of default under certain other
contracts, the revocation or expiration of certain licenses, certain changes
in ownership of the borrower and the general partner of the borrower, certain
changes in the partners of the partnership that controls Charter or such
partners' voting equity or economic interests in such partnership, and any
demand on the CCE, L.P. Guarantee.

Use of Proceeds

Proceeds of the CCE-I Credit Facility were initially used to refinance
existing indebtedness which was originally incurred in connection with the
acquisition of the Crown Missouri Systems and the Crown Connecticut Systems,
to finance capital expenditures, for working capital and for certain
investments and acquisitions permitted under the CCE-I Credit Agreement.

Charter Communications Entertainment II, L.P.

CCE-II and LBAC (which is an affiliate of the Issuer and CCE-II) are the
borrowers under a credit agreement dated as of April 8, 1997 with a consortium
of lenders and NationsBank of Texas, N.A. as the administrative agent, as
amended on May 23, 1997 (the "CCE-II Credit Agreement").

Borrowing Amount

The CCE-II Credit Agreement provides for an eight year term credit facility
in the amount of $100.0 million, an eight year revolving credit facility in
the amount of $185.0 million and a nine year term credit facility in the
amount of $90.0 million. As of March 31, 1997, CCE-II had an aggregate of
approximately $195.8 million of indebtedness outstanding (leaving $39.2
million unused and available for borrowing) under the CCE-II Credit Facility.

Interest Rates

Loans under the CCE-II Credit Facility bear interest at a rate per annum
based upon certain spreads plus a base rate, with the base rate being, at CCE-
II's election, the prime rate of interest or LIBOR. With respect to the eight
year term credit facility and the eight year revolving credit facility, the
applicable spreads are based on the ratio of debt to annualized operating cash
flow with a range of 0 to 1.0% and 0 to 1.0%, respectively. With respect to
the nine year term credit facility, the applicable spreads are 1.250% and
1.5%, respectively. In addition, a quarterly commitment fee of 0.375% per
annum is payable on the unused portion of the CCE-II Credit Agreement.

Security

The CCE-II Credit Facility is secured by substantially all of the assets of
CCE-II and LBAC, and a pledge of all partnership interests and capital stock
in CCE-II and LBAC, respectively.

Amortization and Maturity

Commencing with the quarter ending December 31, 1998, quarterly reductions
of the eight year revolving credit facility are currently required to be made
on the last day of each March, June, September and December through March 31,
2005. Commencing with the quarter ending December 31, 1999, quarterly
reductions of the eight year term credit facility and the nine year term
credit facility are currently required to be made on the last day of each
March, June, September and December through March 31, 2005 and March 31, 2006,
respectively.

Covenants

The CCE-II Credit Agreement contains certain affirmative and negative
covenants, including, but not limited to, (i) maintenance of ratios of debt to
annualized operating cash flow, operating cash flow to fixed charges and
annualized operating cash flow to pro forma debt service, (ii) restrictions on
capital expenditures, (iii) limitations on additional indebtedness, creation
of liens and encumbrances, mergers and sales of assets, acquisitions, and
investments, (iv) restrictions on payments of management fees and (v)
limitations on distributions and payments on subordinated indebtedness.

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Events of Default

The CCE-II Credit Agreement contains certain events of default, including,
but not limited to, failure to perform covenants and payment obligations set
forth in the CCE-II Credit Agreement, commencement of a case or proceeding
pursuant to any Federal or state bankruptcy or insolvency law beyond any
applicable grace period, entry of certain judgments, the occurrence of certain
events of default under certain other contracts, the revocation or expiration
of certain licenses, and certain changes in control of CCE-II, including but
not limited to, certain changes in the partners of the partnership that
controls Charter or such partners' voting equity or economic interests in such
partnership.

Use of Proceeds

Proceeds of the CCE-II Credit Facility have been and will be used to finance
capital expenditures, for working capital and for certain investments and
acquisitions permitted under the CCE-II Credit Agreement.

THE CALIFORNIA LOAN AGREEMENT

The California Note was issued under a senior subordinated loan agreement
dated as of September 29, 1995 (the "California Loan Agreement").

General

The California Note is the unsecured obligation of CCT ranking subordinate
in right of payment to all senior indebtedness of CCT. CCT is a holding
company that conducts substantially all of its business through CCE-II, and
the California Note will be effectively subordinated to the claims of
creditors of CCE-II. As of March 31, 1997, CCT had no Indebtedness other than
the California Note.

Any and all payments on the California Note is prohibited until the
obligations owing under the CCE-II Credit Facility (including refinancings
thereof) are paid in full. Moreover, substantially all rights and remedies
under the California Note, including the right to accelerate the maturity upon
an event of default (including a payment default) are suspended until such
obligations under the CCE-II Credit Facility are paid in full.

Maturity, Interest and Principal

The California Note has an aggregate principal amount $165.7 million and
will mature on September 29, 2005. As of March 31, 1997, the amount
outstanding under the California Note was $196.8 million. For financial
reporting purposes, the amount of the California Note is $206.2 million
because interest accruing under the California Note is based on the average
rate of interest over the life of the California Note (which approximates
15.43%) rather than the stated interest rate. Interest on the California Note
will accrue at the following rates per annum, compounded annually:

<TABLE>
<CAPTION>
YEAR FROM CLOSING DATE PER ANNUM RATE
---------------------- --------------
<S> <C>
Years 1--5............................................... 12%
Year 6................................................... 15%
Year 7................................................... 17%
Year 8................................................... 19%
Year 9................................................... 21%
Year 10.................................................. 23%
</TABLE>

For purposes of the foregoing, a "year" shall be the twelve-month period
ending on any Anniversary Date (as defined in the California Loan Agreement).
Interest will be computed on the basis of a 360 day year of twelve 30-day
months, and on each Anniversary Date (as defined in the California Loan
Agreement) unpaid interest shall compound at the then applicable per annum
rate by adding the same to the then unpaid principal balance.

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Interest shall be due and payable on the Maturity Date (as defined in the
California Loan Agreement) or upon the earlier maturity of the Indebtedness
(as defined in the California Loan Agreement) evidenced by the California
Note. From and after maturity (by acceleration or otherwise), all principal,
interest or any other amounts due from CCT under the California Loan Agreement
or under the California Note shall bear interest at an increased rate (as
described in Section 5.02 of California Loan Agreement). In no event shall the
interest payable in respect of the Indebtedness (as defined in the California
Loan Agreement) evidenced by the California Note exceed the maximum amount
collectible under applicable law.

The California Note is not entitled to the benefit of any mandatory sinking
fund.

Prepayment

The California Note is prepayable at CCT's option in whole at any time or in
part from time to time, without premium or penalty, provided that any such
prepayment of principal shall include all accrued interest on the amount
prepaid.

Events of Default

(a) The following are events of default under the California Loan Agreement:

(i) CCT shall fail to pay, when due (whether by acceleration of maturity
or otherwise), principal of or any interest on any Note; or

(ii) CCT shall fail to pay, when due, any other amount due thereunder or
under any Note and such failure shall have continued for a period of three
business days; or

(iii) Any representation or warranty as to a material matter made by CCT
under the California Loan Agreement or any statement made by CCT in any
financial statement, certificate, report, exhibit or document furnished by
CCT to any Holder (as defined in the California Loan Agreement) pursuant to
the California Loan Agreement shall prove to have been false or misleading
in any material respect at the time when made; or

(iv) A case or proceeding shall have been instituted in respect of CCT
(and shall have remained undismissed for a period of 60 consecutive days if
not instituted by CCT):

A. seeking a declaration or entailing a finding that CCT is insolvent
or a similar declaration or finding, or seeking dissolution,
liquidation, reorganization, arrangement, adjustment, composition or
other similar relief with respect to CCT, its assets or its debts under
any law relating to bankruptcy, insolvency, relief of debtors or
protection of creditors, forfeiture of charter, or any other similar
law now or hereafter in effect; or

B. seeking appointment of a receiver, trustee, custodian, liquidator,
assignee, sequestrator or other similar official for CCT or for all or
any substantial part of its property; or

(v) CCT shall become insolvent, shall become generally unable to pay its
debts as they become due or shall not generally pay its debts as they
become due, shall make a general assignment for the benefit of creditors,
shall institute a case or proceeding described in Section (iv)A. above or
shall consent to any such order for relief, declaration, finding or relief
described therein, shall institute a proceeding described in Section (iv)B.
above or shall consent to any such appointment or to the taking of
possession by any such official of all or any substantial part of its
property whether or not any such proceeding is instituted, shall dissolve,
wind-up or liquidate itself or any substantial part of its property, or
shall take any action to authorize or in furtherance of any of the
foregoing; or

(vi) Any default shall occur in the performance or observance of any
covenant contained in Section 4.02 of the California Loan Agreement; or

113
<PAGE>

(vii) Any default shall occur in the performance or observance of any
other covenant or agreement of CCT under the California Loan Agreement and
shall have continued for a period of 30 days after notice from any Holder
(as defined in the California Loan Agreement) to CCT; or

(viii) CCT (i) shall default (as principal or as guarantor or other
surety), unless such default shall have been waived or cured, in any
payment of principal of or interest on any permitted Indebtedness (as
defined in the California Loan Agreement) for Money Borrowed (as defined in
the California Loan Agreement) in the aggregate amount of $15 million or,
if such Indebtedness is payable or repayable on demand, shall fail to pay
or repay such Indebtedness when demanded or (ii) shall default (unless such
default has been waived or cured) in the observance of any covenant, term
or condition contained in any agreement or instrument by which such
Indebtedness is created, secured or evidenced if the effect of such default
is to cause, all or part of such Indebtedness to become due before its
otherwise stated maturity; or

(ix) One or more final judgments for the payment of money shall have been
entered against CCT which judgment or judgments exceed $15 million in the
aggregate and which remains undischarged for a period (during which
execution shall not be effectively stayed) of 30 days.

For purposes of Sections (iv), (v), (viii) and (ix), all references to "CCT"
shall be deemed to include any Subsidiary or Subsidiaries which, in the
aggregate, in the most recent fiscal year of CCT accounted for more than 10%
of the revenues of CCT and its Subsidiaries (as defined in the California Loan
Agreement) on a consolidated basis, or at the end of such fiscal year owned
more than 10% of the consolidated assets of CCT, all as shown on the
consolidated financial statements for such year, it being understood, however,
that the word "Subsidiary" or "Subsidiaries" as used in this paragraph shall
not include CCE-I or any future subsidiaries of CCE, L.P. that are not
subsidiaries of CCE-II.

(b) The California Loan Agreement provides that, subject in all cases to the
terms of the section entitled "Subordination," if an Event of Default occurs
and is continuing or shall exist, (i) any holder of the California Note, if an
Event of Default occurs under paragraph (a)(i) or (a)(ii) above, or (ii) if
there is more than one holder of the California Note, the holders of a
majority in principal amount of the California Note if an Event of Default
occurs and is continuing other than under paragraph (a)(i) or (a)(ii) above,
may, at such holder or holders' option, by written notice to CCT elect to
declare the unpaid principal amount of the California Note(s) which it (they)
hold(s), interest accrued thereon and all other amounts owed by CCT under the
California Loan Agreement or under the California Note which it (they) hold(s)
to be immediately due and payable. Upon any such acceleration during years 1-5
any accrued and unpaid interest shall be added to principal, and interest
shall accrue on the aggregate unpaid principal balance of the Indebtedness
evidenced by the California Note, as so adjusted, at the rate of 15% per annum
through year 5 and thereafter at the rates set forth above.

Subordination

The Indebtedness evidenced by the California Note and the payment of the
principal of and interest on the California Note is subordinated in right of
payment, to the extent and in the manner provided in Article VI of the
California Loan Agreement, to the prior payment in full of all amounts then
due on all Senior Debt (as defined in the California Loan Agreement).

114
<PAGE>

PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Issuer has agreed that, for a period of 180 days after
the effective date of this Prospectus, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.

The Issuer will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own accounts
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of
options on the New Notes or a combination of such methods of resale, at market
prices at the time of resale, at prices related to such prevailing market
prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Notes. Any broker-dealer that resells New Notes
that were received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of such New Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such resale of New Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that,
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.

For a period of 180 days after the effective date of this Prospectus, the
Issuer will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal.

By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby agrees to notify the Issuer prior
to using the Prospectus in connection with the sale or transfer of New Notes,
and acknowledges and agrees that, upon receipt of notice from the Issuer of
the happening of any event which makes any statement in the Prospectus untrue
in any material respect or which requires the making of any changes in the
Prospectus in order to make the statements therein not misleading (which
notice the Issuer agrees to deliver promptly to such broker-dealer), such
broker-dealer will suspend use of the Prospectus until the Issuer has
delivered an amended or supplemented prospectus to such broker-dealer.

115
<PAGE>

LEGAL MATTERS

Certain legal matters with respect to the Notes will be passed upon for the
Issuer by Paul, Hastings, Janofsky & Walker LLP, New York, New York.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The financial statements included in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP, KPMG Peat Marwick LLP,
Ernst & Young, LLP, or Piaker & Lyons, P.C., independent certified public
accountants, as indicated in their reports with respect thereto.

116
<PAGE>

GLOSSARY

The following is a description of certain terms used in this Prospectus.

A LA CARTE--The purchase of individual basic or expanded basic programming
services on a per-channel basis.

BASIC PENETRATION--The measurement of the take-up of basic cable service
expressed by calculating the number of basic service subscribers outstanding
on such date as a percentage of the total number of homes passed in the
system.

BASIC SERVICE--A package of over-the-air broadcast and satellite-delivered
cable television services.

BASIC SUBSCRIBER--A subscriber to a cable or other television distribution
system who receives the basic level of television service and who is usually
charged a flat monthly rate for a number of channels.

CABLE PLANT--A network of co-axial and/or fiber optic cables that transmit
multiple channels carrying images, sound and data between a central facility
and an individual customer's television set. Networks may allow one-way (from
a headend to a residence and/or business) or two-way (from a headend to a
residence and/or business with a data return path to the headend)
transmission.

CLUSTERING--A general term used to describe the strategy of operating cable
television systems in a specific geographic region, thus allowing for the
achievement of economies of scale and operating efficiencies in such areas as
system management, marketing and technical functions.

DIGITAL COMPRESSION--The conversion of the standard analog video signal into
a digital signal, and the compression of that signal so as to facilitate
multiple channel transmission through a single channel's bandwidth.

DIRECT BROADCAST SATELLITE (DBS)--A service by which packages of television
programming are transmitted to individual homes, each serviced by a single
satellite dish.

EBITDA--Represents income (loss) before interest expense, income taxes,
depreciation and amortization, management fees and other income (expense).

FCC--Federal Communications Commission.

HEADEND--A collection of hardware, typically including satellite receivers,
modulators, amplifiers and video cassette playback machines, within which
signals are processed and then combined for distribution within the cable
network.

HOMES PASSED--Homes that can be connected to a cable distribution system
without further extension of the distribution network.

MATV--Master Antenna Television system. A system which uses a master antenna
to pick up television signals for distribution over a cable to a small group
of subscribers, such as an apartment block or hotel.

MMDS--Multichannel Multipoint Distribution Service. A one-way radio
transmission of television channels over microwave frequencies from a fixed
station transmitting to multiple receiving facilities located at fixed points.

OVERBUILD--The construction of a second cable television system in a
franchise area in which such a system had previously been constructed.

PAY-PER-VIEW--Payment made for individual movies, programs or events as
opposed to a monthly subscription for a whole channel or group of channels.

117
<PAGE>

PREMIUM PENETRATION--The measurement of the take-up of premium cable service
expressed by calculating the number of premium units outstanding on such a
date as a percentage of the total number of basic service subscribers.

PREMIUM SERVICE--An individual cable programming service available only for
additional subscription over and above the basic or expanded basic levels of
television service.

PREMIUM UNITS--The number of subscriptions to premium services which are
paid for on an individual basis.

SMATV--Satellite Master Antenna Television system. A video programming
delivery system to multiple dwelling units utilizing satellite transmissions.

VIDEO DIALTONE--A general term used to describe a video programming delivery
system through telephone lines.

LIST OF ENTITIES

The following is a partial list of entities referred to in this Prospectus.

CAC--CCA Acquisition Corp.

CCA--CCA Holdings Corp.

CCE-I--Charter Communications Entertainment I, L.P.

CCE-II--Charter Communications Entertainment II, L.P.

CCE, L.P.--Charter Communications Entertainment, L.P.

CCT--CCT Holdings Corp.

CENCOM CABLE--Cencom Cable Entertainment, Inc.

CHARTER--Charter Communications, Inc.

CROWN MEDIA--Crown Media, Inc.

HC CROWN--HC Crown Corp. (also referred to as the "Selling Securityholder").

KELSO--Kelso Investment Associates V, L.P. and an affiliate.

KIAV--Kelso Investment Associates V, L.P.

LBAC--Long Beach Acquisition Corp.

118
<PAGE>

INDEX TO AUDITED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
CCA HOLDINGS CORP. AND SUBSIDIARIES:
Report of Independent Public Accountants............................... F-3
Consolidated Balance Sheets as of December 31, 1996 and 1995........... F-4
Consolidated Statements of Operations for the Years Ended December 31,
1996 and 1995......................................................... F-6
Consolidated Statements of Shareholders' Investment for the Years Ended
December 31, 1996 and 1995............................................ F-7
Consolidated Statements of Cash Flows for the Years Ended to December
31, 1996 and 1995..................................................... F-8
Notes to Consolidated Financial Statements............................. F-9
CCA ACQUISITION CORP. AND SUBSIDIARIES:
Report of Independent Public Accountants............................... F-24
Consolidated Balance Sheets as of December 31, 1996 and 1995........... F-25
Consolidated Statements of Operations for the Years Ended December 31,
1996 and 1995......................................................... F-27
Consolidated Statements of Shareholder's Investment for the Years Ended
December 31, 1996 and 1995............................................ F-28
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996 and 1995......................................................... F-29
Notes to Consolidated Financial Statements............................. F-31
CENCOM CABLE ENTERTAINMENT, INC.:
Report of Independent Public Accountants............................... F-45
Balance Sheets as of December 31, 1996 and 1995........................ F-46
Statements of Operations for the Years Ended December 31, 1996 and
1995.................................................................. F-47
Statements of Shareholder's Investment for the Years Ended December 31,
1996 and 1995......................................................... F-48
Statements of Cash Flows for the Years Ended December 31, 1996 and
1995.................................................................. F-49
Notes to Financial Statements.......................................... F-50
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.:
Report of Independent Public Accountants............................... F-56
Balance Sheets as of December 31, 1996 and 1995........................ F-57
Statements of Operations for the Years Ended December 31, 1996 and
1995.................................................................. F-58
Statements of Partners' Capital for the Years Ended December 31, 1996
and 1995.............................................................. F-59
Statements of Cash Flows for the Years Ended December 31, 1996 and
1995.................................................................. F-60
Notes to Financial Statements.......................................... F-61
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.:
Report of Independent Public Accountants............................... F-68
Balance Sheets as of December 31, 1996 and 1995........................ F-69
Statements of Operations for the Years Ended December 31, 1996 and
1995.................................................................. F-70
Statements of Partners' Capital for the Years Ended December 31, 1996
and 1995.............................................................. F-71
Statements of Cash Flows for the Years Ended December 31, 1996 and
1995.................................................................. F-72
Notes to Financial Statements.......................................... F-73
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.:
Report of Independent Public Accountants............................... F-85
Balance Sheets as of December 31, 1996 and 1995........................ F-86
Statements of Operations for the Year ended December 31, 1996 and for
the Period from Inception to December 31, 1995........................ F-87
Statements of Partners' Capital for the Year ended December 31, 1996
and for the Period from Inception to December 31, 1995................ F-88
Statements of Cash Flows for the Year ended December 31, 1996 and for
the Period from Inception to December 31, 1995........................ F-89
Notes to Financial Statements.......................................... F-90
CENCOM CABLE ENTERTAINMENT, INC.--MISSOURI SYSTEM:
Report of Independent Public Accountants............................... F-100
Independent Auditors' Report........................................... F-101
Balance Sheet as of December 31, 1994.................................. F-102
Statements of Operations for the Years Ended December 31, 1994 and
1993.................................................................. F-103
Statement of System's Equity for the Years Ended December 31, 1994 and
1993.................................................................. F-104
Statements of Cash Flows for the Years Ended December 31, 1994 and
1993.................................................................. F-105
Notes to Financial Statements.......................................... F-106
</TABLE>

F-1
<PAGE>

<TABLE>
<S> <C>
CENCOM CABLE INCOME PARTNERS, L.P.--ILLINOIS SYSTEM:
Report of Independent Public Accountants............................... F-113
Independent Auditors' Report........................................... F-114
Balance Sheets as of December 31, 1995 and 1994........................ F-115
Statements of Operations for the Years Ended December 31, 1995, 1994
and 1993.............................................................. F-116
Statements of System's Equity for the Years Ended December 31, 1995,
1994 and 1993......................................................... F-117
Statements of Cash Flows for the Years Ended December 31, 1995, 1994
and 1993.............................................................. F-118
Notes to Financial Statements.......................................... F-119
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS:
Report of Independent Public Accountants............................... F-127
Combined Balance Sheets as of September 29, 1995 and December 31,
1994.................................................................. F-128
Combined Statements of Operations for the Nine Months ended September
29, 1995 and the Years Ended December 31, 1994 and 1993............... F-129
Combined Statements of Systems' Equity for the Nine Months ended
September 29, 1995 and the Years ended December 31, 1994 and 1993..... F-130
Combined Statements of Cash Flows for the Nine Months ended September
29, 1995 and the Years ended December 31, 1994 and 1993............... F-131
Notes to Combined Financial Statements................................. F-132
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE PARTNERS,
L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.:
Report of Independent Auditors......................................... F-140
Balance Sheets as of November 29, 1996 and December 31, 1995........... F-141
Statements of Operations for the Period from January 1, 1996 to
November 29, 1996 and for the Years Ended December 31, 1995 and 1994.. F-143
Statements of Changes in System Capital (Deficiency) for the Period
from January 1, 1996 to November 29, 1996 and for the Years Ended
December 31, 1995 and 1994............................................ F-144
Statements of Cash Flows for the Period from January 1, 1996 to
November 29, 1996 and for the Years ended December 31, 1995 and 1994.. F-145
Notes to Financial Statements.......................................... F-146
UNITED VIDEO CABLEVISION, INC.--MASSACHUSETTS AND MISSOURI DIVISIONS:
Independent Auditors' Report........................................... F-151
Divisional Balance Sheets as of October 31, 1995 and December 31, 1994
and 1993.............................................................. F-152
Statements of Divisional Operations for the Ten Months Ended October
31, 1995 and the Years Ended December 31, 1994 and 1993............... F-153
Statements of Divisional Cash Flows for the Ten Months Ended October
31, 1995 and the Years Ended December 31, 1994 and 1993............... F-154
Statements of Divisional Equity for the Ten Months Ended October 31,
1995 and the Years Ended December 31, 1994 and 1993................... F-155
Notes to Divisional Financial Statements............................... F-158
CROWN MEDIA, INC.--WESTERN CONNECTICUT:
Independent Auditors' Report........................................... F-159
Balance Sheets as of December 31, 1994 and 1993........................ F-160
Statements of Operations for the Year Ended December 31, 1994 and the
Period from December 28, 1992 through December 31, 1993............... F-161
Statements of Division Equity for the Year Ended December 31, 1994 and
the Period from December 28, 1992 through December 31, 1993........... F-162
Statements of Cash Flows for the Year Ended December 31, 1994 and the
Period from December 28, 1992 through December 31, 1993............... F-163
Notes to Financial Statements.......................................... F-164
CROWN CABLE, L.P.:
Independent Auditors' Report........................................... F-167
Balance Sheets as of December 31, 1994 and 1993........................ F-168
Statements of Operations for the Year Ended December 31, 1994 and the
Period from December 10, 1992 through December 31, 1993............... F-169
Statements of Partners' Capital for the Year Ended December 31, 1994
and the Period from December 10, 1992 through December 31, 1993....... F-170
Statements of Cash Flows for the Year Ended December 31, 1994 and the
Period from December 10, 1992 through December 31, 1993............... F-171
Notes to Financial Statements.......................................... F-172
</TABLE>

F-2
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CCA Holdings Corp.:

We have audited the accompanying consolidated balance sheets of CCA Holdings
Corp. (a Delaware corporation) and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations, shareholders'
investment (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CCA Holdings Corp. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

St. Louis, Missouri,

July 1, 1997

F-3
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995

(Continued on the following page)

F-4
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
(CONTINUED)

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' INVESTMENT

CURRENT LIABILITIES:
Current maturities of long-term debt.............. $ 5,880,000 $ --
Accounts payable and accrued expenses............. 18,890,302 13,274,646
Subscriber deposits............................... 473,601 711,663
Payables to affiliates............................ 2,630,149 2,907,529
Other current liabilities......................... 1,401,951 --
------------ ------------
Total current liabilities...................... 29,276,003 16,893,838
------------ ------------
DEFERRED REVENUE................................... 708,339 780,612
------------ ------------
DEFERRED INCOME TAXES.............................. 55,500,000 55,500,000
------------ ------------
LONG-TERM DEBT, less current maturities............ 462,120,000 355,000,000
------------ ------------
DEFERRED MANAGEMENT FEES PAYABLE TO AFFILIATE...... 1,755,000 1,015,000
------------ ------------
NOTE PAYABLE....................................... 82,000,000 82,000,000
------------ ------------
ACCRUED INTEREST ON NOTE PAYABLE................... 22,843,402 10,438,805
------------ ------------
MINORITY INTEREST IN SUBSIDIARY.................... 90,273,351 106,272,025
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' INVESTMENT (DEFICIT):
Class A Voting Common Stock, $.01 par value,
100,000 shares authorized; 75,515 shares issued
and outstanding.................................. 755 755
Class B Voting Common Stock, $.01 par value,
20,000 shares authorized; 4,300 shares issued and
outstanding...................................... 43 43
Class C Non-Voting Common Stock, $.01 par value,
5,000 shares authorized; 185 shares issued and
outstanding...................................... 2 2
Additional paid-in capital........................ 79,999,200 79,999,200
Accumulated deficit............................... (80,395,225) (41,761,175)
------------ ------------
Total shareholders' investment (deficit)....... (395,225) 38,238,825
------------ ------------
$744,080,870 $666,139,105
============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

F-5
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SERVICE REVENUES:
Basic service..................................... $ 96,560,920 $ 65,075,541
Premium service................................... 19,201,801 15,484,951
Other............................................. 27,260,540 19,128,918
------------ ------------
143,023,261 99,689,410
------------ ------------
EXPENSES:
Operating costs................................... 59,869,348 41,800,111
General and administrative........................ 11,628,513 7,142,567
Depreciation and amortization..................... 65,757,387 51,193,702
Management and financial advisory service fees--
related parties.................................. 5,034,375 6,499,167
------------ ------------
142,289,623 106,635,547
------------ ------------
Loss from operations........................... 733,638 (6,946,137)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income................................... 164,476 503,585
Interest expense.................................. (46,654,019) (35,461,026)
Other, net........................................ (1,058,271) 41,622
------------ ------------
(47,547,814) (34,915,819)
------------ ------------
Loss before equity in loss of unconsolidated
limited partnerships, loss from discontinued
operation, provision for income taxes and
minority interest in loss of subsidiary....... (46,814,176) (41,861,956)
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED PARTNER-
SHIPS............................................. (6,302,990) (1,402,194)
------------ ------------
Loss before provision for income taxes, loss
from discontinued operation, and minority
interest in loss of subsidiary................ (53,117,166) (43,264,150)
PROVISION FOR INCOME TAXES......................... -- --
------------ ------------
Loss before loss from discontinued operation
and minority interest in loss of subsidiary... (53,117,166) (43,264,150)
LOSS FROM DISCONTINUED OPERATION................... (1,515,558) --
------------ ------------
Loss before minority interest in loss of sub-
sidiary....................................... (54,632,724) (43,264,150)
MINORITY INTEREST IN LOSS OF SUBSIDIARY............ 15,998,674 1,502,975
------------ ------------
Net loss....................................... $(38,634,050) $(41,761,175)
============ ============
</TABLE>

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

F-6
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995........ $-- $ -- $ -- $ --
Issuance of common stock....... 800 79,999,200 -- 80,000,000
Net loss....................... -- -- (41,761,175) (41,761,175)
---- ----------- ------------ ------------
BALANCE, December 31, 1995...... 800 79,999,200 (41,761,175) 38,238,825
Net loss....................... -- -- (38,634,050) (38,634,050)
---- ----------- ------------ ------------
BALANCE, December 31, 1996...... $800 $79,999,200 $(80,395,225) $ (395,225)
==== =========== ============ ============
</TABLE>

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

F-7
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(38,634,050) $(41,761,175)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization.................... 65,757,387 51,193,702
Loss on sale of property, plant and equipment.... 1,256,945 --
Loss from discontinued operations................ 1,515,558 --
Equity in loss of unconsolidated limited
partnerships..................................... 6,302,990 1,402,194
Minority interest in loss of subsidiary.......... (15,998,674) (1,502,975)
Changes in assets and liabilities, net of effects
from acquisitions--
Accounts receivable, net........................ (1,748,468) (1,387,654)
Prepaid expenses and other...................... 279,406 (250,428)
Accounts payable and accrued expenses........... 4,429,157 4,249,587
Subscriber deposits............................. (257,062) (11,303)
Payables to affiliates, including deferred
management fees................................. 462,620 3,922,529
Other current liabilities....................... 1,401,951 --
Deferred revenue................................ (144,748) 780,612
Accrued interest on note payable................ 12,404,597 10,438,805
------------ ------------
Net cash provided by operating activities..... 37,027,609 27,073,894
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment........ (33,898,020) (22,023,524)
Proceeds from sale of property, plant and
equipment......................................... 986,359 --
Payments for acquisitions, net of cash acquired... (122,017,267) (523,679,458)
Payments of organizational expenses............... (242,875) (1,297,203)
Payments of franchise costs....................... (569,167) (53,266)
Payments of brokerage commissions.................. (310,385) --
Restricted funds held in escrow.................... 301,598 (301,598)
Investment in unconsolidated limited
partnerships...................................... -- (85,775,000)
Minority investment in subsidiary................. -- 107,775,000
------------ ------------
Net cash used in investing activities......... (155,749,757) (525,355,049)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs................... (2,773,844) (7,287,914)
Borrowings under revolving credit and term loan
facility.......................................... 120,500,000 355,000,000
Payments of revolving credit and term loan
facility.......................................... (7,500,000) --
Borrowings under note payable..................... -- 82,000,000
Issuance of common stock.......................... -- 80,000,000
------------ ------------
Net cash provided by financing activities..... 110,226,156 509,712,086
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......... (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year....... 11,430,931 --
------------ ------------
CASH AND CASH EQUIVALENTS, end of year............. $ 2,934,939 $ 11,430,931
============ ============
CASH PAID FOR INTEREST............................. $ 33,921,715 $ 22,907,403
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>

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

F-8
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION AND BASIS OF PRESENTATION

CCA Holdings Corp. (CCA Holdings), a Delaware corporation, was formed on
November 17, 1994. CCA Holdings commenced operations in January 1995 in
connection with consummation of the Crown Transaction (as defined below). The
accompanying consolidated financial statements include the accounts of CCA
Holdings; its wholly-owned subsidiary, CCA Acquisition Corp. (CAC); CAC's
wholly-owned subsidiary, Cencom Cable Entertainment, Inc. (CCE); and Charter
Communications Entertainment I, L.P. (CCE-I), which is controlled by CAC
through its general partnership interest (collectively referred to as the
"Company"). CCA Holdings is owned approximately 85% by Kelso Investment
Associates V, L.P., an investment fund, together with an affiliate
(collectively referred to as "Kelso" herein) and certain other individuals and
approximately 15% by Charter Communications, Inc. (Charter), manager of CCE-
I's cable television systems (see Note 10). All material intercompany
transactions and balances have been eliminated.

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings Corp. (CCT Holdings), an entity affiliated with CCA Holdings
by common ownership, entered into an Asset Exchange Agreement whereby CAC
exchanged a 1% undivided interest in all of its assets for a 1.22% undivided
interest in certain assets to be acquired by CCT Holdings from an affiliate of
Gaylord Entertainment Company, Inc. (Gaylord). Effective September 30, 1995,
CCT Holdings acquired certain cable television systems from Gaylord. Upon
execution of the Asset Purchase Agreement, CAC and CCT Holdings entered into a
series of agreements to contribute the assets acquired under the Crown
Transaction to CCE-I and certain assets acquired in the Gaylord acquisition to
Charter Communications Entertainment II, L.P. (CCE-II). As a result of
entering into these agreements, CCA Holdings owns a 55% interest and CCT
Holdings owns a 45% interest in the combined operations of CCE-I and CCE-II,
respectively. The net loss of CCE-I for the period prior to September 29,
1995, was allocated entirely to CCA Holdings.

As of December 31, 1996, CCE-I provided cable television service to
approximately 125 franchises serving approximately 338,300 basic subscribers
in Connecticut, Illinois, Massachusetts, Missouri and New Hampshire.

CASH EQUIVALENTS

Cash equivalents at December 31, 1996 and 1995, consist primarily of
repurchase agreements with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value. The Company
is subject to loss for amounts invested in repurchase agreements in the event
of nonperformance by the financial institution which acts as the counterparty
under such agreements; however, such noncompliance is not anticipated.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a residence are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.

F-9
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:

<TABLE>
<S> <C>
Trunk and distribution systems................................. 10 years
Subscriber installations....................................... 10 years
Buildings and headends......................................... 10-20 years
Converters..................................................... 5 years
Vehicles and equipment......................................... 4-8 years
Office equipment............................................... 5-10 years
</TABLE>

FRANCHISE COSTS

Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Costs relating
to unsuccessful franchise applications are charged to expense when it is
determined that the efforts to obtain the franchise will not be successful.
Franchise rights acquired through the purchase of cable television systems
represent the excess of the cost of properties acquired over the amounts
assigned to the net tangible assets at date of acquisition. Acquired franchise
rights are amortized using the straight-line method over 15 years.

COVENANT NOT TO COMPETE

Covenant not to compete was amortized over the term of the respective
agreement (two years).

OTHER ASSETS

Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.

During 1995, the Company adopted SFAS No. 121 entitled, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
In accordance with SFAS No. 121, the Company periodically reviews the carrying
value of its long-lived assets, identifiable intangibles and franchise costs
in relation to historical financial results, current business conditions and
trends (including the impact of existing legislation and regulation) to
identify potential situations in which the carrying value of such assets may
not be recoverable. If a review indicates that the carrying value of such
assets may not be recoverable, the carrying value of such assets in excess of
their fair value will be recorded as a reduction of the assets' cost as if a
permanent impairment has occurred. No impairments have occurred and
accordingly, no adjustments to the financial statements of the Company have
been recorded relating to SFAS No. 121.

RESTRICTED FUNDS HELD IN ESCROW

In connection with the acquisition of cable television systems from Mineral
Area Cablevision Co., L.P. (Omega) as further discussed in Note 4, the Company
agreed to deposit a portion of the purchase price into an escrow account in
1995 which was transferred to Omega at the closing of the asset purchase in
January 1996.

INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS

CCA Holdings has a 1% general partnership interest and a 54% limited
partnership interest in Charter Communications Entertainment, L.P. (CCE,
L.P.). CCT Holdings has a 1% general partnership interest and a 44% limited
partnership interest in CCE, L.P. CCE, L.P. has a 97.78% limited partnership
interest in both CCE-I and CCE-II. CCA Holdings' interest in CCE, L.P.,
together with its 1.22% general partnership interest in CCE-I and its 1.22%
limited partnership interest in CCE-II, provide CCA Holdings with a 55%
interest in both CCE-I

F-10
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

and CCE-II. CCT Holdings, owns the remaining 45% interest in both CCE-I and
CCE-II, including a 1% general partnership interest in CCE-II. CCE-II is
controlled by CCT Holdings through its general partnership interest in CCE-II
and provisions in CCE-II's partnership agreement and CCE, L.P. is jointly
controlled by the Company and CCT Holdings through their general partnership
interests in CCE, L.P. and provisions in CCE, L.P.'s partnership agreement;
therefore, CCA Holdings' investment in CCE L.P. and CCE-II is accounted for
using the equity method. Under this method, the investment in CCE L.P. and
CCE-II is originally recorded at cost and is subsequently adjusted to
recognize CCA Holdings' share of net earnings or losses as they occur and
distributions when received.

REVENUES

Cable service revenues are recognized when the related services are
provided.

Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, would be deferred and amortized to income
over the average estimated period that customers are expected to remain
connected to the cable television system. No installation revenue has been
deferred as of December 31, 1996 and 1995, as direct selling costs have
exceeded installation revenues.

Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts.

Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.

OTHER INCOME (EXPENSE)

Other includes gain and loss on disposition of fixed assets and other
miscellaneous income and expense items, which are not directly related to the
Company's primary business. A loss of $1,256,945 was recognized on the sale of
two buildings for the year ended December 31, 1996.

INCOME TAXES

Income taxes are recorded in accordance with SFAS No. 109, "Accounting for
Income Taxes."

DERIVATIVE FINANCIAL INSTRUMENTS

The Company manages risk arising from fluctuations in interest rates by
using interest rate swap and cap agreements, as required by its credit
agreement. These agreements are treated as off-balance sheet financial
instruments. The interest rate swap and cap agreements are being accounted for
as a hedge of the debt obligation, and accordingly, the net settlement amount
is recorded as an adjustment to interest expense in the period incurred.

USE OF ESTIMATES

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.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.

2. INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS:

Effective September 30, 1995, CCT Holdings acquired certain assets from
Gaylord for approximately $340.9 million, which included cable television
systems in California. As described above, these assets were contributed to
CCE-II. To finance the acquisition, CCE-II entered into a revolving credit and
term loan facility and CCT Holdings executed a subordinated seller note to
Gaylord (the "Gaylord Note").

F-11
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

As of December 31, 1996, CCE-II provided cable television service to
approximately 168,100 basic subscribers in southern California.

Summary financial information of CCE-II as of December 31, 1996 and 1995,
and for the period from inception (April 20, 1995) to December 31, 1995, and
for the year ended December 31, 1996, which is not consolidated with the
operating results of the Company, is as follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Current assets............................... $ 10,904,830 $ 11,043,867
Noncurrent assets--primarily investment in
cable television properties................. 338,316,421 348,029,594
------------ ------------
Total assets............................. $349,221,251 $359,073,461
============ ============
Current liabilities.......................... $ 13,098,198 $ 14,217,036
Long-term debt............................... 221,418,000 218,600,000
Other long-term liabilities.................. 383,070 474,460
Partners' capital............................ 114,321,983 125,781,965
------------ ------------
Total liabilities and partners' capital.. $349,221,251 $359,073,461
============ ============
Service revenues............................. $ 90,368,332 $ 21,156,209
============ ============
Income from operations....................... $ 5,039,834 $ 983,638
============ ============
Net loss..................................... $(11,459,982) $ (3,458,535)
============ ============
</TABLE>

3. COMMON STOCK:

The Class A Voting Common Stock (Class A Common Stock) and Class C Non-
Voting Common Stock (Class C Common Stock) have certain preferential rights
upon liquidation of CCA Holdings. In the event of liquidation, dissolution or
"winding up" of CCA Holdings, holders of Class A and Class C Common Stock are
entitled to a preference of $1,000 per share. After such amount is paid,
holders of Class B Voting Common Stock (Class B Common Stock) are entitled to
receive $1,000 per share. Thereafter, Class A and Class C shareholders shall
ratably receive the remaining proceeds.

If upon liquidation, dissolution or "winding up" the assets of CCA Holdings
are insufficient to permit payment to Class A and Class C shareholders for
their full preferential amounts, all assets of CCA Holdings shall then be
distributed ratably to Class A and Class C shareholders. Furthermore, if the
proceeds from liquidation are inadequate to pay Class B shareholders their
full preferential amounts, the proceeds are to be distributed on a pro rata
basis to Class B shareholders.

Upon the occurrence of any Conversion Event (as defined within the Amended
and Restated Certificate of Incorporation) Class C shareholders may convert
any or all of their outstanding shares into the same number of Class A Common
Stock. Furthermore, CCA Holdings may automatically convert outstanding Class C
shares into the same number of Class A shares.

CCA Holdings is restricted from making cash dividends on its common stock
until the balance outstanding under the HC Crown Note (as defined in Note 8)
is repaid.

Charter and Kelso entered into a Stockholders' Agreement providing for
certain restrictions on the transfer, sale or purchase of CCA Holdings' Common
Stock.

F-12
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. ACQUISITIONS:

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I effective January 1, 1995. The acquisition of these systems was part of
a series of larger transactions in which Crown sold its cable television
systems to a group of investors, including Charter, CAC, certain affiliates of
Charter, and third parties, for a total purchase price of approximately $900.0
million. To finance this acquisition, CCE-I entered into a revolving credit
and term loan facility (see Note 9), and CCA Holdings executed a subordinated
seller note to an affiliate of Hallmark for $82.0 million.

In October 1995, CCE-I acquired the net assets of certain systems from
United Video Cablevision, Inc. (United), which include cable television
systems in Massachusetts and Missouri, for an aggregate purchase price of
approximately $96.0 million.

In January 1996, CCE-I acquired the net assets of certain systems from
Omega, which include cable television systems in Missouri, for an aggregate
purchase price of approximately $9.4 million.

In March 1996, CCE-I acquired the net assets of the Illinois system from
Cencom Cable Income Partners, L.P. (CCIP), an affiliated entity, for an
aggregate purchase price of approximately $82.1 million (the "CCIP
Acquisition").

In November 1996, CCE-I acquired the net assets of certain systems from
Masada Cable Partners, L.P. (Masada), which include cable television systems
in Missouri, for an aggregate purchase price of approximately $24.2 million.

These acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the respective dates of
acquisition. The following shows the purchase price and the allocation of the
purchase price to assets acquired and liabilities assumed:

<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
Purchase price:
<S> <C> <C> <C> <C> <C>
Cash paid to seller.... $338,640,282 $93,542,306 $9,178,086 $80,103,013 $23,625,358
Seller note executed by
CCA Holdings.......... 82,000,000 -- -- -- --
Assumed liabilities,
including deferred
taxes of $55,500,000.. 55,638,033 282,000 32,000 -- 82,950
Transaction costs...... 11,935,229 2,216,101 200,000 2,025,000 480,000
------------ ----------- ---------- ----------- -----------
$488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>

F-13
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Allocation of purchase
price to assets
acquired:
Cash................... $ 5,073,954 $ 539 $ 200 $ 1,053,410 $ --
Accounts receivable.... 1,933,859 2,673 5,190 387,906 --
Prepaid expenses and
other................. 279,745 111,385 7,440 90,368 30,483
Property, plant and
equipment............. 162,432,874 12,439,879 1,054,878 11,980,833 2,147,338
Franchise costs........ 307,370,555 84,356,513 8,427,122 69,663,726 22,155,487
Covenant not to
compete............... 20,000,000 -- -- -- --
Accounts payable and
accrued expenses...... (8,877,443) (147,616) (84,744) (975,755) (126,000)
Subscriber deposits.... -- (722,966) -- -- (19,000)
Deferred revenue....... -- -- -- (72,475) --
------------ ----------- ---------- ----------- -----------
Purchase price........ $488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>

The following are the unaudited pro forma operating results as though the
1996 and 1995 acquisitions by CCE-I and CCE-II had been made on January 1 of
the respective year prior to such acquisitions:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31
--------------------------
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Service revenues.............................. $151,548,000 $137,021,602
Income (loss) from operations................. $ 446,000 $ (2,049,590)
Net loss...................................... $(39,157,000) $(41,587,611)
</TABLE>

5. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment is stated at cost and consist of the following
at December 31:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems................. $125,248,708 $110,330,189
Subscriber installations....................... 45,636,572 34,114,600
Land, buildings and headends................... 33,135,716 21,069,307
Converters..................................... 27,097,454 21,046,326
Vehicles and equipment......................... 7,180,068 4,737,430
Office equipment............................... 7,603,973 5,597,301
Construction-in-progress....................... 3,243,405 --
------------ ------------
249,145,896 196,895,153
Less--Accumulated depreciation................. (42,794,517) (18,745,185)
------------ ------------
$206,351,379 $178,149,968
============ ============
</TABLE>

F-14
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. OTHER ASSETS:

Other assets consist of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated
amortization of $1,656,817 and $648,064,
respectively...................................... $8,404,941 $6,639,850
Organizational expenses, net of accumulated
amortization of $574,589 and $287,104,
respectively...................................... 965,489 1,010,099
Brokerage commissions, net of accumulated
amortization of $13,459 and $-0-, respectively.... 296,926 --
---------- ----------
$9,667,356 $7,649,949
========== ==========
</TABLE>

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following at December
31:

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Accrued salaries and related benefits............. $ 1,613,024 $ 888,972
Accounts payable.................................. 1,763,895 646,744
Accrued interest.................................. 2,442,525 2,114,818
Programming expenses.............................. 2,726,803 2,046,640
Franchise fees.................................... 3,187,335 2,467,564
Capital expenditures.............................. 3,482,531 3,525,747
Other............................................. 3,674,189 1,584,161
----------- -----------
$18,890,302 $13,274,646
=========== ===========
</TABLE>

8. NOTE PAYABLE:

In connection with the Crown Transaction, the Company entered into an $82.0
million senior subordinated loan agreement with a subsidiary of Hallmark, HC
Crown Corp., and pursuant to such loan agreement issued a senior subordinated
note (the "HC Crown Note"). The HC Crown Note is an unsecured obligation. The
HC Crown Note is limited in aggregate principal amount to $82.0 million and
has a stated maturity date of December 31, 1999 (the "Stated Maturity Date").
Interest accrues at 13% per annum, compounded semiannually, but is not due and
payable until the Stated Maturity Date. If principal plus accrued interest is
not paid at the Stated Maturity Date, the annual rate at which interest
accrues will initially increase to 18% and will increase by an additional 2%
on each successive anniversary of the Stated Maturity Date (up to a maximum of
26%) until the HC Crown Note is repaid; in addition, a 3% default rate of
interest can, in certain instances, be in effect simultaneously with the
stated rate of interest on the HC Crown Note. The HC Crown Note is redeemable
in whole or in part at the option of the Company at any time, without premium
or penalty, provided that accrued interest is paid on the portion of the HC
Crown Note so redeemed.

Borrowings under the HC Crown Note are subject to certain financial and
nonfinancial covenants and restrictions. The most restrictive covenant
requires maintenance of a ratio of debt (excluding the HC Crown Note) to
adjusted consolidated annualized operating cash flow, as defined, not to
exceed 7.25 to 1 at December 31, 1996. In addition to the subordination in
right of payment provisions contained in the HC Crown Note, the HC Crown Note
is subject to a subordination agreement in favor of senior bank debt of CCE-I.
Pursuant to the subordination agreement, substantially all rights and remedies
under the HC Crown Note, including the rights to

F-15
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

accelerate the maturity upon an event of default (including a payment of
default), are suspended until the obligations under the Credit Agreement (as
defined herein) are paid in full.

The HC Crown Note is subordinated to the Credit Agreement. Pursuant to the
terms of the Credit Agreement, payments on the HC Crown Note are prohibited
until the indefeasible payment in full in cash, and the termination of
commitments to lend under the Credit Agreement. The HC Crown Note will not
have the benefit of any distributions from CCE-II until repayment in full of
CCE-II's credit facility and the Gaylord Note.

The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and
CCE, L.P. (collectively referred to as the "Guarantors"). The CCE, L.P.
guarantee cannot be enforced until the repayment in full and termination of
the Credit Agreement (as defined herein) and the CCE-II credit facility. The
CAC and CCE guarantees cannot be enforced until the repayment in full and
termination of the Credit Agreement. The guarantees, by their terms, are
limited to the proceeds of distributions received from CCE-I, and income, if
any, generated by the Guarantors. CCA Holdings and the Guarantors are
dependent primarily upon distributions from CCE-I to service the HC Crown
Note.

Subsequent to year-end, HC Crown Corp. sold the majority of the HC Crown
Note through a private placement. The fair value of the HC Crown Note plus
accrued interest, based upon the proceeds received, was approximately $89.5
million at December 31, 1996.

9. LONG-TERM DEBT:

In January 1995, CCE-I entered into a revolving credit and term loan
facility (the "Credit Agreement") with a consortium of banks for borrowings up
to $300.0 million. CCE-I has amended, on several occasions, the Credit
Agreement to allow for total borrowings of $505.0 million for the purpose of
making certain acquisitions. Principal payments are due in quarterly
installments beginning September 30, 1997, and continuing through June 30,
2004. Borrowings under the Credit Agreement bear interest at rates based upon
a certain spread plus a base rate, with the base rate being, at CCE-I's
election, the Base Rate, as defined in the Credit Agreement, LIBOR, or
prevailing bid rates on certificates of deposit. The applicable spread is
based on the ratio of debt to annualized operating cash flow. The interest
rates ranged from 7.63% to 9.42% at December 31, 1996. The weighted average
interest rates and weighted average borrowings were 8.05% and 8.71%, and
approximately $425,067,000 and $272,885,000 during 1996 and 1995,
respectively. As this debt instrument bears interest at current market rates,
its carrying amount approximates fair market value at December 31, 1996 and
1995.

Borrowings under the Credit Agreement are collateralized by the assets of
CCE-I. In addition, CAC, CCE and CCT Holdings have pledged their partnership
interests as additional security to the Credit Agreement.

Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which
requires maintenance of a ratio of debt to annualized operating cash flow, as
defined, not to exceed 6.50 to 1 at December 31, 1996. A quarterly commitment
fee of 0.375% per annum is payable on the unused portion of the Credit
Agreement.

F-16
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Commencing September 30, 1997, and March 31, 1998, the principal balances of
the term and fund loans, respectively, shall be amortized in consecutive
quarterly installments until paid in full. In addition, commencing September
30, 1997, and at the end of each calendar quarter thereafter, available
borrowings under the revolving credit facility shall be reduced. The following
table sets forth such information on an annual basis.

<TABLE>
<CAPTION>
PERCENTAGE
OF PRINCIPAL DUE PERCENTAGE REDUCTION
--------------------- OF REVOLVING CREDIT
YEAR TERM LOANS FUND LOANS FACILITY COMMITMENT
---- ---------- ---------- --------------------
<S> <C> <C> <C>
1997............................ 2.10% -- % 2.10%
1998............................ 9.00 .50 9.00
1999............................ 12.00 .50 12.00
2000............................ 12.25 1.00 12.25
2001............................ 16.50 1.00 16.50
2002............................ 20.25 1.00 20.25
2003............................ 21.25 17.40 21.25
2004............................ 6.65 78.60 6.65
------ ------ ------
100.00% 100.00% 100.00%
====== ====== ======
</TABLE>

In addition to the foregoing, effective April 30, 1999, and on each April
30th thereafter, CCE-I is required to make a repayment of principal of the
term and fund loans (pro rata) in an amount equal to 75% of Annual Excess Cash
Flow, as defined in the Credit Agreement, for the preceding year if the
leverage ratio is greater than 5.5 to 1, or 50% of Annual Excess Cash Flow if
the leverage ratio is less than 5.5 to 1. These repayments shall be applied to
principal in inverse order of maturity.

Based upon outstanding indebtedness at December 31, 1996, and the
amortization of term loans and fund loans and scheduled reductions in
available borrowings depicted above, aggregate future principal payments on
the Credit Agreement at December 31, 1996, are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------------
<S> <C>
1997.......................................................... $ 5,880,000
1998.......................................................... 25,625,000
1999.......................................................... 34,025,000
2000.......................................................... 47,640,000
2001.......................................................... 70,150,000
Thereafter.................................................... 284,680,000
------------
$468,000,000
============
</TABLE>

F-17
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

As a requirement of the Credit Agreement, CCE-I has secured interest rate
protection agreements. The Credit Agreement requires CCE-I to enter into
interest rate protection agreements for notional amounts of not less than 50%
of the outstanding obligations. In addition, the interest rate protection
agreements must provide rate protection for a weighted average period of not
less than 18 months. The fair value of the interest rate caps or swaps is the
estimated amount CCE-I would receive (pay) to eliminate the cap or swap
agreement at the reporting date, taking into account current interest rates
and the credit-worthiness of the counterparties. The following summarizes
certain information pertaining to the interest rate protection agreements as
of December 31, 1996:

<TABLE>
<CAPTION>
FAIR
VALUE/
NOTIONAL FIXED CONTRACT EXPIRATION REDEMPTION
AMOUNT TYPE RATE DATE PRICE
------------ ---- ----- ---------------------------------------- ----------
<C> <C> <C> <S> <C>
$ 25,000,000 Swap 5.5% December 1, 1997........................ $(60,812)
25,000,000 Swap 5.5 December 1, 1997........................ (19,135)
75,000,000 Swap 5.5 December 1, 1998........................ *
25,000,000 Swap 4.9 March 28, 1998.......................... (4,956)
20,000,000 Cap 8.5 April 14, 1998.......................... (8,978)
30,000,000 Cap 8.5 September 23, 1999...................... 42,045
50,000,000 Cap 8.5 February 2, 1999........................ 1,085,601
------------ ----------
$250,000,000 6.6% Weighted Average Fixed Rate............. $1,033,765
============ ==========
</TABLE>

*This contract has not been marked to market since its effective date is
after the reporting date.

Management believes that the counterparties of the interest rate protection
agreements will be able to meet their obligations under the agreements. The
purpose of CCE-I's involvement in these interest rate protection agreements is
to minimize CCE-I's exposure to interest rate fluctuations on its floating
rate debt. Management believes that it has no material concentration of credit
or market risks with respect to its interest rate protection agreements.

10. RELATED-PARTY TRANSACTIONS:

Charter provides management services to CCE-I under the terms of a contract
which provides for base fees equal to $4,845,000 and $3,925,000 as of December
31, 1996 and 1995, respectively, per annum plus an annual bonus equal to 30%
of the excess, if any, of operating cash flow (as defined in the management
agreement) over the projected operating cash flow for the year. Payment of the
annual bonus is deferred until termination of the Credit Agreement due to
restrictions provided within the Credit Agreement. The annual bonus for the
year ended December 31, 1996 and 1995, totaled $740,000 and $1,015,000,
respectively. In addition, CCE-I receives financial advisory services from an
affiliate of Kelso, under terms of a contract which provides for fees equal to
$552,500 and $450,000 at December 31, 1996 and 1995, respectively, per annum.
These agreements were amended during 1996 and 1995 in conjunction with each
acquisition of cable television systems to increase the annual base fees for
Charter and Kelso. Expenses recognized by CCE-I under these contracts during
1996 and 1995 were approximately $5,034,000 and $6,499,000, respectively.
Management and financial advisory service fees currently payable of $1,181,300
and $1,029,000 are included in Payables to affiliates at December 31, 1996 and
1995, respectively.

CCE-I pays certain acquisition advisory fees to an affiliate of Kelso and
Charter, which typically equal approximately 1% of the total purchase price
paid for cable television systems acquired. Total acquisition fees paid to the
affiliate of Kelso in 1996 and 1995 were $1,140,000 and $5,250,000,
respectively. Total acquisition fees paid to Charter in 1996 and 1995 were
$1,140,000 and $950,000, respectively. In addition, Charter received
$4,300,000 of equity interests in CCA Holdings during 1995 in conjunction with
the Crown acquisition.

F-18
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

CCE-I and all entities affiliated with Charter collectively utilize a
combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims. CCE-I is allocated charges monthly
based upon its total number of employees, historical claims and medical cost
trend rates. Management considers this allocation to be reasonable for the
operations of CCE-I. During 1996 and 1995, CCE-I expensed approximately
$1,401,300 and $840,000, respectively, relating to insurance allocations.

In 1996, CCE-I and other affiliated entities employed the services of
Charter's National Data Center (the "National Data Center"). The National Data
Center performs certain subscriber billing services and provides computer
network, hardware and software support to CCE-I and other affiliated entities.
The cost of these services is allocated based on the number of subscribers.
Management considers this allocation to be reasonable for the operations of
CCE-I. During 1996, CCE-I expensed approximately $340,600 relating to these
services.

CCE-I maintains a regional office. The regional office performs certain
operational services on behalf of CCE-I and other affiliated entities. The
cost of these services is allocated to CCE-I and affiliated entities based on
their number of subscribers. Management considers this allocation to be
reasonable for the operations of CCE-I. During 1996 and 1995, CCE-I expensed
approximately $799,400 and $512,000, respectively, relating to these services.

CCE-II has similar arrangements as discussed above, which have been
reflected in CCE-II's operations.

11. COMMITMENTS AND CONTINGENCIES:

LEASES

CCE-I leases certain facilities and equipment under noncancelable operating
leases. Rent expense incurred under these leases during 1996 and 1995 was
approximately $617,600 and $533,000, respectively.

Approximate aggregate future minimum lease payments are as follows:

<TABLE>
<S> <C>
1997.............................................................. $484,500
1998.............................................................. 438,900
1999.............................................................. 259,600
2000.............................................................. 159,200
2001.............................................................. 111,200
Thereafter........................................................ 422,100
</TABLE>

CCE-I rents utility poles in its operations. Generally, pole rental
agreements are short term, but CCE-I anticipates that such rentals will recur.
Rent expense for pole attachments during 1996 and 1995 was approximately
$1,773,100 and $1,363,000, respectively.

INSURANCE COVERAGE

CCE-I currently does not have, and does not in the near term anticipate
having, property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the Company's management, the price is cost prohibitive.
Management believes that its experience and policy with such insurance
coverage is consistent with general industry practices. Management will
continue to monitor the insurance markets to attempt to obtain coverage for
CCE-I's distribution plant at reasonable rates.

LITIGATION

F-19
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Acquisition remain pending. Each of the defendants in the Action, including
CCE-I believes the Action, which remains pending, to be without merit and is
contesting it vigorously. In October 1996, the plaintiff filed a Consolidated
Amended Class Action Complaint (the "Amended Complaint"). The general partner
of CCIP believes that portions of the Amended Complaint are legally inadequate
and in January 1997 filed a motion for summary judgment to dismiss all
remaining claims in the Action. There can be no assurance, however, that the
plaintiff will not be awarded damages, some or all of which may be payable by
CCE-I, in connection with the Action.

CCE is a named defendant in two actions filed in 1997 involving an affiliate
of Charter, Cencom Cable Income Partners II, L.P. (CCIP II). An action has
been filed in the Circuit Court of Jackson County, Missouri by 269 individual
plaintiffs who are limited partners of CCIP II against Cencom Properties II,
Inc., the general partner of CCIP II, Cencom Partners Inc., the general
partner of Cencom Partners, LP (CPLP), an entity in which CCIP II invested,
certain named brokerage firms involved in the original sale of the limited
partnership units and CCE. CCE provided management services to both CCIP II
and CPLP and also owned all of the stock of the general partners of each of
these partnerships prior to mid-1994. The Plaintiffs seek recovery of the
consideration paid for their partnership units, restitution of all profits
received by the defendants in connection with the CCIP II transaction and
punitive damages. Also, a purported class action has been filed in the Court
of Chancery of the State of Delaware, in and for New Castle County on behalf
of the limited partners of CCIP II against Cencom Properties II, Inc., CCE,
Charter, certain other affiliates of Charter and certain individuals,
including officers of Charter or Cencom Properties II, Inc. The damages
claimed by the plaintiffs are as yet unspecified. CCE believes that it has
meritorious defense in both actions, including defenses based on applicable
statutes of limitations. CCE intends to defend the actions vigorously. CCE is
not able at this early stage to project the expenses, if any, which will be
associated with the actions or to predict any potential outcome or exposure.

The Company is also a party to lawsuits which are generally incidental to
its business. In the opinion of management, after consulting with legal
counsel, the outcome of the above mentioned lawsuits will not have a material
adverse effect on the Company's consolidated financial position and results of
operations.

SEVERANCE PAYMENT

During 1996, CCE-I and other affiliated entities entered into a Settlement
Agreement and Mutual Release with a former executive, whereby CCE-I will make
severance payments totaling $500,000. The funds are to be paid in 12 equal
installments, which commenced April 1, 1996.

12. REGULATION IN THE CABLE TELEVISION INDUSTRY:

Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. The 1992 Cable Act generally allows for a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable systems in the United States are
subject to rate regulation of basic cable services, provided the local
franchising authority becomes certified to regulate basic service rates. The
1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.

F-20
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

While management believes that CCE-I and CCE-II has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if CCE-I and CCE-II are
unable to justify their rates through a benchmark or cost-of-service filing
pursuant to FCC rules. Management is unable to estimate at this time the
amount of refunds, if any, that may be payable by CCE-I and CCE-II in the
event certain of their rates are successfully challenged by franchising
authorities or found to be unreasonable by the FCC. Management does not
believe that the amount of any such refunds would have a material adverse
effect on the consolidated financial position or results of operations of the
Company.

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the Company has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
Company's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on the Company than previously existed.

During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which alters
federal, state, and local laws and regulations pertaining to cable television,
telecommunications and other services. Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Company. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule makings or litigation or the substantive effect of the new legislation
and the rule makings on the consolidated financial position and results of
operations of the Company.

13. INCOME TAXES:

Income taxes are recorded in accordance with SFAS No. 109. In accordance
with SFAS No. 109, deferred tax assets and liabilities are recognized for the
estimated future tax consequence attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred income tax assets and liabilities are
measured using the enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. Deferred income
tax expense or benefit is the result of changes in the liability or asset
recorded for deferred taxes. A valuation allowance must be established for any
portion of a deferred tax asset for which it is more likely than not that a
tax benefit will not be realized.

During 1996 and 1995, changes in the Company's temporary differences and
losses from operations, which pertain primarily to depreciation and
amortization, resulted in a deferred tax benefits of approximately $12.5
million and $9.0 million, respectively. These amounts were offset by valuation
allowances of equal amounts.

No current provision (benefit) for income taxes was recorded during 1996 and
1995.

F-21
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Deferred taxes are comprised of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Deferred income tax assets:
Accounts receivable......................... $ 148,000 $ 100,000
Covenant not to compete..................... 6,933,000 3,467,000
Investment in unconsolidated limited
partnership................................ -- 556,000
Accrued expenses and payables to
affiliates................................. 2,273,000 1,978,000
Deferred revenue............................ 283,000 312,000
Deferred management fees payable to
affiliate.................................. 702,000 406,000
Tax loss carryforwards...................... 44,352,000 26,119,000
Valuation allowance......................... (21,528,000) (9,042,000)
------------ ------------
Total deferred income tax assets......... 33,163,000 23,896,000
------------ ------------
Deferred income tax liabilities:
Property, plant and equipment............... (37,191,000) (31,867,000)
Franchise costs............................. (44,362,000) (47,285,000)
Investment in unconsolidated limited
partnerships............................... (3,767,000) --
Minority interest in subsidiary............. (3,343,000) (244,000)
------------ ------------
Total deferred income tax liabilities.... (88,663,000) (79,396,000)
------------ ------------
Net deferred income tax liability........ $(55,500,000) $(55,500,000)
============ ============
</TABLE>

At December 31, 1996, the Company had net operating loss (NOL) carryforwards
for regular income tax purposes aggregating approximately $110.9 million,
which expire in various years through 2011. Utilization of the NOLs is subject
to certain limitations. The Company's regular tax NOLs are recognized for
financial statement purposes as a reduction of the deferred tax liability or
an increase of the deferred tax asset.

14. DISCONTINUED OPERATION:

CCE-I approved a plan to discontinue the radio operation maintained by its
subsidiary, Charter Communications Radio St. Louis, LLC. Pursuant to a sales
agreement dated January 23, 1997, such operations will cease upon FCC approval
of the transfer of the radio license.

The net losses of this operation prior to December 31, 1996, are included in
the consolidated statement of operations under "Loss from discontinued
operation." Revenues from such operation were $1,532,572 for the period then
ended. The noncurrent net assets of this operation are comprised primarily of
property, plant and equipment, license fees and other deferred costs. No
material gain or loss is anticipated in connection with the disposition of
these net assets.

15. COMPETITION:

The Connecticut Department of Public Utility Control granted a franchise to
a subsidiary of a local telephone company to serve the entire State of
Connecticut. This provider has proposed to offer its cable service initially
to a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict the ultimate impact of this
development upon the Company's consolidated financial position or results of
operations.

F-22
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

is uncertain what impact, if any, this acquisition will have on the Company's
consolidated financial position or results of operations.

16. EMPLOYEE BENEFIT PLANS:

401(K) PLAN

In 1995, CCE-I adopted the Charter Communications, Inc. 401(k) Plan (the
"401(k) Plan") for the benefit of its employees. All employees who have
completed one year of employment are eligible to participate in the 401(k)
Plan. The 401(k) Plan is a tax-qualified retirement savings plan to which
employees may elect to make pretax contributions up to the lesser of 10% of
their compensation or dollar thresholds established under the Internal Revenue
Code. CCE-I contributes an amount equal to 50% of the first 5% contributed by
each employee. During 1996 and 1995, CCE-I contributed approximately $269,900
and $177,000, to the 401(k) Plan, respectively.

APPRECIATION RIGHTS PLAN

In 1996, certain of CCE-I's employees became participants in the 1996
Charter Communications/Kelso & Company Appreciation Rights Plan (the
"Appreciation Rights Plan"). The Appreciation Rights Plan covers certain key
employees and consultants within the group of companies and partnerships
controlled by affiliates of Kelso and managed by Charter (collectively, the
"Investment Group").

F-23
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CCA Acquisition Corp.:

We have audited the accompanying consolidated balance sheets of CCA
Acquisition Corp. (a Delaware corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of operations,
shareholder's investment (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CCA Acquisition Corp. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

St. Louis, Missouri,

July 1, 1997

F-24
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995

(Continued on the following page)

F-25
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
(CONTINUED)

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S INVESTMENT (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt.............. $ 5,880,000 $ --
Accounts payable and accrued expenses............. 18,517,774 $ 13,274,646
Subscriber deposits............................... 473,601 711,663
Payables to affiliates............................ 2,630,149 2,907,529
Other current liabilities......................... 1,401,951 --
------------ ------------
Total current liabilities...................... 28,903,475 16,893,838
------------ ------------
DEFERRED REVENUE................................... 708,339 780,612
------------ ------------
DEFERRED INCOME TAXES.............................. 55,500,000 55,500,000
------------ ------------
LONG-TERM DEBT, less current maturities............ 462,120,000 355,000,000
------------ ------------
DEFERRED MANAGEMENT FEES PAYABLE TO AFFILIATE...... 1,755,000 1,015,000
------------ ------------
NOTE PAYABLE....................................... 82,000,000 82,000,000
------------ ------------
ACCRUED INTEREST ON NOTE PAYABLE................... 22,843,402 10,438,805
------------ ------------
MINORITY INTEREST IN SUBSIDIARY.................... 90,273,351 106,272,025
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S INVESTMENT (DEFICIT):
Common stock, $.01 par value, 100 shares
authorized; 100 shares issued
and outstanding.................................. 1 1
Additional paid-in capital........................ 79,999,999 79,999,999
Accumulated deficit............................... (80,022,697) (41,761,175)
------------ ------------
Total shareholder's investment (deficit)....... (22,697) 38,238,825
------------ ------------
$744,080,870 $666,139,105
============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

F-26
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SERVICE REVENUES:
Basic service.................................... $ 96,560,920 $ 65,075,541
Premium service.................................. 19,201,801 15,484,951
Other............................................ 27,260,540 19,128,918
------------ ------------
143,023,261 99,689,410
------------ ------------
EXPENSES:
Operating costs.................................. 59,869,348 41,800,111
General and administrative....................... 11,255,985 7,142,567
Depreciation and amortization.................... 65,757,387 51,193,702
Management and financial advisory service fees--
related parties................................. 5,034,375 6,499,167
------------ ------------
141,917,095 106,635,547
------------ ------------
Income (loss) from continuing operations....... 1,106,166 (6,946,137)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income.................................. 164,476 503,585
Interest expense................................. (46,654,019) (35,461,026)
Other, net....................................... (1,058,271) 41,622
------------ ------------
(47,547,814) (34,915,819)
------------ ------------
Loss before equity in loss of unconsolidated
limited partnerships, provision for income
taxes, loss from discontinued operation and
minority interest in loss of subsidiary....... (46,441,648) (41,861,956)
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED PARTNER-
SHIPS............................................. (6,302,990) (1,402,194)
------------ ------------
Loss before provision for income taxes, loss
from discontinued operation and minority in-
terest in loss of subsidiary.................. (52,744,638) (43,264,150)
PROVISION FOR INCOME TAXES......................... -- --
------------ ------------
Loss before loss from discontinued operation
and minority interest in loss of subsidiary... (52,744,638) (43,264,150)
LOSS FROM DISCONTINUED OPERATION................... (1,515,558) --
------------ ------------
Loss before minority interest in loss of sub-
sidiary....................................... (54,260,196) (43,264,150)
MINORITY INTEREST IN LOSS OF SUBSIDIARY............ 15,998,674 1,502,975
------------ ------------
Net loss....................................... $(38,261,522) $(41,761,175)
============ ============
</TABLE>

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

F-27
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S INVESTMENT (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995........ $-- $ -- $ -- $ --
Issuance of common stock...... 1 79,999,999 -- 80,000,000
Net loss...................... -- -- (41,761,175) (41,761,175)
---- ----------- ------------ ------------
BALANCE, December 31, 1995...... 1 79,999,999 (41,761,175) 38,238,825
Net loss...................... -- -- (38,261,522) (38,261,522)
---- ----------- ------------ ------------
BALANCE, December 31, 1996...... $ 1 $79,999,999 $(80,022,697) $ (22,697)
==== =========== ============ ============
</TABLE>

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

F-28
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................... $(38,261,522) $ (41,761,175)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization................... 65,757,387 51,193,702
Loss on sale of property, plant and equipment... 1,256,945 --
Loss from discontinued operation................ 1,515,558 --
Equity in loss of unconsolidated limited part-
nerships....................................... 6,302,990 1,402,194
Minority interest in loss of subsidiary......... (15,998,674) (1,502,975)
Changes in assets and liabilities, net of ef-
fects from acquisitions--
Accounts receivable, net....................... (1,748,468) (1,387,654)
Prepaid expenses and other..................... 279,406 (250,428)
Accounts payable and accrued expenses.......... 4,056,629 4,249,587
Subscriber deposits............................ (257,062) (11,303)
Payables to affiliates, including deferred man-
agement fees.................................. 462,620 3,922,529
Other current liabilities...................... 1,401,951 --
Deferred revenue............................... (144,748) 780,612
Accrued interest on note payable............... 12,404,597 10,438,805
------------ -------------
Net cash provided by operating activities..... 37,027,609 27,073,894
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment....... (33,898,020) (22,023,524)
Proceeds from sale of property, plant and equip-
ment............................................ 986,359 --
Payments for acquisitions, net of cash acquired.. (122,017,267) (523,679,458)
Payments of organizational expenses.............. (242,875) (1,297,203)
Payments of franchise costs...................... (569,167) (53,266)
Payments of brokerage commissions................ (310,385) --
Restricted funds held in escrow.................. 301,598 (301,598)
Investment in unconsolidated limited partner-
ships........................................... -- (85,775,000)
Minority investment in subsidiary................ -- 107,775,000
------------ -------------
Net cash used in investing activities......... (155,749,757) (525,355,049)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs.................. (2,773,844) (7,287,914)
Borrowings under revolving credit and term loan
facility........................................ 120,500,000 355,000,000
Payments of revolving credit and term loan facil-
ity............................................. (7,500,000) --
Borrowings under note payable.................... -- 82,000,000
Issuance of common stock......................... -- 80,000,000
------------ -------------
Net cash provided by financing activities..... 110,226,156 509,712,086
------------ -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVA-
LENTS............................................ (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year...... 11,430,931 --
------------ -------------
CASH AND CASH EQUIVALENTS, end of year............ $ 2,934,939 $ 11,430,931
============ =============
CASH PAID FOR INTEREST............................ $ 33,921,715 $ 22,907,403
============ =============
CASH PAID FOR TAXES............................... $ -- $ --
============ =============
</TABLE>

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

F-29
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995--(CONTINUED)

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs.................. $ (2,773,844) $ (7,287,914)
Borrowings under revolving credit and term loan
facility......................................... 120,500,000 355,000,000
Payments of revolving credit and term loan
facility......................................... (7,500,000) --
Borrowings under note payable.................... -- 82,000,000
Issuance of common stock......................... -- 80,000,000
------------ ------------
Net cash provided by financing activities...... 110,226,156 509,712,086
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS........................................ (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year....... 11,430,931 --
------------ ------------
CASH AND CASH EQUIVALENTS, end of year............. $ 2,934,939 $ 11,430,931
============ ============
CASH PAID FOR INTEREST............................. $ 33,921,715 $ 22,907,403
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>

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

F-30
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

CCA Acquisition Corp. (CAC), a Delaware corporation, was formed on June 27,
1994, and is a wholly-owned subsidiary of CCA Holdings Corp. (CCA Holdings).
CAC commenced operations in January 1995 in connection with consummation of
the Crown Transaction (as defined below). The accompanying consolidated
financial statements include the accounts of CAC; its wholly-owned subsidiary,
Cencom Cable Entertainment, Inc. (CCE); and Charter Communications
Entertainment I, L.P. (CCE-I), which is controlled by CAC through its general
partnership interest (collectively referred to as the "Company"). CCA Holdings
is owned approximately 85% by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals, and approximately 15% by
Charter Communications, Inc. (Charter), manager of CCE-I's cable television
systems (see Note 9). All material intercompany transactions and balances have
been eliminated.

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings Corp. (CCT Holdings), an entity affiliated with CCA Holdings
by common ownership, entered into an Asset Exchange Agreement whereby CAC
exchanged a 1% undivided interest in all of its assets for a 1.22% undivided
interest in certain assets to be acquired by CCT Holdings from an affiliate of
Gaylord Entertainment Company, Inc. (Gaylord). Effective September 30, 1995,
CCT Holdings acquired certain cable television systems from Gaylord. Upon
execution of the Asset Purchase Agreement, CAC and CCT Holdings entered into a
series of agreements to contribute the assets acquired under the Crown
Transaction to CCE-I and certain assets acquired in the Gaylord acquisition to
Charter Communications Entertainment II, L.P. (CCE-II). As a result of
entering into these agreements, CAC owns a 55% interest and CCT Holdings owns
a 45% interest in the combined operations of CCE-I and CCE-II, respectively.
The net loss of CCE-I for the period prior to September 29, 1995, was
allocated entirely to CAC.

Cash Equivalents

Property, Plant and Equipment

F-31
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:

<TABLE>
<S> <C>
Trunk and distribution systems............................... 10 years
Subscriber installations..................................... 10 years
Buildings and headends....................................... 10-20 years
Converters................................................... 5 years
Vehicles and equipment....................................... 4-8 years
Office equipment............................................. 5-10 years
</TABLE>

Franchise Costs

Covenant Not to Compete

Covenant not to compete was amortized over the term of the respective
agreement (two years).

Other Assets

Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.

Restricted Funds Held in Escrow

In connection with the acquisition of cable television systems from Mineral
Area Cablevision Co., L.P. (Omega) as further discussed in Note 3, the Company
agreed to deposit a portion of the purchase price into an escrow account in
1995 which was transferred to Omega at the closing of the asset purchase in
January 1996.

Investment in Unconsolidated Limited Partnerships

CAC has a 1% general partnership interest and a 54% limited partnership
interest in Charter Communications Entertainment, L.P. (CCE, L.P.). CCT
Holdings has a 1% general partnership interest and a 44% limited partnership
interest in CCE, L.P. CCE, L.P. has a 97.78% limited partnership interest in
both CCE-I and CCE-II. CAC's interest in CCE, L.P., together with its 1.22%
general partnership interest in CCE-I and its 1.22% limited partnership
interest in CCE-II, provide CAC with a 55% interest in both CCE-I and CCE-II.
CCT Holdings, owns the remaining 45% interest in both CCE-I and CCE-II,
including a 1% general partnership

F-32
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

interest in CCE-II. CCE-II is controlled by CCT Holdings through its general
partnership interest in CCE-II and provisions in CCE-II's partnership
agreement and CCE, L.P. is jointly controlled by the Company and CCT Holdings
through their general partnership interests in CCE, L.P. and provisions in
CCE, L.P.'s partnership agreement; therefore, CAC's investment in CCE L.P. and
CCE-II, is accounted for using the equity method. Under this method, the
investment in CCE L.P. and CCE-II, is originally recorded at cost and is
subsequently adjusted to recognize CAC's share of net earnings or losses as
they occur and distributions when received.

Revenues

Cable service revenues are recognized when the related services are
provided.

Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts.

Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.

Other Income (Expense)

Income Taxes

Income taxes are recorded in accordance with SFAS No. 109, "Accounting for
Income Taxes."

Derivative Financial Instruments

Use of Estimates

Reclassifications

Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.

2. INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS:

F-33
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

As of December 31, 1996, CCE-II provided cable television service to
approximately 168,100 basic subscribers in southern California.

Summary financial information of CCE-II as of December 31, 1996 and 1995, and
for the period from inception (April 20, 1995) to December 31, 1995, and for
the year ended December 31, 1996, which is not consolidated with the operating
results of the Company, is as follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Current assets................................. $ 10,904,830 $ 11,043,867
Noncurrent assets--primarily investment in
cable television properties................... 338,316,421 348,029,594
------------ ------------
Total assets................................ $349,221,251 $359,073,461
============ ============
Current liabilities............................ $ 13,098,198 $ 14,107,036
Long-term debt................................. 221,418,000 218,600,000
Other long-term liabilities.................... 383,070 584,460
Partners' capital.............................. 114,321,983 125,781,965
------------ ------------
Total liabilities and partners' capital..... $349,221,251 $359,073,461
============ ============
Service revenues............................... $ 90,368,332 $ 21,156,209
============ ============
Income from operations......................... $ 5,039,834 $ 983,638
============ ============
Net loss....................................... $(11,459,982) $ (3,458,535)
============ ============
</TABLE>

3. ACQUISITIONS:

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I effective January 1, 1995. The acquisition of these systems was part of a
series of larger transactions in which Crown sold its cable television systems
to a group of investors, including Charter, CAC, certain affiliates of Charter,
and third parties, for a total purchase price of approximately $900.0 million.
To finance this acquisition, CCE-I entered into a revolving credit and term
loan facility (see Note 8), and CCA Holdings executed a subordinated seller
note to an affiliate of Hallmark for $82.0 million (the "HC Crown Note").

In October 1995, CCE-I acquired the net assets of certain systems from United
Video Cablevision, Inc. (United), which include cable television systems in
Massachusetts and Missouri, for an aggregate purchase price of approximately
$96.0 million.

In January 1996, CCE-I acquired the net assets of certain systems from Omega,
which include cable television systems in Missouri, for an aggregate purchase
price of approximately $9.4 million (the "CCIP Acquisition").

In March 1996, CCE-I acquired the net assets of the Illinois system from
Cencom Cable Income Partners, L.P. (CCIP), for an aggregate purchase price of
approximately $82.1 million (the "CCIP Acquisition").

In November 1996, CCE-I acquired the net assets of certain systems from
Masada Cable Partners, L.P. (Masada), which include cable television systems in
Missouri, for an aggregate purchase price of approximately $24.2 million.

F-34
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Purchase price:
Cash paid to seller.... $338,640,282 $93,542,306 $9,178,086 $80,103,013 $23,625,358
Seller note executed by
CCA Holdings.......... 82,000,000 -- -- -- --
Assumed liabilities,
including deferred
taxes of $55,500,000.. 55,638,033 282,000 32,000 -- 82,950
Transaction costs...... 11,935,229 2,216,101 200,000 2,025,000 480,000
------------ ----------- ---------- ----------- -----------
$488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
Allocation of purchase
price to assets
acquired:
Cash.................. $ 5,073,954 $ 539 $ 200 $ 1,053,410 $ --
Accounts receivable... 1,933,859 2,673 5,190 387,906 --
Prepaid expenses and
other................ 279,745 111,385 7,440 90,368 30,483
Property, plant and
equipment............ 162,432,874 12,439,879 1,054,878 11,980,833 2,147,338
Franchise costs....... 307,370,555 84,356,513 8,427,122 69,663,726 22,155,487
Covenant not to
compete.............. 20,000,000 -- -- -- --
Accounts payable and
accrued expenses..... (8,877,443) (147,616) (84,744) (975,755) (126,000)
Subscriber deposits... -- (722,966) -- -- (19,000)
Deferred revenue...... -- -- -- (72,475) --
------------ ----------- ---------- ----------- -----------
Purchase price...... $488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>

The following are the unaudited pro forma operating results as though the
1996 and 1995 acquisitions by CCE-I and CCE-II had been made on January 1 of
the respective year prior to such acquisitions:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Service revenues................................ $151,548,000 $137,021,602
Income (loss) from operations................... $ 818,000 $ (2,049,590)
Net loss........................................ $(39,529,000) $(41,916,360)
</TABLE>

F-35
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment is stated at cost and consist of the following
at December 31:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems................... $125,248,708 $110,330,189
Subscriber installations......................... 45,636,572 34,114,600
Land, buildings and headends..................... 33,135,716 21,069,307
Converters....................................... 27,097,454 21,046,326
Vehicles and equipment........................... 7,180,068 4,737,430
Office equipment................................. 7,603,973 5,597,301
Construction-in-progress......................... 3,243,405 --
------------ ------------
249,145,896 196,895,153
Less-- Accumulated depreciation.................. (42,794,517) (18,745,185)
------------ ------------
$206,351,379 $178,149,968
============ ============
</TABLE>

5. OTHER ASSETS:

Other assets consist of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated amortization
of $1,656,817 and $648,064, respectively............ $8,404,941 $6,639,850
Organizational expenses, net of accumulated
amortization of $574,589 and $287,104,
respectively........................................ 965,489 1,010,099
Brokerage commissions, net of accumulated
amortization of $13,459 and $-0-, respectively...... 296,926 --
---------- ----------
$9,667,356 $7,649,949
========== ==========
</TABLE>

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following at December
31:

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Accrued salaries and related benefits............... $ 1,283,024 $ 888,972
Accounts payable.................................... 1,763,895 646,744
Accrued interest.................................... 2,442,525 2,114,818
Programming expenses................................ 2,726,803 2,046,640
Franchise fees...................................... 3,187,335 2,467,564
Capital expenditures................................ 3,482,531 3,525,747
Other............................................... 3,631,662 1,584,161
----------- -----------
$18,517,775 $13,274,646
=========== ===========
</TABLE>

F-36
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. NOTE PAYABLE:

In connection with the Crown Transaction, CAC issued a guarantee of payment
to the holder of the HC Crown Note. Accordingly, the debt has been reflected as
a liability of the Company in the accompanying financial statements. The HC
Crown Note is also guaranteed by CCE and CCE, L.P. The HC Crown Note is an
unsecured obligation. The HC Crown Note is limited in aggregate principal
amount to $82.0 million and has a stated maturity date of December 31, 1999
(the "Stated Maturity Date"). Interest accrues at 13% per annum, compounded
semiannually, but is not due and payable until the Stated Maturity Date. If
principal plus accrued interest is not paid at the Stated Maturity Date, the
annual rate at which interest accrues will initially increase to 18% and will
increase by an additional 2% on each successive anniversary of the Stated
Maturity Date (up to a maximum of 26%) until the HC Crown Note is repaid; in
addition, a 3% default rate of interest can, in certain instances, be in effect
simultaneously with the stated rate of interest on the HC Crown Note. The HC
Crown Note is redeemable in whole or in part at the option of CCA Holdings at
any time, without premium or penalty, provided that accrued interest is paid on
the portion of the HC Crown Note so redeemed.

Borrowings under the HC Crown Note are subject to certain financial and
nonfinancial covenants and restrictions. The most restrictive covenant requires
maintenance of a ratio of debt (excluding the HC Crown Note) to adjusted
consolidated annualized operating cash flow, as defined, not to exceed 7.25 to
1 at December 31, 1996. In addition to the subordination in right of payment
provisions contained in the HC Crown Note, the HC Crown Note is subject to a
subordination agreement in favor of senior bank debt of CCE-I. Pursuant to the
subordination agreement, substantially all rights and remedies under the HC
Crown Note, including the rights to accelerate the maturity upon an event of
default (including a payment of default), are suspended until the obligations
under the Credit Agreement (as defined herein) are paid in full.

The HC Crown Note is subordinated to the Credit Agreement. Pursuant to the
terms of the Credit Agreement, payments on the HC Crown Note are prohibited
until the indefeasible payment in full in cash, and the termination of
commitments to lend under the Credit Agreement. The HC Crown Note will not have
the benefit of any distributions from CCE-II until repayment in full of CCE-
II's credit facility and the Gaylord Note.

The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and
CCE, L.P. (collectively referred to as the "Guarantors"). The CCE, L.P.
guarantee cannot be enforced until the repayment in full and termination of the
Credit Agreement (as defined herein) and the CCE-II credit facility. The CAC
and CCE guarantees cannot be enforced until the repayment in full and
termination of the Credit Agreement. The guarantees, by their terms, are
limited to the proceeds of distributions received from CCE-I, and income, if
any, generated by the Guarantors. CCA Holdings and the Guarantors are dependent
primarily upon distributions from CCE-I to service the HC Crown Note.

Subsequent to year-end, HC Crown Corp. sold the majority of the HC Crown Note
through a private placement. The fair value of the HC Crown Note plus accrued
interest, based upon the proceeds received, was approximately $89.5 million at
December 31, 1996.

8. LONG-TERM DEBT:

In January 1995, CCE-I entered into a revolving credit and term loan facility
(the "Credit Agreement") with a consortium of banks for borrowings up to $300.0
million. CCE-I has amended, on several occasions, the Credit Agreement to allow
for total borrowings of $505.0 million for the purpose of making certain
acquisitions. Principal payments are due in quarterly installments beginning
September 30, 1997, and continuing through June 30, 2004. Borrowings under the
Credit Agreement bear interest at rates based upon a certain spread plus a base
rate, with the base rate being, at CCE-I's election, the Base Rate, as defined
in the Credit Agreement, LIBOR, or prevailing bid rates on certificates of
deposit. The applicable spread is based on the ratio of debt to annualized
operating cash flow. The interest rates ranged from 7.63% and 9.42% at December
31, 1996. The weighted

F-37
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

average interest rates and weighted average borrowings were 8.05% and 8.71% and
approximately $425,067,000 and $272,885,000 during 1996 and 1995, respectively.
As this debt instrument bears interest at current market rates, its carrying
amount approximates fair market value at December 31, 1996 and 1995.

Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which requires
maintenance of a ratio of debt to annualized operating cash flow, as defined,
not to exceed 6.50 to 1 at December 31, 1996. A quarterly commitment fee of
0.375% per annum is payable on the unused portion of the Credit Agreement.

In addition to the foregoing, effective April 30, 1999, and on each April
30th thereafter, CCE-I is required to make a repayment of principal of the term
and fund loans (pro rata) in an amount equal to 75% of Annual Excess Cash Flow,
as defined in the Credit Agreement, for the preceding year if the leverage
ratio is greater than 5.5 to 1, or 50% of Annual Excess Cash Flow if the
leverage ratio is less than 5.5 to 1. These repayments shall be applied to
principal in inverse order of maturity.

Based upon outstanding indebtedness at December 31, 1996, and the
amortization of term loans and fund loans, and scheduled reductions in
available borrowings depicted above, aggregate future principal payments on the
Credit Agreement at December 31, 1996, are as follows:

F-38
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

less than 50% of the outstanding obligations. In addition, the interest rate
protection agreements must provide rate protection for a weighted average
period of not less than 18 months. The fair value of the interest rate caps or
swaps is the estimated amount CCE-I would receive (pay) to eliminate the cap or
swap agreement at the reporting date, taking into account current interest
rates and the credit-worthiness of the counterparties. The following summarizes
certain information pertaining to the interest rate protection agreements as of
December 31, 1996:

<TABLE>
<CAPTION>
FAIR
VALUE/
NOTIONAL FIXED REDEMPTION
AMOUNT TYPE RATE CONTRACT EXPIRATION DATE PRICE
------------ ---- ----- --------------------------- ----------
<C> <C> <C> <S> <C>
$ 25,000,000 Swap 5.5% December 1, 1997 $ (60,812)
25,000,000 Swap 5.5 December 1, 1997 (19,135)
75,000,000 Swap 5.5 December 1, 1998 *
25,000,000 Swap 4.9 March 28, 1998 (4,956)
20,000,000 Cap 8.5 April 14, 1998 (8,978)
30,000,000 Cap 8.5 September 23, 1999 42,045
50,000,000 Cap 8.5 February 2, 1999 1,085,601
------------ ----------
$250,000,000 6.6% Weighted Average Fixed Rate $1,033,765
============ ==========
</TABLE>
- --------
* This contract has not been marked to market since its effective date is
after the reporting date.

Management believes that the counterparties of the interest rate protection
agreements will be able to meet their obligations under the agreements. The
purpose of CCE-I's involvement in these interest rate protection agreements is
to minimize CCE-I's exposure to interest rate fluctuations on its floating rate
debt. Management believes that it has no material concentration of credit or
market risks with respect to its interest rate protection agreements.

9. RELATED-PARTY TRANSACTIONS:

Charter provides management services to CCE-I under the terms of a contract
which provides for base fees equal to $4,845,000 and $3,925,000 as of December
31, 1996 and 1995, respectively, per annum plus an annual bonus equal to 30% of
the excess, if any, of operating cash flow (as defined in the management
agreement) over the projected operating cash flow for the year. Payment of the
annual bonus is deferred until termination of the Credit Agreement due to
restrictions provided within the Credit Agreement. The annual bonus for the
year ended December 31, 1996 and 1995, totaled $740,000 and $1,015,000,
respectively. In addition, CCE-I receives financial advisory services from an
affiliate of Kelso under terms of a contract which provides for fees equal to
$552,500 and $450,000 at December 31, 1996 and 1995, respectively, per annum.
These agreements were amended during 1996 and 1995 in conjunction with each
acquisition of cable television systems to increase the annual base fees for
Charter and Kelso. Expenses recognized by CCE-I under these contracts during
1996 and 1995 were approximately $5,034,000 and $6,499,000, respectively.
Management and financial advisory service fees currently payable of $1,181,300
and $1,029,000 are included in Payables to affiliates at December 31, 1996 and
1995, respectively.

CCE-I pays certain acquisition advisory fees to an affiliate of Kelso and
Charter, which typically equal approximately 1% of the total purchase price
paid for cable television systems acquired. Total acquisition fees paid to the
affiliate of Kelso in 1996 and 1995 were $1,140,000 and $5,250,000,
respectively. Total acquisition fees paid to Charter in 1996 and 1995 were
$1,140,000 and $950,000, respectively. In addition, Charter received $4,300,000
of equity interests in CCA Holdings during 1995 in conjunction with the Crown
acquisition.

F-39
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

monthly based upon its total number of employees, historical claims and medical
cost trend rates. Management considers this allocation to be reasonable for the
operations of CCE-I. During 1996 and 1995, CCE-I expensed approximately
$1,401,300 and $840,000, respectively, relating to insurance allocations.

In 1996, certain of CCE-I's employees became participants in the 1996 Charter
Communications/Kelso & Company Appreciation Rights Plan (the "Appreciation
Rights Plan"). The Appreciation Rights Plan covers certain key employees and
consultants within the group of companies and partnerships controlled by
affiliates of Kelso and managed by Charter (collectively, the "Investment
Group").

CCE-I maintains a regional office. The regional office performs certain
operational services on behalf of CCE-I and other affiliated entities. The cost
of these services is allocated to CCE-I and affiliated entities based on their
number of subscribers. Management considers this allocation to be reasonable
for the operations of CCE-I. During 1996 and 1995, CCE-I expensed approximately
$799,400 and $512,000, respectively, relating to these services.

CCE-II has similar arrangements as discussed above, which have been reflected
in CCE-II's operations.

10. COMMITMENTS AND CONTINGENCIES:

Leases

Approximate aggregate future minimum lease payments are as follows:

Insurance Coverage

CCE-I currently does not have, and does not in the near term anticipate
having, property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the Company's management, the price is cost prohibitive.
Management believes that its experience and policy with such insurance coverage
is consistent with general industry practices. Management will continue to
monitor the insurance markets to attempt to obtain coverage for CCE-I's
distribution plant at reasonable rates.

F-40
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Litigation

A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain pending.
Each of the defendants in the Action, including CCE-I believes the Action,
which remains pending, to be without merit and is contesting it vigorously. In
October 1996, the plaintiff filed a Consolidated Amended Class Action Complaint
(the "Amended Complaint"). The general partner of CCIP believes that portions
of the Amended Complaint are legally inadequate and in January 1997 filed a
motion for summary judgment to dismiss all remaining claims in the Action.
There can be no assurance, however, that the plaintiff will not be awarded
damages, some or all of which may be payable by CCE-I, in connection with the
Action.

CCE is a named defendant in two actions filed in 1997 involving an affiliate
of Charter, Cencom Cable Income Partners II, L.P. (CCIP II). An action has been
filed in the Circuit Court of Jackson County, Missouri by 269 individual
plaintiffs who are limited partners of CCIP II against Cencom Properties II,
Inc., the general partner of CCIP II, Cencom Partners Inc., the general partner
of Cencom Partners, LP (CPLP), an entity in which CCIP II invested, certain
named brokerage firms involved in the original sale of the limited partnership
units and CCE. CCE provided management services to both CCIP II and CPLP and
also owned all of the stock of the general partners of each of these
partnerships prior to mid-1994. The Plaintiffs seek recovery of the
consideration paid for their partnership units, restitution of all profits
received by the defendants in connection with the CCIP II transaction and
punitive damages. Also, a purported class action has been filed in the Court of
Chancery of the State of Delaware, in and for New Castle County on behalf of
the limited partners of CCIP II against Cencom Properties II, Inc., CCE,
Charter, certain other affiliates of Charter and certain individuals, including
officers of Charter or Cencom Properties II, Inc. The damages claimed by the
plaintiffs are as yet unspecified. CCE believes that it has meritorious
defenses in both actions, including defenses based on applicable statutes of
limitations. CCE intends to defend the actions vigorously. CCE is not able at
this early stage to project the expenses, if any, which will be associated with
the actions or to predict any potential outcome or exposure.

The Company is also a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of the above mentioned lawsuits will not have a material adverse
effect on the Company's consolidated financial position and results of
operations.

Severance Payment

11. REGULATION IN THE CABLE TELEVISION INDUSTRY:

Congress enacted the Cable Television Consumer Protection and Competition Act
of 1992 (the "1992 Cable Act"), which became effective on December 4, 1992. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates. The 1992 Cable Act and the
Federal Communications Commission's (FCC) rules implementing the 1992 Cable Act
have generally increased the

F-41
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

administrative and operational expenses of cable television systems and have
resulted in additional regulatory oversight by the FCC and local franchise
authorities.

While management believes that CCE-I and CCE-II have complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if CCE-I and CCE-II are
unable to justify their rates through a benchmark or cost-of-service filing
pursuant to FCC rules. Management is unable to estimate at this time the amount
of refunds, if any, that may be payable by CCE-I and CCE-II in the event
certain of their rates are successfully challenged by franchising authorities
or found to be unreasonable by the FCC. Management does not believe that the
amount of any such refunds would have a material adverse effect on the
consolidated financial position or results of operations of the Company.

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have been
renewed for cable operators that have provided satisfactory services and have
complied with the terms of the franchise agreement. Although management
believes that CCE-I and CCE-II have generally met the terms of their franchise
agreements and have provided quality levels of service, and anticipates CCE-I's
and CCE-II's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on CCE-I and CCE-II than previously existed.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by CCE-I and CCE-II. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications Act's
provisions have been and are likely to be subject to judicial challenges.
Management is unable at this time to predict the outcome of such rule makings
or litigation or the substantive effect of the new legislation and the rule
makings on the consolidated financial position and results of operations of the
Company.

12. INCOME TAXES:

CAC is part of the CCA Holdings consolidated group which files consolidated
income tax returns. Income taxes are recorded in accordance with SFAS No. 109.
In accordance with SFAS No. 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequence attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred income tax assets and
liabilities are measured using the enacted tax rates in effect for the year in
which those temporary differences are expected to be recovered or settled.
Deferred income tax expense or benefit is the result of changes in the
liability or asset recorded for deferred taxes. A valuation allowance must be
established for any portion of a deferred tax asset for which it is more likely
than not that a tax benefit will not be realized.

During 1996 and 1995, changes in the Company's temporary differences and
losses from operations, which pertain primarily to depreciation and
amortization, resulted in a deferred tax benefits of approximately $7.4 million
and $4.9 million, respectively. These amounts were offset by valuation
allowances of equal amounts.

No current provision (benefit) for income taxes was recorded during 1996 and
1995.

F-42
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Deferred taxes are comprised of the following at December 31:

<TABLE>
<S> <C> <C>
1996 1995
------------ ------------
Deferred income tax assets:
Accounts receivable........................ $ 148,000 $ 100,000
Covenant not to compete.................... 6,933,000 3,467,000
Investment in unconsolidated limited
partnerships.............................. -- 556,000
Accrued expenses and payables to
affiliates................................ 2,230,000 1,978,000
Deferred revenue........................... 283,000 312,000
Deferred management fees payable to
affiliate................................. 702,000 406,000
Tax loss carryforwards..................... 35,197,000 21,943,000
Valuation allowance........................ (12,330,000) (4,866,000)
------------ ------------
Total deferred income tax assets......... 33,163,000 23,896,000
------------ ------------
Deferred income tax liabilities:
Property, plant and equipment.............. (37,191,000) (31,867,000)
Franchise costs............................ (44,362,000) (47,285,000)
Investment in unconsolidated limited
partnerships.............................. (3,767,000) --
Minority interest in subsidiary............ (3,343,000) (244,000)
------------ ------------
Total deferred income tax liabilities.... (88,663,000) (79,396,000)
------------ ------------
Net deferred income tax liability........ $(55,500,000) $(55,500,000)
============ ============
</TABLE>

At December 31, 1996, the Company had net operating loss (NOL) carryforwards
for regular income tax purposes aggregating approximately $88.0 million, which
expire in various years through 2011. Utilization of the NOLs is subject to
certain limitations. The Company's regular tax NOLs are recognized for
financial statement purposes as a reduction of the deferred tax liability or an
increase of the deferred tax asset.

13. DISCONTINUED OPERATION:

14. COMPETITION:

The Connecticut Department of Public Utility Control granted a franchise to a
subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially to
a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict when the franchise will be
awarded, and the ultimate impact of this development upon the Company's
consolidated financial position or results of operations.

F-43
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

CCE-II's Riverside, California system, providing service to approximately
48,000 basic subscribers, faces competition from a multipoint distribution
system acquired by Pacific Telesis Group. At this time, management is uncertain
what impact, if any, this acquisition will have on the Company's consolidated
financial position or results of operations.

15. 401(K) PLAN:

F-44
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Cencom Cable Entertainment, Inc.:

We have audited the accompanying balance sheets of Cencom Cable
Entertainment, Inc. (a Delaware corporation) as of December 31, 1996 and 1995,
and the related statements of operations, shareholder's investment (deficit)
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cencom Cable
Entertainment, Inc. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

St. Louis, Missouri,

July 1, 1997

F-45
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

BALANCE SHEETS--DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIP... $122,582,298 $137,119,099
------------ ------------
$122,582,298 $137,119,099
============ ============
LIABILITIES AND SHAREHOLDER'S INVESTMENT (DEFICIT)
NOTE PAYABLE....................................... $ 82,000,000 $ 82,000,000
------------ ------------
ACCRUED INTEREST ON NOTE PAYABLE................... 22,843,403 10,438,805
------------ ------------
DEFERRED INCOME TAXES.............................. 55,500,000 55,500,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S INVESTMENT (DEFICIT):
Common stock, $1 par value, 300,000 shares autho-
rized; 245,973 shares
issued and outstanding........................... 245,973 245,973
Additional paid-in capital........................ 21,954,139 21,954,139
Accumulated deficit............................... (59,961,217) (33,019,818)
------------ ------------
Total shareholder's investment (deficit)........ (37,761,105) (10,819,706)
------------ ------------
$122,582,298 $137,119,099
============ ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-46
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED
PARTNERSHIP....................................... $(14,536,801) $(22,581,013)
INTEREST EXPENSE.................................. (12,404,598) (10,438,805)
------------ ------------
Net loss...................................... $(26,941,399) $(33,019,818)
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-47
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

STATEMENTS OF SHAREHOLDER'S INVESTMENT (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
-------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995...... $245,973 $21,954,139 $ -- $ 22,200,112
Net loss.................... -- -- (33,019,818) (33,019,818)
-------- ----------- ------------ ------------
BALANCE, December 31, 1995.... 245,973 21,954,139 (33,019,818) (10,819,706)
Net loss.................... -- -- (26,941,399) (26,941,399)
-------- ----------- ------------ ------------
BALANCE, December 31, 1996.... $245,973 $21,954,139 $(59,961,217) $(37,761,105)
======== =========== ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-48
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(26,941,399) $(33,019,818)
Adjustments to reconcile net loss to net cash from
operating activities--
Equity in loss of unconsolidated limited
partnership..................................... 14,536,801 22,581,013
Changes in assets and liabilities--
Accrued interest on note payable................ 12,404,598 10,438,805
------------ ------------
Net cash from operating activities............. -- --
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES............... -- --
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES............... -- --
------------ ------------
CASH, beginning and end of year.................... $ -- $ --
============ ============
CASH PAID FOR INTEREST............................. $ -- $ --
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-49
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

Cencom Cable Entertainment, Inc. (CCE or the "Company"), a Delaware
corporation, is a wholly owned subsidiary of CCA Acquisition Corp. (CAC). CAC
is a wholly owned subsidiary of CCA Holdings Corp. (CCA Holdings). CCA
Holdings is owned approximately 85% by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals and approximately 15% by Charter
Communications, Inc. (Charter), manager of Charter Communications
Entertainment I, L.P.'s (CCE-I) and Charter Communications Entertainment II,
L.P.'s (CCE-II) cable television systems. All material intercompany
transactions and balances have been eliminated.

In January 1995, CAC completed certain acquisitions, including stock and
asset acquisitions of CCE and cable television systems located in Connecticut
from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards, Incorporated
(Hallmark) (the "Crown Transaction"). CCE's assets were comprised primarily of
cable television systems serving communities in St. Louis County, Missouri
(the "Missouri System"). On September 29, 1995, CAC and CCT Holdings Corp.
(CCT Holdings), an entity affiliated with CCA Holdings by common ownership,
entered into an Asset Exchange Agreement whereby CAC exchanged a 1% undivided
interest in all of its assets (including CCE's assets) for a 1.22% undivided
interest in certain assets to be acquired by CCT Holdings from an affiliate of
Gaylord Entertainment Company, Inc. (Gaylord). In September 1995, CCT Holdings
acquired certain cable television systems from Gaylord. Upon execution of the
Asset Purchase Agreement, CAC and CCT Holdings entered into a series of
agreements to contribute their assets to Charter Communications Entertainment,
L.P. (CCE, L.P.). CCE, L.P. immediately contributed the assets acquired under
the Crown Transaction to CCE-I and certain assets acquired in the Gaylord
acquisition to CCE-II.

The series of transactions representing the contribution of assets to CCE-I
acquired under the Crown Transaction is a reorganization of entities under
common control and has been accounted for in a manner similar to a pooling of
interests. Accordingly, CCE-I's financial statements reflect the activity of
these systems for the entire year. Thus, the net loss of CCE-I generated by
the Missouri System for the period prior to September 29, 1995, was allocated
entirely to CCE.

As a result of these transactions, CCE owns a 33% limited partnership
interest in CCE, L.P., CAC owns a 21% limited partnership interest in CCE,
L.P. and CCT Holdings owns a 44% limited partnership interest in CCE, L.P. In
addition, CAC and CCT Holdings each own a 1% general partnership interest in
CCE, L.P.

Investment in Unconsolidated Limited Partnership

CCE has a 33% limited partnership interest in CCE, L.P. CCE, L.P. is
controlled by CAC and CCT Holdings through their general partnership interests
and provisions within its partnership agreement, therefore, CCE's investment
is accounted for using the equity method of accounting. Under this method, the
investment is originally recorded at cost and is subsequently adjusted to
recognize CCE's share of net earnings or losses as they occur and
distributions when received.

Use of Estimates

F-50
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. INVESTMENTS IN UNCONSOLIDATED LIMITED PARTNERSHIPS:

Summary financial information of CCE-I and CCE-II as of December 31, 1996
and 1995, and for the years then ended (CCE-I) and for the period from
inception (April 20, 1995) to December 31, 1995, and for the year ended
December 31, 1996 (CCE-II), which is not consolidated with the operating
results of the Company, is as follows:

<TABLE>
<CAPTION>
CCE-I CCE-II
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current assets.......... $ 8,999,959 $ 15,396,675 $ 10,904,830 $ 11,043,867
Noncurrent assets--
primarily investment in
cable television
properties............. 657,011,095 566,369,624 338,316,421 348,029,594
------------ ------------ ------------ ------------
Total assets........ $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Current liabilities..... $ 28,903,475 $ 15,138,838 $ 13,098,198 $ 14,107,036
Long-term debt.......... 462,120,000 355,000,000 221,418,000 218,600,000
Other long-term
liabilities............. 2,463,339 3,550,612 383,070 584,460
Partners' capital....... 172,524,240 208,076,849 114,321,983 125,781,965
------------ ------------ ------------ ------------
Total liabilities
and partners'
capital............ $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Service revenues........ $143,023,261 $ 99,689,410 $ 90,368,332 $ 21,156,209
============ ============ ============ ============
Income (loss) from
operations.............. $ 1,106,166 $ (6,946,137) $ 5,039,834 $ 983,638
============ ============ ============ ============
Net loss................ $(35,552,609) $(31,423,151) $(11,459,982) $ (3,458,535)
============ ============ ============ ============
</TABLE>

As of December 31, 1996, CCE-I provided cable television service to
approximately 338,300 basic subscribers in Connecticut, Illinois,
Massachusetts, Missouri and New Hampshire, and CCE-II provided cable
television service to approximately 168,100 basic subscribers in southern
California.

3. ACQUISITIONS BY UNCONSOLIDATED LIMITED PARTNERSHIPS:

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I. The acquisition of these systems was part of a series of larger
transactions in which Crown sold its cable television systems to a group of
investors, including Charter, CAC, certain affiliates of Charter, and third
parties, for a total purchase price of approximately $900.0 million. To
finance this acquisition, CCE-I entered into a revolving credit and term loan
facility (the "CCE-I Credit Agreement") and CCA Holdings executed a
subordinated seller note (the "HC Crown Note"), pursuant to a senior
subordinated loan agreement with an affiliate of Hallmark for $82.0 million
(see Note 4).

In September 1995, CCT Holdings acquired certain assets from Gaylord for
approximately $340.9 million, which included cable television systems in
southern California. As previously described, these assets were contributed to
CCE-II. To finance the acquisition, CCE-II entered into a revolving credit and
term loan facility (the "CCE-II Credit Agreement") and CCT Holdings executed a
subordinated seller note to Gaylord (the "Gaylord Note").

In October 1995, CCE-I acquired the net assets of certain systems from
United Video Cablevision, Inc., which include cable television systems in
Massachusetts and Missouri, for an aggregate purchase price of
approximately $96.0 million.

F-51
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In January 1996, CCE-I acquired the net assets of certain systems from
Mineral Area Cablevision Co. L.P., which include cable television systems in
Missouri, for an aggregate purchase price of approximately $9.4 million.

In November 1996, CCE-I acquired the net assets of certain systems from
Masada Cable Partners, L.P., which include cable television systems in
Missouri, for an aggregate purchase price of approximately $24.2 million.

4. NOTE PAYABLE:

In connection with the Crown Transaction, CCE issued a guarantee of payment
to the holder of the HC Crown Note. Accordingly, the debt has been reflected
as a liability of the Company in the accompanying financial statements. The HC
Crown Note is also guaranteed by CAC and CCE, L.P. The HC Crown Note is an
unsecured obligation. The HC Crown Note is limited in aggregate principal
amount to $82.0 million and has a stated maturity date of December 31, 1999
(the "Stated Maturity Date"). Interest accrues at 13% per annum, compounded
semiannually, but is not due and payable until the Stated Maturity Date. If
principal plus accrued interest is not paid at the Stated Maturity Date, the
annual rate at which interest accrues will initially increase to 18% and will
increase by an additional 2% on each successive anniversary of the Stated
Maturity Date (up to a maximum of 26%) until the HC Crown Note is repaid; in
addition, a 3% default rate of interest can, in certain instances, be in
effect simultaneously with the stated rate of interest on the HC Crown Note.
The HC Crown Note is redeemable in whole or in part at the option of CCA
Holdings at any time, without premium or penalty, provided that accrued
interest is paid on the portion of the HC Crown Note so redeemed.

The HC Crown Note is subordinated to the CCE-I Credit Agreement. Pursuant to
the terms of the CCE-I Credit Agreement, payments on the HC Crown Note are
prohibited until the indefeasible payment in full in cash, and the termination
of commitments to lend under the CCE I Credit Agreement. The HC Crown Note
will not have the benefit of any distributions from CCE-II until repayment in
full of the CCE-II Credit Agreement and the Gaylord Note.

The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and
CCE, L.P. (collectively referred to as the "Guarantors"). The CCE, L.P.
guarantee cannot be enforced until the repayment in full and termination of
the CCE-I Credit Agreement and the CCE-II Credit Agreement. The CAC and CCE
guarantees cannot be enforced until the repayment in full and termination of
the CCE I Credit Agreement. The guarantees, by their terms, are limited to the
proceeds of distributions received from CCE-I, and income, if any, generated

F-52
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

by the Guarantors. CCA Holdings and the Guarantors are dependent primarily
upon distributions from CCE-I to service the HC Crown Note.

5. COMMITMENTS AND CONTINGENCIES:

Litigation

A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain
pending. Each of the defendants in the Action, including CCE-I, believes the
Action, which remains pending, to be without merit and is contesting it
vigorously. In October 1996, the plaintiff filed a Consolidated Amended Class
Action Complaint (the "Amended Complaint"). The general partner of CCIP
believes that portions of the Amended Complaint are legally inadequate and in
January 1997 filed a motion for summary judgment to dismiss all remaining
claims in the Action. There can be no assurance, however, that the plaintiff
will not be awarded damages, some or all of which may be payable by CCE-I, in
connection with the Action.

The Company is a named defendant in two actions filed in 1997 involving an
affiliate of Charter, Cencom Cable Income Partners II, L.P. (CCIP II). An
action has been filed in the Circuit Court of Jackson County, Missouri by 269
individual plaintiffs who are limited partners of CCIP II against Cencom
Properties II, Inc., the general partner of CCIP II, Cencom Partners Inc., the
general partner of Cencom Partners, LP (CPLP), an entity in which CCIP II
invested, certain named brokerage firms involved in the original sale of the
limited partnership units and The Company. The Company provided management
services to both CCIP II and CPLP and also owned all of the stock of the
general partners of each of these partnerships prior to mid-1994. The
Plaintiffs seek recovery of the consideration paid for their partnership
units, restitution of all profits received by the defendants in connection
with the CCIP II transaction and punitive damages. Also a purported class
action has been filed in the Court of Chancery of the State of Delaware, in
and for New Castle County on behalf of the limited partners of CCIP II against
Cencom Properties II, Inc., the Company Charter, certain other affiliates of
Charter and certain individuals, including officers of Charter or Cencom
Properties II, Inc. The damages claimed by the plaintiffs are as yet
unspecified. The Company believes that it has meritorious defenses in both
actions, including defenses based on applicable statutes of limitations. The
Company intends to defend the actions vigorously. The Company is not able at
this early stage to project the expenses, if any, which will be associated
with the actions or to predict any potential outcome or exposure.

6. REGULATION IN THE CABLE TELEVISION INDUSTRY:

F-53
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Congress enacted the Cable Television Consumer Protection and Competition Act
of 1992 (the "1992 Cable Act"), which became effective on December 4, 1992. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates. The 1992 Cable Act and the
Federal Communications Commission's (FCC) rules implementing the 1992 Cable Act
have generally increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local franchise authorities.

Management believes that CCE-I and CCE-II have complied in all material
respects with the rate provisions of the 1992 Cable Act; however, in
jurisdictions that have not yet chosen to certify, refunds covering a one-year
period on basic services may be ordered upon future certification if CCE-I and
CCE-II are unable to justify their rates through a benchmark or cost-of-service
filing pursuant to FCC rules. Management is unable to estimate at this time the
amount of refunds, if any, that may be payable by CCE-I and CCE-II in the event
certain of their rates are successfully challenged by franchising authorities
or found to be unreasonable by the FCC. Management does not believe that the
amount of any such refunds would have a material adverse effect on the
financial position or results of operations of the Company.

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have been
renewed for cable operators that have provided satisfactory services and have
complied with the terms of the franchise agreement. Although management
believes that CCE-I and CCE-II have generally met the terms of their franchise
agreements and have provided quality levels of service, and anticipates CCE-I's
and CCE-II's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on CCE-I and CCE-II than previously existed.

During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which alters
federal, state and local laws and regulations pertaining to cable television,
telecommunication and other services. Under the Telecommunications Act,
telephone companies can complete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by CCE-I and CCE-II. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications Act's
provisions have been and are likely to be subject to judicial challenges.
Management is unable at this time to predict the outcome of such rule makings
or litigation or the substantive effect of the new legislation and the rule
makings on the financial position and results of operations of the Company.

7. INCOME TAXES:

CCE is part of the CCA Holdings consolidated group which files consolidated
tax returns. Income taxes are recorded in accordance with SFAS No. 109. In
accordance with SFAS No. 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequence attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred income tax assets and
liabilities are measured using the enacted tax rates in effect for the year in
which those temporary

F-54
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

differences are expected to be recovered or settled. Deferred income tax
expense or benefit is the result of changes in the liability or asset recorded
for deferred taxes. A valuation allowance must be established for any portion
of a deferred tax asset for which it is more likely than not that a tax benefit
will not be realized.

During 1996 and 1995, changes in the Company's temporary differences and
losses from operations, resulted in deferred tax benefits of approximately $6.1
million and $.7 million, respectively. These amounts were offset by valuation
allowances of equal amounts.

No current provision (benefit) for income taxes was recorded during 1996 and
1995.
Deferred income taxes are comprised of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Deferred income tax assets:
Tax loss carryforwards............................ $ 24,046,000 $ 17,866,000
Valuation allowance............................... (6,843,000) (663,000)
------------ ------------
Total deferred income tax assets................ 17,203,000 17,203,000
Deferred income tax liabilities:
Investments in unconsolidated limited partner-
ships............................................ (72,703,000) (72,703,000)
------------ ------------
Net deferred income tax liability............... $(55,500,000) $(55,500,000)
============ ============
</TABLE>

At December 31, 1996, the Company had net operating loss (NOL) carryforwards
for regular income tax purposes aggregating approximately $60.1 million, which
expire in various years through 2011. Utilization of the NOLs is subject to
certain limitations. The Company's regular tax NOLs are recognized for
financial statement purposes as a reduction of the deferred tax liability or an
increase of the deferred tax asset.

8. COMPETITION:

The Connecticut Department of Public Utility Control granted a franchise to a
subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially to
a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict the ultimate impact of this
development upon the Company's financial position or results of operations.

F-55
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Charter Communications Entertainment, L.P.:

We have audited the accompanying balance sheets of Charter Communications
Entertainment, L.P. (a Delaware limited partnership) as of December 31, 1996
and 1995, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Entertainment, L.P. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

St. Louis, Missouri,
February 21, 1997

F-56
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

BALANCE SHEETS--DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS... $279,854,790 $325,823,701
SUBORDINATED NOTE RECEIVABLE FROM UNCONSOLIDATED
LIMITED PARTNERSHIP................................ 25,000,000 25,000,000
INTEREST RECEIVABLE FROM UNCONSOLIDATED LIMITED
PARTNERSHIP........................................ 2,418,000 500,000
------------ ------------
$307,272,790 $351,323,701
============ ============
LIABILITIES AND PARTNERS' CAPITAL
NOTE PAYABLE........................................ $ 82,000,000 $ 82,000,000
ACCRUED INTEREST ON NOTE PAYABLE.................... 22,843,403 10,438,805
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General partners................................... 624,614 4,928,458
Limited partners--
Ordinary Capital Accounts......................... 10,543,510 83,187,453
------------ ------------
Preferred Capital Account......................... 191,261,263 170,768,985
------------ ------------
Total partners' capital......................... 202,429,387 258,884,896
------------ ------------
$307,272,790 $351,323,701
============ ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-57
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED
PARTNERSHIPS...................................... $(45,968,911) $(34,730,760)
INTEREST EXPENSE.................................. (12,404,598) (10,438,805)
INTEREST INCOME--UNCONSOLIDATED LIMITED
PARTNERSHIP....................................... 1,918,000 500,000
------------ ------------
Net loss.................................... (56,455,509) (44,669,565)
PREFERRED RETURN.................................. (20,492,278) (5,081,095)
------------ ------------
Loss applicable to partners' capital
accounts.................................... $(76,947,787) $(49,750,660)
============ ============
LOSS ALLOCATION TO PARTNERS' CAPITAL ACCOUNTS:
General partners................................ $ (4,303,844) $ (2,782,632)
Limited partners--Preferred Capital Account..... -- --
------------ ------------
NET LOSS APPLICABLE TO LIMITED PARTNERS--ORDINARY
CAPITAL ACCOUNTS................................. $(72,643,943) $(46,968,028)
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-58
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

STATEMENTS OF PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
LIMITED PARTNERS
--------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNERS ACCOUNTS ACCOUNT TOTAL
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1,
1995..................... $ -- $ -- $ -- $ --
Partners' capital
contributions......... 7,711,090 130,155,481 165,687,890 303,554,461
Net loss............... (2,498,438) (42,171,127) -- (44,669,565)
Preference allocation.. (284,194) (4,796,901) 5,081,095 --
----------- ------------ ------------ ------------
BALANCE, December 31,
1995..................... 4,928,458 83,187,453 170,768,985 258,884,896
Net loss............... (3,157,670) (53,297,839) -- (56,455,509)
Preference allocation.. (1,146,174) (19,346,104) 20,492,278 --
----------- ------------ ------------ ------------
BALANCE, December 31,
1996..................... $ 624,614 $ 10,543,510 $191,261,263 $202,429,387
=========== ============ ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-59
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(56,455,509) $(44,669,565)
Adjustments to reconcile net loss to net cash from
operating activities--
Equity in loss of unconsolidated limited
partnerships..................................... 45,968,911 34,730,760
Changes in assets and liabilities--
Interest receivable from unconsolidated limited
partnership..................................... (1,918,000) (500,000)
Accrued interest on note payable................ 12,404,598 10,438,805
------------ ------------
Net cash from operating activities............ -- --
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in unconsolidated limited
partnerships...................................... -- (360,554,461)
------------ ------------
Net cash used in investing activities......... -- (360,554,461)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
General partners' contributions................... -- 7,711,090
Limited partners' contributions................... -- 295,843,371
Issuance of note receivable to unconsolidated
limited partnership............................... -- (47,000,000)
Payments on note receivable from unconsolidated
limited partnership............................... -- 22,000,000
Proceeds from note payable........................ -- 82,000,000
------------ ------------
Net cash provided by financing activities..... -- 360,554,461
------------ ------------
CASH, beginning and end of year.................... $ -- $ --
============ ============
CASH PAID FOR INTEREST............................. $ -- $ --
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-60
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

In connection with a reorganization under common control, the assets of
certain cable television systems located in Connecticut and Missouri were
contributed from CCA Acquisition Corp. (CAC) and its wholly owned subsidiary,
Cencom Cable Entertainment, Inc. (CCE), respectively, to Charter
Communications Entertainment, L.P. (the "Partnership"). CAC and CCE owned and
operated the systems during the first nine months of 1995. These systems were
immediately contributed to a newly formed partnership, Charter Communications
Entertainment I, L.P. (CCE-I). The Partnership, CAC, CCE and CCE-I are all
indirectly owned approximately 85% by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals, and approximately 15% by
Charter Communications, Inc. (Charter). Therefore, this series of transactions
is a reorganization of entities under common control and has been accounted
for in a manner similar to a pooling of interests. Accordingly, the financial
statements reflect the activity of these systems for the entire year.

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings Corp. (CCT Holdings), an entity affiliated with CCA Holdings
Corp. (CCA Holdings) by common ownership, entered into an Asset Exchange
Agreement whereby CAC exchanged a 1% undivided interest in all of its assets
for a 1.22% undivided interest in certain assets to be acquired by CCT
Holdings from an affiliate of Gaylord Entertainment Company, Inc. (Gaylord).
In September 1995, CCT Holdings acquired certain cable television systems from
Gaylord. Upon execution of the Asset Purchase Agreement, CAC and CCT Holdings
entered into a series of agreements to contribute the assets acquired under
the Crown Transaction (see Note 3) to CCE-I and certain assets acquired in the
Gaylord acquisition (see Note 3) to Charter Communications Entertainment II,
L.P. (CCE-II). As a result of entering into these agreements, CCA Holdings,
the parent company of CAC, owns a 55% interest and CCT Holdings owns a 45%
interest in the combined operations of CCE-I and CCE-II, respectively. The net
loss of CCE-I for the period prior to September 29, 1995, was allocated
entirely to CCA Holdings.

As a result of these transactions, CCE owns a 33% limited partnership
interest in the Partnership, CAC owns a 21% limited partnership interest in
the Partnership and CCT Holdings owns a 44% limited partnership interest in
the Partnership. CAC and CCT Holdings each own a 1% general partnership
interest in the Partnership.

The Partnership will terminate no later than December 31, 2055, as provided
in its partnership agreement (the "Partnership Agreement").

Investment in Unconsolidated Limited Partnerships

The Partnership has a 97.78% limited partnership interest in both CCE-I and
CCE-II. CCE-I is controlled by CAC and CCE-II is controlled by CCT Holdings
through their general partnership interests and provisions within the various
partnership agreements; therefore, the Partnership's investment in these
entities is accounted for using the equity method of accounting. Under this
method, the investments are originally recorded at cost and are subsequently
adjusted to recognize the Partnership's share of net earnings or losses as
they occur and distributions when received.

Income Taxes

Income taxes are the responsibility of the partners and as such are not
provided in the accompanying financial statements.

F-61
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Use of Estimates

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

2. INVESTMENTS IN UNCONSOLIDATED LIMITED PARTNERSHIPS:

Summary financial information of CCE-I and CCE-II as of December 31, 1996 and
1995, and for the year then ended (CCE-I), and for the year ended December 31,
1996 and for the period from inception (April 20, 1995) to December 31, 1995
(CCE-II), which is not consolidated with the operating results of the
Partnership, is as follows:

<TABLE>
<CAPTION>
CCE-I CCE-II
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current assets.......... $ 8,999,959 $ 15,396,675 $ 10,904,830 $ 11,043,867
Noncurrent assets--
primarily investment in
cable television
properties............. 657,011,095 566,369,624 338,316,421 348,029,594
------------ ------------ ------------ ------------
Total assets...... $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Current liabilities..... $ 28,903,475 $ 15,138,838 $ 13,098,198 $ 14,107,036
Long-term debt.......... 462,120,000 355,000,000 221,418,000 218,600,000
Other long-term
liabilities............. 2,463,339 3,550,612 383,070 584,460
Partners' capital....... 172,524,240 208,076,849 114,321,983 125,781,965
------------ ------------ ------------ ------------
Total liabilities
and partners'
capital.......... $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Service revenues........ $143,023,261 $ 99,689,410 $ 90,368,332 $ 21,156,209
============ ============ ============ ============
Income (loss) from
operations.............. $ 1,106,166 $ (6,946,137) $ 5,039,834 $ 983,638
============ ============ ============ ============
Net loss................ $(35,552,609) $(31,423,151) $(11,459,982) $ (3,458,535)
============ ============ ============ ============
</TABLE>

As of December 31, 1996, CCE-I provided cable television service to
approximately 338,300 basic subscribers in Connecticut, Illinois,
Massachusetts, Missouri and New Hampshire, and CCE-II provided cable television
service to approximately 168,100 basic subscribers in southern California.

3. ACQUISITIONS BY UNCONSOLIDATED LIMITED PARTNERSHIPS:

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I. The acquisition of these systems was part of a series of larger
transactions in which Crown sold its cable television systems to a group of
investors, including Charter, CAC, certain affiliates of Charter, and third
parties, for a total purchase price of approximately $900.0 million. To finance
this acquisition, CCE-I entered into a revolving credit and term loan facility
(the "CCE-I Credit Agreement"), and CCA Holdings executed a subordinated seller
note (the "HC Crown Note") pursuant to a senior subordinated loan agreement
with an affiliate of Hallmark for $82.0 million (see Note 5).

F-62
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In September 1995, CCT Holdings acquired certain assets from Gaylord for
approximately $340.9 million, which included cable television systems in
southern California. As previously described, these assets were contributed to
CCE-II. To finance the acquisition, CCE-II entered into a revolving credit and
term loan facility (the CCE-II Credit Agreement), and CCT Holdings executed a
subordinated seller note to Gaylord (the "Gaylord Note").

In October 1995, CCE-I acquired the net assets of certain systems from United
Video Cablevision, Inc., which include cable television systems in
Massachusetts and Missouri, for an aggregate purchase price of approximately
$96.0 million.

In January 1996, CCE-I acquired the net assets of certain systems from
Mineral Area Cablevision Co., L.P., which include cable television systems in
Missouri, for an aggregate purchase price of approximately $9.4 million.

4. SUBORDINATED NOTE RECEIVABLE FROM UNCONSOLIDATED LIMITED PARTNERSHIP:

In connection with the formation of CCE-II, CCE-II issued a Promissory Note
(the "Note") to the Partnership in the amount of $47.0 million. Immediately
upon closing of the Gaylord acquisition, CCE-II used proceeds from borrowings
under the CCE-II Credit Agreement to repay $22.0 million on the Note. All
principal or interest amounts due under the Note are subordinated with respect
to the CCE-II Credit Agreement. The Note matures on March 31, 2005. The Note
bears interest at an annual rate equal to the weighted average interest rate
payable on the loans outstanding under the CCE-II Credit Agreement which was
7.66% and 8.20% during 1996 and 1995, respectively. The interest rate was 7.41%
and 7.82% at December 31, 1996 and 1995, respectively.

5. NOTE PAYABLE:

In connection with the Crown Transaction, the Partnership issued a guarantee
of payment to the holder of the HC Crown Note. Accordingly, the debt has been
reflected as a liability of the Partnership in the accompanying financial
statements. The HC Crown Note is also guaranteed by CAC and CCE. The HC Crown
Note is an unsecured obligation. The HC Crown Note is limited in aggregate
principal amount to $82.0 million and has a stated maturity date of December
31, 1999 (the "Stated Maturity Date"). Interest accrues at 13% per annum,
compounded semiannually, but is not due and payable until the Stated Maturity
Date. If principal plus accrued interest is not paid at the Stated Maturity
Date, the annual rate at which interest accrues will initially increase to 18%
and will increase by an additional 2% on each successive anniversary of the
Stated Maturity Date (up to 26%) until the HC Crown Note is repaid; in
addition, a 3% default rate of interest can, in certain instances, be in effect
simultaneously with the stated rate of interest on the HC Crown Note. The HC
Crown Note is redeemable in whole or in part at the option of CCA Holdings at
any time, without premium or penalty, provided that accrued interest is paid on
the portion of the HC Crown Note so redeemed.

F-63
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Borrowings under the HC Crown Note are subject to certain financial and
nonfinancial covenants and restrictions. The most restrictive covenant requires
maintenance of a ratio of debt (excluding the HC Crown Note) to adjusted
consolidated annualized operating cash flow, as defined, not to exceed 7.25 to
1 at December 31, 1996. In addition to the subordination in right of payment
provisions contained in the HC Crown Note, the HC Crown Note is subject to a
subordination agreement in favor of senior bank debt of CCE-I. Pursuant to the
subordination agreement, substantially all rights and remedies under the HC
Crown Note, including the rights to accelerate the maturity upon an event of
default (including a payment of default), are suspended until the obligations
under the CCE-I Credit Agreement, are paid in full.

The HC Crown Note is subordinated to the CCE-I Credit Agreement. Pursuant to
the terms of the CCE-I Credit Agreement payments on the HC Crown Note are
prohibited until the indefeasible payment in full in cash, and the termination
of commitments to lend under the CCE-I Credit Agreement. The HC Crown Note will
not have the benefit of any distributions from CCE-II until repayment in full
of the CCE-II Credit Agreement and the Gaylord Note.

The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and the
Partnership (collectively referred to as the "Guarantors"). The Partnership's
guarantee cannot be enforced until the repayment in full and termination of the
CCE-I Credit Agreement and the CCE-II Credit Agreement. The CAC and CCE
guarantees cannot be enforced until the repayment in full and termination of
the CCE-I Credit Agreement. The guarantees, by their terms, are limited to the
proceeds of distributions received from CCE-I and income, if any, generated by
the Guarantors. CCA Holdings and the Guarantors are dependent primarily upon
distributions from CCE-I to service the HC Crown Note.

Subsequent to year-end, HC Crown Corp. sold the majority of the HC Crown Note
through a private placement. The fair value of the HC Crown Note plus accrued
interest, based upon the proceeds received, was approximately $89.5 million at
December 31, 1996.

6. PARTNERSHIP INTERESTS:

Under the terms of the Partnership Agreement, the profits and losses for
income tax reporting purposes are allocated among the partners in accordance
with their percentage interests subject to any adjustments required by the
Internal Revenue Code and Treasury Regulations.

For financial reporting purposes, profits and losses, and the preferred
return (described below) are allocated in accordance with the liquidation
provisions in the Partnership Agreement.

Proceeds from the liquidation of the Partnership shall be distributed as
follows: (i) to the payment of liquidation expenses; (ii) to the payment of
creditors of the Partnership and the establishment of reserves to provide for
contingent liabilities; (iii) to CCT Holdings, equal to the amount of its
Preferred Capital Account; (iv) to each partner to the extent of such positive
balance in the ratio in which its respective ordinary capital account balance
bears to all such ordinary capital account balances; and (v) the remaining
balance to the partners in accordance with their percentage interests at the
time of liquidation.

CCT Holdings is entitled to an annual preferred return computed in accordance
with the provisions in the Partnership Agreement.

F-64
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Pursuant to the Partnership Agreement, while any amounts remain outstanding
under both the HC Crown Note and the Gaylord Note, distributions to the
Partnership by CCE-I will be distributed by the Partnership to CAC and CCE (pro
rata) for use solely to service the HC Crown Note and distributions to the
Partnership by CCE-II will be distributed by the Partnership to CCT Holdings to
service the Gaylord Note. If the Gaylord Note is repaid prior to payment in
full of the HC Crown Note, then all distributions to the Partnership from both
CCE-I and CCE-II will be used to service the HC Crown Note. If the HC Crown
Note is repaid prior to payment in full of the Gaylord Note, then all
distributions to the Partnership from both CCE-I and CCE-II will be used to
service the Gaylord Note.

In connection with the Gaylord acquisition, CCT Holdings, the Partnership,
and Gaylord entered into a contingent payment agreement (the "Contingent
Agreement"). The Contingent Agreement indicates CCE, L.P. will pay Gaylord 15%
of any amount distributed to CCT Holdings in excess of the total of the Gaylord
Note, the HC Crown Note and $450.0 million.

7. COMMITMENTS AND CONTINGENCIES:

Litigation

A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain pending.
Each of the defendants in the Action, including CCE-I believes the Action,
which remains pending, to be without merit and is contesting it vigorously. In
October 1996, the plaintiff filed a Consolidated Amended Class Action Complaint
(the "Amended Complaint"). The general partner of CCIP believes that portions
of the Amended Complaint are legally inadequate and filed a motion for summary
judgment to dismiss all remaining claims in the Action in January 1997. There
can be no assurance, however, that the plaintiffs will not be awarded damages,
some or all of which may be payable by CCE-I, in connection with the Action.

The Partnership is also a party to lawsuits which are generally incidental to
its business. In the opinion of management, after consulting with legal
counsel, the outcome of these lawsuits will not have a material adverse effect
on the Partnership's financial position and results of operations.

8. REGULATION IN THE CABLE TELEVISION INDUSTRY:

Congress enacted the Cable Television Consumer Protection and Competition Act
of 1992 (the "1992 Cable Act"), which became effective on December 4, 1992. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates. The 1992 Cable Act and the
Federal Communications Commission's (FCC) rules implementing the 1992 Cable Act
have generally increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local franchise authorities.

F-65
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

rates through a benchmark or cost-of-service filing pursuant to FCC rules.
Management is unable to estimate at this time the amount of refunds, if any,
that may be payable by CCE-I and CCE-II in the event certain of their rates are
successfully challenged by franchising authorities or found to be unreasonable
by the FCC. Management does not believe that the amount of any such refunds
would have a material adverse effect on the financial position or results of
operations of the Partnership.

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have been
renewed for cable operators that have provided satisfactory services and have
complied with the terms of the franchise agreement. Although management
believes that CCE-I and CCE-II have generally met the terms of their franchise
agreements and have provided quality levels of service, and anticipates CCE-I's
and CCE-II's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on CCE-I and CCE-II than previously existed.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by CCE-I and CCE-II. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule-makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications Act's
provisions have been and are likely to be subject to judicial challenges.
Management is unable at this time to predict the outcome of such rule-makings
or litigation or the substantive effect of the new legislation and the rule-
makings on the financial position and results of operations of the Partnership.

9. NET LOSS FOR INCOME TAX PURPOSES:

The following reconciliation summarizes the differences between the
Partnership's net loss for financial reporting purposes and net loss for
federal income tax purposes for the year ended December 31, 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net loss for financial reporting purposes...... $(56,455,509) $(44,669,565)
Differences in net loss of unconsolidated
limited partnerships for financial reporting
and tax reporting............................. (2,767,108) 31,239,817
Differences in expenses for financial reporting
and tax reporting............................. 12,404,598 10,438,805
------------ ------------
Net loss for federal income tax purposes... $(46,818,019) $ (2,990,943)
============ ============

The following summarizes the significant cumulative temporary differences
between the Partnership's financial reporting basis and federal income tax
reporting basis as of December 31, 1996 and 1995:

<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Assets:
Investment in unconsolidated limited
partnerships.................................. $ 4,912,673 $ 7,679,781
============ ============
</TABLE>

F-66
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

10. COMPETITION:

The Connecticut Department of Public Utility Control granted a franchise to a
subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially to
a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict the ultimate impact of this
development upon the Partnership's financial position or results of operations.

CCE-II's Riverside, California system, providing service to approximately
48,000 basic subscribers, faces competition from a multipoint distribution
system acquired by Pacific Telesis Group. At this time, management is uncertain
what impact, if any, this acquisition will have on the Partnership's financial
position or results of operations.

11. SIGNIFICANT NONCASH TRANSACTIONS:

The Partnership engaged in the following significant noncash financing
transaction during the years ended December 31:

<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Preference allocation--Preferred Capital Account
(see Note 6)...................................... $20,492,278 $5,081,095
</TABLE>

F-67
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Charter Communications Entertainment I, L.P.:

We have audited the accompanying balance sheets of Charter Communications
Entertainment I, L.P. (a Delaware limited partnership) as of December 31, 1996
and 1995, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Entertainment I, L.P. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

St. Louis, Missouri,
February 21, 1997

F-68
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

BALANCE SHEETS--DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 2,934,939 $ 11,430,931
Accounts receivable, net of allowance for doubtful
accounts of $371,166
and $251,419....................................... 5,465,750 3,324,186
Prepaid expenses and other.......................... 490,443 641,558
Net assets of discontinued operation................ 108,827 --
------------ ------------
Total current assets............................. 8,999,959 15,396,675
------------ ------------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment....................... 206,351,379 178,149,968
Franchise costs, net of accumulated amortization of
$51,761,758 and $21,512,225........................ 439,232,345 370,268,109
Covenant not to compete, net of accumulated amorti-
zation of $20,000,000
and $10,000,000.................................... -- 10,000,000
------------ ------------
645,583,724 558,418,077
------------ ------------
OTHER ASSETS......................................... 9,667,356 7,649,949
------------ ------------
RESTRICTED FUNDS HELD IN ESCROW...................... -- 301,598
------------ ------------
NET NONCURRENT ASSETS OF DISCONTINUED OPERATION...... 1,760,015 --
------------ ------------
$666,011,054 $581,766,299
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt................ $ 5,880,000 $ --
Accounts payable and accrued expenses............... 18,517,774 13,274,646
Subscriber deposits................................. 473,601 711,663
Payables to affiliates.............................. 2,630,149 2,907,529
Other current liabilities........................... 1,401,951 --
------------ ------------
Total current liabilities........................ 28,903,475 16,893,838
------------ ------------
DEFERRED REVENUE..................................... 708,339 780,612
------------ ------------
LONG-TERM DEBT....................................... 462,120,000 355,000,000
------------ ------------
DEFERRED MANAGEMENT FEES PAYABLE TO AFFILIATE........ 1,755,000 1,015,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General Partner..................................... 1,862,703 2,797,869
Limited Partners--
Ordinary Capital Accounts.......................... 65,818,135 112,840,175
Preferred Capital Account.......................... 104,843,402 92,438,805
------------ ------------
Total partners' capital.......................... 172,524,240 208,076,849
------------ ------------
$666,011,054 $581,766,299
============ ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-69
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SERVICE REVENUES:
Basic service................................... $ 96,560,920 $ 65,075,541
Premium service................................. 19,201,801 15,484,951
Other........................................... 27,260,540 19,128,918
------------ ------------
143,023,261 99,689,410
------------ ------------
EXPENSES:
Operating costs................................. 59,869,348 41,800,111
General and administrative...................... 11,255,985 7,142,567
Depreciation and amortization................... 65,757,387 51,193,702
Management and financial advisory service fees--
related parties................................ 5,034,375 6,499,167
------------ ------------
141,917,095 106,635,547
------------ ------------
Income (loss) from continuing operations...... 1,106,166 (6,946,137)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income................................. 164,476 503,585
Interest expense................................ (34,249,422) (25,022,221)
Other........................................... (1,058,271) 41,622
------------ ------------
(35,143,217) (24,477,014)
------------ ------------
Net loss from continuing operations........... (34,037,051) (31,423,151)
LOSS FROM DISCONTINUED OPERATION.................. (1,515,558) --
------------ ------------
Net loss...................................... (35,552,609) (31,423,151)
PREFERRED RETURN.................................. (12,404,597) (3,020,613)
------------ ------------
Net loss application to partner's capital
accounts..................................... (47,957,206) $(34,443,764)
------------ ------------
NET LOSS ALLOCATION:
General Partner................................. (935,166) (124,031)
Limited Partners--Preferred Capital Account..... -- --
------------ ------------
(935,166) (124,031)
------------ ------------
NET LOSS APPLICABLE TO LIMITED PARTNERS--ORDINARY
CAPITAL ACCOUNTS................................. $(47,022,040) $(34,319,733)
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-70
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

STATEMENTS OF PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
LIMITED PARTNERS
--------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNER ACCOUNTS ACCOUNT TOTAL
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995.. $ -- $ -- $ -- $ --
Capital contributions.... 2,921,900 147,159,908 89,418,192 239,500,000
Allocation of net loss... (65,129) (31,358,022) -- (31,423,151)
Allocation of preferred
return.................. (58,902) (2,961,711) 3,020,613 --
---------- ------------ ------------ ------------
BALANCE, December 31,
1995...................... 2,797,869 112,840,175 92,438,805 208,076,849
Capital contributions.... -- -- -- --
Allocation of net loss... (693,276) (34,859,333) -- (35,552,609)
Allocation of preferred
return.................. (241,890) (12,162,707) 12,404,597 --
---------- ------------ ------------ ------------
BALANCE, December 31,
1996...................... $1,862,703 $ 65,818,135 $104,843,402 $172,524,240
========== ============ ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-71
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(35,552,609) $(31,423,151)
Adjustments to reconcile net loss to net cash pro-
vided by operating activities--
Depreciation and amortization.................... 65,757,387 51,193,702
Loss on sale of property, plant and equipment.... 1,256,945 --
Loss from discontinued operation................. 1,515,558 --
Changes in assets and liabilities, net of effects
from acquisitions--
Accounts receivable, net........................ (1,748,468) (1,387,654)
Prepaid expenses and other...................... 279,406 (250,428)
Accounts payable and accrued expenses........... 4,056,629 4,249,587
Subscriber deposits............................. (257,062) (11,303)
Payables to affiliates.......................... 462,620 3,922,529
Other current liabilities....................... 1,401,951 --
Deferred revenue................................ (144,748) 780,612
------------ ------------
Net cash provided by operating activities...... 37,027,609 27,073,894
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment........ (33,898,020) (22,023,524)
Proceeds from sale of property, plant and equip-
ment............................................. 986,359 --
Payments for acquisitions, net of cash acquired... (122,017,267) (579,179,458)
Payments of organizational expenses............... (242,875) (1,297,203)
Payments of franchise costs....................... (569,167) (53,266)
Payments of brokerage commissions................. (310,385) --
Restricted funds held in escrow................... 301,598 (301,598)
------------ ------------
Net cash used in investing activities.......... (155,749,757) (602,855,049)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs................... (2,773,844) (7,287,914)
Borrowings under revolving credit and term loan
facility......................................... 120,500,000 356,000,000
Payments of revolving credit and term loan facili-
ty............................................... (7,500,000) (1,000,000)
Limited Partners' contributions................... -- 236,578,100
General Partner's contribution.................... -- 2,921,900
------------ ------------
Net cash provided by financing activities...... 110,226,156 587,212,086
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS........................................ (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year....... 11,430,931 --
CASH AND CASH EQUIVALENTS, end of year............. $ 2,934,939 $ 11,430,931
============ ============
CASH PAID FOR INTEREST............................. $ 33,921,715 $ 22,907,403
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-72
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

Charter Communications Entertainment I, L.P. (the "Partnership"), a Delaware
limited partnership, was formed effective January 1995, for the purpose of
acquiring and operating existing cable television systems. The Partnership
commenced operations effective January 1995, with the assignment of its
general and limited partnership interests. The Partnership will terminate no
later than December 31, 2055, as provided in its partnership agreement (the
"Partnership Agreement").

CCA Acquisition Corp. (CAC), the General Partner, holds a 1.22% interest in
the Partnership. CAC is a wholly owned subsidiary of CCA Holdings Corp. (CCA
Holdings). Charter Communications Entertainment, L.P. (CCE) and CCT Holdings
Corp. (CCT Holdings) hold limited partnership interests of 97.78% and 1%,
respectively, in the Partnership. CCT Holdings and CCA Holdings hold
partnership interests of 45% and 55%, respectively, in CCE. CCA Holdings and
CCT Holdings are each owned by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals and Charter Communications, Inc.
(Charter), manager of the Partnership's cable television systems (see Note 8).

As of December 31, 1996, the Partnership provided cable television service
to approximately 125 franchises serving approximately 338,300 basic
subscribers in Connecticut, Illinois, Massachusetts, Missouri and New
Hampshire.

Cash Equivalents

Cash equivalents at December 31, 1996 and 1995, consist primarily of
repurchase agreements with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value. The
Partnership is subject to loss for amounts invested in repurchase agreements
in the event of nonperformance by the financial institution which acts as the
counterparty under such agreements; however, such noncompliance is not
anticipated.

Property, Plant and Equipment

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:

<TABLE>
<S> <C>
Trunk and distribution systems................................ 10 years
Subscriber installations...................................... 10 years
Buildings and headends........................................ 10-20 years
Converters.................................................... 5 years
Vehicles and equipment........................................ 4-8 years
Office equipment.............................................. 5-10 years
</TABLE>

F-73
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Franchise Costs

Covenant Not to Compete

Covenant not to compete was amortized over the term of the respective
agreement (two years).

Other Assets

Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.

During 1995, the Partnership adopted Statement of Financial Accounting
Standards (SFAS) No. 121 entitled, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of." In accordance with
SFAS No. 121, the Partnership periodically reviews the carrying value of its
long-lived assets, identifiable intangibles and franchise costs in relation to
historical financial results, current business conditions and trends
(including the impact of existing legislation and regulation) to identify
potential situations in which the carrying value of such assets may not be
recoverable. If a review indicates that the carrying value of such assets may
not be recoverable, the carrying value of such assets in excess of their fair
value will be recorded as a reduction of the assets' cost as if a permanent
impairment has occurred. No impairments have occurred and accordingly, no
adjustments to the financial statements of the Partnership have been recorded
relating to SFAS No. 121.

Restricted Funds Held in Escrow

In connection with the acquisition of cable television systems from Mineral
Area Cablevision Co., L.P. (Omega) as further discussed in Note 3, the
Partnership agreed to deposit a portion of the purchase price into an escrow
account in 1995, which was transferred to Omega at the closing of the asset
purchase in January 1996.

Revenues

Cable service revenues are recognized when the related services are
provided.

Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts.

Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.

Other Income (Expense)

Other includes gain and loss on disposition on fixed assets and other
miscellaneous income and expense items, which are not directly related to the
Partnership's primary business. A loss of $1,256,945 was recognized on the
sale of two buildings for the year ended December 31, 1996.

F-74
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Derivative Financial Instruments

The Partnership manages risk arising from fluctuations in interest rates by
using interest rate swap and cap agreements, as required by its credit
agreement. These agreements are treated as off-balance sheet financial
instruments. The interest rate swap and cap agreements are being accounted for
as a hedge of the debt obligation, and accordingly, the net settlement amount
is recorded as an adjustment to interest expense in the period incurred.

Income Taxes

Income taxes are the responsibility of the partners and as such are not
provided for in the accompanying financial statements, except for taxes
imposed by the state of Illinois. The state income tax benefit generated by
partnership losses for the year ended December 31, 1996, was offset by a
valuation allowance of an equal amount.

Use of Estimates

Reclassifications

Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.

2. PARTNERSHIP INTERESTS:

For financial reporting purposes, profits and losses, and the preferred
return (described below) are allocated in accordance with the liquidation
provisions in the Partnership Agreement.

Proceeds from the liquidation of the Partnership shall be distributed as
follows: (i) to the payment of liquidation expenses; (ii) to the payment of
creditors of the Partnership and the establishment of reserves to provide for
contingent liabilities; (iii) to CCE, equal to the amount of its Preferred
Capital Account; (iv) to each partner to the extent of such positive balance
in the ratio in which its respective ordinary capital account balance bears to
all such ordinary capital account balances; and (v) the remaining balance to
the partners in accordance with their percentage interests at the time of
liquidation.

The Partnership Agreement provides for, among other things, distributions to
the respective partners in proportion to their respective partnership
interests, and the creation of a preferred capital account and preferred
distributions related thereto. CCE is entitled to an annual preferred return
computed in accordance with the provisions in the Partnership Agreement. The
effect of these provisions is to direct the proceeds of distributions from the
Partnership to CCE for repayment of the HC Crown Note (as defined herein).
Furthermore, the Credit Agreement (as defined herein) establishes limitations
on distributions.

F-75
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. ACQUISITIONS:

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) for an aggregate purchase price of approximately
$488.2 million. The assets were later contributed through a series of
transactions to the Partnership effective January 1, 1995. The acquisition of
these systems was part of a series of larger transactions in which Crown sold
its cable television systems to a group of investors, including Charter, CAC,
certain affiliates of Charter, and third parties, for a total purchase price
of approximately $900.0 million.

To finance this acquisition, the Partnership entered into a revolving credit
and term loan facility (see Note 7), and pursuant to a senior subordinated
loan agreement, CCA Holdings executed a subordinated seller note to HC Crown
Corp., an affiliate of Hallmark for $82.0 million (the "HC Crown Note"). The
obligations of the HC Crown Note are guaranteed by CAC, Cencom Cable
Entertainment, Inc., a wholly owned subsidiary of CAC, and CCE (collectively,
the "Guarantors"). The guarantees, by their terms, are limited to the proceeds
of distributions received from the Partnership, and income, if any, generated
by the Guarantors. CCA Holdings and the Guarantors are dependent primarily on
distributions from the Partnership to service the obligations owing under the
HC Crown Note. Upon repayment in full of the obligations of the revolving
credit and term loan facility and termination of all commitments to lend in
respect thereof, the HC Crown Note will have the benefit of distributions from
the Partnership. The Partnership's assets are not pledged as collateral to the
HC Crown Note.

In October 1995, the Partnership acquired the net assets of certain systems
from United Video Cablevision, Inc. (United) which include cable television
systems in Massachusetts and Missouri for an aggregate purchase price of
approximately $96.0 million.

In January 1996, the Partnership acquired the net assets of Omega, which
include cable television systems in Missouri, for an aggregate purchase price
of approximately $9.4 million.

In March 1996, the Partnership acquired the net assets of the Illinois
system from Cencom Cable Income Partners, L.P. (CCIP), an affiliated entity,
for an aggregate purchase price of approximately $82.1 million.

In November 1996, the Partnership acquired the net assets of certain systems
from Masada Cable Partners, L.P. (Masada), which include cable television
systems in Missouri, for an aggregate purchase price of approximately $24.2
million.

F-76
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

These acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the respective date of
acquisition. The following shows the purchase price and the allocation of the
purchase price to assets acquired and liabilities assumed:

<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Purchase price:
Cash paid to seller.... $338,640,282 $93,542,306 $9,178,086 $80,103,013 $23,625,358
Seller note executed by
CCA Holdings.......... 82,000,000 -- -- -- --
Assumed liabilities,
including deferred
income taxes of
$55,500,000 for
Crown................. 55,638,033 282,000 32,000 -- 82,950
Transaction costs...... 11,935,229 2,216,101 200,000 2,025,000 480,000
------------ ----------- ---------- ----------- -----------
$488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
Allocation of purchase
price to
assets acquired:
Cash.................. $ 5,073,954 $ 539 $ 200 $ 1,053,410 $ --
Accounts receivable... 1,933,859 2,673 5,190 387,906 --
Prepaid expenses and
other................ 279,745 111,385 7,440 90,368 30,483
Property, plant and
equipment............ 162,432,874 12,439,879 1,054,878 11,980,833 2,147,338
Franchise costs....... 307,370,555 84,356,513 8,427,122 69,663,726 22,155,487
Covenant not to
compete.............. 20,000,000 -- -- -- --
Accounts payable and
accrued expenses..... (8,877,443) (147,616) (84,744) (975,755) (126,000)
Subscriber deposits... -- (722,966) -- -- (19,000)
Deferred revenue...... -- -- -- (72,475) --
------------ ----------- ---------- ----------- -----------
Purchase price...... $488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>

The following is the unaudited pro forma operating results for the 1996 and
1995 acquisitions as though they had been made on January 1 of the respective
year prior to such acquisitions:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Service revenues................................ $151,548,000 $137,021,602
Income (loss) from operations................... $ 819,000 $ (2,049,590)
Net loss........................................ $(37,743,000) $(41,916,360)
</TABLE>

F-77
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment is stated at cost and consist of the following
at December 31:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems................... $125,248,708 $110,330,189
Subscriber installations......................... 45,636,572 34,114,600
Land, buildings and headends..................... 33,135,716 21,069,307
Converters....................................... 27,097,454 21,046,326
Vehicles and equipment........................... 7,180,068 4,737,430
Office equipment................................. 7,603,973 5,597,301
Construction-in-progress......................... 3,243,405 --
------------ ------------
249,145,896 196,895,153
Less--Accumulated depreciation................... (42,794,517) (18,745,185)
------------ ------------
$206,351,379 $178,149,968
============ ============
</TABLE>

5. OTHER ASSETS:

Other assets consist of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated amortization
of $1,656,817
and $648,064......................................... $8,404,941 $6,639,850
Organizational expenses, net of accumulated
amortization of $574,589
and $287,104......................................... 965,489 1,010,099
Brokerage commissions, net of accumulated amortization
of $13,459
and $--.............................................. 296,926 --
---------- ----------
$9,667,356 $7,649,949
========== ==========
</TABLE>

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following at December
31:

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Accrued salaries and related benefits............... $ 1,283,024 $ 888,972
Accounts payable.................................... 1,763,895 646,744
Accrued interest.................................... 2,442,525 2,114,818
Programming expenses................................ 2,726,803 2,046,640
Franchise fees...................................... 3,187,335 2,467,564
Capital expenditures................................ 3,482,531 3,525,747
Other............................................... 3,631,661 1,584,161
----------- -----------
$18,517,774 $13,274,646
=========== ===========
</TABLE>

7. LONG-TERM DEBT:

Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Credit Agreement:
Term loans...................................... $280,000,000 $280,000,000
Fund loans...................................... 85,000,000 75,000,000
Revolving credit facility....................... 103,000,000 --
------------ ------------
468,000,000 355,000,000
Less--Current maturities........................ (5,880,000) --
------------ ------------
$462,120,000 $355,000,000
============ ============
</TABLE>

F-78
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In January 1995, the Partnership entered into a revolving credit and term
loan facility (the "Credit Agreement") with a consortium of banks for
borrowings up to $300.0 million. The Credit Agreement has been amended on
several occasions to increase total borrowings to $505.0 million for the
purpose of making certain acquisitions. Principal payments are due in
quarterly installments beginning September 30, 1997, and continuing through
June 30, 2004. Borrowings under the Credit Agreement bear interest at rates
based upon a certain spread plus a base rate, with the base rate being, at the
Partnership's election, the Base

Rate, as defined in the Credit Agreement, LIBOR, or prevailing bid rates on
certificates of deposit. The applicable spread is based on the ratio of debt
to annualized operating cash flow. The interest rates ranged from 7.63% to
9.42% at December 31, 1996. The weighted average interest rates and weighted
average borrowings were 8.05% and 8.71%, and approximately $425.1 million and
$272.9 million during 1996 and 1995, respectively. As this debt instrument
bears interest at current market rates, its carrying amount approximates fair
market value at December 31, 1996 and 1995.

Borrowings under the Credit Agreement are collateralized by the assets of
the Partnership. In addition, CAC, CCE and CCT Holdings have pledged their
partnership interests as additional security to the Credit Agreement.

<TABLE>
<CAPTION>
PERCENTAGE OF PRINCIPAL DUE PERCENTAGE REDUCTION
------------------------------ OF REVOLVING CREDIT
YEAR TERM LOANS FUND LOANS FACILITY COMMITMENT
------------- ------------- --------------------
<S> <C> <C> <C>
1997............... 2.10% -- % 2.10%
1998............... 9.00 .50 9.00
1999............... 12.00 .50 12.00
2000............... 12.25 1.00 12.25
2001............... 16.50 1.00 16.50
2002............... 20.25 1.00 20.25
2003............... 21.25 17.40 21.25
2004............... 6.65 78.60 6.65
------------- ------------- ------
100.00% 100.00% 100.00%
============= ============= ======
</TABLE>

In addition to the foregoing, effective April 30, 1999, and on each April
30th thereafter, the Partnership is required to make a repayment of principal
of the outstanding term and fund loans in an amount equal to 75% of Annual
Excess Cash Flow, as defined in the Credit Agreement, for the preceding year
if the leverage ratio is greater than 5.5 to 1, or 50% of Annual Excess Cash
Flow if the leverage ratio is less than 5.5 to 1. These repayments shall be
applied to principal in inverse order of maturity.

F-79
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Based upon outstanding indebtedness at December 31, 1996, the amortization of
term and fund loans and scheduled reductions in available borrowings depicted
above, aggregate future principal payments on the Credit Agreement at December
31, 1996, are as follows:

<TABLE>
<CAPTION>
REVOLVING
CREDIT TOTAL
TERM LOANS FUND LOANS FACILITY AMOUNT
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
1997................... $ 5,880,000 $ -- $ -- $ 5,880,000
1998................... 25,200,000 425,000 -- 25,625,000
1999................... 33,600,000 425,000 -- 34,025,000
2000................... 34,300,000 850,000 12,490,000 47,640,000
2001................... 46,200,000 850,000 23,100,000 70,150,000
Thereafter............. 134,820,000 82,450,000 67,410,000 284,680,000
------------ ----------- ------------ ------------
$280,000,000 $85,000,000 $103,000,000 $468,000,000
============ =========== ============ ============
</TABLE>

As a requirement of the Credit Agreement, the Partnership has secured
interest rate protection agreements. The Credit Agreement requires the
Partnership to enter into interest rate protection agreements for notional
amounts of not less than 50% of the outstanding obligations. In addition, the
interest rate protection agreements must provide rate protection for a weighted
average period of not less than 18 months. The fair value of the interest rate
caps or swaps is the estimated amount the Partnership would (pay) receive to
eliminate the cap or swap agreement at the reporting date, taking into account
current interest rates and the credit-worthiness of the counterparties. The
following summarizes certain information pertaining to the interest rate
protection agreements as of December 31, 1996:

<TABLE>
<CAPTION>
FAIR
VALUE/
NOTIONAL FIXED REDEMPTION
AMOUNT TYPE RATE CONTRACT EXPIRATION DATE PRICE
-------- ---- ----- --------------------------- ----------
<S> <C> <C> <C> <C>
$ 25,000,000 Swap 5.5% December 1, 1997 $ (60,812)
25,000,000 Swap 5.5 December 1, 1997 (19,135)
30,000,000 Cap 8.5 March 28, 1998 (4,956)
50,000,000 Cap 8.5 April 14, 1998 (8,978)
25,000,000 Swap 4.9 December 1, 1998 *
75,000,000 Swap 5.5 February 2, 1999 1,085,601
20,000,000 Cap 8.5 September 23, 1999 42,045
------------ ----------
$250,000,000 6.6% Weighted Average Fixed Rate $1,033,765
============ ==========
</TABLE>
- --------
* This contract has not been marked to market since its effective date is
after the reporting date.

Management believes that the counterparties of the interest hedge agreements
will be able to meet their obligations under the agreements. The purpose of the
Partnership's involvement in these interest hedge agreements is to minimize the
Partnership's exposure to interest rate fluctuations on its floating rate debt.
Management believes that it has no material concentration of credit or market
risks with respect to its interest hedge agreements.

8. RELATED-PARTY TRANSACTIONS:

Charter provides management services to the Partnership under the terms of a
contract which provides for base fees equal to $4,845,000 and $3,925,000 as of
December 31, 1996 and 1995, respectively, per annum plus an annual bonus equal
to 30% of the excess, if any, of operating cash flow (as defined in the
management agreement) over the projected operating cash flow for the year.
Payment of the annual bonus is prohibited until termination of the Credit
Agreement due to restrictions provided within the Credit Agreement. The annual
bonus for the year ended December 31, 1996 and 1995, totaled $740,000 and
$1,015,000, respectively. In addition, the Partnership receives financial
advisory services from an affiliate of Kelso under terms of a contract which

F-80
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

provides for fees equal to $552,500 and $450,000 at December 31, 1996 and 1995,
respectively, per annum. These agreements were amended during 1996 and 1995 in
conjunction with each acquisition of cable television systems to increase the
annual base fees for Charter and Kelso. Expenses recognized by the Partnership
under these contracts during 1996 and 1995 were approximately $5,034,000 and
$6,499,000, respectively. Management and financial advisory service fees
currently payable of $1,181,300 and $1,029,000 are included in Payables to
affiliates at December 31, 1996 and 1995, respectively.

The Partnership pays certain acquisition advisory fees to an affiliate of
Kelso and Charter, which typically equal approximately 1% of the total purchase
price paid for cable television systems acquired. Total acquisition fees paid
to the affiliate of Kelso in 1996 and 1995 were $1,140,000 and $5,250,000,
respectively. Total acquisition fees paid to Charter in 1996 and 1995 were
$1,140,000 and $950,000, respectively. In addition, Charter received $4,300,000
of equity interests in CCA Holdings during 1995 in conjunction with the Crown
acquisition.

The Partnership and all entities affiliated with Charter collectively utilize
a combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims. The Partnership is allocated charges
monthly based upon its total number of employees, historical claims and medical
cost trend rates. Management considers this allocation to be reasonable for the
operations of the Partnership. During 1996 and 1995, the Partnership expensed
approximately $1,401,300 and $840,000, respectively, relating to insurance
allocations.

In 1996, the Partnership and other affiliated entities employed the services
of Charter's National Data Center (the "National Data Center"). The National
Data Center performs certain subscriber billing services and provides computer
network, hardware and software support for the Partnership and other affiliated
entities. The cost of billing services is allocated based on the number of
subscribers. Management considers this allocation to be reasonable for the
operations of the Partnership. During 1996, the Partnership expensed
approximately $340,600 relating to these services.

In 1996, certain of the Partnership's employees became participants in the
1996 Charter Communications/Kelso & Company Appreciation Rights Plan (the
"Appreciation Rights Plan"). The Appreciation Rights Plan covers certain key
employees and consultants within the group of companies and partnerships
controlled by affiliates of Kelso and managed by Charter (collectively, the
"Investment Group").

The Partnership maintains a regional office. The regional office performs
certain operational services on behalf of the Partnership and other affiliated
entities. The cost of these services is allocated to the Partnership and
affiliated entities based on their number of subscribers. Management considers
this allocation to be reasonable for the operations of the Partnership. During
1996 and 1995, the Partnership expensed approximately $799,400 and $512,000,
respectively, relating to these services.

9. COMMITMENTS AND CONTINGENCIES:

Leases

The Partnership leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under these leases during 1996 and 1995
was approximately $617,600 and $533,000, respectively.

Approximate aggregate future minimum lease payments are as follows:

<TABLE>
<S> <C>
AMOUNT
--------
1997................................................................ $484,500
1998................................................................ 438,900
1999................................................................ 259,600
2000................................................................ 159,200
2001................................................................ 111,200
Thereafter.......................................................... 422,100
</TABLE>

F-81
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The Partnership rents utility poles in its operations. Generally, pole rental
agreements are short term, but the Partnership anticipates that such rentals
will recur. Rent expense for pole attachments during 1996 and 1995 was
approximately $1,773,100 and $1,363,000, respectively.

Insurance Coverage

The Partnership currently does not have, and does not in the near term
anticipate having, property and casualty insurance on its underground
distribution plant. Due to large claims incurred by the property and casualty
insurance industry, the pricing of insurance coverage has become inflated to
the point where, in the judgment of the Partnership's management, the price is
cost prohibitive. Management believes that its experience and policy with such
insurance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the Partnership's distribution plant at reasonable rates.

Litigation

A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain pending.
Each of the defendants in the Action, including the Partnership, believes the
Action, which remains pending, to be without merit and is contesting it
vigorously. In October 1996, the plaintiff filed a Consolidated Amended Class
Action Complaint (the "Amended Complaint"). The general partner of CCIP
believes that portions of the Amended Complaint are legally inadequate and in
January 1997 filed a motion for summary judgment to dismiss all remaining
claims in the Action. There can be no assurance, however, that the plaintiff
will not be awarded damages, some or all of which may be payable by the
Partnership, in connection with the Action.

Severance Payment

During 1996, the Partnership and other affiliated entities entered into a
Settlement Agreement and Mutual Release with a former executive, whereby the
Partnership will make severance payments totaling $500,000. The funds are to be
paid in 12 monthly installments, which commenced April 1, 1996.

10. REGULATION IN THE CABLE TELEVISION INDUSTRY:

Congress enacted the Cable Television Consumer Protection and Competition Act
of 1992 (the "1992 Cable Act"), which became effective on December 4, 1992. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates. The 1992 Cable Act and the
Federal Communications Commission's (FCC) rules implementing the 1992 Cable Act
have generally increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local franchise authorities.

F-82
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

While management believes that the Partnership has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if the Partnership is unable
to justify its rates through a benchmark or cost-of-service filing pursuant to
FCC rules. Management is unable to estimate at this time the amount of
refunds, if any, that may be payable by the Partnership in the event certain
of its rates are successfully challenged by franchising authorities or found
to be unreasonable by the FCC. Management does not believe that the amount of
any such refunds would have a material adverse effect on the financial
position or results of operations of the Partnership.

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the Partnership has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
Partnership's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on the Partnership than previously existed.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Partnership. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule makings or litigation or the substantive effect of the new legislation
and the rule makings on the financial position and results of operations of
the Partnership.

11. NET LOSS FOR INCOME TAX PURPOSES:

<TABLE>
<S> <C> <C>
1996 1995
------------ ------------
Net loss for financial reporting purposes...... $(35,552,609) $(31,423,151)
Depreciation differences between financial
reporting and tax reporting................... (9,527,020) (2,376,770)
Differences in losses from property sales
recorded for financial reporting and tax
reporting..................................... 774,144 --
Amortization differences between financial
reporting and tax reporting................... 19,754,275 16,395,856
Differences in expenses recorded for financial
reporting and tax reporting................... 6,192,786 6,484,716
Differences in revenue reported for financial
reporting and tax reporting................... 18,973 780,612
------------ ------------
Net loss for federal income tax purposes....... $(18,339,451) $(10,138,737)
============ ============
</TABLE>

F-83
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following summarizes the significant cumulative temporary differences
between the Partnership's financial reporting basis and federal income tax
reporting basis as of December 31, 1996 and 1995:

<TABLE>
<S> <C> <C>
1996 1995
-------------- -------------
ASSETS:
Accounts receivable....................... $ 371,166 $ 251,419
Net assets of discontinued operation...... 303,673 --
Accrued expenses and payables to
affiliates............................... 5,640,188 4,944,033
Deferred revenue.......................... 708,339 780,612
Deferred management fees payable to
affiliate................................ 1,755,000 1,015,000
-------------- -------------
$ 8,778,366 $ 6,991,064
============== =============
LIABILITIES:
Property, plant and equipment............. $ (91,977,838) $ (79,667,302)
Franchise costs........................... (110,904,002) (118,213,073)
-------------- -------------
$(202,881,840) $(197,880,375)
============== =============
</TABLE>

12. DISCONTINUED OPERATION:

The Partnership approved a plan to discontinue the radio operation
maintained by its subsidiary, Charter Communications Radio St. Louis, LLC.
Pursuant to a sales agreement dated January 23, 1997, such operations will
cease upon FCC approval of the transfer of the radio license.

13. COMPETITION:

The Connecticut Department of Public Utility Control granted a franchise to
a subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially
to a "primary franchise area" of several Connecticut communities, including
one served by the Partnership. Management is unable to predict the ultimate
impact upon the Partnership's financial position or results of operations.

14. 401(K) PLAN:

In 1995, the Partnership adopted the Charter Communications, Inc. 401(k)
Plan (the "401(k) Plan") for the benefit of its employees. All employees who
have completed one year employment are eligible to participate in the 401(k)
Plan. The 401(k) Plan is a tax-qualified retirement savings plan to which
employees may elect to make pretax contributions up to the lesser of 10% of
their compensation or dollar thresholds established under the Internal Revenue
Code. The Partnership contributes an amount equal to 50% of the first 5%
contributed by each employee. During 1996 and 1995, the Partnership
contributed approximately $269,900 and $177,000 to the 401(k) Plan,
respectively.

15. SIGNIFICANT NONCASH TRANSACTIONS:

The Partnership engaged in the following significant noncash financing
transactions during 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Preference allocation--Preferred Capital Account
(see Note 2)...................................... $12,404,597 $3,020,613
</TABLE>

F-84
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Charter Communications Entertainment II, L.P.:

We have audited the accompanying balance sheets of Charter Communications
Entertainment II, L.P. (a Delaware limited partnership) as of December 31,
1996 and 1995, and the related statements of operations, partners' capital and
cash flows for the year ended December 31, 1996, and for the period from
inception (April 20, 1995) to December 31, 1995. These financial statements
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Entertainment II, L.P. as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for the year ended December 31, 1996, and
for the period from inception (April 20, 1995) to December 31, 1995, in
conformity with generally accepted accounting principles.

Arthur Andersen LLP

St. Louis, Missouri,
February 21, 1997

F-85
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

BALANCE SHEETS--DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 6,050,650 $ 5,897,105
Accounts receivable, net of allowance for doubtful
accounts of $325,137
and $220,697....................................... 3,486,418 3,842,278
Prepaid expenses and other.......................... 1,367,762 1,304,484
------------ ------------
Total current assets.............................. 10,904,830 11,043,867
------------ ------------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment....................... 119,701,617 112,901,956
Franchise costs, net of accumulated amortization of
$19,628,548
and $3,810,099..................................... 215,279,033 231,773,954
------------ ------------
334,980,650 344,675,910
------------ ------------
OTHER ASSETS......................................... 3,335,771 3,353,684
------------ ------------
$349,221,251 $359,073,461
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable and accrued expenses............... $ 11,588,865 $ 12,660,930
Subscriber deposits................................. 418,500 444,339
Payables to affiliates.............................. 1,090,833 1,111,767
------------ ------------
Total current liabilities......................... 13,098,198 14,217,036
------------ ------------
DEFERRED REVENUE..................................... 383,070 474,460
------------ ------------
LONG-TERM DEBT....................................... 194,000,000 193,100,000
------------ ------------
SUBORDINATED NOTE PAYABLE TO LIMITED PARTNER......... 27,418,000 25,500,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General Partner..................................... -- --
Limited Partners--
Ordinary Capital Accounts.......................... -- --
Preferred Capital Account.......................... 114,321,983 125,781,965
------------ ------------
Total partners' capital........................... 114,321,983 125,781,965
------------ ------------
$349,221,251 $359,073,461
============ ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-86
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1996, AND

FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
SERVICE REVENUES:
Basic service...................................... $51,070,996 $12,047,565
Premium service.................................... 11,799,695 2,837,578
Other.............................................. 27,497,641 6,271,066
----------- -----------
90,368,332 21,156,209
----------- -----------
EXPENSES:
Operating costs.................................... 42,972,828 9,904,836
General and administrative......................... 7,039,142 1,816,167
Depreciation and amortization...................... 31,716,528 7,441,568
Management and financial advisory service fees--
related parties.................................... 3,600,000 1,010,000
----------- -----------
85,328,498 20,172,571
----------- -----------
Income from operations........................... 5,039,834 983,638
----------- -----------
OTHER INCOME (EXPENSE):
Interest income.................................... 172,008 98,185
Interest expense................................... (16,742,021) (4,540,358)
Other.............................................. 70,197 --
----------- -----------
(16,499,816) (4,442,173)
----------- -----------
Net loss......................................... (11,459,982) (3,458,535)
----------- -----------
PREFERRED RETURN.................................... -- (1,680,890)
----------- -----------
Net loss applicable to partners' capital accounts.. (11,459,982) (5,139,425)
=========== ===========
NET LOSS ALLOCATION:
General Partner.................................... -- (1,292,405)
----------- -----------
Limited Partners--Preferred Capital Account........ (11,459,982) (2,270,286)
(11,459,982) (3,562,691)
----------- -----------
NET LOSS APPLICABLE TO LIMITED PARTNERS--ORDINARY
CAPITAL ACCOUNTS................................... $ -- $(1,576,734)
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-87
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

STATEMENTS OF PARTNERS' CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 1996, AND

FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
LIMITED PARTNERS
------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNER ACCOUNTS ACCOUNT TOTAL
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, at inception...... $ -- $ -- $ -- $ --
Capital contributions.... 1,292,405 1,576,734 126,371,361 129,240,500
Allocation of net loss... (535,247) (653,002) (2,270,286) (3,458,535)
Allocation of preferred
return................... (757,158) (923,732) 1,680,890 --
---------- ---------- ------------ ------------
BALANCE, December 31,
1995....................... -- -- 125,781,965 125,781,965
Allocation of net loss... -- -- (11,459,982) (11,459,982)
---------- ---------- ------------ ------------
BALANCE, December 31,
1996....................... $ -- $ -- $114,321,983 $114,321,983
========== ========== ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-88
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 1996, AND

FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(11,459,982) $ (3,458,535)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization.................... 31,716,528 7,441,568
Changes in assets and liabilities, net of effects
from acquisition--
Accounts receivable, net........................ 355,860 (1,442,510)
Prepaid expenses and other...................... (63,278) (549,005)
Accounts payable and accrued expenses........... (437,065) 4,400,371
Subscriber deposits............................. (25,839) (5,972)
Payables to affiliates.......................... (20,934) 1,111,767
Deferred revenue................................ (91,390) (8,179)
Accrued interest on subordinated note payable to
Limited Partner................................. 1,918,000 500,000
------------ ------------
Net cash provided by operating activities...... 21,891,900 7,989,505
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment........ (22,174,686) (4,876,992)
Payment for Gaylord Entertainment, Inc.
acquisition....................................... -- (340,939,879)
Payments of organizational expenses............... (127,854) (315,403)
Other............................................. 16,268 (8,155)
------------ ------------
Net cash used in investing activities.......... (22,286,272) (346,140,429)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit and term loan
facility.......................................... 6,500,000 193,100,000
Payments of revolving credit and term loan
facility.......................................... (5,600,000) --
Proceeds from subordinated note payable to Limited
Partner........................................... -- 47,000,000
Payment of subordinated note payable to Limited
Partner........................................... -- (22,000,000)
Limited Partners' capital contributions........... -- 127,948,095
General Partner's capital contribution............ -- 1,292,405
Payments of debt issuance costs................... (352,083) (3,292,471)
------------ ------------
Net cash provided by financing activities...... 547,917 344,048,029
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......... 153,545 5,897,105
CASH AND CASH EQUIVALENTS, beginning of period..... 5,897,105 --
------------ ------------
CASH AND CASH EQUIVALENTS, end of period........... $ 6,050,650 $ 5,897,105
============ ============
CASH PAID FOR INTEREST............................. $ 17,511,868 $ 298,839
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-89
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

Charter Communications Entertainment II, L.P. (the "Partnership"), a
Delaware limited partnership, was formed on April 20, 1995, for the purpose of
acquiring and operating existing cable television systems. The Partnership
commenced operations effective September 30, 1995, through the acquisition of
certain cable television systems in southern California. The Partnership will
terminate no later than December 31, 2055, as provided in its partnership
agreement (the "Partnership Agreement"). CCT Holdings Corp. (CCT Holdings),
the General Partner, holds a 1% interest in the Partnership. Charter
Communications Entertainment, L.P. (CCE) and CCA Acquisition Corp. (CAC) hold
limited partnership interests of 97.78% and 1.22%, respectively, in the
Partnership. CCT Holdings and CAC hold partnership interests of 45% and 55%,
respectively, in CCE. CAC is a wholly owned subsidiary of CCA Holdings Corp.
(CCA Holdings). CCA Holdings and CCT Holdings are each owned by Kelso
Investment Associates V, L.P., an investment fund, together with an affiliate
(collectively referred to as "Kelso" herein) and certain other individuals and
Charter Communications, Inc. (Charter), manager of the cable television
systems (see Note 8).

As of December 31, 1996, the Partnership provided cable television service
to 25 franchises serving approximately 168,100 basic subscribers in southern
California.

Cash Equivalents

Cash equivalents at December 31, 1996 and 1995, consist primarily of
repurchase agreements with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value. The
Partnership is subject to loss for amounts invested in repurchase agreements
in the event of nonperformance by the financial institution which acts as the
counterparty under such agreements; however, such noncompliance is not
anticipated.

Property, Plant and Equipment

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:

F-90
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Franchise Costs

Other Assets

Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.

Revenues

Cable service revenues are recognized when the related services are
provided.

Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts.

Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.

Derivative Financial Instruments

Income Taxes

Income taxes are the responsibility of the partners and as such are not
provided for in the accompanying financial statements.

Use of Estimates

F-91
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Reclassifications

Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.

2. PARTNERSHIP INTERESTS:

For financial reporting purposes, profits and losses, and the preferred
return (described below) are allocated in accordance with the liquidation
provisions in the Partnership Agreement.

Proceeds from the liquidation of the Partnership shall be distributed as
follows: (i) to the payment of liquidation expenses; (ii) to the payment of
creditors of the Partnership and the establishment of reserves to provide for
contingent liabilities; (iii) to CCE, equal to the amount of its Preferred
Capital Account; (iv) to each partner to the extent of such positive balance
in the ratio in which its respective ordinary capital account balance bears to
all such positive ordinary capital account balances; and (v) the remaining
balance to the partners in accordance with their percentage interests at the
time of liquidation.

The Partnership Agreement provides for, among other things, distributions to
the respective partners in proportion to their respective partnership
interests, and the creation of a preferred capital account and preferred
distributions related thereto. The effect of these provisions is to direct the
proceeds of distributions from the Partnership to CCE for repayment of the
Gaylord Note (as defined herein). Furthermore, the Credit Agreement (as
defined herein) establishes limitations on distributions.

CCE is entitled to an annual preferred return computed in accordance with
the provisions in the Partnership Agreement. The 1996 preferred return of
approximately $24,424,000 and the cumulative preferred return totaling
approximately $30,260,000 have not been reflected in CCE's capital account as
of December 31, 1996, since the General Partner's capital account and Limited
Partners' ordinary capital account have been reduced to $-0-.

3. ACQUISITION:

Effective September 30, 1995, the General Partner acquired the assets of
certain cable television systems from an affiliate of Gaylord Entertainment
Company, Inc. (Gaylord) for an aggregate purchase price of approximately
$340.9 million, which included cable television systems in southern California
which were transferred to the Partnership.

To finance the acquisition, the Partnership entered into a revolving credit
and term loan facility (see Note 7) and the General Partner executed a
subordinated seller note to Gaylord (the "Gaylord Note"). Upon repayment in
full of the obligations of the revolving credit and term loan facility, and
termination of all commitments to lend in respect thereof, the Gaylord Note
will have the benefit of distributions from the Partnership. The Partnership's
assets are not pledged as collateral to this note.

The acquisition was accounted for using the purchase method of accounting,
and accordingly, results of operations of the acquired assets have been
included in the financial statements from the date of acquisition. The
following shows the final purchase price and the allocation of the purchase
price to assets acquired and liabilities assumed:

<TABLE>
<S> <C>
Purchase price:
Cash paid to seller........................................... $177,847,738
Seller note executed by the General Partner................... 156,240,500
Assumed liabilities........................................... 1,020,000
Transaction costs............................................. 5,831,641
------------
$340,939,879
============
</TABLE>

F-92
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<S> <C>
Amounts allocated to:
Accounts receivable............................................ $ 2,399,768
Prepaid expenses and other.................................... 755,479
Property, plant and equipment................................. 111,402,243
Franchise costs............................................... 235,575,898
Accounts payable and accrued expenses......................... (8,260,559)
Subscriber deposits........................................... (450,311)
Deferred revenue.............................................. (482,639)
------------
Purchase price............................................. $340,939,879
============
</TABLE>

The following is the unaudited pro forma operating results for the above
acquisition as though it had been made on January 1, 1995:
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
1995
------------
<S> <C>
(UNAUDITED)
Service revenues.............................................. $ 83,017,772
Income from operations........................................ $ 3,021,453
Net loss...................................................... $(14,717,823)
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems.................. $ 66,775,942 $ 58,375,261
Subscriber installations........................ 32,957,225 27,078,945
Land, buildings and headends.................... 6,647,140 4,636,945
Converters...................................... 26,886,074 22,116,731
Vehicles and equipment.......................... 2,585,140 1,999,164
Office equipment................................ 2,602,400 2,072,189
------------ ------------
138,453,921 116,279,235
Less--Accumulated depreciation.................. (18,752,304) (3,377,279)
------------ ------------
$119,701,617 $112,901,956
============ ============
</TABLE>
5. OTHER ASSETS:

Other assets consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated amortization
of $533,049 and $96,838............................. $3,111,505 $3,195,633
Organizational expenses, net of accumulated
amortization of $218,991 and $157,352............... 224,266 158,051
---------- ----------
$3,335,771 $3,353,684
========== ==========
</TABLE>

F-93
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following at December
31:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Accrued interest................................. $ 1,053,672 $ 3,741,519
Accrued salaries and related benefits............ 1,208,099 1,026,385
Accounts payable................................. 1,511,336 172,958
Capital expenditures............................. 1,582,391 1,633,606
Programming expenses............................. 1,882,896 1,672,241
Franchise fees................................... 2,176,770 2,196,814
Other............................................ 2,383,701 2,317,407
------------ ------------
$ 11,798,865 $ 12,760,930
============ ============

7. LONG-TERM DEBT:

Long-term debt consists of the following at December 31:
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Credit Agreement:
Term loans...................................... $120,000,000 $120,000,000
Revolving credit facility....................... 74,000,000 73,100,000
------------ ------------
194,000,000 193,100,000
Less-- Current maturities....................... -- --
------------ ------------
$194,000,000 $193,100,000
============ ============
</TABLE>

During September 1995, the Partnership entered into a revolving credit and
term loan facility (the "Credit Agreement") with a consortium of banks for
borrowings up to $235.0 million. The Credit Agreement provides for the
availability of $120.0 million of term loans and a revolving credit facility of
$115.0 million. Principal payments are due in quarterly installments beginning
June 30, 1998, and continuing through September 30, 2004. Borrowings under the
Credit Agreement bear interest at rates based upon a certain spread plus a base
rate, with the base rate being, at the Partnership's election, the prime rate
of NationsBank of Texas, N.A. (the Administrative Agent bank), the Federal
Funds Effective Rate or Eurodollar rates. The applicable spread is based on the
ratio of debt to annualized operating cash flow. At December 31, 1996, interest
rates ranged from 7.19% to 7.75%. The weighted average interest rates and
weighted average borrowings were 7.66% and 8.20%, and approximately $193.6
million and $193.1 million during 1996 and the period from inception to
December 31, 1995, respectively. As this debt instrument bears interest at
current market rates, its carrying amount approximates fair market value at
December 31, 1996.

Borrowings under the Credit Agreement are collateralized by the assets of the
Partnership. In addition, CCT Holdings, CCE and CAC have pledged their
partnership interests as additional security to the Credit Agreement.

Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which requires
maintenance of a ratio of debt to annualized operating cash flow, as defined,
not to exceed 5.25 to 1 at December 31, 1996. A quarterly commitment fee of
0.375% per annum is payable on the unused portion of the Credit Agreement.

F-94
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Commencing June 30, 1998, the principal balances of the term loans shall be
amortized in consecutive quarterly installments until paid in full. In
addition, commencing June 30, 1998, and at the end of each calendar quarter
thereafter, available borrowings under the revolving credit facility shall be
reduced. The following table sets forth such information on an annual basis.

<TABLE>
<CAPTION>
AMOUNT OF REDUCTION
PRINCIPAL DUE OF REVOLVING CREDIT
YEAR ON TERM LOANS FACILITY COMMITMENT
---- ------------- -------------------
<S> <C> <C>
1998....................................... $ 9,330,000 $ 6,900,000
1999....................................... 12,540,000 10,925,000
2000....................................... 13,380,000 12,995,000
2001....................................... 13,380,000 20,470,000
2002....................................... 13,380,000 29,900,000
2003....................................... 18,990,000 33,810,000
2004....................................... 39,000,000 --
------------ ------------
$120,000,000 $115,000,000
============ ============
</TABLE>

Based upon outstanding indebtedness at December 31, 1996, and the
amortization of term loans and scheduled reductions in available borrowings
depicted above, aggregate future principal payments on the Credit Agreement at
December 31, 1996, are as follows:

<TABLE>
<CAPTION>
REVOLVING
TERMS CREDIT
YEAR LOANS FACILITY TOTAL AMOUNT
---- ------------ ----------- ------------
<S> <C> <C> <C>
1997................................... $ -- $ -- $ --
1998................................... 9,330,000 -- 9,330,000
1999................................... 12,540,000 -- 12,540,000
2000................................... 13,380,000 -- 13,380,000
2001................................... 13,380,000 10,290,000 23,670,000
Thereafter............................. 71,370,000 63,710,000 135,080,000
------------ ----------- ------------
$120,000,000 $74,000,000 $194,000,000
============ =========== ============
</TABLE>

As a requirement of the Credit Agreement, the Partnership has secured
interest rate protection agreements. The Credit Agreement requires the
Partnership to enter into interest rate protection agreements for notional
amounts of not less than 50% of the outstanding borrowings within 180 days
from inception of the Credit Agreement. In addition, the interest rate
protection agreements must provide rate protection for a weighted average
period of not less than 18 months. The fair value of the interest rate swaps
is the estimated amount the Partnership would receive (pay) to eliminate the
swap agreement at the reporting date, taking into account current interest
rates and the creditworthiness of the counterparties. The following summarizes
certain information pertaining to the interest rate protection agreements as
of December 31, 1996:

<TABLE>
<CAPTION>
NOTIONAL FIXED
AMOUNT TYPE RATE CONTRACT EXPIRATION DATE FAIR VALUE/REDEMPTION PRICE
------------ ---- ----- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
$ 25,000,000 Swap 5.18% December 19, 1997 $ 214,548
50,000,000 Swap 6.00 December 15, 1998 (87,530)
25,000,000 Swap 5.48 December 29, 1998 126,056
------------ ---------
$100,000,000 5.67% Weighted Average Fixed Rate $ 253,074
============ =========
</TABLE>

F-95
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Management believes that the counterparties of the interest hedge agreements
will be able to meet their obligations under the agreements. The purpose of
the Partnership's involvement in these interest hedge agreements is to
minimize the Partnership's exposure to interest rate fluctuations on its
floating rate debt. Management believes that it has no material concentration
of credit or market risks with respect to these interest hedge agreements.

8. RELATED-PARTY TRANSACTIONS:

Charter provides management services to the Partnership under terms of a
contract which provides for base fees equal to $3,200,000, per annum plus an
annual bonus equal to 30% of the excess, if any, of operating cash flow (as
defined in the management agreement) over the projected operating cash flow
for the year. Payment of the management services bonus is prohibited until
termination of the Credit Agreement due to restrictions provided within the
Credit Agreement. For the year ended December 31, 1996, and for the period
from inception to December 31, 1995, operating cash flows was not in excess of
projected operating cash flow, and thus, no bonus was recognized. In addition,
the Partnership receives financial advisory services from an affiliate of
Kelso, another related party, under terms of a contract which provides for
fees equal to $400,000 per annum. Expenses recognized by the Partnership under
these contracts during 1996 and the period from inception to December 31,
1995, were $3,600,000 and $1,010,000, respectively. Management and financial
advisory service fees currently payable of $900,000 are included in Payables
to affiliates at December 31, 1996 and 1995.

The Partnership pays certain acquisition advisory fees to an affiliate of
Kelso, which typically equal approximately 1% of the total purchase price paid
for cable television systems acquired. Total acquisition fees paid to the
affiliate of Kelso in 1995 were $2.0 million. Charter received $3.0 million in
equity interests in CCT Holdings in conjunction with the Gaylord acquisition.

The Partnership and all entities affiliated with Charter collectively
utilize a combination of insurance coverage and self-insurance programs for
medical, dental and workers' compensation claims. The Partnership is allocated
charges monthly based upon its total number of employees, historical claims
and medical cost trend rates. Management considers this allocation to be
reasonable for the operations of the Partnership. During 1996 and the period
from inception to December 31, 1995, the Partnership expensed approximately
$664,000 and $173,000, respectively, relating to insurance allocations.

In conjunction with the acquisition described in Note 3, the Partnership
executed a promissory note to CCE in the amount of $47.0 million. Immediately
upon closing of the Gaylord acquisition, the Partnership used proceeds from
borrowings under the Credit Agreement to repay $22.0 million on the promissory
note. All principal and interest amounts due under this note are subordinated
with respect to the Credit Agreement set forth in Note 7. The note matures on
March 31, 2005. The note bears interest at an annual rate equal to the
weighted average interest rate payable on the loans outstanding under the
Credit Agreement. Principal and interest amounts due under this note are
included in Subordinated Note Payable to Limited Partner on the accompanying
balance sheets.

In 1996, the Partnership and other affiliated entities employed the services
of Charter's National Data Center (the "National Data Center"). The National
Data Center performs certain subscriber billing services and provider computer
network, hardware and software support for the Partnership and other
affiliated entities. The cost of billing services is allocated based on the
number of subscribers. Management considers this allocation to be reasonable
for the operations of the Partnership. During 1996, the Partnership expensed
approximately $125,000 relating to these services.

F-96
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

9. COMMITMENTS AND CONTINGENCIES:

Leases

The Partnership leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under these leases during 1996 and the
period from inception to December 31, 1995, was approximately $1,086,000 and
$287,000, respectively.

Approximate aggregate future minimum lease payments are as follows:

<TABLE>
<S> <C>
1997.............................................................. $1,133,600
1998.............................................................. 1,126,700
1999.............................................................. 1,123,000
2000.............................................................. 1,100,300
2001.............................................................. 981,000
Thereafter........................................................ 1,129,000
</TABLE>

The Partnership rents utility poles in its operations. Generally, pole rental
agreements are short term, but the Partnership anticipates that such rentals
will recur. Rent expense for pole attachments during 1996 and the period from
inception to December 31, 1995, were approximately $557,000 and $115,000,
respectively.

Insurance Coverage

The Partnership currently does not have and does not in the near term
anticipate having property and casualty insurance on its underground
distribution plant. Due to large claims incurred by the property and casualty
insurance industry, the pricing of insurance coverage has become inflated to
the point where, in the judgment of the Partnership's management, the price is
cost prohibitive. Management believes that its experience and policy with
respect to such insurance coverage is consistent with general industry
practices. Management will continue to monitor the insurance markets to attempt
to obtain coverage for the Partnership's distribution plant at reasonable
rates.

Litigation

The Partnership is a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
Partnership's financial position and results of operations.

10. RATE REGULATION IN THE CABLE TELEVISION INDUSTRY:

Congress enacted the Cable Television Consumer Protection and Competition Act
of 1992 (the "1992 Cable Act"), which became effective on December 4, 1992. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates. The 1992 Cable Act and the
Federal Communications Commission's (FCC) rules implementing the 1992 Cable Act
have generally increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local franchise authorities.

F-97
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

period on basic services may be ordered upon future certification if the
Partnership is unable to justify its rates through a benchmark or cost-of-
service filing pursuant to FCC rules. Management is unable to estimate at this
time the amount of refunds, if any, that may be payable by the Partnership in
the event certain of its rates are successfully challenged by franchising
authorities or found to be unreasonable by the FCC. Management does not believe
that the amount of any such refunds would have a material adverse effect on the
financial position or results of operations of the Partnership.

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have been
renewed for cable operators that have provided satisfactory services and have
complied with the terms of the franchise agreement. Although management
believes that the Partnership has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
Partnership's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on the Partnership than previously existed.

During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act") which alters
federal, state and local laws and regulations pertaining to cable television,
telecommunications and other services. Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Partnership. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule-makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications Act's
provisions have been and are likely to be subject to judicial challenges.
Management is unable at this time to predict the outcome of such rule-makings
or litigation or the substantive effect of the new legislation and the rule-
makings on the financial position and results of operations of the Partnership.

11. NET LOSS FOR INCOME TAX PURPOSES:

<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Net loss for financial reporting purposes....... $(11,459,982) $(3,458,535)
Depreciation differences between financial
reporting and tax
reporting...................................... (20,426,991) (839,467)
Amortization differences between financial
reporting and tax reporting.................... 475,629 177,759
Differences in expenses recorded for financial
reporting and tax reporting.................... (33,833) 2,059,052
Differences in revenue reported for financial
reporting and tax reporting.................... (91,395) 474,460
Other........................................... 33,500 --
------------ -----------
Net loss for federal income tax purposes.... $(31,503,072) $(1,586,731)
============ ===========
</TABLE>

F-98
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following summarizes the significant cumulative temporary differences
between the Partnership's financial reporting basis and the federal income tax
reporting basis as of December 31, 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Assets:
Accounts receivable............................. $ 325,137 $ 220,697
Accrued expenses and payables to affiliates..... 3,151,778 1,825,374
Deferred revenue................................ 383,070 474,460
------------ -----------
$ 3,859,985 $ 2,520,531
============ ===========
Liabilities:
Property, plant and equipment................... $(21,266,975) $ (839,467)
Franchise costs................................. (4,140,301) (9,112,533)
------------ -----------
$(25,407,276) $(9,952,000)
============ ===========
</TABLE>

12.COMPETITION:

The Riverside, California system, providing service to approximately 47,000
basic subscribers, faces competition from a multipoint distribution system
acquired by Pacific Telesis Group. At this time, management is uncertain what
impact, if any, this acquisition will have on the Partnership's financial
position or results of operations.

13.401(K) PLAN:

In 1995, the Partnership adopted the Charter Communications, Inc. 401(k)
Plan (the "Plan") for the benefit of its employees. The Plan is a tax-
qualified retirement savings plan to which employees may elect to make pretax
contributions up to the lesser of 10% of their compensation or dollar
thresholds established under the Internal Revenue Code. The Partnership
contributes an amount equal to 50% of the first 5% contributed by each
employee. During 1996 and the period from inception to December 31, 1995, the
Partnership contributed approximately $165,000 and $34,000, respectively, to
the Plan.

14.SIGNIFICANT NONCASH TRANSACTION:

The Partnership engaged in the following significant noncash financing
transaction during the period from inception to December 31, 1995:

<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
Preference allocation--Preferred Capital Account (see
Note 2).............................................. $ -- $1,680,890
</TABLE>

F-99
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Cencom Cable Entertainment, Inc.:

We have audited the accompanying balance sheet of Cencom Cable
Entertainment, Inc.--Missouri System (as defined in Note 1) as of December 31,
1994, and the related statements of operations, system's equity and cash flows
for the year then ended. These financial statements are the responsibility of
the System's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cencom Cable
Entertainment, Inc.--Missouri System as of December 31, 1994, and the results
of its operations and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 31, 1996

F-100
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Cencom Cable Entertainment, Inc.:

We have audited the accompanying statements of operations, system's equity
and cash flows of Cencom Cable Entertainment, Inc.--Missouri System for the
year ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and the cash flows of
Cencom Cable Entertainment, Inc.--Missouri System for the year ended December
31, 1993, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Dallas, Texas
July 26, 1996

F-101
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
ASSETS
<S> <C>
CURRENT ASSETS:
Cash................................................................. $ --
Accounts receivable, net of allowance for doubtful accounts of
$64,824............................................................. 1,120,640
Prepaid expenses and other........................................... 392,970
------------
Total current assets.............................................. 1,513,610
PROPERTY, PLANT AND EQUIPMENT, net.................................... 103,602,349
INTANGIBLE ASSETS, net................................................ 136,734,126
------------
$241,850,085
============
<CAPTION>
LIABILITIES AND SYSTEM'S EQUITY
<S> <C>
CURRENT LIABILITIES--Accounts payable and accrued expenses............ $ 2,182,624
COMMITMENTS AND CONTINGENCIES
SYSTEM'S EQUITY....................................................... 239,667,461
------------
$241,850,085
============
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-102
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
SERVICE REVENUES................................... $ 55,627,936 $ 54,281,429
------------ ------------
OPERATING EXPENSES:
Operating, general and administrative............ 26,625,458 25,827,879
Depreciation and amortization.................... 36,285,180 36,939,821
Management fee--related party.................... 2,781,397 2,722,796
------------ ------------
65,692,035 65,490,496
------------ ------------
Loss from operations........................... (10,064,099) (11,209,067)
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense................................. (10,154,497) (8,400,499)
Interest income.................................. 19,933 --
Other............................................ 656,568 (78,259)
------------ ------------
(9,477,996) (8,478,758)
------------ ------------
Net loss....................................... $(19,542,095) $(19,687,825)
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-103
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

STATEMENT OF SYSTEM'S EQUITY

<TABLE>
<CAPTION>
SYSTEM'S
EQUITY
------------
<S> <C>
BALANCE, December 31, 1992........................................ $296,375,356
Net activity with Parent........................................ (9,528,237)
Net loss........................................................ (19,687,825)
------------
BALANCE, December 31, 1993........................................ 267,159,294
Net activity with Parent........................................ (7,949,738)
Net loss........................................................ (19,542,095)
------------
BALANCE, December 31, 1994........................................ $239,667,461
============
</TABLE>

The accompanying notes are an integral part of this statement.

F-104
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................... $(19,542,095) $(19,687,825)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization.................. 36,285,180 36,939,821
Loss on retirements of property, plant and
equipment..................................... 84,902 232,528
Changes in assets and liabilities--
Accounts receivable, net..................... 477,006 (572,684)
Prepaid expenses and other................... 116,207 20,920
Accounts payable and accrued expenses........ 184,389 64,178
------------ ------------
Net cash provided by operating activities.. 17,605,589 16,996,938
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment....... (9,655,851) (7,468,701)
------------ ------------
Net cash used in investing activities...... (9,655,851) (7,468,701)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in capital account with Parent........ (7,949,738) (9,528,237)
------------ ------------
Net cash used in financing activities...... (7,949,738) (9,528,237)
------------ ------------
CASH, beginning and end of year.................... $ -- $ --
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-105
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

The accompanying financial statements include the accounts of a certain
cable television system which is owned and operated by Cencom Cable
Entertainment, Inc. (CCE). The financial statements include the historical
assets, liabilities and operations of the Missouri System (the "System")
providing service to communities in and around St. Louis and northeast
Missouri. In November 1991, Crown Cable, Inc., an indirect wholly owned
subsidiary of Hallmark Cards, Incorporated (Hallmark) acquired Cencom Cable
Associates, Inc. (CCA) such that CCA became a 99% owned subsidiary of Crown
Cable, Inc. CCE is a wholly owned subsidiary of CCA. The stock of CCA was
transferred to Crown Media, Inc., (the "Parent" or Crown) in January 1992. In
November, 1994, CCE merged into CCA with CCA surviving. CCA was subsequently
renamed CCE.

As of December 31, 1994, the System passed approximately 248,000 homes and
serviced approximately 126,000 basic subscribers in approximately 59 franchise
areas.

In January, 1995, Crown sold the stock of CCE. The sale was part of a larger
transaction in which Crown sold its cable television systems to a group of
investors, including Charter Communications, Inc. (Charter), certain
affiliates of Charter and third parties.

Cash Management and System Equity Account

The cash management function for the System is performed by the Parent.
Excess cash funds are transferred to the Parent using the System's equity
account. In addition, the Parent makes disbursements on behalf of the System
for items such as payroll, payroll taxes, employee benefits and other costs.
Such amounts are transferred to the System through the System's equity account
and are recognized in the accompanying statements of operations.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a customer are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful lives of the related assets as follows:

<TABLE>
<S> <C>
Trunk and distribution systems................................. 15 years
Subscriber installations....................................... 10 years
Converters..................................................... 5 years
Buildings and headends......................................... 5-20 years
Vehicles and equipment......................................... 4-8 years
Office equipment............................................... 5-10 years
</TABLE>

F-106
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Leasehold improvements are amortized using the straight-line method over
their useful life or lease term, whichever is shorter.

Other Assets

Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Franchise
rights acquired through the purchase of cable systems are stated at estimated
fair value at the date of acquisition and amortized using the straight-line
method over the remaining term of the individual franchises acquired.

Goodwill is amortized using the straight-line method over 15 years from the
date of acquisition.

The System's management continually evaluates the recoverability of carrying
amounts and estimated recovery periods of long-term and intangible assets.
Such evaluation is based on System estimates of current liquidation values of
the cable system on a combined, undiscounted basis using a cash flow multiple
approach. Based on this valuation, the System believes that no impairment of
the carrying amount of intangible assets exists at December 31, 1994, and no
adjustment of estimated recovery periods is warranted.

Revenues

Cable service revenues are recognized when the related services are
provided.

Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, would be deferred and amortized to income
over the average estimated period that customers are expected to remain
connected to the cable television system. No installation revenue has been
deferred as of December 31, 1994, as direct selling costs have exceeded
installation revenues.

Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.

Interest Expense

Interest expense allocated to the System has been determined by applying the
ratio of System's subscribers to total CCE subscribers at the date of CCE's
acquisition by Crown to total CCE interest expense for the year. CCE makes
disbursements on behalf of the System for interest expense. Management
considers this allocation method to be reasonable for the operations of the
System. CCE's debt balance totaled $261,130,000 at December 31, 1994. The
borrowings pertaining to the System are reflected within system's equity. The
weighted average interest rate on CCE borrowings was 5.25% and 4.3% during the
years ended December 31, 1994 and 1993, respectively. The interest rate at
December 31, 1994, is 6.0%.

Income Taxes

Income taxes are the responsibility of the Parent and as such are not
provided for in the accompanying financial statements. Crown is part of the
Hallmark consolidated group which files a consolidated federal income tax
return. Crown accounts for income taxes under the asset and liability method
as prescribed by Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Consolidated tax balances of Crown are not allocated to
individual systems or subsidiaries. On a separate, stand-alone basis, the
System would not have recognized any income tax benefit of operating losses as
the System has generated operating losses for income tax purposes since their
inception and is expected to generate such losses for the foreseeable future.

F-107
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. PREPAID EXPENSES AND OTHER:

Prepaid expenses and other consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Deposits........................................................ $221,670
Prepaid programming............................................. 143,057
Other prepaid expenses and current assets....................... 28,243
--------
$392,970
========
</TABLE>

3. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Trunk and distribution systems................................. $76,587,091
Subscriber installations....................................... 27,672,725
Converters..................................................... 20,824,406
Land, buildings and headends................................... 17,173,797
Vehicles and equipment......................................... 4,559,094
Office equipment............................................... 4,786,441
------------
151,603,554
Less--Accumulated depreciation................................. (48,001,205)
------------
$103,602,349
============
</TABLE>

4. INTANGIBLE ASSETS:

Other assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Franchise cost, net of accumulated amortization of
$54,746,844................................................. $105,719,281
Goodwill, net of accumulated amortization of $8,024,819...... 31,014,845
------------
$136,734,126
============
</TABLE>

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Accrued franchise fees.......................................... $576,869
Accrued salary, COMMISSION and benefits......................... 502,253
Accounts payable................................................ 267,021
Accrued vacation................................................ 194,332
Accrued copyright fees.......................................... 146,508
Accrued billing expense......................................... 144,607
Other........................................................... 351,034
----------
$2,182,624
==========
</TABLE>

F-108
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. RELATED-PARTY TRANSACTIONS:

CCA managed CCE's cable television operations for a standard management fee
equal to 5% of the System's gross service revenues. CCA provided management
services including, but not limited to, accounting, legal, marketing and
negotiation of programming contracts. For the years ended December 31, 1994
and 1993, the System expensed approximately $2,781,000 and $2,723,000,
respectively, related to this arrangement. Management believes these charges
are indicative of the expense which would have been incurred as a stand-alone
entity.

7. COMMITMENTS AND CONTINGENCIES:

Leases

The System leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under leases during 1994 and 1993 was
approximately $302,000 and $377,000, respectively. Future minimum lease
payments are as follows:

<TABLE>
<S> <C>
1995................................................................ $308,000
1996................................................................ 211,000
1997................................................................ 7,000
1998................................................................ 1,000
1999................................................................ 1,000
2000 and Thereafter................................................. 1,000
</TABLE>

The System rents utility poles in its operations. Generally, pole rental
agreements are short term, but the System anticipates that such rentals will
recur. Rent expense incurred for pole attachments during 1994 and 1993 was
approximately $611,000 and $525,000, respectively.

Insurance Coverage

The System currently does not have and does not in the near term anticipate
having property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the System's management, the price is cost prohibitive.
Management believes that its experience and policy with respect to such
insurance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the System's distribution plant at reasonable rates.

Litigation

The System settled a lawsuit for which the System had previously accrued a
loss contingency. Accordingly, the approximate $650,000 excess of the accrual
over the settlement amount was credited to other income in the accompanying
1994 statement of operations.

The System is a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
System's financial position and results of operations.

F-109
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

8. REGULATION IN THE CABLE TELEVISION INDUSTRY:

1992 Cable Act and FCC Regulation

Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. This legislation has caused significant changes to the regulatory
environment in which the cable television industry operates. The 1992 Cable
Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate the basic service rates.

The 1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
Management is unable to predict the ultimate effect of the 1992 Cable Act or
the ultimate outcome of various FCC rule-making proceedings or the litigation
challenging various aspects of the 1992 Cable Act and the FCC's regulations
implementing the 1992 Cable Act.

The 1992 Cable Act and FCC regulations have imposed rate requirements for
basic services and equipment, including rate roll-backs. Under the 1992 Cable
Act, a local franchising authority in a community not subject to "effective
competition" generally is authorized to regulate basic cable rates after
certifying to the FCC that, among other things, it will adopt and administer
rate regulation consistent with FCC rules, and in a manner that will provide a
reasonable opportunity to consider the views of interested parties. Upon
certification, the franchising authority obtains the right to approve the
basic rates charged by the cable system operator. In regulating the basic
service rates, certified local franchise authorities have the authority to
order a rate refund of previously paid rates determined to be in excess of the
maximum permitted reasonable rates. The Telecommunications Act (the
"Telecommunications Act"), passed by Congress on February 1, 1996, and signed
into law by the President on February 8, 1996, broadens the definition of
"effective competition" to include any franchise area where a local exchange
carrier (or its affiliate) provides video programming services to subscribers
by any means, other than through Direct Broadcast Satellite.

Under the 1992 Cable Act, rates for cable programming services not carried
on the basic tier (nonbasic services) could be regulated by the FCC upon the
filing of a complaint by franchise authorities or subscribers that indicates
the cable operator's rates for these services are unreasonable. Rate
complaints have been filed with the FCC with respect to certain of the
System's cable programming services; several complaints are pending as of the
date of the financial statements. The Telecommunications Act eliminates
regulation of nonbasic programming as of March 31, 1999. In the interim, rate
regulation of the nonbasic programming tier can only be triggered by a
franchising authority complaint to the FCC. If the FCC determines that the
System's nonbasic programming service tier rates are unreasonable, the FCC has
the authority to order the System to reduce nonbasic programming service tier
rates and to refund to customers any overcharges occurring from the filing
date of the rate complaint with the FCC.

F-110
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to
determine their maximum permitted rates. Those systems whose rates were above
the benchmark on September 30, 1992, were required to reduce their rates to
the benchmark or by 10%, whichever was less. Under revised rate regulations
adopted February 1994, regulated cable systems were required to set their
rates so that regulated revenues per subscriber did not exceed September 30,
1992, levels, reduced by 17% (taking into account the previous 10% reduction).

Notwithstanding mandated rate regulations, cable operators currently may
adjust their regulated rates to reflect inflation and what the FCC has deemed
to be external costs (such as increases in franchise fees).

In September 1995, the FCC developed an abbreviated cost-of-service form
that permits cable operators to recover costs of significant upgrades that
provide benefits to subscribers of regulated cable services. Cable operators
seeking to raise rates to cover costs of an upgrade would submit only the
costs of the upgrade instead of all current costs. In December 1995, the FCC
revised its cost-of-service rules. At this time, the System's management is
unable to predict the effect of these revised rules on the System's financial
position or results of operations.

In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once a year to reflect inflation and changes in external costs and the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order allows operators to
recover increases in additional types of franchise-requirement costs.
Permitted pass-through increases include increases in the cost of providing
institutional networks, video services, data services to or from governmental
and educational institutions, and certain other cost increases. The System's
management is unable to predict the effect of these new rules on the System's
business.

In November 1995, the FCC proposed to provide cable operators with the
option of establishing uniform rates for similar service packages offered in
multiple franchise areas located in the same region. Under the FCC's current
rules, cable operators subject to rate regulation must establish rates on a
franchise-specific basis. The proposed rules could lower cable operator's
marketing costs and may also allow operators to better respond to competition
from alternative providers. The System's management is unable to predict if
these proposed rules will ultimately be promulgated by the FCC, and if they
are promulgated, their effect on the System's financial position and results
of operations.

While management believes that the System has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if the System is unable to
justify its rates through a benchmark or cost-of-service filing or small
system cost-of-service filing pursuant to FCC rules. Management is unable to
estimate at this time the amount of refunds, if any, that may be payable by
the System in the event certain of its rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC. Management
does not believe that the amount of any such refunds would have a material
adverse effect on the financial position or results of operations of the
System.

"Must Carry" Requirements/"Retransmission Consents"

F-111
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
retransmission consent for all "distant" commercial television stations,
commercial radio stations and certain low power television stations carried by
such system after October 6, 1993. As a result of the mandatory system
carriage rules, the System has been required to carry television broadcast
stations that otherwise would not have been carried, thereby causing
displacement of possibly more attractive programming. The validity of the
mandatory signal carriage requirements is being litigated; however, the
carriage requirements remain in effect pending the outcome of the proceedings.

Franchise Matters

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the System has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
System's future franchise renewal prospects generally will be favorable, there
can be no assurance that any such franchises will be renewed or, if renewed,
that the franchising authorities will not impose more onerous requirements on
the System than previously existed.

Recent Telecommunications Legislation

The Telecommunications Act alters federal, state, and local laws and
regulations pertaining to cable television, telecommunications and other
services.

Under the Telecommunications Act, telephone companies can compete directly
with cable operators in the provision of video programming. This new
legislation recognizes several multiple entry options for telephone companies
to provide competitive video programming.

The Telecommunications Act eliminates broadcast/cable cross-ownership
restrictions, but leaves in place FCC regulations prohibiting local cross-
ownership between television stations and cable systems.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the System. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. The System's management is unable at this time to predict the
outcome of such rule makings or litigation or the substantive effect of the
new legislation and the rule makings on the financial position and results of
operations of the System.

F-112
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Cencom Cable Income Partners, L.P.:

We have audited the accompanying balance sheets of Cencom Cable Income
Partners, L.P.--Illinois System (as defined in Note 1) as of December 31, 1995
and 1994, and the related statements of operations, System's equity and cash
flows for the years then ended. These combined financial statements are the
responsibility of the System's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cencom Cable Income
Partners, L.P.--Illinois System as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.

Arthur Andersen LLP

St. Louis, Missouri,
July 31, 1996

F-113
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Partners Cencom Cable Income Partners, L.P.:

We have audited the accompanying statements of operations, system's equity
and cash flows for Cencom Cable Income Partners, L.P.--Illinois System for the
year ended December 31, 1993. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and the cash flows of
Cencom Cable Income Partners, L.P.--Illinois System for the year ended
December 31, 1993, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

Dallas, Texas July 26, 1996

F-114
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash............................................... $ -- $ --
Accounts receivable, net of allowance for doubtful
accounts of $33,462 and $37,079, respectively..... 433,638 412,627
Prepaid expenses and other......................... 67,786 133,811
------------ ------------
Total current assets............................. 501,424 546,438
PROPERTY, PLANT AND EQUIPMENT, net................... 12,586,022 13,661,411
FRANCHISE COSTS, net of accumulated amortization of
$8,532,620 and $8,097,619, respectively............. 643,819 1,078,820
------------ ------------
$ 13,731,265 $ 15,286,669
============ ============
LIABILITIES AND SYSTEM'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses.............. $ 868,435 $ 785,604
Subscriber deposits and prepayments................ 187,994 182,983
------------ ------------
Total current liabilities........................ 1,056,429 968,587
DEFERRED REVENUE..................................... 74,545 --
COMMITMENTS AND CONTINGENCIES
SYSTEM'S EQUITY...................................... 12,600,291 14,318,082
------------ ------------
$ 13,731,265 $ 15,286,669
============ ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-115
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
SERVICE REVENUES..................... $ 15,464,952 $ 14,357,807 $ 14,375,095
------------ ------------ ------------
OPERATING EXPENSES:
Operating, general and administra-
tive.............................. 7,521,763 7,086,264 6,777,285
Depreciation and amortization...... 4,198,041 4,158,970 4,328,818
Management fee--related party...... 793,303 735,499 719,566
------------ ------------ ------------
12,513,107 11,980,733 11,825,669
------------ ------------ ------------
Income from operations........... 2,951,845 2,377,074 2,549,426
------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest expense................... (2,161,313) (1,536,742) (1,347,089)
Interest income.................... 68,491 25,002 18,530
Other, net......................... 1,000 4,000 (49,101)
------------ ------------ ------------
(2,091,822) (1,507,740) (1,377,660)
------------ ------------ ------------
Net income....................... $ 860,023 $ 869,334 $ 1,171,766
============ ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-116
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

STATEMENTS OF SYSTEM'S EQUITY

<TABLE>
<CAPTION>
SYSTEM'S
EQUITY
------------
<S> <C>
BALANCE, December 31, 1992........................................ $ 18,089,694
Net activity with Parent........................................ (3,259,946)
Net income...................................................... 1,171,766
------------
BALANCE, December 31, 1993........................................ 16,001,514
Net activity with Parent........................................ (2,552,766)
Net income...................................................... 869,334
------------
BALANCE, December 31, 1994........................................ 14,318,082
Net activity with Parent........................................ (2,577,814)
Net income...................................................... 860,023
------------
BALANCE, December 31, 1995........................................ $ 12,600,291
============
</TABLE>

The accompanying notes are an integral part of these statements.

F-117
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 860,023 $ 869,334 $ 1,171,766
Adjustments to reconcile net income to
net cash provided by operating activ-
ities--
Depreciation and amortization....... 4,198,041 4,158,970 4,328,818
Changes in assets and liabilities--
Accounts receivable, net.......... (21,011) (43,173) (68,231)
Prepaid expenses and other........ 66,025 (9,646) (4,225)
Accounts payable and accrued ex-
penses........................... 82,831 134,659 167,343
Subscriber deposits and prepay-
ments............................ 5,011 (26) (390)
Deferred revenue.................. 74,545 -- --
----------- ----------- -----------
Net cash provided by operating
activities..................... 5,265,465 5,110,118 5,595,081
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment............................ (2,616,594) (2,462,071) (2,225,654)
Other................................. (71,057) (95,281) (109,481)
----------- ----------- -----------
Net cash used in investing ac-
tivities....................... (2,687,651) (2,557,352) (2,335,135)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES--
Net change in capital account with
parent............................... (2,577,814) (2,552,766) (3,259,946)
----------- ----------- -----------
Net cash used in financing ac-
tivities....................... (2,577,814) (2,552,766) (3,259,946)
----------- ----------- -----------
CASH, beginning and end of period....... $ -- $ -- $ --
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-118
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

The financial statements include the accounts of a certain cable television
system which is owned and operated by Cencom Cable Income Partners, L.P.
(CCIP). Cencom Properties, Inc. is the General Partner (as referred to herein)
of CCIP. These financial statements include the historical assets, liabilities
and operations of the cable television system of Illinois, providing service
to communities in southwestern Illinois, referred to herein as the "System."

As of December 31, 1995, the System passed approximately 75,000 homes and
serviced approximately 44,000 basic subscribers in approximately 28 franchise
areas. The System comprises approximately 40% of the total CCIP subscribers at
December 31, 1995.

On March 29, 1996, CCIP consummated the sale of the System to Charter
Communications Entertainment I, L.P. (CCE-I), an affiliated entity of CCIP for
an aggregate purchase price of approximately $86.0 million, including related
acquisition fees and expenses (the "Sale Transaction"). The purchase price for
the System was determined in the context of two independent appraisals of all
of CCIP's cable television assets (which included systems other than the
System) conducted in accordance with the terms of the limited partnership
agreement of CCIP. The sale was approved by a majority of CCIP's Limited
Partners following the distribution of a Disclosure Statement dated October 3,
1995, as supplemented on November 1, 1995, and on December 18, 1995.

In connection with the Sale Transaction, a class action lawsuit (the
"Action") was filed in November 1995, on behalf of CCIP's Limited Partners
which sought among other things, to permanently enjoin the sale of all of
CCIP's systems. On February 15, 1996, all of the plaintiff's claims for
injunctive relief were dismissed (including that which sought to prevent
consummation of the sale of the System); the plaintiff's claims for an
unspecified amount of monetary damages remain pending. Based upon (among other
things) the advice of legal counsel, each of the defendants to such action
believes the remaining claims to be without merit and is contesting the claims
vigorously.

Cash Management and System's Equity Account

The cash management function for the System is performed by the holding
company of CCIP. Excess cash funds are transferred to the holding company of
CCIP using the System's equity account. In addition, the holding company of
CCIP makes disbursements on behalf of the System for certain items such as
payroll, payroll taxes, employee benefits and other costs, and incurs debt
borrowings for the System. Such amounts are transferred to the System through
the System's equity account and are recognized in the appropriate expense
categories in the accompanying statements of operations.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a customer are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.

F-119
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful lives of the related assets as follows:

<TABLE>
<S> <C>
Trunk and distribution systems................................. 10 years
Subscriber installations....................................... 10 years
Converters..................................................... 3-5 years
Buildings and headends......................................... 9-20 years
Vehicles and equipment......................................... 4-8 years
Office equipment............................................... 5-10 years
</TABLE>

Franchise Costs

Franchise costs are being amortized using the straight-line method over the
term of the individual franchises.

During 1995, the System adopted Statement of Financial Accounting Standards
(SFAS) No. 121, entitled "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." In accordance with SFAS No. 121,
the System's management periodically reviews the carrying value of its long-
lived assets, identifiable intangibles and franchise costs in relation to
historical financial results, current business conditions and trends
(including the impact of existing legislation and regulation) to identify
potential situations in which the carrying value of such assets may not be
recoverable. If a review indicates that the carrying value of such assets may
not be recoverable, the carrying value of such assets in excess of their fair
value will be recorded as a reduction of the assets' cost as if a permanent
impairment has occurred. The adoption of SFAS No. 121 did not impact the
financial statements of the System.

Revenues

Cable service revenues are recognized when the related services are
provided.

Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, would be deferred and amortized to income
over the average estimated period that customers are expected to remain
connected to the cable television system. No installation revenue has been
deferred as of December 31, 1995 and 1994, as direct selling costs have
exceeded installation revenues.

Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts.

Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.

General and Administrative Expenses

Included in general and administrative expenses is the allocation of certain
expenses incurred by the holding company of CCIP on behalf of the System.
These expenses were allocated to the System based on the ratio of total
System's subscribers to total CCIP subscribers. Management considers this
allocation method to be reasonable for the operations of the System. Expense
allocated to the System totaled $139,025, $162,458 and $174,706 during 1995,
1994 and 1993, respectively.

Intercompany Interest Expense

Interest expense allocated to the System has been determined by applying the
ratio of the System's total subscribers to total CCIP subscribers at each
year-end to total CCIP interest expense for the respective years. Management
considers this allocation method to be reasonable for the operations of the
System. CCIP makes disbursements on behalf of the System for interest expense.
CCIP maintains a loan agreement with a bank for borrowings up to $80,000,000,
secured by all of CCIP's assets, including the assets of the System. At
December 31, 1995 and 1994, CCIP had borrowings of $76,500,000 and
$72,300,000, respectively, related to this debt agreement. The weighted
average borrowings for CCIP for 1995 and 1994 were $73,993,000 and
$66,358,000, respectively. The borrowings pertaining to the System is
reflected within System's Equity. At December 31, 1995 and 1994, the interest
rate was 6.9375% and ranged from 7.375% to 9.5%, respectively. The weighted
average interest rates of CCIP for 1995, 1994 and 1993 were 7.30%, 5.73% and
4.60%, respectively.

F-120
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In November 1990, CCIP issued $30,000,000 of 9.64% Deferred Interest Senior
Notes, which were collateralized by a first lien on all of CCIP's assets
(other than real property), including the System's assets, and the General
Partner's interest in CCIP. These notes were retired on May 10, 1993, at their
accreted value of $37,760,962 with funds from the bank loan agreement.
Interest expense related to these notes has been allocated to the Systems in
the manner described in the preceding paragraph.

Income Taxes

Income taxes are the responsibility of the partners of CCIP and as such are
not provided for in the accompanying financial statements.

Use of Estimates

2. PREPAID EXPENSES AND OTHER:

Prepaid expenses and other consist of the following at December 31:

<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Prepaid insurance.......................................... $ 5,738 $ 66,409
Prepaid programming........................................ 49,576 46,361
Other prepaid expenses and current assets.................. 12,472 21,041
------- --------
$67,786 $133,811
======= ========
</TABLE>

3. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of the following at December 31:

<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Trunk and distribution systems................... $ 20,936,805 $ 20,014,931
Subscriber installations......................... 8,944,170 7,949,512
Converters....................................... 8,082,233 7,665,703
Land, buildings and headends..................... 4,260,054 4,130,402
Vehicles and equipment........................... 1,354,198 1,241,708
Office equipment................................. 1,000,656 974,767
------------ ------------
44,578,116 41,977,023
Less--Accumulated depreciation................... (31,992,094) (28,315,612)
------------ ------------
$ 12,586,022 $ 13,661,411
============ ============
</TABLE>

F-121
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following at December
31:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Accrued franchise fees.................................... $223,888 $222,252
Accounts payable.......................................... 103,733 138,089
Accrued salary, commission and benefits................... 120,480 89,156
Accrued copyright fees.................................... 79,387 73,198
Accrued programming....................................... 52,264 59,219
Other..................................................... 288,683 203,690
-------- --------
$868,435 $785,604
======== ========
</TABLE>

5. SYSTEM'S EQUITY:

As of December 31, 1995 and 1994, CCIP had recorded in its capital accounts
an accumulated deficit of approximately $32,900,000 and $25,200,000,
respectively, represented by earnings net of partner distributions.

6. RELATED-PARTY TRANSACTIONS:

During 1994, Cencom Cable Associates, Inc., a former affiliated entity,
assigned management services under contract with CCIP to the General Partner.
The management service contract provides for the payment of fees equal to 5%
of the System's gross service revenues. Expenses recognized by the System
under this contract were $793,303, $735,499 and $719,566 during 1995, 1994 and
1993, respectively. Management believes these charges are indicative of the
expense which would have been incurred as a stand-alone entity.

7. COMMITMENTS AND CONTINGENCIES:

Leases

The System leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under leases during 1995, 1994 and
1993 was $16,767, $10,705 and $16,296, respectively. Approximate future
minimum lease payments are as follows:

<TABLE>
<S> <C>
1996................................................................. $15,300
1997................................................................. 13,800
1998................................................................. 9,700
1999................................................................. 4,900
2000................................................................. 1,500
Thereafter........................................................... --
</TABLE>

The System rents utility poles in its operations. Generally, pole rental
agreements are short term, but the System's management anticipates that such
rentals will recur. Rent expense incurred for pole attachments during 1995,
1994 and 1993 was approximately $124,800, $101,900 and $106,000 respectively.

F-122
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Insurance Coverage

The System currently does not have and does not in the near term anticipate
having property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the System's management, the insurance coverage is cost
prohibitive. Management believes that its experience and policy with such
issuance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the System's distribution plant at reasonable rates.

Litigation

8. REGULATION IN THE CABLE TELEVISION INDUSTRY:

1992 Cable Act and FCC Regulation

F-123
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

"small cable operators," the Telecommunications Act immediately eliminates
regulation of cable programming rates. Rates for basic tier of "small cable
operators" are deregulated if the system offered a single tier of services as
of December 31, 1994.

Under the 1992 Cable Act, rates for cable programming services not carried on
the basic tier (nonbasic services) could be regulated by the FCC upon the
filing of a complaint by franchise authorities or subscribers that indicates
the cable operator's rates for these services are unreasonable. Rate complaints
have been filed with the FCC with respect to certain of the Partnership's cable
programming services; several complaints are pending as of the date of the
financial statements. The Telecommunications Act eliminates regulation of
nonbasic programming as of March 31, 1999. In the interim, rate regulation of
the nonbasic programming tier can only be triggered by a franchising authority
complaint to the FCC. If the FCC determines that the System's nonbasic
programming service tier rates are unreasonable, the FCC has the authority to
order the System to reduce nonbasic programming service tier rates and to
refund to customers any overcharges occurring from the filing date of the rate
complaint with the FCC.

Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to determine
their maximum permitted rates. Those systems whose rates were above the
benchmark on September 30, 1992, were required to reduce their rates to the
benchmark or by 10%, whichever was less. Under revised rate regulations adopted
February 1994, regulated cable systems were required to set their rates so that
regulated revenues per subscriber did not exceed September 30, 1992, levels,
reduced by 17% (taking into account the previous 10% reduction).

In September 1995, the FCC developed an abbreviated cost-of-service form that
permits cable operators to recover costs of significant upgrades that provide
benefits to subscribers of regulated cable services. Cable operators seeking to
raise rates to cover costs of an upgrade would submit only the costs of the
upgrade instead of all current costs. In December 1995, the FCC revised its
cost-of-service rules. At this time, the System's management is unable to
predict the effect of these revised rules on the System's financial position or
results of operations.

In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once a year to reflect inflation and changes in external costs and the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order allows operators to
recover increases in additional types of franchise-requirement costs. Permitted
pass-through increases include increases in the cost of providing institutional
networks, video services, data services to or from governmental and educational
institutions, and certain other cost increases. The System's management is
unable to predict the effect of these new rules on the System's business.

In November 1995, the FCC proposed to provide cable operators with the option
of establishing uniform rates for similar service packages offered in multiple
franchise areas located in the same region. Under the FCC's current rules,
cable operators subject to rate regulation must establish rates on a franchise-
specific basis. The proposed rules could lower cable operator's marketing costs
and may also allow operators to better respond to competition from alternative
providers. The System's management is unable to predict if these proposed rules
will ultimately be promulgated by the FCC, and if they are promulgated, their
effect on the System's financial position and results of operations.

F-124
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

basic services may be ordered upon future certification if the System is unable
to justify its rates through a benchmark or cost-of-service filing or small
system cost-of-service filing pursuant to FCC rules. Management is unable to
estimate at this time the amount of refunds, if any, that may be payable by the
System in the event certain of its rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC. Management does
not believe that the amount of any such refunds would have a material adverse
effect on the financial position or results of operations of the System.

"Must Carry" Requirements/"Retransmission Consents"

Under the 1992 Cable Act, cable television operators are subject to mandatory
signal carriage requirements that allow local commercial and noncommercial
television broadcast stations to elect to require a cable system to carry the
station, subject to certain exceptions, or, in the case of commercial stations,
to negotiate for "retransmission consent" to carry the station. In addition,
there are requirements for cable systems to obtain retransmission consent for
all "distant" commercial television stations, commercial radio stations and
certain low power television stations carried by such system after October 6,
1993. As a result of the mandatory system carriage rules, the System has been
required to carry television broadcast stations that otherwise would not have
been carried, thereby causing displacement of possibly more attractive
programming. The validity of the mandatory signal carriage requirements is
being litigated; however, the carriage requirements remain in effect pending
the outcome of the proceedings.

Franchise Matters

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have been
renewed for cable operators that have provided satisfactory services and have
complied with the terms of the franchise agreement. Although management
believes that the System has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
System's future franchise renewal prospects generally will be favorable, there
can be no assurance that any such franchises will be renewed or, if renewed,
that the franchising authorities will not impose more onerous requirements on
the System than previously existed.

Recent Telecommunications Legislation

The Telecommunications Act alters federal, state, and local laws and
regulations pertaining to cable television, telecommunications and other
services.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the System. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the Telecommunications
Act's provisions. In addition, certain provisions of the Telecommunications Act
(such as the deregulation of cable programming rates) are not immediately
effective. Further, certain of the Telecommunications Act's provisions have
been and are likely to be subject to judicial challenges. The System's
management is unable at this time to predict the outcome of such rule makings
or litigation or the substantive effect of the new legislation and the rule
makings on the financial position and results of operations of the System.

F-125
<PAGE>

CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

9. NET INCOME FOR INCOME TAX PURPOSES:

The following summarizes the differences between CCIP's net income for
financial reporting and federal income tax purposes for the years ended
December 31:

<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net income for financial reporting pur-
poses................................... $3,453,270 $3,811,203 $3,367,720
Depreciation differences between finan-
cial reporting and tax reporting........ 1,804,940 (301,487) 79,190
Amortization differences between finan-
cial reporting and tax reporting........ 57,969 80,844 609,197
Differences in expenses recorded for fi-
nancial reporting and reported for tax
purposes................................ 844,798 85,052 (16,286)
Revenue reported for tax reporting de-
ferred for financial reporting.......... 187,957 -- --
Other.................................... 31,496 7,768 --
---------- ---------- ----------
Net income for federal income tax purpos-
es...................................... $6,380,430 $3,683,380 $4,039,821
========== ========== ==========
</TABLE>

The following summarizes the significant cumulative temporary differences
between CCIP's financial reporting basis and federal income tax reporting basis
as of December 31:

<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Assets:
Accounts receivable........................... $ 95,346 $ 87,228
Franchise costs............................... 37,384,139 37,326,170
Accrued expenses.............................. 2,520,653 1,667,737
Deferred revenue.............................. 187,957 --
------------ ------------
$ 40,188,095 $ 39,081,135
============ ============
Liabilities--Property, plant and equipment...... $(19,682,850) $(21,816,974)
============ ============
</TABLE>

As discussed in Note 1, the System comprises approximately 40% of CCIP's
total basic subscribers.

F-126
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Cencom Cable Television, Inc.:

We have audited the accompanying combined balance sheets of Cencom Cable
Television, Inc.--Los Angeles and Riverside Systems as of December 31, 1994,
and September 29, 1995, and the related combined statements of operations,
Systems' equity and cash flows for the two years ended December 31, 1993 and
1994, and for the nine months ended September 29, 1995. These combined
financial statements are the responsibility of the Systems' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Cencom Cable
Television, Inc.--Los Angeles and Riverside Systems as of December 31, 1994,
and September 29, 1995, and the results of their operations and their cash
flows for the two years ended December 31, 1993 and 1994, and for the nine
months ended September 29, 1995, in conformity with generally accepted
accounting principles.

Arthur Andersen LLP

Dallas, Texas,
November 22, 1995

F-127
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash.............................................. $ -- $ --
Accounts receivable, net of allowance for doubtful
accounts of $427,936 and $248,355, respectively.. 2,887,129 2,659,333
Prepaid expenses and other........................ 1,749,372 732,128
------------ ------------
Total current assets........................... 4,636,501 3,391,461
PROPERTY, PLANT AND EQUIPMENT, net.................. 117,394,950 111,422,525
FRANCHISE COSTS AND OTHER, net...................... 55,497,894 38,909,434
------------ ------------
$177,529,345 $153,723,420
============ ============
LIABILITIES AND SYSTEMS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses............. $ 6,799,377 $ 5,862,550
Current maturities of long-term debt.............. 126,977 --
Subscriber deposits and prepayments............... 480,716 416,242
------------ ------------
Total current liabilities...................... 7,407,070 6,278,792
NONCURRENT LIABILITIES:
Long-term debt, less current maturities........... 155,521 228,773
Deferred revenue.................................. -- 482,640
------------ ------------
Total noncurrent liabilities................... 155,521 711,413
COMMITMENTS AND CONTINGENCIES
SYSTEMS' EQUITY..................................... 169,966,754 146,733,215
------------ ------------
$177,529,345 $153,723,420
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-128
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE
YEAR ENDED DECEMBER 31, MONTHS ENDED
-------------------------- SEPTEMBER
1993 1994 29, 1995
------------ ------------ ------------
<S> <C> <C> <C>
SERVICE REVENUES...................... $ 74,542,733 $ 78,647,795 $61,861,563
OPERATING EXPENSES:
Operating costs...................... 23,314,140 24,746,916 20,354,512
Selling, general, and administra-
tive................................ 19,772,950 19,671,911 14,627,383
Depreciation and amortization........ 56,518,726 54,092,418 33,379,558
Management fee--related party........ 943,681 1,026,869 2,150,374
------------ ------------ -----------
100,549,497 99,538,114 70,511,827
------------ ------------ -----------
Loss from operations................ (26,006,764) (20,890,319) (8,650,264)
OTHER INCOME (EXPENSE):
Interest income...................... 402 36,193 --
Interest expense..................... (39,935) (31,779) (38,264)
Other................................ (318,223) 8,500 398,079
------------ ------------ -----------
(357,756) 12,914 359,815
------------ ------------ -----------
Net loss............................ $(26,364,520) $(20,877,405) $(8,290,449)
------------ ------------ -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-129
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

COMBINED STATEMENTS OF SYSTEMS' EQUITY

<TABLE>
<CAPTION>
SYSTEMS'
EQUITY
------------
<S> <C>
BALANCE, December 31, 1992........................................ $242,746,018
Net activity with Parent......................................... (8,405,824)
Net loss......................................................... (26,364,520)
------------
BALANCE, December 31, 1993........................................ 207,975,674
Net activity with Parent......................................... (17,131,515)
Net loss......................................................... (20,877,405)
------------
BALANCE, December 31, 1994........................................ 169,966,754
Net activity with Parent......................................... (14,943,090)
Net loss......................................................... (8,290,449)
------------
BALANCE, September 29, 1995....................................... $146,733,215
============
</TABLE>

The accompanying notes are an integral part of these statements.

F-130
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE
YEAR ENDED DECEMBER 31, MONTHS ENDED
-------------------------- SEPTEMBER
1993 1994 29, 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................. $(26,364,520) $(20,877,405) $(8,290,449)
Adjustments to reconcile net loss to
net cash provided by operating
activities--
Depreciation and amortization....... 56,518,726 54,092,418 33,379,558
Changes in assets and liabilities--
Accounts receivable, net........... (2,139,746) 1,068,078 227,796
Prepaid expenses and other......... (288,134) (22,632) 1,017,244
Accounts payable and accrued ex-
penses............................ (647,804) 842,710 (936,827)
Subscriber deposits and prepay-
ments............................. 12,655 (157,691) (64,474)
Deferred revenue................... -- -- 482,640
------------ ------------ -----------
Net cash provided by operating ac-
tivities.......................... 27,091,177 34,945,478 25,815,488
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment.. (11,503,376) (17,720,620) (10,818,674)
Acquisition of KTS Corporation....... (7,055,000) 75,814 --
------------ ------------ -----------
Net cash used in investing activi-
ties............................. (18,558,376) (17,644,806) (10,818,674)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt............ (126,977) (169,157) (53,724)
Net change in capital account with
Parent.............................. (8,405,824) (17,131,515) (14,943,090)
------------ ------------ -----------
Net cash used in financing activi-
ties............................. (8,532,801) (17,300,672) (14,996,814)
------------ ------------ -----------
NET INCREASE IN CASH AND CASH EQUIVA-
LENTS................................ -- -- --
------------ ------------ -----------
CASH AND CASH EQUIVALENTS, beginning
and end of period.................... $ -- $ -- $ --
------------ ------------ -----------
CASH PAID FOR INCOME TAXES............ $ -- $ 800 $ 800
------------ ------------ -----------
CASH PAID FOR INTEREST................ $ 33,187 $ 34,528 $ 44,268
------------ ------------ -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-131
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS

1.SALE OF ASSETS:

On September 29, 1995, Cencom Cable Television, Inc. (CCT) sold
substantially all of its assets to CCT Holdings Corp., an entity jointly owned
by investment partnerships affiliated with Kelso & Company, Inc. and Charter
Communications, Inc. ("Charter"), the manager of CCT's cable systems. Proceeds
from the sale, after a working capital adjustment of $5.5 million, consisted
of $198.8 million in cash and a ten-year, $165.7 million subordinated note
with an interest rate of 12% per year which increases to 15% on the fifth
anniversary and increases 2% on each anniversary thereafter, with principal
and interest payable at maturity. In addition, CCT received the contractual
right to 15% of the net distributable proceeds (after certain debt repayments
and equity distributions) from certain future sales by Charter Communications
Entertainment, L.P., a newly formed joint venture created to operate cable
television systems, to which CCT Holdings Corp. contributed the assets of the
cable systems located in Los Angeles and Riverside, California ("Systems"),
which were purchased from CCT.

Immediately prior to the closing of the sale, CCT's parent paid Charter
$10.6 million to acquire Charter's 2.9% interest in CCT.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

The accompanying combined financial statements include the accounts of the
Systems, which were owned and operated by CCT. Prior to the closing of the
sale on September 29, 1995, CCT was 97.1% owned by Gaylord Broadcasting
Company (the "Parent"), which is a wholly owned subsidiary of Gaylord
Entertainment Company ("Gaylord"), and 2.9% owned by Charter.

All intersystem balances and transactions have been eliminated for
presentation in the combined financial statements.

As of September 29, 1995, the Systems passed 420,353 homes and serviced
165,265 basic subscribers in 33 franchise areas. The Systems comprise
approximately 89% of total CCT subscribers at September 29, 1995.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a customer are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.

F-132
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful lives of assets as follows:

<TABLE>
<S> <C>
Trunk and distribution system................................... 10 years
Subscriber installations........................................ 10 years
Converters...................................................... 5-10 years
Buildings and headends.......................................... 9-20 years
Vehicles and equipment.......................................... 4-8 years
Office equipment................................................ 5-10 years
</TABLE>

Franchise Costs and Other

Franchise costs are being amortized on a straight-line basis over the
remaining terms of the related franchises, the majority of which expire prior
to December 31, 1999. Noncompete covenants are being amortized on a straight-
line basis over three or five years, depending on the terms of the related
agreements.

During 1995, the Systems' management adopted Statement of Financial
Accounting Standards (SFAS) No. 121 entitled, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." In
accordance with SFAS No. 121, the Systems' management periodically reviews the
carrying value of its long-lived assets, identifiable intangibles and
franchise costs in relation to historical financial results, current business
conditions and trends (including the impact of existing legislation and
regulation) to identify potential situations in which the carrying value of
such assets may not be recoverable. If a review indicates that the carrying
value of such assets may not be recoverable, the carrying value of such assets
in excess of their fair value will be recorded as a reduction of the assets'
cost as if a permanent impairment has occurred. The adoption of SFAS No. 121
did not impact the financial statements of the Systems'.

Service Revenues

Cable service revenues are recognized when the related services are
provided. Franchise fees collected from cable subscribers and paid to local
franchises are reported as revenues.

Selling, General and Administrative Expenses

Included in selling, general, and administrative expenses is the allocation
of certain expenses incurred by the holding company of CCT on behalf of the
Systems. These expenses were allocated to the Systems based on the ratio of
total Systems' subscribers to total CCT subscribers. Management considers this
allocation method to be reasonable for the operations of the Systems.

Income Taxes

The Systems have not recorded the benefit of the net operating losses as the
benefit will be retained by the Parent in accordance with the shareholders'
agreement among CCT, Charter, and the Parent.

Cash Management and Systems' Equity Account

The cash management function for the Systems is performed by the holding
company of CCT. Excess cash funds are transferred to the holding company of
CCT using the Systems' equity account. In addition, the holding company of CCT
makes disbursements on behalf of the Systems for certain items such as
programming fees, payroll, payroll taxes, employee benefits, and other costs.
Such amounts are transferred to the Systems through the Systems' equity
account and are recognized in the appropriate expense categories in the
accompanying combined statements of operations.

F-133
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

3. PREPAID EXPENSES AND OTHER:

Prepaid expenses and otehr consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
Prepaid management fee............................. $ 901,236 $ --
Prepaid programming................................ 206,701 182,657
Prepaid property tax............................... 346,573 --
Deposits........................................... 229,816 148,776
Other.............................................. 65,046 400,695
---------- --------
$1,749,372 $732,128
========== ========
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
Trunk and distribution systems................... $116,037,825 $117,825,006
Subscriber installations......................... 37,452,040 41,788,065
Converters....................................... 36,474,366 40,108,987
Land, buildings and headends..................... 7,323,537 7,373,297
Vehicles and equipment........................... 4,532,000 4,915,015
Office equipment................................. 2,875,564 3,450,381
------------ ------------
204,695,332 215,460,751
Less-Accumulated depreciation.................... (87,300,382) (104,038,226)
------------ ------------
$117,394,950 $111,422,525
============ ============
</TABLE>

5. FRANCHISE COSTS AND OTHER:

Franchise costs and other consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
Franchise costs, net of accumulated amortization
of $145,225,911
and $161,743,118, respectively.................... $54,952,146 $38,472,736
Noncompete covenants, net of accumulated
amortization of $169,381
and $278,431, respectively........................ 545,748 436,698
----------- -----------
$55,497,894 $38,909,434
=========== ===========
</TABLE>

During 1994, approximately $49 million of noncompete covenants expired and
the cost and related accumulated amortization were removed from the December
31, 1994, balance sheet.

F-134
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
Accounts payable.................................. $ 419,065 $ 174,353
<S> <C> <C>
Accrued franchise fees............................ 2,267,289 1,601,008
Accrued construction in progress.................. 1,432,163 1,760,849
Accrued salaries and related benefits............. 904,766 628,949
Accrued sales and use tax......................... 464,944 313,210
Accrued program guides............................ 281,040 309,032
Other............................................. 1,030,110 1,075,149
---------- ----------
$6,799,377 $5,862,550
========== ==========
</TABLE>

7. SYSTEMS' EQUITY:

As of September 29, 1995, CCT had recorded in its capital account an
accumulated deficit of approximately $236,670,000, represented by losses and
partner distributions.

8. RELATED-PARTY TRANSACTIONS:

Pursuant to a management agreement (the "Management Agreement"), Crown
Communications, Inc. ("Crown") managed CCT's cable television operations during
1993 and through November 18, 1994, for a standard management fee equal to 3%
of CCT's operating cash flow, as defined. For the years ended December 31, 1993
and 1994, the Systems expensed $943,681 and $904,209, respectively, relating to
the Management Agreement with Crown. Effective November 19, 1994, Crown
assigned its rights and obligations under the Management Agreement to Charter,
and the Management Agreement was amended to increase the standard management
fee from 3% to 8% of CCT's cash flow, as defined, beginning January 1, 1995.
For the period from November 19, 1994, through December 31, 1994, and January
1, 1995, through September 29, 1995, the Systems expensed $122,660 and
$2,150,374, respectively, relating to the Management Agreement with Charter. As
of December 31, 1994, the Systems had prepaid management fees to Charter of
$901,236.

9. COMMITMENT AND CONTINGENCIES:

Leases

The Systems lease certain facilities and equipment under noncancelable
operating leases. Rent expenses incurred under leases during 1993, 1994 and
1995 were $1,149,951, $1,131,333 and $821,634, respectively. Future minimum
lease payments are as follows:

<TABLE>
<S> <C>
1996............................................................ $ 838,569
1997............................................................ 839,486
1998............................................................ 842,712
1999............................................................ 857,564
2000 and thereafter............................................. 1,707,276
----------
Total....................................................... $5,085,607
==========
</TABLE>

F-135
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

The Systems rent utility poles in their operations. Generally, pole rental
agreements are short term, but the Systems' management anticipates that such
rentals will continue to recur. Rent expense incurred for pole attachments
during 1993, 1994 and 1995 were $440,797, $454,393 and $342,478, respectively.

Insurance Coverage

The Systems currently do not have and do not in the near term anticipate
having property and casualty insurance on their underground distribution
plants. Due to large claims incurred by the property and casualty insurance
industry, the pricing of insurance coverage has become inflated to the point
where, in the judgment of the Systems' management, the insurance coverage is
cost prohibitive. Management believes its experience and policy with such
insurance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the Systems' distribution plants at reasonable rates.

Litigation

The Systems are a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
Systems' financial position and results of operations.

10.REGULATION IN THE CABLE INDUSTRY:

1992 Cable Act and FCC Regulation

The 1992 Cable Act and FCC regulations have imposed rate requirements for
basic services and equipment, including rate roll-backs. Under the 1992 Cable
Act, a local franchising authority in a community not subject to "effective
competition" generally is authorized to regulate basic cable rates after
certifying to the FCC that, among other things, it will adopt and administer
rate regulation consistent with FCC rules, and in a manner that will provide a
reasonable opportunity to consider the views of interested parties. Upon
certification, the franchising authority obtains the right to approve the
basic rates charged by the cable system operator. In regulating the basic
service rates, certified local franchise authorities have the authority to
order a rate refund of previously paid rates determined to be in excess of the
maximum permitted reasonable rates. The Telecommunications Act of 1996 (the
"Telecommunications Act"), passed by Congress on February 1, 1996,

F-136
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

and signed into law by the President on February 8, 1996, broadens the
definition of "effective competition" to include any franchise area where a
local exchange carrier (or its affiliate) provides video programming services
to subscribers by any means, other than through Direct Broadcast Satellite.

Under the 1992 Cable Act, rates for cable programming services not carried on
the basic tier (non-basic services) could be regulated by the FCC upon the
filing of a complaint by franchise authorities or subscribers that indicates
the cable operator's rates for these services are unreasonable. Rate complaints
have been filed with the FCC with respect to certain of the Systems' cable
programming services; several complaints are pending as of the date of the
financial statements. The Telecommunications Act eliminates regulation of non-
basic programming as of March 31, 1999. In the interim, rate regulation of the
non-basic programming tier can only be triggered by a franchising authority
complaint to the FCC. If the FCC determines that the Systems' non-basic
programming service tier rates are unreasonable, the FCC has the authority to
order the Systems to reduce non-basic programming service tier rates and to
refund to customers any overcharges occurring from the filing date of the rate
complaint with the FCC.

Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to determine
their maximum permitted rates. Those systems whose rates were above the
benchmark on September 30, 1992, were required to reduce their rates to the
benchmark or by 10%, whichever was less. Under revised rate regulations adopted
February 1994, regulated cable systems were required to set their rates so that
regulated revenues per subscriber did not exceed September 30, 1992, levels,
reduced by 17% (taking into account the previous 10% reduction).

In September 1995, the FCC developed an abbreviated cost-of-service form that
permits cable operators to recover costs of significant upgrades that provide
benefits to subscribers of regulated cable services. Cable operators seeking to
raise rates to cover costs of an upgrade would submit only the costs of the
upgrade instead of all current costs. In December 1995, the FCC revised its
cost-of-service rules. At this time, the Systems' management is unable to
predict the effect of these revised rules on the Systems' financial position or
results of operations.

In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once a year to reflect inflation and changes in external costs and the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order allows operators to
recover increases in additional types of franchise-requirement costs. Permitted
pass-through increases include increases in the cost of providing institutional
networks, video services, data services to or from governmental and educational
institutions, and certain other cost increases. The Systems' management is
unable to predict the effect of these new rules on the Systems' business.

F-137
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

In November 1995, the FCC proposed to provide cable operators with the
option of establishing uniform rates for similar service packages offered in
multiple franchise areas located in the same region. Under the FCC's current
rules, cable operators subject to rate regulation must establish rates on a
franchise-specific basis. The proposed rules could lower cable operators'
marketing costs and may also allow operators to better respond to competition
from alternative providers. The Systems' management is unable to predict if
these proposed rules will ultimately be promulgated by the FCC, and if they
are promulgated, their effect on the Systems' financial position and results
of operations.

While management believes that the Systems have complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if the Systems are unable to
justify their rates through a benchmark or cost-of-service filing or small
system cost-of-service filing pursuant to FCC rules. Management is unable to
estimate at this time the amount of refunds, if any, that may be payable by
the Systems in the event certain of their rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC. Management
does not believe that the amount of any such refunds would have a material
adverse effect on the financial position or results of operations of the
Systems.

"Must Carry" Requirements/"Retransmission Consents"

Under the 1992 Cable Act, cable television operators are subject to
mandatory signal carriage requirements that allow local commercial and non-
commercial television broadcast stations to elect to require a cable system to
carry the station, subject to certain exceptions, or, in the case of
commercial stations, to negotiate for "retransmission consent" to carry the
station. In addition, there are requirements for cable systems to obtain
retransmission consent for all "distant" commercial television stations,
commercial radio stations and certain low power television stations carried by
such system after October 6, 1993. As a result of the mandatory system
carriage rules, the Systems have been required to carry television broadcast
stations that otherwise would not have been carried, thereby causing
displacement of possibly more attractive programming. The validity of the
mandatory signal carriage requirements is being litigated; however, the
carriage requirements remain in effect pending the outcome of the proceedings.

Franchise Matters

The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the Systems have generally met the terms of their franchise
agreements and have provided quality levels of service, and anticipates the
Systems' future franchise renewal prospects generally will be favorable, there
can be no assurance that any such franchises will be renewed or, if renewed,
that the franchising authorities will not impose more onerous requirements on
the Systems than previously existed.

Recent Telecommunications Legislation

The Telecommunications Act alters federal, state and local laws and
regulations pertaining to cable television, telecommunications and other
services. Under the Telecommunications Act, telephone companies can compete
directly with cable operators in the provision of video programming. This new
legislation recognizes several multiple entry options for telephone companies
to provide competitive video programming.

F-138
<PAGE>

CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Systems. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. The Systems' management is unable at this time to predict the
outcome of such rule-makings or litigation or the substantive effect of the
new legislation and the rule-makings on the financial position and results of
operations of the Systems.

F-139
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Charter Communications Entertainment I, L.P.

We have audited the accompanying balance sheets of the Missouri Cable
Television System to be sold by Masada Cable Partners, L.P. to Charter
Communications Entertainment I, L.P., as of November 29, 1996 and December 31,
1995 and the related statements of operations, changes in system capital
(deficiency) and cash flows for the period ended November 29, 1996 and years
ended December 31, 1995 and 1994. These financial statements are the
responsibility of the System's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

As described in Note 1, the System was a part of Masada Cable Partners, L.P.
as of November 29, 1996 and, as such, had no separate legal status or
existence. Transactions with Masada Cable Partners, L.P. are described in
Notes 4 and 5.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Missouri Cable
Television System to be sold by Masada Cable Partners, L.P. to Charter
Communications Entertainment I, L.P. at November 29, 1996 and December 31,
1995 and the results of its operations and its cash flows for the period ended
November 29, 1996 and years ended December 31, 1995 and 1994, in conformity
with generally accepted accounting principles.

Ernst & Young LLP

Birmingham, Alabama
February 17, 1997

F-140
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

BALANCE SHEETS

<TABLE>
<CAPTION>
NOVEMBER 29, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 25,478 $ 69,729
Prepaid expenses and other.......................... 32,401 15,377
----------- ----------
Total current assets................................. 57,879 85,106
Net property and equipment (Note 3).................. 2,501,879 3,312,153
Deferred charges:
Franchise costs..................................... 4,869,519 4,869,519
Acquisition costs................................... 110,637 --
Goodwill............................................ 2,826,763 2,826,763
Other deferred charges.............................. 210,834 201,402
----------- ----------
8,017,753 7,897,684
Accumulated amortization............................ (4,718,452) (4,120,568)
----------- ----------
Net deferred charges................................. 3,299,301 3,777,116
$ 5,859,059 $7,174,375
=========== ==========
</TABLE>

F-141
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

<TABLE>
<CAPTION>
NOVEMBER 29, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SYSTEM DEFICIENCY
Current liabilities:
Accounts payable.................................... $ 25,223 $ 82,742
Subscriber deposits and advance payments............ 37,957 38,422
Accrued interest.................................... 82,949 251,928
Accrued franchise fee............................... 99,098 105,238
Accrued programming fee............................. 74,633 78,581
Accrued pole rent................................... 25,091 32,516
Other accrued liabilities........................... 140,324 343,079
---------- ----------
Total current liabilities............................ 485,275 932,506
Notes payable allocated to the System (Note 4)....... 12,295,000 15,500,000
---------- ----------
Total liabilities.................................... 12,780,275 16,432,506
Contingencies (Note 6)
System capital (deficiency).......................... (6,921,216) (9,258,131)
---------- ----------
$5,859,059 $7,174,375
========== ==========
</TABLE>

See accompanying notes.

F-142
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIODS ENDED
-------------------------------------
NOVEMBER
29, DECEMBER 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Subscriber service revenue............... $ 4,381,706 $ 4,558,494 $ 4,572,833
Operating expenses:
Operating costs......................... 1,951,529 1,993,744 1,883,309
Selling, general and administrative..... 443,075 408,840 384,975
Depreciation............................ 2,021,476 2,460,662 2,551,456
Amortization............................ 597,884 636,383 652,211
----------- ----------- -----------
Total operating expenses................. 5,013,964 5,499,629 5,471,951
----------- ----------- -----------
Loss from operations..................... (632,258) (941,135) (899,118)
Other income (expense):
Interest and fees....................... (1,093,796) (2,244,678) (1,574,024)
Other, net (Note 5)..................... (292,865) (304,476) (192,819)
----------- ----------- -----------
Total other income (expense)............. (1,386,661) (2,549,154) (1,766,843)
----------- ----------- -----------
Net loss................................. $(2,018,919) $(3,490,289) $(2,665,961)
=========== =========== ===========
</TABLE>

See accompanying notes.

F-143
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

STATEMENTS OF CHANGES IN SYSTEM CAPITAL (DEFICIENCY)

<TABLE>
<CAPTION>
SYSTEM
CAPITAL
(DEFICIENCY)
------------
<S> <C>
Balance, December 31, 1993........................................ $(5,674,798)
Net loss......................................................... (2,665,961)
Net change in current accounts with partnership.................. (2,007,978)
-----------
Balance, December 31, 1994........................................ (10,348,737)
Net loss......................................................... (3,490,289)
Net change in current accounts with partnership.................. 4,580,895
-----------
Balance, December 31, 1995........................................ $(9,258,131)
Net loss......................................................... (2,018,919)
Net change in current accounts with partnership.................. 4,355,834
-----------
Balance, November 29, 1996........................................ $(6,921,216)
===========
</TABLE>

See accompanying notes.

F-144
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIODS ENDED
-------------------------------------
NOVEMBER
29, DECEMBER 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................... $(2,018,919) $(3,490,289) $(2,665,961)
Net change in current accounts with
partnership........................... 4,355,834 4,580,895 (2,007,978)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization........ 2,619,360 3,097,045 3,203,667
Gain on sale of fixed assets......... -- (4,478) --
Loss on write-off of deferred
charges............................. -- 120,616 --
Changes in operating assets and
liabilities:
Accounts receivable................. -- 28,261 28,048
Prepaid expenses and other.......... (17,024) (5,201) (395)
Accounts payable.................... (57,519) 47,623 (46,894)
Deposits and advances............... (465) (14,470) (31,017)
Accrued interest.................... (168,979) 156,011 (144,404)
Other accrued liabilities........... (220,268) 326,863 27,894
----------- ----------- -----------
Net cash provided by (used in)
operating activities.................. 4,492,020 4,842,876 (1,637,040)

INVESTING ACTIVITIES
Purchase of property and equipment..... (1,211,202) (367,324) (342,094)
Proceeds from sale of fixed assets..... -- 4,478 --
Additions to deferred charges.......... (120,069) (152,440) (3,174)
----------- ----------- -----------
Net cash used in investing activities.. (1,331,271) (515,286) (345,268)

FINANCING ACTIVITIES
Issuance (payments) of notes payable... (3,205,000) (4,295,440) 1,982,802
----------- ----------- -----------
Net cash provided by (used in)
financing activities.................. (3,205,000) (4,295,440) 1,982,802
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents........................... (44,251) 32,150 494
Cash and cash equivalents at beginning
of year............................... 69,729 37,579 37,085
----------- ----------- -----------
Cash and cash equivalents at end of
year.................................. $ 25,478 $ 69,729 $ 37,579
=========== =========== ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest and fees....... $ 1,262,775 $ 2,088,667 $ 1,718,428
=========== =========== ===========
</TABLE>

See accompanying notes.

F-145
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS
NOVEMBER 29, 1996 AND DECEMBER 31, 1995 AND 1994

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying financial statements include the accounts of the Missouri
Cable Television System (System) to be sold by Masada Cable Partners, L.P.
(Masada) to Charter Communications Entertainment I, L.P. (Charter) pursuant to
a sale agreement between Masada and Charter. The System has no separate legal
status or existence. These financial statements are presented as if the System
had existed as an entity separate from Masada during the periods presented,
and includes the historical assets, liabilities, sales and expenses that are
directly related to the System's operations. These financial statements
include certain Masada partnership asset, liability and expense allocations,
primarily a portion of Masada's acquisition costs and debt and interest
related thereto.

Masada, a Delaware limited partnership, was organized on April 10, 1988 to
acquire, construct and operate cable television systems. The managing general
partner is Masada Cable Management, Inc. and the co-general partner is BHI
Associates III, L.P. (Bariston).

The financial information presented herein reflects the financial position
and results of operations of the System and is not necessarily indicative of
the financial position or results of operations had the System actually
operated as a separate, stand-alone entity during the reporting periods. The
results of operations for such periods do not necessarily reflect any trends
or future prospects for the System as an independent entity.

On November 29, 1996, Masada Cable Partners L.P. entered into an agreement
for the sale of three cable systems, including the System, for $53,000,000. In
connection with the sale, $25,000,000 of the sale price will be remitted
directly by the purchaser to Canadian Imperial Bank as a reduction of the
outstanding principal balance due under a term loan agreement. A distribution
of $27,000,000 will be made to the limited partners. The purchaser will
deposit $500,000 in a pole agreement escrow account, and $957,000 in an
indemnity escrow account.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recognition of Revenue

Subscriber service revenue is recognized in the month the cable service is
provided.

Property and Equipment

Property and equipment is stated at cost. Depreciation is calculated on the
straight-line basis using the following useful lives:

Cable distribution systems............................ 7 years

Computer equipment.................................... 5 years

Transportation equipment.............................. 5 years

Deferred Charges

Deferred charges are recorded at cost. Amortization is provided on a
straight-line basis using the following lives:

Franchise costs....................................... 10 years

Debt issuance costs................................... Term of the related
debt

Acquisition costs..................................... 7 years

Organization costs.................................... 5 years

Goodwill and other.................................... 20 years

F-146
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Long-Lived Assets

In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.
Statement 121 is effective for financial statements for periods beginning on
or after December 15, 1995 although earlier adoption is permitted. Based on
present circumstances, no adjustment to the recorded amounts for System net
property and equipment, franchise costs or goodwill was necessary when
Statement 121 was adopted as of November 29, 1996.

Cash and Cash Equivalents

The System considers all highly liquid investments with a maturity of three
months or less at the time of purchase to be cash equivalents.

Income Taxes

The accompanying financial statements do not include a provision for income
taxes because the taxable income or loss of the System is included in the tax
returns of the partners.

Management Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of management's estimates and
assumptions. Actual results could differ from these estimates.

3.PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
NOVEMBER 29, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Property and equipment:
Land $ -- $ --
Buildings and improvements -- --
Cable distribution systems......................... 19,309,052 18,165,951
Other equipment.................................... 199,851 205,668
------------ ------------
19,508,903 18,371,619
Accumulated depreciation........................... (17,007,024) (15,059,466)
------------ ------------
Net property and equipment.......................... $ 2,501,879 $ 3,312,153
============ ============
</TABLE>

4.NOTES PAYABLE TO THE SYSTEM

For purposes of the financial statements presented herein, the System has
been allocated a portion of the term loan and subordinated note payable by
Masada and associated interest and fees. This allocation was determined by
applying the ratio of total System assets to total Masada assets at November
29, 1996 and December 31, 1995 and 1994. The calculation resulted in 49%, 62%
and 42% of the debt and related interest

F-147
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

expense being allocated to the Missouri Cable System at November 29, 1996 and
December 31, 1995 and 1994 respectively. In the opinion of management, this
method of allocation is reasonable. Since such debt does not represent a
liability of the System, but rather an allocation of Masada long term debt, and
there are neither repayment terms nor a formal agreement between the System and
Masada, such debt has been classified as noncurrent. Management believes the
market value of its notes payable approximates the carrying value in the
accompanying balance sheets due to the variable rate of interest on the notes
payable.

Notes payable allocated to the System consisted of the following:

<TABLE>
<CAPTION>
NOVEMBER DECEMBER
29, 1996 31, 1995
----------- -----------
<S> <C> <C>
Revolving credit and term loan......................... $12,295,000 $15,500,000
Subordinated note payable.............................. -- --
----------- -----------
$12,295,000 $15,500,000
=========== ===========
</TABLE>

The terms and conditions of Masada's total term loan and subordinated debt
which has been allocated to the System, as described above, are summarized
below.

Revolving Credit and Term Loan

Masada had a revolving credit and term loan agreement (Term Loan Agreement)
with three financial institutions which provided for aggregate borrowings of up
to $53,000,000 on a revolving basis through March 31, 1993. At that time the
then outstanding loan balance of $50,150,000 converted to a term loan note,
scheduled to be paid in twenty-five quarterly installments in amounts varying
from 2.25% to 7.67% of the original principal balance beginning September 30,
1993.

Concurrent with the sale of the Georgia Cable Television System by Masada in
July 1995, the purchaser remitted directly to Canadian Imperial Bank of
Commerce $17,752,875 towards the principal resulting in a new principal balance
of $25,000,000. On the same day, the existing term loan was replaced with a new
facility for the remaining $25 million, secured by substantially all remaining
transferable assets of Masada as noted below. Interest on the loan is payable
quarterly and the entire principal balance is due on January 31, 1997.

Under the terms of the Term Loan Agreement, Masada has the option to have
interest computed using a LIBOR rate and/or a variable rate. With the LIBOR
selection, the Term Loan Agreement provides for interest to be paid quarterly
at a rate based on LIBOR plus a variable margin ranging from 3.00% to 3.50%.
The LIBOR rate was in effect at November 29, 1996 for all of the principal
amount outstanding and was 8.375 %.

Borrowings under the Term Loan Agreement are secured by senior liens, in
favor of the lender, on substantially all transferable assets of Masada. Under
the terms of the agreement, Masada pays a one-time fee of 1% of the outstanding
balance of the term loans one year after the effective date of the new loan.

Under the provisions of the agreement, Masada is required to maintain certain
levels of annualized net operating income, as defined, as compared to total
debt (total leverage), senior debt (senior leverage) and net cash flow, as
defined, as compared to debt service (debt service coverage) and certain ratios
of cable subscribers to total debt. Masada is also required to limit capital
expenditures, management and investment banking fees and distributions to the
partners to amounts specified in the agreement.

F-148
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Subordinated Notes Payable

In connection with the execution of the Term Loan Agreement, Masada borrowed
$3,000,000 on July 11, 1991 under a subordinated note agreement with an
unaffiliated party which is due December 31, 1999. Under the provisions of
this subordinated agreement, interest accrues at 25% per annum with interest
payments which began on October 31, 1993 under one of three options given to
the Partnership, the minimum being the payment of 10% interest quarterly with
the remaining 15% being converted to additional principal. Masada also has the
option to pay interest currently as it becomes due.

Borrowings under the subordinated note agreement are secured by subordinate
liens, in favor of the lender, on substantially all transferable assets of
Masada.

Proceeds from the sale of another cable television system by Masada in July
1995 have been used to pay the subordinated notes in order to obtain release
of the liens on assets subject to the sale.

Masada is also required to maintain certain ratios of annualized net
operating income (as defined) to total debt and to limit capital expenditures,
additional indebtedness, management and investment banking fees and
distributions to partners to amounts specified in the agreements.

5. RELATED PARTY TRANSACTIONS

Masada Cable Management, Inc. provides management services to Masada for a
fee of 5% of total revenues. Management fee expense incurred by the System was
approximately $219,000 $233,000 and $234,000 in 1996, 1995 and 1994,
respectively, and is included in other expenses in the accompanying statements
of operations. Accrued management fees were approximately $21,000, $7,000 and
$3,000 at November 29, 1996 and December 31, 1995 and 1994 respectively, and
are included in other accrued liabilities in the accompanying balance sheets.

Bariston Associates, Inc. an affiliate of Bariston, provides ongoing
investment banking services to Masada. Fees incurred by the System for these
investment banking services amounted to approximately $48,000, $48,000 and
$48,000 in 1996, 1995, and 1994, respectively, and are included in other
expenses in the accompanying statements of operations.

6. CONTINGENCIES

Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the 1992 Cable Act), which became effective on December 4, 1992.
This legislation caused significant changes to the regulatory environment in
which the cable television industry operates. The 1992 Cable Act generally
allows for a greater degree of regulation of the cable television industry.
Under the 1992 Cable Act's definition of effective competition, nearly all
cable systems in the United States are subject to rate regulation of basic
cable services. In addition, the 1992 Cable Act allows the Federal
Communications Commission (FCC) to regulate rates for nonbasic service tiers
other than premium services in response to complaints filed by franchising
authorities and/or cable subscribers. In April 1993, the FCC adopted
regulations governing rates for basic and nonbasic services. The FCC's rules
became effective on September 1, 1993.

F-149
<PAGE>

MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

On February 22, 1994, the FCC adopted several additional rate orders
including an order which revised its earlier announced regulatory scheme with
respect to rates. The FCC's new regulations will generally require rate
reductions, absent a successful cost-of-service showing of 17% of September
30, 1992 rates, adjusted for inflation, channel modifications, equipment costs
and increases in programming costs. However, the FCC held rate reductions in
abeyance in certain systems. The new regulations became effective on May 15,
1994, but operators could elect to defer rate reductions to July 14, 1994, so
long as they made no changes in their rates and did not restructure service
offerings between May 15 and July 14, 1994.

On February 22, 1994, the FCC also adopted interim cost-of-service
regulations. Rate reductions will not be required where it is successfully
demonstrated that rates for basic and other regulated programming services are
justified and reasonable using cost-of-service standards. The FCC established
an interim industry-wide 11.25% permitted rate of return, and requested
comments on whether this standard and other interim cost-of-service standards
should be made permanent.

Management believes that it has generally complied with all provisions of
the 1992 Cable Act, including its cable programming service rate-setting
provisions.

F-150
<PAGE>

INDEPENDENT AUDITORS' REPORT

July 25, 1996

To the Board of Directors and Stockholders of United Video Cablevision, Inc.

We have audited the accompanying divisional balance sheets of UNITED VIDEO
CABLEVISION, INC.--MASSACHUSETTS AND MISSOURI DIVISIONS as of October 31, 1995
and December 31, 1994 and 1993, and the related statements of divisional
operations, cash flows and equity for the ten months ended October 31, 1995
and for the years ended December 31, 1994 and 1993. These financial statements
are the responsibility of the Divisions' management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audit provides a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the divisional financial position of United Video
Cablevision, Inc.--Massachusetts and Missouri Divisions as of October 31, 1995
and December 31, 1994 and 1993, and the results of its divisional operations
and its cash flows for the ten months ending October 31, 1995 and the years
ending December 31, 1994 and 1993, in conformity with generally accepted
accounting principles.

Piaker & Lyons, P.C.
Vestal, New York

F-151
<PAGE>

UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS

DIVISIONAL BALANCE SHEETS

OCTOBER 31, 1995
DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.......... $ 31,601 $ 21,455 $ 56,441
------------ ------------ ------------
Accounts receivable (Note 1)
Accounts receivable--trade....... 30,092 142,218 63,690
Accounts receivable--other....... 8,024 10,705 3,315
Less: Allowance for doubtful
accounts........................ (16,289) (17,845) (17,808)
------------ ------------ ------------
Net accounts receivable........ 21,827 135,078 49,197
------------ ------------ ------------
Prepaid expenses................... 95,519 69,250 86,320
------------ ------------ ------------
Total current assets........... 148,947 225,783 191,958
------------ ------------ ------------
Property, plant and equipment--at
cost
Land............................... 109,619 109,619 149,747
Buildings and improvements......... 294,254 285,581 291,413
Vehicles........................... 1,075,983 1,132,689 1,078,300
Cable television distribution
systems........................... 40,601,642 39,334,667 38,100,070
Office furniture, tools and
equipment......................... 501,830 497,427 443,763
Less: Accumulated depreciation
(Note 1).......................... (29,962,342) (27,626,213) (24,257,829)
------------ ------------ ------------
Net property, plant and
equipment..................... 12,620,986 13,733,770 15,805,464
------------ ------------ ------------
Intangible Assets
Goodwill........................... 15,867,456 15,867,456 15,867,456
Franchise rights................... 706,532 706,532 719,375
Non compete agreements............. 742,068 742,068 700,510
Deferred loan costs................ 190,666 190,666 --
Less: Accumulated amortization
(Note 1).......................... (4,026,772) (3,579,220) (2,922,892)
------------ ------------ ------------
Net intangible assets.......... 13,479,950 13,927,502 14,364,449
------------ ------------ ------------
Total assets................... $ 26,249,883 $ 27,887,055 $ 30,361,871
============ ============ ============
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities
Accounts payable and accrued
expenses.......................... $ 639,210 $ 917,370 $ 715,970
Subscriber deposits and unearned
income............................ 728,280 795,177 860,701
Accrued franchise fees............. 103,056 182,848 75,958
Accrued programming fees........... 366,494 357,622 338,618
------------ ------------ ------------
Total current liabilities...... 1,837,040 2,253,017 1,991,247
Divisional equity.................... 24,412,843 25,634,038 28,370,624
------------ ------------ ------------
Total liabilities and
divisional equity............. $ 26,249,883 $ 27,887,055 $ 30,361,871
============ ============ ============
</TABLE>

See the accompanying notes to divisional financial statements.

F-152
<PAGE>

UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS

STATEMENTS OF DIVISIONAL OPERATIONS

FOR THE TEN MONTHS ENDED OCTOBER 31, 1995 AND
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues (Note 1)...................... $15,632,849 $17,790,050 $17,329,551
Operating expenses
Programming.......................... 3,676,125 4,131,467 3,931,693
Plant and operation.................. 1,701,840 2,281,757 2,308,160
General and administrative........... 2,188,773 2,795,654 2,720,003
Marketing and advertising............ 128,859 254,671 288,307
Corporate overhead (Note 3).......... 627,768 678,582 736,081
Depreciation and amortization (Note
1).................................. 3,004,770 4,847,490 4,482,391
----------- ----------- -----------
Total expenses..................... 11,328,135 14,989,621 14,466,635
----------- ----------- -----------
Operating income....................... 4,304,714 2,800,429 2,862,916
----------- ----------- -----------
Other (income) expense
Interest expense (Note 1)............ 2,827,886 3,599,961 3,638,186
Gain on sale of fixed assets......... (4,181) (25,805) (13,725)
----------- ----------- -----------
Total other (income) expense....... 2,823,705 3,574,156 3,624,461
----------- ----------- -----------
Income (loss) before provision for in-
come taxes............................ 1,481,009 (773,727) (761,545)
Provision for income taxes (Note 1).. 13,424 11,718 (32,927)
----------- ----------- -----------
Net income (loss)...................... $ 1,467,585 $ (785,445) $ (728,618)
=========== =========== ===========
</TABLE>

See the accompanying notes to divisional financial statements.

F-153
<PAGE>

UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS

STATEMENTS OF DIVISIONAL CASH FLOWS

FOR THE TEN MONTHS ENDED OCTOBER 31, 1995 AND
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
Operating activities:
Net income (loss)..................... $ 1,467,585 $ (785,445) $ (728,618)
----------- ----------- -----------
Adjustments to reconcile net income
(loss) to net cash provided by
operations:
Depreciation......................... 2,557,217 4,256,041 3,878,639
Amortization of intangibles.......... 447,553 591,449 603,752
Allowance for doubtful accounts...... (1,556) 37 (1,226)
Gain on sale of assets............... (4,181) (25,805) (13,725)
Changes in operating assets and
liabilities,
Net of effects from acquisition of
corporate entities:
Accounts receivable and other
receivables...................... 114,807 (85,918) 78,207
Prepaid expenses.................. (26,269) 17,070 (9,165)
Accounts payable and accrued
expenses......................... (349,080) 327,294 (250,526)
Subscriber deposits and unearned
income........................... (66,897) (65,524) (77,909)
----------- ----------- -----------
Total adjustments................ 2,671,594 5,014,644 4,208,047
----------- ----------- -----------
Net cash provided by operating
activities...................... 4,139,179 4,229,199 3,479,429
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property, plant and
equipment............................ (1,480,206) (2,559,469) (2,958,045)
Acquisqition of intangible assets..... -- (154,505) (12,843)
Proceeds from sale of assets.......... 39,953 400,930 17,050
----------- ----------- -----------
Net cash used in investing
activities...................... (1,440,253) (2,313,044) (2,953,838)
----------- ----------- -----------
Cash flows from financing activities:
Payments to corporate division, net... (2,688,780) (1,951,141) (537,630)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents...................... 10,146 (34,986) (12,039)
Cash and cash equivalents at beginning
of year.............................. 21,455 56,441 68,480
----------- ----------- -----------
Cash and cash equivalents at end of
year................................. $ 31,601 $ 21,455 $ 56,441
=========== =========== ===========
Supplemental disclosures of cash flow
information:
Interest paid, net of amount
capitalized.......................... $ 2,832,391 $ 3,599,555 $ 3,857,328
Income taxes paid..................... -- -- --
</TABLE>

DISCLOSURE OF ACCOUNTING POLICY:

For the purposes of cash flows, the Divisions consider a highly liquid debt
instrument purchased with a maturity of three months or less to be cash
equivalents.

See the accompanying notes to divisional financial statements.

F-154
<PAGE>

UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS

STATEMENTS OF DIVISIONAL EQUITY

FOR THE TEN MONTHS ENDED OCTOBER 31, 1995 AND
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1....................... $25,634,038 $28,370,624 $29,636,872
Net income (loss)........................ 1,467,585 (785,445) (728,618)
Decrease in divisional equity............ (2,688,780) (1,951,141) (537,630)
----------- ----------- -----------
Balance--Ending.......................... $24,412,843 $25,634,038 $28,370,624
=========== =========== ===========
</TABLE>

See the accompanying notes to divisional financial statements.

F-155
<PAGE>

UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS

NOTES TO DIVISIONAL FINANCIAL STATEMENTS

OCTOBER 31, 1995

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity--The accompanying divisional financial statements include
the Massachusetts and Missouri Divisions of United Video Cablevision, Inc.
(The "Divisions"). The Divisions are engaged in providing cable television
programming services to subscribers in its franchised areas. The Corporate
division allocates debt to the operating divisions based upon the respective
acquisition and construction costs relative to the debt incurred. Accordingly,
interest has been allocated to the operating divisions by the Corporate
division, in that manner. For the purpose of the divisional financial
statements, no debt has been allocated to the Divisions from the corporate
division of United Video Cablevision, Inc.

Concentrations of Credit Risk--The Divisions' trade receivables are
comprised of amounts due from subscribers in varying regions throughout the
states. Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Divisions'
customer base and geographic dispersion.

Use of Estimates--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.

Revenue Recognition--The Divisions recognize service revenues on the accrual
basis in the month in which the service is to be provided. Payments received
in advance are included in deferred revenue until the month they become due at
which time they are recognized as income.

Capitalization and Depreciation--In accordance with Statement #51 of the
Financial Accounting Standards Board, the Divisions have adopted the policy of
capitalizing certain expenses applicable to the construction and operation of
a cable television system during the period while the cable television system
is partially under construction and partially in service. During 1995, 1994
and 1993, the total capitalized costs amounted to $189,399, $120,406 and
$45,912, respectively.

The Divisions, for financial reporting purposes, provide depreciation on the
straight-line method, which is considered adequate for the recovery of the
cost of the properties over their estimated useful lives. For income tax
purposes, however, the Divisions utilize both accelerated methods and the
accelerated cost recovery system. For the ten months ended October 31, 1995
and the years ended December 31, 1994 and 1993, the provision for depreciation
in the accompanying statements of operations amounted to $2,557,217,
$4,256,041 and $3,878,639, respectively.

F-156
<PAGE>

UNITED VIDEO CABLEVISION, INC.-- MASSACHUSETTS AND MISSOURI DIVISIONS

NOTES TO DIVISIONAL FINANCIAL STATEMENTS--(CONTINUED)

Depreciation lives for financial statement purposes are as follows:

<TABLE>
<S> <C>
Headend equipment
Tower........................................................... 12 Years
Antennae........................................................ 7 Years
Other headend equipment......................................... 8 Years
Trunk and distribution equipment
Traps, descramblers, converters, decoders....................... 5 Years
Other trunk and distribution equipment.......................... 8 Years
Test equipment.................................................... 5 Years
Local origination equipment....................................... 8 Years
Vehicles.......................................................... 3 Years
Furniture and fixtures............................................ 10 Years
Leasehold improvements............................................ 8 Years
Computer and EDP equipment........................................ 5 Years
</TABLE>

Amortization--The Divisions are amortizing to expense various intangible
assets acquired and incurred on a straight-line basis, generally from 5 to 40
years. For the ten months ended October 31, 1995 and the years ended December
31, 1994 and 1993, the provision for amortization in the accompanying
statements of operations amounted to $447,553, $591,449 and $603,752,
respectively.

Income Taxes--The Divisions are a part of United Video Cablevision, Inc.
which has elected to be taxed as a small business corporation under "Sub-
Chapter S" of the Internal Revenue Code effective January 1, 1987, wherein the
stockholders of United Video Cablevision, Inc. are taxed on any earnings or
losses of the Company.

Bad Debts--The Divisions have adopted the reserve method for recognizing bad
debts for financial statement purposes and continues to utilize the direct
write-off method for tax purposes.

NOTE 2--COMMITMENTS

The Divisions are committed to annual pole rentals of approximately
$300,000, $400,000 and $200,000 at October 31, 1995 and December 31, 1994 and
1993, respectively, to various utilities. These agreements are subject to
termination rights by both parties.

The Divisions lease in various systems the land upon which its towers and
antennae are constructed. The annual rental payments under these leases amount
to approximately $17,000, $19,000 and $21,000 at October 31, 1995 and December
31, 1994 and 1993, respectively.

NOTE 3--MANAGEMENT AGREEMENT WITH RELATED PARTY

The Divisions are being provided with certain management and technical
services by a related party by means of a management agreement. During 1995,
1994 and 1993, the allocated billings amounted to $551,548, $667,077 and
$736,081, respectively.

NOTE 4--EMPLOYEES PROFIT SHARING AND 401(K) PLAN

The Divisions participated in a contributory employees' profit sharing plan
for eligible employees until July 1994. Prior to the plan's termination in
1994, the Divisions' contributions to the plan were at the discretion of the
Board of Directors, but could not exceed the maximum allowable deduction
permitted under the Internal

F-157
<PAGE>

UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS

NOTES TO DIVISIONAL FINANCIAL STATEMENTS--(CONTINUED)

Revenue Code at the time of the contribution. During 1991, the profit sharing
plan was amended to incorporate a 401(K) feature. The Divisions provided
$35,920, $28,657 and $67,601 in the form of employer matching contributions
and profit sharing contributions for 1995, 1994 and 1993, respectively.

In order to be eligible to participate in the plans, employees must complete
one year of service and attain 21 years of age.

NOTE 5--SALE OF DIVISIONS

On July 13, 1995, United Video Cablevision, Inc. entered into an agreement
by which it sold substantially all of the net assets and associated current
liabilities in its Massachusetts and Missouri franchise areas (the Divisions)
for approximately $94,000,000. Upon the completion of the transaction, United
Video Cablevision, Inc. realized a gain of approximately $63,000,000.

F-158
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Crown Media, Inc.:

We have audited the accompanying balance sheets of Crown Media, Inc.--
Western Connecticut as of December 31, 1994 and 1993, and the related
statements of operations, division equity and cash flows for the year ended
December 31, 1994 and the period from December 28, 1992 through December 31,
1993. These financial statements are the responsibility of the management of
Crown Media, Inc. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Crown Media, Inc.--Western
Connecticut as of December 31, 1994 and 1993 and the results of its operations
and its cash flows for the year ended December 31, 1994 and the period from
December 28, 1992 through December 31, 1993 in conformity with generally
accepted accounting principles.

KPMG Peat Marwick LLP

Dallas, Texas
January 18, 1995

F-159
<PAGE>

CROWN MEDIA, INC.--WESTERN CONNECTICUT

BALANCE SHEETS

DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 102,205 $ --
Accounts receivable, net of allowance for doubtful
accounts of $65,862 and $71,776..................... 589,681 483,473
Prepaid expenses..................................... 23,002 219,777
----------- -----------
Total current assets............................... 714,888 703,250
Property and equipment, net (note 3)................... 45,043,268 35,548,957
Intangible assets, net (note 4)........................ 39,500,660 45,000,112
----------- -----------
$85,258,816 $81,252,319
=========== ===========
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Bank overdraft....................................... $ -- $ 3,897,629
Accounts payable and accrued expenses................ 4,003,405 3,006,730
----------- -----------
Total current liabilities.......................... 4,003,405 6,904,359
Division equity (note 5)............................... 81,255,411 74,347,960
Commitments and contingencies (note 6)
----------- -----------
$85,258,816 $81,252,319
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-160
<PAGE>

CROWN MEDIA, INC.--WESTERN CONNECTICUT

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THE PERIOD FROM
DECEMBER 28,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ---------------
<S> <C> <C>
Service revenues................................... $20,398,196 $19,744,788
----------- -----------
Operating expenses:
Operating, general and administrative (note 6)... 12,240,210 11,681,267
Depreciation and amortization.................... 9,031,362 8,458,969
----------- -----------
Total operating expenses....................... 21,271,572 20,140,236
----------- -----------
Loss from operations........................... (873,376) (395,448)
----------- -----------
Other income (expense):
Interest expense................................. (2,736,146) (1,983,285)
Other, net....................................... (186,000) 47,784
----------- -----------
(2,922,146) (1,935,501)
----------- -----------
Net loss....................................... $(3,795,522) $(2,330,949)
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-161
<PAGE>

CROWN MEDIA, INC.--WESTERN CONNECTICUT

STATEMENTS OF DIVISION EQUITY

YEAR ENDED DECEMBER 31, 1994 AND THE PERIOD FROM
DECEMBER 28, 1992 THROUGH DECEMBER 31, 1993

<TABLE>
<S> <C>
Acquisition of assets on December 28, 1992 (note 2)................ $78,187,793
Net change in current accounts with Parent......................... (1,508,884)
Net loss........................................................... (2,330,949)
-----------
Division equity at December 31, 1993............................. 74,347,960
Net change in current accounts with Parent......................... 10,702,973
Net loss........................................................... (3,795,522)
-----------
Division equity at December 31, 1994............................. $81,255,411
===========
</TABLE>

See accompanying notes to financial statements.

F-162
<PAGE>

CROWN MEDIA, INC.--WESTERN CONNECTICUT

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THE PERIOD FROM
DECEMBER 28,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss....................................... $ (3,795,522) $ (2,330,949)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization................ 9,031,362 8,458,969
Changes in current assets and liabilities:
Accounts receivable, net................... (106,208) (483,473)
Prepaid expenses........................... 196,775 (219,777)
Accounts payable and accrued expenses...... 996,675 2,706,730
------------ ------------
Net cash provided by operating activi-
ties.................................... 6,323,082 8,131,500
------------ ------------
Cash flows from investing activities:
Purchase of equipment.......................... (13,053,554) (10,400,938)
Other.......................................... 27,333 (119,307)
------------ ------------
Net cash used in investing activities.... (13,026,221) (10,520,245)
------------ ------------
Cash flows from financing activities:
Net change in current accounts with Parent..... 10,702,973 (1,508,884)
Increase (decrease) in bank overdraft.......... (3,897,629) 3,897,629
------------ ------------
Net cash provided by financing
activities.............................. 6,805,344 2,388,745
------------ ------------
Net increase in cash and cash equivalents........ 102,205 --
Cash and cash equivalents, beginning of the
year............................................ -- --
------------ ------------
Cash and cash equivalents, end of the year....... $ 102,205 $ --
============ ============
Cash paid for interest........................... $ 2,394,715 $ 1,983,285
============ ============
</TABLE>

See accompanying notes to financial statements.

F-163
<PAGE>

CROWN MEDIA, INC.--WESTERN CONNECTICUT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1994 AND 1993

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Organization

On December 28, 1992, Crown Media, Inc. (the "Parent") acquired from the
former owner the New Milford, Housatonic and Mid-Connecticut cable television
franchises located in western Connecticut. Subsequent to acquisition, these
franchises were consolidated into one franchise which is referred to as Crown
Media, Inc.--Western Connecticut (the "Division"). The Division's financial
statements reflect the operations of the cable television systems comprising
the consolidated franchise from the date of acquisition.

On January 18, 1995, the Parent, including the Division, was sold to two
unaffiliated third parties.

(b) Basis of Accounting

The financial information as of December 31, 1994 and 1993 presented herein
reflects the financial position and results of operations of the Division and
is not necessarily indicative of the financial position or results of
operations had the Division operated as a separate, stand-alone entity during
the reporting period. The results of operations for such period do not
necessarily reflect any trends or future prospects for the Division as an
independent entity.

Revenues are recognized when the related services are provided.

(d) Property and Equipment

Property and equipment is carried at cost, including acquisition cost
allocated to tangible assets acquired. The Division charges depreciation to
operations using the composite method on a straight-line basis over the
estimated useful lives of the related property and equipment as follows:

<TABLE>
<S> <C>
Trunk and distribution systems.................................. 5-15 years
Subscriber installations........................................ 5-15 years
Buildings and headends.......................................... 5-20 years
Converters...................................................... 5 years
Vehicles and equipment.......................................... 3-8 years
Office equipment................................................ 5-10 years
</TABLE>

Replacements, renewals and improvements are capitalized and repairs are
charged to expense as incurred.

(e) Intangible Assets

Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Franchise
rights acquired through the purchase of cable systems are stated at estimated
fair value at the date of acquisition and amortized using the straight-line
method over the estimated remaining term of the individual original franchises
acquired. Goodwill is amortized using the straight-line method over 40 years.

The Division continually evaluates the recoverability of its intangible
assets as well as their useful lives using an analysis of projected
undiscounted cash flows from Division operations over the remaining carrying
lives of its intangible assets.

(f) Income Taxes

Income taxes are not provided in the accompanying financial statements as
such taxes are the responsibility of the Parent.

F-164
<PAGE>

CROWN MEDIA, INC.--WESTERN CONNECTICUT

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(g) Cash Management and Equity Account

The cash management function for the Division is performed by the Parent.
Excess cash funds are transferred to the Parent using the Division equity
account. In addition, the Parent makes disbursements on behalf of the Division
for items such as payroll, payroll taxes, employee benefits and other costs.
Such amounts are transferred to the Division through the equity account and
recognized in the accompanying statements of operations.

(2) ACQUISITION

On December 28, 1992, the Division, through its Parent, acquired the assets
of certain cable television systems for consideration of $78,187,793 in a
transaction accounted for as a purchase. Assets of the Division were revalued
based on their estimated fair market values at the date of purchase. The
purchase price was allocated to the Division's assets and liabilities as
follows:

<TABLE>
<S> <C>
Property and equipment........................................ $28,063,232
Franchise costs............................................... 47,954,589
Goodwill...................................................... 2,469,972
Accrued expenses.............................................. (300,000)
-----------
Initial Division equity..................................... $78,187,793
===========
</TABLE>

(3) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1994 and
1993:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Trunk and distribution systems................. $34,234,112 $24,852,634
Subscriber installations....................... 5,293,292 3,738,961
Land, buildings and headends................... 5,499,520 4,845,004
Converters..................................... 4,602,877 3,477,669
Vehicles and equipment......................... 1,478,411 1,249,491
Office equipment............................... 358,154 300,411
Materials, supplies and distribution equip-
ment.......................................... 15,215 --
----------- -----------
Property and equipment, at cost.............. 51,481,581 38,464,170
Accumulated depreciation....................... (6,438,313) (2,915,213)
----------- -----------
Property and equipment, net.................. $45,043,268 $35,548,957
=========== ===========

(4) INTANGIBLE ASSETS

Intangible assets consist of the following at December 31, 1994 and 1993:

<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Franchise costs, net of accumulated amortiza-
tion of $10,919,212 and $5,481,509............ $37,154,687 $42,592,387
Goodwill, net of accumulated amortization of
$123,999 and $62,247.......................... 2,345,973 2,407,725
----------- -----------
$39,500,660 $45,000,112
=========== ===========
</TABLE>

F-165
<PAGE>

CROWN MEDIA, INC.--WESTERN CONNECTICUT

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(5) DIVISION EQUITY

Division equity consists of the following at December 31, 1994 and 1993:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Interest-bearing investment by Parent............ $52,087,793 $52,087,793
Noninterest-bearing investment by Parent......... 26,100,000 26,100,000
Current accounts with Parent..................... 9,194,089 (1,508,884)
Accumulated losses............................... (6,126,471) (2,330,949)
----------- -----------
$81,255,411 $74,347,960
=========== ===========
</TABLE>

The Division is charged interest by the Parent on $52,087,793 of the
Parent's investment at the lesser of the LIBOR rate plus .5% or a base rate
determined by a specific bank. The interest is paid by crediting the Division
equity account on a quarterly basis. At December 31, 1994, the interest rate
was under the LIBOR-based option and was 6%. The remainder of the Division
equity account is noninterest-bearing.

(6) COMMITMENTS AND CONTINGENCIES

The Division leases certain facilities and equipment under non-cancelable
operating leases. Rent expense incurred under these leases for the years ended
December 31, 1994 and 1993 was $102,596 and $79,457, respectively. These lease
agreements, which expire on various dates through 2005, require future annual
minimum rental payments of less than $81,000.

The Parent allocates to the Division a portion of corporate expenses
incurred by the Parent based on the relative number of subscribers in the
Division's cable television systems. Such allocation is paid by the Division
through its equity account and totaled approximately $537,720 and $473,000 for
the years ended December 31, 1994 and 1993, respectively.

In October 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Cable Act"). During May 1993, pursuant
to authority granted to it under the 1992 Cable Act, the Federal
Communications Commission (the "FCC") issued its rate regulation rules which
became effective September 1, 1993. These rules required cable systems not
subject to effective competition, as defined, to set rates for basic and cable
programming services, as well as related equipment and installations, pursuant
to general cost-of-service standards or FCC prescribed benchmarks. These FCC
benchmarks were based on an average 10% competitive differential between
competitive and non-competitive systems. Effective September 1, 1993, cable
systems not electing cost-of-service were required to reduce rates to the
higher of the prescribed benchmarks or rates that were 10% below those in
effect on September 1, 1992.

In February 1994, the FCC announced further changes in its rate regulation
rules and announced its interim cost-of-service standards. In connection with
these changes, the FCC issued revised benchmark formulas, based on a revised
competitive differential of 17%, which became effective May 15, 1994 or July
14, 1994, if certain conditions were met. Regulated cable systems were
required to reduce rates to the higher of the new FCC prescribed benchmarks or
rates that are 17% below those in effect on September 1, 1992.

The Division believes that it has complied with all of the material
provisions of the 1992 Cable Act, including the rate regulation rules
currently in effect. Under the 1992 Cable Act, Congress delegated regulatory
responsibility for the basic service tier and related equipment and
installations to the local franchising authority and regulatory responsibility
for the cable programming service tier to the FCC. If it is determined by the
respective regulatory authority that the rates charged for such regulated
services are inconsistent with the rate regulation rules, the Division could
be responsible for refund liability. The amount of such refunds, if any, is
not currently estimable by the Division.

F-166
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Partners
Crown Cable, L.P.:

We have audited the accompanying balance sheets of Crown Cable, L.P. as of
December 31, 1994 and 1993, and the related statements of operations,
partners' capital and cash flows for the year ended December 31, 1994 and the
period from December 10, 1992 through December 31, 1993. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Crown Cable, L.P. as of
December 31, 1994 and 1993, and the results of its operations and its cash
flows for the year ended December 31, 1994 and the period from December 10,
1992 through December 31, 1993 in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Dallas, Texas
January 18, 1995

F-167
<PAGE>

CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)

BALANCE SHEETS

DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
1994 1993
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents............................ $ 142,165 $ --
Accounts receivable, net of allowance for doubtful
accounts of $20,828 and $50,958, respectively....... 300,424 309,194
Prepaid expenses..................................... 28,610 23,956
Intercompany receivable from parent.................. 4,845,742 3,624,115
----------- -----------
Total current assets............................... 5,316,941 3,957,265
Property and equipment, net (note 3)................... 12,579,329 12,073,161
Intangibles and other assets, net (note 4)............. 26,974,928 34,570,187
----------- -----------
$44,871,198 $50,600,613
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Bank overdraft....................................... $ -- $ 1,169,636
Accounts payable and accrued expenses................ 1,935,249 1,648,088
----------- -----------
Total current liabilities.......................... 1,935,249 2,817,724
----------- -----------
Long-term debt (note 5)................................ 41,175,652 41,175,652
Partners' capital (note 6)
General partner...................................... 1,742,695 6,541,165
Limited partner...................................... 17,602 66,072
----------- -----------
Total partners' capital............................ 1,760,297 6,607,237
Commitments and contingencies (note 7)
----------- -----------
$44,871,198 $50,600,613
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-168
<PAGE>

CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 10,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Service revenues.................................... $11,596,931 $11,600,781
----------- -----------
Operating expenses:
Operating, general and administrative............. 5,298,470 5,760,704
Depreciation and amortization..................... 8,955,775 9,404,808
----------- -----------
Total operating expenses........................ 14,254,245 15,165,512
----------- -----------
Loss from operations............................ (2,657,314) (3,564,731)
----------- -----------
Other income (expense):
Interest expense.................................. (2,162,839) (1,666,836)
Other, net........................................ (26,787) 38,804
----------- -----------
(2,189,626) (1,628,032)
----------- -----------
Net loss........................................ $(4,846,940) $(5,192,763)
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-169
<PAGE>

CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)

STATEMENTS OF PARTNERS' CAPITAL

YEAR ENDED DECEMBER 31, 1994 AND THE PERIOD FROM
DECEMBER 10, 1992 THROUGH DECEMBER 31, 1993

<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNER TOTAL
----------- -------- -----------
<S> <C> <C> <C>
Initial capital contribution, December 10,
1992..................................... $11,682,000 $118,000 $11,800,000
Net loss.................................. (5,140,835) (51,928) (5,192,763)
----------- -------- -----------
Balance, December 31, 1993................ 6,541,165 66,072 6,607,237
Net loss.................................. (4,798,470) (48,470) (4,846,940)
----------- -------- -----------
Balance, December 31, 1994................ $ 1,742,695 $ 17,602 $ 1,760,297
=========== ======== ===========
</TABLE>

See accompanying notes to financial statements.

F-170
<PAGE>

CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 10,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(4,846,940) $(5,192,763)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization..................... 8,955,775 9,404,808
Changes in certain assets and liabilities:
Accounts receivable, net......................... 8,770 (460,797)
Prepaid expenses................................. (4,654) 121,458
Accounts payable and accrued expenses............ 287,161 (66,054)
----------- -----------
Net cash provided by operating activities....... 4,400,112 3,806,652
----------- -----------
Cash flows from investing activities:
Purchase of equipment.............................. (1,803,173) (1,258,685)
Other.............................................. (63,511) (93,488)
----------- -----------
Net cash used in investing activities............ (1,866,684) (1,352,173)
----------- -----------
Cash flows from financing activities:
Advances to parent, net............................ (1,221,627) (3,624,115)
Change in bank overdraft........................... (1,169,636) 1,169,636
----------- -----------
Net cash used in financing activities............ (2,391,263) (2,454,479)
----------- -----------
Net change in cash and cash equivalents.............. 142,165 --
Cash and cash equivalents:
Beginning of year.................................. -- --
----------- -----------
End of year........................................ $ 142,165 $ --
=========== ===========
Cash paid for interest............................... $ 1,893,034 $ 1,666,836
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-171
<PAGE>

CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1994 AND 1993

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Organization

Crown Cable, L.P., a Delaware limited partnership (the "Partnership"),
formerly Tele-Media Company of Northeast Connecticut, L.P. ("Tele-Media"), was
formed on May 10, 1982 for the purpose of owning and operating existing cable
television systems. The name of the Partnership was changed, effective
December 10, 1992 (note 2). The Partnership will terminate no later than
December 31, 2014 as provided in the Partnership Agreement. The general
partner is Crown Cable Company of Northeastern Connecticut, a wholly-owned
subsidiary of Crown Media, Inc. (the "Parent").

(b) Revenue Recognition

Revenues are recognized when the related services are provided.

Property and equipment is carried at cost, including acquisition cost
allocated to tangible assets acquired. The Partnership charges depreciation to
operations using the composite method on a straight-line basis over the
estimated useful lives of the related property and equipment as follows:

Replacements, renewals and improvements are capitalized and repairs are
charged to expense as incurred.

(d) Intangible and Other Assets

Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Franchise
rights acquired through purchase of cable systems are stated at estimated fair
value at the date of acquisition and amortized using the straight-line method
over the estimated remaining term of the individual franchises. Goodwill is
amortized using the straight-line method over 40 years. Noncompete agreements
are amortized on a straight-line basis over the original term of the
agreements.

The Partnership continually evaluates the recoverability of its intangible
assets as well as their useful lives using an analysis of projected
undiscounted cash flows from operations over the remaining carrying lives of
its intangible assets.

(e) Income Taxes

Income taxes are not provided in the accompanying financial statements as
such taxes are the responsibility of the partners.

(f) Cash Management and Intercompany Account

The cash management function for the Partnership is performed by the Parent.
Excess cash funds are transferred to the Parent using the Partnership's
intercompany account. In addition, the Parent makes disbursements on behalf of
the Partnership for items such as payroll, payroll taxes, employee benefits
and other costs. To the extent that the disbursements represent expenses
applicable to the business of the Partnership, such amounts are transferred to
the Partnership through its intercompany account and recognized in the
accompanying statement of operations. The net intercompany receivable is
unsecured and non-interest bearing.

F-172
<PAGE>

CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(2) ACQUISITION

On December 10, 1992, the general partner and sole limited partner (also a
wholly-owned subsidiary of the Parent) acquired all outstanding partnership
interests of Tele-Media for consideration of $11,800,000 in a transaction
accounted for as a purchase. Assets and liabilities of the Partnership were
revalued based on their estimated fair market values at the date of purchase.
The purchase price was allocated to the Partnership's assets and liabilities
as follows:

<TABLE>
<S> <C>
Net working capital deficit assumed......................... $ (1,727,308)
Property and equipment...................................... 12,205,962
Franchise costs............................................. 32,520,431
Noncompete agreements....................................... 5,425,000
Goodwill.................................................... 4,544,590
Other assets................................................ 6,977
Long-term debt.............................................. (41,175,652)
------------
Initial capital contribution.............................. $ 11,800,000
============
</TABLE>

(3) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1994 and
1993:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Trunk and distribution systems................... $ 9,164,749 $ 8,396,269
Subscriber installations......................... 1,563,975 1,092,307
Land, buildings and headends..................... 1,477,223 1,349,184
Converters....................................... 2,579,715 2,218,852
Vehicles and equipment........................... 409,364 294,526
Office equipment................................. 125,954 113,509
----------- -----------
Property and equipment, at cost................ 15,320,980 13,464,647
Accumulated depreciation......................... (2,741,651) (1,391,486)
----------- -----------
Property and equipment, net.................... $12,579,329 $12,073,161
=========== ===========
</TABLE>

(4) INTANGIBLES AND OTHER ASSETS

Intangibles and other assets consist of the following at December 31, 1994
and 1993:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Franchise costs, net of accumulated amortization of
$11,656,186 and $5,982,876........................ $20,957,733 $26,631,043
Goodwill, net of accumulated amortization of
$233,645 and $120,029............................. 4,310,945 4,424,561
Noncompete agreements, net of accumulated
amortization of $3,718,750 and $1,910,417......... 1,706,250 3,514,583
----------- -----------
$26,974,928 $34,570,187
=========== ===========
</TABLE>

(5) LONG-TERM DEBT

The Partnership has a long-term interest bearing payable with the Parent in
the amount of $41,175,652 as a result of the purchase of partnership interests
on December 10, 1992 (note 2). The liability is unsecured and bears interest
at the lesser of the LIBOR rate plus .5% or a base rate determined by a
specified bank. Interest is

F-173
<PAGE>

CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

paid quarterly through the Partnership's intercompany account. At December 31,
1994, the interest rate was under the LIBOR-based option and was 6%. The
liability was due in January 1996; however, as a result of the sale of the
Parent on January 18, 1995, the liability was cancelled.

(6) DISTRIBUTIONS AND ALLOCATIONS

Profits and losses are allocated in proportion to the partners' original
capital contributions on December 10, 1992. Losses are allocated to the limited
partner only to the extent that such allocation would reduce the limited
partner's capital account to zero. All remaining losses are allocated to the
general partner.

The Partnership is required to distribute all cash available for
distribution. Distributions are to be made within 120 days after the end of
each fiscal year and are allocated in the same proportion as profits and
losses.

The Parent charges the Partnership a management fee based on the number of
subscribers in the Partnership's cable systems. Such management fee is paid by
the Partnership through its intercompany account and totaled approximately
$331,000 in 1994 and $299,000 in 1993.

(7) COMMITMENTS AND CONTINGENCIES

The Partnership leases certain facilities and equipment under non-cancelable
operating leases. Rent expense incurred under these leases for the years ended
December 31, 1994 and 1993 were $74,000 and $49,000, respectively. These lease
agreements, which expire on various dates through 2005, require future annual
minimum rental payments of less than $84,000.

In October 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Cable Act"). During May 1993, pursuant
to authority granted to it under the 1992 Cable Act, the Federal Communications
Commission (the "FCC") issued its rate regulation rules which became effective
September 1, 1993. These rate regulation rules required cable systems not
subject to effective competition, as defined, to set rates for basic and cable
programming services, as well as related equipment and installations, pursuant
to general cost-of-service standards or FCC prescribed benchmarks. These FCC
benchmarks were based on an average 10% competitive differential between
competitive and non-competitive systems. Effective September 1, 1993, cable
systems not electing cost-of-service were required to reduce rates to the
higher of the prescribed benchmarks or rates that were 10% below those in
effect on September 1, 1992.

In February 1994, the FCC announced further changes in its rate regulation
rules and announced its interim cost-of-service standards. In connection with
these changes, the FCC issued revised benchmark formulas, based on a revised
competitive differential of 17%, which became effective May 15, 1994 or July
14, 1994, if certain conditions were met. Regulated cable systems were required
to reduce rates to the higher of the new FCC prescribed benchmarks or rates
that are 17% below those in effect on September 1, 1992.

The Partnership believes that it has complied with all of the provisions of
the 1992 Cable Act, including the rate regulation rules currently in effect.
Under the 1992 Cable Act, Congress delegated regulatory responsibility for the
basic service tier and related equipment and installations to the local
franchising authority and regulatory responsibility for the cable programming
service tier to the FCC. If it is determined by the respective regulatory
authority that the rates charged for such regulated services are inconsistent
with the rate regulation rules, the Partnership could be responsible for refund
liability. The amount of such refunds, if any, is not currently estimable by
the Partnership.

F-174
<PAGE>

INDEX TO UNAUDITED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
CCA HOLDINGS CORP. AND SUBSIDIARIES:
Condensed Consolidated Balance Sheet as of March 31, 1997 (Unaudited).. F-176
Condensed Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)............................. F-177
Condensed Consolidated Statement of Shareholders' Investment for the
Three Months Ended March 31, 1997 (Unaudited)......................... F-178
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)............................. F-179
Notes to Unaudited Condensed Consolidated Financial Statements
(Unaudited)........................................................... F-180
CCA ACQUISITION CORP. AND SUBSIDIARIES:
Condensed Consolidated Balance Sheet as of March 31, 1997 (Unaudited).. F-181
Condensed Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)............................. F-182
Condensed Consolidated Statement of Shareholder's Investment for the
Three Months Ended March 31, 1997 (Unaudited)......................... F-183
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)............................. F-184
Notes to Unaudited Condensed Consolidated Financial Statements
(Unaudited)........................................................... F-185
CENCOM CABLE ENTERTAINMENT INC.:
Balance Sheet as of March 31, 1997 (Unaudited)......................... F-186
Statements of Operations for the Three Months Ended March 31, 1997 and
1996 (Unaudited)...................................................... F-187
Statement of Shareholder's Investment for the Three Months Ended March
31, 1997 (Unaudited).................................................. F-188
Statements of Cash Flows for the Three Months Ended March 31, 1997 and
1996 (Unaudited)...................................................... F-189
Notes to Unaudited Financial Statements (Unaudited).................... F-190
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.:
Balance Sheet as of March 31, 1997 (Unaudited)......................... F-191
Statements of Operations for the Three Months Ended March 31, 1997 and
1996 (Unaudited)...................................................... F-192
Statement of Partners' Capital for the Three Months Ended March 31,
1997 (Unaudited)...................................................... F-193
Statements of Cash Flows for the Three Months Ended March 31, 1997 and
1996 (Unaudited)...................................................... F-194
Notes to Unaudited Financial Statements (Unaudited).................... F-195
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.:
Condensed Consolidated Balance Sheet as of March 31, 1997 (Unaudited).. F-196
Condensed Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)............................. F-197
Condensed Consolidated Statement of Partners' Capital for the Three
Months Ended March 31, 1997 (Unaudited)............................... F-198
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)............................. F-199
Notes to Unaudited Condensed Consolidated Financial Statements
(Unaudited)........................................................... F-200
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.:
Condensed Balance Sheet as of March 31, 1997 (Unaudited)............... F-201
Condensed Statement of Operations for the Three Months Ended March 31,
1997 (Unaudited)...................................................... F-202
Condensed Statement of Partners' Capital for the Three Months Ended
March 31, 1997 (Unaudited)............................................ F-203
Condensed Statement of Cash Flows for the Three Months Ended March 31,
1997 (Unaudited)...................................................... F-204
Notes to Unaudited Condensed Financial Statements (Unaudited).......... F-205
</TABLE>

F-175
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................... $ 1,017,528
Accounts receivable, net of allowances for doubtful accounts of
$573,206...................................................... 4,213,585
Prepaid expenses and other..................................... 901,865
Net assets of discontinued operation........................... 108,827
------------
Total current assets......................................... 6,241,805
------------
Investment in Cable Television Properties:
Property, plant and equipment, net of accumulated depreciation
of $49,709,267................................................ 207,392,240
Franchise costs, net of accumulated amortization of
$59,965,282................................................... 431,204,094
------------
638,596,334
------------
Other Assets, net of accumulated amortization of $22,615,466..... 9,364,765
------------
Net Noncurrent Assets of Discontinued Operation.................. 1,760,015
------------
Investment in Unconsolidated Limited Partnerships................ 76,159,890
------------
$732,122,809
============
LIABILITIES AND SHAREHOLDERS' INVESTMENT (DEFICIT)
Current Liabilities, including payables to affiliates of
$2,532,659 and current maturities of long term debt of
$12,286,250..................................................... $ 31,437,904
------------
Deferred Revenue................................................. 1,060,234
------------
Deferred Management Fees Payable to Affiliate.................... 1,755,000
------------
Deferred Income Taxes............................................ 55,500,000
------------
Note Payable to Seller........................................... 82,000,000
------------
Accrued Interest on Note Payable to Seller....................... 26,250,910
------------
Long Term Debt, less current maturities.......................... 455,713,750
------------
Minority Interest in Subsidiary.................................. 87,558,137
------------
Commitments and Contingencies....................................
Shareholders' Investment (Deficit)............................... (9,153,126)
------------
$732,122,809
============
</TABLE>

The accompanying notes are an integral part of this condensed consolidated
balance sheet.

F-176
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Service Revenues................................... $ 40,486,734 $ 30,812,824
------------ ------------
Expenses:
Operating, general and administrative............ 20,664,445 15,929,758
Depreciation and amortization.................... 15,218,022 15,106,492
Management and financial advisory service fees--
related parties................................. 1,331,232 1,106,250
------------ ------------
Total operating expenses....................... 37,213,699 32,142,500
------------ ------------
Income (loss) from operations.................. 3,273,035 (1,329,676)
------------ ------------
Other Income (Expense):
Interest income.................................. 1,154 66,813
Interest expense................................. (12,894,299) (10,446,407)
Other, net....................................... 56,921 (516,456)
------------ ------------
(12,836,224) (10,896,050)
------------ ------------
Loss before equity in loss of unconsolidated
limited partnerships, provision for income
taxes and minority interest in loss of
subsidiary.................................... (9,563,189) (12,225,726)
Equity in Loss of Unconsolidated Limited Partner-
ships............................................. (1,909,926) (1,838,272)
------------ ------------
Loss before provision for income taxes and
minority interest in loss of subsidiary....... (11,473,115) (14,063,998)
Provision for Income Taxes......................... -- --
------------ ------------
Loss before minority interest in loss of sub-
sidiary....................................... (11,473,115) (14,063,998)
Minority Interest in Loss of Subsidiary............ 2,715,214 4,112,354
------------ ------------
Net loss....................................... $ (8,757,901) $ (9,951,644)
============ ============
</TABLE>

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

F-177
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1996....... $800 $79,999,200 $(80,395,225) $ (395,225)
Net loss....................... -- -- (8,757,901) (8,757,901)
---- ----------- ------------ -----------
Balance, March 31, 1997.......... $800 $79,999,200 $(89,153,126) $(9,153,126)
==== =========== ============ ===========
</TABLE>

The accompanying notes are an integral part of this condensed consolidated
statement.

F-178
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
----------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss.......................................... $(8,757,901) $ (9,951,644)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities--
Amortization of debt issuance costs.............. 279,234 --
Depreciation and amortization.................... 15,218,022 15,106,492
Equity in loss of unconsolidated limited
partnerships.................................... 1,909,926 1,838,272
Minority interest in loss of subsidiary.......... (2,715,214) (4,112,354)
Loss on disposal of fixed assets................. -- 586,391
Changes in assets and liabilities, net of effects
from acquisitions--
Accounts receivable, net........................ 1,252,165 (1,099,394)
Prepaid expenses and other...................... (411,422) (381,015)
Other assets, net............................... (67,772) --
Current liabilities............................. (4,244,349) (2,893,069)
Deferred revenue................................ 351,895 3,283
Accrued interest on note payable to seller...... 3,407,508 3,004,261
----------- -------------
Net cash provided by (used in) operating
activities.................................... 6,222,092 2,101,223
----------- -------------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment........ (7,964,230) (10,377,702)
Payments for acquisitions of cable television
systems, net of cash acquired and deferred income
taxes assumed.................................... -- (90,484,489)
Restricted funds held in escrow................... -- 301,598
Increase in franchise costs....................... (175,273) (285,614)
Proceeds from sale of property, plant and
equipment........................................ -- 654,755
----------- -------------
Net cash used in investing activities.......... (8,139,503) (100,191,452)
----------- -------------
Cash Flows from Financing Activities:
Payments of debt issuance costs................... -- (1,756,965)
Payments under revolving credit agreement......... (3,700,000) --
Borrowings under revolving credit agreement....... 3,700,000 88,000,000
Bank overdrafts................................... -- 416,263
----------- -------------
Net cash provided by financing activities...... -- 86,659,298
----------- -------------
Net Decrease in Cash and Cash Equivalents.......... (1,917,411) (11,430,931)
Cash and Cash Equivalents, beginning of period..... 2,934,939 11,430,931
----------- -------------
Cash and Cash Equivalents, end of period........... $ 1,017,528 $ --
=========== =============
Cash Paid for Interest............................. $ 7,657,603 $ 8,929,146
=========== =============
Cash Paid for Taxes................................ $ -- $ --
=========== =============
</TABLE>

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

F-179
<PAGE>

CCA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION:

CCA Holdings Corp. (CCA Holdings), a Delaware corporation, was formed on
November 17, 1994. CCA Holdings commenced operations in January 1995 upon
consummation of the acquisition of certain cable television systems from Crown
Media, Inc., a subsidiary of Hallmark Cards, Incorporated. The accompanying
unaudited condensed consolidated financial statements include the accounts of
CCA Holdings; its wholly owned subsidiary, CCA Acquisition Corp. (CAC); CAC's
wholly owned subsidiary, Cencom Cable Entertainment, Inc. (CCE) and Charter
Communications Entertainment I, L.P. (CCE-I), which is controlled by CAC
through its general partnership interest (collectively referred to as the
"Company"). CCA Holdings is owned by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate and certain other individuals, and
by Charter Communications, Inc., manager of CCE-I's cable television systems.

The accompanying unaudited financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.

2. RESPONSIBILITY FOR FINANCIAL STATEMENTS:

The financial statements as of March 31, 1997, and for the three months
ended March 31, 1997 and 1996, are unaudited; however, in the opinion of
management, such statements include all adjustments necessary for a fair
presentation of the financial position and results of operations for the
periods presented. These financial statements should be read in conjunction
with the financial statements and notes thereto as of and for the year ended
December 31, 1996. Interim results are not necessarily indicative of results
for a full year.

F-180
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................... $ 1,017,528
Accounts receivable, net of allowance for doubtful accounts of
$573,206...................................................... 4,213,585
Prepaid expenses and other..................................... 901,865
Net assets of discontinued operation........................... 108,827
------------
Total current assets......................................... 6,241,805
------------
Investment in Cable Television Properties:
Property, plant and equipment, net of accumulated depreciation
of $49,709,267................................................ 207,392,240
Franchise costs, net of accumulated amortization of
$59,965,282................................................... 431,204,094
------------
638,596,334
------------
Other Assets, net of accumulated amortization of $22,615,466..... 9,364,765
------------
Net Noncurrent Assets of Discontinued Operation.................. 1,760,015
------------
Investment in Unconsolidated Limited Partnerships................ 76,159,890
------------
$732,122,809
============
LIABILITIES AND SHAREHOLDER'S INVESTMENT (DEFICIT)
Current Liabilities, including payables to affiliates of
$2,532,659 and current maturities of
long-term debt of $12,286,250................................... $ 30,943,504
------------
Deferred Revenue................................................. 1,060,234
------------
Deferred Management Fees Payable to Affiliate.................... 1,755,000
------------
Deferred Income Taxes............................................ 55,500,000
------------
Note Payable to Seller........................................... 82,000,000
------------
Accrued Interest on Note Payable to Seller....................... 26,250,910
------------
Long Term Debt, less current maturities.......................... 455,713,750
------------
Minority Interest in Subsidiary.................................. 87,558,137
------------
Commitments and Contingencies
Shareholder's Investment (Deficit)............................... (8,658,726)
------------
$732,122,809
============
</TABLE>

The accompanying notes are an integral part of this condensed consolidated
balance sheet.

F-181
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Service Revenues................................... $ 40,486,734 $ 30,812,824
------------ ------------
Expenses:
Operating, general and administrative............ 20,542,573 15,847,258
Depreciation and amortization.................... 15,218,022 15,106,492
Management and financial advisory service fees--
related parties................................. 1,331,232 1,106,250
------------ ------------
Total operating expenses....................... 37,091,827 32,060,000
------------ ------------
Income (loss) from operations.................. 3,394,907 (1,247,176)
------------ ------------
Other Income (Expense):
Interest income.................................. 1,154 66,813
Interest expense................................. (12,894,299) (10,446,407)
Other, net....................................... 56,921 (516,456)
------------ ------------
(12,836,224) (10,896,050)
------------ ------------
Loss before equity in loss of unconsolidated
limited partnerships, provision for income
taxes and minority interest on loss of
subsidiary.................................... (9,441,317) (12,143,226)
Equity in Loss of Unconsolidated Limited
Partnerships...................................... (1,909,926) (1,838,272)
------------ ------------
Loss before provision for income taxes and
minority interest in loss of subsidiary....... (11,351,243) (13,981,498)
Provision for Income Taxes......................... -- --
------------ ------------
Loss before minority interest in loss of
subsidiary.................................... (11,351,243) (13,981,498)
Minority Interest in Loss of Subsidiary............ 2,715,214 4,112,354
------------ ------------
Net loss....................................... $ (8,636,029) $ (9,869,144)
============ ============
</TABLE>

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

F-182
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S INVESTMENT (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1996....... $ 1 $79,999,999 $(80,022,697) $ (22,697)
Net loss....................... -- -- (8,636,029) (8,636,029)
---- ----------- ------------ -----------
Balance, March 31, 1997.......... $ 1 $79,999,999 $(88,658,726) $(8,658,726)
==== =========== ============ ===========
</TABLE>

The accompanying notes are an integral part of this condensed consolidated
statement.

F-183
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
----------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss.......................................... $(8,636,029) $ (9,869,144)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities--
Amortization of debt issuance costs.............. 279,234 --
Depreciation and amortization.................... 15,218,022 15,106,492
Equity in loss of unconsolidated subsidiaries.... 1,909,926 1,838,272
Minority interest in loss of subsidiary.......... (2,715,214) (4,112,354)
Loss on disposal of fixed assets................. -- 586,391
Changes in assets and liabilities, net of effects
from acquisitions--
Accounts receivable, net........................ 1,252,165 (1,099,394)
Prepaid expenses and other...................... (411,422) (381,015)
Other assets, net............................... (67,772) --
Current liabilities............................. (4,366,221) (2,975,569)
Deferred revenue................................ 351,895 3,283
Accrued interest on note payable to seller...... 3,407,508 3,004,261
----------- -------------
Net cash provided by (used in) operating
activities.................................... 6,222,092 2,101,223
----------- -------------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment........ (7,964,230) (10,377,702)
Payments for acquisitions of cable television
systems, net of cash acquired and deferred income
taxes assumed.................................... -- (90,484,489)
Restricted funds held in escrow................... -- 301,598
Increase in franchise costs....................... (175,273) (285,614)
Proceeds from sale of property, plant and
equipment........................................ -- 654,755
----------- -------------
Net cash used in investing activities.......... (8,139,503) (100,191,452)
----------- -------------
Cash Flows from Financing Activities:
Payments of debt issuance costs................... -- (1,756,965)
Payments under revolving credit agreement......... (3,700,000) --
Borrowings under revolving credit and term loan
facility......................................... 3,700,000 88,000,000
Bank overdrafts................................... -- 416,263
----------- -------------
Net cash provided by financing activities...... -- 86,659,298
----------- -------------
Net Decrease in Cash and Cash Equivalents.......... (1,917,411) (11,430,931)
Cash and Cash Equivalents, beginning of period..... 2,934,939 11,430,931
----------- -------------
Cash and Cash Equivalents, end of period........... $ 1,017,528 $ --
=========== =============
Cash Paid for Interest............................. $ 7,657,603 $ 8,929,146
=========== =============
Cash Paid for Taxes................................ $ -- $ --
=========== =============
</TABLE>

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

F-184
<PAGE>

CCA ACQUISITION CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION:

CCA Acquisition Corp. (CAC), a Delaware corporation, was formed on June 27,
1994, and is a wholly-owned subsidiary of CCA Holdings Corp. (CCA Holdings).
CAC commenced operations in January 1995 in connection with consummation of
the Crown Transaction (as defined below). The accompanying consolidated
financial statements include the accounts of CAC; its wholly-owned subsidiary,
Cencom Cable Entertainment, Inc.; and Charter Communications Entertainment I,
L.P. (CCE-I), which is controlled by CAC through its general partnership
interest (collectively referred to as the "Company"). CCA Holdings is owned by
Kelso Investment Associates V, L.P., an investment fund, together with an
affiliate and certain other individuals, and by Charter Communications, Inc.,
manager of CCE-I's cable television systems.

2. RESPONSIBILITY FOR FINANCIAL STATEMENTS:

The financial statements as of March 31, 1997, and for the three months
ended March 31, 1997 and 1996, are unaudited; however, in the opinion of
management, such statements include all adjustments necessary for a fair
presentation of the financial position and results of operations for the
periods presented. These financial statements should be read in conjunction
with the financial statements and notes thereto for the year ended December
31, 1996. Interim results are not necessarily indicative of results for a full
year.

F-185
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C>
ASSETS
Investment in Unconsolidated Limited Partnership.................. $119,675,705
------------
$119,675,705
============
LIABILITIES AND SHAREHOLDER'S INVESTMENT (DEFICIT)
Note Payable...................................................... $ 82,000,000
------------
Accrued Interest on Note Payable.................................. 26,250,911
------------
Deferred Income Taxes............................................. 55,500,000
------------
Commitments and Contingencies
Shareholder's Investment (Deficit)................................ (44,075,206)
------------
$119,675,705
============
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-186
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Equity in Loss of Unconsolidated Limited
Partnership........................................ $(2,906,593) $(3,854,134)
Interest Expense.................................... (3,407,508) (3,004,261)
----------- -----------
Net loss........................................ $(6,314,101) $(6,858,395)
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-187
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

STATEMENT OF SHAREHOLDER'S INVESTMENT (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 1997

(UNAUDITED)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
-------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996.... $245,973 $21,954,139 $(59,961,217) $(37,761,105)
Net loss.................... -- -- (6,314,101) (6,314,101)
-------- ----------- ------------ ------------
Balance, March 31, 1997....... $245,973 $21,954,139 $(66,275,318) $(44,075,206)
======== =========== ============ ============
</TABLE>

The accompanying notes are an integral part of this statement.

F-188
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss............................................ $(6,314,101) $(6,858,395)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Equity in loss of unconsolidated limited
partnership....................................... 2,906,593 3,854,134
Changes in assets and liabilities--
Accrued interest on note payable.................. 3,407,508 3,004,261
----------- -----------
Net cash provided by operating activities........ -- --
----------- -----------
Cash Flows from Investing Activities................. -- --
----------- -----------
Cash Flows from Financing Activities................. -- --
----------- -----------
Cash, beginning and end of period.................... $ -- $ --
=========== ===========
Cash Paid for Interest............................... $ -- $ --
=========== ===========
Cash Paid for Taxes.................................. $ -- $ --
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-189
<PAGE>

CENCOM CABLE ENTERTAINMENT, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION:

Cencom Cable Entertainment, Inc. (CCE), a Delaware corporation, is a wholly
owned subsidiary of CCA Acquisition Corp. (CAC). CAC is a wholly owned
subsidiary of CCA Holdings Corp. (CCA Holdings). CCA Holdings is owned by
Kelso Investment Associates V, L.P., an investment fund, together with an
affiliate and certain other individuals, and by Charter Communications, Inc.,
manager of Charter Communications Entertainment I, L.P.'s (CCE-I) and Charter
Communications Entertainment II, L.P.'s (CCE-II) cable television systems.

Effective January 1995, CAC completed certain acquisitions, including stock
and asset acquisitions of CCE and cable television systems located in
Connecticut from Crown Media, Inc., a subsidiary of Hallmark Cards,
Incorporated (the "Crown Transaction"). CCE's assets were comprised primarily
of cable television systems serving communities in St. Louis County, Missouri.
On September 29, 1995, CAC and CCT Holdings Corp. (CCT Holdings), an entity
affiliated with CCA Holdings by common ownership, entered into an Asset
Exchange Agreement whereby CAC exchanged a 1% undivided interest in all of its
assets (including CCE's assets) for a 1.22% undivided interest in certain
assets to be acquired by CCT Holdings from an affiliate of Gaylord
Entertainment Company, Inc. (Gaylord). Effective September 30, 1995, CCT
Holdings acquired certain cable television systems from Gaylord. Upon
execution of the Asset Purchase Agreement, CAC and CCT Holdings entered into a
series of agreements to contribute their assets to Charter Communications
Entertainment, L.P. (CCE, L.P.). CCE, L.P. immediately contributed the assets
acquired under the Crown Transaction to CCE-I and certain assets acquired in
the Gaylord acquisition to CCE-II.

2. RESPONSIBILITY FOR FINANCIAL STATEMENTS:

F-190
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C>
ASSETS
Investment in Unconsolidated Limited Partnerships................ $270,559,431
Subordinated Note Receivable from Unconsolidated Limited
Partnership..................................................... 25,000,000
Interest Receivable from Unconsolidated Limited Partnership...... 2,905,500
------------
$298,464,931
============
LIABILITIES AND PARTNERS' CAPITAL
Note Payable..................................................... $ 82,000,000
------------
Accrued Interest on Note Payable................................. 26,250,911
------------
Commitments and Contingencies
Partners' Capital:
General partners............................................... --
Limited partners--
Ordinary Capital Account...................................... --
Preferred Capital Account..................................... 190,214,020
------------
Total partners' capital...................................... 190,214,020
------------
$298,464,931
============
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-191
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Equity in Loss of Unconsolidated Limited
Partnerships..................................... $ (9,295,359) $(12,204,194)
Interest Expense.................................. (3,407,508) (3,004,261)
Interest Income--Unconsolidated Limited
Partnership...................................... 487,500 525,000
------------ ------------
Net loss...................................... $(12,215,367) $(14,683,455)
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-192
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

STATEMENT OF PARTNERS' CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
LIMITED PARTNERS
-------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNERS ACCOUNTS ACCOUNT TOTAL
--------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31,
1996..................... $ 624,614 $10,543,510 $191,261,263 $202,429,387
Allocation of net loss.. (458,677) (7,741,936) (4,014,754) (12,215,367)
Preference allocation... (165,937) (2,801,574) 2,967,511 --
--------- ----------- ------------ ------------
Balance, March 31, 1997... $ -- $ -- $190,214,020 $190,214,020
========= =========== ============ ============
</TABLE>

The accompanying notes are an integral part of this statement.

F-193
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss.......................................... $(12,215,367) $(14,683,455)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Equity in loss of unconsolidated limited
partnerships.................................... 9,295,359 12,204,194
Changes in assets and liabilities--
Interest receivable from unconsolidated limited
partnership.................................... (487,500) (525,000)
Accrued interest on note payable................ 3,407,508 3,004,261
------------ ------------
Net cash provided by operating activities...... -- --
------------ ------------
Cash Flows from Investing Activities............... -- --
------------ ------------
Cash Flows from Financing Activities............... -- --
------------ ------------
Cash, beginning and end of period.................. $ -- $ --
============ ============
Cash Paid for Interest............................. $ -- $ --
============ ============
Cash Paid for Taxes................................ $ -- $ --
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-194
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION:

In connection with a reorganization under common control, the assets of
certain cable television systems located in Connecticut and Missouri were
contributed from CCA Acquisition Corp. (CAC) and its wholly owned subsidiary,
Cencom Cable Entertainment, Inc. (CCE), respectively, to Charter
Communications Entertainment, L.P. (the "Partnership"). CAC and CCE owned and
operated the systems during the first nine months of 1995. These systems were
immediately contributed to a newly formed partnership, Charter Communications
Entertainment I, L.P. (CCE-I). The Partnership, CAC, CCE and CCE-I are all
owned by Kelso Investment Associates V, L.P. an investment fund, together with
an affiliate and certain other individuals, and by Charter Communications,
Inc. Therefore, this series of transactions is a reorganization of entities
under common control and has been accounted for in a manner similar to a
pooling of interests. Accordingly, the financial statements reflect the
activity of these systems for the entire year.

In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings Corp. (CCT Holdings), an entity affiliated with CCA Holdings
Corp. (CCA Holdings) by common ownership, entered into an Asset Exchange
Agreement whereby CAC exchanged a 1% undivided interest in all of its assets
for a 1.22% undivided interest in certain assets to be acquired by CCT
Holdings from an affiliate of Gaylord Entertainment Company, Inc. (Gaylord).
In September 1995, CCT Holdings acquired certain cable television systems from
Gaylord. Upon execution of the Asset Purchase Agreement, CAC and CCT Holdings
entered into a series of agreements to contribute the assets acquired under
the Crown Transaction (see Note 3) to CCE-I and certain assets acquired in the
Gaylord acquisition (see Note 3) to Charter Communications II, L.P. (CCE-II).
As a result of entering into these agreements, CCA Holdings, the parent
company of CAC, owns a 55% interest and CCT Holdings owns a 45% interest in
the combined operations of CCE-I and CCE-II, respectively. The net loss of
CCE-I for the period prior to September 29, 1995, was allocated entirely to
CCA Holdings.

The Partnership will terminate no later than December 31, 2055, as provided
in its partnership agreement (the "Partnership Agreement").

2. RESPONSIBILITY FOR FINANCIAL STATEMENTS:

3. PARTNERS' CAPITAL:

CCT Holdings is entitled to a portion of an annual preferred return computed
in accordance with the provisions in the Partnership Agreement. A portion of
the 1997 preferred return totalling approximately $6,550,000 has not been
reflected in CCT Holdings' capital account as of March 31, 1997, since the
General Partner's capital account and Limited Partners' ordinary capital
account have been reduced to $-0-

F-195
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents....................................... $ 1,017,528
Accounts receivable, net of allowances for doubtful accounts of
$573,206....................................................... 4,213,585
Prepaid expenses and other...................................... 901,865
Net current assets of discontinued operation.................... 108,827
------------
Total current assets.......................................... 6,241,805
------------
Investment in Cable Television Properties:
Property, plant and equipment, net of accumulated depreciation
of $49,709,267................................................. 207,392,240
Franchise costs, net of accumulated amortization of
$59,965,282.................................................... 431,204,094
------------
638,596,334
------------
Other Assets, net of accumulated amortization of $22,615,466...... 9,364,765
------------
Net Noncurrent Assets of Discontinued Operation................... 1,760,015
------------
$655,962,919
============
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities, including payables to affiliates of
$2,532,659 and current maturities of long-term debt of
$12,286,250...................................................... $ 30,943,504
------------
Deferred Revenue.................................................. 1,060,234
------------
Deferred Management Fees Payable to Affiliate..................... 1,755,000
------------
Long-Term Debt, less current maturities........................... 455,713,750
------------
Commitments and Contingencies
Partners' Capital:
General partner................................................. 1,678,598
Limited partners................................................ 164,811,833
------------
Total partners' capital....................................... 166,490,431
------------
$655,962,919
============
</TABLE>

The accompanying notes are an integral part of this condensed consolidated
balance sheet.

F-196
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Service Revenues..................................... $40,486,734 $30,812,824
----------- -----------
Expenses:
Operating, general and administrative.............. 20,542,573 15,847,258
Depreciation and amortization...................... 15,218,022 15,106,492
Management and financial advisory service fees--
related parties................................... 1,331,232 1,106,250
----------- -----------
37,091,827 32,060,000
----------- -----------
Income (loss) from operations.................... 3,394,907 (1,247,176)
----------- -----------
Other Income (Expense):
Interest income.................................... 1,154 66,813
Interest expense................................... (9,486,791) (7,442,146)
Other, net......................................... 56,921 (516,456)
----------- -----------
(9,428,716) (7,891,789)
----------- -----------
Net loss......................................... $(6,033,809) $(9,138,965)
=========== ===========
</TABLE>

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

F-197
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
LIMITED PARTNERS
-------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNER ACCOUNTS ACCOUNT TOTAL
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31,
1996...................... $1,862,703 $65,818,135 $104,843,402 $172,524,240
Allocation of net loss... (117,659) (5,916,150) -- (6,033,809)
Allocation of preference
return.................. (66,446) (3,341,062) 3,407,508 --
---------- ----------- ------------ ------------
Balance, March 31, 1997.... $1,678,598 $56,560,923 $108,250,910 $166,490,431
========== =========== ============ ============
</TABLE>

The accompanying notes are an integral part of this condensed consolidated
statement.

F-198
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
----------- ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss........................................... $(6,033,809) $ (9,138,965)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities--
Amortization of debt issuance costs............... 279,234 --
Depreciation and amortization..................... 15,218,022 15,106,492
Loss on disposal of fixed assets.................. -- 586,391
Changes in assets and liabilities, net of effects
from acquisitions--
Accounts receivable, net......................... 1,252,165 (1,099,394)
Prepaid expenses and other....................... (411,422) (381,015)
Other assets..................................... (67,772) --
Current liabilities.............................. (4,366,221) (2,975,569)
Deferred revenue................................. 351,895 3,283
----------- ------------
Net cash provided by (used in) operating
activities..................................... 6,222,092 2,101,223
----------- ------------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment......... (7,964,230) (10,377,702)
Payments for acquisitions of cable television
systems, net of cash acquired..................... -- (90,484,489)
Restricted funds held in escrow.................... -- 301,598
Increase in franchise costs........................ (175,273) (285,614)
Proceeds from sale of property, plant and
equipment......................................... -- 654,755
----------- ------------
Net cash used in investing activities........... (8,139,503) (100,191,452)
----------- ------------
Cash Flows from Financing Activities:
Payments of debt issuance costs.................... -- (1,756,965)
Payments under revolving credit and term loan
facility.......................................... (3,700,000) --
Borrowings under revolving credit and term loan
facility.......................................... 3,700,000 88,000,000
Bank overdrafts.................................... -- 416,263
----------- ------------
Net cash provided by financing activities....... -- 86,659,298
----------- ------------
Net Decrease in Cash and Cash Equivalents........... (1,917,411) (11,430,931)
Cash and Cash Equivalents, beginning of period...... 2,934,939 11,430,931
----------- ------------
Cash and Cash Equivalents, end of period............ $ 1,017,528 $ --
=========== ============
Cash Paid for Interest.............................. $ 7,657,603 $ 8,929,146
=========== ============
Cash Paid for Taxes................................. $ -- $ --
=========== ============
</TABLE>

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

F-199
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION:

Charter Communications Entertainment I, L.P. (the "Partnership"), a Delaware
limited partnership, was formed effective January 1995, for purpose of
acquiring and operating existing cable television systems. The Partnership
commenced operations effective January 1995, with the assignment of its
general and limited partnership interests. The Partnership will terminate no
later than December 31, 2055, as provided in its partnership agreement.

CCA Acquisition Corp. (CAC), the General Partner, holds a 1.22% interest in
the Partnership. CAC is a wholly owned subsidiary of CCA Holdings Corp. (CCA
Holdings). Charter Communications Entertainment, L.P. (CCE) and CCT Holdings
Corp. (CCT Holdings) hold limited partnership interests of 97.78% and 1%,
respectively, in the Partnership. CCT Holdings and CCA Holdings hold
partnership interests of 45% and 55%, respectively, in CCE. CCA Holdings and
CCT Holdings are each owned by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate and certain other individuals, and
Charter Communications, Inc., manager of the Partnership's cable television
systems.

2. RESPONSIBILITY FOR FINANCIAL STATEMENTS:

F-200
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

CONDENSED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents....................................... $ 5,321,051
Accounts receivable, net of allowance for doubtful accounts of
$246,668....................................................... 2,515,174
Prepaid expenses and other...................................... 987,653
------------
Total current assets.......................................... 8,823,878
------------
Investment in Cable Television Properties:
Property, plant and equipment, net of accumulated depreciation
of $23,045,168................................................. 121,480,476
Franchise costs, net of accumulated amortization of
$23,527,820.................................................... 211,580,838
------------
333,061,314
------------
Other Assets, net of accumulated amortization of $777,118......... 3,316,289
------------
$345,201,481
============
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities, including payables to affiliates of
$1,052,375....................................................... $ 10,288,028
------------
Deferred Revenue.................................................. 358,563
------------
Long-Term Debt.................................................... 195,800,000
------------
Subordinated Note Payable to Limited Partner...................... 27,905,500
------------
Commitments and Contingencies
Partners' Capital:
General partner................................................. --
Limited partners................................................ 110,849,390
------------
Total partners' capital....................................... 110,849,390
------------
$345,201,481
============
</TABLE>

The accompanying notes are an integral part of this condensed balance sheet.

F-201
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Service Revenues..................................... $22,669,563 $21,975,113
----------- -----------
Expenses:
Operating, general and administrative.............. 12,954,278 12,502,557
Depreciation and amortization...................... 8,232,426 7,670,709
Management and financial advisory service fees--
related parties................................... 900,000 900,000
----------- -----------
22,086,704 21,073,266
----------- -----------
Income from operations........................... 582,859 901,847
----------- -----------
Interest Income (Expense):
Interest income.................................... 66,677 28,990
Interest expense................................... (4,122,129) (4,273,150)
----------- -----------
(4,055,452) (4,244,160)
----------- -----------
Net loss......................................... $(3,472,593) $(3,342,313)
=========== ===========
</TABLE>

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

F-202
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

CONDENSED STATEMENT OF PARTNERS' CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
LIMITED PARTNERS
---------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNER ACCOUNTS ACCOUNT TOTAL
------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996......... $ -- $ -- $114,321,983 $114,321,983
Allocation of net loss........... -- -- (3,472,593) (3,472,593)
----- ----- ------------ ------------
Balance, March 31, 1997............ $ -- $ -- $110,849,390 $110,849,390
===== ===== ============ ============
</TABLE>

The accompanying notes are an integral part of this condensed statement.

F-203
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss........................................... $ (3,472,593) $(3,342,313)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization..................... 8,232,426 7,670,709
Changes in assets and liabilities--
Accounts receivable, net......................... 971,244 1,086,787
Prepaid expenses and other....................... 380,109 412,019
Current liabilities.............................. (2,810,170) (4,751,089)
Deferred revenue................................. (24,507) (22,386)
Accrued interest on subordinated note payable to
limited partner................................. 487,500 525,000
Other assets, net................................ (5,596) (74,647)
------------ -----------
Net cash provided by operating activities....... 3,758,413 1,504,080
------------ -----------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment......... (6,071,723) (4,735,293)
Increase in franchise costs........................ (216,289) (27,048)
Restricted funds held in escrow.................... (4,000,000) --
------------ -----------
Net cash used in investing activities........... (10,288,012) (4,762,341)
------------ -----------
Cash Flows from Financing Activities:
Payments of long-term debt......................... (500,000) --
Borrowings of long-term debt....................... 2,300,000 --
Payments of debt issuance costs.................... -- (125,000)
------------ -----------
Net cash provided by (used in) financing
activities..................................... 1,800,000 (125,000)
------------ -----------
Net Decrease in Cash and Cash Equivalents........... (4,729,599) (3,383,261)
Cash and Cash Equivalents, beginning of period...... 6,050,650 5,897,105
------------ -----------
Cash and Cash Equivalents, end of period............ $ 1,321,051 $ 2,513,844
============ ===========
Cash Paid for Interest.............................. $ 4,137,885 $ 5,360,246
============ ===========
Cash Paid for Taxes................................. $ -- $ --
============ ===========
</TABLE>

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

F-204
<PAGE>

CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION:

CCT Holdings Corp. (CCT Holdings), the General Partner, holds a 1% interest
in the Partnership. Charter Communications Entertainment, L.P. (CCE) and CCA
Acquisition Corp. (CAC) hold limited partnership interests of 97.78% and
1.22%, respectively, in the Partnership. CCT Holdings and CAC hold partnership
interests of 45% and 55%, respectively, in CCE. CAC is a wholly owned
subsidiary of CCA Holdings Corp. (CCA Holdings). CCA Holdings and CCT Holdings
are each owned by Kelso Investment Associates V, L.P., an investment fund,
together with an affiliate and certain other individuals, and Charter
Communications, Inc., manager of the Partnership's cable television systems.

2. RESPONSIBILITY FOR FINANCIAL STATEMENTS:

3. LONG BEACH INVESTMENT

In May 1997, the Partnership made a $25.0 million investment (the "Long
Beach Investment") in Long Beach Acquisition Corp. (LBAC), in connection with
the acquisition of LBAC by Charter Communications Long Beach, Inc. (CC-LB), an
affiliate of the Partnership. LBAC owns cable television systems serving
communities in Long Beach, California. The Long Beach Investment was in the
form of a loan convertible into 27.5% of the stock of LBAC. In connection with
the Long Beach Investment, the Partnership and LBAC became jointly and
severally liable under the Partnership's credit facility, which was increased
by approximately $140.0 million, and CCE-II borrowed $25.0 million under the
Partnership's credit facility in order to make the Long Beach Investment.

F-205
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE ISSUER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 2
Risk Factors.............................................................. 23
The Exchange Offer ....................................................... 32
The Company............................................................... 38
Capitalization............................................................ 39
Unaudited Selected Historical and Unaudited Pro Forma Financial Data...... 40
Unaudited Pro Forma Financial Statements ................................. 43
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................................... 46
Business.................................................................. 57
Management................................................................ 82
Certain Relationships and Related
Transactions............................................................. 85
Principal Securityholders................................................. 88
Description of Notes...................................................... 89
Certain Federal Income Tax Consequences................................... 106
Description of Other Indebtedness......................................... 110
Plan of Distribution...................................................... 115
Legal Matters............................................................. 116
Independent Certified Public Accountants.................................. 116
Glossary.................................................................. 117
List of Entities.......................................................... 118
Index to Audited Financial Statements..................................... F-1
</TABLE>

An Affiliate of

LOGO
[of Charter Communications]

$82,000,000

CCA HOLDINGS CORP.

SENIOR SUBORDINATED NOTES DUE 1999

------------------------

PROSPECTUS

------------------------

JULY , 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of the State of Delaware provides
that a corporation has the power to indemnify a director, officer, employee or
agent of the corporation and certain other persons serving at the request of
the corporation in related capacities against amounts paid and expenses
incurred in connection with an action or proceeding to which he is or is
threatened to be made a party by reason of such position, if such person shall
have acted in god faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, in any criminal
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful, provided that, in the case of actions brought by or in the right of
the corporation, no indemnification shall be made with respect to any matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the adjudicating court
determines that such indemnification is proper under the circumstances. CCA's
Certificate of Incorporation provides that CCA shall indemnify its directors
and officers to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law. CCA's Certificate of Incorporation also provides that
no director shall be liable to the Company or its stockholders for monetary
damages for breach of his fiduciary duty as director, except for liability (i)
of any breach of the director's duty of loyalty to CCA or its stockholders,
(ii) for acts or omissions not in good faith or which involved intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law or (iv) for any transaction in which the
director derived an improper personal benefit.

CAC's Certificate of Incorporation provides that CAC shall indemnify its
directors and officers to the fullest extent permitted by Section 145 of the
Delaware General Corporation Law. CAC's Certificate of Incorporation also
provides that no director shall be liable to the Company or its stockholders
for monetary damages for breach of his fiduciary duty as director, except for
liability (i) for any breach of the director's duty or loyalty to CAC or its
stockholders, (ii) for acts or omissions not in good faith or which involved
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law or (iv) for any transaction in which
the director derived an improper personal benefit.

Cencom Cable's Certificate of Incorporation provides that Cencom Cable shall
indemnify its directors and officers to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law. Cencom Cable's
Certificate of Incorporation also provides that no director shall be liable to
the Company or its stockholders for monetary damages for breach of his
fiduciary duty as director, except for liability (i) of any breach of the
director's duty of loyalty to Cencom Cable's or its stockholders, (ii) for
acts or omissions not in good faith or which involved intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction in which the director derived an
improper personal benefit.

Section 17-108 of the Revised Limited Partnership Act of the State of
Delaware provides that subject to such standards and restrictions, if any, as
are set forth in its a partnership agreement, a limited partnership may, and
shall have the power to, indemnify and hold harmless any partner or other
person from and against any and all claims and demands whatsoever.

CCE, L.P.'s Agreement of Limited Partnership provides that CCE, L.P. shall
indemnify its directors and officers to the fullest extent permitted by
applicable law. CCE, L.P.'s Agreement of Limited Partnership also provides
that none of the general partners or any of their affiliates or the partners,
officers, directors or employees of such general partner or affiliate shall be
liable to the partnership or any partner for any act or omission taken or
omitted by such person in good faith, provided that such act or omission did
not constitute gross negligence, fraud, willful violation of the law, willful
violation of the Agreement of Limited Partnership or reckless disregard of the
duties of such person.

II-1
<PAGE>

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
*1.1 Placement Agreement, dated February 10, 1997, among CCA Holdings
Corp., HC Crown Corp. and Furman Selz LLC
*3.1 Amended and Restated Certificate of Incorporation of CCA Holdings
Corp.
*3.2 Amended and Restated By-laws of CCA Holdings Corp.
*3.3 Certificate of Incorporation of CCA Acquisition Corp.
*3.4 Amended and Restated By-laws of CCA Acquisition Corp.
*3.5 Certificate of Incorporation of Cencom Cable Entertainment, Inc.
*3.6 Amended and Restated By-laws of Cencom Cable Entertainment, Inc.
*3.7 Certificate of Limited Partnership of Charter Communications
Entertainment, L.P.
*3.8 Amendment to Certificate of Limited Partnership of Charter
Communications Entertainment, L.P.
*3.9 Agreement of Limited Partnership of Charter Communications
Entertainment, L.P.
*4.1 Indenture, dated February 13, 1997, between CCA Holdings Corp. and
Harris Trust and Savings Bank, as Trustee
*4.2 Second Amended and Restated Guaranty, dated February 13, 1997, issued
by CCA Acquisition Corp.
*4.3 Second Amended and Restated Guaranty, dated February 13, 1997, issued
by Cencom Cable Entertainment, Inc.
*4.4 Second Amended and Restated Guaranty, dated February 13, 1997, issued
by Charter Communications Entertainment, L.P.
*4.5 Second Amended and Restated Subordination Agreement between Harris
Trust and Savings Bank, as Trustee, CCA Holdings Corp. and Toronto
Dominion (Texas) Inc., as Administrative Agent, dated February 13,
1997
*4.6 Letter Agreement, dated November 15, 1996, between CCA Holdings Corp.
and HC Crown Corp.
*4.7 Form of Old Note (included in Exhibit 4.1)
*4.8 Form of New Note (included in Exhibit 4.1)
**5.1 Legal Opinion
*10.1 Amended and Restated Loan Agreement dated as of September 29, 1995
(the "CCE-I Loan Agreement") among Charter Communications
Entertainment I, L.P., as Borrower, Toronto Dominion (Texas), Inc. and
Chemical Bank, as Documentation Agents, Toronto Dominion (Texas),
Inc., Chemical Bank, CIBC Inc., Credit Lyonnais Cayman Island Branch
and Nationsbank, N.A. (Carolinas), as Managing Agents, Banque Paribas
and Union Bank, as Co-Agents, the Signatory Banks thereto, and Toronto
Dominion (Texas), Inc., as Administrative Agent
*10.2 First Amendment to the CCE-I Loan Agreement dated as of October 31,
1995
*10.3 Second Amendment to the CCE-I Loan Agreement dated as of January 16,
1996
*10.4 Third Amendment to the CCE-I Loan Agreement dated as of March 29, 1996
*10.5 Fourth Amendment to the CCE-I Loan Agreement dated as of May 24, 1996
*10.6 Fifth Amendment to the CCE-I Loan Agreement dated as of November 29,
1996
*10.7 Sixth Amendment to the CCE-I Loan Agreement dated as of February 7,
1997
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
*10.8 Amended and Restated Shareholders' Agreement dated as of November 15,
1996 between Kelso & Company, L.P., Charter Communications, Inc. and
HC Crown Corp.
*10.9 Amended and Restated Management Agreement dated as of September 29,
1995 between Charter Communications Entertainment I, L.P. and Charter
Communications, Inc.
*10.10 Amendment Number One to Amended and Restated Management Agreement
dated as of October 31, 1995 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc.
*10.11 Amendment Number Two to Amended and Restated Management Agreement
dated as of March 29, 1996 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc.
*10.12 Amendment Number Three to Amended and Restated Management Agreement
dated as of November 29, 1996 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc.
*10.13 Certificate of Limited Partnership of Charter Communications
Entertainment I, L.P.
*10.14 Amendment to the Certificate of Limited Partnership of Charter
Communications Entertainment I, L.P.
*10.15 Agreement of Limited Partnership of Charter Communications
Entertainment I, L.P.
*10.16 Certificate of Limited Partnership of Charter Communications
Entertainment II, L.P.
*10.17 Agreement of Limited Partnership of Charter Communications
Entertainment II, L.P.
*10.18 Contingent Payment Agreement dated as of September 29, 1995 among
Charter Communications Entertainment, L.P., CCT Holdings Corp. and
Cencom CableTelevision, Inc.
*10.19 Amended and Restated Stockholders' Agreement dated as of September 29,
1995 among CCA Holdings Corp., Kelso Investment Associates V, L.P.,
Kelso Equity Partners V, L.P. and Charter Communications, Inc.
*10.20 Registration Rights Agreement dated as of January 18, 1995 (the
"Registration Rights Agreement") among CCA Holdings Corp., Kelso
Investment Associates V, L.P., Kelso Equity Partners V, L.P. and
Charter Communications, Inc.
*10.21 Amendment Number One to the Registration Rights Agreement dated as of
September 29, 1995
*12.1 Crown Systems, Ratio of Earnings to Fixed Charges Calculation
*12.2 CCA Holdings Corp. and subsidiaries, Ratio of Earnings to Fixed
Charges Calculation
*21.1 List of Subsidiaries of Registrants
**23.1 Consent of Arthur Andersen LLP.
**23.2 Consent of Ernst & Young LLP
**23.3 Consent of KPMG Peat Marwick LLP
**23.4 Consent of Piaker & Lyons, P.C.
**23.5 Consent of Paul, Hastings, Janofsky & Walker LLP (included in Exhibit
5.1)
*25.1 Statement of Eligibility of Harris Trust and Savings Bank, as Trustee,
on Form T-1
*27.1 Financial Data Schedule CCA Holdings Corp.
*27.2 Financial Data Schedule CCA Acquisition Corp.
*27.3 Financial Data Schedule Cencom Cable Entertainment, Inc.
*27.4 Financial Data Schedule Charter Communications Entertainment, L.P.
**99.1 Letter of Transmittal
</TABLE>
- --------

*Previously filed.

**Filed herewith.

(b) Financial Statement Schedules.

Reports of Independent Certified Public Accountants incorporated by
reference herein.

II-3
<PAGE>

ITEM 22. UNDERTAKINGS

The undersigned hereby undertake with respect to the securities offered by
them:

1. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act") may be permitted as to
directors, officers and controlling persons of the registrants pursuant to
the foregoing provisions or otherwise, the Registrants have been advised
that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the event a claim for indemnification against such liabilities (other than
the payment by the Registrants of expenses incurred or paid by a director,
officer or controlling person of the Registrants in the successful defense
of any action, suit, or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
the Registrants will, unless in the opinion of its respective counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

2. The Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.

3. The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

4. The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
each of the Registrants' annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

The undersigned Registrants hereby undertake:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

II-4
<PAGE>

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, State of
Missouri, on the 8th day of July, 1997.

CCA Holdings Corp.

/s/ Jerald L. Kent
By: _________________________________
Name: Jerald L. Kent
Title: President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:

<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE

/s/ Jerald L. Kent President, Chief July 8, 1997
- ------------------------------------- Executive Officer
JERALD L. KENT and Director

/s/ Howard L. Wood Vice Chairman of the July 8, 1997
- ------------------------------------- Board and Director
HOWARD L. WOOD

/s/ Kent D. Kalkwarf Senior Vice July 8, 1997
- ------------------------------------- President and Chief
KENT D. KALKWARF Financial Officer
(Principal
Financial Officer)

/s/ Ralph G. Kelly Senior Vice July 8, 1997
- ------------------------------------- President--
RALPH G. KELLY Treasurer
(Principal
Accounting
Officer)

/s/ George E. Matelich Director July 8, 1997
- -------------------------------------
GEORGE E. MATELICH

/s/ Frank T. Nickell Director July 8, 1997
- -------------------------------------
FRANK T. NICKELL

/s/ Thomas R. Wall IV Director July 8, 1997
- -------------------------------------
THOMAS R. WALL IV
</TABLE>

II-6
<PAGE>

SIGNATURES

CCA Acquisition Corp.

/s/ Jerald L. Kent
By: _________________________________
Name: Jerald L. Kent
Title: President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

<TABLE>
<S> <C> <C>
SIGNATURE TITLE
DATE

/s/ Jerald L. Kent President, Chief July 8, 1997
- ------------------------------------- Executive Officer
JERALD L. KENT and Director

/s/ Howard L. Wood Vice Chairman of the July 8, 1997
- ------------------------------------- Board and Director
HOWARD L. WOOD

/s/ Kent D. Kalkwarf Senior Vice July 8, 1997
- ------------------------------------- President and Chief
KENT D. KALKWARF Financial Officer
(Principal
Financial Officer)

/s/ Ralph G. Kelly Senior Vice July 8, 1997
- ------------------------------------- President--
RALPH G. KELLY Treasurer
(Principal
Accounting Officer)

/s/ George E. Matelich Director July 8, 1997
- -------------------------------------
GEORGE E. MATELICH

/s/ Frank T. Nickell Director July 8, 1997
- -------------------------------------
FRANK T. NICKELL

/s/ Thomas R. Wall IV Director July 8, 1997
- -------------------------------------
THOMAS R. WALL IV
</TABLE>

II-7
<PAGE>

SIGNATURES

Cencom Cable Entertainment, Inc.

/s/ Jerald L. Kent
By: _________________________________
Name: Jerald L. Kent
Title: President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE

/s/ Jerald L. Kent President, Chief July 8, 1997
- ------------------------------------- Executive Officer
JERALD L. KENT and Director

/s/ Ralph G. Kelly Senior Vice July 8, 1997
- ------------------------------------- President--
RALPH G. KELLY Treasurer
(Principal
Accounting Officer)

/s/ Kent D. Kalkwarf Senior Vice July 8, 1997
- ------------------------------------- President and Chief
KENT D. KALKWARF Financial Officer
(Principal
Financial Officer)

/s/ Barry L. Babcock Chairman of the July 8, 1997
- ------------------------------------- Board
BARRY L. BABCOCK and Director

/s/ Howard L. Wood Vice Chairman of the July 8, 1997
- ------------------------------------- Board and Director
HOWARD L. WOOD
</TABLE>

II-8
<PAGE>

SIGNATURES

Charter Communications
Entertainment, L.P.

CCA Acquisition Corp.,
its General Partner
By: _________________________________

/s/ Jerald L. Kent
By: _________________________________
Name: Jerald L. Kent
Title: President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE

/s/ Jerald L. Kent President, Chief July 8, 1997
- ------------------------------------- Executive Officer
JERALD L. KENT and Director

/s/ Howard L. Wood Vice Chairman of the July 8, 1997
- ------------------------------------- Board and Director
HOWARD L. WOOD

/s/ Kent D. Kalkwarf Senior Vice July 8, 1997
- ------------------------------------- President and Chief
KENT D. KALKWARF Financial Officer
(Principal
Financial Officer)

/s/ Ralph G. Kelly Senior Vice July 8, 1997
- ------------------------------------- President--
RALPH G. KELLY Treasurer
(Principal
Accounting Officer)

/s/ George E. Matelich Director July 8, 1997
- -------------------------------------
GEORGE E. MATELICH

/s/ Frank T. Nickell Director July 8, 1997
- -------------------------------------
FRANK T. NICKELL

/s/ Thomas R. Wall IV Director July 8, 1997
- -------------------------------------
THOMAS R. WALL IV
</TABLE>

II-9
<PAGE>

EXHIBIT INDEX

CCA HOLDINGS, CORP.

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
------- ----------- ----------
<C> <S> <C>
*1.1 Placement Agreement, dated February 10, 1997, among CCA
Holdings Corp., HC Crown Corp. and Furman Selz LLC.......
*3.1 Amended and Restated Certificate of Incorporation of CCA
Holdings Corp............................................
*3.2 Amended and Restated By-laws of CCA Holdings Corp........
*3.3 Certificate of Incorporation of CCA Acquisition Corp.....
*3.4 Amended and Restated By-laws of CCA Acquisition Corp.....
*3.5 Certificate of Incorporation of Cencom Cable
Entertainment, Inc.......................................
*3.6 Amended and Restated By-laws of Cencom Cable
Entertainment, Inc.......................................
*3.7 Certificate of Limited Partnership of Charter
Communications Entertainment, L.P........................
*3.8 Amendment to Certificate of Limited Partnership of
Charter Communications
Entertainment, L.P.......................................
*3.9 Agreement of Limited Partnership of Charter
Communications Entertainment, L.P........................
*4.1 Indenture, dated February 13, 1997, between CCA Holdings
Corp. and Harris Trust and Savings Bank, as Trustee......
*4.2 Second Amended and Restated Guaranty, dated February 13,
1997, issued by CCA Acquisition Corp. ...................
*4.3 Second Amended and Restated Guaranty, dated February 13,
1997, issued by Cencom Cable Entertainment, Inc. ........
*4.4 Second Amended and Restated Guaranty, dated February 13,
1997, issued by Charter Communications Entertainment,
L.P. ....................................................
*4.5 Second Amended and Restated Subordination Agreement
between Harris Trust and Savings Bank, as Trustee, CCA
Holdings Corp. and Toronto Dominion (Texas) Inc., as
Administrative Agent, dated February 13, 1997............
*4.6 Letter Agreement, dated November 15, 1996, between CCA
Holdings Corp. and
HC Crown Corp............................................
*4.7 Form of Old Note (included in Exhibit 4.1)...............
*4.8 Form of New Note (included in Exhibit 4.1)...............
**5.1 Legal Opinion............................................
*10.1 Amended and Restated Loan Agreement dated as of September
29, 1995 (the "CCE-I Loan Agreement") among Charter
Communications Entertainment I, L.P., as Borrower,
Toronto Dominion (Texas), Inc. and Chemical Bank, as
Documentation Agents, Toronto Dominion (Texas), Inc.,
Chemical Bank, CIBC Inc., Credit Lyonnais Cayman Island
Branch and Nationsbank, N.A. (Carolinas), as Managing
Agents, Banque Paribas and Union Bank, as Co-Agents, the
Signatory Banks thereto, and Toronto Dominion (Texas),
Inc., as Administrative Agent............................
*10.2 First Amendment to the CCE-I Loan Agreement dated as of
October 31, 1995.........................................
*10.3 Second Amendment to the CCE-I Loan Agreement dated as of
January 16, 1996.........................................
*10.4 Third Amendment to the CCE-I Loan Agreement dated as of
March 29, 1996...........................................
*10.5 Fourth Amendment to the CCE-I Loan Agreement dated as of
May 24, 1996.............................................
*10.6 Fifth Amendment to the CCE-I Loan Agreement dated as of
November 29, 1996........................................
*10.7 Sixth Amendment to the CCE-I Loan Agreement dated as of
February 7, 1997.........................................
*10.8 Amended and Restated Shareholders' Agreement dated as of
November 15, 1996 between Kelso & Company, L.P., Charter
Communications, Inc. and HC Crown Corp. .................
*10.9 Amended and Restated Management Agreement dated as of
September 29, 1995 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc. ..
*10.10 Amendment Number One to Amended and Restated Management
Agreement dated as of October 31, 1995 between Charter
Communications Entertainment I, L.P. and Charter
Communications, Inc. ....................................
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
------- ----------- ----------
<C> <S> <C>
*10.11 Amendment Number Two to Amended and Restated Management
Agreement dated as of March 29, 1996 between Charter
Communications Entertainment I, L.P. and Charter
Communications, Inc. ....................................
*10.12 Amendment Number Three to Amended and Restated Management
Agreement dated as of November 29, 1996 between Charter
Communications Entertainment I, L.P. and Charter
Communications, Inc. ....................................
*10.13 Certificate of Limited Partnership of Charter
Communications Entertainment I, L.P. ....................
*10.14 Amendment to the Certificate of Limited Partnership of
Charter Communications Entertainment I, L.P. ............
*10.15 Agreement of Limited Partnership of Charter
Communications Entertainment I, L.P. ....................
*10.16 Certificate of Limited Partnership of Charter
Communications Entertainment II, L.P. ...................
*10.17 Agreement of Limited Partnership of Charter
Communications Entertainment II, L.P. ...................
*10.18 Contingent Payment Agreement dated as of September 29,
1995 among Charter Communications Entertainment, L.P.,
CCT Holdings Corp. and Cencom Cable
Television, Inc. ........................................
*10.19 Amended and Restated Stockholders' Agreement dated as of
September 29, 1995 among CCA Holdings Corp., Kelso
Investment Associates V, L.P., Kelso Equity Partners V,
L.P. and Charter Communications, Inc.....................
*10.20 Registration Rights Agreement dated as of January 18,
1995 (the "Registration Rights Agreement") among CCA
Holdings Corp., Kelso Investment Associates V, L.P.,
Kelso Equity Partners V, L.P. and Charter Communications,
Inc......................................................
*10.21 Amendment Number One to the Registration Rights Agreement
dated as of September 29, 1995...........................
*12.1 Crown Systems, Ratio of Earnings to Fixed Charges
Calculation..............................................
*12.2 CCA Holdings Corp. and subsidiaries, Ratio of Earnings to
Fixed Charges Calculation................................
*21.1 List of Subsidiaries of Registrants......................
**23.1 Consent of Arthur Andersen LLP...........................
**23.2 Consent of Ernst & Young LLP.............................
**23.3 Consent of KPMG Peat Marwick LLP.........................
**23.4 Consent of Piaker & Lyons, P.C...........................
**23.5 Consent of Paul, Hastings, Janofsky & Walker LLP
(included in Exhibit 5.1)................................
*25.1 Statement of Eligibility of Harris Trust and Savings
Bank, as Trustee, on Form T-1............................
*27.1 Financial Data Schedule CCA Holdings Corp. ..............
*27.2 Financial Data Schedule CCA Acquisition Corp. ...........
*27.3 Financial Data Schedule Cencom Cable Entertainment,
Inc. ....................................................
*27.4 Financial Data Schedule Charter Communications
Entertainment, L.P. .....................................
**99.1 Letter of Transmittal....................................
</TABLE>
- --------

*Previously filed.

**Filed herewith.

<PAGE>

Exhibit 5.1

PAUL, HASTINGS, JANOFSKY & WALKER LLP

July 8, 1997

26095.78448

CCA Holdings Corp.
CCA Acquisition Corp.
Cencom Cable Entertainment, Inc.
Charter Communications Entertainment, L.P.
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri 63131

CCA HOLDINGS CORP.
CCA ACQUISITION CORP.
CENCOM CABLE ENTERTAINMENT, INC.
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
REGISTRATION STATEMENT ON FORM S-4 (REG. NO. 333-26853)
-------------------------------------------------------

Ladies and Gentlemen:

This opinion is delivered in our capacity as counsel to CCA Holdings
Corp. (the "Issuer"), CCA Acquisition Corp. ("CAC"), Cencom Cable Entertainment,
Inc. ("Cencom Cable"), and Charter Communications Entertainment, L.P. ("CCE, LP"
and, together with CAC and Cencom Cable, the "Guarantors"), in connection with
the Issuer's and the Guarantors' registration statement on Form S-4 (File No.
333-26853) (the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "1933 Act"),
relating to the proposed issuance by the Issuer of $82,000,000 principal amount
of its Series B Senior Subordinated Notes due 1999 (together with the guarantee
thereof by the Guarantors, the "Series B Notes") in exchange for an equivalent
amount of its outstanding Series A Senior Subordinated Notes due 1999 (together
with the guarantee thereof by the Guarantors, the "Series A Notes") (such
exchange, as described in the Registration Statement, the "Exchange Offer"). The
Series A Notes have been, and the Series B Notes will be, issued pursuant to an
Indenture, dated as of February 13,
<PAGE>

CCA Holdings Corp.
CCA Acquisition Corp.
Cencom Cable Entertainment, Inc.
Charter Communications Entertainment, L.P.
July 8, 1997
Page 2

1997 (the "Indenture") between the Issuer and Harris Trust and Savings Bank, as
trustee (the "Trustee").

In connection with this opinion, we have examined copies or originals
of such documents, resolutions, certificates and instruments of the Issuer as we
have deemed necessary to form a basis for the opinion hereinafter expressed. In
addition, we have reviewed certificates of public officials, statutes, records
and other instruments and documents as we have deemed necessary to form a basis
for the opinion hereinafter expressed. In our examination of the foregoing, we
have assumed, without independent investigation, (i) the genuineness of all
signatures, and the authority of all persons or entities signing all documents
examined by us and (ii) the authenticity of all documents submitted to us as
originals and the conformity to authentic original documents of all copies
submitted to us as certified, conformed or photostatic copies. With regard to
certain factual matters, we have relied, without independent investigation or
verification, upon statements and representations of the Issuer and the
Guarantors and representatives of the Issuer and the Guarantors.

Based upon the foregoing, subject to the qualifications hereinafter
set forth, we are of the opinion that, when the Registration Statement has
become effective under the 1933 Act and the Series B Notes have been duly
authenticated by the Trustee and duly executed and authorized in accordance with
the Indenture and issued and sold in exchange for the Series A Notes as
contemplated by the Registration Statement and in accordance with the Exchange
Offer, the Series B Notes will constitute valid and legally binding obligations
of the Issuer, subject to (i) bankruptcy, insolvency, reorganization,
moratorium, liquidation, rearrangement, fraudulent transfer, fraudulent
conveyance and other similar laws (including, without limitation, court
decisions) now or hereafter in effect and affecting the rights and remedies of
creditors generally or providing for the relief of debtors, (ii) the refusal of
a particular court to grant equitable remedies, including, without limitation,
specific performance and injunctive relief, and (iii) general principles of
equity (regardless of whether such remedies are sought in a proceeding in equity
or at law).

The opinions expressed herein are limited exclusively to the federal
laws of the United States of America, the laws of the State of New York and the
<PAGE>

CCA Holdings Corp.
CCA Acquisition Corp.
Cencom Cable Entertainment, Inc.
Charter Communications Entertainment, L.P.
July 8, 1997
Page 3

General Corporation Law of the State of Delaware, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.

We hereby consent to being named as counsel to the Issuer and the
Guarantors in the Registration Statement, to the references therein to our firm
under the caption "Legal Matters" and to the inclusion of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the 1933 Act or the rules and regulations of the
Commission thereunder.

Very truly yours,

/s/ Paul, Hastings, Janofsky & Walker LLP

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the consolidated financial statements of
CCA Holdings Corp. and subsidiaries as of and for the years ended December 31,
1996 and 1995, (and to all references to our Firm) included in or made a part of
Amendment No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the consolidated financial statements of
CCA Acquisition Corp. and subsidiaries as of and for the years ended December
31, 1996 and 1995, (and to all references to our Firm) included in or made a
part of Amendment No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Cencom Cable
Entertainment, Inc. as of and for the years ended December 31, 1996 and 1995,
(and to all references to our Firm) included in or made a part of Amendment
No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Charter
Communications Entertainment, L.P. as of and for the years ended December 31,
1996 and 1995, (and to all references to our Firm) included in or made a part of
Amendment No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Charter
Communications Entertainment I, L.P. as of and for the years ended December
31, 1996 and 1995, (and to all references to our Firm) included in or made a
part of Amendment No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Charter
Communications Entertainment II, L.P. as of December 31, 1996 and 1995 and for
the year ended December 31, 1996 and for the period from inception (April 20,
1995) to December 31, 1995, (and to all references to our Firm) included in or
made a part of Amendment No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated July 31, 1996, relating to the financial statements of Cencom Cable
Entertainment, Inc.--Missouri System as of and for the year ended December 31,
1994, (and to all references to our Firm) included in or made a part of
Amendment No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated July 31, 1996, relating to the financial statements of Cencom Cable Income
Partners, L.P.--Illinois System as of and for the years ended December 31, 1995
and 1994, (and to all references to our Firm) included in or made a part of
Amendment No. 1 to Registration Statement No. 333-26853.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
July 1, 1997

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated November 22, 1995, relating to the financial statements of Cencom Cable
Television, Inc.--Los Angeles and Riverside Systems as of September 29, 1995 and
December 31, 1994, and for the nine months ended September 29, 1995 and the
years ended December 31, 1994 and 1993, (and to all references to our Firm)
included in or made a part of Amendment No. 1 to Registration Statement
No. 333-26853.

ARTHUR ANDERSEN LLP

Dallas, Texas,
July 1, 1997

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Independent Certified
Public Accountants" and to the use of our report dated February 17, 1997, with
respect to the Missouri Cable Television System to be sold by Masada Cable
Partners, L.P. to Charter Communications Entertainment I, L.P., in Amendment
No. 1 to Registration Statement No. 333-26853 for the $82,000,000 Series B
Senior Subordinated Notes due 1999 of CCA Holdings Corp.

ERNST & YOUNG LLP

Birmingham, Alabama
July 1, 1997

<PAGE>

Exhibit 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the use of our reports included herein and to the reference to our
firm under the headings "Independent Certified Public Accountants" and
"Unaudited Selected Historical and Unaudited Pro Forma Financial Data" in the
registration statement.

KPMG Peat Marwick LLP

Dallas, Texas
July 1, 1997

<PAGE>

EXHIBIT 23.4

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated July 25, 1996, on the financial statements of United Video Cablevision,
Inc. Massachusetts and Missouri Divisions included in or made part of CCA
Holdings Corp.'s Form S-4 registration statement.

Piaker & Lyons, P.C.

Vestal, New York
July 1, 1997

<PAGE>

EXHIBIT 99.1

LETTER OF TRANSMITTAL
To Tender
Series A Senior Subordinated Notes
due 1999
of CCA Holdings Corp.
Pursuant to the Prospectus
dated _____________, 1997

- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
___________, 1997 UNLESS EXTENDED (AS SO EXTENDED, THE "EXPIRATION DATE").
EXCEPT AS PROVIDED UNDER APPLICABLE SECURITIES LAWS, TENDERS OF OLD NOTES (AS
DEFINED HEREIN) MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE UNLESS SUCH OLD NOTES HAVE BEEN ACCEPTED FOR
EXCHANGE BY CCA HOLDINGS CORP. PRIOR THERETO.
- --------------------------------------------------------------------------------

To: HARRIS TRUST AND SAVINGS BANK, EXCHANGE AGENT
<TABLE>
<CAPTION>
BY MAIL, BY HAND OR OVERNIGHT DELIVERY: BY FACSIMILE:
<S> <C>
Harris Trust and Savings Bank (212) 701-7636
c/o Harris Trust Company of New York
77 Water Street, 4th Floor CONFIRMATION AND INFORMATION:
New York, NY 10005
Attn: Reorganization Department (212) 701-7649
</TABLE>

Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of instructions via a facsimile number other than
the one listed above will not constitute valid delivery.

The undersigned acknowledges receipt and review of the prospectus dated
July __, 1997 (the "Prospectus") of CCA Holdings Corp., a Delaware corporation
("Issuer") and this Letter of Transmittal relating to the Issuer's Series A
Senior Subordinated Notes due 1999 ("Old Notes"), which constitutes the Issuer's
offer ("Exchange Offer") to exchange Old Notes for Series B Subordinated Notes
due 1999 ("New Notes") in accordance with the terms and conditions described in
the Prospectus. Capitalized terms used but not defined herein shall have the
meanings given to them in the Prospectus.

This Letter of Transmittal must be used if (i) Old Notes are to be
physically delivered herewith, (ii) delivery of Old Notes is to be made by book-
entry transfer to the Exchange Agent's account at The Depository Trust Company
("Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Procedures for Tendering" in the Prospectus, or (iii) the
guaranteed delivery procedures described in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedures" are to be utilized. Delivery of
documents to a Book-Entry Transfer Facility does not constitute delivery to the
Exchange Agent.

A holder who wishes to tender Old Notes must, at a minimum, complete
columns (1) and (3) in the box below, captioned "Description of Old Notes," and
sign in the box below captioned "Sign Here." If only columns (1) and (3) are
completed, the holder will be deemed to have tendered all Old Notes listed in
column (3) of the box captioned "Description of Old Notes." If a holder wishes
to tender less than all of such Old Notes, column (4) must be completed in full,
and such holder should refer to Instruction 4 of the instructions hereto
("Instructions") regarding completion of this Letter of Transmittal.

Holders who desire to tender their Old Notes and (i) whose Old Notes are
not immediately available, (ii) who cannot deliver their Old Notes, this Letter
of Transmittal and all other documents required hereby to the Exchange Agent
prior to the Expiration Date, or (iii) who cannot complete the procedure for
book-entry transfer on a timely
<PAGE>

basis, must tender their Old Notes pursuant to the guaranteed delivery procedure
set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures." See Instruction 2.

If the undersigned is not the person in whose name the Old Notes tendered
are registered on the books of the Issuer, a properly completed bond power must
be obtained from the registered holder of such Old Notes and submitted with this
Letter of Transmittal in order to tender them pursuant to this Letter of
Transmittal. See Instructions 1 and 5.

PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING
ANY INFORMATION BELOW.

Ladies and Gentlemen:

Pursuant to the offer by the Issuer to exchange up to $82,000,000 principal
amount of Old Notes for up to $82,000,000 principal amount of New Notes, upon
the terms and subject to the conditions set forth in the Prospectus and this
Letter of Transmittal, the undersigned hereby tenders to the Issuer the Old
Notes indicated below. Accrued interest on Old Notes accepted for exchange will
not be paid, but will instead continue to accrue.

Subject to and effective upon acceptance for exchange of the Old Notes
tendered herewith, the undersigned hereby exchanges, assigns and transfers to or
upon the order of the Issuer all right, title and interest in and to all the Old
Notes that are being tendered hereby, and irrevocably constitutes and appoints
the Exchange Agent the true and lawful agent and attorney-in-fact of the
undersigned (with full knowledge that the Exchange Agent also acts as the agent
of the Issuer) with respect to such Old Notes, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest) to (a) present such Old Notes and all evidences of transfer and
authenticity to, or upon the order of, the Issuer for registration in the name
of the undersigned on the books of the Issuer if the undersigned is not
currently the registered holder thereof, (b) deliver certificates for such Old
Notes, or transfer ownership of such Old Notes on the account books maintained
by the Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Issuer upon receipt by the Exchange Agent as the undersigned's agent, of the New
Notes to be issued in exchange therefor, (c) present such Old Notes for
cancellation and transfer on the books of the Issuer and (d) receive all
benefits and otherwise exercise all rights of beneficial ownership of such Old
Notes, all in accordance with the terms of the Exchange Offer.

The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby, and that when the same are accepted for exchange and exchanged
by the Issuer, the Issuer will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claims. The undersigned will, upon request, execute and deliver
any additional documents deemed by the Exchange Agent or the Issuer to be
necessary or desirable to complete the exchange, assignment and transfer of the
Old Notes tendered hereby.

The undersigned further represents and warrants that (i) this Exchange
Offer is being made in reliance on an interpretation by the staff of the
Securities and Exchange Commission set forth in Exxon Capital Holdings Corp.,
----------------------------
SEC No-Action Letter (April 13, 1989), Morgan Stanley & Co., Inc., SEC No-Action
--------------------------
Letter (June 5, 1991) and Shearman & Sterling, SEC No-Action (July 2, 1993)
-------------------
that the New Notes may be offered for resale, resold and otherwise transferred
by the holders thereof without compliance with the registration and prospectus
delivery provisions of the Securities Act of 1933, as amended (the "Securities
Act"), (ii) the New Notes are being obtained in the ordinary course of business
of the person receiving such New Notes, whether or not such person is the holder
of the Old Notes, (iii) no such person has any arrangement with any person to
participate in the distribution of such New Notes and (iv) no such person is an
"affiliate" of the Issuer or any of the Guarantors within the meaning of Rule
405 under the Securities Act. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of the New Notes. If the undersigned is a broker-dealer that
will receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes; however, by so
agreeing and by delivering a prospectus, the undersigned will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.

<PAGE>

Listed below are the Old Notes tendered by the undersigned upon the terms
and conditions set forth in the Prospectus and this Letter of Transmittal. The
undersigned understands that the minimum permitted tender is $1 million
principal amount of Old Notes and that all other tenders must be in integral
multiples of $1 million.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

(1) (2) (3) (4)
CERTIFICATE AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
NUMBER(S)* AMOUNT OF OLD NOTES TENDERED (MUST BE
(ATTACH SEPARATE AN INTEGRAL MULTIPLE
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) LIST OF $1 MILLION)**
(PLEASE FILL IN, IF BLANK) IF NECESSARY)
----------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------- -------------------- -------------------- --------------------
------------------------------------------------- -------------------- -------------------- --------------------
------------------------------------------------- -------------------- -------------------- --------------------
------------------------------------------------- -------------------- -------------------- --------------------
------------------------------------------------- -------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>
- --------------
* Need not be completed by holders tendering by book-entry transfer.
** Need not be completed by holders who wish to tender all Old Notes listed.
Unless otherwise indicated in column (4), the holder(s) will be deemed to
have tendered the entire aggregate principal amount represented by the Old
Notes listed in column (3).

NOTE: SIGNATURES MUST BE PROVIDED IN THE BOX BELOW CAPTIONED "SIGN HERE."
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE EXCHANGE AGENT'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
AND COMPLETE THE FOLLOWING:

Name of Tendering Institution:
Account Number:
at The Depository Trust Company.

Transaction Code Number:

[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:

Name(s) of Registered Holder(s):__________________________________________
Date of Execution of Notice of Guaranteed Delivery:_______________________
Name of Eligible Institution that Guaranteed Delivery:____________________
If Delivery is by Book-Entry Transfer, provide Account Number:____________
at The Depository Trust Company.

[_] CHECK HERE IF OLD NOTES ARE BEING DELIVERED HEREWITH
<PAGE>

<S> <C>

TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES

PAYOR'S NAME: _____________________________________________

PART 1--please provide your TIN in the
box at right and certify by signing and TIN:_____________________________
SUBSTITUTE dating below Social Security Number or Employer Identification Number
Form W-9 --------------------------------------------------------------------------------------------------------
Department of the Treasury Part 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING (SEE INSTRUCTIONS)
Internal Revenue Service

Payor's Request for --------------------------------------------------------------------------------------------------------
Taxpayer
Identification CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number shown on this form is my
Number (TIN) correct TIN (or I am waiting for a number to be issued to me), and (2) I am not subject to backup
and Certification withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding.

Signature:____________________________________ Date:________________________________

- ------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

Instructions for Parts 1 and 2. Individuals (including sole proprietors)
------------------------------
are not exempt from backup withholding. Corporations are exempt from backup
withholding for certain payments, such as interest and dividends. For a
complete list of exempt payees, please consult your tax advisor. If you are
exempt from backup withholding, you should still complete this form to avoid
possible erroneous backup withholding. Enter your correct Taxpayer
Identification Number ("TIN") in Part 1, write "Exempt" in Part 2, and sign and
date the form. If you are a nonresident alien or a foreign entity not subject
to backup withholding, you must provide to the Issuer a completed Form W-8,
Certificate of Foreign Status.

INSTRUCTIONS FOR CERTIFICATION. YOU MUST CROSS OUT ITEM (2) IN THE BOX
------------------------------
MARKED "CERTIFICATION" IN THE SUBSTITUTE FORM W-9 ABOVE IF YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE
OF UNDER REPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. NOTE: FAILURE TO
COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY
PAYMENTS MADE TO YOU AS A RESULT OF THE EXCHANGE OFFER OR ON ACCOUNT OF THE NEW
NOTES.

* * *

Upon satisfaction or waiver of the conditions to the Exchange Offer, the
Issuer will accept promptly after the Expiration Date all properly tendered Old
Notes and will deliver the New Notes in exchange therefor promptly after
acceptance of such Old Notes. Interest on Old Notes accepted for exchange in
the Exchange Offer will accrue to the Expiration Date, will be added to the New
Notes as if accrued on the New Notes, and will continue to accrue without
interruption on the Expiration Date.

For purposes of the Exchange Offer, the Issuer will be deemed to have
accepted for exchange tendered Old Notes if, as and when the Issuer gives oral
or written notice to the Exchange Agent of their acceptance for exchange of the
tenders of such Old Notes. New Notes will be delivered by deposit of the same
with the Exchange Agent, which will act as agent for tendering holders for the
purpose of receiving New Notes from the Issuer and transmitting the same to such
holders.

All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, trustees in bankruptcy, legal representatives,
successors and assigns of the undersigned.

EXCEPT AS PROVIDED UNDER APPLICABLE SECURITIES LAWS, TENDERS OF OLD NOTES
MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE UNLESS SUCH OLD NOTES HAVE BEEN ACCEPTED FOR EXCHANGE BY THE
ISSUER PRIOR THERETO.
<PAGE>

The Issuer may, in its sole discretion, extend the period of time for which
the Exchange Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date to which the Exchange Offer has been extended. The
Issuer shall make a public announcement of any such extension of the Exchange
Offer no later than 9:00 a.m. New York City time, on the next business day after
the previously scheduled Expiration Date.

In the event the Issuer should modify the consideration offered for Old
Notes in the Exchange Offer, such modified consideration would be paid to all
holders of Old Notes accepted in the Exchange Offer, including those holders who
tendered before the announcement of such modification. If the consideration is
modified, the Exchange Offer will remain open at least ten business days from
the date the Issuer gives notice, by public announcement or otherwise, of such
modification, as required by applicable law.

The undersigned understands that tenders of Old Notes pursuant to any one
of the procedures described in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering" and in the Instructions hereto will constitute
a binding agreement between the undersigned and the Issuer upon the terms and
subject to the conditions of the Exchange Offer.

Unless otherwise indicated under "Special Issuance Instructions" below,
please (i) issue the New Notes and (ii) return any Old Notes not tendered or not
exchanged, in the Name(s) of the undersigned (and, in the case of Old Notes
tendered by book-entry transfer, by credit to the account at the Book-Entry
Transfer Facility designated above). Similarly, unless otherwise indicated
under "Special Delivery Instructions" below, please mail (i) the New Notes and
(ii) any certificates for Old Notes not tendered or not exchanged (and
accompanying documents, as appropriate), to the undersigned at the address shown
in the box captioned "Description of Old Notes" above. In the event that both
"Special Issuance Instructions" and "Special Delivery Instructions" are
completed, please issue the New Notes, return any Old Notes not tendered or not
exchanged and mail any check and any certificates to the person(s) and
address(es) so indicated. The undersigned recognizes that the Issuer has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name(s) of the registered
holder(s) thereof if the Issuer does not accept for exchange any of the Old
Notes so tendered.

The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. By completing the box entitled "Description of Old
Notes" and signing this Letter of Transmittal, the undersigned will be deemed to
have tendered the Old Notes indicated in such box, and will receive New Notes in
exchange for such Old Notes.
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------- -------------------------------------------------------
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 7) (See Instruction 7)

To be completed ONLY if (i) the New Notes To be completed ONLY if (i) the New Notes
and/or (ii) the Old Notes (if any) not tendered or and/or (ii) the Old Notes (if any) not tendered or
not exchanged are to be issued in the name of not exchanged are to be mailed to someone other
someone other than the undersigned, or if Old Notes than the undersigned or to the undersigned at an
delivered by book-entry transfer that are not address other than that shown in the box captioned
tendered or not exchanged are to be returned by "Description of Old Notes" above.
credit to an account maintained at a Book-Entry
Transfer Facility other than as designated above.

(Check appropriate boxes) (Check appropriate boxes)

[_] New Notes [_] Old Notes [_] New Notes [_] Old Notes

Name______________________________________________ Name______________________________________________
(Please Print) (Please Print)

Address____________________________________________ Address___________________________________________

---------------------------------------------- ---------------------------------------------------
(Include Zip Code) (Include Zip Code)

----------------------------------------------- ---------------------------------------------------
(Taxpayer ID or Social Security Number) (Taxpayer ID or Social Security Number

[_] Credit untendered or unexchanged Old Notes
delivered by book-entry transfer to the Book-Entry
Transfer Facility account at The Depository Trust
Company.

Account Number____________________________________

- ----------------------------------------------------- -----------------------------------------------------
</TABLE>
<PAGE>

SIGN HERE
TO BE COMPLETED BY ALL TENDERING HOLDERS
(INCLUDING THOSE COMPLETING THE NOTICE OF GUARANTEED DELIVERY)

_____________________________________________ ____________________________________________________
Signature of Owner Signature of Owner (If more than one)

<S> <C>
Dated: _______________, 1997 Area Code and Telephone Number: _____________________________

(Must be signed by registered holder(s) exactly as name(s) appear(s) on Old Notes or on a security position
listing or by person(s) authorized to become registered holder(s) by Old Notes and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)

Name(s)____________________________________________ Address_______________________________________________

____________________________________________________ _______________________________________________________
(PLEASE PRINT) (INCLUDE ZIP CODE)

Capacity (full title)________________________________ Area Code and Telephone No.____________________________

Taxpayer ID or Social Security Number(s)_______________________________________________________________________

GUARANTEE OF SIGNATURE(S) (If required--see Instructions 1 and 5)

Name of Firm________________________________________ Authorized Signature___________________________________

Address and Telephone
Number of Firm______________________________________ Print name_____________________________________________

____________________________________________________ Title__________________________________________________

____________________________________________________ Dated ___________________________________________, 1997

__________________________________________________________________________________________________________________
</TABLE>
<PAGE>

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or correspondent in the United States (an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
if (a) this Letter of Transmittal is signed by the registered holder(s) of the
Old Notes tendered herewith (which term, for purposes of this Letter of
Transmittal, shall include any participant in one of the Book-Entry Transfer
Facilities whose name appears on a security position listing as the owner of the
Old Notes tendered herewith) and such holder(s) have not completed either the
box captioned "Special Issuance Instructions" or the box captioned "Special
Delivery Instructions" on this Letter of Transmittal or (b) such Old Notes are
tendered for the account of an Eligible Institution. See Instruction 5.

2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. This Letter of
Transmittal is to be used if (i) Old Notes are to be forwarded to the Exchange
Agent herewith, (ii) delivery of Old Notes is to be made by book-entry transfer
to the Exchange Agent's account at one of the Book-Entry Transfer Facilities
pursuant to the procedures set forth in the Prospectus under the caption "The
Exchange Offer--Procedures for Tendering" or (iii) the guaranteed delivery
procedures described under the same caption and under "--Guaranteed Delivery
Procedures" in the Prospectus are to be utilized.

All physically delivered Old Notes, or a confirmation of a book-entry
transfer into the Exchange Agent's account at one of the Book-Entry Transfer
Facilities of all Old Notes tendered herewith, as well as a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and all other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth on the front page of this Letter of
Transmittal prior to the Expiration Date.

Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other documents required hereby to the Exchange Agent prior
to the Expiration Date, or (iii) who cannot complete the procedure for book-
entry transfer on a timely basis, must tender their Old Notes pursuant to the
guaranteed delivery procedures set forth in the Prospectus. Pursuant to such
procedures: (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery setting
forth the name and address of the holder of Old Notes, the certificate number(s)
of such Old Notes and the principal amount of Old Notes to be delivered, stating
that tender is being made thereby and guaranteeing that the certificate(s)
representing the Old Notes, the Letter of Transmittal and all other documents
required thereby will be deposited by the Eligible Institution with the Exchange
Agent within five business days after the Expiration Date and (c) all physically
delivered Old Notes in proper form for transfer (or a confirmation of a book-
entry transfer into the Exchange Agent's account at one of the Book-Entry
Transfer Facilities of all Old Notes so delivered), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and all
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent within five business days after the Expiration Date, all as
provided in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures".

THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND RISK OF THE TENDERING HOLDER. IF OLD NOTES ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED,
AND ENOUGH TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

No alternative, conditional or contingent tenders will be accepted. By
executing this Letter of Transmittal (or a facsimile hereof), the tendering
holder waives any right to receive any notice of the acceptance for exchange of
the Old Notes.

3. INADEQUATE SPACE. If the space provided is inadequate, the aggregate
principal amount of the Old Notes being tendered and the certificate numbers (if
available) must be listed on a separate schedule signed by the tendering holder
and attached hereto.
<PAGE>

4. PARTIAL TENDERS. Tenders of the Old Notes will be accepted only in
integral multiples of $1 million. If tenders are to be made with respect to
less than the entire principal amount of any Old Notes, the holder must fill in
the principal amount of Old Notes which are tendered in column (4) of the box
captioned "Description of Old Notes." The entire principal amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated in Column (4). In the case of partial tenders, Old Notes in
fully registered form for the principal amount of Old Notes not tendered will be
sent to the person(s) signing this Letter of Transmittal, unless otherwise
indicated in the appropriate box on this Letter of Transmittal, promptly after
the Expiration Date.

5. SIGNATURES ON LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS.
The signature(s) of the registered holder(s) on this Letter of Transmittal must
correspond with the name(s) as written on the face of the Old Notes, without
alteration, enlargement or any change whatsoever.

If any of the Old Notes are held of record by two or more joint owners, all
such owners must sign this Letter of Transmittal. If any of the Old Notes are
registered in different names, it will be necessary to complete, sign and submit
as many separate copies of this Letter of Transmittal as there are names in
which Old Notes are held.

If this Letter of Transmittal is signed by the registered holder(s) of the
Old Notes, no endorsements of Old Notes or separate bond powers are required.
If, however, the Interest Payments are to be made, the New Notes are to be
issued, or Old Notes not tendered or not exchanged are to be issued or returned
in the name(s) of any person(s) or address(es) other than those of the
registered holder(s), then endorsements of certificates transmitted hereby and
separate bond powers are required, and signatures on any such Old Notes or bond
powers must be guaranteed by an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Old Notes, such Old Notes must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name(s) of the registered holder(s) on such Old Notes. Signature(s) on any such
Old Notes or bond powers must be guaranteed by an Eligible Institution.

If this Letter of Transmittal or any Old Notes or bond powers are signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative
capacity, such person must so indicate when signing and proper evidence,
satisfactory to the Issuer, of the authority of such person to so act must be
submitted with this Letter of Transmittal (unless waived by the Issuer).

6. TRANSFER TAXES. The Issuer will pay or cause to be paid security
transfer taxes, if any, with respect to the exchange and transfer of Old Notes
pursuant to the Exchange Offer. If, however, New Notes are to be issued to, or
Old Notes not tendered or not exchanged are to be delivered to or are to be
issued or registered in the name of, any person other than the registered
holder(s), or if tendered Old Notes are to be registered in the name of any
person other than the transferor of Old Notes to the Issuer or its order
pursuant to the Exchange Offer, then the amount of any such security transfer
taxes (whether imposed on the registered holder(s), such other person or
otherwise) will be payable by the tendering holder. If satisfactory evidence of
the payment of such tax, or exemption therefrom, is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.

Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.

7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION. If any of (i) the New
Notes or (ii) any Old Notes not tendered or not exchanged are to be issued or
returned to or in the name of a person other than the person(s) signing this
Letter of Transmittal, or if any of (i) the New Notes or (ii) any Old Notes not
tendered or not exchanged, are to be mailed to a person other than the person(s)
signing this Letter of Transmittal at an address other than that shown above,
the applicable box(es) on this Letter of Transmittal should be completed.
Holders tendering Old Notes by book-entry transfer may request that the Old
Notes not tendered or not exchanged be credited to an account maintained at one
of the Book-Entry Transfer Facilities. If no instructions are given, such Old
Notes not tendered will be returned to the name and address of the person
signing this Letter of Transmittal, or, at the Issuer's option, by crediting the
account of the Book-Entry Transfer Facility so designated.
<PAGE>

8. SUBSTITUTE FORM W-9. Federal income tax law generally requires that a
tendering holder whose Old Notes are accepted for payment provide the Exchange
Agent (as payor) with his correct TIN, which, in the case of a holder who is an
individual, is his social security number. If the Exchange Agent is not
provided with the correct TIN or an adequate basis for an exemption, such holder
may be subject to a penalty imposed by the Internal Revenue Service. In
addition, backup withholding at the rate of 31% may be imposed upon any payments
resulting from the Exchange Offer or made on account of the New Notes. If
withholding results in an overpayment of taxes, a holder may be eligible for a
refund. In order to avoid such backup withholding, each tendering holder must
provide the Exchange Agent with such holder's correct TIN by completing the
Substitute Form W-9 (the "Form") set forth in this Letter of Transmittal.
Certain holders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt
holder must enter its correct TIN in Part 1 of the Form, write "Exempt" in Part
2 of such Form, and sign and date the Form. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form W-
8, entitled "Certificate of Foreign Status." Such Forms W-8 may be obtained
from the Exchange Agent. If a holder does not have a TIN, such holder should
write "Applied For" in the space for the TIN; if notice of the TIN assigned to
such holder is not received by the Exchange Agent within 60 days, backup
withholding will begin and continue until the Exchange Agent is in receipt of
notice of such TIN. Note: Writing "Applied For" on the Form means that a
holder has already applied for a TIN or that a holder intends to apply for a
TIN.

Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Notes to be deemed invalidly tendered, but may require withholding at the rate
of 31% to be imposed on the amount of any payments made to the tendering holder
as a result of the Exchange Offer or on account of the New Notes. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained.

9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth in this Letter of Transmittal.

10. SATISFACTION AND WAIVER OF CONDITIONS. All questions as to the
validity, form, eligibility (including time of receipt), acceptance for exchange
or withdrawal of any tender of Old Notes pursuant to any of the procedures
described herein or in the Prospectus will be determined by the Issuer in its
sole discretion, which determination shall be final and binding on all parties.
The Issuer reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes the Issuer's acceptance for exchange of which
may, in the opinion of the Issuer or its counsel, be unlawful. The Issuer also
reserves the absolute right to amend, waive or modify any of the conditions of
the Exchange Offer as set forth in the Prospectus under the caption "The
Exchange Offer--Conditions," or to waive any defect or irregularity in any
tender with respect to any particular Old Notes or any particular holder. The
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the Instructions hereto) by the Issuer shall be final
and binding on all parties. Unless waived by the Issuer, any defects or
irregularities in connection with the tender of Old Notes must be cured within
such time as the Issuer shall determine. Neither the Issuer, the Exchange Agent
nor any other person will be under any duty to give notification of any defects
or irregularities with respect to tenders of Old Notes, nor shall any of them
incur any liability for failure to give any such modification.

11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at its address set forth on the front page of this Letter of
Transmittal for further instructions.

12. WITHDRAWAL. Except as otherwise provided below, tenders of Old Notes
pursuant to the Exchange Offer are irrevocable and no withdrawal rights are
being afforded to holders of Old Notes. EXCEPT AS PROVIDED UNDER APPLICABLE
SECURITIES LAWS, TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE UNLESS SUCH OLD NOTES HAVE BEEN
ACCEPTED FOR EXCHANGE PRIOR THERETO. To be effective with respect to the tender
of Old Notes, a notice of withdrawal must (i) be given in writing or by
facsimile transmission and be timely received by the Exchange Agent at its
address set forth on the front page of this Letter of Transmittal before
acceptance by the of the Old Notes relating to such withdrawal, (ii) specify the
name(s) of the person(s) who tendered
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the Old Notes and the principal amount of Old Notes to be withdrawn, (iii) where
Old Notes have been delivered or otherwise identified to the Exchange Agent,
specify the name(s) in which such Old Notes are registered (if different from
the person(s) tendering the Old Notes) and the certificate numbers of the
particular Old Notes to be withdrawn, (iv) if Old Notes have been tendered
pursuant to the procedure for book-entry transfer, specify the name, account
number and Book-Entry Transfer Facility to be credited with the withdrawn Old
Notes, and (v) be signed by the holder of Old Notes in the same manner as the
original signature on this Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Exchange
Agent that the person withdrawing the tender has succeeded to beneficial
ownership of the Old Notes prior to the physical release of Old Notes to be
withdrawn.

Withdrawals of tenders of Old Notes may not be rescinded, and any Old Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer; provided, however, that withdrawn Old Notes may be tendered by
following one of the procedures described in the Prospectus under the caption
"The Exchange Offer--Procedures for Tendering" at any time prior to the
Expiration Date.

The Exchange Agent for the Exchange Offer is:

Harris Trust and Savings Bank

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By Mail, By Hand or Overnight Delivery: By Facsimile:

Harris Trust and Savings Bank (212) 701-7636
c/o Harris Trust Company of New York
77 Water Street, 4th Floor Confirmation and Information:
New York, NY 10005
Attention: Reorganization Department (212) 701-7649

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