CLASSIC COMMUNICATIONS INC, S-1/A, 1999-11-15

CLASSIC COMMUNICATIONS INC
S-1/A, 1999-11-15
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1999

REGISTRATION NO. 333-89295

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT NO. 1 TO FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
CLASSIC COMMUNICATIONS, INC.
(Exact name of Registrant as Specified in Its Charter)

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

<TABLE>
<S> <C> <C>
DELAWARE 4841 74-2630019
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

515 CONGRESS AVENUE, SUITE 2626, AUSTIN, TX 78701
(512) 476-9095
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

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

J. MERRITT BELISLE
CHIEF EXECUTIVE OFFICER
515 CONGRESS AVENUE, SUITE 2626
AUSTIN, TX 78701
(512) 476-9095
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)

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

Copies to:

<TABLE>
<S> <C>
PETER C. KRUPP KIRK A. DAVENPORT
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) LATHAM & WATKINS
333 WEST WACKER DRIVE 885 THIRD AVENUE
CHICAGO, IL 60606 NEW YORK, NEW YORK 10022
(312) 407-0700 (212) 906-1284
</TABLE>

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

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

This preliminary prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated November 15, 1999.

6,250,000 Shares

[CLASSIC COMMUNICATIONS LOGO]

Class A Common Stock
---------------------

This is an initial public offering of shares of Class A common stock of
Classic Communications, Inc. All of the 6,250,000 shares of Class A common stock
are being sold by Classic.

Prior to this offering, there has been no public market for the Class A
common stock. It is currently estimated that the initial public offering price
per share will be between $23.00 and $25.00. Classic has applied to have the
Class A common stock included for quotation on the Nasdaq National Market under
the symbol "CLSC".

See "Risk Factors" beginning on page 14 to read about certain factors you
should consider before buying shares of the Class A common stock.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Initial public offering price............................ $ $
Underwriting discount.................................... $ $
Proceeds, before expenses, to Classic.................... $ $
</TABLE>

To the extent that the underwriters sell more than 6,250,000 shares of
Class A common stock, the underwriters have the option to purchase up to an
additional 937,500 shares from Classic at the initial public offering price less
the underwriting discount.

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

The underwriters expect to deliver the shares in New York, New York on
, 1999.

GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
---------------------

Prospectus dated , 1999.
<PAGE> 3

[Map of the United States marked to indicate
location of cable systems.]
<PAGE> 4

SUMMARY

The following summary is intended to highlight certain information
contained elsewhere in this prospectus. This summary is not intended to be a
complete statement of all material facts of the offering and is qualified in its
entirety by the more detailed information and historical and pro forma financial
information, including the notes relating to that information, appearing
elsewhere in this prospectus. Except as otherwise required by the context, the
information presented in this prospectus concerning Classic and its business
gives effect to (1) the completed acquisition of Buford Group, Inc. by our
subsidiary, Classic Cable, Inc. and the related financing; (2) other
acquisitions completed by either Classic or Buford prior to the date of this
prospectus; (3) the pending acquisition of substantially all of the assets of
Star Cable Associates by a subsidiary of Classic Cable and the related
financing; (4) the partial redemption of Classic Cable's 2008 Subordinated Notes
and the related financing; (5) the reclassification of our common stock into
Class A common stock, Class B common stock and nonvoting common stock; (6) the
conversion of all outstanding shares of our voting common stock into Class B
common stock on a one-for-one basis; and (7) the offering contemplated in this
prospectus. Reference should be made to the "Selected Historical Consolidated
Financial Data -- Classic Communications, Inc." and "Selected Historical
Consolidated Financial Data -- Buford Group, Inc." and "Unaudited Pro Forma
Consolidated Financial Information" for the definition of certain financial
terms appearing throughout this prospectus. As used in this prospectus, the
terms "Classic," "we," "us" and "our" refer to Classic Communications, Inc. and
the term "Classic Cable" refers to our subsidiary Classic Cable, Inc.

OUR BUSINESS

We are a growth oriented cable operator focused on non-metropolitan markets
in the United States. We have experienced growth in subscribers, revenues and
cash flows, primarily through the successful execution and integration of over
20 acquisitions of cable systems primarily clustered in nine contiguous states.
Pro forma for the pending acquisition of Star Cable Associates and assuming
completion of other recently publicly announced transactions by other companies
in the cable television industry, we believe we are the 14th largest cable
operator in the United States. Our systems pass approximately 707,000 homes and
serve approximately 414,000 basic subscribers.

Through the acquisition of clustered non-metropolitan cable systems, and by
upgrading these cable systems, we are building a regional platform for the
delivery of digital cable and high-speed Internet access to the homes and
businesses of our customers. We believe that our strategy combines the
attractive characteristics of the non-metropolitan cable market segment with the
growth opportunity of broadband services and the Internet. The combination of
attractive market characteristics and the successful execution of our
acquisition strategy has enabled us to achieve high growth rates and attractive
EBITDA margins.

OUR STRATEGY

Our business strategy is to:

- FOCUS ON ATTRACTIVE NON-METROPOLITAN MARKETS: We plan to continue to
focus on growing communities in or around county seats, which generally
tend to have more robust household growth, higher income per household
and a stronger business foundation than do other non-metropolitan
markets.

- EXPAND AND IMPROVE CLUSTERS THROUGH SELECTIVE ACQUISITIONS: We plan to
continue to leverage our experience in acquiring and integrating cable
systems by continuing our acquisition growth strategy when attractive
cable systems are available for acquisition at reasonable valuations.
1
<PAGE> 5

- FOCUS ON COMMUNITY RELATIONS AND CUSTOMER SATISFACTION: We plan to
maintain and enhance our relationships with the local communities in
which we operate and utilize our state-of-the-art call centers to
complement our existing service to our customers.

- INCREASE THE REVENUE-GENERATING BANDWIDTH OF OUR CABLE PLANT: We plan to
continue to upgrade our cable plant aggressively and systematically,
utilizing the most cost-effective and appropriate technology.

- IMPLEMENT OUR BROADBAND SERVICES: We plan to continue to offer enhanced
video services and to selectively expand our high-speed Internet access
offerings, a move which we believe will improve our competitiveness and
increase our revenues and cash flows.

RAPIDLY CONSOLIDATING INDUSTRY

Consolidation in the cable industry over the past three years has been
driven by the benefits derived from scale, including operating efficiencies,
increased advertising sales and the ability to deploy new broadband applications
efficiently. This consolidation has accelerated recently with the emergence of
the Internet as a mass medium for disseminating information, entertainment and
commerce. We believe that cable companies are the leaders in the race to become
the high-speed data service providers of choice to the consumer. Recent
investments and acquisitions by AT&T, Microsoft, and Charter Communications have
validated cable's position as a preferred broadband solution.

While this consolidation has taken place primarily among large-scale
metropolitan operators, attention has expanded recently to non-metropolitan
markets. Smaller independent operators understand the value created through
consolidation and are beginning to make themselves available to be merged or
acquired. Additionally, metropolitan focused consolidators are beginning to sell
their non-metropolitan area systems. We believe that these circumstances create
an opportunity for us to continue and accelerate our focused strategy to
consolidate attractive non-metropolitan cable assets.

PROVEN MANAGEMENT TEAM

J. Merritt Belisle, our Chief Executive Officer, and Steven E. Seach, our
President and Chief Financial Officer, founded Classic in 1992 and have
assembled a management team with significant experience operating cable
television systems and providing quality customer service to cable subscribers.
Messrs. Belisle and Seach have 20 years of collective experience in acquiring,
operating, integrating and developing cable television systems and have worked
together for over ten years.

As a result of the Buford acquisition, our management team has been further
enhanced by the addition of several key members of Buford's management team,
including Ron Martin, who became our Executive Vice President of Operations, and
Kay Monigold, who became our Executive Vice President of Administration. Mr.
Martin and Ms. Monigold have been in the cable industry for over 25 years and 18
years, respectively.

Upon completion of this offering, members of our management team will
collectively own or have options to acquire approximately 9% of our Class A
common stock and approximately 12% of our Class B common stock. Up to an
additional 2,000,000 shares of our Class A common stock have been set aside for
issuance to management pursuant to awards under our 1999 Omnibus Stock Incentive
Plan.

2
<PAGE> 6

THE BUFORD ACQUISITION

On July 28, 1999, our subsidiary Classic Cable acquired Buford Group, Inc.,
which operates cable television systems in Arkansas, Louisiana, Missouri and
Texas, for approximately $300 million in cash. The Buford cable systems served
approximately 170,000 basic subscribers and, we believe, represented an
excellent geographic and strategic fit with our other cable systems. In
addition, we believe that the Buford acquisition provided other benefits,
including an opportunity to reduce programming costs, consolidate headends and
enhance customer service. The Buford acquisition was financed through a $350.0
million credit facility and the issuance of $150.0 million of Classic Cable's
senior subordinated notes due 2009. See "Description of Certain Indebtedness."
In addition, we contributed approximately $95.7 million in cash to Classic Cable
pursuant to the Brera Classic equity investment. See "--The Brera Classic Equity
Investment."

THE BRERA CLASSIC EQUITY INVESTMENT

In connection with the Buford acquisition, we received $100.0 million from
Brera Classic, LLC, $95.7 million of which we contributed in cash to Classic
Cable, $3.3 million of which was paid to Brera Classic pursuant to management
and advisory fee agreements, and $750,000 of which was paid to Brera Classic to
reimburse Brera Classic for certain of its fees and expenses incurred in
connection with the Brera Classic equity investment. This equity investment was
financed through the sale of our common stock to Brera Classic. Brera Classic is
an indirect subsidiary of Brera Capital Partners Limited Partnership. Brera
Capital Partners is a $650 million private equity investment fund based in New
York that invests in a very limited number of companies in a few selected
industries, including telecommunications and media. Upon completion of this
offering, Brera Classic will own approximately 40.6% of the outstanding capital
stock of Classic, representing an approximate 73.5% voting interest (38.3% of
the outstanding capital stock of Classic, representing an approximate 72.7%
voting interest if the underwriters exercise their overallotment option in
full), subject to dilution in connection with the issuance of options to certain
members of our management team. Certain investors hold an approximate 20%
nonvoting equity interest in Brera Classic, including a 9.0% nonvoting equity
interest held by affiliates of Goldman Sachs, one of our underwriters. See
"Certain Relationships and Related Transactions," "Principal Stockholders" and
"Underwriting."

THE STAR ACQUISITION

On October 14, 1999, a subsidiary of Classic Cable entered into an
agreement to purchase substantially all the assets of Star Cable Associates,
which operates cable television systems in Texas, Louisiana and Ohio, for an
aggregate purchase price of approximately $110 million in cash and 555,555
shares of Class A common stock. The Star cable systems serve approximately
57,000 subscribers and represent a continuation of our clustering strategy. In
addition, we believe that the Star acquisition provides further benefits in the
form of headend consolidation opportunities. We expect the Star acquisition to
be consummated in the first quarter of 2000 and to be financed with part of the
proceeds from this offering and additional borrowings under our bank credit
facilities. This offering is not conditioned upon the closing of the Star
acquisition and the Star acquisition is not conditioned upon the closing of this
offering.

3
<PAGE> 7

THE OFFERING

<TABLE>
<S> <C>
Total Class A common stock offered(1)....................... 6,250,000
===========
Shares of common stock to be outstanding after the offering:
Class A common stock...................................... 6,250,000
Class B common stock(2)................................... 8,211,342
Nonvoting common stock(3)................................. 1,528,261
-----------
Total(1).......................................... 15,989,603
===========
</TABLE>

(1) If the underwriters exercise their overallotment option in full, the total
number of shares of Class A common stock offered and the total number of
shares of Class A common stock outstanding after this offering will each be
7,187,500.

(2) Shares of Class B common stock are convertible into shares of Class A common
stock at any time on a one-for-one basis. If, immediately following this
offering, all of the outstanding Class B common stock was converted into
Class A common stock, it would represent approximately 56.8% of our Class A
common stock (53.3% of our Class A common stock if the underwriters exercise
their overallotment option in full). See "Description of Capital Stock."

(3) Shares of nonvoting common stock are convertible into shares of Class A
common stock at any time on a one-for-one basis. If, immediately following
this offering, all of the outstanding nonvoting common stock was converted
into Class A common stock, it would represent approximately 19.6% of our
Class A common stock (17.5% of our Class A common stock if the underwriters
exercise their overallotment option in full).

Use of Proceeds............ We will use the proceeds from this offering to
repay a portion of our indebtedness and finance
part of the Star acquisition. See "Use of
Proceeds."

Voting Rights.............. Each share of Class A common stock entitles the
holder to one vote. Each share of Class B common
stock entitles the holder to ten votes. Each share
of Class B common stock will automatically convert
into a share of Class A common stock upon transfer
to anyone other than a "Permitted Transferee." See
"Description of Capital Stock."

Control by Brera........... Brera Classic will own approximately 79.0% of the
outstanding shares of Classic's Class B common
stock following the offering. Through its ownership
of our Class B common stock, Brera Classic will
control approximately 73.5% of the total voting
power of all of our capital stock after the
offering (72.7% of the total voting power if the
underwriters exercise their overallotment option in
full). As a result of this ownership and a
stockholders' agreement with several other
stockholders of Classic, Brera Classic will be able
to elect a majority of the members of our board of
directors and will have the power to amend
provisions in our certificate of incorporation
relating to activities in which we may engage. See
"Risk Factors -- Brera Classic has the ability to
control matters on which Classic's stockholders may
vote," "Certain Relationships and Related
Transactions -- 1999 Stockholders' Agreement" and
"Description of Capital Stock."

Proposed Nasdaq National
Market Symbol............ "CLSC."

4
<PAGE> 8

RISK FACTORS

You should consider carefully the information set forth under the caption
"Risk Factors" beginning on page 14 and all the other information set forth in
this prospectus before deciding whether to invest in our Class A common stock.
------------------------

Our principal executive offices are located at 515 Congress Avenue, Suite
2626, Austin, Texas 78701. Our telephone number is (512) 476-9095, and our
Internet Web site is www.classic-cable.com. The information on our Web site is
not a part of this prospectus.

5
<PAGE> 9

SUMMARY PRO FORMA FINANCIAL AND OPERATING DATA

The following table presents summary pro forma financial and operating data
about us. The unaudited pro forma data give effect to (1) the completed
acquisition of Buford Group, Inc. by our subsidiary, Classic Cable, Inc. and the
related financing, (2) other acquisitions completed by either Classic or Buford
prior to the date of this prospectus, (3) the pending acquisition of
substantially all of the assets of Star by a subsidiary of Classic Cable and the
related financing, (4) the partial redemption of Classic Cable's 2008 senior
subordinated notes and the related financing, (5) the reclassification of our
common stock into Class A common stock, Class B common stock and nonvoting
common stock, (6) the conversion of all outstanding shares of our voting common
stock into Class B common stock on a one-for-one basis and (7) the offering
contemplated in this prospectus as if all of these transactions had been
consummated on January 1, 1998, in the case of the income statement and other
financial data, and on September 30, 1999, with respect to the balance sheet
data. The pro forma data have been derived from the Unaudited Pro Forma
Consolidated Financial Information of Classic, which is included elsewhere in
this prospectus. The unaudited pro forma data do not purport to be indicative of
the results that would have been obtained had such transactions been completed
as of the assumed dates and for the periods presented nor are they necessarily
indicative of results that may be obtained in the future. You should read this
information together with "Selected Historical Consolidated Financial
Data -- Classic Communications, Inc.," "Selected Historical Consolidated
Financial Data -- Buford Group, Inc.," "Unaudited Pro Forma Consolidated
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Classic's, Buford's and Star's
consolidated financial statements and the notes relating to those statements
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE AND
SUBSCRIBER DATA)
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues................................................... $ 168,344 $ 135,925
Costs and expenses......................................... 107,233 88,240
Depreciation and amortization.............................. 81,463 64,138
--------- ---------
Operating loss............................................. (20,352) (16,453)
Interest expense........................................... (45,282) (34,344)
Other income (expense)..................................... (730) (211)
--------- ---------
Loss before income tax benefit............................. (66,364) (51,008)
Income tax benefit......................................... 2,156 210
--------- ---------
Net loss................................................... $ (64,208) $ (50,798)
========= =========
BALANCE SHEET DATA:
Total cash and cash equivalents............................ -- $ 7,497
Total assets............................................... -- 730,491
Total debt................................................. -- 504,939
Total liabilities.......................................... -- 584,438
Total stockholders' equity................................. -- 146,053
</TABLE>

6
<PAGE> 10

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE AND
SUBSCRIBER DATA)
<S> <C> <C>
OTHER FINANCIAL DATA:
Cash flows from operating activities....................... $ 36,321 $ 25,264
Cash flows from investing activities....................... (503,557) (333,913)
Cash flows from financing activities....................... 462,058 309,263
Adjusted EBITDA(1)......................................... 70,107(2) 51,447(2)
Adjusted EBITDA margin(3).................................. 41.6% 37.9%
Basic and diluted loss per share........................... $ (6.82) $ (4.44)
Capital expenditures....................................... 37,840 28,457
Deficiency of earnings to fixed charges(4)................. (66,364) (51,008)
OPERATING DATA:
Homes passed(5)............................................ 693,753 706,724
Basic subscribers(6)....................................... 409,606 414,379
Basic penetration(7)....................................... 59.0% 58.6%
Digital subscribers........................................ 1,454 3,843
Premium subscribers(8)..................................... 219,391 221,964
Premium penetration(9)..................................... 53.6% 53.6%
Average monthly basic revenue per basic subscriber(10)..... $ 27.82 $ 29.74
Average monthly total revenue per basic subscriber(11)..... $ 33.21 $ 36.33
</TABLE>

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

(1) Adjusted EBITDA is defined as operating income (loss) plus depreciation and
amortization plus non-cash operating charges. Non-cash operating charges
consist of Classic's compensation on restricted stock of $1,108,000 and
$1,920,000 as well as Buford's compensation relating to stock appreciation
rights and equity participation agreements of $7,888,000 and $1,842,000 for
the periods ended December 31, 1998 and September 30, 1999, respectively.
Adjusted EBITDA is presented because management believes it is a widely
accepted financial indicator of a company's ability to incur and service
debt. We believe that Adjusted EBITDA is not intended to be a performance
measure that should be regarded as an alternative to, or more meaningful
than, either operating income or net income as an indicator of operating
performance or to the statement of cash flows as a measure of liquidity, is
not intended to represent funds available for dividends, reinvestment or
other discretionary uses, and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. Adjusted EBITDA measures
presented may not be comparable to similarly titled measures presented by
other companies.

(2) Adjusted EBITDA for 1998 was reduced by $775,000 of fees paid to certain
members of the executive management team in connection with completed
acquisition and financing transactions. Without these fees, Adjusted EBITDA
would have been $70,882,000 and the Adjusted EBITDA margin would have been
42.1%. Adjusted EBITDA for the nine months ended September 30, 1999 was
reduced by $5,462,000 of fees paid to certain members of the management
team in connection with completed acquisitions and financing transactions,
$935,000 of non-recurring costs of Buford Group, Inc. incurred in
connection with the acquisition's working capital adjustment and $425,000
of costs associated with Star's Deferred Equity Bonus Plan payable upon the
sale of cable systems. Without these fees, Adjusted EBITDA would have been
$58,269,000 and the Adjusted EBITDA margin would have been 42.9%. The
following table details the Adjusted EBITDA amount of $58,269,000 by
Classic's systems prior to the Buford acquisition, the systems acquired
from Buford and the systems to be acquired from Star:

<TABLE>
<CAPTION>
CLASSIC BUFORD STAR TOTAL
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Adjusted EBITDA................ $25,740,000 $23,766,000 $8,763,000 $58,269,000
</TABLE>

(3) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of
revenues. This measurement is used by management, and is commonly used in
the cable television industry, to analyze and compare cable television
companies on the basis of operating performance. We believe that Adjusted
EBITDA margin is not intended to be a performance measure that should be
regarded as an alternative either to operating income or net income as
prepared in accordance with generally accepted accounting principles.
Adjusted EBITDA measures presented may not be comparable to similarly
titled measures presented by other companies.

(4) Deficiency of earnings consists of loss before income tax benefit and
extraordinary loss. Fixed charges consist of interest expense and the
interest portion of rental expense.

7
<PAGE> 11

(5) Homes passed refers to estimates by us of the approximate number of
dwelling units in a particular community that can be connected to our cable
television distribution system without any further extension of principal
transmission lines.

(6) A home with one or more television sets connected to a cable system is
counted as one basic subscriber. Bulk accounts are included on an
equivalent basic unit basis in which the total monthly bill for the account
is divided by the basic monthly charge for a single outlet in the area.

(7) Penetration is calculated as the number of basic subscribers as a
percentage of homes passed.

(8) For the Classic and Star systems, premium subscribers are the number of
subscribers who pay a monthly fee for premium channels. Multiplexing of
premium channels is counted as one subscriber. For the Buford systems,
multiplexing of premium channels is counted as one subscriber for each
premium channel received.

(9) Premium penetration is calculated as the number of premium subscribers as a
percentage of basic subscribers.

(10) Average monthly basic revenue per basic subscriber equals revenues from
basic subscriptions of cable systems during the respective period divided
by the months in the period and divided by the weighted average number of
our basic subscribers for the respective period.

(11) Average monthly total revenue per basic subscriber equals total revenues of
cable systems during the respective period divided by the months in the
period and divided by the weighted average number of our basic subscribers
for such respective period.

8
<PAGE> 12

SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA --
CLASSIC COMMUNICATIONS, INC.

The following table presents summary historical financial and operating
data about Classic. You should read this information together with "Selected
Historical Consolidated Financial Data -- Classic Communications, Inc.,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Classic's consolidated financial statements and the notes
relating to those statements included elsewhere in this prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- ---------------------
1996 1997 1998 1998 1999
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AND SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................. $ 59,821 $ 60,995 $ 69,802 $ 50,404 $ 72,391
Costs and expenses....................... 33,553 36,555 42,070 30,435 48,677
Depreciation and amortization............ 27,510 27,832 30,531 21,682 32,305
-------- -------- -------- -------- ---------
Operating loss........................... (1,242) (3,392) (2,799) (1,713) (8,591)
Interest expense......................... (20,633) (21,299) (24,442) (17,134) (27,851)
Gain on sale of cable systems............ 4,901 3,644 -- -- --
Write-off of abandoned telephone
operations............................. (2,994) (500) (220) -- --
Other income (expense)................... -- 71 192 121 110
-------- -------- -------- -------- ---------
Loss before income tax benefit and
extraordinary loss..................... (19,968) (21,476) (27,269) (18,726) (36,332)
Income tax benefit....................... 6,802 7,347 1,930 1,719 --
Extraordinary loss....................... -- -- (5,524) (5,524) (6,632)
-------- -------- -------- -------- ---------
Net loss................................. $(13,166) $(14,129) $(30,863) $(22,531) $ (42,964)
======== ======== ======== ======== =========
BALANCE SHEET DATA:
Total cash and cash equivalents.......... $ 653 $ 616 $ 2,779 -- $ 7,497
Total assets............................. 245,922 220,162 254,604 -- 607,476
Total debt............................... 197,504 191,990 282,842 -- 522,842
Total liabilities........................ 219,232 206,643 301,392 -- 599,604
Total redeemable preferred stock......... 22,726 26,705 -- -- --
Total stockholders' equity (deficit)..... 3,965 (13,186) (46,788) -- 7,872
OTHER FINANCIAL DATA:
Cash flows from operating activities..... $ 7,933 $ 7,892 $ 14,262 $ 7,884 $ 3,793
Cash flows from investing activities..... 3,387 (1,341) (57,245) (49,405) (308,338)
Cash flows from financing activities..... (12,155) (6,588) 45,146 45,733 309,263
Adjusted EBITDA(1)....................... 27,326 25,498(2) 28,840(3) 20,745(3) 25,635(4)
Adjusted EBITDA margin(5)................ 45.7% 41.8% 41.3% 41.2% 35.4%
Basic and diluted loss per common share
before extraordinary item.............. $ (7.30) $ (7.53) $ (11.43) $ (8.37) $ (7.85)
Basic and diluted loss per common share.. (7.30) (7.53) (13.55) (10.53) (9.28)
Capital expenditures..................... 8,212 10,135 13,759 7,658 15,971
Deficiency of earnings to fixed
charges(6)............................. (19,968) (21,476) (27,269) (18,726) (36,332)
</TABLE>

9
<PAGE> 13

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

(1) Adjusted EBITDA is defined as operating loss plus depreciation and
amortization plus non-cash operating charges. Non-cash operating charges
for the years ended December 31, 1996, 1997 and 1998 and the nine month
periods ended September 30, 1998 and 1999 related to compensation on
restricted stock and were $1,058,000, $1,058,000, $1,108,000, $776,000 and
$1,921,000, respectively. Adjusted EBITDA is presented because we believe
it is a widely accepted financial indicator of a company's ability to incur
and service debt. We believe that Adjusted EBITDA is not intended to be a
performance measure that should be regarded as an alternative to, or more
meaningful than, either operating income or net income as an indicator of
operating performance or to the statement of cash flows as a measure of
liquidity, is not intended to represent funds available for dividends,
reinvestment or other discretionary uses, and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. Adjusted EBITDA
measures presented may not be comparable to similarly titled measures
presented by other companies.

(2) Adjusted EBITDA for 1997 was reduced by legal, consultant and other
one-time non-recurring fees totaling $1,411,000 incurred in connection with
the settlement of certain claims that arose in conjunction with divorce
proceedings of one of our officers as well as $400,000 in fees paid to
certain members of our management team in connection with completed
acquisition and divestiture transactions. Without these fees, Adjusted
EBITDA would have been $27,309,000.

(3) Adjusted EBITDA for 1998 was reduced by $775,000 of fees paid to certain
members of our executive management team in connection with completed
acquisition and financing transactions. Without these fees, Adjusted EBITDA
would have been $29,615,000 for the year ended December 31, 1998 and
$21,520,000 for the nine months ended September 30, 1998.

(4) Adjusted EBITDA for 1999 was reduced by $5,462,000 in fees paid to certain
members of our management team in connection with the July 1999 Buford
Group, Inc. acquisition and related financing. Without these fees, Adjusted
EBITDA would have been $31,097,000.

(5) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of
revenues. This measurement is used by us, and is commonly used in the cable
television industry, to analyze and compare cable television companies on
the basis of operating performance. We believe that Adjusted EBITDA margin
is not intended to be a performance measure that should be regarded as an
alternative either to operating income or net income as prepared in
accordance with generally accepted accounting principles. Adjusted EBITDA
measures presented may not be comparable to similarly titled measures
presented by other companies.

(6) Deficiency of earnings consists of loss before income tax benefit and
extraordinary loss. Fixed charges consist of interest expense and the
interest portion of rental expense.

(7) Homes passed refers to estimates by us of the approximate number of
dwelling units in a particular community that can be connected to our cable
television distribution system without any further extension of principal
transmission lines.

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<PAGE> 14

(8) A home with one or more television sets connected to a cable system is
counted as one basic subscriber. Bulk accounts are included on an
equivalent basic unit basis in which the total monthly bill for the account
is divided by the basic monthly charge for a single outlet in the area. End
of period basic and premium subscribers are net of system sales that
occurred during 1996 and 1997.

(9) End of period subscribers reflect asset sales that were consummated during
the third quarter of 1996 and the second quarter of 1997.

(10) Penetration is calculated as the number of basic subscribers as a
percentage of homes passed.

(11) Premium subscribers are the number of subscribers who pay a monthly fee for
premium channels. Multiplexing of premium channels is counted as one
subscriber.

(12) Premium penetration is calculated as the number of premium subscribers as a
percentage of basic subscribers.

(13) Average monthly basic revenue per basic subscriber equals revenues from
basic subscriptions of cable systems during the respective period divided
by the months in the period and divided by the weighted average number of
our basic subscribers for the respective period.

(14) Average monthly total revenue per basic subscriber equals total revenues of
cable systems during the respective period divided by the months in the
period and divided by the weighted average number of our basic subscribers
for the respective period.

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<PAGE> 15

SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA -- BUFORD GROUP, INC.

The following table presents summary historical financial and operating
data about Buford. You should read this information together with "Selected
Historical Consolidated Financial Data -- Buford Group, Inc.," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Buford's consolidated financial statements and the notes relating to those
statements included elsewhere in this prospectus.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1996 1997 1998 1998 1999
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues...................................... $ 49,561 $ 58,136 $ 70,475 $ 32,943 $ 38,398
Costs and expenses............................ 32,932 40,858 51,168 24,547 22,433
Depreciation and amortization................. 17,175 17,753 21,399 10,137 12,105
-------- -------- -------- -------- --------
Operating income (loss)....................... (546) (475) (2,092) (1,741) 3,860
Interest expense.............................. (5,345) (5,787) (7,919) (3,681) (4,095)
Gain on sale of cable systems................. 5,418 -- -- -- --
Other income (expense)........................ 344 859 (221) 73 (78)
-------- -------- -------- -------- --------
Loss before income taxes and cumulative effect
of change in accounting principle........... (129) (5,403) (10,232) (5,349) (313)
Income tax benefit (expense).................. (94) 315 226 (25) 210
Cumulative effect of change in accounting
principle, net of taxes..................... -- -- -- -- (207)
-------- -------- -------- -------- --------
Net loss...................................... $ (223) $ (5,088) $(10,006) $ (5,374) $ (310)
======== ======== ======== ======== ========
BALANCE SHEET DATA:
Total assets.................................. $117,676 $143,932 $175,953 -- $166,602
Total debt.................................... 60,053 85,000 118,000 -- 112,000
Total liabilities............................. 69,182 97,008 131,147 -- 122,881
Total stockholders' equity.................... 48,493 46,924 44,806 -- 43,721
OTHER FINANCIAL DATA:
Cash flows from operating activities.......... $ 13,628 $ 16,872 $ 20,334 $ 8,470 $ 8,527
Cash flows from investing activities.......... (20,289) (39,683) (53,151) (40,969) (7,540)
Cash flows from financing activities.......... (10,927) 24,947 32,830 30,000 (6,000)
Adjusted EBITDA(1)............................ 18,087 20,797 27,195 11,946 15,190
Adjusted EBITDA margin(2)..................... 36.5% 35.8% 38.6% 36.3% 39.6%
Capital expenditures.......................... $ 15,593 $ 22,042 $ 20,469 $ 10,980 $ 7,540
Deficiency of earnings to cover fixed
charges(3).................................. (129) (5,403) (10,232) (5,349) (313)
OPERATING DATA (END OF PERIOD, EXCEPT
AVERAGE):
Homes passed(4)............................... 234,994 270,430 315,629 307,974 315,629
Basic subscribers(5).......................... 131,148 143,829 172,557 172,923 173,799
Basic penetration(6).......................... 55.8% 53.2% 54.7% 56.2% 55.1%
Digital subscribers........................... -- 65 1,254 604 1,580
Premium subscribers(7)........................ 92,247 99,644 122,404 122,668 122,268
Premium penetration(8)........................ 70.3% 69.3% 70.9% 70.9% 70.4%
Average monthly basic revenue per basic
subscriber(9)............................... $ 24.80 $ 26.31 $ 28.17 $ 28.27 $ 30.94
Average monthly total revenue per basic
subscriber(10).............................. $ 32.05 $ 33.68 $ 35.64 $ 33.52 $ 37.84
</TABLE>

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<PAGE> 16

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

(1) Adjusted EBITDA is defined as operating income (loss) plus depreciation and
amortization plus non-cash operating charges. Non-cash operating charges
for the years ended December 31, 1996, 1997 and 1998 and the six month
periods ended June 30, 1998 and 1999 related to employee stock compensation
were $1,458,000, $3,519,000, $7,888,000, $3,550,000 and a credit of
($775,000), respectively. Adjusted EBITDA is presented because we believe
it is a widely accepted financial indicator of a company's ability to incur
and service debt. We believe that Adjusted EBITDA is not intended to be a
performance measure that should be regarded as an alternative to, or more
meaningful than, either operating income or net income as an indicator of
operating performance or to cash provided by operations as a measure of
liquidity, is not intended to represent funds available for dividends,
reinvestment or other discretionary uses, and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. Adjusted EBITDA
measures presented may not be comparable to similarly titled measures
presented by other companies.

(2) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of
revenues. This measurement is used by us, and is commonly used in the cable
television industry, to analyze and compare cable television companies on
the basis of operating performance. We believe that Adjusted EBITDA margin
is not intended to be a performance measure that should be regarded as an
alternative either to operating income or net income as prepared in
accordance with generally accepted accounting principles. Adjusted EBITDA
measures presented may not be comparable to similarly titled measures
presented by other companies.

(3) Deficiency of earnings consists of loss before income tax benefit (expense)
and cumulative effect of change in accounting principle. Fixed charges
consist of interest expense and the interest portion of rental expense.

(4) Homes passed refers to estimates by us of the approximate number of
dwelling units in a particular community that can be connected to our cable
television distribution system without any further extension of principal
transmission lines.

(5) A home with one or more television sets connected to a cable system is
counted as one basic subscriber. Bulk accounts are included on an
equivalent basic unit basis in which the total monthly bill for the account
is divided by the basic monthly charge for a single outlet in the area.

(6) Penetration is calculated as the number of basic subscribers as a
percentage of homes passed.

(7) Each premium channel received is counted as a separate premium subscriber.

(8) Premium penetration is calculated as the number of premium subscribers as a
percentage of basic subscribers.

(9) Average monthly basic revenue per basic subscriber equals revenues from
basic subscriptions of cable systems during the respective period divided
by the months in the period and divided by the weighted average number of
Buford's basic subscribers for the respective period.

(10) Average monthly total revenue per basic subscriber equals total revenues of
cable systems during the respective period divided by the months in the
period and divided by the weighted average number of Buford's basic
subscribers for the respective period.

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<PAGE> 17

RISK FACTORS

Before you invest in our Class A common stock, you should be aware that
there are various risks, including those described below. You should carefully
consider these risk factors, together with all of the other information included
in this prospectus.

WE ARE A HOLDING COMPANY AND ARE DEPENDENT ON THE OPERATIONS AND FUNDS OF OUR
SUBSIDIARIES.

We are a holding company and are dependent on the cash flow generated by
our direct and indirect operating subsidiaries. We must rely on dividends or
other intercompany transfers from our operating subsidiaries to generate the
funds necessary to meet debt service and other obligations. The ability of our
subsidiaries to pay dividends or make other payments will be subject to
applicable state laws and contractual restrictions. The debt instruments of
Classic Cable severely restrict, among other things, the payment of dividends
and the making of loans by Classic Cable or its subsidiaries to us.

WE HAVE SIGNIFICANT DEBT WHICH MAY LIMIT FUNDS AVAILABLE TO OPERATE AND COMPETE
EFFECTIVELY.

We, along with our subsidiary Classic Cable, have a significant amount of
debt outstanding. As of September 30, 1999, pro forma for the Star acquisition,
we would have owed approximately $504.9 million under our various debt
agreements. The maximum amount of senior debt that we would have been able to
borrow on that date was $75.0 million, subject to limitations contained in
Classic Cable's credit facility. Under the credit facility, Classic Cable will
be required to make minimum principal payments totaling approximately $2.9
million beginning in 2001, increasing to $19.8 million by 2007, with all unpaid
amounts due by 2008. You should be aware that this significant amount of debt
could have important consequences, including the following:

- We may be unable to obtain additional financing for working capital,
capital expenditures, acquisitions and general corporate purposes;

- A significant portion of Classic Cable's cash flow from operations must
be dedicated to the repayment of indebtedness, which will reduce the
amount of cash it has available for other purposes;

- We may be disadvantaged as compared to our competitors as a result of the
significant amount of debt we now owe; and

- Our ability to adjust to changing market conditions and our ability to
withstand competition may be hampered by the amount of debt we now owe.
It may also make us more vulnerable in a market downturn.

Our earnings on a pro forma basis were not sufficient to cover our fixed
charges by $66.4 million for the year ended December 31, 1998 and by $51.0
million for the nine months ended September 30, 1999. However, you should know
that these amounts reflect non-cash charges for depreciation, amortization and
compensation totaling approximately $90.5 million for the year ended December
31, 1998 and $67.9 million for the nine months ended September 30, 1999.

DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES WILL BE ABLE TO
INCUR SUBSTANTIALLY MORE DEBT. THIS COULD FURTHER EXACERBATE THE RISKS
ASSOCIATED WITH OUR SUBSTANTIAL LEVERAGE.

We and our subsidiaries will be able to incur substantial additional
indebtedness in the future. The terms of the indenture do not fully prohibit us
or our subsidiaries from doing so. Classic Cable's credit facility permits
additional borrowing of up to $75.0 million. If new debt is added to our and our
subsidiaries' current debt levels, the related risks that we and they now face
could intensify. See "Description of Certain Indebtedness."

14
<PAGE> 18

WE MAY NOT HAVE ENOUGH CASH TO SERVICE OUR INDEBTEDNESS AND TO FUND OUR CAPITAL
EXPENDITURES AND ACQUISITIONS.

We intend to upgrade a significant portion of our cable systems over the
coming years and make other capital investments. Over the next four years, we
plan to spend approximately $200 million to maintain, expand and upgrade the
systems we own and the systems we have agreed to acquire from Star. We have
never managed a capital expenditure program of this size and the cost of our
plans could increase if we fail to effectively execute our plan. Our ability to
make payments on and to refinance our indebtedness and to fund planned capital
expenditures and acquisitions will depend on Classic Cable's ability to generate
cash in the future. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond our control.

We cannot assure you that Classic Cable's business will generate sufficient
cash flow from operations and that currently anticipated cost savings and
operating improvements will be realized on schedule in an amount sufficient to
enable us to pay our indebtedness or to fund our other liquidity needs. We may
need to refinance all or a portion of our indebtedness, on or before maturity.
We cannot assure you that we will be able to refinance any of our indebtedness,
including Classic Cable's credit facility, on commercially reasonable terms or
at all.

THE STAR ACQUISITION MAY NOT BE CONSUMMATED AND IF NOT CONSUMMATED, OUR
MANAGEMENT WILL HAVE BROAD DISCRETION WITH RESPECT TO THE USE OF THE PROCEEDS
ALLOCATED TO THE STAR ACQUISITION.

The consummation of the Star acquisition is subject to a number of
conditions, including governmental approval and the transfer of franchise
licenses and other agreements to a subsidiary of Classic Cable by Star. If these
conditions are not materially met, the Star acquisition may not be consummated.
The consummation of the Star acquisition may fail to conform to the assumptions
we used in preparing the Unaudited Pro Forma Consolidated Financial Information.
Therefore, in analyzing the Unaudited Pro Forma Consolidated Financial
Information and other information, you should consider that the Star acquisition
may not be consummated on the terms described in this prospectus or at all. We
cannot assure you that the Star acquisition will be consummated on the terms
described in this prospectus, or at all. This offering is not contingent or in
any way dependent on the consummation of the Star acquisition. If the Star
acquisition is not consummated, a significant portion of the net proceeds from
the offering will not be designated for a specific use. In these circumstances,
our management will have broad discretion with respect to the portion of the
proceeds from this offering allocated to the Star acquisition and you will not
have the opportunity, as part of your investment decision, to assess how the
proceeds are being used.

WE MAY NOT BE ABLE TO CONTINUE OUR ACQUISITION STRATEGY.

A significant element of our growth strategy is to expand 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
regional cluster. We cannot assure you that we will be able to identify and
acquire additional cable systems or that we will be able to finance significant
acquisitions in the future. See "Business -- Our Strategy."

IF THE OPERATIONS OF THE COMPANIES CLASSIC CABLE ACQUIRES ARE NOT SUCCESSFULLY
INTEGRATED WITH ITS OPERATIONS, OUR FINANCIAL RESULTS MAY BE ADVERSELY AFFECTED.

The benefits we anticipate in the combination of Classic Cable, Buford and
Star may not be realized if combining Classic Cable's business, Buford's
business and Star's business cannot be accomplished in an efficient and
effective manner. This combination will require, among other things, the
integration of management philosophies and personnel, arrangements with third
party vendors, standardization of training programs, realization of operating
efficiencies and effective

15
<PAGE> 19

coordination of sales and marketing and financial reporting efforts.
Acquisitions in general pose a number of special risks for us, including adverse
short-term effects on our reported operating results, diversion of management's
attention, and unanticipated problems or legal liabilities. Future acquisitions
and the integration of other companies' operations into ours may not be
successful or accomplished efficiently. If we fail to integrate Buford's and
Star's operations successfully, Classic Cable's operations and our financial
results could be affected, both materially and adversely.

IF WE CANNOT ADEQUATELY MANAGE OUR INCREASED SIZE RESULTING FROM CLASSIC CABLE'S
ACQUISITION OF BUFORD AND STAR, ITS FUTURE OPERATIONS MAY BE ADVERSELY AFFECTED.

Classic Cable's operations approximately doubled with the purchase of
Buford. The Star acquisition will result in the addition of 37 systems to
Classic Cable's operations. Our future operations depend largely upon our
ability to manage this sizeable and growing business successfully. In addition,
Classic Cable's management team now manages a larger number of cable operations
than it has previously operated. If we fail to manage the size and the growth of
Classic Cable's business or our expansion plans, a material adverse effect could
result.

WE EXPECT TO CONTINUE TO INCUR NET LOSSES.

We had a pro forma consolidated net loss of $64.2 million for the year
ended December 31, 1998 and a pro forma net loss of $50.8 million for the nine
months ended September 30, 1999. We expect to continue to incur net losses for
the foreseeable future. These losses reflect significant depreciation and
amortization charges and interest expense on debt we incurred. We cannot assure
you that we will become profitable in the foreseeable future, if ever. You
should also be aware that there are restrictions and limitations on our ability
to utilize our net operating losses for federal income tax purposes in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Results of Operations -- Classic Communications."

OUR DEBT AGREEMENTS MAY SIGNIFICANTLY LIMIT OR PROHIBIT US FROM ENGAGING IN
CERTAIN TRANSACTIONS.

Our indentures and Classic Cable's credit facility impose significant
operating and financial restrictions on us and our subsidiaries.

The loan documents Classic Cable signed to borrow money to acquire Buford
impose significant restrictive covenants on Classic Cable and require Classic
Cable to maintain specified financial ratios and satisfy certain financial
tests. Classic Cable's ability to meet these financial ratios and tests may be
affected by events beyond its control and, as a result, we cannot assure you
that Classic Cable will be able to meet such tests. In addition, the
restrictions contained in Classic Cable's credit facility could limit its
ability to obtain future financing, make needed capital expenditures, withstand
a future downturn in its business or in the economy or otherwise conduct
necessary corporate activities. Classic Cable's failure to comply with the
restrictions in its indentures and its credit facility could lead to a default
under the terms of those documents. In the event of such a default, the lenders
could declare all amounts borrowed and all amounts due under other instruments
that contain certain provisions for cross-acceleration or cross-default due and
payable. In addition, the lenders could terminate their commitments to lend to
Classic Cable in the future. If that occurs, we cannot assure you that we would
be able to meet debt service and other obligations or that we would be able to
find additional alternative financing. Even if we could obtain additional
alternative financing, we cannot assure you that it would be on terms that are
favorable or acceptable to us.

You should also be aware that the existing indebtedness under Classic
Cable's credit facility is secured by substantially all of Classic Cable's and
its subsidiaries' assets. Should a default or

16
<PAGE> 20

acceleration of this indebtedness occur, the holders of this indebtedness could
sell the assets to satisfy all or a part of what is owed. See "Description of
Certain Indebtedness."

BRERA CLASSIC HAS THE ABILITY TO CONTROL MATTERS ON WHICH CLASSIC'S STOCKHOLDERS
MAY VOTE.

We have two classes of voting common stock -- Class A common stock, which
carries one vote per share, and Class B common stock which carries ten votes per
share. Upon completion of this offering, holders of Class B common stock will
control approximately 92.9% of the voting power of our outstanding common stock
(92.0% of the voting power of our common stock if the underwriters exercise
their overallotment option in full). Following the offering, Brera Classic will
own approximately 79.0% of our Class B common stock. As a result, Brera Classic
will control us and have the ability to elect the majority of our directors. The
board, in turn, may appoint new senior management and decide which matters will
be submitted to our stockholders for approval. These actions include adopting
amendments to our certificate of incorporation and approving mergers or sales of
substantially all of our assets. The interests of Brera Classic and its
respective affiliates may conflict with the interests of the holders of Class A
common stock. In addition, upon the completion of this offering, 94.6% of the
holders of our Class B common stock and warrants to purchase Class B common
stock will be subject to a stockholders' agreement. The parties to the
stockholders' agreement have agreed to vote their shares of Class B common stock
in favor of the election to our board of (1) four nominees chosen by Brera
Classic, (2) our chief executive officer and (3) two nominees chosen by the
other parties to the stockholders' agreement, one of whom must be Steven Seach
for as long as he is employed by us. We expect that the agreement will be
amended so that the parties will be obligated to vote their shares of Class B
common stock in favor of the election to our board of up to (1) six nominees
chosen by Brera Classic, (2) our chief executive officer, (3) two nominees
chosen by the other parties to the stockholders' agreement, one of whom must be
Steven Seach for as long as he is employed by us and (4) two nominees who are
independent directors (as defined by the rules of the Nasdaq National Market)
chosen by a majority vote of the board of directors. These voting arrangements
will terminate when these stockholders hold less than 30% of all of our common
stock. See "Certain Relationships and Related Transactions -- 1999 Stockholders'
Agreement."

CLASSIC'S ORGANIZATIONAL DOCUMENTS MAY INHIBIT OR PREVENT A TAKEOVER THAT
STOCKHOLDERS MAY CONSIDER FAVORABLE.

Brera Classic will have the ability to delay or prevent a change of control
or changes in our management that stockholders consider favorable or beneficial.
Provisions in our organizational documents may also have the effect of delaying
or preventing these changes, including provisions authorizing issuance of "blank
check" preferred stock, restricting the calling of special meetings of
stockholders and requiring advanced notice of proposals for stockholder
meetings. If a change of control or change in management is delayed or
prevented, the market price of our Class A common stock could suffer or holders
may not receive a premium over the then-current market price of the Class A
common stock.

OUR BUSINESS DEPENDS ON A LIMITED NUMBER OF KEY PERSONNEL. THE LOSS OF ANY ONE
OF THESE PERSONS COULD ADVERSELY AFFECT OUR BUSINESS.

Our continued success is highly dependent upon the personal efforts and
abilities of our senior management, including J. Merritt Belisle, our Chief
Executive Officer, and Steven E. Seach, our President and Chief Financial
Officer. Although we have employment contracts with these officers, we cannot
assure you that their services will continue to be available to us and the loss
of either one of them could impact us in a negative way.

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<PAGE> 21

WE CANNOT ASSURE YOU THAT OUR FRANCHISES WILL BE RENEWED OR THAT A FRANCHISING
AUTHORITY WILL NOT GRANT A FRANCHISE IN OUR MARKETS TO A COMPETITOR.

Our business is dependent upon the retention and renewal of our local
franchises. Franchises typically impose conditions relating to the operation of
cable television systems, including requirements relating to the payment of
fees, system bandwidth capacity, customer service requirements, franchise
renewal and termination. Historically, franchises have been renewed for cable
operators that have provided satisfactory services and have complied with the
terms of their franchises. We may not be able to retain or renew such
franchises, or renew these franchises on terms as favorable to us as our
existing franchises. Furthermore, it is possible that a franchising authority
might grant a franchise to another cable company or other telecommunications
provider seeking to provide cable services. The non-renewal or termination of
franchises relating to a significant portion of our subscribers could have a
material adverse effect on our results of operations. See
"Business -- Franchises."

OUR BUSINESS IS SUBJECT TO COMPREHENSIVE LEGISLATION AND GOVERNMENT REGULATION.

The cable television industry is subject to extensive regulation at the
federal and local levels, and in some cases, at the state level. The 1984 Cable
Act, the 1992 Cable Act and the 1996 Telecom Act establish a national policy to
guide the development and regulation of cable television systems. Principal
responsibility for implementing the policies of the Cable Acts and 1996 Telecom
Act has been allocated between the FCC and state or local regulatory
authorities. We cannot predict the effect that ongoing or future developments
may have on the cable communications industry or on our operations and we cannot
assure you that our revenues and results of operations will not be adversely
affected in the future by regulation of cable system rates.

A federal district court in Oregon recently held that, as a condition of
approving AT&T's acquisition of TCI's cable franchises, the City of Portland had
the authority to require AT&T to provide competing Internet and other on-line
services providers with open access to AT&T's cable platforms. This case has
been appealed. Open access requirements have also been adopted in Broward
County, Florida and Fairfax, Virginia and are being considered by a number of
other franchising authorities. Similar conditions could be imposed upon us,
either pursuant to a local franchising authority's approval of a merger or other
transaction between us and another company or through future regulatory or
legislative developments at the federal, state or local level. On the other
hand, future regulatory or legislative developments at the federal or state
level could limit the authority of local franchising authorities to impose such
conditions. Restrictions along these lines, if upheld or enacted, could prohibit
us from entering into exclusive access agreements with affiliated, and possibly
unaffiliated, providers of Internet delivered content. See "Legislation and
Regulation -- Cable Entry into Telecommunications and Broadband Services."

A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies. Although no state in which we currently
operate has enacted state level regulation, we cannot assure you that the states
in which we do operate will not enact such regulation, or that we will not
acquire any other cable systems in a state that does regulate our business. See
"Legislation and Regulation -- State and Local Regulation." Government
regulations at any level may affect our ability to obtain a sufficient return on
our investments. Furthermore, the regulations are changing rapidly to allow
significantly increased competition among various service providers. As a
result, we cannot predict the eventual effect of these regulations. See
"Legislation and Regulation." We closed the Buford acquisition and the Brera
Classic equity investment using temporary licenses from the FCC in certain
limited instances. While we do not anticipate problems in obtaining final
approval, our ability to operate some of our systems could be significantly
impaired if we cannot obtain final approval.

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<PAGE> 22

THE CABLE TELEVISION INDUSTRY IS EXTREMELY COMPETITIVE AND WE CANNOT PREDICT
WHETHER WE WILL BE SUCCESSFUL IN REMAINING COMPETITIVE.

We compete with other operators of cable systems, including systems
operated by local governments, and with other distribution systems capable of
delivering programming to homes or businesses, including direct broadcast
satellite systems, known as DBS, and multichannel multipoint distribution
service systems, known as wireless cable, which use low-power microwave
frequencies to transmit video programming over the air to customers. Within the
home video programming market, we compete with other cable franchise holders and
with DBS and wireless cable providers. In recent years, the FCC has adopted
policies providing for a more favorable operating environment for new and
existing technologies that provide, or have the potential to provide,
substantial competition to cable systems. Programming comparable to that of
cable systems is currently available to the owners of home satellite dish earth
stations through conventional-, medium- and high-powered satellites. Several
companies offer DBS service. In recent years there has been significant national
growth in the number of subscribers to DBS services, and such growth would be
assisted if one or more DBS providers is successful in delivering local
broadcast signals. Legislation to amend the Copyright Act to authorize carriage
of local broadcast signals by DBS providers has passed both chambers of Congress
and is currently pending before a conference committee.

In addition, recent FCC and judicial decisions and federal legislation have
enabled local telephone companies to provide a wide variety of video and data
services competitive with services provided by cable systems and to provide
cable services directly to customers. We cannot predict the extent to which
competition will materialize from other cable television operators, other
distribution systems for delivering video programming to the home or other
potential competitors, or, if such competition materializes, the extent of its
effect on us. Various local exchange carriers currently are providing video
programming services within and outside their telephone service areas through a
variety of distribution methods, including both the deployment of broadband
cable facilities and the use of wireless transmission facilities. Advances in
communications technology, as well as changes in the marketplace and the
regulatory and legislative environment, are constantly occurring. As a result,
we cannot predict the effect that ongoing or future developments might have on
the cable industry. See "Business -- Competition" and "Legislation and
Regulation."

WE COULD BE ADVERSELY AFFECTED IF OUR OR OUR VENDORS' COMPUTER SYSTEMS ARE NOT
YEAR 2000 COMPLIANT.

Year 2000 issues exist when dates are recorded in computers using two
digits, rather than four, and are then used for arithmetic operations,
comparisons or sorting. A two-digit recording may recognize a date using "00" as
1900 rather than 2000, which could cause our computer systems to perform
inaccurate computations. We may not be able to identify all systems with year
2000 problems. Moreover, the costs to correct these problems may be substantial.
Also we may not be able to correct the problems we identify. You should be aware
that year 2000 issues relate not only to our systems, but also to those used by
our vendors. We anticipate that system replacements and modifications will
resolve any year 2000 issues that may exist with our vendors or their vendors.
However, we cannot assure you that such replacements or modifications will be
completed successfully or on time and, as a result, any failure to complete such
modifications on time could materially affect our financial and operating
results in a negative way. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Year 2000 Compliance."

THE MARKET PRICE OF OUR CLASS A COMMON STOCK MAY BE EXTREMELY VOLATILE.

The initial public offering price that we determine, with the assistance of
the underwriters, may have no relation to the price at which the Class A common
stock trades after completion of
19
<PAGE> 23

the offering. Among the factors considered in determining the initial public
offering price of the shares, in addition to prevailing market conditions, will
be our historical performance, estimates of our business potential and our
earnings prospects, an assessment of our management and the consideration of the
above factors in relation to market valuation of companies in related
businesses. The market price of the Class A common stock may be extremely
volatile for many reasons, including:

- actual or anticipated variations in our revenues and operating results;

- a public market for the Class A common stock may not develop;

- announcements of the development of improved or competitive technologies;

- the use of new products or promotions by us or our competitors;

- the operating and stock performance of our companies;

- the offer and sale by us in the future of additional shares of Class A
common stock or other securities;

- changes in financial forecasts by securities analysts;

- new conditions or trends in the cable industry; and

- changes in interest rates.

In addition, the stock markets from time to time experience extreme price
and volume fluctuations that may be unrelated and disproportionate to the
operating performance of companies. These broad fluctuations may adversely
affect the trading price of our Class A common stock, regardless of our actual
results.

THE MARKET PRICE FOR OUR CLASS A COMMON STOCK COULD BE ADVERSELY AFFECTED BY THE
LARGE NUMBER OF ADDITIONAL SHARES ELIGIBLE FOR ISSUANCE IN THE FUTURE.

Immediately following the offering, 6,250,000 shares of Class A common
stock will be issued and outstanding, and 7,187,500 shares will be outstanding
if the underwriters exercise their overallotment option in full. An additional
14,348,007 shares of Class A common stock will be issuable under the
circumstances described in the section "Shares Eligible for Future Sale."
Substantially all of the shares of Class A common stock issuable upon conversion
of shares of our Class B common stock and nonvoting common stock will have
"demand" and/or "piggyback" registration rights attached to them. "Demand"
rights enable the holders to demand that their shares be registered and may
require us to file a registration statement under the Securities Act of 1933 at
our expense. "Piggyback" rights provide for notice to the relevant holders if we
propose to register any of our securities under the Securities Act, and such
holders may include their shares in the registration statement. Shares of Class
A common stock not held by our affiliates will be freely saleable at the end of
the relevant restricted period pursuant to Rule 144.

The sale of a substantial number of shares of Class A common stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Class A common stock. In addition, any such sale or perception
that such sale could occur could make it more difficult for us to sell equity
securities or equity-related securities in the future at a time and price that
we deem appropriate. See "Shares Eligible For Future Sale."

Stockholders holding 95.2% of our outstanding common stock, including all
of our executive officers and directors, have agreed not to offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any shares of our Class A common stock, or any options or
warrants to purchase any shares of our Class A common stock, or any

20
<PAGE> 24

securities convertible into, exchangeable for or that represent the right to
receive shares of our Class A common stock, for a period of 180 days after the
date of this prospectus.

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION RESULTING IN YOUR STOCK
BEING WORTH LESS ON A NET TANGIBLE BOOK VALUE BASIS THAN THE AMOUNT YOU
INVESTED.

Purchasers of the Class A common stock offered hereby will experience an
immediate dilution in net tangible book value of $41.21 per share of Class A
common stock purchased. Accordingly, in the event we are liquidated, investors
may not receive the full amount of their investment. See "Dilution."

21
<PAGE> 25

FORWARD-LOOKING STATEMENTS

The statements, other than statements of historical fact, included in this
prospectus are forward-looking statements. These statements include, but are not
limited to:

- statements regarding our plans for future acquisitions;

- statements regarding integration of our cable systems and future acquired
systems;

- statements regarding our planned capital expenditures and system
upgrades;

- statements regarding the offering of video and Internet access on our
systems; and

- statements regarding our preparations for the year 2000 date change.

Forward-looking statements generally can also be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "plan," "seek," or "believe." We believe that the
expectations reflected in such forward-looking statements are accurate. However,
we cannot assure you that such expectations will occur. Our actual future
performance could differ materially from such statements. Factors that could
cause such or contribute to such differences include, but are not limited to:

- the uncertainties and/or potential delays associated with integrating
Buford and Star and future acquisitions;

- our ability to acquire additional cable systems on terms favorable to us;

- the passage of legislation or court decisions adversely affecting the
cable industry;

- our ability to repay or refinance our outstanding indebtedness;

- the timing, actual cost and allocation of our capital expenditures and
system upgrades;

- our potential need for additional capital;

- competition in the cable industry;

- the advent of new technology; and

- seasonality.

You should not unduly rely on these forward-looking statements, which speak
only as of the date of this prospectus. Except as required by law, we are not
obligated to publicly release any revisions to these forward-looking statements
to reflect events or circumstances occurring after the date of this prospectus
or to reflect the occurrence of unanticipated events. Important factors that
could cause our actual results to differ materially from our expectations are
discussed under "Risk Factors" and elsewhere in this prospectus. All subsequent
written and oral forward-looking statements attributable to Classic, or persons
acting on its behalf, are expressly qualified in their entirety by the
statements in those sections.

USE OF PROCEEDS

We estimate that our net proceeds from the sale of Class A common stock in
the offering will be approximately $137.2 million, after deducting underwriting
discounts and commissions and estimated offering expenses. This assumes an
initial public offering price of $24.00 per share, which is the midpoint of the
range appearing on the cover page of this prospectus. (Our net proceeds from the
offering will be approximately $158.2 million if the underwriters exercise their
overallotment option in full.)

We intend to use the net proceeds of $137.2 million from the offering as
follows:

- approximately $59.6 million to finance part of the Star acquisition;

22
<PAGE> 26

- approximately $68.5 million to redeem the outstanding principal amount of
our 13 1/4% senior discount notes due 2009; and

- approximately $9.1 million in premiums necessary to redeem the
outstanding principal amount of our senior discount notes.

There is approximately $68.5 million in aggregate principal amount of
13 1/4% senior discount notes outstanding, with interest payable every six
months on February 1 and August 1, commencing on February 1, 2004. The senior
discount notes mature on August 1, 2009, but are redeemable prior to August 1,
2001 with the cash proceeds of one or more equity offerings if we pay a
redemption price equal to 113.25% of the accreted value of the notes, together
with accrued and unpaid interest. See "Description of Certain
Indebtedness -- Classic 2009 Senior Discount Notes."

On October 14, 1999 a subsidiary of Classic Cable entered into an agreement
to purchase substantially all the assets of Star Cable Associates for
approximately $110 million in cash and 555,555 shares of Class A common stock.
The portion of the Star acquisition not financed with the proceeds from this
offering will be financed by available borrowings under our credit facility. In
the event that the Star acquisition is not consummated, our management will have
broad discretion in the application of the proceeds allocated to the Star
acquisition. See "Risk Factors -- The Star acquisition may not be consummated,
and, if not consummated, our management will have broad discretion with respect
to the use of the proceeds allocated to the Star acquisition." Pending use, the
net proceeds will be invested in short-term investment-grade instruments,
certificates of deposit or direct or guaranteed obligations of the U.S.
government.

DIVIDEND POLICY

We do not expect to pay any cash dividends on our Class A common stock in
the foreseeable future. Covenants in the indentures and credit agreements
governing the indebtedness of subsidiaries restrict their ability to make
distributions to us and, accordingly, limit our ability to declare or pay cash
dividends. We intend to cause our subsidiaries to retain future earnings, if
any, to finance the expansion of our business.

23
<PAGE> 27

CAPITALIZATION

The following table sets forth as of September 30, 1999 on a consolidated
basis:

- the actual capitalization of Classic;

- the pro forma capitalization of Classic to reflect:

(1) the issuance and sale by Classic of the shares of Class A common
stock offered in this prospectus for net proceeds of $137.2 million, after
deducting underwriting discounts and estimated offering expenses totaling
$12.8 million at an initial public offering price per share of $24.00,
which is the midpoint of the range appearing on the cover page of this
prospectus;

(2) the partial redemption of Classic Cable's 2008 subordinated notes
and related financing that occurred in September 1999;

(3) the reclassification of our common stock into Class A common stock,
Class B common stock and nonvoting common stock; and

(4) the conversion of all our outstanding shares of voting common stock
into Class B common stock on a one-for-one basis.

- the pro forma as adjusted capitalization of Classic to reflect the
pending acquisition of substantially all the assets of Star Cable
Associates by a subsidiary of Classic Cable and the related
financing.

This table should be read in conjunction with the "Unaudited Pro Forma
Financial Statements" and the accompanying notes included elsewhere in this
prospectus. See also "Use of Proceeds."

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- --------- -----------
<S> <C> <C> <C>
Assets
Cash and cash equivalents.......................... $ 7,497 $ 7,497 $ 7,497
========= ========= =========
Long-term debt:
13 1/4% senior discount notes...................... $ 114,000 $ -- $ --
Discount on 13 1/4% senior discount notes.......... (45,488) -- --
9 7/8% senior subordinated notes................... 39,005 39,005 39,005
Discount on 9 7/8% senior subordinated notes....... (160) (160) (160)
9 3/8% senior subordinated notes................... 150,000 150,000 150,000
The 1999 credit facility(1)........................ 265,000 205,365 315,609
Other.............................................. 485 485 485
--------- --------- ---------
Total long-term debt....................... 522,842 394,695 504,939
Stockholders' equity
Voting common stock:
Class A common stock; $.01 par value(2)......... -- 63 69
Class B common stock; $.01 par value(3)......... -- 82 82
Common stock, voting; $.01 par value(4)......... 82 -- --
Common stock, nonvoting; $.01 par value(5)......... 15 15 15
Additional paid-in capital......................... 126,103 263,265 276,192
Accumulated deficit................................ (118,328) (130,305) (130,305)
--------- --------- ---------
Total stockholders' equity................. 7,872 133,120 146,053
--------- --------- ---------
Total capitalization....................... $ 530,714 $ 527,815 $ 650,992
========= ========= =========
</TABLE>

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

(1) Assumes that the portion of the proceeds from this offering to be used to
purchase Star were ratably applied towards reducing our A, B and C term loan
facilities under our 1999 credit facility. However, if the Star acquisition
is not consummated, a significant portion of

24
<PAGE> 28

the net proceeds from this offering will not be designated for a specific
use and none of the net proceeds may be applied towards the 1999 credit
facility.

(2) no shares authorized on a historical basis; 120,000,000 shares authorized on
a pro forma and pro forma as adjusted basis; no shares issued and
outstanding on a historical basis; 6,250,000 shares issued and outstanding
on a pro forma basis; 6,805,555 shares issued and outstanding on a pro forma
as adjusted basis.

(3) no shares authorized on a historical basis; 45,000,000 shares authorized on
a pro forma and pro forma as adjusted basis; no shares issued and
outstanding on a historical basis; 8,211,342 shares issued and outstanding
on a pro forma basis; 8,211,342 shares issued and outstanding on a pro forma
as adjusted basis.

(4) 10,442,000 shares authorized on a historical basis; 8,211,342 shares issued
and outstanding on a historical basis; on a pro forma and pro forma as
adjusted basis, all outstanding shares are converted to Class B common
stock.

(5) 4,503,000 shares authorized on a historical basis; 7,500,000 shares
authorized on a pro forma and pro forma as adjusted basis; 1,528,261 shares
issued and outstanding on a historical basis; 1,528,261 shares issued and
outstanding on a pro forma basis; 1,528,261 shares issued and outstanding on
a pro forma as adjusted basis.

25
<PAGE> 29

DILUTION

The difference between the public offering price per share of our Class A
common stock and the pro forma net tangible book value per share of our Class A
common stock, Class B common stock and nonvoting common stock after this
offering constitutes the dilution to investors in this offering. Net tangible
book value per share is determined by dividing our net tangible book value
(total tangible assets less total liabilities) by the number of outstanding
shares of Class A common stock, Class B common stock and nonvoting common stock.
In calculating the dilution, we have made the same assumptions described on the
following page with respect to our unaudited pro forma financial statements.

As of September 30, 1999, our pro forma net tangible book value was a
deficit of approximately $413,000 or $(40.10) per share of Class A common stock,
Class B common stock and nonvoting common stock prior to the issuance of shares
pursuant to this offering. After giving effect to the sale of 6,250,000 shares
of our Class A common stock at an initial public offering price of $24.00 per
share, less the estimated expenses of this offering, our pro forma net negative
tangible book value as of September 30, 1999 would have been approximately
$285,000, or $(17.21) per share of Class A common stock, Class B common stock
and nonvoting common stock, representing an immediate increase in our net
tangible book value of $22.89 per share to current stockholders and an immediate
dilution of $41.21 per share to new investors. The following table illustrates
the foregoing information as of September 30, 1999 with respect to dilution to
new investors on a per share basis:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ 24.00
Pro forma net tangible book value per share at September
30, 1999(a)............................................ (40.10)
Increase in pro forma net tangible book value per share
attributable to new investors purchasing shares in the
offering............................................... 22.89
------
Pro forma net tangible book value per share after the
offering.................................................. (17.21)
-------
Pro forma dilution per share to new investors(b)............ $ 41.21
=======
</TABLE>

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

(a) The pro forma net tangible book value is calculated assuming the Star
acquisition is financed with debt.

(b) Assuming the exercise of the underwriters' overallotment option, pro forma
dilution per share to new investors would be $39.08.

The following table summarizes, on a pro forma basis, at September 30,
1999, after giving effect to the pro forma adjustments referenced above, the
differences between the number of shares of common stock purchased from us, the
aggregate cash consideration paid to us and the average price per share paid by
our existing stockholders and by new investors purchasing shares of common stock
in this offering. The calculation below is based on an assumed initial public
offering price of $24.00 per share, before deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 9,739,603 61% $134,100,000 47% $13.77
New Investors.............. 6,250,000 39 150,000,000 53 24.00
---------- --- ------------ --- ------
Total............ 15,989,603 100% $284,100,000 100% $17.77
========== === ============ === ======
</TABLE>

This discussion and table assume no exercise of any stock options or
warrants outstanding at September 30, 1999. At September 30, 1999, there were
options outstanding to purchase a total of 1.1 million shares of common stock
with a weighted average exercise price of $17.34 per share. There were warrants
outstanding to purchase approximately 336,000 of common stock at an exercise
price of $0.001 per share. To the extent that any of these options or warrants
are exercised, there will be further dilution to new investors.

26
<PAGE> 30

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following Unaudited Pro Forma Consolidated Financial Information is
based on the audited and unaudited financial statements of Classic, Buford, and
Star included elsewhere in this prospectus, and unaudited financial information
of certain systems acquired by Classic Cable in July 1998 and certain systems
acquired by Buford in April 1998. The unaudited pro forma adjustments are based
upon available information and certain assumptions that we believe are
reasonable. The Unaudited Pro Forma Consolidated Financial Information and
accompanying notes should be read in conjunction with the historical financial
statements of Classic, Buford, and Star and the respective notes to those
statements, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing elsewhere in this prospectus.

The Unaudited Pro Forma Consolidated Balance Sheet has been prepared to
give effect to (1) the pending acquisition of substantially all of the assets of
Star Cable Associates by a subsidiary of Classic Cable and the related
financing, (2) the reclassification of our stock into Class A common stock,
Class B common stock and nonvoting common stock, (3) the conversion of all
outstanding shares of voting common stock into Class B common stock on a
one-for-one basis and (4) the offering contemplated in this prospectus as if all
such transactions had occurred on September 30, 1999. The Unaudited Pro Forma
Consolidated Statements of Operations have been prepared to give effect to (1)
the transactions set forth in the previous sentence, (2) the completed
acquisition of Buford Group, Inc. by our subsidiary, Classic Cable, Inc. and the
related financing, (3) the partial redemption of Classic Cable's 2008 senior
subordinated notes and the related financing and (4) the other acquisitions
completed by either Classic or Buford prior to the date of this prospectus as if
they had occurred on January 1, 1998. All acquisitions are accounted for under
the purchase method of accounting. The Unaudited Pro Forma Consolidated
Financial Information reflects our allocation of our purchase price for the
Buford acquisition and our assumed purchase price for the Star acquisition based
upon our current estimates of the fair values of the assets to be acquired and
liabilities assumed. The final purchase price and the allocation of that price
may vary as additional information is obtained and, accordingly, the ultimate
allocation may differ from those used in the Unaudited Pro Forma Consolidated
Financial Information.

The Unaudited Pro Forma Consolidated Financial Information does not purport
to be indicative of the results that would have been obtained had the
transactions been completed as of the assumed date and for the periods presented
or that may be obtained in the future. The Unaudited Pro Forma Consolidated
Financial Information is included in this prospectus for informational purposes,
and while we believe that it may be helpful in understanding our combined
operations for the periods indicated, you should not unduly rely on the
information.

The column labeled "Subtotal" in the Unaudited Pro Forma Consolidated
Financial Information assumes that the portion of the proceeds from this
offering to be used to purchase Star were ratably applied towards reducing our
A, B and C term loan facilities under our 1999 credit facility. The column
labeled "Pro Forma" assumes that a portion of the proceeds was used to finance
the Star acquisition. However, if the Star acquisition is not consummated, a
significant portion of the net proceeds from this offering will not be
designated for a specific use and none of the net proceeds may be applied
towards the 1999 credit facility. In these circumstances, our management will
have broad discretion with respect to the use of the portion of the proceeds
from this offering allocated to the Star acquisition.

27
<PAGE> 31

CLASSIC COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
CLASSIC
COMMUNICATIONS ADJUSTMENTS SUBTOTAL
-------------- ----------- --------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents......... $ 7,497 $ -- $ 7,497
Accounts receivable, net.......... 9,281 -- 9,281
Prepaid expenses.................. 1,018 -- 1,018
Property, plant and equipment..... 284,743 -- 284,743
Accumulated depreciation.......... (54,517) -- (54,517)
--------- -------- ---------
230,226 -- 230,226
Deferred financing costs, net..... 21,501 (2,899)(a) 18,602
Intangible assets:
Subscriber relationships......... 190,753 -- 190,753
Franchise rights................. 171,834 -- 171,834
Noncompete agreements............ 16,555 -- 16,555
Goodwill......................... 42,473 -- 42,473
--------- -------- ---------
421,615 -- 421,615
Less accumulated amortization..... (83,662) -- (83,662)
--------- -------- ---------
337,953 -- 337,953
--------- -------- ---------
Total assets............... $ 607,476 $ (2,899) $ 604,577
========= ======== =========
LIABILITIES AND STOCKHOLDERS'
(DEFICIT) EQUITY
Liabilities:
Accounts payable................. $ 599 $ -- $ 599
Subscriber deposits and unearned
income......................... 7,513 -- 7,513
Accrued expenses................. 13,475 -- 13,475
Accrued interest................. 6,501 -- 6,501
Long-term debt................... 522,842 (128,147)(d,f) 394,695
Deferred taxes, net.............. 48,674 -- 48,674
--------- -------- ---------
Total liabilities.......... 599,604 (128,147) 471,457
Stockholders' (deficit) equity:
Class A common stock............. -- 63(b) 63
Class B common stock............. -- 82(h) 82
Common stock, voting............. 82 (82)(h) --
Common stock, nonvoting.......... 15 -- 15
Additional paid-in capital....... 126,103 137,162(c,g) 263,265
Accumulated deficit.............. (118,328) (11,977)(a,e) (130,305)
--------- -------- ---------
Total stockholders'
(deficit) equity.......... 7,872 125,248 133,120
--------- -------- ---------
Total liabilities and
stockholders' equity...... $ 607,476 $ (2,899) $ 604,577
========= ======== =========

STAR ADJUSTMENTS PRO FORMA
---- ----------- ---------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents......... $ 4,240 $(4,240)(10) $ 7,497
Accounts receivable, net.......... 844 -- 10,125
Prepaid expenses.................. 237 -- 1,255
Property, plant and equipment..... 71,525 (20,872)(2,14) 335,396
Accumulated depreciation.......... (18,384) 18,384(3) (54,517)
-------- ------- ---------
53,141 (2,488) 280,879
Deferred financing costs, net..... 463 1,037(4,22) 20,102
Intangible assets:
Subscriber relationships......... 538 33,190(5,15) 224,481
Franchise rights................. 16,128 19,348(6,16) 207,310
Noncompete agreements............ 1,416 1,459(7,17) 19,430
Goodwill......................... 9,719 (9,118)(8,18) 43,074
-------- ------- ---------
27,801 44,879 494,295
Less accumulated amortization..... (8,710) 8,710(9) (83,662)
-------- ------- ---------
19,091 53,589 410,633
-------- ------- ---------
Total assets............... $ 78,016 $47,898 $ 730,491
======== ======= =========
LIABILITIES AND STOCKHOLDERS'
(DEFICIT) EQUITY
Liabilities:
Accounts payable................. $ 1,153 $ -- $ 1,752
Subscriber deposits and unearned
income......................... 1,406 -- 8,919
Accrued expenses................. 677 (499)(11) 13,653
Accrued interest................. 414 (414)(12) 6,501
Long-term debt................... 89,331 20,913(13,21) 504,939
Deferred taxes, net.............. -- -- 48,674
-------- ------- ---------
Total liabilities.......... 92,981 20,000 584,438
Stockholders' (deficit) equity:
Class A common stock............. -- 6(19) 69
Class B common stock............. -- -- 82
Common stock, voting............. -- -- --
Common stock, nonvoting.......... -- -- 15
Additional paid-in capital....... -- 12,927(20,23) 276,192
Accumulated deficit.............. (14,965) 14,965(1) (130,305)
-------- ------- ---------
Total stockholders'
(deficit) equity.......... (14,965) 27,898 146,053
-------- ------- ---------
Total liabilities and
stockholders' equity...... $ 78,016 $47,898 $ 730,491
======== ======= =========
</TABLE>

See Notes to Unaudited Pro Forma Consolidated Balance Sheet.
28
<PAGE> 32

CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 1999

(DOLLARS IN THOUSANDS)

Set forth below are the notes to the Unaudited Pro Forma Consolidated
Balance Sheet. The letters and numbers set forth across from the line items
below correspond to the letters and numbers set forth on the Unaudited Pro Forma
Consolidated Balance Sheet. The following pro forma adjustments to the unaudited
consolidated balance sheet assume: (1) the pending acquisition of substantially
all of the assets of Star Cable Associates by a subsidiary of Classic Cable and
the related financing; (2) the reclassification of our stock into Class A common
stock, Class B common stock and nonvoting common stock; (3) the conversion of
all outstanding shares of our voting common stock into Class B common stock on a
one-to-one basis; and (4) the offering contemplated in this prospectus as if all
such transactions had occurred on September 30, 1999.

The Star acquisition will be accounted for using the purchase method. The
cost of the acquisition will be allocated based on the fair value of the assets
acquired and liabilities assumed, based upon a valuation that is not yet
complete. Our estimate of the final purchase price takes into account expected
purchase price adjustments set forth in the acquisition agreement. Accordingly,
the allocation of the purchase price may change upon completion of the
acquisition.

The estimated final purchase price of Star and the preliminary allocation
are as follows:

<TABLE>
<CAPTION>
STAR
--------
<C> <S> <C>
Purchase price.............................................. $121,677
========
(1) Eliminate partner's deficiency.............................. (14,965)
Eliminate historical property, plant and equipment:
(2) Costs....................................................... (71,525)
(3) Accumulated deprecation..................................... 18,384
Eliminate historical intangible assets:
(4) Deferred financing costs.................................... (463)
(5) Subscriber relationships.................................... (538)
(6) Franchise rights............................................ (16,128)
(7) Noncompete agreements....................................... (1,416)
(8) Goodwill and other intangible assets........................ (9,719)
(9) Accumulated amortization.................................... 8,710
(10) Eliminate cash not purchased................................ (4,240)
(11) Eliminate accrued expenses not assumed...................... 499
(12) Eliminate accrued interest not assumed...................... 414
(13) Eliminate long-term debt not assumed........................ 89,331
Adjustments to record assets at fair value:
(14) Property, plant and equipment............................... 50,653
(15) Subscriber relationships.................................... 33,728
(16) Franchise rights............................................ 35,476
(17) Noncompete agreements....................................... 2,875
(18) Goodwill.................................................... 601
--------
Total....................................................... $121,677
========
</TABLE>

29
<PAGE> 33

<TABLE>
<S> <C> <C>
Concurrent with this offering, we would have written off unamortized
deferred financing costs of $2,899. The charge for the write off will
(a) be reflected as an extraordinary charge in the income statement for
the period during which the transaction occurred. No such charge is
included in the pro forma income statement information presented in
this prospectus.

The sources and uses of funds for the offering contemplated in this
prospectus are as follows:
</TABLE>

<TABLE>
<S> <C> <C>
SOURCES OF FUNDS:
(b) Common stock................................................ $ 63
(c) Additional paid-in capital.................................. 149,937
--------
$150,000
========
USES OF FUNDS:
Retirement of the principal amount of the Classic 2009
(d) Senior Discount Notes..................................... $ 68,512
(e) Payment of premium on the Classic 2009 Senior Discount
Notes..................................................... 9,078
(f) Pay down the credit facility*............................... 59,635
(g) Estimated fees and expenses................................. 12,775
--------
$150,000
========
* Assumes that the portion of the proceeds from this offering to be
used to purchase Star were ratably applied towards reducing our A, B
and C term loan facilities under our 1999 credit facility. However,
if the Star acquisition is not consummated, a significant portion of
the net proceeds from this offering will not be designated for a
specific use and none of the net proceeds may be applied towards the
1999 credit facility.
</TABLE>

<TABLE>
<S> <C> <C>
(h) The conversion of the voting common stock results in a
reclassification of $82 from voting common stock to Class B common
stock.

Sources and uses of funds for the Star acquisition are assumed to be
as follows:
</TABLE>

<TABLE>
<S> <C> <C>
SOURCES OF FUNDS:
Star Investment:
(19) Common stock................................................ $ 6
(20) Additional paid-in capital.................................. 13,327
(21) Borrowings on the credit facility........................... 110,244
--------
$123,577
========

USES OF FUNDS:
Purchase Star............................................... $121,677
(22) Deferred financing costs.................................... 1,500
(23) Costs of offering........................................... 400
--------
$123,577
========
</TABLE>

30
<PAGE> 34

CLASSIC COMMUNICATIONS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
BUFORD
CLASSIC CABLE 1998
COMMUNICATIONS ONE BUFORD ACQUISITION ADJUSTMENTS SUBTOTAL STAR
-------------- ----- ------ ----------- ----------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 69,802 $6,564 $ 70,475 $3,056 $ -- $149,897 $18,447
Operating expenses:
Programming..................... 17,840 1,831 18,339 708 -- 38,718 5,435
Plant and operating............. 8,437 815 6,937 397 -- 16,586 2,588
General and administrative...... 11,295 1,037 16,183 557 -- 29,072 1,691
Marketing and advertising....... 850 97 345 -- -- 1,292 230
Corporate overhead.............. 3,648 -- 9,364 99 (1,490)(a) 11,621 644
Depreciation and amortization... 30,531 529 21,399 750 13,981(b) 67,190 5,393
-------- ------ -------- ------ -------- -------- -------
Total operating
expenses................... 72,601 4,309 72,567 2,511 12,491 164,479 15,981
-------- ------ -------- ------ -------- -------- -------
Operating income (loss)............ (2,799) 2,255 (2,092) 545 (12,491) (14,582) 2,466
Interest expense................... (24,442) -- (7,919) (34) (3,945)(c) (36,340) (5,652)
Other income (expense)............. (28) (648) (221) 1 -- (896) 166
-------- ------ -------- ------ -------- -------- -------
Income (loss) before income taxes.. (27,269) 1,607 (10,232) 512 (16,436) (51,818) (3,020)
Income tax benefit................. 1,930 -- 226 -- --(d) 2,156 --
-------- ------ -------- ------ -------- -------- -------
Net income (loss).................. $(25,339) $1,607 $(10,006) $ 512 $(16,436) $(49,662) $(3,020)
======== ====== ======== ====== ======== ======== =======
Basic and diluted loss per share... $ (11.43) $ (5.61)
Shares used in computing loss per
share............................. 2,603 8,853

PRO
ADJUSTMENTS FORMA
----------- -----
<S> <C> <C>
Revenues........................... $ -- $168,344
Operating expenses:
Programming..................... -- 44,153
Plant and operating............. -- 19,174
General and administrative...... -- 30,763
Marketing and advertising....... -- 1,522
Corporate overhead.............. (644)(a) 11,621
Depreciation and amortization... 8,880(b) 81,463
-------- --------
Total operating
expenses................... 8,236 188,696
-------- --------
Operating income (loss)............ (8,236) (20,352)
Interest expense................... (3,290)(c) (45,282)
Other income (expense)............. -- (730)
-------- --------
Income (loss) before income taxes.. (11,526) (66,364)
Income tax benefit................. --(d) 2,156
-------- --------
Net income (loss).................. $(11,526) $(64,208)
======== ========
Basic and diluted loss per share... $ (6.82)
Shares used in computing loss per
share............................. 9,409
</TABLE>

See the Notes to the Unaudited Pro Forma Consolidated Statement of Operations.
31
<PAGE> 35

CLASSIC COMMUNICATIONS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
CLASSIC
COMMUNICATIONS BUFORD(1) ADJUSTMENTS SUBTOTAL STAR ADJUSTMENTS PRO FORMA
-------------- --------- ----------- -------- ---- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................ $ 72,391 $44,901 $ -- $117,292 $18,633 $ -- $135,925
Operating expenses:
Programming..................... 19,272 12,468 -- 31,740 5,635 -- 37,375
Plant and operating............. 8,046 4,325 -- 12,371 2,830 -- 15,201
General and administrative...... 11,273 12,305 -- 23,578 1,625 -- 25,203
Marketing and advertising....... 955 972 -- 1,927 205 -- 2,132
Corporate overhead.............. 9,131 260 (1,062)(a) 8,329 654 (654)(a) 8,329
Depreciation and amortization... 32,305 14,052 7,076(b) 53,433 5,521 5,184(b) 64,138
-------- ------- ------- -------- ------- ------- --------
Total operating expenses.... 80,982 44,382 6,014 131,378 16,470 4,530 152,378
-------- ------- ------- -------- ------- ------- --------
Income (loss) from operations....... (8,591) 519 (6,014) (14,086) 2,163 (4,530) (16,453)
Interest expense.................... (27,851) (4,642) 4,856(c) (27,637) (5,232) (1,475)(c) (34,344)
Other income (expense).............. 110 (377) -- (267) 56 -- (211)
-------- ------- ------- -------- ------- ------- --------
Loss before income taxes............ (36,332) (4,500) (1,158) (41,990) (3,013) (6,005) (51,008)
Income tax benefit.................. -- 210 --(d) 210 -- --(d) 210
-------- ------- ------- -------- ------- ------- --------
Net loss............................ $(36,332) $(4,290) $(1,158) $(41,780) $(3,013) $(6,005) $(50,798)
======== ======= ======= ======== ======= ======= ========
Basic and diluted loss per share.... $ (7.85) $ (3.84) $ (4.44)
Shares used in computing loss per
share............................. 4,630 10,880 11,436
</TABLE>

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

(1) Represents seven months activity from January 1, 1999 through its
acquisition by Classic Cable, Inc.

See the Notes to Unaudited Pro Forma Consolidated Statements of Operations.
32
<PAGE> 36

CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

The accompanying Unaudited Pro Forma Consolidated Statements of Operations
for the year ended December 31, 1998 and the nine months ended September 30,
1999 reflect the pro forma adjustments described below as if (1) the completed
acquisition of Buford Group, Inc. by our subsidiary, Classic Cable, Inc. and the
related financing, (2) other acquisitions completed by either Classic or Buford
prior to the date of this prospectus, (3) the pending acquisition of
substantially all of the assets of Star Cable Associates by a subsidiary of
Classic Cable and the related financing, (4) the partial redemption of Classic
Cable's 2008 Subordinated Notes and the related financing and (5) the offering
contemplated in this prospectus as if all such transactions had occurred on
January 1, 1998. The Unaudited Pro Forma Consolidated Statements of Operations
combine the historical results of operations of Classic with those of Buford,
Star and the completed acquisitions. These statements reflect the following
adjustments for the period indicated:

(a) Classic Cable has formulated a restructuring plan whereby certain
identified employees of Buford's corporate management were terminated. The
functions of these employees were duplicative with those of Classic Cable
and there is no expectation that the revenues generated by the Buford
systems will be adversely affected by the restructuring plan. The costs
associated with these employees were $1,490 and $1,062 for the year ended
December 31, 1998 and the nine months ended September 30, 1999,
respectively.

Star pays a management fee to its general partner based upon a certain
percentage of revenues. This arrangement will terminate upon the closing of
the Star acquisition. There is no expectation that the revenues generated
by the Star systems will be adversely affected by the termination of this
agreement. The costs associated with this agreement were $644 and $654 for
the year ended December 31, 1998 and the nine months ended September 30,
1999, respectively.

(b) Represents pro forma adjustments to depreciation and amortization
in connection with the Buford acquisition and the Star acquisition and
their completed acquisitions. The depreciation and amortization expense of
property, plant and equipment and intangible

33
<PAGE> 37

assets acquired, net of elimination of depreciation and amortization
expense on historical assets, is as follows:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED
1998 SEPTEMBER 30, 1999
------------ ------------------
<S> <C> <C>
CABLE ONE AND BUFORD
- --------------------------
Depreciation and amortization expense on the purchased
basis of property, plant and equipment and intangible
assets acquired...................................... $ 36,659 $ 21,128
Elimination of historical depreciation and amortization
expense.............................................. (22,678) (14,052)
-------- --------
Total adjustment to depreciation and
amortization............................... $ 13,981 $ 7,076
======== ========

STAR
- ----
Depreciation and amortization expense on the purchased
basis of property, plant and equipment and intangible
assets acquired...................................... $ 14,273 $ 10,705
Elimination of historical depreciation and amortization
expense.............................................. (5,393) (5,521)
-------- --------
Total adjustment to depreciation and
amortization............................... $ 8,880 $ 5,184
======== ========
</TABLE>

The property, plant, and equipment and intangible assets acquired in
connection with the Star acquisition are estimated below:

<TABLE>
<CAPTION>
DEPRECIATION/
AMORTIZATION
PERIOD
STAR (YEARS)
-------- -------------
<S> <C> <C>
Land...................................................... $ 365 --
Buildings................................................. 1,607 30
Leasehold improvements.................................... 336 7
Vehicles.................................................. 1,552 5
Cable television distribution systems..................... 18,062 12
UHF system................................................ 3,815 7
Mobile radio equipment.................................... 149 7
Headend electronics....................................... 10,856 7
Headend tower and antennae................................ 4,554 7
Microwave equipment....................................... 1,915 7
Shop and test equipment................................... 2,268 7
Drops..................................................... 3,956 7
Furniture and fixtures.................................... 661 7
Office equipment.......................................... 405 7
Computer hardware and equipment........................... 132 4
Computer software......................................... 20 3
Subscriber relationships.................................. 33,728 12
Franchise rights.......................................... 35,476 8
Noncompete agreements..................................... 2,875 3
Goodwill.................................................. 601 20
--------
$123,333
========
</TABLE>

34
<PAGE> 38

- interest expense on the credit facility using a current interest
rate of 7.75%, 8.00% and 8.00% for the Term A, Term B and Term C
loans, respectively, per annum,

- interest expense on the 2009 senior subordinated notes using a
rate of 9.375% per annum,

- amortization expense of deferred financing fees related to the
2009 senior subordinated notes and the credit facility,

- elimination of historical interest expense related to Buford's
and Star's debt not assumed, and

- elimination of historical interest expense from the 1998 credit
facility, the redeemed portion of the 2008 senior subordinated
notes and the 2009 senior discount notes as well as the
elimination of the related amortization of deferred financing
costs, as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1998 1999
----------------- -----------------
<S> <C> <C>
Buford
Interest expense on the credit facility............ $ 16,284* $ 9,215*
Interest expense on the 2009 senior subordinated
notes............................................ 14,063 7,911
Amortization expense of deferred financing fees.... 1,869 1,299
Elimination of historical interest expense on the
1998 credit facility, 2009 senior discount notes,
redeemed portion of the 2008 senior subordinated
notes, subordinated debt and acquisition debt not
assumed as well as related amortization of
deferred financing costs......................... (28,271) (23,281)
-------- --------
Total increase (decrease) to interest
expense................................ $ 3,945 $ (4,856)
======== ========
</TABLE>

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

* The total effect of a 1/8% variance in the interest rate would be $257 and
$193, respectively.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1998 1999
----------------- -----------------
<S> <C> <C>
Star
Interest expense on the credit facility............ $ 8,741* $ 6,556*
Amortization expense of deferred financing fees.... 201 151
Elimination of historical interest expense on the
acquisition debt not assumed as well as the
related amortization of deferred financing
costs............................................ (5,652) (5,232)
-------- --------
Total increase to interest expense....... $ 3,290 $ 1,475
======== ========
</TABLE>

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

* The total effect of a 1/8% variance in the interest rate would be $395 and
$296, respectively.

(d) Represents the:

- tax effect of pro forma adjustments,

- recognition of tax expense for the acquired systems which were
historically not allocated tax expense by their former parent,
and

35
<PAGE> 39

- the effect of recording a valuation allowance on excess deferred
tax assets arising from pro forma adjustments.

We record a tax benefit only to the extent existing deferred tax
liabilities reverse within the appropriate period to offset deferred tax assets.
These reversing liabilities were fully recognized in 1998, and a valuation
allowance remains on 100% of the remaining deferred tax assets. As a result, the
ratable tax benefit to be realized is limited, resulting in an effective rate of
less than 5%.

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED
1998 SEPTEMBER 30, 1999
------------ ------------------
<S> <C> <C>
Total pro forma adjustments............................ $(27,962) $(7,163)
Tax rate............................................... 34% 34%
-------- -------
$ 9,507 $ 2,435

Total Cable One, Buford 1998 acquisition and Star pre
tax income........................................... $ (901) $(3,013)
Tax rate............................................... 34% 34%
-------- -------
$ 306 $ 1,024

Effect of valuation allowance.......................... (9,813) (3,459)
-------- -------
Total adjustment to income tax benefit................. $ -- $ --
======== =======
</TABLE>

36
<PAGE> 40

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA --
CLASSIC COMMUNICATIONS, INC.

The following table presents selected historical financial data about
Classic. You should read this information together with "Summary Historical
Financial and Operating Data -- Classic Communications, Inc.," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
Classic's consolidated financial statements and the notes relating to those
statements included elsewhere in this prospectus.

Classic's selected historical financial data as of and for each of the five
years in the period ended December 31, 1998 have been derived from Classic's
consolidated financial statements, which have been audited and reported upon by
Ernst & Young LLP for the years ended December 31, 1994, 1995 and 1996 and
PricewaterhouseCoopers LLP for the years ended December 31, 1997 and 1998. The
historical data for the nine months ended September 30, 1998 and 1999 have been
derived from Classic's unaudited financial statements. The unaudited financial
statements contain all adjustments, consisting of normal recurring accruals,
which Classic considers necessary for a fair presentation of its financial
position and results of operations for these periods.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................... $16,019 $ 36,677 $ 59,821 $ 60,995 $ 69,802 $ 50,404 $ 72,391
Costs and expenses......................... 8,372 18,911 33,553 36,555 42,070 30,435 48,677
Depreciation and amortization.............. 6,383 16,427 27,510 27,832 30,531 21,682 32,305
------- -------- -------- -------- -------- -------- --------
Operating income (loss).................... 1,264 1,339 (1,242) (3,392) (2,799) (1,713) (8,591)
Interest expense........................... (4,975) (14,199) (20,633) (21,299) (24,442) (17,134) (27,851)
Gain on sale of cable systems.............. 115 -- 4,901 3,644 -- -- --
Write-off of abandoned telephone
operations............................... -- -- (2,994) (500) (220) -- --
Other income (expense)..................... -- -- -- 71 192 121 110
------- -------- -------- -------- -------- -------- --------
Loss before income tax benefit, minority
interest and extraordinary loss.......... (3,596) (12,860) (19,968) (21,476) (27,269) (18,726) (36,332)
Income tax benefit......................... 1,121 4,533 6,802 7,347 1,930 1,719 --
Extraordinary loss......................... -- (4,054) -- -- (5,524) (5,524) (6,632)
Minority interest in net loss of
subsidiary............................... 46 -- -- -- -- -- --
------- -------- -------- -------- -------- -------- --------
Net loss................................... $(2,429) $(12,381) $(13,166) $(14,129) $(30,863) $(22,531) $(42,964)
======= ======== ======== ======== ======== ======== ========
Basic and diluted loss applicable to common
stockholders before extraordinary item... $ (3.13) $ (5.87) $ (7.30) $ (7.53) $ (11.43) $ (8.37) $ (7.85)
Basic and diluted loss applicable to common
stockholders............................. $ (3.13) $ (8.21) $ (7.30) $ (7.53) $ (13.55) $ (10.53) $ (9.28)
BALANCE SHEET DATA (END OF PERIOD):
Total assets............................... $96,136 $271,516 $245,922 $220,162 $254,604 $ -- $607,476
Total debt................................. 58,161 207,706 197,504 191,990 282,842 -- 522,842
Total liabilities.......................... 78,251 232,531 219,232 206,643 301,392 -- 599,604
Total redeemable preferred stock........... 12,332 19,260 22,726 26,705 -- -- --
Total stockholders' equity (deficit)....... 5,553 19,725 3,965 (13,186) (46,788) -- 7,872
</TABLE>

37
<PAGE> 41

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA -- BUFORD GROUP, INC.

The following table presents selected historical financial data about
Buford. You should read this information together with "Summary Historical
Financial and Operating Data -- Buford Group, Inc.," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and Buford's
consolidated financial statements and the notes relating to those statements
included elsewhere in this prospectus.

The selected data presented below under the headings "Income Statement
Data" and "Balance Sheet Data," for and as of the end of each of the years in
the five-year period ended December 31, 1998 are derived from Buford's
consolidated financial statements, which financial statements have been audited
by KPMG LLP, independent certified public accountants. The consolidated
financial statements as of December 31, 1998 and 1997, and for each of the years
in the three-year period ended December 31, 1998, and the auditors' report
thereon, are included elsewhere in this prospectus. The historical data for the
six months ended June 30, 1998 and 1999 have been derived from Buford's
unaudited financial statements. The unaudited financial statements contain all
adjustments, consisting of normal recurring accruals, which Buford considers
necessary for a fair presentation of Buford's financial position and results of
operations for these periods.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................. $ 37,032 $ 49,558 $ 49,561 $ 58,136 $ 70,475 $ 32,943 $ 38,398
Costs and expenses........................ 26,755 32,965 32,932 40,858 51,168 24,547 22,433
Depreciation and amortization............. 13,670 17,379 17,175 17,753 21,399 10,137 12,105
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)................... (3,393) (786) (546) (475) (2,092) (1,741) 3,860
Interest expense.......................... (2,823) (6,332) (5,345) (5,787) (7,919) (3,681) (4,095)
Gain on sale of cable systems............. -- 8,506 5,418 -- -- -- --
Other income (expense).................... 191 1,443 344 859 (221) 73 (78)
-------- -------- -------- -------- -------- -------- --------
Loss before income tax benefit (expense)
and cumulative effect of change in
accounting principle.................... (6,025) 2,831 (129) (5,403) (10,232) (5,349) (313)
Income tax benefit (expense).............. 3,027 7,235 (94) 315 226 (25) 210
Cumulative effect of change in accounting
principle............................... -- -- -- -- -- -- (207)
-------- -------- -------- -------- -------- -------- --------
Net income (loss)......................... $ (2,998) $ 10,066 $ (223) $ (5,088) $(10,006) $ (5,374) $ (310)
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA (END OF PERIOD):
Total assets.............................. $127,702 $127,379 $117,676 $143,932 $175,953 -- $166,602
Total debt................................ 72,110 70,643 60,053 85,000 118,000 -- 112,000
Total liabilities......................... 91,773 80,122 69,182 97,008 131,147 -- 122,881
Total stockholders' equity................ 35,969 47,257 48,493 46,924 44,806 -- 43,721
</TABLE>

38
<PAGE> 42

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

The following discussion provides additional information regarding our pro
forma financial condition as of September 30, 1999 and for the nine months ended
September 30, 1999 and the year ended December 31, 1998. It also includes
historical information regarding our financial condition and results of
operations for each of the years ended December 31, 1996, 1997 and 1998 and the
nine months ended September 30, 1998 and 1999. This discussion should be read in
conjunction with "Selected Historical Consolidated Financial Data -- Classic
Communications, Inc.," "Selected Historical Consolidated Financial
Data -- Buford Group, Inc.," "Unaudited Pro Forma Consolidated Financial
Information" and Classic's, Buford's and Star's consolidated financial
statements and the notes relating to those statements appearing elsewhere in
this prospectus. During their existence, both Classic Cable and Buford have
completed multiple acquisitions and divestitures of cable systems. As a result,
we believe that period-to-period comparisons of their financial results to date
are not necessarily meaningful and should not be relied upon as an indication of
future performance.

OVERVIEW

As a result of the Buford acquisition and the pending Star acquisition and
assuming completion of other recently publicly announced transactions by other
companies in the cable television industry, we believe we will be the 14th
largest cable television operator in the United States. We own, operate and
develop cable television systems in selected non-metropolitan markets clustered
primarily in nine contiguous states primarily located in the central United
States. Since 1992, we have completed and integrated over 20 acquisitions. As of
September 30, 1999, our collective systems passed approximately 707,000 homes
and served approximately 414,000 basic subscribers, which includes approximately
98,000 homes and 57,000 subscribers for Star.

REVENUES. Revenues are primarily attributable to monthly subscription fees
charged to subscribers for our basic and premium cable television programming
services. Basic revenues consist of monthly subscription fees for all services,
other than premium programming, as well as monthly charges for customer
equipment rental. Premium revenues consist of monthly subscription fees for
programming provided on a per channel basis. In addition, other revenues are
derived from:

- installation and reconnection fees charged to basic subscribers to
commence or reinstate service;

- pay-per-view charges;

- late payment fees;

- advertising revenues; and

- commissions related to the sale of merchandise by home shopping services.

At September 30, 1999, our collective systems served approximately 414,000
basic subscribers and approximately 222,000 premium units, representing a basic
penetration rate of approximately 59% and a premium penetration rate of
approximately 54%. For Classic and Star premium subscribers are the number of
subscribers who pay a monthly fee for premium channels. Multiplexing premium
channels is counted as one subscriber. For Buford, each premium channel received
is counted as a separate premium subscriber. Premium penetration is calculated
as the number of premium subscribers as a percentage of basic subscribers. The

39
<PAGE> 43

table below sets forth for the periods indicated the percentage of our total
revenues attributable to the various sources:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -----------------
<S> <C> <C>
Basic.................................. 81.1% 81.9%
Premium................................ 11.9 11.3
Other.................................. 7.0 6.8
----- -----
Total revenues............... 100.0% 100.0%
===== =====
</TABLE>

OPERATING EXPENSES. Our operating expenses consist of (A) programming fees,
(B) plant and operating costs, (C) general and administrative expenses and (D)
marketing costs directly attributable to the systems. Programming fees have
historically increased at rates in excess of inflation due to system
acquisitions and internal growth, as well as increases in the number, quality
and cost of programming services offered by us. We benefit from our membership
in an industry cooperative with over 10 million basic subscribers that provides
its members with volume discounts from programming networks and cable equipment
vendors. Plant and operating costs include expenses related to wages and
employee benefits of technical personnel, electricity, systems supplies,
vehicles and other operating costs. General and administrative expenses directly
attributable to the systems include wages and employee benefits for customer
service, accounting and administrative personnel, franchise fees and expenses
related to billing, payment processing, and office administration.

CORPORATE OVERHEAD. Corporate overhead consists primarily of expenses
incurred by our executive management, which are not directly attributable to any
one system.

OPERATING LOSSES. The high level of depreciation and amortization
associated with the acquisitions and capital expenditures related to continued
construction and upgrading of the current systems, together with interest costs
related to our financing activities, have contributed to our net losses. We
believe that such net losses are common for the cable television industry.

RESULTS OF OPERATIONS -- CLASSIC COMMUNICATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1998

<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1999
------------------------ ------------------------
AMOUNT % OF REVENUES AMOUNT % OF REVENUES
------ ------------- ------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................ $50,404 100.0% $72,391 100.0%
Operating expenses:
Programming........................ 12,891 25.6 19,272 26.6
Plant and operating................ 6,063 12.0 8,046 11.1
General and administrative......... 8,168 16.2 11,273 15.6
Marketing and advertising.......... 555 1.1 955 1.3
Corporate overhead................. 2,758 5.5 9,131 12.6
Depreciation and amortization...... 21,682 43.0 32,305 44.6
------- ----- ------- -----
Total operating expenses...... 52,117 103.4 80,982 111.9
------- ----- ------- -----
Loss from operations.......... $(1,713) (3.4)% $(8,591) (11.9)%
======= ===== ======= =====
</TABLE>

REVENUES. Revenues increased $22.0 million, or 44%, for the nine months
ended September 30, 1999, as compared to the corresponding prior year period.
Basic revenues

40
<PAGE> 44

increased by $7.5 million due to increased subscribers of approximately 28,000
in July 1998 and 170,000 in July 1999 and basic rate increases. The increase in
subscribers was due to the acquisition of systems from Cable One in July 1998
and the acquisition of Buford Group, Inc. in July 1999. In addition, there was a
rate increase of approximately 7% affecting approximately two-thirds of our
customers in February 1999 which resulted in an increase in basic revenues per
subscriber of 7% from $27.74 to $29.69 period to period. Classic Cable has
historically increased rates in February in order to offset increases in
operating costs such as programming which occur primarily in January of each
year.

OPERATING EXPENSES. Operating expenses increased $28.9 million, or 55%, for
the nine months ended September 30, 1999, as compared to the corresponding prior
year period. Programming expenses increased $6.4 million due to the continued
escalation in rates charged by programming vendors as well as an increase in the
subscriber base over the same period in 1998. Plant and operating and general
and administrative expenses increased $5.1 million, or 36%, as a result of the
additional costs associated with the systems acquired in 1998 and 1999.
Corporate overhead increased $6.4 million primarily due to $6.6 million of
acquisition related compensation expenses incurred in connection with the Buford
acquisition. Depreciation and amortization expense for the nine months ended
September 30, 1999 was $32.3 million, an increase of $10.6 million over the same
period in 1998. The increase represents the effect of acquisitions and capital
expenditures.

OTHER INCOME AND EXPENSES. Interest expense increased $10.7 million, or
63%, for the nine months ended September 30, 1999, as compared to the
corresponding prior year period. This increase is primarily the result of the
debt issued in conjunction with the July 1999 and 1998 acquisitions and
subsequent refinancing of debt.

INCOME TAX BENEFIT. The income tax benefit decreased $1.7 million for the
nine months ended September 30, 1999, as compared to the corresponding prior
year period. No tax benefit was recognized in 1999. The effective tax rates for
the nine months ended September 30, 1999 and September 30, 1998 differ from the
statutory rates primarily due to an increase in the valuation allowance on
deferred tax assets.

NET LOSS. As a result of the above described fluctuations in Classic's
results of operations and extraordinary losses recognized in connection with the
July 1998 and 1999 refinancing of debt, the net loss of $43.0 million for the
nine months ended September 30, 1999 increased by $20.4 million, as compared to
the net loss of $22.5 million for the corresponding prior year period.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
------------------------ ------------------------
AMOUNT % OF REVENUES AMOUNT % OF REVENUES
------ ------------- ------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................ $60,995 100.0% $69,802 100.0%
Operating expenses:
Programming........................ 14,916 24.5 17,840 25.6
Plant and operating................ 7,622 12.5 8,437 12.1
General and administrative......... 9,257 15.2 11,295 16.2
Marketing and advertising.......... 438 0.7 850 1.2
Corporate overhead.................... 4,322 7.1 3,648 5.2
Depreciation and amortization......... 27,832 45.6 30,531 43.7
------- ----- ------- -----
Loss from operations.......... $(3,392) (5.6)% $(2,799) (4.0)%
======= ===== ======= =====
</TABLE>

41
<PAGE> 45

REVENUES. Revenues for the year ended December 31, 1998 were $69.8 million,
an improvement of $8.8 million over revenues for the year ended December 31,
1997. Basic revenues improved by $7.4 million, or 14.7%, while average monthly
basic revenues per subscriber increased from $25.22 to $27.87, or 10.5%. The
improvement was due primarily to basic rate increases in February 1998 affecting
234 systems and serving approximately 114,000 subscribers, or 69% of total
subscribers, as well as revenue generated from the systems acquired from Cable
One on July 29, 1998. The majority of the remaining systems also had rate
increases during 1998. The change in basic subscribers for the year ended
December 31, 1998 is primarily due to the acquisition of systems from Cable One
in 1998 and the sale of certain Kansas and Oklahoma systems serving
approximately 4,000 basic subscribers during the second quarter of 1997, as well
as bulk account equivalent basic unit conversion calculations following the
basic rate increases, the increased availability and affordability of
competitive video services, non-pay disconnects, and other terminations of
service. The remaining revenues increased 13.7%, from $10.2 million for the year
ended December 31, 1997 to $11.6 million for the year ended December 31, 1998,
due in large part to continued promotion of pay-per-view events.

OPERATING EXPENSES. Operating expenses for the year ended December 31, 1998
were $38.4 million, an increase of $6.2 million, or 19.2%, over operating
expenses for the year ended December 31, 1997. An escalation in rates charged by
certain programming vendors as well as increases in copyright fees and premium
units were largely responsible for the $2.9 million increase in programming
costs over programming costs for the year ended December 31, 1997. Plant and
operating expenses increased from $7.6 million for the year ended December 31,
1997 to $8.4 million for the year ended December 31, 1998, reflecting increases
in technical wages and benefits, plant power, and amounts paid to outside
contractors to update our subscriber database. General and administrative
expenses increased from $9.3 million for the year ended December 31, 1997 to
$11.3 million for the year ended December 31, 1998 due to increases in
administrative wages and benefits, telephone, property taxes and bad debt
expense. General and administrative expense as a percentage of revenue increased
during this period from 15.2% to 16.2%. Marketing expenses for the year ended
December 31, 1998 were $0.9 million, an increase of 94.1% over marketing
expenses for the year ended December 31, 1997. The majority of this increase
relates to increased spending associated with our marketing initiatives. As a
percentage of revenues, operating expenses increased slightly from 52.8% for the
year ended December 31, 1997 to 55.0% for the year ended December 31, 1998.

CORPORATE OVERHEAD. Corporate overhead decreased $0.7 million, or 15.6%,
from $4.3 million for the year ended December 31, 1997 to $3.6 million for the
year ended December 31, 1998 due primarily to a reduction in litigation costs
compared to the year ended December 31, 1997.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for
the year ended December 31, 1998 was $30.5 million, an increase of $2.7 million
over depreciation and amortization expense for the year ended December 31, 1997.
The increase is largely reflective of the inclusion of fixed assets placed into
service during 1997 and 1998.

INCOME TAX BENEFIT. The income tax benefit decreased from $7.3 million for
year ended December 31, 1997 to $1.9 million for the year ended December 31,
1998. The pre-tax loss increased in 1998. However, the effective tax rate
decreased. The effective tax rate decreased from 34.2% for the year ended
December 31, 1997 to 7.1% for the year ended December 31, 1998. This decrease is
primarily due to an increase in the valuation allowance against deferred tax
assets.

42
<PAGE> 46

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
------------------------ ------------------------
AMOUNT % OF REVENUES AMOUNT % OF REVENUES
------ ------------- ------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................ $59,821 100.0% $60,995 100.0%
Operating expenses:
Programming........................ 15,106 25.3 14,916 24.5
Plant and operating................ 7,308 12.2 7,622 12.5
General and administrative......... 8,688 14.5 9,257 15.2
Marketing and advertising.......... 238 0.4 438 0.7
Corporate overhead...................... 2,213 3.7 4,322 7.1
Depreciation and amortization........... 27,510 46.0 27,832 45.6
------- ----- ------- -----
Loss from operations.......... $(1,242) (2.1)% $(3,392) (5.6)%
======= ===== ======= =====
</TABLE>

REVENUES. Revenues for the year ended December 31, 1997 were $61.0 million,
an improvement of $1.2 million, or 2.0%, over revenues of $59.8 million for the
year ended December 31, 1996. In 1997, basic revenues increased by $1.8 million,
or 3.7%, due to basic rate increases implemented primarily during the first
quarter of the year. Average monthly basic revenues per subscriber increased
from $22.77 to $25.22 or 10.8% over the same period in 1996. The decrease in
basic subscribers for the period ended December 31, 1997 is largely reflective
of the sale of Kansas and Oklahoma systems serving approximately 4,000 basic
subscribers during the second quarter of 1997 as well as bulk account equivalent
basic unit conversion calculations following the basic rate increases, the
increased availability and affordability of competitive video services, non-pay
disconnects, and other terminations of service. In 1997, Classic Cable launched
a coordinated array of marketing techniques to attract and retain customers and
to increase premium service penetration, including door-to-door and direct mail
solicitation, telemarketing, media advertising, local promotional events and
cross-channel promotions of new services and pay-per-view events. Net of the
system sales, premium subscribers increased by 2,975 units or 4.9% during 1997
with a corresponding 2.2% increase in penetration, from 36.4% in 1996 to 38.5%
at December 31, 1997. The corresponding premium revenue decreased, however, 3.2%
from $6.5 million in 1996 to $6.3 million in 1997 due in large part to the
system divestitures and discounted pricing offered in connection with the
various marketing campaigns. The remaining revenues also decreased 11.0%, from
$4.1 million in 1996 to $3.6 million in 1997, largely as a function of the
system divestitures and free or heavily-discounted installation marketing
promotions. The decrease was partially offset by $197,000 or 181%, increase in
pay-per-view event revenue.

OPERATING EXPENSES. Operating expenses increased $893,000, or 2.8%, from
$31.3 million in 1996 to $32.2 million in 1997. Programming costs for the year
ended December 31, 1997 decreased $190,000, or 1.3%, over the year ended
December 31, 1996 to $14.9 million. Increases in copyright fees, premium units
and rates charged by certain programming vendors were offset by the
renegotiation of certain programming contracts wherein rate concessions, launch
fees and other marketing support totaling $564,000 were obtained. Plant and
operating expenses increased $314,000, or 4.3%, to $7.6 million during 1997 due
to the hiring of additional technical personnel as well as increases in
technical wages and benefits and vehicle operating expenses. General and
administrative expenses for 1997 were $9.3 million, an increase of $569,000, or
6.5%, over 1996. The increase was due primarily to the addition of certain key
management and administrative personnel, an increase in bad debt expense, and
the write-off of certain costs related to the termination of the purchase
agreement and operations associated with the

43
<PAGE> 47

proposed acquisition of telephone exchanges in Kansas. Marketing and advertising
expenses for the year ended December 31, 1997, were $438,000, an increase of
$200,000, or 84.0%, over the year ended December 31, 1996, relating directly to
increased spending associated with our aforementioned new marketing initiatives.
As a percentage of revenues, operating expenses increased slightly, from 52.4%
for the year ended December 31, 1996 to 52.9% for the year ended December 31,
1997.

CORPORATE OVERHEAD. Corporate overhead for the year ended December 31,
1997, was $4.3 million, an increase of $2.1 million over the year ended December
31, 1996. The increase was largely reflective of costs incurred in conjunction
with divorce proceedings with one of Classic's officers. Classic agreed to,
among other things, provide monetary consideration for the release of certain
claims. Legal, consultant and other charges of approximately $1.4 million were
charged to corporate overhead for 1997 in connection with this matter. The
remainder of the increase was due primarily to the hiring of the Vice President
of Operations in February 1997 as well as other increases in executive
compensation, travel and entertainment.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for
the year ended December 31, 1997, was $27.8 million, an increase of $322,000
over the year ended December 31, 1996. The increase is due primarily to the
inclusion of fixed assets placed into service during the year. The increase was
partially offset by the sales of certain systems during 1996 and 1997.

INCOME TAX BENEFIT. The benefit for income taxes increased from $6.8
million in 1996 to $7.3 million in 1997, primarily due to the increase in the
pre-tax loss from operations in 1997 and an increase in the effective tax rate
from 34.1% to 34.2% in 1996 and 1997, respectively.

Total deferred tax liabilities and total deferred tax assets decreased by
$12.9 million and $6.3 million, respectively, from 1996 to 1997. Approximately
$8.1 million of the decrease in deferred tax liabilities relates to taxable
temporary differences, primarily recurring book depreciation, and amortization
in excess of tax. The remaining $4.8 million decrease in deferred tax
liabilities relates to the increase in tax basis of assets held by one of our
subsidiaries as a result of a deferred intercompany gain recognized during 1997.
Approximately $4.9 million of the decrease in total deferred tax assets relates
primarily to the utilization of net operating losses to offset taxable income
generated by the taxable temporary differences noted above. Total deferred tax
assets also decreased by $1.5 million due to the expiration of certain net
operating losses in 1997.

The expiration of net operating losses in 1997 had no impact on the
provision for income taxes since a valuation allowance had previously been
provided for these loss carryforwards. The deferred tax asset for the expired
net operating loss carryforwards and the related valuation allowance were
reduced accordingly.

The net effect of the above item resulted in a current federal tax expense
of $0.3 million for alternative minimum tax and a deferred tax benefit of $7.6
million for the reduction in net deferred tax liabilities.

RESULTS OF OPERATIONS -- BUFORD

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

REVENUES. Revenues for the six months ended June 30, 1999 were $38.4
million, an improvement of $5.5 million, or 17%, over revenues of $32.9 million
for the corresponding prior year period. Revenues for the six months ended June
30, 1999 included the revenues for the systems acquired in late April 1998.
Average monthly basic revenue per basic subscriber increased 7% from $28.27 in
the first six months of 1998 to $30.94 in the first six months of 1999.

44
<PAGE> 48

OPERATING EXPENSES. Operating expenses increased $2.3 million from $20.2
million for the six months ended June 30, 1998 to $22.5 million for the six
months ended June 30, 1999. Programming costs for the six months ended June 30,
1999 increased $1.7 million, or 19%, over the corresponding prior year period to
$10.4 million. The increase was due primarily to the acquisition of subscribers
in late April 1998 and an increase in the number and quality of programming
services offered by Buford. Plant and operating expenses totaled $3.4 million
for the six months ended June 30, 1999 and June 30, 1998. Plant and operating
expenses as a percent of revenues decreased from 10% for the six months ended
June 30, 1998 to 9% for the six months ended June 30, 1999 reflecting the
continued benefits derived from Buford's cluster strategy. General and
administrative expenses for the six months ended June 30, 1999 were $8.5
million, up $0.6 million, or 7%, over the corresponding prior year period. The
increase was due primarily to cable systems and subscribers acquired in 1998. As
a percentage of revenues, general and administrative expenses decreased from 24%
for the six months ended June 30, 1998 to 22% for the six months ended June 30,
1999. Marketing and advertising expenses for the six months ended June 30, 1999
and 1998 were relatively flat at $0.2 million.

CORPORATE OVERHEAD. Corporate overhead for the six months ended June 30,
1999 was $(0.1) million, a decrease over the six months ended June 30, 1998 of
approximately $4.4 million due primarily to compensation expense related to
employee stock appreciation rights in 1998. The management group's appreciation
rights were tied to the appreciation in the market value of Buford's common
stock. Buford recorded a credit of approximately $0.7 million during the six
months ended June 30, 1999 to corporate overhead based on the actual payments
made upon consummation of the sale. Buford recorded compensation expense of $3.6
million in the six months ended June 30, 1998 related to these appreciation
rights. Excluding the compensation expense relating to these appreciation
rights, corporate overhead decreased by approximately $0.2 million for the six
months ended June 30, 1999 as compared to the six months ended June 30, 1998.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for
the six months ended June 30, 1999 was $12.1 million, an increase of $2 million
or 19% over the corresponding prior year period. The increase is due primarily
to the inclusion of the tangible and intangible assets acquired during 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

REVENUES. Revenues in 1998 were $70.5 million, an improvement of $12.4
million, or 21.3%, over revenues in 1997. The improvement was due primarily to
basic rate increases during the first half of 1998 as well as revenue generated
from the systems acquired in late April 1998. Buford has historically increased
rates in the majority of its systems during the first half of the year in order
to offset increases in its operating costs such as programming which occur in
January of each year. Average monthly basic revenue per basic subscriber
increased 7.1%, from $26.31 for the year ended December 31, 1997 to $28.17 for
the year ended December 31, 1998.

OPERATING EXPENSES. Operating expenses in 1998 were $41.8 million, an
increase of $5.8 million, or 16.1%, over operating expenses for the year ended
December 31, 1997. The continued escalation in rates charged by programming
vendors as well as increases in copyright fees and premium units were largely
responsible for the $4.0 million increase in programming costs over 1997. Plant
and operating expenses increased from $6.6 million for the year ended December
31, 1997 to $6.9 million for the year ended December 31, 1998, reflecting
increases in technical wages and benefits and amounts paid to outside
contractors. General and administrative expenses increased from $14.9 million
for the year ended December 31, 1997 to $16.2 million for the year ended
December 31, 1998 due to increases in administrative wages and benefits and
utility expense. Marketing and advertising expenses for the year ended December
31, 1998 were $0.3 million, an increase of 50.0% over marketing and advertising

45
<PAGE> 49

expenses for the year ended December 31, 1997. The majority of this increase
relates to increased spending associated with Buford's marketing initiatives.

CORPORATE OVERHEAD. Corporate overhead increased $4.5 million, or 91.8%,
from $4.9 million for the year ended December 31, 1997 to $9.4 million for the
year ended December 31, 1998 due primarily to an increase in compensation
expense related to employee stock appreciation rights from $3.5 million for the
year ended December 31, 1997 to $7.9 million for the year ended December 31,
1998.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for
the year ended December 31, 1998 was $21.4 million, an increase of $3.6 million
over depreciation and amortization expense for the year ended December 31, 1997.
The increase is largely reflective of the inclusion of fixed assets acquired and
those placed into service during 1997 and 1998.

INCOME TAX BENEFIT. Income tax benefit of $0.2 million was recorded for
the year ended December 31, 1998 versus $0.3 million for the year ended December
31, 1997. This decrease is primarily due to an increase in the valuation
allowance against deferred tax assets.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

REVENUES. Revenues for the year ended December 31, 1997 were $58.1
million, an improvement of $8.5 million, or 17.1%, over revenues of $49.6
million for the year ended December 31, 1996. This increase was primarily due to
basic rate increases implemented during the first half of the year, and
acquisitions of cable systems in Arkansas and Texas. Average monthly basic
revenue per basic subscriber increased 6.1% from $24.80 for the year ended
December 31, 1996 to $26.31 for the year ended December 31, 1997.

OPERATING EXPENSES. Operating expenses increased $6.0 million, or 20.0%,
from $30.0 million for the year ended December 31, 1996 to $36.0 million for the
year ended December 31, 1997. Programming costs for the year ended December 31,
1997 were 14.3 million, an increase of $2.7 million, or 23.3%, over the year
ended December 31, 1996. This increase was due to the acquisition of several
cable systems, increased subscriber rates and the expanded channel lineups in
many of Buford's markets. Plant and operating expenses increased $0.9 million,
or 15.8%, to $6.6 million during 1997 due to the hiring of additional technical
personnel as well as increases in technical wages and benefits and vehicle
operating expenses. General and administrative expenses for the year ended
December 31, 1997 were $14.9 million, an increase of $2.3 million, or 18.3%,
over general and administrative expenses for the year ended December 31, 1996.
The increase was due primarily to an increase in bad debt expense and telephone
expense which were related to the consolidation of regional offices into the
Buford Call Center facility in Tyler, Texas. Marketing and advertising expenses
for the year ended December 31, 1997 and December 31, 1996 were flat at $0.2
million.

CORPORATE OVERHEAD. Corporate overhead for the year ended December 31,
1997 was $4.9 million, an increase of $2.0 million over the year ended December
31, 1996. The increase was largely reflective of an increase in compensation
expense related to employee stock appreciation rights from $1.5 million for the
year ended December 31, 1996 to $3.5 million for the year ended December 31,
1997.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for
the year ended December 31, 1997, was $17.8 million, an increase of $0.6 million
over depreciation and amortization expense for the year ended December 31, 1996.
The increase is due primarily to the inclusion of fixed assets placed into
service during the year.

INCOME TAX BENEFIT. The benefit for income taxes was $0.3 million for the
year ended December 31, 1997 versus tax expense of $0.1 million for the year
ended December 31, 1996, primarily due to the increase in the pre-tax loss from
operations in 1997.

46
<PAGE> 50

LIQUIDITY AND CAPITAL RESOURCES

CLASSIC -- HISTORICAL

Since Classic's inception, Classic has been supported through debt
financings and equity raised through sales of equity to institutional equity
investors. At September 30, 1999, a substantial majority of the capital stock of
Classic was owned by institutional investors, including Brera Classic, BT
Capital Partners, Inc., Austin Ventures, L.P., BA Capital Company, L.P., The
Texas Growth Fund, and certain members of Classic's bank group. These
institutional investors have contributed approximately $134.1 million of total
equity financing to Classic. At September 30, 1999, Classic had aggregate
consolidated indebtedness of approximately $522.8 million. This debt and equity
financing was utilized primarily in the acquisition of cable television systems.

Our net cash provided by operations was $14.3 million in 1998 compared to
$7.9 million in 1997 and $7.9 million in 1996. Our net cash provided by (used
in) investing activities was $(57.2) million, $(1.3) million and $3.4 million in
1998, 1997 and 1996, respectively. Our net cash provided by (used in) financing
amounted to $45.1 million, $(6.6) million and $(12.2) million, in 1998, 1997 and
1996, respectively. Our Adjusted EBITDA increased to $28.8 million in 1998 from
$25.5 million in 1997 and $27.3 million in 1996. Adjusted EBITDA as a percentage
of revenue changed to 41.3% in 1998 from 41.8% in 1997, and 45.7% in 1996.
Included in Adjusted EBITDA for the year ended December 31, 1997 were charges of
$1.4 million for divorce litigation costs and $0.4 million for special bonuses
paid to executive officers. Included in Adjusted EBITDA for the year ended
December 31, 1998 were special bonuses paid to executive officers of $0.8
million.

For the three years ended December 31, 1998, our capital expenditures,
other than those related to acquisitions, were approximately $32.1 million.
Capital expenditures include expansion and improvements of existing cable
properties, plant and equipment upgrades, as well as cable line drops, line
plant extensions and installations of service to new subscribers.

BUFORD -- HISTORICAL

For the three years ended December 31, 1998, Buford's capital expenditures,
other than those related to acquisitions, were approximately $58.1 million.
Capital expenditures include expansion and improvements of existing cable
properties, plant and equipment upgrades, as well as cable line drops, line
plant extensions and installations of services to new subscribers and the
addition of a new state of the art call center.

Since its inception, Buford was supported by commercial banking
institutions and insurance company funding. At June 30, 1999, Buford had
aggregate consolidated indebtedness of $112.0 million, all of which was repaid
on the date of the acquisition. Borrowings bore interest at the banks' floating
rates, LIBOR, or a combination thereof as selected by Buford, plus a margin
dependent on Buford's leverage ratio. The weighted average effective interest
rate at June 30, 1999 was 6.2%.

Buford's net cash provided by operations was $20.3 million in 1998 compared
to $16.9 million in 1997 and $13.6 million in 1996. Buford's net cash provided
by (used in) investing activities was ($53.2 million), ($39.7 million) and $20.3
million in 1998, 1997 and 1996, respectively. Buford's net cash provided by
(used in) financing amounted to $32.8 million, $24.9 million and ($10.9 million)
in 1998, 1997 and 1996, respectively. Buford's Adjusted EBITDA increased to
$27.2 million in 1998 from $20.8 million in 1997 and $18.1 million in 1996.
Adjusted EBITDA as a percentage of revenue changed to 38.6% in 1998 from 35.8%
in 1997 and 36.5% in 1996.

47
<PAGE> 51

PRO FORMA FOR THE BUFORD ACQUISITION, THE STAR ACQUISITION AND OTHER COMPLETED
ACQUISITIONS

The cable television industry is a capital intensive business that
generally requires financing for the upgrade, expansion and maintenance of the
technical infrastructure. In addition, we have pursued, and continue to pursue,
a business strategy that includes selective acquisitions. We have funded our
working capital requirements, capital expenditures and acquisitions through a
combination of internally generated funds, long- and short-term borrowings, and
equity contributions. We intend to continue to finance these expenditures from
similar sources.

In July 1998, we issued $114.0 million of 13.25% Senior Discount Notes due
2009 and our wholly owned subsidiary, Classic Cable, issued $125.0 million of
9.875% Senior Subordinated Notes due 2008. Net of the applicable discounts and
the fair value of the common stock sold along with the 2009 senior discount
notes, proceeds from these issues were $60 million and $124.4 million,
respectively. Concurrent with the offering, Classic Cable entered into the $125
million 1998 Credit Agreement. Proceeds from the 1998 Credit Agreement totaled
$96 million. These proceeds were used to retire the existing debt facility and
purchase certain cable systems of Cable One.

In July 1999, Classic Cable issued $150.0 million of 9.375% Senior
Subordinated Notes due 2009. Concurrently with the offering, Classic Cable
entered into the 1999 Credit Agreement. The proceeds from these transactions and
a sale of our stock were approximately $425.0 million and were used to (a) fund
the acquisition of Buford Group, Inc., (b) repay the 1998 Credit Agreement and
(c) pay fees and expenses of these transactions. The 1999 Credit Agreement
consists of (a) a $75.0 million revolving credit facility which matures in 2007,
(b) a $75.0 million Term A loan facility which matures in 2007, (c) a $100.0
million Term B loan facility which matures in 2008, and (d) a $100.0 million
Term C loan facility which matures in 2008. Mandatory payments commence in 2001.
Interest is based upon either a LIBOR rate plus an applicable margin or, at our
option, a base rate plus an applicable margin. The Term C loan facility was
utilized in September 1999 to fund the partial redemption of $86.0 million of
the 2008 subordinated notes. For more information regarding our utilization of
the facilities under the 1999 credit agreement, see "Description of Certain
Indebtedness -- Credit Facility."

We anticipate utilizing the proceeds of this offering to repay the 2009
senior discount notes and to finance the Star acquisition. We anticipate that
the repayment of the 2009 senior discount notes will result in a loss on
extinguishment of debt of approximately $11.5 million.

The 1999 Credit Agreement of Classic Cable is collateralized by essentially
all the assets of Classic Cable. We have no operations of our own. Consequently,
we will rely on dividends and cash flow of Classic Cable to meet our debt
service obligations. The terms of the 1999 Credit Agreement restrict certain
activities of Classic Cable, including the incurrence of additional indebtedness
and the payment of certain dividends. Accordingly, substantially all the assets
and operations of Classic Cable are restricted as to transfer to us and may not
be available for dividends and/or our debt service.

We have debt service requirements increasing from approximately $40 million
a year to $54 million over the next eight years. During the next four fiscal
years, we anticipate capital expenditures averaging approximately $50 million a
year. Debt covenants dictate that Classic Cable maintain certain ratios related
to debt balances and operating results in addition to limiting the amount that
can be used for capital expenditures. Funds to support Classic Cable's
operations and pay the anticipated debt service and capital expenditure
requirements are anticipated to be primarily generated from its operating
activities and from additional financing activities. On September 30, 1999, we
had $75.0 million available under Classic Cable's line of credit, subject to
some limitations.

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We have formulated a capital expenditures plan to spend over the next four
fiscal years approximately:

- $126.0 million to establish a technical standard of 550-750 MHz bandwidth
capacity, or 78 analog channels, in cable television systems serving
approximately 72% of our basic subscribers and for the consolidation of
headends;

- $52.0 million for ongoing maintenance and replacement, installations and
extensions to improve the cable plant related to customer growth; and

- $22.0 million for the purchase of additional addressable converters and
headend equipment to support the deployment of digital services. See
"Business."

Our ability to make payments on and to refinance our indebtedness and to
fund planned capital expenditures will depend on our ability to generate cash in
the future. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond our control.

Based on Classic Cable's current level of operations and anticipated cost
savings and operative improvements, we believe Classic Cable's cash flow from
operations, available cash and available borrowings under its credit facility
will be adequate to meet our future liquidity needs for at least the next few
years.

We cannot assure you, however, that Classic Cable's business will generate
sufficient cash flow from operations, that currently anticipated cost savings
and operative improvements will be realized on schedule or that future
borrowings will be available to us under Classic Cable's credit facility in an
amount sufficient to enable us to pay our indebtedness or to fund our other
liquidity needs. We may need to refinance all or a portion of our indebtedness
on or before maturity. We cannot assure you that we will be able to refinance
any of our indebtedness, including Classic Cable's credit facility and its
outstanding notes, on commercially reasonable terms or at all. See "Risk
Factors."

FLOATING RATE DEBT

Classic Cable's credit facility bears interest at floating rates.
Accordingly, its earnings are affected by changes in short-term interest rates.
Classic Cable does not enter into derivatives or other financial instruments for
trading or speculative purposes. However, the credit facility does require that
50% of Classic Cable's outstanding debt be effectively subject to a fixed rate.
If Classic Cable has non-fixed rate debt in a principal amount in excess of its
current senior subordinated indebtedness, as set forth in the credit facility,
then Classic Cable must enter into interest rate hedges and/or other
arrangements which are designed solely to protect against fluctuations in
interest rates. These arrangements would be required only with respect to the
portion of Classic Cable's debt in excess of its senior subordinated
indebtedness to the extent necessary to raise the aggregate amount of Classic
Cable's fixed rate debt to 50% of its outstanding debt.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, which, as
amended, is required to be adopted in years beginning after June 15, 2000.
Because of the Company's minimal use of derivatives, management does not
anticipate that the adoption of the new Statement will have a significant effect
on earnings or the financial position of the Company.

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INFLATION

Certain of our expenses, such as programming, wages and benefits, equipment
repair and maintenance, billing and marketing are subject to inflation. However,
because changes in costs are generally passed through to subscribers, these
changes historically have not had a material adverse effect on our results of
operations.

YEAR 2000 COMPLIANCE

Through 1999, most large companies will be facing a potentially serious
business problem because many software applications and computer equipment
developed in the past may not properly recognize calendar dates beginning in the
year 2000. This problem could cause computers to either shut down or provide
incorrect data.

These problems are expected to increase in frequency and severity as the
year 2000 approaches. This issue impacts our owned or licensed computer systems
and equipment used in connection with internal operations, including:

- information processing and financial reporting systems;

- customer billing systems;

- customer service systems;

- telecommunication transmission and reception systems; and

- facility systems

We also rely directly or indirectly, in the regular course of business, on
the proper operation and compatibility of third party systems. The year 2000
problem could cause these systems to fail or become incompatible with our
systems.

The failure or loss of compatibility among systems could cause material
disruptions, including the inability to process transactions, generate invoices,
or to respond to requests for service. We could also face similar disruptions if
the year 2000 problem causes general widespread problems or an economic crisis.
We cannot now estimate the extent of these potential disruptions on our results
of operations, liquidity or financial condition.

Through the redeployment of internal resources and the selective engagement
of outside consultants, we are addressing the year 2000 problem with respect to
our internal operations in three stages:

- conducting an inventory and evaluation of our systems, components, and
other significant infrastructure to identify those elements that we
reasonably believe could be expected to be affected by the year 2000
problem. This stage has been completed.

- remediating or replacing equipment that, based upon such inventory and
evaluation, we believe may fail to operate properly in the year 2000.
This stage has been completed.

- testing of the remediation and replacement conducted in stage two. This
stage is substantially complete, with further testing to be conducted up
to and through December 31, 1999.

Much of our assessment efforts have involved, and depend upon, inquiries to
third party service providers, suppliers and vendors of various parts or
components of our systems. We have obtained certifications from third party
service providers, suppliers and vendors as to the readiness of mission critical
elements. Certain of these parties have certified the readiness of their
products but will not certify their operability within our fully integrated
systems. We cannot assure you that these technologies of third parties, on which
we rely, will be year 2000 ready or

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timely converted into year 2000 compliant systems compatible with our systems.
We have, however, evaluated the potential impact of third party and/or
integration failure on our systems in connection with the development of our
contingency plans.

Our year 2000 plan calls for appropriate contingency planning for our
at-risk business functions. As part of our normal operations, contingency plans
are in place to minimize disruption of service to customers and other critical
business functions, including guidelines for informing the appropriate personnel
in order to accelerate restoration of service.

We have negotiated certain contractual rights relating to the year 2000
problem in the Star asset purchase agreement. We have included acquired cable
television systems in our year 2000 compliance efforts. We are monitoring the
remediation process for the systems we are acquiring to ensure completion of
remediation in a timely manner. We have found that these companies are following
a three stage process similar to that outlined above and are on a similar time
line for completion. We are not currently aware of any likely material system
failures relating to the year 2000 affecting the acquired systems.

We believe our efforts have significantly reduced our level of uncertainty
about the year 2000 problem and, in particular, about the year 2000 compliance
and readiness of our material vendors. However, no assurance can be given that
year 2000 compliance can be achieved without costs that might affect future
financial results or cause reported financial information not to be necessarily
indicative of future operating results or future financial condition.

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BUSINESS

COMPANY OVERVIEW

We believe that there are significant operating, competitive and economic
advantages in acquiring and owning systems in non-metropolitan markets. In
pursuing our business strategy, we have focused our acquisition efforts on cable
television systems in growing non-metropolitan markets and have sought to build
geographic clusters of these systems. Because of poor reception of broadcast
television signals, customers often require cable television service in these
markets to receive a full complement of off-air broadcast stations, such as ABC,
NBC, CBS, and FOX. These off-air broadcast stations represent approximately 26%
of overall television viewing. In addition, there are typically fewer
competitive entertainment alternatives in these markets. As the leading
multi-channel video provider in our markets, we have capitalized on these market
characteristics by generating predictable revenue streams and EBITDA.

Approximately 71% of our cable subscribers reside in a county seat or are
located within a 30-mile radius of a county seat. These markets typically have
(A) larger populations, (B) more favorable demographics, (C) higher growth
characteristics, and (D) stronger economic activity than do other
non-metropolitan markets. We have created clusters of cable television systems
around these markets and believe that clustering cable systems provides
significant operating and cost advantages. We own and manage 576 cable systems
primarily clustered in nine contiguous states, including 37 systems for Star
located in Louisiana, Ohio and Texas. Approximately 72% of our customers are
located on approximately 27% of our headends. This level of clustering allows us
to deploy our technical staff, vehicle fleet, and shared resources more
efficiently, resulting in lower operating and capital costs and improved
customer response time. Clustering also allows us to:

- manage the workforce and allocate personnel more effectively;

- address the specific customer service and programming needs of our
customers;

- introduce digital cable services and other new services in a cost
effective manner;

- increase the number of households reached with existing marketing
budgets;

- increase the benefits of local and regional community relations efforts;
and

- manage political relationships at the local and state level.

We believe that providing superior customer service and developing strong
community relations are key elements to our long-term success and enable us to
maintain our subscribers, support our rates, and foster good working
relationships with local administrators. We seek to achieve a high level of
customer satisfaction by employing a well-trained staff of customer service
representatives and experienced field technicians. We operate two call centers
located in Tyler, Texas, and Plainville, Kansas, which offer 24-hour, 7-day per
week coverage to all of our customers on a toll-free basis. We believe that the
combination of these call centers provides us with redundancy safeguards and a
platform for further growth.

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J. Merritt Belisle, our Chief Executive Officer, and Steven E. Seach, our
President and Chief Financial Officer, founded Classic in 1992 and have
assembled a management team with significant business experience operating cable
television systems and providing quality customer service to cable subscribers.
Messrs. Belisle and Seach have 20 years of collective experience in acquiring,
operating, integrating and developing cable television systems and have worked
together for over ten years.

As a result of the Buford acquisition, our management team has been further
enhanced by the addition of several key members of Buford's management team,
including Ron Martin, who became our Executive Vice President of Operations and
Kay Monigold, who became our Executive Vice President of Administration. Mr.
Martin and Ms. Monigold have been in the cable industry for over 25 years and 18
years, respectively.

Since our inception, we have been supported through debt financings and
equity raised through sales to institutional equity investors. A substantial
majority of our capital stock is owned by institutional investors, including
Brera Classic, BT Capital Partners, Inc., Austin Ventures, L.P., BA Capital
Company, L.P., The Texas Growth Fund, and certain members of our existing bank
group. These institutional investors have contributed approximately $134.1
million of total equity financing to us. At September 30, 1999, on a pro forma
basis, we had long-term debt of approximately $504.9 million. This debt and
equity financing was utilized primarily in the acquisition of cable television
systems.

OUR STRATEGY

FOCUS ON ATTRACTIVE NON-METROPOLITAN MARKETS

We have followed a systematic approach to acquiring, consolidating,
operating and developing cable television systems based on the primary goal of
increasing our operating cash flow while maintaining the quality of our
services. Our business strategy is to focus on serving growing non-metropolitan
communities in the United States. For example, approximately 71% of our cable
subscribers reside in a county seat or within a 30-mile radius of a county seat.
These markets generally tend to have more serviceable households per mile, more
robust household growth, higher income per household, more disposable income per
household and a stronger business foundation than do other non-metropolitan
markets. According to Equifax National Decisions Systems and Claritus, Inc.,
total households in the top 110 systems owned by us are projected to grow by
approximately 6.2%, versus the national average of 5.7%, from 1997 to 2002.
Those 110 systems currently serve approximately 62.6% of our total subscribers.
We believe that our cable systems generally are subject to less competition than
systems serving large urban cities, especially for services such as high speed
Internet access. It is our goal to continue to focus on growing non-metropolitan
areas.

EXPAND AND IMPROVE CLUSTERS THROUGH SELECTIVE ACQUISITIONS

To date, we have sought to acquire cable television systems in communities
that are in close geographic proximity to other cable television systems owned
or managed by us in order to maximize the economies of scale and operating
efficiencies associated with "clusters" of systems. We plan to continue our
clustering strategy by pursuing opportunities to purchase cable television
systems in our existing markets as well as by entering contiguous or surrounding
markets, if and when attractive acquisition opportunities become available. In
addition to system acquisition opportunities, we expect to pursue opportunities
to exchange certain of our cable

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systems for other cable television properties to promote our clustering strategy
further. Factors likely to be considered by us in evaluating the desirability of
a potential acquisition or asset exchange opportunity include valuation,
subscriber densities, growth potential, in terms of both market and cash flow,
and whether the target system can be readily integrated into our operations.

In order to offer Internet access on a full-scale residential and
commercial basis in the communities we serve, we are actively seeking to acquire
incumbent Internet service providers in and around our markets. We believe that
acquiring the expertise from an incumbent Internet service provider would allow
us to offer services in the most effective and timely manner enabling us to
capitalize on the immediate, viable Internet opportunities in our markets. We
are also interested in acquiring or aligning with other companies that provide
other telecommunications services including local and long distance telephone,
utility, and direct-to-home, in addition to other Internet technology and
software firms.

FOCUS ON COMMUNITY RELATIONS AND CUSTOMER SATISFACTION

We believe that providing superior customer service and enhancing the
quality of life in the communities we serve are the key elements to our ultimate
long-term success. Our high level of service enables us to maintain subscribers
and support our rates. It is our goal to achieve a high level of customer
satisfaction by employing a well-trained staff of customer service
representatives and experienced field technicians.

Our Tyler, Texas call center offers 24-hour, 7-day per week coverage to
customers on a toll-free basis. The call center utilizes four T-1 lines and can
handle up to 80 incoming calls at any given time. We believe that, as currently
configured, the call center can accommodate 250,000 subscribers. The call center
complex, including hardware and software, was designed to be rapidly and
cost-effectively increased in scale to manage up to approximately 2.0 million
subscribers.

Our Tyler, Texas call center administers all phases of on-site service at a
customer's home, including dispatching the order, confirming that service has
been completed and updating the billing system and the customer's records to
reflect completion of the service. We utilize a satellite-based system to track
and dispatch our service vehicles throughout the service territory. The Qualcomm
OmniTRACS system provides real-time, constant two-way communications between the
call center and service vehicles. The system utilizes a base unit at the call
center that sends and receives messages via satellite from receiver/transmitters
installed atop each service vehicle.

Our Plainville, Kansas call center also offers 24-hour, 7-day per week
coverage on a toll-free basis. The customer service center is supported by three
T-1 lines and can handle up to 60 incoming calls at any given time through a
telephone switch we own. The switch is complemented by a software package that
can track call statistics ranging from average answer time to the number of
calls by type, as well as individual and group performance statistics. This
sophisticated software facilitates the movement of customer service and field
service agents in order to minimize answer times. Data is recorded daily and
reports can be generated to track trends in call volume.

We believe customer service is further enhanced by our 44 offices and
Star's seven offices and their ability to coordinate technical service and
installation appointments more effectively and to respond quickly to customer
inquiries. We also believe that local offices increase the effectiveness of our
customer retention efforts, community relations endeavors, and marketing
campaigns. Our customer service and technical staff attend ongoing workshops led
by both a full-time, in-house training specialist and outside customer service
and technical training firms that emphasize first time quality, point-of-sale
subscriber acquisition, upgrade and retention,

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technical support, and other pertinent customer service issues. In addition, we
employ bilingual customer service representatives to serve our Spanish-speaking
subscriber base.

We are dedicated to fostering strong community relations in the communities
we serve. The cornerstone of our community relations strategy is our Classic
Scholarship Fund, which has provided meaningful financial assistance to hundreds
of graduating high school seniors within our service areas over the past three
years. We install and provide free cable television service and Internet access
to public schools, government buildings, and public libraries in our franchise
areas. We believe that our relations with the communities we serve are good.

We maintain a site on the World Wide Web (http://www.classic-cable.com) to
help communicate and interact with our online customers. Our website was
designed to help our customers make intelligent television viewing choices and
to acquaint our customers with us and our corporate mission.

INCREASE THE REVENUE-GENERATING BANDWIDTH OF OUR CABLE PLANT

Through our capital improvement program, we plan to upgrade our cable plant
aggressively and systematically utilizing cost-effective and appropriate
technology for the market served. These upgrades include:

- Traditional rebuild to a 550-750 MHz bandwidth capacity in selected
systems;

- The deployment of digital compression services such as Headend in The
Sky(R), known as HITS, a digital compression service developed by
National Digital Television Center, Inc., a subsidiary of
Tele-Communications, Inc., and TVN Entertainment Digital Service, known
as TVN;

- The deployment of fiber optic cable; and

- The consolidation of headends.

We believe that these technical upgrades create additional revenue
opportunities, enhance operating efficiencies, increase customer satisfaction,
improve franchise relationships and solidify our position as the dominant
provider of multi-channel video services in our markets. We seek to benefit from
the capital improvement program by generating additional revenue from:

- Expanded tiers of basic programming;

- Multiplexed premium services;

- Pay-per-view movies and events;

- Digital music;

- On-screen navigators;

- Home shopping services;

- High-speed data services;

- Internet access; and

- Advertising.

IMPLEMENT OUR BROADBAND SERVICES

DIGITAL SERVICES. Depending on the size of the system, we intend to offer
digital video services through either a digital headend or through a
direct-to-home solution. In larger systems,

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we provide enhanced digital video in our upgraded and certain other systems
using either HITS or TVN. HITS enables us to deliver video services such as:

- pay-per-view programming;

- on-screen programming navigators;

- multiplexed premium channels such as HBO-Family and HBO-Signature;

- digital music; and

- multiple tiers of niche satellite basic programming.

TVN also offers a similar digital compression service which provides a
robust line up of pay-per-view programming, digital quality music channels, and
the on-screen programming navigator. This digital delivery method provides for a
more flexible, customized product and improved channel lineups and may
potentially allow for more flexibility in pricing and packaging.

For systems with fewer than 2,000 subscribers, or other systems whose
headends are uneconomical to upgrade, we intend to use a digital satellite
alternative to provide a more robust cable product offering. Whether through the
resale of digital programming from a DBS provider or HITS-2-Home, we can offer
customers over 140 additional channels. For example, HITS has recently developed
a seamlessly delivered digital satellite programming overlay product direct to
the home. This product, HITS-2-Home, is expected to offer customers a
programming selection comparable to that currently offered by HITS to the
headend.

We believe that these enhanced digital video services will allow us to
provide digital services comparable to DBS at a lower cost. We have introduced
digital cable services to approximately 98,000 homes, representing approximately
62,000 cable subscribers. As of September 30, 1999, we had approximately 3,800
digital customers. We plan to continue the roll out of digital cable services
throughout the company over the next several months.

INTERNET SERVICES. We believe that additional revenue opportunities exist
in non-metropolitan markets by providing advanced telecommunication services,
such as Internet access and the delivery of high-speed data services, including
local- and wide-area network applications, for residential and commercial
customers. We believe that these markets have limited appeal to the larger
telecommunications companies and that our technical platform will provide these
services at higher speeds and lower cost, giving us a competitive advantage over
other telecommunication providers in the markets in which we operate. For
example, a 10 megabit cable modem can provide Internet access at download speeds
350 times faster than typical 28.8 kilobit dial-up telephone modem connections.
We have introduced Internet access via one-way cable modem in selected systems
and will seek to complement this service with the telephone modem connection
through acquisitions of local Internet service providers.

As part of our strategy to deliver Classic-branded advanced data services
in communities we serve, we have entered into a non-exclusive agreement with
High Speed Access Corporation, known as HSA. HSA provides a comprehensive
turnkey solution for high speed Internet access via cable modems to residential
and commercial end users. HSA will provide speed to market, call center/help
desk support, national and local marketing assistance, engineering and network
design, cable modems and supporting headend equipment. The General Instruments
modem that HSA currently uses is system flexible, capable of being deployed in a
one-way, or telco return, or two-way scenario. In return for these services, we
will receive a 50% split of gross customer revenue. We plan to pursue strategic
relationships with other high speed internet companies in the near future.
Currently, we have nine active sites passing approximately 46,000 homes.

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STAR ACQUISITION

On October 14, 1999, a subsidiary of Classic Cable entered into an
agreement to purchase substantially all of the assets of Star Cable Associates,
which operates cable television systems in Texas, Louisiana and Ohio, for an
aggregate purchase price of approximately $110 million in cash and 555,555
shares of Class A common stock. The asset purchase agreement contains customary
representations, warranties, covenants, indemnities and closing conditions,
including closing conditions related to governmental approvals and the transfer
of franchise licenses to Classic Cable by Star. The asset purchase agreement is
terminable by any party to the agreement not in breach of the agreement on March
31, 2000 if the Star acquisition has not been consummated prior to such date.
The asset purchase agreement is terminable on July 31, 2000 by any party to the
agreement if the Star acquisition had not been consummated prior to such date.
Star serves approximately 57,000 customers. For the nine months ended September
30, 1999, Star had revenues of approximately $18.6 million. For the year ended
December 31, 1998, Star had revenues of approximately $18.4 million.

SYSTEM LOCATION

We operate cable television systems in non-metropolitan markets primarily
clustered in nine contiguous states in the central United States. The following
table illustrates our relative rank in each of the states we operate based on
total number of subscribers giving effect to recently announced transactions:

<TABLE>
<CAPTION>
EQUIVALENT
HOMES BASIC BASIC
STATE PASSED UNITS PENETRATION RANK
- ----- ------ ---------- ----------- ----
<S> <C> <C> <C> <C>
Texas.................................... 318,187 162,820 51% 5
Arkansas................................. 96,728 56,682 59 4
Oklahoma................................. 81,270 49,981 61 3
Louisiana................................ 63,900 44,600 70 4
Missouri................................. 67,072 39,237 58 4
Kansas................................... 50,965 35,666 70 3
Ohio..................................... 17,452 12,009 69 --
Colorado................................. 5,157 5,323 103 5
Nebraska................................. 3,389 2,101 62 --
New Mexico............................... 2,604 1,662 64 --
------- ------- -----
Subtotal............................ 706,724 410,081 58
CCTV................................ 4,298
------- ------- -----
Total.......................... 706,724 414,379 59%
======= ======= =====
</TABLE>

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

(1) Includes 22 systems to be acquired from Star.

(2) Includes six systems to be acquired from Star. Exclusive of Star, we would
be ranked eighth in this State.

(3) Includes nine systems to be acquired from Star.

(4) Our system in Colorado includes a number of multi-dwelling units, allowing
for basic penetration over 100%.

As part of the Buford acquisition, we acquired Correctional Cable
Television, Inc., known as CCT. CCT is the largest provider of programming
services to the prison market, serving 90 correctional facilities in 18 states,
reaching more than 70,000 inmates. CCT provides programming services through
company-owned and installed modified headends under three to five year
contracts. CCT's EBITDA has grown at a compounded annual rate of approximately

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40% during the last three years. CCT's continued growth will be driven by
increased penetration of the prison market, which consists of approximately
2,000 federal, state and juvenile facilities.

MARKETING, PROGRAMMING AND RATES

Our marketing programs and campaigns are based upon a variety of cable
services creatively packaged and tailored to appeal to our different markets and
segments within each market. We routinely survey our customer base to ensure
that we are meeting the demands of our customers and staying abreast of our
competition in order to counter competitors' promotional campaigns effectively.
We use a coordinated array of marketing techniques to attract and retain
customers and to increase premium service penetration, including door-to-door
and direct mail solicitation, telemarketing, media advertising, local
promotional events typically sponsored by programming services and cross-channel
promotion of new services and pay-per-view.

We have various contracts to obtain basic, satellite and premium
programming for our cable systems from program suppliers, including, in limited
circumstances, some broadcast stations, with compensation generally based on a
fixed fee per customer or a percentage of the gross receipts for the particular
service. Some program suppliers provide volume discount pricing structures
and/or offer marketing support. In addition, we are a member of a programming
consortium consisting of small to medium sized multiple cable systems operators
and individual cable systems serving, in the aggregate, over ten million cable
subscribers. The consortium helps create efficiencies in the areas of securing
and administering programming contracts, as well as establishing more favorable
programming rates and contract terms for small and medium sized cable operators.
We do not have long-term programming contracts for the supply of a substantial
amount of our programming. In cases where we do have such contracts, they are
generally for fixed periods of time ranging from one to five years and are
subject to negotiated renewal. While we believe that our relations with our
programming suppliers are generally good, the loss of contracts with certain of
our programming suppliers would have a material adverse effect on our results of
operations. Cable programming costs are expected to continue to increase due to
additional programming being provided to customers, increased costs to purchase
cable programming, inflationary increases and other factors. For the year ended
December 31, 1998 and the nine months ended September 30, 1999, programming
costs as a percentage of revenues were 26% and 27%, respectively. We cannot
assure you that our programming costs will not increase substantially in the
near future or that other materially adverse terms will not be added to our
programming contracts.

Our cable systems offer our customers programming that includes the local
network, independent and educational television stations, a limited number of
television signals from distant cities, numerous satellite-delivered,
non-broadcast channels such as CNN, MTV, USA, ESPN and TNT, and in some systems
local information and public access channels. The programming offered by us
varies among the cable systems depending upon each system's channel capacity and
viewer interests. Primarily for competitive reasons, we generally attempt to
offer a single level of basic service containing all broadcast and
satellite-delivered programming. In a few systems, however, we do offer multiple
tiers of cable television programming. We also offer premium programming
services, both on a per-channel basis and in many systems as part of premium
service packages designed to enhance our customer's perception of value.

Monthly customer rates for services vary from market to market, primarily
according to the amount of programming provided and competitive factors. At
September 30, 1999, our monthly full basic service rates for residential
customers ranged from $18.00 to $35.45 and per-channel premium service rates,
not including special promotions, ranged from $5.95 to $12.00 per service. At
September 30, 1999, the weighted average price for our monthly full basic
service was approximately $30.44.

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A one-time installation fee, which we may wholly or partially waive during
a promotional period, is usually charged to new customers. We charge monthly
fees for converters and remote control tuning devices. In addition, we also
charge administrative fees for delinquent payments for service. Customers are
free to discontinue service at any time without additional charge but may be
charged a reconnection fee to resume service. Commercial customers, such as
hotels, motels and hospitals, are charged a negotiated, non-recurring fee for
installation of service and monthly fees. Multiple dwelling unit accounts may be
offered a bulk rate in exchange for single-point billing and basic service to
all units.

In addition to customer fees, we derive modest revenues from the sale of
local spot advertising time on locally originated and satellite-delivered
programming. We also derive modest revenues from affiliations with home shopping
services, which offer merchandise for sale to customers and compensate system
operators with a percentage of their sales receipts.

We also derive revenue from the sale of programming featuring movies and
special events to customers on a pay-per-view basis. We believe that we will be
able to further increase our pay-per-view penetration rates and revenue as we
continue to deploy addressable technology in upgraded systems and in systems
where we launch a digital compression service.

While we plan to offer advanced telecommunications services in certain of
our cable systems, we anticipate that monthly customer fees derived from
multi-channel video services will continue to constitute the large majority of
our total revenues for the foreseeable future.

TECHNICAL OVERVIEW

We endeavor to maintain high technical performance standards in all of our
cable systems. To accomplish this, we have embarked on our capital improvement
plan to upgrade our cable systems selectively. This program, which involves the
use of fiber optic technology, will (A) expand channel capacities, (B) enhance
signal quality, (C) improve technical reliability, (D) augment address ability,
and (E) provide a platform to develop high-speed data services and Internet
access. We believe that such technical upgrades create additional revenue
opportunities, enhance operating efficiencies, increase customer satisfaction,
improve franchising relations and solidify our position as the dominant provider
of video services in the markets in which we operate. Before committing the
capital to upgrade or rebuild a system, we carefully assess:

- the existing technical reliability and picture quality of the system;

- basic subscribers' demand for more channels;

- requirements in connection with franchise renewals;

- programming alternatives offered by our competitors;

- customers' demand for other cable television and broadband
telecommunications services; and

- the return on investment of any such capital outlay.

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Currently, our subscribers, on average, are served by systems with an
analog capacity of 51 channels with 41 channels in use. The table below
summarizes our existing technical profile, as of September 30, 1999:

<TABLE>
<CAPTION>
UP TO 29 30 TO 39 40 TO 49 50 TO 59 OVER 60
CHANNELS CHANNELS CHANNELS CHANNELS CHANNELS TOTAL
-------- -------- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Number of Systems......... 18 249 131 68 110 576
Miles of Plant............ 169 5,147 5,341 3,497 5,647 19,802
Homes Passed.............. 7,001 162,774 193,317 108,586 235,046 706,724
Basic Subscribers......... 3,362 81,710 115,409 60,766 148,834 410,081
% of Total Basic
Subscribers............. 0.8% 19.9% 28.1% 14.8% 36.3% 100.0%
Basic Subs per Mile....... 19.9 15.9 21.6 17.4 26.4 20.7
Premium Subs.............. 1,093 38,231 54,589 39,903 88,148 221,964
Premium Penetration....... 32.5% 46.8% 47.3% 65.7% 59.2% 54.1%
</TABLE>

-------------------------
(1) Includes 9 systems for Star serving 30 to 39 channels, 7 systems
serving 40 to 49 channels, 6 systems serving 50 to 59 channels and
15 systems serving over 60 channels. Star does not have any system
that serves less than 30 channels.

(2) Does not include approximately 4,300 equivalent basic units
related to CCT.

Our capital improvement plan contemplates the investment of approximately
$200.0 million over the next four fiscal years as follows:

- $126.0 million to establish a technical standard of 550-750 MHz bandwidth
capacity in cable television systems serving approximately 72% of our
basic subscribers and for the consolidation of headends;

- $52.0 million for ongoing maintenance and replacement, installations and
extensions to the cable plant related to customer growth; and

- $22.0 million for the purchase of additional addressable converters and
headend equipment to support the deployment of digital services.

The table below summarizes our expected pro forma technical profile
assuming completion of the capital improvement program as of September 30, 1999:

<TABLE>
<CAPTION>
UP TO 29 30 TO 39 40 TO 49 50 TO 59 OVER 60
CHANNELS CHANNELS CHANNELS CHANNELS CHANNELS TOTAL
-------- -------- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Number of Systems......... -- 212 117 42 205 576
Miles of Plant............ -- 3,379 1,783 1,101 13,538 19,802
Homes Passed.............. -- 101,034 65,700 31,665 508,325 706,724
Basic Subscribers......... -- 47,825 32,186 15,251 314,819 410,081
% of Total Basic
Subscribers............. NA 11.7% 7.8% 3.7% 76.8% 100.0%
Basic Subs per Mile....... NA 14.2 18.1 13.8 23.3 20.7
Premium Subs.............. -- 21,956 13,622 8,904 177,482 221,964
Premium Penetration....... NA 45.9% 42.3% 58.4% 56.4% 54.1%
</TABLE>

-------------------------
(1) Includes 5 systems for Star serving 30 to 39 channels, 6 systems
serving 40 to 49 channels, 4 systems serving 50 to 59 channels and
22 systems serving over 60 channels. Star does not have any system
that serves less than 30 channels.

(2) The analysis above does not reflect the impact of anticipated
headend consolidations achieved through the selective deployment
of fiber optic technology.

(3) Does not include approximately 4,300 equivalent basic units
related to CCT.

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With the exception of 11 systems, we do not currently use addressable
technology. We utilize a "trap" scheme whereby a technician installs filters, or
traps, at each cabled home enabling the technician to configure the programming
received by each subscriber. The cable system improvement program contemplates
the use of addressable set-top boxes in selected analog upgraded systems, in
addition to digital addressable technology. This service transmits digitally
compressed signals of niche satellite programming, multiplexed premium services,
pay-per-view movies and digital music for reception by cable systems, which in
turn deliver them to their subscribers.

Our active use of fiber optic technology as an alternative to coaxial cable
is playing a major role in expanding channel capacity and improving the
performance of our cable television systems. 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.
We expect to use fiber backbone architecture selectively to eliminate headend
facilities and to reduce amplifier cascades, thereby improving picture quality,
system reliability and headend and maintenance expenditures.

Recently, high-speed cable modems and set-top boxes using digital
compression technology have become commercially viable. These developments allow
for the introduction of high-speed data services and Internet access and will
increase programming services available to customers. Digital compression
technology has the potential to expand channel capacity significantly given that
up to 12 digital channels can be carried in the bandwidth of one analog channel
(6 MHz).

We own or lease 670 towers that are used to receive off-air broadcast
signals from the nearest urban transmit site or via intermittent microwave relay
stations, including 53 towers owned by Star. Our towers range from 15 feet to
600 feet in height and 146 of our towers, including eight Star towers, are at
least 200 feet in height. We lease tower space to cellular telephone, personal
communications services paging and other transmission companies for a fixed
monthly charge typically dictated by long-term contract.

FRANCHISES

Cable television systems are typically constructed and operated under
non-exclusive franchises granted by local governmental authorities. These
franchises typically contain conditions, such as:

- time limitations on commencement and completion of construction;

- conditions of service, including number of channels, types of programming
and the provision of free service to schools and certain other public
institutions; and

- the maintenance of insurance and indemnity bonds.

Certain provisions of local franchises are subject to federal regulation
under both the 1984 Cable Act and the 1992 Cable Act. See "Legislation and
Regulation -- Federal Regulation -- Cable Rate Regulation."

At September 30, 1999, pro forma for the Star acquisition, we held 787
franchises, including 92 franchises for Star. These franchises, all of which are
non-exclusive, generally provide for the payment of fees to the issuing
authority. Annual franchise fees imposed on the cable systems range from 0% to
5% of the gross revenues generated by the cable systems. With limited
exceptions, franchise fees are passed directly through to the customers on their
monthly bills. The 1984 Cable Act prohibits franchising authorities from
imposing franchise fees in excess of 5% of gross revenues, and permits a cable
operator to seek renegotiation and modification of franchise requirements if
warranted by changed circumstances. Our franchises can be terminated by the
franchising authority prior to the stated expiration date for uncured breaches
by us of material provisions.

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The following table sets forth the number of franchises by year of
franchise expiration and the approximate number and percentage of basic
subscribers at September 30, 1999:

<TABLE>
<CAPTION>
% OF NUMBER % OF
NUMBER OF TOTAL OF TOTAL
YEAR OF FRANCHISE EXPIRATION FRANCHISES FRANCHISES SUBSCRIBERS SUBSCRIBERS
- ---------------------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Prior to 2000.................. 29 3.7% 26,395 6.4%
2000 to 2003................... 187 23.8 95,095 23.2
After 2003..................... 571 72.6 288,591 70.4
--- ----- ------- -----
Total................ 787 100.0% 410,081 100.0%
=== ===== ======= =====
</TABLE>

The Star franchises have an average remaining life of six years per system.

The Cable Acts provide, among other things, comprehensive renewal
procedures which require that an incumbent franchisee's renewal application be
assessed on its own merits and not as part of a comparative process with
competing applications. See "Legislation and Regulation." We believe that we
have good relationships with our franchising communities. To date, we have never
had a franchise revoked or terminated. Additionally, no request made by us for
franchise renewals or extensions has been denied, although the renewed or
extended franchises have frequently resulted in franchise modifications on
satisfactory terms. The Cable Acts also establish the conditions for sale of a
cable system in the event that the franchise is not renewed or is revoked "for
cause" by the franchising authority.

The 1992 Cable Act provides that a franchising authority may not grant an
exclusive franchise, may not unreasonably refuse to award an additional
competitive franchise, and may operate cable systems itself without franchises.
Under the 1992 Cable Act, franchising authorities are immunized from monetary
damage awards arising from regulation of cable television systems or decisions
made on franchise grants, renewals, transfers and amendments. See "Legislation
and Regulation -- Federal Regulation -- Cable Rate Regulation."

INDUSTRY OVERVIEW

A cable television system receives television, radio and data signals at
the system's "headend" site by means of off-air antennas, microwave relay
systems and satellite earth stations. These signals are then modulated,
amplified and distributed through coaxial and fiber optic distribution systems
to deliver a wide variety of channels of television programming to subscribers
who pay fees on a monthly basis for this service. A cable television system may
also originate its own television programming and other information services for
distribution through its system. Cable television systems generally are
constructed and operated pursuant to non-exclusive franchises or similar
licenses granted by local governmental authorities for a specified period of
time.

The cable television industry developed in the United States in the late
1940's and early 1950's in response to the needs of residents in predominantly
rural and mountainous areas of the country where the quality of off-air
television reception was inadequate due to factors such as unfavorable
topography and remoteness from television broadcast towers. In the 1960's, cable
systems also developed in non-metropolitan markets that had limited availability
of off-air television station signals. All of these markets are regarded within
the cable industry as "classic cable" television system markets.

Cable television systems offer customers programming consisting of
broadcast television signals of local network affiliates, independent and
educational television stations, a limited number of television signals from
so-called "super stations" originating from distant cites, such as WGN from
Chicago, various channels, such as Cable News Network, Music Television, the USA
Network, Turner Network Television, and Entertainment and Sports Programming
Network,

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programming originated locally by the cable television system, such as public,
government and education access programs, and informational displays featuring
news, weather and public service announcements. For an additional monthly
charge, cable television systems also offer "premium" television services to
customers on a per-channel basis. These services, such as Home Box Office,
Cinemax, Showtime, The Movie Channel and selected regional sports networks, are
channels that consist principally of feature films, live sporting events,
concerts and other special entertainment features, usually presented without
commercial interruption.

A customer generally pays an initial installation charge and fixed monthly
fees for basic and premium television services and for other services, such as
the rental of converters and remote control devices. These monthly service fees
constitute the primary source of revenues for cable television systems. In
addition to customer revenues from these services, cable television systems
generate revenues from additional fees paid by customers for pay-per-view
programming of movies and special events and from the sale of available
advertising spots on advertiser-supported programming. Cable television systems
also frequently offer their customers home shopping services for a share of the
revenues from products sold in their service areas. The cable television
industry is changing rapidly due to new technology and new alliances between
cable television and other telecommunications companies. Providing traditional
cable television programming is only one aspect of the industry as potential
opportunities to expand into Internet, broadband data, telephone, and other
telecommunications services continue to develop and become more commercially
viable.

COMPETITION

Cable television systems face competition from (A) alternative methods of
receiving and distributing television signals, such as off-air television
broadcast programming, direct broadcast satellite services, known as "DBS," and
wireless cable services, and (B) other sources of news, information and
entertainment, such as newspapers, movie theaters, live sporting events, on-line
computer services and home video products. Our competitive position depends, in
part, upon reasonable prices to customers, greater variety of programming and
other communications services, and superior technical performance and customer
service. Accordingly, cable operators in rural areas, where off-air reception is
more limited, generally achieve higher penetration rates than cable operators in
major metropolitan areas, where numerous, high quality off-air signals are
available.

Cable television systems generally operate pursuant to franchises granted
on a nonexclusive basis, so that more than one cable television system may be
built in the same area, known as an "overbuild," with potential loss of revenue
to the operator of the original system. It is possible that a franchising
authority might grant a second franchise to another company containing terms and
conditions more favorable than those afforded to us. The 1992 Cable Act
prohibits franchising authorities from unreasonably denying requests for
additional franchises and permits franchising authorities to operate cable
television systems without a franchise. Although a private competitor ordinarily
would seek a franchise from a local jurisdiction, municipalities have built and
operated their own systems. Overbuilds historically have been relatively rare,
as constructing and developing a cable television system is capital-intensive,
and it is difficult for the new operator to gain a marketing advantage over the
incumbent operator. Including Star, we currently have competing franchises in
ten systems passing approximately 23,100 homes.

In recent years, the FCC and Congress have adopted policies providing a
more favorable operating environment for new and existing technologies that
provide, or have the potential to provide, substantial competition to cable
television systems. These technologies include, among others, DBS service,
whereby signals are transmitted by satellite to satellite dishes as small as 18
inches located on customer premises. Programming is currently available to the
owners of DBS dishes through conventional, medium and high-powered satellites.
DBS systems provide movies, broadcast stations, and other program services
comparable to those of cable television
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systems. DBS systems can also provide high speed Internet access. DBS service
can be received anywhere in the continental United States through installation
of a small rooftop or side-mounted antenna. This technology has the capability
of providing more than 100 channels of programming over a single high-powered
satellite with significantly higher capacity if multiple satellites are placed
in the same orbital position. DBS is currently being heavily marketed on a
nationwide basis by two DBS providers. DBS providers are significant competition
to cable service providers, including us.

The 1992 Cable Act contains provisions, which the FCC has implemented with
regulations, to enhance the ability of cable competitors to purchase and make
available to home satellite dish owners certain satellite delivered cable
programming at competitive costs. The FCC also adopted regulations that preempt
certain local restrictions on satellite and over-the-air antenna reception of
video programming services, including zoning, land-use or building regulations,
or any private covenant, homeowners' association rule or similar restriction on
property within the exclusive use or control of the antenna user. Digital
satellite service, known as DSS, offered by DBS systems has certain advantages
over cable systems with respect to programming and digital quality, as well as
disadvantages that include high up-front costs and a lack of local programming,
service and equipment distribution. Our strategy of providing pay-per-view and
perhaps satellite niche programming via digital services in certain of our cable
systems is designed to combat digital satellite service competition. "Bundling"
of our video service with advanced telecommunications services in certain of the
cable systems may also be an effective tool for competing with DSS. DBS suffers
certain significant operating disadvantages compared to cable television,
however, including the subscriber's present inability to view different
programming on different television sets, line-of-sight reception requirements,
up-front costs associated with the dish antenna, and the lack of local
programming. DBS currently faces technical and legal obstacles to providing
local broadcast signals, although both DBS providers are now attempting to do so
in certain major markets. However, legislation removing the existing legal
obstacles to retransmitting local broadcast programming to DBS subscribers has
passed both the House of Representatives and the Senate and has been reported
out to a conference committee.

Cable television systems also compete with wireless program distribution
services such as multichannel multipoint distribution service, or MMDS, which
use low power microwave signals to transmit video programming and high speed
data services, including Internet access, over the air to customers.
Additionally, the FCC licensed new frequencies in the 28 MHz band for a new
multichannel wireless video service similar to MMDS, known as Local Multipoint
Distribution Service, or LMDS. LMDS is also suited for providing wireless data
services, including the possibility of Internet access. Wireless distribution
services generally provide many of the programming services provided by cable
systems, and digital compression technology may significantly increase the
channel capacity of these wireless distribution services. Because MMDS service
requires unobstructed "line of sight" transmission paths, the ability of MMDS
systems to compete may be hampered in some areas by physical terrain and
foliage.

Federal cross-ownership restrictions historically limited entry by local
telephone companies into the cable television business. The 1996 Telecom Act
eliminated this cross-ownership restriction, making it possible for companies
with considerable resources to overbuild existing cable systems. Congress has
also repealed the prohibition against national television networks owning cable
systems. Various local exchange carriers, commonly referred to as LECs,
currently are seeking to provide video programming services within their
telephone service areas through a variety of distribution methods, primarily
through the deployment of broadband wire facilities, but also through the use of
wireless or MMDS transmission. Several telephone companies have begun seeking
cable television franchises from local governmental authorities and constructing
cable television systems. Cable television systems could be placed at a
competitive disadvantage if the delivery of video programming services by LECs
becomes widespread, since LECs may not be required, under certain circumstances,
to obtain local franchises to deliver such video services

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or to comply with the variety of obligations imposed upon cable television
systems under such franchises. The entry of telephone companies as direct
competitors is likely to continue and could adversely affect the profitability
and valuation of our cable systems. 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. We believe,
however, that the non-metropolitan markets in which we provide or expect to
provide cable services are unlikely to support competition in the provision of
video and telecommunications broadband services given the lower population
densities and higher costs per subscriber of installing a plant.

The 1996 Telecom Act's provisions promoting facilities-based broadband
competition are primarily targeted at larger markets, and its prohibition of
buyouts and joint ventures between incumbent cable operators and LECs exempts
small operators and carriers meeting certain criteria. See "Legislation and
Regulation." We believe that significant growth opportunities exist for us by
establishing cooperative rather than competitive relationships with LECs within
our service areas, to the extent permitted by law.

The entry of electric utility companies into the cable television business,
as now authorized by the 1996 Telecom Act, could also have an adverse effect on
our business. Well-capitalized businesses from outside the cable industry may
also become competitors for franchises or providers of competing services.

Other new technologies may become competitive with non-entertainment
services offered by cable television systems. The FCC has authorized television
broadcast stations to transmit textual and graphic information useful both to
consumers and businesses. The FCC also permits commercial and noncommercial FM
stations to use their sub-carrier frequencies to provide non-broadcast services
including data transmissions. The FCC has established an over-the-air
Interactive Video and Data Service that will permit two-way interaction with
commercial and educational programming along with informational and data
services. The expansion of fiber optic systems and the introduction of new xDSL
services by LECs and other common carriers provide facilities for the
transmission and distribution to homes and businesses of video services,
including interactive computer-based services like the Internet, data and other
non-video services. The FCC has held spectrum auctions for licenses to provide
PCS.

Advances in communications technology as well as changes in the marketplace
and the regulatory and legislative environments are constantly occurring. Thus,
it is not possible to predict the effect that ongoing or future developments
might have on the cable industry or on our operations.

EMPLOYEES

At September 30, 1999, Classic employed approximately 758 full-time
employees and 56 part-time employees of which 88 and 5, respectively, were
employed by Star. None of our employees is represented by a labor union. We
consider our relations with our employees to be good.

PROPERTIES

A cable television system consists of four principal operating components.
The first component, known as the headend, receives television, radio and
information signals by means of special antennas and satellite earth stations.
The second component, the distribution network, which originates at the headend
and extends throughout the system's service area, consists of microwave relays,
coaxial or fiber optic cables placed on utility poles or buried underground and
associated electronic equipment. The third component of the system is a "drop
cable," which extends from the distribution network into each customer's home
and connects the distribution system to the customer's television set. The
fourth component, a converter, is the home terminal

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device that expands channel capacity to permit reception of more than 12
channels of programming.

Our principal physical assets consist of cable television systems,
including signal-receiving, encoding and decoding apparatus, headends,
distribution systems and subscriber house drop equipment for each of the cable
systems. The signal receiving apparatus typically includes a tower, antenna,
ancillary electronic equipment and earth stations for reception of satellite
signals. Headends, consisting of associated electronic equipment necessary for
the reception, amplification and modulation of signals, are located near the
receiving devices. Our distribution systems consist primarily of coaxial cable
and related electronic equipment. As the upgrades are completed, the cable
systems will incorporate fiber optic cable. Subscriber equipment consists of
taps, house drops and converters. We own our distribution systems, various
office fixtures, test equipment and certain service vehicles. The physical
components of the cable systems require maintenance and periodic upgrading to
keep pace with technological advances.

Our cables generally are attached to utility poles under pole rental
agreements with local public utilities, although in some areas the distribution
cable is buried in underground ducts or trenches. The FCC regulates most pole
attachment rates under the federal Pole Attachment Act.

We own or lease parcels of real property for signal reception sites, such
as antenna towers and headends, microwave complexes and business offices,
including our principal executive offices. We believe that our properties, both
owned and leased, are in good condition and are suitable and adequate for our
business operations as presently conducted.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which we are or Classic
Cable is a party or to which any of our or their respective properties are
subject.

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LEGISLATION AND REGULATION

The cable television industry is regulated by the FCC, some state
governments and substantially all local governments. In addition, various
legislative and regulatory proposals under consideration from time to time by
Congress and various federal agencies have in the past materially affected, and
may in the future materially affect, us and the cable television industry. The
following is a summary of federal laws and regulations affecting the growth and
operation of the cable television industry and a description of certain state
and local laws. We believe that the regulation of our industry remains a matter
of interest to Congress, the FCC and other regulatory authorities. There can be
no assurance as to what, if any, future actions such legislative and regulatory
authorities may take or the effect thereof on our operations.

FEDERAL REGULATION

The primary federal statute dealing with the regulation of the cable
television industry is the Communications Act. The three principal amendments to
the Communications Act that shaped the existing regulatory framework for the
cable television industry were the 1984 Cable Act, the 1992 Cable Act and the
1996 Telecom Act. The 1996 Telecom Act, which became effective in February 1996,
was the most comprehensive reform of the nation's telecommunications laws since
the Communications Act. Although the long term goal of the 1996 Telecom Act is
to promote competition and decrease regulation of various communications
industries, in the short term, the law delegates to the FCC, and in some cases
to the states, broad new rulemaking authority. The FCC and state regulatory
agencies have been required to conduct numerous rulemaking and regulatory
proceedings to implement the 1996 Telecom Act and such proceedings may
materially affect the cable television industry.

The FCC, the principal federal regulatory agency with jurisdiction over
cable television, has promulgated regulations to implement the provisions
contained in the Communications Act. The FCC has the authority to enforce these
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. Below, you will find
a brief summary of certain of these federal regulations as adopted to date.

CABLE RATE REGULATION

The 1992 Cable Act imposed an extensive rate regulation regime on the cable
television industry. Under that regime, local franchise authorities had primary
responsibility for administering the basic service tier. The FCC directly
administered rate regulation of cable programming service tiers, which included
all video programming distributed over a system that is not part of the basic
service tier. Although the 1996 Telecom Act preserves local franchise authority
to regulate the basic service tier, it eliminated FCC authority to regulate
cable programming service tier rates as of March 31, 1999. Accordingly, the FCC
is no longer able to act on cable programming service tier rate increases that
occur after that date.

Federal law nonetheless continues to govern certain aspects of local rate
regulation. For example, federal law requires that the basic service tier be
offered to all cable subscribers. Recent FCC regulations adopted pursuant to the
1996 Telecom Act define "effective competition" and "small cable operator" for
purposes of exempting certain cable systems' basic tier from rate regulation.
Additional federal regulations require cable systems to permit customers to
purchase video programming on a per channel or per program basis without
subscribing to any tier of service, other than the basic service tier, unless
the cable system is technically incapable of doing so. Generally this exemption
is available until a cable system obtains the technical capability, but not
later than December 2002.

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Although the 1996 Telecom Act eliminated FCC rate regulation of the higher
tiers, local franchising authorities, known in the industry as LFAs, continue to
have authority over the regulation of the lowest level of cable -- the basic
service tier, commonly known as BST. For regulatory purposes, the BST contains
local broadcast stations and public, educational, and government, or PEG, access
channels and other services the system operator chooses to include in the same
package with these channels. Before an LFA begins BST rate regulation, it must
certify to the FCC that it will follow applicable federal rules, and many LFAs
have voluntarily declined to exercise this authority. LFAs also have primary
responsibility for regulating cable equipment rates. Under federal law, charges
for various types of cable equipment must be unbundled from each other and from
monthly charges for programming services. The 1996 Telecom Act allows operators
to aggregate costs for broad categories of equipment across geographic and
functional lines. This change should facilitate the introduction of new
technology. Few of the LFAs in the communities in which we operate have elected
to certify to regulate rates. However there can be no assurance that our
revenues and results of operations will not be adversely affected in the future
by regulation of cable system rates.

FRANCHISE FEES

Federal law allows franchising authorities to impose franchise fees, but
such payments cannot exceed 5% of a cable system's annual gross revenues derived
from the operation of the cable system in providing cable service. Under the
1996 Telecom Act, franchising authorities may not exact franchise fees from
revenues derived from telecommunications services, however, many LFA's seek
analogous fees under separate telecommunications service franchises. LFA
authority to collect these telecommunications franchise fees is the subject of
litigation.

RENEWAL OF FRANCHISES

The 1984 Cable Act established renewal procedures and criteria designed to
protect incumbent franchisees against arbitrary denials of renewal. While these
formal procedures are not mandatory unless timely invoked by either the cable
operator or the franchising authority, they can provide substantial protection
to incumbent franchisees. Even after the formal renewal procedures are invoked,
franchising authorities and cable operators remain free to negotiate a renewal
outside the formal process. Nevertheless, renewal is by no means assured, as the
franchisee must meet certain statutory standards. Even if a franchise is
renewed, a franchising authority may impose new and more onerous requirements
such as upgrading facilities and equipment, although the municipality must take
into account the cost of meeting such requirements. The 1992 Cable Act made
several changes to the process under which a franchise is renewed, some of which
could make it easier in some cases for a franchising authority to deny renewal.

COMPETING FRANCHISES

The 1992 Cable Act prohibits franchising authorities from unreasonably
refusing to grant franchises to competing cable television systems and permits
franchising authorities to operate their own cable television systems without
franchises. We currently have competing franchises in ten systems passing
approximately 23,100 homes.

FRANCHISE TRANSFERS

The 1992 Cable Act requires franchising authorities to act on any franchise
transfer request within 120 days after receipt of all information required by
FCC regulations and by the franchising authority. Approval is deemed to be
granted if the franchising authority fails to act within such period.

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CABLE ENTRY INTO TELECOMMUNICATIONS AND BROADBAND SERVICES

The 1996 Telecom Act provides that no state or local laws or regulations
may prohibit or have the effect of prohibiting any entity from providing any
interstate or intrastate telecommunications service. States are authorized,
however, to impose "competitively neutral" requirements regarding universal
service, public safety and welfare, service quality, and consumer protection.
State and local governments also retain their authority to manage the public
rights-of-way and may require reasonable, competitively neutral compensation for
management of the public rights-of-way when cable operators provide
telecommunications service. The favorable pole attachment rates afforded cable
operators under federal law can be gradually increased by utility companies
owning the poles beginning in 2001 pursuant to an FCC prescribed formula if the
operator provides telecommunications service, as well as cable service, over its
plant. The FCC has clarified that a cable operator's favorable pole rates are
not endangered by the provision of non-cable services such as Internet access.

Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One critical
component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers, including cable operators, is the interconnection
obligation imposed on all telecommunications carriers. The FCC adopted
regulations implementing the 1996 Telecom Act requirement that LECs open their
telephone networks to competition by providing competitors interconnection,
access to unbundled network elements and retail services at wholesale rates. The
U.S. Supreme Court in January 1999 upheld the FCC's authority to adopt pricing
rules for unbundled network elements and resale by competitive LECs. The FCC in
September 1999 redetermined which unbundled network elements LECs must make
available to new telecommunications providers at wholesale prices. The FCC's
pricing rules may be subject to further judicial review. The ultimate outcome of
the litigation and the FCC's rulemakings, and the ultimate impact of the 1996
Telecom Act or any final regulations adopted pursuant to the new law on us or
our business cannot be determined at this time.

Cable entry into markets for broadband services such as Internet access may
be affected by the regulatory landscape now being fashioned by Congress, the
FCC, state and local regulators and the courts. In a report to Congress adopted
in January 1999, the FCC declined to regulate cable system delivery of Internet
services and specifically refused to require cable operators to provide
competitors with nondiscriminatory access to such services. More recently, on
October 13, 1999, the FCC's Cable Services Bureau issued a staff report to FCC
Chairman, William Kennard, on the status of the broadband market. The report
recommended the continuation of the FCC's policy of regulatory restraint for
cable delivered Internet services. The report noted, however, that the FCC
should be prepared to act swiftly if competitive harm actually arises, such as
if the cable industry were to develop a closed, proprietary network design that
could create a technological barrier to access by competitors to cable plant.

In recent months, some local franchise authorities have imposed open access
conditions on their approval of transfers of control, including those involving
such major transactions as AT&T's acquisition of TCI's and Media One's cable
franchises. For example, the City of Portland, Oregon required AT&T to provide
competing Internet and other on-line service providers with open access to its
newly acquired cable platforms. This decision was upheld on appeal before a
federal district court, although that decision is on appeal. LFAs in Broward
County, Florida, North Andover, Massachusetts and Fairfax, Virginia have imposed
similar open access requirements. In Broward, the requirement was imposed on all
cable operators serving the County, while in North Andover and Fairfax the
requirement was imposed as a condition for approving the transfer of a cable
franchise. The Broward County and North Andover requirements are on appeal.
Numerous other franchise authorities are considering imposing similar
requirements, either during transfer or renewal processes or by promulgating
regulations pursuant to their general franchise authority.

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In addition to the developments above, a petition for declaratory ruling
has been filed with the FCC requesting a determination that cable service
providers must provide leased access channels to Internet service providers.
Several bills are also pending in Congress that, if adopted, would require open
access.

On October 26, 1999, GTE filed an antitrust lawsuit in federal district
court in Pittsburgh against TCI, Comcast and At Home Corporation alleging that
the relationships between these companies, which preclude open access,
constitute illegal tying, exclusive dealing and concerted refusal to deal. If
GTE prevails in this litigation, it could negatively impact our cable modem
service plans.

Open access conditions, similar to those described above, could be imposed
upon us, either pursuant to a local franchising authority's approval of a merger
or other transaction between us and another company, through the franchise
renewal process or through future regulatory, judicial or legislative
developments at the federal state or local levels. Such developments could
negatively impact our cable modem service plans. Likewise, future developments
at these levels could limit or preempt the authority of franchise authorities to
impose mandated access conditions.

TELEPHONE COMPANY ENTRY INTO CABLE TELEVISION

The 1996 Telecom Act makes far reaching changes in the regulation of
telephone companies that provide video programming services. The new law
eliminates federal legal barriers to competition in the local telephone and
cable communications businesses, preempts state and local laws and regulations
which create competitive barriers and sets basic standards for relationships
between telecommunications providers. The 1996 Telecom Act also eliminates the
requirements that LECs obtain FCC approval under Section 214 of the
Communications Act before providing video services in their telephone service
areas and removes the statutory telephone company/cable television
cross-ownership prohibition, thereby allowing LECs to offer video services in
their telephone service areas. LECs may provide service as traditional cable
operators with local franchises, or they may opt to provide their programming
over "open video systems," subject to certain conditions, including, but not
limited to, setting aside a portion of their channel capacity, up to two-thirds,
for use by unaffiliated program distributors on a non-discriminatory basis.
While the Fifth Circuit Court of Appeals recently reversed certain of the FCC's
open video system rules, including its preemption of local franchising, on
October 14, 1999, the Fifth Circuit ruled that a Southwestern Bell ("SWB")
affiliate could provide video services over SWB facilities without obtaining a
cable franchise. Both decisions may be subject to further appeal. It is unclear
what effect this ruling will have on the entities pursuing open video system
operation. LECs could be formidable competitors to traditional cable operators,
and certain LECs have begun offering cable services, both within and outside of
their service areas. We currently have telephone overbuilds in three systems
passing approximately 3,300 homes.

The 1996 Telecom Act generally limits acquisitions and prohibits certain
joint ventures between LECs and cable operators in the same market. There are
some statutory exceptions to the buy-out and joint venture prohibitions,
including exceptions for certain small cable systems as defined by Federal law
and for cable systems or telephone facilities serving certain rural areas, and
the FCC is authorized to grant waivers of the prohibitions under certain
circumstances.

ELECTRIC UTILITY ENTRY INTO TELECOMMUNICATIONS/CABLE TELEVISION

The 1996 Telecom Act provides that registered utility holding companies and
subsidiaries may provide telecommunications services, including cable
television. Electric utilities must establish separate subsidiaries, known as
"exempt telecommunications companies" and must apply to the FCC for operating
authority. Because of their resources, electric utilities could also be
formidable competitors to traditional cable systems.

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ADDITIONAL OWNERSHIP RESTRICTIONS

The 1996 Telecom Act repealed the 1984 Cable Act's prohibition against LECs
providing video programming directly to customers within their local telephone
exchange service areas. However, with certain limited exceptions, a LEC or its
affiliate may not acquire more than a 10% equity interest in an existing cable
system operating within the LEC's service area. The 1996 Telecom Act also
authorized LECs and others to operate "open video systems" without obtaining a
local cable franchise under the 1984 Cable Act. However, in a January 1999
decision, the U.S. Court of Appeals for the Fifth Circuit held that the 1996
Telecom Act did not preempt state franchise laws that might be applicable to
these systems. See "Business -- Competition."

The 1984 Cable Act and the FCC's rules prohibit the common ownership,
operation, control or interest in a cable system and a local television
broadcast station whose predicted grade B contour, a measure of a television
station's signal strength as defined by the FCC's rules, covers any portion of
the community served by the cable system. The 1996 Telecom Act eliminated the
statutory ban and directed the FCC to review its cross-ownership rule within two
years. Pursuant to the 1996 Telecom Act, the FCC eliminated its restrictions on
the cross-ownership of cable systems and national broadcasting networks, and has
commenced a proceeding to review its broadcast cable cross-ownership
restrictions. In order to encourage competition in the provision of video
programming, the FCC adopted a rule prohibiting the common ownership,
affiliation, control or interest in cable television systems and wireless cable
facilities having overlapping service areas, except in very limited
circumstances. The 1992 Cable Act codified this restriction and extended it to
co-located satellite master antenna television systems, or SMATV systems.
Permitted arrangements in effect as of October 5, 1992, were grandfathered. In
January 1995, the FCC adopted regulations which permit cable operators to own
and operate SMATV systems within their franchise areas, provided that such
operation is consistent with local cable franchise requirements. The 1996
Telecom Act exempts cable systems subject to effective competition from the
wireless cable and SMATV restrictions. In addition, a cable operator can
purchase an SMATV system located within its franchise areas and technically
integrate it into its cable system. The 1992 Cable Act permits states or local
franchising authorities to adopt certain additional restrictions on the
ownership of cable television systems.

Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a cable
system from devoting more than 40% of its activated channel capacity to the
carriage of affiliated national program services and has imposed limits on the
number of cable subscribers that a single cable operator can serve. In general,
pursuant to rules adopted October 8, 1999, no cable operator can have an
attributable interest in cable systems which serve more than 30% of all
nationwide subscribers to multichannel video programming distributors including
cable and DBS subscribers. These new horizontal ownership rules raise the
percentage of all cable subscribers that can be served by a single cable
operator to 36.7% of current cable subscribers. Attributable interests for these
purposes include voting stock interests of 5% or more, certain officerships and
directorships, and general and uninsulated limited partnership interests. The
FCC raised the attribution threshold for voting stock held by passive
institutional investors from 10% to 20%, and created a new equity/debt rule that
treats any investor that holds over 33% of the total equity plus debt as an
attributable interest holder. The FCC has stayed the effectiveness of its
horizontal ownership rule pending the outcome of the appeal from a U.S. District
Court decision holding the multiple ownership limit provision of the 1992 Cable
Act unconstitutional. The FCC's October 8th decision also defined what
constitutes a "cognizable interest" triggering application of various FCC rules
relating to the provision of cable services such as cross-ownership, leased
access, open video systems, programming access and channel occupancy. In
addition, a rulemaking proceeding to examine, among other issues, whether any
limitations on cable DBS cross-ownership are warranted in order to prevent
anticompetitive conduct in the video services market remains pending before the
FCC.

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There are no federal restrictions on non-U.S. entities having an ownership
interest in cable television systems. Section 310(b)(4) of the Communications
Act does, however, limit direct and indirect foreign ownership of interests in
FCC broadcast and common carrier radio licenses, although the FCC may conclude
that this indirect foreign ownership is consistent with the public interest.

TECHNICAL REQUIREMENTS

The FCC has imposed technical standards applicable to the cable channels on
which broadcast stations are carried, and has prohibited franchising authorities
from adopting standards which are in conflict with or more restrictive than
those established by the FCC. Those standards are applicable to all classes of
channels which carry downstream National Television System Committee, known as
NTSC, video programming. The FCC also has adopted additional standards
applicable to cable television systems using frequencies in the 108-137 MHz and
225-400 MHz bands in order to prevent harmful interference with aeronautical
navigation and safety radio services and has also established limits on cable
system signal leakage. Periodic testing by cable operators for compliance with
the technical standards and signal leakage limits is required and an annual
filing of the results of these measurements is required. The 1992 Cable Act
requires the FCC to update its technical standards periodically to take into
account changes in technology. Under the 1996 Telecom Act, local franchising
authorities may not prohibit, condition or restrict a cable system's use of any
type of subscriber equipment or transmission technology.

The FCC has adopted regulations to implement the requirements of the 1992
Cable Act designed to improve the compatibility of cable systems and consumer
electronics equipment. Among other things, these regulations generally prohibit
cable operators from scrambling their basic service tier. The 1996 Telecom Act
directs the FCC to rely on the marketplace and set only minimal standards to
assure compatibility between television sets, VCRs and cable systems.

Pursuant to the requirements of the 1996 Telecom Act, the FCC recently
reaffirmed an order implementing regulations intended to promote the commercial
availability of navigation devices, including set-top converters. The rules
apply generally to all multichannel video programming distributors, or MVPDs,
and to all equipment used to receive multichannel video programming, including
VCRs and even computers if used for that purpose. The FCC has exempted from its
rules all analog equipment and navigation devices that operate throughout the
continental United States and are commercially available from unaffiliated
sources, such as equipment used by DBS services. The order requires that the
security functions presently integrated in set-top converters be separated from
their other functions and that separate security modules be available from cable
operators by July 2000. Cable operators will be allowed to provide integrated
set-top converters to their customers until January 1, 2005. After that time,
the sale of or lease by operators of new set-top converters with embedded
security functions will be prohibited, subject to the FCC's reassessment in
2000.

POLE ATTACHMENTS

The FCC currently regulates the rates and conditions imposed by certain
public utilities for use of their poles unless state public service commissions
are able to demonstrate that they regulate the rates, terms and conditions of
cable television pole attachments. In addition, cooperatively and municipally
owned utilities are not subject to the FCC's pole attachment regulations and in
most cases are not subject to the pole attachment regulations of the state. We
may operate systems that utilize poles owned by cooperatively and government
owned utilities. Louisiana is the only state in which we currently operate cable
systems that has certified to the FCC that it regulates the rates, terms and
conditions for pole attachments. In addition, Ohio, in which Star operates cable
systems, has made a similar certification to the FCC. In the absence of state
regulation, and except for cooperatively or government owned poles, the FCC
administers such pole attachment rates through use of a formula which it has
devised. As
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directed by the 1996 Telecom Act, the FCC has adopted a new rate formula for any
attaching party, including cable systems, which offers telecommunications
services. This new formula will result in significantly higher attachment rates
for cable systems which choose to offer such services, or permit their
transmission on their cable systems, but does not begin to take effect until
2001 and will be phased in by equal increments over the ensuing five years.
Various parties have requested the FCC to reconsider these new regulations and
several parties have filed petitions for review at the FCC and in federal
appellate courts. A 1997 proceeding to consider whether certain elements of the
existing rate formula should be adjusted also remains pending before the FCC. If
adopted, these adjustments may increase the fees paid by cable operators to
utilities for pole attachments and conduit space. The ultimate outcome of these
rulemakings and the ultimate impact of any revised FCC rate formula or of any
new pole attachment rate regulations on us or our business cannot be determined
at this time.

MUST CARRY/RETRANSMISSION CONSENT

The 1992 Cable Act contains broadcast signals carriage requirements that,
among other things, allow local commercial television broadcast stations to
elect once every three years between requiring a cable system to carry the
station, known as must carry, or negotiating for payments for granting
permission to the cable operator to carry the station, known as retransmission
consent. A cable system generally is required to devote up to one-third of its
activated channel capacity for the carriage of local commercial television
stations whether pursuant to the mandatory carriage or retransmission consent
requirements of the 1992 Cable Act. Local non-commercial television stations are
also given mandatory carriage rights, subject to certain exceptions, within the
larger of: (A) a 50-mile radius from the station's city of license; or (B) the
station's Grade B contour, a measure of signal strength. Unlike commercial
stations, noncommercial stations are not given the option to negotiate
retransmission consent for the carriage of their signal. In addition, cable
systems must obtain retransmission consent for the carriage of all "distant"
commercial broadcast stations, except for certain "superstations," i.e.,
commercial satellite-delivered independent stations, such as WGN. Must carry
requests can limit a cable systems' programming offerings, and retransmission
consent demands may require substantial payments or other concessions. Either
option has a potentially adverse affect on our business. The burden associated
with "must carry" may increase substantially as broadcasters proceed with
planned conversion to digital transmission and if the FCC determines that cable
systems must carry all analog and digital broadcasts in their entirety. The FCC
has initiated a rulemaking proceeding concerning whether and under what
circumstances cable operators must carry digital broadcast signals.

ACCESS CHANNELS

LFAs can include franchise provisions requiring cable operators to set
aside certain channels for public, educational and governmental access
programming. The 1984 Cable Act further requires cable television systems with
36 or more activated channels to designate a portion of their channel capacity,
up to 15% in some cases, for commercial leased access by unaffiliated third
parties. While the 1984 Cable Act allowed cable operators substantial latitude
in setting leased access rates, the 1992 Cable Act requires leased access rates
to be set according to a formula determined by the FCC. The FCC has adopted
rules regulating the terms, conditions and maximum rates a cable operator may
charge for use of the designated channel capacity, but use of commercial leased
access channels has been relatively limited.

The FCC released revised rules in February 1997 mandating a modest rate
reduction. The reduction sparked some increase in part-time use, but did not
make commercial leased access substantially more attractive to third party
programmers. The FCC has initiated a proceeding to consider whether the leased
access requirement applies to cable modem internet access services offered by
cable operators. Although we do not believe such use is in accord with the

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governing statute, a contrary ruling could lead to substantial leased access
activity by Internet Service Providers and disrupt our own plans for Internet
service.

ACCESS TO PROGRAMMING

To spur the development of independent cable programmers and competition to
incumbent cable operators, the 1992 Cable Act imposed restrictions on the
dealings between cable operators and cable programmers. Of special significance
from a competitive business posture, the 1992 Cable Act precludes satellite
distributed video programmers affiliated with cable companies from favoring
cable operators over competitors and requires such programmers to sell their
programming to other multichannel video distributors. This provision limits the
ability of vertically integrated cable programmers to offer exclusive
programming arrangements to cable companies. Recently, there has been increased
interest in further restricting the marketing practices of cable programmers,
including subjecting programmers who are not affiliated with cable operators to
all of the existing program access requirements. In an effort to increase
competition in the video marketplace, the FCC revised its program access
complaint procedures. Among other revisions, the order increased sanctions for
violation of the program access rules. The FCC has, in subsequent decisions,
declined to broaden the scope of the rules to include terrestrially delivered
programming.

INSIDE WIRING

In October 1997, the FCC adopted new procedural guidelines governing the
disposition of home run wiring, a line running to an individual subscriber's
unit from a common feeder or riser cable, in multi-dwelling units, or MDUs. The
rules allow MDU owners to attempt to force cable television operators without
contracts to either sell, abandon or remove home run wiring and terminate
service to MDU subscribers unless operators retain rights under common or state
law to maintain ownership rights in the home run wiring. In addition, the FCC is
reviewing the enforceability of contracts to provide exclusive video service
within an MDU complex. The FCC has sought comment on abrogating all such
contracts held by incumbent cable operators, but allowing such contracts when
held by new entrants. These changes, if ultimately adopted, will make it easier
for an MDU complex owner to terminate service from an incumbent cable operator
in favor of a new entrant and leave the already competitive MDU sector even more
challenging for incumbent cable operators unless operators retain rights under
common or state law to maintain ownership rights in the home run wiring.

OTHER FCC REGULATIONS

The FCC continues to have rulemaking proceedings pending that will
implement various provisions of the 1996 Telecom Act. It also has adopted
regulations implementing various provisions of the 1992 Cable Act and the 1996
Telecom Act, many of which have been the subject of petitions requesting
reconsideration and appeals of various aspects of its rulemaking proceedings. In
addition to the FCC regulations noted above, there are other FCC regulations
covering such areas as:

- equal employment opportunity;

- subscriber privacy;

- syndicated program exclusivity;

- network program non-duplication;

- closed captioning of video programming;

- registration of cable systems;

- maintenance of various records and public inspection files;
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- aeronautical frequency usage;

- lockbox availability;

- origination cablecasting and sponsorship identification;

- antenna structure notification;

- tower marking and lighting;

- blackouts of local sports broadcast programming;

- application of rules governing political broadcasts;

- limitations on advertising contained in non-broadcast children's
programming;

- programmer access to cable systems;

- programming agreements;

- technical standards;

- consumer protection and customer service standards;

- emergency alert system requirements;

- consumer electronics equipment compatibility; and

- implementation of rules governing DBS systems.

The 1992 Cable Act, the 1996 Telecom Act and the FCC's rules implementing
these statutory provisions generally have increased the administrative and
operational expenses of cable systems and have resulted in additional regulatory
oversight by the FCC and local franchise authorities. We will continue to
develop strategies to attempt to minimize the adverse impact that the FCC's
regulations and the other provisions of the 1992 Cable Act and the 1996 Telecom
Act have on our business. However, no assurances can be given that we will be
able to develop and successfully implement such strategies to minimize the
adverse impact of the FCC's rate regulations, the 1992 Cable Act or the 1996
Telecom Act on our business.

The FCC has the 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 used in connection
with cable operations.

Cable 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 revenue 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
payments for broadcast signal carriage cannot be predicted at this time. 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
our ability to obtain suitable programming and could substantially increase the
cost of programming that remained available for distribution to our customers.
We cannot predict the outcome of this legislative activity.

Cable operators distribute programming and advertising that use music
controlled by the two major music performing rights organizations, ASCAP and
BMI. In October 1989, the special rate court of the U.S. District Court of the
Southern District of New York imposed interim rates on the cable industry's use
of ASCAP-controlled music. The same federal district court recently

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established a special rate court for BMI. BMI and certain cable industry
representatives recently concluded negotiations for a standard licensing
agreement covering the usage of BMI music contained in advertising and other
information inserted by operators into cable programming and on certain local
access and origination channels carried on cable systems. ASCAP and cable
industry representatives have met to discuss the development of a standard
licensing agreement covering ASCAP music in local origination and access
channels and pay-per-view programming. Recently, the U.S. District Court of the
Southern District of New York ruled that, on an interim basis, cable operators
must pay ASCAP the same fees paid to BMI for locally originated programming,
PEG, leased access and local advertising. Although we cannot predict the
ultimate outcome of these industry negotiations and litigation or the amount of
any license fees we may be required to pay for past and future use of
ASCAP-controlled music, we do not believe these license fees will be material to
our operations.

STATE AND LOCAL REGULATION

Cable television systems generally are operated pursuant to nonexclusive
franchises granted by a municipality or other state or local government entity
in order to cross public rights-of-way. Federal law now prohibits franchise
authorities from granting exclusive franchises or from unreasonably refusing to
award additional franchises. Cable franchises generally are granted for fixed
terms and in many cases include monetary penalties for non-compliance and may be
terminable if the franchisee fails to comply with material provisions. The terms
and conditions of franchises vary materially from jurisdiction to jurisdiction.
Each franchise generally contains provisions governing cable operations, service
rates, franchise fees, system construction and maintenance obligations, system
channel capacity, design and technical performance, customer service standards,
and indemnification protections. A number of states, such as Connecticut,
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. Although LFAs have considerable discretion in
establishing franchise terms, there are certain federal limitations. For
example, LFAs cannot insist on franchise fees exceeding 5% of the system's gross
revenues, cannot dictate the particular technology used by the system, and
cannot specify video programming other than identifying broad categories of
programming.

The 1984 Cable Act places certain limitations on a franchising authority's
ability to control the operation of a cable system operator, and the courts have
from time to time reviewed the constitutionality of several general franchise
requirements, including franchise fees and access channel requirements, often
with inconsistent results. On the other hand, the 1992 Cable Act prohibits
exclusive franchises, and allows franchising authorities to exercise greater
control over the operation of franchised cable television systems, especially in
the area of customer service and rate regulation. Moreover, franchising
authorities are immunized from monetary damage awards arising from regulation of
cable television systems or decisions made on franchise grants, renewals,
transfers and amendments.

Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the franchise authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and service or increased
franchise fees as a condition of renewal. Similarly, if a franchise authority's
consent is required for the purchase or sale of a cable system or franchise,
such authority may attempt to impose more burdensome or onerous franchise
requirements in connection with a request for consent. Historically, franchises
have been renewed for cable operators that have provided satisfactory services
and have complied with the terms of their franchise. We have generally had good
experiences with our cable franchise renewals.

requirements regarding universal service, public safety and welfare, service
quality, and consumer protection. State and local governments also retain their
authority to manage the public rights-of-way and may require reasonable,
competitively neutral compensation for management of the public right-of-way
when cable operators provide telecommunications service.

In July 1999, the U.S. District Court for the District of Oregon held that
the City of Portland, Oregon had the authority to require AT&T Corp. to provide
cable modem services to competitors on a non-discriminatory basis. AT&T has
sought expedited review of this decision in the 9th Circuit Court of Appeals. A
number of other franchising authorities have imposed, or are considering
imposing, similar open access requirements.

OTHER MATTERS

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

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MANAGEMENT

Executive officers, key operations managers and outside directors of
Classic are as follows:

<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND
DIRECTORS OF CLASSIC COMMUNICATIONS AGE POSITION
- ----------------------------------- --- --------
<S> <C> <C>
Alberto Cribiore............................. 54 Director and Chairman of the Board
J. Merritt Belisle........................... 43 Director and Chief Executive Officer
Steven E. Seach.............................. 42 Director, President and Chief Financial
Officer
Ronald W. Martin............................. 47 Executive Vice President of Operations
Elizabeth Kay Monigold....................... 46 Executive Vice President of
Administration
Lisa A. Hook................................. 41 Director
David Webb................................... 46 Director
Jeffery C. Garvey............................ 50 Director
James A. Kofalt.............................. 57 Director
Martin D. Payson............................. 63 Director
</TABLE>

ALBERTO CRIBIORE, founder and Managing Principal of Brera Capital Partners,
was appointed Chairman of the Board upon the closing of the Brera Classic equity
investment. Prior to forming Brera in 1997, Mr. Cribiore was Co-President and
Partner at Clayton, Dubilier & Rice, Inc. which he joined in 1985 as one of
three principal shareholders. He had previously been a Senior Vice President at
Warner Communications, where he was responsible for mergers, acquisitions and
divestitures. Mr. Cribiore is a cum laude graduate of Bocconi University in
Milan, Italy and holds degrees in Business Administration and Economics. He is
currently a Director of Riverwood International Corporation and Hansberger
Group, Inc. Mr. Cribiore also serves as the Chairman of the board of directors
of Global Decisions Group, LLC, the parent company of Cambridge Energy Research
Associates, and MCM Group, Inc. He is also currently Co-Chairman of the board of
directors of B-G Western, Inc., the parent of Western Industries, Inc., and a
member of the board of directors of Western Industries, Inc. Mr. Cribiore serves
as one of Brera Classic's designees to our Board. See "Certain Relationships and
Related Transactions -- 1999 Stockholders' Agreement."

J. MERRITT BELISLE, our Chief Executive Officer and director, founded
Classic in March 1992. From January 1988 through August 1991, he was a Vice
President at Texas Commerce Investment Banking, a division of Texas Commerce
Bank, N.A., Houston, Texas. From April 1985 to January 1988, Mr. Belisle was
Chief Executive Officer of Community Cable Incorporated, a small multi-system
cable television operator based in Austin, Texas. Community Cable was sold to a
cable television subsidiary of Time Warner, Inc. Prior to founding Community
Cable, Mr. Belisle was a corporate and securities attorney with the Houston
office of Baker & Botts. Mr. Belisle received a BBA in 1977, an MPA in 1980, and
a JD in 1981 from The University of Texas at Austin. Mr. Belisle serves as one
of our directors pursuant to his position as our Chief Executive Officer. See
"Certain Relationships and Related Transactions -- 1999 Stockholders'
Agreement."

STEVEN E. SEACH, our President and Chief Financial Officer and director,
assisted Mr. Belisle in the founding of Classic in March 1992. Mr. Seach became
a member of the board of Classic in 1998. Mr. Seach became our President in
October 1996 and, through August 1998, was substantially responsible for our
operations. From March 1992 to June 1994, Mr. Seach served as an advisor to
Classic and its board of directors for strategic, operational and financial
matters. Mr. Seach became our Chief Financial Officer in July 1994. Prior to his
association with us, Mr. Seach spent 12 years in the corporate banking and
investment banking industries, primarily with Texas Commerce Bank, N.A.,
Houston, Texas. Mr. Seach received a BBA in finance from

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the University of Houston in 1980. He is currently a director of The Keller
Group and serves as one of our directors pursuant to the 1999 Stockholders'
Agreement. See "Certain Relationships and Related Transactions -- 1999
Stockholders' Agreement."

RONALD W. MARTIN, who became our Executive Vice President of Operations
upon the closing of the Buford acquisition, is responsible for all of our system
operating and marketing functions. Since 1993, he served as Buford's Executive
Vice President and Chief Operating Officer. A graduate of Dakota Wesleyan, he
joined Buford in 1973 as Business Manager for KXON-TV in Mitchell, South Dakota,
later serving in the same position at KFSM-TV in Fort Smith, Arkansas. He joined
Buford's corporate staff in 1976, serving as Internal Auditor and Personnel
Administrator. In 1981, Mr. Martin was named Vice President of Human Resources
and Administration for Buford. Mr. Martin is a board member and past Chairman of
the National Cable Television Cooperative and serves on the CTAM Digital
Committee.

ELIZABETH KAY MONIGOLD, who became our Executive Vice President of
Administration upon the closing of the Buford acquisition, is responsible for
all of our human resources, legal, information systems and risk management
functions, as well as operating responsibility for Correctional Cable
Television. Since 1993, she served as Buford's Executive Vice President and
Chief Administrative Officer. Ms. Monigold joined Buford in 1981 and served in
numerous capacities including the evaluation of new business opportunities such
as data, telephony, digital and other new technologies. Ms. Monigold earned a
BBA in Business Management from The University of Texas at Tyler.

LISA A. HOOK, a Principal of Brera Capital Partners, was appointed a
director upon the closing of the Brera Classic equity investment. Prior to
joining Brera Classic in 1998, Ms. Hook was a Managing Director of Alpine
Capital Group, a telecommunications and media venture capital firm. From 1989 to
1996, Ms. Hook served in a number of senior executive level positions at Time
Warner Inc., including Executive Vice President/Chief Operating Officer of Time
Warner Telecom and Special Advisor to the Vice Chairman. From 1987 to 1989, Ms.
Hook served as the Legal Advisor to the Chairman of the Federal Communications
Commission. From 1985 to 1987, Ms. Hook served as a senior attorney at Viacom
International, responsible for Viacom Cable. Prior to joining Viacom, Ms. Hook
was an attorney with the law firm of Hogan & Hartson. Ms. Hook received her BA
from Duke University and her JD from the Dickinson School of Law. Ms. Hook
serves as one of Brera Classic's designees to our board. She is currently a
director of Time Warner Telecom, Inc. and Roberts Radio LLC. See "Certain
Relationships and Related Transactions -- 1999 Stockholders' Agreement."

DAVID WEBB, a Principal of Brera Capital Partners, was appointed a director
upon the closing of the Brera Classic equity investment. Prior to joining Brera
Classic in 1999, Mr. Webb was a Managing Director in the investment banking
division of Merrill Lynch, which he joined in 1981. Mr. Webb was the head of the
firm's Global Financial Sponsors Group, and a member of the investment banking
division's U.S. Operating Committee. Mr. Webb received a BA with honors from the
University of North Carolina, where he was a Morehead Scholar, and an MBA from
the Darden School of the University of Virginia. He is a director of Homes for
the Homeless Inc. and both B-G Western, Inc. and Western Industries, Inc. Mr.
Webb serves as one of Brera Classic's designees to our board. See "Certain
Relationships and Related Transactions -- 1999 Stockholders' Agreement."

MARTIN D. PAYSON, the Chairman of Latin Communications Group, Inc., a
privately-held Spanish language media company, was appointed a director upon the
closing of the Brera Classic equity investment. Previously, Mr. Payson was Vice
Chairman of Time Warner Inc. and a member of its board of directors. Before the
merger of Warner Communications Inc. and Time, Inc., Mr. Payson held the
position of Office of the President and General Counsel of Warner
Communications. Mr. Payson is a director of Delta Financial Corp. and Panavision
Inc., as well as several privately-held companies and philanthropic
organizations. Mr. Payson received his AB

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from Cornell University and his LLB cum laude from New York University School of
Law. Mr. Payson serves as one of Brera Classic's designees to our board. See
"Certain Relationships and Related Transactions -- 1999 Stockholders'
Agreement."

JEFFERY C. GARVEY, a general partner of Austin Ventures, L.P., was
appointed a director in November 1999 and was a director of Classic from July
1992 to July 28, 1999. Mr. Garvey has been general partner of Austin Ventures,
L.P. since 1984. Mr. Garvey is currently a director of CelPage and Kirtland
Capital Partners. From 1979 through 1986, Mr. Garvey was the Executive Vice
President and President of Rust Capital, Ltd, a small business investment
company. Prior to that, Mr. Garvey was an officer with PNC Bank in Philadelphia.
Mr. Garvey received his BA with honors from St. Lawrence University in 1971.

JAMES A. KOFALT was appointed a director in November 1999. Mr. Kofalt has
held various management positions at Cablevision Systems Corporation, including
Chief Operating Officer from 1990 to 1992 and President and Chief Operating
Officer from 1992 to 1994. He is a former Chairman of the Boards of Directors of
Campuslink Communications Systems, Inc., from 1995 to 1999, and Optel, Inc.,
from 1995 to 1996. Mr. Kofalt is currently a director of PaeTec Corp. and
Correctnet Global Information Solutions, Inc. and a member of the Board of
Visitors of the Lineberger Comprehensive Cancer Research Center at the
University of North Carolina. Mr. Kofalt received his B.S. from the United
States Military Academy at West Point.

ELECTION OF DIRECTORS AND APPOINTMENT OF EXECUTIVE OFFICERS

Our board of directors will be divided into three classes, and each
director will serve for a staggered three-year term. The board will consist of:
two Class I directors, Messrs. Seach and Webb; three Class II directors, Messrs.
Belisle and Kofalt and Ms. Hook; and three Class III directors, Messrs.
Cribiore, Garvey and Payson. At each annual meeting of stockholders, a class of
directors will be elected for a three-year term to succeed the directors of the
same class whose terms are then expiring. The terms of the Class I directors,
Class II directors and Class III directors will expire upon the election and
qualification of successor directors at the annual meeting of stockholders held
during the calendar years 2000, 2001 and 2002, respectively.

Each officer serves at the discretion of the board of directors. There are
no family relationships among any of our directors and executive officers.

BOARD COMMITTEES

We have appointed an audit committee and a compensation committee of the
board of directors. The audit committee will review our internal accounting
procedures and will consider and report to the board of directors with respect
to other auditing and accounting matters, including the selection of our
independent auditors, the scope of annual audits, fees to be paid to our
independent auditors and the performance of our independent auditors. The audit
committee consists of Mr. Webb, Mr. Payson and Mr. Kofalt. The compensation
committee will review and recommend to the board of directors the salaries,
benefits and stock option grants of all employees, consultants, directors and
other individuals compensated by us. The compensation committee also administers
our stock option and other employee benefits plans. The compensation committee
consists of Ms. Hook, Mr. Garvey and Mr. Payson.

DIRECTOR COMPENSATION

Our directors are not currently compensated. We currently anticipate that
decisions with respect to the compensation of directors will be made on an
on-going basis. In August 1999, Mr. Martin Payson, who is currently a member of
our board of directors, was granted an option to purchase 7,000 shares of our
Class A common stock at an exercise price of $20 per share. Mr. James A. Kofalt,
who was appointed to our board in November 1999, will be granted an option to
purchase 8,000 shares of our Class A common stock at an exercise price equal to
the

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initial offering price to the public per share of Class A common stock in this
offering. These options will have a 10-year term and vest in 25% increments on
each anniversary date of the grant over four years.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Historically, all compensation decisions relating to our executive officers
have been made by our board of directors as a whole. J. Merritt Belisle, our
Chief Executive Officer, and Steven E. Seach, our President, as board members,
historically participated in deliberations of the board of directors with
respect to compensation of all executive officers. In the future, the
compensation committee will make all compensation decisions regarding our
executive officers. No interlocking relationship exists between the compensation
committee and the board of directors or compensation committee of any other
company, and no such relationship existed in the past.

1999 STOCKHOLDERS' AGREEMENT

Effective July 28, 1999, Classic, Brera Classic, BT Capital Partners, Inc.,
Austin Ventures, L.P., BA Capital Company, L.P., as the successor in interest to
NationsBanc Capital Corp., J. Merritt Belisle, Steven E. Seach and certain other
stockholders of Classic entered into a stockholders' agreement. This agreement
provides, among other things, that, until such time as the parties to the
stockholders' agreement together own less than 30% of the outstanding common
stock (on a fully diluted basis) of Classic, the parties will vote their shares
of Class B common stock in favor of the election to our board of (1) four
nominees chosen by Brerra Classic, (2) our chief executive officer and (3) two
nominees chosen by the other parties to the stockholders' agreement, one of whom
must be Steven Seach for as long as he is employed by us. We expect that the
agreement will be amended so that the parties will be obligated to vote their
shares of Class B common stock in favor of the election to our board of up to
(1) six nominees chosen by Brera Classic, (2) our chief executive officer, (3)
two nominees chosen by the other parties to the stockholders' agreement, one of
whom must be Steven Seach for as long as he is employed by us and (4) two
nominees who are independent directors (as defined by the rules of the Nasdaq
National Market) chosen by a majority vote of the board of directors. These
voting arrangements will terminate when these stockholders hold less than 30% of
all of our common stock. See "Certain Relationships and Related
Transactions -- 1999 Stockholders' Agreement."

The amendment to the stockholders' agreement also provides, among other
things, that a party to the agreement will not be able to participate in the
nominating of directors under the agreement if such party holds less than 2% of
the outstanding common stock on a fully diluted basis, although such party will
be obligated to vote for the nominees under the agreement as long as it holds at
least 1% of the outstanding common stock on a fully diluted basis. The parties
to the agreement other than Brera will not be entitled to nominate directors
under the agreement if such parties hold less than 4% of the outstanding common
stock on a fully diluted basis. The amended stockholders' agreement also
provides that the parties will vote to cause:

(1) the Class I directors to be comprised of up to (A) two directors
nominated by Brera and (B) our chief executive officer or one director
nominated by the other parties to the agreement;

(2) the Class II directors to be comprised of up to (A) two directors
nominated by Brera, (B) our chief executive officer or one director
nominated by the other parties to the agreement and (C) one independent
director; and

(3) the Class III directors to be comprised of up to (A) two directors
nominated by Brera, (B) our chief executive officer or one director
nominated by the other parties to the agreement and (C) one independent
director.

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We anticipate that Star will become a party to the stockholders' agreement,
as amended, upon completion of the Star acquisition.

OTHER CORPORATE PERSONNEL

BRYAN D. NOTEBOOM, our Vice President of Finance, has been with us since
our inception and coordinates our finance and mergers and acquisitions
functions. Mr. Noteboom has an extensive background in cable television,
accounting, and finance through prior work experience in the cable industry and
as a senior auditor with Coopers & Lybrand. Mr. Noteboom earned a BBA in
Accounting/Finance from the University of Texas at Austin in December 1985 and
is a licensed Certified Public Accountant.

RON ENAS, our Vice President of Engineering, joined us in September 1999
and is responsible for all technical functions, including the oversight of our
capital expenditure program. Mr. Enas has 25 years of experience in the
industry, having previously held positions of increasing responsibility with
Time Warner, Inc., Post Newsweek Cable and Harron Communications Corp. Mr. Enas
is a graduate of Tyler Junior College.

MICHELE JENKINS, our Vice President of Marketing, joined us in October 1999
and is responsible for all aspects of marketing, sales and programming. Prior to
joining us, Ms. Jenkins served as Corporate Director of Programming and PPV for
Marcus Cable. Prior to Marcus Cable, Ms. Jenkins served as Corporate Director of
Marketing at Sammons Communications, Inc. Ms. Jenkins is a graduate of Texas
Tech University.

MARK ROWE, our Corporate Controller, joined us in 1998 and coordinates our
accounting function, including SEC reporting and budgeting. Prior to joining us,
Mr. Rowe worked as an audit manager at Ernst & Young LLP, serving a number of
telecommunication industry clients. Mr. Rowe earned a BBA in Accounting from The
University of Texas at Austin in 1990 and is a licensed Certified Public
Accountant.

ASHLEY M. KIMERY, our Corporate Treasurer, joined us in 1995 and currently
oversees our cash management and tax functions. Prior to joining us, Ms. Kimery
worked for seven years in both the audit and tax departments at Ernst & Young
LLP. Ms. Kimery earned a BBA in Accounting from Texas A&M University in 1987, an
MPA in Tax from The University of Texas at Austin in 1991 and is a licensed
Certified Public Accountant.

JOHN ELLIS, our Management Information Systems Manager, has over 25 years
experience in information technology and is responsible for the development,
implementation and operation of all software and hardware network interfaces for
us. Mr. Ellis joined Buford in 1981 and was instrumental in the network design
of the Tyler, Texas call center. Mr. Ellis is currently serving on the CableLabs
Year 2000 Committee.

RONALD G. JANSONIUS, our Advanced Technology Manager, has been with us
since 1996 and is responsible for directing our advanced technology initiatives.
Mr. Jansonius has over 6 years of computer, network, and broadband technology
expertise. He received a BS from Fort Hays State University in 1982.

KEY OPERATIONS PERSONNEL

ARL COPE, our Vice President and Regional Manager, joined Buford in 1987
and is responsible for the oversight of all operational, technical and local
marketing aspects of certain of our systems in Arkansas, southern Missouri, and
northern Louisiana. A 30-year veteran of the cable television industry, Mr. Cope
currently serves as Secretary/Treasurer of the Arkansas Cable Telecommunications
Association and has been a board member since 1989.

WILLIAM E. FLOWERS, JR., our Vice President and Regional Manager, has over
18 years of experience in the cable television industry and oversees all
operational, technical and local

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marketing aspects of our systems in the western and panhandle regions of Texas
and in New Mexico. Mr. Flowers joined us in August 1998.

STEVE LOWE, our Vice President and Regional Manager, has over 25 years
experience in the cable television industry and oversees all operational,
technical and local marketing aspects of our systems in central and east Texas
and central Louisiana. Prior to joining Buford in 1988, Mr. Lowe constructed,
owned and operated cable systems in western Oklahoma. Mr. Lowe currently serves
on the board of directors of the Texas Cable Television Association.

RON SCHAEFFER, our General Manager of Correctional Cable Television, is
responsible for the operation of existing business and the development of new
business within Correctional Cable Television. Mr. Schaeffer joined Buford in
1992 and has been instrumental in the development of the Satellite Education
Network, which is designed to provide interactive educational services to
prisons. Mr. Schaeffer is a graduate of New York University.

DAVID D. WALKER, our Vice President and Regional Manager, has over 28 years
of experience in the cable television industry and oversees all operational,
technical and local marketing aspects of certain of our systems in Missouri,
Oklahoma, and Arkansas. Mr. Walker serves on the board of directors of the
Arkansas Cable Telecommunications Association.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

Other than the executive officers of Classic who are also directors, no
directors of Classic receive any compensation for serving as a director. The
following table summarizes the compensation for services rendered which Classic
paid to the Chief Executive Officer, President and other most highly compensated
executive officers whose total annual compensation exceeded $100,000 in our
fiscal year ended December 31, 1998:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------------------------- RESTRICTED
OTHER ANNUAL STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2)(3)
--------------------------- ---- ------ ----- --------------- ------------
<S> <C> <C> <C> <C> <C>
J. Merritt Belisle..................... 1998 $200,000 $361,539(4) $6,607 $ 49,609
Chief Executive Officer
Steven E. Seach........................ 1998 $277,084 $258,302(5) $6,607 $659,471
President and Chief Financial Officer
Gilbert W. Nichols(6).................. 1998 $103,332 $ 44,101 $3,563 --
Vice President of Operations
</TABLE>

- ---------------
(1) Amounts reported as other annual compensation represent our contribution
under our 401(k) plan and/or vehicle fringe benefits.

(2) The executive officers of Classic received restricted stock during 1996
under the 1996 Stock Restricted Plan. See "-- 1996 Restricted Stock Plan."
On July 29, 1998, Messrs. Belisle and Seach held 229,050 shares and 67,283
shares of restricted stock, respectively, and each of Messrs. Belisle and
Seach exchanged their existing shares of restricted stock for 242,209 new
shares of restricted stock under the 1998 Restricted Stock Plan with revised
vesting terms and other restrictions. See "-- 1998 Restricted Stock Plan."
Long-term compensation amounts are calculated by multiplying the number of
1998 restricted shares issued by the per share value of Classic's
unrestricted stock as of the date of issuance, less an amount equal to the
number of 1996 restricted shares exchanged therefor multiplied by the per
share value of Classic's unrestricted stock on the date of issuance.

(3) As of December 31, 1998, Messrs. Belisle and Seach each owned 242,209
restricted shares of Classic's common stock. The total value of all
restricted stock owned by Messrs. Belisle and Seach was approximately
$913,000 each, computed without taking into consideration any of the
restrictions. These shares vested upon the consummation of the Brera Classic
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equity investment. Messrs. Belisle and Seach are entitled to dividends in
respect of these shares in the same manner as the holders of common stock, but
only to the extent that such dividends exceed the distribution thresholds
applicable thereto. See "-- 1998 Restricted Stock Plan."

(4) Includes a transaction fee of $300,000 paid pursuant to a pre-existing
employment agreement in connection with the acquisition of certain
properties from Cable One in July 1998, and the related financings.

(5) Includes a transaction fee of $250,000 paid pursuant to a pre-existing
employment agreement in connection with the acquisition of certain
properties from Cable One in July 1998, and the related financings.

(6) Mr. Nichols resigned effective March 19, 1999.

1996 RESTRICTED STOCK PLAN

Certain current and former members of management own restricted stock
subject to the terms of our 1996 Restricted Stock Plan. Pursuant to the 1996
Plan, we may, from time to time, grant restricted stock to our officers and
other key employees upon the terms, conditions and provisions of the 1996 Plan.
Concurrent with the adoption of the 1996 Plan, we granted a total of 517,626
shares of common stock as of such date, of which only 144,940 shares are
currently outstanding. These shares vested upon the consummation of the Brera
Classic equity investment. One-half of such shares of common stock is subject to
a distribution threshold equal to $9.93 per share, i.e., the first $9.93 of
distributions with respect to such shares is to be withheld. One-fourth of the
shares is subject to a distribution threshold of $19.06 per share and one-fourth
to a distribution threshold of $29.78 per share.

1998 RESTRICTED STOCK PLAN

The terms of the 1998 Plan are similar in all material respects to the 1996
Plan. In July 1998, each of Messrs. Seach and Belisle exchanged all of their
existing shares under the 1996 Plan for 242,209 shares of common stock pursuant
to the 1998 Plan. These shares vested upon the consummation of the Brera Classic
equity investment. All of such shares of common stock are subject to a
distribution threshold equal to $3.77 per share, i.e., the first $3.77 of
distributions with respect to such shares is to be withheld and distributed
instead to other holders of our Class B common stock.

1999 OMNIBUS STOCK INCENTIVE PLAN

The following description of our 1999 Omnibus Stock Incentive Plan is a
summary and is qualified in its entirety by reference to the text of the 1999
Omnibus Stock Incentive Plan, which is filed as an exhibit to the registration
statement of which this prospectus is a part.

Classic's 1999 Omnibus Stock Incentive Plan was adopted by our board of
directors in October 1999 for the benefit of our officers, directors, key
employees, advisors and consultants. The following discussion assumes that the
plan will become effective upon the completion of this offering in accordance
with its terms. An aggregate of 2,000,000 shares of Class A common stock is
reserved for issuance under the plan. The plan provides for the issuance of
stock-based incentive awards, including stock options, stock appreciation
rights, restricted stock, deferred stock and performance shares. An award may
consist of one or any combination of benefits. Under this plan, awards covering
no more than 80% of the shares reserved for issuance under the plan may be
granted to any participant in any one year.

The plan will initially be administered by our board of directors, although
it may be administered by either our board of directors or by any committee of
our board of directors. The board or a committee of the board, acting as the
plan administrator, may interpret this plan, may

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prescribe, amend and rescind rules governing the plan, and may otherwise
supervise the administration of this plan. This plan permits the plan
administrator to select the officers, directors, key employees, advisors and
consultants, including directors who are also employees, who will receive awards
and generally to determine the terms and conditions of those awards.
Notwithstanding the foregoing, the grant of any award intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue
Code, and any administrative determinations made in connection therewith, must
be carried out by a committee of the board or a board committee, consisting of
at least two "outside directors," as defined under Section 162(m), in a manner
consistent with the rules governing performance-based compensation under Section
162(m).

We may issue two types of stock options under this plan: incentive stock
options or ISO's, which are intended to qualify for favorable tax treatment
under the Code, and non-qualified stock options. The option price of each ISO
granted under this plan must be at least equal to the fair market value of a
share of Class A common stock on the date the ISO is granted.

Stock appreciation rights, or SARs, may be granted under this plan either
alone or in conjunction with all or part of any stock option granted under this
plan. An SAR granted under this plan entitles its holder to receive, at the time
of exercise, an amount per share equal to the excess of the fair market value,
at the date of exercise, of a share of Class A common stock over a specified
price fixed by the plan administrator.

Restricted stock, deferred stock and performance shares may be granted
under this plan. The plan administrator will determine the purchase price,
performance period and performance goals, if any, for any grant of restricted
stock, deferred stock and performance shares. Participants with restricted stock
and performance shares generally have all of the rights of a stockholder. For
deferred stock, during the deferral period and subject to the terms and
conditions that the plan administrator imposes, the deferred stock units may be
credited with dividend equivalent rights. The plan administrator may, in its
discretion, provide for the lapse of these restrictions in installments and may
accelerate or waive these restrictions, in whole or in part, based on such facts
as the attainment of performance goals or the participant's termination of
employment or service, death or disability.

In the event of a merger, consolidation, reorganization, recapitalization,
stock dividend or other change in corporate structure affecting the number of
issued shares of Class A voting common stock, the plan administrator may make an
equitable substitution or proportionate adjustment in the number and type of
shares authorized by this plan, and the number and exercise price of shares
subject to outstanding awards. In addition, the plan administrator, in its
discretion, may terminate all awards providing for payment of cash or in-kind
consideration.

In the event of a change of control of Classic, unless otherwise determined
by the administrator of the plan or the board of directors before the change of
control,

(1) any stock appreciation rights outstanding for at least six months
and any stock options awarded under the plan not previously vested will
vest in full;

(2) the restrictions applicable to any restricted stock, deferred
stock or performance share awards under the plan shall lapse and such
shares and awards will vest in full; and

(3) any loans by us to a participant of the plan to purchase or
exercise awards under the plan will be forgiven and the collateral pledged
in connection with any such loan shall be released.

For purposes of the plan, a change of control will be deemed to have occurred
if:

(1) any person (other than us or any of our subsidiaries, or certain
other related parties as specified in the plan) is or becomes after the
effective date of the plan the

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beneficial owner of our securities (not including securities acquired
directly from the Company or its affiliates) representing 50% or more of
the voting power of Classic;

(2) upon completion of a merger or consolidation of Classic with any
other corporation or entity (other than (a) a merger or consolidation
whereby the holders of at least 50% of the voting power of Classic prior to
the merger or consolidation continue to own at least 50% of the voting
power of Classic or the surviving entity after the merger or consolidation
or (b) a merger or consolidation that implements a recapitalization of
Classic and no person (other than existing stockholders) acquires more than
50% of the voting power of Classic); or

(3) upon completion of a plan of complete liquidation of Classic or an
agreement for the sale or disposition by us of all or substantially all of
our assets.

The terms of this plan provide that our board of directors may amend,
suspend or terminate this plan at any time, provided that some amendments
require approval of our stockholders under the Internal Revenue Code of 1986, as
amended. Furthermore, no action may be taken that adversely affects any rights
under outstanding awards without the holder's consent.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND 1999
NON-QUALIFIED STOCK OPTION GRANTS

At the closing of the Brera Classic equity investment, J. Merritt Belisle
and Steven E. Seach each entered into an employment agreement with us, on
substantially similar terms with their former employment agreements. In
connection with the consummation of the Brera Classic equity investment, Mr.
Belisle was paid $780,000 and Mr. Seach was paid $700,000 under their former
employment agreements. Each of the new employment agreements provides for their
employment with us for a continuing two year period. Messrs. Belisle and Seach
are each to be paid an annual salary of $350,000 per year. Each new employment
agreement provides that upon termination by us without "good cause" (as defined
in each agreement) or termination by the employee for certain reasons, the
employee will be entitled to two years' worth of base compensation and benefits.
In addition, Belisle and Seach's employment agreements contain provisions under
which we may be required to purchase and they may be required to sell to us
their shares if their employment is terminated. Each employment agreement also
prohibits the employee from competing with us during his term of employment and
for a period of two years thereafter.

The employment agreements of Messrs. Belisle and Seach in effect prior to
the consummation of the Brera Classic equity investment provided for a
transaction fee of 1% to be paid on the value of all mergers, acquisitions, or
dispositions of assets or subsidiaries by us that were consummated during their
term of employment. Messrs. Belisle and Seach each received a transaction fee of
$1.5 million related to the consummation of the Buford acquisition. The new
employment agreements do not contain a provision for transaction fees to be paid
to Messrs. Belisle and Seach.

Under their option agreements entered into in connection with their
employment agreements, Messrs. Belisle and Seach were each granted a stock
option with a 10-year exercise period to purchase 279,874 shares of Class B
common stock at an exercise price of $14.57 per share, which will vest monthly
over a three-year period which began July 28, 1999, or alternatively,
immediately upon the closing of a "liquidity event" (as defined in the
agreements). Upon the closing of this offering 139,937 of these shares will vest
and the remaining shares will continue to vest as described in the previous
sentence.

In addition, Messrs. Belisle and Seach will each also receive a second
stock option with a 10-year exercise period to purchase 279,874 shares of Class
B common stock, to vest monthly over a three-year period commencing on the date
of the closing of this offering, or alternatively,

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immediately upon the closing of a "liquidity event" (as defined in the
agreements) which involves a sale of all of our common stock for cash or a sale
of all or substantially all of the assets of Classic. The exercise price of the
second option is the initial offering price to the public per share of Class A
common stock in this offering.

We have entered into employment agreements with Ronald W. Martin and
Elizabeth Kay Monigold. These employment agreements relate to their employment
by us as the Executive Vice President of Operations and the Executive Vice
President of Administration, respectively, and each are for a continuing
one-year period. Ronald W. Martin is to be paid an annual salary of $175,000 and
Elizabeth Kay Monigold is to be paid an annual salary of $120,000. Each
employment agreement provides that upon termination by us without "good cause,"
as defined in each agreement, the employee will be entitled to one year's worth
of base compensation and benefits. Each employment agreement also prohibits the
employee from competing with us during the term of employment and for a period
of two years thereafter.

In addition, we granted stock options to purchase 589,500 shares of our
Class A common stock at an exercise price of $20 per share. The options were
granted in August 1999 to Martin Payson, a director, and to Ronald W. Martin,
Elizabeth Kay Monigold and several of our other officers and key employees.
These options, which have 10-year terms, vest in 25% increments over each of the
first four anniversaries of the grants.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

LOANS TO AFFILIATES

During 1998, Classic had outstanding subordinated indebtedness, including
accrued interest, in the amount of approximately $4.5 million to Austin
Ventures, L.P., The Texas Growth Fund, and BT Capital Partners, Inc. and
preferred stock, including accrued and unpaid dividends, in the amount of
approximately $29.4 million to BA Capital Company, L.P. and BT Capital Partners,
Inc., each a stockholder. Approximately $3.9 million of such indebtedness bore
interest at the rate of 15.0% per annum and the remainder bore interest at the
rate of 7.5% per annum. All of such subordinated indebtedness and preferred
stock had been incurred or issued to fund the acquisition of various cable
properties acquired by us. We repaid such indebtedness and redeemed the
preferred stock from the holders thereof out of the proceeds received from a
previous issuance of senior subordinated notes.

In 1997, we advanced approximately $200,000 to Mr. Belisle, which has been
forgiven.

1999 STOCKHOLDERS' AGREEMENT

Effective July 28, 1999, Classic, Brera Classic, BT Capital Partners, Inc.,
Austin Ventures, L.P., BA Capital Company, L.P., as the successor in interest to
NationsBanc Capital Corp., J. Merritt Belisle, Steven E. Seach and certain other
stockholders of Classic entered into a stockholders' agreement. This agreement
provides, among other things, that, until such time as the parties to the
stockholders' agreement together own less than 30% of the outstanding common
stock (on a fully diluted basis) of Classic, the parties will vote their shares
of Class B common stock in favor of the election to our board of (1) four
nominees chosen by Brera Classic, (2) our chief executive officer and (3) two
nominees chosen by the other parties to the stockholders' agreement, one of whom
must be Steven Seach for as long as he is employed by us. We expect that the
agreement will be amended so that the parties will be obligated to vote their
shares of Class B common stock in favor of the election to our board of up to
(1) six nominees chosen by Brera Classic, (2) our chief executive officer, (3)
two nominees chosen by the other parties to the stockholders' agreement, one of
whom must be Steven Seach for as long as he is employed by us and (4) two
nominees who are independent directors (as defined by the rules of the Nasdaq
National Market) chosen by a majority vote of the board of directors. These
voting arrangements will terminate when these stockholders hold less than 30% of
all of our common stock.

(1) the Class I directors to be comprised of up to (A) two directors
nominated by Brera and (B) our chief executive officer or one director
nominated by the other parties to the agreement;

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<PAGE> 92

We anticipate that Star will become a party to the stockholders' agreement,
as amended, upon completion of the Star acquisition.

MANAGEMENT AND ADVISORY FEE AGREEMENT

As part of the Brera Classic equity investment, Classic and Brera Classic
entered into an agreement pursuant to which Brera Classic was paid a transaction
fee of $3 million upon closing of the Brera Classic equity investment in
consideration for arranging the equity investment. The agreement further
provides that we will pay Brera Classic an annual fee of $250,000 in
consideration for transactional assistance and advice provided to us until we
are sold or complete an initial public offering, the first payment of which was
made at the closing of the Buford acquisition.

BRERA CLASSIC INVESTMENT AGREEMENT

Classic and Brera Classic entered into an Investment Agreement whereby
Classic agreed to issue and sell 6,490,734 shares of Classic voting common stock
for an aggregate purchase price of $100 million. Pursuant to the Investment
Agreement, Classic agreed to pay all fees and expenses of Brera Classic's legal
counsel, financial advisors, accountants and third party consultants in an
amount up to $750,000. In addition to the $750,000 paid to Brera Classic at the
closing of the Buford acquisition for its fees and expenses of counsel,
accountants, advisors and consultants, Classic reimbursed Brera for $252,000 of
closing costs incurred by Brera on Classic's behalf.

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<PAGE> 93

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of our common stock by (1) each named executive officer and each
director, (2) each stockholder known by us to beneficially own 5.0% or more of
our common stock and (3) all directors and officers as a group. No shares of
Class A common stock will be outstanding prior to the completion of this
offering. See "Description of Capital Stock" for more information regarding
conversion rights of the Class B common stock. We do not expect any of the
stockholders, directors or officers listed below to own Class A common stock
immediately following this offering.

The information in the table assumes the underwriters' option to purchase
additional shares is not exercised and does not reflect any shares purchased in
this offering by any of the principal stockholders, directors or named executive
officers listed below.

<TABLE>
<CAPTION>
CLASS B NONVOTING PERCENT OF VOTE AS
COMMON COMMON A SINGLE CLASS(4)
STOCK(2) STOCK(3) -------------------
------------------- ----------------- BEFORE AFTER
BENEFICIAL OWNER(1) NUMBER PERCENT NUMBER PERCENT OFFERING OFFERING
------------------- --------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Brera Classic(5)................................... 6,490,734 79.0% -- % 79.0% 73.5%
BT Capital Partners, Inc.(6)....................... 1,326 * 766,211 49.2 * *
Austin Ventures, L.P.(7)........................... 735,987 9.0 -- 9.0 8.3
BA Capital Company, L.P. (8)....................... 159,049 1.9 542,995 35.5% 1.9 1.8
J. Merritt Belisle(9).............................. 430,739 5.1 -- 5.1 4.9
Steven E. Seach(10)................................ 430,739 5.1 -- 5.1 4.9
Ronald W. Martin................................... -- -- * *
Elizabeth Kay Monigold............................. -- -- * *
Lisa A. Hook(11)................................... 6,490,734 79.0 -- 79.0 73.5
Alberto Cribiore(12)............................... 6,490,734 79.0 -- 79.0 73.5
David Webb(13)..................................... 6,490,734 79.0 -- 79.0 73.5
Jeffery C. Garvey(14).............................. 735,987 9.0 -- 9.0 8.3
James Kofalt....................................... -- -- * *
Martin Payson...................................... -- -- * *
All directors and executive officers as a group (10
persons)......................................... 8,088,199 94.2 -- 94.2 87.8
</TABLE>

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

* Less than 1%

(1) The address for Brera Classic, Lisa Hook, Alberto Cribiore, and David Webb
is 712 Fifth Avenue, 34th Floor, New York, New York 10019. The address for
Austin Ventures, L.P. is 114 West 7th Street, Suite 1300, Austin, Texas
78701. The address for BT Capital Partners, Inc. is 130 Liberty Street,
25th Floor, New York, New York 10006. The address for BA Capital Company,
L.P. is 100 North Tryon Street, Charlotte, North Carolina 28255. The
address for J. Merritt Belisle, Steven E. Seach, Jeffery C. Garvey, James
Kofalt and Martin Payson is c/o Classic Communications, Inc., 515 Congress
Ave., Suite 2626, Austin, Texas 78701. Unless otherwise indicated below,
the persons and entities named in the table above have sole voting and sole
investment power with respect to all shares beneficially owned, subject to
community property laws, where applicable.

(2) Shares of Class B common stock may be acquired at any time for $.01 per
share pursuant to the outstanding warrant issued to BA Capital Company,
L.P. Shares of Class B common stock subject to this warrant and any options
are deemed outstanding for the purposes of the number of shares owned by
such person and of computing the percentage ownership of the person holding
such warrants or options but are not deemed outstanding for computing the
percentage ownership of any other person.

(3) All shares of nonvoting common stock are convertible into shares of Class B
common stock without cost and without advance notice by the holders
thereof. As a result, we believe that such shares should be taken into
account in considering voting interests in us. Shares of nonvoting common
stock may be acquired at any time for $.01 per share pursuant to
outstanding warrants issued to a number of stockholders. Shares of
nonvoting

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<PAGE> 94

common stock subject to these warrants are deemed outstanding for the
purposes of the number of shares owned by such person and of computing the
percentage ownership of the person holding such warrants but are not deemed
outstanding for computing the percentage ownership of any other person.

(4) Each share of Class A common stock entitles its holder to one vote and each
share of Class B common stock entitles its holder to ten votes. Holders of
both classes of voting common stock will vote together as a single class on
all matters to be presented for a vote of stockholders, unless otherwise
required by law. Excludes nonvoting common stock.

(5) Brera Classic has sold nonvoting equity interests in Brera Classic equal to
19.85% of its investment in us to certain institutions and individuals,
including affiliates of Goldman, Sachs & Co., who purchased 9.0% of such
investment, and The Chase Manhattan Bank.

(6) BT Capital Partners' nonvoting common stock ownership includes warrants to
purchase 30,225 shares of nonvoting common stock.

(7) Austin Ventures, L.P. owns 323,832 shares of Class B common stock, Austin
Ventures III-A, L.P. owns 223,422 shares of Class B common stock and Austin
Ventures III-B, L.P. owns 188,733 shares of Class B common stock. AV
Partners, L.P. is the general partner of each of these partnerships.

(8) BA Capital Company, L.P. is the successor in interest to NationsBanc
Capital Corp. Class B common stock ownership Includes warrants to purchase
152,418 shares of Class B common stock.

(9) Mr. Belisle's totals include 185,877 shares of Class B common stock
purchasable within 60 days of November 15, 1999 pursuant to the exercise of
options, assuming that the initial public offering was completed on such
date.

(10) Mr. Seach's totals include an option to purchase 185,877 shares of Class B
common stock purchasable within 60 days of November 15, 1999 pursuant to
the exercise of options, assuming that the initial public offering was
completed on such date.

(11) Lisa Hook is a director of Classic and a manager of Brera Classic. Ms. Hook
is not the registered holder of any shares and disclaims the beneficial
ownership of the shares listed above except to the extent of her indirect
interest in the assets of the nominal shareholder, if any.

(12) Alberto Cribiore is a director of Classic and a manager of Brera Classic.
Mr. Cribiore is not the registered holder of any shares and disclaims the
beneficial ownership of the shares listed above except to the extent of his
indirect interest in the assets of the nominal shareholder, if any.

(13) David Webb is a director of Classic and a manager of Brera Classic. Mr.
Webb is not the registered holder of any shares and disclaims the
beneficial ownership of the shares listed above except to the extent of his
indirect interest in the assets of the nominal shareholder, if any.

(14) Jeffery C. Garvey is a general partner of Austin Ventures, L.P. Mr. Garvey
is not the registered holder of any shares and disclaims the beneficial
ownership of the shares listed above except to the extent of his indirect
interest in the assets of the nominal shareholder, if any.

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<PAGE> 95

DESCRIPTION OF CERTAIN INDEBTEDNESS

CREDIT FACILITY

We have no operations of our own. Consequently, we will rely on dividends
from Classic Cable, and hence the cash flow of Classic Cable, in order to meet
our debt service obligations. In order to finance a portion of the Buford
acquisition purchase price, Classic Cable entered into a credit facility,
agented by Goldman Sachs Credit Partners L.P., Union Bank of California, N.A.
and The Chase Manhattan Bank pursuant to which Classic Cable may borrow up to
$350.0 million. The credit facility consists of the following:

<TABLE>
<CAPTION>
MAXIMUM
MAXIMUM ALTERNATE
LIBOR BASE RATE
CREDIT FACILITY AMOUNT TENOR SPREAD(1) SPREAD(1)
- --------------- ------ ----- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Revolving Credit Facility.......... $ 75.0 July 31, 2007 250 bps 150 bps
Term Loan A Facility............... 75.0 July 31, 2007 250 bps 150 bps
Term Loan B Facility............... 100.0 January 31, 2008 275 bps 175 bps
Term Loan C Facility............... 100.0 January 31, 2008 275 bps 175 bps
------
Total Facility........... $350.0
======
</TABLE>

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

(1) Pricing subject to a leverage-based pricing grid.

The $75.0 million eight year revolving credit facility is available to
Classic Cable for working capital, capital expenditures, refinancing debt and
general corporate purposes, including acquisitions. Up to $25.0 million may be
used to redeem Classic Cable's 2008 notes put by the noteholders as a result of
the change of control. The $75.0 million eight year term loan A facility and the
$100.0 million eight and one-half year term loan B facility were drawn at the
closing of the Buford acquisition to fund Classic Cable's purchase of Buford and
to refinance debt and pay certain other costs associated with the Buford
acquisition. The $100.0 million eight and one-half year term loan C facility may
be used for working capital, capital expenditures, general corporate purposes,
including acquisitions, and to redeem Classic Cable's 2008 notes put by the
noteholders as a result of a change of control. On September 8, 1999, the
Company borrowed $90.0 million under the term loan C facility to redeem Classic
Cable's 2008 notes put by the noteholders as a result of the change of control.

On each date set forth below, Classic Cable's ability to borrow under its
revolving credit facility will automatically be reduced to the corresponding
amount set forth below:

<TABLE>
<CAPTION>
REDUCED REVOLVING CREDIT
DATE OF REDUCTION FACILITY AMOUNT
- ----------------- ------------------------
<S> <C>
December 31, 2001 $73,125,000
March 31, 2002 71,718,750
June 30, 2002 70,312,500
September 30, 2002 69,906,250
December 31, 2002 67,500,000
March 31, 2003 65,625,000
June 30, 2003 63,750,000
September 30, 2003 61,875,000
December 31, 2003 60,000,000
March 31, 2004 57,187,500
June 30, 2004 54,375,000
September 30, 2004 51,562,500
December 31, 2004 48,750,000
</TABLE>

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<PAGE> 96

<TABLE>
<CAPTION>
REDUCED REVOLVING CREDIT
DATE OF REDUCTION FACILITY AMOUNT
- ----------------- ------------------------
<S> <C>
March 31, 2005 45,000,000
June 30, 2005 41,250,000
September 30, 2005 37,500,000
December 31, 2005 33,750,000
March 31, 2006 29,062,500
June 30, 2006 24,375,000
September 30, 2006 19,687,500
December 31, 2006 15,000,000
March 31, 2007 7,500,000
July 31, 2007 0
</TABLE>

The term loan A facility is payable in quarterly installments on the last
day of each March, June, September and December, commencing on December 31, 2001
and continuing through and including March 31, 2007, with a final installment of
all outstanding principal and interest payable on July 30, 2007 in the amounts
set forth below:

<TABLE>
<CAPTION>
TERM A REDUCTION DATE PRINCIPAL PAYMENT
- --------------------- -----------------
<S> <C>
December 31, 2001 $ 1,875,000
March 31, June 30, September 30 and December 31, 2002 1,406,250
March 31, June 30, September 30 and December 31, 2003 1,875,000
March 31, June 30, September 30 and December 31, 2004 2,812,500
March 31, June 30, September 30 and December 31, 2005 3,750,000
March 31, June 30, September 30 and December 31, 2006 4,687,500
March 31 and July 31, 2007 7,500,000
</TABLE>

The term loan B facility is payable in quarterly installments on the last
day of each March, June, September and December, commencing on December 31, 2001
and continuing through and including December 31, 2007, with a final installment
of all outstanding principal and interest payable on January 31, 2008 in the
amounts set forth below:

<TABLE>
<CAPTION>
TERM B REDUCTION DATE PRINCIPAL PAYMENT
- --------------------- -----------------
<S> <C>
December 31, 2001 $ 250,000
March 31, June 30, September 30 and December 31, 2002 250,000
March 31, June 30, September 30 and December 31, 2003 250,000
March 31, June 30, September 30 and December 31, 2004 250,000
March 31, June 30, September 30 and December 31, 2005 250,000
March 31, June 30, September 30 and December 31, 2006 250,000
March 31, June 30, September 30 and December 31, 2007 250,000
January 31, 2008 93,750,000
</TABLE>

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<PAGE> 97

The term loan C facility is payable in quarterly installments on the last
day of each March, June, September and December, commencing on December 31, 2001
and continuing through and including December 31, 2007, with a final installment
of all outstanding principal and interest payable on January 31, 2008 in the
amounts set forth below:

<TABLE>
<CAPTION>
TERM C REDUCTION DATE PRINCIPAL PAYMENT
- --------------------- -----------------
<S> <C>
December 31, 2001 $ 225,000
March 31, June 30, September 30 and December 31, 2002 225,000
March 31, June 30, September 30 and December 31, 2003 225,000
March 31, June 30, September 30 and December 31, 2004 225,000
March 31, June 30, September 30 and December 31, 2005 225,000
March 31, June 30, September 30 and December 31, 2006 225,000
March 31, June 30, September 30 and December 31, 2007 225,000
January 31, 2008 84,375,000
</TABLE>

The credit facility provides for prepayment of the loans under the
following circumstances:

- Beginning in 2002, a prepayment must be made each year in an amount equal
to 75% of excess cash flow for the previous fiscal year;

- Upon receipt of net proceeds from asset sales exceeding $2,000,000, in
the aggregate, a prepayment must be made in the amount of such excess,
unless Classic Cable intends to reinvest the proceeds through a permitted
acquisition within six months. If so, the proceeds will be held in a cash
collateral account for the six month period or until reinvested. If these
proceeds are not reinvested within six months, they will be used to
prepay the loans. If the amount being held in the cash collateral account
ever exceeds $10,000,000, the excess will be used to prepay the loans;

- Upon receipt of net proceeds from any sale-leaseback of tower assets made
during any period in which the maximum total debt ratio is greater than
6.75:1.00, the proceeds must be used to prepay the loans;

- Upon receipt of net proceeds from any sale-leaseback of tower assets made
during any period in which the maximum total debt ratio is less than or
equal to 6.75:1.00, a prepayment must be made in an amount equal to 50%
of the proceeds;

- Upon receipt of net proceeds from any equity offering, the proceeds must
be used to prepay the loans to the extent they are not used to prepay
subordinated notes or to finance permitted acquisitions;

- Upon receipt of net proceeds from any debt offering, the proceeds must be
used to prepay the loans;

- Upon receipt of net proceeds in excess of $500,000 from purchase price
adjustments in connection with an acquisition, a prepayment must be made
in the amount of the excess; and

- Upon receipt of proceeds exceeding $250,000, in the aggregate, from
insurance, condemnation award or other compensation in respect of any
casualty affecting any of Class Cable's property, a prepayment must be
made in the amount of the excess to the extent the proceeds are not used
for the repair or replacement of the property.

Each prepayment described above will be applied to the outstanding amounts of
the term loans and the revolving loans on a pro rata basis.

The credit facility is secured by a perfected first priority security
interest in substantially all of Classic Cable's personal property, including,
without limitation, the capital stock of Classic

94
<PAGE> 98

Cable's direct and indirect subsidiaries. The credit facility is unconditionally
guaranteed by each of Classic Cable's direct and indirect domestic subsidiaries.
In addition, the credit facility will be subject to several customary negative
covenants as well as financial covenants, including

- a maximum total debt ratio,

- a maximum senior debt ratio,

- a minimum interest coverage ratio,

- a pro forma debt service coverage ratio, and

- a maximum capital expenditures amount.

In addition, the revolving credit facility provides for the payment of an
unused commitment fee based on the average daily amount of the unused revolving
credit commitment. This fee is payable quarterly in arrears on the last day of
each March, June, September and December, commencing on September 30, 1999. The
amount of the unused commitment fee is based on the maximum total debt ratio. If
this ratio is less than 5.50:1, the fee is equal to 0.375% per annum. If the
ratio is more than 5.50:1, the fee is equal to 0.500% per annum.

CLASSIC CABLE'S 2009 SUBORDINATED NOTES

A portion of the Buford acquisition price was financed by Classic Cable's
issuance of $150.0 million in principal amount of 9 3/8% senior subordinated
notes due 2009. These notes, which were issued pursuant to an exemption from
registration under the Securities Act, were exchanged for an identical principal
amount of 2009 senior subordinated notes registered under the Securities Act.
The subordinated notes have the following basic terms:

Maturity...................... August 1, 2009.

Interest...................... Annual rate -- 9 3/8%.
Payment frequency -- every six months on
February 1 and August 1.
First payment -- February 1, 2000.

Guarantors.................... The 2009 subordinated notes are guaranteed by
each of Classic Cable's current and future
domestic restricted subsidiaries. Each
guarantor is a wholly owned subsidiary of
Classic Cable. If Classic Cable cannot make
payments on the notes when they are due, the
guarantors must make them instead.

Ranking....................... The 2009 subordinated notes and the subsidiary
guarantees are senior subordinated debts and
rank equally with Classic Cable's 2008 notes.

The 2009 subordinated notes rank behind all of
Classic Cable and the subsidiary guarantors'
current and future indebtedness, except:

- trade payables; and

- indebtedness, such as the 2008 notes, that
expressly provides that it is not senior to
the subordinated notes and the related
subsidiary guarantees.

Optional Redemption........... On or after August 1, 2004, Classic Cable may
redeem some or all of the subordinated notes at
any time at the redemption prices then in
effect: 12-month period

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<PAGE> 99

beginning August 1, 2004 -- 104.688%;
2005 -- 103.125%; 2006 -- 101.562%; and 2007
and thereafter -- 100.000%.

Before August 1, 2002, Classic Cable may redeem
up to 35% of the notes ever issued under the
indenture with the proceeds of one or more
public equity offerings by, or strategic equity
investments in, Classic Cable or Classic at the
redemption price of 109.375%.

Mandatory Offer to
Repurchase.................... If Classic Cable sells assets under some
circumstances, or experiences specific kinds of
changes of control, Classic Cable must offer to
repurchase the 2009 subordinated notes at the
redemption prices of 100% and 101%,
respectively.

Basic Covenants of
Indenture..................... Classic Cable issued the 2009 subordinated
notes under an indenture with Chase Bank of
Texas, National Association. The indenture,
among other things, restricts Classic Cable's
ability and the ability of its subsidiaries to:

- borrow money;

- pay dividends on stock or repurchase stock;

- make investments;

- use assets as security in other transactions;

- sell certain assets or merge with or into
other companies; and

- engage in certain transactions with
affiliates.

CLASSIC CABLE'S 2008 SUBORDINATED NOTES

In connection with the Cable One acquisition and our recapitalization,
Classic Cable issued $125.0 million in principal amount of 9 7/8% senior
subordinated notes due 2008, of which $39.0 million is currently outstanding.
These notes, which were issued pursuant to an exemption from registration under
the Securities Act, were exchanged for an identical principal amount of 2008
senior subordinated notes registered under the Securities Act. The 2008
subordinated notes have the following basic terms:

Maturity................... August 1, 2008.

Interest................... Annual rate -- 9 7/8%.
Payment frequency -- every six months on February 1
and August 1.
First payment -- February 1, 1999.

Guarantors................. All of Classic Cable's wholly-owned subsidiaries.

Optional Redemption........ Classic Cable may not redeem the notes prior to
August 1, 2003. After August 1, 2003, Classic Cable
may redeem any amount of the notes at any time at
the respective redemption prices, together with
accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time prior to
August 1, 2001, Classic Cable may redeem up to 35%
of the original aggregate principal amount of the
notes with the cash proceeds of one or more equity
offerings or a strategic equity investment. Should
Classic Cable do so, it would be required to pay a
redemption price equal to 109.875% of the principal
amount of

96
<PAGE> 100

the notes to be redeemed, together with accrued and
unpaid interest, if any, to the date of redemption.
Classic Cable would still be required to keep at
least 65% of the original aggregate principal
amount of the notes outstanding after such a
redemption.

Change of Control.......... Upon the occurrence of a change of control, the
holders of the notes have the right to require
Classic Cable to repurchase the notes at a price
equal to 101% of the original aggregate principal
amount, together with accrued and unpaid interest,
if any, to the date of repurchase. In addition,
upon the occurrence of a change of control, Classic
Cable will have the option to redeem the notes
prior to August 1, 2003, at the respective
redemption price.

On July 28, 1999, a change of control of Classic
occurred. Accordingly, Classic Cable offered to
repurchase all outstanding notes at a price equal
to 101% of the original aggregate principal amount
together with accrued and unpaid interest to the
date of repurchase. As a result of this offer,
which closed on September 9, 1999, we purchased
$86.0 million in principal amount of the notes.

Ranking.................... The notes are unsecured and are subordinated to all
existing and future senior indebtedness of Classic
Cable. The notes rank without preference with all
existing and future senior subordinated
indebtedness of Classic Cable.

Guarantees................. The guarantees are general unsecured obligations of
the subsidiary guarantors and are subordinated in
right of payment to all existing and future
guarantor senior indebtedness. The guarantees are
joint and several.

Restrictive Covenants...... The indenture under which the notes were issued
limits:

- the incurrence of additional indebtedness by
Classic Cable and its subsidiaries;

- the making of restricted payments;

- the payment of dividends on, and redemption of,
Classic Cable's capital stock and Classic Cable's
subsidiaries' capital stock and the redemption of
Classic Cable's and Classic Cable's subsidiaries'
subordinated obligations;

- sales of assets;

- transactions with affiliates; and

- liens.

In addition, the indenture limits Classic Cable's
ability to engage in consolidations, mergers and
transfers of substantially all of its assets and
also contains certain restrictions on distributions
from its subsidiaries. All of these limitations and
prohibitions are subject to a number of important
qualifications and exceptions.

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<PAGE> 101

CLASSIC 2009 SENIOR DISCOUNT NOTES

In connection with the Cable One acquisition and our recapitalization, we
issued $114,000,000 in principal amount of 13 1/4% senior discount notes due
2009. These notes, which were issued pursuant to an exemption from registration
under the Securities Act, were exchanged for an identical principal amount of
2009 senior discount notes registered under the Securities Act. The 2009 senior
discount notes have the following basic terms:

Maturity................... August 1, 2009.

Interest................... Annual rate -- 13 1/4%.
Payment frequency -- every six months on February 1
and August 1.
First payment -- February 1, 2004.

Optional Redemption........ With exceptions, we may not redeem the notes prior
to August 1, 2003. After August 1, 2003, we may
redeem any amount of the notes at any time at the
respective redemption prices, together with accrued
and unpaid interest, if any, to the date of
redemption. In addition, at any time prior to
August 1, 2001, we may redeem all of the original
aggregate principal amount of the notes with the
cash proceeds of one or more equity offerings or a
strategic equity investment. Should we do so, we
would be required to pay a redemption price equal
to 113.25% of the accreted value of the notes to be
redeemed, together with accrued and unpaid
interest, if any, to the date of redemption.

Change of Control.......... Upon the occurrence of a change of control, the
holders of the notes have the right to require us
to repurchase the notes at a price equal to 101% of
the accreted value of the notes, together with
accrued and unpaid interest, if any, to the date of
repurchase.

On July 28, 1999, a change of control of Classic
occurred. Accordingly, Classic offered to
repurchase all outstanding notes at a price equal
to 101% of the original aggregate principal amount
together with accrued and unpaid interest, if any,
to the date of repurchase. This offer expired on
September 1, 1999. No notes were redeemed.

Ranking.................... The notes will be unsecured and will rank without
preference with all existing and future unsecured
indebtedness of Classic, and senior to all future
subordinated indebtedness of Classic. The notes
will also be subordinate to all existing and future
liabilities of Classic's subsidiaries.

98
<PAGE> 102

Restrictive Covenants...... The indenture under which the notes were issued
limits:

- the incurrence of additional indebtedness by us
and our subsidiaries;

- the payment of dividends on, and redemption of,
our capital stock and our subsidiaries' capital
stock and the redemption of our and our
subsidiaries' subordinated obligations;

- investments;

- sales of assets and subsidiary stock;

- transactions with affiliates;

- sale and leaseback transactions; and

- liens.

In addition, the indenture limits our ability to
engage in consolidations, mergers and transfers of
substantially all of our assets and also contains
certain restrictions on distributions from our
subsidiaries. All of these limitations and
prohibitions are subject to a number of important
qualifications and exceptions.

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<PAGE> 103

DESCRIPTION OF CAPITAL STOCK

GENERAL

Our authorized capital stock will consist of: (1) 120,000,000 shares of
Class A common stock, $.01 par value per share, (2) 45,000,000 shares of Class B
common stock, $.01 par value per share, (3) 7,500,000 shares of nonvoting common
stock, $.01 par value per share, and (4) 10,000,000 shares of preferred stock,
$.01 par value per share, issuable in series. Set forth below is a summary
description of all the material terms of our capital stock. Such description is
qualified in its entirety by reference to our certificate of incorporation and
by-laws, a copy of each of which is filed as an exhibit to the registration
statement of which this prospectus is a part.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

There are 6,250,000 shares of Class A common stock being offered through
this prospectus, 7,187,500 if the underwriters' option to purchase additional
shares is exercised, and 11,194,952 shares are reserved for issuance upon
possible conversion of Class B common stock and nonvoting common stock into
Class A common stock (assuming exercise of options and warrants to be
outstanding upon completion of this offering). Upon completion of this offering
there will be 8,211,342 shares of Class B common stock outstanding.

VOTING. The holders of Class A common stock and Class B common stock will
generally vote as a single class on all matters upon which stockholders have a
right to vote, subject to the requirements of the applicable laws and the rights
of any series of preferred stock or common stock to a separate class vote. Each
stockholder is entitled to one vote for each share of Class A common stock held
and each stockholder is entitled to ten votes for each share of Class B common
stock held. Holders of the majority of the Class A common stock and the Class B
common stock, voting as a single class, will have the right to increase or
decrease the amount of our authorized capital stock without a separate class
vote of the class of capital stock to be increased or decreased. In no event,
however, may such stockholders vote to decrease a class of capital stock below
the number of shares outstanding of such class. Holders of nonvoting common
stock will have no right to vote on any matter, except as may be required by
law. If required by law, the holders of nonvoting common stock will each have
one vote for each share of nonvoting common stock held.

DIVIDENDS AND OTHER DISTRIBUTIONS. The holders of Class A common stock,
Class B common stock and nonvoting common stock will be entitled to equal
dividends on a per share basis when declared by the board of directors, except
that all dividends payable in common stock will be paid in the form of Class A
common stock to holders of Class A common stock, in the form of Class B common
stock to holders of Class B common stock and in the form of nonvoting common
stock or Class A common stock to holders of nonvoting common stock. No shares of
any class of common stock may be split, divided or combined unless the
outstanding shares of the other classes are also proportionally split, divided
or combined.

If Classic is liquidated or wound up, subject to the rights of the holders
of Preferred Stock, our remaining assets will be distributed pro rata, on an
equal per share basis, to holders of all three classes of common stock.

MERGER. In the event of a merger, the holders of Class A common stock,
Class B common stock and nonvoting common stock will be entitled to receive the
same per share consideration, if any, except that if such consideration includes
voting securities (or the right to acquire voting securities or securities
exchangeable for or convertible into voting securities), we may (but are not
required to) provide for the holders of Class B common stock to receive
consideration entitling them to ten times the number of votes per share as the
consideration being received by

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holders of the Class A common stock and provide for the holders of nonvoting
common stock to receive non-voting shares with conversion rights to receive
shares of the voting securities to be received by the holders of Class B common
stock.

CONVERSION OF CLASS B COMMON STOCK TO CLASS A COMMON STOCK. Shares of Class
B common stock will be converted into shares of Class A common stock on a
one-for-one basis (1) at the option of the holder at any time, (2) upon transfer
to a person or entity which is not a Permitted Transferee, as defined in our
certificate of incorporation, (3) on the date that Brera Classic or its
Permitted Transferees elect to convert all of the Class B common stock they hold
into Class A common stock, (4) on the first date that the number of shares of
Class B common stock outstanding is less than 5% of the then outstanding shares
of common stock (without regard to voting rights).

Permitted Transferees include:

(1) any "Initial Holder," as defined in the certificate of
incorporation;

(2) the spouse of an Initial Holder, any Descendant or Ancestor of
such an Initial Holder, each as defined in the certificate of
incorporation, and the spouse of any Descendant of such an Initial Holder;

(3) a Permitted Trust, as defined in the certificate of incorporation;

(4) a Permitted Charitable Foundation, as defined in the certificate
of incorporation; or

(5) an Affiliate of an Initial Holder, as defined in the certificate
of incorporation.

The term "Initial Holder" includes:

(1) each person or entity in whose name one or more shares of Class B
common stock are registered upon the completion of this offering, referred
to as the "effective time";

(2) each holder of nonvoting common stock at the effective time in
whose name one or more shares of Class B common stock become registered in
the event of a conversion of nonvoting common stock to Class B common stock
pursuant to the certificate of incorporation, with such time being referred
to as the "nonvoting conversion time";

(3) each joint owner of a share of Class B common stock at the
effective time or at the nonvoting conversion time;

(4) each minor who is the beneficiary at the effective time or at the
nonvoting conversion time of a Uniform Gifts to Minors Act account under
which the custodian, in such capacity, is an Initial Holder;

(5) the settlor of any trust which is an Initial Holder or any
beneficiary at the effective time or at the nonvoting conversion time of
any irrevocable trust which is an Initial Holder; and

(6) each record holder of options or warrants to purchase Class B
common stock or nonvoting common stock at the effective time in whose name
one or more shares of Class B common stock or nonvoting common stock, as
applicable, become registered upon exercise of such warrants or options.

A person or entity will cease to be an Initial Holder once that person or
entity no longer holds of record or beneficially any Class B common stock or
warrants and options as described above. For purposes of the definition of
"Initial Holder," if any shares of Class B common stock are registered in the
name of a nominee at the effective time or at the nonvoting conversion time,
such shares shall be deemed to be registered in the name of the person or entity
for whom such nominee is acting.

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CONVERSION OF NONVOTING COMMON STOCK TO VOTING COMMON STOCK. Except when
inconsistent with any law or regulation relating to our ownership or control
with respect to the holder, shares of nonvoting common stock of a holder will be
convertible into shares of Class B common stock on a one-for-one basis at the
option of such holder at any time. However, shares of nonvoting common stock
will not be convertible into shares of Class B common stock on or after the
earliest of (1) transfer to a person or entity which is not a Permitted
Transferee, (2) the date that Brera Classic or its Permitted Transferee, elects
to convert all of the Class B common stock held by it and its Permitted
Transferees into Class A common stock, (3) the first date on which the number of
shares of Class B common stock outstanding is less than 5% of the then
outstanding shares of common stock (calculated without regard to voting rights).
Except when inconsistent with any law or regulation relating to our ownership or
control with respect to the holder, nonvoting common stock will be convertible
into Class A common stock on a one-for-one basis at the option of the holder at
any time.

PREEMPTIVE RIGHTS. The holders of our shares of capital stock will not have
any preemptive rights to any outstanding or newly issued shares of capital
stock.

WARRANTS

As of September 30, 1999, we had warrants outstanding to purchase 152,418
shares of Class B common stock and 183,435 shares of nonvoting common stock.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the common stock is Chase Mellon
Shareholder Services.

PREFERRED STOCK

Pursuant to our certificate of incorporation, we may issue up to 10,000,000
shares of preferred stock in one or more series. Our board of directors has the
authority, without any vote or action by our stockholders, to create one or more
series of preferred stock up to the limit of our authorized but unissued shares
of preferred stock and to fix the designations, preferences, rights,
qualifications, limitations and restrictions thereof, including the voting
rights, dividend rights, dividend rate, conversion rights, terms of redemption
(including sinking fund provisions), redemption price or prices, liquidation
preferences and the number of shares constituting any series. Upon the
completion of this offering, there will be no shares of preferred stock
outstanding. The issuance of preferred stock could have the effect of decreasing
the market price of the common stock, impeding or delaying a possible takeover
and adversely affecting the voting and other rights of the holders of common
stock. We currently have no plans to issue any shares of preferred stock. See
"-- Certain Anti-Takeover Matters -- Authorized but Unissued Shares."

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 145 of the Delaware General Corporation Law authorizes a
corporation's board of directors to grant indemnity to directors and officers in
terms sufficiently broad to permit such indemnification under certain
circumstances for liabilities, including reimbursement for expenses incurred,
arising under the Securities Act.

Our certificate of incorporation and by-laws provide for mandatory
indemnification of our directors to the fullest extent authorized or permitted
by law and permissive indemnification of our officers as, when and if authorized
by our board of directors. As a result, we have eliminated the personal
liability of directors for monetary damages resulting from breaches of fiduciary
duties. We have indemnification agreements with each individual director, and we
have insurance that provides indemnification for our directors, officers and
certain other employees for certain

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liabilities. We believe that these indemnification provisions, individual
agreements and insurance are necessary to attract and retain qualified directors
and officers.

The limitation of liability and indemnification provisions in our
certificate of incorporation and by-laws may not be enforceable against us if
someone challenges these provisions. Nonetheless, these provisions may
discourage stockholders from bringing a lawsuit against directors for breach of
their fiduciary duties. These provisions may also have the effect of reducing
the likelihood of derivative litigation against directors and officers, even
though such action, if successful, might otherwise benefit us and our
stockholders. Furthermore, a stockholder's investment may be adversely affected
to the extent we pay the cost of settlement and damage awards against directors
and officers pursuant to these indemnification provisions.

No litigation or proceeding is now pending that involves any of our
directors, officers or employees for which indemnification is or has been
sought. We are also unaware of any threatened litigation that could result in
claims for indemnification.

CERTAIN ANTI-TAKEOVER MATTERS

CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS

Our certificate of incorporation and by-laws include a number of provisions
that may have the effect of encouraging persons considering unsolicited tender
offers or other unilateral takeover proposals to negotiate with our board of
directors rather than pursue non-negotiated takeover attempts. These provisions
include high vote Class B common stock, a classified board, an advance notice
requirement for director nominations and actions to be taken at annual meetings
of stockholders, and the availability of authorized but unissued blank check
preferred stock.

CLASS B VOTING COMMON STOCK

We have three classes of common stock -- Class A common stock, which
carries one vote per share, Class B common stock, which carries ten votes per
share, and nonvoting common stock, which carries no votes per share. Upon
completion of this offering, holders of Class B common stock will control
approximately 92.9% of the voting power of our outstanding common stock, 92.0%
if the underwriters exercise their overallotment option in full. See "Risk
Factors -- Brera Classic has the ability to control matters on which Classic's
stockholders may vote."

CLASSIFIED BOARD OF DIRECTORS

Our certificate of incorporation establishes a classified board of
directors. The board will be divided into three classes of approximately equal
size, with directors for terms expiring in 2000 (Class I), 2001 (Class II) and
2002 (Class III). Afterwards, subject to the right of holders of any series of
preferred stock to elect directors, stockholders will elect one class
constituting approximately one-third of the board for a three-year term at each
annual meeting of stockholders. See "Management -- Election of Directors and
Appointment of Executive Officers." As a result, at least two annual meetings of
stockholders may be required for the stockholders to change a majority of the
board. The classification of directors will make it more difficult to change the
composition of the board of directors and will instead promote a continuity of
existing management.

SELECTED AMENDED CERTIFICATE OF INCORPORATION AND AMENDED BY-LAW PROVISIONS

Our by-laws provide that directors may be removed from office only for
cause and only by the affirmative vote of the holders of at least 51% of our
total outstanding Class A common stock and Class B common stock. Subject to the
terms of any series of preferred stock,

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vacancies on our board of directors, including those resulting from an increase
in the number of directors, may be filled only by the remaining directors, not
by stockholders.

Any action required or permitted to be taken by our stockholders may be
effected only at an annual or special meeting of stockholders and will not be
permitted to be taken by written consent in lieu of a meeting. Our certificate
of incorporation and by-laws provide that special meetings of stockholders may
be called by the chairman of our board of directors or a majority of our board.
Stockholders will not be permitted to call a special meeting or to require that
the board of directors call a special meeting of stockholders.

There are provisions contained in our certificate of incorporation,
including those relating to the size and classification of the board of
directors, the removal of directors, the prohibition on action by written
consent and the calling of special meetings, which may only be amended by the
affirmative vote of the holders of at least two-thirds of our total outstanding
common stock. In addition, our certificate of incorporation provides that our
amended by-laws may only be amended by the affirmative vote of the holders of at
least two-thirds of our outstanding voting stock or by a majority vote of the
members of the board of directors in office.

Our by-laws require advance notice procedures be followed with regard to
stockholder proposals relating to the nomination of candidates for election as
directors or new business to be presented at meetings of stockholders. These
procedures provide that notice of these stockholder proposals must be timely
given in writing to our corporate Secretary prior to the meeting at which the
action is to be taken. Generally, to be timely, notice must be received at our
principal executive offices not less than 90 days nor more than 120 days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders. In the event the annual meeting is called for a date that is not
within 30 days before or after such anniversary date, notice by the stockholder
in order to be timely must be so received not later than the close of business
on the tenth day following the earlier of the day on which notice of the day of
the annual meeting was mailed or public disclosure of the date of the annual
meeting was made. The advance notice requirement does not give our board of
directors any power to approve or disapprove stockholder director nominations or
proposals but may have the effect of precluding the consideration of certain
business at a meeting if the proper notice procedures are not followed.

DELAWARE ANTI-TAKEOVER LAW

Section 203 of the Delaware General Corporation Law prohibits certain
"business combination" transactions between a Delaware corporation and any
"interested stockholder" owning 15% or more of the corporation's outstanding
voting stock for a period of three years after the date on which such
stockholder became an interested stockholder, unless (1) the board of directors
approves, prior to such date, either the proposed business combination or the
proposed acquisition of stock which resulted in the stockholder becoming an
interested stockholder, (2) upon consummation of the transaction in which the
stockholder becomes an interested stockholder, the interested stockholder
acquires at least 85% of those shares of the voting stock of the corporation
which are not held by the directors, officers or certain employee stock plans or
(3) on or subsequent to the consummation date, the business combination with the
interested stockholder is approved by the board of directors and also approved
at a stockholders' meeting by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of the corporation's voting stock other
than shares held by the interested stockholder. Under Delaware law, a "business
combination" includes a merger, asset sale or other transaction resulting in a
financial benefit to the interested stockholder.

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AUTHORIZED BUT UNISSUED SHARES

The authorized but unissued shares of common stock and preferred stock are
available for future issuance without stockholder approval. We may use these
additional shares for a variety of corporate purposes, including future public
offerings to raise additional capital, corporate acquisitions and employee
benefit plans.

Our certificate of incorporation provides for 10,000,000 authorized shares
of preferred stock, none of which has been issued. The existence of authorized
but unissued preferred stock may enable the board of directors to render more
difficult or discourage an attempt to obtain control over us by means of a
merger, tender offer, proxy contest or otherwise. For example, if in the due
exercise of its fiduciary obligations, the board of directors were to determine
that a takeover proposal is not in our best interests, the board of directors
could cause shares of preferred stock to be issued without stockholder approval
in one or more private offerings or other transactions that might dilute the
voting or other rights of the proposed acquirer or insurgent stockholder or
stockholder group. In this regard, our certificate of incorporation grants our
board of directors broad power to establish the rights and preferences of
authorized and unissued preferred stock. The issuance of shares of preferred
stock pursuant to our board of directors' authority described above could
decrease the amount of earnings and assets available for distribution to holders
of common stock and adversely affect the rights, of stockholders including
voting rights in the event a particular series of preferred stock is given a
disproportionately large number of votes per share, and may have the effect of
delaying, deferring or preventing a change in control that may be favored by
certain stockholders. The board of directors does not currently intend to seek
stockholder approval prior to any issuance of preferred stock, unless required
by law.

REGISTRATION RIGHTS

Prior to the completion of this offering, we will amend our registration
rights agreement with the holders of our Class B common stock and nonvoting
common stock to provide that these holders will have the right to cause us to
register the shares of Class A common stock issued to them upon conversion of
their shares of Class B common stock and nonvoting common stock. We anticipate
that Star will become a party to this agreement upon completion of the Star
acquisition. In addition, holders of 342,000 shares of Class B common stock
issued in connection with Classic's 2009 senior discount notes have been given
"piggyback" registration rights.

This registration rights agreement will provide that each eligible holder
will be entitled to "piggyback" registration rights obligating us, subject to
specified limitations, to register its shares of Class A common stock on
registration statements filed by us. If, in an underwritten offering where
eligible holders have "piggyback" registration rights, the underwriters
determine that the total amount of securities that we and the eligible holders
propose to include exceeds the number which can be sold in the offering so as to
have a significant adverse effect on the price, timing or distribution of the
securities offered or the market for our common stock, some eligible holders
will be given priority "piggyback" registration rights in this offering and in
the first secondary offering of our Class A common stock. Pursuant to these
rights, after 100% of the securities we propose to offer are accounted for, BT
Capital Partners, Inc., Union Bancal Venture Corporation, Austin Ventures, L.P.
and certain affiliates, Texas Growth Fund, the Chase Manhattan Bank and BA
Capital Company, L.P., as a group, will have the right to sell two-thirds of the
remaining total amount of securities to be sold, and Brera Classic and Messrs.
Belisle and Seach, as a group, will have the right to sell one-third of the
remaining total amount of securities to be sold. These holders may also exercise
their demand rights obligating us, subject to specified limitations, to register
their shares of Class A common stock, provided that the amount of shares subject
to each demand is reasonably expected to have a market value equal to or more
than $10,000,000. If, in an underwritten demand registration, the underwriters
determine that the total amount of securities that the eligible holders propose
to include exceeds the number which can be sold in the offering so as to have a
significant adverse effect on the price,

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timing or distribution of the securities offered or the market for our Class A
common stock, some eligible holders will be given priority registration rights
in this offering of our Class A common stock, if a demand registration, and in
the first subsequent demand registration. Pursuant to these rights, after 100%
of the securities we propose to offer are accounted for, BT Capital Partners,
Inc., Union Bancal Venture Corporation, Austin Ventures, L.P. and certain
affiliates, Texas Growth Fund, the Chase Manhattan Bank and BA Capital Company,
L.P., as a group, will have the right to sell two-thirds of the remaining total
amount of securities to be sold, and Brera Classic and Messrs. Belisle and
Seach, as a group, will have the right to sell one-third of the remaining total
amount of securities to be sold. We are obligated to pay the costs associated
with all such registrations.

Immediately following the offering, nearly all shares of Class A common
stock issuable upon conversion of outstanding Class B common stock and nonvoting
common stock will be subject to the registration rights described above.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our Class A common
stock. We cannot predict the effect, if any, that sales or shares or the
availability of shares for sale will have on the market price of our Class A
common stock prevailing from time to time. Sales of substantial amounts of our
common stock in the public market could adversely affect prevailing market
prices of our Class A common stock. Furthermore, since no shares will be
available for sale shortly after this offering because of contractual and legal
restrictions on resale described below, sales of substantial amounts of common
stock in the public market after these restrictions lapse could adversely affect
the prevailing market price and our ability to raise equity capital in the
future.

Upon completion of this offering, we will have outstanding an aggregate of
15,989,603 shares of our common stock (16,927,103 if the underwriters exercise
their overallotment option in full), consisting of 6,250,000 shares of Class A
common stock (7,187,500 if the underwriters exercise their overallotment option
in full), 8,211,342 shares of Class B common stock and 1,528,261 shares of
nonvoting common stock, assuming no exercise of outstanding options or warrants.
All of the shares of Class B common stock and nonvoting common stock are
convertible into shares of Class A common stock. See "Description of Capital
Stock." Of these shares, all of the shares of Class A common stock sold in this
offering will be freely tradable without restriction or further registration
under the Securities Act, unless such shares are purchased by "affiliates" as
that term is defined in Rule 144 under the Securities Act. Any shares of Class A
common stock outstanding as a result of the conversion of shares of Class B
common stock held by affiliates of ours will be "restricted securities" as that
term is defined in Rule 144 under the Securities Act. Restricted securities may
be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144 promulgated under the Securities Act,
which rules are summarized below.

As a result of the contractual restrictions described below and the
provisions of Rule 144, the restricted securities will be available for sale in
the public market subject to the volume limitations and other conditions of Rule
144. Some of the restricted securities could be available for resale immediately
upon the expiration of the 180-day lock-up period.

LOCK-UP AGREEMENTS

Stockholders holding 95.2% of our outstanding common stock, including all
of our executive officers and directors, have signed lock-up agreements and are
parties to a registration rights agreement whereby they agreed not to offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any shares of our Class A common stock, or any
options or warrants to purchase any shares of our Class A common stock, or any
securities convertible into, exchangeable for or that represent the right to
receive shares of our Class A common stock, for a period of 180 days after the
effective date of this prospectus. Transfers or dispositions can be made sooner
with the prior written consent of Goldman, Sachs & Co.

RULE 144

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

- 1% of the number of shares of Class A common stock then outstanding,
which will equal approximately 62,500 shares immediately after this
offering; or

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- the average weekly trading volume of the Class A common stock on the
Nasdaq National Market during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us.

RULE 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering. The sale of such shares, or the perception that
sales will be made, could adversely effect the price of our Class A common stock
after this offering because a greater supply of shares would be perceived to be
available for sale in the public market.

STOCK OPTIONS

Our board of directors has approved the 1999 Omnibus Stock Incentive Plan
to distribute stock options and other purchase rights to certain of our
employees. We believe the plan will enable us to attract and retain highly
qualified personnel who will contribute to our success and the success of our
stockholders. In addition, we granted stock options in August 1999 to purchase
589,500 shares of our Class A common stock at an exercise price of $20 per share
to a director and several officers and key employees. We will grant a stock
option in November 1999 to James Kofalt to purchase 8,000 shares of our Class A
common stock at the initial offering price to the public of our Class A common
stock.

Immediately following the completion of this offering, we intend to file a
registration statement on Form S-8 under the Securities Act covering 2,597,500
shares of Class A common stock reserved for issuance under the plan, the August
stock option grants and the options to be granted to James Kofalt. The
registration statement will become effective automatically upon filing, at which
time options to purchase 597,500 shares of Class A common stock will be issued
and outstanding, of which no shares will be vested. Accordingly, shares
registered under the registration statement will, subject to vesting provisions
and Rule 144 volume limitations applicable to our affiliates, be available for
sale in the open market immediately after the 180-day lock-up agreements expire.
Exercise of options under the plan and the August stock option grants may dilute
the percentage of ownership held by the existing stockholders. See "Description
of Capital Stock -- Registration Rights."

Upon completion of this offering, options to purchase 1,119,496 shares of
Class B common stock will be issued and outstanding, of which 326,520 shares
will have vested. All of the shares of Class B common stock issuable upon
exercise of these options will be subject to the registration rights agreement
described under the caption "Description of Capital Stock -- Registration
Rights."

WARRANTS

As of September 30, 1999, we had warrants outstanding to purchase 152,418
shares of Class B common stock and 183,435 shares of nonvoting common stock.

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REGISTRATION RIGHTS

Upon completion of this offering, certain holders of our Class B common
stock and nonvoting common stock will be entitled to require that we register
the shares of Class A common stock into which their shares of Class B common
stock are convertible. Any sales of securities by these stockholders could have
a material adverse effect on the trading price of our Class A common stock. In
addition, we anticipate that Star will become a party to this agreement upon
completion of the Star acquisition. See "Description of Capital Stock --
Registration Rights."

STAR ACQUISITION

On October 14, 1999, a subsidiary of Classic Cable entered into an
agreement to purchase substantially all the assets of Star Cable Associates for
an aggregate purchase price of approximately $110 million in cash and 555,555
shares of Class A common stock. We anticipate that all of these shares will be
subject to the registration rights agreement described under the caption "Shares
Eligible for Future Sale -- Registration Rights."

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IMPORTANT UNITED STATES FEDERAL TAX CONSIDERATIONS FOR
NON-UNITED STATES HOLDERS

This is a general discussion of certain United States federal tax
consequences of the acquisition, ownership, and disposition of our Class A
common stock by a holder that, for U.S. federal income tax purposes, is not a
U.S. person as we define that term below. A holder of our Class A common stock
who is not a U.S. person is a non-U.S. holder. We assume in this discussion that
you will hold our Class A common stock issued pursuant to the offering as a
capital asset (generally, property held for investment). We do not discuss all
aspects of U.S. federal taxation that may be important to you in light of your
individual investment circumstances, such as special tax rules that would apply
to you, for example, if you are a dealer in securities, financial institution,
bank, insurance company, tax-exempt organization, partnership or owner of more
than 5% of our Class A common stock. Our discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations, judicial opinions, published positions of the U.S. Internal Revenue
Service and other applicable authorities, all as in effect on the date of this
prospectus and all of which are subject to differing interpretations or change,
possibly with retroactive effect. We have not sought, and will not seek, any
ruling from the IRS or opinion of counsel with respect to the tax consequences
discussed in this prospectus, and there can be no assurance that the IRS will
not take a position contrary to the tax consequences discussed below or that any
position taken by the IRS would not be sustained. We urge you to consult your
tax advisor about the U.S. federal tax consequences of acquiring, holding, and
disposing of our Class A common stock, as well as any tax consequences that may
arise under the laws of any foreign, state, local, or other taxing jurisdiction.

For purposes of this discussion, a U.S. person means any one of the
following:

- a citizen or resident of the U.S.

- a corporation, partnership, or other entity created or organized in the
U.S. or under the laws of the U.S. or of any political subdivision of the
U.S.

- an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source.

- a trust, the administration of which is subject to the primary
supervision of a U.S. court and that has one or more U.S. persons who
have the authority to control all substantial decisions of the trust

DIVIDENDS

Dividends paid to a non-U.S. holder will generally be subject to
withholding of U.S. federal income tax at the rate of 30%. If, however, the
dividend is effectively connected with the conduct of a trade or business of the
U.S. by the non-U.S. holder, the dividend will be subject to U.S. federal income
tax imposed on net income on the same basis that applies to U.S. persons
generally, and, for corporate holders under certain circumstances, the branch
profits tax. Non-U.S. holders should consult any applicable income tax treaties
that may provide for a reduction of, or exemption from, withholding taxes. For
purposes of determining whether tax is to be withheld at a reduced rate as
specified by a treaty, we generally will presume that dividends we pay on or
before December 31, 2000, to an address in a foreign country are paid to a
resident of that country.

Under recently finalized Treasury regulations, which in general apply to
dividends that we pay after December 31, 2000, to obtain a reduced rate of
withholding under a treaty, a non-U.S. holder generally will be required to
provide certification as to that non-U.S. holder's entitlement to treaty
benefits. These regulations also provide special rules to determine whether, for
purposes of applying a treaty, dividends that we pay a non-U.S. holder that is
an entity should be treated as paid to holders of interests in that entity.

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GAIN ON DISPOSITION

A non-U.S. holder will generally not be subject to United States federal
income tax, including by way of withholding, on gain recognized on a sale or
other disposition of our Class A common stock unless any one of the following is
true:

- the gain is effectively connected with the conduct of a trade or business
in the U.S. by the non-U.S. holder

- the non-U.S. holder is a nonresident alien individual present in the U.S.
for 183 or more days in the taxable year of the disposition and certain
other requirements are met

- the non-U.S. holder is subject to tax pursuant to provisions of the U.S.
federal income tax law applicable to certain U.S. expatriates

- we are or have been during certain periods a "United States real property
holding corporation" for U.S. federal income tax purposes

If we are or have been a United States real property holding corporation, a
non-U.S. holder will generally not be subject to U.S. federal income tax on gain
recognized on a sale or other disposition of our Class A common stock provided
that:

- the non-U.S. holder does not hold, and has not held during certain
periods, directly or indirectly, more than 5% of our outstanding Class A
common stock and

- our Class A common stock is and continues to be regularly traded on an
established securities market for U.S. federal income tax purposes.

We believe that our Class A common stock will be regularly traded on an
established securities market for this purpose in any year in which it is listed
on the Nasdaq National Market.

If we are or have been during certain periods a U.S. real property holding
corporation and the above exception does not apply, a non-U.S. holder will be
subject to U.S. federal income tax with respect to gain realized on any sale or
other disposition of our Class A common stock as well as to a withholding tax,
generally at a rate of 10% of the proceeds. Any amount withheld pursuant to a
withholding tax will be creditable against a non-U.S. holder's U.S. federal
income tax liability.

Gain that is effectively connected with the conduct of a trade or business
in the U.S. by the non-U.S. holder will be subject to the U.S. federal income
tax imposed on net income on the same basis that applies to U.S. persons
generally, and, for corporate holders under certain circumstances, the branch
profits tax, but will generally not be subject to withholding. Non-U.S. holders
should consult any applicable income tax treaties that may provide for different
rules.

UNITED STATES FEDERAL ESTATE TAXES

Our Class A common stock that is owned or treated as owned by an individual
who is not a citizen or resident of the U.S., as specially defined for U.S.
federal estate tax purposes, on the date of that person's death will be included
in his or her estate for U.S. federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Generally, we must report annually to the IRS and to each non-U.S. holder
the amount of dividends that we paid to a holder, and the amount of tax that we
withheld on those dividends. This information may also be made available to the
tax authorities of a county in which the non-U.S. holder resides.

Under current U.S. Treasury regulations, U.S. information reporting
requirements and backup withholding tax will generally not apply to dividends
that we pay on our Class A common stock to a non-U.S. holder at an address
outside the U.S. Payments of the proceeds of a sale or other taxable disposition
of our Class A common stock by a U.S. office of a broker are subject to both

111
<PAGE> 115

backup withholding at a rate of 31% and information reporting, unless the holder
certifies as to its non-U.S. holder status under penalties of perjury or
otherwise establishes an exemption. Information reporting requirements, but not
backup withholding tax, will also apply to payments of the proceeds of a sale or
other taxable disposition of our Class A common stock by foreign offices of U.S.
brokers or foreign brokers with certain types of relationships to the U.S.
unless the broker has documentary evidence in its records that the holder is a
non-U.S. holder and certain other conditions are met or the holder otherwise
established an exemption.

Backup withholding is not an additional tax. Any amounts that we withhold
under the backup withholding rules will be refunded or credited against the
non-U.S. holder's U.S. federal income tax liability if certain required
information is furnished to the IRS.

The U.S. Treasury Department has promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general,
those regulations do not significantly alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify reliance standards. The final regulations are generally
effective for payments made after December 31, 2000, subject to transition
rules.

LEGAL MATTERS

The validity of the shares of Class A common stock offered hereby will be
passed upon by Skadden, Arps, Slate, Meagher & Flom (Illinois), Chicago,
Illinois. Certain legal matters in connection with this offering will be passed
upon for the underwriters by Latham & Watkins, New York, New York.

EXPERTS

The financial statements of Classic Communications, Inc. as of December 31,
1998 and 1997 and for each of the two years in the period ended December 31,
1998 as well as the financial statements of Star Cable Associates as of December
31, 1998 and 1997 and for each of the three years in the period ended December
31, 1998, included in this prospectus, have been so included in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements for the year ended December 31, 1996, as set forth in their
report. We have included our 1996 financial statements in the prospectus and
elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.

The consolidated financial statements of Buford Group, Inc. and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three-year period ended December 31, 1998, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.

CHANGE IN ACCOUNTANTS

On October 4, 1999, our management dismissed Ernst & Young LLP and engaged
PricewaterhouseCoopers LLP as our independent public accountants to audit our
financial statements. The decision to dismiss Ernst & Young LLP and to engage
PricewaterhouseCoopers LLP was approved by our board of directors on October 18,
1999.

We believe, and have been advised by Ernst & Young LLP that it concurs with
such belief, that, for the years ended December 31, 1997 and December 31, 1998,
we and Ernst & Young LLP did not have any disagreement on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreement, if not

112
<PAGE> 116

resolved to the satisfaction of Ernst & Young LLP would have caused it to make
reference in connection with its report on our financial statements to the
subject matter of the disagreement.

The report of Ernst & Young LLP on our financial statements for the years
ended December 31, 1997 and December 31, 1998 did not contain an adverse opinion
or a disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles. During that period there were no
"reportable events" within the meaning of Item 304(a)(l)(v) of regulation S-K
promulgated under the Securities Act.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange
Act of 1934. We are required to file annual, quarterly and special reports and
other information with the Securities and Exchange Commission. You may read and
copy any of these reports, statements and other information that we file at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call 1-800-SEC-0330 for further information on the
public reference rooms. Our filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at http://www.sec.gov.

We have filed a registration statement on Form S-1 to register with the SEC
the Class A common stock. This prospectus is part of that registration
statement. As allowed by the SEC's rules, this prospectus does not contain all
of the information you can find in the registration statement or the exhibits to
the registration statement.

113
<PAGE> 117

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
CLASSIC COMMUNICATIONS, INC.
Audited Annual Financial Statements
Report of Independent Accountants...................... F-2
Report of Independent Auditors......................... F-3
Consolidated Balance Sheets as of December 31, 1998 and
1997.................................................. F-4
Consolidated Statements of Operations for the years
ended December 31, 1998, 1997, and 1996............... F-5
Consolidated Statements of Stockholders' Deficit for
the years ended December 31, 1998, 1997, and 1996..... F-6
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997, and 1996............... F-7
Notes to Consolidated Financial Statements............. F-8
Unaudited Interim Financial Statements
Unaudited Consolidated Balance Sheet as of September
30, 1999.............................................. F-23
Unaudited Consolidated Statements of Operations for the
nine months ended September 30, 1999 and 1998......... F-24
Unaudited Consolidated Statements of Cash Flows for the
nine months ended September 30, 1999 and 1998......... F-25
Notes to Unaudited Consolidated Financial Statements... F-26

BUFORD GROUP, INC.
Audited Annual Financial Statements
Independent Auditors' Report........................... F-32
Consolidated Balance Sheets as of December 31, 1998 and
1997.................................................. F-33
Consolidated Statements of Operations for the years
ended December 31, 1998, 1997, and 1996............... F-34
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1998, 1997, and 1996......... F-35
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997, and 1996............... F-36
Notes to Consolidated Financial Statements............. F-37
Unaudited Interim Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of
June 30, 1999......................................... F-45
Unaudited Condensed Consolidated Statements of
Operations for the six months ended June 30, 1999 and
1998.................................................. F-46
Unaudited Condensed Consolidated Statements of Cash
Flows for the six months ended June 30, 1999 and
1998.................................................. F-47
Notes to Unaudited Condensed Consolidated Financial
Statements............................................ F-48

STAR CABLE ASSOCIATES
Audited Annual Financial Statements
Report of Independent Accountants...................... F-50
Balance Sheets as of December 31, 1998 and 1997........ F-51
Statements of Operations and Changes in Partners'
Capital (Deficiency) for the years ended December 31,
1998, 1997, and 1996.................................. F-52
Statements of Cash Flows for the years ended December
31, 1998, 1997, and 1996.............................. F-53
Notes to the Financial Statements...................... F-54
Unaudited Interim Financial Statements
Unaudited Condensed Balance Sheets as of September 30,
1999.................................................. F-62
Unaudited Condensed Statements of Operations and
Changes in Partners' Capital (Deficiency) for the nine
months ended September 30, 1999 and 1998.............. F-63
Unaudited Condensed Statements of Cash Flows for the
nine months ended September 30, 1999 and 1998......... F-64
Notes to the Condensed Financial Statements
(Unaudited)........................................... F-65
</TABLE>

F-1
<PAGE> 118

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Classic Communications, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, changes in stockholders' deficit
and cash flows present fairly, in all material respects, the financial position
of Classic Communications, Inc. and its subsidiaries at December 31, 1998 and
1997, and the results of their operations and their cash flows for each of the
two years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles. These consolidated 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 of these statements in accordance with generally accepted auditing
standards, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Austin, Texas
October 14, 1999

F-2
<PAGE> 119

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Classic Communications, Inc.

We have audited the accompanying consolidated statements of operations,
stockholders' equity (deficit) and cash flows of Classic Communications, Inc.
and its subsidiaries (the "Company") for the year ended December 31, 1996. Our
audit also included the financial statement schedule listed in Item 16(b) of
this Registration Statement (insofar as it relates to the statements of
operations, stockholders' equity (deficit) and cash flows for the year ended
December 31, 1996). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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 consolidated results of operations and cash flows
of Classic Communications, Inc. and its subsidiaries for the year ended December
31, 1996 in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP

Austin, Texas
March 30, 1999

F-3
<PAGE> 120

CLASSIC COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1998 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 2,779 $ 616
Accounts receivable, net.................................... 5,474 4,519
Prepaid expenses............................................ 424 607
Property, plant and equipment............................... 127,169 96,850
Less accumulated depreciation............................... (39,977) (28,211)
-------- --------
87,192 68,639
Deferred financing costs, net............................... 8,919 4,494
Intangible assets:
Subscriber relationships.................................. 95,180 82,364
Franchise rights.......................................... 71,464 59,149
Noncompete agreements..................................... 8,425 12,104
Goodwill.................................................. 40,435 39,695
Other..................................................... 140 228
-------- --------
215,644 193,540
Less accumulated amortization............................. (65,828) (52,253)
-------- --------
149,816 141,287
-------- --------
Total assets........................................ $254,604 $220,162
-------- --------

LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Liabilities:
Accounts payable.......................................... $ 647 $ 772
Subscriber deposits and unearned income................... 4,846 3,507
Other accrued expenses.................................... 6,106 5,922
Accrued interest.......................................... 5,883 1,534
Long-term debt............................................ 282,842 187,967
Subordinated debt -- affiliates........................... -- 4,023
Deferred taxes, net....................................... 1,068 2,918
-------- --------
Total liabilities................................... 301,392 206,643
Commitments and Contingencies
15% PIK Redeemable Senior Preferred Stock: $.01 par value;
redemption price -- $1,000 per share plus accrued and
unpaid dividends (1998 -- none; 1997 -- $1,880,159);
1998 -- 20,000 shares authorized, none issued and
outstanding; 1997 -- 20,000 shares authorized, 5,000
issued and outstanding at net issue price plus accrued PIK
stock dividends of 1,880 shares........................... -- 5,978
15% PIK Redeemable Junior Preferred Stock: $.01 par value;
redemption price -- $1,000 per share plus accrued and
unpaid dividends (1998 -- none; 1997 -- $5,585,969);
1998 -- 35,000 shares authorized, none issued and
outstanding; 1997 -- 35,000 shares authorized, 14,815
issued and outstanding at net issue price plus accrued PIK
stock dividends of 5,586 shares........................... -- 19,435
8% PIK Cumulative Redeemable Preferred Stock, Series A of
Television Enterprises, Inc. (a subsidiary): no par value;
redemption price -- $100 per share plus accrued and unpaid
dividends (1998 -- none; 1997 -- $25,548); 1998 -- 12,670
shares authorized, none issued and outstanding;
1997 -- 12,670 shares authorized, issued and outstanding
at net issue price........................................ -- 1,292
Stockholders' deficit:
Common stock, voting, convertible to nonvoting common
stock: $.01 par value; 1998 -- 5,442,000 shares
authorized, 1,720,608 issued and outstanding;
1997 -- 3,142,922 authorized, 621,532 issued and
outstanding............................................. 17 6
Common stock, nonvoting, convertible to voting common
stock: $.01 par value; 1998 -- 4,503,000 shares
authorized, 1,528,261 issued and outstanding;
1997 -- 2,600,108 authorized, 2,185,532 issued and
outstanding............................................. 15 22
Additional paid-in capital................................ 30,464 33,405
Unearned compensation..................................... (1,920) (2,118)
Accumulated deficit....................................... (75,364) (44,501)
-------- --------
Total stockholders' deficit......................... (46,788) (13,186)
-------- --------
Total liabilities, redeemable preferred stock and
stockholders' deficit............................... $254,604 $220,162
======== ========
</TABLE>

See accompanying notes.

F-4
<PAGE> 121

CLASSIC COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues.................................................. $ 69,802 $ 60,995 $ 59,821
Operating expenses:
Programming............................................. 17,840 14,916 15,106
Plant and operating..................................... 8,437 7,622 7,308
General and administrative.............................. 11,295 9,257 8,688
Marketing and advertising............................... 850 438 238
Corporate overhead...................................... 3,648 4,322 2,213
Depreciation and amortization........................... 30,531 27,832 27,510
-------- -------- --------
Total operating expenses........................ 72,601 64,387 61,063
-------- -------- --------
Loss from operations...................................... (2,799) (3,392) (1,242)
Interest expense.......................................... (24,442) (21,299) (20,633)
Gain on sale of cable system.............................. -- 3,644 4,901
Write-off of abandoned telephone operations and accrual of
related costs........................................... (220) (500) (2,994)
Other income.............................................. 192 71 --
-------- -------- --------
Loss before income taxes and extraordinary item........... (27,269) (21,476) (19,968)
Income tax benefit........................................ 1,930 7,347 6,802
-------- -------- --------
Loss before extraordinary item............................ (25,339) (14,129) (13,166)
Extraordinary loss on extinguishment of debt.............. (5,524) -- --
-------- -------- --------
Net loss........................................ $(30,863) $(14,129) $(13,166)
======== ======== ========
Loss applicable to common stockholders.................... $(35,274) $(18,209) $(16,734)
======== ======== ========
Basic and diluted loss per share:
Loss per share applicable to common stockholders before
extraordinary item...................................... $ (11.43) $ (7.53) $ (7.30)
Extraordinary loss on extinguishment of debt.............. (2.12) -- --
-------- -------- --------
Loss per share applicable to common stockholders.......... $ (13.55) $ (7.53) $ (7.30)
======== ======== ========
</TABLE>

See accompanying notes.

F-5
<PAGE> 122

CLASSIC COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
VOTING NONVOTING COMMON STOCK
COMMON STOCK COMMON STOCK CLASS A
------------------ ------------------ ---------------- ADDITIONAL
SHARES SHARES SHARES PAID-IN ACCUMULATED UNEARNED
ISSUED AMOUNT ISSUED AMOUNT ISSUED AMOUNT CAPITAL DEFICIT COMPENSATION
------ ------ ------ ------ ------ ------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995..................... 646,901 $ 6 1,642,537 $17 10,075 $ -- $36,909 $(17,206) $ --
Conversion of common
stock................. (542,995) (5) 542,995 5 -- -- -- -- --
Restricted stock awards.. 258,813 3 -- -- -- -- 4,231 -- (4,234)
Stock exchange.......... 258,813 2 -- -- (10,075) -- (2) -- --
Compensation on
restricted stock...... -- -- -- -- -- -- -- -- 1,058
Expenses related to
equity transactions... -- -- -- -- -- -- (85) -- --
Accretion of discount on
preferred stock....... -- -- -- -- -- -- (237) -- --
Dividends on preferred
stock................. -- -- -- -- -- -- (3,331) -- --
Net loss................ -- -- -- -- -- -- -- (13,166) --
--------- --- --------- --- ------- ---- ------- -------- --------
Balance at December 31,
1996.................... 621,532 6 2,185,532 22 -- -- 37,485 (30,372) (3,176)
Compensation on
restricted stock...... -- -- -- -- -- -- -- -- 1,058
Accretion of discount on
preferred stock....... -- -- -- -- -- -- (237) -- --
Dividends on preferred
stock................. -- -- -- -- -- -- (3,843) -- --
Net loss................ -- -- -- -- -- -- -- (14,129) --
--------- --- --------- --- ------- ---- ------- -------- --------
Balance at December 31,
1997.................... 621,532 6 2,185,532 22 -- -- 33,405 (44,501) (2,118)
Issuance of common
stock................. 355,258 4 -- -- -- -- 1,336 -- --
Conversion of common
stock................. 657,271 6 (657,271) (6) -- -- -- -- --
Compensation on
restricted stock...... -- -- -- -- -- -- -- -- 1,108
Exchange of restricted
common stock.......... 188,085 2 -- -- -- -- 1,122 -- (1,124)
Repurchase and
cancellation of
treasury stock........ (101,538) (1) -- -- -- -- (987) -- 214
Accretion of discount on
preferred stock....... -- -- -- -- -- -- (1,869) -- --
Dividends on preferred
stock................. -- -- -- -- -- -- (2,542) -- --
Net loss................ -- -- -- -- -- -- -- (30,863) --
Other................... -- -- -- (1) -- -- (1) -- --
--------- --- --------- --- ------- ---- ------- -------- --------
Balance at December 31,
1998.................... 1,720,608 $17 1,528,261 $15 -- $ -- $30,464 $(75,364) (1,920)
========= === ========= === ======= ==== ======= ======== ========

TOTAL
STOCKHOLDERS'
EQUITY
(DEFICIT)
-------------
<S> <C>
Balance at December 31,
1995..................... $ 19,726
Conversion of common
stock................. --
Restricted stock awards.. --
Stock exchange.......... --
Compensation on
restricted stock...... 1,058
Expenses related to
equity transactions... (85)
Accretion of discount on
preferred stock....... (237)
Dividends on preferred
stock................. (3,331)
Net loss................ (13,166)
--------
Balance at December 31,
1996.................... 3,965
Compensation on
restricted stock...... 1,058
Accretion of discount on
preferred stock....... (237)
Dividends on preferred
stock................. (3,843)
Net loss................ (14,129)
--------
Balance at December 31,
1997.................... (13,186)
Issuance of common
stock................. 1,340
Conversion of common
stock................. --
Compensation on
restricted stock...... 1,108
Exchange of restricted
common stock.......... --
Repurchase and
cancellation of
treasury stock........ (774)
Accretion of discount on
preferred stock....... (1,869)
Dividends on preferred
stock................. (2,542)
Net loss................ (30,863)
Other................... (2)
--------
Balance at December 31,
1998.................... $(46,788)
========
</TABLE>

See accompanying notes.

F-6
<PAGE> 123

CLASSIC COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................................. $ (30,863) $(14,129) $(13,166)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Provision for doubtful accounts........................ 971 1,248 1,491
Depreciation........................................... 12,041 10,285 9,491
Amortization of intangibles............................ 18,352 17,547 18,019
Amortization of deferred financing costs............... 1,181 1,373 1,491
Discount accretion on bank debt........................ 3,589 457 490
PIK interest on senior subordinated promissory Notes... 435 517 446
Gain on sales of cable systems......................... -- (3,644) (4,901)
Non-cash compensation.................................. 1,108 1,058 1,058
Deferred tax benefit................................... (1,850) (7,593) (6,804)
Extraordinary loss..................................... 5,524 -- --
Changes in working capital, net of acquisition amounts:
Change in accounts receivable....................... (1,841) (321) (3,952)
Change in prepaids and other assets................. 166 126 754
Change in other accruals and payables............... 1,100 413 2,685
Change in accrued interest.......................... 4,349 555 831
--------- -------- --------
Net cash provided by operating activities................ 14,262 7,892 7,933
INVESTING ACTIVITIES
Acquisition of cable television systems.................. (43,486) -- (367)
Purchases of property, plant and equipment............... (13,759) (10,135) (8,212)
Payments for other intangibles........................... -- (323) (467)
Net proceeds from sale of cable systems.................. -- 6,189 12,433
Net proceeds from litigation settlement.................. -- 2,928 --
--------- -------- --------
Net cash provided by (used in) investing activities...... (57,245) (1,341) 3,387
FINANCING ACTIVITIES
Proceeds from long-term debt............................. 281,208 759 2,208
Repayments of long-term debt............................. (190,308) (7,246) (13,345)
Repayments of subordinated indebtedness.................. (4,458) -- --
Repayment of promissory notes............................ (650) -- --
Financing costs.......................................... (9,455) -- (232)
Redemption of preferred stock............................ (31,023) -- --
Cash dividends paid on preferred stock................... (93) (101) (101)
Sales of common stock.................................... 50 -- (85)
Repurchase of common stock............................... (125) -- --
Purchase of subsidiary stock............................. -- -- (600)
--------- -------- --------
Net cash provided by (used in) financing activities...... 45,146 (6,588) (12,155)
--------- -------- --------
Increase (decrease) in cash and cash equivalents......... 2,163 (37) (835)
Cash and cash equivalents at beginning of year........... 616 653 1,488
--------- -------- --------
Cash and cash equivalents at end of year................. $ 2,779 $ 616 $ 653
========= ======== ========
Cash taxes paid.......................................... $ 166 $ 1 $ 5
Cash interest paid....................................... $ 15,247 $ 18,397 $ 17,367
Non-cash investing and financing activities:
PIK dividends on preferred stock....................... $ 2,475 $ 3,742 $ 3,229
Accretion of discount on preferred stock............... $ 1,869 $ 237 $ 237
</TABLE>

See accompanying notes.

F-7
<PAGE> 124

CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998

1. ORGANIZATION

Classic Communications, Inc. and its subsidiaries (collectively, the
"Company") acquire, develop and operate cable television systems throughout the
United States.

2. ACQUISITIONS AND DISPOSITIONS OF CABLE TELEVISION SYSTEMS

ACQUISITIONS

In December 1998, the Company acquired certain assets of TCA Cable Partners
in exchange for a cable television system in Texas (with a fair value of
approximately $0.6 million) and cash consideration of $2.4 million.

In July 1998, the Company acquired certain assets of Cable One, Inc. (the
"Cable One Acquisition") serving communities in four states for approximately
$41.7 million in cash and the assumption of $0.2 million in net operating
liabilities. The purchase was financed from proceeds of the Company's private
debt offering.

The above acquisitions were accounted for using the purchase method and,
accordingly, the operating results of the systems acquired have been included in
the Company's consolidated financial statements since the date of acquisition.

DISPOSITIONS

During 1998, the Company sold or disposed of some smaller systems that did
not fit into the Company's long-term strategic plans.

In April and May 1997, the Company sold certain cable television systems in
Kansas and Oklahoma for $5.7 million, net of selling expenses. The net pretax
gain from the sales was approximately $3.6 million.

In September 1996, the Company sold certain cable television systems in
Arkansas for cash consideration of $12.4 million, net of selling expenses. The
net pretax gain from the sale was approximately $4.9 million.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned and majority-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

REVENUE RECOGNITION

Service income includes subscriber service revenues and charges for
installations and connections and is recognized in the period in which the
services are provided to the customers. Subscriber services paid for in advance
are recorded as income when earned.

Initial installation revenue is recognized as revenue when the service is
performed, to the extent of direct selling costs, with any balance deferred and
taken into income over the estimated average period that subscribers are
expected to remain connected to the system.

F-8
<PAGE> 125
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. Depreciation is computed
using the straight-line method over the following estimated useful lives of the
assets:

<TABLE>
<S> <C>
Buildings.............................................. 30 years
Cable television distribution systems.................. 7-12 years
Office furniture and equipment......................... 3-7 years
Vehicles............................................... 5 years
</TABLE>

Leasehold improvements are amortized over the shorter of their estimated
life or the period of the related leases.

Initial subscriber connection costs are capitalized as part of cable
television distribution systems. Costs related to disconnects and reconnects of
customers are expensed as incurred.

DEFERRED FINANCING COSTS

Deferred financing costs are being amortized to interest expense using the
interest method over the terms of the related debt.

INTANGIBLE ASSETS

The useful lives of the specific intangible assets are as follows:

<TABLE>
<S> <C>
Subscriber relationships............................... 5-15 years
Franchise rights....................................... 7-10 years
Noncompete agreements.................................. 5 years
Goodwill............................................... 5-40 years
</TABLE>

Intangible assets are being amortized using the straight-line method over
their estimated useful lives.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically reviews the carrying amounts of property, plant
and equipment, identifiable intangible assets and goodwill both purchased in the
normal course of business and acquired through acquisition to determine whether
current events or circumstances, as defined in Financial Accounting Standards
Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of, warrant adjustments to such carrying
amounts by considering, among other things, the future cash inflows expected to
result from the use of the asset and its eventual disposition less the future
cash outflows expected to be necessary to obtain those inflows. An impairment
loss would be measured by comparing the fair value of the asset with its
carrying amount. Any write-down is treated as a permanent reduction in the
carrying amount of the assets. Management reviews the valuation and amortization
periods of goodwill on a periodic basis, taking into consideration any events or
circumstances which might result in diminished fair value or revised useful
life. No events or circumstances have occurred to warrant a diminished fair
value or reduction in the useful life of goodwill.

INCOME TAXES

The Company adopted the provisions of the Financial Accounting Standards
Board Statement No. 109, Accounting for Income Taxes, upon inception.
Accordingly, the liability method
F-9
<PAGE> 126
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

is used in accounting for income taxes. Under this method, deferred tax assets
and liabilities are determined based on differences between the financial
reporting and tax bases of assets and liabilities and are measured using the tax
rates that are expected to be in effect when the differences are expected to
reverse, based upon current laws and regulations.

CASH AND CASH EQUIVALENTS

For financial reporting purposes, the Company considers all highly liquid
investments purchased with original maturities of three months or less to be
cash equivalents.

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily cash, cash equivalents and accounts
receivable. Excess cash is invested in high quality short-term liquid money
instruments issued by highly-rated financial institutions. Concentrations of
credit risk with respect to the Company's receivables are limited due to the
large number of customers, individually small balances, short payment terms and
required deposits.

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of certain of the Company's financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable and
other accrued liabilities, approximate fair value because of their short
maturities. All bank debt agreements carry variable interest rates and their
carrying value is considered to approximate fair value. The estimated fair value
of the Company's bonds is based on quoted market prices. The carrying amount of
the Company's bonds was $186.5 million and the fair value was $198.4 million at
December 31, 1998.

The Company utilizes interest rate cap and interest rate swap agreements to
manage interest rate exposures. The principal objective of such agreements is to
minimize the risks and/or costs associated with financial activities. The
Company does not utilize financial instruments for trading or other speculative
purposes. The counterparties to these contractual arrangements are major
financial institutions with which the Company also has other financial
relationships. The Company is exposed to credit loss in the event of
nonperformance by these counterparties. However, the Company does not anticipate
nonperformance by the other parties, and no material loss would be expected from
their nonperformance.

RECENT ACCOUNTING PRONOUNCEMENTS

F-10
<PAGE> 127
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. ACCOUNTS RECEIVABLE

Accounts receivable consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
---------------
1998 1997
---- ----
<S> <C> <C>
Accounts receivable, trade.................................. $5,211 $4,570
Accounts receivable, other.................................. 588 211
Less allowance for doubtful accounts........................ (325) (262)
------ ------
Accounts receivables, net of allowance...................... $5,474 $4,519
====== ======
</TABLE>

The activity in the Company's allowance for doubtful accounts for the
periods ending December 31, 1998, 1997 and 1996 is as follows (in thousands):

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END
FOR THE PERIOD ENDED OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
- -------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1998.............. $262 $ 971 $ (908) $325
December 31, 1997.............. $513 $1,248 $(1,499) $262
December 31, 1996.............. $249 $1,491 $(1,227) $513
</TABLE>

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1998 1997
---- ----
<S> <C> <C>
Land........................................................ $ 1,152 $ 1,021
Buildings and improvements.................................. 3,262 2,107
Vehicles.................................................... 6,061 4,088
Cable television distribution systems....................... 106,373 83,499
Office furniture, tools and equipment....................... 3,858 2,499
Construction in progress.................................... 6,463 3,636
-------- --------
127,169 96,850
Less accumulated depreciation............................... (39,977) (28,211)
-------- --------
$ 87,192 $ 68,639
======== ========
</TABLE>

F-11
<PAGE> 128
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT

Balances of amounts outstanding under the Company's various debt agreements
are as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1998 1997
---- ----
<S> <C> <C>
1998 Credit Agreement
Term loans................................................ $ 75,000 $ --
Revolving loans........................................... 20,800 --
13.25% Senior Discount Notes................................ 114,000 --
Unamortized discount...................................... (51,963) --
9.875% Senior Subordinated Notes............................ 125,000 --
Unamortized discount...................................... (563) --
1995 Senior Credit Agreement
Term A loan............................................... -- 18,324
Term B loan............................................... -- 58,184
Line of credit notes...................................... -- 112,717
Unamortized discount...................................... (1,892)
Other....................................................... 568 634
-------- --------
$282,842 $187,967
======== ========
</TABLE>

In July 1998, the Company issued $114.0 million of 13.25% Senior Discount
Notes due 2009 and its wholly owned subsidiary, Classic Cable, issued $125.0
million of 9.875% Senior Subordinated Notes due 2008. Net of the applicable
discounts and the fair value of the common stock sold along with the Senior
Discount Notes, proceeds from these issues were $60.0 million and $124.4
million, respectively. Interest payments on the Senior Discount Notes do not
commence until 2004. Interest payments on the Senior Subordinated Notes begin in
1999. Concurrent with the offering, Classic Cable entered into the 1998 Credit
Agreement. The 1998 Credit Agreement consists of a $50.0 million Reducing
Revolving Credit Facility which matures in 2006 and a $75.0 million Term Loan
Facility which matures in 2007. Mandatory payments commence in 2000. The Company
may be subject to mandatory prepayments based upon operating results, sales of
assets, equity or debt offerings or other events. Interest is based upon either
a LIBOR rate plus an applicable margin or, at the option of the Company, a base
rate plus an applicable margin. At December 31, 1998, the weighted average
interest rate in effect was 7.6%. Proceeds from the 1998 Credit Agreement
totaled $95.8 million.

In connection with the early extinguishment of the Senior Credit Agreement,
an extraordinary loss of $5.5 million was recorded related to the write-off of
unamortized deferred financing costs and discount.

The Senior Discount Notes were sold in units that consisted of a $1,000
note and three shares of common stock of the Company. Shares issued in
connection with the offering totaled 342,000. Proceeds of $3.77 per share were
allocated to the sale of the shares, resulting in a discount being recorded on
the debt of $1.3 million. This per share amount represents the fair value of the
stock as of the date of the offering.

F-12
<PAGE> 129
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Agreement restrict certain activities of Classic Cable, including the incurrence
of additional indebtedness and the payment of certain dividends. Accordingly,
substantially all the assets and operations of Classic Cable are restricted as
to transfer to the Company and may not be available for dividends and/or debt
service of the Company.

The Senior Discount Notes are unsecured and rank without preference with
all existing and future unsecured indebtedness of the Company, and senior to all
future subordinated indebtedness of the Company. The notes are also subordinate
to all existing and future liabilities of the Company's subsidiaries. The Senior
Subordinated Notes are unsecured and are subordinated to all existing and future
senior indebtedness of Classic Cable. The notes rank without preference with all
existing and future senior subordinated indebtedness of Classic Cable. Both the
Senior Discount Notes and the Senior Subordinated Notes may be redeemed
contingent on certain events and/or the passage of time at the redemption price,
which may include a premium. Restrictive covenants associated with these notes
limit our ability to enter into certain transactions.

In connection with the 1998 Credit Agreement, the Company is required to
pay a quarterly commitment fee that can range from 0.375% to 0.500% per annum on
the unused portion of the revolving loan commitment.

The 1995 Senior Credit Agreement consisted of a $20,000,000 Term A Loan, a
$65,000,000 Term B Loan and Line of Credit Notes not to exceed $130,000,000.
Interest was based upon either a LIBOR rate plus an applicable margin or, at the
option of the Company, a base rate plus an applicable margin. The 1995 Senior
Credit Agreement was amended in 1997. A fee of approximately $1 million was paid
to the bank equal to 0.5% of the outstanding Term Loans and Line of Credit
Notes. This amount is included as a component of interest expense in 1997.

The Company utilizes interest rate cap and interest rate swap agreements to
limit the impact of increases in interest rates on its floating rate debt. The
agreements require premium payments to counterparties based upon a notional
principal amount. No such agreements were outstanding at December 31, 1998 or
1997. Interest rate cap agreements entitle the Company to receive from the
counterparties the amounts, if any, by which the selected market interest rates
exceed the strike rates stated in the agreements. Interest rate swap agreements
are used by the Company to change the interest rate of their debt from variable
rate to fixed rate. The swap is a contractual agreement between the Company and
another party to exchange payments periodically over the life of the agreement
based upon the interest rates of the underlying debt over the period of the
agreement. The differential to be paid or received is accrued and recognized as
an adjustment of interest expense related to the debt (the accrual accounting
method). The premium paid for both types of agreements is amortized to interest
expense using the interest method over the life of the agreement.

Maturities of long-term debt are as follows (in thousands):

<TABLE>
<S> <C>
1999.................................................... $ 118
2000.................................................... 1,200
2001.................................................... 750
2002.................................................... 750
2003.................................................... 750
Thereafter.............................................. 331,800
--------
$335,368
========
</TABLE>

F-13
<PAGE> 130
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. SUBORDINATED DEBT -- AFFILIATES

Subordinated debt was held by shareholders of the Company and consisted of
the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
-------------
1998 1997
---- ----
<S> <C> <C>
7.5% Junior Subordinated Promissory Notes(A)................ $-- $ 295
15% Senior Subordinated Promissory Note(B).................. -- 3,728
--- ------
$-- $4,023
=== ======
</TABLE>

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

(A) The Junior Subordinated Promissory Notes (the "Interest Notes") bore
interest at 7.5% per annum. The Interest Notes had no required principal
payments other than upon maturity on July 7, 2002. The interest on the
Interest Notes was deferred until maturity. The Interest Notes and accrued
interest were paid in full in July 1998.

(B) The Senior Subordinated Promissory Note (the "Senior Note") bore interest
at 15% per annum, payable quarterly in arrears unless paid in kind ("PIK")
through the issuance of new Senior Notes (the "PIK Notes") incorporating
the same terms as the Senior Note. All principal and deferred interest
under the Senior and PIK Notes was due on December 31, 2007. The Senior
Note, the PIK Notes and accrued interest were paid in full in July 1998.

8. CAPITAL STOCK

SHARES RESERVED

At December 31, 1998, 152,418 shares of Voting Common Stock and 183,435
shares of Nonvoting Common Stock were reserved for the exercise of the Common
Stock Purchase Warrants.

COMMON STOCK

In 1996, the Company issued 258,813 shares of restricted Voting Common
Stock to complete an exchange for 10,075 shares of Class A Common Stock that was
initiated in October 1995. The restrictions include a three and one half year
vesting provision and the entitlement to $9.93 less per share in distributions
than the amount otherwise payable for distribution to the holders of the
Company's Common Stock. The amount by which the fair value of the restricted
Voting Common Stock exceeded the fair value of the Class A Common Stock was
recorded as deferred compensation and is expensed ratably over the vesting
period. The fair value of the restricted Voting Common Stock and the Class A
Common Stock was determined as of the issuance date by an independent valuation.

The Company has the 1996 and 1998 Restricted Stock Award Plans ("the
Plans") whereby employees may be granted shares of the Company's Voting Common
Stock. The stock awards will generally vest over a three to four year period. In
addition, upon any distribution event, the restricted stock stockholders will be
entitled to either $29.78 less per share, $19.06 less per share or $3.77 less
per share in distributions than the amount otherwise payable for distribution to
the holders of the Company's Common Stock. The Company has authorized 743,231
shares under the Plans, all of which have been awarded. The fair value of the
awards was recorded as deferred compensation and is expensed ratably over the
vesting period. The fair value was determined by an independent valuation.

F-14
<PAGE> 131
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the activity of the Company's restricted
stock:

<TABLE>
<CAPTION>
DISTRIBUTION THRESHOLDS
--------------------------------------
$29.78 $19.06 $9.93 $3.77 TOTAL
------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995.... -- -- -- -- --
Class A Common Stock
Exchange................... -- -- 258,813 -- 258,813
1996 Restricted Stock Award
Plan....................... 129,407 129,406 -- -- 258,813
------- ------- -------- ------- --------
Balance at December 31, 1996.... 129,407 129,406 258,813 -- 517,626
No activity in 1997........... -- -- -- -- --
------- ------- -------- ------- --------
Balance at December 31, 1997.... 129,407 129,406 258,813 -- 517,626
Repurchase of stock........... -- -- (76,350) -- (76,350)
1998 Restricted Stock Award
Plan:
Shares exchanged........... (93,171) (93,171) (109,991) -- (296,333)
Shares awarded............. -- -- -- 484,418 484,418
Other...................... (2) (1) -- -- (3)
------- ------- -------- ------- --------
Balance at December 31, 1998.... 36,234 36,234 72,472 484,418 629,358
======= ======= ======== ======= ========
Shares vested at December 31,
1998.......................... 27,176 27,176 54,354 67,280 175,986
======= ======= ======== ======= ========
</TABLE>

Upon certain events, the Company has repurchase rights for unvested shares.
The Company also has the right of first refusal for any proposed disposition of
shares issued under the Plans. The restrictions on the shares are transferable.

PREFERRED STOCK

In July 1998, the Company redeemed the outstanding shares of TVE Preferred
Stock at a redemption price per share of $100 plus accrued and unpaid dividends.

In July 1998, the Company redeemed the outstanding shares of Senior and
Junior Preferred Stock at a redemption price per share of $1,000 plus accrued
and unpaid dividends.

STOCK PURCHASE WARRANTS

At December 31, 1998 and 1997, there were warrants outstanding to acquire
335,853 common shares at $.001 per share which expire in 2006. No warrants have
been exercised as of December 31, 1998. Under the terms of the warrant
agreements, the exercise price and exercise rate shall be subject to adjustment
in the event of a change in the number of shares outstanding or valuation of the
Company's Common Stock.

VOTING RIGHTS

At December 31, 1998, all general voting power was vested in the holders of
Voting Common Stock. The holders of Preferred Stock have no voting rights with
regard to matters submitted to a vote of the stockholders. However, the
affirmative consent or vote of at least 80% of the outstanding shares of
Preferred Stock, voting as a class, shall be required with respect to any action
affecting the power, preferences and rights of the holders of shares of
Preferred Stock.

F-15
<PAGE> 132
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Holders of Nonvoting Common Stock are entitled at any time and from time to
time to convert any and all of the shares held into the same number of shares of
Voting Common Stock provided that such conversion would be in accordance with
all laws, regulations, rules or other requirements of any governmental authority
applicable to such conversion.

DIVIDENDS

The holders of Junior and Senior Preferred Stock are entitled to a
cumulative dividend equal to $150.00 per share per annum, due and payable at the
end of each calendar quarter. Dividends are payable solely in the form of
additional shares of such class of Preferred Stock.

The holders of TVE Preferred Stock are entitled to a cumulative cash
dividend equal to $8.00 per share per annum, due and payable on June 30 of each
year.

Dividends on Common Stock shall be paid at such times as may be declared by
the Board of Directors. Through December 31, 1998, no such dividends had been
declared.

9. INCOME TAXES

Significant components of income tax benefit from continuing operations are
as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current:
Federal............................................. $ (80) $ 246 $ --
State............................................... -- -- 2
------- ------- -------
Total Current............................... (80) 246 2
Deferred:
Federal............................................. (1,536) (6,304) (5,649)
State............................................... (314) (1,289) (1,155)
------- ------- -------
Total Deferred.............................. (1,850) (7,593) (6,804)
------- ------- -------
Income tax benefit.......................... $(1,930) $(7,347) $(6,802)
======= ======= =======
</TABLE>

The Company's provision for income taxes differs from the expected tax
expense (benefit) amount computed by applying the statutory federal income tax
rate of 34% to income before income taxes and extraordinary items as a result of
the following:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Tax at U.S. statutory rate............................... (34.0)% (34.0)% (34.0)%
State taxes, net of federal benefit...................... (3.9) (3.8) (3.9)
Increase in valuation allowance.......................... 27.8 -- --
Nondeductible items...................................... 3.0 3.6 3.8
----- ----- -----
(7.1)% (34.2)% (34.1)%
===== ===== =====
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used

F-16
<PAGE> 133
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

for income tax purposes. Significant components of the Company's deferred tax
liabilities and assets are as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1998 1997
---- ----
<S> <C> <C>
Deferred tax liabilities:
Book over tax basis of depreciable assets................. $ 698 $ 2,091
Book over tax basis of assets that are amortizable for
tax.................................................... 3,144 5,414
-------- -------
Total deferred tax liabilities.................... 3,842 7,505
Deferred tax assets:
Net operating loss carryforwards:
Acquired............................................... 4,880 4,880
Other.................................................. 13,411 6,807
Other....................................................... 1,847 561
-------- -------
Total deferred tax assets......................... 20,138 12,248
Less valuation allowance.................................... (17,364) (7,661)
-------- -------
Net deferred tax assets........................... 2,774 4,587
-------- -------
Net deferred tax liabilities...................... $ 1,068 $ 2,918
======== =======
</TABLE>

At December 31, 1998, the Company had net operating loss carryforwards of
$46,411,000 for federal income tax purposes, which begin to expire in 2002 if
not utilized. Utilization of the loss carryforwards is subject to various
limitations under the Internal Revenue Code (including limitations of Section
382 of the Internal Revenue Code), which could result in expiration of the loss
carryforwards before utilization.

Approximately $7.6 million of the total valuation allowance as of December
31, 1998 was previously recorded for certain acquisition net operating loss
carryforwards and other acquisition deferred tax assets due to restrictions on
their utilization under the tax law and other uncertainties regarding their
realization. When, and if, realized, the tax benefit associated with these
deferred tax assets will be applied to reduce goodwill and other noncurrent
intangibles related to the acquisitions.

During 1997, a subsidiary of the Company filed an amended income tax return
for a period prior to its acquisition. This resulted in an additional net
operating loss carryforward of $1,525,000 available to the Company. The Company
has recorded a deferred tax asset of $584,000 for this item and a corresponding
reduction to goodwill related to the subsidiary's acquisition.

10. EMPLOYEE BENEFIT PLAN

The Company sponsors a defined contribution pension plan, a 401(k) plan.
Participation in this plan is available to substantially all employees.
Employees may contribute up to 15% of their pay. The Company may match employee
contributions for an amount up to 6% of each employee's base salary. Costs of
the plan, including the Company's matching contributions, were $149,000,
$114,000 and $89,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.

11. ABANDONMENT OF TELEPHONE OPERATIONS

At December 31, 1995 the Company was negotiating an agreement to purchase
four telephone exchanges in Kansas. For various reasons, the Company did not
complete the

F-17
<PAGE> 134
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

acquisitions and hence, did not enter the telephone business. Net assets of the
telephone business, when abandoned in 1996, consisted primarily of property,
plant and equipment. In connection therewith, the Company recorded a $2,994,000
charge in 1996 related to the termination of the purchase agreement and
operations associated with the proposed acquisition. Items included in the
charge were the write-off of certain costs capitalized in connection with the
proposed acquisition, legal and consulting fees and estimated severance for
personnel reductions. The Company revised their estimate of costs associated
with the abandonment and took an additional charge of $500,000 in 1997.

In November 1998, the Company settled certain litigation related to these
transactions. Terms of the settlement included the sale of certain cable
television systems in Kansas, the granting of a five year right of first refusal
for the sale of certain other cable television systems in Kansas, and a five
year non-competition agreement. In addition, the Company received cash
consideration of $348,000 in 1999 in connection with the settlement. The
settlement resulted in a loss of approximately $220,000.

12. SETTLEMENT OF CLAIMS

In February 1998, the Company settled claims that arose in conjunction with
divorce proceedings of an officer of the Company. The Company purchased certain
stock of the Company in which the officer's wife held a community property
interest and provided monetary consideration for the release of the claims. The
Company acquired and canceled 101,538 shares of the Company's Common Stock
(76,350 of which were restricted stock). The related expenses, including legal,
consultant and other fees of approximately $1,411,000 are included in corporate
overhead expenses in 1997.

In March 1997, the Company settled certain litigation in which the Company
was seeking damages related to a previous year's acquisition. The Company
received approximately $3.5 million in the settlement. The net proceeds of $3
million were recorded as a reduction of goodwill.

13. COMMITMENTS AND CONTINGENCIES

LEASE ARRANGEMENTS

The Company, as an integral part of its cable operations, has entered into
short-term lease contracts for microwave service, pole use and office space. At
December 31, 1998, approximate annual minimum aggregate rentals under such
leases were $1,206,000 in 1999, $1,004,000 in 2000, $954,000 in 2001, $891,000
in 2002, $873,000 in 2003 and $287,000 thereafter. Rent expense was $1,285,000,
$1,160,000 and $1,071,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.

LITIGATION

The Company is involved in various legal proceedings that have arisen in
the normal course of business. While the ultimate results of these matters
cannot be predicted with certainty, management does not expect them to have a
material adverse effect on the consolidated financial position and results of
operations of the Company.

F-18
<PAGE> 135
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Loss before extraordinary item............................ $(25,339) $(14,129) $(13,166)
Preferred stock dividends................................. (2,542) (3,843) (3,331)
Accretion of discount on preferred stock.................. (1,869) (237) (237)
-------- -------- --------
Loss applicable to common stockholders before
extraordinary item...................................... $(29,750) $(18,209) $(16,734)
======== ======== ========
Net loss.................................................. $(30,863) $(14,129) $(13,166)
Preferred stock dividends................................. (2,542) (3,843) (3,331)
Accretion of discount on preferred stock.................. (1,869) (237) (237)
-------- -------- --------
Loss applicable to common stockholders.................... $(35,274) $(18,209) $(16,734)
======== ======== ========
Weighted-average shares outstanding....................... 2,968 2,807 2,639
Less unvested portion of restricted stock................. (365) (388) (346)
-------- -------- --------
Adjusted weighted-average shares outstanding.............. 2,603 2,419 2,293
======== ======== ========
Basic and diluted loss per share:
Loss per share applicable to common stockholders before
extraordinary item...................................... $ (11.43) $ (7.53) $ (7.30)
Extraordinary loss on extinguishment of debt.............. (2.12) -- --
-------- -------- --------
Loss per share applicable to common stockholders.......... $ (13.55) $ (7.53) $ (7.30)
======== ======== ========
</TABLE>

Warrants to purchase 335,853 shares of common stock at $.001 per share were
outstanding during 1998, 1997 and 1996 but were not included in the computation
of diluted earnings per share as the effect of their exercise would be
antidilutive.

15. SUBSEQUENT EVENT

ACQUISITIONS

On July 28, 1999, the Company's wholly-owned subsidiary, Classic Cable,
acquired all of the outstanding stock and partnership interests of the Buford
Group, Inc., for approximately $300 million in cash. The acquisition was
financed through a) the $95.7 million capital contribution from Brera Classic,
described in the Equity Investment below, b) the proceeds from the Company's
1999 credit facility and c) the proceeds from a private debt offering of $150
million of Classic Cable's senior subordinated notes, which were registered in
August 1999 as described below. The transaction will be accounted for as a
purchase transaction and the assets and liabilities assumed will be recorded at
fair value.

F-19
<PAGE> 136
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

19th month through the 23rd month from the date of issuance and 10% per annum
for the 24th month and thereafter from the date of issuance, which dividends
would be payable in two semi-annual installments on the last day of June and
December of each year. All Preferred Stock would be converted into shares of
Class A Common Stock in the event of the closing of an initial public offering
at a conversion price of $36.00 per share. CCI would be able to convert all of
the Preferred Stock at any time two years after the date of issuance of the
Preferred Stock at a conversion price of $32.00 per share.

The following summarized unaudited pro forma financial information assumes
the Buford acquisition had occurred on January 1, 1998 and 1997, respectively
and that the acquisition of Cable One had occurred on January 1, 1998 and 1997
(see Note 2). The following pro forma information is not necessarily indicative
of the results that would have occurred had the transaction been completed at
the beginning of the period indicated, nor is it indicative of future operating
results (in thousands, except per share data):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
Revenues................................................... $149,897 $139,531
Loss before extraordinary item............................. (49,662) (32,829)
Net loss................................................... (55,186) (32,829)
Basic and diluted loss per share........................... $ (6.07) $ (3.68)
</TABLE>

REGISTRATION OF DEBT

On August 24, 1999, the Company's Registration Statements related to the
Classic Cable 9.875% subordinated notes due in 2008 and the Classic
Communications 13.25% senior discount notes due 2009 were declared effective
with the Securities and Exchange Commission. On September 3, 1999, the
Registration Statement of the Classic Cable 9.375% senior subordinated notes due
2009 was declared effective.

CHANGE OF CONTROL OFFERS

Pursuant to the change of control resulting from the Brera Classic, LLC
("Brera") investment discussed below, and in accordance with the indentures of
the note agreement, the Company offered to redeem all of its outstanding 9.875%
subordinated notes due 2008 and 13.25% senior discount notes due 2009. The
Company redeemed $86 million of the 9.875% senior subordinated notes due 2008 at
101% of face value plus accrued interest. This resulted in an extraordinary loss
from the early extinguishment of debt in the third quarter of 1999 equal to the
amount of the unamortized discount and financing costs on the notes and the 1%
premium paid. The Company borrowed $90.0 million under its credit facility to
repurchase the tendered 2008 subordinated notes and to pay associated fees and
expenses incurred as a result of the change of control offer. None of the 13.25%
senior discount notes were tendered for redemption.

1999 CREDIT FACILITY

The Company also entered into a $350 million credit facility in July 1999.
The facility is composed of a Revolving Credit Facility of $75 million, Term
Loan A of $75 million, Term Loan B of $100 million and a Term Loan C of $100
million. Interest is based upon either a LIBOR rate plus an applicable margin
or, at the option of the Company, a base rate plus an applicable margin.

F-20
<PAGE> 137
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

EQUITY INVESTMENT

On July 28, 1999, the Company sold 6,490,734 shares, or 64% of Classic
Communications voting common stock to Brera for $100 million. The proceeds were
distributed as follows: $95.7 million was contributed to Classic Cable, a wholly
owned subsidiary, $3.3 million was paid to Brera pursuant to management and
advisory fee agreements, and approximately $750,000 was paid to Brera as
reimbursement for certain of its fees and expenses incurred in connection with
the investment. The agreement further provides that the Company is to pay an
annual management fee of $250,000 to Brera until the Company is sold or closes
an initial public offering, the first payment of which was made at the closing
of the Buford agreement.

RELATED PARTY TRANSACTIONS

In accordance with various provisions of executive management's employment
agreements, the Company made payments totaling approximately $5 million in
relation to the Buford acquisition and change of control that resulted from the
Brera equity investment. All payments to management were treated as a current
period cost in the third quarter of 1999.

In connection with the closing of the Brera equity investment, certain
officers of the Company were granted stock options with a 10-year term to
purchase 559,748 shares of common stock at an exercise price of $14.57 per
share, which vest over a three-year period, or earlier upon certain defined
liquidity events. The $14.57 exercise price represented the fair value of the
common stock at the date the original Brera commitment was received and the date
the commitment to grant such options was made to the officers.

Additionally, the officers will receive options with a 10-year term to
purchase 559,748 shares of Class B common stock at an exercise price equal to
the initial offering price per share to the public of the Class A common stock
in the stock offering described below. These options vest over a three year
period, or earlier upon certain defined liquidity events.

In connection with the Buford acquisition, Classic Communications paid a
transaction fee of $300,000 to The Austin Advisory, a financial consulting firm
in which a former member of executive management is a principal.

STOCK TRANSACTIONS

In October 1999, the Company approved an amendment to its Certificate of
Incorporation. As a result and contingent on the stock offering discussed below,
all shares of existing voting stock will convert into shares of Class B common
stock and the terms of the nonvoting shares will be amended. In addition, a new
class of common stock, Class A common stock, was authorized. The shares of
voting common stock will be converted to Class B common stock on a one-for-one
basis. Each share of Class A common stock will receive one vote per share. Each
share of Class B stock will receive ten votes per share.

STOCKHOLDERS' AGREEMENT

Effective July 28, 1999, significant stockholders of the Company's
outstanding stock entered into the 1999 stockholders' agreement which subjects
the equity securities owned by these stockholders to a right of first offer to
the Company and to other stockholders party to the stockholders' agreement. The
agreement also contains preemptive purchase rights in favor of these
stockholders in the event the Company issues or sells additional securities,
other than in an initial public offering. The 1999 stockholders' agreement
replaces the 1995 stockholders' agreement.

F-21
<PAGE> 138
CLASSIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK OPTION GRANTS AND THE 1999 OMNIBUS STOCK INCENTIVE PLAN

In August 1999, options to purchase 589,500 shares of Class A common stock
were issued to a director and certain officers and key employees. These options
have 10-year terms and vest ratably over four years.

In October 1999, the 1999 Omnibus Stock Incentive Plan was adopted
contingent on the stock offering discussed below. Two million shares of Class A
stock are reserved for issuance under the plan. The plan provides for the
issuance of stock-based incentive awards, including stock options, stock
appreciation rights, restricted stock, deferred stock and performance shares. An
award may consist of one arrangement or benefit or two or more of them in tandem
or in the alternative. Under this plan, awards covering no more than 80% of the
shares reserved for issuance under the plan may be granted to any participant in
any one year.

STOCK OFFERING

In October 1999, the Board of Directors approved plans for the Company to
register shares of its Class A common stock for sale to the public.

F-22
<PAGE> 139

CLASSIC COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEET

(IN THOUSANDS)
(UNAUDITED)

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
-------------
<S> <C>
Cash and cash equivalents................................... $ 7,497
Accounts receivable, net.................................... 9,281
Prepaid expenses............................................ 1,018
Property, plant and equipment............................... 284,743
Less accumulated depreciation............................... (54,517)
---------
230,226
Deferred financing costs, net............................... 21,501
Intangible assets:
Subscriber relationships.................................. 190,753
Franchise rights.......................................... 171,834
Noncompete agreements..................................... 16,555
Goodwill.................................................. 42,473
---------
421,615
Less accumulated amortization............................... (83,662)
---------
337,953
---------
Total assets......................................... $ 607,476
=========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Accounts payable.......................................... $ 599
Subscriber deposits and unearned income................... 7,513
Accrued expenses.......................................... 13,475
Accrued interest.......................................... 6,501
Long-term debt............................................ 522,842
Deferred taxes, net....................................... 48,674
---------
Total liabilities.................................... 599,604
Stockholders' equity:
Common stock, voting...................................... 82
Common stock, nonvoting................................... 15
Additional paid-in capital................................ 126,103
Accumulated deficit....................................... (118,328)
---------
Total stockholders' equity........................... 7,872
---------
Total liabilities and stockholders' equity........... $ 607,476
=========
</TABLE>

See accompanying notes.

F-23
<PAGE> 140

CLASSIC COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30
-------------------
1999 1998
---- ----
<S> <C> <C>
Revenues.................................................... $ 72,391 $ 50,404
Operating expenses:
Programming............................................... 19,272 12,891
Plant and operating....................................... 8,046 6,063
General and administrative................................ 11,273 8,168
Marketing and advertising................................. 955 555
Corporate overhead........................................ 9,131 2,758
Depreciation and amortization............................. 32,305 21,682
-------- --------
Total operating expenses............................... 80,982 52,117
-------- --------
Loss from operations........................................ (8,591) (1,713)
Interest expense............................................ (27,851) (17,134)
Other income................................................ 110 121
-------- --------
Loss before income taxes and extraordinary loss............. (36,332) (18,726)
Income tax benefit.......................................... -- 1,719
-------- --------
Loss before extraordinary item.............................. (36,332) (17,007)
Extraordinary loss on extinguishment of debt................ (6,632) (5,524)
-------- --------
Net loss.................................................... $(42,964) $(22,531)
======== ========
Basic and diluted loss applicable to common stockholders.... $(42,964) $(26,942)
======== ========
Basic and diluted loss per share:
Loss applicable to common stockholders before extraordinary
item...................................................... $ (7.85) $ (8.37)
Extraordinary loss on extinguishment of debt................ $ (1.43) $ (2.16)
-------- --------
Loss per share applicable to common stockholders............ $ (9.28) $ (10.53)
======== ========
</TABLE>

See accompanying notes.

F-24
<PAGE> 141

CLASSIC COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
----------------------
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................. $ (42,964) $ (22,531)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Provision for doubtful accounts........................ 916 642
Depreciation........................................... 14,471 8,650
Amortization of intangibles............................ 17,834 13,032
Amortization of deferred financing costs............... 810 802
Discount accretion on long-term debt................... 6,517 1,565
Non-cash compensation.................................. 1,920 776
Deferred tax benefit................................... -- (1,719)
PIK interest on Senior Subordinated Promissory Notes... -- 435
Extraordinary loss..................................... 6,632 5,524
Change in operating assets and liabilities:
Accounts receivable.................................. (1,823) (1,300)
Prepaid expenses..................................... (98) 287
Accounts payable..................................... (1,752) (503)
Subscriber deposits and unearned income.............. 326 1,727
Accrued expenses..................................... 386 (565)
Accrued interest..................................... 618 1,062
--------- ---------
Net cash provided by operating activities................. 3,793 7,884
INVESTING ACTIVITIES
Acquisition of cable television systems................... (291,942) (41,747)
Payments for other intangibles............................ (425) --
Purchase of property, plant and equipment................. (15,971) (7,658)
--------- ---------
Net cash used in investing activities..................... (308,338) (49,405)
FINANCING ACTIVITIES
Proceeds from long-term debt.............................. 420,500 281,208
Repayments of long-term debt.............................. (187,377) (190,292)
Repayment of subordinated indebtedness.................... -- (4,458)
Repayment of promissory notes............................. -- (650)
Payment of premium on redeemed notes...................... (860) --
Financing costs........................................... (18,704) (8,884)
Redemption of preferred stock............................. -- (31,023)
Cash dividends paid on preferred stock.................... -- (93)
Sales of common stock..................................... 95,704 50
Repurchase of common stock................................ -- (125)
--------- ---------
Net cash provided by financing activities................. 309,263 45,733
--------- ---------
Change in cash and cash equivalents....................... 4,718 4,212
Cash and cash equivalents at beginning of period.......... 2,779 616
--------- ---------
Cash and cash equivalents at end of period................ $ 7,497 $ 4,828
========= =========
</TABLE>

See accompanying notes.

F-25
<PAGE> 142

CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Classic
Communications, Inc. ("CCI"), have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three- and nine-month periods ended September 30, 1999 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999.

2. ACCOUNTS RECEIVABLE

The activity in CCI's allowance for doubtful accounts for the nine months
ending September 30, 1999 and 1998 is as follows (in thousands):

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
FOR THE NINE MONTHS ENDED OF PERIOD EXPENSES DEDUCTIONS PERIOD
------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
September 30, 1999............. $737 $916 $(915) $738
September 30, 1998............. 262 642 (581) 323
</TABLE>

3. INCOME TAXES

CCI did not record an income tax benefit for the nine months ended
September 30, 1999. The effective tax rates for the nine months ended September
30, 1999 and September 30, 1998 differ primarily due to an increase in the
valuation allowance on deferred tax assets. CCI believes it is more likely than
not that such deferred tax assets will not be utilized in the near term.

CCI's benefit for income taxes differs from the amount computed by applying
the statutory rate to loss before income taxes primarily due to the impact of
permanent differences, an increase in the valuation allowance and other items as
discussed above.

F-26
<PAGE> 143
CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1999 1998
-------- --------
<S> <C> <C>
Loss before extraordinary item.............................. $(36,332) $(17,007)
Preferred stock dividends................................... -- (2,542)
Accretion of discount on preferred stock.................... -- (1,869)
-------- --------
Loss applicable to common stockholders before extraordinary
item...................................................... $(36,332) $(21,418)
======== ========
Net loss.................................................... $(42,964) $(22,531)
Preferred stock dividends................................... -- (2,542)
Accretion of discount on preferred stock.................... -- (1,869)
-------- --------
Loss applicable to common stockholders...................... $(42,964) $(26,942)
======== ========
Weighted-average shares outstanding......................... 4,937 2,870
Less unvested portion of restricted stock................... (307) (312)
-------- --------
Adjusted weighted-average shares outstanding................ 4,630 2,558
======== ========
Basic and diluted loss per share:
Loss applicable to common stockholders before extraordinary
item...................................................... $ (7.85) $ (8.37)
Extraordinary loss on extinguishment of debt................ (1.43) (2.16)
-------- --------
Loss per share applicable to common stockholders............ $ (9.28) $ (10.53)
======== ========
</TABLE>

Warrants to purchase 335,853 shares of common stock at $.001 per share
outstanding during 1999 and 1998 were not included in the computation of diluted
earnings per share as the effect of their exercise would be antidilutive.
Options to purchase 559,748 and 589,500 shares of common stock at an exercise
price of $14.57 and $20.00 per share, respectively, granted in 1999 were not
included in the computation of diluted earnings per share as the effect of their
exercise would be antidilutive.

5. BUFORD ACQUISITION

On July 28, 1999, CCI's wholly-owned subsidiary, Classic Cable, acquired
all of the outstanding stock and partnership interests of the Buford Group,
Inc., for approximately $300 million in cash. The acquisition was financed
through (a) the $95.7 million capital contribution from Brera Classic, LLC
("Brera") described in the Equity Investment section below, (b) the proceeds
from Classic Cable's 1999 credit facility and (c) the proceeds from a private
debt offering of $150 million of Classic Cable's 9.375% senior subordinated
notes, which were registered in August 1999 as described below. The transaction
is accounted for as a purchase transaction and the assets and liabilities
assumed are recorded at fair value.

The following summarized unaudited pro forma financial information assumes
the Buford acquisition had occurred on January 1, 1999 and 1998, respectively
and that the acquisition of certain systems of Cable One had occurred on January
1, 1998. The following pro forma information is not necessarily indicative of
the results that would have occurred had the

F-27
<PAGE> 144
CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

transaction been completed at the beginning of the period indicated, nor is it
indicative of future operating results (in thousands, except per share data):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1999 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
Revenues.................................................... $117,292 $108,612
Net loss before extraordinary item.......................... (41,780) (22,234)
Net loss.................................................... (48,412) (27,758)
Basic and diluted loss per share............................ $ (4.97) $ (2.97)
</TABLE>

The allocation of purchase price reflected in the September 30, 1999
consolidated balance sheet is preliminary. CCI has arranged to obtain an
independent valuation of the Buford Group, Inc.'s property, plant and equipment
and intangible assets. Management expects to receive the completed report during
the fourth quarter of 1999.

6. LONG-TERM DEBT

The Company's long-term debt consists of the following as of September 30,
1999 (in thousands):

<TABLE>
<S> <C>
13 1/4% senior discount notes............................ $114,000
Discount on 13 1/4% senior discount notes................ (45,488)
9 7/8% senior subordinated notes......................... 39,005
Discount on 9 7/8% senior subordinated notes............. (160)
9 3/8% senior subordinated notes......................... 150,000
The 1999 credit facility................................. 265,000
Other.................................................... 485
--------
Total long-term debt........................... $522,842
========
</TABLE>

REGISTRATION OF DEBT

On August 24, 1999, the Registration Statements related to the Classic
Cable 9.875% subordinated notes due in 2008 and the Classic Communications
13.25% senior discount notes due 2009 were declared effective with the
Securities and Exchange Commission. On September 3, 1999, the Registration
Statement of the Classic Cable 9.375% senior subordinated notes due 2009 was
declared effective.

CHANGE OF CONTROL OFFERS

Pursuant to the change of control resulting from the Brera investment
discussed below, and in accordance with the indentures of the note agreement,
CCI and Classic Cable offered to redeem all of their outstanding 9.875% senior
subordinated notes due 2008 and 13.25% senior discount notes due 2009. Classic
Cable redeemed $86 million of the 9.875% senior subordinated notes due 2008 at
101% of face value plus accrued interest. This resulted in an extraordinary loss
from the early extinguishment of debt in the third quarter of 1999 equal to the
amount of the unamortized discount and financing costs on the notes and the 1%
premium paid. Classic Cable borrowed $90.0 million under its credit facility to
repurchase the tendered 2008 senior

F-28
<PAGE> 145
CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

subordinated notes and to pay associated fees and expenses incurred as a result
of the change of control offer. None of the 13.25% senior discount notes were
tendered for redemption.

1999 CREDIT FACILITY

Classic Cable entered into a $350 million credit facility in July 1999. The
facility is composed of a Revolving Credit Facility of $75 million, Term Loan A
of $75 million, Term Loan B of $100 million and a Term Loan C of $100 million.
Interest is based upon either a LIBOR rate plus an applicable margin or, at
Classic Cable's option, a base rate plus an applicable margin.

7. EQUITY

EQUITY INVESTMENT

On July 28, 1999, CCI sold 6,490,734 shares, or 64% of its voting common
stock to Brera for $100 million. The proceeds were distributed as follows: $95.7
million was contributed to Classic Cable, $3.3 million was paid to Brera
pursuant to management and advisory fee agreements, and approximately $750,000
was paid to Brera as reimbursement for certain of its fees and expenses incurred
in connection with the investment. The agreement further provides that CCI is to
pay an annual management fee of $250,000 to Brera until CCI is sold or closes an
initial public offering, the first payment of which was made at the closing of
the Buford agreement.

STOCKHOLDERS' AGREEMENT

Effective July 28, 1999, significant stockholders of CCI's outstanding
stock entered into the 1999 stockholders' agreement which subjects the equity
securities owned by these stockholders to a right of first offer to CCI and to
other stockholders party to the stockholders' agreement. The agreement also
contains preemptive purchase rights in favor of these stockholders in the event
CCI issues or sells additional securities, other than in an initial public
offering. The 1999 stockholders' agreement replaces the 1995 stockholders'
agreement.

STOCK OPTION GRANTS

In August 1999, options to purchase 589,500 shares of Class A common stock
were issued to a director and certain officers and key employees at an exercise
price of $20.00 per share. These options have 10-year terms and vest ratably
over four years.

8. RELATED PARTY TRANSACTIONS

In accordance with various provisions of executive management's employment
agreements, CCI made payments totaling approximately $5 million in relation to
the Buford acquisition and change of control that resulted from the Brera equity
investment. All payments to management were treated as a current period cost in
the third quarter of 1999.

In connection with the closing of the Brera equity investment, certain
officers of CCI were granted stock options with a 10-year term to purchase
559,748 shares of common stock at an exercise price of $14.57 per share, which
vest over a three-year period, or earlier upon certain defined liquidity events.
The $14.57 exercise price represented the fair value of the common stock at the
date the original Brera commitment was received and the date the commitment to
grant such options was made to the officers.

Additionally, the officers will receive options with a 10-year term to
purchase 559,748 shares of Class B common stock at an exercise price equal to
the initial offering price per share to the

F-29
<PAGE> 146
CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

public of the Class A common stock in the stock offering described below. These
options vest over a three year period, or earlier upon certain defined liquidity
events.

In connection with the Buford acquisition, CCI paid a transaction fee of
$300,000 to The Austin Advisory, a financial consulting firm in which a former
member of executive management is a principal.

9. SUBSEQUENT EVENTS

STAR ACQUISITION

On October 14, 1999, an indirect subsidiary of CCI entered into an
agreement with Star Cable Associates ("Star"), to purchase substantially all of
the assets of Star for approximately $110 million in cash and (1) $20 million in
Series A cumulative redeemable convertible preferred stock (the "Preferred
Stock") or (2), in the event of the consummation of the initial public offering
("IPO") of CCI's Class A voting common stock ("Class A Common Stock") prior to
the closing of the Star acquisition, 555,555 shares of Class A Common Stock of
CCI. The Preferred Stock would have a stated value of $1,000 per share and rank
senior to all classes of junior stock. The holders of the Preferred Stock would
be entitled to cumulative cash dividends at a rate of 6% per annum for the first
18 months from the date of issuance, 8% per annum for the 19th month through the
23rd month from the date of issuance and 10% per annum for the 24th month and
thereafter from the date of issuance, which dividends would be payable in two
semi-annual installments on the last day of June and December of each year. All
Preferred Stock would be converted into shares of Class A Common Stock in the
event of the closing of an initial public offering at a conversion price of
$36.00 per share. CCI would be able to convert all of the Preferred Stock at any
time two years after the date of issuance of the Preferred Stock at a conversion
price of $32.00 per share.

STOCK TRANSACTIONS

In October 1999, CCI approved an amendment to its Certificate of
Incorporation. As a result and contingent on the stock offering discussed below,
all shares of existing voting stock will convert into shares of Class B common
stock and the terms of the nonvoting shares will be amended. In addition, a new
class of common stock, Class A, will be authorized. The shares of voting common
stock will be converted to Class B common stock on a one-for-one basis. Each
share of Class A common stock will receive one vote per share. Each share of
Class B stock will receive ten votes per share.

THE 1999 OMNIBUS STOCK INCENTIVE PLAN

In October 1999, the 1999 Omnibus Stock Incentive Plan was adopted
contingent on the stock offering discussed below. Two million shares of Class A
common stock are reserved for issuance under the plan. The plan provides for the
issuance of stock-based incentive awards, including stock options, stock
appreciation rights, restricted stock, deferred stock and performance shares. An
award may consist of one arrangement or benefit or two or more of them in tandem
or in the alternative. Under this plan, awards covering no more than 80% of the
shares reserved for issuance under the plan may be granted to any participant in
any one year.

F-30
<PAGE> 147
CLASSIC COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK OFFERING

In October 1999, the Board of Directors approved plans for CCI to register
shares of its Class A common stock for sale to the public.

F-31
<PAGE> 148

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Buford Group, Inc.:

We have audited the accompanying consolidated balance sheets of Buford
Group, Inc. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Buford
Group, Inc. and subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998 in conformity with generally accepted accounting
principles.

KPMG LLP

Dallas, Texas
March 5, 1999

F-32
<PAGE> 149

BUFORD GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash and cash equivalents................................... $ 7,903 $ 7,890
Accounts receivable, net.................................... 2,878 2,514
Prepaid expenses............................................ 166 342
Property, plant and equipment............................... 200,727 166,886
Less accumulated depreciation and amortization.............. (87,483) (71,198)
-------- --------
113,244 95,688
Intangible assets:
Franchise rights.......................................... 54,417 35,767
Noncompetition agreements................................. 7,434 7,434
Excess cost over net assets of acquired companies......... 2,114 2,114
Other..................................................... 2,116 2,031
-------- --------
66,081 47,346
Less accumulated amortization............................. (16,705) (12,001)
-------- --------
49,376 35,345
Other assets................................................ 2,386 2,153
-------- --------
$175,953 $143,932
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 1,033 $ 1,209
Deposits and unearned revenues.............................. 2,234 1,984
Accrued expenses............................................ 8,642 7,052
Long-term obligations....................................... 118,000 85,000
Deferred federal income taxes............................... 1,238 1,763
-------- --------
Total liabilities...................................... 131,147 97,008
-------- --------
Stockholders' equity:
Common stock, $1 par value. Authorized 2,000 shares;
issued and outstanding 1,000 shares.................... 1 1
Additional capital........................................ 14,833 6,945
Retained earnings......................................... 29,972 39,978
-------- --------
Total stockholders' equity............................. 44,806 46,924
Commitments and contingencies...............................
-------- --------
$175,953 $143,932
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-33
<PAGE> 150

BUFORD GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cable television revenues.................................. $ 70,475 $58,136 $49,561
Operating expenses:
Programming.............................................. 18,339 14,349 11,596
Plant and operating...................................... 6,937 6,567 5,705
General and administrative............................... 16,183 14,910 12,557
Marketing and advertising................................ 345 174 176
Corporate overhead....................................... 9,364 4,858 2,898
Depreciation and amortization............................ 21,399 17,753 17,175
-------- ------- -------
72,567 58,611 50,107
-------- ------- -------
Operating loss........................................ (2,092) (475) (546)
-------- ------- -------
Other income (expense):
Interest expense......................................... (7,919) (5,787) (5,345)
Interest income.......................................... 307 324 521
Gain (loss) on sales of assets........................... (165) 829 5,655
Other, net............................................... (363) (294) (414)
-------- ------- -------
(8,140) (4,928) 417
-------- ------- -------
Loss before income taxes.............................. (10,232) (5,403) (129)
Income tax benefit (expense)............................... 226 315 (94)
-------- ------- -------
Net loss.............................................. $(10,006) $(5,088) $ (223)
======== ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-34
<PAGE> 151

BUFORD GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
COMMON ADDITIONAL RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------ ---------- -------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995.......... $1 $ 1,968 $45,289 $ 47,258
Employee stock appreciation........... -- 1,458 -- 1,458
Net loss.............................. -- -- (223) (223)
-- ------- -------- --------
Balance at December 31, 1996.......... 1 3,426 45,066 48,493
Employee stock appreciation........... -- 3,519 -- 3,519
Net loss.............................. -- -- (5,088) (5,088)
-- ------- -------- --------
Balance at December 31, 1997.......... 1 6,945 39,978 46,924
Employee stock appreciation........... -- 7,888 -- 7,888
Net loss.............................. -- -- (10,006) (10,006)
-- ------- -------- --------
Balance at December 31, 1998.......... $1 $14,833 $29,972 $ 44,806
== ======= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-35
<PAGE> 152

BUFORD GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss................................................ $(10,006) $ (5,088) $ (223)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization...................... 21,399 17,753 17,175
Non-cash interest expense.......................... 171 168 --
(Gain) loss on sales of assets..................... 165 (829) (5,655)
Employee stock appreciation expense................ 7,888 3,519 1,458
Deferred federal income tax expense (benefit)...... (525) (449) 94
Changes in assets and liabilities, excluding
acquisitions and dispositions:
Accounts receivable........................... (364) (1,031) 484
Prepaid expenses.............................. 176 (30) (47)
Federal income taxes receivable............... -- -- 1,040
Accounts payable and accrued expenses......... 1,414 1,908 (522)
Deposits and unearned revenue................. 250 1,418 79
Other......................................... (234) (467) (255)
-------- -------- --------
Net cash provided by operating activities..... 20,334 16,872 13,628
-------- -------- --------
Cash flows from investing activities:
Acquisitions of cable systems........................... (29,900) (17,771) (18,350)
Additions to property, plant and equipment.............. (20,469) (22,042) (15,593)
Additions to intangible assets.......................... (3,139) (1,098) --
Net proceeds from sale of assets........................ 357 -- --
Net proceeds from disposition of cable systems.......... -- 1,228 13,654
-------- -------- --------
Net cash used in investing activities......... (53,151) (39,683) (20,289)
-------- -------- --------
Cash flows from financing activities:
Proceeds from long-term obligations..................... 33,000 25,000 4,260
Payments of long-term obligations....................... -- (53) (14,850)
Payment of debt issuance costs.......................... (170) -- (337)
-------- -------- --------
Net cash provided by (used in) financing
activities................................. 32,830 24,947 (10,927)
Net increase (decrease) in cash and cash equivalents...... 13 2,136 (17,588)
Cash and cash equivalents at beginning of year............ 7,890 5,754 23,342
-------- -------- --------
Cash and cash equivalents at end of year.................. $ 7,903 $ 7,890 $ 5,754
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-36
<PAGE> 153

BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) ORGANIZATION

Buford Group, Inc. and subsidiaries (the "Company") are engaged in cable
television operations within the United States. The Company owns and operates
cable television systems primarily in Texas, Louisiana, Arkansas, and Missouri.

(b) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Buford Group,
Inc. and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

During 1998, the Company purchased the remaining 76.8% of Friendship Cable,
Ltd. ("FCL"), a Texas limited partnership in which the Company had held a 1%
general partner interest and limited partner interests aggregating 22.2%. The
accounts of FCL for 1998 and 1997 are consolidated because the Company, as
general partner, is required to fund deficits incurred during the period from
inception to January 1, 2000, and certain shareholders of the Company controlled
the limited partner interests of FCL through the date of the Company's
acquisition of the remaining interests. In prior years, allocated net losses to
the limited partners had reduced their capital accounts to zero.

Revenues from basic and premium services are recognized when the related
services are provided.

Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable television system.

(d) STATEMENTS OF CASH FLOWS

The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

The Company uses the indirect method to present cash flows from operating
activities. Supplemental disclosures of cash flow information follow:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Interest paid............................................. $7,593,000 $4,588,000
========== ==========
Income taxes paid......................................... $ 250,000 $ 59,000
========== ==========
</TABLE>

(e) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost, including all direct
cost and certain indirect costs of construction of cable television transmission
and distribution systems, and the cost of new customer installations.
Maintenance and repairs are charged to expense as incurred and equipment
replacements and betterments are capitalized. The Company charges

F-37
<PAGE> 154
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

depreciation to operations on a straight-line basis over the estimated useful
lives of the related property and equipment as follows:

<TABLE>
<S> <C>
Cable distribution equipment......................... 3 - 12 years
Furniture, fixtures, automobiles and other........... 3 - 12 years
Buildings and improvements........................... 5 - 20 years
</TABLE>

(f) INTANGIBLE ASSETS

The excess cost over net identifiable tangible and intangible assets of
acquired companies is being amortized on a straight-line basis over the
estimated economic lives of 40 years. Franchise rights purchased in connection
with cable television operations are being amortized on a straight-line basis
over 5 to 15 years. The costs of noncompetition agreements are being amortized
on a straight-line basis over the terms of the respective agreements.

The Company assesses the recoverability of intangible assets as well as the
related amortization lives by determining whether the carrying value of the
intangible assets can be recovered over the remaining lives through projected
undiscounted future cash flows. To the extent that such projections indicate
that undiscounted future cash flows are not expected to be adequate to recover
the carrying amounts of the related intangible assets, such carrying amounts are
adjusted for impairment to a level commensurate with the estimated fair value of
the underlying assets.

(g) FEDERAL INCOME TAXES

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount more likely than not to be realized.
Income tax expense is the total of tax payable for the period and the change
during the period in deferred tax assets and liabilities.

(h) DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE

The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Any derivative financial
instruments are used to manage well-defined interest rate risks related to the
Company's outstanding debt.

Any costs of interest rate agreements are initially recognized as assets
and amortized to interest expense over the lives of the agreements using the
interest method. Under all interest rate agreements, the differential to be paid
or received is recognized as an adjustment to interest expense. During the years
ended December 31, 1998, 1997 and 1996, the Company recognized net expenses of
$39,000, $38,000 and $59,000, respectively, under its interest rate agreements
(see note 6).

The carrying amounts of cash equivalents, accounts receivable and accounts
payable reported in the accompanying consolidated financial statements
approximate fair value due to their short maturities. The outstanding borrowings
under the Company's credit agreement (note 6) bear interest at current market
rates, and thus, the carrying amount of debt approximates estimated fair value.
The fair value of the interest rate agreements (note 6) was

F-38
<PAGE> 155
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approximately $(449,000) at December 31, 1998, which represents the estimated
amount, based on dealer quotations, that the Company would pay, excluding
accrued interest, to terminate the contracts at December 31, 1998, taking into
account the current unrealized loss on open contracts.

(i) 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.

(j) COMPREHENSIVE INCOME

The Company adopted the provisions of Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income," in the first
quarter of 1998, which required companies to disclose comprehensive income
separately from net income. Comprehensive income is defined as the change in
equity during a period from transactions and other events and circumstances from
non-ownership sources. It includes all changes in equity during a period, except
those resulting from investments by owners and distributions to owners. The
adoption of this statement had no effect on the Company at December 31, 1998,
because the Company has no elements of other comprehensive income. Accordingly,
comprehensive income and net income are the same amount for each period
presented.

(2) ACQUISITIONS AND DISPOSITIONS

In April 1998, the Company acquired cable systems from three unaffiliated
parties for $29.9 million. In April and May 1997, the Company acquired cable
systems from unaffiliated parties for $17.8 million. During 1996, the Company
acquired cable systems from unaffiliated parties for $18.4 million.

The acquisitions were accounted for as purchases and, accordingly, the
purchase prices were allocated to tangible and intangible assets based on
estimated fair values at the dates of the acquisitions. Operating results of the
acquired systems are included in the accompanying financial statements from the
dates of acquisition. Net assets acquired as a result of these acquisitions
included $15.6 million, $7.4 million and $7.0 million in franchise rights and
$14.3 million, $10.4 million and $11.4 million in property, plant and equipment
during 1998, 1997 and 1996, respectively.

On October 1, 1996, the Company sold all of its cable television systems
operating in North Carolina for a cash purchase price of $11.8 million,
resulting in a gain of $4.7 million. Additionally, on October 1, 1996, the
Company sold cable television system assets of a consolidated partnership
(70%-owned) for a total cash price of $2.1 million, resulting in a gain of
$717,000.

In September 1998, the Company acquired the remaining 76.8% of FCL for $2.8
million. The Company accounted for this transaction as a purchase business
combination, and accordingly, allocated the purchase price to FCL's assets
(primarily intangible assets) based on their estimated fair values.

Unaudited pro forma operating results as though the 1998 and 1997
acquisitions discussed above had occurred on January 1, 1997, with adjustments
to give effect to amortization of

F-39
<PAGE> 156
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

franchises, depreciation of property, plant and equipment, interest expense and
certain other adjustments is as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
Revenues.................................................... $ 73,531 $67,354
Operating income (loss)..................................... (1,630) 1,801
Net loss.................................................... (10,177) (4,831)
</TABLE>

(3) ACCOUNTS RECEIVABLE

Accounts receivable consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
---- ----
<S> <C> <C>
Accounts receivable, trade.................................. $2,665 $2,417
Accounts receivable, other.................................. 627 554
------ ------
3,292 2,971
Less allowance for doubtful accounts........................ (414) (457)
------ ------
$2,878 $2,514
====== ======
</TABLE>

(4) OTHER ASSETS

The Company is the named beneficiary on life insurance policies for key
management members. The cash surrender value of the policies is recorded net of
policy loans of $5,977,000 and $5,553,000 at December 31, 1998 and 1997,
respectively. The net amounts of $2,153,000 and $1,837,000 at December 31, 1998
and 1997, respectively, are included in other assets in the accompanying
consolidated balance sheets.

(5) PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment and accumulated depreciation and
amortization follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
Cable distribution equipment................................ $188,264 $155,119
Furniture, fixtures, automobiles and other.................. 8,572 7,520
Buildings, land and improvements............................ 3,891 4,247
-------- --------
200,727 166,886
Less accumulated depreciation and amortization.............. (87,483) (71,198)
-------- --------
Property, plant and equipment, net..................... $113,244 $ 95,688
======== ========
</TABLE>

(6) LONG-TERM OBLIGATIONS

The Company had outstanding borrowings of $118,000,000 and $85,000,000 at
December 31, 1998 and 1997, respectively, under a credit agreement with banks
providing for up to $140,000,000 of borrowings. Borrowings bear interest at the
bank's floating rate, the London

F-40
<PAGE> 157
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Interbank Offered Rate ("LIBOR"), or a combination thereof as selected by the
Company, plus a margin dependent on the Company's leverage ratio (as defined in
the credit agreement). The weighted average effective interest rate at December
31, 1998 and 1997 was 6.75%. The Company must pay an annual commitment fee
ranging from .25% to .375% of the unfunded portion of the commitment. Borrowings
under the credit agreement are secured by the common stock of the Company and
its subsidiaries. The credit agreement contains certain provisions which limit
the Company as to additional indebtedness, sales of assets, liens, guarantees,
investments and acquisitions. Additionally, the Company must maintain certain
specified financial ratios.

On April 30, 1998, the bank amended the credit agreement to extend the
final maturity date to June 30, 2005. Beginning September 30, 1999, and
quarterly thereafter through June 30, 2005, the commitment amount is to be
reduced by quarterly amounts ranging from $2,655,000 to $12,685,000.
Additionally, on or before April 30 of each year, commencing April 30, 2000, the
Company is required to make mandatory payments equal to 50% of the excess cash
flow for the previous fiscal year, if any, as defined in the credit agreement.

In accordance with the credit agreement, the Company has interest rate
agreements with various banks to reduce the impact of changes in interest rates.
At December 31, 1998, the Company had three interest rate collar agreements
expiring in May 1999, October 1999 and June 2000 with a bank covering notional
principal amounts of $10,000,000, $10,000,000 and $15,000,000, respectively.
These agreements have maximum cap rates of 8.20%, 7.50% and 6.55%, respectively,
and each has a minimum floor rate of 5.65%. The Company also had an interest
rate swap agreement with a bank covering a notional amount of $25,000,000, with
a fixed rate of 5.73%, which expires in January 2000.

The Company is exposed to credit loss in the event of nonperformance of the
other parties to the above agreements; however, the Company does not anticipate
nonperformance by such counterparties.

As of December 31, 1998, principal payments due on indebtedness in future
years was as follows (in thousands):

<TABLE>
<S> <C>
1999..................................................... $ 5,310
2000..................................................... 10,620
2001..................................................... 15,340
2002..................................................... 18,880
Thereafter............................................... 67,850
</TABLE>

(7) ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
---- ----
<S> <C> <C>
Accrued programming......................................... $2,970 $1,312
Accrued property taxes...................................... 1,704 1,389
Accrued payroll and benefits................................ 1,279 1,764
Accrued interest............................................ 514 938
Accrued other............................................... 2,175 1,649
------ ------
$8,642 $7,052
====== ======
</TABLE>

F-41
<PAGE> 158
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(8) INCOME TAXES

Income tax expense (benefit) for the years ended December 31, 1998, 1997
and 1996 includes the following (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current -- State.......................................... $ 250 $ 134 $--
Current -- Federal........................................ 49 -- --
Deferred -- Federal....................................... (525) (449) 94
----- ----- ---
$(226) $(315) $94
===== ===== ===
</TABLE>

Actual income tax expense (benefit) differs from the "expected" income tax
expense (benefit) (computed by applying the U.S. federal corporate tax rate of
35% to the loss before income taxes) as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Computed expected tax benefit......................... $(3,581) $(1,891) $ (45)
Change in the valuation allowance..................... 394 328 1
Revision of prior year estimate....................... 299 -- (252)
Employee stock appreciation........................... 2,760 1,231 509
Other................................................. (98) 17 (119)
------- ------- -----
$ (226) $ (315) $ 94
======= ======= =====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1998 and 1997 are presented as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 8,616 $ 5,992
Alternative minimum tax credit carryforwards.............. 5,692 5,692
Investment in partnerships................................ -- 1,593
Deferred compensation..................................... -- 116
Other..................................................... 968 670
------- -------
Total gross deferred tax assets...................... 15,276 14,063
Less valuation allowance.................................. (4,764) (4,370)
------- -------
Net deferred tax assets.............................. 10,512 9,693
------- -------
Deferred tax liabilities:
Property and equipment, principally due to differences in
depreciation........................................... $11,118 $10,898
Other..................................................... 632 558
------- -------
Total gross deferred tax liabilities................. 11,750 11,456
------- -------
Net deferred tax liability........................... $(1,238) $(1,763)
======= =======
</TABLE>

The net changes in the valuation allowance for 1998, 1997 and 1996 were
increases of $394,000, $328,000, and $1,000, respectively. The Company has
recognized deferred tax assets

F-42
<PAGE> 159
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to the extent such assets can be realized through future reversals of existing
temporary differences.

At December 31, 1998, the Company had approximately $24,596,000 of tax net
operating loss carryforwards which expire in years 2007 through 2012. In
addition, the Company had approximately $5,700,000 of alternative minimum tax
credit carryforwards available to reduce future regular federal income taxes
over an indefinite period.

(9) LEASE OBLIGATIONS

Total rental expense for operating leases was $1,427,000, $1,433,000 and
$1,264,000 in 1998, 1997 and 1996, respectively. Included in these amounts are
payments for pole rental agreements amounting to $1,313,000, $1,306,000 and
$1,102,000 in 1998, 1997 and 1996, respectively. Pole rental agreements may be
terminated by either party by written notice ranging up to ninety days. The
remaining operating lease agreements are primarily for office space and annual
minimum aggregate rentals under such leases are not considered material.

(10) EMPLOYEE BENEFIT PLANS

In January 1992, the Company established a savings plan to provide elective
employee and employer contributions under Section 401(k) of the Internal Revenue
Code. Under the terms of the plan, the Company may make voluntary contributions
to the plan matching employee contributions in percentages and discretionary
amounts as determined by the Board of Directors. The Company made matching and
discretionary contributions to the plan of $423,000, $459,000 and $397,000 in
1998, 1997 and 1996, respectively.

Under the terms of the Buford Television Partnership Agreement (the
"Agreement") effective January 1, 1994, a new partnership, Buford Television
Partnership ("BTP"), was formed to hold the outstanding shares of the Company.
Under the terms of this Agreement, the stockholders on January 1, 1994
contributed 100% of their shares to the Partnership. Key employees were granted
12% ownership of future appreciation in the market value of the Company's common
stock, as defined in the Agreement, through appreciation percentages. These
appreciation percentages have none of the rights associated with ownership of
the common stock of the Company, such as voting or dividend rights, and will
have no value outside the context of the Agreement. However, the partners of
BTP, which include the key employees, have voting rights in the management of
BTP, the purpose of which is to acquire, manage, vote, pledge, hold and dispose
of the Company's stock and to perform all duties necessary to accomplish the
purposes of BTP. On December 1, 1997, the Agreement was amended whereby 620
shares of the Company's common stock were withdrawn from BTP by the principal
stockholders, leaving BTP with 380 shares of the Company's common stock, or 38%
ownership. However, the aforementioned key employees still retain 12% ownership
of the future appreciation in the market value of 100% of the Company's common
stock. Participants have vested 20% each year in the accumulated value of their
appreciation percentages, and became fully vested as of December 31, 1998. The
Company records expense for the accumulated value of the common stock
appreciation based on vesting criteria over the five year vesting period, and
subsequently, will continue to record expense based on the fully vested status
of the key employees and changes in fair value of the Company's common stock.
For the years ended December 31, 1998, 1997 and 1996, the Company recognized
$7,888,000, $3,519,000 and $1,458,000, respectively, in expense related to the
Agreement. The cumulative amount recorded pursuant to this agreement was
$14,833,000 as of December 31, 1998.

F-43
<PAGE> 160
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has agreements with several employees that provide for amounts
to be paid to such employees in the event of a sale of certain cable systems'
assets. The amounts to be paid are based on several factors, including
historical cash flow. No amounts have been recorded related to these agreements
as the Company has not consummated a sale of any of the cable systems' assets
covered by these agreements.

(11) CONTINGENCIES

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 ("FCC") issued its rate regulation rules which became effective
September 1, 1993. These rate regulation rules required cable systems in
franchised areas serving at least 1,000 customers, which receive certification
and are 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. The
Act also entailed quality service criteria and must carry/retransmission
requirements.

On February 1, 1996, Congress passed The Telecommunications Act of 1996
(the "1996 Act") which was signed into law on February 6, 1996. This new law
altered federal, state and local laws and regulations for telecommunications
providers and services, including the Company. Several aspects of the 1996 Act
impact cable television, including the elimination of regulation of the cable
programming service tier for certain smaller cable providers, including the
Company.

The Company believes that it has complied with all provisions of the 1992
Cable Act and the 1996 Act including the rate setting provisions promulgated by
the FCC.

(12) SUBSEQUENT EVENT (UNAUDITED)

In May 1999, the Company and its stockholders entered into an agreement to
sell all of the common stock of the Company to Classic Cable, Inc. for
approximately $302.3 million.

F-44
<PAGE> 161

BUFORD GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(DOLLARS IN THOUSANDS)

<TABLE>
<S> <C>
ASSETS

Cash and cash equivalents................................... $ 2,890
Accounts receivable, net of allowance for doubtful accounts
of $398................................................... 2,846
Prepaid expenses............................................ 484
Property, plant and equipment............................... 208,268
Less accumulated depreciation and amortization.............. (96,913)
--------
111,355
Intangible assets:
Franchise rights....................................... 54,417
Noncompetition agreements.............................. 7,434
Excess cost over net assets of acquired companies...... 2,114
Other.................................................. 1,089
--------
65,054
Less accumulated amortization.......................... (18,613)
--------
46,441
Other assets................................................ 2,586
--------
$166,602
========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 491
Deposits and unearned revenues.............................. 2,341
Accrued expenses............................................ 7,073
Long-term obligations....................................... 112,000
Deferred federal income taxes............................... 976
--------
Total liabilities................................. 122,881
--------
Stockholders' equity:
Common stock, $1 par value. Authorized 2,000 shares;
issued and outstanding 1,000 shares................... 1
Additional capital..................................... 14,058
Retained earnings...................................... 29,662
--------
Total stockholders' equity........................ 43,721
Commitments and contingencies...............................
--------
$166,602
========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

F-45
<PAGE> 162

BUFORD GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
----------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cable television revenues........................... $19,537 $17,680 $38,398 $32,943
------- ------- ------- -------
Operating expenses:
Programming....................................... 5,213 4,657 10,430 8,762
Plant and operating............................... 1,683 1,688 3,377 3,345
General and administrative........................ 4,301 4,239 8,461 7,936
Marketing and advertising......................... 128 57 237 150
Corporate overhead................................ (430) 2,250 (72) 4,354
Depreciation and amortization..................... 6,378 5,267 12,105 10,137
------- ------- ------- -------
17,273 18,158 34,538 34,684
------- ------- ------- -------
Operating income (loss)........................ 2,264 (478) 3,860 (1,741)
------- ------- ------- -------
Other income (expense):
Interest expense.................................. (2,001) (2,089) (4,095) (3,681)
Interest income................................... 74 90 166 172
Other, net........................................ (175) (77) (244) (99)
------- ------- ------- -------
(2,102) (2,076) (4,173) (3,608)
------- ------- ------- -------
Loss before income taxes and cumulative effect
of change in accounting principle............ 162 (2,554) (313) (5,349)
Income tax benefit (expense)........................ 123 131 210 (25)
------- ------- ------- -------
Loss before cumulative effect of change in
accounting principle......................... 285 (2,423) (103) (5,374)
Cumulative effect of change in accounting principle,
net of income tax benefit of $52.................. -- -- 207 --
------- ------- ------- -------
Net loss....................................... 285 $(2,423) $ (310) $(5,374)
======= ======= ======= =======
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

F-46
<PAGE> 163

BUFORD GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (310) $ (5,374)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization........................ 12,105 10,137
Non-cash interest expense............................ 12 42
Employee stock appreciation expense.................. (775) 3,550
Deferred federal income tax benefit.................. (210) (274)
Cumulative effect of change in accounting
principle........................................... 207 --
Changes in assets and liabilities:
Accounts receivable............................... 32 (718)
Prepaid expenses.................................. (318) (188)
Accounts payable and accrued expenses............. (2,111) 1,272
Deposits and unearned revenues.................... 107 201
Other............................................. (212) (178)
------- --------
Net cash provided by operating activities......... 8,527 8,470
------- --------
Cash flows from investing activities:
Additions to property, plant and equipment................ (7,540) (10,980)
Acquisition of cable systems.............................. -- (29,900)
Other..................................................... -- (89)
------- --------
Net cash used in investing activities............. (7,540) (40,969)
------- --------
Cash flows from financing activities:
Proceeds from long-term obligations....................... -- 30,000
Payments of long-term obligations......................... (6,000) --
------- --------
Net cash provided by (used in) financing
activities...................................... (6,000) 30,000
------- --------
Net decrease in cash and cash equivalents................... (5,013) (2,499)
Cash and cash equivalents at beginning of period............ 7,903 7,890
------- --------
Cash and cash equivalents at end of period.................. $ 2,890 $ 5,391
======= ========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

F-47
<PAGE> 164

BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

(1) GENERAL AND BASIS OF PRESENTATION

(a) ORGANIZATION

Buford Group, Inc. and subsidiaries are engaged in cable television
operations within the United States. The Company owns and operates cable
television systems primarily in Texas, Louisiana, Arkansas, and Missouri.

(b) PRINCIPLES OF CONSOLIDATION

The unaudited condensed consolidated financial statements include the
accounts of Buford Group, Inc. and its subsidiaries (the "Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.

In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of the Company contain all adjustments,
consisting only of those of a normal recurring nature, necessary to present
fairly the Company's financial position as of June 30, 1999, and the results of
operations and cash flows for the three and six months ended June 30, 1999 and
1998. These results are not necessarily indicative of the results to be expected
for the full fiscal year.

(d) USE OF ESTIMATES

(e) COMPREHENSIVE INCOME

(2) RECENT ACCOUNTING PRONOUNCEMENT

The Company adopted the provisions of Statement of Position 98-5 ("SOP
98-5"), "Reporting on the Costs of Start-up Activities," effective as of January
1, 1999. This pronouncement requires that costs of start-up activities,
including organizational costs, should be expensed as incurred. As a result of
adopting SOP 98-5, the Company recorded a charge of $259,000, less tax benefit
of $52,000, as the cumulative effect of recording the change in accounting
principle as of January 1, 1999.

F-48
<PAGE> 165
BUFORD GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)

(3) CONTINGENCIES

The Company believes that it has complied with all provisions of the 1992
Cable Act and the 1996 Act including the rate setting provisions promulgated by
the FCC.

(4) SUBSEQUENT EVENTS

In May 1999, the Company and its shareholders entered into an agreement to
sell the common stock of the Company to Classic Cable, Inc. On July 29, 1999,
the sale was consummated for a total selling price of approximately $297.8
million. In connection with the Buford Television Partnership Agreement (the
"Agreement"), the Buford Television Partnership granted ownership in 12% of
future appreciation in the market value of the Company's common stock, to
certain key employees. At December 31, 1998, the Company had accrued an
estimated liability under this agreement of approximately $14.8 million. The key
employees covered by the Agreement received approximately $14.1 million in
satisfaction of their rights under the agreement at the time of sale.
Accordingly, the Company recorded a credit of approximately $.7 million to
corporate overhead expense during the three months ended June 30, 1999.

Additionally, the Company paid out approximately $2.6 million to certain
employees under separate agreements that provided for payments in the event of
the sale of certain cable systems' assets. The Company has not recognized
expense at June 30, 1999 related to these agreements as such amounts are payable
only upon consummation of a sale of cable system assets and were recognized when
the sale closed.

F-49
<PAGE> 166

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Star Cable Associates

In our opinion, the accompanying balance sheets and the related statements of
operations and changes in partners' capital (deficiency) and cash flows present
fairly, in all material respects, the financial position of Star Cable
Associates at December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania
July 26, 1999

F-50
<PAGE> 167

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS OF DOLLARS)

ASSETS

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 3,013 $ 3,044
Accounts receivable, net.................................. 871 649
Construction materials.................................... 348 400
Prepaid expenses and other current assets................. 194 219
-------- -------
Total current assets.............................. 4,426 4,312
Property, plant and equipment net, (Note 6)................. 50,478 49,710
Deferred financing costs, net............................... 451 249
Intangible assets:
Subscriber lists.......................................... 538 538
Franchise rights.......................................... 8,687 2,994
Noncompete agreements..................................... 1,157 1,157
Goodwill.................................................. 6,585 4,714
Other..................................................... 41 38
-------- -------
17,008 9,441
Less accumulated amortization............................. (6,818) (6,276)
-------- -------
10,190 3,165
-------- -------
Total assets...................................... $ 65,545 $57,436
======== =======

LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)

Current Liabilities:
Accounts payable.......................................... $ 1,250 $ 1,114
Subscriber deposits and unearned income................... 1,012 805
Other accrued liabilities................................. 157 277
Accrued interest payable.................................. 228 185
Management fees payable (Note 12)......................... 120 50
-------- -------
Total current liabilities......................... 2,767 2,431
Deferred installation revenue............................... 235 278
Accrued interest payable -- subordinated debt............... 250 250
Senior debt (Note 7)........................................ 39,000 31,200
Subordinated debt -- Related party (Note 8)................. 35,245 32,209
-------- -------
Total liabilities................................. 77,497 66,368
-------- -------
Commitments and contingencies (Notes 3, 11 and 13)
Partners' capital (deficiency).............................. (11,952) (8,932)
-------- -------
Total liabilities and partners' capital
(deficiency).................................... $ 65,545 $57,436
======== =======
</TABLE>

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

F-51
<PAGE> 168

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

STATEMENTS OF OPERATIONS AND CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues.................................................... $ 18,447 $16,950 $15,902
-------- ------- -------
Operating expenses:
Programming............................................... 5,435 5,016 4,449
CATV system operating costs............................... 2,588 2,536 2,538
General and administrative................................ 1,691 1,603 1,787
Marketing and advertising................................. 230 207 163
Management fees........................................... 644 589 547
Depreciation and amortization............................. 5,393 5,122 5,395
-------- ------- -------
Total operating expenses.......................... 15,981 15,073 14,879
-------- ------- -------
Income from operations...................................... 2,466 1,877 1,023
-------- ------- -------
Other income (expense):
Interest income........................................... 167 192 182
Interest expense (Note 8)................................. (5,652) (5,575) (4,440)
(Loss) gain on sale of assets............................. (1) (5) 714
-------- ------- -------
(5,486) (5,388) (3,544)
-------- ------- -------
Loss before extraordinary item.............................. (3,020) (3,511) (2,521)
Extraordinary item:
Loss on early extinguishment of debt...................... -- (249) --
-------- ------- -------
Net loss.......................................... (3,020) (3,760) (2,521)
Partners' capital (deficiency), beginning of year........... (8,932) (5,172) (2,651)
-------- ------- -------
Partners' capital (deficiency), end of year................. $(11,952) $(8,932) $(5,172)
======== ======= =======
</TABLE>

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

F-52
<PAGE> 169

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $ (3,020) $ (3,760) $(2,521)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 4,854 4,706 4,908
Amortization of intangibles............................ 539 416 487
Amortization of deferred financing costs............... 37 49 45
Accrued interest on subordinated debt -- Related
party................................................ 3,036 3,552 2,457
Extraordinary item -- loss on early extinguishment of
debt................................................. -- 249 --
Loss (gain) on sale of assets.......................... 1 5 (714)
Deferred installation revenue.......................... (43) (111) (95)
Changes in working capital:
Accounts receivable, net............................... (222) 203 (196)
Construction materials................................. 52 24 124
Prepaid expenses and other current assets.............. 25 36 175
Accounts payable....................................... 136 263 (209)
Subscriber deposits and unearned income................ 207 (26) (76)
Other accrued liabilities.............................. (120) (47) (405)
Accrued interest payable............................... 43 (28) 95
Management fees payable................................ 70 4 42
-------- -------- -------
Net cash provided by operating activities......... 5,595 5,535 4,117
-------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of CATV systems.................................. (9,586) -- (585)
Capital expenditures...................................... (3,612) (2,460) (2,750)
Proceeds from sale of other assets........................ 11 10 8
Proceeds from sale of CATV systems, net................... -- -- 902
-------- -------- -------
Net cash used in investing activities............. (13,187) (2,450) (2,425)
-------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility................ 39,000 31,200 --
Repayments of revolving credit facility................... (31,200) (24,250) (750)
Repayments of subordinated debt -- Related party.......... -- (10,650) (1,000)
Expenditures for deferred financing costs................. (239) (257) (161)
-------- -------- -------
Net cash provided by (used in) financing
activities...................................... 7,561 (3,957) (1,911)
-------- -------- -------
Net decrease in cash and cash equivalents................... (31) (872) (219)
Cash and cash equivalents, beginning of year................ 3,044 3,916 4,135
-------- -------- -------
Cash and cash equivalents, end of year...................... $ 3,013 $ 3,044 $ 3,916
======== ======== =======
Supplemental schedule of cash flow information:
Cash interest paid........................................ $ 2,536 $ 1,928 $ 1,653
======== ======== =======
Accrued interest on subordinated debt -- Related party.... $ 3,036 $ 3,552 $ 2,457
======== ======== =======
</TABLE>

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

F-53
<PAGE> 170

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS

1. ORGANIZATION

Star Cable Associates (the Partnership) is a general partnership formed
under the laws of the Commonwealth of Pennsylvania on August 6, 1986 to acquire,
develop and operate community antenna television systems (CATV systems). The
Partnership is governed by the Partnership Agreement and the Pennsylvania
Uniform Partnership Act. The Partnership operates CATV systems in Texas,
Louisiana and Ohio.

Distributions, additional capital contributions and allocations of profits
and losses among the partners are determined in accordance with the provisions
of the Partnership Agreement. The Partnership Agreement also provides the
general partners with the right to acquire each other's respective Partnership
interests under certain conditions. Star Cable Management, Inc. (SCM), is the
managing general partner (Note 12).

2. ACQUISITIONS

In November 1998, the Partnership acquired additional CATV systems in
Louisiana from Galaxy Telecom L.P. (the Galaxy acquisition) for approximately
$9,586,000 in cash, including transaction costs. Based on appraised values,
approximately $2,022,000 of the purchase price was allocated to tangible assets
(primarily distribution systems) and $7,564,000 was allocated to intangible
assets. The purchase price was financed from borrowings under the Partnership's
senior revolving credit facility.

In February 1999, the Partnership acquired certain operating assets of a
CATV system from Illini Cablevision of Sabine, Inc., Illini Cablevision of Fort
Polk, Inc. and Cable West of Louisiana, Inc. (the Illini acquisition) for
approximately $15,000,000 in cash. Based on appraised values, approximately
$4,952,000 of the purchase price has been allocated to tangible assets
(primarily distribution systems) and $10,048,000 has been allocated to
intangible assets. These acquisitions were financed primarily from additional
borrowings of approximately $12,700,000 under the Partnership's revolving credit
facility.

The above acquisitions were accounted for using the purchase method and,
accordingly, the operating results of the systems acquired have been included in
the Partnership's financial statements since the date of acquisition.

The following summarized unaudited pro forma financial information assumes
the Galaxy acquisition had occurred on January 1, 1998 and 1997, respectively,
and the Illini acquisition had occurred on January 1, 1998. The following pro
forma information is not necessarily indicative of the results that would have
occurred had the transaction been completed at the beginning of the period
indicated, nor is it indicative of future operating results (in thousands):

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
-----------------
1998 1997
---- ----
<S> <C> <C>
Revenues.................................................... $24,907 $19,587
Net loss.................................................... $ (871) $(3,540)
</TABLE>

3. CABLE RATE REGULATION

In recent years, the cable television industry has been subject to Federal
Communications Commission (FCC) regulation under the Telecommunications Act of
1996 and, previously, the Cable Television Consumer Protection and Competition
Act of 1992 and related FCC regulations.

F-54
<PAGE> 171
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

On April 1, 1999, programming tier cable television rates were deregulated.
Basic rates remain subject to local rate regulations if the community becomes
certified to regulate through the FCC. The Partnership currently has no
communities actively regulating basic rates.

During the periods the Partnership's cable rates were subject to regulation
under the 1996 Act, the Partnership believes it met the FCC definition for small
system relief from certain of the regulations. During the period its rates were
subject to the 1992 Act, the Partnership generally justified its rates on the
"cost-of-service" basis. In each case, management believes it fairly interpreted
and applied the applicable laws and regulations.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS SEGMENT

The Partnership is primarily engaged in one line of business and has one
industry segment, which is to acquire, develop and operate CATV systems.

REVENUE RECOGNITION

Revenue from cable services includes earned subscriber service revenue and
fees for installations and connections. Subscriber service revenue is recognized
in the period in which the services are provided to the customers. Subscriber
services paid for in advance are recorded as income when earned.

Initial installation revenue is recognized when the service is performed,
to the extent of direct selling costs, with any balance deferred and taken into
income over the estimated average period that subscribers are expected to remain
connected to the system.

INCOME TAXES

The partners are required to report their respective share of the
Partnership's taxable income or loss in their individual income tax returns and
are personally liable for any related taxes thereon. Accordingly, no provision
for income taxes has been made in the accompanying financial statements of the
Partnership.

The Partnership has not provided unaudited pro forma information as if the
Partnership was a taxable entity, since the Partnership would have no income tax
benefit under the provisions of Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," due to the recognition of a full valuation allowance against the
Partnership's net deferred tax assets.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and highly liquid
investments with original maturities of 3 months or less.

CONSTRUCTION MATERIALS

Construction materials are carried at cost and represent electronic
components and other materials purchased to maintain or to construct cable
television systems.

F-55
<PAGE> 172
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost.

Depreciation is computed using the straight-line method over the following
estimated useful lives of the assets:

<TABLE>
<S> <C>
Buildings and improvements............................. 25 years
Cable television distribution systems and plant........ 7-12 years
Equipment.............................................. 5-7 years
Transportation vehicles................................ 5 years
Furniture and fixtures................................. 7 years
</TABLE>

Leasehold improvements are amortized over the shorter of their estimated
life or the period of the related leases.

Initial subscriber costs are capitalized as part of cable television
distribution systems pursuant to industry practice. Costs related to disconnects
and reconnects of customers are expensed as incurred. Maintenance and repair
costs are charged to expense as incurred.

DEFERRED FINANCING COSTS

Deferred financing costs are capitalized and amortized using the interest
method over the term of the related debt.

INTANGIBLE ASSETS

Amounts allocated to specific identifiable intangible assets in connection
with CATV system acquisitions are capitalized and amortized using the
straight-line method over periods ranging as follows:

<TABLE>
<S> <C>
Noncompete agreements.................................. 5-15 years
Subscriber lists....................................... 10 years
Franchise rights....................................... 7 years
Goodwill............................................... 20 years
</TABLE>

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically reviews the carrying amounts of property, plant
and equipment, identifiable intangible assets and goodwill both purchased in the
normal course of business and acquired through acquisition to determine whether
current events or circumstances, as defined in SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
warrant adjustments to such carrying amounts by considering, among other things,
the future cash inflows expected to result from the use of the asset and its
eventual disposition less the future cash outflows expected to be necessary to
obtain those inflows. At this time, future cash inflows exceed future cash
outflows; thus, no impairment loss has been
recognized. Management reviews the valuation and amortization periods of
goodwill on a periodic basis, taking into consideration any events or
circumstances which might result in diminished fair value or revised useful
life. No events or circumstances have occurred to warrant a diminished fair
value or reduction in the useful life of goodwill.

F-56
<PAGE> 173
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Partnership to
concentrations of credit risk are primarily cash, cash equivalents and accounts
receivable. Excess cash is invested in high quality short-term liquid money
instruments issued by highly-rated financial institutions. Concentrations of
credit risk with respect to the Partnership receivables are limited due to the
geographic dispersion and large number of customers, individually small
balances, short payment terms and required deposits.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of certain financial instruments, including cash and
cash equivalents, accounts receivable, accounts payable and other accrued
liabilities approximate fair value because of their short maturities. The fair
value of the Partnership's debt (Notes 7 and 8) approximates the book value due
to the variable interest rates of the debt.

USE OF ESTIMATES

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in years
beginning after June 15, 1999. Recently, the FASB delayed the effective date of
this statement for one year through the issuance of SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities -- Deferral of the Effective
Date of SFAS No. 133 and an Amendment of SFAS No. 133." Because of the
Partnership's minimal use of derivatives, management does not anticipate that
the adoption of the new Statement will have a significant effect on earnings or
the financial position of the Partnership.

5. ACCOUNTS RECEIVABLE

Accounts receivable consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
------------
1998 1997
---- ----
<S> <C> <C>
Accounts receivable, subscriber............................. $915 $643
Accounts receivable, related party.......................... 10 41
Less allowance for doubtful accounts........................ (54) (35)
---- ----
Accounts receivable, net of allowance....................... $871 $649
==== ====
</TABLE>

F-57
<PAGE> 174
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1998 1997
---- ----
<S> <C> <C>
Land........................................................ $ 54 $ 54
Buildings and improvements.................................. 232 232
Cable television distribution systems....................... 55,269 50,487
Towers, head-ends and transmission equipment................ 6,648 6,324
Transportation vehicles..................................... 1,355 1,181
Furniture and fixtures...................................... 1,822 1,590
-------- --------
65,380 59,868
Less accumulated depreciation............................... (14,902) (10,158)
-------- --------
$ 50,478 $ 49,710
======== ========
</TABLE>

7. SENIOR DEBT

The Partnership has a revolving credit facility with certain lenders. In
October 1997, the Partnership amended its loan agreement with the lenders to
increase the maximum borrowing under the revolving credit facility from $25
million to $35 million. This amendment resulted in the write-off of unamortized
debt issuance costs of approximately $249,000 which had been reflected as an
extraordinary item in the 1997 Statement of Operations.

In November 1998, in connection with the acquisition of the CATV systems in
Louisiana, the loan agreement was again amended to increase the maximum
borrowings under the revolving credit facility from $35 million to $55 million.
The borrowings outstanding under the revolving credit facility totaled $39
million and $31.2 million at December 31, 1998 and 1997, respectively.

Under the Amended and Restated Loan Agreement, interest accrues at the
option of the Partnership at (1) 0.375% to 1.5% over the bank's prime rate or
(2) 1.375% to 2.5% over the LIBOR rate based on the Partnership's leverage
ratio, as defined in the loan agreement. Based on the option selected, interest
is payable currently on a quarterly basis for option (1) or at the end of the
selected term (which can range between 1 and 6 months) for option (2). The
interest rate in effect under the revolving credit facility was in a range of
7.50% to 7.66% at December 31, 1998 and was 8.19% at December 31, 1997. Terms of
the loan agreement provides for fees of .25 percent per annum on the average
daily unused balance of the revolving credit facility.

The revolving credit facility requires quarterly payments of principal
beginning March 31, 2001 through December 31, 2006. In the event that current
borrowings do not increase and no principal payments are made before they are
required, quarterly principal payments would range from $1,375,000 to
$2,062,500.

F-58
<PAGE> 175
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

The following is a schedule of principal payments as of December 31, 1998
(in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-----------------------
<S> <C>
1999..................................................... $ --
2000..................................................... --
2001..................................................... 5,500
2002..................................................... 5,500
2003..................................................... 8,250
Thereafter............................................... 19,750
-------
$39,000
=======
</TABLE>

The loan agreement includes various covenants and restrictions relating to
additional indebtedness, disposition of major assets, capital expenditures,
management fees, and certain operating and financial covenants. The loan
agreement limits Partnership distributions and provides reimbursement to the
bank, under certain circumstances, for any potential reduction in the rate of
return on the bank's capital as a consequence of its obligations under the
agreement. The loan is collateralized by substantially all of the Partnership's
assets.

8. SUBORDINATED DEBT-RELATED PARTY

Subordinated debt-Related party consist of (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1998 1997
---- ----
<S> <C> <C>
Subordinated notes -- Principal............................. $27,040 $27,040
Subordinated notes -- accrued interest...................... 8,205 5,169
------- -------
Total............................................. $35,245 $32,209
======= =======
</TABLE>

The Partnership entered into a series of loan agreements with the managing
general partner of the Partnership. At December 31, 1998 and 1997, $27,039,673
of principal remained outstanding under the loan agreements. The loans mature on
December 31, 2003 and accrue interest at prime plus 1/2% due monthly. The
interest rate in effect at December 31, 1998 and 1997 was 8.25% and 9.0%,
respectively.

In connection with the October 1997 amendment to the Partnership's Senior
Debt (Note 7), principal and accrued interest outstanding on subordinated notes
in the amount of approximately $10,650,000 were paid off.

On October 31, 1997, the Partnership entered into a new subordination
agreement that prohibits any repayment of principal and interest on the
subordinated notes until such time as the senior debt has been paid or the
senior lenders agree to such repayments. Accrued interest is added to principal
on its due date.

9. SELF-INSURED MEDICAL PLAN

The Partnership participates in a self-insured medical plan with certain
related entities. Medical claims are paid by the Partnership for all related
entities that share in the proportional risk of the plan. Claims paid by the
Partnership on behalf of these entities are subsequently reimbursed. Claims paid
relating to the Partnership's employees amounted to approximately

F-59
<PAGE> 176
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

$227,000, $129,000 and $146,000 in 1998, 1997 and 1996, respectively. The
Partnership is liable for each employee's medical expenses up to $32,500 per
year with claims in excess of $32,500 reinsured with a third party.

10. DEFINED CONTRIBUTION SAVINGS PLAN

The Partnership has a defined contribution 401(k) plan available to
substantially all employees. Under the plan, the Partnership matches 50% of
eligible employees' annual contributions up to $250 per employee. Partnership
matching contributions to the plan in 1998, 1997 and 1996 were approximately
$9,400, $9,400 and $9,200, respectively.

11. DEFERRED COMPENSATION

The Partnership has a Deferred Equity Bonus Plan (the Plan) for certain key
employees providing for the earning of bonuses based on the appreciation in the
market value of the Partnership's various CATV systems from the base year as
defined in the Plan document. The bonus earned vests over a ten year period from
the date an employee becomes operating manager at a CATV system and is payable
at the time such CATV system is sold. As of December 31, 1998 and 1997, no
amounts were due under the Plan.

12. RELATED-PARTY TRANSACTIONS

SCM, the managing general partner, supervises and manages the operations of
the Partnership's CATV systems and performs certain other duties with respect to
the Partnership's operations. Management fees, as prescribed by the management
agreement, are not to exceed 3.5% of the quarterly gross revenues of the
Partnership, plus additional amounts as defined under the terms of the
management agreement. SCM is also entitled to be reimbursed for certain direct
costs incurred on behalf of the Partnership. The management agreement expires on
the earlier of January 31, 2001, the date SCM is no longer a general partner, or
(as to any individual CATV system) on the closing date of the sale of the
respective system. Management fees earned by SCM in 1998, 1997 and 1996
approximated $644,000, $589,000 and $547,000, respectively.

The Partnership pays certain employee wages and benefits, lease and general
and administrative costs on behalf of certain related entities. These costs are
included in other receivables and are subsequently reimbursed by the related
entities. At December 31, 1998 and 1997, such related-party receivables were
approximately $10,000 and $41,000, respectively.

13. LEASE COMMITMENTS

The Partnership leases office space and land used in the conduct of its
business under long-term noncancelable operating leases expiring at various
times. In May 1997, the Partnership entered into a 3-year operating lease
renewal with a related entity for its office space. The rental obligation
provides for monthly rentals of approximately $3,500 over the term of the lease.
Total rent expense for all leases, including cancelable pole use leases, for the
years ended December 31, 1998, 1997 and 1996 was approximately $81,000, $84,000
and $243,000, respectively.

F-60
<PAGE> 177
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

The following is a schedule of minimum lease payments required under
noncancelable operating leases as of December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
- -----------------------
<S> <C>
1999........................................................ $ 88
2000........................................................ 39
2001........................................................ 13
2002........................................................ 4
2003........................................................ 2
Thereafter.................................................. 3
----
$149
====
</TABLE>

F-61
<PAGE> 178

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

UNAUDITED CONDENSED BALANCE SHEET

SEPTEMBER 30, 1999

(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents................................. $ 4,240
Accounts receivable, net.................................. 844
Construction materials.................................... 349
Prepaid expenses and other current assets................. 237
--------
Total current assets.............................. 5,670
Property, plant and equipment, net.......................... 52,792
Deferred financing costs, net............................... 463
Intangible assets:
Subscriber lists.......................................... 538
Franchise rights.......................................... 16,128
Noncompete agreements..................................... 1,416
Goodwill.................................................. 9,064
Other..................................................... 655
--------
27,801
Less accumulated amortization............................. (8,710)
--------
19,091
--------
Total assets...................................... $ 78,016
========

Current Liabilities:
Accounts payable.......................................... $ 1,153
Subscriber deposits and unearned income................... 1,074
Other accrued liabilities................................. 178
Accrued interest payable.................................. 283
Management fees payable................................... 74
--------
Total current liabilities......................... 2,762
Deferred installation revenue............................... 332
Deferred compensation....................................... 425
Accrued interest payable-subordinated debt.................. 131
Senior debt................................................. 51,700
Subordinated debt -- Related party.......................... 37,631
--------
Total liabilities................................. 92,981
--------
Commitments and contingencies
Partners' capital (deficiency).............................. (14,965)
--------
Total liabilities and partners' capital
(deficiency)...................................... $ 78,016
========
</TABLE>

See accompanying notes to unaudited condensed financial statements.

F-62
<PAGE> 179

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS AND CHANGES IN PARTNERS' CAPITAL
(DEFICIENCY)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues.................................................... $ 18,633 $ 13,513
-------- --------
Operating expenses:
Programming............................................... 5,635 4,207
CATV system operating costs............................... 2,830 1,623
General and administrative................................ 1,625 1,174
Marketing and advertising................................. 205 219
Management fees........................................... 654 471
Depreciation and amortization............................. 5,521 3,718
-------- --------
Total operating expenses.......................... 16,470 11,412
-------- --------
Income from operations...................................... 2,163 2,101
-------- --------
Other income (expense):
Interest income........................................... 98 126
Interest expense.......................................... (5,232) (4,189)
Loss on sale of assets.................................... (42) (1)
-------- --------
(5,176) (4,064)
-------- --------
Net loss.......................................... (3,013) (1,963)
Partners' capital (deficiency), beginning of period......... (11,952) (10,238)
-------- --------
Partners' capital (deficiency), end of period............... $(14,965) $(12,201)
======== ========
</TABLE>

See accompanying notes to unaudited condensed financial statements.

F-63
<PAGE> 180

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $ (3,013) $(1,963)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 3,853 3,455
Amortization of intangibles............................ 1,668 263
Amortization of deferred financing costs............... 42 20
Accrued interest on subordinated debt -- Related
party................................................. 2,386 2,359
Loss (gain) on sale of assets.......................... 42 1
Deferred installation revenue.......................... 97 (33)
Deferred compensation.................................. 425 --
Changes in working capital:
Accounts receivable, net............................... 27 40
Construction materials................................. (1) 51
Prepaid expenses and other current assets.............. (43) (25)
Accounts payable....................................... (97) 84
Subscriber deposits and unearned income................ 62 37
Other accrued liabilities.............................. 21 (277)
Accrued interest payable............................... (64) (110)
Management fees payable................................ (46) 3
-------- -------
Net cash provided by operating activities......... 5,359 3,905
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of CATV systems.................................. (14,500) (644)
Capital expenditures...................................... (2,290) (2,031)
Proceeds from sale of other assets........................ 12 11
Proceeds from sale of CATV systems, net................... -- --
-------- -------
Net cash used in investing activities............. (16,778) (2,664)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility................ 12,700 --
Expenditures for deferred financing costs................. (54) (50)
-------- -------
Net cash provided by (used in) financing
activities...................................... 12,646 (50)
-------- -------
Net increase in cash and cash equivalents................... 1,227 1,191
Cash and cash equivalents, beginning of period.............. 3,013 3,044
-------- -------
Cash and cash equivalents, end of period.................... $ 4,240 $ 4,235
======== =======
Supplemental schedule of cash flow information:
Cash interest paid........................................ $ 2,894 $ 1,916
======== =======
Accrued interest on subordinated debt -- Related party.... $ 2,386 $ 2,359
======== =======
</TABLE>

See accompanying notes to unaudited condensed financial statements.

F-64
<PAGE> 181

STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. ORGANIZATION

2. INTERIM FINANCIAL INFORMATION

The accompanying unaudited consolidated financial statements of the
Partnership have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included in the accompanying unaudited financial
statements. Operating results for the nine-month period ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999.

3. USE OF ESTIMATES

4. ACQUISITIONS

In November 1998, the Partnership acquired additional CATV systems in
Louisiana from Galaxy Telecom L.P. (Galaxy acquisition) for approximately
$9,586,000 in cash, including transaction costs. Based on appraised values,
approximately $2,022,000 of the purchase price was allocated to tangible assets
(primarily distribution systems) and $7,564,000 was allocated to intangible
assets. The purchase price was financed from borrowings under the Partnership's
senior revolving credit facility.

These acquisitions were accounted for using the purchase method, and
accordingly, the operating results of the systems acquired have been included in
the Partnership's financial statements since the date of acquisition.

The following summarized unaudited pro forma financial information assumes
the Illini acquisition had occurred on January 1, 1999 and 1998, respectively,
and the Galaxy acquisition had occurred on January 1, 1998. The following pro
forma information is not necessarily

F-65
<PAGE> 182
STAR CABLE ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

indicative of the results that would have occurred had the transaction been
completed at the beginning of the period indicated, nor is it indicative of
future operating results (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------
1999 1998
------- -------
<S> <C> <C>
Revenues.................................................... $18,989 $16,943
Net loss.................................................... $(2,916) $ (787)
</TABLE>

5. DEFERRED COMPENSATION

The Partnership has a Deferred Equity Bonus Plan (the Plan) for certain key
employees providing for the earning of bonuses based on the appreciation in the
market value of the Partnership's various CATV systems from the base year as
defined in the Plan document. The bonus earned vests over a ten year period from
the date an employee becomes operating manager at a CATV system and is payable
at the time such CATV system is sold. For the nine months ended September 30,
1999 and 1998, the Partnership recognized approximately $425,000 and $0 of
expense, respectively, related to the Plan. The liability outstanding under the
Plan at September 30, 1999 and 1998 was approximately $425,000 and $0,
respectively.

6. SUBSEQUENT EVENT

In October 1999, the Partnership entered into an agreement to sell 100% of
its assets to Universal Cable Holdings, Inc., an indirect subsidiary of Classic
Communication, Inc. (Classic) for an aggregate purchase price of approximately
$110 million in cash and (1) $20 million in Series A cumulative redeemable
convertible preferred stock or (2), in the event of the consummation of a
initial public offering of Classic's Class A voting common stock prior to the
closing of the transaction, 555,555 shares of Classic's Class A Common Stock.
The consummation of the transaction is subject to a number of conditions
including governmental approval and the transfer of franchise licenses to a
subsidiary of Classic.

F-66
<PAGE> 183

UNDERWRITING

Classic and the underwriters for the offering (the "Underwriters") named
below have entered into an underwriting agreement with respect to the shares
being offered. Subject to certain conditions, each Underwriter has severally
agreed to purchase the number of shares indicated in the following table.
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Donaldson, Lufkin & Jenrette Securities Corporation are the representatives of
the Underwriters.

<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Goldman, Sachs & Co. .......................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
---------
Total............................................. 6,250,000
=========
</TABLE>

If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional 937,500
shares from Classic to cover such sales. They may exercise that option for 30
days. If any shares are purchased pursuant to this option, the Underwriters will
severally purchase shares in approximately the same proportion as set forth in
the table above.

The following table shows the per share and total underwriting discounts to
be paid to the Underwriters by Classic. Such amounts are shown assuming both no
exercise and full exercise of the Underwriters' option to purchase 937,500
additional shares.

<TABLE>
<CAPTION>
Paid by Classic
--------------------
No Full
Exercise Exercise
-------- --------
<S> <C> <C>
Per Share............ $ $
Total................ $ $
</TABLE>

Shares sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover page of this
prospectus. Any shares sold by the Underwriters to securities dealers may be
sold at a discount of up to $ per share from the initial public offering
price. Any such securities dealers may resell any shares purchased from the
Underwriters to certain other brokers or dealers at a discount of up to $
per share from the initial public offering price. If all of the shares are not
sold at the initial public offering price, the representatives may change the
offering price and the other selling terms.

Classic and stockholders holding 95.2% of its outstanding common stock,
including all of its executive officers and directors, have agreed with the
underwriters not to dispose of or hedge any of their Class A common stock or
securities convertible into or exchangeable for shares of Class A common stock
during the period from the date of this prospectus continuing through the date
180 days after the date of this prospectus, except with the prior written
consent of Goldman, Sachs & Co. This agreement does not apply to any existing
employee benefit plans. See "Shares Eligible for Future Sale" for a discussion
of certain transfer restrictions.

Prior to the offering, there has been no public market for the shares. The
initial public offering price will be negotiated among Classic and the
representatives. Among the factors to be considered in determining the initial
public offering price of the shares, in addition to prevailing market
conditions, will be Classic's historical performance, estimates of the business
potential and earnings

U-1
<PAGE> 184

prospects of Classic, an assessment of Classic's management and the
consideration of the above factors in relation to market valuation of companies
in related businesses.

Application has been made for quotation of the Class A common stock on the
Nasdaq National Market under the symbol "CLSC".

In connection with the offering, the Underwriters may purchase and sell
shares of Class A common stock in the open market. These transactions may
include short sales, stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by the Underwriters of a
greater number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the Class A
common stock while the offering is in progress.

The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.

These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Class A common stock. As a result, the price of
the Class A common stock may be higher than the price that otherwise might exist
in the open market. If these activities are commenced, they may be discontinued
by the Underwriters at any time. These transactions may be effected on the
Nasdaq National Market, in the over-the-counter market or otherwise.

The Underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.

Classic estimates that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $2,500,000.

Classic has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

Certain of the Underwriters and their affiliates have in the past provided,
and may in the future from time to time provide, investment banking and general
financing and banking services to Classic and its affiliates for which they have
in the past received, and may in the future receive, customary fees.
Specifically, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation served as
the initial purchasers in the July 1999 offering of $150,000,000 of 9 3/8%
Senior Subordinated Notes due 2009 of Classic Cable. The initial purchasers
received customary underwriting discounts.

Affiliates of Goldman, Sachs & Co. own a 9% interest in Brera Classic,
which owns approximately 64% of the capital stock of Classic prior to this
offering and 40.6% after giving effect to this offering.

At Classic's request, the Underwriters have reserved for sale, at the
initial public offering price, up to 5% of the shares of Class A common stock
that will be offered by this prospectus to Classic's directors, officers,
employees, business associates, related persons and designees. Some purchasers
of the reserved shares may be required to agree in writing not to offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of or hedge such shares for 180 days from their date of
purchase. The number of shares of Class A common stock available for sale to the
general public will be reduced to the extent such persons purchase such reserved
shares. Any reserved shares that are not so purchased will be offered by the
Underwriters to the general public on the same basis as the other shares offered
in the offering.

U-2
<PAGE> 185

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

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Risk Factors.......................... 14
Forward-Looking Statements............ 22
Use of Proceeds....................... 22
Dividend Policy....................... 23
Capitalization........................ 24
Dilution.............................. 26
Unaudited Pro Forma Consolidated
Financial Information............... 27
Selected Historical Consolidated
Financial Data -- Classic
Communications, Inc. ............... 37
Selected Historical Consolidated
Financial Data -- Buford Group,
Inc. ............................... 38
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 39
Business.............................. 52
Legislation and Regulation............ 67
Management............................ 78
Certain Relationships and Related
Transactions........................ 88
Principal Stockholders................ 90
Description of Certain Indebtedness... 92
Description of Capital Stock.......... 100
Shares Eligible for Future Sale....... 107
Important United States Federal Tax
Considerations for Non-United States
Holders............................. 110
Legal Matters......................... 112
Experts............................... 112
Change in Accountants................. 112
Where You Can Find More Information... 113
Index to Consolidated Financial
Statements.......................... F-1
Underwriting.......................... U-1
</TABLE>

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

6,250,000 Shares

CLASSIC COMMUNICATIONS, INC.
Class A Common Stock
---------------------

[CLASSIC COMMUNICATIONS LOGO]

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

GOLDMAN, SACHS & CO.

MERRILL LYNCH & CO.

DONALDSON, LUFKIN & JENRETTE

Representatives of the Underwriters
------------------------------------------------------
------------------------------------------------------
<PAGE> 186

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates.

<TABLE>
<S> <C>
SEC registration fee........................................ $ 55,948
NASD filing fee............................................. 20,625
Nasdaq National Market listing fee.......................... 70,000
Printing and engraving expenses............................. 950,000
Legal fees and expenses..................................... 875,000
Accounting fees and expenses................................ 350,000
Blue sky fees and expenses.................................. 10,000
Transfer agent and registrar fees and expenses.............. 7,500
Miscellaneous fees and expenses............................. 160,927
----------
Total............................................. $2,500,000
</TABLE>

Classic will bear all of the expenses shown above.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") grants each corporation organized thereunder, such as the Registrant,
the power to indemnify its directors and officers against liabilities for
certain of their acts. Section 102(b)(7) of the DGCL permits a provision in the
certificate of incorporation of each corporation organized thereunder, such as
the Registrant, eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for certain breaches of
fiduciary duty as a director except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit. Article Eighth of the Registrant's Certificate of
Incorporation has eliminated the personal liability of directors to the fullest
extent permitted by Section 102(b)(7) of the DGCL.

Article 8 of the Registrant's Amended and Restated Certificate of
Incorporation provides as follows: The Corporation shall indemnify its directors
to the fullest extent authorized or permitted by law, as now or hereafter in
effect, and such right to indemnification shall continue as to a person who has
ceased to be a director of the Corporation and shall inure to the benefit of his
or her heirs, executors and personal and legal representatives; provided,
however, that, except for proceedings to enforce rights to indemnification, the
Corporation shall not be obligated to indemnify any director (or his or her
heirs, executors or personal or legal representatives) in connection with a
proceeding (or part thereof) initiated by such person unless such proceeding (or
part thereof) was authorized or consented to by the board of directors (or any
duly authorized committee thereof). The right to indemnification conferred by
Article VIII shall include the right to be paid by the Corporation the expenses
incurred in defending or otherwise participating in any proceeding in advance of
its final disposition. To the same extent as directors, when so determined by
the board of directors, or when, as and if authorized from time to time by the
board of directors (or any duly authorized committee thereof), the Corporation
may, but is not required to, provide rights to indemnification and to the
advancement of expenses to officers, employees and agents of the Corporation
similar to those conferred in Article VIII to

II-1
<PAGE> 187

directors of the Corporation. The rights to indemnification and to the advance
of expenses conferred in this Article VIII shall not be exclusive of any other
right which any person may have or hereafter acquire under this Amended and
Restated Certificate of Incorporation, the By-Laws of the Corporation, any
statute, agreement, vote of the stockholders or disinterested directors or
otherwise. Any repeal or modification of this Article VIII by the stockholders
of the Corporation shall not adversely affect any rights to indemnification and
to the advancement of expenses of a director of the Corporation existing at the
time of such repeal or modification with respect to any acts or omissions
occurring prior to such repeal or modification.

Each of the directors of the Registrant are or will be parties to
indemnification agreements whereby the Registrant agrees to indemnify each
director to the fullest extent authorized or permitted by law for claims
relating to the fact that the individual is or was a director of the Registrant.
The agreement also provides that if the Registrant maintains an insurance policy
providing directors liability insurance, the director shall be covered to the
maximum extent of the coverage available.

The foregoing statements are subject to the detailed provisions of Section
102(b)(7) of the DGCL, Article 8 of the Amended and Restated Certificate of
Incorporation of the Registrant and Article 8 of the By-Laws of the Registrant,
as applicable.

The foregoing discussion is qualified in its entirety by reference to the
DGCL and the Registrant's Amended and Restated Certificate of Incorporation and
By-Laws.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On July 28, 1999, the Registrant issued 5,490,734 shares of its voting
common stock at a price of $14.57 per share and 1,000,000 shares of its voting
common stock at a price of $20.00 per share to Brera Classic, LLC, for an
aggregate offering price of $100,000,000.

On September 15, 1998, the Registrant issued 6,631 shares of its voting
common stock to Nationsbanc Capital Corp. (n/k/a BA Capital Company, L.P.) and
1,326 shares of its voting common stock to BT Capital Partners, Inc. for an
aggregate offering price of approximately $30,000. On September 15, 1998 the
Registrant also sold 2,653 shares of voting common stock to each of J. Merritt
Belisle and Steven E. Seach for an aggregate consideration of approximately
$20,000.

On July 30, 1998, the Registrant issued 323,832 shares of its voting common
stock to Austin Ventures, L.P. in exchange for 323,832 shares of its nonvoting
common stock, 223,422 shares of its voting common stock to Austin Ventures
III-A, L.P. in exchange for 223,422 shares of its nonvoting common stock, and
188,733 shares of its voting common stock to Austin Ventures III-B, L.P. in
exchange for 188,733 shares of its nonvoting common stock and no additional
consideration.

On July 29, 1998, the Registrant issued 242,209 shares of restricted voting
common stock to each of J. Merritt Belisle and Steven E. Seach under the terms
of the Registrant's 1998 Restricted Stock Plan in exchange for the shares of
restricted stock held by Messrs. Belisle and Seach under the Registrant's 1996
Restricted Stock Award Plan of which all shares are fully vested. While these
shares of common stock were granted in exchange for no additional cash
consideration, such shares are subject to a distribution threshold equal to
$3.77 per share, i.e., the first $3.77 of distributions with respect to such
shares is to be withheld.

We believe that the sale and issuance of securities in all the above
transactions were exempt from registration under the Securities Act by virtue of
Section 4(2) thereof, or Regulation D thereunder, as transactions by an issuer
not involving a public offering. Appropriate legends are affixed to the stock
certificates issued in such transactions. Similar legends were imposed in
connection with any subsequent sales of any such securities. All recipients
either received adequate information about the Registrant or had access, through
employment or other
II-2
<PAGE> 188

relationships, to such information. In addition, the foregoing transactions were
consummated without the use of underwriters and public offering documents and
involved a very small number of purchasers.

On July 14, 1998, the Registrant issued 114,000 units, consisting of
$114,000,000 aggregate principal amount 13 1/4% Senior Discount Notes due 2009
and 342,000 shares of the Registrant's common stock, to Merrill, Lynch, Pierce,
Fenner & Smith Incorporated as initial purchaser, the aggregate proceeds of
which was $60 million.

We believe that the sale and issuance of securities in the above
transaction was exempt from registration under the Securities Act by virtue of
Rule 144A, as private resales of securities to institutions. Appropriate legends
are affixed to the stock certificates issued in such transactions. Similar
legends were imposed in connection with any subsequent sales of any such
securities.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
1.1** -- Form of Underwriting Agreement.
2.1* -- Securities Purchase Agreement between Classic Cable, Inc.
and Buford Group, Inc. dated as of May 11, 1999.
2.2** -- Asset Purchase Agreement between Universal Cable
Holdings, Inc. and Star Cable Associates, dated as of
October 14, 1999.
3.1* -- Amended and Restated Certificate of Incorporation of
Classic Communications, Inc., dated as of October 30,
1995.
3.1(b)* -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation of Classic Communications,
Inc. dated July 21, 1998.
3.1(c)* -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation of Classic Communications,
Inc. dated July 28, 1999.
3.1(d)** -- Form of Amended and Restated Certificate of Incorporation
of Classic Communications, Inc.
3.2* -- Amended and Restated Bylaws of Classic Communications,
Inc.
3.2(b)** -- Form of Amended and Restated Bylaws of Classic
Communications, Inc.
4.1 -- Form of certificate evidencing shares of Class A common
stock.
5.1(a) -- Opinion of Skadden, Arps, Slate, Meagher and Flom
(Illinois), special counsel to Classic Communications,
Inc.
10.1** -- Employment Agreement dated as of July 29, 1999 by and
between Classic Cable, Inc. and Ronald W. Martin.
10.2** -- Employment Agreement dated as of July 29, 1999 by and
between Classic Cable, Inc. and Elizabeth Kay Manigold.
</TABLE>

II-3
<PAGE> 189

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.3* -- Employment Agreement dated as of July 28, 1999 by and
between Classic Communications, Inc., Classic Cable, Inc.
and J. Merritt Belisle.
10.4* -- Employment Agreement dated as of July 28, 1999 by and
between Classic Communications, Inc., Classic Cable, Inc.
and Steven E. Seach.
10.5* -- Credit Agreement among Classic Cable, Inc., As Borrower,
the Lenders Parties thereto, Union Bank of California,
N.A. and Goldman Sachs Credit Partners L.P. as
Co-Arrangers, Goldman Sachs Credit Partners L.P., as
Syndication Agent and Union Bank of California, N.A., as
Administrative and Documentation Agent, dated as of July
29, 1998.
10.6* -- Amended and Restated Credit Agreement dated July 28, 1999
among Classic Cable, Inc., as Borrower, the Lenders
Parties thereto, Goldman Sachs Credit Partners, L.P., as
Lead Arranger and Syndication Agent, and The Chase
Manhattan Bank, as Documentation Agent, and Union Bank of
California, N.A., as Administrative Agent.
10.7* -- Facilities Commitment Letter, dated June 24, 1999,
between Classic Cable, Inc. and Goldman Sachs Credit
Partners L.P.
10.8* -- Asset Purchase Agreement dated May 14, 1998 by and
between Cable One, Inc. and Black Creek Communications,
Inc.
10.8(b)* -- Assignment of Asset Purchase Agreement dated June 19,
1998.
10.8(c)* -- Amendment No. 1 to Asset Purchase Agreement dated July
15, 1998.
10.9* -- 1996 Restricted Stock Award Plan of Classic
Communications, Inc.
10.10* -- 1998 Restricted Stock Award Plan of Classic
Communications, Inc.
10.10(a)* -- Restricted Stock Award Agreement dated July 29, 1998 by
and between J. Merritt Belisle and Classic
Communications, Inc.
10.10(b)* -- Restricted Stock Award Agreement dated July 29, 1998 by
and between Steven E. Seach and Classic Communications,
Inc.
10.11* -- Investment Agreement dated as of May 24, 1999 between
Brera Classic, LLC and Classic Communications, Inc.
10.12* -- Management and Advisory Fee Agreement dated May 24, 1999.
10.14* -- Stockholders' Agreement, dated as of July 28, 1999, by
and among Classic Communications, Inc., Brera Classic,
LLC and the additional parties named therein.
10.15* -- Registration Rights Agreement, dated as of July 28, 1999,
among Classic Communications, Inc., Brera Classic, LLC,
and the additional parties named therein.
10.16* -- Purchase Agreement, dated July 21, 1999, by and among
Classic Cable, Inc. and Goldman, Sachs & Co., Donaldson,
Lufkin & Jenrette Securities Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
10.17* -- Exchange and Registration Rights Agreement, dated July
28, 1999, by and between Classic Cable, Inc. and Goldman,
Sachs & Co., Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
10.18* -- Indenture for $150,000,000 9 3/8% Senior Subordinated
Notes due 2009, dated as of July 28, 1999 between Classic
Cable, Inc., as Issuer, the Guarantors listed on Schedule
1 thereto, and Chase Bank of Texas, National Association,
as Trustee.
10.19* -- Form of Global 9 3/8% Senior Subordinated Note due 2009.
</TABLE>

II-4
<PAGE> 190

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.20 -- Indenture dated as of July 29, 1998, for Units consisting
of $114,000,000 in Aggregate Principal Amount at
Maturity, 13 1/4% Senior Discount Notes due 2009, by and
among Classic Communications, Inc., as Issuer, and Bank
One, N.A., as Trustee (incorporated by reference to
Exhibit 4.1 to Classic Communications, Inc.'s
Registration Statement on Form S-4 (Registration No.
333-63641)).
10.21 -- Form of Global 13 1/4 Senior Discount Note due 2009
(incorporated by reference to Exhibit 4.2 to Classic
Communications, Inc.'s Registration Statement on Form S-4
(Registration No. 333-63641)).
10.22 -- Registration Rights Agreement dated as of July 29, 1998,
by and between Classic Communications, Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (incorporated
by reference to Exhibit 4.3A to Classic Communications,
Inc.'s Registration Statement on Form S-4 (Registration
No. 333-63641)).
10.23 -- Shareholder and Registration Rights Agreement, dated as
of July 29, 1998, by and among Classic Communications,
Inc. and Certain Stockholders and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated (incorporated by reference to
Exhibit 4.3B to Classic Communications, Inc.'s
Registration Statement on Form S-4 (Registration No.
333-63641)).
10.24 -- Amended and Restated Registration Rights Agreement dated
as of October 31, 1995, modified by Amendment No. 1
(dated as of October 31, 1995) and Amendment No. 2 (dated
as of December 27, 1995) (incorporated by reference to
Exhibit 4.3C to Classic Communications, Inc.'s
Registration Statement on Form S-4 (Registration No.
333-63641)).
10.25 -- Amended and Restated Shareholders Agreement dated as of
October 31, 1995, modified by Amendment No. 1 (dated as
of October 31, 1995), Amendment No. 2 (dated as of
December 27, 1995) and Amendment No. 3 (dated as of
December 19, 1997) (incorporated by reference to Exhibit
4.3D to Classic Communications, Inc.'s Registration
Statement on Form S-4 (Registration No. 333-63641)).
10.26 -- First Supplemental Indenture, dated as of July 28, 1999,
between Classic Cable, Inc., as Issuer, the Subsidiary
Guarantors named thereon, as Guarantors, and Chase Bank
of Texas, National Association, as Trustee (incorporated
by reference to Exhibit 4.4 to Classic Communications,
Inc.'s Registration Statement on Form S-4 (Registration
No. 333-63641)).
10.27 -- Form of Amended and Restated Stockholders' Agreement, by
and among Classic Communications, Inc., Brera Classic,
LLC and the additional parties named therein.
10.28 -- Form of Amended and Restated Registration Rights
Agreement by and among Classic Communications, Inc.,
Brera Classic, LLC and the additional parties named
therein.
10.29 -- 1999 Omnibus Stock Incentive Plan of Classic
Communications, Inc.
10.30 -- Form of Stock Option Agreement relating to August 1999
Grants.
21.1* -- Subsidiaries of Classic Communications, Inc.
23.1 -- Consent of Ernst & Young LLP.
</TABLE>

II-5
<PAGE> 191

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
23.2 -- Consent of KPMG LLP.
23.3 -- Consent of PricewaterhouseCoopers LLP.
23.4 -- Consent of PricewaterhouseCoopers LLP.
23.5 -- Consent of Skadden, Arps, Slate, Meagher and Flom
(Illinois) (included in Exhibit 5.1).
24.1** -- Powers of Attorney (included as part of signature page of
this Registration Statement).
</TABLE>

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

* Incorporated by reference to the identically numbered Exhibit to Classic
Communications, Inc.'s Registration Statement on Form S-4 (Registration No.
333-63641).

** Previously filed.

b. Financial Statement Schedules.

The following appear after the signature page of this Registration
Statement:

Report of Independent Public Accountants on Financial Statement Schedules

<TABLE>
<CAPTION>
PAGE
SCHEDULE DESCRIPTION NO.
- -------- ----------- ----
<C> <S> <C>
S-1 Condensed Financial Information of Classic Communications,
Inc. stand alone. S-1
</TABLE>

All other schedules are omitted because the required information is
included in the Consolidated Financial Statements or the Notes thereto or is
otherwise inapplicable.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant 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 Registrant will, unless in the opinion of its 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.

II-6
<PAGE> 192

(f) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time was it declared effective.

(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
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.

II-7
<PAGE> 193

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 Austin, State of Texas, on
the 15th day of November, 1999.

CLASSIC COMMUNICATIONS, INC.

By: /s/ STEVEN E. SEACH
----------------------------------
Steven E. Seach

President and Chief Financial
Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board November 15, 1999
- -----------------------------------------------------
Alberto Cribiore

* Chief Executive Officer November 15, 1999
- ----------------------------------------------------- and Director (Principal
J. Merritt Belisle Executive Officer)

/s/ STEVEN E. SEACH President and Chief November 15, 1999
- ----------------------------------------------------- Financial Officer and a
Steven E. Seach Director (Principal
Financial Officer and
Principal Accounting
Officer)

* Director November 15, 1999
- -----------------------------------------------------
Lisa A. Hook

* Director November 15, 1999
- -----------------------------------------------------
David Webb

* Director November 15, 1999
- -----------------------------------------------------
Martin Payson

*By: /s/ STEVEN E. SEACH
------------------------------------------------
Steven E. Seach
</TABLE>

II-8
<PAGE> 194

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Classic Communications, Inc.

In our opinion, the 1998 and 1997 information set forth in the accompanying
condensed financial statement schedule of Classic Communications, Inc. (parent
company only) is fairly stated, in all material respects, in relation to the
consolidated financial statements of Classic Communications, Inc. and
subsidiaries from which it has been derived. This condensed financial statement
schedule is the responsibility of the Company's management; our responsibility
is to express an opinion on the schedule based on our audits. We conducted our
audits of the consolidated financial statements of Classic Communications, Inc.
and subsidiaries in accordance with generally accepted auditing standards; and
in our report dated October 14, 1999, we expressed an unqualified opinion on
those financial statements.

PricewaterhouseCoopers LLP

Austin, Texas
October 14, 1999

S-1
<PAGE> 195

SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CLASSIC COMMUNICATIONS, INC.

CONDENSED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1998 1997
---- ----
<S> <C> <C>
Cash and cash equivalents................................... $ -- $ --
Investment in and advances to affiliates.................... 13,142,000 16,339,000
Deferred financing costs, net............................... 2,465,000 --
------------ ------------
Total assets...................................... $ 15,607,000 $ 16,339,000
============ ============

LIABILITIES, REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT
Liabilities:
Accrued interest.......................................... $ -- $ 90,000
Subordinated debt......................................... -- 4,023,000
Long-term debt............................................ 62,038,000 --
Deferred taxes, net....................................... 51,000 --
Amounts due from subsidiary............................... 306,000 --
------------ ------------
Total liabilities................................. 62,395,000 4,113,000
15% PIK Redeemable Senior Preferred Stock................. -- 5,978,000
15% PIK Redeemable Junior Preferred Stock................. -- 19,434,000
Common stock, Voting...................................... 17,000 6,000
Common stock, Nonvoting................................... 15,000 22,000
Paid in capital........................................... 30,464,000 33,405,000
Unearned compensation..................................... (1,920,000) (2,118,000)
Accumulated deficit....................................... (75,364,000) (44,501,000)
------------ ------------
Total stockholders' deficit....................... (46,788,000) (13,186,000)
------------ ------------
Total liabilities, redeemable preferred stock and
stockholders' deficit........................... $ 15,607,000 $ 16,339,000
============ ============
</TABLE>

S-2
<PAGE> 196

CLASSIC COMMUNICATIONS, INC.

CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Interest expense............................. $ (3,754,000) $ (539,000) $ (469,000)
Interest in loss of subsidiary............... (26,700,000) (13,787,000) (12,866,000)
------------ ------------ ------------
Loss before taxes............................ (30,454,000) (14,326,000) (13,335,000)
Income tax benefit (expense)................. (409,000) 197,000 169,000
------------ ------------ ------------
Net loss..................................... $(30,863,000) $(14,129,000) $(13,166,000)
============ ============ ============
</TABLE>

S-3
<PAGE> 197

CLASSIC COMMUNICATIONS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash from operations.............................. $ 265,000 $ -- $ 85,000
Investing activities
Capital contribution to subsidiary.............. (22,764,000) -- --
----------- -------- ------------
Net cash used in investing activities............. (22,764,000) -- --
Financing activities
Expenses related to equity financings........... -- -- (85,000)
Proceeds from long-term debt.................... 59,981,000 -- --
Repayments of long-term debt.................... (16,000) -- --
Repayment of subordinated indebtedness.......... (4,458,000) -- --
Repayment of promissory notes................... (650,000) -- --
Redemption of preferred stock................... (29,756,000) -- --
Financing costs................................. (2,527,000) -- --
Sale of common stock............................ 50,000 -- --
Repurchase of common stock...................... (125,000) -- --
----------- -------- ------------
Net cash provided by (used in) financing
activities...................................... 22,499,000 -- (85,000)
Net change in cash................................ -- -- --
----------- -------- ------------
Cash and cash equivalents at beginning of year.... -- -- --
----------- -------- ------------
Cash and cash equivalents at end of year.......... $ -- $ -- $ --
=========== ======== ============
</TABLE>

All 1997 activity related to non cash items.

S-4
<PAGE> 198

CLASSIC COMMUNICATIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1998

1. BASIS OF PRESENTATION

In the parent company-only financial statements, the Company's investment
in subsidiaries is stated at cost plus equity in undistributed earnings (losses)
of subsidiaries since the date of acquisition, plus advances to, and less
payments from, subsidiaries. The parent company-only financial statements should
be read in conjunction with the Company's consolidated financial statements.

2. LONG-TERM DEBT

Balance of amounts outstanding under the Company's debt agreement is as
follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1998 1997
---- ----
<S> <C> <C>
13.25% Senior Discount Notes................................ $114,000 $ --
Unamortized discount...................................... (51,962) --
-------- --------
$ 62,038 $ --
======== ========
</TABLE>

In July 1998, the Company issued $114.0 million of 13.25% Senior Discount
Notes due 2009. Net of the applicable discounts and the fair value of the common
stock sold along with the Senior Discount Notes, proceeds from this issue were
$60.0 million. Interest payments on the Senior Discount Notes do not commence
until 2004.

The Senior Discount Notes were sold in units that consisted of a $1,000
note and three shares of common stock of the Company. Shares issued in
connection with the offering totaled 342,000. Proceeds of $3.77 per share were
allocated to the sale of the shares. A discount of $1.3 million was recorded in
connection with common stock issued. This per share amount represents the fair
value of the stock as of the date of the offering.

The 1998 Credit Agreement of Classic Cable is collateralized by essentially
all the assets of Classic Cable. The Company has no operations of its own.
Consequently, it will rely on dividends and cash flow of Classic Cable to meet
its debt service obligations. The terms of the Credit Agreement restrict certain
activities of Classic Cable, including the incurrence of additional indebtedness
and the payment of certain dividends. Accordingly, substantially all the assets
and operations of Classic Cable are restricted as to transfer to the Company and
may not be available for dividends and/or debt service of the Company.

3. SUBORDINATED DEBT

Subordinated debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
----------------
1998 1997
---- ----
<S> <C> <C>
7.5% Junior Subordinated Promissory Notes(A)................ $ -- $ 295
15% Senior Subordinated Promissory Note (B)................. -- 3,727
------ ------
$ -- $4,023
====== ======
</TABLE>

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

(A) The Junior Subordinated Promissory Notes (the "Interest Notes") bore
interest at 7.5% per annum. The Interest Notes had no required principal
payments other than upon

S-5
<PAGE> 199

maturity on July 7, 2002. The interest on the Interest Notes was deferred
until maturity. The Interest Notes and accrued interest were paid in full
in July 1998.

S-6
<PAGE> 200

EXHIBIT LIST

<TABLE>
<CAPTION>
EXHIBIT
NO. NAME
------- ----
<C> <S>
1.1** -- Form of Underwriting Agreement.
2.1* -- Securities Purchase Agreement between Classic Cable, Inc.
and Buford Group, Inc. dated as of May 11, 1999.
2.2** -- Asset Purchase Agreement between Universal Cable
Holdings, Inc. and Star Cable Associates, dated as of
October 14, 1999.
3.1* -- Amended and Restated Certificate of Incorporation of
Classic Communications, Inc., dated as of October 30,
1995.
3.1(b)* -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation of Classic Communications,
Inc. dated July 21, 1998.
3.1(c)* -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation of Classic Communications,
Inc. dated July 28, 1999.
3.1(d)** -- Form of Amended and Restated Certificate of Incorporation
of Classic Communications, Inc.
3.2* -- Amended and Restated Bylaws of Classic Communications,
Inc.
3.2(b)** -- Form of Amended and Restated Bylaws of Classic
Communications, Inc.
4.1 -- Form of certificate evidencing shares of Class A common
stock.
5.1(a) -- Opinion of Skadden, Arps, Slate, Meagher and Flom
(Illinois), special counsel to Classic Communications,
Inc.
10.1** -- Employment Agreement dated as of July 29, 1999 by and
between Classic Cable, Inc. and Ronald W. Martin.
10.2** -- Employment Agreement dated as of July 29, 1999 by and
between Classic Cable, Inc. and Elizabeth Kay Monigold.
10.3* -- Employment Agreement dated as of July 28, 1999 by and
between Classic Communications, Inc., Classic Cable, Inc.
and J. Merritt Belisle.
10.4* -- Employment Agreement dated as of July 28, 1999 by and
between Classic Communications, Inc., Classic Cable, Inc.
and Steven E. Seach.
10.5* -- Credit Agreement among Classic Cable, Inc., As Borrower,
the Lenders Parties thereto, Union Bank of California,
N.A. and Goldman Sachs Credit Partners L.P. as
Co-Arrangers, Goldman Sachs Credit Partners L.P., as
Syndication Agent and Union Bank of California, N.A., as
Administrative and Documentation Agent, dated as of July
29, 1998.
10.6* -- Amended and Restated Credit Agreement dated July 28, 1999
among Classic Cable, Inc., as Borrower, the Lenders
Parties thereto, Goldman Sachs Credit Partners, L.P., as
Lead Arranger and Syndication Agent, and The Chase
Manhattan Bank, as Documentation Agent, and Union Bank of
California, N.A., as Administrative Agent.
10.7* -- Facilities Commitment Letter, dated June 24, 1999,
between Classic Cable, Inc. and Goldman Sachs Credit
Partners L.P.
10.8* -- Asset Purchase Agreement dated May 14, 1998 by and
between Cable One, Inc. and Black Creek Communications,
Inc.
10.8(b)* -- Assignment of Asset Purchase Agreement dated June 19,
1998.
10.8(c)* -- Amendment No. 1 to Asset Purchase Agreement dated July
15, 1998.
10.9* -- 1996 Restricted Stock Award Plan of Classic
Communications, Inc.
10.10* -- 1998 Restricted Stock Award Plan of Classic
Communications, Inc.
10.10(a)* -- Restricted Stock Award Agreement dated July 29, 1998 by
and between J. Merritt Belisle and Classic
Communications, Inc.
</TABLE>

<PAGE> 201

<TABLE>
<CAPTION>
EXHIBIT
NO. NAME
------- ----
<C> <S>
10.10(b)* -- Restricted Stock Award Agreement dated July 29, 1998 by
and between Steven E. Seach and Classic Communications,
Inc.
10.11* -- Investment Agreement dated as of May 24, 1999 between
Brera Classic, LLC and Classic Communications, Inc.
10.12* -- Management and Advisory Fee Agreement dated May 24, 1999.
10.14* -- Stockholders' Agreement, dated as of July 28, 1999, by
and among Classic Communications, Inc., Brera Classic,
LLC and the additional parties named therein.
10.15* -- Registration Rights Agreement, dated as of July 28, 1999,
among Classic Communications, Inc., Brera Classic, LLC,
and the additional parties named therein.
10.16* -- Purchase Agreement, dated July 21, 1999, by and among
Classic Cable, Inc. and Goldman, Sachs & Co., Donaldson,
Lufkin & Jenrette Securities Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
10.17* -- Exchange and Registration Rights Agreement, dated July
28, 1999, by and between Classic Cable, Inc. and Goldman,
Sachs & Co., Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
10.18* -- Indenture for $150,000,000 9 3/8% Senior Subordinated
Notes due 2009, dated as of July 28, 1999 between Classic
Cable, Inc., as Issuer, the Guarantors listed on Schedule
1 thereto, and Chase Bank of Texas, National Association,
as Trustee.
10.19* -- Form of Global 9 3/8% Senior Subordinated Note due 2009.
10.20 -- Indenture dated as of July 29, 1998, for Units consisting
of $114,000,000 in Aggregate Principal Amount at
Maturity, 13 1/4% Senior Discount Notes due 2009, by and
among Classic Communications, Inc., as Issuer, and Bank
One, N.A., as Trustee (incorporated by reference to
Exhibit 4.1 to Classic Communications, Inc.'s
Registration Statement on Form S-4 (Registration No.
333-63641)).
10.21 -- Form of Global 13 1/4 Senior Discount Note due 2009
(incorporated by reference to Exhibit 4.2 to Classic
Communications, Inc.'s Registration Statement on Form S-4
(Registration No. 333-63641)).
10.22 -- Registration Rights Agreement dated as of July 29, 1998,
by and between Classic Communications, Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (incorporated
by reference to Exhibit 4.3A to Classic Communications,
Inc.'s Registration Statement on Form S-4 (Registration
No. 333-63641)).
10.23 -- Shareholder and Registration Rights Agreement, dated as
of July 29, 1998, by and among Classic Communications,
Inc. and Certain Stockholders and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated (incorporated by reference to
Exhibit 4.3B to Classic Communications, Inc.'s
Registration Statement on Form S-4 (Registration No.
333-63641)).
10.24 -- Amended and Restated Registration Rights Agreement dated
as of October 31, 1995, modified by Amendment No. 1
(dated as of October 31, 1995) and Amendment No. 2 (dated
as of December 27, 1995) (incorporated by reference to
Exhibit 4.3C to Classic Communications, Inc.'s
Registration Statement on Form S-4 (Registration No.
333-63641)).
</TABLE>
<PAGE> 202

<TABLE>
<CAPTION>
EXHIBIT
NO. NAME
------- ----
<C> <S>
10.25 -- Amended and Restated Shareholders Agreement dated as of
October 31, 1995, modified by Amendment No. 1 (dated as
of October 31, 1995), Amendment No. 2 (dated as of
December 27, 1995) and Amendment No. 3 (dated as of
December 19, 1997) (incorporated by reference to Exhibit
4.3D to Classic Communications, Inc.'s Registration
Statement on Form S-4 (Registration No. 333-63641)).
10.26 -- First Supplemental Indenture, dated as of July 28, 1999,
between Classic Cable, Inc., as Issuer, the Subsidiary
Guarantors named thereon, as Guarantors, and Chase Bank
of Texas, National Association, as Trustee (incorporated
by reference to Exhibit 4.4 to Classic Communications,
Inc.'s Registration Statement on Form S-4 (Registration
No. 333-63641)).
10.27 -- Form of Amended and Restated Stockholders' Agreement, by
and among Classic Communications, Inc., Brera Classic,
LLC and the additional parties named therein.
10.28 -- Form of Amended and Restated Registration Rights
Agreement by and among Classic Communications, Inc.,
Brera Classic, LLC and the additional parties named
therein.
10.29 -- 1999 Omnibus Stock Incentive Plan of Classic
Communications, Inc.
10.30 -- Form of Stock Option Agreement relating to August 1999
Grants.
21.1* -- Subsidiaries of Classic Communications, Inc.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of KPMG LLP.
23.3 -- Consent of PricewaterhouseCoopers LLP.
23.4 -- Consent of PricewaterhouseCoopers LLP.
23.5 -- Consent of Skadden, Arps, Slate, Meagher and Flom
(Illinois) (included in Exhibit 5.1).
24.1** -- Powers of Attorney (included as part of signature page of
this Registration Statement).
</TABLE>

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

* Incorporated by reference to the identically numbered Exhibit to Classic
Communications, Inc.'s Registration Statement on Form S-4 (Registration No.
333-63641).

** Previously filed.

<PAGE> 1
EXHIBIT 4.1

<TABLE>
<S> <C> <C>
NUMBER CLASSIC COMMUNICATIONS, INC. SHARES
CA

INCORPORATED UNDER THE LAWS SEE REVERSE FOR CERTAIN DEFINITIONS
OF THE STATE OF DELAWARE CUSIP 182728 20 4

This Certifies that

is the registered owner of

FULLY PAID AND NONASSESSABLE SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01, OF

CLASSIC COMMUNICATIONS, INC.

(herein referred to as the "Corporation"), transferable on the books of the Corporation by the holder hereof in person or by duly
authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are
issued and shall be subject to all the terms, conditions and limitations of the Certificate of Incorporation and Bylaws of the
Corporation, including all amendments heretofore or hereafter made to such Certificate of Incorporation or Bylaws, to all of which
reference is made hereby and to all of which the holder asserts by acceptance hereof.

(CERTIFICATE OF STOCK)

This Certificate is not valid unless countersigned by the transfer agent and registered by the registrar of the Corporation.

IN WITNESS WHEREOF, the Corporation has caused facsimile signatures of its duly authorized officers and its facsimile seal to
be hereunto affixed.

Dated:

/s/ ALBERTO CRIBIORE /s/ BRYAN D. NOTEBOOM

CHAIRMAN OF THE BOARD [SEAL] SECRETARY

COUNTERSIGNED AND REGISTERED:
CHASE MELLON SHAREHOLDER SERVICES
TRANSFER AGENT AND REGISTRAR

BY
AUTHORIZED SIGNATURE

</TABLE>
<PAGE> 2

The Corporation will furnish without charge to each stockholder who so
requests a full statement of the designations, preferences, limitations and
relative rights of each class of stock or series thereof of the Corporation and
the variations in the relative rights and preferences between the shares of any
series of preferred stock, so far as the same have been fixed and determined,
and the authority of the board of directors to fix and determine the relative
rights and preferences of any series of preferred stock. Such requests may be
made to the Corporation or to the transfer agent.

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- Custodian
---------------------------------------
(Cust) (Minor)
TEN ENT -- as tenants by the entities under Uniform Gifts to Minors

JT TEN -- as joint tenants with rights of Act
survivorship and not as tenants ------------------------------------
in common (State)
</TABLE>

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, ______________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------

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

- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE

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

_________________________________________________________________________ Shares
of the Class A Common Stock represented by the within, Certificate, and do
hereby irrevocably constitute and

appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.

Dated Signature(s):
-------------------------------

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

------------------------------------------
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

SIGNATURE(S) GUARANTEED:

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION, (BANKS, STOCK BROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad 15.

<PAGE> 1
EXHIBIT 5.1(a)

[Letterhead of Skadden, Arps, Slate, Meagher & Flom (Illinois)]

November 15, 1999

Classic Communications, Inc.
515 Congress Avenue
Suite 2626
Austin, TX 78701

Re: Classic Communications, Inc. - Registration
Statement on Form S-1 (No. 333-89295)

Ladies and Gentlemen:

We are acting as special counsel to Classic Communications,
Inc., a Delaware corporation (the "Company"), in connection with the initial
public offering of up to 7,187,500 shares (the "Shares") of the Company's Class
A Voting Common Stock, par value $0.01 per share (the "Class A Common Stock").

This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").

In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-1 (File No. 333-89295) as filed with the
Securities and Exchange Commission (the "Commission") under the Act on October
19, 1999, and Amendment No. 1 thereto, as filed with the Commission on November
15, 1999 (such Registration Statement, as so amended and as may be further
amended from time to time, being hereinafter referred to as the "Registration
Statement"); (ii) the form of underwriting agreement (the "Underwriting
Agreement") proposed to be entered into by and

<PAGE> 2

Classic Communications, Inc.
November 15, 1999
Page 2

among the Company and Goldman, Sachs & Co., Merrill Lynch, Pierce Fenner & Smith
Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation, as
representatives of the several underwriters named therein (the "Underwriters"),
filed as an exhibit to the Registration Statement; (iii) the Form of Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation") and
the Amended and Restated Bylaws of the Company (the "Bylaws"), proposed to be
adopted and filed as exhibits to the Registration Statement; (iv) a specimen
certificate representing the Class A Common Stock; (v) certain resolutions of
the Board of Directors of the Company and drafts of certain resolutions (the
"Draft Resolutions") of the Pricing Committee of the Board of Directors of the
Company (the "Pricing Committee"), in each case relating to the issuance and
sale of the Shares and related matters; and (vi) the stock ledger of the
Company. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.

In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
Company, we have assumed that such parties had or will have the power, corporate
or other, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
execution and delivery by such parties of such documents and the validity and
binding effect thereof. As to any facts material to the opinions expressed
herein which we have not independently established or verified, we have relied
upon statements and representations of officers and other representatives of the
Company and others.

<PAGE> 3

Classic Communications, Inc.
November 15, 1999
Page 3

Members of our firm are admitted to the practice of law in the
State of Illinois, and we do not express any opinion as to the laws of any other
jurisdiction other than the Delaware General Corporation Law.

Based upon and subject to the foregoing, we are of the opinion
that when: (i) the Registration Statement becomes effective; (ii) the price at
which the Shares are to be sold to the Underwriters pursuant to the Underwriting
Agreement and other matters relating to the issuance and sale of the Shares have
been approved by the Pricing Committee in accordance with the Draft Resolutions;
(iii) the Underwriting Agreement has been duly executed and delivered; (iv) the
Certificate of Incorporation and Bylaws become effective; and (v) certificates
representing the Shares in the form of the specimen certificate examined by us
have been manually signed by an authorized officer of the transfer agent and
registrar for the Class A Common Stock and registered by such transfer agent and
registrar, and duly delivered upon payment by the Underwriters of the agreed
upon consideration as contemplated by the Underwriting Agreement, the Shares
will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to the
reference to our firm under the heading "Legal Matters" in the Registration
Statement. In giving this consent, we do not thereby admit that we are included
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Commission.

Very truly yours,

/s/ Skadden, Arps, Slate, Meagher &
Flom (Illinois)

<PAGE> 1
EXHIBIT 10.27

FORM OF AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT

dated as of November __, 1999

among

CLASSIC COMMUNICATIONS, INC.,

BRERA CLASSIC, LLC,

and

the additional parties named herein.

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----

<S> <C> <C>
1. Definitions................................................................................2

2. Election of Directors and Related Matters..................................................4
2.1 Board Voting......................................................................4
2.2 Chairmen..........................................................................5
2.3 Removal...........................................................................5
2.4 Vacancy...........................................................................6
2.5 Independence......................................................................6
2.6 Preferred Stock...................................................................6
2.7 Termination of Rights.............................................................6
2.8 Observer Rights...................................................................6
2.9 Term..............................................................................7
2.10 Star Cable Associates.............................................................7

3. Miscellaneous..............................................................................7
3.1 Confidentiality...................................................................7
3.2 Successors and Assigns............................................................8
3.3 Specific Performance..............................................................8
3.4 Entire Agreement; Amendment.......................................................8
3.5 Expenses and Attorneys' Fees......................................................8
3.6 Notices...........................................................................8
3.7 Severability.....................................................................10
3.8 Headings.........................................................................10
3.9 Counterparts.....................................................................10
3.10 Representations and Warranties...................................................10
3.11 Governing Law....................................................................10
3.12 Consent to Jurisdiction and Service of Process;
Appointment of Agent for Service of Process......................................10
3.13 Waiver of Jury Trial.............................................................11
</TABLE>

-i-
<PAGE> 3

AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT

THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Agreement"), dated as of November __, 1999, is by and among Classic
Communications, Inc., a Delaware corporation (the "Company"), Brera Classic,
LLC, a Delaware limited liability company (together with its Permitted
Transferees (as defined herein) "Brera"), J. Merritt Belisle (together with his
Permitted Transferees, "Belisle"), Steven E. Seach (together with his Permitted
Transferees, "Seach") and Bryan D. Noteboom (together with his Permitted
Transferees, "Noteboom") (Belisle, Seach and Noteboom are collectively known as
"Management Stockholders" and individually as a "Management Stockholder"), BT
Capital Partners, Inc., a Delaware corporation ("BT Capital"), Union Bancal
Venture Corporation, a Delaware corporation ("Union Bancal"), The Chase
Manhattan Bank, N.A. ("Chase"), Austin Ventures, L.P., a Delaware limited
partnership ("Austin"), Austin Ventures III-A, L.P., a Delaware limited
partnership ("Austin III-A"), Austin Ventures III-B, L.P., a Delaware limited
partnership ("Austin III-B") (Austin, Austin III-A, and Austin III-B are
collectively referred to as "Austin Ventures"), Texas Growth Fund, a trust fund
created by the Constitution of the State of Texas ("Growth Fund"), and BA
Capital Company, L.P., successor in interest to NationsBanc Capital Corp., a
Texas Corporation ("BA Capital") (Austin, Austin III-A, Austin III-B, Union
Bancal, Chase, Growth Fund, BT Capital, BA Capital and the other signatories
hereto and their Permitted Transferees are collectively referred to as the
"Investors" and individually as an "Investor").

WHEREAS, the parties to this Agreement hold Common Stock of
the Company and warrants to purchase Common Stock;

WHEREAS, the parties to this Agreement are parties to the
Stockholders' Agreement, dated as of July 28, 1999 (the "Original Stockholders'
Agreement");
WHEREAS, the Company is in the process of conducting an
Initial Public Offering of its Class A Voting Common Stock; and

WHEREAS, the parties to this Agreement wish to amend and
restate in full the Original Stockholders' Agreement, effective as of the
closing of the Initial Public Offering, (the "Closing") in light of the
Company's status as a public company following the IPO and the requirements of
the Nasdaq National Market relating to independent directors.

1
<PAGE> 4

NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt of
and sufficiency of which is hereby acknowledged, the parties hereto hereby agree
that:

AGREEMENT

1. Definitions
-----------
When used in this Agreement, the following terms shall have
the meanings specified:

1.1 "Affiliate" as applied to any Person, means any other
Person directly or indirectly controlling, controlled by or under common control
with that Person. The term "control" (including, with correlative meanings, the
terms "controlling," "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of power to
direct the management and policies of that Person, whether through voting power,
by contract or otherwise.

1.2 "Agreement" has the meaning set forth in the preamble
hereto.

1.3 "Belisle" means J. Merritt Belisle.

1.4 "Board" means the Board of Directors of the Company.

1.5 "Brera" means, collectively, Brera Classic, LLC, a
Delaware limited liability company and its Permitted Transferees.

1.6 "Brera Director" has the meaning set forth in Section
2.1(a)(i).

1.7 "Bylaws" means the Bylaws of the Company, as amended or
restated from time to time.

1.8 "Certificate of Incorporation" means the Company's
Amended and Restated Certificate of Incorporation, as amended or restated from
time to time.

1.9 "Class I Director" has the meaning set forth in Section
2.1(b)(i).

2
<PAGE> 5

1.10 "Class II Director" has the meaning set forth in Section
2.1(b)(ii).

1.11 "Class III Director" has the meaning set forth in Section
2.1(b)(iii).

1.12 "Closing" has the meaning set forth in the recitals
hereto.

1.13 "Common Stock" means the Voting Common Stock and
Nonvoting Common Stock, par value $0.01 per share, of the Company.

1.14 "Company" means Classic Communications, Inc., a Delaware
corporation, and its successors and assigns.

1.15 "Current Investor Director" means Jeff Garvey for so long
as he serves as a director of the Company pursuant to Section 2.1 or his
replacement selected pursuant to Section 2.4.

1.16 "Equity Securities" means any class of capital stock of
the Company and all securities convertible into or rights to purchase capital
stock of the Company, if any, including any warrants and options and any and all
other equity securities of the Company or securities convertible into or
exchangeable for such securities or issued as a distribution with respect to or
in exchange for such securities.

1.17 "Fully Diluted Basis" means all outstanding shares of
Equity Securities plus all shares of Equity Securities issuable upon the
conversion of any other securities of the Company (including the exercise of any
warrants) in each case without regard to the voting rights attached to such
shares.

1.18 "GAAP" means United States generally accepted accounting
principles, consistently applied.

1.19 "Initial Public Offering" means a registered offering of
Common Stock that results in net proceeds to the Company of at least $100
million and listing of the Common Stock on a national securities exchange or the
Nasdaq National Market.

1.20 "Investor Director" has the meaning set forth in Section
2.1(a)(ii).

3
<PAGE> 6
1.21 "Investor Majority" means the holders of a majority of
Equity Securities held by the Investors.

1.22 "Management Stockholder" or "Management Stockholders" has
the meaning set forth in the preamble hereto.

1.23 "Permitted Transferee" or Permitted Transferees has the
meaning set forth in the Certificate of Incorporation.

1.24 "Person" means any natural person, corporation, firm,
joint venture, limited liability company, partnership, trust, unincorporated
organization, government or any department or agency of government or any other
entity.

1.25 "Seach" means Steven E. Seach.

1.26 "Securities Act" means the Securities Act of 1933, as
amended.

1.27 "Stockholder" or "Stockholders" means, collectively,
Brera, the Management Stockholders and the Investors.

2. Election of Directors and Related Matters.

2.1 Board Voting. Until such time as the Stockholders together
own less than 30% of the outstanding Common Stock on a Fully Diluted Basis (the
"Expiration Date"), the Company and each Stockholder agrees to take any and all
action necessary, including, without limitation, the voting of all of its Common
Stock, the execution of written consents, the calling of special meetings, the
removal of directors, the filling of vacancies in directorships on the Board,
the waiving of notice, the attendance of meetings and the amendment of the
Certificate of Incorporation or the Bylaws, so as to:

(a) cause the Board to consist of up to eleven (11) directors
composed of the following Persons:

(i) up to six (6) Persons designated by
Brera (the "Brera Directors");

4
<PAGE> 7

(ii) the chief executive officer of the
Company, initially Belisle for so long as he is employed by the
Company, and two other individuals selected by the Investor Majority,
provided that Seach shall hold one board seat, for so long as he is
employed by the Company, and the Current Investor Director shall hold
the other board seat until the Investor Majority decides otherwise
(the "Investor Directors"); and

(iii) two (2) Independent Directors (as
defined pursuant to Rule 4200 of the Marketplace Rules of the National
Association of Securities Dealers, Inc. or any successor provision
thereto, the "Independent Directors"), which shall be designated by a
majority vote of the Board.

(b) cause the Board to be divided into three classes as
follows:

(i) one class (the "Class I Directors") to
consist of up to two (2) Brera Directors and one (1) Investor Director
to serve until the first annual meeting of the Company following the
Closing and thereafter for additional terms of three years;

(ii) one class (the "Class II Directors") to
consist of up to two (2) Brera Directors, one (1) Investor Director and
one (1) Independent Director to serve until the second annual meeting
of the Company following the Closing and thereafter for additional
terms of three years; and

(iii) one class (the "Class III Directors") to
consist of up to two (2) Brera Directors, one (1) Investor Director and
one (1) Independent Director, to serve until the third annual meeting
of the Company following the Closing and thereafter for additional
terms of three years.

2.2 Chairmen. Brera will designate the chairman of the Board
and the chairman of each committee of the Board.

2.3 Removal. Unless required for the due exercise of their
fiduciary duties, the Stockholders will not take any action to remove any
director

5
<PAGE> 8

designated pursuant to this Section 2 without the prior written consent of the
Person who or which designated that director.

2.4 Vacancy. If any Brera Director or Investor Director (other
than the chief executive officer) ceases to serve as a member of the Board
during such representative's term of office, the resulting vacancy on the Board
shall be designated only by Brera or the Investor Majority, as the case may be,
but only upon such written direction and under no other circumstances. If
Belisle or Seach is terminated or otherwise ceases to be the chief executive
officer or chief financial officer, respec tively, of the Company (whether by
death, disability or otherwise), then such person shall be deemed to have
resigned from the Board and (a) in the case of Belisle, he will be replaced by
the new chief executive officer of the Company and (b) in the case of Seach, he
will be replaced by a director designated by the Investors consistent with the
terms and provisions of this Section 2.

2.5 Independence. Nothing contained in this Agreement shall
have the effect of causing any Brera Director, Investor Director or Independent
Director to be deemed to be the deputy of or otherwise required to discharge his
or her duties on the Board under the direction of, or with special attention to
the interests of, the person designating such Person to serve on the Board.

2.6 Preferred Stock. Nothing in this Agreement is intended to
affect the right, if any, of holders of preferred stock of the Company, voting
as a class, to elect additional directors to the Board as contained in the
certificate of designations with respect to such preferred stock.

2.7 Termination of Rights. If at any time any of the Investors
or Brera shall cease to own at least 2% of the outstanding Common Stock on a
Fully Diluted Basis, then Brera or such Investor, as the case may be, shall no
longer be entitled to participate in the designation of any member of the Board,
but shall be required to comply with this Agreement for so long as it holds at
least 1% of the outstanding Common Stock on a Fully Diluted Basis; provided that
if at any time the Investors as a group shall cease to own at least 4% of the
outstanding Common Stock on a Fully Diluted Basis, then the Investors as a group
shall no longer be entitled to participate in the designation of any member of
the Board.

2.8 Observer Rights. Each of Austin, Growth Fund, BT Capital
and BA Capital will have, so long as each remains party to this Agreement and
retains, together with its Affiliates, at least 2.5% of the Common Stock, the
rights to (a) receive notices of Board meetings along with the directors and (b)
send one

6
<PAGE> 9

representative to observe Board meetings, provided that the representative will
not have any right to vote at, participate in or disrupt the meeting, and
provided further that by sending a representative to a meeting, the Stockholder
agrees to be bound by all confidentiality and fiduciary duties that apply to
directors at such meetings. The Company will pay the reasonable out-of-pocket
expenses incurred in sending such an observer.

2.9 Term. The term of this Agreement shall become effective
and commence upon the Closing and terminate upon the Expiration Date.

2.10 Star Cable Associates. The parties to this Agreement
hereby agree that, upon (a) the execution by Star Cable Associates ("Star") of a
consent and joinder agreement pursuant to which Star agrees to be bound by all
of the provisions of this Agreement, and (b) the completion of the acquisition
of substantially all the assets of Star by Universal Cable Holdings, Inc.
("Universal") pursuant to the Asset Purchase Agreement, dated as of October 14,
1999, by and between Universal and Star, then, at the Company's discretion, Star
shall be bound by and entitled to the benefits of this Agreement as though it
were an original party hereto as a "Stock holder," and all references to
"Stockholder" herein shall be deemed to include Star.

2.11 Transaction Fees. Brera agrees that, so long as the
Current Investors as a group own at least 2% of the outstanding Common Stock on
a Fully Diluted Basis, then any transaction fee payable by the Company to Brera
that exceeds 1% of the transaction value for any such transaction must be
approved by a majority of the directors excluding the Brera Directors and the
directors of the Company who are officers of the Company.

3. Miscellaneous.

3.1 Confidentiality. Each party to this Agreement agrees to
use the same degree of care to keep confidential any information from time to
time supplied to it by or on behalf of the Company which the Company or the
Person acting on its behalf designates in writing at the time of its delivery to
be treated as confidential or actually known by the receiver to be confidential
information as such party uses to keep confidential its own information of a
similar character; provided, however, that the foregoing provisions of this
Section 3.1 shall not apply:

(a) to any information which is or becomes public knowledge
other than by reason of any breach by such party of this Section 3.1 or is or
becomes available to such party on a nonconfidential basis from a source that
such party

7
<PAGE> 10

reasonably believes may disclose such information without violating a
confidentiality obligation to the Company;

(b) to the extent a party is required to disclose the
information in question pursuant to any law, statute, rule or regulation or any
order of any court or judicial process or pursuant to any direction, request or
requirement of any self-regulating organization or any governmental, fiscal,
monetary or other authority;

(c) to the extent that a party is reasonably required to
disclose the information in question for the protection or enforcement of any of
such party's rights or interests against the Company (provided that each party
hereby agrees that it will use reasonable efforts promptly to notify the Company
of any request for information to which this clause (c) applies); or

(d) to the prospective transferee in connection with any
contemplated Transfer of any of the shares of Common Stock by such party,
provided such transferee agrees to maintain confidentiality of such information
consistent with the provisions of this Section 3.1.

3.2 Successors and Assigns. This Agreement shall not be assign
able by any Stockholder to any Person other than the Permitted Transferees.

3.3 Specific Performance. Without limiting the rights of each
party to this Agreement to pursue all other legal and equitable rights available
to such party for any other party's failure to perform its obligations under
this Agreement, the parties hereto acknowledge and agree that the remedy at law
for any failure to perform their obligations hereunder would be inadequate and
that each of them, respectively, shall be entitled to specific performance,
injunctive relief or other equitable remedies in the event of any such failure.

3.4 Entire Agreement; Amendment. This Agreement constitutes
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof. Without limiting the generality of the foregoing,
this Agreement supercedes the Original Stockholders' Agreement. This Agreement
may be amended, and the performance of any provision hereof may be waived, only
by the written agreement of each Stockholder holding at least 5% of the Equity
Securities on a Fully Diluted Basis.

3.5 Expenses and Attorneys' Fees. Except as specifically
provided in this Agreement, the Company shall pay all reasonable fees and
expenses incurred by the Stockholders, including the reasonable fees of their
respective counsel, in

8
<PAGE> 11

connection with the preparation, issuance, maintenance, reissuance and amendment
of this Agreement and the consummation of the transactions contemplated by this
Agree ment and the protection or enforcement of the Stockholders' rights under
this Agreement.

3.6 Notices. Any notice provided for in this Agreement must be
in writing and must be either (a) personally delivered, (b) sent by a recognized
overnight courier service, to the recipient at the address below indicated or
(c) by facsimile which is confirmed in writing by sending a copy of such
facsimile to the recipient thereof pursuant to clause (a) or (b) above:

To the Company: Classic Communications, Inc.
515 Congress Avenue
Austin, TX 78701
Attention: J. Merritt Belisle
Fax: (512) 476-5204

With a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive, Suite 2300
Chicago, IL 60606
Attention: Peter C. Krupp, Esq.
Fax: (312) 407-0411

With a copy to: Winstead Sechrest & Minick P.C.
100 Congress Avenue, Suite 800
Austin, Texas 78701
Attention: Tim Young
Fax: (512) 370-2850

To Brera: Brera Classic, LLC
c/o Brera Capital Partners, LLC
712 Fifth Avenue
34th Floor
New York, NY 10019
Attention: Lisa Hook
Fax: (212) 835-1399

9
<PAGE> 12

With a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive, Suite 2300
Chicago, IL 60606
Attention: Peter C. Krupp, Esq.
Fax: (312) 407-0411

To Stockholders: at the addresses listed on the signature pages attached hereto.

or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given (x) on the date
such notice is personally delivered, (y) one (1) day after the date such notice
is delivered to the overnight courier service if sent by overnight courier or
(z) with respect to facsimiles, on the earlier of one (1) day after the date
such facsimile is delivered to the overnight courier for confirmation or
confirmation by telephone to the number designated herein; provided that in each
case notices received after 4:00 p.m. (local time of the recipient) shall be
deemed to have been duly given on the next business day.

3.7 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

3.8 Headings. The headings and captions contained herein are
for convenience only and shall not control or affect the meaning or construction
of any provision hereof.

3.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and which
together shall constitute one and the same instrument.

3.10 Representations and Warranties. Each party to this
Agreement represents and warrants to each other party to this Agreement that (i)
all action on the part of such party necessary for the authorization, execution,
delivery and perfor mance of this Agreement has been taken and (ii) this
Agreement is a legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.

10
<PAGE> 13
3.11 Governing Law. All questions concerning the validity,
meaning and effect of this Agreement shall be determined in accordance with the
laws of the State of New York applicable to contracts made and to be performed
within the State, without regard to the principles of conflicts of laws except
to the extent necessary to permit this Agreement to be governed by New York law
as set forth above.

3.12 Consent to Jurisdiction and Service of Process;
Appointment of Agent for Service of Process. EACH PARTY TO THIS AGREEMENT HEREBY
CONSENTS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND ANY NEW YORK STATE COURT LOCATED IN THE
BOROUGH OF MANHATTAN AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREBY, OR ANY BUSINESS OR OTHER DISPUTES BETWEEN THE PARTIES (WHETHER SUCH
ACTIONS OR PROCEEDINGS ARE BASED IN STATUTE, TORT, CONTRACT OR OTHERWISE), SHALL
BE LITIGATED IN SUCH COURTS. EACH PARTY (A) CONSENTS TO SUBMIT ITSELF TO THE
PERSONAL JURISDICTION OF SUCH COURTS FOR SUCH ACTIONS OR PROCEEDINGS, (B) AGREES
THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION
OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (C) AGREES THAT IT WILL NOT
BRING ANY SUCH ACTION OR PROCEEDING IN ANY COURT OTHER THAN SUCH COURTS. EACH
PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE AND IRREVOCABLE JURISDICTION AND VENUE OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREE TO BE BOUND BY ANY NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION
WITH SUCH ACTIONS OR PROCEEDINGS. A COPY OF ANY SERVICE OF PROCESS SERVED UPON
THE PARTIES SHALL BE MAILED BY REGISTERED MAIL TO THE RESPECTIVE PARTY EXCEPT
THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY
SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY A
PARTY REFUSES TO ACCEPT SERVICE, EACH PARTY AGREES THAT SERVICE UPON THE
APPROPRIATE

11
<PAGE> 14

PARTY BY REGISTERED MAIL SHALL CONSTITUTE SUFFICIENT SERVICE. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.

3.13 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
RELATIONSHIP THAT IS BEING ESTABLISHED. EACH PARTY ALSO WAIVES ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF ANY OF THE OTHER PARTIES. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO
RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED
HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

ACCORDINGLY, EACH PARTY ACKNOWLEDGES THAT IT HAS WAIVED ITS RIGHT TO SUE OR BE
SUED IN TEXAS AND TO A JURY TRIAL. EACH PARTY HAS DISCUSSED THIS AGREEMENT WITH
ITS COUNSEL AND AGREES TO BE BOUND BY ITS TERMS.

12
<PAGE> 15

IN WITNESS WHEREOF, the parties have executed this
Stockholders' Agreement as of the day and year first above written.

CLASSIC COMMUNICATIONS, INC.

By:
----------------------------------
Name: J.Merritt Belisle
Title: Chief Executive Officer

BRERA CLASSIC, LLC

By:
----------------------------------
Name: Lisa A. Hook
Title: Authorized Signatory

<PAGE> 16
AUSTIN VENTURES, L.P.
By: AV PARTNERS, L.P.

By:
----------------------------------
Name: Jeffery C. Garvey
Title: General Partner

AUSTIN VENTURES III-A, L.P.
By: AV PARTNERS III, L.P.

By:
----------------------------------
Name: Jeffery C. Garvey
Title: General Partner

AUSTIN VENTURES III-B, L.P.
By: AV PARTNERS III, L.P.

By:
----------------------------------
Name: Jeffery C. Garvey
Title: General Partner

BA CAPITAL COMPANY, L.P.

By:
----------------------------------
Its General Partner

By:
----------------------------------
Name: Robert H. Sheridan
Title:

<PAGE> 17

BOARD OF TRUSTEES OF TEXAS GROWTH
FUND - 1991 TRUST, AS TRUSTEE

By: TGF Management Corp.

By:
----------------------------------
Name: James J. Kozlowski
Title: President

BT CAPITAL PARTNERS, INC.

By:
----------------------------------
Name: Robert J. Marakovits
Title: President

UNION BANCAL VENTURE CORPORATION

By:
----------------------------------
Name:
Title:

THE CHASE MANHATTAN BANK, N.A.

By:
----------------------------------
Name:
Title:

J. MERRITT BELISLE

By:
----------------------------------

<PAGE> 18

STEVEN E. SEACH

By:
----------------------------------

BRYAN D. NOTEBOOM

By:
----------------------------------

CIBC CAPITAL CORP.

By:
----------------------------------
Name:
Title:

SENIOR DEBT PORTFOLIO

By: Boston Management and Research as
Investment Advisor

By:
----------------------------------
Name:
Title:

MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.

By:
----------------------------------
Name:
Title:

<PAGE> 19

VAN KAMPEN PRIME RATE INCOME TRUST

By: Van Kampen Investment Advisory Corp.

By:
----------------------------------
Name:
Title:

MARK LIVINGSTON

By:
----------------------------------

COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEEN BANK B.A.
(Rabobank Nederland) New York Branch

By:
----------------------------------
Name:
Title:

FLEET NATIONAL BANK

By:
----------------------------------
Name:
Title:

UNION BANK

By:
----------------------------------
Name:
Title:

<PAGE> 1
EXHIBIT 10.28

FORM OF AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

dated as of November , 1999

among

CLASSIC COMMUNICATIONS, INC.,

BRERA CLASSIC, LLC,

and

the additional parties named herein.

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS.............................................................................2
1.1 Capitalized Terms.................................................................2
1.2 Defined Terms.....................................................................2
1.3 General Interpretive Principles...................................................7

SECTION 2. REGISTRATION RIGHTS.....................................................................7
2.1 Demand Registrations..............................................................7
2.2 Piggyback Registrations..........................................................12
2.3 Lock-Up Period for the Company and Others........................................14
2.4 Registration Procedures..........................................................15
2.5 Underwritten Offerings...........................................................23
2.6 No Inconsistent Agreements; Additional Rights....................................24
2.7 Registration Expenses............................................................25
2.8 Indemnification..................................................................26
2.9 Rules 144 and 144A...............................................................31
2.10 Effectiveness....................................................................31
2.11 Star Cable Associates............................................................31

SECTION 3. MISCELLANEOUS..........................................................................31
3.1 Entire Agreement.................................................................31
3.2 Injunctive Relief................................................................31
3.3 Attorneys' Fees..................................................................32
3.4 Notices..........................................................................32
3.5 Successors, Assigns and Transferees..............................................33
3.6 Headings.........................................................................34
3.7 Severability.....................................................................34
3.8 Amendment; Waiver................................................................34
3.9 Counterparts.....................................................................35
3.10 Representations and Warranties...................................................35
3.11 Governing Law....................................................................35
3.12 Consent to Jurisdiction and Service of Process; Appointment of Agent
for Service of Process...........................................................35
3.13 Waiver of Jury Trial.............................................................36
</TABLE>

<PAGE> 3

AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), dated as of November , 1999, is by and among Classic
Communications, Inc., a Delaware corporation (the "Company"), Brera Classic,
LLC, a Delaware limited liability company ("Brera"), J. Merritt Belisle
("Belisle"), Steven E. Seach ("Seach") and Bryan D. Noteboom ("Noteboom")
(Belisle, Seach, and Noteboom are collectively referred to as the "Management
Stockholders" and individually as a "Management Stockholder"), BT Capital
Partners, Inc., a Delaware corporation ("BT Capital"), Union Bancal Venture
Corporation, a Delaware corporation ("Union Bancal"), The Chase Manhattan Bank,
N.A. ("Chase"), Austin Ventures, L.P., a Delaware limited partnership
("Austin"), Austin Ventures III-A, L.P., a Delaware limited partnership ("Austin
III-A"), Austin Ventures III-B, L.P., a Delaware limited partnership ("Austin
III-B"), Texas Growth Fund, a trust fund created by the Constitution of the
State of Texas ("Growth Fund"), and BA Capital Company, L.P., successor in
interest to NationsBanc Capital Corp., a Texas Corporation ("BA Capital"), (BT
Capital, Union Bancal, Chase, Austin, Austin III-A, Austin III-B, Growth Fund
and BA Capital are collectively referred to as the "Current Investors" and
individually as a "Current Investor"). The parties (other than the Company) and
any Person who hereafter acquires shares of Equity Securities (as defined
herein) pursuant to the provisions of, and subject to the restrictions and
rights set forth in, this Agreement, shall sometimes hereinafter be referred to
individually as a "Stockholder" and collectively as the "Stockholders."

WHEREAS, the Company and Brera have entered into an Investment
Agreement, dated as of May 24, 1999 (the "Investment Agreement"), pursuant to
which Brera has purchased, in the aggregate, from the Company, and the Company
has sold to Brera, 6,490,734 shares of voting common stock, par value $0.01 per
share (the "Voting Common Stock"), of the Company;

WHEREAS, the Company is in the process of conducting an Initial Public
Offering;

WHEREAS, as part of the Initial Public Offering, all of the currently
outstanding shares of Voting Common Stock will be converted to Class B Voting
Common Stock, par value $0.01 per share ("Class B Common Stock") convertible

<PAGE> 4

into Class A Voting Common Stock, par value $0.01 per share ("Class A Common
Stock"), on a one-for-one basis;

WHEREAS, the parties to this Agreement wish to provide for certain
registration rights relating to the shares of Class A Common Stock issuable upon
the conversion of shares of Class B Common Stock;

WHEREAS, contingent upon the Current Investors (as defined herein)
being included in the overallotment option to be granted to the underwriters of
the Initial Public Offering, the parties to this Agreement wish to amend certain
provisions of the Registration Rights Agreement, dated as of July 28, 1999 (the
"Previous Registration Rights Agreement"), among the parties hereto, relating to
the allocation of registrable securities; and

WHEREAS, this Agreement shall not become effective until completion of
the Closing.

NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, covenants and agreements of the parties hereto, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS.

1.1 Capitalized Terms. Capitalized terms used but not defined herein
shall have the respective meanings given to them in the Investment Agreement.

1.2 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:

"Adverse Disclosure" means public disclosure of material non-public
information, which disclosure in the Board's good faith judgment after
consultation with counsel to the Company (i) would be required to be made in any
registration statement filed with the SEC by the Company so that such
registration statement would not be materially misleading; (ii) would not be
required to be made at such time but for the filing of such registration
statement; and (iii) the Company has a bona fide business purpose for not
disclosing publicly.

2
<PAGE> 5

"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by or under common control with that
Person. The term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of power to direct the
management and policies of that Person, whether through voting power, by
contract or otherwise.

"Agreement" has the meaning set forth in the preamble hereto.

"Brera" has the meaning set forth in the preamble hereto.

"Brera Registrable Securities" means any Class A Common Stock held by
or issuable to Brera upon conversion of shares of Class B Common Stock, and any
securities that may be issued or distributed or be issuable in respect of any
Brera Registrable Securities by way of stock dividend, stock split or other
distribution, merger, consolidation, exchange offer, recapitalization or
reclassification or similar transaction; provided, however, that any such Brera
Registrable Securities shall cease to be Brera Registrable Securities to the
extent a Registration Statement with respect to the sale of such Brera
Registrable Securities has been declared effective under the Securities Act and
such Brera Registrable Securities have been disposed of in accordance with the
plan of distribution set forth in such Registration Statement. Unless otherwise
provided herein, a percentage (or a majority) of the Brera Registrable
Securities shall be determined based on the number of securities remaining
unregistered.

"Board" means the board of directors of the Company.

"Business Day" has the meaning set forth in the Investment Agreement.

"Class A Common Stock" has the meaning set forth in the preamble
hereto.

"Class B Common Stock" has the meaning set forth in the preamble
hereto.

"Closing" means the closing of the Initial Public Offering of the
Company.

3
<PAGE> 6

"Common Stock" means the Voting Common Stock and Nonvoting Common
Stock, par value $0.01 per share, of the Company.

"Company" has the meaning set forth in the preamble and includes the
Company's successors by merger, acquisition, reorganization or otherwise.

"Company Public Sale" has the meaning set forth in Section 2.2(a).

"Current Investors" has the meaning set forth in the preamble hereto.

"Current Investors Registrable Securities" means any Class A Common
Stock held by or issuable to the Current Investors upon conversion of shares of
Class B Common Stock, and any securities that may be issued or distributed or be
issuable in respect of any Current Investors Registrable Securities by way of
stock dividend, stock split or other distribution, merger, consolidation,
exchange offer, recapitalization or reclassification or similar transaction;
provided, however, that any such Current Investors Registrable Securities shall
cease to be Current Investors Registrable Securities to the extent a
Registration Statement with respect to the sale of such Current Investors
Registrable Securities has been declared effective under the Securities Act and
such Current Investors Registrable Securities have been disposed of in
accordance with the plan of distribution set forth in such Registration
Statement. Unless otherwise provided herein, a percentage (or a majority) of the
Current Investors Registrable Securities shall be determined based on the number
of securities remaining unregistered.

"Demand Notice" has the meaning set forth in Section 2.1(f).

"Demand Period" has the meaning set forth in Section 2.1(e).

"Demand Registration" has the meaning set forth in Section 2.1(a)(iii).

"Demand Registration Statement" has the meaning set forth in Section
2.1(a).

"Equity Securities" has the meaning set forth in the Investment
Agreement.

4
<PAGE> 7

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor thereto, and any rules and regulations promulgated thereunder,
all as the same shall be in effect from time to time.

A "holder" or "holders" means, unless the context otherwise requires,
any holder or holders of Registrable Securities (whether or not acquired
pursuant to the Investment Agreement) who is a party hereto or who otherwise
agrees in writing to be bound by the provisions of this Agreement.

"Indemnified Company Parties" has the meaning set forth in Section
2.8(b).

"Indemnified Holder Parties" has the meaning set forth in Section
2.8(a).

"Initial Public Offering" means a registered offering of Common Stock
that results in net proceeds to the Company of at least $100 million and listing
of the Common Stock on a national securities exchange or the Nasdaq Stock
Market's National Market.

"Investment Agreement" has the meaning set forth in the recitals.

"Long-Form Registration" has the meaning set forth in Section
2.1(a)(i).

"Long-Form Demand Registration" has the meaning set forth in Section
2.1(a)(iii).

"Loss" has the meaning set forth in Section 2.8(a).

"NASD" means the National Association of Securities Dealers, Inc.

"Person" means any individual, firm, limited liability company or
partnership, joint venture, corporation, joint stock company, trust or
unincorporated organization, incorporated or unincorporated association,
government (or any department, agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.

"Piggyback Registration" has the meaning set forth in Section 2.2(a).

5
<PAGE> 8

"Prospectus" means the prospectus included in any Registration
Statement as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and all other amendments and supplements
to the prospectus, including post-effective amendments and all other material
incorporated by reference in such prospectus.

"Registrable Securities" means the Brera Registrable Securities and the
Current Investors Registrable Securities. For purposes of this Agreement, a
"class" of Registrable Securities means the Brera Registrable Securities or the
Current Investors Registrable Securities, as applicable.

"Registration" means a registration of the Company's securities for
sale to the public under a Registration Statement.

"Registration Expenses" has the meaning set forth in Section 2.7(a).

"Registration Statement" means any registration statement of the
Company filed with, or to be filed with, the SEC under the rules and regulations
promulgated under the Securities Act, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
and all exhibits and all material incorporated by reference in such registration
statement.

"Requesting Class" has the meaning set forth in Section 2.1(i).

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended, and any
successor thereto, and any rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time.

"Short-Form Registration" has the meaning set forth in Section
2.1(a)(i).

"Short-Form Demand Registration" has the meaning set forth in Section
2.1(a)(iii).

6
<PAGE> 9

"Underwritten Offering" means a Registration in which securities of the
Company are sold to an underwriter on a firm commitment basis for reoffering to
the public.

"Voting Common Stock" means the voting Common Stock, par value $.01 per
share, of the Company

1.3 General Interpretive Principles. Whenever used in this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
any noun or pronoun shall be deemed to include the plural as well as the
singular and to cover all genders. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
be construed to affect the meaning, construction or effect hereof. Unless
otherwise specified, the terms "hereof," "herein" and similar terms refer to
this Agreement as a whole (including the exhibits, schedules and disclosure
statements hereto), and references herein to Sections refer to Sections of this
Agreement.

SECTION 2. REGISTRATION RIGHTS.

2.1 Demand Registrations.

(a) Demand by Holders. (i) At any time after the Closing, but
in no event within one hundred eighty (180) days of the effective date
of a Registration Statement, the holder or holders of twenty (20%) or
more of the Brera Registrable Securities at any time may request
Registration under the Securities Act of all or part of their Brera
Registrable Securities on Form S-1 or any similar long-form
registration ("Long-Form Registration") or, if available, on Form S-3
or any similar short-form registration ("Short-Form Registration") by
delivering a written notice to the Company to that effect; provided,
however, that the aggregate offering value of the Brera Registrable
Securities requested to be registered in any such Registration must be
reasonably expected to equal at least $10,000,000.

(ii) At any time after the Closing, but in no
event within one hundred eighty (180) days of the effective date of a
Registration Statement, Current Investors holding a majority of the
Current Investors' Registrable Securities at any time may request
Registration under the Securities Act of all or part of their Current
Investors Registrable Securities on any Long-Form Registration or, if
available,

7
<PAGE> 10

any Short-Form Registration by delivering a written notice to the
Company to that effect; provided, however, that the aggregate offering
value of the Current Investors Registrable Securities requested to be
registered in any such Registration must be reasonably expected to
equal at least $10,000,000.

(iii) Any Long-Form Registration and Short-Form
Registration requested pursuant to this Section 2.1(a), other than a
Registration in which the Company sells any of its securities in a
primary offering, are referred to herein, respectively, as a "Long-Form
Demand Registration" and a "Short-Form Demand Registration." All
Long-Form Demand Registrations and Short-Form Demand Registrations
shall collectively be referred to herein as "Demand Registrations."
Notwithstanding the foregoing, the Company will have the right to
register and sell any of its securities in a Registration requested
pursuant to this Section 2.1 (a) and all Registrations requested
pursuant to this Section 2.1(a) in which the Company sells any of its
securities in a primary offering, other than pursuant to an
over-allotment option granted to underwriters in connection with such
offering, shall not be deemed to be Demand Registrations and shall be
considered Piggyback Registrations and will be governed by Section
2.2.

Each request for a Demand Registration shall specify the kind and aggregate
amount of the class of Registrable Securities to be registered and the intended
methods of disposition thereof. Upon such request for a Demand Registration, the
Company shall file a Registration Statement relating to such Demand Registration
(the "Demand Registration Statement"), and shall use its best efforts promptly
to cause to become effective the Registration of such class of Registrable
Securities (and all other Registrable Securities which the Company has been
requested to register by any other holder pursuant to Section 2.1(f) hereof)
under (i) the Securities Act, and (ii) the "Blue Sky" laws of such jurisdictions
as any holder of Registrable Securities being registered under such Registration
or any underwriter, if any, reasonably requests.

(b) Long-Form Demand Registrations. A maximum of four (4)
Long-Form Demand Registrations may be requested by the holders of the Brera
Registrable Securities pursuant to subparagraph (i) of Section 2.1(a), and a
maximum of three (3) Long-Form Demand Registration may be requested by the
holders of the Current Investors Registrable Securities pursuant to subparagraph
(ii) of Section

<PAGE> 11

2.1(a). A Registration will not count as a Long-Form Demand Registration until
it has become effective and unless the holders of Registrable Securities
initially requesting such Registration are able to register and sell at least
seventy-five percent (75%) of the Registrable Securities requested to be
included in such registration.

(c) Short-Form Demand Registrations. In addition to the
Long-Form Demand Registrations that may be requested pursuant to Section 2.1(b),
the holders of Brera Registrable Securities and the Current Investors
Registrable Securities will each, as a class, be entitled to request, pursuant
and subject to the terms of Section 2.1(a), four (4) Short-Form Demand
Registrations. Once the Company has become subject to the reporting requirements
of the Securities Exchange Act, the Corporation will use its best efforts to
make Short-Form Demand Registrations available for the sale of Registrable
Securities.

(d) Demand Withdrawal. In the event that a Demand Registration
is requested under Section 2.1(a), and the holders of the class of Registrable
Securities later determine not to sell their Registrable Securities in
connection with the registration requested, then prompt notice shall be given by
such holders to the Company that the registration requested is no longer
required and that the request is thereby withdrawn. Upon receipt of such notice,
the Company shall cease all efforts to secure registration and shall take all
action necessary and reasonably practicable to prevent the commencement of
effectiveness for any registration statement that it is preparing or has
prepared in connection with the withdrawn request. Such registration shall be
deemed a Demand Registration for purposes of Sections 2.1(b) and (c) above,
unless the withdrawing holders shall have paid or reimbursed the Company for all
of the reasonable out-of-pocket fees and expenses incurred by the Company in
connection with the registration of such withdrawn Registrable Securities.

(e) Effective Registration. The Company shall be deemed to
have effected a Demand Registration if the Demand Registration Statement is
declared effective by the SEC and remains effective for not fewer than 180 days
(or such shorter period as will terminate when all Registrable Securities
covered by such Demand Registration Statement have been sold or withdrawn), or,
if such Registration Statement relates to an Underwritten Offering, such longer
period as in the opinion of counsel for the underwriter or underwriters a
Prospectus is required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer (in either case, such period
being the "Demand Period"). No Demand Registration shall be deemed to have been
effected if (i) during the Demand Period, such Registration is interfered with
by any stop order, injunction or other

9
<PAGE> 12

order or requirement of the SEC or other governmental agency or court or (ii)
the conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such Registration are not satisfied.

(f) Demand Notice. Promptly upon receipt of any request for a
Demand Registration pursuant to Section 2.1(a) (but in no event more than five
(5) Business Days thereafter), the Company shall serve written notice (a "Demand
Notice") of any such Registration request to all other holders of Registrable
Securities, and the Company shall include in such Registration all such
Registrable Securities of any holder with respect to which the Company has
received written requests for inclusion therein within 30 days after the Demand
Notice has been given to it. All requests made pursuant to this Section 2.1(f)
shall specify the kind and aggregate amount of Registrable Securities to be
registered and the intended method of distribution of such securities.

(g) Delay in Filing; Suspension of Registration. If the
continued effectiveness of the Demand Registration Statement at any time would
require the Company to make an Adverse Disclosure, the Company may, upon giving
prompt written notice of such action to the holders, suspend use of the Demand
Registration Statement (a "Demand Suspension"); provided, however, that the
Company shall not be permitted to exercise a Demand Suspension (i) more than
three times during any twenty-four (24) month period, (ii) for a period
exceeding forty (40) days on any one occasion, or (iii) for an aggregate period
exceeding one hundred twenty (120) days in any twelve (12) month period with
respect to more than one Demand Suspension. In the case of a Demand Suspension,
the holders agree to suspend use of the Prospectus related to the Demand
Registration in connection with any such sale or purchase or offer to sell or
purchase of Registrable Securities upon receipt of the notice referred to above.
The Company shall immediately notify the holders upon the termination of any
Demand Suspension, amend or supplement the Prospectus, if necessary, so it does
not contain any untrue statement or omission therein and furnish to the holders
such numbers of copies of the Prospectus as so amended or supplemented as the
holders may reasonably request. The Company agrees, if necessary, to supplement
or make amendments to the Demand Registration Statement, if required by the
registration form used by the Company for the Demand Registration or by the
instructions applicable to such registration form or by the Securities Act or
the rules or regulations promulgated thereunder or as may reasonably be
requested by the Holders of a majority of the Registrable Securities to be
included in such Registration.

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<PAGE> 13

(h) Underwritten Offering. If not less than a majority of the
holders of any class of Registrable Securities requesting a Demand Registration
so elect, the offering of Registrable Securities pursuant to such Demand
Registration shall be in the form of an Underwritten Offering. If any offering
pursuant to a Demand Registration involves an Underwritten Offering, the holders
of a majority of the Registrable Securities included in such Demand Registration
shall, after consulting with the Company, have the right to select the managing
underwriter or underwriters to administer the offering.

(i) Priority of Securities Registered Pursuant to Demand
Registrations. If the managing underwriter or underwriters of a Demand
Registration (or, in the case of a Demand Registration not being underwritten,
holders of a majority of the class of Registrable Securities requesting the
Demand Registration (the "Requesting Class")), advise the Company in writing
that, in its or their opinion, the number of securities requested to be included
in such Demand Registration (including securities of the Company for its own
account or for the account of other Persons which are not holders of Registrable
Securities) exceeds the number which can be sold in such offering without being
likely to have a significant adverse effect on the price, timing or distribution
of the securities offered or the market for the Company's Common Stock, the
Company will include in such Registration, Registrable Securities sought to be
registered therein and only such lesser number of other securities as shall, in
the opinion of the managing underwriter or underwriters (or, in the case of a
Demand Registration not being underwritten, holders of a majority of the
Requesting Class) not be likely to have such an effect, allocated as follows:
(i) first, pro rata among all holders of Registrable Securities that have
requested pursuant to this Section 2.1 to be included in such Registration,
based on the fully diluted ownership of such holders (provided that any
Registrable Securities allocated to any such holder pursuant to this clause (i)
that exceed such holder's request will be reallocated among the remaining
requesting holders of Registrable Securities in like manner) and (ii) second,
and only if all of the Registrable Securities referenced in clause (i) have been
included, any other securities eligible for inclusion in such Registration.
Notwithstanding the foregoing, if such Demand Registration involves the Initial
Public Offering or the first Registration in which the Current Investors are
entitled to request that their Registrable Securities be

11
<PAGE> 14
included in such Registration, the Registrable Securities to be included in
such Registration shall be allocated as follows: two-thirds (2/3) of the number
of shares available for Registration under this Section 2.1(i) (the "Section 2.1
Available Shares") shall be allocated pro rata among the Current Investors which
have requested pursuant to Section 2.2(a) to be included in such Registration
based on their fully diluted ownership, and one-third (1/3) of the Section 2.1
Available Shares shall be allocated to Brera, Belisle and Seach as a group
(collectively, the "Brera Group") on a pro rata basis; provided, further,
however, that if either the Brera Group or the Current Investors (as a group)
desire to Register less than the number of shares allocated to it or them in
accordance with this Section 2.1(i), then the remaining Section 2.1 Available
Shares which the Brera Group or the Current Investors (as a group) do not desire
to register shall be re-allocated to the Current Investors (as a group) or the
Brera Group, as applicable.

2.2 Piggyback Registrations.

(a) Participation. If the Company at any time proposes to file
a Registration Statement under the Securities Act with respect to any offering
of its Equity Securities for its own account or for the account of any holders
(other than (i) a Registration under Section 2.1 hereof, (ii) a Registration on
Form S-4 or S-8 or any successor form to such Forms, (iii) a Registration of
securities solely relating to an offering and sale to employees or directors of
the Company pursuant to any employee stock plan or other employee benefit plan
arrangement, or (iv) a Registration of securities issued solely in an
acquisition or business combination) (a "Company Public Sale"), then, as soon as
practicable (but in no event less than thirty (30) days prior to the proposed
date of filing such Registration Statement), the Company shall give written
notice of such proposed filing to all holders of Registrable Securities and
(unless all such Registrable Securities are then registered pursuant to Section
2.1) such notice shall offer the holders of such Registrable Securities the
opportunity to register such number of Registrable Securities as each such
holder may request in writing (a "Piggyback Registration"). Subject to Section
2.2(b), the Company shall include in such Registration Statement all Registrable
Securities requested within fifteen (15) Business Days after the receipt by the
holder of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder) to be included in the
Registration for such offering pursuant to a Piggyback Registration; provided,
however, that if at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Registration
Statement filed in connection with such Registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of

12
<PAGE> 15

Registrable Securities and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such Registration (but not from its obligation to
pay the Registration Expenses in connection therewith), without prejudice,
however, to the rights of any holders of Registrable Securities entitled to
request that such Registration be effected as a Demand Registration under
Section 2.1, and (ii) in the case of a determination to delay registering and in
the absence of a request for a Demand Registration, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. If the offering pursuant to such Registration
Statement is to be underwritten, then each holder making a request for a
Piggyback Registration pursuant to this Section 2.2(a) must participate in such
Underwritten Offering. If the offering pursuant to such Registration Statement
is to be on any other basis, then each holder making a request for a Piggyback
Registration pursuant to this Section 2.2(a) must participate in such offering
on such basis. Each holder of Registrable Securities shall be permitted to
withdraw all or part of such holder's Registrable Securities from a Piggyback
Registration at any time prior to the effective date thereof. No registration
effected under this Section 2.2 shall relieve the Company of its obligation to
effect any registration upon request under Section 2.1, nor shall any such
registration hereunder be deemed to have been effected pursuant to Section 2.1.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2.2.

(b) Priority of Piggyback Registration. If the managing
underwriter or underwriters of any proposed Underwritten Offering in a Piggyback
Registration inform the Company and the holders of such Registrable Securities
in writing that the total amount or kind of securities which such holders and
any other Persons intend to include in such offering exceeds the number which
can be sold in such offering so as to have a significant adverse effect on the
price, timing or distribution of the securities offered in such offering or the
market for the Company's Common Stock, then the securities to be included in
such Registration shall be (i) first, 100% of the securities that the Company
proposes to sell, (ii) second, and only if all the securities referenced in
clause (i) have been included, the number of Registrable Securities that, in the
opinion of such underwriter or underwriters, can be sold without having such
adverse effect, allocated as follows: (A) in the Initial Public
Offering and

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<PAGE> 16
in the Company's first secondary offering in which Piggyback Registration rights
are available, two-thirds (2/3) of the number of shares available for
Registration under this clause (ii) (the "Section 2.2 Available Shares") shall
be allocated pro rata among the Current Investors which have requested pursuant
to Section 2.2(a) to be included in such Registration based on their fully
diluted owner ship, and one-third (1/3) of the Section 2.2 Available Shares
shall be allocated to the Brera Group; provided, further, however, that if
either the Brera Group or the Current Investors (as a group) desire to Register
less than the number of shares allocated to it or them in accordance with this
clause (ii), then the remaining Section 2.2 Available Shares which the Brera
Group or the Current Investors (as a group) do not desire to register shall be
re-allocated to the Current Investors (as a group) or the Brera Group, as
applicable; or (B) in any other offering, pro rata among the holders of all
Registrable Securities that have requested pursuant to Section 2.2(a) to be
included in such Registration, based on the fully diluted ownership of such
holders (provided that any Registrable Securities allocated to any such holder
pursuant to this clause (B) that exceed such holder's request will be
reallocated among the remaining requesting holders of Registrable Securities in
like manner) and (iii) third, and only if all of the Registrable Securities
referenced in clauses (i) and (ii) have been included, any other securities
eligible for inclusion in such Registration.

(c) No Effect on Demand Registrations. No Registration of
Registrable Securities effected pursuant to a request under this Section 2.2
shall be deemed to have been effected pursuant to Section 2.1 hereof or shall
relieve the Company of its obligations under Section 2.1 hereof.

2.3 Lock-Up Period for the Company and Others. In the case of an
Underwritten Offering, the Company agrees, if requested by the holders of a
majority of any class of Registrable Securities or the managing underwriters in
such Underwritten Offering, not to effect any public sale or distribution of
any securities the same as or similar to those being registered, or any
securities convertible into or exchange able or exercisable for such securities,
during the period beginning 7 days before, and ending 180 days (or such lesser
period as may be permitted by such holders or such underwriter) after, the
effective date of the Registration Statement filed in connection with such
registration (or, in the case of an underwriting under a shelf registration, the
date of the closing under the underwriting agreement), to the extent timely
notified in writing by a holder of Registrable Securities covered by such
Registration Statement or the managing underwriters (except, in each case, as
part of such Underwritten Offering, if permitted, or pursuant to registrations
on

14
<PAGE> 17

Forms S-4 or S-8 or any successor form to such Forms or otherwise as part of any
registration of securities for offering and sale to management of the Company
pursuant to any employee stock plan or other employee benefit plan arrangement
or Registration of securities issued solely in an acquisition or business
combination). The Company agrees to use all reasonable efforts to obtain from
each Current Investor and each holder of restricted securities of the Company
the same as or similar to those being registered by the Company, or any
restricted securities convertible into or exchangeable or exercisable for any of
its securities, an agreement not to effect any public sale or distribution of
such securities during any such period referred to in this paragraph, except as
part of any such Registration if permitted. Without limiting the foregoing (but
subject to Section 2.6), if after the date hereof the Company grants any Person
any rights to demand or participate in, a Registration, the Company agrees that
the agreement with respect thereto shall include such Person's agreement as
contemplated by the previous sentence. In addition to the foregoing, each holder
of Registrable Securities hereby agrees not to effect any public sale or
distribution of equity securities of the Company, including any public sale
pursuant to Rule 144 under the Securities Act, or any securities convertible
into or exchangeable or exercisable for such securities, during the seven days
prior to and the 180-day period beginning on the effective date of the Company's
Initial Public Offering, unless the underwriters managing the Initial Public
Offering otherwise agree. During such period, the Company may impose stop
transfer instructions with respect to Registrable Securities to prohibit
transfers in violation of the previous sentence.

2.4 Registration Procedures.

(a) Actions by Company. In connection with the Company's
registration obligations under Sections 2.1 and 2.2 hereof, the Company will use
its best efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
distribution thereof as expeditiously as possible, and pursuant thereto the
Company will, as expeditiously as possible:

(i) before filing a Registration Statement or Prospectus, or
any amendments or supplements thereto and in connection therewith, (x)
furnish to the underwriters, if any, and to the holders of the
Registrable Securities covered by such Registration Statement, copies
of all documents prepared to be filed, which documents will be subject
to the review of such underwriters and such holders and their

15
<PAGE> 18

respective counsel and (y) except in the case of a registration under
Section 2.2, not file any Registration Statement or Prospectus or
amendments or supplements thereto to which the holders of a majority of
Registrable Securities covered by such Registration Statement or the
underwriters, if any, shall reasonably object;

(ii) prepare and, in the case of a Demand Registration, no
later than 45 days after a request for a Demand Registration, file with
the SEC a Registration Statement relating to the Registrable Securities
including all exhibits and financial statements required by the SEC to
be filed therewith, and use its best efforts to cause such Registration
Statement to become effective under the Securities Act; provided,
however, that such period shall be 90 days if a request for a Demand
Registration is made in the first 45 days of any year, and the Company
cannot file such Demand Registration without audited financial
statements for the prior calendar year under the rules of the SEC;

(iii) prepare and file with the SEC such amendments and
post-effective amendments to such Registration Statement and
supplements to the Prospectus as may be (x) reasonably requested by the
holders of a majority of the participating Registrable Securities, (y)
reasonably requested by any participating holder (to the extent such
request relates to information relating to such holder), or (z)
necessary to keep such Registration effective for the Demand Period (in
the case of a Demand Registration);

(iv) notify the selling holders of Registrable Securities and
the managing underwriter or underwriters, if any, and (if requested)
confirm such advice in writing, as soon as reasonably practicable after
notice thereof is received by the Company (a) when the Registration
Statement or any amendment thereto has been filed or becomes effective,
when the Prospectus or any amendment or supplement to the Prospectus
has been filed, and, to furnish such selling holders and managing
underwriter or underwriters, if any, with copies thereof, (b) of any
written comments by the SEC or any request by the SEC or any other
federal or state governmental authority for amendments or supplements
to the Registration Statement or the Prospectus or for additional
information, (c) of the issuance by the SEC of any

16
<PAGE> 19

stop order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of any preliminary or
final Prospectus or the initiation or threatening of any proceedings
for such purposes, (d) if, at any time, the representations and
warranties of the Company contemplated by paragraph (xiv) below cease
to be true and correct in all material respects and (e) of any
notification with respect to the suspension of the qualification of the
Registrable Securities for offering or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;

(v) promptly notify each selling holder of Registrable
Securities and the managing underwriter or underwriters, if any, when
the Company becomes aware of the happening of any event as a result of
which the Registration Statement or the Prospectus included in such
Registration Statement (as then in effect) contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein (in the case of the Prospectus
and any preliminary Prospectus, in light of the circumstances under
which they were made) not misleading or, if for any other reason it
shall be necessary during such time period to amend or supplement the
Registration Statement or the Prospectus in order to comply with the
Securities Act and, in either case as promptly as reasonably
practicable thereafter, prepare and file with the SEC, and furnish
without charge to the selling holders and the managing underwriter or
underwriters, if any, an amendment or supplement to such Registration
Statement or Prospectus which will correct such statement or omission
or effect such compliance;

(vi) make every reasonable effort to prevent or obtain the
withdrawal of any stop order or other order suspending the use of any
preliminary or final Prospectus or suspending any qualification of the
Registrable Securities at the earliest possible moment;

(vii) if reasonably requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in
connection with an Underwritten Offering, promptly incorporate in a
Prospectus supplement or post-effective amendment such information as
the managing underwriter or underwriters and the holders of a majority
of the Registrable Securities being sold agree

17
<PAGE> 20

should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being
sold to, and the purchase price being paid therefor by, such
underwriter or underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all required filings
of such Prospectus supplement or post-effective amendment as soon as
reasonably practicable after being notified of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment;

(viii) furnish to each selling holder of Registrable
Securities and each managing underwriter, if any, without charge, as
many conformed copies as such holder or managing underwriter may
reasonably request of the Registration Statement and any amendment or
post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference);

(ix) deliver to each selling holder of Registrable Securities
and each managing underwriter, if any, without charge, as many copies
of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such holder or managing underwriter
may reasonably request (it being understood that the Company consents
to the use of the Prospectus or any amendment or supplement thereto by
each of the selling holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto) and such other documents as such selling holder or
managing underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities by such holder or
underwriter;

(x) on or prior to the date on which the Registration
Statement is declared effective, use its best efforts to register or
qualify, and cooperate with the selling holders of Registrable
Securities, the managing underwriter, underwriters or agent, if any,
and their respective counsel, in connection with the registration or
qualification of such Registrable Securities for offer and sale under
the securities or

18
<PAGE> 21

"Blue Sky" laws of each state and other jurisdiction of the United
States as any such selling holder, underwriter or agent, if any, or
their respective counsel, reasonably request in writing and do any and
all other acts or things reasonably necessary or advisable to keep such
registration or qualification in effect for so long as such
Registration Statement remains in effect and so as to permit the
continuance of sales and dealings in such jurisdictions for as long as
may be necessary to complete the distribution of the Registrable
Securities covered by the Registration Statement; provided that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action
which would subject it to taxation or general service of process in any
such jurisdiction where it is not then so subject;

(xi) cooperate with the selling holders of
Registrable Securities and the managing underwriter, underwriters or
agent, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the
managing underwriters may request at least two (2) Business Days prior
to any sale of Registrable Securities to the underwriters;

(xii) use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriter
or underwriters, if any, to consummate the disposition of such
Registrable Securities;

(xiii) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Registrable
Securities and provide the applicable transfer agent with printed
certificates for the Registrable Securities which are in a form
eligible for deposit with The Depository Trust Company or such other
form as is reasonably requested by the selling holders;

(xiv) make such representations and warranties to the holders
of Registrable Securities being registered, and the

19
<PAGE> 22

underwriters or agents, if any, in form, substance and scope as are
customarily made by issuers in secondary underwritten public offerings;

(xv) enter into such customary agreements (including
underwriting and indemnification agreements) and take all such other
actions as the holders of at least a majority of any class of
Registrable Securities being sold or the managing underwriter or agent,
if any, reasonably request in order to expedite or facilitate the
registration and disposition of such Registrable Securities;

(xvi) obtain for delivery to the holders of Registrable
Securities being registered and to the underwriter, under writers or
agent, if any, an opinion or opinions from counsel for the Company
dated the effective date of the Registration Statement and, in the
event of an Underwritten Offering, brought down to the date of
execution of the underwriting agreement (if different from such
effective date) and to the closing under the underwriting agreement, in
customary form, scope and substance, which counsel and opinions shall
be reasonably satisfactory to such holders, underwriters or agents and
their respective counsel;

(xvii) obtain for delivery to the Company and the underwriter,
underwriters or agent, if any, with copies to the holders of
Registrable Securities (unless precluded by applicable accounting
rules), a "comfort" letter from the Company's independent certified
public accountants in customary form and covering such matters of the
type customarily covered by "comfort" letters and such other matters as
the managing underwriter or underwriters reasonably request, dated the
date of execution of the underwriting agreement and brought down to the
closing under the underwriting agreement;

(xviii) notify each seller of Registrable Securities and each
underwriter or agent, if any, participating in the disposition of such
Registrable Securities and their respective counsel of, and cooperate
with such sellers and such underwriters or agents, if any, in
connection with any filings required to be made with the NASD;

(xix) use its best efforts to comply with all applicable rules
and regulations of the SEC and make generally available to

20
<PAGE> 23

its security holders, as soon as reasonably practicable (but not more
than fifteen months) after the effective date of the Registration
Statement, an earnings statement satisfying the provisions of Section
11(a) of the Securities Act and the rules and regulations promulgated
thereunder;

(xx) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such Registration
Statement from and after a date not later than the effective date of
such Registration Statement;

(xxi) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on
which any of the Company's securities are then listed or quoted and on
each inter-dealer quotation system on which any of the Company's
securities are then quoted;

(xxii) make available upon reasonable notice at reasonable
times and for reasonable periods for inspection by a representative
appointed by a majority of the sellers of such Registrable Securities
covered by such Registration Statement, by any underwriter
participating in any disposition to be effected pursuant to such
Registration Statement and by any attorney, accountant or other agent
retained by such sellers or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers,
directors and employees and the independent public accountants who have
certified its financial statements to make themselves available to
discuss the business of the Company and to supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such Registration Statement as
shall be necessary to enable them to exercise their due diligence
responsibility (subject to each party referred to in this clause (xxii)
entering into customary confidentiality agreements in a form reasonably
acceptable to the Company);

(xxiii) make available senior management personnel of the
Company to participate in, and cause them to cooperate with the holders
or the managing underwriter in any Underwritten Offering in connection
with "road show" and other customary marketing activities, including
"one-on-one" meetings with prospective purchasers of the Registrable
Securities to be sold in the Underwritten

21
<PAGE> 24

Offering and otherwise to facilitate, cooperate with, and participate
in each pro posed offering contemplated herein and customary selling
efforts related thereto, in each case to the same extent as if the
Company were engaged in a primary registered offering of its Common
Stock;

(xxiv) promptly, after the issuance of an earnings release or
upon the request of a holder, prepare a current report on Form 8-K with
respect to such earnings release or a matter of disclosure as
requested by such holder and file such Form 8-K with the SEC; and

(xxv) take such other actions as sellers of such Registrable
Securities holding 51% of the shares to be sold shall reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities.

(b) Holders' Information. The Company may require each seller
of Registrable Securities as to which any Registration is being effected to
furnish to the Company such information regarding the distribution of such
securities and such other information relating to such holder and its ownership
of Registrable Securities as the Company may from time to time reasonably
request in writing. Each holder of Registrable Securities agrees to furnish such
information to the Company and to cooperate with the Company as necessary to
enable the Company to comply with the provisions of this Agreement. If any such
registration statement refers to any holder of Registrable Securities by name or
otherwise as the holder of any securities of the Company, then such holder shall
have the right to require (i) the insertion therein of language, in form and
substance satisfactory to such holder, to the effect that the holding by such
holder of such securities is not to be construed as a recommendation
by such holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the deletion of the
reference to such holder.

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<PAGE> 25

(c) Discontinuation of Disposition. Each holder of Registrable
Securities agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 2.4(a)(v) hereof, such holder will forthwith discontinue
disposition of Registrable Securities pursuant to such Registration Statement
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 2.4(a)(v) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus, and, if so directed by the Company, such holder
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the Demand Period
during which such Registration Statement is required to be maintained effective
shall be extended by the number of days during the period from and including
the date of the giving of such notice to and including the date when each seller
of Registrable Securities covered by such Registration Statement either receives
the copies of the supplemented or amended Prospectus contemplated by Section
2.4(a)(v) hereof or is advised in writing by the Company that the use of the
Prospectus may be resumed.

2.5 Underwritten Offerings.

(a) Demand Registrations. If requested by the underwriters for
any Underwritten Offering requested by holders of Registrable Securities
pursuant to a Registration under Section 2.1, the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Company, holders of a
majority of the Registrable Securities to be included in such underwriting, and
the underwriters, and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of that
type, including, without limitation, indemnities no less favorable to the
recipient thereof than those provided in Section 2.8. The holders of the
Registrable Securities proposed to be distributed by such underwriters will
cooperate with the Company in the negotiation of the underwriting agreement and
will give consideration to the reasonable suggestions of the Company regarding
the form thereof. Such holders of Registrable Securities to be distributed by
such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such

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<PAGE> 26

underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Any such
holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities, such holder's intended method of
distribution and any other representations required by law.

(b) Piggyback Registrations. If the Company proposes to
register any of its securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed in an Underwritten
Offering through one or more underwriters, the Company will, if requested by any
holder of Registrable Securities pursuant to Section 2.2 and subject to the
provisions of Section 2.2(b), use its best efforts to arrange for such
underwriters to include on the same terms and conditions that apply to the other
sellers in such Registration all the Registrable Securities to be offered and
sold by such holder among the securities of the Company to be distributed by
such underwriters in such Registration. The holders of Registrable Securities to
be distributed by such underwriters shall be parties to the underwriting
agreement between the Company and such underwriters and any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the under writers other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution or any other representations required
by law.

(c) Participation in Underwritten Registrations. No Person may
participate in any Underwritten Offering hereunder unless such Person (i) agrees
to sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled to approve such arrangements and
(ii) completes and executes all questionnaires, indemnities, underwriting
agreements and other documents (other than powers of attorney) required under
the terms of such underwriting arrangements.

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<PAGE> 27

2.6 No Inconsistent Agreements; Additional Rights. The Company will not
hereafter enter into, and except as disclosed on Schedule 3.3 to the Investment
Agreement and the Existing Registration Rights Agreements (as defined in the
Investment Agreement), is not currently a party to, any agreement with respect
to its securities which is inconsistent with the rights granted to the holders
of Registrable Securities by this Agreement or otherwise conflicts with the
provisions hereof.

2.7 Registration Expenses.

(a) Expenses Paid by Company. All expenses incident to the
Company's performance of or compliance with this Agreement will be paid by the
Company (and, in the case of the filing of a Registration Statement, regardless
of whether such Registration Statement becomes effective), including without
limitation (i) all registration and filing fees, and any other fees and expenses
associated with filings required to be made with the SEC or the NASD (including,
if applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel as may be required by the rules and regulations of the NASD),
(ii) all fees and expenses of compliance with state securities or "Blue Sky"
laws (including fees and disbursements of counsel in connection with "Blue Sky"
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities being sold
may designate), (iii) all printing, duplicating, word processing, messenger,
telephone, facsimile and mailing and delivery expenses (including expenses of
printing certificates for the Registrable Securities in a form eligible for
deposit with The Depository Trust Company and of printing prospectuses), (iv)
all printing, mailing and delivery expenses incurred in the preparation and
delivery of a Registration Statement or Prospectus, (v) all fees and
disbursements of counsel for the Company and of all independent certified public
accountants of the Company (including the expenses of cold comfort letters
required by or incident to such performance), (vi) Securities Act liability
insurance or similar insurance if the Company so desires or the underwriters so
require in accordance with then customary underwriting practice, (vii) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or quotation of the Registrable Securities
on any inter-dealer quotation system, (viii) all applicable rating agency fees
with respect to the Preferred Stock, (ix) all reasonable fees and disbursements
of one law firm or other counsel selected by the holders of a majority of the
Registrable Securities being registered, (x) all reasonable fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (except as

25
<PAGE> 28

set forth in Section 2.7(b) below), (xi) all fees and expenses of accountants to
the holders of Registrable Securities being sold, (xii) all fees and expenses of
any special experts retained by the Company in connection with any Demand
Registration or Piggyback Registration and (xiii) fees and expenses of other
Persons retained by the Company without limitation (all such expenses being
herein called "Registration Expenses"). The Company will, in any event, pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any audit and the fees and expenses of any Person, including special experts,
retained by the Company.

(b) Expenses Not Paid by Company. The Company shall not be
required to pay any fees and disbursements of underwriters not customarily paid
by the issuers or sellers of securities, including underwriting discounts and
commissions and transfer taxes, if any, attributable to the sale of Registrable
Securities and the fees and expenses of counsel to the underwriters other than
as provided in paragraph (a) above.

2.8 Indemnification.

(a) Indemnification by Company. The Company will, and hereby
agrees to, indemnify and hold harmless, to the full extent permitted by law,
each holder of Registrable Securities, its Affiliates and their respective
officers, directors, shareholders, employees, advisors, agents, each other
Person who participates as an underwriter, selling broker, dealer manager, or
similar securities industry professional in the offering or sale of Registrable
Securities, and each Person who controls (within the meaning of the Securities
Act or the Exchange Act) any of the foregoing Persons (collectively, the
"Indemnified Holder Parties") from and against any and all losses, claims,
damages, liabilities (or actions or proceedings in respect thereof, whether or
not such Indemnified Holder Party is a party thereto) and expenses, joint or
several (including reasonable costs of investigation and legal expenses) (each,
a "Loss" and collectively "Losses") arising out of or based upon (i) any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement under which such Registrable Securities were registered under the
Securities Act (including any final, preliminary or summary Prospectus
contained therein or any amendment thereof or supplement thereto or any
documents incorporated by reference therein), or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a Prospectus or
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading; provided, however, that the Company

26
<PAGE> 29

shall not be liable to any particular Indemnified Holder Party in any such case
to the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any such Registration Statement in reliance upon and in conformity with written
information furnished to the Company by such Indemnified Holder Party through an
instrument duly executed by such Indemnified Holder Party, specifically stating
that it is for use in the preparation of such Registration Statement; and
provided, further, that the Company will not be liable to any particular
Indemnified Holder Party in any case to the extent that any such Loss arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in any final, preliminary or summary Prospectus if such
untrue statement or alleged untrue statement or omission or alleged omission is
completely corrected in an amendment or supplement to such Prospectus and the
relevant Indemnified Holder Party (having previously been furnished by or on
behalf of the Company with a sufficient number of copies of the same on a timely
basis), fails to deliver such Prospectus as so amended or supplement prior to or
concurrently with the sales of the Registrable Securities to the Person
asserting such loss, claim, damage, liability or expense. This indemnity shall
be in addition to any liability the Company may otherwise have. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such holder or any Indemnified Holder Party and shall survive the
transfer of such securities by such holder.

(b) Indemnification by the Selling Holder of Registrable
Securities. In the event of Registration of any Registrable Securities of the
Company under the Securities Act pursuant to Sections 2.1 or 2.2 hereof, each
selling holder of Registrable Securities agrees (severally and not jointly) to
indemnify and hold harmless, to the full extent permitted by law, the Company,
its directors and officers and each Person who controls (within the meaning of
the Securities Act and the Exchange Act) the Company (collectively, the
"Indemnified Company Parties") from and against any Losses resulting from any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement under which such Registrable
Securities were registered under the Securities Act (including any final,
preliminary or summary Prospectus contained therein or any amendment thereof or
supplement thereto or any documents incorporated by reference therein), or
necessary to make the statements therein (in the case of a Prospectus or
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any written information furnished to the
Company through an instrument duly executed by such holder, specifically stating
that it is for

27
<PAGE> 30

inclusion in such Registration Statement and has not been corrected in a
subsequent writing prior to or concurrently with the sale of the Registrable
Securities. In no event shall the liability of any selling holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such holder under the sale of the Registrable Securities giving rise
to such indemnification obligation. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above (with appropriate modification) with respect to
information so furnished in writing by such Persons specifically for inclusion
in any Prospectus or Registration Statement.

(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided, that any delay or failure to so notify the indemnifying party shall
relieve the indemnifying party of its obligations hereunder only to the extent,
if at all, that it is actually and materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the Indemnified Holder Party
or the Indemnified Company Party, as the case may be; provided, however, that
any Person entitled to indemnification hereunder shall have the right to select
and employ separate counsel and to participate in the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such Person
unless (i) the indemnifying party has agreed in writing to pay such fees or
expenses, (ii) the indemnifying party shall have failed to assume the defense of
such claim within a reasonable time after receipt of notice of such claim from
the Person entitled to indemnification hereunder and employ counsel reasonably
satisfactory to such Person, (iii) the Indemnified Holder Party or the
Indemnified Company Party, as the case may be, has reasonably concluded (based
on advice of counsel) that there may be legal defenses available to it or other
Indemnified Holder Parties or Indemnified Company parties, as the case may be,
that are different from or in addition to those available to the indemnifying
party, or (iv) in the reasonable judgment of any such Person, based upon advice
of its counsel, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent, but such consent may not be unreasonably

28
<PAGE> 31

withheld; provided that an indemnifying party shall not be required to consent
to any settlement involving the imposition of equitable remedies or involving
the imposition of any material obligations on such indemnifying party other
than financial obligations for which such indemnified party will be indemnified
hereunder. If the indemnifying party assumes the defense, the indemnifying party
shall have the right to settle such action without the consent of the
Indemnified Holder Party or the Indemnified Company Party, as the case may be;
provided, however, that the indemnifying party shall be required to obtain such
consent (which consent shall not be unreasonably withheld) if the settlement
includes any admission of wrongdoing on the part of the Indemnified Holder Party
or the Indemnified Company Party, as the case may be, or any decree or
restriction on the Indemnified Holder Party or the Indemnified Company Party, as
the case may be, or its officers or directors. No indemnifying party shall
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Holder Party or Indemnified Company Party, as the
case may be, of an unconditional release from all liability in respect to such
claim or litigation or which would impose any material obligations on such
Indemnified Holder Party or Indemnified Company Party, as the case may be. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time from all such
Indemnified Holder Party or Parties or Indemnified Company Party or Parties, as
the case may be, unless (x) the employment of more than one counsel has been
authorized in writing by the Indemnified Holder Party or Parties or the
Indemnified Company Party or Parties, as the case may be, (y) an Indemnified
Holder Party or Indemnified Company Party, as the case may be, has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it that are different from or in addition to those available to the
other Indemnified Holder Parties or Indemnified Company Parties, as the case may
be, or (z) a conflict or potential conflict exists or may exist (based on advice
of counsel to an Indemnified Holder Party or an Indemnified Company Party, as
the case may be) between such Indemnified Holder Party or such Indemnified
Company Party, as the case may be, and the other Indemnified Holder Parties or
Indemnified Company Parties, as the case may be, in each of which cases the
indemnifying party shall be obligated to pay the reasonable fees and expenses
of such additional counsel or counsels.

(d) Contribution. If for any reason the indemnification
provided for in paragraphs (a) and (b) of this Section 2.8 is unavailable to an
Indemnified

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<PAGE> 32

Holder Party or an Indemnified Company Party, as the case may be, or
insufficient to hold it harmless as contemplated by paragraphs (a) and (b) of
this Section 2.8, then the indemnifying party shall contribute to the amount
paid or payable by the Indemnified Holder Party or the Indemnified Company
Party, as the case may be, as a result of such Loss in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the Indemnified Holder Party or the Indemnified Company Party, as the
case may be, on the other. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the Indemnified
Holder Party or the Indemnified Company Party, as the case may be, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Notwithstanding anything
in this Section 2.8(d) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this Section 2.8(d) to contribute any
amount in excess of the amount by which the net proceeds received by such
indemnifying party from the sale of Registrable Securities in the offering to
which the Losses of the Indemnified Holder Parties or the Indemnified Company
Parties, as the case may be, relate exceeds the amount of any damages which such
indemnifying party has otherwise been required to pay by reason of such untrue
statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.8(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. If
indemnification is available under this Section 2.8, the indemnifying parties
shall indemnify each Indemnified Holder Party or Indemnified Company Party, as
the case may be, to the full extent provided in Sections 2.8(a) and 2.8(b)
hereof without regard to the relative fault of said indemnifying parties or
Indemnified Holder Party or Indemnified Company Party, as the case may be.

(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subdivisions of this Section 2.8
(with appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of any
governmental authority, other than the Securities Act.

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<PAGE> 33

(f) Indemnification Payments. The indemnification required by
this Section 2.8 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, promptly as and when bills are
received or Losses are incurred.

2.9 Rules 144 and 144A. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rules 144, 144A or Regulation S under the
Securities Act), and it will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rules 144, 144A or Regulation S under the Securities Act, as
such Rules may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements and, if not, the
specifics thereof.

2.10 Effectiveness. This Agreement shall not become effective until the
Closing. Prior to such time, the terms of the Previous Registration Rights
Agreement shall remain in full force and effect.

2.11 Star Cable Associates. The parties to this Agreement hereby agree
that, upon (a) the execution by Star Cable Associates ("Star") of a consent and
joinder agreement pursuant to which Star agrees to be bound by all of the
provisions of this Agreement, and (b) the completion of the acquisition of
substantially all the assets of Star by Universal Cable Holdings, Inc.
("Universal") pursuant to the Asset Purchase Agreement, dated as of October 14,
1999, by and between Universal and Star, then Star shall be bound by and
entitled to the benefits of this Agreement as though it were an original party
hereto, and all references to "Current Investors" herein shall be deemed to
include Star.

SECTION 3. MISCELLANEOUS.

3.1 Entire Agreement. This Agreement shall, as of the Closing,
constitute the full and entire understanding and agreement between the parties
with

31
<PAGE> 34

regard to the subject matter hereof. This Agreement shall, as of the Closing,
supercede the Previous Registration Rights Agreement.

3.2 Injunctive Relief. It is hereby agreed and acknowledged that it
will be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an aggrieved Person will be irreparably
damaged and will not have an adequate remedy at law. Any such Person shall,
therefore, be entitled (in addition to any other remedy to which it may be
entitled in law or in equity) to injunctive relief, including, without
limitation, specific performance, to enforce such obligations, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law.

3.3 Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is validly asserted as
a defense, the successful party shall, to the extent permitted by applicable
law, be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.

3.4 Notices. Any notice provided for in this Agreement must be in
writing and must be either (a) personally delivered, (b) sent by a recognized
overnight courier service, to the recipient at the address below indicated or
(c) by facsimile which is confirmed in writing by sending a copy of such
facsimile to the recipient thereof pursuant to clause (a) or (b) above:

To the Company: Classic Communications, Inc.
515 Congress Avenue
Austin, TX 78701
Attention: J. Merritt Belisle
Fax: (512) 476-5204

With a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive, Suite 2300
Chicago, IL 60606
Attention: Peter C. Krupp, Esq.
Fax: (312) 407-0411

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<PAGE> 35

With a copy to: Winstead Sechrest & Minick P.C.
100 Congress Avenue, Suite 800
Austin, Texas 78701
Attention: Tim Young
Fax: (512) 370-2850

To Brera: Brera Classic, LLC
c/o Brera Capital Partners, LLC
712 Fifth Avenue
34th Floor
New York, NY 10019
Attention: Lisa Hook
Fax: (212) 835-1399

With a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive, Suite 2300
Chicago, IL 60606
Attention: Peter C. Krupp, Esq.
Fax: (312) 407-0411

To Stockholders: at the addresses listed on the signature pages
attached hereto.

or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given (x) on the date
such notice is person ally delivered, (y) one (1) day after the date such notice
is delivered to the overnight courier service if sent by overnight courier or
(z) with respect to facsimiles, on the earlier of one (1) day after the date
such facsimile is delivered to the overnight courier for confirmation or
confirmation by telephone to the number designated herein; provided that in each
case notices received after 4:00 p.m. (local time of the recipient) shall be
deemed to have been duly given on the next business day.

3.5 Successors, Assigns and Transferees. (a) The registration rights of
any holder under this Agreement with respect to any Registrable Securities may
be transferred and assigned, provided that other than a transfer or assignment
to Brera or an Affiliate of Brera, no such assignment shall be binding upon or
obligate the Company to any such assignee unless and until (i) the Company shall
have received notice of such assignment as herein provided, which notice shall
(A)

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<PAGE> 36

reference this Agreement and (B) set forth the name and address of any assignee
for the purpose of any notices hereunder or (ii) such assignee can establish its
beneficial or record ownership of any Registrable Securities and shall have
provided the Company with the information called for by clause (i)(B) of this
Section 3.5(a), (iii) such assignee acquires at least twenty percent (20%) of
the Registrable Securities held by a holder; provided that such Registrable
Securities represent at least five percent (5%) of the Company's outstanding
Common Stock; provided, further, that any assignment of registration rights to a
limited or general partner of any holder will be without restriction as to
minimum share holdings, and (iv) such assignee is not a competitor of the
Company. Any transfer or assignment made other than as provided in the first
sentence of this Section 3.5 shall be null and void.

(b) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, and their respective successors and permitted
assigns. Whether or not any express assignment shall have been made, the
provisions of this Agreement which are for the benefit of the parties hereto
other than the Company shall also be for the benefit of and enforceable by any
subsequent holder of Registrable Securities, subject to the provisions contained
herein.

3.6 Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

3.7 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
therein.

3.8 Amendment; Waiver. (a) This Agreement may not be amended or
modified and waivers and consents to departures from the provisions hereof may
not be given, except by an instrument or instruments in writing making specific
reference to this Agreement and signed by the Company, the holders of a majority
of Registrable Securities of each class then outstanding and, so long as it is a
holder, Brera. Each holder of any Registrable Securities at the time or
thereafter

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<PAGE> 37

outstanding shall be bound by any amendment, modification, waiver or consent
authorized by this Section 3.8(a), whether or not such Registrable Securities
shall have been marked accordingly.

(b) The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. Except as otherwise expressly provided herein, no failure on the part of
any party to exercise, and no delay in exercising, any right, power or remedy
hereunder, or otherwise available in respect hereof at law or in equity, shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.

3.9 Counterparts. This Agreement may be executed in any number of
separate counterparts and by the parties hereto in separate counterparts each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.

3.10 Representations and Warranties. Each party to this Agreement
represents and warrants to each other party to this Agreement that (i) all
action on the part of such party necessary for the authorization, execution,
delivery and performance of this Agreement has been taken and (ii) this
Agreement is a legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.

3.11 Governing Law. All questions concerning the validity, meaning and
effect of this Agreement shall be determined in accordance with the laws of the
State of New York applicable to contracts made and to be performed within the
State, without regard to the principles of conflicts of laws except to the
extent necessary to permit this Agreement to be governed by New York law as set
forth above.

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<PAGE> 38

PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY BUSINESS OR OTHER DISPUTES BETWEEN THE PARTIES
(WHETHER SUCH ACTIONS OR PROCEEDINGS ARE BASED IN STATUTE, TORT, CONTRACT OR
OTHERWISE), SHALL BE LITIGATED IN SUCH COURTS. EACH PARTY (A) CONSENTS TO SUBMIT
ITSELF TO THE PERSONAL JURISDICTION OF SUCH COURTS FOR SUCH ACTIONS OR
PROCEEDINGS, (B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL
JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (C)
AGREES THAT IT WILL NOT BRING ANY SUCH ACTION OR PROCEEDING IN ANY COURT OTHER
THAN SUCH COURTS. EACH PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE AND IRREVOCABLE
JURISDICTION AND VENUE OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM
NON-CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY NON-APPEALABLE
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH ACTIONS OR PROCEEDINGS. A COPY
OF ANY SERVICE OF PROCESS SERVED UPON THE PARTIES SHALL BE MAILED BY REGISTERED
MAIL TO THE RESPECTIVE PARTY EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY A PARTY REFUSES TO ACCEPT SERVICE,
EACH PARTY AGREES THAT SERVICE UPON THE APPROPRIATE PARTY BY REGISTERED MAIL
SHALL CONSTITUTE SUFFICIENT SERVICE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A
PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

36
<PAGE> 39

TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED
HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

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<PAGE> 40

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first written above.

CLASSIC COMMUNICATIONS, INC.

By:
------------------------------------
Name: J. Merritt Belisle
Title: Chief Executive Officer

BRERA CLASSIC, LLC

By:
------------------------------------
Name: Lisa A. Hook
Title: Authorized Signatory

AUSTIN VENTURE, L.P.
By: AV PARTNERS, L.P.

By:
------------------------------------
Name: Jeffery C. Garvey
Title: General Partner

AUSTIN VENTURE III-A, L.P.
By: AV PARTNERS III, L.P.

By:
------------------------------------
Name: Jeffery C. Garvey
Title: General Partner

<PAGE> 41

AUSTIN VENTURE III-B, L.P.
By: AV PARTNERS III, L.P.

By:
------------------------------------
Name: Jeffery C. Garvey
Title: General Partner

BA CAPITAL COMPANY, L.P.

By:
------------------------------------
Its General Partner

By:
------------------------------------
Name: Robert H. Sheridan
Title:

TEXAS GROWTH FUND

By:
------------------------------------
Name: James J. Kozlowski
Title: President

BT CAPITAL PARTNERS, INC.

By:
------------------------------------
Name: Robert J. Marakovits
Title: President

<PAGE> 42

UNION BANCAL VENTURE CORPORATION

By:
------------------------------------
Name:
Title:

THE CHASE MANHATTAN BANK, N.A.

By:
------------------------------------
Name:
Title:

J. MERRITT BELISLE

By:
------------------------------------

STEVEN E. SEACH

By:
------------------------------------

BRYAN D. NOTEBOOM

By:
------------------------------------

<PAGE> 1
EXHIBIT 10.29

THIS PLAN CONTAINS A PRE-DISPUTE PROVISION TO ARBITRATE ANY AND ALL DISPUTES,
AS MORE FULLY DESCRIBED IN SECTION 11(7) HEREOF.

CLASSIC COMMUNICATIONS, INC.

1999 OMNIBUS STOCK INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

The name of this plan is the Classic Communications, Inc.
1999 Omnibus Stock Incentive Plan (the "Plan"). The Plan was adopted by the
Board (defined below) on October 18, 1999, subject to the approval of the
stockholders of the Company (defined below), which approval was obtained on
November ____, 1999. The purpose of the Plan is to enable the Company to
attract and retain highly qualified personnel who will contribute to the
Company's success and to provide incentives to Participants (defined below)
that are linked directly to increases in stockholder value and will therefore
inure to the benefit of all stockholders of the Company.

For purposes of the Plan, the following terms shall be
defined as set forth below:

(1) "Administrator" means the Board, or if and to the extent
the Board does not administer the Plan, the Committee in accordance with
Section 2 below.

(2) "Board" means the Board of Directors of the Company.

(3) "Change of Control" a "Change of Control" shall be deemed
to have occurred if:

(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than the Company or any of its
Subsidiaries; any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries; any Initial
Holder or Permitted Transferee thereof (as defined in the Company's Amended and
Restated Certificate of Incorporation); or any company owned, directly or
indirectly, by the stockholders of the

<PAGE> 2

Company in substantially the same proportions as their ownership of Stock of
the Company) is or becomes after the Effective Date the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned
by such person any securities acquired directly from the Company or its
affiliates) representing 50% or more of the combined voting power of the
Company's then outstanding securities; or

(b) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity, other than
(i) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
(other than existing stockholders) acquires more than 50% of the combined
voting power of the Company's then outstanding securities; or

(c) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.

(4) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.

(5) "Committee" means the Compensation Committee of the Board
or any committee the Board may subsequently appoint to administer the Plan. To
the extent necessary and desirable, the Committee shall be composed entirely of
individuals who meet the qualifications referred to in Section 162(m) of the
Code and Rule 16b-3 under the Exchange Act. If at any time or to any extent the
Board shall not administer the Plan, then the functions of the Board specified
in the Plan shall be exercised by the Committee.

(6) "Company" means Classic Communications, Inc., a Delaware
corporation (or any successor corporation).

2
<PAGE> 3

(7) "Deferred Stock" means an award made pursuant to Section
7 below of the right to receive Stock at the end of a specified deferral
period.

(8) "Disability" means the inability of a Participant to
perform substantially his or her duties and responsibilities to the Company or
any Parent Corporation or Subsidiary by reason of a physical or mental
disability or infirmity (i) for a continuous period of six months, or (ii) at
such earlier time as the Participant submits medical evidence satisfactory to
the Administrator that the Participant has a physical or mental disability or
infirmity that will likely prevent the Participant from returning to the
performance of the Participant's work duties for six months or longer. The date
of such Disability shall be the last day of such six-month period or the day on
which the Participant submits such satisfactory medical evidence, as the case
may be.

(9) "Eligible Recipient" means an officer, director,
employee, consultant or advisor of the Company or any Parent Corporation or
Subsidiary.

(10) "Employee Director" means any director of the Company
who is also an employee of the Company, Parent Corporation or any Subsidiary.

(11) "Exchange Act" means the Securities Exchange Act of
1934, as amended.

(12) "Fair Market Value" means, as of any given date, with
respect to any awards granted hereunder, (A) if the Stock is publicly traded,
the closing sale price of a share of Stock on such date, (B) the fair market
value of a share of Stock as determined in accordance with a method prescribed
in the agreement evidencing any award hereunder, or (C) the fair market value
of a share of Stock as otherwise determined by the Administrator in the good
faith exercise of its discretion.

(13) "Incentive Stock Option" means any Stock Option intended
to be designated as an "incentive stock option" within the meaning of Section
422 of the Code.
(14) "Non-Qualified Stock Option" means any Stock Option that
is not an Incentive Stock Option, including any Stock Option that provides (as
of the time such option is granted) that it will not be treated as an Incentive
Stock Option.

3
<PAGE> 4

(15) "Parent Corporation" means any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company, if
each of the corporations in the chain (other than the Company) owns stock
possessing 50% or more of the combined voting power of all classes of stock in
one of the other corporations in the chain.

(16) "Participant" means any Eligible Recipient selected by
the Administrator, pursuant to the Administrator's authority in Section 2
below, to receive grants of Stock Options, Stock Appreciation Rights,
Restricted Stock awards, Deferred Stock awards, Performance Share awards or any
combination of the foregoing.

(17) "Performance Shares" means an award of shares of Stock
pursuant to Section 7 below that is subject to restrictions based upon the
attainment of specified performance objectives.

(18) "Registration Statement" means the registration
statement on Form S-1 filed with the Securities and Exchange Commission for the
initial underwritten public offering of the Company's Stock.

(19) "Restricted Stock" means an award granted pursuant to
Section 7 below of shares of Stock subject to certain restrictions.

(20) "Stock" means the Class A voting common stock, par value
$0.01 per share, of the Company.

(21) "Stock Appreciation Right" means the right pursuant to
an award granted under Section 6 below to receive an amount equal to the
excess, if any, of (A) the Fair Market Value, as of the date such Stock
Appreciation Right or portion thereof is surrendered, of the shares of Stock
covered by such right or such portion thereof, over (B) the aggregate exercise
price of such right or such portion thereof.

(22) "Stock Option" means an option to purchase shares of
Stock granted pursuant to Section 5 below.

(23) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken
chain owns stock

4
<PAGE> 5
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

SECTION 2. ADMINISTRATION.

The Plan shall be administered in accordance with the
requirements of Section 162(m) of the Code (but only to the extent necessary
and desirable to maintain qualification of awards under the Plan under Section
162(m) of the Code) and, to the extent applicable, Rule 16b-3 under the
Exchange Act ("Rule 16b-3") by the Board or, at the Board's sole discretion, by
the Committee, which shall be appointed by the Board, and which shall serve at
the pleasure of the Board.

Pursuant to the terms of the Plan, the Administrator shall
have the power and authority to grant to Eligible Recipients pursuant to the
terms of the Plan: (a) Stock Options, (b) Stock Appreciation Rights, (c)
Restricted Stock, (d) Performance Shares, (e) Deferred Stock or (f) any
combination of the foregoing. The Administrator shall have the authority:

(a) to select those Eligible Recipients who shall be
Participants;

(b) to determine whether and to what extent Stock
Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Performance Shares or a combination of the foregoing, are to be granted
hereunder to Participants;

(d) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, (x) the restrictions applicable to Restricted
Stock or Deferred Stock awards and the conditions under which restrictions
applicable to such Restricted or Deferred Stock shall lapse, and (y) the
performance goals and periods applicable to the award of Performance Shares);

(e) to determine the terms and conditions, not
inconsistent with the terms of the Plan, which shall govern all written
instruments evidencing the Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock,

5
<PAGE> 6

Performance Shares or any combination of the foregoing granted hereunder to
Participants; and

(f) to reduce the exercise price of any Stock Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Stock Option has declined since the date such Stock Option was
granted.

The Administrator shall have the authority, in its sole
discretion, to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall from time to time deem advisable;
to interpret the terms and provisions of the Plan and any award issued under
the Plan (and any agreements relating thereto); and to otherwise supervise the
administration of the Plan.

All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants.

SECTION 3. STOCK SUBJECT TO PLAN.

The total number of shares of Stock reserved and available
for issuance under the Plan shall be 2,000,000. Such shares may consist, in
whole or in part, of authorized and unissued shares or treasury shares. The
aggregate number of shares of Stock as to which Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, and Performance Shares
may be granted to any individual during any calendar year may not, subject to
adjustment as provided in this Section 3, exceed 80% of the shares of Stock
reserved for the purposes of the Plan in accordance with the provisions of this
Section 3.

Consistent with the provisions of Section 162(m) of the Code,
as from time to time applicable, to the extent that (i) a Stock Option expires
or is otherwise terminated without being exercised, or (ii) any shares of Stock
subject to any Restricted Stock, Deferred Stock or Performance Share award
granted hereunder are forfeited, such shares shall again be available for
issuance in connection with future awards under the Plan. If any shares of
Stock have been pledged as collateral for indebtedness incurred by a
Participant in connection with the exercise of a Stock Option and such shares
are returned to the Company in satisfaction of such indebtedness, such shares
shall again be available for issuance in connection with future awards under
the Plan.

6
<PAGE> 7

In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure
affecting the Stock, an equitable substitution or proportionate adjustment
shall be made in (i) the aggregate number of shares reserved for issuance under
the Plan, (ii) the kind, number and option price of shares subject to
outstanding Stock Options granted under the Plan, and (iii) the kind, number
and purchase price of shares issuable pursuant to awards of Restricted Stock,
Deferred Stock and Performance Shares, in each case as may be determined by the
Administrator, in its sole discretion. Such other substitutions or adjustments
shall be made as may be determined by the Administrator, in its sole
discretion. An adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
related to any Stock Option. In connection with any event described in this
paragraph, the Administrator may provide, in its sole discretion, for the
cancellation of any outstanding awards and payment in cash or other property
therefor.

SECTION 4. ELIGIBILITY.

Officers, directors and employees of the Company or any
Parent Corporation or Subsidiary, and consultants and advisors to the Company
or any Parent Corporation or Subsidiary, who are responsible for or are in a
position to contribute to the management, growth and/or profitability of the
business of the Company shall be eligible to be granted Stock Options, Stock
Appreciation Rights, Restricted Stock awards, Deferred Stock awards,
Performance Shares or any combination of the foregoing hereunder. Participants
under the Plan shall be selected from time to time by the Administrator, in its
sole discretion, from among the Eligible Recipients recommended by the senior
management of the Company, and the Administrator shall determine, in its sole
discretion, the number of shares of Stock covered by each such award.

SECTION 5. STOCK OPTIONS.

Stock Options may be granted alone or in addition to other
awards granted under the Plan. Any Stock Option granted under the Plan shall be
in such form as the Administrator may from time to time approve, and the
provisions of Stock Option awards need not be the same with respect to each
optionee. Recipients of Stock Options shall enter into a subscription and/or
award agreement with the Company, in such form as the Administrator shall
determine, which agreement

7
<PAGE> 8

shall set forth, among other things, the exercise price of the option, the term
of the option and provisions regarding exercisability of such option granted
thereunder.

The Stock Options granted under the Plan may be of two types:
(i) Incentive Stock Options and (ii) Non-Qualified Stock Options.

The Administrator shall have the authority to grant any
officer or employee of the Company (including directors who are also officers
of the Company) Incentive Stock Options, Non-Qualified Stock Options, or both
types of Stock Options (in each case with or without Stock Appreciation
Rights). Directors who are not officers of the Company, consultants and
advisors may only be granted Non-Qualified Stock Options (with or without Stock
Appreciation Rights). To the extent that any Stock Option does not qualify as
an Incentive Stock Option, it shall constitute a separate Non-Qualified Stock
Option. More than one option may be granted to the same optionee and be
outstanding concurrently hereunder.

Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Administrator
shall deem desirable:

(1) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be determined by the Administrator in
its sole discretion at the time of grant but shall not, in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of the
Stock on such date and shall not, in any event, be less than the par value (if
any) of the Stock. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company, any Parent
Corporation or Subsidiary and an Incentive Stock Option is granted to such
employee, the option price of such Incentive Stock Option (to the extent
required by the Code at the time of grant) shall be no less than 110% of the
Fair Market Value of the Stock on the date such Incentive Stock Option is
granted.

(2) Option Term. The term of each Stock Option shall be fixed
by the Administrator, but no Stock Option shall be exercisable more than ten
years after the date such Stock Option is granted; provided, however, that if
an employee owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of

8
<PAGE> 9

the Company, any Parent Corporation or Subsidiary and an Incentive Stock Option
is granted to such employee, the term of such Incentive Stock Option (to the
extent required by the Code at the time of grant) shall be no more than five
years from the date of grant.

(3) Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Administrator at or after the time of grant. The
Administrator may provide at the time of grant, in its sole discretion, that
any Stock Option shall be exercisable only in installments, and the
Administrator may waive such installment exercise provisions at any time, in
whole or in part, based on such factors as the Administrator may determine, in
its sole discretion.

(4) Method of Exercise. Subject to paragraph (3) of this
Section 5, Stock Options may be exercised in whole or in part at any time
during the option period, by giving written notice of exercise to the Company
specifying the number of shares to be purchased, accompanied by payment in full
of the purchase price in cash or its equivalent (including a promissory note
subject to paragraph (5) of this Section 5), as determined by the
Administrator. As determined by the Administrator, in its sole discretion,
payment in whole or in part may also be made (i) by means of any cashless
exercise procedure approved by the Administrator, (ii) in the form of
unrestricted Stock already owned by the optionee which, (x) in the case of
unrestricted Stock acquired upon exercise of an option, have been owned by the
optionee for more than six months on the date of surrender, and (y) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Stock as to which such Stock Option shall be exercised, or (iii) in the
case of the exercise of a Non-Qualified Stock Option, in the form of Restricted
Stock or Performance Shares subject to an award hereunder (based, in each case,
on the Fair Market Value of the Stock on the date the option is exercised);
provided, however, that in the case of an Incentive Stock Option, the right to
make payment in the form of already owned shares may be authorized only at the
time of grant. If payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock or
Performance Shares, the shares received upon the exercise of such Stock Option
shall be restricted in accordance with the original terms of the Restricted
Stock or Performance Share award in question, except that the Administrator may
direct that such restrictions shall apply only to that number of shares equal
to the number of shares surrendered upon the exercise of such option. An
optionee shall generally have the rights to dividends and any other rights of a
stockholder with respect to the Stock subject to the Stock

9
<PAGE> 10

Option only after the optionee has given written notice of exercise, has paid
in full for such shares, and, if requested, has given the representation
described in paragraph (2) of Section 11 below.

The Administrator may require the surrender of all or a
portion of any Stock Option granted under the Plan as a condition precedent to
the grant of a new Stock Option. Subject to the provisions of the Plan, such
new Stock Option shall be exercisable at the price, during such period and on
such other terms and conditions as are specified by the Administrator at the
time the new Stock Option is granted. Consistent with the provisions of Section
162(m), to the extent applicable, upon their surrender, Stock Options shall be
canceled and the shares previously subject to such canceled Stock Options
shall again be available for grants of Stock Options and other awards
hereunder.

(5) Loans. The Company may make loans available to Stock
Option holders in connection with the exercise of outstanding options granted
under the Plan, as the Administrator, in its sole discretion, may determine.
Such loans shall (i) be evidenced by promissory notes entered into by the Stock
Option holders in favor of the Company, (ii) be subject to the terms and
conditions set forth in this Section 5(5) and such other terms and conditions,
not inconsistent with the Plan, as the Administrator shall determine, (iii)
bear interest at the applicable Federal interest rate or such other rate as the
Administrator shall determine, and (iv) be subject to Board approval (or to
approval by the Administrator to the extent the Board may delegate such
authority). In no event may the principal amount of any such loan exceed the
sum of (x) the exercise price less the par value (if any) of the shares of
Stock covered by the Stock Option, or portion thereof, exercised by the holder,
and (y) any Federal, state, and local income tax attributable to such exercise.
The initial term of the loan, the schedule of payments of principal and
interest under the loan, the extent to which the loan is to be with or without
recourse against the holder with respect to principal or interest and the
conditions upon which the loan will become payable in the event of the holder's
termination of employment shall be determined by the Administrator. Unless the
Administrator determines otherwise, when a loan is made, shares of Stock
having a Fair Market Value at least equal to the principal amount of the loan
shall be pledged by the holder to the Company as security for payment of the
unpaid balance of the loan, and such pledge shall be evidenced by a pledge
agreement, the terms of which shall be determined by the Administrator, in its
sole discretion; provided, however, that each loan shall comply with all
applicable laws, regulations and

10
<PAGE> 11

rules of the Board of Governors of the Federal Reserve System and any other
governmental agency having jurisdiction.

(6) Non-Transferability of Options. Except under the laws of
descent and distribution, unless otherwise determined by the Administrator, the
optionee shall not be permitted to sell, transfer, pledge or assign any Stock
Option, and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee; provided, however, that the optionee shall be
permitted to transfer one or more Non-Qualified Stock Options to a trust
controlled by the optionee during the optionee's lifetime for estate planning
purposes.

(7) Termination of Employment or Service. If an optionee's
employment with or service as a director, consultant or advisor to the Company
terminates by reason of death, Disability or for any other reason, the Stock
Option may thereafter be exercised to the extent provided in the applicable
subscription or award agreement, or as otherwise determined by the
Administrator.

(8) Annual Limit on Incentive Stock Options. To the extent
that the aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of shares of Stock with respect to which Incentive
Stock Options granted to an optionee under this Plan and all other option plans
of the Company, any Parent Corporation or Subsidiary become exercisable for the
first time by the optionee during any calendar year exceeds $100,000 (as
determined in accordance with Section 422(d) of the Code), the portion of such
Incentive Stock Options in excess of $100,000 shall be treated as Non-Qualified
Stock Options.

SECTION 6. STOCK APPRECIATION RIGHTS.

Stock Appreciation Rights may be granted either alone ("Free
Standing Rights") or in conjunction with all or part of any Stock Option
granted under the Plan ("Related Rights"). In the case of a Non-Qualified Stock
Option, Related Rights may be granted either at or after the time of the grant
of such Stock Option. In the case of an Incentive Stock Option, Related Rights
may be granted only at the time of the grant of the Incentive Stock Option. The
Administrator shall determine the Eligible Recipients to whom, and the time or
times at which, grants of Stock Appreciation Rights shall be made; the number
of shares of Stock to be awarded, the exercise price, and all other conditions
of Stock Appreciation Rights. The provisions of Stock Appreciation Rights need
not be the same with respect to each Participant.

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<PAGE> 12

Stock Appreciation Rights granted under the Plan shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable:

(1) Awards. The prospective recipient of a Stock Appreciation
Right shall not have any rights with respect to such award, unless and until
such recipient has executed an agreement evidencing the award (a "Stock
Appreciation Right Agreement") and delivered a fully executed copy thereof to
the Company, within a period of sixty days (or such other period as the
Administrator may specify) after the award date. Participants who are granted
Stock Appreciation Rights shall have no rights as stockholders of the Company
with respect to the grant or exercise of such rights.

(2) Exercisability.

(a) Stock Appreciation Rights that are Free Standing
Rights ("Free Standing Stock Appreciation Rights") shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Administrator at or after grant; provided, however, that no Free
Standing Stock Appreciation Right shall be exercisable during the first six
months of its term, except that this additional limitation shall not apply in
the event of a Participant's death or Disability prior to the expiration of
such six-month period.

(b) Stock Appreciation Rights that are Related Rights
("Related Stock Appreciation Rights") shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 above and this
Section 6 of the Plan; provided, however, that a Related Stock Appreciation
Right granted in connection with an Incentive Stock Option shall be exercisable
only if and when the Fair Market Value of the Stock subject to the Incentive
Stock Option exceeds the option price of such Stock Option; provided, further,
that no Related Stock Appreciation Right shall be exercisable during the first
six months of its term, except that this additional limitation shall not apply
in the event of a Participant's death or Disability prior to the expiration of
such six-month period.

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<PAGE> 13

(3) Payment Upon Exercise.

(a) Upon the exercise of a Free Standing Stock
Appreciation Right, the Participant shall be entitled to receive up to, but not
more than, an amount in cash or that number of shares of Stock (or any
combination of cash and shares of Stock) equal in value to the excess of the
Fair Market Value of one share of Stock as of the date of exercise over the
price per share specified in the Free Standing Stock Appreciation Right (which
price shall be no less than 100% of the Fair Market Value of the Stock on the
date of grant) multiplied by the number of shares of Stock in respect of which
the Free Standing Stock Appreciation Right is being exercised, with the
Administrator having the right to determine the form of payment.

(b) A Related Right may be exercised by a Participant
by surrendering the applicable portion of the related Stock Option. Upon such
exercise and surrender, the Participant shall be entitled to receive up to, but
not more than, an amount in cash or that number of shares of Stock (or any
combination of cash and shares of Stock) equal in value to the excess of the
Fair Market Value of one share of Stock as of the date of exercise over the
option price per share specified in the related Stock Option multiplied by the
number of shares of Stock in respect of which the Related Stock Appreciation
Right is being exercised, with the Administrator having the right to determine
the form of payment. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the Related Rights have
been so exercised.

(4) Non-Transferability.

(a) Free Standing Stock Appreciation Rights shall be
transferable only when and to the extent that a Stock Option would be
transferable under paragraph (6) of Section 5 of the Plan.

(b) Related Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying Stock Option would
be transferable under paragraph (6) of Section 5 of the Plan.

(5) Termination of Employment or Service

(a) In the event of the termination of employment or
service of a Participant who has been granted one or more Free Standing Stock
Appreciation

13
<PAGE> 14

Rights, such rights shall be exercisable at such time or times and subject
to such terms and conditions as shall be determined by the Administrator at or
after grant.

(b) In the event of the termination of employment or
service of a Participant who has been granted one or more Related Stock
Appreciation Rights, such rights shall be exercisable at such time or times and
subject to such terms and conditions as set forth in the related Stock Options.

(6) Term.

(a) The term of each Free Standing Stock Appreciation
Right shall be fixed by the Administrator, but no Free Standing Stock
Appreciation Right shall be exercisable more than ten years after the date such
right is granted.

(b) The term of each Related Stock Appreciation Right
shall be the term of the Stock Option to which it relates, but no Related Stock
Appreciation Right shall be exercisable more than ten years after the date
such right is granted.

SECTION 7. RESTRICTED STOCK, DEFERRED STOCK AND PERFORMANCE SHARES.

(1) General. Restricted Stock, Deferred Stock or Performance
Share awards may be issued either alone or in addition to other awards granted
under the Plan. The Administrator shall determine the Eligible Recipients to
whom, and the time or times at which, grants of Restricted Stock, Deferred
Stock or Performance Share awards shall be made; the number of shares to be
awarded; the price, if any, to be paid by the recipient of Restricted Stock,
Deferred Stock or Performance Share awards; the Restricted Period (as defined
in paragraph (3) of this Section 7) applicable to Restricted Stock or Deferred
Stock awards; the performance objectives applicable to Performance Share or
Deferred Stock awards; the date or dates on which restrictions applicable to
Restricted Stock or Deferred Stock awards shall lapse during the Restricted
Period; and all other conditions of the Restricted Stock, Deferred Stock and
Performance Share awards. Subject to the requirements of Section 162(m) of the
Code, as applicable, the Administrator may also condition the grant of
Restricted Stock, Deferred Stock awards or Performance Shares upon the exercise
of Stock Options, or upon such other criteria as the Administrator may
determine, in its sole discretion. The provisions of Restricted Stock, Deferred
Stock or Performance Share awards need not be the

14
<PAGE> 15

same with respect to each recipient. In the sole discretion of the
Administrator, loans may be made to Participants in connection with the
purchase of Restricted Stock under substantially the same terms and conditions
as provided in paragraph (5) of Section 5 of the Plan with respect to the
exercise of Stock Options.

(2) Awards and Certificates. The prospective recipient of a
Restricted Stock, Deferred Stock or Performance Share award shall not have any
rights with respect to such award, unless and until such recipient has executed
an agreement evidencing the award (a "Restricted Stock Award Agreement,"
"Deferred Stock Award Agreement" or "Performance Share Award Agreement," as
appropriate) and delivered a fully executed copy thereof to the Company, within
a period of sixty days (or such other period as the Administrator may specify)
after the award date. Except as otherwise provided below in this Section 7(2),
(i) each Participant who is awarded Restricted Stock or Performance Shares
shall be issued a stock certificate in respect of such shares of Restricted
Stock or Performance Shares; and (ii) such certificate shall be registered in
the name of the Participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such award.

The Company may require that the stock certificates
evidencing Restricted Stock or Performance Share awards hereunder be held in
the custody of the Company until the restrictions thereon shall have lapsed,
and that, as a condition of any Restricted Stock award or Performance Share
award, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.

With respect to Deferred Stock awards, at the expiration of
the Restricted Period, stock certificates in respect of such shares of Deferred
Stock shall be delivered to the participant, or his legal representative, in a
number equal to the number of shares of Stock covered by the Deferred Stock
award.

(3) Restrictions and Conditions. The Restricted Stock,
Deferred Stock and Performance Share awards granted pursuant to this Section 7
shall be subject to the following restrictions and conditions:

(a) Subject to the provisions of the Plan and the
Restricted Stock Award Agreement, Deferred Stock Award Agreement or Performance
Share Award Agreement, as appropriate, governing such award, during such period
as may be set by the Administrator commencing on the grant date (the
"Restricted

15
<PAGE> 16
Period"), the Participant shall not be permitted to sell, transfer, pledge or
assign shares of Restricted Stock, Performance Shares or Deferred Stock awarded
under the Plan; provided, however, that the Administrator may, in its sole
discretion, provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions in whole or in part based on such factors
and such circumstances as the Administrator may determine, in its sole
discretion, including, but not limited to, the attainment of certain
performance related goals, the Participant's termination of employment or
service, death or Disability.

(b) Except as provided in paragraph (2)(a) of this
Section 7, the Participant shall generally have, with respect to shares of
Restricted Stock or Performance Shares, all of the rights of a stockholder with
respect to such stock during the Restricted Period. The Participant shall
generally not have the rights of a stockholder with respect to stock subject to
Deferred Stock awards during the Restricted Period; provided, however, that
dividends declared during the Restricted Period with respect to the number of
shares covered by a Deferred Stock award shall be paid to the Participant.
Certificates for shares of unrestricted Stock shall be delivered to the
Participant promptly after, and only after, the Restricted Period shall expire
without forfeiture in respect of such shares of Restricted Stock, Performance
Shares or Deferred Stock, except as the Administrator, in its sole discretion,
shall otherwise determine.

(c) The rights of holders of Restricted Stock, Deferred
Stock and Performance Share awards upon termination of employment or service
for any reason during the Restricted Period shall be set forth in the
Restricted Stock Award Agreement, Deferred Stock Award Agreement or Performance
Share Award Agreement, as appropriate, governing such awards.

SECTION 8. CHANGE OF CONTROL.

The following acceleration provisions shall apply in the
event of a Change of Control (as defined in this Plan, unless otherwise
modified in the agreement evidencing any awards under this Plan). In the event
of a Change of Control, unless otherwise determined by the Administrator or the
Board in writing at or after grant (including under any individual agreement
evidencing awards under this Plan), but prior to the occurrence of such Change
of Control:

16
<PAGE> 17

(1) any Stock Appreciation Rights outstanding for at least
six months and any Stock Options awarded under the Plan not previously
exercisable and vested shall become fully exercisable and vested;

(2) the restrictions applicable to any Restricted Stock,
Deferred Stock or Performance Share awards under the Plan shall lapse, and such
shares and awards shall be deemed fully vested; and

(3) any indebtedness incurred pursuant to Section 5(5) above
shall be forgiven and the collateral pledged in connection with any such loan
shall be released.

SECTION 9. AMENDMENT AND TERMINATION.

The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any award theretofore granted without such
Participant's consent.

Stockholder approval under this Section 9 shall only be
required with respect to any material amendment at such time and under such
circumstances as stockholder approval would be required, at the discretion of
the Administrator, under Sections 422 and 162(m) of the Code or other law, rule
or regulation to the extent applicable to the Plan.

The Administrator may amend the terms of any award
theretofore granted, prospectively or retroactively, but, subject to Section 3
of Plan, no such amendment shall impair the rights of any holder without his or
her consent.

SECTION 10. UNFUNDED STATUS OF PLAN.

The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.

17
<PAGE> 18

SECTION 11. GENERAL PROVISIONS.

(1) Shares of Stock shall not be issued pursuant to the
exercise of any award granted hereunder unless the exercise of such award and
the issuance and delivery of such shares of Stock pursuant thereto shall comply
with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act and the requirements of
any stock exchange upon which the Stock may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

(2) The Administrator may require each person purchasing
shares pursuant to a Stock Option to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Administrator deems appropriate to reflect any restrictions on transfer.

All certificates for shares of Stock delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, and any applicable federal or state securities
law, and the Administrator may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions.

(3) Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval, if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific cases. The
adoption of the Plan shall not confer upon any officer, director, employee,
consultant or advisor of the Company any right to continued employment or
service with the Company, as the case may be, nor shall it interfere in any way
with the right of the Company to terminate the employment or service of any of
its officers, directors, employees, consultants or advisors at any time.

(4) Each Participant shall, no later than the date as of
which the value of an award first becomes includible in the gross income of the
Participant for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The

18
<PAGE> 19

obligations of the Company under the Plan shall be conditional on the making of
such payments or arrangements, and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Participant.

(5) No member of the Board or the Administrator, nor any
officer or employee of the Company acting on behalf of the Board or the
Administrator, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or employee
of the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

(6) Governing Law. This Plan shall be governed by and
construed according to the laws of the State of Delaware without regard to its
principles of conflict of laws.

(7) Dispute Resolution. The Company and any Participant will
use their reasonable best efforts to resolve any dispute under the Plan through
good faith negotiations. The Company or any Participant must submit a written
notice to any other party to whom such dispute pertains, and any such dispute
that cannot be resolved within 30 calendar days of receipt of such notice (or
such other period to which the parties may agree) will be submitted to an
arbitrator selected by mutual agreement of the parties. In the event that,
within 50 days of the written notice referred to in the preceding sentence, a
single arbitrator has not been selected by mutual agreement of the parties, a
panel of arbitrators (with each party to the dispute being entitled to select
one arbitrator and, if necessary to prevent the possibility of deadlock, one
additional arbitrator being selected by such arbitrators selected by the
parties to the dispute) shall be selected by the parties. Except as otherwise
provided herein or as the parties to the dispute may otherwise agree, such
arbitration will be conducted (1) in accordance with the then existing rules of
the Center for Public Resources ("CPR") and (2) at the Company's corporate
headquarters in Austin, Texas. The decision of the arbitrator or arbitrators,
or of a majority thereof, as the case may be, made in writing will be final and
binding upon the parties thereto as to the questions submitted, and the parties
will abide by and comply with such decision. The parties thereto expressly
agree and under stand that they may not seek and the arbitrator(s) may not
award punitive or exemplary damages and any award of any such arbitrator(s)
shall be limited to

19
<PAGE> 20
compensatory damages. Unless the decision of the arbitrator(s) provides for a
different allocation of costs and expenses determined by the arbitrators to be
equitable under the circumstances, the prevailing party or parties in any
arbitration will be entitled to recover all reasonable fees (including but not
limited to attorneys' fees) and expenses incurred by it or them in connection
with such arbitration from the nonprevailing party or parties; provided,
however, that any and all costs and expenses of CPR necessary and payable prior
to any such arbitration shall be allocated equally between the parties, subject
to any re-allocation of such costs and expenses by the arbitrator(s). The
parties hereto expressly agree and understand that the dispute resolution
procedure described above shall the sole and exclusive remedy for any and all
disputes arising under or relating to this Plan or the administration thereof.

SECTION 12. STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

(1) The grant of any award hereunder shall be contingent upon
stockholder approval of the Plan being obtained within twelve (12) months
before or after the date the Board adopts the Plan.

(2) Subject to the approval of the Plan by the stockholders
of the Company within twelve (12) months before or after the date the Plan is
adopted by the Board, the Plan shall be effective as of October 1, 1999 (the
"Effective Date").

SECTION 13. TERM OF PLAN.

No Stock Option, Stock Appreciation Right, Restricted Stock,
Deferred Stock or Performance Share award shall be granted pursuant to the Plan
on or after the tenth anniversary of the Effective Date, but awards theretofore
granted may extend beyond that date.

20
<PAGE> 21

THIS AGREEMENT CONTAINS A PRE-DISPUTE AGREEMENT TO ARBITRATE ANY AND ALL
DISPUTES, AS MORE FULLY DESCRIBED IN SECTION 18 HEREOF.

FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Option
Agreement"), dated as of the _____ of______________, 1999 (the "Date of
Grant"), by and between Classic Communications, Inc., a Delaware corporation
(the "Company"), and [NAME OF EMPLOYEE OR DIRECTOR] (the "Optionee").

Pursuant to the Company's 1999 Omnibus Stock Incentive Plan
(the "Plan"), the Board of Directors of the Company (the "Board"), as the
Administrator of the Plan, has determined that the Optionee is to be granted an
option (the "Option") to purchase shares of the Company's Class A voting
common stock, par value $0.01 per share (the "Common Stock"), on the terms and
conditions set forth herein, and hereby grants such Option. The Option is not
intended to constitute an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

Any capitalized terms not defined herein shall have their
respective meanings set forth in the Plan.

1. Number of Shares. The Company hereby grants to the
Optionee the right and option (the "Option") to purchase, on the terms and
conditions hereinafter set forth, [NUMBER OF OPTION SHARES] shares of the
Company's Common Stock (the "Option Shares") at a price of [EXERCISE PRICE] per
share (the "Option Exercise Price").

2. Option Term. The term of the Option and of this Option
Agreement (the "Option Term") shall commence on the Date of Grant and, unless
the Option is previously terminated pursuant to this Option Agreement, shall
terminate upon the expiration of ten (10) years from the Date of Grant. Upon
expiration of the Option Term, all rights of the Optionee hereunder shall
terminate.

3. Conditions of Exercise. (a) Subject to Section 7 below,
the Option shall vest and become exercisable as to [INSERT DESCRIPTION OF
VESTING PERIODS, I.E., TWENTY PERCENT (20%) OF THE OPTION SHARES ON EACH OF THE
FIRST FIVE ANNIVERSARIES OF THE DATE OF GRANT].

<PAGE> 22

(b) Except as otherwise provided herein, the right of the
Optionee to purchase Option Shares with respect to which this Option has become
exercisable may be exercised in whole or in part at any time or from time to
time prior to expiration of the Option Term; provided, however, that the Option
may not be exercised for a fraction of a share of Stock.

4. Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or similar change
affecting the Common Stock, a substitution or proportionate adjustment shall be
made in the kind, number and Option Exercise Price of shares of Common Stock
subject to the unexercised portion of the Option, as may be determined by the
Administrator in its sole discretion.

5. Nontransferability of Option. Except under the laws of
descent and distribution or as otherwise provided by the Administrator, the
Option and this Option Agreement shall not be transferable and, during the
lifetime of Optionee, the Option may be exercised only by Optionee; provided,
however, that the Optionee shall be permitted to transfer the Option to a trust
controlled by the Optionee during the Optionee's lifetime for estate planning
purposes. Without limiting the generality of the foregoing, except as otherwise
provided herein, the Option may not be assigned, transferred, pledged or
hypothecated in any way, shall not be assignable by operation of law, and shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option shall be null and void and without effect.

6. Method of Exercise of Option. The Option may be exercised
by means of written notice of exercise to the Company specifying the number of
Option Shares to be purchased, accompanied by payment in full of the aggregate
Option Exercise Price and any applicable withholding taxes (i) in cash or by
check, (ii) by means of a cashless exercise procedure either through a broker
or, at the discretion of the Administrator, through withholding of shares of
Common Stock otherwise issuable upon exercise of the Option in an amount
sufficient to pay the aggregate Option Exercise Price and any applicable
withholding taxes, (iii) in the form of unrestricted Stock already owned by the
Optionee which, (x) in the case of unrestricted Stock acquired upon exercise of
an option, have been owned by the Optionee for more than six months on the date
of surrender, and (y) have an aggregate Fair Market Value on the date of
surrender equal to the aggregate Option

2
<PAGE> 23

Exercise Price of the Stock as to which such Stock Option shall be exercised,
or (iv) by any other means of exercise authorized from time to time by the
Board or the Administrator.

7. Effect of Termination of Employment. Subject to Section
3(a), upon the termination of Optionee's employment or service with the Company
or any Parent Corporation or Subsidiary under any circumstances (including
without limitation by reason of the sale of such Subsidiary), the Option shall
immediately terminate as to any Option Shares that have not previously vested
as of the date of such termination (the "Termination Date"). Any portion of the
Option that has vested as of the Termination Date shall be exercisable in whole
or in part for a period of 90 days following the Termination Date; provided,
however, that in the event of termination by reason of Optionee's death or
Disability, such exercise period shall extend until the date that is six months
from the Termination Date; provided, further, that if (i) the Optionee
terminates his or her employment with the Company or any Parent Corporation or
Subsidiary to join a competitor of the Company or any Parent Corporation or
Subsidiary or (ii) in the event of Optionee's employment with the Company or
any Parent Corporation or Subsidiary is terminated for Cause, such exercise
period shall be limited to a period of 10 days following the Termination Date.
Upon expiration of such 90-day, six-month or 10-day period, as applicable, any
unexercised portion of the Option shall terminate in full. For purposes of this
paragraph 7, "Cause" shall mean (w) the Optionee's conviction of a criminal
offense that could reasonably be expected to have an adverse effect upon the
business or reputation of the Company or any Parent Corporation or Subsidiary,
(x) an action by Optionee involving personal dishonesty, theft or fraud in
connection with Optionee's duties as an officer or employee of the Company or
any Parent Corporation or Subsidiary, (y) Optionee's repeated failure to abide
by or follow any lawful direction of the Board, Chief Executive Officer or
President of the Company or any Parent Corporation or Subsidiary or (z) the
Optionee's violation of his or her non-disclosure, non-solicitation or
non-competition obligations to the Company or any Parent Corporation or
Subsidiary, if any. Notwithstanding anything to the contrary, in no event may
any Option be exercised after the expiration of the term of such Option.

8. Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by facsimile or first class
mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three days after mailing or 24 hours after
transmission by facsimile to the respective parties named below:

3
<PAGE> 24

If to Company: Classic Communications, Inc.
515 Congress Avenue
Suite 2626
Austin, TX 78701
Attn: Chief Financial Officer
Facsimile: (512) 476-5204

with a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, IL 60606-1285
Attn: Peter C. Krupp, Esq.
Facsimile: 312-407-0411

If to the Optionee: [NAME]
[ADDRESS]
Facsimile: [NUMBER]

Either party hereto may change such party's address for notices by notice duly
given pursuant hereto.

9. Securities Laws Requirements. The Option shall not be
exercisable to any extent, and the Company shall not be obligated to transfer
any Option Shares to the Optionee upon exercise of such Option, if such
exercise, in the opinion of counsel for the Company, would violate the
Securities Act (or any other federal or state statutes having similar
requirements as may be in effect at that time). Further, the Company may
require as a condition of transfer of any Option Shares pursuant to any
exercise of the Option that the Optionee furnish a written representation that
he or she is purchasing or acquiring the Option Shares for investment and not
with a view to resale or distribution to the public.

10. Withholding Requirements. The Company's obligations under
this Option Agreement shall be subject to all applicable tax and other
withholding requirements, and the Company shall, to the extent permitted by
law, have the right to deduct any withholding amounts from any payment or
transfer of any kind otherwise due to the Optionee.

4
<PAGE> 25

11. Failure to Enforce Not a Waiver. The failure of the
Company to enforce at any time any provision of this Option Agreement shall in
no way be construed to be a waiver of such provision or of any other provision
hereof.

12. Governing Law. This Option Agreement shall be governed by
and construed according to the laws of the State of Delaware without regard to
its principles of conflict of laws.

13. Incorporation of Plan. The Plan is hereby incorporated by
reference and made a part hereof, and the Option and this Option Agreement
shall be subject to all terms and conditions of the Plan.

14. Amendments. This Option Agreement may be amended or
modified at any time only by an instrument in writing signed by each of the
parties hereto.

15. Rights as a Stockholder. Neither the Optionee nor any of
the Optionee's successors in interest shall have any rights as a stockholder of
the Company with respect to any shares of Common Stock subject to the Option
until the date of issuance of a stock certificate for such shares of Common
Stock.

16. Agreement Not a Contract of Employment. Neither the Plan,
the granting of the Option, this Option Agreement nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Optionee has a right to continue
to provide services as an officer, director, employee, consultant or advisor of
the Company or any Parent Corporation or Subsidiary for any period of time or
at any specific rate of compensation.

17. Authority of the Administrator. The Administrator shall
have full authority to interpret and construe the terms of the Plan and this
Option Agreement. The determination of the Administrator as to any such matter
of interpretation or construction shall be final, binding and conclusive.

18. Dispute Resolution. The parties hereto will use their
reason able best efforts to resolve any dispute hereunder through good faith
negotiations. A party hereto must submit a written notice to any other party to
whom such dispute pertains, and any such dispute that cannot be resolved within
30 calendar days of receipt of such notice (or such other period to which the
parties may agree) will be

5
<PAGE> 26

submitted to an arbitrator selected by mutual agreement of the parties. In the
event that, within 50 days of the written notice referred to in the preceding
sentence, a single arbitrator has not been selected by mutual agreement of the
parties, a panel of arbitrators (with each party to the dispute being entitled
to select one arbitrator and, if necessary to prevent the possibility of
deadlock, one additional arbitrator being selected by such arbitrators selected
by the parties to the dispute) shall be selected by the parties. Except as
otherwise provided herein or as the parties to the dispute may otherwise agree,
such arbitration will be conducted (1) in accordance with the then existing
rules of the Center for Public Resources ("CPR") and (2) at the Company's
corporate headquarters in Austin, Texas. The decision of the arbitrator or
arbitrators, or of a majority thereof, as the case may be, made in writing will
be final and binding upon the parties hereto as to the questions submitted, and
the parties will abide by and comply with such decision. The parties hereto
expressly agree and understand that they may not seek and the arbitrator(s) may
not award punitive or exemplary damages and any award of any such arbitrator(s)
shall be limited to compensatory damages. Unless the decision of the
arbitrator(s) provides for a different allocation of costs and expenses
determined by the arbitrators to be equitable under the circumstances, the
prevailing party or parties in any arbitration will be entitled to recover all
reasonable fees (including but not limited to attorneys' fees) and expenses
incurred by it or them in connection with such arbitration from the
nonprevailing party or parties; provided, however, that any and all costs and
expenses of CPR necessary and payable prior to any such arbitration shall be
allocated equally between the parties, subject to any re-allocation of such
costs and expenses by the arbitrator(s). The parties hereto expressly agree and
understand that the dispute resolution procedure described above shall the sole
and exclusive remedy for any and all disputes arising under or relating to this
Option Agreement or the administration thereof.

* * *

6
<PAGE> 27

IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Option Agreement on the day and year first above written.

CLASSIC COMMUNICATIONS, INC.

By
-----------------------------------
Name
---------------------------------
Title
--------------------------------

The undersigned has had the opportunity
to read the terms and provisions of the
foregoing Option Agreement and the
terms and provisions of the Plan,
herein incorporated by reference. The
undersigned hereby accepts and agrees
to all the terms and provisions of the
foregoing Option Agreement and to all
the terms and provisions of the Plan,
herein incorporated by reference. THE
UNDERSIGNED UNDERSTANDS THAT THIS
OPTION AGREEMENT CONTAINS A PRE-DISPUTE
AGREEMENT TO ARBITRATE ANY AND ALL
DISPUTES, AS MORE FULLY DESCRIBED IN
SECTION 18 HEREOF.

---------------------------------------
The Optionee

Address:
----------------------------
----------------------------
----------------------------

<PAGE> 1
EXHIBIT 10.30

THIS AGREEMENT CONTAINS A PRE-DISPUTE AGREEMENT TO ARBITRATE ANY AND ALL
DISPUTES, AS MORE FULLY DESCRIBED IN SECTION 21 HEREOF.

CLASSIC COMMUNICATIONS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Option
Agreement"), dated as of the 25th day of August, 1999 (the "Date of Grant"), by
and between Classic Communications, Inc., a Delaware corporation (the
"Company"), and [NAME OF EMPLOYEE] (the "Optionee"). Any capitalized terms used
but not defined herein shall have their respective meanings set forth in Section
22.

WHEREAS, the Company desires to provide the Optionee with an
opportunity to purchase shares of its Class A voting common stock, par value
$.01 per share ("Common Stock"), as hereinafter provided;

NOW THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
do hereby agree as follows:

1. Number of Shares. Effective as of the date hereof, the
Company hereby grants to the Optionee the right and option (the "Option") to pur
chase, on the terms and conditions hereinafter set forth, [NUMBER OF OPTION
SHARES] shares of the Company's Common Stock (the "Option Shares") at a price of
twenty dollars ($20.00) per share (the "Option Exercise Price"). The Option is
not intended to constitute an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

3. Conditions of Exercise. (a) Subject to Sections 7 and 8
below, the Option shall vest and become exercisable as to twenty-five percent
(25%) of the Option Shares on each of the first four (4) anniversaries of the
Date of Grant.

<PAGE> 2
(b) Except as otherwise provided herein, the right of
the Optionee to purchase Option Shares with respect to which this Option has
become exercisable may be exercised in whole or in part at any time or from time
to time prior to expiration of the Option Term; provided, however, that the
Option may not be exercised for a fraction of a share of Common Stock.

4. Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or similar change
affecting the Common Stock, a substitution or proportionate adjustment shall be
made in the kind, number and Option Exercise Price of the shares of Common Stock
subject to the unexercised portion of the Option, as may be determined by the
Administrator in its sole discretion.

6. Method of Exercise of Option. The Option may be exercised
by means of written notice of exercise to the Company specifying the number of
Option Shares to be purchased, accompanied by payment in full of the aggregate
Option Exercise Price and any applicable withholding taxes (i) in cash or by
check, (ii) by means of a cashless exercise procedure either through a broker
or, at the discretion of the Administrator, through withholding of shares of
Common Stock otherwise issuable upon exercise of the Option in an amount
sufficient to pay the aggregate Option Exercise Price and any applicable
withholding taxes, (iii) in the form of unrestricted Common Stock already owned
by the Optionee which, (x) in the case of unrestricted Common Stock acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (y)

<PAGE> 3
have an aggregate Fair Market Value on the date of surrender equal to the
aggregate Option Exercise Price of the Common Stock as to which such Option
shall be exercised, or (iv) by any other means of exercise authorized from time
to time by the Board or the Administrator.

7. Effect of Termination of Employment. Subject to Section
3(a), upon the termination of Optionee's employment or service with the Company
or any Subsidiary under any circumstances (including without limitation by
reason of the sale of such Subsidiary), the Option shall immediately terminate
as to any Option Shares that have not previously vested as of the date of such
termination (the "Termination Date"). Any portion of the Option that has vested
as of the Termination Date shall be exercisable in whole or in part for a
period of 90 days following the Termination Date; provided, however, that in the
event of termination by reason of death or Disability, such exercise period
shall extend until the date that is six months from the Termination Date;
provided, further, that if (i) the Optionee terminates his or her employment
with the Company or any Subsidiary to join a competitor of the Company or any
Subsidiary or (ii) the Optionee's employment with the Company or any Subsidiary
is terminated for Cause, such exercise period shall be limited to a period of
ten days following the Termination Date. Upon expiration of such 90-day,
six-month or 10-day period, as applicable, any unexercised portion of the Option
shall terminate in full. For purposes of this paragraph 7, "Cause" shall mean
(w) the Optionee's conviction of a criminal offense that could reasonably be
expected to have an adverse effect upon the business or reputation of the
Company any Subsidiary, (x) an action by Optionee involving personal dishonesty,
theft or fraud in connection with Optionee's duties as an officer or employee of
the Company or any Subsidiary, (y) Optionee's repeated failure to abide by or
follow any lawful direction of the Board, Chief Executive Officer or President
of the Company or any Subsidiary or (z) the Optionee's violation of his or her
non-disclosure, non-solicitation or non-competition obligations to the Company
or any Subsidiary. Notwithstanding anything to the contrary, in no event may
any Option be exercised after the expiration of the term of such Option.

8. Effect of Change Of Control. In the Event of a Change of
Control (as defined below), unless otherwise determined by the Administrator or
the Board in writing prior to the occurrence of such Change of Control, the
portion of the Option, if any, not exercisable and vested shall become fully
exercisable and vested. For purposes of this Section 8, a "Change of Control"
shall be deemed to have occurred if:

<PAGE> 4

(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act, as amended (other than the Company or any
of its Subsidiaries; any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries; any Initial
Holder or Permitted Transferee thereof (as defined in the Company's Amended and
Restated Certificate of Incorporation); or any company owned, directly or
indirectly, by the stock holders of the Company (in substantially the same
proportions as their ownership of Common Stock of the Company) is or becomes
after the Date of Grant the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates) representing 50% or more
of the combined voting power of the Company's then outstanding securities; or

(b) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation or entity, other than
(i) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 50% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
(other than existing stockholders) acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or

9. Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by facsimile or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given three days after mailing or 24 hours after transmission
by facsimile to the respective parties named below:

<PAGE> 5

If to Company: Classic Communications, Inc.
515 Congress Avenue
Suite 2626
Austin, TX 78701
Attn: Chief Financial Officer
Facsimile: (512) 476-5204

with a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, IL 60606-1285
Attn: Peter C. Krupp, Esq.
Facsimile: 312-407-0411

If to the Optionee: At the address set forth on the signature page
attached hereto.

Either party hereto may change such party's address for notices by notice duly
given pursuant hereto.

10. Securities Laws Requirements. The Option shall not be
exercisable to any extent, and the Company shall not be obligated to transfer
any Option Shares to the Optionee upon exercise of such Option, if such
exercise, in the opinion of counsel for the Company, would violate the
Securities Act of 1933, as amended, the Exchange Act (or any other federal or
state statutes having similar requirements as may be in effect at that time),
the requirements of any stock ex change upon which the Common Stock may then be
listed or the provisions of any other law. Further, the Company may require as a
condition of transfer of any Option Shares pursuant to any exercise of the
Option that the Optionee furnish a written representation that he or she is
purchasing or acquiring the Option Shares for investment and not with a view to
resale or distribution to the public. The certificates for the Option Shares
may include any legend which the Administrator deems appropriate to reflect any
restrictions on transfer. All certificates for Option Shares shall be subject to
such stock-transfer orders and other restrictions as the Administrator may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.

<PAGE> 6

11. Withholding Requirements. The Company's obligations under
this Option Agreement shall be subject to all applicable tax and other
withholding requirements, and the Company shall, to the extent permitted by law,
have the right to deduct any withholding amounts from any payment or transfer of
any kind otherwise due to the Optionee.

12. Administration. This Option Agreement shall be
administered, in accordance with applicable law, by the Board, or, at the
Board's sole discretion, by the Committee, which shall be appointed by the
Board, and which shall serve at the pleasure of the Board.

13. Fractional Shares. No fractional shares of Common Stock
shall be issued or delivered. The Company shall determine whether cash or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

14. Failure to Enforce Not a Waiver. The failure of the
Company to enforce at any time any provision of this Option Agreement shall in
no way be construed to be a waiver of such provision or of any other provision
hereof.

15. Governing Law. This Option Agreement shall be governed by
and construed according to the laws of the State of Delaware without regard to
its principles of conflict of laws.

16. Amendments. This Option Agreement may be amended or
modified at any time only by an instrument in writing signed by each of the
parties hereto.

17. Rights as a Stockholder. Neither the Optionee nor any of
the Optionee's successors in interest shall have any rights as a stockholder of
the Company with respect to any Option Shares until the date of issuance of a
stock certificate for such Option Shares.

18. Agreement Not a Contract of Employment. Neither the
granting of the Option or this Option Agreement shall constitute or be evidence
of any agreement or understanding, express or implied, that the Optionee has a
right to continue as an officer, director, employee, consultant or advisor of
the Company or any Subsidiary or affiliate of the Company for any period of time
or at any specific rate of compensation.

<PAGE> 7

19. Authority of the Administrator. The Administrator shall
have full authority to interpret and construe this Option Agreement. The
determination of the Administrator as to any such matter of interpretation or
construction shall be final, binding and conclusive.

20. Indemnification. No member of the Board or the
Administrator, nor any officer or employee of the Company or its Subsidiaries
acting on behalf of the Board or the Administrator, shall be personally liable
for any action, determination, or interpretation taken or made in good faith
with respect to this Option Agreement, and all members of the Board or the
Administrator and each and any officer or employee of the Company or its
Subsidiaries acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company or its Subsidiaries in respect of
any such action, determination or interpretation.

21. Dispute Resolution. The parties hereto will use their
reasonable best efforts to resolve any dispute hereunder through good faith
negotiations. A party hereto must submit a written notice to any other party to
whom such dispute pertains, and any such dispute that cannot be resolved within
30 calendar days of receipt of such notice (or such other period to which the
parties may agree) will be submitted to an arbitrator selected by mutual
agreement of the parties. In the event that, within 50 days of the written
notice referred to in the preceding sentence, a single arbitrator has not been
selected by mutual agreement of the parties, a panel of arbitrators (with each
party to the dispute being entitled to select one arbitrator and, if necessary
to prevent the possibility of deadlock, one additional arbitrator being selected
by such arbitrators selected by the parties to the dispute) shall be selected by
the parties. Except as otherwise provided herein or as the parties to the
dispute may otherwise agree, such arbitration will be conducted (1) in
accordance with the then existing rules of the Center for Public Resources
("CPR") and (2) at the Company's corporate headquarters in Austin, Texas. The
decision of the arbitrator or arbitrators, or of a majority thereof, as the case
may be, made in writing will be final and binding upon the parties hereto as to
the questions submitted, and the parties will abide by and comply with such
decision. The parties hereto expressly agree and understand that they may not
seek and the arbitrator(s) may not award punitive or exemplary damages and any
award of any such arbitrator(s) shall be limited to compensatory damages. Unless
the decision of the arbitrator(s), as the case may be, provides for a different
allocation of costs and expenses determined by the arbitrators to be equitable
under the circumstances, the prevailing party or parties in any arbitration will
be entitled to recover all reasonable fees (including but not limited to
attorneys' fees) and expenses incurred by it or them in connection with such
arbitration from the

<PAGE> 8

nonprevailing party or parties; provided, however, that any and all costs and
expenses of CPR necessary and payable prior to any such arbitration shall be
allocated equally between the parties, subject to any re-allocation of such
costs and expenses by the arbitrator(s). The parties hereto expressly agree and
understand that the dispute resolution procedure described above shall the sole
and exclusive remedy for any and all disputes arising under or relating to this
Option Agreement or the administration thereof.

22. Definitions. For purposes of this Option Agreement, the
following terms shall be defined as set forth below:

(a) "Administrator" means the Board or, at the
Board's sole discretion, the Committee.

(b) "Board" means the Board of Directors of the
Company.

(c) "Committee" means the compensation committee of
the Board or any committee the Board may subsequently appoint to administer this
Option Agreement. To the extent necessary and desirable, the Committee shall be
composed entirely of individuals who meet the qualifications referred to in
Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. If at any time
the Board shall not administer this Option Agreement, then the functions of the
Board specified herein shall be administered by the Committee.

(d) "Disability" means the inability of an Optionee
to perform substantially his duties and responsibilities to the Company or any
Parent Corporation or Subsidiary by reason of a physical or mental disability or
infirmity (i) for a continuous period of six months or (ii) at such earlier time
as the Optionee submits medical evidence satisfactory to the Administrator that
the Optionee has a physical or mental disability or infirmity that will likely
prevent the Optionee from returning to the performance of the Optionee's work
duties for six months or longer. The date of such Disability shall be the last
day of such six-month period or the day on which the Optionee submits such
satisfactory medical evidence, as the case may be.

(e) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.

(f) "Fair Market Value" means, as of any given date,
with respect to any awards granted hereunder, (A) if the Common Stock is
publicly

<PAGE> 9

traded, the closing sale price of a share of Common Stock on such date, (B) the
fair market value of a share of Common Stock as determined in accordance with a
method prescribed in the agreement evidencing any award hereunder, or (C) the
fair market value of a share of Common Stock as otherwise determined by the
Administrator in the good faith exercise of its discretion.

(g) "Parent Corporation" means any corporation (other
than the Company) in an unbroken chain of corporations ending with the Company,
if each of the corporations in the chain (other than the Company) owns stock
possessing 50% or more of the combined voting power of all classes of stock in
one of the other corporations in the chain.

(h) "Subsidiary" means any corporation (other than
the Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.

* * *

<PAGE> 10

IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Option Agreement on the day and year first above written.

CLASSIC COMMUNICATIONS, INC.

By
--------------------------------------
Name
------------------------------------
Title
-----------------------------------

The undersigned has had the opportunity
to read the terms and provisions of the
foregoing Option Agreement. The
undersigned hereby accepts and agrees to
all the terms and provisions of the
foregoing Option Agreement. THE
UNDERSIGNED UNDER STANDS THAT THIS OPTION
AGREEMENT CONTAINS A PRE-DISPUTE
AGREEMENT TO ARBITRATE ANY AND ALL
DISPUTES, AS MORE FULLY DESCRIBED IN
SECTION 21 HEREOF.

The Optionee

Address:
-------------------------------

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

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 30, 1999 (insofar as it relates to the statements
of operations, stockholders' equity (deficit) and cash flows for the year ended
December 31, 1996) in Amendment No. 1 to the Registration Statement (Form S-1
No. 333-89295) and related Prospectus of Classic Communications, Inc. for the
registration of shares of its common stock.

/s/ Ernst & Young LLP

Austin, Texas

November 12, 1999

<PAGE> 1

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Buford Group, Inc.:

We consent to the use of our report included herein and to the references to our
firm under the headings "Experts" and "Selected Historical Consolidated
Financial Data -- Buford Group, Inc." in the prospectus.

/s/ KPMG LLP

Dallas, Texas

November 12, 1999

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our reports dated October 14, 1999 relating to the financial statements and
financial statement schedule listed in the Index at Item 16(b) of Classic
Communications, Inc., which appear in such Registration Statement. We also
consent to the reference to us under the heading "Experts" and "Selected
Historical Consolidated Financial Data -- Classic Communications, Inc." in such
Registration Statement.

PricewaterhouseCoopers LLP

Austin, Texas

November 12, 1999

<PAGE> 1

EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated July 26, 1999 relating to the financial statements of Star
Cable Associates, which appear in such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.

PricewaterhouseCoopers LLP

Pittsburgh, PA

November 12, 1999