TELEMUNDO GROUP INC, 10-K, 1997-04-01

TELEMUNDO GROUP INC
10-K, 1997-04-01
TELEVISION BROADCASTING STATIONS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File Number 0-16099
___________

TELEMUNDO GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware 13-3348686
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2290 West 8th Avenue
Hialeah, Florida 33010
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (305) 884-8200
___________

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

Securities registered pursuant to Section 12(g) of the Act:

Series A Common Stock, $.01 par- value
Series A Common Stock Purchase Warrants
___________

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. [x]

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [x]

Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. [x]

As of March 26, 1997, 10,164,156 shares of Common Stock of Telemundo
Group, Inc. were outstanding, and the aggregate market value of the voting
stock held by nonaffiliates was approximately $175,786,000. Directors,
officers and 10% or greater stockholders are considered affiliates for
purposes of this calculation but should not be deemed affiliates for any
other purpose.

DOCUMENTS INCORPORATED BY REFERENCE:

(1) Portions of Telemundo Group, Inc. 1996 Annual Report to Stockholders -
Parts II and IV.
(2) Portions of Telemundo Group, Inc. Proxy Statement for the 1997 Annual
Meeting of Stockholders - Part III.
=============================================================================

TABLE OF CONTENTS

Page

PART I
Item 1. BUSINESS............................................. 2
Item 2. PROPERTIES........................................... 11
Item 3. LEGAL PROCEEDINGS.................................... 12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.. 12

PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS........................ 12
Item 6. SELECTED FINANCIAL DATA.............................. 12
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION................. 13
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......... 13
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE................ 13

PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT... 13
Item 11. EXECUTIVE COMPENSATION............................... 13
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT......................................... 13
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....... 13

PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K........................................ 13

PART I

Item 1. BUSINESS

Telemundo Group, Inc., together with its subsidiaries (collectively,
"Telemundo" or the "Company"), is one of two Spanish-language television
broadcast networks in the United States. The network provides programming
24-hours per day to its owned and operated stations and affiliates, which
serve 59 markets in the U.S., including the 32 largest Hispanic markets, and
reaches approximately 85% of all U.S. Hispanic households. Hispanics currently
constitute approximately 10% of the U.S. population, or 27 million people,
according to the U.S. Census Bureau, which also projects Hispanics to be the
largest minority group in the United States by the year 2010. The Company
also owns and operates the leading full-power television station and related
production facilities in Puerto Rico. References to the U.S. exclude Puerto
Rico unless otherwise noted.

Telemundo completed the acquisition of a 74.5% interest in its
Chicago affiliate, WSNS-TV ("WSNS"), on February 26, 1996 and now owns and
operates full power Spanish-language television stations in the seven largest
Hispanic Market Areas in the United States. "Market Area" or "DMA" refers to
Designated Market Area, a term developed by Nielsen Media Research, Inc.
("Nielsen T.V.") and used by the television industry to describe a
geographically distinct television market.

The Company also distributes its programming through 13 owned and
operated low-power television stations, 43 affiliated broadcast stations
and 91 satellite direct cable affiliates. The Company's programming is
carried on an additional 513 cable systems in markets served by broadcast
stations in the Company's network.

General Development of Business

The Company was organized in May 1986 under the laws of Delaware
and is the successor to John Blair & Company, formerly a diversified
communications company ("Blair"). The Company began its United States
network with three television stations in January 1987, providing
approximately 18 hours per week of network programming. The Company
now transmits Spanish-language programming 24-hours per day to its
network of owned and operated stations and affiliates in the United
States. The Company increased its coverage from 65% of all U.S. Hispanic
households at the beginning of 1989 to approximately 85% of all U.S. Hispanic
households in March 1997. In July 1993 the Company consented to the entry of
an order for relief under chapter 11 of the United States Code (the
"Bankruptcy Code") and on December 30, 1994 consummated a plan of
reorganization under the Bankruptcy Code.

Narrative Description of Business

The Company's principal source of revenue is the sale of network
advertising time on its network and the sale of local and national spot
advertising time on the Company's owned and operated television stations.
Additionally, the Company sells blocks of air time during non-network
programming hours to independent programmers ("block time programmers").

The Telemundo Network and Broadcast Operations

The Company's television network covers 59 markets in the United
States, including the 32 largest Hispanic markets, and reaches approximately
85% of all U.S. Hispanic households. Coverage is achieved through seven
full-power and 13 low-power owned and operated television stations, 43
affiliated broadcast stations and 91 satellite direct cable systems
affiliated with the Company. The signal from the Company's owned and
operated stations and broadcast affiliates is also carried on an additional
513 cable systems throughout the United States.

The Company's Television Stations

Since the acquisition of a majority interest in its full-power
Chicago affiliate, the Company owns and operates eight full-power and 13
low-power Spanish-language television stations in the United States and
Puerto Rico.

Full-power Stations

The Company's U.S. owned and operated full-power stations broadcast
network programming and produce and broadcast local news and other limited
programming focused on the audience in each of their respective local
markets. Each full-power station also sells blocks of broadcast time
during non-network programming hours to block time programmers. The
following table sets forth certain information about the Company's owned
and operated full-power Spanish-language television stations.

<TABLE>

Approximate
Hispanic Hispanics as a Ranking of Market Number of other Spanish- Ranking of Market
television percentage Area by number of language television Area by number of
Market Area households in of total Hispanic television stations operating in total television
served and station Market Area (1) population (2) households (1) Market Area (3) households (1)
- ------------------ --------------- -------------- -------------------- ---------------------- -----------------
<S> <C> <C> <C> <C> <C>
Los Angeles, CA
KVEA, Channel 52 1,362,000 37% 1 2 2
New York, NY
WNJU, Channel 47 936,000 17% 2 1 1
Miami, FL
WSCV, Channel 51 454,000 36% 3 3 16
Houston, TX
KTMD, Channel 48 292,000 24% 4 2 11
San Francisco, CA
KSTS, Channel 48 283,000 18% 5 2 5
Chicago, IL
WSNS, Channel 44 282,000 13% 6 1 3
San Antonio, TX
KVDA, Channel 60 281,000 50% 7 2 38
San Juan, PR
WKAQ, Channel 2 (4) 1,132,000 - - 6 -
___________

<FN>
(1) Estimated by Nielsen for January 1, 1997.

(2) Claritas, Inc., 1996, derived from U.S. Census Bureau data and other
government statistics.

(3) The Company and each of its Spanish-language competitors broadcast
over UHF, except in Puerto Rico, where WKAQ and its three major competitors
broadcast over VHF. The Company's principal competitor, Univision, owns a
Spanish-language station in each of the U.S. markets that are served by the
Company's owned and operated full-power stations. Independent Spanish-language
stations also broadcast in the Los Angeles, Miami, Houston, San Antonio and
San Francisco broadcast markets. The independent stations in Los Angeles and
Houston and one of the independent stations in Miami are full-power stations.

(4) Source: Mediafax, Television Audience Measurements Puerto Rico,
November 1996.

</TABLE>

The information below regarding population growth and country of
origin is from Claritas, Inc., 1996:

Los Angeles: The Company owns and operates KVEA, Channel 52, licensed to
Corona, California and serving the Los Angeles market. KVEA began operating
as a Spanish-language station in 1985. Los Angeles is the largest U.S.
Hispanic market, representing approximately 18% of the Hispanic television
households in the United States. An estimated 5.7 million Hispanics reside
in the Los Angeles DMA, constituting approximately 37% of the Los Angeles
DMA population. The Hispanic population in Los Angeles more than doubled
between 1980 and 1996, and immigration trends indicate that the Hispanic
population will continue to grow rapidly. As a reflection of the significance
of Spanish-language television, Spanish-language television programs
periodically draw higher overall audience levels than all of the competing
English-language programs in the Los Angeles Market Area. The Hispanic
population in Los Angeles is predominantly Mexican in origin. In addition
to a Univision station, Los Angeles has a local, independently-owned
Spanish-language television station.

New York: The Company owns and operates WNJU, Channel 47, licensed to
Linden, New Jersey and serving the New York market. WNJU began operating
as a Spanish-language station in 1965. New York is the second largest U.S.
Hispanic market, representing approximately 13% of the Hispanic television
households in the United States. An estimated 3.2 million Hispanics reside
in the New York DMA, constituting approximately 17% of the New York DMA
population. The Hispanic population in New York increased by approximately
51% between 1980 and 1996. Although almost half of this market is of Puerto
Rican origin, the New York Hispanic community is relatively diverse.

Miami: The Company owns and operates WSCV, Channel 51, licensed to Ft.
Lauderdale, Florida and serving the Miami-Ft. Lauderdale market. WSCV began
operating as a Spanish-language station in 1985. Miami is the third largest
U.S. Hispanic market, representing approximately 6% of the Hispanic
television households in the United States. An estimated 1.3 million
Hispanics reside in the Miami DMA, constituting approximately 36% of the
Miami DMA population. It has been estimated that more than half of the
population of Dade County is comprised of Hispanics. The Hispanic population
in Miami more than doubled between 1980 and 1996. Approximately 54% of
Hispanics in Miami are of Cuban origin.

Houston: The Company owns and operates KTMD, Channel 48, licensed to
Galveston, Texas and serving the Houston-Galveston market. KTMD began
operating as a Spanish-language station in 1987. The Houston-Galveston
market is the fourth largest U.S. Hispanic market, in terms of households,
representing approximately 4% of the Hispanic television households in the
United States. An estimated 1.1 million Hispanics reside in the Houston DMA
(which includes Galveston), constituting approximately 24% of the Houston DMA
population. The Hispanic population in Houston increased by approximately
125% between 1980 and 1996 and is principally of Mexican origin.

San Francisco: The Company owns and operates KSTS, Channel 48, licensed
to San Jose, California and serving the San Francisco-San Jose market. KSTS
began operating as a Spanish-language station in 1987. The San Francisco-
San Jose Hispanic market is the fifth largest U.S. Hispanic market,
representing approximately 4% of the Hispanic television households in the
U.S. An estimated 1.2 million Hispanics reside in the San Francisco DMA
(which includes San Jose), constituting approximately 18% of the San
Francisco DMA population. The Hispanic population in this market grew by
approximately 82% from 1980 to 1996 and is over 68% of Mexican origin.

Chicago: On February 26, 1996, the Company acquired a 74.5% interest in
and now operates WSNS, Channel 44, licensed to and serving the Chicago
market. WSNS began operating as a Spanish-language station in 1985. The
Chicago market is the sixth largest Hispanic market in the United States,
representing approximately 4% of the Hispanic television households in the
U.S. An estimated 1.1 million Hispanics reside in the Chicago DMA,
constituting approximately 13% of the Chicago DMA population. The Hispanic
population grew by approximately 70% from 1980 to 1996 and approximates the
overall ethnic mix of the U.S. Hispanic population base.

San Antonio: The Company owns and operates KVDA, Channel 60, licensed to
and serving the San Antonio, Texas market. KVDA began operating as a
Spanish-language station in 1989. The San Antonio market is the seventh
largest U.S. Hispanic market, representing approximately 4% of the Hispanic
television households in the United States. An estimated 946,000 Hispanics
reside in the San Antonio DMA, constituting approximately 50% of the San
Antonio DMA population. The Hispanic population in San Antonio, which is
principally of Mexican origin, increased by approximately 47% between 1980
and 1996.

San Juan, Puerto Rico: The Company owns and operates television station
WKAQ, Channel 2, in San Juan, which together with its affiliate, WOLE
(channel 12 in Mayaguez), and its translator facilities, cover virtually
all of Puerto Rico. WKAQ began operating as a Spanish-language television
station in 1954. The current population of Puerto Rico is approximately 3.8
million.

Low-power Stations

The Company owns and operates 13 low-power television stations
("LPTVs") and has received permission from the FCC to build two additional
LPTVs. LPTVs and "translator stations" generally operate at significantly
lower levels of power than full-power stations. In addition, their signals
generally cover smaller areas than those covered by full-power stations and
may not cover the full Market Area. LPTV's extend the network's coverage in
areas where a full-power television station was not available for the
network. Under FCC rules, LPTVs operate on a secondary basis and are
subject to displacement. Under the 1992 Cable Act (described below),
LPTVs have very limited cable carriage rights. See "FCC Regulation". The
Company's low-power television stations operate with minimal staff and
generally do not originate programming or have their own sales forces.

Approximate
Hispanic
television
Area served and station(s) households
- -------------------------- ----------
Santa Fe, NM
(1): K52BS................................................ 187,000
Sacramento, CA (1): K47DQ, K52CK, K61FI................... 142,000
Boston, MA: W32AY......................................... 86,000
Austin, TX (1): K11SF..................................... 75,000
Salinas-Monterey, CA: K15CU............................... 48,000
Odessa/Midland, TX (1): K60EE, K49CD...................... 39,000
Colorado Springs, CO: K49CJ............................... 39,000
Santa Maria, CA: K27EI.................................... 38,000
Salt Lake City, UT: K48EJ................................. 34,000
Abilene, TX: K40DX........................................ 14,000
___________

(1) These areas are served by more than one LPTV, including affiliated
LPTVs.

Affiliates

The Company currently provides programming to 134 affiliates
serving 44 Hispanic markets in the United States. The Company's affiliates
in these markets, which consist of 43 affiliated broadcast stations and 91
satellite direct cable affiliates that take the network's signal directly
from the satellite, represent approximately 48% of the network's total
coverage of the U.S. Hispanic market.

The Company provides its affiliates with programming and retains
the right to sell generally 50% to 60% of the commercial advertising time
available during such programming. Affiliates generally carry the full
network schedule. The Company also acts as the exclusive representative of
the affiliates for national and regional spot advertising sales, and
receives a commission on such sales. The Company is able to provide
advertising sales representation services to affiliated stations by reason
of a waiver of applicable regulations granted by the FCC. Revenue from
the Company's representation services represented less than 1% of the
total revenue of the Company in 1996.

The Company's current contracts with its affiliates generally have
two to five year terms and some provide for compensation to the affiliate.
As of February 1997, no single affiliated station accounted for more than
3.2% of total network coverage.

Programming

The Company currently makes available Spanish-language programming
24-hours per day to its network, including movies, novelas, talk and
entertainment shows, variety shows, national and international news, music
and sporting events. More than 40% of such programming is produced by the
Company at production facilities near Miami and Mexico City. In addition,
the Company's owned and operated full-power stations and certain affiliates
produce and broadcast local news and other limited programming focused on
the audience in each of their respective local markets. The remainder of
the Company's programming is purchased from various program suppliers
primarily in Mexico and other Latin American countries.

The Company's programming schedule includes Ocurrio Asi, the first
news magazine format program in Spanish-language television. Produced by
the Company since 1990 in its Miami facilities, this show has consistently
been one of Telemundo's highest rated programs. Other Telemundo produced
programming with consistently strong market shares include two talk shows,
Sevcec and El y Ella, and a musical variety program, Padrisimo.

In May 1996, the Company announced that it had entered into an
agreement to co-produce television programming with Mexican television
network Television Azteca. The Telemundo/TV Azteca alliance encompasses
a broad range of entertainment projects, including novelas, the most popular
format of television programming among Spanish-language television viewers
in the U.S. Novelas will be aired on the Telemundo network in the U.S. and
on the TV Azteca network in Mexico, and syndicated internationally. The
first project, Nada Personal, began airing on the Telemundo Network in
August 1996.

The programming lineup of WKAQ in Puerto Rico differs from that of
the Company's network, but includes approximately 16 hours per week of
Telemundo network programming. Through its production studios, WKAQ produces
approximately 26 hours of programming weekly, including variety and comedy
shows, mini-series, news and public affairs shows, all primarily directed
toward the Puerto Rico market. In addition, WKAQ has the right of first
refusal to purchase novelas, in the Puerto Rico market, produced by Grupo
Televisa, S.A. de C.V. ("Televisa") pursuant to a programming agreement
with approximately three years remaining. WKAQ also broadcasts programming
from other Latin American countries and broadcasts United States syndicated
programming dubbed in Spanish.

The Company also sells the rights to broadcast its original
programming in the international markets. Revenue from the syndication of
the Company's programming represented approximately 1% of the Company's
total net revenue in 1996.

TeleNoticias

In addition, Telemundo and CBS entered into a number of agreements
relating to news activities, including an agreement under which CBS will
produce the Company's nightly network newscasts for a period of five years.
The Company also entered into other agreements including the rental of the
TeleNoticias studio facility in the Company's network operations center to
CBS, the provision of certain technical and other services by the Company
to CBS, and the provision of certain other news services by CBS to the
Company.

In connection with the Purchase, all outstanding disputes among
Telemundo and its former partners were resolved, including the dismissal
of the October 16, 1995 legal action commenced by Telemundo in New York
State Court relating to certain corporate governance and other issues.

Sales and Marketing

The Company has a network and national spot sales and marketing
force, including account executives and sales managers with backgrounds in
both Spanish-language and English-language media, to sell advertising time
broadcast over the Company's entire network (network sales) and to sell
advertising time in markets covered by the Company's owned and operated
stations and affiliates (national spot sales). The Company has national
sales offices in New York, Los Angeles, Miami, Chicago, San Francisco,
San Antonio, Dallas, Houston and Orange County, California.

Each owned and operated full-power station also has a sales and
marketing force to sell local and national spot advertising on its own
behalf.

The Company sells advertising time to a broad and diverse group of
advertisers. No single advertiser accounted for 10% or more of the Company's
1996 total revenue. According to Hispanic Business Magazine, the top ten
advertisers in Spanish-language media in 1996, all of which are major
advertisers on the Telemundo network, were The Procter & Gamble Co.,
AT&T Corp., McDonald's Corp., Sears, Roebuck & Co., Anheuser-Busch
Companies Inc., Philip Morris Companies, Inc., Colgate-Palmolive Co.,
Ford Motor Co., MCI Communications Corp., and J.C. Penney Co.

Additionally, the network and each of the Company's stations sell
blocks of air time during non-network programming hours to block time
programmers.

Ratings Systems

The Nielsen Hispanic Television Index ("NHTI") which began in
November 1992, and the Nielsen Hispanic Station Index ("NHSI") provide
national network (NHTI) and local (NHSI) television ratings and share data
for the Hispanic audience. The Company's advertising revenue depends to a
large extent on its ratings. Management believes that Spanish-language
television has the potential to garner a larger share of total U.S.
television advertising revenue, and better demographic information and
audience research will accelerate this process. General market advertisers
have traditionally relied on Nielsen T.V. television ratings in making
network advertising decisions.

Competition

The broadcasting industry has become increasingly competitive in
recent years. Competitive success of a television network or station depends
primarily on public response to the programs broadcast, which affects the
revenue earned by the network or station from the sale of advertising time.
In addition to programming, factors determining competitive position include
management's ability and experience, marketing, research and promotional
efforts.

In each of the markets in which the Company owns and operates
full-power stations, except Puerto Rico, the Company's station competes
directly with a full-power Univision station which ranks first in Spanish-
language television viewership in its DMA. The Univision stations and the
Univision network affiliates together reach a larger percentage of Hispanic
viewers in the U.S. than the Company's stations and affiliates and have
attracted at times approximately 80% of the overall Spanish-language
network television viewing audience. Generally, the competing Univision
stations have been operating in their markets longer than have the Company's
stations. In addition, effective July 1, 1996, Univision acquired the
Galavision cable network ("Galavision") from Televisa, the largest supplier
of Spanish-language programs in the world. Galavision, which has operated
primarily as a Spanish-language cable television network since 1980 and
serves approximately 1.8 million subscribers, also competes with the Company.
Both Televisa and Corporacion Venezolana de Television, C.A. ("Venevision")
have entered into long-term contracts to supply Spanish-language programming
to the Univision and Galavision networks. Through these program license
agreements, Univision has the right of first refusal to air in the U.S. all
Spanish-language programming produced by Televisa and Venevision until
December 2017. These supply contracts currently provide Univision with a
competitive advantage in obtaining programming originating from Mexico and
in targeting Hispanics of Mexican origin, which account for approximately
64% of the U.S. Hispanic market.

There are also several independent Spanish-language television
stations that broadcast, on a full-time or part-time basis, in markets in
which the Company owns and operates stations. Independent Spanish-language
television stations compete with Company-owned stations in the Los Angeles,
Miami, Houston, San Francisco and San Antonio Market Areas. The independent
station in Los Angeles also has a program supply agreement with Televisa.
The independent stations in Los Angeles and Houston and one of the
independent stations in Miami are full-power stations.

The Company's owned and operated television stations and affiliates
also face competition for advertising revenue from other sources serving the
same markets and competing for the same target audience, such as other
Spanish-language and English-language media, including television stations,
cable channels, radio stations, magazines, newspapers, movies and other
forms of entertainment. The English-language media are generally better
developed and better capitalized than the Spanish-language media in the
United States. Several English-language networks and stations are
broadcasting Spanish-language translations of their general market
programs using the second audio programs ("SAP"). The Company believes
these SAP transmissions have not attracted a significant number of Hispanic
viewers.

In Puerto Rico, WKAQ has three significant Spanish-language
television station competitors. In addition, three other Spanish-language
television stations operate in that market. Although the general market
programming of the three major English-language U.S. networks is available
in Puerto Rico through cable carriage, none of such networks has attracted
a significant share of the Puerto Rico audience to date.

Further advances in technology such as video compression,
programming through direct broadcast satellites and programming delivered
through fiber optic telephone lines could lower entry barriers for new
channels and encourage the development of increasingly specialized niche
programming.

FCC Regulation

Licensing

The ownership of the Company's television stations and certain of
its television broadcasting operations are subject to the jurisdiction of
the Federal Communications Commission (the "FCC") under the Communications
Act of 1934, as amended (the "Communications Act"). The Communications Act
was substantially amended by the Telecommunications Act of 1996 (the
"Telecom Act"). The Communications Act prohibits the operation of
television broadcasting stations except under a license issued by the FCC
and empowers the FCC, among other matters, to issue, renew, revoke and
modify broadcast licenses, to determine the location of stations, to
establish areas to be served and to regulate certain aspects of broadcast
programming. The Communications Act prohibits the assignment of a broadcast
license or the transfer of control of a licensee without the prior approval
of the FCC. If the FCC determines that violations of the Communications Act
or the FCC's own regulations have occurred, it may impose sanctions ranging
from admonition of a licensee to license revocation.

The Communications Act provides that a license may be granted to any
applicant if the public interest, convenience and necessity will be served
thereby, subject to certain limitations. Television broadcast licenses have
in the past usually been issued initially for terms of five years. Upon
application, and in the absence of an objection to the renewal application,
or an adverse finding as to the licensee's qualifications, broadcast
licenses usually have been renewed for additional terms of up to five years
without a hearing by the FCC. However, on January 24, 1997, pursuant to the
terms of the Telecom Act, the FCC increased the terms of such licenses and
their renewals to eight years. FCC licenses of full-power stations held by
the Company have the following expiration dates: WKAQ - February 1, 1997;
WSNS - December 1, 1997; KTMD and KVDA - August 1, 1998; KSTS and KVEA -
December 1, 1998; WNJU - June 1, 1999, and WSCV - February 1, 2005. An
application to renew the license of WKAQ was timely filed and is pending
at the FCC. Under FCC rules, an existing license automatically continues
in effect once a timely renewal application has been filed until a final
FCC decision is issued.

Attributable Interests

Under existing FCC regulations governing multiple ownership of
broadcast stations, a license to operate a television station will not be
granted (unless established waiver standards are met) to any party (or
parties under common control) that has an "attributable interest" in
another broadcast station with an overlapping service area. The regulations
also prohibit (with certain qualifications) any person or entity from
having an "attributable interest" in television stations, located in
markets which, in the aggregate, include more than 35% of total U.S.
television households. For purposes of this rule, UHF stations are
attributed with one-half of the television households in their respective
markets. Additionally, the rules prohibit (with certain qualifications)
anyone with an "attributable interest" in a television station from also
having an "attributable interest" in a radio station, daily newspaper or
cable television system serving a community located within the relevant
coverage area of that station, and vice versa. The Telecom Act, among other
measures, directs the FCC (i) to expand a waiver policy for allowing common
ownership of a television station and one or more overlapping radio
stations to include the top 50 television markets (currently the top 25
television markets) and (ii) to consider modification of its rule
prohibiting common ownership of two overlapping television stations. The
Company is unable to predict the effect of any changes resulting from the
Telecom Act.

Under existing FCC regulations, the officers, directors and certain
of the equity owners of a broadcasting company are deemed to have an
"attributable interest" in the broadcasting company. In the case of a
corporation controlling or operating television stations, there is
attribution only to directors and officers and to stockholders who own
5% or more of the outstanding voting stock. Institutional investors,
including mutual funds, insurance companies and banks acting in a fiduciary
capacity, may own up to 10% of the outstanding voting stock without being
subject to such attribution, provided that such stockholders exercise no
control over the management or policies of the broadcasting company. In the
case of the Company, there are presently two attributable stockholders:
TLMD Partners II, L.L.C. and Bastion Capital Fund, L.P.

Foreign Ownership Restrictions

The Communications Act limits the amount of capital stock that
aliens may own in a broadcast station licensee and in the parent company of
a licensee. No broadcast license may be held by a corporation of which more
than one-fifth of its capital stock is owned or voted by non-U.S. citizens
or their representatives, by foreign governments or their representatives,
or by non-U.S. corporations. The Company's broadcast licenses are held by
subsidiary companies that are controlled directly or indirectly by the
Company. A broadcast license may not be granted to or held by any
corporation that is controlled, directly or indirectly, by any other
corporation more than one-fourth of whose capital stock is owned or voted
by non-citizens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations, if the FCC finds that the
public interest will be served by the refusal or revocation of such license.
The Company's Restated Certificate of Incorporation provides that the
transfer of the Company's capital stock, whether voluntary or involuntary,
will not be permitted and will be ineffective if such transfer would
violate (or would result in a violation of) the Communications Act or any
of the rules or regulations promulgated thereunder.

Coverage and Must-carry Rights

The FCC has adopted regulations implementing the Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act").
These regulations required television broadcasters to elect, at three-year
intervals beginning June 17, 1993, whether to exercise either certain "must
carry" or "retransmission consent" rights in connection with their carriage
by local cable television systems. Those stations that elected to exercise
must carry rights could demand carriage on a specified channel on cable
systems within their market area. However, these must carry rights are
not absolute, but are dependent on variables such as the number of
activated channels on, and location and size of, the cable system, the
amount of duplicative programming on a broadcast station, the channel
positioning demands of other broadcast stations and the signal quality
of the stations at the cable system's principal headend. LPTVs (as defined
below) have very limited must carry rights, although cable systems cannot
retransmit LPTV stations' signals without their consent. The Company's
owned and operated full-power stations in the United States have elected
must carry rights. The constitutionality of the must carry provisions
have been challenged and a special three-judge panel of the U.S. District
Court for the District of Columbia upheld the constitutionality of the
must carry rules in a 2-1 decision issued on December 13, 1995. This
determination has been appealed to the Supreme Court of the United States
which has heard the appeal and is expected to issue a decision prior to
June 30, 1997. In the meantime, the FCC's must carry regulations
implementing the Cable Act remain in effect. The Company cannot predict
the outcome of the Supreme Court's review of the case.

The Company's stations serving several markets and many of the
Company's affiliates are classified by the FCC as "low-power" stations.
Certain of the Company's owned and operated stations and affiliates
increase their coverage through use of "translators" that rebroadcast
the station's signal. Both low-power and translator stations are referred
to as "LPTV" stations and generally operate at significantly lower levels
of power than full-power stations. Under FCC rules, such LPTV stations
operate on a secondary basis; that is, they are subject to displacement
by a full-power station or other facility if one is licensed and they must
tolerate defined levels of electromagnetic interference from full-power
stations.

Proposed Rulemaking; Recent and Proposed Legislation

The FCC has undertaken several initiatives to change aspects of
television and radio regulation, particularly with respect to broadcast
programming, station ownership restrictions and attribution rules.

The Commission is conducting a rulemaking proceeding to devise a
table of channel allotments in connection with the introduction of digital
television service ("DTV"). The FCC has preliminarily decided to allot a
second broadcast channel to each full-power commercial television station
for DTV operation. According to this preliminary decision, stations would
be permitted to phase in their DTV operations over a period of several
years following adoption of a final table of allotments, at the end of
which they would be required to surrender their non-DTV channel. Meanwhile,
Congress is considering proposals that would require incumbent broadcasters
to bid at auctions for the additional spectrum required to effect a
transition to DTV, or, alternatively, would assign additional DTV spectrum
to incumbent broadcasters and require the early surrender of their non-DTV
channel for sale by public auction. Under certain circumstances, conversion
to DTV operations may reduce a station's geographical coverage area. In
addition, the FCC will maintain the secondary status of LPTV stations in
connection with its implementation of a channel allotment plan for DTV.
The Commission has acknowledged that DTV channel allotment may involve
displacement of existing LPTV stations, particularly in major television
markets. A number of the Company's owned and operated and affiliated
low-power stations may be affected. The Company cannot predict the
outcome of DTV proceedings.

The Commission has issued a notice of proposed rulemaking to consider
changes to its attribution rules. The FCC also is conducting a rulemaking
proceeding to consider the modification of the local co-ownership
prohibition and review the radio-television ownership restriction. The FCC
currently is examining several rules governing the relationship between
broadcast television networks and their affiliated stations. The FCC is
conducting a rulemaking proceeding to examine its rules prohibiting broadcast
television networks from representing their affiliated stations for the sale
of non-network advertising time and from influencing or controlling the
rates set by its affiliates for the sale of non-network advertising time
(the Company acts as the exclusive representative of its affiliates
pursuant to a waiver of such restriction). Separately, the FCC is conducting
a rulemaking proceeding to consider the relaxation or elimination of its
rules prohibiting broadcast television networks from (a) restricting
their affiliates' right to reject network programming; (b) reserving an
option to use specified amounts of their affiliates' broadcast time; and
(c) forbidding their affiliates from broadcasting programming of another
network; and to consider the relaxation of its rule prohibiting network
affiliated stations from preventing other stations from broadcasting the
programming of their network.

On August 8, 1996, under the Children's Television Act of 1990
(the "CTA"), the FCC amended its rules to establish a "processing guideline"
for broadcast television stations of at least three hours per week, averaged
over a six-month period, of "programming that furthers the educational and
informational needs of children 16 and under in any respect, including the
child's intellectual/cognitive or social/emotional needs." A television
station ultimately found not to have complied with the CTA could face
sanctions including monetary fines and the possible non-renewal of its
broadcast license.

The CTA and FCC rules require television station licensees to
identify programs specifically designed to educate and inform children at
the beginning of each program and in published program listings. In
addition, the Telecom Act directed the broadcast and cable television
industries to develop and transmit an encrypted rating in all video
programming that, when used in conjunction with so-called "V-chip"
technology, would permit the blocking of programs with a common rating.
On January 17, 1997, an industry proposal was submitted to the FCC
describing a voluntary ratings system under which all video programming
would be designated in one of six categories. Pursuant to the Telecom Act,
the FCC has initiated a proceeding to determine whether to accept the
industry proposal or to establish and implement an alternative system for
rating and blocking video programming. The FCC has indicated that it will
commence a separate proceeding shortly addressing technical issues related
to the "V-chip." The Company cannot predict whether the FCC will accept
the industry proposal regarding the rating and blocking of video
programming, or how changes in this proposal could affect the Company's
business.

There are additional FCC regulations and policies, and regulations
and policies of other federal agencies governing network-affiliate relations,
political broadcasts, public affairs programming, equal opportunity
employment, taxation and other areas affecting the business and operations
of broadcast stations. Proposals for additional or revised rules are
considered by federal regulatory agencies and Congress from time to time.
The Company cannot predict the resolution of these issues or other issues
discussed above, although their outcome could, over a period of time,
affect, either adversely or favorably, the broadcasting industry.

The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act or other Congressional acts or of the
regulations and policies of the FCC thereunder. Reference is made to the
Communications Act, the Telecom Act, other Congressional acts, such
regulations and policies, and the public notices promulgated by the FCC for
further information. The laws, rules, regulations and interpretations
governing the Company's business are revised from time to time and it is
not possible to predict the effect that future regulatory changes will have
on the Company's business.

Seasonality of Business

Seasonal revenue fluctuations are common in the television
broadcasting industry and the Company's revenue reflects seasonal patterns
with respect to advertiser expenditures. Increased advertising during the
holiday season results in increases in revenue for the fourth quarter. The
seasonality is more pronounced in Puerto Rico and as a result, the Company
experiences seasonal fluctuations to a greater degree than the U.S.
broadcasting industry in general. Because costs are more ratably spread
throughout the year, the impact of this seasonality on operating income is
more pronounced.

Employees

As of December 31, 1996, the Company and its subsidiaries had
approximately 1,125 full-time employees, approximately 200 of whom were
employees of WKAQ in Puerto Rico. Approximately 60 employees of WNJU,
approximately 25 employees of KSTS and approximately 120 employees of
WKAQ are covered by union contracts. WSNS has approximately 70 employees
of which approximately one-half are unionized. The unionized employees at
WSNS have been operating without an executed collective bargaining
agreement for approximately three years. The Company is currently
negotiating with the unionized employees at WSNS to reach a new collective
bargaining agreement. Additionally, approximately 53 employees are seeking
to be represented by a union at KVEA in Los Angeles, however the Company
is currently challenging the representation. The Company does not believe
the situation at WSNS and KVEA to present a significant operating risk. The
Company believes its relations with its employees and unions are
satisfactory.

Item 1b. STATEMENT REGARDING FORWARD LOOKING DISCLOSURE

Except for the historical information contained in this Annual
Report on Form 10-K, certain matters discussed herein, including (without
limitation) under Part I, Item 1, "Business", Item 3, "Legal Proceedings"
and under Part II, Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations", are forward looking
disclosures that involve risks and uncertainties, including (without
limitation) those risks associated with the availability of programming,
the impact of competition, the effect of economic and market conditions,
litigation, the impact of current or pending legislation and regulation
and other risks detailed from time to time in the Company's Securities
and Exchange Commission reports.

Item 2. PROPERTIES

In 1994, the Company moved its executive offices from New York
City to a location near Miami, Florida where it has production studios,
its network operations center and its Miami station, WSCV. These facilities
are located in approximately 120,000 square feet of space under a lease
which expires in December 1998, with options to renew through December
2004. As previously discussed, the Company sub-leases certain space in
these facilities to CBS.

The Company's New York network and national spot sales and marketing
offices and WNJU's sales and business offices are located in New York City
in approximately 30,000 square feet of leased space. The term of the lease
runs through February 1998. The Company is currently conducting a search
for alternate leased space in New York.

The offices and studios of KVEA are located in approximately 32,000
square feet of leased premises in Glendale, California. The leases were
renewed through January 31, 2002. KVEA also leases its transmitter and
broadcast tower site on Mount Wilson in the Los Angeles area, with a new
lease currently being negotiated.

The offices and studios of WNJU are located in approximately 15,000
square feet of leased premises in Hasbrouck Heights, New Jersey under a
lease that expires in 1999, with options to renew through 2004, and WNJU's
sales force and business office occupies office space in the Company's New
York sales and marketing offices. The transmitter and antenna of WNJU are
located on top of One World Trade Center in New York City under a lease
that expires in 1999 with an option to renew through 2004.

The offices and studio of WSCV are located in the same leased
premises occupied by the Company's network operations center in Hialeah,
Florida. In addition, WSCV leases space for its antenna and transmitter
in Miami, Florida under a lease that expires in 2003, with options to renew
through 2010.

The offices and studio of KTMD are located in approximately 17,000
square feet of leased premises in Houston, Texas. The lease covering these
premises expires on December 31, 1997. KTMD's tower and transmitter are
located on property owned by KTMD between Houston and Galveston.

The offices and studio of KSTS are located in approximately 16,000
square feet of leased premises in San Jose, California under leases that
expire in 1998. The transmitter and antenna of KSTS are located on leased
property on Monument Peak, outside of San Jose, under a lease that expires
in 1998. The Company is in the process of searching for an alternate
transmitter and antenna site.

The offices and studio of WSNS are located in owned premises
consisting of approximately 21,000 square feet in Chicago, Illinois.
The transmitter and antenna of WSNS are located on top of the Hancock
Tower in Chicago under a lease which expires in 1999 with an option to
renew through 2009.

The offices and studio of KVDA are located in owned premises of
approximately 20,000 square feet in San Antonio, Texas. The transmitter
and broadcast tower of KVDA are located on approximately 80 acres of owned
land outside of San Antonio.

The offices and studios of WKAQ and its related production
facilities are located in owned premises consisting of approximately
180,000 square feet in San Juan, Puerto Rico. The transmitter and broadcast
tower of WKAQ are located on property owned by the Department of Natural
Resources of the Commonwealth of Puerto Rico, which has granted WKAQ a use
permit expiring in 1998. WKAQ also operates several translator facilities
to cover small towns in the mountainous regions of Puerto Rico.

In addition, the Company leases various properties throughout the
country for LPTVs and sales and executive offices. None of these lease
commitments are material to the Company.

Item 3. LEGAL PROCEEDINGS

The Company and its subsidiaries are involved in a number of
actions and are contesting the allegations of the complaints in each
pending action and believe, based on current knowledge, that the outcome
of all such actions will not have a material adverse effect on the Company
or its business.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders in the fourth
quarter of the fiscal year covered by this Annual Report on Form 10-K.

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

See the information in Note 14 to the Notes to Consolidated Financial
Statements appearing on page 25 and the inside back cover of the Telemundo
Group, Inc. 1996 Annual Report to Stockholders, which information is
incorporated herein by reference.

Item 6. SELECTED FINANCIAL DATA

See the information under the caption "Selected Financial Data" on
page 2 of the Telemundo Group, Inc. 1996 Annual Report to Stockholders,
which information is incorporated herein by reference.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

See the information under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 3
through 8 of the Telemundo Group, Inc. 1996 Annual Report to Stockholders,
which information is incorporated herein by reference.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company and
Subsidiaries, including the independent auditors' report thereon, included
on pages 9 through 26 of the Telemundo Group, Inc. 1996 Annual Report to
Stockholders, which information is incorporated herein by reference, are
listed in Item 14 below.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors and executive officers of the
Company is incorporated herein by reference from the Company's Proxy
Statement for the 1997 Annual Meeting of Stockholders under the captions
"Election of Directors" and "Executive Officers of the Company."

Item 11. EXECUTIVE COMPENSATION

See the information in the Company's Proxy Statement for the 1997
Annual Meeting of Stockholders under the caption "Executive Compensation,"
which information is incorporated herein by reference, except for the
information under the subcaptions "Compensation Committee Report" and
"Performance Graph."

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See the information in the Company's Proxy Statement for the 1997
Annual Meeting of Stockholders under the caption "Security Ownership of
Certain Beneficial Owners and Management," which information is
incorporated herein by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the information in the Company's Proxy Statement for the 1997
Annual Meeting of Stockholders under the caption "Related Party
Transactions," which information is incorporated herein by reference.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements.

The Consolidated Financial Statements of Telemundo Group, Inc. and
Subsidiaries, including the independent auditor's report thereon, which
appear on pages 9 through 26 of the Telemundo Group, Inc. 1996 Annual
Report to Stockholders, are incorporated herein by reference.

1996 Annual
Report Page No.
---------------

TELEMUNDO GROUP, INC. AND SUBSIDIARIES:
Consolidated Statements of Operations...................... 9
Consolidated Balance Sheets................................ 10
Consolidated Statements of Changes in Common Stockholders'
Equity (Deficiency).................................... 11
Consolidated Statements of Cash Flows...................... 12
Notes to Consolidated Financial Statements (1-14).......... 13
Independent Auditors' Report............................... 26

2. Financial Statement Schedule.

VIII. Valuation and Qualifying Accounts 10-K Page 21

All other schedules have been omitted because they are inapplicable, not
required, or the information is included elsewhere in the consolidated
financial statements or notes thereto.

3. Exhibits.

EXHIBIT INDEX

Exhibit
Number
2.1 Chapter 11 Plan of Reorganization filed with the United States
Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court") on November 19, 1993, filed as Exhibit 2.1 to
the Company's Current Report on Form 8-K dated November 22, 1993 and
incorporated herein by reference.

2.2 Second Amended Disclosure Statement pursuant to Section 1125 of the
Bankruptcy Code dated April 29, 1994, filed as Exhibit 28.1 to the
Company's Current Report on Form 8-K dated July 20, 1994 and
incorporated herein by reference.

2.3 Second Amended Plan of Reorganization filed with the Bankruptcy
Court on April 29, 1994, filed as Exhibit 2.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994
(the "March 31, 1994 10-Q") and incorporated herein by reference.

2.4 Order Pursuant to Section 1129 of the Bankruptcy Code confirming the
Debtor's Second Amended Chapter 11 Plan of Reorganization dated
July 20, 1994, filed as Exhibit 2.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994
(the "September 30, 1994 10-Q") and incorporated herein by
reference.

3.1 The Company's Restated Certificate of Incorporation, filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K dated
December 30, 1994 (the "December 30, 1994 8-K") and incorporated
herein by reference.

3.2 The Company's Restated Bylaws, filed as Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994
("1994 10-K") and incorporated herein by reference.

4.2 Warrant Agreement dated as of December 30, 1994 between the Company
and Shawmut Bank Connecticut, National Association, filed as Exhibit
4.3 to the December 30, 1994 8-K and incorporated herein by
reference.

4.3 Warrant Agreement dated as of December 30, 1994 between the Company
and Reliance Insurance Company, filed as Exhibit 4.4 to the
December 30, 1994 8-K and incorporated herein by reference.

4.4 Registration Rights Agreement dated as of December 30, 1994 between
the Company, Apollo Advisors, L.P. and Reliance Insurance Company,
filed as Exhibit 4.5 to the December 30, 1994 8-K and incorporated
herein by reference.

4.5 First Supplemental Indenture dated as of December 12, 1995 between
the Company and Bankers Trust Company, as trustee, with respect to
the 10.25% Senior Notes Due December 30, 2001, filed as an exhibit
in Registration Statement No. 33-64599 of the Company under the
Securities Act of 1933, as amended, filed November 27, 1995 and
incorporated herein by reference.

4.6 Indenture dated as of February 26, 1996 between the Company and Bank
of Montreal Trust Company, as trustee, with respect to the 10.5%
Senior Notes Due 2006, filed as Exhibit 1 to the Company's Current
Report on Form 8-K dated February 26, 1996 and incorporated herein
by reference.

10.1 Employment Agreements between the Company and each of Joaquin F.
Blaya, Jose C. Cancela, Filiberto Fernandez, and Jose Del Cueto,
filed as Exhibit 10.19 to the Company's Quarterly Report of
Form 10-Q for the quarter ended June 30, 1992, and incorporated
herein by reference.*

10.2 Employment Agreement between the Company and Gustavo Pupo-Mayo dated
as of September 16, 1994 filed as Exhibit 10.9 to the 1994 10-K and
incorporated herein by reference.*

10.3 Continuation Agreement between the Company and Bernard S. Carrey
dated October 15, 1993 filed as Exhibit 10.18 to the Annual Report
on Form 10-K for the year ended December 31, 1993 ("1993 10-K") and
incorporated herein by reference.*

10.4 Continuation Agreement between the Company and Kevin M. Sheehan
dated October 15, 1993 filed as Exhibit 10.19 to the 1993 10-K and
incorporated herein by reference.*

10.5 Amendment No. 1 dated as of May 15, 1994 to Employment Agreement
between the Company and Joaquin F. Blaya dated as of May 26, 1992,
filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter
ended June 30, 1994 (the "June 30, 1994 10-Q") and incorporated
herein by reference.*

10.6 Employment Agreement between the Company and Joaquin F. Blaya dated
as of May 15, 1994, filed as Exhibit 10.2 to the June 30, 1994 10-Q
and incorporated herein by reference.*

10.7 Employment Agreement dated as of May 15, 1994 between the Company
and Peter J. Housman II, filed as Exhibit 10.3 to the June 30, 1994
10-Q and incorporated herein by reference.*

10.8 Amendment No. 1 dated as of May 15, 1994 to Employment Agreement
between the Company and Jose C. Cancela dated as of May 27, 1992,
filed as Exhibit 10.4 to the June 30, 1994 10-Q and incorporated
herein by reference.*

10.9 Employment Agreement dated as of May 15, 1994 between the Company
and Jose C. Cancela, filed as Exhibit 10.5 to the June 30, 1994 10-Q
and incorporated herein by reference.*

10.10 Limited Partnership Agreement dated July 20, 1994 between Telemundo
News Network, Inc., Telenoticias del Mundo, Inc., Reuter Latam
News, Inc., Antena 3 International, Inc. and Artear Argentina
Corporation, filed as Exhibit 10.8 to the June 30, 1994 8-K and
incorporated herein by reference.

10.11 Loan and Security Agreement dated as of December 31, 1994 between
the Company and Foothill Capital Corporation, filed as Exhibit
10.1 to the December 30, 1994 8-K and incorporated herein by
reference.

10.12 Asset Purchase Agreement dated as of June 26, 1996, by and among
Telenoticias del Mundo, L.P., Telemundo Group, Inc. and CBS Inc.,
filed as Exhibit 2(a) to the Company's Current Report on Form 8-K
dated June 26, 1996 and incorporated herein by reference.

10.13 Agreement by and among the Stockholders of Harriscope of Chicago,
Inc. and National Subscription Television of Chicago, Inc. and
Telemundo of Chicago, Inc. dated as of November 8, 1995 filed as
Exhibit 10.1 to the Form 10-Q/A filed November 27, 1995 and
incorporated herein by reference.

10.14 Amended and Restated Partnership Agreement, dated February 26, 1996,
by and among Essaness Theatres Corporation, Telemundo of Chicago,
Inc. and Harriscope of Chicago, Inc., a form of which was filed as
Exhibit 10.2 to the Form 10-Q/A filed November 27, 1995 and
incorporated herein by reference.

10.15 Stock Option Agreements dated as of December 31, 1994 between the
Company and each of Joaquin F. Blaya, Jose C. Cancela, and Peter J.
Housman II, filed as Exhibit 10.21 to the 1994 10-K and incorporated
herein by reference.*

10.16 Employment Agreement dated as of March 9, 1995 between the Company
and Roland A. Hernandez, filed as Exhibit 10.1 to the Company's
Form 10 -Q for the quarter ended March 31, 1995 (the "March 31, 1995
10-Q") and incorporated herein by reference.*

10.17 Non Qualified Stock Option Agreement dated as of March 9, 1995
between the Company and Roland A. Hernandez, filed as Exhibit
10.2 to the March 31, 1995 10-Q and incorporated herein by
reference.*

10.18 Employment Agreement dated as of February 27, 1995 between the
Company and Stuart Livingston, filed as Exhibit 10.18 to the
December 31, 1995 10-K and incorporated herein by reference.*

10.19 Employment Agreement dated as of February 27, 1995 between the
Company and Stephen J. Levin and Amendment to Employment Agreement
dated May 30, 1995, filed as Exhibit 10.19 to the December 31, 1995
10-K and incorporated herein by reference.*

10.20 Non Qualified Stock Option Agreement dated as of March 9, 1995
between the Company and Stuart Livingston, filed as Exhibit 10.20 to
the December 31, 1995 10-K and incorporated herein by reference.*

10.21 Non Qualified Stock Option Agreements dated as of March 9, 1995 and
May 30, 1995 between the Company and Stephen J. Levin, filed as
Exhibit 10.21 to the December 31, 1995 10-K and incorporated herein
by reference.*

10.22 Non Qualified Stock Option Agreement dated as of June 30, 1995
between the Company and Jose C. Cancela, filed as Exhibit 10.1 to
the Company's Form 10-Q for the quarter ended June 30, 1995
(the "June 30, 1995 10-Q") and incorporated herein by reference.*

10.23 Non Qualified Stock Option Agreement dated as of June 30, 1995
between the Company and Peter J. Housman II, filed as Exhibit
10.2 to the June 30, 1995 10-Q and incorporated herein by
reference.*

10.24 Agreement and Release dated as of March 17, 1995 between the Company
and Joaquin F. Blaya, filed as Exhibit 10.3 to the Company's
March 31, 1995 10-Q and incorporated herein by reference.*

10.25 The Company's 1994 Stock Plan filed as Exhibit 10.1 to the 1994 10-K
and incorporated herein by reference.

10.26 Employment Agreement dated as of June 11, 1996 between the Company
and Donald J. Tringali, filed as Exhibit 10.1 to the September 30,
1996 10-Q and incorporated by reference.*

10.27 Non Qualified Stock Option Agreement dated as of June 11, 1996
between the Company and Donald J. Tringali, filed as Exhibit 10.1 to
the September 30, 1996 10-Q and incorporated by reference.*

10.28 Employment Agreement dated as of February 28, 1996 between the
Company and Stuart Livingston.*

10.29 Non Qualified Stock Option Agreement dated as of November 15, 1996
between the Company and Stuart Livingston.

10.30 Employment Agreement dated as of March 7, 1997 between the Company
and Jose Cancela.*

10.31 Employment Agreement dated as of March 7, 1997 between the Company
and Peter J. Housman II.*

13.1 Portions of Telemundo Group, Inc. 1996 Annual Report to
Stockholders.

21.1 List of Subsidiaries of the Company.

24.1 Power of Attorney (included on signature page of this Annual Report
on Form 10-K).

27.1 Financial Data Schedule.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the three months ended
December 31, 1996.

__________________
* Management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to Item 14(c) of this form.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hialeah, Florida, on the 31st day of March, 1997.

TELEMUNDO GROUP, INC.
(Registrant)

By /s/ ROLAND A. HERNANDEZ
------------------------
Roland A. Hernandez
President and Chief
Executive Officer

The undersigned directors and officers of Telemundo Group, Inc.
hereby constitute and appoint Peter J. Housman II and Roland A. Hernandez,
and each of them, with full power to act without the other and with full
power of substitution and resubstitution, our true and lawful
attorneys-in-fact with full power to execute in our name and behalf in
the capacities indicated below this Annual Report on Form 10-K and any
and all amendments thereto and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and
Exchange Commission and hereby ratify and confirm all that such
attorneys-in-fact, or any of them, or their substitutes shall lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed by the following persons in the
capacities indicated on March 31, 1997.

Signature Title
--------- -----

- ------------------
Leon D. Black Chairman of the Board and Director

/s/ ROLAND A. HERNANDEZ
- ---------------------
Roland A. Hernandez President, Principal Executive Officer and
Director

/s/ PETER J. HOUSMAN II
- ---------------------
Peter J. Housman II Principal Financial Officer

/s/ STEVEN E. DAWSON
- ------------------
Steven E. Dawson Principal Accounting Officer

/s/ GUILLERMO BRON
- ----------------
Guillermo Bron Director

/s/ ALAN KOLOD
- -------------
Alan Kolod Director

- ------------------
Barry W. Ridings Director

/s/ BRUCE H. SPECTOR
- ------------------
Bruce H. Spector Director

/s/ EDWARD M. YORKE
- -----------------
Edward M. Yorke Director

/s/ DAVID E. YURKERWICH
- --------------------
David E. Yurkerwich Director

/s/ DANIEL VILLANUEVA Director
- ---------------------
Daniel Villanueva

<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(in thousands of dollars)

Column B Column C Column D Column E
----- ----------------------------------- --------- --------

Additions
-----------------------------------

Balance at Charged to Deducted from
Beginning Charged to Profit Other Accounts Reserves - Balance at
Description of Period and Loss or Income - Describe Describe (a) End of Period
- ------------------------------------ ---------- ------------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996:
Allowance for doubtful accounts.... $2,650 $5,522 $ - $2,229 $5,943
====== ====== ============= ====== ======

Year Ended December 31, 1995:
Allowance for doubtful accounts.... $2,845 $2,020 $ - $2,215 $2,650
====== ====== ============= ====== ======
Year Ended December 31, 1994:
Allowance for doubtful accounts.... $2,501 $2,392 $ - $2,048 $2,845
====== ====== ============= ====== ======

Year Ended December 31, 1996:
Reserve for TV Program
Exhibition Rights................. $1,251 $ 712 $ - $ 934 $1,029
====== ====== ============= ======= ======

Year Ended December 31, 1995:
Reserve for TV Program
Exhibition Rights................. $1,249 $ 835 $ - $ 833 $1,251
====== ====== ============= ======= ======

Year Ended December 31, 1994:
Reserve for TV Program
Exhibition Rights................. $2,137 $3,705 $ - $4,593 $1,249
====== ====== ============= ====== ======
___________

(a) Amounts written off, net of recoveries

</TABLE>

EXECUTION COPY

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, dated as of February 28, 1996,
between TELEMUNDO GROUP, INC., a Delaware corporation (the
"Company"), and STUART LIVINGSTON (the "Executive").

Section 1. Employment and Term. The Company agrees to
employ the Executive and the Executive agrees to serve as an
employee of the Company with the duties set forth in Section 2
for a term (the "Term") beginning as of February 28, 1996 (the
"Commencement Date") and ending at the close of business on
February 27, 1998, or any earlier date of termination under
Section 6 or any later date of termination after extension
under Section 7 (the "Termination Date").

Section 2. Duties. The Executive agrees during the Term
to serve in such capacities and perform such duties as directed
by the Company. The Executive's title shall be Senior Vice
President, Operations and Business Affairs of the Company or
such other title as may be mutually agreed upon by the Company
and the Executive. The Executive agrees to use his best
efforts to promote the interest of the Company, subject at all
times to the direction of the President and Chief Executive
Officer of the Company (the "President") or to such other
executive officer of the Company as may be designated by the
President from time to time. The Executive agrees to devote
his entire business time and attention, with undivided loyalty,
to the performance of such duties.

Section 3. Consideration; Salary and Bonus During Term.

(a) Consideration. The consideration for
entering into this Agreement shall be the performance
of services by the Executive pursuant to this
Agreement and the employment of the Executive by the
Company as well as the payments and benefits provided
under this Agreement.

(b) Salary. The Company shall pay salary to
the Executive at the annual rate of (i) $240,000
during the period from the date hereof through
February 27, 1997, and at the rate of $260,000 during
the period from February 28, 1997 through February
27, 1998, to be paid (subject to required
withholdings) in accordance with the Company's
regular payroll practices.

(c) Bonus. During the Term, the Executive will
be eligible for a bonus each year in an amount
computed in accordance with Exhibit A hereto.
Bonuses hereunder shall be paid at the times bonuses
are customarily paid to the Company's executives.
Except as set forth in the last sentences of Sections
6(b) and 6(c), the Executive must be employed by the
Company in good standing on the last day of the
calendar year to receive a bonus for such year.

Section 4. Vacations. The Executive shall be entitled
during the Term to vacations in accordance with the policies of
the Company, except that he shall be entitled to four weeks of
vacation per calendar year during the Term (pro rata for
partial years). The Company shall not pay the Executive any
additional compensation for any vacation time not used by the
Executive. To the extent that the Executive cannot take his
vacation as a result of the request of the President of the
Company, he may carry such unused vacation over to the
following calendar year.

Section 5. Fringe Benefits. During the Term, the
Executive shall enjoy the benefits, including, without
limitation, participation in medical insurance, group term life
insurance and retirement and savings plans, and salary
continuation benefits, customarily afforded to executives of
the Company in positions comparable to the Executive's.
Nothing in this Agreement shall restrict the right of the
Company generally to amend, modify or terminate any such
benefits for executives in positions comparable to the
Executive's, but at no time shall they be less favorable to the
Executive than those generally afforded to executives with
lower level positions than the Executive.

Section 6. Termination.

(a) The Company may terminate this Agreement for
Cause as determined by the President. "Cause" means
the Executive's causing material injury to the
Company; the Executive's willful misconduct in the
performance of (or failure to perform) his duties
hereunder; the Executive's dishonest, fraudulent or
unlawful behavior whether or not in connection with
his employment; or the Executive's unsatisfactory
performance of his duties hereunder after 60 days'
prior written notice, including reasons of such
unsatisfactory performance and failure to remedy such
performance to the satisfaction of the President
within such 60 day period. Upon the effective date
of termination under this Section 6(a), the
obligations of the parties under this Agreement shall
cease, except for the obligations of the Executive
contained in Sections 8 and 9.

(b) This Agreement shall terminate immediately upon
the death or other event rendering the Executive
unable to perform his duties and obligations under
this agreement for a period in excess of 90 days,
whether or not consecutive, during the Term as
determined by the President. Upon the effective date
of termination under this Section 6(b), the
obligations of the parties under this Agreement shall
cease, except for the obligations of the Executive
contained in Sections 8 and 9.

(c) If the Company terminates this Agreement other
than pursuant to Section 6(a) or 6(b) or if the
Executive terminates this Agreement pursuant to
Section 6(d), then, except as provided in Section 7,
the Company's sole obligation to the Executive shall
be to continue to pay salary in accordance with
Section 3(b) and maintain benefits in accordance with
Section 5 until the Termination Date. Upon the
effective date of termination under this Section
6(c), the obligations of the parties under this
Agreement shall cease, except for the obligations of
the Company under the preceding sentence and under
Section 7 and the obligations of the Executive
contained in Sections 8 and 9.

(d) The Executive shall have the right to terminate
his employment under this Agreement in the event that
he suffers a Diminution of Duty (as defined below)
within sixty days' of a Change of Control (as such
term is defined in the Company's 1994 Stock Plan). A
"Diminution in Duty" means a change in the
Executive's responsibilities which represents a
material demotion or material diminution from his
responsibilities as in effect on the date hereof. A
Diminution in Duty shall not be deemed to have
occurred prior to the giving of written notice by the
Executive to the Company specifically describing the
alleged diminution or demotion, and the actions the
Executive believes are necessary to cure such alleged
Diminution in Duty, and the Company's failure to so
cure within 15 days of receipt of such notice. The
giving of such notice and the action or failure to
take action by the Company shall be irrelevant in
determining whether a material demotion or material
diminution constituting a Diminution in Duty has in
fact occurred.

Section 7. [Intentionally Omitted].

Section 8. Confidentiality. Except as required in his
duties hereunder, the Executive will not, directly or
indirectly, use, disseminate or disclose any Confidential
Information. Upon expiration or termination of the Term, all
documents, records and similar repositories of or containing
Confidential Information, including copies thereof, then in the
Executive's possession, whether prepared by the Executive or
others, will be left with the Company. "Confidential
Information" means nonpublic information relating to the
Company or any affiliate of the Company. Following the
expiration or termination of the Term, the Executive agrees to
reasonably cooperate with the Company and its affiliates with
respect to matters with which the Executive was involved during
the Term. This Section 8 shall survive the expiration or
termination of the Term. If in connection with Executive's
cooperation with respect to legal matters, it is necessary for
Executive to be represented by separate counsel, the Company
will pay the reasonable fees of such counsel, provided that if
Executive is named as a defendant in an action or proceeding by
reason of fact that he was an officer of the Company, any fees
or expenses paid by the Company will be subject to procedures
and rights of indemnification of officers and directors of the
Company under the Company's By-Laws and the laws of the State
of Delaware.

Section 9. Covenant Not to Interfere. The Executive
agrees and covenants that, for a period of one year following
the expiration or termination of the Term, he will not
interfere directly or indirectly in any way with the Company.
"Interfere" means to influence or attempt to influence,
directly or indirectly, customers, program suppliers,
employees, performers or independent contractors of the
Company, its subsidiaries or any of its network affiliates to
restrict, reduce, sever or otherwise alter their relationship
with the Company, its subsidiaries or any of its network
affiliates. In the event any court having jurisdiction shall
reduce the duration or scope of the covenant not to interfere
set forth in this Section 9, such covenant, in its reduced
form, shall be enforceable. This Section 9 shall survive the
expiration or termination of the Term.

Section 10. Assignability, etc. The rights and
obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive acknowledges that the
services to be rendered by him are unique and personal and
accordingly that he may not assign any of his rights or
delegate any of his duties or obligations under this Agreement.

Section 11. Notices. All notices given hereunder shall
be in writing and shall be sent by registered or certified mail
or delivered by hand and shall be deemed to be given on the
date received. Any notice by the Company to the Executive
shall be mailed or delivered to:

Stuart Livingston
47 South Prospect Drive
Coral Gables, FL 33133

or such other address as may from time to time be provided by
the Executive to the Company for such purposes.

Any notice by the Executive to the Company shall be mailed
or delivered to:

Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: President and Chief Executive Officer

and

Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: General Counsel

or such address or addresses as may from time to time be
provided by the Company to the Executive for such purpose.

Section 12. Captions. The captions in this Agreement are
inserted for convenience only and do not constitute a part of
this Agreement.

Section 13. Amendments, etc. This Agreement may be
amended, modified or terminated only by an instrument in
writing signed by the parties hereto.

Section 15. Remedies. Each of the parties to this
Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree
and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
Such specific performance and/or injunctive relief shall be
available without the posting of any bond or other security.

Section 16. Entire Agreement; Severability. This
Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof. Wherever 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 invalid,
illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any
other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained
herein.

Section 17. No Conflicts. The Executive represents and
warrants to the Company that the execution and performance of
this Agreement by the Executive does not violate or conflict
with any agreement, arrangement, understanding or restriction,
written or oral, between the Executive and any other firm or
person. The Executive shall indemnify and hold harmless the
Company and its subsidiaries, shareholders, directors and
officers from any and all loss, damage or expense, including
attorneys' fees, arising out of any breach of the foregoing
representation and warranty by the Executive.

IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.

TELEMUNDO GROUP, INC.

By:
-----------------------
President and Chief
Executive Officer

---------------------
Stuart Livingston

EXHIBIT A
to Agreement dated as of February 28, 1996
between Telemundo Group, Inc. and
Stuart Livingston
(dollars in thousands)

Adjusted Net Contribution(1)

Bonus Payment if 1996 1997
Level Target Achieved(2) Target Target
----- ---------------- ------- -------
1 $50,000 $29,435 $35,322
2 $125,000 $34,630 $47,000
3 $225,000 $39,824 $52,500

_______________________________
(1) "Adjusted Net Contribution" means operating income plus
depreciation and amortization determined in accordance
with generally accepted accounting principles, without
giving effect to any income, gain or loss associated with
TeleNoticias del Mundo, L.P. or WSNS, but determined
consistent with the accounting method for determining "Net
Contribution before TeleNoticias and WSNS" on the
Company's internal financial statements in prior periods
and adjusted to eliminate the impact of changes in
accounting principles after the date of this Agreement and
of acquisitions or divestitures of operating units after
the date of this Agreement if taking such operating units
into account would either increase or decrease the actual
Net Contribution by at least 5% of the Adjusted Net
Contribution target in the year of acquisition or
divestiture on an annualized basis.

(2) Each bonus payment shall be subject to required
withholdings. The Executive must be employed on the last
day of a calendar year to earn a bonus for such year.
Bonuses shall not be prorated for partial years.
Calculations hereunder shall be made by the Company's
Chief Financial Officer, whose decision shall be final.
Any amounts between Levels 1 and 2 or Levels 2 and 3 shall
be determined by interpolation.

EXECUTION COPY

NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS

AGREEMENT made as of the 15th day of November, 1996
(the "Grant Date"), between Telemundo Group, Inc., a Delaware
corporation (the "Company"), and Stuart Livingston (the
"Optionee").

WHEREAS, the Company has adopted the 1994 Stock Plan
(the "Plan") in order to provide additional incentive to
certain officers and employees of the Company and its
Subsidiaries; and

WHEREAS, the Committee responsible for administration
of the Plan has determined to grant an option to the Optionee
as provided herein;

NOW, THEREFORE, the parties hereto agree as follows:

1. Grant of Option.

1.1 The Company hereby grants to the Optionee
the right and option (the "Option") to purchase all or any
part of an aggregate of 10,000 whole shares of Stock subject
to, and in accordance with, the terms and conditions set
forth in this Agreement.

1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of
the Code.

1.3 This Agreement shall be construed in
accordance and consistent with, and subject to, the
provisions of the Plan (the provisions of which are
incorporated herein by reference) and, except as otherwise
expressly set forth herein, the capitalized terms used in
this Agreement shall have the same definitions as set forth
in the Plan.

2. Purchase Price.

The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of the Option
shall be $29.875 per share.

3. Duration of Option.

The Option shall be exercisable to the extent and in
the manner provided herein for a period of ten years from the
Grant Date (the "Exercise Term"); provided, however, that the
Option may be earlier terminated as provided in Section 7
hereof.

4. Earnings Target.

Set forth on Exhibit A attached hereto are the
earnings targets for Adjusted Net Contribution established by
the Committee for the Company for the fiscal years ended
December 31, 1996, 1997 and 1998 (the "Earnings Targets").

5. Exercisability of Option.

Unless otherwise provided in this Agreement or the
Plan, the Option shall entitle the Optionee to purchase, in
whole at any time or in part from time to time, shares of
Stock covered by the Option to the extent the Option has
become "vested." Except as provided in Section 7, the Option
shall "vest" as to the following shares of Stock upon the
later of (i) certification by the Committee that the Company
has attained 90% of the Earnings Target set for each fiscal
year set forth below, and (ii) the respective anniversary
date of this Agreement immediately following the end of such
fiscal year (such date of vesting referred to as the "Vesting
Date"):

Upon certification
Option vests as to the that Earnings Target
following number of Shares met for fiscal year end:
-------------------------- -----------------------

3,333.34 1996
3,333.33 1997
3,333.33 1998

To the extent the Company has failed to attain 90% of
the Earnings Target for any fiscal year end, the Option shall
not vest as to the number of shares of Stock related to such
fiscal year end ("Lost Shares") and the Optionee shall not be
entitled under any circumstances to exercise the Option in
respect of such Lost Shares, except as provided in the second
following sentence. Within 30 days after the date the
Company's independent auditors certify the Company's financial
statements for the applicable fiscal year, the Committee shall
meet to certify whether or not 90% of the Earnings Target for
such fiscal year has been met. Notwithstanding the foregoing,
any shares of Stock which have not vested as set forth above
shall "vest" nine years from the Grant Date if, but only if,
Optionee has been employed with the Company from the Grant Date
until such time. Each right of purchase shall be cumulative
and shall continue, unless sooner exercised or terminated as
herein provided, during the remaining period of the Exercise
Term.

6. Manner of Exercise and Payment.

6.1 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by
delivery of written notice to the Company, at its principal
executive office. Such notice shall state that the Optionee
is electing to exercise the Option and the number of shares
of Stock in respect of which the Option is being exercised
and shall be signed by the person or persons exercising the
Option. If requested by the Committee, such person or
persons shall (i) deliver this Agreement to the Secretary of
the Company who shall endorse thereon a notation of such
exercise and (ii) provide satisfactory proof as to the right
of such person or persons to exercise the Option.

6.2 The notice of exercise described in Section
6.1 shall be accompanied by the full purchase price for the
shares of Stock in respect of which the Option is being
exercised and by the Withholding Taxes, in cash, by check or,
in the discretion of the Committee, by transferring shares of
Stock to the Company held by the Optionee for more than six
months and having a Fair Market Value on the day preceding
the date of exercise equal to the cash amount for which such
shares of Stock are substituted.

6.3 Upon receipt of notice of exercise and full
payment for the shares of Stock in respect of which the
Option is being exercised and of the Withholding Taxes, the
Company shall, subject to Section 14 of the Plan, promptly
take such action as may be necessary to effect the transfer
to the Optionee of the number of shares of Stock as to which
such exercise was effective, including issuing and delivering
such shares of Stock and entering the Optionee's name as a
stockholder of record on the books of the Company.

6.4 The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to the Option until
(i) the Option shall have been exercised pursuant to the
terms of this Agreement and the Optionee shall have paid the
full purchase price for the number of shares of Stock in
respect of which the Option was exercised, (ii) the Company
shall have issued and delivered the shares of Stock to the
Optionee, and (iii) the Optionee's name shall have been
entered as a stockholder of record on the books of the
Company, whereupon the Optionee shall have full voting and
other ownership rights with respect to such shares.

7. Termination of Employment.

7.1 Termination other than for Cause or following
Change of Control. If the employment of the Optionee is
terminated by the Company or by the Optionee for any reason
other than for Cause or following a Change of Control, the
Optionee may at any time within one year after such
termination of employment (but in no event after the
expiration of the Exercise Term) exercise the Option to the
extent, but only to the extent, that the Option or portion
thereof was exercisable on the date of such termination of
employment, provided, however, that (a) if the Optionee and
Company enter into or have entered into a written employment
agreement providing for a guaranteed term of employment, and
if Optionee is terminated by the Company, for any reason
other than for Cause (as defined in the Plan or in such
written employment agreement) or following a Change of
Control prior to the expiration of such guaranteed employment
period, then the portion of the Option that would have been
exercisable had employment continued until the next Vesting
Date and had the relevant Earnings Target been met, shall,
regardless of whether such Earnings Target is met, be deemed
to have been exercisable on the date of such termination of
employment; and (b) if the Optionee's employment is
terminated by the Company or by the Optionee for any reason
other than for Cause or following a Change of Control after
the fiscal year end but before the Committee certifies that
the Earnings Target has been met, the portion of the Option
that would have been exercisable as a result of meeting the
Earnings Targets shall, if the Earnings Targets are met and
if the termination occurred after the relevant anniversary
date, be deemed to have been exercisable on the date of such
termination of employment (and in such case the one year
period referred to in the first sentence of this section 7.1
shall be deemed to commence upon the date of certification of
the Earnings Targets being met). For purposes of this
Agreement, an Optionee's employment will be considered
terminated upon (i) an actual termination, (ii) a change in
the Optionee's status, title, position or responsibilities
(including reporting responsibilities) which, in the
Committee's reasonable judgment, represents a demotion from
his status, title, position or responsibilities as in effect
immediately prior thereto, or (iii) the assignment to the
Optionee of any duties or responsibilities which, in the
Committee's reasonable judgment, are inconsistent with such
status, title, position or responsibilities. In the event of
the Optionee's death, the Option shall be exercisable, to the
extent provided in the Plan and this Agreement, by the
legatee or legatees under his will, or by his personal
representatives or distributees, and such person or persons
shall be substituted for the Optionee each time the Optionee
is referred to herein.

7.2 Change of Control. If the Optionee's
employment is terminated by the Company or by the Optionee
following a Change in Control, the provisions of Section 8
shall apply.

7.3 Termination for Cause. Notwithstanding
anything to the contrary contained herein, if the employment
of the Optionee is terminated for Cause, the Option shall
terminate on the date of the Optionee's termination of
employment whether or not exercisable.

8. Effect of Change in Control.

Notwithstanding anything contained in the Plan or this
Agreement to the contrary other than the last sentence of
this Section 8, in the event of a Change in Control (A) all
Options outstanding on the date of such Change in Control
(other than the Lost Shares) shall become immediately and
fully exercisable and (B) upon termination of an Optionee's
employment with the Company following a Change in Control,
Options held by such Optionee shall remain exercisable until
the later of (x) one year after termination and (y) sixty
(60) days following the expiration of the Pooling Period (in
the event the Change in Control constitutes a Pooling
Transaction), but in no event beyond the stated term of the
Option. In the case of a Change in Control which also
constitutes a Pooling Transaction, the Board may take such
actions which it determines, after consultation with its
advisors, are reasonably necessary in order to assure that
the Pooling Transaction will qualify as such, including, but
not limited to, providing that all Options specifically
identified by the Committee shall not become immediately and
fully exercisable on the date of the Change in Control but
rather shall become immediately and fully exercisable on the
date following the last day of the Pooling Period (whether or
not the Optionee is then an employee of the Company).

9. Nontransferability.

The Option shall not be transferable other than by
will or by the laws of descent and distribution. During the
lifetime of the Optionee, the Option shall be exercisable
only by the Optionee.

10. No Right to Continued Employment.

Nothing in this Agreement (as opposed to the
Employee's employment agreement, if any), or the Plan shall
be interpreted or construed to confer upon the Optionee any
right with respect to continuance of employment by the
Company, nor shall this Agreement or the Plan interfere in
any way with the right of the Company to terminate the
Optionee's employment at any time.

11. Adjustments.

In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate
adjustments to the number and class of shares of Stock
subject to the Option and the purchase price for such shares
of Stock. The Committee's adjustment shall be made in
accordance with the provisions of Section 4.5 of the Plan
and shall be effective and final, binding and conclusive for
all purposes of the Plan and this Agreement.

12. Certain Events.

Subject to Section 8 hereof, upon the effective date
of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company
(a "Transaction"), the Option shall continue in effect in
accordance with its terms and the Optionee shall be entitled
to receive in respect of all shares of Stock subject to the
Option, upon exercise of the Option, the same number and kind
of stock, securities, cash, property or other consideration
that each holder of shares of Stock was entitled to receive
in the Transaction.

13. Withholding of Taxes.

At such times as an Optionee recognizes taxable income
in connection with the receipt of shares of Stock,
securities, cash or property hereunder (a "Taxable Event"),
the Optionee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as
may be required by law to be withheld by the Company in
connection with the Taxable Event (the "Withholding Taxes")
prior to the issuance, or release from escrow, of such shares
of Stock or securities or the payment of such cash or such
property. The Company shall have the right to deduct from
any payment of cash to an Optionee or Grantee an amount equal
to the Withholding Taxes in satisfaction of the obligation to
pay Withholding Taxes. In satisfaction of the obligation to
pay Withholding Taxes to the Company, the Optionee may make a
written election (the "Tax Election"), which may be accepted
or rejected in the discretion of the Committee, to have
withheld a portion of the shares then issuable to him having
an aggregate Fair Market Value, on the date preceding the
date of such issuance, equal to the Withholding Taxes,
provided that in respect of an Optionee who may be subject to
liability under Section 16(b) of the Exchange Act either:
(i) the Tax Election is made at least six (6) months prior to
the date of the Taxable Event and the Tax Election is
irrevocable with respect to all Taxable Events of a similar
nature occurring prior to the expiration of six (6) months
following a revocation of the Tax Election; or (ii) in the
case of the exercise of an Option (A) the Optionee makes the
Tax Election at least six (6) months after the date the
Option was granted, (B) the Option is exercised during the
ten (10) day period beginning on the third business day and
ending on the twelfth business day following the release for
publication of the Company's quarterly or annual statement of
sales and earnings (a "Window Period") and (C) the Tax
Election is made during the Window Period in which the
related Option is exercised or prior to such Window Period
and subsequent to the immediately preceding Window Period.
Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, (i) modify the provisions of
this Section 13 or impose such other restrictions or
limitations on Tax Elections as may be necessary to ensure
that the Tax Elections will be exempt transactions under
Section 16(b) of the Exchange Act, and (ii) permit Tax
Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.

14. Employee Bound by the Plan.

The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and
provisions thereof.

15. Modification of Agreement.

This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but
only by a written instrument executed by the parties hereto.

16. Severability.

Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or
invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.

17. Governing Law.

The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws
of the State of Florida without giving effect to the
conflicts of laws principles thereof.

18. Successors in Interest.

This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement
shall inure to the benefit of the Optionee's legal
representatives. All obligations imposed upon the Optionee
and all rights granted to the Company under this Agreement
shall be final, binding and conclusive upon the Optionee's
heirs, executors, administrators and successors.

19. Resolution of Disputes.

Any dispute or disagreement which may arise under, or
as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be
determined by binding arbitration. The parties may agree to
submit the matter to a single arbitrator or to several
arbitrators, may require that arbitrators possess special
qualifications or expertise or may agree to submit a matter
to a mutually acceptable firm of experts for decision. In
the event the parties shall fail to thus agree upon terms of
arbitration within twenty (20) days from the first written
demand for arbitration, then such disputed matter shall be
settled by arbitration under the Rules of the American
Arbitration Association, by three arbitrators appointed in
accordance with such Rules. Such arbitration shall be held
in Miami, Florida. Once a matter has been submitted to
arbitration pursuant to this section, the decision of the
arbitrators reached and promulgated as a result thereof shall
be final and binding upon all parties. The cost of
arbitration shall be shared equally by the parties and each
party shall pay the expenses of his/its attorneys, except
that the arbitrators shall be entitled to award the costs of
arbitration, attorneys and accountants' fees, as well as
costs, to the party that they determine to be the prevailing
party in any such arbitration.

20. Counterparts.

This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.

TELEMUNDO GROUP, INC.

By:
--------------------------
Name: Roland A. Hernandez
Title: President and Chief
Executive Officer

---------------------
Stuart Livingston

EXHIBIT A

Telemundo Group, Inc.
Option Schedule
(dollars in thousands)

Adjusted Net Contribution(1)
----------------------------

As of December 31
-----------------

Earnings
Targets 1996 1997 1998
- ------- ---- ---- ----

Target $34,630 $41,556 $49,867

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, dated as of March 7, 1997 (the
"Agreement"), between Telemundo Group, Inc., a Delaware
corporation (the "Company"), and Jose C. Cancela (the
"Executive").

Section 1. Employment and Term. The Company agrees to
employ the Executive, and the Executive agrees to serve as an
employee of the Company, with the duties set forth in Section 2
for a term (the "Term of Employment") beginning as of January
1, 1997 (the "Commencement Date") and ending at the close of
business on December 31, 1997 or any earlier date of
termination under Section 7. The Employment Agreement, dated
as of May 15, 1994, between the Company and the Executive is
hereby superseded by this Agreement and terminated with no
further force or effect effective as of the close of business
on December 31, 1996.

Section 2. Duties. The Executive agrees during the
Term of Employment to serve as Executive Vice President of the
Company reporting to the President and Chief Executive Officer
of the Company. The Executive agrees to use his best efforts
to promote the interests of the Company, subject at all times
to the direction of the President and Chief Executive Officer
of the Company. The Executive agrees to devote his entire
business time and attention, with undivided loyalty, to the
performance of such duties.

Section 3. Consideration: Salary and Bonus During Term
of Employment.

(a) Consideration. The consideration for entering into
this Agreement shall be the performance of services by the
Executive pursuant to this Agreement and the employment of the
Executive by the Company as well as the payments and benefits
provided under this Agreement.

(b) Salary. The Company shall pay salary to the
Executive at the annual rate of $400,000 during the period from
January 1, 1997 through May 31, 1997, and, at the annual rate
of $300,000, during the period from June 1, 1997 through
December 31, 1997, to be paid (subject to required withholding
taxes) in arrears in equal installments bi-weekly.

(c) Bonus. During the Term of Employment, the Executive
will be eligible for a bonus based on the attainment by each of
Telemundo of Florida, Inc. (the "Miami Station") and Telemundo
of Puerto Rico, Inc. (the "Puerto Rico Station") of the budget
targets set forth in Exhibit A if the Executive is employed by
the Company on the last day of the Term of Employment. If the
Miami Station achieves 100% of the applicable budget target
indicated on Exhibit A, the Executive shall receive a bonus in
the amount of $90,000. In addition, for every $1 over the
budget target achieved by the Miami Station, the Executive will
receive $.05; provided that, if the Miami Station exceeds the
budget target for the Miami Station by $250,000 or more, the
Executive shall receive an additional bonus of $20,000. If the
Puerto Rico Station achieves 100% of the applicable budget
target indicated on Exhibit A, the Executive shall receive a
bonus in the amount of $90,000. In addition, for every $1 over
the budget target achieved by the Puerto Rico Station, the
Executive will receive $.04; provided that, if the Puerto Rico
Station exceeds the budget target by $500,000 or more, the
Executive shall receive an additional bonus of $20,000. The
Compensation Committee shall meet within two months after the
end of the performance period (or as soon thereafter as is
practicable) to certify whether the budget targets have been
satisfied. If the Compensation Committee so certifies, the
bonuses will be paid (subject to applicable withholding taxes)
promptly but in no event later than ten days after such
certification. For purposes of this Agreement, the
"Compensation Committee" shall mean a committee consisting of
at least two (2) directors of the Company, all of whom are "non-
employees" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and "outside
directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended.

Section 4. Stock Option Agreement. The parties hereto
hereby agree that if, and only if, each of the Miami Station
and the Puerto Rico Station achieve the "Applicable Budget
Target" indicated on Exhibit A attached hereto, the
Nonqualified Stock Option Agreement for Corporate Officers,
dated as of June 30, 1995, between the Company and the
Executive shall be promptly amended to provide that, subject to
the terms and conditions of the Stock Option Agreement, the
Executive shall be entitled to purchase one-third of the total
number of shares covered by the Stock Option Agreement on or
after December 31, 1997 rather than on June 30, 1998 as
currently provided therein. Executive understands that the
Company makes no representation whatsoever with respect to the
tax effect, if any, of any such amendment to the Stock Option
Agreement.

Section 5. Vacations. The Executive shall be entitled
during the Term of Employment to vacations in accordance with
the policies of the Company for senior executive officers (but
in no event to less than 20 paid vacation days per year). The
Company shall not pay the Executive any additional compensation
for any vacation time not used by the Executive.

Section 6. Fringe Benefits. During the Term of
Employment, the Executive shall enjoy the benefits being
customarily afforded to senior executive officers of the
Company (including $300,000 of term life insurance), except
that the Executive shall not participate in any bonus plan now
or hereafter maintained by the Company (the provisions of
Section 3(c) and this Section 6 being in lieu of such
participation). During the Term of Employment, the Company
will pay bonuses to the Executive which, on an after tax basis,
equal the premiums paid by the Executive under the Company's
long-term disability insurance plan for basic and supplemental
coverage (or up to $10,000 per annum in premiums paid by the
Executive under his personal long-term disability insurance
policy). Nothing in this Agreement shall restrict the right of
the Company generally to amend, modify or terminate any such
benefits.

Section 7. Termination.

(a) The Company may terminate this Agreement and the
Executive's employment for Cause as determined by the President
and Chief Executive Officer of the Company. "Cause" means the
Executive's knowingly or recklessly causing material injury to
the Company, the Executive's willful misconduct in the
performance of (or failure to perform) his duties hereunder, or
the Executive's dishonest, fraudulent or unlawful behavior
involving moral turpitude whether or not in connection with his
employment.

(b) This Agreement and the Executive's employment shall
terminate immediately upon the death, disability or other event
rendering the Executive unable to perform his duties and
obligations under this Agreement as determined by the President
and Chief Executive Officer of the Company and supported by
appropriate medical evidence.

(c) If the Company terminates this Agreement and thereby
the Executive's employment other than pursuant to Section 7(a)
or 7(b), then the Company's sole obligation to the Executive
shall be to continue to pay salary in accordance with Section
3(b) and provide medical benefits substantially similar to
those provided the Executive during the Term of Employment, in
each case until December 31, 1997; however, any such payments
shall be reduced by any amounts earned by Executive from other
sources during the Term of Employment. In that regard,
Executive shall be obligated to make good faith efforts to
obtain other employment if Executive's employment hereunder is
terminated other than pursuant to Section 7(a) or 7(b). The
continuation of such medical benefits shall be in satisfaction
of the Company's obligations under Section 4980B of the
Internal Revenue Code of 1986, as amended, or any similar state
law requiring continuation of such benefits, with respect to
the period of time during which such benefits are continued
hereunder. The obligations of the Company under this Section
7(c) shall continue only so long as the Executive does not
breach his obligations under Sections 8 and 9. Upon the
effective date of termination under this Section 7(c), the
obligations of the parties under this Agreement shall cease,
except for the obligations of the Company specifically set
forth in this Section 7(c) and the obligations of the Executive
contained in Sections 8 and 9.

(d) If the Executive's employment terminates other than
pursuant to Section 6(c), the obligations of the parties under
this Agreement shall cease, except for the obligations of the
Executive contained in Sections 7 and 8.

Section 8. Confidentiality. Except as required in his
duties hereunder, the Executive will not, directly or
indirectly, use, disseminate or disclose any Confidential
Information. Upon expiration or termination of the Term of
Employment, all documents, records and similar repositories of
or containing Confidential Information, including copies
thereof, then in the Executive's possession, whether prepared
by the Executive or others, will be left with the Company.
"Confidential Information" means non-public information
relating to the Company or any affiliate of the Company.
Following the expiration or termination of the Term of
Employment, the Executive agrees to cooperate, for a period of
five years with respect to legal matters and for a period of
one year with respect to all other matters, with the Company
and its affiliates with respect to matters with which the
Executive was involved during the Term of Employment. This
Section 8 shall survive the expiration or termination of the
Term of Employment.

Section 9. Covenant Not to Interfere. The
Executive agrees and covenants that, for a period of one year
following the expiration or termination of the Term of
Employment, he will not interfere directly or indirectly in any
way with the Company. "Interfere" means to influence or
attempt to influence, directly or indirectly, present or active
prospective customers, employees, performers, directors,
representatives, agents or independent contractors of the
Company, its subsidiaries or any of its network affiliates to
restrict, reduce, sever or otherwise alter their relationship
with the Company, its subsidiaries or any of its network
affiliates. In the event any court having jurisdiction shall
reduce the duration or scope of the covenant not to interfere
set forth in this Section 9, such covenant, in its reduced
form, shall be enforceable. This Section 9 shall survive the
expiration or termination of the Term of Employment.

Section 10. Assignability. The rights and obligations
of the Company under this Agreement shall inure to the benefit
of and shall be binding upon the successors and assigns of the
Company. The Executive acknowledges that the services to be
rendered by him are unique and personal and accordingly that he
may not assign any of his rights or delegate any of his duties
or obligations under this Agreement.

Jose C. Cancela
Telemundo Group, Inc.
2470 West 8th Avenue
Hialeah, Florida 33010

or such other address as may from time to time be provided by
the Executive to the Company for such purposes.

Any notice by the Executive to the Company shall be mailed
or delivered to:

Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: President and Chief Executive Officer

and

Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: General Counsel

or such address or addresses as may from time to time be
provided by the Company to the Executive for such purpose.

Section 12. Captions. The captions in this Agreement
are inserted for convenience only and do not constitute a part
of this Agreement.

Section 13. Amendments, etc. This Agreement may be
amended, modified or terminated only by an instrument in
writing signed by the parties hereto.

Section 14. Governing Law. This Agreement is made in
and shall be governed by and construed in accordance with the
laws of the State of Florida, without giving effect to conflict
of law principles. The Executive hereby consents to the
jurisdiction of the courts of the State of Florida. The
Executive hereby appoints the Corporate Secretary of the
Company as his agent for service of process and agrees to
accept service of process upon delivery to such agent, with a
copy sent by registered or certified mail to the Executive at
his address as set forth in Section 11.

Section 15. Understandings Remedies. Each of the
parties to this Agreement will be entitled to enforce its
rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to
exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this
Agreement. Such specific performance and/or injunctive relief
shall be available without the posting of any bond or other
security. Except when a party is seeking an injunction or
specific performance hereunder, the parties agree to submit any
dispute concerning this Agreement to binding arbitration. The
parties may agree to submit the matter to a single arbitrator
or to several arbitrators, may require that arbitrators possess
special qualifications or expertise or may agree to submit a
matter to a mutually acceptable firm of experts for decision.
In the event the parties shall fail to thus agree upon terms of
arbitration within twenty (20) days from the first written
demand for arbitration, then such disputed matter shall be
settled by arbitration under the Rules of the American
Arbitration Association, by three arbitrators appointed in
accordance with such Rules. Such arbitration shall be held in
Miami, Florida. Once a matter has been submitted to
arbitration pursuant to this section, the decision of the
arbitrators reached and promulgated as a result thereof shall
be final and binding upon all parties. The cost of arbitration
shall be shared equally by the parties and each party shall pay
the expenses of his/its attorneys, except that the arbitrators
shall be entitled to award the costs of arbitration, attorneys
and accountants' fees, as well as costs, to the party that they
determine to be the prevailing party in any such arbitration.

Section 16. Entire Agreement: Severability. This
Agreement and the Exhibits hereto constitute the entire
agreement between the parties with respect to the subject
matter hereof. 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 invalid, illegal or unenforceable in
any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.

Section 17. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.

IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.

TELEMUNDO GROUP, INC.

By:/s/ Roland A. Hernandez
-----------------------
Name: Roland A. Hernandez
Title: President and Chief
Executive Officer

/s/ Jose C. Cancela
----------------------------
Jose C. Cancela

EXHIBIT A
---------

Telemundo Group, Inc.
Bonus Schedule

Base % Awarded Amount
Bonus of Every in excess
If Appli- $1 Achieved of Budget
cable in excess Target at
Applicable Budget of the which Added Added
Budget Target Budget Bonus is Bonus
Station Target Achieved Target Achieved Amount
- ------- ----------- ---------- --------- --------- ------

Miami $10,070,000 $90,000 5% $250,000 $20,000
Puerto Rico $17,698,000 $90,000 4% $500,000 $20,000

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, dated as of March 7, 1997, between
Telemundo Group, Inc., a Delaware corporation (the "Company"),
and Peter J. Housman II (the "Executive").

Section 1. Employment and Term. The Company agrees to
employ the Executive, and the Executive agrees to serve as an
employee of the Company, with the duties set forth in Section 2,
for a term (the "Term of Employment") beginning as of January 1,
1997 (the "Commencement Date") and ending at the close of
business on December 31, 1997 or any earlier date of termination
under Section 8. The Employment Agreement, dated as of May 15,
1994, between the Company and the Executive is hereby superseded
by this Agreement and terminated with no further force or effect
effective as of the close of business on December 31, 1996.

Section 2. Duties. The Executive agrees during the
Term of Employment to serve as Chief Financial Officer and
Treasurer of the Company reporting to the President and Chief
Executive Officer of the Company. The Executive agrees to use
his best efforts to promote the interests of the Company,
subject at all times to the direction of the President and Chief
Executive Officer of the Company. The Executive agrees to devote
his entire business time and attention with undivided loyalty,
to the performance of such duties.

Section 3. Consideration: Salary and Bonus During Term
of Employment.

(a) Consideration. The consideration for entering
into this Agreement shall be the performance of
services by the Executive pursuant to this Agreement
and the employment of the Executive by the Company as
well as the payments and benefits provided under this
Agreement.

(b) Salary. The Company shall pay salary to the
Executive at the annual rate of $325,000, to be paid
(subject to required withholding taxes) in arrears in
equal installments bi-weekly.

(c) Bonus. During the Term of Employment, the
Executive will be eligible for a bonus based on the
attainment by the Company of the performance targets
set forth on Exhibit A as "Net Contribution" if the
Executive is employed by the Company on the last day
of the performance period to which a performance
target relates. The Compensation Committee has
established performance targets for the period covered
by this Agreement, which are attached hereto as
Exhibit A. If the Company attains the threshold but
not the mid-level target, the Executive shall receive
a bonus in an amount equal to 50% of his annual salary
(pro-rated for a short period). If the Company attains
mid-level but not the high-point target, the Executive
shall receive a bonus in an amount equal to 75% of his
annual salary (pro-rated for a short period). If the
Company attains the high-point target, the Executive
shall receive a bonus in an amount equal to 100% of
his annual salary (pro-rated for a short period). If
the Company attains an amount of earnings between the
threshold and mid-level targets, or between the
mid-level and high-point targets, as the case may be,
the amount of the bonus shall be determined by linear
interpolation between the relevant bonus percentages
and targets. The Compensation Committee shall meet
within two months (or as soon thereafter as is
practicable) after the end of a performance period to
which a bonus relates to certify whether a performance
target has been satisfied. If the Compensation
Committee so certifies, the bonus will be paid
(subject to applicable withholding taxes) promptly but
in no event later than ten days after such
certification. For purposes of this Agreement, the
"Compensation Committee" shall mean a committee
consisting of at least two (2) directors of the
Company, all of whom are "non-employees" within the
meaning of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended, and "outside directors"
within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended.

Section 4. Stock Option Agreement. The parties hereto
hereby agree that the Nonqualified Stock Option Agreement for
Corporate Officers, dated as of June 30, 1995, between the
Company and the Executive (the "Stock Option Agreement") shall
be promptly amended to provide that, subject to the terms and
conditions of the Stock Option Agreement, the Executive shall be
entitled to purchase one-third of the total number of shares
covered by the Stock Option Agreement on or after December 31,
1997 instead of on the third anniversary of the Grant Date (as
such term is defined in the Stock Option Agreement) as currently
provided therein (i.e., June 30, 1998). Executive understands
that the Company makes no representation whatsoever with respect
to the tax effect, if any, of any such amendment to the Stock
Option Agreement.

Section 6. Fringe Benefits. During the Term of
Employment the Executive shall enjoy the benefits being
customarily afforded to senior executive officers of the Company
(including $300,000 of term life insurance), except that the
Executive shall not participate in any bonus plan now or
hereafter maintained by the Company (the provisions of Section
3(c) and this Section 6 being in lieu of such participation).
During the Term of Employment, the Company will pay bonuses to
the Executive which, on an after tax basis, equal the premiums
paid by the Executive under the Company's long-term disability
insurance plan for basic and supplemental coverage (or up to
$10,000 per annum in premiums paid by the Executive under his
personal long-term disability insurance policy). Nothing in this
Agreement shall restrict the right of the Company generally to
amend, modify or terminate any such benefits.

Section 7. Intentionally Omitted.

Section 8. Termination.

(a) The Company may terminate this Agreement and the
Executive's employment for Cause as determined by the
President and Chief Executive Officer of the Company.
"Cause" means the Executive's knowingly or recklessly
causing material injury to the Company, the
Executive's willful misconduct in the performance of
(or failure to perform) his duties hereunder, or the
Executive's dishonest, fraudulent or unlawfu1 behavior
involving moral turpitude whether or not in connection
with his employment.

(b) This Agreement and the Executive's employment
shall terminate immediately upon the death, disability
or other event rendering the Executive unable to
perform his duties and obligations under this
Agreement as determined by the President and Chief
Executive Officer of the Company and supported by
appropriate medical evidence.

(c) If the Company terminates this Agreement and
thereby the Executive's employment other than pursuant
to Section 8(a) or 8(b), then the Company's sole
obligation to the Executive (in addition to its
obligations under the Stock Option Agreement) shall be
to continue to pay salary in accordance with Section
3(b) and provide medical benefits substantially
similar to those provided the Executive during the
Term of Employment, in each case until December 31,
1997. The continuation of such medical benefits shall
be in satisfaction of the Company's obligations under
Section 4980B of the Internal Revenue Code of 1986, as
amended, or any similar state law requiring
continuation of such benefits, with respect to the
period of time during which such benefits are
continued hereunder. The obligations of the Company
under this Section 8(c) shall continue only so long as
the Executive does not breach his obligations under
Sections 9 and 10. Upon the effective date of
termination under this Section 8(c), the obligations
of the parties under this Agreement shall cease,
except for the obligations of the Company specifically
set forth in this Section 8(c) and the obligations of
the Executive contained in Sections 9 and 10.

(d) If the Executive's employment terminates other
than pursuant to Section 8(c), the obligations of the
parties under this Agreement shall cease, except for
the obligations of the Executive contained in Sections
9 and 10.

Section 9. Confidentiality. Except as required in his
duties hereunder, the Executive will not, directly or
indirectly, use, disseminate or disclose any Confidential
Information. Upon expiration or termination of the Term of
Employment, all documents, records and similar repositories of
or containing Confidential Information, including copies
thereof, then in the Executive's possession, whether prepared by
the Executive or others, will be left with the Company.
"Confidential Information" means non-public information relating
to the Company or any affiliate of the Company. Following the
expiration or termination of the Term of Employment, the
Executive agrees to cooperate, for a period of five years with
respect to legal matters and for a period of one year with
respect to all other matters, with the Company and its
affiliates with respect to matters with which the Executive was
involved during the Term of Employment. This Section 9 shall
survive the expiration or termination of the Term of Employment.

Section 10. Covenant Not to Interfere. The Executive
agrees and covenants that, for a period of one year following
the expiration or termination of the Term of Employment, he will
not interfere directly or indirectly in any way with the
Company. "Interfere" means to influence or attempt to influence,
directly or indirectly, present or active prospective customers,
employees, performers, directors, representatives, agents or
independent contractors of the Company, its subsidiaries or any
of its network affiliates to restrict, reduce, sever or
otherwise alter their relationship with the Company, its
subsidiaries or any of its network affiliates. In the event any
court having jurisdiction shall reduce the duration or scope of
the covenant not to interfere set forth in this Section 10, such
covenant, in its reduced form, shall be enforceable. This
Section 10 shall survive the expiration or termination of the
Term of Employment.

Section 11. Assignability, etc. The rights and
obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive acknowledges that the
services to be rendered by him are unique and personal and
accordingly that he may not assign any of his rights or delegate
any of his duties or obligations under this Agreement.

Section 12. Notices. All notices given hereunder shall
be in writing and shall be sent by registered or certified mail
or delivered by hand and shall be deemed to be given on the date
received. Any notice by the Company to the Executive shall be
mailed or delivered to:

Peter J. Housman II
Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010

or such other address as may from time to time be provided by
the Executive to the Company for such purposes.

Any notice by the Executive to the Company shall be mailed
or delivered to:

Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: President and Chief Executive Officer

and

Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: General Counsel

or such address or addresses as may from time to time be
provided by the Company to the Executive for such purpose.

Section 13. Captions. The captions in this Agreement
are inserted for convenience only and do not constitute a part
of this Agreement.

Section 14. Amendments, etc. This Agreement may be
amended, modified or terminated only by an instruments in
writing signed by the parties hereto.

Section 15. Governing Law. This Agreement is made in
and shall be governed by and construed in accordance with the
laws of the State of Florida, without giving effect to conflict
of law principles. The Executive hereby consents to the
jurisdiction of the courts of the State of Florida. The
Executive hereby appoints the Corporate Secretary of the Company
as his agent for service of process and agrees to accept service
of process upon delivery to such agent, with a copy sent by
registered or certified mail to the Executive at his address as
set forth in Section 12.

Section 16. Understandings and Remedies. Each of the
parties to this Agreement will be entitled to enforce its rights
under this Agreement specifically, to recover damages by reason
of any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or
equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations
of the provisions of this Agreement. Such specific performance
and/or injunctive relief shall be available without the posting
of any bond or other security. Except when a party is seeking an
injunction or specific performance hereunder, the parties agree
to submit any dispute concerning this Agreement to binding
arbitration. The parties may agree to submit the matter to a
single arbitrator or to several arbitrators, may require that
arbitrators possess special qualifications or expertise or may
agree to submit a matter to a mutually acceptable firm of
experts for decision. In the event the parties shall fail to
thus agree upon terms of arbitration within twenty (20) days
from the first written demand for arbitration, then such
disputed matter shall be settled by arbitration under the Rules
of the American Arbitration Association, by three arbitrators
appointed in accordance with such Rules. Such arbitration shall
be held in Miami, Florida. Once a matter has been submitted to
arbitration pursuant to this section, the decision of the
arbitrators reached and promulgated as a result thereof shall be
final and binding upon all parties. The cost of arbitration
shall be shared equally by the parties and each party shall pay
the expenses of his/its attorneys, except that the arbitrators
shall be entitled to award the costs of arbitration, attorneys
and accountants' fees, as well as costs, to the party that they
determine to be the prevailing party in any such arbitration.

Section 17. Entire Agreement; Severability. This
Agreement and the Exhibits hereto constitute the entire
agreement between the parties with respect to the subject matter
hereof. The Executive specifically acknowledges that no
representations have been made to him by the Company or any of
its affiliates regarding the value of the common stock of the
Company, now or in the future. 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 invalid, illegal or
unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any
other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained
herein.

Section 18. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.

IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.

TELEMUNDO GROUP, INC.

By: /s/ Roland A. Hernandez
-----------------------
Name: Roland A. Hernandez
Title: President and Chief
Executive Officer

/s/ Peter J. Housman II
-----------------------
Peter J. Housman II

EXHIBIT A
---------

Telemundo Group, Inc.
Bonus Schedule
(dollars in thousands)

Net Contribution(1)
-------------------

% of Salary if
Target Achieved(2) 1997 Targets
- --------------- ------------

100% $52,200
75% 45,900
50% 39,500

_______________________________
(1) "Net Contribution" means operating income plus
depreciation and amortization determined in accordance with
generally accepted accounting principles, without giving effect
to any income, gain or loss associated with WSNS, but determined
consistent with the accounting method for determining "Net
Contribution" on the Company's internal financial statements in
prior periods and adjusted to eliminate the impact of changes in
accounting principles after the date of this Agreement and of
acquisitions or divestitures of operating units after the date
of this Agreement if taking such operating units into account
would either increase or decrease the actual Net Contribution by
at least 5% of the 50% Net Contribution target in the year of
acquisition or divestiture on an annualized basis.

(2) If Net Contribution is between targets, % of salary
will be determined by linear interpolation.

Contents

TELEMUNDO GROUP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA

(Amounts in thousands, except per share data)

<TABLE>

STATEMENT OF OPERATIONS DATA:
<CAPTION>
Predecessor
---------------------------------
Year Ended December 31 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenue.................................. $202,713 $169,148 $183,894 $177,809 $153,572

EBITDA (a)................................... 42,603 26,021 23,980 28,066 21,338

Operating income............................. 29,292 14,379 13,176 16,597 10,823

Reorganization items......................... - - 76,255 (2,543) -
Interest expense - net of interest income.... (18,920) (14,489) (645) (24,411) (35,739)
Loss from investment in TeleNoticias......... (3,120) (6,355) (1,314) - -
Loss on disposal of TeleNoticias............. (2,441) - - - -
Income (loss) before extraordinary item...... (1,179) (10,088) 84,049 (14,059) (26,743)
Extraordinary item - extinguishment of debt.. (17,243) - 130,482 - -

Net income (loss) (b)........................ (18,422) (10,088) 214,531 (14,059) (26,743)

Net income (loss) per share:
Loss before extraordinary item............. $ (.12) $(1.01)
Extraordinary item......................... (1.71) -
------ ------
Net loss................................... $(1.83) $(1.01) (c) (c) (c)
====== ====== ====== ====== ======

Dividends declared on common shares.......... - - - - -
====== ====== ====== ====== ======
</TABLE>

<TABLE>

BALANCE SHEET DATA:

<CAPTION> Predecessor
----------------------------------
December 31 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Working capital............................ $ 44,769 $ 36,395 $ 32,325 $ 65,691 $ 51,657
Broadcast licenses and reorganization value
in excess of amounts allocable to
identifiable assets, net.................. 132,831 90,200 92,792 - -
Total assets............................... 295,560 224,459 232,024 169,657 148,564
Long-term debt (liabilities subject to
settlement prior to 1994)................. 179,695 108,032 100,724 326,784 304,183
Common stockholders' equity (deficiency).... 42,893 60,251 70,000 (214,816) (200,757)

<FN>
(a) EBITDA (earnings before interest, taxes, depreciation and amortization) is operating income before depreciation and
amortization. Although EBITDA is not intended to represent cash flow or any other measure of financial performance
under generally accepted accounting principles, the Company believes it is helpful in understanding cash flow generated
from operations that is available for debt service, taxes, working capital requirements and capital expenditures.
(b) Prior to 1995, net income (loss) was significantly impacted in certain years by nonrecurring income and expense
items related to the Company's financial restructuring (see Note 9 of "Notes to Consolidated Financial Statements").
(c) Net income (loss) per share is not applicable as the Company was recapitalized and adopted fresh start reporting
as of December 31, 1994 (see Note 9 of "Notes to Consolidated Financial Statements").

</TABLE>

TELEMUNDO GROUP, INC. AND SUBSIDIARIES

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

TRANSACTIONS AFFECTING COMPARABILITY OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION

On December 30, 1994, Telemundo Group, Inc. ("Telemundo"), together with its
subsidiaries (collectively, the "Company"), consummated a financial
restructuring pursuant to a plan of reorganization under chapter 11 of the
Bankruptcy Code (the "Plan"). The period prior to the consummation of the
Plan is presented on a historical cost basis without giving effect to the
reorganization and is separated by a line. For purposes of these financial
statements, the term "Predecessor" refers to the Company prior to emergence
from chapter 11 reorganization. (See Note 9 of "Notes to Consolidated
Financial Statements").

On February 26, 1996, the Company completed the acquisition of a 74.5%
interest in Video 44, which owns WSNS-TV, Channel 44 in Chicago. The
acquisition was accounted for under the purchase method of accounting.
(See Note 2 of "Notes to Consolidated Financial Statements").

The following discussion and analysis of financial condition and results
of operations should be read in conjunction with the Company's consolidated
financial statements and related notes, to which note references relate.
Except for historical information contained herein, certain matters discussed
herein are forward looking disclosures that involve risks and uncertainties,
including (without limitation) those risks associated with the availability
of programming, the impact of competition, the effect of economic and market
conditions, litigation, the impact of current or pending legislation and
regulation, and other risks detailed from time to time in the Company's
Security and Exchange Commission reports.

RESULTS OF OPERATIONS

Net revenue for each of the three years in the period ended December 31, 1996
was as follows:

Predecessor
--------------
Year Ended Year Ended Year Ended
December 31 December 31 December 31
1996 Change 1995 Change 1994
---------------------------------------------------
Net Commercial Air Time:
Continental U.S.:
Network and
National Spot.... $ 82,728,000 22% $ 67,938,000 (16)% $ 81,313,000
Local.............. 47,167,000 21% 38,888,000 (11)% 43,600,000
------------ ------------ ------------
129,895,000 22% 106,826,000 (14)% 124,913,000

Puerto Rico.......... 43,741,000 16% 37,830,000 2% 37,232,000
------------ ------------ ------------
173,636,000 20% 144,656,000 (11)% 162,145,000
Other Revenue.......... 29,077,000 19% 24,492,000 13% 21,749,000
------------ ------------ ------------
$202,713,000 20% $169,148,000 (8)% $183,894,000
============ ============ ============

The increase in network and national spot revenue in 1996 is the result of
the continued growth in the overall Spanish-language television market, the
acquisition of WSNS-TV in Chicago, enhanced sales efforts and changes in
audience share. Excluding the impact of WSNS, which is reflected in the
financial statements effective February 27, 1996, network and national spot
revenue would have increased by 13% for 1996. The decrease in network and
national spot revenue in 1995 was the result of an overall decline in
audience share throughout 1994, which continued through February 1995.
A change in audience share typically has a delayed impact on revenue. The
impact of the decline in audience share was in part offset by the growth in
the overall Spanish-language television advertising market.

The increase in local revenue in 1996 is the result of a significant increase
at KVEA (Los Angeles), increases at other major owned and operated stations,
and the acquisition of WSNS. Excluding the impact of WSNS, local revenue
would have increased by 7% for the year. The decline in local revenue for
1995 was the result of the ratings decline, which most significantly
impacted KVEA.

The Company's average share of the weekday Spanish-language television
network audience for the first through fourth quarters of 1996 was 26%, 23%,
23% and 21%, respectively, and was 22%, 24%, 25% and 26%, respectively, for
the first through fourth quarters of 1995.

The increase in commercial air time revenue in Puerto Rico in 1996 is the
result of an increase in WKAQ's prime time audience share, enhanced sales
efforts, and growth in the overall market, due in part to political
advertising. The increase in 1995 was the result of WKAQ's dominant audience
share in a market which grew slightly.

Other revenue increased in 1996 primarily due to sales of blocks of broadcast
time to independent programmers and the acquisition of WSNS. Excluding the
impact of WSNS, other revenue would have increased by 9%. Other revenue
increased in 1995 primarily due to increased sales of blocks of broadcast
time, offset in part by a decrease in international program sales. Sales
of blocks of broadcast time on a network and national basis accounted for
65% of total other revenue for both 1996 and 1995.

Direct operating costs increased $8.4 million or 11% in 1996, which primarily
reflects an increase in programming costs, as well as costs attributable to
WSNS. Excluding WSNS, direct operating expenses would have increased by 8%.
The $12.3 million or 14% decrease in 1995 primarily resulted from reductions
in the cost of programming in certain time periods.

Selling, general and administrative expenses, other than network and
corporate, increased $5.6 million or 16% in 1996, which was primarily the
result of the acquisition of WSNS. Excluding WSNS, selling, general and
administrative expenses would have increased by 2%.

Network expenses, which represent costs associated with the network operations
center as well as sales, marketing and other network costs not allocated to
specific television stations, increased by $3.0 million or 12% in 1996.
The 1996 results are impacted by the provision of $3.8 million to the
allowance for doubtful accounts relating to a particular client, the
payment terms of whose current receivable balance as well as future
business is currently being negotiated. Network expensesdecreased by
$2.7 million or 9% in 1995 which was the result of the implementation of
certain cost saving measures, including staff reductions in response to
the decline in revenue, offset in part by the increase in the cost of the
Nielsen national Hispanic television ratings service.

Corporate expenses decreased by $29,000 in 1996 which was primarily a
result of an increase in executive incentive compensation more than offset
by other expense savings. Corporate expenses decreased by $411,000 or 9%
in 1995, which reflected cost saving measures.

As a result of the revenue and expense items discussed above, operating
income before depreciation and amortization ("EBITDA") increased by $16.6
million or 64% in 1996 and increased $2.0 million or 9% in 1995.

Depreciation and amortization expense increased $1.7 million or 14% in 1996
which primarily reflects the addition of WSNS.

As of December 31, 1994, the Company completed its reorganization to which
the following nonrecurring income and expense items relate:

(i) As a result of the application of "fresh start" reporting upon
emergence from bankruptcy, the Company adjusted its assets and
liabilities to their estimated fair value as of December 30, 1994
pursuant to the provisions of the American Institute of Certified
Public Accountants Statement of Position 90-7 entitled, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"). The resulting increase in the Company's net assets of
$86.92.8 million is included in reorganization items in the
consolidated statement of operations for the year ended December 31,
1994.

(ii) In accordance with SOP 90-7, the legal, professional and other
costs and expenses related to the reorganization totalling $11.6 million
are included in reorganization items in the consolidated statement of
operations for the year ended December 31, 1994.
(iii) Also pursuant to SOP 90-7, included in reorganization items in
the consolidated statement of operations for the year ended December 31,
1994 is interest income of $967,000 earned on cash balances that would
have otherwise been used to make scheduled principal and interest
payments on debt in default and to pay prepetition liabilities.
(iv) An extraordinary gain from debt forgiveness of $130.5 million is
reported in the consolidated statement of operations for the year ended
December 31, 1994, which represents the total amount of liabilities
discharged in the reorganization, including accrued interest and
unamortized discount, reduced by the amount of distributions to holders
of such the predecessor's liabilities. The distributions, which are
described in Note 9 to the consolidated financial statements, included
cash, new debt, shares of common stock and warrants to purchase common
stock.

Interest expense, net of interest income, for 1996 totalled $18.9 million as
compared to $14.5 million and $645,000 for 1995 and 1994, respectively.
Interest expense for 1996 includes (i) interest accrued and accreted on the
10.5% Senior Notes due 2006 (the "New Senior Notes") from February 26, 1996,
which were issued at a discount and were structured to produce a yield to
maturity of 10.5% per annum, (ii) amortization of deferred issuance costs for
the New Senior Notes, (iii) interest and fees associated with the Company's
revolving credit facility, and (iv) interest accrued and accreted on the
10.25% Senior Notes (the "10.25% Notes") which were outstanding during the
period (approximately 99.8% of which were tendered in a repurchase offer on
February 26, 1996). Interest expense was offset by $304,000 of interest
income in 1996. Interest expense for 1995 primarily represents interest on
the Company's 10.25% Notes, and is offset by $268,000 of interest income. No
interest had been accrued on any of the Company's outstanding debt in 1994
as the Company was in reorganization.

Net loss from investment in TeleNoticias of $3.1 million, $6.4 million and
$1.3 million for 1996, 1995 and 1994, respectively, represents the Company's
42% share of TeleNoticias' net loss and related costs (see further discussion
in Liquidity and Sources of Capital).

In addition, the loss on disposal of TeleNoticias of $2.4 million resulted
from the disposal of the Company's interests in TeleNoticias on June 26,
1996 (see further discussion in Liquidity and Sources of Capital).

The income tax provision recorded in each of the periods relates to WKAQ,
which is taxed separately under Puerto Rico income tax regulations,
withholding taxes related to foreign operations, and certain federal and
state income and franchise taxes. The Company is in a net operating loss for
federal tax purposes. The Company's use of its net operating and capital
loss carryforwards, incurred prior to December 31, 1994, are subject to
certain limitations imposed by Section 382 of the Internal Revenue Code and
their use will be limited each year subsequent to December 310, 1994.

Minority interest represents distributions to the 25.5% partner in Video 44,
which is based on a minimum preferred distribution to such partner.

The extraordinary loss on extinguishment of debt in 1996 represents the
difference between (i) the cost of repurchasing the 10.25% Notes pursuant to
the tender offer, including related fees and expenses, together with the
consent fee associated with amending the 10.25% Note indenture, and (ii) the
net book value of the repurchased 10.25% Notes. The 10.25% Notes were
originally recorded at their fair value, which was less than the principal
amount, reflecting an effective interest rate of 13.34%.

LIQUIDITY AND SOURCES OF CAPITAL

The Company's cash flows from operating activities were $22.6 million for
1996 as compared to $11.6 million for 1995 and $8.1 million for 1994. The
increase in 1996 is the result of the improvement in operating income before
depreciation and amortization and the net effect of changes in certain asset
and liability accounts, including WSNS's initial working capital
requirements. The increase in 1995 was the result of an increase in operating
income and the net effect of changes in certain asset and liability accounts,
including a greater decrease of accounts receivable.

The Company had working capital of $44.8 million at December 31, 1996. The
Company did not have any borrowings outstanding under its $20 million
revolving credit facility at December 31, 1996.

On February 26, 1996, Telemundo completed the acquisition of a 74.5% interest
in Video 44, which owns WSNS-TV, Channel 44 in Chicago, which had been the
Company's largest affiliated station (the "Acquisition"). The purchase price
was $45.9 million, including costs and liabilities associated with the
Acquisition. On February 26, 1996, the Company also completed the sale of
$192 million in aggregate principal amount of New Senior Notes, the proceeds
of which were used primarily for the Acquisition and to repurchase $116.7
million principal amount of its 10.25% Notes, representing approximately
99.8% of the aggregate outstanding principal amount of the 10.25% Notes,
tendered in a repurchase offer which commenced on November 27, 1995
(the "Repurchase").

The Repurchase, the issuance of the New Senior Notes and the amendment of
the 10.25% Notes indenture were designed to enhance the Company's operating
and financial flexibility by, among other things, removing the near-term
amortization requirements of the 10.25% Notes, and amending certain covenants
relating to the 10.25% Notes to conform generally to the covenants relating
to the New Senior Notes.

The New Senior Notes were issued at a discount and were structured to produce
a yield to maturity of 10.5% per annum. The New Senior Notes require
semi-annual interest payments at the rate of 7% per annum on their principal
amount at maturity through and including February 15, 1999, and after such
date will bear interest at a rate of 10.5% per annum on their principal
amount at maturity. The approximately $175 million of gross proceeds were
used for the Acquisition, the Repurchase, the consent solicitation, related
fees and expenses, and for general corporate purposes, including reducing the
amount outstanding under the Company's credit facility by $5.0 million.

Capital expenditures of approximately $9.1 million were made during 1996 for
the replacement or upgrading of equipment at all operations, including WSNS,
expanding production capabilities and upgrading facilities. The Company
anticipates that capital expenditures of approximately $9.6 million will be
made during 1997.

From July 1994 through June 1996, Telemundo held a 42% interest in
Telenoticias del Mundo, L.P. ("TeleNoticias"), an international
Spanish-language news service. On June 26, 1996, Telemundo acquired the
remaining 58% interest in TeleNoticias from its former partners for
approximately $5.1 million (the "Purchase"). Contemporaneous with the
Purchase, the company sold substantially all of the assets and certain
liabilities of TeleNoticias to CBS Inc. ("CBS") (the "Sale"). The total
consideration for the Sale was $5.0 million in cash and a $1.25 million note
from CBS, which bears no interest and is payable five years after the closing
date, which was recorded at its present value of $750,000. The consideration
for the Sale included $1.0 million cash consideration paid by CBS which is
held in escrow for any post-closing adjustments that may occur. These
transactions, when combined with the Company's net investment in TeleNoticias,
comprised of capital contributions and advances made and losses recognized in
the operations of TeleNoticias through the date of Sale, resulted in a loss
on disposal of TeleNoticias of $2.4 million.

In addition, Telemundo and CBS entered into a number of agreements relating to
news activities, including an agreement under which CBS will produce the
Company's nightly national newscasts for a period of five years at a cost
which is less than the license fee which the Company had paid to TeleNoticias
for such newscasts. The Company also entered into other agreements including
the rental of the TeleNoticias studio facility in the Company's network
operations center to CBS, the provision of certain technical and other
services by the Company to CBS, and the provision of certain other news
services by CBS to the Company.

These agreements generate net expense savings and additional sources of
income for the Company, some of which were reinvested in ongoing operations,
including programming and promotion initiatives. As a result of such
reinvestment, the net impact from the agreements on the Company's 1996
operating results is not material.

In connection with the TeleNoticias Purchase, all outstanding disputes
relating to the litigation among Telemundo and its former partners were
resolved, including the dismissal of the October 16, 1995 legal action
commenced by Telemundo in New York State Court relating to certain corporate
governance and other issues.

The Company's principal sources of liquidity are cash from operations and a
revolving credit facility. The facility provides for borrowings of up to $20
million and is subject to an accounts receivable borrowing base. The entire
amount was available at December 31, 1996. The Company plans on financing
interim cash needs through cash generated from operations and, if necessary,
the revolving credit facility. The Company does not anticipate the need to
obtain any additional financing to fund operations for the foreseeable future.

<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Predecessor
------------
<CAPTION>
Year Ended December 31 1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenue................................... $202,713,000 $169,148,000 $183,894,000
------------ ------------ ------------
Costs and expenses:
Direct operating costs...................... 86,994,000 78,609,000 90,914,000
Selling, general and administrative
expenses other than network and corporate. 39,910,000 34,270,000 35,688,000
Network expenses............................ 28,835,000 25,848,000 28,501,000
Corporate expenses.......................... 4,371,000 4,400,000 4,811,000
Depreciation and amortization............... 13,311,000 11,642,000 10,804,000
------------ ------------ ------------
173,421,000 154,769,000 170,718,000
------------ ------------ ------------

Operating income.............................. 29,292,000 14,379,000 13,176,000

Reorganization items.......................... - - 76,255,000
Interest expense - net of interest income of
$304,000 in 1996 and $268,000 in 1995....... (18,920,000) (14,489,000) (645,000)
Loss from investment in TeleNoticias.......... (3,120,000) (6,355,000) (1,314,000)
Loss on disposal of TeleNoticias.............. (2,441,000) - -
Other income (expense)........................ 14,000 (104,000) (34,000)
Income (loss) before income taxes, minority
interest and extraordinary item............. 4,825,000 (6,569,000) 87,438,000
Income tax provision.......................... (3,879,000) (3,519,000) (3,389,000)
Minority interest............................. (2,125,000) - -
------------ ------------ ------------
Income (loss) before extraordinary item....... (1,179,000) (10,088,000) 84,049,000
Extraordinary item - extinguishment of debt... (17,243,000) - 130,482,000
------------- ------------ ------------

Net income (loss) $(18,422,000) $(10,088,000) $214,531,000
============ ============ ============

Net income (loss) per share:
Loss before extraordinary item $ (.12) $(1.01)
Extraordinary item.......................... (1.71) -
------- ------
Net loss.................................... $(1.83) $(1.01) *
======= ====== =====
Weighted average shares outstanding........... 10,054,493 10,000,035 *
============ ============ =====

* Net income (loss) per share is not applicable as the Company was
recapitalized and adopted fresh start reporting as of December 31, 1994
(see Note 9).

See notes to consolidated financial statements
</TABLE>

<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Assets December 31 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalent............................ $ 12,587,000 $ 3,199,000
Accounts receivable, less allowance for doubtful
accounts of $5,943,000 and $2,650,000............. 51,824,000 45,801,000
Television programming............................ 14,062,000 13,063,000
Prepaid expenses and other........................ 7,685,000 4,537,000
------------ -----------
Total current assets................................ 86,158,000 66,600,000
Property and equipment, net........................... 64,532,000 60,538,000
Television programming ............................... 4,588,000 3,195,000
Other assets.......................................... 7,451,000 2,175,000
Investment in and receivable from TeleNoticias........ - 1,751,000
Broadcast licenses and reorganization value in
excess of amounts allocable to iidentifiable assets,
net................................................. 132,831,000 90,200,000
------------ ------------

$295,560,000 $224,459,000
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------

Current liabilities:
Accounts payable.................................... $ 8,831,000 $ 7,318,000
Accrued expenses and other........................ 27,484,000 19,371,000
Television programming obligations................ 5,074,000 4,370,000
------------ ------------
Total current liabilities..................... 41,389,000 31,059,000
Long-term debt........................................ 179,695,000 108,032,000
Capital lease obligations............................. 5,945,000 6,662,000
Television programming obligations.................... 442,000 552,000
Other liabilities..................................... 19,950,000 17,903,000
------------ ------------
247,421,000 164,208,000
------------ ------------

Minority interest..................................... 5,246,000 -
------------ ------------

Contingencies and commitments

Common stockholders' equity:
Series A common stock, $.01 par value,
14,388,394 shares authorized, 6,621,983 and
5,933,865 shares outstanding at December 31, 1996
and 1995.......................................... 66,000 59,000
Series B common stock, $.01 par value,
5,611,606 shares authorized, 3,530,232 and
4,066,335 shares outstanding at December 31, 1996
and 1995.......................................... 36,000 41,000
Additional paid-in capital............................ 71,301,000 70,239,000
Retained earnings (deficit)........................... (28,510,000) (10,088,000)
------------ ------------
42,893,000 60,251,000
------------ ------------

$295,560,000 $224,459,000
============ ============

See notes to consolidated financial statements
</TABLE>

<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY (DEFICIENCY)
<CAPTION>
Number of
Shares Common
Outstanding Stock
----------------------------------- -----------------------------
Common
Series A Series B Series A Series B Additional Retained Stockholders'
Common Common Common Common Common Common Paid-In Earnings Equity
Stock Stock Stock Stock Stock Stock Capital (Deficit) (Deficiency)
----------- -------- -------- --------- -------- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, 12/31/93 37,042,924 - - $ 370,000 $ - $ - $245,768,000 $(460,954,000) $(214,816,000)
Net income....... - - - - - - - 214,531,000 214,531,000
Elimination of former
equity interests.. (37,042,924) - - (370,000) - - (245,768,000) 246,423,000 285,000
Common stock issued in
the restructuring and
application of fresh
start reporting... - 4,388,394 5,611,606 - 44,000 56,000 69,900,000 - 70,000,000
----------- --------- --------- --------- -------- -------- ------------ ------------- ------------

Balance, 12/31/94. - 4,388,394 5,611,606 - 44,000 56,000 69,900,000 - 70,000,000
Net loss................ - - - - - - - (10,088,000) (10,088,000)
Stock option
transactions (a)...... - - - - - - 338,000 - 338,000
Warrant conversions..... - 200 - - - - 1,000 - 1,000
Stock conversions....... - 1,545,271 (1,545,271) - 15,000 (15,000) - - -
----------- --------- --------- --------- -------- -------- ------------ ------------- ------------

Balance, 12/31/1995..... - 33,865 4,066,335 - 59,000 41,000 70,239,000 (10,088,000) 60,251,000
Net loss................ - - - - - - - (18,422,000) (18,422,000)
Issuance of stock
pursuant to exercise
of stock options...... - 150,000 - - 2,000 - 1,048,000 - 1,050,000

Warrant conversions..... - 2,015 - - - - 14,000 - 14,000
Stock conversions....... - 536,103 (536,103) - 5,000 (5,000) - - -

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

Balance, 12/31/96..... - 6,621,983 3,530,232 - $ 66,000 $ 36,000 $ 71,301,000 $ (28,510,000) $ 42,893,000
=========== ========= ========= ========= ======== ======== ============ ============= ============

<FN>
(a) Effect of the cancellation and issuance of options to a former
officer.

See notes to consolidated financial statements
</TABLE>

<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Predecessor
-----------
<CAPTION>
Year Ended December 31 1996 1995 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $(18,422,000) $(10,088,000) $214,531,000
Charges not affecting cash:
Depreciation and amortization................. 13,311,000 11,642,000 10,804,000
Fresh start revaluation....................... - - (86,901,000)
Interest accretion............................ 4,559,000 1,511,000 -
Loss from investment in TeleNoticias.......... 3,120,000 6,355,000 1,314,000
Loss on disposal of TeleNoticias.............. 2,441,000 - -
Extraordinary item - extinguishment of debt... 17,243,000 - (130,482,000)
Changes in assets and liabilities:
Accounts receivable........................... (6,023,000) 1,872,000 (4,532,000)
Television programming........................ (2,392,000) (676,000) (250,000)
Television programming obligations............ 594,000 (1,133,000) (866,000)
Accounts payable and accrued expenses and
other......................................... 8,181,000 2,112,000 4,465,000
------------ ------------
22,612,000 11,595,000 $ 8,083,000
------------ ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of Video 44, net of cash acquired..... (43,973,000) - -
Additions to property and equipment............... (9,125,000) (6,719,000) (12,550,000)
Investment in TeleNoticias........................ (1,704,000) (3,104,000) (5,462,000)
Disposal of TeleNoticias, net..................... (2,769,000) - -
------------ ------------ ------------
(57,571,000) (9,823,000) (18,012,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of New Senior Notes.... 169,981,000 - -
Repurchase of 10.25% Notes, consent fee and
related costs................................... (118,993,000) - -
Proceeds from exercise of stock options and
warrants........................................ 1,065,000 - -
Payments of obligations under capital leases...... (642,000) (517,000) (594,000)
Borrowings under credit facility.................. 8,012,000 6,013,000 200,000
Payments under credit facility.................... (13,993,000) (216,000) -
Payments of liabilities relating to consummation
of the Plan..................................... (1,083,000) (5,703,000) (35,928,000)
Proceeds from common stock issued pursuant to
the Plan........................................ - - 10,426,000
------------ ------------ ------------
44,347,000 (423,000) (25,896,000)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents.. 9,388,000 1,349,000 (35,825,000)
Cash and cash equivalents, beginning of year...... 3,199,000 1,850,000 37,675,000
------------ ------------ ------------

Cash and cash equivalents, end of year............ $ 12,587,000 $ 3,199,000 $ 1,850,000
============ ============ ============

Non-cash investing activities:
Note receivable and escrow deposit associated
with disposal of TeleNoticias, net of accrued
liabilities..................................... $ 879,000 $ - $ -
============ ============ ============

See notes to consolidated financial statements
</TABLE>

TELEMUNDO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________________________________________________________________________

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Telemundo Group, Inc. ("Telemundo") and its subsidiaries (collectively the
"Company") is a Spanish-language television broadcast network, that owns and
operates stations in the continental United States. The Company acquires
and produces Spanish-language television programming for its broadcast
network and syndicates programming to other broadcasters. The Company's
sales force sells advertising time on behalf of its owned television
stations and affiliates. In addition, the Company owns and operates a
television station and related production facilities in Puerto Rico.
Telemundo Group, Inc. ("Telemundo"), together with its subsidiaries
(collectively, the "Company"), is one of two Spanish-language television
broadcast networks in the United States. The network provides programming
24-hours per day to its owned and operated stations and affiliates, which
serve 59 markets in the United States, including the 32 largest Hispanic
markets, and reaches approximately 85% of all U.S. Hispanic households.
The Company also owns and operates the leading full-power television station
and related production facilities in Puerto Rico. The Company produces
Spanish-language programming for use on its network and for sale in foreign
countries and sells advertising time on behalf of its owned and operated
television stations and affiliates.

BASIS OF PRESENTATION

On December 30, 1994 (the "Consummation Date"), Telemundo consummated a
financial restructuring pursuant to a plan of reorganization under chapter
11 of the Bankruptcy Code (the "Plan"). Pursuant to the provisions of the
American Institute of Certified Public Accountants Statement of Position
90-7 entitled, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7"), the Company adjusted its assets and
liabilities to their estimated fair values upon consummation of the
reorganization. The period prior to the Consummation Date is presented on a
historical cost basis without giving effect to the reorganization and is
separated by a line. For purposes of these financial statements, the term
"Predecessor" refers to the Company prior to emergence from chapter 11
reorganization (see Note 9).

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Telemundo and
its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation. The Company's 42% investment in
Telenoticias del Mundo, L.P. ("TeleNoticias") had been accounted for by the
equity method until June 26, 1996, when substantially all of the assets and
certain liabilities of TeleNoticias were sold to CBS Inc. ("CBS")
(see Note 4).

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain amounts reported in the
consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers short-term investments with a maturity of three months
or less to be cash equivalents. Such short-term investments are carried at
cost which approximates fair value.

TELEVISION PROGRAMMING

Television programming rights and the related obligations are recorded at
gross contract prices. The costs of the rights are amortized on varying
bases related to the license and distribution periods, usage of the programs
and management's estimate of revenue to be realized from each airing of the
programs.

DEPRECIATION AND AMORTIZATION

Property and equipment is depreciated by the straight-line method over
estimated useful lives as follows:

Buildings........................... 40 Years
Antennas and Transmitters........... 20 Years
Other Broadcast Equipment........... 3 to 7 Years
Furniture and Fixtures.............. 5 to 7 Years
Automobiles and Trucks.............. 4 Years
Leasehold Improvements.............. Life of Lease

BROADCAST LICENSES AND REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE
TO IDENTIFIABLE ASSETS

Broadcast licenses and reorganization value in excess of amounts allocable
to identifiable assets represents the portions of reorganization value and
Video 44 purchase price not attributable to specific tangible assets
estimated value at the time of the reorganization and the purchase and are
being amortized on a straight-line basis over periods ranging from 10 to 40
years. Accumulated amortization was $6.7 million at December 31, 1996.
Broadcast licenses and reorganization value in excess of amounts allocable to
identifiable assets is attributable primarily to FCC broadcast licenses
($118.3 million net of accumulated amortization at December 31, 1996).
The Company evaluates the recoverability of its investment in such intangible
assets in relation to anticipated cash flows on an undiscounted basis. If
the estimated future cash flows are projected to be less than the carrying
value, an impairment write-down would be recorded.

REVENUE RECOGNITION

Revenue is derived primarily from the sale of advertising time on a network,
national spot and local basis. In addition, the Company earns revenue from
the sale of blocks of broadcast time during non-network programming hours.
Revenue is recognized when earned, i.e., when the advertisement is aired or
the block of broadcast time is utilized. The Company reviews the
collectibility of its accounts receivable and adjusts its allowance for
doubtful accounts accordingly. During 1996, 1995 and 1994, no customer
accounted for more than 10% of the Company's commercial air time
revenue.

PER COMMON SHARE INFORMATION

Net loss per share for the years ended December 31, 1996 and 1995 is
calculated by dividing the net loss by the weighted average number of shares
outstanding during the period. Conversion of stock options and warrants are
not included in the computation to the extent that stock options and warrants
are antidilutive. As a result of the effects of the reorganization, per
share information and weighted average number of shares outstanding for 1994
are not applicable and therefore have been omitted from the accompanying
financial statements.

RECLASSIFICATIONS

Certain reclassifications have been made in the prior years' financial
statements to conform with the current year's presentation.

2. ACQUISITION AND REFINANCING

On February 26, 1996, Telemundo completed the acquisition of a 74.5% interest
in a joint venture ("Video 44"), which owns WSNS-TV, Channel 44 in Chicago,
which had been the Company's largest affiliated station (the "Acquisition").
The purchase price for the Acquisition was approximately $44.6 million of
cash and $1.3 million of costs and liabilities associated with the
Acquisition. The allocation of the $45.9 million purchase price among
property and equipment, broadcast licenses and other assets was based upon
estimated fair market values. The operations of Video 44 are consolidated
with those of the Company and the interest, subject to a minimum preferred
distribution, attributable to the partner which owns the remaining 25.5%
of the venture is reflected in the accompanying financial statements as
minority interest.

On February 26, 1996, the Company also completed the sale of $192 million in
aggregate principal amount of 10.5% Senior Notes due 2006 (the "New Senior
Notes"), the proceeds of which were used primarily for the Acquisition and
to repurchase $116.7 million principal amount of its 10.25% Senior Notes
(the "10.25% Notes"), representing approximately 99.8% of the aggregate
outstanding principal amount of the 10.25% Notes, tendered in a repurchase
offer which commenced on November 27, 1995 (the "Repurchase"). A
supplemental indenture covering the 10.25% Notes also became operative on
February 26, 1996. The supplemental indenture contains amendments to the
indenture governing the 10.25% Notes which conform generally to the
covenants relating to the New Senior Notes and had been consented to by
holders of a majority of the outstanding principal amount of the 10.25% Notes
pursuant to a consent solicitation. The Repurchase resulted in an
extraordinary loss of $17.2 million in 1996.

The New Senior Notes were issued at a discount and were structured to produce
a yield to maturity of 10.5% per annum. The New Senior Notes require
semi-annual interest payments at the rate of 7% per annum on their principal
amount at maturity through and including February 15, 1999, and after such
date will bear interest at a rate of 10.5% per annum on their principal
amount at maturity. The $175.2 million of gross proceeds were used for the
Acquisition, the Repurchase, the consent solicitation, related fees and
expenses, and for general corporate purposes, including reducing the amount
outstanding under the Company's credit facility by $5.0 million.

The following summarized, unaudited pro forma results of operations for the
year ended December 31, 1996 and 1995, assume the Acquisition, the
Repurchase and the issuance of the New Senior Notes occurred as of the
beginning of the respective years. Items associated with TeleNoticias (see
Note 4) are excluded from the pro forma amounts, including the "Loss from
investment in TeleNoticias" and the "Loss on disposal of TeleNoticias" which
are reflected in the Company's Consolidated Statements of Operations.

Year Ended December 31 1996 1995
- --------------------------------------------------------------------------

Net revenue............................. $205,215,000 $186,771,000
Income (loss) before extraordinary item. 3,764,000 (5,682,000)
Net loss................................ (13,479,000) (21,705,000)

Per share:
Income (loss) before extraordinary
item................................ $.37 $(.57)
Net loss.............................. $(1.34) $(2.17)

3. PROPERTY AND EQUIPMENT

December 31 1996 1995
- --------------------------------------------------------------------------

Land................................... $ 4,727,000 $ 4,161,000
Buildings.............................. 18,965,000 15,975,000
Machinery andBroadcast and other
equipment............................ 43,463,000 34,319,000
Satellite transponder.................. 6,999,000 6,999,000
Leasehold improvements 9,436,000 8,026,000
----------- -----------
83,590,000 69,480,000

Less accumulated depreciation and
amortization......................... (19,058,000) (8,942,000)
----------- -----------
$64,532,000 $60,538,000
=========== ===========

4. INVESTMENT IN TELENOTICIAS

From July 1994 through June 1996, Telemundo held a 42% interest in
TeleNoticias, an international Spanish-language news service. On June 26,
1996, Telemundo acquired the remaining 58% interest in TeleNoticias from
its former partners for approximately $5.1 million (the "Purchase").
Contemporaneous with the Purchase, the Company sold substantially all of the
assets and certain liabilities of TeleNoticias to CBS (the "Sale"). The
total consideration for the Sale was $5.0 million in cash and a $1.25
million note from CBS, which bears no interest and is payable five years
after the closing date, which was recorded at its present value of $750,000.
The consideration for the sale included $1.0 million cash consideration paid
by CBS which is held in escrow as a reserve for any post-closing adjustments
that may occur. These transactions, when combined with the Company's net
investment in TeleNoticias, comprised of capital contributions and advances
made and losses recognized in the operations of TeleNoticias through the
date of Sale, resulted in a loss on disposal of TeleNoticias of $2.4 million.

In addition, Telemundo and CBS entered into a number of agreements relating
to news activities, including an agreement under which CBS will produce the
Company's nightly newscasts for a period of five years. The Company also
entered into other agreements including the rental of the TeleNoticias
studio facility in the Company's network operations center to CBS, the
provision of certain technical and other services by the Company to CBS, and
the provision of certain other news services by CBS to the Company.

In connection with the Purchase, all outstanding disputes among Telemundo
and its former partners were resolved, including the dismissal of the October
16, 1995 legal action commenced by Telemundo in New York State Court
relating to certain corporate governance and other issues.

5. ACCRUED EXPENSES AND OTHER

December 31 1996 1995
- -------------------------------------------------------------------------

Accrued compensation and commissions..... $ 6,495,000 $ 3,980,000
Accrued agency commissions............... 6,164,000 5,004,000
Accrued reorganization costs............. 490,000 1,722,000
Accrued interest expense................. 5,040,000 -
Other accrued expenses................... 9,295,000 8,665,000
----------- -----------
$27,484,000 $19,371,000
=========== ===========

6. LONG-TERM DEBT

December 31 1996 1995
- -------------------------------------------------------------------------

New Senior Notes........................ $179,521,000 -
10.25% Notes............................ 159,000 102,035,000
Revolving credit facility............... 15,000 5,997,000
------------ ------------
179,695,000 108,032,000
Less current portion.................... - -
------------ ------------
$179,695,000 $108,032,000
============ ============

Significant terms of the Company's debt agreements are as follows:

New Senior Notes: On February 26, 1996, the Company completed the sale of
$192 million in aggregate principal amount of the New Senior Notes which are
unsecured obligations of the Company. The New Senior Notes were issued at a
discount and were structured to produce a yield to maturity of 10.5% per
annum. The New Senior Notes require semi-annual interest payments at the
rate of 7% per annum on their principal amount at maturity through and
including February 15, 1999, and after such date will bear interest at a rate
of 10.5% per annum on their principal amount at maturity. The principal
balance is due in its entirety on February 26, 2006.

10.25% Notes: The 10.25% Notes were recorded at their fair value of
$100,524,000 (principal amount of $116,889,000) at December 31, 1994,
reflecting an effective interest rate of 13.34%, based upon market trading
activity at the time of consummation of the Plan. The 10.25% Notes are
unsecured obligations of the Company bearing interest from December 31,
1994, payable semi-annually, and maturing December 30, 2001. On February 26,
1996, the Company completed the sale of $192 million in aggregate principal
amount of New Senior Notes, the proceeds of which were used primarily for
the Acquisition and to repurchase $116,705,500 principal amount of the
10.25% Notes tendered in the Repurchase, representing approximately 99.8% of
the aggregate outstanding principal amount of the 10.25% Notes.

Revolving Credit Facility: The Revolving Credit Facility ("Credit Facility")
provides for borrowings of up to $20 million and is subject to an accounts
receivable borrowing base. The entire amount was available at December 31,
1996. Interest accrues at a rate of prime plus 1.75% (10% and 10.25% at
December 31, 1996 and 1995, respectively, and averaged 10% for all of 1996
and 10.58% for all of 1995). The agreement expires December 30, 1999 and is
cancelable at the Company's option prior to expiration upon payment of an
early termination fee, except during the first 60 days of 1998 or 1999 when
the agreement may be terminated without incurring an early termination fee.
The Company is required to pay a fee of 0.5% per annum based on the average
unborrowed portion of the Credit Facility. The Company is also required to
pay other annual fees and expenses in connection with the borrowing
agreement. The Credit Facility is secured by substantially all U.S. assets
of the Company and does not require compensating balances.

The New Senior Notes, the 10.25% Notes, and Credit Facility agreements
contain certain covenants which, among other things, require the Company to
maintain certain financial ratios and impose on Telemundo and its
subsidiaries certain limitations or prohibitions on: (i) the incurrance of
indebtedness or the guarantee or assumption of indebtedness of another;
(ii) the creation or incidence of mortgages, pledges or security interests
on the property or assets of the Company or any of its subsidiaries; (iii)
the sale of assets of the Company or any of its subsidiaries; (iv) the
merger or consolidation of the Company; (v) the payment of dividends or the
redemption or repurchase of any capital stock of the Company; and (vi)
investments and acquisitions.

Interest paid was $8,667,000, $12,810,000 and $645,000 for the years ended
1996, 1995 and 1994, respectively. As a result of the reorganization, only
cash interest payments for capital leases were made during 1994 (see Note 9).

7. INCOME TAXES

The Company and its domestic subsidiaries file a consolidated federal income
tax return. The Company files a separate Puerto Rico income tax return for
its operations in Puerto Rico. The income tax provision consisted of:

Predecessor
-----------
Year Ended December 31 1996 1995 1994
- -------------------------------------------------------------------------

Puerto Rico (a)............ $3,473,000 $3,379,000 $3,279,000
Federal, state and other... 406,000 140,000 110,000
---------- ---------- ----------
$3,879,000 $3,519,000 $3,389,000
========== =========== ==========

(a) Represents a provision for withholding tax related to intercompany
interest.

The Company paid $1,790,000, $1,534,000 and $1,260,000 for withholding taxes
related to its operations in Puerto Rico in 1996, 1995 and 1994,
respectively. In addition, the Company paid federal and state income and
franchise and foreign withholding taxes of $514,000, $190,000 and $173,000 in
1996, 1995 and 1994, respectively.

The tax effects comprising the Company's net deferred taxes as of December
31, 1996 and 1995 are as follows:

December 31 1996 1995
- ----------------------------------------------------------------------------

Deferred Tax Assets:
Net operating loss carryforwards ("NOLs")..... $84,459,000 $76,324,000
Capital loss carryforward..................... 8,827,000 8,827,000
Amortization of FCC broadcast
licenses - Predecessor...................... 28,948,000 30,886,000
Other......................................... 7,998,000 2,970,000
------------ -----------
130,232,000 119,007,000
------------ -----------
Deferred Tax Liabilities:
Amortization of FCC broadcast licenses..... (50,443,000) (35,178,000)
Accelerated depreciation................... (1,743,000) (1,621,000)
------------ ------------
(52,186,000) (36,799,000)
------------ ------------

Net deferred tax asset....................... 78,046,000 82,208,000
Valuation allowance.......................... (78,046,000) (82,208,000)
------------ ------------

Net deferred tax............................. $ - $ -
============ ============

Limitations imposed by Section 382 of the Internal Revenue Code will limit
the amount of NOLs and capital loss carryforwards which will be available
to offset future U.S. taxable income to approximately $6,600,000 annually,
or a total of $92,400,000 during the permitted carryover period, except in
certain circumstances. The limitations only apply to the Company's U.S.
NOLs and capital loss carryforwards incurred before December 31, 1994.

As there is no assurance that the Company will generate sufficient earnings
to utilize its available tax assets, including its NOLs, a valuation
allowance has been established to offset the existing net deferred tax asset.

The Company has NOLs expiring as follows:

Commonwealth of
U.S. Puerto Rico
------------------------ -----------------------
2002....... $ 19,472,000 1997...... $ 4,958,000
2003....... 43,317,000 1998...... 5,973,000
2004....... 31,103,000 1999...... 5,657,000
2005....... 6,262,000 2000...... 3,402,000
2006....... 31,799,000 2001...... 1,931,000
2007....... 26,942,000 2002...... 313,000
------------
2008....... 8,676,000 $22,234,000
2010....... 12,334,000(a) ============
2011....... 24,114,000(a)
$204,019,000
============

(a) Not limited by Section 382 of the Internal Revenue Code.

The Company also has state tax NOLs in various jurisdictions.

The Company's 1994 and 1995 federal income tax returns have been recently
selected for examination by the Internal Revenue Service. Assessments, if
any, are not expected to have a material adverse effect on the financial
results.

8. WARRANTS

Pursuant to the Plan, 639,75048 warrants were issued, entitling the holders
of each warrant to purchase one share of Series A common stock at $7 per
share. These warrants are all exercisable from December 30, 1994 and
expire on December 30, 1999. There were 637,535 warrants outstanding at
December 31, 1996. Also pursuant to the Pplan, 416,667 warrants were issued
to Reliance Group Holdings, Inc. and its affiliates which are all
outstanding. Each warrant entitles the holder to purchase one share of
Series A common stock at $7.19 per share and the warrants are exercisable in
three equal annual installments commencing December 30, 1995, expiring five
years from the date they become exercisable. The warrants contain certain
customary antidilutive provisions in the event of a change in the Company's
capitalization.

9. CHAPTER 11 REORGANIZATION

On June 8, 1993 (the "Petition Date"), certain holders of the outstanding
13 5/8% subordinated debentures and the indenture trustee for such
debentures filed an involuntary petition for reorganization under chapter 11
of title 11 of the United States Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court"). The involuntary petition was filed against
Telemundo and did not include its subsidiaries. On July 30, 1993, the
Company consented to the entry of an order for relief under the Bankruptcy
Code. On July 20, 1994, the Bankruptcy Court entered an order confirming
the Company's second amended plan of reorganization. The reorganization was
consummated on December 30, 1994 and is reflected in the accompanying
financial statements as if the consummation occurred on December 31, 1994,
which is not significantly different than operations through December 30,
1994.

Under the terms of the Plan, the following occurred: (a) an aggregate of
$31,348,000 in cash, $88,668,000 in principal amount of 10.25% Notes,
8,550,000 shares of Series A and B common stock of reorganized Telemundo and
639,750 warrants to purchase Series A common stock were issued in
satisfaction of bondholder and general unsecured creditor claims;
(b) $7.0 million was paid to settle all claims relating to an unfavorable
long-term lease; and (c)$219,000 in cash and $28,220,000 in 10.25% Notes were
issued, and the Company received $2,639,000 from a co-defendant, as part
of a settlement of litigation. Under the Plan, pre-existing equity interests
were canceled. The existing stockholders were given rights to purchase
1,450,000 shares of Series A common stock. Reliance Group Holdings, Inc. and
its affiliates agreed to acquire Series A common stock not acquired by other
stockholders for which commitment they received 416,667 warrants to purchase
Series A common stock.

Reorganization items are items associated with chapter 11 proceedings that
were incurred subsequent to July 29, 1993 and consisted of the following:

Predecessor
-----------
Year ended December 31 1994
-----------------------------------------------------

Professional fees...................... $ (6,365,000)
Contract cancellation costs............ (3,479,000)
Other.................................. (1,101,000)
Litigation settlement.................. (668,000)
Interest income........................ 967,000
-------------
(10,646,000)
Revaluation of Assets and Liabilities.. 86,901,000
-------------
$ 76,255,000
=============

On the Consummation Date, Telemundo adopted fresh start reporting in
accordance with SOP 90-7. The fresh start reporting equity value of
$70 million was determined by the Company with the assistance of its
financial advisors using certain financial analyses, including discounted
future cash flows. The significant factors considered were analyses of
publicly available information of other companies believed to be comparable
to the Company, industry, economic and overall market conditions, and
historical and projected performance of the Company.

Under fresh start reporting, the reorganization value of the entity has been
allocated to the reorganized company's assets and liabilities on a basis
substantially consistent with the purchase method of accounting. The portion
of reorganization value not attributable to specific tangible or identifiable
intangible assets were included in "Broadcast Licenses and Reorganization
Value in Excess of Amounts Allocable to Identifiable Assets" in the
accompanying consolidated balance sheets.

10. EMPLOYEE RETIREMENT AND INCENTIVE PLANS

The Company maintains qualified defined contribution retirement and savings
plans for its U.S. employees and a defined benefit plan for its Puerto Rico
employees. The contributions to these plans totalled $527,000, $520,000 and
$499,000, in 1996, 1995, and 1994, respectively.

Pursuant to the Plan, the Company adopted a Stock Plan (the "Stock Plan")
whereby key employees may be granted restricted stock or options to acquire
up to 1,000,000 shares of Series A common stock, exercisable for a maximum
term of 10 years. The Stock Plan is administered by a committee of the
Company's board of directors. Options to acquire 600,000 of these shares
were granted on the Consummation Date with an exercise price of $7 per share
which become exercisable upon the attainment of certain earnings targets.
500,000 of these options issued to a former officer were canceled in 1995 and
the remaining 100,000 options did not become exercisable as the earnings
targets were not met. The former officer was issued separate options to
purchase 150,000 shares of Series A common stock with an exercise price of
$7 per share exercisable from January 1, 1996 through December 31, 1998.
These options were exercised on August 23, 1996. During 1995, the Company
issued options to purchase 572,500 shares of Series A common stock to
officers of the Company. The exercise price of these options is $10 per
share and one-quarter of the options vest annually upon the Company attaining
certain earnings targets. Any of these options that have not vested at the
end of nine years from the grant date will vest at that time if the officer
is still employed by the Company. An additional 100,000 options were issued
in 1995 to officers at an exercise price of $14.625 per share, are not
subject to the Company attaining certain earnings targets, and vest in three
installments through 2000.

During 1996, the Company issued options to purchase 75,000 and 10,000 shares
of Series A common stock with exercise prices of $23.375 and $29.875 per
share, respectively, to officers of the Company. One-third of the options
vest annually upon the Company attaining certain earnings targets and any of
these options that have not vested at the end of nine years from the grant
date will vest at that time if the officers are still employed by the Company.

In June 1996, subject to approval of the Company's stockholders, the Company
adopted the 1996 Non-Employee Director Stock Option Plan ("Director Plan")
whereby each non-management director will receive an annual grant of options
to purchase 2,500 shares of the Company's Series A Common Stock. Stock
issued pursuant to the Director Plan shall not exceed 100,000 shares. The
exercise price shall be equal to the fair market value of the Company's
underlying common stock at the date of grant, one-third of the granted
options vest on each anniversary date and extend for a period of ten years.
The Company issued options to purchase 20,000 shares of Series A common
stock on June 12, 1996 at an exercise price of $24.75.

The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under Financial Accounting
Standards Board Statement No. 123, "Accounting for Stock-Based Compensation"
("FASB 123"), requires use of option valuation models that were not developed
for valuing employee stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

However, pro forma information regarding net income and earnings per share
is required by FASB 123, and accordingly has been determined as if the
Company had accounted for its employee stock options under the fair value
method of FASB 123. The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1996, 2001, and 2002, respectively:
risk-free interest rates of 5.0%, 6.5% and 6.6%; no dividend yields; a
volatility factor of the expected market price of the Company's common stock
of .41; and a weighted-average expected life of the option of 6 years.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information assuming the implementation of the fair
value method of FASB 123 follows:

1996 1995
---------- ------------

Pro forma income (loss) before
extraordinary item.................... $ (2,485,00) $(11,978,000)
Extraordinary item.................... (17,243,000) -
------------ ------------

Net income (loss)..................... $(19,728,000) $(11,978,000)
------------- ------------

Pro forma net income (loss) per share:
Loss before extraordinary item........ $(.25) $(1.20)
Extraordinary item.................... (1.71) -
----- ------
Net loss.............................. $(1.96) $(1.20)
====== ======

<TABLE>

A summary of the Company's stock option activity and related information for
the years ended December 31 follows:

<CAPTION> 1996 1995 1994
-------------------------------- -------------------------------- --------------------------------
Weighted Average Weighted Average Weighted Average
Number of Shares Exercise Price Number of Shares Exercise Price Number of Shares Exercice Price
<S> <C> <C> <C> <C> <C> <C>
Shares under
option at
beginning of
year........... 822,500 $10.53 600,000 $ 7.00 - $ -
Granted........ 105,000 24.26 822,500 10.09 600,000 7.00
Exercised...... (150,000) 7.00 - - - -
Canceled or
lapsed......... - - (600,000) 7.00 - -
-------- ------ ------- ------ ------- ------

Shares under
option at end
of year........ 777,500 $14.52 822,500 $10.09 600,000 $ 7.00
======= ======= =======
Exercisable
at end
of year........ 143,125 $10.13 150,000 $ 7.00 - -

Weighted-average
fair value
of options
granted during
the year........ $13.08 $ 5.44 -

</TABLE>
Exercise prices for options outstanding as of December 31, 1996 ranged from
$10.00 to $29.875. The weighted average remaining contractual life of
those options is 8.4 years.

11. CONTINGENCIES AND COMMITMENTS

The Company and its subsidiaries are involved in a number of actions and
are contesting the allegations of the complaints in each pending action and
believe, based on current knowledge, that the outcome of all such actions
will not have a material adverse effect on the Company's consolidated
financial position or results of operations.

The Company is obligated under various leases, some of which contain renewal
options and provide for cost escalation payments. At December 31, 1996,
future minimum rental payments under such leases are as follows:

Operating Capital
Leases Leases
---------- -------

1997.............................. $ 3,360,000 $ 1,234,000
1998.............................. 2,793,000 1,271,000
1999.............................. 2,296,000 1,380,000
2000.............................. 1,544,000 1,380,000
2001.............................. 719,000 1,380,000
2002 and later.................... 338,000 1,955,000
----------- -----------

Total minimum lease payments...... $11,050,000 8,600,000
===========
Less amount representing interest. (1,930,000)
-----------
Present value of minimum lease
payments(includes current portion
of $725,000)...................... $ 6,670,000
===========

Rent expense was $5,264,000, $4,440,000 and $2,711,000 in 1996, 1995 and
1994, respectively.

Certain of the Company's affiliation agreements, which typically last two
to five years, provide for compensation to affiliates.

The Company has employment agreements with certain officers pursuant to
which the Company has commitments for compensation aggregating $2,313,000
and $277,000 for 1997 and 1998, respectively. These agreements provide for
additional compensation based upon the achievement of certain performance
targets.

The Company has contracted for certain audience measurement services in the
U.S. and Puerto Rico. The Company is committed to pay $7,908,000,
$7,708,000, $7,625,000, $7,308,000, and $230,000 in 1997, 1998, 1999, 2000
and 2001, respectively.

The Company has certain programming and news production contracts in which
the Company is committed to pay $12,529,000, $5,197,000, $5,092,000 and
$5,214,000 in 1997, 1998, 1999 and 2000, respectively.

12. TRANSACTIONS WITH AFFILIATES

The Company paid approximately $1,350,000, $1,225,000 and $1,125,000 in 1996,
1995 and 1994, respectively, to a broadcast television station affiliate, in
which the President and Chief Executive Officer of the Company has a
financial interest.

In February 1996 the Company completed the offering of its New Senior Notes
in which Alex. Brown & Sons Incorporated was a co-manager and received an
underwriting fee. A director of the Company is a Managing Director of
Alex. Brown & Sons Incorporated.

Management believes that the transactions described above were on terms no
less favorable to the Company than could be obtained from unaffiliated
parties.

13. FINANCIAL INSTRUMENTS

Pursuant to the Financial Accounting Standard Board Statement No. 107,
"Disclosures about Fair Values of Financial Instruments," the estimated fair
values of the Company's financial instruments are summarized as follows:

December 31, 1996 December 31, 1995
------------------------- ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------------------- ------------------------
Cash and cash equivalents.$ 12,587,000 $ 12,587,000 $ 3,199,000 $ 3,199,000
Accounts receivable....... 54,441,000 54,441,000 45,801,000 45,801,000
Long-term debt:.........
New Senior Notes........ 179,521,000 190,080,000 - -
10.25% Notes............ 159,000 183,000 102,035,000 118,047,000
Credit facility......... 15,000 15,000 5,997,000 5,997,000

The carrying amount reported in the consolidated balance sheet for cash and
cash equivalents approximates fair value because of the short-term maturity
of these financial instruments. The revolving credit facility approximates
fair value because it is a variable rate instrument. Estimated fair value
for the 10.5% Notes is based upon market prices at December 31, 1996.
Estimated fair value for the 10.25% Notes is based upon the face amount of
such Notes.

14. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

(in thousands, except per share data)

1996 Quarter
-------------------------------------------
First Second Third Fourth(a) Year
------- ------- ------- ------- ---------

Net revenue... $ 38,267 $54,311 $51,002 $59,133 $ 202,713
======== ======= ======= ======= =========
Operating income
(loss)........ $ (3,246) $ 8,474 $ 8,099 $15,965 $ 29,292
Income(loss) ======== ======= ======= ======= =========
before
extraordinary
item........ $ (9,691) $(2,190) $ 1,428 $ 9,274 $ (1,179)
======== ======= ======= ======= ========
Net income
(loss)........ $(26,934) $(2,190) $ 1,428 $ 9,274 $(18,422)
======== ======= ======= ======= ========
Net income
(loss)per share
(b)........... $ (2.69) $ (.22) $ .13 $ .83 $ (1.83)
======== ======= ======= ======= ========
Common stock
price range(c):
High.. ...... $ 19.00 $ 25.625 $35.375 $ 34.50
Low.......... $ 13.75 $ 17.00 $ 20.50 $ 26.375

1995 Quarter
---------------------------------------
First Second Third Fourth Year
----- ------ ------- ------- --------

Net revenue... $ 34,895 $43,540 $41,413 $49,300 $169,148
======= ======= ======= ======= ========
Operating income
(loss)........ $( 5,189) $ 3,505 $ 3,475 $12,588 $ 14,379
======== ======= ======= ======= ========
Net income
(loss)....... $(11,124) $(2,444) $(2,540) $ 6,020 $(10,088)
======== ======= ======= ======= ========
Net income
(loss)
per share(b).. $ (1.11) $ (.24) $ (.25) $ .55 $ (1.01)
======== ======= ======= ======= =======
Common stock
price range(c):
High......... $ 9.625 $15.875 $ 16.75 $ 17.75
Low.......... $ 7.375 $ 8.50 $ 13.75 $ 13.75

[FN]
(a) Includes the impact of a significant additional provision to the
allowance for doubtful accounts and adjustments to certain expense
accruals. The net impact of these was a reduction in earnings of
$1.0 million.

(b) Weighted average shares outstanding for the third and fourth quarters
of 1996 and the fourth quarter of 1995 is adjusted for the incremental
shares attributed to outstanding options and warrants to purchase common
stock.

(c) The Company's Series A common stock trades on the Nasdaq National
Market tier of The Nasdaq Stock Market under the symbol TLMD. The Company's
warrants trade on the Nasdaq SmallCap Market tier of The Nasdaq Stock Market
under the symbol TLMDW.

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of Telemundo Group, Inc.:

We have audited the accompanying consolidated balance sheets of Telemundo
Group, Inc. ("the Company") and its subsidiaries as of December 31, 1996
and 1995 and the related consolidated statements of operations, changes
in common stockholders' equity (deficiency) and of cash flows for each
of the two years in the period ended December 31, 1996 (Successor
Company operations) and for the year ended December 31, 1994
(Predecessor Company operations). Our audit also includes the
consolidated financial statement schedule listed in item 14. 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
did not audit the financial statements of TeleNoticias del Mundo, L.P.
("TeleNoticias"), the Company's investment in which is accounted for
by use of the equity method for 1995 and 1994. The Company's
investment in TeleNoticias of $897,000 at December 31, 1995 and net
loss of $6,355,000 and $1,314,000 from its investment in TeleNoticias
for the year ended December 31, 1995 and 1994, respectively, are
included in the accompanying consolidated financial statements. The
financial statements of TeleNoticias for 1995 and 1994 were audited
by other auditors whose report (which as to 1995 contains substantial
doubt as to TeleNoticias'ability to continue as a going concern, the
effect of which, in our opinion, is not material in relation to the
consolidated financial statements) has been furnished to us, and in
our opinion insofar as it relates to the amount included for
TeleNoticias, is based solely on the report of such other auditors.

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 statment presentation. We believe that our
audits and the report of the other auditors provide a reasonable
basis for our opinion.

As discussed in Notes 1 and 9 to the consolidated financial
statements, on July 20, 1994, the Bankruptcy Court entered an
order confirming the plan of reorganization which became effective
after the close of business on December 30, 1994. Accordingly,
the accompanying consolidated financial statements have been
prepared in conformity with AICPA Statement of Position 90-7,
Financial Reporting for Entities in Reorganization Under the
Bankruptcy Code, for the Successor Company as a new entity with
assets, liabilities, and a capital structure having carrying
values not comparable with prior periods as described in Notes 1
and 9.

In our opinion, based on our audits and the report of the other
auditor, such consolidated financial statements present fairly,
in all material respects, the financial position of the Company
as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the two years in the
period ended December 31, 1996 (Successor Company operations)
and for the year ended December 31, 1994 (Predecessor Company
operations) in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated
financial statement taken as a whole, presents fairly, in all
material respects, the information set forth therein.

/s/ Deloitte & Touche, LLP
Miami, Florida
March 31, 1997

Telemundo Executive Officers and Directors
-----------------------------------------------

Roland A. Hernandez Leon D. Black
President and Chairman of the Board
Chief Executive Officer, Director Apollo Management, L.P.

Jose C. Cancela Guillermo Bron
Executive Vice President Director
Bastion Capital Fund, L.P.

Stephen J. Levin Alan Kolod
Executive Vice President Director
Moses & Singer

Donald J. Tringali Barry W. Ridings
Executive Vice President Director
Alex. Brown & Sons Incorporated

Peter J. Housman II Bruce H. Spector
Chief Financial Officer and Treasurer Director
Apollo Advisors, L.P.

Stuart Livingston Daniel D. Villanueva
Senior Vice President, Director
Operations and Business Affairs Bastion Capital Fund, L.P.

Osvaldo F. Torres Edward M. Yorke
Associate General Counsel and Secretary Director
Apollo Management, L.P.

David E. Yurkerwich
Director
Peterson Consulting LLC

Telemundo Investor Information
------------------------------

FORM 10-K

A copy of the Company's 1996 Annual Report on Form 10-K filed with the
Securities and Exchange Commission will be furnished free of charge (except
for exhibits) to any security holder upon written request to:

Vincent L. Sadusky
Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
or by calling (305) 889-7068

Stock Transfer Agent and Warrant Agent Independent Auditors

First Union National Bank of North Deloitte & Touche LLP
Carolina Miami, Florida
Charlotte, North Carolina

10.25% Senior Notes Trustee 10.5% Senior Notes Trustee

Bankers Trust Company Bank of Montreal Trust Company
New York, New York New York, New York

As of March 26, 1997 there were 223 holders of record of the Company's
Series A common stock and 14 holders of record of the Company's Series B
common stock (which amounts do not include the number of stockholders whose
shares are held of record by brokerage houses, but include each brokerage
house as one stockholder). The Company estimates there are in excess of 500
beneficial shareholders.

The Company has not paid cash dividends on any of its common stock and has
no present intention of doing so. Certain loan provisions prohibit or
restrict the amount of dividends that the Company may pay.

The Company's Series A common stock trades on The Nasdaq National Market
tier of the Nasdaq Stock Market under the symbol TLMD. The Company's
warrants trade on the Nasdaq SmallCap Market tier of The Nasdaq Stock Market
under the symbol TLMDW.

3834

EXHIBIT 21.1
------------

Jurisdiction of
Subsidiary Doing Business As Incorporation
- ---------- ---------------- -------------

Estrella Communications, Inc. KVEA/Channel 52 Delaware
Estrella License Corporation Delaware
New Jersey Television Broadcasting
Corporation New York
SACC Acquisition Corporation Delaware
SAT Corporation Delaware
Spanish American Communications Corp. Delaware
Telemundo Network, Inc. Delaware
Telemundo News Network, Inc. Delaware
Telemundo of Austin, Inc. K11SF/Channel 11 Delaware
Telemundo of Chicago, Inc. Delaware
Telemundo of Colorado Springs, Inc. K49CJ/Channel 49 Delaware
Telemundo of Florida License Corporation Delaware
Telemundo of Florida, Inc. WSCV/Channel 51 Delaware
Telemundo of Galveston-Houston License
Corporation Delaware
Telemundo of Galveston-Houston, Inc. KTMD/Channel 48 Delaware
Telemundo of Mexico, Inc. Delaware
Telemundo of Northern California License
Corporation Delaware
Telemundo of Northern California, Inc. KSTS/Channel 48 California
Telemundo of Puerto Rico License
Corporation Delaware
Telemundo of Puerto Rico, Inc. WKAQ/Channel 2 Puerto Rico
Telemundo of San Antonio License
Corporation Delaware
Telemundo of San Antonio, Inc. KVDA/Channel 60 Texas
Telemundo of Santa Fe, Inc. K52BS/Channel 52 Delaware
Telemundo Studios Mexico, S.A. de C.V. Mexico
Telenoticias del Mundo, Inc. Delaware
Tu Mundo Music, Inc. Delaware
Video 44 Acquisition Corporation, Inc. Illinois
WNJU License Corporation Delaware
WNJU-TV Broadcasting Corporation WNJU/Channel 47 New Jersey

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 12,587
<SECURITIES> 0
<RECEIVABLES> 57,767
0<ALLOWANCES> 3,326
<INVENTORY> 0
<CURRENT-ASSETS> 88,358
<PP&E> 83,590
<DEPRECIATION> 19,058
<TOTAL-ASSETS> 297,760
<CURRENT-LIABILITIES> 43,589
<BONDS> 179,680
0
0
<COMMON> 102
<OTHER-SE> 42,791
<TOTAL-LIABILITY-AND-EQUITY> 297,760
<SALES> 202,713
<TOTAL-REVENUES> 202,713
<CGS> 0
<TOTAL-COSTS> 160,110
<OTHER-EXPENSES> 5,547
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,920
<INCOME-PRETAX> 4,825
<INCOME-TAX> 3,879
<INCOME-CONTINUING> (1,179)
<DISCONTINUED> 0
<EXTRAORDINARY> (17,243)
<CHANGES> 0
<NET-INCOME> (18,422)
<EPS-PRIMARY> (1.83)
<EPS-DILUTED> (1.83)

</TABLE>