KAGAN MEDIA PARTNERS L P, 10-K, 1996-03-29

KAGAN MEDIA PARTNERS L P
10-K, 1996-03-29

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<PAGE> 1
FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1995

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to
------------------- ----------------------------

Commission file number 0-17507
---------------------------------------------------------

Kagan Media Partners, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 22-2931567
----------------------- ----------------
(State of organization) (I.R.S. Employer
Identification No.)

126 Clock Tower Place
Carmel, California 93923
--------------------- ----------
(Address of principal (Zip Code)
executive offices)

Registrant's telephone number, including area code (408) 624-1536

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

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

Units of Limited Partnership Interest
-------------------------------------
(Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the 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. / /

State the aggregate market value of the voting stock held by
non-affiliates of the Registrant: Not applicable.
<PAGE> 2
Kagan Media Partners, L.P.
Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 1995

Table of Contents
<TABLE>
<CAPTION>
Page
----
Part I
<S> <C> <C>
Item 1 Business..................................................... 1
Item 2 Properties................................................... 5
Item 3 Legal Proceedings............................................ 5
Item 4 Submission of Matters to a Vote
of Security Holders........................................ 6

Part II

Item 5 Market for Registrant's Common Equity
and Related Stockholder Matters............................ 7
Item 6 Selected Financial Data...................................... 8
Item 7 Management's Discussion and
Analysis of Financial Condition
and Results of Operations.................................. 9
Item 8 Financial Statements and
Supplementary Data......................................... F-1
Item 9 Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure....................................... 16

Part III

Item 10 Directors and Executive Officers
of the Registrant.......................................... 16
Item 11 Executive Compensation....................................... 21
Item 12 Security Ownership of Certain
Beneficial Owners and Management........................... 21
Item 13 Certain Relationships and
Related Transactions....................................... 22

Part IV

Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K.................................... 24
</TABLE>
<PAGE> 3
PART I

Item 1. Business

General

Kagan Media Partners, L.P. (the "Partnership" or the "Registrant") is a
Delaware limited partnership formed on November 15, 1988. Kagan Media Capital
Inc., a Delaware corporation which is controlled by Mr. Paul Kagan, is the
principal Investment Adviser to, and is the Managing General Partner of, the
Partnership. Mezzanine Capital Corporation, a Delaware corporation which is a
wholly-owned subsidiary of Paine Webber Group Inc., is the Administrative
General Partner of the Partnership. The Independent General Partners are
Rochelle B. King, Scott N. Ledbetter and Rod Warner. (The Managing General
Partner, the Administrative General Partner and the Independent General
Partners are collectively referred to herein as the "General Partners.")

The Managing General Partner, subject to the supervision of the Kagan
Executive Committee and the Independent General Partners, is solely responsible
for the identification and negotiation of all Partnership investments. In
addition, the Managing General Partner has ongoing responsibility for the
day-to-day operation and management of the Partnership's investments. The
Kagan Executive Committee, which is composed of one representative of each of
the Managing General Partner and the Administrative General Partner, must
approve certain Partnership decisions as described in the Partnership
Agreement.

The Administrative General Partner has overall responsibility for the
discharge of all necessary Partnership administrative functions and assists the
Managing General Partner in structuring investments and loans of the
Partnership.

The Partnership has elected to operate as a business development company
under the Investment Company Act of 1940. The investment objectives of the
Partnership are to provide current income and capital appreciation by investing
in and offering significant managerial assistance to existing cable television
systems and radio and broadcast television stations ("Media Properties"). The
Partnership intended to achieve its objectives primarily by acquiring
subordinated debt investments with a high current coupon and an equity
participation in connection with the financing or acquisition of a Media
Property by an unaffiliated Media Property operator. In 1995 and 1994, the
Partnership received proceeds from the sale and prepayment of various
investments (discussed more fully below) and distributed a substantial portion
of the related proceeds to the partners. The Partnership will not make any
additional investments.

While the Partnership must be terminated no later than July 21, 2001
(subject to the approval of a majority of the Limited Partners' interests, if
such approval is required under the Investment Company Act of 1940), it was
originally anticipated that the Partnership would be liquidated in 1998 or
1999. In December 1995, the Partnership liquidated its investments in
Vista/Narragansett Cable, L.P. and Multimedia, Inc. The amounts received
composed substantially all of the distribution declared at December 31, 1995,
which was paid in February 1996. Additionally, Tele-Media Company of Mid
America, L.P. entered into an agreement for

1
<PAGE> 4
the sale of its assets to a third party, which if consummated, would accelerate
the liquidation of the Partnership's interest. (See discussion below and Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations").

On February 27, 1989, the Partnership began a public offering of its units
of limited partnership interest ("Units"). The Partnership held four closings
for the admission of Limited Partners. Pursuant to these closings, the
following Units were sold by the Partnership and the following gross offering
proceeds and net offering proceeds (equal to gross offering proceeds less
selling commissions, non-accountable marketing fees and expense reimbursements
and other offering and organizational expenses) were received by the
Partnership:

<TABLE>
<CAPTION>
Gross Offering
Date Number of Units Price Per Unit Proceeds Net Offering Proceeds*
- ---------------- --------------- -------------- -------------- ----------------------
<S> <C> <C> <C> <C>
July 21, 1989 803,601 $20.00 $16,072,020 $13,661,217
December 6, 1989 123,178 20.00 2,463,560 2,094,026
January 25, 1990 126,604 20.00 2,532,080 2,152,268
March 15, 1990 335,090 20.00 6,701,800 5,771,380
--------- ----------- -----------
1,388,473 $27,769,460 $23,678,891
========= =========== ===========
</TABLE>

* Prior to deduction of financial advisory fee which is equal to 2% of
gross offering proceeds.

The Managing General Partner and the Administrative General Partner (the
"Operating General Partners") initially contributed $700 and $300,
respectively, for their general partner interests in the Partnership. The
Operating General Partners also contributed an additional $758,234 to fund the
amount by which certain offering and organization expenses exceeded 4% of the
aggregate capital contributions of the Limited Partners.

Investments

As of December 31, 1995, the Partnership held one participating debt
investment in a managed company, with an amortized cost of approximately $6.0
million (valued at approximately $3.4 million), two high-yield debt investments
in non-managed companies with an aggregate amortized cost of approximately $1.9
million (valued at approximately $1.9 million) and equity investments in two
non-managed companies with an aggregate amortized cost of approximately $0.2
million (valued at approximately $0.2 million) as set forth below.

2
<PAGE> 5
Participating Debt Investment

The Partnership holds a senior-participation instrument from Tele-Media
Company of Mid-America, L.P. ("TM-MA") that is in the form of a participating
debt investment and consists of $6 million in principal amount of senior
subordinated debt of TM-MA due September 30, 2001. The debt, which is subject
to certain prepayment provisions, bears current interest at a rate of 14% and
contingent interest to be computed under a specified formula.

As of year-end 1993, TM-MA was in default under its senior debt
instruments. As a result of this default, the senior lenders to TM-MA blocked
payment to the Partnership of the interest due on the Partnership's
participating debt investment at December 31, 1994. Consequently, the
Partnership stopped accruing interest on the notes, effective October 1, 1993.
$210,000 of accrued interest receivable was reflected on the Partnership's
Statement of Assets and Liabilities at December 31, 1994.

In the fourth quarter of 1995, negotiations for the sale of the assets of
TM-MA to an unaffiliated joint venture were completed in principle (TM-MA Sale
Agreement). Under the terms of the TM-MA Sale Agreement, the Partnership would
be entitled to receive approximately $3,400,000 for its senior participation
instrument, which is significantly less than the principal amount of such
instrument. As of February 29, 1996, the TM-MA Sale Agreement was amended.
Pursuant to this amendment, the closing under the agreement may occur as late as
September 30, 1996. This amendment requires the consent of numerous creditors
including the Partnership. Even if the Partnership consents to the amendment,
it is not clear whether all other necessary creditor consents will be obtained.
If the necessary creditor consents are obtained, the TM-MA Sale Agreement would
still be subject to numerous conditions. In addition, Phoenix Leasing
Corporation, a subordinated lender that owns a subordinated note similar to the
Partnership's senior participation instrument, has commenced suit against TM-MA
to collect the obligations owned by TM-MA to Phoenix Leasing Corporation. It is
impossible to predict the outcome of any legal proceedings and its impact on
this or any proposed sale. In light of the foregoing, there can be no assurance
that the transaction contemplated by the TM-MA Sale Agreement can be consummated
on schedule or at all. In October 1995, certain equity interests filed a lawsuit
opposing the TM-MA Sale Agreement and are seeking, among other things, to have a
receiver appointed to administer TM-MA's assets. TM-MA has advised the
Partnership that it believes that this lawsuit is without merit. TM-MA is
attempting to negotiate a resolution with the equity interests, and, absent a
successful resolution, TM-MA has advised the Partnership that it is prepared to
make a prepackaged filing under Chapter 11 of the U.S. Bankruptcy Code to
facilitate the timely consummation of the TM-MA Sale Agreement. During 1995, the
Partnership recorded unrealized depreciation of its investment in TM-MA of
$641,754, which represented the difference between the sum of the carrying value
of the investment ($4,045,000), adjusted for amortization and the estimated
value of the Partnership's interests based upon the TM-MA Sale Agreement. In
addition, the Partnership realized a loss of $210,000 to recognize the write-off
of interest receivable previously accrued.

3
<PAGE> 6
High-Yield Debt Investments in Non-Managed Companies

High-yield debt investments held by the Partnership in non-managed
companies as of December 31, 1995 were as follows:

<TABLE>
<CAPTION>
Description of Investment Amortized Cost* Value
- ----------------------------------------------------- --------------- ----------
<S> <C> <C>
$1,000,000 face of Comcast Corporation, 10.25% Senior
Subordinated Debentures due 10/15/01 $1,003,585 $1,080,000

$790,000 face of Century Communications Corporation,
11.875% Senior Subordinated Debentures due 10/15/03 894,255 847,275
---------- ----------
Total $1,897,840 $1,927,275
========== ==========
</TABLE>

- ---------------
* Cost shown includes applicable amount of investment analysis fees paid to
the Investment Adviser.

Equity Investments in Non-Managed Companies

Equity investments held by the Partnership in non-managed companies as of
December 31, 1995 were as follows:

<TABLE>
<CAPTION>
Description of Investment Cost Value
- ----------------------------------------------------- --------------- ----------
<S> <C> <C>
8,000 shares of Tele-Communications, Inc. Class A
Common Stock $ 145,733 $ 159,000

2,000 shares of Tele-Communications, Inc. New Liberty
Media Group Series A Common Stock 45,017 53,500
---------- ----------
Total $ 190,750 $ 212,500
========== ==========
</TABLE>

Competition

The Partnership competes with other entities with similar investment
objectives. Competitors include other business development companies,
investment partnerships and corporations, small business investment companies
and banking organizations investing directly or through affiliates and
individuals. Most of these competitors may have more experience with hybrid
debt/equity investments similar to senior-participation instruments than the
Managing General Partner and many have more resources than the Partnership.
However, because the Partnership has liquidated a substantial portion of its
portfolio and has entered into an arrangement (the TM-MA Sale Agreement) to
liquidate a significant portion of the remaining portfolio, competition should
not have a material effect on the Partnership.

Employees

The Partnership has no employees. As discussed above, the Operating
General Partners and their affiliates manage the Partnership's investments and
perform services on behalf of the

4
<PAGE> 7
Partnership. The Operating General Partners are entitled to certain fees and
reimbursements of certain out-of-pocket expenses incurred in connection with
the performance of these management services. See Item 10 of this Report
"Directors and Executive Officers of the Registrant" and Item 13 of this
Report, "Certain Relationships and Related Transactions," which are
incorporated herein by reference.

Item 2. Properties

The Partnership does not own or lease any physical properties. The
Partnership, however, uses the offices of the Managing General Partner located
at 126 Clock Tower Place, Carmel, California 93923.

Item 3. Legal Proceedings

In November 1994, a series of purported class actions (the "New York
Limited Partnership Actions") were filed in the United States District Court
for the Southern District of New York concerning PaineWebber Incorporated sale
and sponsorship of various limited partnership investments, including those
offered by the Partnership. The lawsuits were brought against PaineWebber
Incorporated and Paine Webber Group, Inc. (together, "PaineWebber"), among
others, by allegedly dissatisfied partnership investors. In March 1995, after
the actions were consolidated under the title In re: PaineWebber Limited
Partnerships Litigation, the plaintiffs amended their complaint to assert claims
against a variety of other defendants, including Mezzanine Capital Corp., an
affiliate of PaineWebber and the Administrative General Partner in the
Partnership ("Administrative General Partner").

The amended complaint in the New York Limited Partnership Actions alleged
that, in connection with the sale of interests in the Partnership, PaineWebber
and the Administrative General Partners (1) failed to provide adequate
disclosure of the risks involved with each partnership; (2) made false and
misleading representations about the safety of the investments and the
partnership's anticipated performance; and (3) marketed the partnerships to
investors for whom such investments were not suitable. The plaintiffs, also
alleged that following the sale of the partnership investments PaineWebber and
the Administrative General Partner misrepresented financial information about
the partnership's value and performance. The amended complaint alleged that
PaineWebber and the Administrative General Partner violated the Racketeer
Influenced and Corrupt Organizations Act ("RICO") and the federal securities
laws. The plaintiffs sought unspecified damages, including reimbursement for
all sums invested by them in the partnerships, as well as disgorgement of all
fees and other income derived by PaineWebber from the limited partnerships. In
addition, the plaintiffs also sought treble damages under RICO.

On May 30, 1995 the US District Court certified class action treatments of
the plaintiffs' claims in the class action entitled, In re: PaineWebber
Limited Partnerships Litigation.

5
<PAGE> 8
District of New York to be used to resolve the litigation in accordance with a
definitive settlement agreement and plan the allocation which the parties
expect to submit to the court for its consideration and approval within the
next several months. Until a definitive settlement and plan of allocation is
approved by the court, there can be no assurance what, if any, payment or
non-monetary benefits will be made available to unitholders in the Partnership.

In February 1996, approximately 150 plaintiffs filed an action entitled
Abbate v. PaineWebber Inc. in Sacramento, California Superior Court against
PaineWebber Incorporated and various affiliated entities concerning the
plaintiff's purchases of various limited partnership interests. The complaint
alleges, among other things, that PaineWebber and its related entities
committed fraud and misrepresentation and breached fiduciary duties allegedly
owed to the plaintiffs by selling or promoting limited partnership investments
that were unsuitable for the plaintiffs and by overstating the benefits,
understating the risks and failing to state material facts concerning the
investments. The complaint seeks compensatory damages of $15 million plus
punitive damages.

Under certain limited circumstances, pursuant to the Partnership Agreement
and other contractual obligations, PaineWebber and its affiliates, including
the Administrative General Partner, and its affiliates could be entitled to
indemnification from the Partnership for expenses and liabilities in
connection with these cases. The General Partners are unable to determine the
effect, if any of these actions on the Partnership's financial statements,
taken as a whole.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the Limited Partners of the
Partnership, through the solicitation of proxies or otherwise, during the
fourth quarter of the fiscal year ended December 31, 1995.

6
<PAGE> 9
PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

There is no established trading market for the purchase and sale of the
Units and certain transfer restrictions have been implemented to assure that no
such organized trading market will develop.

As of March 1, 1996, the number of Limited Partners was approximately
2,500.

The Partnership declared the following cash distributions to its partners
during 1995 and 1994:

<TABLE>
<CAPTION>
Quarter Amount of
During Which Distribution
Distributed Cash Total Amount of Per Limited
Was Generated Distribution (1) Partner Unit Record Date Payment Date
- ----------------- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
4th Quarter 1995 $4,908,743 $3.50 January 31, 1996 February 15, 1996
1st Quarter 1994 420,749 .30 April 30, 1994 May 15, 1994
2nd Quarter 1994 6,422,488 (2) July 31, 1994 August 15, 1994
3rd Quarter 1994 6,847,202 (3) October 31, 1994 November 13, 1994
4th Quarter 1994 957,256 (4) (5) January 31, 1995 February 15, 1995
</TABLE>

(1) Includes distributions to the Operating General Partners in an amount
equal to 1.0% of each total distribution amount.

(2) Distributions to Limited Partners ranged, depending upon date of
admission to the Partnership, from $4.26 per unit to $4.77 per unit based
upon investors' preferred return account.

(3) Distribution to Limited Partners ranged, depending upon date of admission
to the Partnership from $4.71 per unit to $4.95 per unit based upon
investors' preferred return account.

(4) Distribution to the Limited Partners ranged, depending upon date of
admission to the Partnership from $.65 per unit to $.70 per unit depending
upon date of admission to the Partnership.

(5) The distribution in respect of the fourth quarter of 1994 was made from
cash generated in prior quarters.

7
<PAGE> 10
Item 6. Selected Financial Data

The following selected financial data of the Partnership has been derived
from the financial statements for the indicated periods. The information set
forth below should be read in conjunction with the Partnership's financial
statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in Items 8 and 7,
respectively, of this Report, which are incorporated herein by reference.

<TABLE>
<CAPTION>
As of December 31,
or Year Ended December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(in thousands, except per unit amounts)
<S> <C> <C> <C> <C> <C>
Total Investment Income $ 464 $1,918 $3,196 $2,217 $2,694
Net Investment Income 69 1,434 3,452(3) 1,450 1,925

Net Realized and Unrealized
Gain (Loss) on Investments 387 (72) (3,234) 1,110 1,426
Cash Distributions Declared to Partners 4,909 14,648 2,244 1,963 1,926

Net Assets 6,776 11,229 24,515 26,541 25,944
Total Assets 11,771 12,273 25,150 27,821 26,906
Value of Investments 5,540 9,641 23,757 26,595 25,271

Per Unit of Limited Partnership Interest:
Net Investment Income .05 1.02 2.46 1.03 1.37
Net Realized and Unrealized
Gain (Loss) on Investments .27 (.05) (2.30) .79 1.02
Cash Distributions Declared
to Partners (1) (2) 3.50 10.44(4) 1.60 1.40 1.37
Net Asset Value $4.46 $7.64 $17.11 $18.55 $18.13
</TABLE>

(1) Calculated using the weighted average number of Units outstanding during
the respective periods. Actual amounts vary depending upon when
specific Units were issued.

(2) Distribution amounts are reflected for the period during which cash for
the distribution was generated. A portion of the actual cash
distributions are paid subsequent to such period.

(3) The Partnership reversed all previously accrued subordinated management
fees and related interest during 1993. As a result, the Partnership
reported "negative" total expenses for 1993. (See Note 5 to the Financial
Statements, included elsewhere in this Report, for further discussion).

(4) Such amount represents average per Unit of cash distribution for 1994.
Cash distribution for the final three quarters of 1994 was made in
accordance with investors preferred return accounts and, thus, varied
based upon date of admission to the Partnership. For the year,
distributions declared ranged from $9.92 per unit to $10.72 per unit
depending upon date of admission to the Partnership.

8
<PAGE> 11
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Liquidity and Capital Resources

At December 31, 1995, the Partnership held one participating debt
investment in a managed company with an amortized cost of approximately $6.0
million, two high-yield debt investments in non-managed companies with an
aggregate amortized cost of approximately $1.9 million, and equity investments
in two non-managed companies with an amortized cost of approximately $0.2
million. Of these investments, only the high yield debt investments in
non-managed companies (Comcast Corporation and Century Communications
Corporation), which represent approximately 23% of the remaining investment
portfolio on an amortized cost basis (approximately 35% of the remaining
portfolio based upon the December 31, 1995 valuation), generate current
investment income. On an annualized basis, this income is less than the
Partnership's current level of operating costs. Thus, in 1994 the Partnership
established cash reserves from a portion of certain prepayment proceeds
received to fund working capital requirements. Further, until an investment is
repaid or sold, it is anticipated that the Partnership will not make any
additional cash distributions, except for the distributions accrued at December
31, 1995.

The Partnership will not make any additional investments other than
temporary investments of its working capital in short-term U.S. government
securities. At December 31, 1995, the Partnership's cash of $6,144,423 was
primarily invested in such government securities. This cash amount exceeds the
Partnership's cash balance at December 31, 1994 of $2,325,407, primarily as a
result of the two December 1995 liquidating transactions. The sale of the
assets of Vista/Narraganset, L.P. ("Vista") generated proceeds of $4,778,499
and the tendering of the Partnership's shares in Multimedia, Inc. as a result
of its merger with Gannett, Inc., generated proceeds of $113,125. The General
Partners believe that after providing for the distribution accrued at December
31, 1995 totaling $4,908,743, the working capital reserves are sufficient,
along with cash from operations currently being generated, to fund operating
expenses for the foreseeable future.

During 1995 and 1994, the Partnership declared and paid distributions in
the aggregate amounts of $4,908,743 and $14,647,695, respectively, except that
$957,256 of the 1994 distributions were paid to the partners during 1995 and
the entire 1995 declared distribution was paid to the partners in 1996.

Accrued interest receivable decreased $213,970 from $260,679 at December
31, 1994 to $46,709 at December 31, 1995, principally due to the write off
recognized during 1995 relating to $210,000 of accrued interest on the TM-MA
Notes. (See discussion below.)

9
<PAGE> 12
Consequently, the Partnership stopped accruing interest on the notes, effective
October 1, 1993. $210,000 of accrued interest receivable was reflected on the
Partnership's Statement of Assets and Liability at December 31, 1994.

In the fourth quarter of 1995, negotiations for the sale of the assets of
TM-MA to an unaffiliated joint venture were completed in principle (TM-MA Sale
Agreement). Under the terms of the TM-MA Sale Agreement, the Partnership would
be entitled to receive approximately $3,400,000 for its senior participation
instrument, which is significantly less than the principal amount of such
instrument. As of February 29, 1996, the TM-MA Sale Agreement was amended.
Pursuant to this amendment, the closing under the agreement may occur as late as
of September 30, 1996. This amendment requires the consent of numerous creditors
including the Partnership. Even if the Partnership consents the amendment, it is
not clear whether all other necessary creditor consents will be obtained. If the
necessary creditor consents are obtained, the TM-MA Sale Agreement would still
be subject to numerous conditions. There can be no assurance that the
transaction contemplated by the TM-MA Sale Agreement can be consummated on
schedule or at all. In October 1995, certain equity interests filed a lawsuit
opposing the TM-MA Sale Agreement and are seeking, among other things, to have a
receiver appointed to administer TM-MA's assets. TM-MA has advised the
Partnership that it believes that this lawsuit is without merit. TM-MA is
attempting to negotiate a resolution with the equity interests, and, absent a
successful resolution, TM-MA has advised the Partnership that it is prepared to
make a prepackaged filing under Chapter 11 of the U.S. Bankruptcy Code to
facilitate the timely consummation of the TM-MA Sale Agreement. In addition,
Phoenix Leasing Corporation, a subordinated lender that owns a subordinated note
similar to the Partnership's senior participation instrument, has commenced
suit against TM-MA to collect the obligations owned by TM-MA to Phoenix Leasing
Corporation. It is impossible to predict the outcome of any legal proceedings
and its impact on this or any proposed sale. During 1995, the Partnership
recorded unrealized depreciation of its investment in TM-MA of $641,754, which
represented the difference between the sum of the carrying value of the
investment ($4,045,000), adjusted for amortization and the estimated value of
the Partnership's interests based upon the TM-MA Sale Agreement. In addition,
the Partnership realized a loss of $210,000 to recognize the write-off of
interest receivable previously accrued.

In January 1990, the Partnership acquired $6,800,000, 15.5% Senior
Subordinated Notes (the "Notes") of Vista/Narragansett Cable, L.P.
("Vista/Narragansett") due January 8, 1995. Under the terms of the Notes,
interest at the rate of 12.75% per annum was payable currently with the balance
of interest (2.75% per annum) added to the principal balance of the Notes. On
May 1, 1991, Vista/Narragansett ceased making interest payments. An agreement
to restructure of Vista/Narragansett's capital structure was reached during 1992
and was executed in March 1993.

Under the restructuring, the Partnership agreed to defer interest accrued
but uncollected as of September 30, 1992 in the amount of $2,247,786 and agreed
to cease accruing interest on the Notes subsequent to September 30, 1992.

The Partnership restated the Notes in the form of a non-interest bearing
note in the principal amount of $9,047,786, which represented the original
principal plus the interest accrued through September 30, 1992. The Notes were
to be paid only out of proceeds of the sale of Vista/Narragansett's cable
systems. Any sale by Vista/Narragansett required the approval of the
Partnership.

On August 8, 1995 Vista/Narragansett entered into a purchase and sale
agreement with a third party for the sale of the assets of Vista/Narragansett.
On December 29, 1995, the sale of the assets of Vista/Narragansett was
consummated. The Partnership received proceeds of $4,778,499 as its share of
the distributed proceeds from the sale. In addition, the Partnership will
receive a portion of any amounts remaining in a $400,000 escrow account
established by

10
<PAGE> 13
Vista/Narragansett at closing to provide security to the buyer in respect of
Vista/Narragansett's compliance with its representation and warranties. This
escrow will not be terminated until December 1996. The Partnership has
released Vista/Narragansett from all of its financial obligations under the
Notes. The Notes, which had an amortized cost of $7,837,257, were valued at
$4,700,000 at September 30, 1995, and represented approximately 46% of the
investments held by the Partnership based upon the valuation at such date.

Inflation and Changing Prices

Inflation has had no material impact on the operations or financial
condition of the Partnership from inception through December 31, 1995 although
market and worldwide economic conditions and changes in federal regulations
have in the past affected the cable industry and thus the Partnership's
investment values. However, because the Partnership is no longer acquiring new
investments, it is anticipated that inflation and changing prices will not have
an impact on the Partnership.

Litigation

See Item 3, "Legal Proceedings," for a discussion of certain legal
actions.

11
<PAGE> 14
Results of Operations

Investment Income and Expenses

The Partnership's investment income consists primarily of interest income
earned from the various debt investments which are held by the Partnership as
well as the investment of working capital. Major expenses consist of
professional fees, the amortization of the deferred organization expenses and
the investment advisory and Independent General Partners' fees. Professional
fees consist primarily of custodial, legal and audit fees.

1995 Compared to 1994

The Partnership's net investment income was $68,818 for the year ended
December 31, 1995 as compared to $1,434,067 for the year ended December 31,
1994. The principal reason for the decrease in net investment income was the
decrease in interest income, which was $436,223 in 1995 as compared to
$1,917,789 in 1994, slightly offset by a decrease in total expenses.

The reasons for the decrease in interest income were (i) the 1994
prepayment of the Telemedia Broadcasting notes ($6 million, 20% notes) and
Cablevision notes ($7.2 million, 13% notes) in June and September,
respectively, which generated interest income for a portion of 1994; and (ii)
The non-accretion of interest on the Vista/Narragansett senior subordinated
notes due to the valuation of such notes pursuant to a purchase and sale
agreement which was consummated in December 1995. The accretion of interest
income was discontinued in June 1995.

Total expenses decreased by $88,317 or approximately 18% in 1995 as
compared to 1994. Investment advisory fees increased by $4,786 or 5% as
provided in the Partnership Agreement. Insurance expense decreased by $4,911
or 6% due to a decrease in premiums. General and administrative expenses
decreased by $20,733 or 27% due to a general decline in administrative activity
while professional fees increased by $23,493 or 38% due principally to expenses
incurred in connection with the Vista/Narragansett and TM-MA transactions.

12
<PAGE> 15
1994 Compared to 1993

The Partnership's net investment income was $1,434,067 for 1994 as
compared to net investment income of $3,451,085 for 1993. The principal
reasons for the decrease in net investment income are:

1) The repayment of the Tele-Media Broadcasting Notes in June 1994.
These notes earned investment income for nine months in 1993, as compared to
slightly more than five months in 1994. Additionally, as a result of the
prepayment of the Cablevision Notes in early September 1994, interest income
was earned for approximately eight months in 1994. The Cablevision investment
was outstanding for all of 1993.

2) The decision to place the TM-MA investment on non-accrual status,
effective October 1, 1993. The statements of operations for 1993 reflect
the recognition of interest through September 30, 1993 net of a provision for
uncollectable accounts of $210,000. See prior discussion of TM-MA.

3) The reversal of cumulative subordinated management fees in 1993 after
the determination that the possibility of the Partnership ever having the
obligation to make such payments was remote.

The above items were partially offset by the effect of the Vista
restructuring which was consummated on March 15, 1993. The Partnership did not
accrue any interest on the Vista investment during the time the restructuring
agreement was being negotiated (from April 1, 1991 to March 15, 1993).
Pursuant to the terms of the restructuring, the Partnership received a
non-interest bearing note in the principal amount of $9,047,786 on March 15,
1993. The Partnership, which had a basis in the note at March 15, 1993 of
$7,037,297, is recognizing the amortization of the discount as interest income
over the term of the note. Additionally, in accordance with the terms of the
restructuring, the Partnership received $50,000 in 1994 which was accounted for
as a reduction in the outstanding principal (See discussion below concerning
the unrealized depreciation in the value of this investment.)

Expenses for the 1994 year were consistent with the 1993 year, except that
in 1993, all previously accrued subordinated management fees and related
interest were reversed as discussed below. Amortization expense decreased in
1994 as compared to 1993 because the related organization costs were fully
amortized in the fourth quarter of 1994. There was an increase in professional
fees, which resulted primarily from the legal fees incurred in connection with
the proposed TM-MA restructuring and an increase in general and administrative
expenses. The investment advisory fee increased by 5% in 1994 as compared to
1993 as provided for in the Partnership Agreement.

Net Unrealized Depreciation on Investments

The Kagan Executive Committee values the Partnership's investments on a
quarterly basis utilizing a variety of methods. Securities that are publicly
traded, and for which market quotations are readily available, are valued based
on the highest bid price for such securities as of the last trading day of the
fiscal quarter.

13
<PAGE> 16
In accordance with portfolio valuation guidelines ("Guidelines") adopted
by the General Partners, investments for which market quotations are not
readily available are valued at cost (the "Cost Method") unless the Kagan
Executive Committee determines that significant events have occurred with
respect to such investments which necessitates the use of an alternate
valuation methodology. The Managing General Partner is responsible for
applying the Guidelines and performing the due diligence necessary to determine
whether such significant events have occurred and of presenting to the Kagan
Executive Committee its conclusion as to whether the use of the Cost Method
is appropriate with respect to any particular investment. The Kagan Executive
Committee then determines whether to continue to use the Cost Method for each
investment or whether to use an alternate valuation methodology. If the Kagan
Executive Committee determines that the use of the Cost Method is not
appropriate for a particular investment, then the Managing General Partner
shall propose an alternate valuation methodology and, based upon its analysis,
shall determine the market value of the investment. The Managing General
Partner shall present to the General Partners its conclusions as to the fair
market value for the investment in question and the General Partners shall then
determine the fair market value for that investment in good faith.

As of December 31, 1994, the Partnership had recorded net unrealized
depreciation of investments of $6,202,336. During 1995, the Partnership
recorded net additional unrealized depreciation of $468,003 and sold
investments that had $4,091,451 aggregate net unrealized depreciation
at December 31, 1994. At December 31, 1995, the Partnership had recorded
aggregate net unrealized depreciation of investments of $2,578,888.

The increase in net unrealized depreciation of investments during 1995 and
the cumulative net unrealized depreciation of investments as of December 31,
1995, consisted of the following components:

<TABLE>
<CAPTION>
Unrealized Appreciation
(Depreciation) Recorded
----------------------------------------
Investment During 1995 As of December 31, 1995
- ------------------------------------- ----------- -----------------------
<S> <C> <C>
Tele-Media Mid-America notes $(641,754)(1) $(2,630,073)
Comcast debentures 97,934 76,415
Century Communications debentures 37,317 (46,980)
Tele-Communications Inc. common stock 30,017 13,267
Tele-Communications Inc., New
Liberty Media Group, Series A common
stock 8,483 8,483
--------- -----------
$(468,003) $(2,578,888)
========= ===========
</TABLE>

(1) The significant decreases in value of the Tele-Media Mid-America
investment, for which market quotations are not readily available, reflect the
value inherent in the Partnership's position based on the third party offer
embodied in the TM-MA Agreement. (See above for a more detailed discussion of
this investment).

The Comcast, Century Communications, Tele-Communications Inc. and
Tele-Communications, New Liberty Media Group Series A investments were valued
based on market quotations which are readily available for these securities.
These changes in value are reflective of changes in the public markets for
cable related debt and equity during the year.

14
<PAGE> 17
Item 8. Financial Statements and Supplementary Data

KAGAN MEDIA PARTNERS, L.P.

List of Financial Statements

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants F-2

Schedule of Investments - December 31, 1995 and 1994 F-3

Statements of Assets and Liabilities -
December 31, 1995 and 1994 F-7

Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 F-8

Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F-9

Statements of Changes in Net Assets for the years
ended December 31, 1995, 1994 and 1993 F-10

Financial Highlights for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 F-11

Notes to Financial Statements F-12
</TABLE>

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted since
(1) the information required is disclosed in the financial statements and notes
thereto; (2) the schedules are not required under the related instructions; or
(3) the schedules are inapplicable.

F-1
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Kagan Media Partners, L.P.

We have audited the accompanying statements of assets and liabilities of
Kagan Media Partners, L.P., including the schedule of investments, as of
December 31, 1995 and 1994, and the related statements of operations, cash
flows and changes in net assets for the years ended December 31, 1995, 1994 and
1993 and the financial highlights for each of the five years in the period
ended December 31, 1995. These financial statements and financial highlights
are the responsibility of the Partnership's General Partners. Our
responsibility is to express an opinion on these financial statements and
selected per unit data and ratios based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our audit procedures also included confirmation of
investments and cash held by the custodian as of December 31, 1995, and 1994.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Kagan Media Partners, L.P. as of December 31, 1995 and 1994, the results of
its operations, its cash flows and changes in its net assets and the financial
highlights, for each of the respective periods stated in the first paragraph,
in conformity with generally accepted accounting principles.

As discussed in Note 14 to the Financial Statements, there is litigation
pending against, among others the Administrative General Partner and affiliates
of the Administrative General Partner. The ultimate outcome of this litigation
and its effects, if any, on the Partnership cannot presently be determined.

Coopers and Lybrand L. L.P.
New York, New York
February 15, 1996, except as
to Note 14 for which
the date is March 19, 1996

F-2
<PAGE> 19
KAGAN MEDIA PARTNERS, L.P.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1995

<TABLE>
<CAPTION>
Principal
Amount/ Amortized % of Total
Shares Investment Investment Date Cost Value Investments
- ---------- ------------------------- --------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PARTICIPATING DEBT INVESTMENTS
IN MANAGED COMPANY:

$6,000,000 Tele-Media Company
of Mid-America, L.P.,
14.0% Senior Subordinated
Notes due 9/30/01* October 1989 $6,030,073 $3,400,000 61.4%
---------- ---------- ----

TOTAL PARTICIPATING DEBT
INVESTMENTS IN MANAGED
COMPANY (50.2% of net assets) 6,030,073 3,400,000 61.4
---------- ---------- ----

HIGH-YIELD DEBT INVESTMENTS
IN NON-MANAGED COMPANIES:

$1,000,000 Comcast Corporation,
10.25% Senior
Subordinated Debentures
due 10/15/01 April 1992 1,003,585 1,080,000 19.5
---------- ---------- ----

$790,000 Century Communications
Corporation, 11.875%
Senior Subordinated
Debentures due 10/15/03 March 1993 894,255 847,275 15.3
---------- ---------- ----

TOTAL HIGH-YIELD DEBT
INVESTMENTS IN NON-MANAGED
COMPANIES (28.5% of net assets) 1,897,840 1,927,275 34.8%
---------- ---------- ----
</TABLE>

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

F-3
<PAGE> 20
KAGAN MEDIA PARTNERS, L.P.

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1995

8,000 sh. Tele-Communications, Inc.,
Class A Common Stock* August 1993 145,733 159,000 2.8

2,000 sh. Tele-Communications, Inc.,
New Liberty Media Group
Series A Common Stock* August 1995 45,017 53,500 1.0
---------- ---------- -----

TOTAL EQUITY INVESTMENTS
IN NON-MANAGED COMPANIES
(3.1% of net assets) 190,750 212,500 3.8
---------- ---------- -----

TOTAL INVESTMENTS (81.8%
of net assets) $8,118,663 $5,539,775 100.0%
========== ========== =====
</TABLE>

- ---------------
* Non-income producing security.

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

F-4
<PAGE> 21
KAGAN MEDIA PARTNERS, L.P.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1994

$6,000,000 Tele-Media Company of October 1989 $6,033,319 $4,045,000 42.0%
Mid-America, L.P., ---------- ---------- -----
14.0% Senior
Subordinated Notes
due 9/30/01 (1)

PARTICIPATING DEBT INVESTMENT IN MANAGED
COMPANY (36% of net assets) 6,033,319 4,045,000 42.0
---------- ---------- -----
HIGH-YIELD DEBT
INVESTMENT IN
MANAGED COMPANY
(NOTE 11):

$8,997,786 Vista/Narragansett January 1990 7,632,076 3,550,000 36.8
Cable, L.P., Zero ---------- ---------- -----
Coupon Senior
Subordinated Notes
due 12/31/97

HIGH-YIELD DEBT INVESTMENT IN MANAGED
COMPANY (31.6% of net assets) 7,632,076 3,550,000 36.8%
---------- ---------- -----
</TABLE>

- ---------------
(1) $210,000 of accrued interest remains outstanding and is included in
accrued interest receivable on the balance sheet as of December 31, 1994.
The accrual of interest on these notes was discontinued by the Partnership
effective October 1, 1993. While the notes also bear contingent and/or
participating interest to be computed under specific formulas, the
performance of the underlying assets and the restructuring in progress
make the realization of such additional interest remote.

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

F-5
<PAGE> 22
KAGAN MEDIA PARTNERS, L.P.

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1994

<TABLE>
<CAPTION>
Principal
Amount/ Amortized % of Total
Shares Investment Investment Date Cost Value Investments
- ---------- ------------------------- --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
HIGH-YIELD DEBT INVESTMENTS IN
NON-MANAGED COMPANIES:

$1,000,000 Comcast Corporation, April 1992 1,004,019 982,500 10.2%
10.25% Senior Subordinated
Debentures due 10/15/01

$ 790,000 Century Communications March 1993 902,935 818,638 8.5
Corporation, 11.875% Senior ----------- ---------- -----
Subordinated Debentures due
10/15/03

TOTAL HIGH-YIELD DEBT INVESTMENTS IN
NON-MANAGED COMPANIES (16% of net assets) 1,906,954 1,801,138 18.7
----------- ---------- -----

EQUITY INVESTMENTS IN NON-MANAGED
COMPANIES:

8,000 sh. Tele-Communications, Inc., August 1993 190,750 174,000 1.8
Class A
Common Stock*

2,500 sh. Multimedia, Inc., August 1993 80,625 71,250 0.7
Common Stock* ----------- ---------- -----

TOTAL EQUITY INVESTMENTS IN NON-MANAGED
COMPANIES(2.2% of net assets) 271,375 245,250 2.5
----------- ---------- -----

TOTAL INVESTMENTS (85.8% of net assets) $15,843,724 $9,641,388 100.0%
=========== ========== =====
</TABLE>

- ---------------
* Non-income producing security.

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

F-6
<PAGE> 23
KAGAN MEDIA PARTNERS, L.P.

STATEMENTS OF ASSETS AND LIABILITIES

DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
ASSETS: 1995 1994
----------- -----------
<S> <C> <C>
Investments (Notes 2, 7, 8, 9 and 10) -
Participating debt investments in managed
companies, at value (amortized cost -
$6,030,073 and $6,033,319 in 1995 and 1994,
respectively) $ 3,400,000 $ 4,045,000
High-yield debt investments in managed
companies, at value (amortized cost - $7,632,076
at December 31, 1994) -- 3,550,000
High-yield debt investments in non-managed
companies, at value (amortized cost - $1,897,840
and $1,906,954 in 1995 and 1994, respectively) 1,927,275 1,801,138
Equity investments in non-managed companies, at
value (cost - $190,750 and $271,375 in 1995 and
1994, respectively) 212,500 245,250
----------- -----------
Total investments 5,539,775 9,641,388
Cash and cash equivalents 6,144,423 2,325,407
Accrued interest receivable (Note 8) 46,709 260,679
Prepaid insurance 39,795 46,021
----------- -----------
Total assets $11,770,702 $12,273,495
=========== ===========
LIABILITIES:
Distributions payable to partners $ 4,908,743 $ 957,256
Accounts payable and accrued expenses 45,698 48,438
Investment advisory and analysis fees payable 25,126 23,930
Independent General Partners' fees payable 14,375 14,375
----------- -----------
Total liabilities 4,993,942 1,043,999
----------- -----------
Commitments and contingencies (Notes 5, 8 and 14)
NET ASSETS (Notes 3 and 12):
Operating General Partners 582,303 626,830
Limited Partners (equivalent to $4.46 and $7.64
per limited partnership unit, respectively,
based on 1,388,473 units outstanding at December
31, 1995 and 1994) 6,194,457 10,602,666
----------- -----------
Net assets 6,776,760 11,229,496
----------- -----------
Total liabilities and net assets $11,770,702 $12,273,495
=========== ===========
</TABLE>

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

F-7
<PAGE> 24
KAGAN MEDIA PARTNERS, L.P.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
INVESTMENT INCOME: 1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Interest $ 464,223 $ 1,917,789 $ 3,196,422
----------- ----------- -----------
Total investment income 464,223 1,917,789 3,196,422
----------- ----------- -----------
Expenses:
Investment advisory fees (Note 4) 100,507 95,721 91,163
Amortization of deferred organization expenses -- 90,952 117,457
Insurance expense 78,330 83,241 78,880
General and administrative expenses 56,068 76,801 43,879
Professional fees 85,500 62,007 40,801
Independent General Partners' fees (Note 6) 75,000 75,000 75,000
Subordinated management fees and related interest
expense (Note 5) -- -- (702,563)
----------- ----------- -----------
Total expenses 395,405 483,722 (255,383)
----------- ----------- -----------
NET INVESTMENT INCOME 68,818 1,434,067 3,451,805
----------- ----------- -----------
REALIZED AND UNREALIZED (LOSS) GAIN ON
INVESTMENTS:
Net realized (loss) gain on investments (Notes 7, 8 and 9) (3,236,259) 1,087,308 2,537,188
Net increase (decrease) in unrealized appreciation of
investments (Note 11) 3,623,448 (1,159,242) (5,770,953)
----------- ----------- -----------
Net gain (loss) on investments 387,189 (71,934) (3,233,765)
----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 456,007 $ 1,362,133 $ 218,040
=========== =========== ===========
</TABLE>

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

F-8
<PAGE> 25
KAGAN MEDIA PARTNERS, L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 456,007 $ 1,362,133 $ 218,040
------------ ------------ ------------
Adjustments to reconcile net increase in net assets
resulting from operations to net cash provided by
operating activities:
Amortization of discounts and premiums on
investments (192,822) (367,310) (337,633)
Amortization of deferred organization expenses -- 90,952 117,457
Decrease (increase) in accrued interest receivable 3,970 194,375 (154,640)
Decrease (increase) in prepaid insurance 6,226 392 (5,402)
Decrease increase in accounts payable and accrued
expenses (2,740) 11,708 5,240
Increase in investment advisory fees payable 1,196 1,139 1,086
(Decrease) in deferred subordinated management fees
and related interest payable -- -- (702,563)
Net realized loss (gain) on investments 3,236,259 (1,087,308) (2,537,188)
Net (increase) decrease in unrealized appreciation
of investments (3,623,448) 1,159,242 5,770,953
------------ ------------ ------------
Total adjustments (571,359) 3,190 2,157,310
------------ ------------ ------------
Net cash (used in) provided by operating activities (115,352) 1,365,323 2,375,350
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments -- -- (79,941)
Proceeds from disposition of investments, net 4,891,624 14,410,834 3,108
------------ ------------ ------------
Net cash provided by (used in) investing activities 4,891,624 14,410,834 (76,833)
------------ ------------ ------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Cash distributions paid to partners (957,256) (14,251,438) (2,173,872)
------------ ------------ ------------
Net cash used in financing activities (957,256) (14,251,438) (2,173,872)
------------ ------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,819,016 1,524,719 124,645

CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 2,325,407 800,688 676,043
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 6,144,423 $ 2,325,407 $ 800,688
============ ============ ============
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Investments exchanged for other investments $ -- $ -- $ 9,076,375
Dividends declared but unpaid $ 4,908,743 $ 957,256 $ 560,999
</TABLE>

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

F-9
<PAGE> 26
KAGAN MEDIA PARTNERS, L.P.

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
INVESTMENT INCOME: 1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Increase in net assets resulting from operations:
Net investment income $ 68,818 $ 1,434,067 $ 3,451,805
Net realized (loss) gain on investments (3,236,259) 1,087,308 2,537,188
Net increase (decrease) in unrealized appreciation
of investments 3,623,448 (1,159,242) (5,770,953)
------------ ------------ ------------
Net increase in net assets resulting from operations 456,007 1,362,133 218,040
Distributions to partners from -
Net cash from operations (899,961)(1) (1,262,247) (2,240,889)
Net cash from capital transactions (4,008,782) (13,385,448) (3,108)
------------ ------------ ------------
Total decrease in net assets (4,452,736) (13,285,562) (2,025,957)
Net Assets:
Beginning of period 11,229,496 24,515,058 26,541,015
------------ ------------ ------------
End of period, including undistributed investment
income of $236,933, $1,278,076 and $1,106,256 in
1995, 1994 and 1993, respectively (2) $ 6,776,760 $ 11,229,496 $ 24,515,058
============ ============ ============
</TABLE>

(1) Represents interest accretion relating to the investment in
Vista/Narragansett reflected in the Partnership's statements of operations for
the years ended 1995, 1994 and 1993, totaling $205,182, $394,587 and
$300,192, respectively.

(2) The undistributed investment income at December 31, 1995 is reduced by the
distribution relating to the Vista/Narragansett investment reflected above as
well as the loss incurred with respect to the TM-MA accrued interest
receivable of $210,000.

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

F-10
<PAGE> 27
KAGAN MEDIA PARTNERS, L.P.

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
For the Years Ended December 31
---------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Unit Data:
Investment income $ .33 $ 1.37 $ 2.28 $ 1.58 $ 1.92
Expenses (.28) (.35) .18(1) (.55) (.55)
------------- ------------- ------------- ------------- -------------
Net investment income .05 1.02 2.46 1.03 1.37
Net realized (loss) gain on investments (2.31) .78 1.81 1.23 .09
Net increase (decrease) in unrealized
appreciation of investments 2.58 (.83) (4.11) (.44) .93
Cash distributions declared to partners (3.50) (10.44)(2) (1.60) (1.40) (1.37)
------------- ------------- ------------- ------------- -------------
Net (decrease) increase in net asset
value (3.18) (9.47) (1.44) .42 1.02
Net asset value:
Beginning of period 7.64 17.11 18.55 18.13 17.11
------------- ------------- ------------- ------------- -------------
End of period $ 4.46 $ 7.64 $ 17.11 $ 18.55 $ 18.13
============= ============= ============= ============= =============
Ratios:
Ratio of expenses to average net assets 4.39% 2.71% (0.99)% 2.93% 3.03%
Ratio of net investment income to
average net assets .76% 8.02% 13.39% 5.55% 7.58%
Total investment return (3) 5.06% 7.84% .90% 9.92% 13.56%
Number of limited partnership units at
end of period 1,388,473 1,388,473 1,388,473 1,388,473 1,388,473
</TABLE>

- ------------------------
(1) The Partnership reversed all previously accrued subordinated management
fees and related interest during 1993. As a result, the Partnership
reported "negative" total expenses.

(2) Represents average of distributions declared to partners for 1994. Actual
distributions per unit for 1994 were based upon investors preferred return
accounts and ranged from of $9.92 per unit to $10.72 per unit.

(3) Total investment return was computed as the ratio of increase in net assets
resulting from operations over the average net assets during the period
presented.

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

F-11
<PAGE> 28
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995

1. ORGANIZATION AND PURPOSE

Kagan Media Partners, L.P. (the "Partnership"), a Delaware limited
partnership, was organized on November 15, 1988 to operate as a business
development company under the Investment Company Act of 1940. The
Partnership's operations commenced on July 21, 1989.

Kagan Media Capital Inc., a Delaware corporation which is controlled by
Mr. Paul Kagan, is the principal Investment Adviser to, and is the Managing
General Partner of, the Partnership. Mezzanine Capital Corporation, a Delaware
corporation which is a wholly-owned subsidiary of Paine Webber Group Inc., is
the Administrative General Partner of the Partnership.

The investment objectives of the Partnership are to provide current income
and capital appreciation by investing in and offering significant managerial
assistance to existing cable television systems and radio and broadcast
television stations ("Media Properties"). The Partnership sought to achieve
its objectives by acquiring subordinated debt investments with a high current
coupon and an equity participation in connection with the financing or
acquisition of a Media Property by an unaffiliated Media Property operator.
The Partnership also acquired certain preferred equity interests in joint
ventures formed with a Media Property operator to acquire and operate a Media
Property and to a limited extent, invested in other equity and debt securities
of media companies. Managed companies are those to which significant managerial
assistance is offered.

Based upon the Partnership's liquidation of certain investments in 1994
and 1995 through prepayments, merger and negotiated sale, the Partnership's
portfolio decreased and no new investments will be made. Further, if the sale
of the assets of Tele Media Company of Mid America, L.P. can be completed as
contemplated, the Partnership may be liquidated sooner than originally
anticipated. (See

F-12
<PAGE> 29
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

Item 7, "Management's Discussion" and "Analysis of Financial Condition and
Results of Operations." and Footnote 8, "TM-MA Investment").

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation The Partnership maintains its accounting records,
prepares financial statements and files its tax returns on the accrual basis of
accounting. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenue and expenses during the
reporting periods. The most significant estimates relate to the valuation of
certain investments. Actual results could differ from those estimates.

Valuation of Investments High-yield debt investments and other securities
in non-managed companies for which market quotations are readily available are
valued at their current market value, which is determined by the highest bid
price for such securities as of the last trading day of the fiscal quarter.

Participating debt investments and other securities in managed companies
for which market quotations are not readily available are valued at fair value
as determined in good faith by the Managing General Partner in accordance with
valuation guidelines approved by the Independent General Partners. Each such
investment is valued initially based upon its cost to the Partnership ("cost
method"). The cost method is used until significant developments affecting the
investment necessitate revaluation of the investment based on an alternate
valuation method.

Investment Transactions The Partnership invested primarily in high-yield,
privately placed debt investments issued as mezzanine financing in connection
with the refinancing or acquisition of a media property by an unaffiliated
operator. The risk of loss upon default by an issuer is greater than with
investment grade securities because high-yield securities are generally
unsecured and are usually subordinated to other creditors of the issuer. Also,
these issuers usually have higher levels of indebtedness and are more sensitive
to adverse economic conditions than investment grade issuers. There generally
is no quoted market for these securities.

Although the Partnership cannot eliminate the risks associated with its
investment in these high-yield securities, it has established risk management
procedures. The Partnership subjects each prospective investment to close
analysis, and makes only those investments that are recommended by the Managing
General Partner and that meet the Partnership's investment guidelines or that
have otherwise been approved by the Independent General Partners. The
Partnership also has procedures in place to continually monitor its issuers.

Cash and Cash Equivalents For purposes of the Statements of Assets and
Liabilities and the Statements of Cash Flows, the Partnership considers all
highly liquid investments with a maturity of

F-13
<PAGE> 30
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

three months or less when purchased to be cash equivalents. These temporary
investments are recorded at cost, with approximate fair market value. The
Partnership places its cash investments in short-term US government securities,
which are held in trust at one financial institution.

Interest Receivable on Notes Notes are placed on non-accrual status in
the event of a default (after any applicable grace period expires) or if the
Operating General Partners (See Note 3 below) determine that there is no
reasonable expectation of collecting the interest.

Income Taxes No provision for income taxes has been made in the financial
statements since taxes on fund income are the responsibility of the individual
partners rather than the Partnership.

3. CAPITAL CONTRIBUTIONS

Upon formation of the Partnership, the Managing General Partner and the
Administrative General Partner (the "Operating General Partners") contributed
$700 and $300, respectively, for their general partner interests in the
Partnership. Units of limited partnership interest were then sold in a public
offering at a price of $20.00 per unit. The Partnership held four closings
between July 21, 1989 and March 15, 1990, receiving gross offering proceeds of
$27,769,460.

The Operating General Partners also contributed an additional $758,234 to
fund the amount by which certain offering and organization expenses exceeded 4%
of the aggregate capital contributions of the Limited Partners.

4. INVESTMENT ADVISORY AND ANALYSIS FEES

As the Partnership's principal Investment Adviser, the Managing General
Partner is responsible for the identification of investments and all other
investment advisory services necessary for the operation of the Partnership in
carrying out its investment objectives and policies. As compensation for its
services, the Investment Adviser receives an annual investment advisory fee
which initially was $75,000, escalating by an amount equal to 5% of the prior
year's annual fee in each calendar year. The investment advisory fees
attributable to the years ended December 31, 1995, 1994 and 1993 of $100,507,
$95,721 and $91,163, respectively, have been charged to operations.

The Investment Adviser also receives an investment analysis fee equal to
0.75% of the amount invested by the Partnership in senior-participation
instruments as consideration for structuring, due diligence and financial
analysis in connection with an investment. Investment analysis fees of $45,000
were paid during 1993. No such fees were accrued or paid in 1995 and 1994.
Certain of these fees were reimbursed to the Partnership by the issuers of the
notes and a portion of the fees were capitalized as a cost of the respective
investments.

F-14
<PAGE> 31
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

5. DEFERRED SUBORDINATED MANAGEMENT FEES AND RELATED INTEREST EXPENSE

The Operating General Partners are entitled to receive annual subordinated
management fees equal to 1% of net capital invested (as defined in the
Partnership Agreement) as of the end of each fiscal quarter as compensation for
the managerial supervision provided to the Partnership. Of this amount, 0.75%
is payable to the Managing General Partner and 0.25% is payable to the
Administrative General Partner. These management fees have not been and will
not be paid to the operating general partners until the limited partners have
received cash distributions equal to a cumulative but not compounded, 10%
preferred return (as defined in the Partnership Agreement). During the three
months ended December 31, 1993, the Partnership reversed the previously
accrued management fees, comprised of $207,927 recorded during 1993 and
$622,513 recorded during prior years.

To the extent the subordinated management fees are not currently paid in
cash with respect to any calendar quarter, they accrue interest at the rate of
10% compounded annually. The payment of the interest is subject to the same
subordinated provisions as the management fees. Therefore, during the three
months ended December 31, 1993, the Partnership also reversed the previously
accrued interest, comprised of $57,777 recorded during 1993 and $80,050
recorded during prior years. Further, the Operating General Partners believe
that the likelihood of payment of these or any future amounts is remote.

6. INDEPENDENT GENERAL PARTNERS' FEES

As compensation for services rendered to the Partnership, each of the
three Independent General Partners receives a fee of $6,250 per quarter, plus
out-of-pocket expenses. Fees of $75,000 per year have been charged to
operations for each of the years ended December 31, 1995, 1994 and 1993.

F-15
<PAGE> 32
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

7. VISTA/NARRAGANSETT SALE

In January 1990, the Partnership acquired $6,800,000, 15.5% Senior
Subordinated Notes (the "Notes") of Vista/Narragansett Cable, L.P.
("Vista/Narragansett") due January 8, 1995. Under the terms of the Notes,
interest at the rate of 12.75% per annum was payable currently with the balance
of interest (2.75% per annum) added to the principal balance of the Notes. On
May 1, 1991, Vista/Narragansett ceased making interest payments. A
restructuring agreement of Vista/Narragansett's capital structure was reached
during 1992 and was executed in March 1993.

The Partnership restated the Notes in the form of a non-interest bearing
note in the principal amount of $9,047,786, which represented the original
principal plus the interest accrued through September 30, 1992. In 1994, the
Partnership received $50,000 which was treated as a reduction in principal.
The Notes were to be paid only out of proceeds of the sale of
Vista/Narragansett's cable systems. Any sale by Vista/Narragansett required
the approval of the Partnership.

In late March 1995 the Partnership was advised by the management of
Vista/Narragansett that a third party offer for purchase of the assets of
Vista/Narragansett had been received on March 22, 1995. The Partnership agreed
to allow management of Vista/Narragansett to pursue the offer. On June 14,
1995, management of Vista/Narragansett signed a letter of intent to accept the
offer, and on August 8, 1995, entered into a purchase and sale agreement. On
December 29, 1995, the sale of the assets of Vista/Narragansett was
consummated. The Partnership received proceeds of $4,778,499 as its share of
the distributed proceeds from the sale. In addition, the Partnership will
receive a portion of any amounts remaining in a $400,000 escrow account
established by Vista/Narragansett at closing to provide collateral to the buyer
in respect of Vista/Narragansett's compliance with its representation and
warranties. This escrow account will not be terminated until December 1996.
The Partnership has released Vista/Narragansett from all of its financial
obligations under the Notes. The Notes, which had an amortized cost of
$7,837,257, were valued at $4,700,000 at September 30, 1995, which represented
approximately 46% of the investments held by the Partnership based upon the
valuation at such date.

The proceeds received from the Vista/Narragansett sale represented
substantially all of the distributions declared to partners at December 31,
1995.

8. TM-MA INVESTMENT

F-16
<PAGE> 33
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

which is subject to certain prepayment provisions, bears current interest at a
rate of 14% and contingent interest to be computed under a specified formula.

As of December 31, 1993, TM-MA was in default under its senior debt
instruments. As a result of this default, the senior lenders to TM-MA blocked
payment to the Partnership of the interest due on the Partnership's
participating debt investment at December 31, 1994. Consequently, the
Partnership stopped accruing interest on the notes, effective October 1, 1993.
$210,000 of accrued interest receivable was reflected on the Partnership's
Statement of Assets and Liability at December 31, 1994.

9. PREPAYMENT - TELE-MEDIA BROADCASTING COMPANY OF AMERICA

On June 13, 1994, Tele-Media Broadcasting Company of America ("Tele-Media
Broadcasting") prepaid its April 28, 1996 20% Senior Subordinated notes owned
by the Partnership. The Partnership had originally acquired $6,000,000
principal amount of Tele-Media Broadcasting notes in April 1993 in exchange for
certain other securities. Because the Tele-Media Broadcasting notes would not
have been allowed to be prepaid under the terms of the notes until April 1995,
the Partnership was able to negotiate a favorable prepayment. Under the terms
of the prepayment agreement, the Partnership received aggregate gross proceeds
of $7,406,974 composed of the original principal of $6,000,000, accrued and
deferred interest aggregating $518,333, a contractual prepayment penalty of
$120,000 and a negotiated prepayment fee of $768,641. As of December 31, 1993,
the Partnership's investment in the Tele-Media Broadcasting notes comprised
25.4% of total investments and 24.7% of the total net assets of the
Partnership.

F-17
<PAGE> 34
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

10. PREPAYMENT - CABLEVISION SYSTEMS SERVICES CORPORATION

On September 6, 1994, Cablevision Systems Services Corporation
("Cablevision") prepaid its 13% promissory notes due December 29,1994 issued to
the Partnership.

On February 28, 1991 the Partnership originally acquired $6,000,000 of
Cablevision 9% recourse subordinated notes, a participating debt investment.
In December 1992, Cablevision notified the Partnership of its intention to
prepay the notes along with contingent interest of $1,232,769. Following
negotiations, the Partnership agreed to a restatement of the terms associated
with the 9% notes, including an exchange of collateral. As amended, the
promissory notes bore interest at 13% and were scheduled to mature on December
29, 1994. The Partnership accepted an additional promissory note with the same
terms in the amount of $1,232,769 in payment of the contingent interest. The
notes no longer had a participation or contingent interest feature
(collectively, the "Cablevision Notes").

In August 1994, Cablevision informed the Partnership of its desire to
prepay the Cablevision Notes. Pursuant to the terms of the Cablevision Notes,
Cablevision was obligated to pay a prepayment premium equal to 2% on the
outstanding principal for the period from January 1, 1993 to September 6, 1994.
The Partnership received aggregate proceeds of $7,651,279 which represented
the original principal of $7,232,769, accrued interest of $175,172 from June
30, 1994 through September 6, 1994 and the contractual 2% prepayment premium of
$243,338. As of December 31, 1993, the Partnership's investment in the
Cablevision Notes represented 30.5% of total investments and 29.6% of the total
net assets of the Partnership.

11. UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS

During 1993, the Partnership recorded $164,115 of unrealized appreciation
and $3,251,387 of unrealized depreciation of investments.

During 1994, the Partnership recorded unrealized appreciation of $2,836
and unrealized depreciation of $1,162,078, increasing the balance of net
unrealized depreciation of investments to $6,202,336 at December 31, 1994.

As of December 31, 1995, the Partnership recorded net unrealized
depreciation of $468,003 ($641,754 of unrealized depreciation and $173,751 of
unrealized appreciation) and sold investments with respect to which $4,091,451
of unrealized depreciation had been provided in previous periods, reducing net
unrealized depreciation by $3,623,448 to $2,578,888 at December 31, 1995.
Substantially all of the net unrealized depreciation of investments at December
31, 1995 is associated with the Partnership's debt investment in TM-MA. (See
note 8.)

F-18
<PAGE> 35
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

12. ALLOCATION OF NET ASSETS

The following schedule summarizes the allocation of net assets between the
Limited Partners and the Operating General Partners:

<TABLE>
<CAPTION>
Operating
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance, December 31, 1992 $ 779,944 $ 25,761,071 $ 26,541,015
Allocation of net investment income 34,518 3,417,287 3,451,805
Allocation of net realized gain on investments 25,372 2,511,816 2,537,188
Allocation of decrease in net unrealized
appreciation of investments (57,710) (5,713,243) (5,770,953)
Cash distributions declared to partners (22,440) (2,221,557) (2,243,997)
------------ ------------ ------------
Balance, December 31, 1993 $ 759,684 $ 23,755,374 $ 24,515,058
Allocation of net investment income 14,341 1,419,726 1,434,067
Allocation of net realized gain on investments 10,873 1,076,435 1,087,308
Allocation of increase in net unrealized
depreciation of investments (11,592) (1,147,650) (1,159,242)
Cash distributions declared to partners (146,476) (14,501,219) (14,647,695)
------------ ------------ ------------
Balance, December 31, 1994 $ 626,830 $ 10,602,666 $ 11,229,496
Allocation of net investment income 688 68,130 68,818
Allocation of net realized loss in investments (32,363) (3,203,896) (3,236,259)
Allocation of increase in net unrealized
appreciation of investments 36,235 3,587,213 3,623,448
Cash distribution declared to partners (49,087) (4,859,656) (4,908,743)
------------ ------------ ------------
Balance, December 31, 1995 $ 582,303 $ 6,194,457 $ 6,776,760
============ ============ ============
</TABLE>

F-19
<PAGE> 36
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

13. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING

The following is a reconciliation of the net increase in net assets
resulting from operations as shown in the accompanying financial statements to
the taxable income reported for federal income tax purposes:

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net increase in net assets resulting from operations
per financial statements $ 456,007 $ 1,362,133 $ 218,040

Increase (decrease) resulting from:

Subordinated management fees and related interest
expense -- -- (702,563)

Loss on sale of investments (3,896,146) -- (530,143)

Unrealized depreciation of investments including
interest 468,003 1,159,242 5,770,953

Accrued interest receivable 210,000 -- 210,000

Amortization of bond discounts 243,267 618,344 (73,634)

Other (8,750) 5,993 2,000
----------- ----------- -----------
Taxable (loss) income per federal income tax return $(2,527,619) $ 3,145,712 $ 4,894,653
=========== =========== ===========
</TABLE>

The following is a reconciliation of the amount of the Partnership's net assets
as shown in the accompanying financial statements and the tax bases of
the Partnership's net assets:

<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Net assets per financial statements $ 6,776,760 $ 11,229,496
Unrealized depreciation (appreciation) of investments 2,578,888 6,202,336
Commissions and expenses paid in connection with the
sale of limited partnership units 4,058,674 4,058,674
Distributions payable to partners 4,908,743 957,256
Accrued interest receivable 420,000 210,000
Basis of investments 377,855 (55,066)
Other 22,344 81,093
------------ ------------
Tax bases of net assets $ 19,143,264 $ 22,683,789
============ ============
</TABLE>

F-20
<PAGE> 37
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

14. LITIGATION

The amended complaint in the New York Limited Partnership Actions alleged
that, in connection with the sale of interests in the Partnership, PaineWebber
and the Administrative General Partners (1) failed to provide adequate
disclosure of the risks involved with each partnership; (2) made false and
misleading representations about the safety of the investments and the
partnership's anticipated performance; and (3) marketed the partnerships to
investors for whom such investments were not suitable. The plaintiffs also
alleged that following the sale of the partnership investments PaineWebber and
the Administrative General Partner misrepresented financial information about
the partnership's value and performance. The amended complaint alleged that
PaineWebber and the Administrative General Partner violated the Racketeer
Influenced and Corrupt Organizations Act ("RICO") and the federal securities
laws. The plaintiffs sought unspecified damages, including reimbursement for
all sums invested by them in the partnerships, as well as disgorgement of all
fees and other income derived by PaineWebber from the limited partnerships. In
addition, the plaintiffs also sought treble damages under RICO.

On May 30, 1995, the US District Court certified class action treatment of
the plaintiffs' claims in the class action entitled, In re: PaineWebber
Limited Partnerships Litigation.

In January 1996, PaineWebber signed a memorandum of understanding with the
plaintiffs in the class action outlining the terms under which the parties have
agreed to settle the case. Pursuant to that memorandum of understanding,
PaineWebber irrevocably deposited $125 million into an escrow fund under the
supervision of the United States District Court for the Southern District of
New York to be used to resolve the litigation in accordance with a definitive
settlement agreement and plan of allocation which the parties expect to submit
to the court for its consideration and approval within the next several months.
Until a definitive settlement and plan of allocation is approved by the court,
there can be no assurance what, if any, payment or non-monetary benefits will
be made available to unitholders in the Partnership.

In February 1996, approximately 150 plaintiffs filed an action entitled
Abbate v. PaineWebber Inc. in Sacramento, California Superior Court against
PaineWebber Incorporated and various affiliated

F-21
<PAGE> 38
KAGAN MEDIA PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

entities concerning the plaintiff's purchases of various limited partnership
interests. The complaint alleges, among other things, that PaineWebber and its
related entities committed fraud and misrepresentation and breached fiduciary
duties allegedly owed to the plaintiffs by selling or promoting limited
partnership investments that were unsuitable for the plaintiffs and by
overstating the benefits, understating the risks and failing to state material
facts concerning the investments. The complaint seeks compensatory damages of
$15 million plus punitive damages.

Under certain limited circumstances, pursuant to the Partnership Agreement
and other contractual obligations, PaineWebber and its affiliates, including
the Administrative General Partner and its affiliates could be entitled to
indemnification from the Partnership for expenses and liabilities in
connection with these cases. The General Partners are unable to determine the
effect if any, of these actions on the Partnership's financial statements taken
as a whole.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value of certain financial instruments, whether or
not reported on the balance sheet. Where quoted market prices are available the
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used including
the discount rate and estimates of future cash flows. In addition, SFAS No. 107
excludes certain financial instruments and all nonfinancial instruments from its
disclosure requirements. The aggregate fair value amounts presented do not
purport to represent and should not be considered representative of the
underlying market value of the Partnership.

The methods and assumptions used to estimate the fair value of each class
of the financial instruments are described below.

Investments. As described in Note 2, investments in managed companies
have been estimated by the Managing General Partner in the absence of
readily ascertainable market value. Due to the inherent uncertainty of
valuation, those estimated values may differ significantly from the values
that would have been used had a ready market for the investments existed,
and the differences could be material.

Cash equivalents. For cash and investments in government securities, the
carrying value approximates fair value, due to their short maturities.

Liabilities, including distributions payable to partners. For liabilities,
the carrying value approximates fair value, due to their short maturities.

F-22
<PAGE> 39
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

There have been no changes in accountants or disagreements with
accountants with respect to accounting or financial disclosure issues during
1995, 1994 or 1993.

PART III

Item 10. Directors and Executive Officers of the Registrant

The Partnership has no officers or directors. The General Partners of the
Partnership jointly manage and control the affairs of the Partnership and have
general responsibility and authority in all matters affecting its business.

Information concerning the directors and executive officers of the
Operating General Partners and the Independent General Partners is as follows:

Kagan Media Capital Inc.

<TABLE>
<CAPTION>
Name Positions Held
- ------------------------ ----------------------------
<S> <C>
Paul Kagan President and Director
Sharon B. Armbrust Vice President
Larry Gerbrandt Vice President
Norman Glaser Vice President, Chief Financial Officer
and Director
Jo Ann Suyematsu Vice President and Secretary
</TABLE>

Mr. Paul Kagan, age 58, is President and Director of Paul Kagan
Associates, Inc. ("PKA"), Kagan Seminars, Inc., Kagan Capital Management and
Cygnus Publishing Company, Inc., is a Director of Kagan Media Appraisals, Inc.,
Kagan Entertainment, Inc. and Camelot Cable II, Inc., and is President of Kagan
Financial Management, Inc. Mr. Kagan has held these positions since the
creation of these entities. Mr. Kagan is also Chairman of the Board of
Directors of Personal Library Software, Inc. and Baseline II, Inc. As
President of Kagan Capital Management, Mr. Kagan serves as the portfolio
manager for the Kagan Stock Fund and Kagan Capital Management's managed
accounts. Mr. Kagan holds seminars on a variety of media subjects, including
cable television, pay television, broadcasting, motion pictures and home video.
PKA currently publishes 28 newsletters on various communications and media
disciplines, including CABLE TV INVESTOR and BROADCAST INVESTOR, the only
continuing publications analyzing the values of public and private cable
television and broadcast

16
<PAGE> 40
companies. Over the past two decades, Mr. Kagan and his staff have appraised
cable television and broadcast properties, totaling over $6 billion, on
contract assignment, as well as many times that amount through information
analyses in various publications of affiliates. Mr. Kagan has worked in the
communications media industry since 1958. Prior to forming PKA in 1969, Mr.
Kagan was a broadcasting-cable television securities analyst for E.F. Hutton &
Company Inc. Mr. Kagan has held executive positions with the Radio Advertising
Bureau, CBS Radio and WOR-FM Radio, all in New York. Earlier, Mr. Kagan held
editorial positions with the Endicott (NY) Daily Bulletin and the Binghamton
(NY) Morning Sun, as well as staff and executive positions with WENE-AM Radio
in Endicott, NY and WBRX-AM in Berwick, PA. Mr. Kagan has contributed over 100
articles on investment and finance to Barrons and the National Observer. Mr.
Kagan is a member of the New York Society of Security Analysts, a fellow of the
Financial Analysts Federation and an associate member of the Broadcasting
Financial Management Association. Mr. Kagan is the brother-in-law of Mr.
Norman Glaser. Mr. Kagan received a Bachelor of Arts degree in Communications
from Hunter College.

Sharon B. Armbrust, age 51, is Vice President - Investment Research, and
Senior Analyst for a number of PKA publications, including CABLE TV INVESTOR,
CABLE TV FINANCE, WIRELESS TELECOM INVESTOR, WIRELESS MARKET STATS,
INTERNATIONAL CELLULAR and ASIA PACIFIC TELECOM INVESTORand ASIA PACIFIC
TELECOM INVESTOR. Mrs. Armbrust joined PKA in April 1979, and earlier held
positions as Editorial Director, Director and Vice President of Research. Mrs.
Armbrust is responsible for PKA cable TV and telecommunications stock analysis
and is also the executive editor for a number of cable and wired/wireless
telecom special reports and databooks published by PKA. In addition, Mrs.
Armbrust acts as a consultant in strategic planning and the appraisal of
private market values for cable TV, cellular, ESMR (enhanced specialized mobile
radio), paging and other telecommunications areas. Prior to joining PKA, Mrs.
Armbrust was a regional operations manager and budget analyst for a national
retailing firm. Earlier, Mrs. Armbrust was employed as a systems analyst for
the State of Maryland. Mrs. Armbrust holds a Bachelor of Science degree from
the University of Michigan and a Master of Arts degree from The John Hopkins
University.

Larry Gerbrandt, age 43, is Vice President for PKA and is responsible for the
company's entertainment research and special reports division. Mr. Gerbrandt
joined PKA in 1984. Mr. Gerbrandt also serves as a Vice President of Cygnus
Publishing Company, Inc., an affiliate of Kagan Media Capital. Mr. Gerbrandt
is Senior Analyst for ten Kagan newsletters, including CABLE TV PROGRAMMING,
CABLE TV ADVERTISING, TV PROGRAM INVESTOR, MOTION PICTURE INVESTOR, CABLE
NETWORK INVESTOR and THE PAY TV NEWSLETTER and oversees PKA's special report
division. In addition, Mr. Gerbrandt serves as a specialist in the appraisal
of programming networks and television and motion picture libraries and also as
a strategic consultant in these areas. Mr. Gerbrandt's broad knowledge of
television programming trends has made him a frequently quoted source in such
national publications as Time Magazine, Newsweek, The New York Times and The
Wall Street Journal. Mr. Gerbrandt's other duties include moderating Kagan
Seminars, Inc. seminars on such topics as pay-per-view, cable programming
trends and television program finance. Prior to joining PKA, Mr. Gerbrandt
held executive positions with the cable division of Orion Broadcast Group and
Brimstone Films, a Dallas, Texas-based production company he helped found in
1980. While at Brimstone, Mr. Gerbrandt was an award-winning producer of
television commercials, industrial films, museum documentaries and live
television events. Mr. Gerbrandt is an award-winning fine arts

17
<PAGE> 41
photographer. Mr. Gerbrandt holds a Bachelor of Arts degree in Business
Administration from Loretto Heights College in Denver, Colorado.

Norman Glaser, age 60, is President and Director of Kagan Media
Appraisals, Inc. and Kagan Entertainment, Inc. Mr. Glaser also serves as Vice
President and Chief Financial Officer of PKA and Kagan Capital Management,
Vice President, Chief Financial Officer and Director of Kagan Seminars, Inc.
and Kagan Financial Management, Inc., Secretary, Vice President and Director of
Cygnus Publishing Company, Inc., Director of Personal Library Software, Inc.
and Baseline II, Inc. Mr. Glaser became associated with PKA and its affiliated
companies in 1986. Mr. Glaser is also General Partner of the Kagan Stock Fund
and the Kagan Venture Fund. Mr. Glaser is a certified public accountant who
between 1979 and 1986 was engaged as principal in the business of providing tax
and financial planning and business management advice to corporations and
individuals. Previously, Mr. Glaser served for nine years as chief financial
officer of an international consulting and research firm based in New York,
London and Houston. Prior thereto Mr. Glaser acted as Vice President - Finance
of a public company engaged in the computer systems industry, and practiced
accountancy with a national accounting firm. Mr. Glaser is a member of the
American Institute of Certified Public Accountants and the California Society
of Certified Public Accountants. Mr. Glaser is the brother-in-law of Mr. Paul
Kagan. Mr. Glaser holds a Bachelor of Arts degree in Business Administration
from the City University of New York.

Jo Ann Suyematsu, age 45, is Vice President - Client Relations of Kagan Capital
Management. Mrs. Suyematsu has been associated with PKA since 1984 (and also
was employed by the firm from 1978 to 1983). Mrs. Suyematsu is responsible for
the administration of all managed accounts and the Kagan Stock Fund, and acts
as a liaison with clients. Mrs. Suyematsu also serves as Vice President -
Administration of PKA. From November 1983 to April 1984, Mrs. Suyematsu served
as an executive secretary at Vail National Bank in Vail, Colorado. Prior to
joining PKA in 1978, Mrs. Suyematsu had been associated with Boulder National
Bank, Boulder, Colorado; the Los Angeles office of Continental Illinois
National Bank and Trust Company of Chicago; and Continental Bank
International-Pacific, also in Los Angeles. Mrs. Suyematsu holds a Bachelor of
Science degree in Radio, Television and Film from Temple University's Annenberg
School of Communications.

18
<PAGE> 42
Mezzanine Capital Corporation

<TABLE>
<CAPTION>
Name Positions Held
- --------------------- ---------------------------
<S> <C>
Gerald F. Goertz, Jr. President and Director

Clifford B. Wattley Vice President,
Assistant Secretary
and Director

Stephen R. Dyer Vice President,
Assistant Secretary
and Director

Joseph P. Ciavarella Vice President,
Secretary, Treasurer
and Chief Financial
and Accounting
Officer
</TABLE>

Gerald F. Goertz, Jr., age 38, is the President and a Director of
Mezzanine Capital Corporation. Mr. Goertz joined PaineWebber Incorporated in
December 1990 and holds the position of Senior Vice President and Director of
Private Investments. Prior to joining PaineWebber Incorporated, Mr. Goertz was
associated with CG Realty Advisors and The Freeman Company. He received his
Bachelor of Arts degree in Business Administration in 1979 from Vanderbilt
University and his Juris Doctorate and Masters of Business Administration from
Memphis State University in 1982.

Clifford B. Wattley, age 46, is a Vice President. Assistant Secretary and
a Director of Mezzanine Capital Corporation. Mr. Wattley is a Corporate Vice
President with PaineWebber Incorporated, having joined the firm in 1986. He
also was employed previously by Paine, Webber, Jackson & Curtis from 1979 to
1980. From 1986 to 1992, Mr. Wattley participated in PaineWebber's Principal
Transactions Group. From 1992, Mr. Wattley has been a member of the Private
Investment Department. He holds a Bachelor of Science degree in engineering
from Columbia University and a Masters in Business Administration from Harvard
University.

Stephen R. Dyer, age 36, is a Vice President, Assistant Secretary and a
Director of Mezzanine Capital Corporation. He joined PaineWebber Incorporated
in June 1988 as a Divisional Vice President and is currently a Corporate Vice
President. Prior to joining PaineWebber Incorporated, Mr. Dyer had been
employed, since June 1987, as an Assistant Vice President in the Retail
National Products Group of L.F. Rothschild & Co. Incorporated. Prior to
joining L.F. Rothschild, he was employed, beginning in January 1985, as an
Associate in the Real Estate Department of Thomson McKinnon Securities Inc.
From July 1981 to August 1983, Mr. Dyer was on the audit staff of the
accounting firm of Arthur Young & Company. He received his Bachelor of Science
degree in Accounting in 1981 from Boston College and a Masters of Business
Administration from Indiana University in December 1984. Mr. Dyer is a
Certified Public Accountant.

Joseph P. Ciavarella, age 40, is Vice President, Secretary, Treasurer and
Chief Financial and Accounting Officer of the Administrative General Partner.
He joined PaineWebber

19
<PAGE> 43
Incorporated in May 1994 as a Corporate Vice President. Immediately prior to
joining PaineWebber Incorporated, he was associated from August 1993 to May
1994 with the Aviation Capital Group. From 1983 to 1993, he was a financial
officer of Integrated Resources Inc. and a senior officer in the Equipment
Leasing Division, Aircraft Finance and Capital Markets areas. He is a graduate
of Hofstra University and is a Certified Public Accountant.

Independent General Partners

A. Rochelle B. King

Rochelle B. King, age 58, is President and sole shareholder of King
Investment Banking Services, Inc. King Investment Banking Services, Inc., a
Delaware corporation, was established in January 1989 to provide
consulting and other services to the broadcasting, media and
communications industries. The firm provides services relating to all types of
project financing, including raising equity and arranging senior, subordinated
and mezzanine debt financing, and, in appropriate acquisitions, high-yield
debt. Services include pre-acquisition analysis, transaction evaluation and
structuring, marketing and investor presentations and document supervision.
Ms. King was formerly a Vice President of Merrill Lynch & Co. until December
1988. Ms. King joined Merrill Lynch Pierce Fenner & Smith in 1983 and
served as a Tax Marketing Specialist until joining Merrill Lynch Investment
Banking in 1985. Beginning in 1986, Ms. King devoted all of her time to
providing investment banking services to ML Media Partners, L.P. and ML Media
Opportunity Partners, L.P., two publicly funded media blind pool partnerships
which raised almost $300,000,000 in equity and acquired approximately
$750,000,000 in media properties through leveraged acquisitions. Ms. King is a
registered securities broker. Before joining Merrill Lynch Pierce Fenner &
Smith, Ms. King was a corporate and securities lawyer at Phillips, Nizer,
Benjamin, Krim & Ballon from 1979 to 1983 and at Simpson Thacher & Bartlett
from 1977 to 1979. Ms. King received a Bachelor of Arts degree from Queens
College, C.U.N.Y., and a J.D. degree from the University of Pennsylvania Law
School.

B. Scott N. Ledbetter

Scott N. Ledbetter, age 45, is a cofounder of Columbia International,
Inc., an owner and operator of cable television systems throughout the United
States, and has served as a director and chief financial officer since 1984 and
chief operating officer since 1990. Before joining Columbia International,
Inc., Mr. Ledbetter served as Vice President and Chief Financial Officer for
Page America Group, Inc., a radio common carrier in the radio communications
business, from July 1984 to December 1984, and served as Vice President and
Chief Financial Officer for United Artists Cablesystems Corporation, a multiple
cable television system operator, from 1979 to July 1984. Mr. Ledbetter also
served as chairman of the Financial Affairs Committee of the National Cable
Television Association from 1982 to 1984 and, in 1987, was elected as a
Representative to the governing body of Greenwich, Connecticut. Mr. Ledbetter
received a Bachelor of Arts degree from Duke University in 1973 and a Masters
degree in Business Administration from Columbia University in 1975.

20
<PAGE> 44
C. Rod Warner

Rod Warner, age 60, the sole shareholder of The R Corporation, has served
as President and director of the company since establishing the company in 1981
and is a Director and a Shareholder of Wireless Cable of Florida, Inc., since
August of 1989. The R Corporation is a marketing consulting firm which serves
cable television and broadcast clients who require marketing, promotion and
programming advisory services. The R Corporation's services primarily are
directed toward subscriber acquisition, retention and audience building
problems of independent and multiple cable television system operators,
satellite pay and basic programming services and commercial television
stations. Through its Direct Sales Division, The R Corporation contracts for
door-to-door sales campaigns selling entertainment channels, home computers,
home security systems and stereo modules to cable television subscribers.
Wireless Cable of Florida, Inc. was formed to compete with conventional coaxial
cable systems by assembling and operating microwave channels to deliver cable
programming over-the-air to subscribers. The effort is focused in the
Southeast where the company has assembled channels for "wireless cable" in Ft.
Pierce, Pensacola and Sarasota, Florida and Savannah, Georgia. Mr. Warner
served as a consultant for the start-up of pay television services in
England and Ireland and provided similar consulting services in the Caribbean.
Mr. Warner received a Bachelor of Arts degree from Ohio Wesleyan University in
1957 and a Master of Arts degree from Ohio State University in 1961.

Item 11. Executive Compensation

No compensation was paid by the Partnership to the officers and directors
of the Operating General Partners. See Item 13 below for a description of the
compensation and fees paid to the General Partners and their affiliates by the
Partnership during 1995.

Item 12. Security Ownership of Certain Beneficial Owners and Management

(a) As of the date hereof, no person is known by the
Partnership to be the beneficial owner of more than 5% of the
Units of the Partnership. The Partnership has no directors or
officers, and neither of the Operating General Partners of the
Partnership nor their directors beneficially own any Units. ATL,
Inc., an Affiliate of the Administrative General Partner, owned
23,725 Units at December 31, 1995. Such Units were purchased
pursuant to legal settlements with certain limited partners.

The names and addresses of the Operating General Partners are as
follows:

Managing General Partner:

Kagan Media Capital Inc.
126 Clock Tower Place
Carmel, California 93923

21
<PAGE> 45
Administrative General Partner:

Mezzanine Capital Corporation
1200 Lincoln Harbor, 5th Floor
Weehawken, NJ 07087

(b) The following table sets forth the number of Units
beneficially owned by the Independent General Partners and by
all the General Partners and their directors and officers as a
group as of March 1, 1996.

<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial Ownership of Class
- ---------------------------- ----------------------- --------
<S> <C> <C>
Independent General Partners
Scott N. Ledbetter 500 *
Rod Warner 250** *
All General Partners, and their directors
and officers as a group (2 persons) 750 *
</TABLE>
- ---------------
* Less than 1% of class.
** Owned by Victoria Warner, the wife of Rod Warner.

(c) The Partnership knows of no arrangements, the operation of the
terms of which may at a subsequent date result in a change in
control of the Partnership.

Item 13. Certain Relationships and Related Transactions

The General Partners and their affiliates have received or will receive
certain types of compensation, fees, or other distributions in connection with
the operations of the Partnership. The fees and compensation were determined
in accordance with the applicable provisions of the Partnership Agreement.

Following is a summary of the amounts paid or payable to the General
Partners and their affiliates during 1995.

Investment Advisory Fee The Managing General Partner receives an annual
investment advisory fee for its services as the Partnership's principal
Investment Adviser. The fee was initially established at $75,000 per year,
escalating by an amount equal to 5% of the prior year's annual fee in each
calendar year. The investment advisory fee attributable to the year ended
December 31, 1995 was $100,507.

Investment Analysis Fees The Managing General Partner, as the
Partnership's principal Investment Adviser, also receives an investment analysis
fee as consideration for structuring, due

22
<PAGE> 46
diligence and financial analysis in connection with a qualifying Partnership
investment equal to 0.75% of the amount invested by the Partnership. No
investment analysis fees were paid or accured by the Partnership during 1995.

Subordinated Management Fees The Managing General Partner and the
Administrative General Partner are entitled to receive annual subordinated
management fees equal to 0.75% and 0.25%, respectively, of net capital invested
(as defined in the Partnership Agreement) as of the end of each fiscal quarter
as compensation for the managerial supervision provided to the Partnership.
Subordinated management fees payable to the Managing General Partner and the
Administrative General Partner with respect to 1993 were $209,100 and $69,700,
respectively. To the extent the subordinated management fees are not currently
paid in cash with respect to any calendar quarter, they accrue interest at the
rate of 10% compounded annually. Interest expense of $80,540 accrued with
respect to the deferred subordinated management fees during 1993.

These management fees and related interest have not and will not be paid
to the Operating General Partners until the Limited Partners have received cash
distributions equal to a cumulative but not compounded, 10% preferred return
(as defined in the Partnership Agreement). During the three months ended
December 31, 1993, the Partnership reversed the previously accrued management
fees and related interest, comprised of $265,704 recorded during 1993 and
$702,563 recorded during prior years. The Partnership will not accrue these,
or any future amounts, unless and until the payment of these subordinated fees
and interest by the Partnership becomes probable. The Operating General
Partners believe that the likelihood of payment of these or any future payments
is remote.

Independent General Partners' Fees As compensation for services rendered
to the Partnership, each of the three Independent General Partners receives a
fee of $6,250 per quarter, plus out-of-pocket expenses. Fees attributable to
the year ended December 31, 1995 were $75,000.

Distributions to Partners The General Partners received 1% of the
aggregate cash distribution declared to partners. For the year ended December
31, 1995, such amounts aggregated $4,909, of which $3,436 accrued to Kagan
Media Capital and $1,473 accrued to Mezzanine Capital Corporation.

23
<PAGE> 47
PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K

(a) and (d) The following documents are filed as part of this Report:

1. Financial Statements:

See List of Financial Statements in Item 8.

2. Financial Statement Schedules:
None.

(b) The Partnership did not file any report on Form 8-K during the
fourth quarter of the fiscal year ended December 31, 1995.

<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- --------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Agreement of Limited Partnership of Kagan
Media Partners, L.P., dated July 21, 1989. Filed as Appendix A
to Post-Effective Amendment No. 1 to the Registration
Statement on Form N-2 for Kagan Media Partners, L.P.
(Registration No. 33-25599) on October 2, 1989.*

10.1 Investment Advisory Agreement, dated July 21, 1989 between
Kagan Media Partners, L.P. and Kagan Media Capital Inc. Filed
as Exhibit 6 to Pre-Effective Amendment No. 4 to the
Registration Statement on Form N-2 of Kagan Media Partners,
L.P. (Registration No. 33-25599) on February 7, 1989.*

10.2 Custody Agreement, dated July 21, 1989, between Kagan Media
Partners, L.P. and FirsTier Bank, N.A. Filed as Exhibit 9 to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-2 of Kagan Media Partners, L.P. (Registration No.
33-25599) on December 30, 1988.*

10.3 Transfer Agent Agreement, dated July 21, 1989, between Kagan
Media Partners, L.P., PaineWebber Media Inc. and Service Data
Corporation. Filed as Exhibit 10.7 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1989.*
</TABLE>

- -----------------
* Not filed herewith. In accordance with Rule 12b-32 of the General Rules
and Regulations under the Securities Exchange Act of 1934, reference is
made to the document previously filed with the Commission which is
incorporated herein by reference.

24
<PAGE> 48

<TABLE>
<S> <C> <C>
10.4 (a) Senior Subordinated Note Purchase and Guaranty Agreement
dated as of September 15, 1989 among Tele-Media Company of
Mid-America, L.P., a Delaware limited Partnership
("Tele-Media"), as Issuer and the Registrant, Phoenix Leasing
Incorporated and CMS TM Mezzanine, L.P. as Purchasers. Filed
as Exhibit 10.8(a) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1989.*

(b) Senior Subordinated Note No. 1 in the principal sum of $6
million, dated September 29, 1989 between Tele-Media as Debtor
and the Registrant as Holder. Filed as Exhibit 10.8(b) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.*

(c) Contingent Payment Agreement dated as of September 15, 1989
between Tele-Media as Debtor and the Registrant as Holder.
Filed as Exhibit 10.8(c) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1989.*

10.5 (a) Debenture Purchase Agreement dated as of January 8, 1990
between the Registrant as Purchaser and Vista/Narragansett
Cable, L.P., a Delaware limited partnership ("Vista"), as
Debtor. Filed as Exhibit 10.9(a) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1989.*

(b) Debenture in the principal sum of $ 6.8 million dated January
8, 1990 between Vista as Debtor and the Registrant as
Purchaser. Filed as Exhibit 10.9(b) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1989.*

(c) Contingent Interest Certificate between Vista as Debtor and
the Registrant as Purchaser. Filed as Exhibit 10.9(c) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.*

(d) Amendment No. 1 to Debenture Purchase Agreement, dated as of
March 15, 1993, by and between Vista/Narragansett Cable, L.P.
and Registrant. Filed as Exhibit 10.1(a) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1993.*

(e) Restated Debenture, dated March 15, 1993, in the principal
amount of $9,047,786 between Vista/Narragansett Cable, L.P. as
Debtor and the Registrant as Purchaser. Filed as Exhibit
10.1(b) to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1993.*

(f) Restated Contingent Interest Certificate between
Vista/Narragansett Cable, L.P. as Debtor and the Registrant as
Purchaser. Filed as Exhibit 10.1(c) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1993.*
</TABLE>

- ---------------
* Not filed herewith. In accordance with Rule 12b-32 of the General Rules
and Regulations under the Securities Exchange Act of 1934, reference is
made to the document previously filed with the Commission which is
incorporated herein by reference.

25
<PAGE> 49
<TABLE>
<S> <C> <C>
(g) Security Agreement, dated as of March 15, 1993, by and between
Vista/Narragansett Cable, L.P. as Debtor and the Registrant as
the Secured Party. Filed as Exhibit 10.1(d) to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993.*

(h) Contingent Management Agreement, dated as of March 15, 1993,
by and between Vista/Narragansett Cable, L.P. and the
Registrant. Filed as Exhibit 10.1(e) to the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31,
1993.*

(i) Amended and Restated Intercreditor and Subordination
Agreement, dated as of March 15, 1993, by and between
Registrant, Fleet National Bank and Vista/Narragansett Cable,
L.P. Filed as Exhibit 10.1(f) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993.*

10.6 (a) Promissory Note, dated December 31, 1992, in the principal
amount of $6,000,000 between Cablevision Systems Services
Corporation, a New York corporation, ("Cablevision") as Debtor
and the Registrant as Holder. Filed as Exhibit 10.6(a) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992.*

(b) Promissory Note, dated December 31, 1992, in the principal
amount of $1,232,769 between Cablevision as Debtor and the
Registrant as Holder. Filed as Exhibit 10.6(b) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992.*

(c) Termination Agreement, dated as of December 31, 1992, among
Registrant, Cablevision, Cablevision Systems Company,
Cablevision of Chicago and Charles F. Dolan. Filed as Exhibit
10.6(c) to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992.*

(d) Irrevocable Standby Letter of Credit, dated February 4, 1993,
between Bank of Montreal as Issuer and Registrant as
Beneficiary. Filed as Exhibit 10.6(d) to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1992.*

10.7 (a) Senior Subordinated Note Purchase and Guaranty Agreement,
dated as of April 28, 1993, between the Registrant, Tele-Media
Broadcasting Company of America, Robert E. Tudek and Everett
I. Mundy. Filed as Exhibit 10.2(a) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1993.*

(b) Senior Subordinated Note No. 1, dated April 28, 1993, between
Tele-Media Broadcasting Company of America as Debtor and
Registrant as Purchaser. Filed as Exhibit 10.2(b) to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993.*

</TABLE>

26
<PAGE> 50
<TABLE>
<S> <C> <C>
(c) Pledge and Security Agreement, dated as of April 28, 1993, by
and between Tele-Media Broadcasting Company of America and
Registrant. Filed as Exhibit 10.2(c) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1993.*

(d) Stock Pledge Agreement, dated as of April 28, 1993, between
Robert E. Tudek and Everett I. Mundy as Pledgors and
Registrant as Purchaser. Filed as Exhibit 10.2(d) to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993.*

(e) Mortgage and Security Agreement, dated as of April 28, 1993,
by and between Tele-Media Broadcasting Company of America and
Registrant for the Premises at Ipswitch Street, Town of
Johnston, County of Providence, State of Rhode Island. Filed
as Exhibit 10.2(e) to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1993.*

(f) Mortgage and Security Agreement, dated as of April 28, 1993,
by and between Tele-Media Broadcasting Company of America and
Registrant for the Premises at 1520 Wampanoag Trail, City of
East Providence, County of Providence, State of Rhode Island.
Filed as Exhibit 10.2(f) to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993.*

(g) Consent and Recognition, dated as of April 28, 1993, between
Tele-Media Broadcasting Company of America, Capital
Cities/ABC, Inc. and Registrant. Filed as Exhibit 10.2(g) to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993.*

11.1 Statement of Computation of Net Investment Income per Limited
Partnership Unit.

20.1 Report Furnished to Securities Holders.
</TABLE>

- ---------------------
* Not filed herewith. In accordance with Rule 12b-32 of the General Rules
and Regulations under the Securities Exchange Act of 1934, reference is
made to the document previously filed with the Commission which is
incorporated herein by reference.

27
<PAGE> 51
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.

Dated: March 27, 1996

KAGAN MEDIA PARTNERS, L.P.

By: KAGAN MEDIA CAPITAL INC.
its Managing General Partner

By: /s/ Paul F. Kagan
--------------------------------
Name: Paul F. Kagan
Title: President and Director

By: /s/ Norman Glaser
--------------------------------
Name: Norman Glaser
Title: Vice President, Chief Financial
Officer and Director

By: MEZZANINE CAPITAL CORPORATION
its Administrative General Partner

By: /s/ Gerald F. Goertz, Jr.
--------------------------------
Name: Gerald F. Goertz, Jr.
Title: President and Director

By: /s/ Joseph P. Ciavarella
--------------------------------
Name: Joseph P. Ciavarella
Title: Vice President, Secretary, Treasurer and Chief
Financial and Accounting Officer

By: ROCHELLE B. KING
Independent General Partner

/s/ Rochelle B. King
--------------------------------

By: SCOTT N. LEDBETTER
Independent General Partner

/s/ Scott N. Ledbetter
--------------------------------

By: ROD WARNER
Independent General Partner

/s/ Rod Warner
--------------------------------

28
<PAGE> 52
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 27, 1996.

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

/s/ Paul F. Kagan President and Director of
- -------------------------
Paul F. Kagan Kagan Media Capital Inc.

/s/ Norman Glaser Vice President, Chief Financial
- -------------------------
Norman Glaser Officer and Director of
Kagan Media Capital Inc.

/s/ Gerald F. Goertz, Jr. President and Director of
- -------------------------
Gerald F. Goertz, Jr. Mezzanine Capital Corporation

/s/ Clifford B. Wattley Vice President, Assistant
- -------------------------
Clifford B. Wattley Secretary and Director of
Mezzanine Capital Corporation

/s/ Stephen R. Dyer Vice President, Assistant
- -------------------------
Stephen R. Dyer Secretary and Director of
Mezzanine Capital Corporation

29
<PAGE> 53
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No. Description Pages
- ----------- -------------------------------------------------------------- -----
<S> <C> <C> <C>
3.1 Amended and Restated Agreement of Limited Partnership of Kagan *
Media Partners, L.P., dated July 21, 1989. (Incorporated by
Reference.)

10.1 Investor Advisory Agreement, dated July 21, 1989 between Kagan *
Media Partners, L.P. and Kagan Media Capital Inc.
(Incorporated by Reference.)

10.2 Custody Agreement, dated July 21, 1989, between Kagan Media *
Partners, L.P. and FirsTier Bank, N.A. (Incorporated by
Reference.)

10.3 Transfer Agent Agreement, dated July 21, 1989, between Kagan
Media Partners, L.P., PaineWebber Media Inc. and Service Data
Corporation. (Incorporated by Reference.)

10.4 (a) Senior Subordinated Note Purchase and Guaranty Agreement *
dated as of September 15, 1989 among Tele-Media Company of
Mid-America, L.P., a Delaware limited Partnership
("Tele-Media"), as Issuer and the Registrant, Phoenix Leasing
Incorporated and CMS TM Mezzanine, L.P. as Purchasers.
(Incorporated by Reference.)

(b) Senior Subordinated Note No. 1 in the principal sum of $6 *
million, dated September 29, 1989 between Tele-Media as Debtor
and the Registrant as Holder. (Incorporated by Reference.)

(c) Contingent Payment Agreement dated as of September 15, 1989
between Tele-Media as Debtor and the Registrant as Holder.
(Incorporated by Reference.)

10.5 (a) Debenture Purchase Agreement dated as of January 8, 1990 *
between the Registrant as Purchaser and Vista/Narragansett
Cable, L.P., a Delaware limited partnership ("Vista"), as
Debtor. (Incorporated by Reference.)

(b) Debenture in the principal sum of $ 6.8 million dated January
8, 1990 between Vista as Debtor and the Registrant as
Purchaser. (Incorporated by Reference.)

(c) Contingent Interest Certificate between Vista as Debtor and
the Registrant as Purchaser. (Incorporated by Reference.)

(d) Amendment No. 1 to Debenture Purchase Agreement, dated as of *
March 15, 1993, by and between Vista/Narragansett Cable, L.P.
and Registrant. (Incorporated by Reference.)
</TABLE>

30
<PAGE> 54
<TABLE>
<S> <C> <C> <C>
(e) Restated Debenture, dated March 15, 1993, in the principal *
amount of $9,047,786 between Vista/Narragansett Cable, L.P. as
Debtor and the Registrant as Purchaser. (Incorporated by
Reference.)

(f) Restated Contingent Interest Certificate between *
Vista/Narragansett Cable, L.P. as Debtor and the Registrant as
Purchaser. (Incorporated by Reference.)

(g) Security Agreement, dated as of March 15, 1993, by and between *
Vista/Narragansett Cable, L.P. as Debtor and the Registrant as
the Secured Party. (Incorporated by Reference.)

(h) Contingent Management Agreement, dated as of March 15, 1993, *
by and between Vista/Narragansett Cable, L.P. and the
Registrant. (Incorporated by Reference.)

(i) Amended and Restated Intercreditor and Subordination *
Agreement, dated as of March 15, 1993, by and between
Registrant, Fleet National Bank and Vista/Narragansett Cable,
L.P. (Incorporated by Reference.)

10.6 (a) Promissory Note, dated December 31, 1992, in the principal *
amount of $6,000,000 between Cablevision Systems Services
Corporation, a New York corporation, ("Cablevision") as Debtor
and the Registrant as Holder. (Incorporated by Reference.)

(b) Promissory Note, dated December 31, 1992, in the principal *
amount of $1,232,769 between Cablevision as Debtor and the
Registrant as Holder. (Incorporated by Reference.)

(c) Termination Agreement, dated as of December 31, 1992, among *
Registrant, Cablevision, Cablevision Systems Company,
Cablevision of Chicago and Charles F. Dolan. (Incorporated by
Reference.)

(d) Irrevocable Standby Letter of Credit, dated February 4, 1993, *
between Bank of Montreal as Issuer and Registrant as
Beneficiary. (Incorporated by Reference.)

10.7 (a) Senior Subordinated Note Purchase and Guaranty Agreement, *
dated as of April 28, 1993, between the Registrant, Tele-Media
Broadcasting Company of America, Robert E. Tudek and Everett
I. Mundy. (Incorporated by Reference.)

(b) Senior Subordinated Note No. 1, dated April 28, 1993, between *
Tele-Media Broadcasting Company of America as Debtor and
Registrant as Purchaser. (Incorporated by Reference.)
</TABLE>

31
<PAGE> 55
<TABLE>
<S> <C> <C> <C>
(c) Pledge and Security Agreement, dated as of April 28, 1993, by *
and between Tele-Media Broadcasting Company of America and
Registrant. (Incorporated by Reference.)

(d) Stock Pledge Agreement, dated as of April 28, 1993, between *
Robert E. Tudek and Everett I. Mundy as Pledgors and
Registrant as Purchaser. (Incorporated by Reference.)

(e) Mortgage and Security Agreement, dated as of April 28, 1993, *
by and between Tele-Media Broadcasting Company of America and
Registrant for the Premises at Ipswitch Street, Town of
Johnston, County of Providence, State of Rhode Island.
(Incorporated by Reference.)

(f) Mortgage and Security Agreement, dated as of April 28, 1993, *
by and between Tele-Media Broadcasting Company of America and
Registrant for the Premises at 1520 Wampanoag Trail, City of
East Providence, County of Providence, State of Rhode Island.
(Incorporated by Reference.)

(g) Consent and Recognition, dated as of April 28, 1993, between *
Tele-Media Broadcasting Company of America, Capital
Cities/ABC, Inc. and Registrant. (Incorporated by Reference.)

11.1 Statement of Computation of Net Investment Income per Limited
Partnership Unit.

20.1 Report Furnished to Securities Holders.
</TABLE>

- ----------------
* See Item 14(c) for statement of location of exhibits incorporated by
reference.

<PAGE> 1
EXHIBIT 11.1

33
<PAGE> 2

KAGAN MEDIA PARTNERS, L.P.

STATEMENT OF COMPUTATION OF NET INVESTMENT
INCOME PER LIMITED PARTNERSHIP UNIT

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net Investment Income $ 68,818 $1,434,067 $3,451,805
Percentage Allocable to Limited Partners 99% 99% 99%
---------- ---------- ----------
Net Investment Income
Allocable to Limited Partners $ 68,130 $1,419,726 $3,417,287
========== ========== ==========
Weighted Average Number of
Limited Partnership Units Outstanding 1,388,473 1,388,473 1,388,473
========== ========== ==========
Net Investment Income
Per Limited Partnership Unit $ .05 $ 1.02 $ 2.46
========== ========== ==========
</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 6,144,423
<SECURITIES> 5,539,775
<RECEIVABLES> 46,709
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,770,702
<CURRENT-LIABILITIES> 4,993,942
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,770,702
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 456,007
<INCOME-TAX> 0
<INCOME-CONTINUING> 456,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 456,007
<EPS-PRIMARY> .33
<EPS-DILUTED> 0

</TABLE>