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    Launched in April to more than six million subscribers, Toon Disney is the Disney Channel's 24-hour all-animation basic cable network. Toon Disney showcases the unmatched Disney library, with its 70 years of shorts, movies, series and specials.

    Lifetime solidified and expanded its standing as "television for women" in 1998. It ranks number one in audiences of women 18 to 49 throughout the day, outpacing all other basic cable networks, and last year experienced its highest ratings ever — a 20 percent increase over 1997.

Its first spin-off, the Lifetime Movie Network, provides viewers with movies 24 hours a day. In August, the new network introduced three original prime-time series, Any Day Now, Maggie and Oh Baby.

The magazine series New Attitudes premiered in March and continues to increase its audience in its late-night time slot; an aggressive public affairs campaign for more high-quality child care took viewers' concerns to the White House and Capitol Hill.

The Lifetime sports division, which telecasts the Women's National Basketball Association, expanded in 1998 to include a women's team triathlon, a golf tournament for breast cancer awareness and a women's college basketball tournament.

    The Emmy Award-winning A&E Network now serves more than 78 million homes in the U.S. It offers a unique blend of original programming, including mysteries from Hercule Poirot to Sherlock Holmes; the literary dramas Tom Jones, Tess and the yet-to-come Hornblower, based on the C. S. Forester novels, and investigative documentaries hosted by Bill Kurtis.

In 1999, A&E also will unveil a slate of original movies, including Murder in a Small Town, a mystery starring Gene Wilder; Dash & Lilly, starring Sam Shepard and Judy Davis as writers Dashiell Hammett and Lillian Hellman, with Bebe Neuwirth as Dorothy Parker; the life of showman P. T. Barnum, and Edgar Allan Poe's Murders in the Rue Morgue.

    The History Channel won two 1998 Peabody Awards for excellence in documentary programming and is the only TV network devoted exclusively to the subject of history. It is now available in more than 50 million homes.

    E! increased its reach to 51 million U.S. cable and direct broadcast satellite subscribers in 1998. In October, the company launched its second channel, "style," a 24-hour network devoted to style, fashion and the events that shape these worlds. E! programming is seen in more than 120 countries, reaching 400 million homes. It has two 24-hour branded channels outside the U.S. and is planning to start other regional versions in 1999.

    In just 12 months, WDTV-I launched Disney Channels in Spain and Italy, bringing the count to eight, with plans for at least three more before 2000. Subscriber levels have increased in all markets, with channels in France and Spain doing particularly well.

WDTV-I established new free-TV relationships in Latin America and developed critically acclaimed kids' programming, such as the interactive live-TV program Diggit in the United Kingdom. WDTV-I now licenses nearly 5,000 hours of programming worldwide and provides more than 400 hours of Disney-branded shows weekly.

    Fairchild publishes Jane, Los Angeles Magazine and W, a fashion lifestyle magazine that was named one of AdWeek's 10 Hottest Magazines for the second straight year.

In addition to its consumer magazines, Fairchild produces nine other fashion and retail trade publications, including Women's Wear Daily and Daily News Record. With 15 bureaus and more than 700 employees across the globe, Fairchild is one of the world's largest fashion news-gathering networks.

Statements describing the company's expectations for future developments constitute "forward-looking statements" that are subject to uncertainties and possible change. For a discussion of factors that may affect future performance, see "Forward-Looking Statements " in the "Management's Discussions and Analysis" section of this report.