FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(MARK ONE)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       FOR THE QUARTERLY PERIOD ENDED March 31, 2003

                                       OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       FOR THE TRANSITION PERIOD FROM ________________ TO ____________________

                         Commission File Number 1-13452

                        PAXSON COMMUNICATIONS CORPORATION
             (Exact name of registrant as specified in its charter)

            DELAWARE                                    59-3212788
(State or other jurisdiction of              (IRS Employer Identification No.)
 incorporation or organization)

        601 Clearwater Park Road
        West Palm Beach, Florida                                       33401
(Address of principal executive offices)                            (Zip Code)

       Registrant's Telephone Number, Including Area Code: (561) 659-4122

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

YES [X]  NO [ |


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 2003:

                           CLASS OF STOCK                     NUMBER OF SHARES
                           --------------                     ----------------
Common stock-Class A, $0.001 par value per share.............   59,261,670
Common stock-Class B, $0.001 par value per share.............    8,311,639





                        PAXSON COMMUNICATIONS CORPORATION





                                      INDEX




                                                                                                                            PAGE
                                                                                                                            ----

                                                                                                                            
PART I - FINANCIAL INFORMATION

         Item 1.   Financial Statements

         Consolidated Balance Sheets as of March 31, 2003 (unaudited) and December 31, 2002..........................          3

         Consolidated Statements of Operations for the Three Months Ended March  31, 2003 and 2002
         (unaudited) ................................................................................................          4

         Consolidated Statement of Stockholders' Deficit for the Three Months Ended March 31, 2003
         (unaudited).................................................................................................          5

         Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002
         (unaudited).................................................................................................          6

         Notes to Unaudited Consolidated Financial Statements........................................................          7

         Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations .............         13

         Item 4.  Controls and Procedures  ..........................................................................         22



PART II - OTHER INFORMATION


         Item 6.   Exhibits and Reports on Form 8-K  ................................................................         23

         Signatures..................................................................................................         25

         Certifications..............................................................................................         26





                                       2



ITEM 1.  FINANCIAL STATEMENTS

                        PAXSON COMMUNICATIONS CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                        (in thousands except share data)



                                                                                                  MARCH 31,     DECEMBER 31,
                                                                                                     2003            2002
                                                                                                 -----------       -----------
                                                                                                 (UNAUDITED)

                                                                                                             
Assets
Current assets:
    Cash and cash equivalents .............................................................      $    65,288       $    25,765
    Short-term investments ................................................................           13,623            17,073
    Accounts receivable, net of allowance for doubtful accounts of $2,229 and $2,100,
        respectively ......................................................................           18,274            28,810
    Program rights ........................................................................           36,521            33,998
    Amounts due from Crown Media ..........................................................           10,680            11,239
    Prepaid expenses and other current assets .............................................            5,271             5,011
                                                                                                 -----------       -----------
       Total current assets ...............................................................          149,657           121,896
Property and equipment, net ...............................................................          125,247           128,258
Intangible assets, net ....................................................................          878,701           880,703
Program rights, net of current portion ....................................................           33,053            35,972
Amounts due from Crown Media, net of current portion ......................................           15,999            18,769
Investments in broadcast properties .......................................................            7,278             8,777
Assets held for sale ......................................................................           20,465            28,886
Other assets, net .........................................................................           27,825            27,748
                                                                                                 -----------       -----------
       Total assets .......................................................................      $ 1,258,225       $ 1,251,009
                                                                                                 ===========       ===========
Liabilities, Mandatorily Redeemable Preferred Stock and Stockholders' Deficit
Current liabilities:
    Accounts payable and accrued liabilities ..............................................      $    33,256       $    34,720
    Accrued interest ......................................................................            9,048            14,621
    Obligations for program rights ........................................................           19,474            21,475
    Obligations to CBS ....................................................................           18,376            15,664
    Obligations for cable distribution rights .............................................            6,108             5,246
    Deferred revenue from cable and satellite distribution rights .........................            8,645             7,839
    Current portion of bank financing .....................................................            3,280             3,144
                                                                                                 -----------       -----------
       Total current liabilities ..........................................................           98,187           102,709
    Obligations for program rights, net of current portion ................................            6,884             6,800
    Obligations to CBS, net of current portion ............................................           24,731            30,025
    Obligations for cable distribution rights, net of current portion .....................              371               733
    Deferred revenue from cable and satellite distribution rights, net of current portion .            8,891             9,210
    Deferred income taxes .................................................................          136,334           136,286
    Senior subordinated notes and bank financing, net of current portion ..................          908,520           896,957
    Other long-term liabilities ...........................................................           23,592            23,653
                                                                                                 -----------       -----------
       Total liabilities ..................................................................        1,207,510         1,206,373
                                                                                                 -----------       -----------
Mandatorily redeemable preferred stock ....................................................        1,016,363           993,101
                                                                                                 -----------       -----------
Commitments and contingencies
Stockholders' deficit:
    Class A common stock, $0.001 par value; one vote per share; 215,000,000
       shares authorized, 59,261,670 and 56,568,827 shares issued and outstanding .........               59                57
    Class B common stock, $0.001 par value; ten votes per share; 35,000,000
       shares authorized and 8,311,639 shares issued and outstanding ......................                8                 8
    Common stock warrants and call option .................................................           68,384            68,384
    Stock subscription notes receivable, net ..............................................             (132)             (747)
    Additional paid-in capital ............................................................          519,415           513,109
    Deferred stock option compensation ....................................................           (3,677)           (2,460)
    Accumulated deficit ...................................................................       (1,547,117)       (1,523,670)
    Accumulated other comprehensive loss ..................................................           (2,588)           (3,146)
                                                                                                 -----------       -----------
       Total stockholders' deficit ........................................................         (965,648)         (948,465)
                                                                                                 -----------       -----------
    Total liabilities, mandatorily redeemable preferred stock, and stockholders' deficit ..      $ 1,258,225       $ 1,251,009
                                                                                                 ===========       ===========


         THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
                             FINANCIAL STATEMENTS.



                                       3


                        PAXSON COMMUNICATIONS CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands except share and per share data)



                                                                                            FOR THE THREE MONTHS ENDED
                                                                                                    MARCH 31,
                                                                                          -------------------------------
                                                                                               2003              2002
                                                                                          ------------       ------------
                                                                                                    (UNAUDITED)
                                                                                                       
REVENUES:
Gross revenues .....................................................................      $     82,678       $     80,781
Less: agency commissions ...........................................................           (12,076)           (11,706)
                                                                                          ------------       ------------
Net revenues .......................................................................            70,602             69,075
                                                                                          ------------       ------------
EXPENSES:
   Programming and broadcast operations (excluding stock-based compensation of $804
      and $145, respectively) ......................................................            12,602             12,958
   Program rights amortization .....................................................            13,022             18,969
   Selling, general and administrative (excluding stock-based compensation of $6,610
      and $1,188, respectively) ....................................................            27,103             29,619
   Time brokerage and affiliation fees .............................................             1,101                935
   Stock-based compensation ........................................................             7,414              1,333
   Adjustment of programming to net realizable value ...............................             1,066                 --
   Restructuring credits ...........................................................               (21)              (402)
   Depreciation and amortization ...................................................            14,570             12,638
                                                                                          ------------       ------------
   Total operating expenses ........................................................            76,857             76,050

Gain on sale of broadcast assets ...................................................            26,789                 --
                                                                                          ------------       ------------
Operating income (loss) ............................................................            20,534             (6,975)
                                                                                          ------------       ------------
OTHER INCOME (EXPENSE):
   Interest expense ................................................................           (22,125)           (19,659)
   Interest income .................................................................               878                496
   Other expenses, net .............................................................               (23)              (571)
   Loss on extinguishment of debt ..................................................                --            (17,552)
   Gain on modification of program rights obligations ..............................               603                233
                                                                                          ------------       ------------
Loss before income taxes ...........................................................              (133)           (44,028)
Income tax provision ...............................................................               (52)          (125,903)
                                                                                          ------------       ------------
Net loss ...........................................................................              (185)          (169,931)
Dividends and accretion on redeemable preferred stock ..............................           (23,262)           (29,531)
                                                                                          ------------       ------------
Net loss attributable to common stockholders .......................................      $    (23,447)      $   (199,462)
                                                                                          ============       ============
Basic and diluted loss per common share ............................................      $      (0.35)      $      (3.08)
                                                                                          ============       ============
Weighted average shares outstanding ................................................        66,799,581         64,758,512
                                                                                          ============       ============




         THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
                              FINANCIAL STATEMENTS.



                                       4




                        PAXSON COMMUNICATIONS CORPORATION

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
              For the Three Months Ended March 31, 2003 (Unaudited)
                                 (in thousands)




                                             COMMON                                                     ACCUMU-
                                              STOCK      STOCK                DEFERRED                   LATED
                                             WARRANTS SUBSCRIPTION  ADDI-      STOCK                     OTHER        TOTAL
                            COMMON STOCK       AND       NOTES      TIONAL     OPTION                    COMPRE-      STOCK-
                          ----------------    CALL    RECEIVABLE,   PAID-IN   COMPEN-     ACCUMULATED    HENSIVE      HOLDERS'
                          CLASS A  CLASS B   OPTION       NET       CAPITAL    SATION       DEFICIT       LOSS        DEFICIT
                          -------  -------   -------- -----------  ---------  ---------   -----------   ----------    ---------
                                                                                           
Balance, December 31,
 2002 .................... $  57   $     8   $ 68,384   $  (747)   $ 513,109    $(2,460)   $(1,523,670)   $ (3,146)   $(948,465)
 Stock-based
   compensation ..........    --        --         --        --           --      7,414             --          --        7,414
 Deferred stock option
   compensation ..........    --        --         --        --        8,631     (8,631)            --          --           --
 Stock options exercised .     2        --         --        --           10         --             --          --           12
 Payment of employee
   income taxes on
   exercise of common
   stock options .........    --        --         --        --       (2,335)        --             --          --       (2,335)
 Repayment of stock
   subscription notes
   receivable ............    --        --         --       615           --         --             --          --          615
 Other comprehensive
   income ................    --        --         --        --           --         --             --         558          558
 Dividends on redeemable
   and convertible
   preferred stock .......    --        --         --        --           --         --        (22,839)         --      (22,839)
 Accretion on redeemable
   and convertible
   preferred stock .......    --        --         --        --           --         --           (423)         --         (423)
 Net loss ................    --        --         --        --           --         --           (185)         --         (185)
                           -----   -------   --------   -------    ---------    -------    -----------    --------    ---------
Balance, March 31, 2003... $  59   $     8   $ 68,384   $  (132)   $ 519,415    $(3,677)   $(1,547,117)   $ (2,588)   $(965,648)
                           =====   =======   ========   =======    =========    =======    ===========    ========    =========



         THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
                             FINANCIAL STATEMENTS.



                                       5



                        PAXSON COMMUNICATIONS CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)




                                                                              FOR THE THREE MONTHS ENDED
                                                                                      MARCH 31,
                                                                              ---------------------------
                                                                                 2003          2002
                                                                             ------------    ------------
                                                                                      (UNAUDITED)

                                                                                       
    Cash flows from operating activities:
        Net loss ............................................................   $    (185)   $(169,931)
    Adjustments  to  reconcile  net loss to net cash  provided  by (used  in)
    operating activities:
        Depreciation and amortization .......................................      14,570       12,638
        Stock-based compensation ............................................       7,414        1,333
        Loss on extinguishment of debt ......................................          --       17,552
        Non-cash restructuring credits ......................................         (21)        (402)
        Program rights amortization .........................................      13,022       18,969
        Adjustment of programming to net realizable value ...................       1,066           --
        Payments for cable distribution rights ..............................      (1,500)      (2,278)
        Barter revenue ......................................................        (432)        (156)
        Payments for program rights and deposits ............................     (13,187)     (29,050)
        Provision for doubtful accounts .....................................         411           --
        Deferred income tax provision .......................................          48      125,873
        Loss on sale or disposal of assets ..................................         275          713
        Gain on sale of broadcast assets ....................................     (26,789)          --
        Gain on modification of program rights obligations ..................        (603)        (233)
        Accretion on senior subordinated discount notes .....................      10,425        7,974
    Changes in assets and liabilities:
        Decrease in accounts receivable .....................................       7,973        4,344
        Decrease in amounts due from Crown Media ............................       3,329           --
        (Increase) decrease in prepaid expenses and other current assets ....        (254)         593
        Decrease in other assets ............................................         406          671
        Decrease in accounts payable and accrued liabilities ................        (384)      (3,357)
        Decrease in accrued interest ........................................      (5,573)      (5,891)
        Decrease in obligations to CBS ......................................      (2,212)          --
                                                                                ---------    ---------
             Net cash provided by (used in) operating activities ............       7,799      (20,638)
                                                                                ---------    ---------
    Cash flows from investing activities:
        Decrease (increase) in short-term investments .......................       3,450      (12,134)
        Purchases of property and equipment .................................      (5,354)     (12,048)
        Proceeds from sale of broadcast assets ..............................      35,000           --
        Proceeds from sale of property and equipment ........................         207           --
        Other ...............................................................          --         (456)
                                                                                ---------    ---------
             Net cash provided by (used in) investing activities ............      33,303      (24,638)
                                                                                ---------    ---------
    Cash flows from financing activities:
        Borrowings of long-term debt ........................................       2,000      320,338
        Repayments of long-term debt ........................................        (725)         (12)
        Redemption of 12 1/2% exchange debentures ...........................          --     (284,410)
        Payments of loan origination costs ..................................        (531)      (9,164)
        Debt extinguishment premium and costs ...............................          --      (14,302)
        Payments of employee income taxes on exercise of
          common stock options ..............................................      (2,335)          --
        Proceeds from exercise of common stock options, net .................          12        1,082
                                                                                ---------    ---------
             Net cash (used in) provided by financing activities ............      (1,579)      13,532
                                                                                ---------    ---------
        Increase (decrease) in cash and cash equivalents ....................      39,523      (31,744)
        Cash and cash equivalents, beginning of period ......................      25,765       83,858
                                                                                ---------    ---------
        Cash and cash equivalents, end of period ............................   $  65,288    $  52,114
                                                                                =========    =========



        THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
                             FINANCIAL STATEMENTS.



                                       6




                        PAXSON COMMUNICATIONS CORPORATION

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

    Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of March 31, 2003 and
for the three month periods ended March 31, 2003 and 2002 is unaudited. In the
opinion of management, all adjustments necessary for the fair presentation of
such financial information have been included. These adjustments are of a normal
recurring nature. The consolidated financial statements include the accounts of
the Company and its majority owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.

    Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Certain reclassifications have been made to the
prior year's financial statements to conform to the 2003 presentation. These
financial statements, footnotes and discussions should be read in conjunction
with the financial statements and related footnotes and discussions contained in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2002, and the definitive proxy statement for the annual meeting of stockholders
to be held May 16, 2003, both of which were filed with the United States
Securities and Exchange Commission.


2. RESTRUCTURING PLANS

    During the fourth quarter of 2002, the Company adopted a plan to consolidate
certain of its operations, reduce personnel and modify its programming schedule
in order to significantly reduce the Company's cash operating expenditures. In
connection with this plan, the Company recorded a restructuring charge of
approximately $2.6 million in the fourth quarter of 2002 consisting of $2.2
million in termination benefits for 95 employees and $0.4 million for costs
associated with exiting leased properties and consolidating certain operations.
Through March 31, 2003, the Company has paid $2.1 million in termination
benefits to 94 employees and paid $0.3 million of lease termination and other
costs. The Company has accounted for these costs pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"), which the Company
early adopted in the fourth quarter of 2002. SFAS 146 requires that a liability
for a cost associated with an exit or disposal activity be recognized when the
liability is incurred. Additional restructuring costs, if any, will be
recognized as they are incurred.

    The Company has substantially completed its Joint Sales Agreement ("JSA")
restructuring plan entered into in the fourth quarter of 2000, except for
contractual lease obligations for closed locations, the majority of which expire
in 2004.

    The following summarizes the activity in the Company's restructuring
reserves for the three months ended March 31, 2003 (in thousands):




                                                               AMOUNTS CHARGED
                                              BALANCE           (CREDITED) TO             CASH               BALANCE
CORPORATE RESTRUCTURING                  DECEMBER 31, 2002    COSTS AND EXPENSES       DEDUCTIONS        MARCH  31, 2003
                                        ------------------    ------------------       ----------      -----------------
Accrued liabilities:
                                                                                                
  Lease and other costs............          $    262            $      46         $        (172)           $    136
  Severance........................               732                  (67)                 (660)                  5
                                             --------            ----------        --------------           --------
                                             $    994            $     (21)        $        (832)           $    141
                                             ========            ==========        ==============           ========

JSA RESTRUCTURING
Accrued liabilities:
  Lease costs......................          $    528            $      --         $        (181)           $    347
                                             ========            =========         ==============           ========





                                       7




    The following summarizes the activity in the Company's JSA restructuring
reserves for the three months ended March 31, 2002 (in thousands):





                                                                     AMOUNTS
                                                  BALANCE          CREDITED TO
                                                DECEMBER 31,        COSTS AND              CASH            BALANCE
                                                    2001             EXPENSES            DEDUCTIONS     MARCH 31, 2002
                                                 ----------          --------            ----------     --------------
                                                                                               
   Accrued Liabilities:
        Lease costs.................             $    1,717          $    (129)          $     (254)       $   1,334
        Severance...................                    382               (273)                (109)              --
                                                 ----------          ---------           ----------        ---------
                                                 $    2,099          $    (402)          $     (363)       $   1,334
                                                 ==========          =========           ==========        =========



3. ASSETS HELD FOR SALE

    The results of operations and gain on sale of assets held for sale are
included in the determination of the Company's operating income (loss) from its
continuing operations in accordance with SFAS No. 144, "Accounting for
Impairment or Disposal of Long-Lived Assets" ("SFAS 144") since these assets do
not constitute a component of the Company under SFAS 144.


    Assets held for sale consist of the following (in thousands):




                                                       MARCH 31,            DECEMBER 31,
                                                         2003                   2002
                                                    -------------          -------------
                                                                     
Intangible assets, net......................        $      7,579           $     13,783
Property and equipment, net.................              12,821                 14,868
Other assets................................                  65                    235
                                                    ------------           ------------
                                                    $     20,465           $     28,886
                                                    ============           ============


    In February 2003, the Company completed the sale of the assets of its
television station KPXF, serving Fresno, California, to Univision
Communications, Inc. for a cash purchase price of $35 million resulting in a
gain of approximately $26.8 million.

    In February 2003, the Company entered into an agreement to sell the assets
of its television station KAPX, serving Albuquerque, New Mexico, for a cash
purchase price of $20.0 million. The sale of KAPX is expected to be completed in
the second quarter of 2003.

    In November 2002, the Company entered into an agreement to sell the assets
of its television stations WMPX, serving Portland-Auburn, Maine, and WPXO,
serving St. Croix, USVI, to Corporate Media Consultants Group, LLC for an
aggregate cash purchase price of $10 million. The sale of these stations closed
in April 2003. See Note 12.

4. LONG-TERM DEBT

    Senior subordinated notes and bank financing consists of the following (in
thousands):




                                                                        MARCH 31,      DECEMBER 31,
                                                                          2003            2002
                                                                        ---------      ------------
                                                                                  
      12-1/4% Senior Subordinated Discount Notes due 2009 .......      $   496,263       $   496,263
      10-3/4% Senior Subordinated Notes due 2008 ................          200,000           200,000
      Senior Bank Credit Facility ...............................          355,013           353,725
      Other debt ................................................              544               558
                                                                       -----------       -----------
                                                                         1,051,820         1,050,546
      Less: discount on 12-1/4% Senior Subordinated Discount
        Notes ...................................................         (140,020)         (150,445)
      Less: current portion of bank financing ...................           (3,280)           (3,144)
                                                                       -----------       -----------
                                                                       $   908,520       $   896,957
                                                                       ===========       ===========





                                       8


     The Company's senior credit facility, as amended, contains various
covenants restricting the Company's ability and the ability of its subsidiaries
to incur additional indebtedness, dispose of assets, pay dividends, repurchase
or redeem capital stock and indebtedness, create liens, make capital
expenditures, make certain investments or acquisitions and enter into
transactions with affiliates and otherwise restricting its activities. On May 5,
2003, the Company and its lenders amended and restated its senior credit
facility to consolidate previous amendments and, as further described below, to
incorporate the terms of a March 2003 waiver of the Company's minimum net
revenue covenant for fiscal quarters ended June 30, September 30 and December
31, 2003. In addition, the amended and restated senior credit agreement allows
for the issuance of letters of credit, subject to availability under the
Company's $25 million revolving credit facility. At March 31, 2003, there was
$25 million in borrowings outstanding under the revolving credit facility. The
Company paid a fee of $0.1 million in connection with this amendment. The senior
credit facility, as amended, contains the following financial covenants: (1)
twelve-month trailing minimum net revenue and minimum EBITDA (as defined) for
each of the fiscal quarters ended June 30, 2001 through December 31, 2004, (2)
maximum ratio of total senior debt to EBITDA, maximum ratio of total debt to
EBITDA, minimum permitted interest coverage ratio and minimum permitted fixed
charge coverage ratio, each beginning for each of the fiscal quarters ending on
or after March 31, 2005, (3) maximum annual capital expenditures for 2001
through 2006 and (4) maximum annual programming payments for 2002 through 2006.

     Pursuant to the Company's amended and restated credit agreement dated May
5, 2003, the Company's trailing twelve-month minimum net revenue covenants for
the quarters ended June 30, September 30 and December 31, 2003 have been reduced
to $250 million, provided that the Company has satisfied the requirement to pay
a fee in the amount of 0.125% of the outstanding principal amount under the
facility for each period that the Company's minimum net revenues are less than
the covenant minimums set forth in the credit agreement, but not less than $250
million. These terms are consistent with the terms of a waiver the Company
obtained in March 2003, for which the Company paid a waiver fee of $0.5 million,
and have now been incorporated into the amended and restated credit agreement.

     At March 31, 2003, the Company was in compliance with its amended
covenants. The Company believes that it will continue to be in compliance with
these amended covenants through the end of fiscal 2003, however the Company
cannot predict whether it will continue to be in compliance in 2004 and beyond.
There can be no assurance that the Company will continue to be in compliance
with these covenants in future periods. If the Company were to violate any of
these amended covenants, the Company would be required to seek a waiver from its
lenders under the senior credit facility and possibly seek an amendment to the
amended and restated senior credit facility. There can be no assurance that the
Company's lenders under its senior credit facility would grant the Company any
waiver or amendment which might become necessary. If the Company failed to meet
any of its debt covenants and the Company's lenders did not grant a waiver or
amend the facility, the lenders would have the right to declare an event of
default and seek remedies including acceleration of all outstanding amounts due
under the senior credit facility. Should an event of default be declared under
the senior credit facility, this would cause a cross default to occur under the
Company's senior subordinated note and senior subordinated discount note
indentures, thus giving each trustee the right to accelerate repayment, and
would give the holders of each of the Company's three outstanding series of
preferred stock the right to elect two directors per series to the Company's
Board of Directors. There can be no assurance that the Company would be
successful in obtaining alternative sources of funding to repay these
obligations should these events occur.

5. MANDATORILY REDEEMABLE PREFERRED STOCK

    The following represents a summary of the changes in the Company's
mandatorily redeemable preferred stock during the three month period ended March
31, 2003 (in thousands):




                                                          JUNIOR                        SERIES B
                                                       EXCHANGEABLE    CONVERTIBLE     CONVERTIBLE
                                                         PREFERRED      PREFERRED     EXCHANGEABLE
                                                           STOCK          STOCK         PREFERRED
                                                          13 1/4%        9 3/4%         STOCK 8%          TOTAL
                                                        ----------      ----------      ----------      ----------
                                                                                                      
Balance at December 31, 2002 .....................      $  354,498      $  114,320      $  524,283      $  993,101
Accretion ........................................             298             125              --             423
Accrual of cumulative dividends ..................          11,703           2,836           8,300          22,839
                                                        ----------      ----------      ----------      ----------
Balance at March 31, 2003 ........................      $  366,499      $  117,281      $  532,583      $1,016,363
                                                        ==========      ==========      ==========      ==========
Aggregate liquidation preference at March 31, 2003      $  370,859      $  119,175      $  532,583      $1,022,617
Shares authorized ................................          72,000          17,500          41,500         131,000
Shares issued and outstanding ....................          35,330          11,918          41,500          88,748
Accrued dividends ................................      $   17,555      $       --      $  117,583      $  135,138




                                       9



    Holders of the 13 1/4% Junior Exchangeable Preferred Stock are entitled to
cumulative dividends at an annual rate of 13 1/4% of the liquidation preference,
payable semi-annually in cash or additional shares beginning November 15, 1998
and accumulating from the issue date. If dividends for any period ending after
May 15, 2003 are paid in additional shares of Junior Exchangeable Preferred
Stock, the dividend rate will increase by 1% per annum for such dividend payment
period. The Company intends to continue to pay dividends in additional shares in
2003, therefore the dividend rate will increase to 14 1/4% after May 15, 2003.

6. COMPREHENSIVE INCOME (LOSS)

    The components of comprehensive income (loss) are as follows (in thousands):

                                               THREE MONTHS ENDED MARCH 31,
                                              ------------------------------
                                                  2003            2002
                                                -------         ---------
Net loss ...............................         $(185)         $(169,931)
Other comprehensive income:
   Unrealized gain on interest rate swap           558                775
                                                 -----          ---------
Comprehensive income (loss) ............         $ 373          $(169,156)
                                                 =====          =========


7. INCOME TAXES

    The Company has recorded a provision for income taxes based on its estimated
annual effective income tax rate. For the three months ended March 31, 2003 and
2002, the Company has recorded a valuation allowance for its deferred tax assets
(resulting from tax losses generated during the periods) net of those deferred
tax liabilities which are expected to reverse in determinate future periods, as
it believes it is more likely than not that it will be unable to utilize its
remaining net deferred tax assets. Upon adoption of SFAS No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142") on January 1, 2002, the Company no longer
amortizes its goodwill and FCC license intangible assets. Under previous
accounting standards, these assets were being amortized over 25 years. Although
the provisions of SFAS 142 stipulate that indefinite-lived intangible assets and
goodwill are not amortized, the Company is required under FASB Statement No.
109, "Accounting for Income Taxes" to recognize deferred tax liabilities and
assets for temporary differences related to goodwill and FCC license intangible
assets and the tax-deductible portion of these assets. Prior to adopting SFAS
142, the Company considered its deferred tax liabilities related to these assets
as a source of future taxable income in assessing the realization of its
deferred tax assets. Because indefinite-lived intangible assets and goodwill are
no longer amortized for financial reporting purposes under SFAS 142, the related
deferred tax liabilities will not reverse until some indeterminate future period
should the assets become impaired or when they are disposed of. Therefore, the
reversal of deferred tax liabilities related to FCC license intangible assets
and goodwill is no longer considered a source of future taxable income in
assessing the realization of deferred tax assets. As a result of this accounting
change, the Company was required to record an increase in its deferred tax asset
valuation allowance totaling approximately $125.9 million during the three
months ended March 31, 2002. In addition, the Company will continue to record
increases in its valuation allowance in future periods based on increases in the
deferred tax liabilities and assets for temporary differences related to
goodwill and FCC license intangible assets.


    The Company structured the disposition of its radio division in 1997 and its
acquisition of television stations during the period following this disposition
in a manner that the Company believed would qualify these transactions as a
"like kind" exchange under Section 1031 of the Internal Revenue Code and would
permit the Company to defer recognizing for income tax purposes up to
approximately $333 million of gain. The IRS has examined the Company's 1997 tax
return and has issued the Company a "30-day letter" proposing to disallow all of
the Company's gain deferral. The Company intends to contest this determination
with the IRS appeals division, but the outcome of this matter cannot be
determined at this time, and the Company can provide no assurance that it will
prevail. In addition, the "30-day letter" offered the Company an alternative
position that, in the event the IRS is unsuccessful in disallowing all of the
gain deferral, approximately $62 million of the $333 million gain deferral will
be disallowed. The Company intends to contest this alternative determination as
well, however the Company can provide no assurance that it will prevail. Should
the IRS successfully challenge the Company's position and disallow all or part
of its gain deferral, because the Company had net operating losses in the years
subsequent to 1997 in excess of the amount of the deferred gain, the Company
would not be liable for any tax deficiency, but could be liable for interest on
the tax liability for the period prior to the carryback of its net operating
losses. The Company has estimated the amount of interest for which it could be
held liable to be a maximum of approximately $15 million should the IRS succeed
in disallowing all of the deferred gain. However, should the IRS only be
successful in disallowing part of the gain under its alternative position, the
Company estimates it would be liable for only a nominal amount of interest.




                                       10



8. PER SHARE DATA

    Basic and diluted loss per common share was computed by dividing net loss
less dividends and accretion on redeemable preferred stock by the weighted
average number of common shares outstanding during the period. The effect of
stock options and warrants is antidilutive. Accordingly, basic and diluted loss
per share is the same for all periods presented.

    As of March 31, 2003 and 2002, the following securities, which could
potentially dilute earnings per share in the future, were not included in the
computation of earnings per share, because to do so would have been antidilutive
(in thousands):




                                                                    MARCH 31,
                                                                ------------------
                                                                 2003        2002
                                                                ------      ------
                                                                      
Stock options outstanding ................................       4,151      12,514
Class A common stock warrants outstanding ................      32,428      32,428
Class A common stock reserved under convertible securities      39,344      38,660
                                                                ------      ------
                                                                75,923      83,602
                                                                ======      ======


9.  STOCK-BASED COMPENSATION

    Employee stock options are accounted for using the intrinsic value method.
Stock-based compensation to non-employees is accounted for using the fair value
method. When options are granted to employees, a non-cash charge representing
the difference between the exercise price and the quoted market price of the
common stock underlying the vested options on the date of grant is recorded as
stock-based compensation expense with the balance deferred and amortized over
the remaining vesting period.

    In January 2003, the Company consummated a stock option exchange offer under
which the Company issued to holders who tendered their eligible options in the
exchange offer new options under the Company's 1998 Stock Incentive Plan, as
amended, (the "Plan") to purchase one share of the Company's Class A common
stock for each two shares of Class A common stock issuable upon the exercise of
tendered options, at an exercise price of $0.01 per share. Because the terms of
the new options provided for a one business day exercise period, all holders who
tendered their eligible options in the exchange offer exercised their new
options promptly after the issuance of those new options. Approximately 7.3
million options were tendered in the exchange and approximately 2.6 million new
shares of Class A common stock were issued upon exercise of the new options, net
of approximately 1.0 million shares of Class A common stock withheld, in
accordance with the Plan's provisions, at the holders' elections to cover income
taxes and option exercise price totaling approximately $2.4 million. The stock
option exchange resulted in a fixed non-cash stock-based compensation expense of
approximately $8.5 million, of which approximately $6.9 million related to
vested shares was recognized in the first quarter of 2003 and the remaining $1.6
million is being recognized on a straight-line basis over the remaining one year
vesting schedule of the modified award. In addition, the remaining deferred
stock compensation expense totaling approximately $2.5 million at December 31,
2002 associated with the tendered options will be recognized on a straight-line
basis over the remaining one year vesting schedule of the modified award ($0.5
million recognized in the first quarter of 2003).

    Had compensation expense for the Company's option plans been determined
using the fair value method the Company's net loss and net loss per share would
have been as follows (in thousands except per share data):




                                                               THREE MONTHS ENDED MARCH 31,
                                                               ----------------------------
                                                                 2003                2002
                                                               --------           ---------
                                                                            
      Net loss available to common stockholders:
        As reported .....................................      $(23,447)          $(199,462)
      Add: Stock-based compensation expense
        included in reported net loss ...................         7,414               1,333
      Deduct:  Total stock-based compensation
        expense determined under the fair value method ..        (7,903)             (1,829)
                                                               --------           ---------
      Pro forma net loss available to common stockholders      $(23,936)          $(199,958)
                                                               ========           =========
      Basic and diluted net loss per share:
        As reported .....................................      $  (0.35)          $   (3.08)
        Pro forma .......................................         (0.35)              (3.09)



    The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option pricing model assuming a dividend yield of 0.0%,
expected volatility range of 50% to 73%, risk free interest rates of 2.8% to
6.9% and weighted average expected option terms of 0.5 to 7.5 years.



                                       11


10. SUPPLEMENTAL CASH FLOW INFORMATION

    Supplemental cash flow information and non-cash operating and financing
activities are as follows (in thousands):



                                                                 FOR THE THREE MONTHS
                                                                   ENDED MARCH 31,
                                                                 --------------------
                                                                   2003        2002
                                                                 -------      -------
                                                                      (Unaudited)

                                                                        
      Supplemental disclosures of cash flow information:
           Cash paid for interest .........................      $16,013      $16,520
                                                                 =======      =======
           Cash paid for income taxes .....................      $    89      $   369
                                                                 =======      =======
      Non-cash operating and financing activities:
           Dividends accrued on redeemable preferred stock       $22,839      $22,413
                                                                 =======      =======
           Discount accretion on redeemable securities ....      $   423      $ 7,118
                                                                 =======      =======
           Stock option exercise proceeds and withholding
             taxes remitted through withholding of shares
             received upon exercise .......................      $ 2,359      $    --
                                                                 =======      =======
           Repayment of stock subscription notes receivable
             through offset of deferred compensation ......      $   615      $    --
                                                                 =======      =======



11. NEW ACCOUNTING PRONOUNCEMENTS

     In the first quarter of 2003, the Company adopted SFAS No. 145 "Rescission
of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS 145"). Among other matters, SFAS 145 rescinds FASB
Statement No. 4, "Reporting Gains and Losses from Extinguishment of Debt" which
required gains and losses from extinguishments of debt to be classified as an
extraordinary item, net of related income taxes. As a result, debt
extinguishments used as part of an entity's risk management strategy no longer
meet the criteria for classification as extraordinary items. In connection with
the Company's January 2002 refinancing, the Company recognized a loss due to
early extinguishment of debt totaling approximately $17.6 million resulting
primarily from the redemption premium and the write-off of unamortized debt
costs associated with the repayment of the Company's 12 1/2% exchange
debentures. This loss was classified as an extraordinary item in the Company's
previously issued financial statements. Due to the adoption of SFAS 145 in 2003,
the Company has reclassified this loss to other income (expense) in the
Company's consolidated statement of operations.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" ("SFAS 148"). SFAS 148 amends SFAS No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), to provide
alternative methods of transition for companies that voluntarily change to a
fair value-based method of accounting for stock-based employee compensation.
SFAS 148 also amends the disclosure provisions of SFAS 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. Currently, the Company accounts for stock option plans
under the intrinsic value method of APB Opinion No. 25. The provisions of SFAS
148 are effective for fiscal years ending after December 15, 2002. The Company
has adopted the disclosure provisions of SFAS 148 in its 2002 annual financial
statements and in its 2003 interim financial statements. The Company does not
intend to change its accounting policy with regard to stock based compensation
and there was no impact on the Company's financial position, results of
operations or cash flows upon adoption of SFAS 148.

12.  SUBSEQUENT EVENTS

     In April 2003, the Company completed the sale of its television stations
WMPX, serving Portland-Auburn, Maine, and WPXO, serving St. Croix, USVI, to
Corporate Media Consultants Group, LLC for an aggregate cash purchase price of
$10 million, and completed the sale of its limited partnership interest in
television station WWDP, serving the Boston, Massachusetts market, for
approximately $14 million. The Company expects to recognize gains on the sale of
these broadcast assets totaling approximately $14 million in the second quarter
of 2003.

     In May 2003, the Company and The Christian Network, Inc., the owner of the
property located in Clearwater, Florida on which the Company's satellite up-link
facility is located, renewed the Company's lease of the property for an
additional five year term commencing July 1, 2003.



                                       12






ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS


GENERAL

    We are a network television broadcasting company which owns and operates the
largest broadcast television station group in the U.S., as measured by the
number of television households in the markets our stations serve. We currently
own and operate 61 broadcast television stations (including three stations we
operate under time brokerage agreements), which reach all of the top 20 U.S.
markets and 41 of the top 50 U.S. markets. We operate PAX TV, a network that
provides family entertainment programming seven days per week and reaches
approximately 88% of prime time television households in the U.S. (approximately
94 million homes) through our broadcast television station group, and pursuant
to distribution arrangements with cable and satellite distribution systems and
our broadcast station affiliates.

    We were founded in 1991 by Lowell W. Paxson, who remains our Chairman and
controlling stockholder. We began by purchasing radio and television stations,
and grew to become Florida's largest radio station group, while also owning two
network-affiliated television stations and other television stations that
carried principally infomercials and other paid programming. In 1997, we sold
our radio station group and our network-affiliated television stations to
concentrate on building our owned and operated television station group. We used
the proceeds from the sale of our radio station group and network-affiliated
television stations to acquire television stations and build the PAX TV network.
Since commencing our television operations in 1994, we have established the
largest owned and operated broadcast television station group in the U.S., as
measured by the number of television households in the markets our stations
serve. We launched PAX TV on August 31, 1998, and are now in our fifth network
programming season.

    In September 1999, National Broadcasting Company, Inc. ("NBC") invested $415
million in our company. We have also entered into a number of agreements with
NBC that are intended to strengthen our business. Under these agreements, NBC
sells our network spot advertising and performs our network research and sales
marketing functions. We have also entered into Joint Sales Agreements ("JSA")
with NBC with respect to most of our stations serving markets also served by an
NBC owned and operated station, and with many independently owned NBC affiliated
stations serving markets also served by our stations. During the three months
ended March 31, 2003, we paid or accrued amounts due to NBC totaling
approximately $5.3 million for commission compensation and cost reimbursements
incurred under our agreements with NBC.

    We derive our revenues from the sale of network spot advertising time,
network long form paid programming and station advertising:

    o   NETWORK SPOT ADVERTISING REVENUE. We sell commercial air time to
        advertisers who want to reach the entire nationwide PAX TV viewing
        audience with a single advertisement. Most of our network advertising is
        sold under advance, or "upfront," commitments to purchase advertising
        time, which are obtained before the beginning of our PAX TV programming
        season. Network advertising rates are significantly affected by audience
        ratings and our ability to reach audience demographics that are
        desirable to advertisers. Higher ratings generally will enable us to
        charge higher rates to advertisers. Our network advertising revenue
        represented approximately 22% of our revenue during the three months
        ended March 31, 2003.

    o   NETWORK LONG FORM PAID PROGRAMMING. We sell air time for long form paid
        programming, consisting primarily of infomercials, during broadcasting
        hours when we are not airing PAX TV. Our network long form paid
        programming represented approximately 42% of our revenue during the
        three months ended March 31, 2003.

    o   STATION ADVERTISING REVENUE. We sell commercial airtime to advertisers
        who want to reach the viewing audience in specific geographic markets in
        which we own and operate our television stations. These advertisers may
        be local businesses or regional or national advertisers who want to
        target their advertising in these markets. Station advertising rates are
        affected by ratings and local market conditions. Our station advertising
        sales represented approximately 36% of our revenue during the three
        months ended March 31, 2003. Included in station advertising revenue is
        long form paid programming sold locally or nationally which represented
        approximately 21% of our revenue during the three months ended March 31,
        2003.

    Beginning in January 2003, we modified our programming schedule by replacing
network programming during the hours of 1 p.m. to 5 p.m., Monday through Friday,
and 5 p.m. to 6 p.m. and 11 p.m. to midnight, Saturday and Sunday, with long
form paid programming. As a result, the percentage of our revenues derived from


                                       13


long form paid programming has increased from 47% in the year ended December 31,
2002, to 63% in the three months ended March 31, 2003. We expect to continue to
derive more than half of our revenues from long form paid programming for the
remainder of 2003.

    Commencing in the fourth quarter of 1999, we began entering into JSAs with
owners of broadcast stations in markets served by our stations. After
implementation of a JSA, we no longer employ our own on-site station sales
staff. The JSA partner provides station spot advertising sales management and
representation for our stations and we integrate and co-locate our station
operations with those of our JSA partners. To date, we have entered into JSAs
for 50 of our 61 owned and operated television stations.

    Our primary operating expenses include selling, general and administrative
expenses, depreciation and amortization expenses, programming expenses, employee
compensation and costs associated with cable and satellite distribution, ratings
services and promotional advertising. Programming amortization is a significant
expense and is affected significantly by several factors, including the mix of
syndicated versus lower cost original programming as well as the frequency with
which programs are aired. As we acquire a more complete library of lower cost
original programming to replace our syndicated programming, our programming
amortization expense should decline.

RESULTS OF OPERATIONS

    The following table sets forth net revenues, the components of operating
expenses and other operating data for the three months ended March 31, 2003 and
2002 (in thousands):




                                                                           THREE MONTHS ENDED
                                                                                MARCH 31,
                                                                       -------- --------------------
                                                                         2003                2002
                                                                       --------             --------
                                                                                (UNAUDITED)
                                                                                      
      Gross revenues ......................................            $ 82,678             $ 80,781
      Less: agency commissions ............................             (12,076)             (11,706)
                                                                       --------             --------
      Net revenues ........................................              70,602               69,075
                                                                       --------             --------
      Expenses:
      Programming and broadcast operations ................              12,602               12,958
      Program rights amortization .........................              13,022               18,969
      Selling, general and administrative .................              27,103               29,619
      Time brokerage and affiliation fees .................               1,101                  935
      Stock-based compensation ............................               7,414                1,333
      Adjustment of programming to net realizable value ...               1,066                   --
      Restructuring credits ...............................                 (21)                (402)
      Depreciation and amortization .......................              14,570               12,638
                                                                       --------             --------
      Total operating expenses ............................              76,857               76,050

      Gain on sale of broadcast assets ....................              26,789                   --
                                                                       --------             --------
      Operating income (loss) .............................            $ 20,534             $ (6,975)
                                                                       ========             ========
      Other Data:
      Program rights payments and deposits ................            $ 13,187             $ 29,050
      Payments for cable distribution rights ..............               1,500                2,278
      Capital expenditures ................................               5,354               12,048
      Cash flows provided by (used in) operating activities               7,799              (20,638)
      Cash flows provided by (used in) investing activities              33,303              (24,638)
      Cash flows (used in) provided by financing activities              (1,579)              13,532



THREE MONTHS ENDED MARCH 31, 2003 AND 2002

    Gross revenues increased 2.3% to $82.7 million for the three months ended
March 31, 2003 from $80.8 million for the three months ended March 31, 2002.
This increase is primarily attributable to higher advertising revenues from our
television stations. The increase in television station revenues is primarily
due to favorable results from the modification of our programming schedule in
January 2003 whereby we replaced daytime programming and related spot
advertising with long form paid programming. Network revenues remained
relatively flat versus the first quarter of last year.

                                       14


    Programming and broadcast operations expenses were $12.6 million during the
three months ended March 31, 2003, compared with $13.0 million for the
comparable period last year. This decrease is primarily due to lower programming
costs. Program rights amortization expense was $13.0 million during the three
months ended March 31, 2003 compared with $19.0 million for the comparable
period last year. The decrease is primarily due to the modification of our
programming schedule in January 2003 whereby we replaced daytime programming
with long form paid programming for which we have no programming cost. Selling,
general and administrative expenses were $27.1 million during the three months
ended March 31, 2003 compared with $29.6 million for the comparable period last
year. The decrease is primarily a result of cost cutting measures including
headcount reductions in connection with the fourth quarter 2002 restructuring
activities described below and lower legal expenses resulting primarily from the
2002 completion of the NBC arbitration matter, partially offset by an increase
in advertising expenses to promote the PAX TV Network. In addition, during the
first quarter of 2003, we received approximately $2.2 million from NBC to settle
a pending dispute regarding digital television signal interference at our
television station WPXM, serving the Miami-Fort Lauderdale, Florida market. This
settlement was recorded as a reduction of our selling, general and
administrative expenses. During the three months ended March 31, 2003, we
recognized an adjustment of programming to net realizable value totaling $1.1
million resulting from our decision to no longer air an original game show
production. Depreciation and amortization expense was $14.6 million during the
three months ended March 31, 2003 compared with $12.6 million for the comparable
period last year. This increase is due primarily to the amortization of certain
intangible assets related to television stations currently operating under time
brokerage agreements.

    In February 2003, we completed the sale of our television station KPXF,
serving the Fresno, California market, for approximately $35 million resulting
in a gain of approximately $26.8 million. KPXF was classified as an asset held
for sale pursuant to SFAS No. 144, "Accounting for Impairment or Disposal of
Long-Lived Assets" ("SFAS 144") which we adopted in 2002. The gain on sale of
KPXF has been included in the determination of our operating income from
continuing operations since our assets held for sale do not constitute a
component of the Company under SFAS 144.

    In January 2003, we consummated a stock option exchange offer under which we
issued to holders who tendered their eligible options in the exchange offer new
options under our 1998 Stock Incentive Plan, as amended, (the "Plan") to
purchase one share of our Class A common stock for each two shares of our Class
A common stock issuable upon the exercise of tendered options, at an exercise
price of $0.01 per share. Because the terms of the new options provided for a
one business day exercise period, all holders who tendered their eligible
options in the exchange offer exercised their new options promptly after the
issuance of those new options. Approximately 7.3 million options were tendered
in the exchange and approximately 2.6 million new shares of Class A common stock
were issued upon exercise of the new options, net of approximately 1.0 million
shares of Class A common stock withheld, in accordance with the Plan's
provisions, at the holders' elections to cover income taxes and option exercise
price totaling approximately $2.4 million. The stock option exchange resulted in
a non-cash stock-based compensation expense of approximately $8.5 million, of
which approximately $6.9 million related to vested shares was recognized in the
first quarter of 2003 and the remaining $1.6 million will be recognized on a
straight-line basis over the remaining one year vesting schedule of the modified
award. In addition, the remaining deferred stock compensation expense associated
with the original stock option awards totaling approximately $2.5 million at
December 31, 2002 associated with tendered options is being recognized on a
straight-line basis over the remaining one year vesting schedule of the modified
awards ($0.5 million recognized in the first quarter of 2003).

    Interest expense for the three months ended March 31, 2003 increased to
$22.1 million from $19.7 million in the same period in 2002. The increase is
primarily due to a greater level of debt due to our refinancing in January 2002.
At March 31, 2003, total long-term debt and senior subordinated notes were
$911.8 million compared with $857.5 million as of March 31, 2002. Interest
income for the three months ended March 31, 2003 increased to $0.9 million from
$0.5 million in the same period in 2002. The increase is primarily due to higher
average cash and short-term investment balances in 2003 resulting from proceeds
from asset sales.

    In the first quarter of 2003, we adopted SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections" ("SFAS 145"). Among other matters, SFAS 145 rescinds FASB Statement
No. 4, "Reporting Gains and Losses from Extinguishment of Debt", which required
gains and losses from extinguishments of debt to be classified as an
extraordinary item, net of related income taxes. As a result, debt
extinguishments used as part of an entity's risk management strategy no longer
meet the criteria for classification as extraordinary items. As described below,
in connection with our January 2002 refinancing, we recognized a loss due to
early extinguishment of debt totaling approximately $17.6 million resulting
primarily from the redemption premium and the write-off of unamortized debt
costs associated with the repayment of the 12 1/2% exchange debentures. This
loss was classified as an extraordinary item in our previously issued financial
statements. Because of the adoption of SFAS 145 in 2003, we have reclassified
this loss to other income (expense) in our consolidated statement of operations.



                                       15



RESTRUCTURING ACTIVITIES

    During the fourth quarter of 2002, we adopted a plan to consolidate certain
of our operations, reduce personnel and modify our programming schedule in order
to significantly reduce our cash operating expenditures. In connection with this
plan, we recorded a restructuring charge of approximately $2.6 million in the
fourth quarter of 2002 consisting of $2.2 million in termination benefits for 95
employees and $0.4 million for costs associated with exiting leased properties
and consolidating certain operations. Through March 31, 2003, we have paid $2.1
million in termination benefits to 94 employees and paid $0.3 million of lease
termination and other costs. We have accounted for these costs pursuant to SFAS
146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS
146") which we early adopted in the fourth quarter of 2002. SFAS 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Additional restructuring costs, if
any, will be recognized as they are incurred.

    We have substantially completed the JSA restructuring plan entered into in
the fourth quarter of 2000, except for contractual lease obligations for closed
locations, the majority of which expire in 2004.

INCOME TAXES

    We have recorded a provision for income taxes based on our estimated annual
effective income tax rate. For the three months ended March 31, 2003 and 2002,
we have recorded a valuation allowance for our deferred tax assets (resulting
from tax losses generated during the periods) net of those deferred tax
liabilities which are expected to reverse in determinate future periods, as we
believe it is more likely than not that we will be unable to utilize our
remaining net deferred tax assets. Upon adoption of SFAS No. 142, Goodwill and
Other Intangible Assets ("SFAS 142") on January 1, 2002, we no longer amortize
goodwill and FCC license intangible assets. Under previous accounting standards,
these assets were being amortized over 25 years. Although the provisions of SFAS
142 stipulate that indefinite-lived intangible assets and goodwill are not
amortized, we are required under FASB Statement No. 109, "Accounting for Income
Taxes" ("SFAS 109"), to recognize deferred tax liabilities and assets for
temporary differences related to goodwill and FCC license intangible assets and
the tax-deductible portion of these assets. Prior to the adoption of SFAS 142,
we considered our deferred tax liabilities related to these assets as a source
of future taxable income in assessing the realization of our deferred tax
assets. Because indefinite-lived intangible assets and goodwill are no longer
amortized for financial reporting purposes under SFAS 142, the related deferred
tax liabilities will not reverse until some indeterminate future period should
the assets become impaired or when they are disposed of. Therefore, the reversal
of deferred tax liabilities related to FCC license intangible assets and
goodwill is no longer considered a source of future taxable income in assessing
the realization of deferred tax assets. As a result of this accounting change,
we were required to record an increase in our deferred tax asset valuation
allowance totaling approximately $125.9 million during the three months ended
March 31, 2002. In addition, we will continue to record increases in our
valuation allowance in future periods based on increases in the deferred tax
liabilities and assets for temporary differences related to goodwill and FCC
license intangible assets.






                                       16



LIQUIDITY AND CAPITAL RESOURCES

    Our primary capital requirements are to fund capital expenditures for our
television properties, programming rights payments and debt service payments.
Our primary sources of liquidity are our cash on hand, net working capital and
proceeds to be received in connection with our plan to generate over $100
million from the sale of non-core assets. To date, we have completed $85 million
of these asset sales, which include the sale of our television station WPXB,
serving the Merrimack, New Hampshire market, to NBC for $26 million, which we
completed on October 29, 2002; the sale of our television station KPXF, serving
the Fresno, California market, to Univision Communications, Inc. for $35
million, which we completed on February 19, 2003; the sale of our television
stations WMPX, serving the Portland-Auburn, Maine market, and WPXO, serving the
St. Croix, U.S. Virgin Islands market for an aggregate purchase price of $10
million, which we completed in April 2003; and the sale of our limited
partnership interest in television station WWDP, serving the Boston,
Massachusetts market, for approximately $14 million, which we completed in April
2003. In addition, we have signed a definitive agreement to sell the assets of
our television station KAPX, serving the Albuquerque, New Mexico market, to
Univision Communications, Inc. for $20 million. The sale of KAPX is expected to
close in the second quarter of 2003. We believe that cash provided by future
operations, net working capital and the proceeds from the planned asset sales
will provide the liquidity necessary to meet our obligations and financial
commitments for at least the next twelve months. If we are unable to complete
the identified asset sale or our financial results are not as anticipated, we
may be required to seek to sell additional assets or raise additional funds
through the offering of equity securities in order to generate sufficient cash
to meet our liquidity needs. We can provide no assurance that we would be
successful in selling assets or raising additional funds if this were to occur.

    As of March 31, 2003, we had $78.9 million in cash and short-term
investments and working capital of approximately $51.5 million. During the three
months ended March 31, 2003, our cash and short-term investments increased by
approximately $36.1 million due primarily to $35.0 million in proceeds from the
sale of broadcast assets.

    Cash provided by (used in) operating activities was approximately $7.8
million and ($20.6) million for the three months ended March 31, 2003 and 2002,
respectively. These amounts reflect cash generated or used in connection with
the operation of PAX TV, including the related programming rights and cable
distribution rights payments and interest payments on our debt. The increase is
due to improved operating results from the modification of our programming
schedule and other restructuring activities as well as reduced programming
payments in the period.

    Cash provided by (used in) investing activities was approximately $33.3
million and ($24.6) million for the three months ended March 31, 2003 and 2002,
respectively. These amounts include proceeds from the sale of broadcast assets,
capital expenditures and short term investment transactions. As previously
described, in the first quarter of 2003 we received $35.0 million in proceeds
from the sale of our television station KPXF. As of March 31, 2003, we had
agreements to purchase significant assets of broadcast properties totaling
approximately $36.0 million, net of deposits and advances. We do not anticipate
spending any significant amounts to satisfy these commitments until 2005 or
thereafter.

     Capital expenditures were approximately $5.4 million and $12.0 million for
the three months ended March 31, 2003 and 2002, respectively. The FCC has
mandated that each licensee of a full power broadcast television station that
was allotted a second digital television channel in addition to the current
analog channel, complete the construction of digital facilities capable of
serving its community of license with a signal of requisite strength by May
2002, and complete the build out of the balance of its full authorized
facilities by a later date to be established by the FCC. Despite the current
uncertainty that exists in the broadcasting industry with respect to standards
for digital broadcast services, planned formats and usage, we have complied and
intend to continue to comply with the FCC's timing requirements for the
construction of digital television facilities and the broadcast of digital
television services. We have commenced our migration to digital broadcasting in
certain of our markets and will continue to do so throughout the required time
period. We currently own or operate 28 stations broadcasting in digital and
expect to have 14 more stations broadcasting in digital by December 31, 2003. We
are awaiting construction permits from the FCC with respect to nine of our
television stations. Seven of our television stations have not received a
digital channel allocation and therefore will not be converted until the end of
the digital transition. Because of the uncertainty as to standards, formats and
usage, we cannot currently predict with reasonable certainty the amount or
timing of the expenditures we will likely have to make to complete the digital
conversion of our stations. We currently anticipate, however, that we will spend
at least an additional $22 million over the next two to three years to complete
the conversion. We will likely fund our digital conversion from cash on hand and
proceeds from our remaining planned asset sale.

    Cash (used in) provided by financing activities was ($1.6) million and $13.5
million during the three months ended March 31, 2003 and 2002, respectively.
These amounts include the proceeds from borrowings to fund capital expenditures
and proceeds from stock option exercises, net of principal repayments. Also
included are proceeds from the January 2002 refinancing described below, as well
as the related principal repayments, redemption premium, and refinancing costs.



                                       17


    In January 2002, we completed an offering of senior subordinated discount
notes due in 2009. Gross proceeds of the offering totaled approximately $308.3
million and were used to refinance our 12 1/2% exchange debentures due 2006,
which were issued in exchange for the outstanding shares of our 12 1/2%
exchangeable preferred stock on January 14, 2002, and to pay costs related to
the offering. The notes were sold at a discounted price of 62.132% of the
principal amount at maturity, which represents a yield to maturity of 12 1/4%.
Interest on the notes will be payable semi-annually beginning on July 15, 2006.
The senior subordinated discount notes are guaranteed by our subsidiaries. As
described above, we recognized a loss due to early extinguishment of debt
totaling approximately $17.6 million in the first quarter of 2002 resulting
primarily from the redemption premium and the write-off of unamortized debt
costs associated with the repayment of the 12 1/2% exchange debentures.

    The terms of the indentures governing our senior subordinated notes contain
covenants limiting our ability to incur additional indebtedness except for
specified indebtedness related to the funding of capital expenditures and
refinancing indebtedness. In addition, our senior credit facility also contains
covenants restricting our ability and the ability of our subsidiaries to incur
additional indebtedness, dispose of assets, pay dividends, repurchase or redeem
capital stock and indebtedness, create liens, make capital expenditures, make
certain investments or acquisitions and enter into transactions with affiliates
and otherwise restricting our activities. On June 28, 2002, we and our lenders
amended our senior credit facility to, among other things, reduce the minimum
required levels of net revenues and EBITDA (as defined in the senior credit
facility and summarized below) for certain periods under the facility's
financial covenants and allow us to retain the proceeds from certain planned
asset sales for general corporate purposes. In connection with the amendment,
the interest rates were increased to LIBOR plus 3.25% or Base Rate (as defined)
plus 2.25% and we paid an amendment fee of $0.9 million. On November 4, 2002, we
and our lenders amended our senior credit facility to, among other things,
exclude from the definition of EBITDA certain costs resulting from our plan to
consolidate certain of our operations, reduce personnel and modify our
programming schedule. In connection with this amendment, we incurred costs of
approximately $0.6 million. Our senior credit facility, as amended, contains the
following financial covenants: (1) twelve-month trailing minimum net revenue and
minimum EBITDA for each of the fiscal quarters ended June 30, 2001 through
December 31, 2004, (2) maximum ratio of total senior debt to EBITDA, maximum
ratio of total debt to EBITDA, minimum permitted interest coverage ratio and
minimum permitted fixed charge coverage ratio, each beginning for each of the
fiscal quarters ending on or after March 31, 2005, (3) maximum annual capital
expenditures for 2001 through 2006 and (4) maximum annual programming payments
for 2002 through 2006. EBITDA, as defined under our senior credit facility, is
equal to our consolidated net loss plus the sum of interest expense (net of
interest income), depreciation, amortization (excluding programming
amortization), stock-based compensation, permitted programming net realizable
value adjustments, permitted restructuring and other charges, time brokerage and
affiliation fees, losses on the sale of assets and other non-cash expenses minus
the sum of gains on the sale of assets and other non-cash income. In addition,
EBITDA, as defined, is adjusted to give effect to acquisitions or dispositions
of television stations as if they occurred at the beginning of the period they
were consummated. For the three months ended March 31, 2003, our net revenues
and EBITDA, as defined, exceeded our covenant minimum net revenues and EBITDA
under our senior credit facility for the period.

     On May 5, 2003, we and our lenders amended and restated our senior bank
credit agreement to consolidate the aforementioned amendments and, as further
described below, to incorporate the terms of a March 2003 waiver of our minimum
net revenue covenant for fiscal quarters ended June 30, September 30 and
December 31, 2003. In addition, the amended and restated senior credit agreement
allows for the issuance of letters of credit, subject to availability, under our
$25 million revolving credit facility. At March 31, 2003, there was $25 million
in borrowings outstanding under the revolving credit facility. The Company paid
a fee of $0.1 million in connection with this amendment.

    Our twelve-month trailing minimum net revenue and EBITDA covenants, as
amended, for the next four quarters are as follows (in thousands):




FISCAL QUARTER ENDING                                          MINIMUM NET REVENUES      MINIMUM EBITDA
---------------------                                         ----------------------   ----------------
                                                                                     
June 30, 2003.............................................          $   270,000            $   34,000
September 30, 2003........................................          $   280,000            $   45,000
December 31, 2003.........................................          $   290,000            $   50,000
March 31, 2004............................................          $   300,000            $   56,000



     Pursuant to our amended and restated credit agreement dated May 5, 2003,
our trailing twelve-month minimum net revenue covenants for the quarters ended
June 30, September 30 and December 31, 2003 are deemed to be $250 million,



                                       18


provided that we have satisfied the requirement to pay a fee in the amount of
0.125% of the outstanding principal amount under the facility for each period
that our minimum net revenues are less than the covenant minimums as set forth
above, but not less than $250 million. These terms are consistent with the terms
of a waiver we obtained in March 2003, for which we paid a waiver fee of $0.5
million, and have now been incorporated into the amended and restated credit
agreement.

     Our ability to meet these financial covenants is influenced by several
factors, the most significant of which is our ability to generate revenues,
which in turn is affected by overall conditions in the television advertising
marketplace, our network and station ratings and the success of our JSA and
other operating strategies and cost cutting initiatives. Adverse developments
with respect to these or other factors could result in our failing to meet one
or more of these covenants. At March 31, 2003, we were in compliance with these
amended covenants. We believe we will continue to be in compliance with these
amended covenants through the end of fiscal 2003, however we cannot predict
whether we will continue to be in compliance in 2004 and beyond. There can be no
assurance that we will continue to be in compliance with these covenants in
future periods. If we were to violate any of these covenants we would be
required to seek a waiver from our lenders under our senior credit facility and
possibly seek an amendment to our amended and restated senior credit facility.
We can provide no assurance that the lenders under our senior credit facility
would grant us any waiver or amendment which might become necessary. If we
failed to meet any of our debt covenants and our lenders did not grant a waiver
or amend our facility, they would have the right to declare an event of default
and seek remedies including acceleration of all outstanding amounts due under
the senior credit facility. Should an event of default be declared under the
senior credit facility, this would cause a cross default to occur under the
senior subordinated note and senior subordinated discount note indentures, thus
giving each trustee the right to accelerate repayment, and would give the
holders of each of our three outstanding series of preferred stock the right to
elect two directors per series to our board of directors. We can provide no
assurance that we would be successful in obtaining alternative sources of
funding to repay these obligations should these events occur.

    As of March 31, 2003, our programming contracts require collective payments
of approximately $28.5 million as follows (in thousands):




                                            OBLIGATION FOR     PROGRAM RIGHTS
                                            PROGRAM RIGHTS       COMMITMENTS        TOTAL
                                            --------------       -----------    ------------
                                                                       
2003 (April--December)..................      $  17,283          $   1,862      $    19,145
2004....................................          7,209                300            7,509
2005....................................          1,866                 --            1,866
                                              ---------          ---------      -----------
                                              $  26,358          $   2,162      $    28,520
                                              =========          =========      ===========


    On August 1, 2002, we entered into agreements with a subsidiary of CBS
Broadcasting, Inc. ("CBS") and Crown Media United States, LLC ("Crown Media") to
sublicense our rights to broadcast the television series TOUCHED BY AN ANGEL
("Touched") to Crown Media for exclusive exhibition on the Hallmark Channel,
commencing September 9, 2002. Under the terms of the agreement with Crown Media,
we will receive approximately $47.4 million from Crown Media, $38.6 million of
which will be paid over a three-year period commencing August 2002 and the
remaining $8.8 million of which will be paid over a three-year period commencing
August 2003.

    Under the terms of our agreement with CBS, we remain obligated to CBS for
amounts due under our pre-existing license agreement, less estimated programming
cost savings of approximately $15 million. As of March 31, 2003, amounts due or
committed to CBS totaled approximately $61.4 million (including commitments of
approximately $18.3 million for the 2002/2003 season to be made available in the
future). The transaction resulted in a gain of approximately $4 million, which
is being deferred over the term of the Crown Media agreement.

    We have a significant concentration of credit risk with respect to the
amounts due from Crown Media under the sublicense agreement. As of March 31,
2003, the maximum amount of loss due to credit risk that we would sustain if
Crown Media failed to perform under the agreement totaled approximately $26.7
million, representing the present value of amounts due from Crown Media. Under
the terms of the sublicense agreement, we have the right to terminate Crown
Media's rights to broadcast Touched if Crown Media fails to make timely payments
under the agreement. Therefore, should Crown Media fail to perform under the
agreement, we could regain our exclusive rights to broadcast Touched on PAX TV
pursuant to our existing licensing agreement with CBS.



                                       19



    Our obligations to CBS for Touched will be partially funded through the
sub-license fees from Crown Media. As of March 31, 2003, our obligation to CBS
and our receivable from Crown Media related to Touched are due as follows (in
thousands):




                                            OBLIGATIONS            FUTURE         AMOUNTS DUE FROM
                                              TO CBS        COMMITMENTS TO CBS       CROWN MEDIA            TOTAL
                                           ------------     ------------------    -----------------        -------
                                                                                               
      2003 (April-December) ......            $13,065            $  1,742             $ (9,650)            $ 5,157
      2004 .......................             16,526               2,742              (12,867)              6,401
      2005 .......................             11,419               6,699               (7,506)             10,612
      2006 .......................              2,097               7,094                   --               9,191
                                              -------            --------             --------             -------
                                               43,107              18,277              (30,023)             31,361
      Amount representing interest                 --                  --                3,344               3,344
                                              -------            --------             --------             -------
                                              $43,107            $ 18,277             $(26,679)            $34,705
                                              =======            ========             ========             =======



    As of March 31, 2003, obligations for cable distribution rights require
collective payments by us of approximately $6.5 million as follows (in
thousands):



                                                                            
2003 (April--December)...........................................              $      6,108
2004.............................................................                       191
2005.............................................................                       180
                                                                               ------------
                                                                               $      6,479
                                                                               ============




                                       20



FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS AND UNCERTAINTIES

    This Report contains forward-looking statements that reflect our current
views with respect to future events. All statements in this Report other than
those that are statements of historical facts are generally forward-looking
statements. These statements are based on our current assumptions and analysis,
which we believe to be reasonable, but are subject to numerous risks and
uncertainties that could cause actual results to differ materially from our
expectations. All forward-looking statements in this Report are made only as of
the date of this Report, and we do not undertake any obligation to update these
forward-looking statements, even though circumstances may change in the future.
Factors to consider in evaluating any forward-looking statements and the other
information contained herein and which could cause actual results to differ from
those anticipated in our forward-looking statements or could otherwise adversely
affect our business or financial condition include those set forth in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2002, as filed with
the US Securities and Exchange Commission, along with the following updates to
our Form 10-K disclosures.

WE MAY NOT BE ABLE TO REDEEM OUR SECURITIES HELD BY NBC WERE NBC TO DEMAND THAT
WE DO SO AND THIS COULD HAVE ADVERSE CONSEQUENCES FOR US.

     NBC has the right, at any time that the FCC renders a final decision that
NBC's investment in us is "attributable" to NBC (as that term is defined under
applicable rules of the FCC), or for a period of 60 days beginning on September
15, 2003, and on each September 15 after 2003, to demand that we redeem, or
arrange for a third party to acquire, any shares of our Series B preferred stock
then held by NBC. Our ability to effect any redemption is restricted by the
terms of our outstanding debt and preferred stock. NBC also has the right to
demand that we redeem any Series B preferred stock and Class A common stock
issued upon conversion of the Series B preferred stock then held by NBC upon the
occurrence of various events of default. Should we fail to effect a redemption
within prescribed time periods, NBC generally will be permitted to transfer,
without restriction, any of our securities acquired by it, its right to acquire
Mr. Paxson's Class B common stock, its contractual rights with respect to our
business, and its other rights under the related transaction agreements. Should
we fail to effect a redemption triggered by an event of default on our part
within 180 days after demand, NBC will have the right to exercise in full its
existing warrants to purchase shares of our Class A common stock and its right
to acquire Mr. Paxson's Class B common stock at reduced prices. If NBC does not
exercise these rights, we will have another 30-day period to effect a
redemption. If we then fail to effect a redemption, NBC may require us to
conduct, at our option, a public sale or liquidation of our assets, after which
time NBC will not be permitted to exercise its rights to acquire more of our
securities. Should NBC exercise any of its rights to demand redemption, we may
not have sufficient funds to pay the redemption price for the securities to be
redeemed and may not be able to identify another party willing to purchase those
securities at the required redemption prices. If we were unable to complete a
redemption, we would be unable to prevent NBC from transferring its interest in
our company to a third party selected by NBC in its discretion or, in the case
of a default by us, requiring us to effect a public sale or liquidation of our
assets. The occurrence of any of these events could have a material adverse
effect upon us.

WE COULD BE SUBJECT TO A MATERIAL TAX LIABILITY IF THE IRS SUCCESSFULLY
CHALLENGES OUR POSITION REGARDING THE 1997 DISPOSITION OF OUR RADIO DIVISION.

     We structured the disposition of our radio division in 1997 and our
acquisition of television stations during the period following this disposition
in a manner that we believed would qualify these transactions as a "like kind"
exchange under Section 1031 of the Internal Revenue Code and would permit us to
defer recognizing for income tax purposes up to approximately $333 million of
gain. The IRS has examined our 1997 tax return and has issued us a "30-day
letter" proposing to disallow all of our gain deferral. We intend to contest
this determination with the IRS appeals division, but the outcome of this matter
cannot be determined at this time, and we can provide no assurance that we will
prevail. In addition, the "30-day letter" offered an alternative position that,
in the event the IRS is unsuccessful in disallowing all of the gain deferral,
approximately $62 million of the $333 million gain deferral will be disallowed.
We intend to contest this alternative determination as well, however we can
provide no assurance that we will prevail. Should the IRS successfully challenge
our position and disallow all or part of our gain deferral, because we had net
operating losses in the years subsequent to 1997 in excess of the amount of the
deferred gain, we would not be liable for any tax deficiency, but could be
liable for interest on the tax liability for the period prior to the carryback
of our net operating losses. We have estimated the amount of interest for which
we could be held liable to be a maximum of approximately $15 million should the
IRS succeed in disallowing all of the deferred gain. However, should the IRS
only be successful in disallowing part of the gain under its alternative
position, we estimate we would be liable for only a nominal amount of interest.




                                       21


WE ARE REQUIRED BY THE FCC TO ABANDON THE ANALOG BROADCAST SERVICE OF 24 OF OUR
FULL POWER STATIONS OCCUPYING THE 700 MHZ SPECTRUM AND MAY SUFFER ADVERSE
CONSEQUENCES IF WE ARE UNABLE TO SECURE ALTERNATIVE DISTRIBUTION ON REASONABLE
TERMS.

     Twenty-four of our full power stations are licensed to broadcast by using
either an analog or digital signal on channels 52-69, a portion of the frequency
within the 700 MHz band of broadcast spectrum that is currently allocated to
television broadcasting by the FCC. As part of the nationwide transition from
analog to digital broadcasting, the 700 MHz band will be transitioned to use by
new wireless and public safety operators. A federal statute requires that, after
December 31, 2006, or the date on which 85% of television households in a
television market are capable of receiving digital services, broadcasters must
surrender analog signals and broadcast only on their allotted digital frequency.
In some cases, broadcasters, including our company, have been given a digital
channel allocation within the 700 MHz band of spectrum. We have lobbied Congress
and the FCC to delay enforcement of these rules to allow us to develop and
implement strategies to vacate our 700 MHz spectrum and secure alternative
distribution. The FCC, by order released September 17, 2001, authorized analog
stations operating in the 700 MHz band to enter into private agreements with
prospective new users of the 700 MHz spectrum that would result in the operation
of their analog signal on the channel assigned for digital service and delay
institution of digital service until December 31, 2005, or later than December
31, 2005, if less than 70% of the television households in the station's market
area are capable of receiving digital broadcast signals. Broadcasters given a
digital channel allocation within the 700 MHz band may delay institution of
digital service until December 31, 2005, or later than December 31, 2005, if
less than 70% of the television households in the station's market are capable
of receiving digital broadcast signals. The FCC has not yet concluded the
auctions necessary to determine the future users of the 700 MHz spectrum. On
June 19, 2002, Congress passed the Auction Reform Act of 2002, indefinitely
postponing the auction of the 700 MHz spectrum. We cannot predict when we will
abandon, by private agreement or as required by law, the broadcast service of
our 24 stations occupying the 700 MHz spectrum. We could suffer adverse
consequences if we are unable to secure alternative simultaneous distribution of
both the analog and digital signals of those stations on reasonable terms and
conditions. We cannot now predict the impact, if any, on our business of the
abandonment of our broadcast television service in the 700 MHz spectrum.

THE OCCURRENCE OF EXTRAORDINARY EVENTS, SUCH AS THE ATTACKS ON THE WORLD TRADE
CENTER AND THE PENTAGON AND THE WAR IN IRAQ, MAY SUBSTANTIALLY DECREASE THE USE
OF AND DEMAND FOR ADVERTISING, WHICH MAY DECREASE OUR REVENUES.

     On September 11, 2001, terrorists attacked the World Trade Center in New
York City and the Pentagon outside of Washington, D.C. In addition to the tragic
loss of life and suffering occasioned by these attacks, there has been
infrastructure damage and a nationwide disruption of commercial and leisure
activities. Following the terrorist attacks, the already weak advertising market
worsened, resulting in lower advertising sales revenues for television network
and cable programming businesses nationwide. The occurrence of future terrorist
attacks, and conflicts such as the war in Iraq, cannot be predicted, and their
occurrence can be expected to further negatively affect the United States
economy generally, and specifically the market for television advertising.

ITEM 4. CONTROLS AND PROCEDURES

     As required by Rule 13a-15 under the Securities Exchange Act of 1934,
within the 90 days prior to the filing date of this report, we carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures. This evaluation was carried out under the supervision
and with the participation of our management, including our Chief Executive
Officer and our Chief Financial Officer. Based upon that evaluation, our Chief
Executive Officer and our Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information required to be included in our periodic SEC reports. It should be
noted that the design of any system of controls is based in part upon certain
assumptions about the likelihood of future events and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote. In addition, we reviewed our
internal controls, and there have been no significant changes in our internal
controls or in other factors which would significantly affect internal controls
subsequent to the date we carried out this evaluation.

     Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer as appropriate, to allow timely decisions
regarding required disclosure.




                                       22



                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) List of Exhibits:

  EXHIBIT
  NUMBER        DESCRIPTION OF EXHIBITS
 ---------      -----------------------

   3.1.1        Certificate of Incorporation of the Company (1)

   3.1.6        Certificate of Designation of the Company's 9-3/4% Series A
                Convertible Preferred Stock (2)

   3.1.7        Certificate of Designation of the Company's 13-1/4% Cumulative
                Junior Exchangeable Preferred Stock (2)

   3.1.8        Certificate of Designation of the Company's 8% Series B
                Convertible Exchangeable Preferred Stock (3)

   3.1.9        Certificate of Amendment to the Certificate of Incorporation of
                the Company

   3.2          Bylaws of the Company (4)

   4.6          Indenture, dated as of July 12, 2001, among the Company, the
                Subsidiary Guarantors party thereto, and The Bank of New York,
                as Trustee, with respect to the Company's 10-3/4% Senior
                Subordinated Notes due 2008 (5)

   4.7          Credit Agreement, dated as of July 12, 2001, among the Company,
                the Lenders party thereto, Citicorp USA, Inc., as Administrative
                Agent for the Lenders and as Collateral Agent for the Secured
                Parties, Union Bank of California, N.A., as Syndication Agent
                for the Lenders, and CIBC Inc. and General Electric Capital
                Corporation, as Co-Documentation Agents for the Lenders (5)

   4.7.1        Amendment No. 1, dated as of January 7, 2002, to the Credit
                Agreement, dated as of July 12, 2001, amount the Company, the
                Lenders party thereto, and Citicorp USA, Inc., as Administrative
                Agent for the Lenders (6)

   4.7.2        Amendment No. 2, dated as of June 28, 2002, to the Credit
                Agreement, dated as of July 12, 2001, among the Company, the
                Lenders party thereto, and Citicorp USA, Inc., as Administrative
                Agent for the Lenders (7)

   4.7.3        Amendment No. 3, dated as of November 4, 2002, to the Credit
                Agreement, dated as of July 12, 2001, among the Company, the
                Lenders party thereto, and Citicorp USA, Inc., as Administrative
                Agent for the Lenders (8)

   4.7.4        Waiver, dated as of March 13, 2003, between the Company and
                Citicorp USA, Inc., as Administrative Agent for the Lenders (9)

   4.7.5        Amended and Restated Credit Agreement, dated as of May 5, 2003,
                among the Company, the Lenders party thereto, the Issuers party
                thereto, Citicorp USA, Inc., as administrative agent for the
                Lenders and the Issuers and as collateral agent for the Secured
                Parties, Union Bank of California, N.A., as syndication agent
                for the Lenders and the Issuers, and General Electric Capital
                Corporation, as documentation agent for the Lenders and the
                Issuers

   4.8          Indenture, dated as of January 14, 2002, among the Company, the
                Subsidiary Guarantors party thereto, and The Bank of New York,
                as Trustee, with respect to the Company's 12-1/4% Senior
                Subordinated Discount Notes due 2009 (10)


   99.1         Certification by the Chief Executive Officer of Paxson
                Communications Corporation pursuant to 18 U.S.C. Section 1350 as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002

   99.2         Certification by the Chief Financial Officer of Paxson
                Communications Corporation pursuant to 18 U.S.C. Section 1350 as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002

----------

(1)      Filed with the Company's Annual Report on Form 10-K, dated March 31,
         1995, and incorporated herein by reference.

(2)      Filed with the Company's Registration Statement on Form S-4, as
         amended, filed July 23, 1998, Registration No. 333-59641, and
         incorporated herein by reference.



                                       23


(3)      Filed with the Company's Form 8-K, dated September 15, 1999, and
         incorporated herein by reference.

(4)      Filed with the Company's Quarterly Report on Form 10-Q, dated March 31,
         2001, and incorporated herein by reference.

(5)      Filed with the Company's Quarterly Report on Form 10-Q, dated June 30,
         2001, and incorporated herein by reference.

(6)      Filed with the Company's Quarterly Report on Form 10-Q, dated June 30,
         2002, and incorporated herein by reference.

(7)      Filed with the Company's Form 8-K, dated June 28, 2002, and
         incorporated herein by reference.

(8)      Filed with the Company's Quarterly Report on Form 10-Q, dated September
         30, 2002, and incorporated herein by reference.

(9)      Filed with the Company's Annual Report on Form 10-K, dated December 31,
         2002, and incorporated herein by reference.

(10)     Filed with the Company's Annual Report on Form 10-K, dated December 31,
         2001, and incorporated herein by reference.

(b) Reports on Form 8-K.

    Form 8-K, dated February 20, 2003, under Item 9. "Regulation FD Disclosure"
    disclosing that the Company closed on the sale of its television station
    KPXF (TV), serving the Fresno, California market, to Univision
    Communications, Inc. for a cash purchase price of $35 million.

    Form 8-K, dated March 25, 2003, under Item Item 9. "Regulation FD
    Disclosure" disclosing the Company's fourth quarter and full year 2002
    financial results and that the Company will be restating its quarterly
    financial results for 2002 in order to correct an accounting matter with
    respect to deferred tax adjustments resulting from the Company's adoption of
    SFAS No. 142, "Goodwill and Other Intangible Assets."





                                       24




                        PAXSON COMMUNICATIONS CORPORATION

                                   SIGNATURES

Pursuant to the requirements 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.

                            PAXSON COMMUNICATIONS CORPORATION

Date: May 15, 2003          By:   /s/ RONALD L. RUBIN
                                  -------------------
                                  Ronald L. Rubin
                                  Vice President, Chief Accounting Officer and
                                  Corporate Controller
                                  (Principal Accounting Officer)




                                       25




                                 CERTIFICATIONS

I, Lowell W. Paxson, Chairman and Chief Executive Officer of Paxson
Communications Corporation, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Paxson Communications
     Corporation;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) Designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     (c) Presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     (a) All significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


/s/ LOWELL W. PAXSON
-------------------------------------------------------------------
Lowell W. Paxson
Chairman and Chief Executive Officer (Principal Executive Officer)
Dated: May 15, 2003



                                       26






I, Thomas E. Severson, Jr., Senior Vice President and Chief Financial Officer of
Paxson Communications Corporation, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Paxson Communications
     Corporation;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) Designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     (c) Presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     (a) All significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



/s/ THOMAS E. SEVERSON, JR.
-----------------------------------------
Thomas E. Severson, Jr.
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Dated: May 15, 2003


                                       27