content: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 10-Q
  (Mark One)
  
  (X)  Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
       Act of 1934 for the Quarterly Period Ended:
                                    JUNE 30, 1997
                                         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 0-6983
  
                                COMCAST CORPORATION
                              [GRAPHIC OMITTED - LOGO]
  
  
               (Exact name of registrant as specified in its charter)
  
         PENNSYLVANIA                                         23-1709202
  --------------------------------------------------------------------------------
  (State or other jurisdiction of                          (I.R.S. Employer
   incorporation or organization)                         Identification No.)
  
                   1500 Market Street, Philadelphia, PA 19102-2148
  --------------------------------------------------------------------------------
                      (Address of principal executive offices)
                                     (Zip Code)
  
  Registrant's telephone number, including area code:  (215) 665-1700
  
                             --------------------------
  
  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  twelve months (or for such shorter period that the registrant was
  required to file such  reports),  and (2) has been subject to such  requirements
  for the past 90 days.
  
             Yes  __X__                                     No _____
  
                             --------------------------
  
  As of June 30, 1997,  there were  308,258,612  shares of Class A Special  Common
  Stock, 31,793,767 shares of Class A Common Stock and 8,786,250 shares of Class B
  Common Stock outstanding.
  
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
                                  TABLE OF CONTENTS
  
  
  
  
                                                                             Page
                                                                            Number
  
  PART I.   FINANCIAL INFORMATION
  
            Item 1.   Financial Statements
  
                      Condensed Consolidated Balance
                      Sheet as of June 30, 1997 and December 31,
                      1996 (Unaudited)...........................................2
  
                      Condensed Consolidated Statement of
                      Operations and Accumulated Deficit for
                      the Six and Three Months Ended June 30,
                      1997 and 1996 (Unaudited)..................................3
  
                      Condensed Consolidated Statement of Cash
                      Flows for the Six Months Ended June 30,
                      1997 and 1996 (Unaudited)..................................4
  
                      Notes to Condensed Consolidated
                      Financial Statements (Unaudited)......................5 - 15
  
            Item 2.   Management's Discussion and Analysis
                      of Financial Condition and Results of
                      Operations...........................................16 - 27
  
  PART II.  OTHER INFORMATION
  
            Item 1.   Legal Proceedings.........................................28
  
            Item 2.   Changes in Securities.....................................28
  
            Item 4.   Submission of Matters to a Vote of 
                      Security Holders.......................................28-29
  
            Item 6.   Exhibits and Reports on Form 8-K.......................29-30
  
            SIGNATURE...........................................................31
  
                         -----------------------------------
  
  This Quarterly  Report on Form 10-Q contains  forward  looking  statements  made
  pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
  Reform Act of 1995.  Readers are cautioned that such forward looking  statements
  involve  risks and  uncertainties  which  could  significantly  affect  expected
  results  in the  future  from  those  expressed  in  any  such  forward  looking
  statements  made by, or on behalf,  of the Company.  Certain  factors that could
  cause actual  results to differ  materially  include,  without  limitation,  the
  effects of  legislative  and  regulatory  changes;  the  potential for increased
  competition;  technological  changes; the need to generate substantial growth in
  the subscriber base by successfully launching,  marketing and providing services
  in  identified  markets;  pricing  pressures  which could affect  demand for the
  Company's services; the Company's ability to expand its distribution; changes in
  labor, programming, equipment and capital costs; the Company's continued ability
  to  create  or  acquire  programming  and  products  that  customers  will  find
  attractive;  future  acquisitions,   strategic  partnerships  and  divestitures;
  general business and economic conditions;  and other risks detailed from time to
  time in the Company's  periodic  reports filed with the  Securities and Exchange
  Commission.
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  PART I.        FINANCIAL INFORMATION
  
  ITEM 1.        FINANCIAL STATEMENTS
  
                        CONDENSED CONSOLIDATED BALANCE SHEET
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                                                         (Dollars in millions, except share data)
                                                                                               June 30,           December 31,
                                                                                                 1997                 1996
  <S>                                                                                          <C>                   <C>   
  ASSETS
  CURRENT ASSETS
     Cash and cash equivalents....................................................             $1,264.6              $331.3
     Short-term investments.......................................................                144.4               208.3
     Accounts receivable, less allowance for doubtful
        accounts of $96.3 and $97.1...............................................                416.8               439.3
     Inventories, net.............................................................                305.3               258.4
     Other current assets.........................................................                154.7               168.5
                                                                                              ---------           ---------
          Total current assets....................................................              2,285.8             1,405.8
                                                                                              ---------           ---------
  INVESTMENTS, principally in affiliates..........................................              1,066.2             1,177.7
                                                                                              ---------           ---------
  PROPERTY AND EQUIPMENT..........................................................              3,905.6             3,600.1
     Accumulated depreciation.....................................................             (1,237.5)           (1,061.3)
                                                                                              ---------           ---------
     Property and equipment, net..................................................              2,668.1             2,538.8
                                                                                              ---------           ---------
  DEFERRED CHARGES................................................................              9,013.1             8,578.8
     Accumulated amortization.....................................................             (1,836.2)           (1,612.5)
                                                                                              ---------           ---------
     Deferred charges, net........................................................              7,176.9             6,966.3
                                                                                              ---------           ---------
                                                                                              $13,197.0           $12,088.6
                                                                                              =========           =========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES
     Accounts payable and accrued expenses........................................             $1,069.3            $1,044.3
     Accrued interest.............................................................                107.2                91.1
     Current portion of long-term debt, including optional
        debt repayments of $527.0 and $70.0.......................................                626.3               229.5
                                                                                              ---------           ---------
          Total current liabilities...............................................              1,802.8             1,364.9
                                                                                              ---------           ---------
  LONG-TERM DEBT, less current portion............................................              6,786.7             7,102.7
                                                                                              ---------           ---------
  DEFERRED INCOME TAXES...........................................................              2,078.1             2,140.5
                                                                                              ---------           ---------
  MINORITY INTEREST AND OTHER.....................................................              1,050.9               859.3
                                                                                              ---------           ---------
  COMMITMENTS AND CONTINGENCIES
  
  COMMON EQUITY PUT OPTIONS.......................................................                 31.4                69.6
                                                                                              ---------           ---------
  STOCKHOLDERS' EQUITY
     Preferred stock - authorized, 20,000,000 shares
        5% series A convertible, no par value, issued, 6,370 at redemption value..                 31.9                31.9
        5.25% series B mandatorily redeemable convertible, $1,000 par value,
          issued, 500,000 at redemption value.....................................                500.0
     Class A special common stock, $1 par value - authorized,
        500,000,000 shares; issued, 308,258,612 and 283,281,675...................                308.3               283.3
     Class A common stock, $1 par value - authorized,
        200,000,000 shares; issued, 31,793,767 and 33,959,368 ....................                 31.8                34.0
     Class B common stock, $1 par value - authorized,
        50,000,000 shares; issued, 8,786,250 .....................................                  8.8                 8.8
     Additional capital...........................................................              2,830.3             2,326.6
     Accumulated deficit..........................................................             (2,262.6)           (2,127.1)
     Unrealized gains on marketable securities....................................                  9.0                 0.1
     Cumulative translation adjustments...........................................                (10.4)               (6.0)
                                                                                              ---------           ---------
          Total stockholders' equity..............................................              1,447.1               551.6
                                                                                              ---------           ---------
                                                                                              $13,197.0           $12,088.6
                                                                                              =========           =========
  </TABLE>
  See notes to condensed consolidated financial statements.
  
                                          2
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
       CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                                                (Amounts in millions, except per share data)
                                                                              Six Months Ended              Three Months Ended
                                                                                  June 30,                       June 30,
                                                                            1997            1996           1997            1996
  <S>                                                                     <C>             <C>              <C>             <C>   
  REVENUES
      Service income............................................          $1,367.9        $1,040.5         $716.8          $539.9
      Net sales from electronic retailing.......................             947.4           855.8          467.7           405.7
                                                                         ---------       ---------      ---------       --------- 
                                                                           2,315.3         1,896.3        1,184.5           945.6
                                                                         ---------       ---------      ---------       --------- 
  COSTS AND EXPENSES
      Operating.................................................             611.3           453.5          313.9           223.7
      Cost of goods sold from electronic retailing..............             570.0           512.4          278.1           242.3
      Selling, general and administrative.......................             432.9           364.2          225.1           183.5
      Depreciation..............................................             221.5           142.7          125.7            74.3
      Amortization..............................................             240.9           181.6          124.3            93.1
                                                                         ---------       ---------      ---------       --------- 
                                                                           2,076.6         1,654.4        1,067.1           816.9
                                                                         ---------       ---------      ---------       --------- 
  
  OPERATING INCOME..............................................             238.7           241.9          117.4           128.7
  
  OTHER (INCOME) EXPENSE
      Interest expense..........................................             278.9           268.0          145.6           133.2
      Investment income.........................................             (88.6)          (47.5)         (76.4)          (28.9)
      Equity in net losses of affiliates........................             126.2            60.3           56.1            25.8
      Gain from equity offering of affiliate....................                             (40.6)                         (40.6)
      Other.....................................................               4.4            22.9           (4.5)           11.6
                                                                         ---------       ---------      ---------       --------- 
                                                                             320.9           263.1          120.8           101.1
                                                                         ---------       ---------      ---------       --------- 
  (LOSS) INCOME BEFORE INCOME TAX EXPENSE, MINORITY
      INTEREST AND EXTRAORDINARY ITEMS..........................             (82.2)          (21.2)          (3.4)           27.6
  
  INCOME TAX EXPENSE............................................              36.9            24.6           27.0            23.7
                                                                         ---------       ---------      ---------       --------- 
  
  (LOSS) INCOME BEFORE MINORITY INTEREST AND
      EXTRAORDINARY ITEMS.......................................            (119.1)          (45.8)         (30.4)            3.9
  
  MINORITY INTEREST.............................................             (39.8)          (29.0)         (15.8)          (13.9)
                                                                         ---------       ---------      ---------       --------- 
  
  (LOSS) INCOME BEFORE EXTRAORDINARY ITEMS......................             (79.3)          (16.8)         (14.6)           17.8
  
  EXTRAORDINARY ITEMS...........................................             (22.8)           (1.0)         (22.8)           (1.0)
                                                                         ---------       ---------      ---------       --------- 
  
  NET (LOSS) INCOME.............................................            (102.1)          (17.8)         (37.4)           16.8
  
  PREFERRED DIVIDENDS...........................................              (0.8)                          (0.4)
                                                                         ---------       ---------      ---------       --------- 
  
  NET (LOSS) INCOME FOR COMMON STOCKHOLDERS.....................           ($102.9)         ($17.8)        ($37.8)          $16.8
                                                                         =========       =========      =========       ========= 
  
  ACCUMULATED DEFICIT
      Beginning of period ......................................         ($2,127.1)      ($1,914.3)     ($2,205.3)      ($1,997.1)
      Net (loss) income.........................................            (102.1)          (17.8)         (37.4)           16.8
      Common dividends - $.0467, $.0467, $.0233 and $.0233
        per share...............................................             (15.7)          (11.0)          (8.2)           (5.4)
      Retirement of common stock................................             (17.7)          (87.5)         (11.7)          (44.9)
                                                                         ---------       ---------      ---------       --------- 
      End of period.............................................         ($2,262.6)      ($2,030.6)     ($2,262.6)      ($2,030.6)
                                                                         =========       =========      =========       ========= 
  
  (LOSS) INCOME FOR COMMON STOCKHOLDERS
    PER COMMON SHARE
      (Loss) income before extraordinary items..................             ($.25)          ($.07)         ($.05)           $.07
      Extraordinary items.......................................              (.07)                          (.07)
                                                                         ---------       ---------      ---------       --------- 
           Net (loss) income....................................             ($.32)          ($.07)         ($.12)           $.07
                                                                         =========       =========      =========       ========= 
  
  WEIGHTED AVERAGE NUMBER OF COMMON SHARES
      OUTSTANDING DURING THE PERIOD.............................             325.3           237.6          324.8           235.8
                                                                         =========       =========      =========       ========= 
  </TABLE>
  See notes to condensed consolidated financial statements.
  
                                          3
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                                                                    (Dollars in millions)
                                                                                                   Six Months Ended June 30,
                                                                                                  1997                 1996
  <S>                                                                                          <C>                   <C>   
  OPERATING ACTIVITIES
     Net loss.....................................................................              ($102.1)             ($17.8)
     Adjustments to reconcile net loss to net cash provided
       by operating activities:
        Depreciation..............................................................                221.5               142.7
        Amortization..............................................................                240.9               181.6
        Non-cash interest expense, net............................................                 26.8                32.2
        Equity in net losses of affiliates........................................                126.2                60.3
        Gains on long-term investments, net of losses.............................                (65.2)              (16.3)
        Gain from equity offering of affiliate....................................                                    (40.6)
        Minority interest.........................................................                (39.8)              (29.0)
        Extraordinary items.......................................................                 22.8                 1.0
        Deferred income taxes and other...........................................                (12.8)               12.2
                                                                                               --------              ------
                                                                                                  418.3               326.3
  
        Decrease in accounts receivable, net......................................                 43.4                55.2
        (Increase) decrease in inventories, net...................................                (46.9)                0.3
        Decrease in other current assets..........................................                  2.9                 0.7
        Increase (decrease) in accounts payable and accrued expenses..............                  2.6               (99.3)
        Increase in accrued interest..............................................                 16.1                 6.0
                                                                                               --------              ------
  
               Net cash provided by operating activities..........................                436.4               289.2
                                                                                               --------              ------
  
  FINANCING ACTIVITIES
     Proceeds from borrowings.....................................................              2,958.0               558.3
     Retirement and repayment of debt.............................................             (2,940.3)             (478.3)
     Issuance of preferred stock..................................................                500.0
     Issuances of common stock, net...............................................                498.5                 1.3
     Repurchases of common stock, net.............................................                (33.6)             (108.3)
     Dividends....................................................................                (16.5)              (11.0)
     Deferred financing costs.....................................................                (43.2)               (1.7)
     Other........................................................................                  1.8                (3.1)
                                                                                               --------              ------
  
               Net cash provided by (used in) financing activities................                924.7               (42.8)
                                                                                               --------              ------
  
  INVESTING ACTIVITIES
     Acquisitions, net of cash acquired...........................................               (125.8)              (46.5)
     Proceeds from sales of short-term investments, net...........................                127.2               237.0
     Investments, principally in affiliates.......................................                (78.5)             (357.4)
     Proceeds from sales of and distribution from long-term investments...........                 95.7                91.4
     Proceeds from investee's repayment of loan...................................                 25.2
     Capital expenditures.........................................................               (447.1)             (278.9)
     Additions to deferred charges................................................                (24.1)              (17.5)
     Other........................................................................                 (0.4)               (5.9)
                                                                                               --------              ------
  
               Net cash used in investing activities..............................               (427.8)             (377.8)
                                                                                               --------              ------
  
  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................                933.3              (131.4)
  
  CASH AND CASH EQUIVALENTS, beginning of period..................................                331.3               539.1
                                                                                               --------              ------
  
  CASH AND CASH EQUIVALENTS, end of period........................................             $1,264.6              $407.7
                                                                                               ========              ======
  </TABLE>
  
  
  See notes to condensed consolidated financial statements.
  
                                          4
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
  
  1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  
        Basis of Presentation
        The condensed  consolidated balance sheet as of December 31, 1996 has been
        condensed from the audited consolidated balance sheet as of that date. The
        condensed  consolidated  balance sheet as of June 30, 1997,  the condensed
        consolidated  statement of operations and accumulated  deficit for the six
        and  three  months  ended  June  30,  1997  and  1996  and  the  condensed
        consolidated  statement  of cash flows for the six  months  ended June 30,
        1997 and 1996 have been prepared by Comcast  Corporation  (the  "Company")
        and have not been audited by the Company's  independent  auditors.  In the
        opinion  of  management,   all  adjustments  (which  include  only  normal
        recurring adjustments) necessary to present fairly the financial position,
        results  of  operations  and cash  flows  as of June 30,  1997 and for all
        periods presented have been made.
  
        Certain  information  and  note  disclosures   normally  included  in  the
        Company's  annual  financial   statements   prepared  in  accordance  with
        generally accepted  accounting  principles have been condensed or omitted.
        These  condensed  consolidated  financial  statements  should  be  read in
        conjunction  with the financial  statements and notes thereto  included in
        the Company's  December 31, 1996 Annual Report on Form 10-K filed with the
        Securities  and Exchange  Commission.  The results of  operations  for the
        periods  ended June 30, 1997 are not  necessarily  indicative of operating
        results for the full year.
  
  2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  
        New Accounting Pronouncements
        Effective January 1, 1997, the Company adopted the provisions of Statement
        of  Financial  Accounting  Standards  ("SFAS")  No. 125,  "Accounting  for
        Transfers  and  Servicing  of  Financial  Assets  and  Extinguishments  of
        Liabilities," which was issued by the Financial Accounting Standards Board
        ("FASB") in June 1996. Under this statement, after a transfer of financial
        assets,  an  entity  recognizes  the  financial  and  servicing  assets it
        controls  and the  liabilities  it has  incurred,  derecognizes  financial
        assets when control has been surrendered and derecognizes liabilities when
        extinguished. Adoption of this statement did not have a significant impact
        on the Company's consolidated financial position or results of operations.
  
        In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share." This
        statement,  which  clarifies  and  supersedes  the  current  authoritative
        accounting literature regarding the computation and disclosure of earnings
        per share,  is  effective  for interim  and annual  periods  ending  after
        December  15, 1997 and may not be applied  earlier.  The Company  does not
        expect adoption of this statement to result in significant  changes to the
        Company's  calculation or presentation of loss for common stockholders per
        common share.
  
        In June 1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
        Income." This  statement,  which  establishes  standards for reporting and
        disclosure of  comprehensive  income,  is effective for interim and annual
        periods  beginning after December 15, 1997,  although  earlier adoption is
        permitted.  Reclassification of financial  information for earlier periods
        presented for comparative purposes is required under SFAS No. 130. As this
        statement   only  requires   additional   disclosures   in  the  Company's
        consolidated  financial statements,  its adoption will not have any impact
        on the Company's consolidated financial position or results of operations.
        The Company expects to adopt SFAS No. 130 effective January 1, 1998.
  
        In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
        an Enterprise and Related Information." This statement,  which establishes
        standards for the reporting of information  about  operating  segments and
        requires the reporting of selected information about operating segments in
        interim  financial  statements,  is effective  for fiscal years  beginning
        after  December 15,  1997,  although  earlier  application  is  permitted.
        Reclassification  of segment information for earlier periods presented for
        comparative  purposes is required under SFAS No. 131. The Company does not
        expect adoption of this statement to result in significant  changes to its
        presentation of financial data by business segment. The Company expects to
        adopt SFAS No. 131 effective January 1, 1998.
  
                                          5
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        (Loss) Income for Common Stockholders Per Common Share
        Loss for common  stockholders  per common share  amounts were  computed by
        dividing net loss and loss before  extraordinary items, after deduction of
        preferred stock dividends, by the weighted average number of common shares
        outstanding  during the period. For the six months ended June 30, 1997 and
        1996 and for the three months ended June 30, 1997,  the  Company's  common
        stock  equivalents have an antidilutive  effect on net loss per share and,
        therefore,  have not been used in determining  the total weighted  average
        number of common shares outstanding.
  
        For the three months ended June 30, 1996, the Company's  shares which were
        issuable upon conversion of its  convertible  debentures and upon exercise
        of its then  outstanding  common  equity put options  were not included as
        common stock  equivalents,  since  inclusion of these shares would have an
        antidilutive effect on net income per share. The Company's dilutive common
        stock  equivalents for such period,  consisting  solely of shares issuable
        under employee stock  programs,  did not have any impact on net income per
        share as presented in the Company's  condensed  consolidated  statement of
        operations  and  accumulated  deficit for the three  months ended June 30,
        1996.  Therefore,  primary and fully diluted net income per share have not
        been presented for such period.  For the three months ended June 30, 1996,
        the primary and fully diluted weighted average number of common shares and
        common share equivalents outstanding were 241.0 million and 241.3 million,
        respectively.
  
        Reclassifications
        Certain  reclassifications  have  been made to the  prior  year  condensed
        consolidated financial statements to conform to those classifications used
        in 1997.
  
  3.    ACQUISITIONS AND OTHER SIGNIFICANT EVENTS
  
        Microsoft Investment
        On June  30,  1997  (the  "Issuance  Date"),  the  Company  and  Microsoft
        Corporation  ("Microsoft")  completed  a  Stock  Purchase  Agreement  (the
        "Agreement")  under which Microsoft  purchased and the Company issued 24.6
        million shares of the Company's  Class A Special  Common Stock,  par value
        $1.00 per share (the "Class A Special  Stock"),  at $20.29 per share,  for
        $500.0  million and 500,000  shares of the  Company's  newly  issued 5.25%
        Series B Mandatorily  Redeemable  Convertible  Preferred  Stock, par value
        $1,000 per share (the "Series B Preferred Stock"), for $500.0 million.
  
        The Series B  Preferred  Stock has a 5.25%  pay-in-kind  annual  dividend.
        Dividends will be paid quarterly through the issuance of additional shares
        of  Series  B  Preferred  Stock  (the  "Additional  Shares")  and  will be
        cumulative from the Issuance Date (except that dividends on the Additional
        Shares will accrue from the date such Additional  Shares are issued).  The
        Series B Preferred Stock, including the Additional Shares, is convertible,
        at the option of  Microsoft,  into 21.2 million  shares of Class A Special
        Stock,  subject to  adjustment  in certain  limited  circumstances,  which
        equals an initial  conversion  price of $23.54 per share,  increasing as a
        result of the Additional  Shares to $33.91 per share on June 30, 2004. The
        Series B Preferred  Stock is mandatorily  redeemable on June 30, 2017, or,
        at the option of the Company  beginning  on June 30, 2004 or at the option
        of Microsoft on June 30, 2004 or on June 30, 2012.  Upon  redemption,  the
        Company, at its option, may redeem the Series B Preferred Stock with cash,
        Class A Special Stock or a combination  thereof.  As the Company currently
        intends to redeem the Series B Preferred  Stock with Class A Special Stock
        upon  redemption,  the Series B Preferred  Stock has been  classified as a
        component  of  stockholders'  equity  as of June 30,  1997.  The  Series B
        Preferred Stock is generally non-voting.
  
        Offerings of Subsidiary Debt
        On May 8, 1997, Comcast Cellular Holdings,  Inc. ("Comcast  Cellular"),  a
        wholly owned subsidiary of the Company, completed the sale of $1.0 billion
        principal  amount of 9 1/2% Senior Notes due 2007 (the  "Cellular  Notes")
        through a private offering with  registration  rights.  The Cellular Notes
        are  obligations  of  Comcast  Cellular  and are not  obligations  of, nor
        guaranteed  by, the Company.  Comcast  Cellular used the net proceeds from
        the offering to repay existing  borrowings by its subsidiaries,  including
        its senior participating redeemable zero coupon notes. Collectively, these
        transactions are referred to herein as the "Cellular Refinancing."
  
                                          6
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        On May 1, 1997,  Comcast Cable  Communications,  Inc. ("Comcast Cable"), a
        wholly owned subsidiary of the Company, completed the sale of $1.7 billion
        principal  amount of notes (the "Cable Notes") through a private  offering
        with  registration  rights.  The Cable Notes were issued in four tranches:
        $300.0 million  principal amount of 8 1/8% Notes due 2004,  $600.0 million
        principal amount of 8 3/8% Notes due 2007, $550.0 million principal amount
        of 8 7/8% Notes due 2017 and  $250.0  million  principal  amount of 8 1/2%
        Notes due 2027. The Notes due 2027 are subject to repurchase at the option
        of the holder in 2009.  The Cable Notes are  obligations  of Comcast Cable
        and are not obligations of, nor guaranteed by, the Company.  Comcast Cable
        used  substantially  all of the net  proceeds  from the  offering to repay
        existing borrowings by its subsidiaries.  Collectively, these transactions
        are referred to herein as the "Cable Refinancing."
  
        E! Entertainment
        On March 31, 1997, the Company, through Comcast Entertainment Holdings LLC
        (the  "LLC"),  which is owned  50.1% by the  Company and 49.9% by The Walt
        Disney Company ("Disney"),  purchased a 58.4% interest in E! Entertainment
        Television,  Inc.  ("E!  Entertainment"),   an  entertainment  programming
        service distributed to more than 42 million subscribers, from Time Warner,
        Inc.  ("Time  Warner") for $321.9 million (the "E!  Acquisition").  The E!
        Acquisition was funded by cash contributions to the LLC by the Company and
        Disney of $132.8 million and $189.1 million,  respectively.  In connection
        with the E! Acquisition,  the Company contributed its 10.4% interest in E!
        Entertainment  to the LLC.  Following these  transactions,  the LLC owns a
        68.8% interest in E!  Entertainment.  To fund the cash contribution to the
        LLC, the Company  borrowed  $132.8  million from Disney in the form of two
        10-year, 7% notes (the "Disney Notes").
  
        The Company accounted for the E! Acquisition under the purchase method and
        E!  Entertainment  was consolidated  with the Company  effective March 31,
        1997.  The  allocation  of the purchase  price  relating to the assets and
        liabilities of E! Entertainment is preliminary pending a final appraisal.
  
        After September 1998,  Disney,  in certain  circumstances,  is entitled to
        request that the LLC purchase  Disney's  entire interest in the LLC at its
        then fair market value (as determined by an appraisal process). If the LLC
        elects not to purchase  Disney's  interest,  Disney has the right,  at its
        option, to purchase either the Company's entire interest in the LLC or all
        of the shares of stock of E!  Entertainment  held by the LLC, in each case
        at fair market value.  In the event that Disney  exercises its rights,  as
        described above, a portion or all of the Disney Notes may be replaced with
        a three year note due to Disney.
  
        Scripps Cable
        In November 1996,  the Company  acquired the cable  television  operations
        ("Scripps Cable") of The E.W. Scripps Company ("E.W. Scripps") in exchange
        for  93.048  million  shares  of Class A  Special  Stock  valued at $1.552
        billion (the "Scripps Acquisition"). The Company accounted for the Scripps
        Acquisition  under the purchase method and Scripps Cable was  consolidated
        with the  Company  effective  November  1, 1996.  The terms of the Scripps
        Acquisition  provide for, among other things,  the  indemnification of the
        Company  by  E.  W.  Scripps  for  certain   liabilities,   including  tax
        liabilities, relating to Scripps Cable prior to the acquisition date.
  
        Comcast-Spectacor
        In July 1996, the Company  completed its acquisition  (the "Sports Venture
        Acquisition")  of a  66%  interest  in  the  Philadelphia  Flyers  Limited
        Partnership,  a Pennsylvania limited partnership  ("PFLP"),  the assets of
        which, after giving effect to the Sports Venture  Acquisition,  consist of
        (i) the  National  Basketball  Association  ("NBA")  franchise  to own and
        operate the  Philadelphia  76ers  basketball  team and related assets (the
        "Sixers"),  (ii) the National  Hockey League ("NHL")  franchise to own and
        operate the Philadelphia  Flyers hockey team and related assets, and (iii)
        two adjacent arenas, leasehold interests in and development rights related
        to the land  underlying  the  arenas  and other  adjacent  parcels of land
        located  in  Philadelphia,   Pennsylvania  (collectively,  the  "Arenas").
        Concurrent with the completion of the Sports Venture Acquisition, PFLP was
        renamed Comcast Spectacor, L.P. ("Comcast-Spectacor").
  
        The Sports Venture  Acquisition was completed in two steps. In April 1996,
        the Company  purchased the Sixers for $125.0  million in cash plus assumed
        net  liabilities  of  approximately  $11.0  million  through a partnership
        controlled by the Company. To complete the Sports Venture Acquisition,  in
        July 1996, the Company  contributed its interest 
  
                                          7
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        in the Sixers, exchanged approximately 3.5 million shares of the Company's
        Class A Special  Stock and 6,370 shares of the  Company's  newly issued 5%
        Series A  Convertible  Preferred  Stock and paid $15.0 million in cash for
        its current interest in  Comcast-Spectacor.  The remaining 34% interest in
        Comcast-Spectacor is owned by a group, including the former majority owner
        of PFLP, who also manages Comcast-Spectacor. In connection with the Sports
        Venture Acquisition, Comcast-Spectacor assumed the outstanding liabilities
        relating to the Sixers and the Arenas,  including a mortgage obligation of
        $155.0 million. The Company accounts for its interest in Comcast-Spectacor
        under the equity method (see Note 4).
  
        Unaudited Pro Forma Information
        The  following  unaudited pro forma  information  for the six months ended
        June 30, 1996 has been presented as if the Scripps Acquisition occurred on
        January  1,  1996.  This  unaudited  pro  forma  information  is  based on
        historical results of operations,  adjusted for acquisition costs, and, in
        the  opinion of  management,  is not  necessarily  indicative  of what the
        results  would have been had the  Company  operated  Scripps  Cable  since
        January 1, 1996 (dollars in millions, except per common share data).
  
                                                                  Six Months Ended
                                                                   June 30, 1996
             Revenues.......................................         $2,046.2
             Loss before extraordinary items................            (44.1)
             Net loss.......................................            (45.1)
             Net loss per common share......................            (0.14)
  
  4.    INVESTMENTS, PRINCIPALLY IN AFFILIATES
                                                     June 30,         December 31,
                                                      1997               1996
                                                       (Dollars in millions)
             Equity method..................         $936.4             $966.1
             Public companies...............           92.2              165.5
             Privately held companies.......           37.6               46.1
                                                   --------           --------
                                                   $1,066.2           $1,177.7
                                                   ========           ========
  
        Equity Method
        The Company records its  proportionate  interests in the net income (loss)
        of  substantially  all of its investees,  other than the UK Investees (see
        below), three months in arrears. The Company's recorded investments exceed
        its proportionate interests in the book value of the investees' net assets
        by  $227.6  million  as  of  June  30,  1997  (primarily  related  to  the
        investments in Comcast-Spectacor  and Sprint PCS (see below)). Such excess
        is being  amortized  to equity in net  income  or loss,  primarily  over a
        period of twenty years,  which is consistent  with the estimated  lives of
        the  underlying  assets.  The original cost of  investments  accounted for
        under the equity method  totaled  $1.324  billion and $1.271 billion as of
        June 30, 1997 and December 31, 1996,  respectively.  Summarized  financial
        information for the Company's  equity method  investees is presented below
        (dollars in millions).
  
                                          8
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                                 Sprint                      UK
                                                                  PCS         TCGI       Investees      Other     Combined
  <S>                                                           <C>          <C>            <C>         <C>        <C>    
  Six Months Ended June 30, 1997:
  
     Combined Results of Operations
        Revenues, net..................................           $13.6       $184.2        $92.9      $442.3       $733.0
        Operating, selling, general and
          administrative expenses......................           351.5        171.9         82.2       453.0      1,058.6
        Depreciation and amortization..................            43.8         56.2         36.0        54.1        190.1
        Operating loss.................................          (381.7)       (43.9)       (25.3)      (64.8)      (515.7)
        Net loss (a)...................................          (398.8)       (87.7)       (44.8)      (89.6)      (620.9)
  
     Company's Equity in Net Loss
        Equity in current period net loss (b)..........          ($59.8)      ($14.2)      ($16.7)     ($31.3)     ($122.0)
        Amortization expense...........................            (0.1)        (0.4)        (0.3)       (3.4)        (4.2)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................          ($59.9)      ($14.6)      ($17.0)     ($34.7)     ($126.2)
                                                                =======      =======        =====       =====      =======
  
  Three Months Ended June 30, 1997:
  
     Combined Results of Operations
        Revenues, net..................................            $9.5        $96.8        $48.4      $241.2       $395.9
        Operating, selling, general and
          administrative expenses......................           165.9         90.7         42.0       239.1        537.7
        Depreciation and amortization..................            34.4         29.8         18.6        24.1        106.9
        Operating loss.................................          (190.8)       (23.7)       (12.2)      (22.0)      (248.7)
        Net loss (a)...................................          (215.5)       (45.0)       (22.6)      (38.8)      (321.9)
  
     Company's Equity in Net Loss
        Equity in current period net loss..............          ($32.3)       ($7.4)       ($8.3)      ($6.2)      ($54.2)
        Amortization expense...........................                         (0.2)        (0.2)       (1.5)        (1.9)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................          ($32.3)       ($7.6)       ($8.5)      ($7.7)      ($56.1)
                                                                =======      =======        =====       =====      =======
  
  
  Combined Financial Position
  
  As of June 30, 1997:
        Current assets.................................          $308.9       $657.4       $140.6      $304.1     $1,411.0
        Noncurrent assets..............................         4,599.5      1,474.2        706.0     1,268.9      8,048.6
        Current liabilities............................           251.5        206.4         89.5       793.4      1,340.8
        Noncurrent liabilities.........................         2,417.9      1,079.5        589.3       543.7      4,630.4
  <FN>
  
  ------------
  (a)   See footnote (1) on page 10.
  (b)   See footnote (2) on page 10.
  </FN>
  </TABLE>
  
                                          9
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                                 Sprint                      UK
                                                                  PCS         TCGI       Investees      Other     Combined
  <S>                                                           <C>          <C>            <C>         <C>        <C>    
  Six Months Ended June 30, 1996:
  
     Combined Results of Operations
        Revenues, net..................................        $              $120.1        $77.1      $248.6       $445.8
        Operating, selling, general and
          administrative expenses......................            75.5        111.3         71.1       245.4        503.3
        Depreciation and amortization..................             0.3         32.1         28.2        30.8         91.4
        Operating loss.................................           (75.8)       (23.3)       (22.2)      (27.6)      (148.9)
        Net loss (1)...................................          (152.7)       (51.1)       (36.2)      (39.8)      (279.8)
  
     Company's Equity in Net Loss
        Equity in current period net loss..............          ($22.9)       ($9.7)      ($14.8)     ($10.7)      ($58.1)
        Amortization income (expense)..................             0.6         (0.8)                    (2.0)        (2.2)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................          ($22.3)      ($10.5)      ($14.8)     ($12.7)      ($60.3)
                                                                =======      =======        =====       =====      =======
  
  Three Months Ended June 30, 1996:
  
     Combined Results of Operations
        Revenues, net..................................        $               $63.7        $34.5      $126.5       $224.7
        Operating, selling, general and
          administrative expenses......................            30.7         59.0         32.0       121.7        243.4
        Depreciation and amortization..................             0.3         16.8         12.8        14.7         44.6
        Operating loss.................................           (31.0)       (12.1)       (10.3)       (9.9)       (63.3)
        Net loss (1)...................................           (67.4)       (26.0)       (15.9)      (16.9)      (126.2)
  
     Company's Equity in Net Loss
        Equity in current period net loss..............          ($10.1)       ($4.9)       ($6.2)      ($4.2)      ($25.4)
        Amortization income (expense)..................             0.6         (0.5)                    (0.5)        (0.4)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................           ($9.5)       ($5.4)       ($6.2)      ($4.7)      ($25.8)
                                                                =======      =======        =====       =====      =======
  <FN>
        --------
        (1)   Net loss also  represents  loss from  continuing  operations  before
              extraordinary  items and cumulative  effect of changes in accounting
              principle.
        (2)   As a result of the E!  Acquisition,  the  Company  recorded a charge
              representing the cumulative amount that would have been recorded had
              the Company accounted for its investment in E!  Entertainment  under
              the  equity  method  since  the  date  of  initial  investment  (the
              "Cumulative Charge").  Since the Company's proportionate share of E!
              Entertainment's  cumulative  losses  was in excess of the  Company's
              historical  cost basis in E!  Entertainment  and as the  Company was
              under  no   contractual   obligation   to  fund  the  losses  of  E!
              Entertainment,  the  Cumulative  Charge was limited to the Company's
              historical  cost basis of $12.1 million.  Such amount is included in
              equity  in net  losses  of  affiliates  in the  Company's  condensed
              consolidated statement of operations and accumulated deficit for the
              six  months  ended  June  30,  1997  as it is  not  significant  for
              restatement of the Company's prior year financial statements.
  </FN>
  </TABLE>
  
        Sprint  PCS.  The  Company,   Tele-Communications,   Inc.   ("TCI"),   Cox
        Communications,   Inc.  ("Cox")  and  Sprint  Corporation  ("Sprint,"  and
        together  with the  Company,  TCI and Cox,  the  "Parents"),  and  certain
        subsidiaries  of  the  Parents,  engage  in  the  wireless  communications
        business  through a limited  partnership  known as  "Sprint  Spectrum"  or
        "Sprint PCS," a development  stage  enterprise  through June 30, 1997. The
        Company  made its initial  investment  in 1994 and,  as of June 30,  1997,
        holds a general and limited partnership interest of 15% in Sprint PCS. The
        Company's  investment  in Sprint  PCS is  accounted  for under the  equity
        method  based  on the  Company's  general  partnership  interest  and  its
        representation on the partnership's board of directors.
  
        TCGI.  Through  June  1996,  the  Company  held  investments  in  Teleport
        Communications Group, Inc. ("TCGI"),  TCG Partners and certain local joint
        ventures (the "Teleport Joint Ventures") managed by TCGI and TCG Partners.
        TCGI 
  
                                         10
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        is one of the largest  competitive  alternative  access  providers  in the
        United States in terms of route miles.  The Company had a 20.0% investment
        in TCGI and interests in the Teleport Joint Ventures ranging from 12.4% to
        20.3%.  In June 1996,  TCGI sold  approximately  27 million  shares of its
        Class A Common Stock (the "TCGI Class A Stock"),  for $16 per share, in an
        initial public offering (the "TCGI IPO"). In connection with the TCGI IPO,
        TCGI, the Company and subsidiaries of Cox, TCI and Continental Cablevision
        ("Continental" and collectively with Cox, TCI and the Company,  the "Cable
        Stockholders")  entered  into an  agreement  pursuant  to  which  TCGI was
        reorganized (the "Reorganization"). The Reorganization consisted of, among
        other  things:  (i) the  acquisition  by TCGI of TCG  Partners;  (ii)  the
        acquisition by TCGI of additional interests in the Teleport Joint Ventures
        (including  100% of those  interests  held by the Company);  and (iii) the
        contribution  to TCGI of  $269.0  million  aggregate  principal  amount of
        indebtedness,  plus accrued  interest  thereon,  owed by TCGI to the Cable
        Stockholders  (except that TCI retained a $26 million subordinated note of
        TCGI),  including  $53.8  million  principal  amount  and $4.1  million of
        accrued   interest   owed  to  the  Company.   In   connection   with  the
        Reorganization, the Company received 25.6 million shares of TCGI's Class B
        Common Stock (the "TCGI Class B Stock").  Each share of TCGI Class B Stock
        is entitled to voting power equivalent to ten shares of TCGI Class A Stock
        and is  convertible,  at the option of the holder,  into one share of TCGI
        Class A Stock.  As a result of the TCGI IPO, the Company  recorded a $40.6
        million increase in its proportionate share of TCGI's net assets as a gain
        from equity offering of affiliate in its condensed  consolidated statement
        of operations and  accumulated  deficit for the six and three months ended
        June 30, 1996.
  
        During the three months ended March 31, 1997,  the Company  received  2.76
        million  shares  of TCGI  Class  A Stock  from  TCGI in  exchange  for the
        Company's shares of an alternate access provider. In May 1997, the Company
        sold  all of its  shares  of TCGI  Class A Stock  for  $68.9  million  and
        recognized a $68.9 million  pre-tax gain,  which is included in investment
        income  in  its  condensed   consolidated   statement  of  operations  and
        accumulated deficit for the six and three months ended June 30, 1997.
  
        As of June 30, 1997,  the Company owns TCGI Class B Stock  representing  a
        19.8% voting interest and a 15.5% equity interest.  The Company  continues
        to account for its  interest in TCGI under the equity  method based on its
        voting  interest   maintained   through  the  TCGI  Class  B  Stock,   its
        representation  on TCGI's board of directors  and its  participation  in a
        TCGI  stockholder  agreement  granting  certain rights to a control group.
        Assuming  conversion  of the TCGI Class B Stock held by the  Company  into
        TCGI Class A Stock, the Company's investment in TCGI, which had a carrying
        value of $131.1  million as of June 30,  1997,  would have a fair value of
        approximately $1.009 billion, based on the quoted market price of the TCGI
        Class A Stock as of July 31, 1997.
  
        UK  Investees.  As of June 30,  1997,  Comcast UK Cable  Partners  Limited
        ("Comcast UK Cable"),  a consolidated  subsidiary of the Company,  holds a
        27.5%  interest  in  Birmingham  Cable  Corporation  Limited  and a  50.0%
        interest in Cable London PLC. In addition,  Comcast UK Cable  historically
        held an  investment  in  Cambridge  Holding  Company  Limited  ("Cambridge
        Cable").  In March 1996,  Comcast UK Cable purchased the 50.0% interest in
        Cambridge   Cable  that  it  had  not   previously   owned  for  cash  and
        approximately  8.9 million of its Class A Common  Shares  (the  "Cambridge
        Acquisition").  Following the Cambridge Acquisition, Comcast UK Cable owns
        100.0% of Cambridge  Cable and  consolidated  the  financial  position and
        results of operations of Cambridge Cable effective March 31, 1996.
  
        Other. The Company's 11 other equity method investees include  investments
        in wired telecommunications  (including Garden State Cablevision,  L.P., a
        cable  communications  company serving 207,000  subscribers as of June 30,
        1997 in the State of New Jersey), wireless  telecommunications  (including
        Primestar - see below) and content providers (including  Comcast-Spectacor
        - see Note 3). The Company holds interests  representing  less than 20% of
        the total  outstanding  ownership  interest in certain of its other equity
        method  investees.  The equity  method of accounting is utilized for these
        investments  based on the type of  investment  (i.e.  general  partnership
        interest),  board representation,  participation in a controlling investor
        group,  significant shareholder rights or a combination of these and other
        factors. In addition,  the Company's 66% interest in Comcast- Spectacor is
        accounted  for under the equity  method  since the  Company  does not have
        control  over  Comcast-  Spectacor's  operations.  The  Company  does  not
        consider  these  other  equity  method   investments  to  be  individually
        significant to its consolidated financial position,  results of operations
        or liquidity.
  
                                         11
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        Roll-up of Primestar's Operations.  In June 1997, the Company entered into
        a binding  letter  agreement  (the  "Roll-up  Agreement")  with  PRIMESTAR
        Partners  L.P.  ("Primestar")  and the  affiliates  of  each of the  other
        partners  of  Primestar,  including  TCI  Satellite  Entertainment,   Inc.
        ("TSAT"), a publicly-traded company. Primestar, in which the Company holds
        a 10.4% general and limited partnership  interest,  is principally engaged
        in the business of  acquiring,  originating  and/or  providing  television
        programming   services   delivered  by  satellite  through  a  network  of
        distributors,  including the Company,  throughout the United  States.  The
        Roll-up  Agreement  sets forth the  principal  terms and  conditions  of a
        proposed  transaction  (the  "Roll-up  Transaction"),  through  which  the
        Company's direct broadcast satellite ("DBS") operations, Primestar and the
        Primestar-related   distribution  businesses  of  the  other  partners  of
        Primestar will be consolidated into a newly-formed publicly-traded company
        ("New Primestar").  In connection with the Roll-up Transaction,  TSAT will
        become a wholly owned  subsidiary of New Primestar.  The Company  provided
        DBS services,  through a  distributorship  arrangement with Primestar,  to
        152,000 subscribers as of June 30, 1997.
  
        New   Primestar   will  acquire  the  Primestar   partnership   interests,
        subscribers  and  related  assets,  as  applicable,  of the parties to the
        Roll-up  Transaction,  in exchange  for (i) cash,  (ii) shares of Series A
        Common Stock of New Primestar and (iii) shares of Series C Common Stock of
        New  Primestar,  in each  case in an  amount  determined  pursuant  to the
        Roll-up  Agreement.  The Company  will  continue to market and support the
        Primestar  programming  services on an agency basis after  consummation of
        the Roll-up  Transaction;  however, the terms of such arrangement have not
        yet been  determined.  Under  the  terms of the  Roll-up  Agreement,  upon
        closing of the  Roll-up  Transaction,  the  Company is expected to receive
        approximately  $90  million  in cash and to own  approximately  10% of New
        Primestar  common equity,  subject to  adjustments  based on the number of
        subscribers,  inventory  amounts and other  factors.  As of June 30, 1997,
        assets of the Company's DBS operations totaled $138.2 million.
  
        In  June  1997,   Primestar  entered  into  an  agreement  with  The  News
        Corporation Limited, MCI  Telecommunications  Corporation and American Sky
        Broadcasting LLC ("ASkyB"), pursuant to which Primestar (or, under certain
        circumstances,  New Primestar) will acquire certain assets relating to the
        high-power, DBS business of ASkyB. In exchange for such assets, ASkyB will
        receive  non-voting  securities of New Primestar  that will be convertible
        into  non-voting  common stock of New  Primestar  and,  accordingly,  will
        reduce  the  Company's   common  equity   interest  in  New  Primestar  to
        approximately 7% on a fully diluted basis.
  
        These  transactions  are not  conditioned  on  each  other  and may  close
        independently.  They are expected to close in 1998,  subject to receipt of
        all  necessary  governmental  and  regulatory  approvals,   including  the
        approval  of  the  Federal  Communications  Commission.  There  can  be no
        assurance that such approvals will be obtained.
  
        @Home.  On July 11,  1997 (the  "@Home  IPO  Date"),  At Home  Corporation
        ("@Home"), an equity method investee of the Company,  completed an initial
        public  offering of its Series A Common  Stock.  @Home  provides  Internet
        services  to  customers   and   businesses   over  the  cable   television
        infrastructure in a limited number of cities in the United States.  During
        the third quarter of 1997, due to the dilution of the Company's equity and
        voting interest and other factors,  the Company expects to discontinue the
        equity method of accounting for its  investment in @Home.  As of the @Home
        IPO Date,  the Company held 14.6  million  shares of @Home Series A Common
        Stock,   representing  a  12.2%  and  5.7%  equity  and  voting  interest,
        respectively.
  
        Investments - Public Companies
        The Company holds  unrestricted  equity  investments  in certain  publicly
        traded companies, including its investments in Nextel Communications, Inc.
        ("Nextel") and Time Warner (see below),  with an historical cost of $140.3
        million and $212.7  million as of June 30,  1997 and  December  31,  1996,
        respectively.  The  Company  has  recorded  these  investments,  which are
        classified as available for sale, at their estimated fair values of $154.2
        million and $212.9  million as of June 30,  1997 and  December  31,  1996,
        respectively.  The  unrealized  pre-tax  gains  as of June  30,  1997  and
        December 31, 1996 of $13.9  million and $0.2 million,  respectively,  have
        been reported in the Company's condensed  consolidated  balance sheet as a
        component of  stockholders'  equity,  net of related  deferred  income tax
        expense of $4.9 million and $0.1 million, respectively.
  
                                         12
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        As of June 30, 1997 and December  31,  1996,  the Company held 3.3 million
        shares of Nextel common stock.  In addition,  as of December 31, 1996, the
        Company  held  options to acquire an  additional  25.0  million  shares of
        Nextel  common  stock at $16 per share.  As of December  31,  1996,  these
        options,  which had an historical cost of $20.0 million,  were included in
        investments  in  publicly  traded  companies  at their fair value of $32.6
        million.  In February  1997,  the Company sold these options to Nextel for
        $25.0  million and  recognized  a pre-tax gain of $5.0  million,  which is
        included in investment income in its condensed  consolidated  statement of
        operations and accumulated deficit for the six months ended June 30, 1997.
        In July 1997,  the Company  sold its 3.3 million  shares of Nextel  common
        stock for $73.4  million  resulting  in a pre-tax  gain of $32.1  million,
        which will be recognized in the third quarter of 1997. Accordingly,  as of
        June 30, 1997,  the Company's  investment in Nextel,  which is recorded at
        its fair value of $62.1 million, is included in short-term  investments in
        the Company's condensed consolidated balance sheet.
  
        In February  1996, in  connection  with certain  preemptive  rights of the
        Company under  previously  existing  agreements  with Nextel,  the Company
        purchased  8.16 million shares of Nextel common stock at $12.25 per share,
        for $99.9  million.  During  the three  months  ended June 30,  1996,  the
        Company sold 4.4 million  shares of Nextel  common stock for $85.6 million
        and  recognized  a pre-tax  gain of $29.7  million,  which is  included in
        investment  income in its condensed  consolidated  statement of operations
        and accumulated deficit for the six and three months ended June 30, 1996.
  
        The Company  received 1.36 million shares of Time Warner common stock (the
        "Time Warner Stock") in exchange (the "Exchange") for all of the shares of
        Turner  Broadcasting  System, Inc. ("TBS") stock (the "TBS Stock") held by
        the  Company as a result of the  merger of Time  Warner and TBS in October
        1996. As a result of the Exchange,  the Company  recognized a pre-tax gain
        of  $47.3  million  in  the  fourth  quarter  of  1996,  representing  the
        difference between the Company's historical cost basis in the TBS Stock of
        $8.9 million and the new basis for the Company's investment in Time Warner
        Stock of $56.2  million,  which was based on the closing price of the Time
        Warner Stock on the merger date of $41.375 per share. In December 1996 and
        January  1997,  the Company sold 92,500  shares and 1.27  million  shares,
        respectively,  of the Time Warner Stock, representing the Company's entire
        interest in Time Warner, for $3.7 million and $48.6 million, respectively.
        In  connection  with the January  1997 sales,  the  Company  recognized  a
        pre-tax loss of $3.8 million,  which is included in  investment  income in
        its condensed consolidated statement of operations and accumulated deficit
        for the six months ended June 30, 1997. As of December 31, 1996,  the 1.27
        million  shares of Time Warner Stock held by the Company were  recorded at
        their  fair  value  of  $47.4  million  and were  included  in  short-term
        investments in the Company's condensed consolidated balance sheet.
  
  5.    LONG-TERM DEBT
  
        The Cable  Refinancing  and the  Cellular  Refinancing  had a  significant
        impact on the maturities of the Company's  long-term  debt.  Maturities of
        long-term debt outstanding as of June 30, 1997 through 2001 are as follows
        (dollars in millions).
  
             1997 (1)................................             $560.9
             1998....................................              117.6
             1999....................................              207.4
             2000....................................              301.7
             2001....................................              577.8
  
        ---------------
        (1)  Represents  maturities of long-term debt for the remaining six months
             of 1997,  which includes  $527.0 million of optional debt  repayments
             made in July 1997 (see below).
  
        As of June  30,  1997 and  December  31,  1996,  the  Company's  effective
        weighted average interest rate on its long-term debt outstanding was 8.02%
        and 7.68%, respectively.
  
        On  June  30,  1997,  the  Company  redeemed  all of its  outstanding  10%
        Subordinated  Debentures,  due 2003 (the "10%  Debentures").  An aggregate
        principal amount of $139.3 million of the 10% Debentures was redeemed at a
  
                                         13
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        redemption  price of 100% of the principal  amount thereof,  together with
        accrued interest  thereon.  On the date of redemption,  the 10% Debentures
        had an accreted value of $127.7 million.
  
        In connection with the Cable Refinancing, the Cellular Refinancing and the
        redemption of the 10% Debentures,  the Company  expensed  unamortized debt
        acquisition costs and incurred debt extinguishment costs of $35.1 million,
        resulting in an extraordinary  loss, net of tax, of $22.8 million or $0.07
        per common share during the six and three months ended June 30, 1997.
  
        In July 1997, the Company made optional debt repayments aggregating $527.0
        million with existing cash, cash  equivalents and short-term  investments.
        Current  portion  of  long-term  debt as of June 30,  1997  includes  such
        amount.  As a result of these debt  repayments,  the Company  will expense
        unamortized  debt  acquisition  costs  of $3.5  million,  resulting  in an
        extraordinary  loss,  net of tax, of $2.3 million in the third  quarter of
        1997.
  
        As of July 31, 1997, certain  subsidiaries of the Company had unused lines
        of credit of $1.129 billion.  The availability and use of the unused lines
        of credit is restricted  by the  covenants of the related debt  agreements
        and to subsidiary general purposes and dividend  declaration.  The Company
        continually  evaluates its debt  structure  with the intention of reducing
        its debt service requirements when desirable.
  
  6.    STOCKHOLDERS' EQUITY
  
        Concurrent  with the  announcement  of the Scripps  Acquisition in October
        1995,  the Company  announced  that its Board of  Directors  authorized  a
        market repurchase program (the "Repurchase Program") pursuant to which the
        Company  could  purchase,  at such  times  and on such  terms as it deemed
        appropriate,  up to  $500.0  million  of  its  outstanding  common  equity
        securities,  subject to certain restrictions and market conditions.  Based
        on the trade date for stock  repurchases,  during the six and three months
        ended June 30, 1997 and 1996, the Company  repurchased 2.3 million shares,
        6.5  million   shares,   1.6  million  shares  and  3.3  million   shares,
        respectively,  of its common stock for  aggregate  consideration  of $36.2
        million,  $116.6 million,  $24.7 million and $59.9 million,  respectively,
        pursuant  to the  Repurchase  Program.  During the term of the  Repurchase
        Program, which terminated on May 13, 1997, the Company repurchased a total
        of 13.5 million shares of its common stock for aggregate  consideration of
        $228.6 million.
  
        As part of the Repurchase Program,  the Company sold put options on shares
        of its Class A Special Stock.  Put options on 4.0 million shares,  sold by
        the Company  during 1996 and 1995 and  outstanding  at December  31, 1996,
        expired unexercised during the first quarter of 1997. Upon expiration, the
        Company  reclassified  $69.6  million,  the  amount  it  would  have  been
        obligated  to pay to  repurchase  such  shares  had the put  options  been
        exercised,  from common  equity put options to  additional  capital in the
        Company's condensed consolidated balance sheet.
  
        As part of the  Repurchase  Program,  in April 1997,  the Company sold put
        options  on 2.0  million  shares  of its Class A  Special  Stock.  The put
        options  give the holder the right to require  the  Company to  repurchase
        such shares at a specified  price on specific dates in April and May 1998.
        The amount the Company would be obligated to pay to repurchase such shares
        upon  exercise  of the put  options,  totaling  $31.4  million,  has  been
        reclassified  from additional  capital to common equity put options in the
        Company's June 30, 1997 condensed consolidated balance sheet.
  
  7.    STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
  
        The Company  made cash  payments for  interest of $233.8  million,  $229.7
        million, $116.7 million and $127.7 million during the six and three months
        ended June 30, 1997 and 1996, respectively.
  
        The Company made cash  payments for income taxes of $75.0  million,  $62.2
        million,  $56.7 million and $46.9 million  during the six and three months
        ended June 30, 1997 and 1996, respectively.
  
                                         14
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
                                     (Unaudited)
  
  8.    CONTINGENCIES
  
        The Company is subject to claims which arise in the ordinary course of its
        business and other legal  proceedings.  In the opinion of management,  the
        amount of  ultimate  liability  with  respect  to these  actions  will not
        materially  affect  the  financial  position,  results  of  operations  or
        liquidity of the Company.
  
  9.    FINANCIAL DATA BY BUSINESS SEGMENT
        (Dollars in millions)
  <TABLE>
  <CAPTION>
                                                 Domestic
                                                   Cable          Electronic         Cellular
                                              Communications       Retailing      Communications       Other (1)           Total
  <S>                                            <C>                 <C>               <C>               <C>             <C>     
  Six Months Ended June 30, 1997
  Revenues, net........................          $1,021.9            $947.4            $220.3            $125.7          $2,315.3
  Depreciation and amortization........             306.8              51.6              61.5              42.5             462.4
  Operating income (loss)..............             169.9             103.0              27.1             (61.3)            238.7
  Interest expense.....................             119.9              27.9              52.1              79.0             278.9
  Capital expenditures.................             251.5              41.1              57.9              96.6             447.1
  Equity in net losses of affiliates...                                                                   126.2             126.2
  
  Three Months Ended June 30, 1997
  Revenues, net........................            $520.8            $467.7            $116.2             $79.8          $1,184.5
  Depreciation and amortization........             168.0              24.8              31.5              25.7             250.0
  Operating income (loss)..............              78.4              50.7              19.4             (31.1)            117.4
  Interest expense.....................              63.2              13.9              28.1              40.4             145.6
  Capital expenditures.................             144.9              26.1              40.0              56.1             267.1
  Equity in net losses of affiliates...                                                                    56.1              56.1
  
  As of June 30, 1997
  Assets...............................          $6,067.2          $2,144.6          $1,461.9          $3,523.3         $13,197.0
  Long-term debt, less current portion.           2,584.8             811.0           1,149.7           2,241.2           6,786.7
  
  Six Months Ended June 30, 1996
  Revenues, net........................            $778.3            $855.8            $207.1             $55.1          $1,896.3
  Depreciation and amortization........             192.6              51.9              56.8              23.0             324.3
  Operating income (loss)..............             190.6              87.5              14.3             (50.5)            241.9
  Interest expense.....................             110.8              35.1              44.0              78.1             268.0
  Capital expenditures.................             137.9              19.5              36.6              84.9             278.9
  Equity in net losses (income) of
      affiliates.......................               0.1              (0.1)                               60.3              60.3
  
  Three Months Ended June 30, 1996
  Revenues, net........................            $396.0            $405.7            $108.9             $35.0            $945.6
  Depreciation and amortization........              97.3              25.7              30.5              13.9             167.4
  Operating income (loss)..............             101.8              41.3              12.1             (26.5)            128.7
  Interest expense.....................              54.1              16.9              23.2              39.0             133.2
  Capital expenditures.................              83.9              13.4              21.7              48.5             167.5
  Equity in net losses (income) of
      affiliates.......................                                (0.1)                               25.9              25.8
  <FN>
  ---------------
  (1)   Other includes certain operating  businesses,  including E!  Entertainment
        (beginning on March 31, 1997), the Company's  consolidated  United Kingdom
        cable and telecommunications  operations and the Company's DBS operations,
        and elimination entries related to the segments presented.
  </FN>
  </TABLE>
  
                                         15
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                 RESULTS OF OPERATIONS
  
  Overview
  
  The Company has  experienced  significant  growth in recent  years both  through
  strategic  acquisitions and growth in its existing  businesses.  The Company has
  historically  met its cash  needs for  operations  through  its cash  flows from
  operating   activities.   Cash   requirements   for   acquisitions  and  capital
  expenditures have been provided through the Company's  financing  activities and
  sales of long-term  investments,  as well as its existing cash, cash equivalents
  and short-term investments.
  
  General Developments of Business
  
  Microsoft Investment
  On June 30, 1997 (the "Issuance  Date"),  the Company and Microsoft  Corporation
  ("Microsoft") completed a Stock Purchase Agreement (the "Agreement") under which
  Microsoft  purchased and the Company issued 24.6 million shares of the Company's
  Class A Special  Common  Stock,  par value $1.00 per share (the "Class A Special
  Stock"),  at $20.29 per share,  for $500.0  million  and  500,000  shares of the
  Company's  newly  issued  5.25%  Series  B  Mandatorily  Redeemable  Convertible
  Preferred  Stock,  par value $1,000 per share (the "Series B Preferred  Stock"),
  for $500.0 million.
  
  The Series B Preferred Stock has a 5.25% pay-in-kind annual dividend.  Dividends
  will be paid  quarterly  through the issuance of  additional  shares of Series B
  Preferred  Stock  (the  "Additional  Shares")  and will be  cumulative  from the
  Issuance Date (except that dividends on the  Additional  Shares will accrue from
  the date such  Additional  Shares are  issued).  The Series B  Preferred  Stock,
  including the Additional  Shares,  is  convertible,  at the option of Microsoft,
  into 21.2 million  shares of Class A Special  Stock,  subject to  adjustment  in
  certain  limited  circumstances,  which  equals an initial  conversion  price of
  $23.54 per share,  increasing as a result of the Additional Shares to $33.91 per
  share on June 30, 2004. The Series B Preferred  Stock is mandatorily  redeemable
  on June 30, 2017, or, at the option of the Company beginning on June 30, 2004 or
  at the  option  of  Microsoft  on  June  30,  2004  or on June  30,  2012.  Upon
  redemption,  the Company, at its option, may redeem the Series B Preferred Stock
  with  cash,  Class A Special  Stock or a  combination  thereof.  As the  Company
  currently  intends to redeem the Series B  Preferred  Stock with Class A Special
  Stock upon  redemption,  the Series B Preferred  Stock has been  classified as a
  component of  stockholders'  equity as of June 30, 1997.  The Series B Preferred
  Stock is generally non-voting.
  
  Offerings of Subsidiary Debt
  On May 8, 1997, Comcast Cellular Holdings,  Inc. ("Comcast Cellular"),  a wholly
  owned  subsidiary of the Company,  completed the sale of $1.0 billion  principal
  amount of 9 1/2% Senior Notes due 2007 (the "Cellular  Notes") through a private
  offering with registration rights. The Cellular Notes are obligations of Comcast
  Cellular and are not  obligations  of, nor guaranteed  by, the Company.  Comcast
  Cellular used the net proceeds from the offering to repay existing borrowings by
  its  subsidiaries,  including its senior  participating  redeemable  zero coupon
  notes. Collectively,  these transactions are referred to herein as the "Cellular
  Refinancing."
  
  On May 1, 1997, Comcast Cable  Communications,  Inc. ("Comcast Cable"), a wholly
  owned  subsidiary of the Company,  completed the sale of $1.7 billion  principal
  amount of notes (the "Cable Notes") through a private offering with registration
  rights.  The Cable Notes were issued in four tranches:  $300.0 million principal
  amount of 8 1/8% Notes due 2004, $600.0 million principal amount of 8 3/8% Notes
  due 2007,  $550.0 million  principal  amount of 8 7/8% Notes due 2017 and $250.0
  million  principal  amount  of 8 1/2%  Notes  due  2027.  The Notes due 2027 are
  subject to repurchase  at the option of the holder in 2009.  The Cable Notes are
  obligations of Comcast Cable and are not  obligations of, nor guaranteed by, the
  Company.  Comcast  Cable used  substantially  all of the net  proceeds  from the
  offering to repay existing borrowings by its subsidiaries.  Collectively,  these
  transactions are referred to herein as the "Cable Refinancing."
  
  E! Entertainment
  On March 31, 1997, the Company,  through Comcast Entertainment Holdings LLC (the
  "LLC"), which is owned 50.1% by the Company and 49.9% by The Walt Disney Company
  ("Disney"), purchased a 58.4% interest in E! Entertainment Television, Inc. ("E!
  Entertainment"),  an entertainment  programming service distributed to more than
  42 million
  
                                         16
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  subscribers,  from Time Warner, Inc. ("Time Warner") for $321.9 million (the "E!
  Acquisition"). The E! Acquisition was funded by cash contributions to the LLC by
  the Company and Disney of $132.8 million and $189.1  million,  respectively.  In
  connection with the E! Acquisition,  the Company  contributed its 10.4% interest
  in E!  Entertainment to the LLC.  Following these  transactions,  the LLC owns a
  68.8% interest in E!  Entertainment.  To fund the cash  contribution to the LLC,
  the Company  borrowed $132.8 million from Disney in the form of two 10-year,  7%
  notes (the "Disney Notes").
  
  The Company  accounted for the E!  Acquisition  under the purchase method and E!
  Entertainment  was consolidated  with the Company  effective March 31, 1997. The
  allocation of the purchase price relating to the assets and liabilities of E!
  Entertainment is preliminary pending a final appraisal.
  
  After September 1998, Disney, in certain  circumstances,  is entitled to request
  that the LLC  purchase  Disney's  entire  interest  in the LLC at its then  fair
  market value (as determined by an appraisal  process).  If the LLC elects not to
  purchase  Disney's  interest,  Disney has the right, at its option,  to purchase
  either the Company's entire interest in the LLC or all of the shares of stock of
  E!  Entertainment  held by the LLC,  in each case at fair market  value.  In the
  event that Disney exercises its rights,  as described above, a portion or all of
  the Disney Notes may be replaced with a three year note due to Disney.
  
  Scripps Cable
  In November 1996, the Company acquired the cable television operations ("Scripps
  Cable") of The E.W.  Scripps  Company  ("E.W.  Scripps")  in exchange for 93.048
  million  shares of Class A Special Stock valued at $1.552  billion (the "Scripps
  Acquisition").  The  Company  accounted  for the Scripps  Acquisition  under the
  purchase method and Scripps Cable was  consolidated  with the Company  effective
  November 1, 1996. The terms of the Scripps  Acquisition provide for, among other
  things,  the  indemnification  of the  Company  by E.  W.  Scripps  for  certain
  liabilities,  including tax liabilities,  relating to Scripps Cable prior to the
  acquisition date.
  
  Comcast-Spectacor
  In July 1996,  the  Company  completed  its  acquisition  (the  "Sports  Venture
  Acquisition") of a 66% interest in the Philadelphia Flyers Limited  Partnership,
  a Pennsylvania limited partnership  ("PFLP"),  the assets of which, after giving
  effect to the Sports Venture Acquisition, consist of (i) the National Basketball
  Association  ("NBA")  franchise  to  own  and  operate  the  Philadelphia  76ers
  basketball  team and related  assets (the  "Sixers"),  (ii) the National  Hockey
  League ("NHL") franchise to own and operate the Philadelphia  Flyers hockey team
  and related assets,  and (iii) two adjacent arenas,  leasehold  interests in and
  development  rights related to the land underlying the arenas and other adjacent
  parcels  of  land  located  in  Philadelphia,  Pennsylvania  (collectively,  the
  "Arenas").  Concurrent  with the completion of the Sports  Venture  Acquisition,
  PFLP was renamed Comcast Spectacor, L.P. ("Comcast-Spectacor").
  
  The Sports Venture  Acquisition  was completed in two steps.  In April 1996, the
  Company  purchased  the  Sixers  for $125.0  million  in cash plus  assumed  net
  liabilities of approximately  $11.0 million through a partnership  controlled by
  the  Company.  To complete the Sports  Venture  Acquisition,  in July 1996,  the
  Company  contributed  its interest in the Sixers,  exchanged  approximately  3.5
  million  shares of the  Company's  Class A Special Stock and 6,370 shares of the
  Company's  newly issued 5% Series A Convertible  Preferred  Stock and paid $15.0
  million in cash for its current interest in Comcast-Spectacor. The remaining 34%
  interest in Comcast-Spectacor is owned by a group, including the former majority
  owner of PFLP, who also manages Comcast-Spectacor. In connection with the Sports
  Venture  Acquisition,  Comcast-Spectacor  assumed  the  outstanding  liabilities
  relating to the Sixers and the Arenas, including a mortgage obligation of $155.0
  million.  The Company accounts for its interest in  Comcast-Spectacor  under the
  equity method.
  
  Liquidity and Capital Resources
  
  Cash, Cash Equivalents and Short-term Investments
  The  Company  has  traditionally  maintained  significant  levels of cash,  cash
  equivalents  and  short-term   investments  to  meet  its  short-term  liquidity
  requirements.  Cash, cash equivalents and short-term  investments as of June 30,
  1997 were $1.409 billion.  As of June 30, 1997,  $276.6 million of the Company's
  cash,  cash  equivalents  and  short-term  investments  was restricted to use by
  subsidiaries of the Company under contractual or other  arrangements,  including
  $132.5 million which is restricted to use by Comcast UK Cable  Partners  Limited
  ("Comcast UK Cable").
  
                                         17
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  The Company's cash, cash equivalents and short-term  investments are recorded at
  cost which  approximates  their fair value.  As of June 30, 1997,  the Company's
  short-term  investments of $144.4  million  include 3.3 million shares of Nextel
  Communications,  Inc.  ("Nextel")  common stock  recorded at their fair value of
  $62.1 million (see "Investments"). The remaining short-term investments of $82.3
  million had a weighted average maturity of approximately 13 months. However, due
  to the high  degree  of  liquidity  and the  intent of  management  to use these
  investments  as needed to fund its  commitments,  the  Company  considers  these
  current assets.
  
  Investments
  Sprint PCS. The Company, Tele-Communications,  Inc. ("TCI"), Cox Communications,
  Inc.  ("Cox," and together  with the Company and TCI, the "Cable  Parents")  and
  Sprint  Corporation   ("Sprint,"  and  together  with  the  Cable  Parents,  the
  "Parents"),   and   certain   subsidiaries   of  the   Parents   (the   "Partner
  Subsidiaries"), engage in the wireless communications business through a limited
  partnership  known as "Sprint  Spectrum" or "Sprint  PCS," a  development  stage
  enterprise  through  June 30,  1997.  The  Company  owns 15% of  Sprint  PCS and
  accounts for its investment in Sprint PCS under the equity method.
  
  Under the  provisions  of the  Sprint PCS  partnership  agreement,  the  Partner
  Subsidiaries  have  committed to  contribute  $4.2 billion in cash to Sprint PCS
  through 1999, of which the Company's  share is $630.0  million.  Of this funding
  requirement,  the  Company  has made total cash  contributions  to Sprint PCS of
  $501.3 million  through July 31, 1997 and issued a $105.0 million  guaranty on a
  portion of Sprint PCS' outstanding  debt, which may be satisfied  through making
  additional contributions to Sprint PCS under the remaining cash commitment.  The
  Company anticipates that Sprint PCS' capital  requirements over the next several
  years will be  significant.  Requirements  in excess of  committed  capital  are
  planned to be funded by Sprint PCS through external  financing,  including,  but
  not limited to, vendor financing,  bank financing and securities  offered to the
  public.  In August  1996,  Sprint PCS sold $750.0  million  principal  amount at
  maturity  of  Senior  Notes  and  Senior  Discount  Notes  due  2006 in a public
  offering. In October 1996, Sprint PCS closed three credit agreements providing a
  total of $5.1 billion in  available  financing,  including  $2.0 billion in bank
  financing  and $3.1  billion in vendor  financing.  The timing of the  Company's
  remaining  capital  contributions  to Sprint PCS is  dependent  upon a number of
  factors,  including  Sprint  PCS'  working  capital  requirements.  The  Company
  anticipates  funding its remaining capital commitments to Sprint PCS through its
  cash flows from  operating  activities,  its existing  cash,  cash  equivalents,
  short-term investments and lines of credit or other external financing,  or by a
  combination of these sources.
  
  TCGI. Through June 1996, the Company held investments in Teleport Communications
  Group,  Inc.  ("TCGI"),  TCG  Partners  and certain  local joint  ventures  (the
  "Teleport Joint Ventures") managed by TCGI and TCG Partners.  TCGI is one of the
  largest  competitive  alternative access providers in the United States in terms
  of route miles.  The Company had a 20.0% investment in TCGI and interests in the
  Teleport Joint  Ventures  ranging from 12.4% to 20.3%.  In June 1996,  TCGI sold
  approximately  27 million  shares of its Class A Common Stock (the "TCGI Class A
  Stock"),  for $16 per share,  in an initial public offering (the "TCGI IPO"). In
  connection with the TCGI IPO, TCGI, the Company and subsidiaries of Cox, TCI and
  Continental  Cablevision  ("Continental"  and collectively with Cox, TCI and the
  Company, the "Cable  Stockholders")  entered into an agreement pursuant to which
  TCGI was reorganized (the  "Reorganization").  The Reorganization  consisted of,
  among  other  things:  (i) the  acquisition  by TCGI of TCG  Partners;  (ii) the
  acquisition  by TCGI of  additional  interests  in the Teleport  Joint  Ventures
  (including  100%  of  those  interests  held  by the  Company);  and  (iii)  the
  contribution  to  TCGI  of  $269.0  million   aggregate   principal   amount  of
  indebtedness,  plus  accrued  interest  thereon,  owed  by  TCGI  to  the  Cable
  Stockholders (except that TCI retained a $26 million subordinated note of TCGI),
  including $53.8 million  principal  amount and $4.1 million of accrued  interest
  owed to the Company. In connection with the Reorganization, the Company received
  25.6  million  shares of TCGI's Class B Common Stock (the "TCGI Class B Stock").
  Each share of TCGI Class B Stock is entitled to voting power  equivalent  to ten
  shares of TCGI Class A Stock and is  convertible,  at the option of the  holder,
  into one share of TCGI Class A Stock.  As a result of the TCGI IPO,  the Company
  recorded  a $40.6  million  increase  in its  proportionate  share of TCGI's net
  assets as a gain from equity  offering of affiliate (the "TCGI IPO Gain") in its
  condensed  consolidated  statement of operations and accumulated deficit for the
  six and three months ended June 30, 1996.
  
  During the three months ended March 31, 1997, the Company  received 2.76 million
  shares of TCGI Class A Stock from TCGI in exchange for the  Company's  shares of
  an alternate access provider. In May 1997, the Company sold all of its shares of
  TCGI Class A Stock for $68.9 million and recognized a $68.9 million pre-tax gain
  (the "TCGI Class A Gain"),
  
                                         18
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  which is included in investment income in its condensed  consolidated  statement
  of operations  and  accumulated  deficit for the six and three months ended June
  30, 1997.
  
  As of June 30, 1997,  the Company owns TCGI Class B Stock  representing  a 19.8%
  voting interest and a 15.5% equity  interest.  The Company  continues to account
  for its interest in TCGI under the equity  method  based on its voting  interest
  maintained through the TCGI Class B Stock, its representation on TCGI's board of
  directors and its participation in a TCGI stockholder agreement granting certain
  rights to a control group. Assuming conversion of the TCGI Class B Stock held by
  the Company into TCGI Class A Stock, the Company's investment in TCGI, which had
  a carrying value of $131.1 million as of June 30, 1997,  would have a fair value
  of  approximately  $1.009 billion,  based on the quoted market price of the TCGI
  Class A Stock as of July 31, 1997.
  
  Roll-up of  Primestar's  Operations.  In June 1997,  the Company  entered into a
  binding letter agreement (the "Roll-up  Agreement") with PRIMESTAR Partners L.P.
  ("Primestar")  and the  affiliates  of each of the other  partners of Primestar,
  including TCI Satellite Entertainment, Inc. ("TSAT"), a publicly-traded company.
  Primestar,  in which the Company holds a 10.4%  general and limited  partnership
  interest,  is  principally  engaged in the  business of  acquiring,  originating
  and/or providing television  programming services delivered by satellite through
  a network of distributors,  including the Company, throughout the United States.
  The  Roll-up  Agreement  sets  forth the  principal  terms and  conditions  of a
  proposed  transaction (the "Roll-up  Transaction"),  through which the Company's
  direct   broadcast   satellite   ("DBS")    operations,    Primestar   and   the
  Primestar-related  distribution  businesses  of the other  partners of Primestar
  will  be  consolidated  into  a  newly-formed   publicly-traded   company  ("New
  Primestar").  In  connection  with the Roll-up  Transaction,  TSAT will become a
  wholly owned  subsidiary of New  Primestar.  The Company  provided DBS services,
  through a distributorship  arrangement with Primestar, to 152,000 subscribers as
  of June 30, 1997.
  
  New Primestar will acquire the Primestar partnership interests,  subscribers and
  related assets,  as applicable,  of the parties to the Roll-up  Transaction,  in
  exchange for (i) cash, (ii) shares of Series A Common Stock of New Primestar and
  (iii)  shares  of  Series C Common  Stock of New  Primestar,  in each case in an
  amount determined  pursuant to the Roll-up Agreement.  The Company will continue
  to market and  support the  Primestar  programming  services on an agency  basis
  after  consummation  of the  Roll-up  Transaction;  however,  the  terms of such
  arrangement  have not yet  been  determined.  Under  the  terms  of the  Roll-up
  Agreement,  upon closing of the Roll-up Transaction,  the Company is expected to
  receive  approximately  $90 million in cash and to own  approximately 10% of New
  Primestar  common  equity,  subject  to  adjustments  based  on  the  number  of
  subscribers, inventory amounts and other factors. As of June 30, 1997, assets of
  the Company's DBS operations totaled $138.2 million.
  
  In June 1997,  Primestar  entered  into an agreement  with The News  Corporation
  Limited,  MCI  Telecommunications  Corporation and American Sky Broadcasting LLC
  ("ASkyB"),  pursuant to which  Primestar (or, under certain  circumstances,  New
  Primestar) will acquire certain assets relating to the high-power,  DBS business
  of ASkyB. In exchange for such assets, ASkyB will receive non-voting  securities
  of New Primestar that will be convertible  into  non-voting  common stock of New
  Primestar and, accordingly,  will reduce the Company's common equity interest in
  New Primestar to approximately 7% on a fully diluted basis.
  
  These   transactions   are  not   conditioned   on  each  other  and  may  close
  independently.  They are  expected  to close in 1998,  subject to receipt of all
  necessary  governmental and regulatory approvals,  including the approval of the
  Federal Communications Commission. There can be no assurance that such approvals
  will be obtained.
  
  @Home. On July 11, 1997 (the "@Home IPO Date"),  At Home Corporation  ("@Home"),
  an equity method  investee of the Company,  completed an initial public offering
  of its Series A Common Stock.  @Home provides Internet services to customers and
  businesses  over the cable  television  infrastructure  in a  limited  number of
  cities in the  United  States.  During  the third  quarter  of 1997,  due to the
  dilution of the  Company's  equity and voting  interest and other  factors,  the
  Company  expects  to  discontinue  the  equity  method  of  accounting  for  its
  investment  in @Home.  As of the @Home IPO Date,  the Company  held 14.6 million
  shares of @Home Series A Common Stock,  representing a 12.2% and 5.7% equity and
  voting interest, respectively.
  
  Nextel.  As of June 30, 1997 and December 31, 1996, the Company held 3.3 million
  shares of Nextel common stock. In addition, as of December 31, 1996, the Company
  held options to acquire an additional 25.0 million shares of Nextel
  
                                         19
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  common stock at $16 per share. As of December 31, 1996, these options, which had
  an historical  cost of $20.0  million,  were included in investments in publicly
  traded  companies at their fair value of $32.6  million.  In February  1997, the
  Company sold these options to Nextel for $25.0 million and  recognized a pre-tax
  gain of $5.0 million,  which is included in  investment  income in its condensed
  consolidated  statement of operations and accumulated deficit for the six months
  ended June 30, 1997.  In July 1997,  the Company sold its 3.3 million  shares of
  Nextel  common  stock for $73.4  million  resulting  in a pre-tax  gain of $32.1
  million, which will be recognized in the third quarter of 1997. Accordingly,  as
  of June 30, 1997, the Company's  investment in Nextel,  which is recorded at its
  fair value of $62.1  million,  is  included  in  short-term  investments  in the
  Company's condensed consolidated balance sheet.
  
  In February 1996, in connection  with certain  preemptive  rights of the Company
  under previously  existing  agreements with Nextel,  the Company  purchased 8.16
  million  shares of Nextel common stock at $12.25 per share,  for $99.9  million.
  During the three months ended June 30, 1996, the Company sold 4.4 million shares
  of Nextel common stock for $85.6 million and  recognized a pre-tax gain of $29.7
  million  (the  "Nextel  Gain"),  which is included in  investment  income in its
  condensed  consolidated  statement of operations and accumulated deficit for the
  six and three months ended June 30, 1996.
  
  Time Warner/TBS.  The Company received 1.36 million shares of Time Warner common
  stock (the "Time  Warner  Stock") in exchange  (the  "Exchange")  for all of the
  shares of Turner Broadcasting  System, Inc. ("TBS") stock (the "TBS Stock") held
  by the Company as a result of the merger of Time Warner and TBS in October 1996.
  As a result of the  Exchange,  the Company  recognized  a pre-tax  gain of $47.3
  million in the fourth quarter of 1996,  representing the difference  between the
  Company's  historical  cost basis in the TBS Stock of $8.9  million  and the new
  basis for the Company's investment in Time Warner Stock of $56.2 million,  which
  was based on the closing  price of the Time  Warner  Stock on the merger date of
  $41.375 per share.  In December 1996 and January  1997,  the Company sold 92,500
  shares  and  1.27  million  shares,  respectively,  of the  Time  Warner  Stock,
  representing the Company's entire interest in Time Warner,  for $3.7 million and
  $48.6  million,  respectively.  In connection  with the January 1997 sales,  the
  Company  recognized  a  pre-tax  loss of $3.8  million,  which  is  included  in
  investment  income in its condensed  consolidated  statement of  operations  and
  accumulated  deficit for the six months ended June 30, 1997.  As of December 31,
  1996,  the 1.27  million  shares of Time Warner  Stock held by the Company  were
  recorded at their fair value of $47.4  million and were  included in  short-term
  investments in the Company's condensed consolidated balance sheet.
  
  The Company does not have any  additional  significant  contractual  commitments
  with respect to any of its investments.  However, to the extent the Company does
  not fund its  investees'  capital  calls,  it exposes  itself to dilution of its
  ownership interests.  The Company continually evaluates its existing investments
  as well as new investment opportunities.
  
  Financing
  The Company has  historically  utilized a strategy of financing its acquisitions
  through  senior debt at the  acquired  operating  subsidiary  level.  Additional
  financing  has also  been  obtained  by the  Company  through  the  issuance  of
  subordinated debt at the intermediate  holding company and parent company levels
  and, to some extent,  through public  offerings of a subsidiary  company's stock
  and debt instruments.
  
  The Cable Refinancing and the Cellular  Refinancing had a significant  impact on
  the  maturities of the Company's  long-term  debt.  Maturities of long-term debt
  outstanding  as of June  30,  1997  through  2001  are as  follows  (dollars  in
  millions).
  
             1997 (1).............................              $560.9
             1998.................................               117.6
             1999.................................               207.4
             2000.................................               301.7
             2001.................................               577.8
  
  ---------------
  (1)   Represents  maturities  of long-term  debt for the remaining six months of
        1997,  which includes  $527.0 million of optional debt  repayments made in
        July 1997 (see below).
  
  As of June 30, 1997 and December  31, 1996,  the  Company's  effective  weighted
  average  interest rate on its long-term  debt  outstanding  was 8.02% and 7.68%,
  respectively.
  
                                         20
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  On June 30, 1997, the Company  redeemed all of its outstanding 10%  Subordinated
  Debentures,  due 2003 (the "10% Debentures").  An aggregate  principal amount of
  $139.3 million of the 10% Debentures was redeemed at a redemption  price of 100%
  of the principal amount thereof,  together with accrued interest thereon. On the
  date of redemption, the 10% Debentures had an accreted value of $127.7 million.
  
  In July 1997,  the Company made  optional  debt  repayments  aggregating  $527.0
  million with existing cash, cash equivalents and short-term investments. Current
  portion of long-term debt as of June 30, 1997 includes such amount.  As a result
  of these debt repayments,  the Company will expense unamortized debt acquisition
  costs of $3.5 million,  resulting in an extraordinary  loss, net of tax, of $2.3
  million in the third quarter of 1997.
  
  As of July 31,  1997,  certain  subsidiaries  of the Company had unused lines of
  credit of $1.129 billion. The availability and use of the unused lines of credit
  is restricted by the covenants of the related debt  agreements and to subsidiary
  general purposes and dividend declaration. The Company continually evaluates its
  debt structure with the intention of reducing its debt service requirements when
  desirable.
  
  Concurrent with the announcement of the Scripps Acquisition in October 1995, the
  Company  announced  that its Board of Directors  authorized a market  repurchase
  program (the "Repurchase Program") pursuant to which the Company could purchase,
  at such times and on such terms as it deemed  appropriate,  up to $500.0 million
  of its outstanding common equity securities, subject to certain restrictions and
  market conditions. Based on the trade date for stock repurchases, during the six
  and three  months  ended June 30,  1997 and 1996,  the Company  repurchased  2.3
  million shares,  6.5 million shares,  1.6 million shares and 3.3 million shares,
  respectively,  of its common stock for aggregate consideration of $36.2 million,
  $116.6 million, $24.7 million and $59.9 million,  respectively,  pursuant to the
  Repurchase Program.  During the term of the Repurchase Program, which terminated
  on May 13, 1997,  the Company  repurchased a total of 13.5 million shares of its
  common stock for aggregate consideration of $228.6 million.
  
  As part of the Repurchase Program, the Company sold put options on shares of its
  Class A Special Stock.  Put options on 4.0 million  shares,  sold by the Company
  during 1996 and 1995 and outstanding at December 31, 1996,  expired  unexercised
  during the first  quarter of 1997.  Upon  expiration,  the Company  reclassified
  $69.6 million, the amount it would have been obligated to pay to repurchase such
  shares had the put options  been  exercised,  from common  equity put options to
  additional capital in the Company's condensed consolidated balance sheet.
  
  As part of the Repurchase  Program,  in April 1997, the Company sold put options
  on 2.0 million  shares of its Class A Special  Stock.  The put options  give the
  holder the right to require the Company to repurchase such shares at a specified
  price on specific  dates in April and May 1998.  The amount the Company would be
  obligated  to pay to  repurchase  such shares upon  exercise of the put options,
  totaling $31.4 million,  has been reclassified from additional capital to common
  equity put options in the Company's June 30, 1997 condensed consolidated balance
  sheet.
  
                              -------------------------
  
  Following  the Scripps  Acquisition,  the Company no longer had a  stockholders'
  deficiency.  However,  the Company expects to continue to recognize  significant
  losses for the  foreseeable  future,  resulting in  decreases  in  stockholders'
  equity.   The   telecommunications   industry,   including  cable  and  cellular
  communications,   and  the  electronic   retailing   industry  are  experiencing
  increasing  competition and rapid  technological  changes.  The Company's future
  results of operations will be affected by its ability to react to changes in the
  competitive  environment  and by its  ability  to  implement  new  technologies.
  However,  the Company believes that competition,  technological  changes and its
  significant  losses  will  not  significantly   affect  its  ability  to  obtain
  financing.
  
  The Company  believes  that it will be able to meet its  current  and  long-term
  liquidity and capital  requirements,  including fixed charges,  through its cash
  flows from operating  activities,  existing cash, cash  equivalents,  short-term
  investments and lines of credit and other external financing.
  
                                         21
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  Statement of Cash Flows
  
  Cash and cash  equivalents  increased  $933.3  million as of June 30,  1997 from
  December 31, 1996 and decreased $131.4 million as of June 30, 1996 from December
  31, 1995.  Changes in cash and cash  equivalents  resulted  from cash flows from
  operating, financing and investing activities which are explained below.
  
  Net cash provided by operating  activities amounted to $436.4 million and $289.2
  million  for the six months  ended  June 30,  1997 and 1996,  respectively.  The
  increase of $147.2 million is  principally  due to the increase in the Company's
  operating  income  before   depreciation  and  amortization   (see  "Results  of
  Operations"),  including the effects of the Scripps Acquisition,  and changes in
  working capital as a result of the timing of receipts and disbursements.
  
  Net cash  provided  by (used in)  financing  activities  was $924.7  million and
  ($42.8)  million for the six months ended June 30, 1997 and 1996,  respectively.
  During the six months ended June 30, 1997, the Company  borrowed $2.958 billion,
  including  the  Cable  Notes of $1.691  billion,  the  Cellular  Notes of $998.4
  million,  the Disney Notes of $132.8 million and  borrowings  under its existing
  lines of credit,  and repaid  $2.940  billion of its long-term  debt,  including
  $1.665 billion relating to the Cable Refinancing, $981.8 million relating to the
  Cellular  Refinancing  and $139.3 million  relating to the redemption of the 10%
  Debentures.  Deferred  financing costs of $43.2 million were incurred during the
  six months  ended June 30, 1997  related to the  issuance of the Cable Notes and
  the Cellular Notes. In addition,  during the six months ended June 30, 1997, the
  Company  received  $1.0 billion from  Microsoft  for the issuance of its Class A
  Special Stock and Series B Preferred Stock and repurchased  $33.6 million of its
  common stock.  During the six months ended June 30, 1996,  the Company  borrowed
  $558.3  million under its existing  lines of credit and repaid  $478.3  million,
  including the effects of  refinancings  and $88.9 million of repayments  under a
  vendor  financing  arrangement.  In  addition,  the Company  repurchased  $108.3
  million of its common stock during the six months ended June 30, 1996.
  
  Net cash used in investing  activities was $427.8 million and $377.8 million for
  the six months ended June 30, 1997 and 1996, respectively. During the six months
  ended June 30,  1997,  net cash used in  investing  activities  includes  the E!
  Acquisition,  net of cash acquired, of $118.7 million, investments in affiliates
  of $78.5  million  and capital  expenditures  of $447.1  million,  offset by the
  proceeds  from  the  sales  of  short-term  and  long-term   investments  and  a
  distribution  from an investee of $222.9  million and Sprint PCS' repayment of a
  $25.2 million loan.  During the six months ended June 30, 1996, net cash used in
  investing  activities  includes  investments  in affiliates  of $357.4  million,
  including   $125.0   million  for  the   purchase  of  the  Sixers  and  capital
  contributions to Sprint PCS of $69.3 million, and capital expenditures of $278.9
  million,  offset  by  proceeds  from  the  sales  of  short-term  and  long-term
  investments of $328.4 million.
  
  Results of Operations
  
  The effects of the Company's recent acquisitions, as well as increased levels of
  capital expenditures,  were to increase significantly the Company's revenues and
  expenses  resulting in  substantial  increases in its  operating  income  before
  depreciation and amortization,  depreciation  expense,  amortization expense and
  interest expense. In addition,  the Company's equity in net losses of affiliates
  has increased  principally as a result of the start-up  nature of certain of the
  Company's  equity  investees (see  "Operating  Results by Business  Segment" and
  "Consolidated  Analysis"). As a result of the increases in depreciation expense,
  amortization  expense,  interest expense and equity in net losses of affiliates,
  it is expected  that the Company will continue to recognize  significant  losses
  for the foreseeable future.
  
                                         22
  
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  Summarized  consolidated  financial  information for the Company for the six and
  three  months  ended June 30, 1997 and 1996 is as follows  (dollars in millions,
  "NM" denotes percentage is not meaningful):
  <TABLE>
  <CAPTION>
                                                                                  Six Months Ended
                                                                                      June 30,                   Increase / (Decrease)
                                                                                1997            1996             $              %
  
  <S>                                                                          <C>            <C>               <C>             <C>  
  Revenues...........................................................          $2,315.3       $1,896.3          $419.0          22.1%
  Cost of goods sold from electronic retailing.......................             570.0          512.4            57.6          11.2
  Operating, selling, general and administrative expenses............           1,044.2          817.7           226.5          27.7
                                                                               --------       --------
  Operating income before depreciation and
     amortization (1)................................................             701.1          566.2           134.9          23.8
  Depreciation.......................................................             221.5          142.7            78.8          55.2
  Amortization.......................................................             240.9          181.6            59.3          32.7
                                                                               --------       --------
  Operating income...................................................             238.7          241.9            (3.2)         (1.3)
                                                                               --------       --------
  Interest expense...................................................             278.9          268.0            10.9           4.1
  Investment income..................................................             (88.6)         (47.5)           41.1          86.5
  Equity in net losses of affiliates.................................             126.2           60.3            65.9            NM
  Gain from equity offering of affiliate.............................                            (40.6)          (40.6)           NM
  Other..............................................................               4.4           22.9           (18.5)        (80.8)
  Income tax expense.................................................              36.9           24.6            12.3          50.0
  Minority interest..................................................             (39.8)         (29.0)           10.8          37.2
  Extraordinary items................................................             (22.8)          (1.0)           21.8            NM
                                                                               --------       --------
  Net loss...........................................................           ($102.1)        ($17.8)          $84.3            NM
                                                                               ========       ========
  </TABLE>
  <TABLE>
  <CAPTION>
                                                                                  Three Months Ended
                                                                                      June 30,                   Increase / (Decrease)
                                                                                1997            1996             $              %
  <S>                                                                          <C>              <C>             <C>             <C>  
  Revenues...........................................................          $1,184.5         $945.6          $238.9          25.3%
  Cost of goods sold from electronic retailing.......................             278.1          242.3            35.8          14.8
  Operating, selling, general and administrative expenses............             539.0          407.2           131.8          32.4
                                                                               --------       --------
  Operating income before depreciation and
     amortization (1) ...............................................             367.4          296.1            71.3          24.1
  Depreciation.......................................................             125.7           74.3            51.4          69.2
  Amortization.......................................................             124.3           93.1            31.2          33.5
                                                                               --------       --------
  Operating income...................................................             117.4          128.7           (11.3)         (8.8)
                                                                               --------       --------
  Interest expense...................................................             145.6          133.2            12.4           9.3
  Investment income..................................................             (76.4)         (28.9)           47.5            NM
  Equity in net losses of affiliates.................................              56.1           25.8            30.3            NM
  Gain from equity offering of affiliate.............................                            (40.6)          (40.6)           NM
  Other..............................................................              (4.5)          11.6           (16.1)           NM
  Income tax expense.................................................              27.0           23.7             3.3          13.9
  Minority interest..................................................             (15.8)         (13.9)            1.9          13.7
  Extraordinary items................................................             (22.8)          (1.0)           21.8            NM
                                                                               --------       --------
  Net (loss) income..................................................            ($37.4)         $16.8          ($54.2)           NM
                                                                               ========       ========
  <FN>
  ------------
  (1)   Operating income before depreciation and amortization is commonly referred
        to in the Company's  businesses as "operating  cash flow."  Operating cash
        flow is a measure of a company's  ability to generate  cash to service its
        obligations,  including debt service  obligations,  and to finance capital
        and other expenditures. In part due to the capital intensive nature of the
        Company's  businesses  and the  resulting  significant  level of  non-cash
        depreciation  expense and  amortization  expense,  operating  cash flow is
        frequently  used  as one of the  bases  for  comparing  businesses  in the
        Company's  industries.  Operating  cash flow does not purport to represent
        net income or net cash  provided by operating  activities,  as those terms
        are defined under generally accepted accounting principles, and 
  
                                         23
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
        should not be  considered as an  alternative  to such  measurements  as an
        indicator of the  Company's  performance.  See  "Statement  of Cash Flows"
        above for a discussion of net cash provided by operating activities.
  </FN>
  </TABLE>
  
  Operating Results by Business Segment
  
  Domestic Cable Communications
  
  As a result of the Scripps Acquisition,  the Company commenced consolidating the
  financial  results of Scripps Cable  effective  November 1, 1996.  The following
  table presents actual  financial  information for the six and three months ended
  June 30, 1997 and pro forma  financial  information for the six and three months
  ended June 30, 1996 as if the Scripps  Acquisition  occurred on January 1, 1996.
  Pro forma financial information is presented herein for purposes of analysis and
  may not reflect what actual  operating  results  would have been had the Company
  owned Scripps Cable since January 1, 1996 (dollars in millions):
  
  <TABLE>
  <CAPTION>
                                                                     Six Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  <S>                                                          <C>                    <C>                 <C>                 <C>  
  Service income...........................................    $1,021.9               $929.1              $92.8               10.0%
  Operating, selling, general and
        administrative expenses............................       545.2                479.4               65.8               13.7
                                                               --------               ------              -----
  Operating income before depreciation
        and amortization (a)...............................      $476.7               $449.7              $27.0                6.0%
                                                               ========               ======              =====
  
  
                                                                    Three Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  Service income...........................................      $520.8               $471.8              $49.0               10.4%
  Operating, selling, general and
        administrative expenses............................       274.4                238.8               35.6               14.9
                                                               --------               ------              -----
  Operating income before depreciation
        and amortization (a)...............................      $246.4               $233.0              $13.4                5.8%
                                                               ========               ======              ===== 
  <FN>
  ---------------
  (a) See footnote (1) on page 23.
  </FN>
  </TABLE>
  
  Of the  respective  $92.8 million and $49.0 million  increases in service income
  for the six and three month  periods from 1996 to 1997,  $19.6  million and $9.6
  million are attributable to subscriber  growth,  $61.3 million and $29.3 million
  relate to changes in rates and $11.9 million and $10.1  million  relate to other
  product offerings.
  
  Of the  respective  $65.8  million and $35.6  million  increases  in  operating,
  selling, general and administrative expenses for the six and three month periods
  from 1996 to 1997,  $17.1 million and $9.5 million are attributable to increases
  in the costs of cable programming as a result of subscriber  growth,  additional
  channel  offerings  and changes in rates,  $11.1  million  and $5.1  million are
  attributable to increases in costs  associated  with customer  service and $37.6
  million and $21.0  million  result from  increases  in the cost of labor,  other
  volume related expenses and costs associated with new product  offerings.  It is
  anticipated  that the Company's cost of cable  programming  will increase in the
  future as cable  programming  rates  increase  and  additional  sources of cable
  programming become available.
  
                                         24
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  Electronic Retailing
  
  The following  table sets forth operating  results for the Company's  electronic
  retailing   segment,   consisting  of  the  operations  of  QVC,  Inc.  and  its
  subsidiaries  ("QVC"), a majority owned and controlled subsidiary of the Company
  (dollars in millions):
  <TABLE>
  <CAPTION>
                                                                     Six Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  <S>                                                            <C>                  <C>                  <C>                <C>  
  Net sales from electronic retailing......................      $947.4               $855.8               $91.6              10.7%
  Cost of goods sold from electronic retailing.............       570.0                512.4                57.6              11.2
  Operating, selling, general and administrative
        expenses...........................................       222.8                204.0                18.8               9.2
                                                                 ------               ------               -----
  Operating income before depreciation
        and amortization (a)...............................      $154.6               $139.4               $15.2              10.9%
                                                                 ======               ======               =====
  
  Gross margin.............................................        39.8%                40.1%
  
  
                                                                    Three Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  Net sales from electronic retailing......................      $467.7               $405.7               $62.0              15.3%
  Cost of goods sold from electronic retailing.............       278.1                242.3                35.8              14.8
  Operating, selling, general and administrative
        expenses...........................................       114.1                 96.4                17.7              18.4
                                                                 ------               ------               -----
  Operating income before depreciation
        and amortization (a)...............................       $75.5                $67.0                $8.5              12.7%
                                                                 ======               ======               =====
  
  Gross margin.............................................        40.5%                40.3%
  <FN>
  ---------------
  (a) See footnote (1) on page 23.
  </FN>
  </TABLE>
  
  The respective increases in net sales from electronic retailing of $91.6 million
  and $62.0  million  for the six and three  month  periods  from 1996 to 1997 are
  primarily  attributable  to the effects of a 7.1% increase during each period in
  the average  number of homes  receiving  QVC  services in the United  States and
  13.7%  and  13.5%  increases,  respectively,  in the  average  number  of  homes
  receiving QVC services in the United Kingdom.
  
  The  increases in cost of goods sold from  electronic  retailing  are  primarily
  related to the growth in net sales. The changes in gross margin from 1996 to the
  same  period in 1997 are a result of changes in product  mix and an  increase in
  shipping and handling costs.
  
  Of the respective  increases in operating,  selling,  general and administrative
  expenses of $18.8  million and $17.7 million for the six and three month periods
  from 1996 to 1997, $13.6 million and $7.3 million are primarily  attributable to
  start-up costs incurred by QVC in Germany,  which began operations in the fourth
  quarter of 1996.  The remaining  increases of $5.2 million and $10.4 million are
  primarily  attributable to higher sales volume offset, in part, by the reduction
  in expenses realized upon consolidation of QVC's multichannel  operations and an
  increase in net finance fee income from credit card operations for the six month
  period from 1996 to 1997.
  
                                         25
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  Cellular Communications
  
  The following table sets forth the operating results for the Company's  cellular
  communications segment (dollars in millions):
  <TABLE>
  <CAPTION>
                                                                     Six Months Ended
                                                                         June 30,                            Increase/(Decrease)
                                                                 1997                1996                   $                   %
  <S>                                                            <C>                  <C>                  <C>                 <C> 
  Service income...........................................      $220.3               $207.1               $13.2               6.4%
  Operating, selling, general and administrative
        expenses...........................................       131.7                136.0                (4.3)             (3.2)
                                                                 ------               ------               -----
  Operating income before depreciation
        and amortization (a)...............................       $88.6                $71.1               $17.5              24.6%
                                                                 ======               ======               =====
  
                                                                    Three Months Ended
                                                                         June 30,                            Increase/(Decrease)
                                                                 1997                1996                   $                   %
  Service income...........................................      $116.2               $108.9                $7.3               6.7%
  Operating, selling, general and administrative
        expenses...........................................        65.3                 66.3                (1.0)             (1.5)
                                                                 ------               ------               ----- 
  Operating income before depreciation
        and amortization (a)...............................       $50.9                $42.6                $8.3              19.5%
                                                                 ======               ======               =====
  <FN>
  ---------------
  (a) See footnote (1) on page 23.
  </FN>
  </TABLE>
  
  Of the respective $13.2 million and $7.3 million increases in service income for
  the six and three  month  periods  from  1996 to 1997,  $14.6  million  and $6.1
  million are attributable to the Company's subscriber growth and $7.3 million and
  $4.9 million are  attributable to roamer growth.  Offsetting these increases are
  decreases of $8.7 million and $3.7 million resulting  primarily from a reduction
  in the  average  rate  per  minute  of use and the  average  minutes  of use per
  subscriber from 1996 to the same periods in 1997.
  
  The respective  $4.3 million and $1.0 million  decreases in operating,  selling,
  general and  administrative  expenses  for the six and three month  periods from
  1996 to 1997 are primarily  attributable to expense reductions  achieved through
  implementation of fraud management  programs and a reduction in commission costs
  resulting  from fewer gross  sales in 1997 as  compared  to the same  periods in
  1996.  These  reductions  were  partially  offset by increases in volume related
  expenses resulting from subscriber growth.
  
  Consolidated Analysis
  
  The respective $78.8 million and $51.4 million increases in depreciation expense
  for the six and three month periods from 1996 to 1997 are primarily attributable
  to  the  effects  of  the  Scripps   Acquisition  and  the  effects  of  capital
  expenditures.
  
  The respective $59.3 million and $31.2 million increases in amortization expense
  for the six and three month periods from 1996 to 1997 are primarily attributable
  to the effects of the Scripps Acquisition.
  
  The respective $10.9 million and $12.4 million increases in interest expense for
  the six and three month periods from 1996 to 1997 are  attributable to increased
  levels of debt and changes in the Company's  weighted average interest rate. The
  Company anticipates that, for the foreseeable future, interest expense will be a
  significant  cost to the Company and will have a significant  adverse  effect on
  the  Company's  ability to realize net  earnings.  The Company  believes it will
  continue to be able to meet its obligations through its ability both to generate
  operating  income before  depreciation  and  amortization and to obtain external
  financing.
  
                                         26
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  The respective  $41.1 million and $47.5 million  increases in investment  income
  for the six and three month periods from 1996 to 1997 are primarily attributable
  to the  TCGI  Class  A Gain  recognized  in  1997,  offset  by the  Nextel  Gain
  recognized in 1996.
  
  The respective $65.9 million and $30.3 million increases in equity in net losses
  of  affiliates  for  the six and  three  month  periods  from  1996 to 1997  are
  primarily  due to the effects of increased  losses  incurred by Sprint PCS, TCGI
  and certain of the Company's other equity  investees,  and the effects of the E!
  Acquisition (see below) and the Sports Venture Acquisition. Based on Sprint PCS'
  current  operations  and  business  plan,  the  Company   anticipates  that  its
  proportionate share of Sprint PCS' losses will be significant in future periods.
  In addition,  as a result of the E!  Acquisition,  the Company recorded a charge
  representing the cumulative amount that would have been recorded had the Company
  accounted for its investment in E!  Entertainment  under the equity method since
  the date of initial  investment (the "Cumulative  Charge").  Since the Company's
  proportionate share of E! Entertainment's cumulative losses was in excess of the
  Company's historical cost basis in E! Entertainment and as the Company was under
  no contractual obligation to fund the losses of E! Entertainment, the Cumulative
  Charge was limited to the Company's historical cost basis of $12.1 million. Such
  amount is  included  in equity in net  losses  of  affiliates  in the  Company's
  condensed  consolidated  statement of operations and accumulated deficit for the
  six months ended June 30, 1997 as it is not  significant  for restatement of the
  Company's prior year financial statements.
  
  Gain from equity  offering of affiliate  for the six and three months ended June
  30, 1996 represents the TCGI IPO Gain.
  
  The respective  $18.5 million and $16.1 million  decreases in other expenses for
  the six and three month periods from 1996 to 1997 are primarily  attributable to
  the settlement of certain litigation during the six months ended June 30, 1996.
  
  The $12.3  million  increase in income tax expense for the six month period from
  1996 to 1997 is  primarily a result of an  increase in state  income tax expense
  due to  increases  in the net income of certain of the  Company's  subsidiaries,
  increases  in  non-deductible  foreign  losses  and  equity  in  net  losses  of
  affiliates  and  increased  goodwill  amortization  resulting  from the  Scripps
  Acquisition,  offset by the effect of the increase in the Company's  loss before
  income tax expense, minority interest and extraordinary items.
  
  The $10.8  million  increase in minority  interest for the six month period from
  1996 to 1997 is  primarily  attributable  to the  effects  of changes in the net
  income (loss) of QVC and Comcast UK Cable.
  
  In  connection  with the Cable  Refinancing,  the Cellular  Refinancing  and the
  redemption  of  the  10%  Debentures,  the  Company  expensed  unamortized  debt
  acquisition  costs and  incurred  debt  extinguishment  costs of $35.1  million,
  resulting in an  extraordinary  loss,  net of tax, of $22.8 million or $0.07 per
  common share during the six and three months ended June 30, 1997.
  
  For the six and  three  months  ended  June 30,  1997 and  1996,  the  Company's
  distribution from an investee and earnings before  extraordinary  items,  income
  tax expense,  equity in net losses of  affiliates  and fixed  charges  (interest
  expense) were $364.5 million, $336.1 million, $214.1 million and $200.5 million,
  respectively.  Such earnings were adequate to cover the Company's fixed charges,
  including interest  capitalized of $18.0 million,  $14.7 million,  $9.4 million,
  and $7.6 million, of $296.9 million,  $282.7 million,  $155.0 million and $140.8
  million for the six and three months ended June 30, 1997 and 1996, respectively.
  Fixed charges include non-cash interest expense, net of interest capitalized, of
  $28.9 million,  $32.2  million,  $11.9 million and $16.1 million for the six and
  three months ended June 30, 1997 and 1996, respectively.
  
  The  Company  believes  that  its  losses  will  not  significantly  affect  the
  performance of its normal business activities because of its existing cash, cash
  equivalents and short-term investments, its ability to generate operating income
  before  depreciation  and  amortization  and  its  ability  to  obtain  external
  financing.
  
  The  Company  believes  that  its  operations  are not  materially  affected  by
  inflation.
  
                                         27
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  PART II.       OTHER INFORMATION
  
  ITEM 1.        LEGAL PROCEEDINGS
  
        The  Company  is not party to  litigation  which,  in the  opinion  of the
        Company's management, will have a material adverse effect on the Company's
        financial position, results of operations or liquidity.
  
  ITEM 2.        CHANGES IN SECURITIES
  
        On June  30,  1997  (the  "Issuance  Date"),  the  Company  and  Microsoft
        Corporation  ("Microsoft")  completed  a  Stock  Purchase  Agreement  (the
        "Agreement")  under which Microsoft  purchased and the Company issued 24.6
        million shares of the Company's  Class A Special  Common Stock,  par value
        $1.00 per share (the "Class A Special  Stock"),  at $20.29 per share,  for
        $500.0  million and 500,000  shares of the  Company's  newly  issued 5.25%
        Series B Mandatorily  Redeemable  Convertible  Preferred  Stock, par value
        $1,000 per share (the "Series B Preferred Stock"), for $500.0 million.
  
        The Series B  Preferred  Stock has a 5.25%  pay-in-kind  annual  dividend.
        Dividends will be paid quarterly through the issuance of additional shares
        of  Series  B  Preferred  Stock  (the  "Additional  Shares")  and  will be
        cumulative from the Issuance Date (except that dividends on the Additional
        Shares will accrue from the date such Additional  Shares are issued).  The
        Series B Preferred Stock, including the Additional Shares, is convertible,
        at the option of  Microsoft,  into 21.2 million  shares of Class A Special
        Stock,  subject to  adjustment  in certain  limited  circumstances,  which
        equals an initial  conversion  price of $23.54 per share,  increasing as a
        result of the Additional  Shares to $33.91 per share on June 30, 2004. The
        Series B Preferred  Stock is mandatorily  redeemable on June 30, 2017, or,
        at the option of the Company  beginning  on June 30, 2004 or at the option
        of Microsoft on June 30, 2004 or on June 30, 2012.  Upon  redemption,  the
        Company, at its option, may redeem the Series B Preferred Stock with cash,
        Class A Special Stock or a combination  thereof.  As the Company currently
        intends to redeem the Series B Preferred  Stock with Class A Special Stock
        upon  redemption,  the Series B Preferred  Stock has been  classified as a
        component  of  stockholders'  equity  as of June 30,  1997.  The  Series B
        Preferred Stock is generally non-voting.
  
        The Class A Special Stock and the Series B Preferred  Stock were issued to
        Microsoft in a transaction exempt from the Securities Act of 1933 pursuant
        to Section 4(2) thereof.
  
  ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
        At the Annual  Meeting on June 18,  1997,  the  shareholders  approved the
        following proposals:
  
              To elect ten directors to serve for the ensuing year and until their
              respective successors shall have been duly elected and qualified.
  <TABLE>
  <CAPTION>
              Director                          Class of Stock                           For                      Withheld
  
  <S>                                           <C>                                 <C>                          <C>    
        Ralph J. Roberts                           Class A                             28,004,496                   272,389
                                                   Class B                            131,793,750
  
        Julian A. Brodsky                          Class A                             28,013,270                   263,615
                                                   Class B                            131,793,750
  
        Brian L. Roberts                           Class A                             28,009,647                   267,238
                                                   Class B                            131,793,750
  
        Daniel Aaron                               Class A                             27,297,721                   979,164
                                                   Class B                            131,793,750
  
        Gustave G. Amsterdam                       Class A                             28,008,461                   268,424
                                                   Class B                            131,793,750
  
        Sheldon M. Bonovitz                        Class A                             27,300,651                   976,234
                                                   Class B                            131,793,750
  </TABLE>
  
                                         28
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
  <TABLE>
  <CAPTION>
              Director                          Class of Stock                           For                      Withheld
  
  <S>                                            <C>                                <C>                          <C>    
        Joseph L. Castle II                        Class A                             28,025,126                   251,759
                                                   Class B                            131,793,750
  
        Bernard C. Watson                          Class A                             28,022,551                   254,334
                                                   Class B                            131,793,750
  
        Irving A. Wechsler                         Class A                             28,013,944                   262,941
                                                   Class B                            131,793,750
  
        Anne Wexler                                Class A                             26,770,145                 1,506,740
                                                   Class B                            131,793,750
  </TABLE>
  
              To  consider a proposal  to approve  the  Comcast  Corporation  1996
              Executive Cash Bonus Plan.
  <TABLE>
  <CAPTION>
                                                                                                                     Broker
          Class of Stock                      For                     Against                Abstain                 Nonvote
  <S>                                    <C>                       <C>                    <C>                      <C>      
            Class A                         19,330,447                868,351                429,932                  7,648,155
            Class B                        131,793,750
  </TABLE>
  
             To ratify the  appointment  of Deloitte & Touche LLP as the Company's
             independent auditors for the 1997 fiscal year.
  <TABLE>
  <CAPTION>
          Class of Stock                      For                     Against                Abstain
  <S>                                      <C>                        <C>                    <C>   
            Class A                         28,140,157                 62,099                 74,629
            Class B                        131,793,750
  </TABLE>
  
  ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K
  
        (a)   Exhibits required to be filed by Item 601 of Regulation S-K:
  
              3.1   Statement of Designations,  Preferences and Rights of Series B
                    Convertible Preferred Stock of the Company.
  
              10.1  Indenture  dated  as of May 1,  1997,  between  Comcast  Cable
                    Communications,  Inc. and Bank of Montreal Trust  Company,  as
                    Trustee,  in respect of Comcast Cable  Communications,  Inc.'s
                    8-1/8% Notes due 2004, 8-3/8% Notes due 2007, 8-7/8% Notes due
                    2017 and 8-1/2% Notes due 2027  (incorporated  by reference to
                    Exhibit 4.1(a) to the Registration Statement on Form S-4 (File
                    No. 333- 30745) of Comcast Cable Communications, Inc.).
  
              10.2  Indenture dated as of May 8, 1997,  between  Comcast  Cellular
                    Holdings,  Inc.  and The  Bank of New  York,  as  Trustee,  in
                    respect of Comcast  Cellular  Holdings,  Inc.'s  9-1/2% Senior
                    Notes due 2007  (incorporated  by  reference to Exhibit 4.1 to
                    the  Registration  Statement on Form S-4 (File No. 333- 31009)
                    of Comcast Cellular Holdings, Inc.).
  
              27.1  Financial Data Schedule.
  
        (b)   Reports on Form 8-K:
  
              (i)   Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on April 3, 1997  relating to its  announcement  of the
                    acquisition  of  a  majority  interest  in  E!   Entertainment
                    Television,  Inc.  by Comcast  Entertainment  Holdings  LLC, a
                    joint venture between Comcast  Corporation and The Walt Disney
                    Company.
  
              (ii)  Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on April 16, 1997 relating to its  announcement  of the
                    intention  of  its  wholly  owned  subsidiary,  Comcast  Cable
                    Communications,  Inc., to offer  approximately $1.0 billion of
                    notes in a private placement.
  
                                         29
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  
              (iii) Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 7 on April 24, 1997  relating to the  acquisition  of the
                    cable television operations of the E.W. Scripps Company, which
                    included  the audited  consolidated  financial  statements  of
                    Comcast SCH Holdings, Inc. as of December 31, 1996 and for the
                    period  from  November  1, 1996 to  December  31, 1996 and the
                    audited  combined  financial  statements  of  the  Predecessor
                    Corporation  as of  December  31,  1995,  for the period  from
                    January 1, 1996 to October  31,  1996 and for the years  ended
                    December 31, 1995 and 1994.
  
              (iv)  Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on May 2, 1997  relating to its  announcement  that its
                    wholly owned subsidiary,  Comcast Cable Communications,  Inc.,
                    had  closed  on the sale of $1.7  billion  of notes  through a
                    private placement with registration rights.
  
              (v)   Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on June 10,  1997  relating  to its  announcement  that
                    Microsoft Corporation will make an investment of $1 billion in
                    Comcast Corporation.
  
                                         30
  <PAGE>
                        COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
                                      SIGNATURE
  
             Pursuant to the  requirements  of the  Securities and Exchange Act of
  1934,  the  Registrant has duly caused this report to be signed on its behalf by
  the undersigned thereunto duly authorized.
  
  
  
                                          COMCAST CORPORATION
                                          ----------------------------------------
  
  
  
  
  
  
                                          /S/ LAWRENCE S. SMITH
                                          ----------------------------------------
                                          Lawrence S. Smith
                                          Executive Vice President
                                          (Principal Accounting Officer)
  
  
  
  Date: August 14, 1997
  
                                         31
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metadata_filer: {"company-data": {"conformed-name": "COMCAST CORP", "cik": "0000022301", "assigned-sic": "4841", "irs-number": "231709202", "state-of-incorporation": "PA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-06983", "film-number": "97661862"}, "business-address": {"street1": "1500 MARKET STREET", "city": "PHILADELPHIA", "state": "PA", "zip": "19102-2148", "phone": "2156651700"}, "mail-address": {"street1": "1500 MARKET STREET", "city": "PHILADELPHIA", "state": "PA", "zip": "19102-2148"}}
text: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 10-Q
  (Mark One)
  
  (X)  Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
       Act of 1934 for the Quarterly Period Ended:
                                    JUNE 30, 1997
                                         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 0-6983
  
                                COMCAST CORPORATION
                              [GRAPHIC OMITTED - LOGO]
  
               (Exact name of registrant as specified in its charter)
  
         PENNSYLVANIA                                         23-1709202
  --------------------------------------------------------------------------------
  (State or other jurisdiction of                          (I.R.S. Employer
   incorporation or organization)                         Identification No.)
  
                   1500 Market Street, Philadelphia, PA 19102-2148
  --------------------------------------------------------------------------------
                      (Address of principal executive offices)
                                     (Zip Code)
  
  Registrant's telephone number, including area code:  (215) 665-1700
  
                             --------------------------
  
  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  twelve months (or for such shorter period that the registrant was
  required to file such  reports),  and (2) has been subject to such  requirements
  for the past 90 days.
  
             Yes  __X__                                     No _____
  
                             --------------------------
  
  As of June 30, 1997,  there were  308,258,612  shares of Class A Special  Common
  Stock, 31,793,767 shares of Class A Common Stock and 8,786,250 shares of Class B
  Common Stock outstanding.
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
                                  TABLE OF CONTENTS
  
                                                                             Page
                                                                            Number
  
  PART I.   FINANCIAL INFORMATION
  
            Item 1.   Financial Statements
  
                      Condensed Consolidated Balance
                      Sheet as of June 30, 1997 and December 31,
                      1996 (Unaudited)...........................................2
  
                      Condensed Consolidated Statement of
                      Operations and Accumulated Deficit for
                      the Six and Three Months Ended June 30,
                      1997 and 1996 (Unaudited)..................................3
  
                      Condensed Consolidated Statement of Cash
                      Flows for the Six Months Ended June 30,
                      1997 and 1996 (Unaudited)..................................4
  
                      Notes to Condensed Consolidated
                      Financial Statements (Unaudited)......................5 - 15
  
            Item 2.   Management's Discussion and Analysis
                      of Financial Condition and Results of
                      Operations...........................................16 - 27
  
  PART II.  OTHER INFORMATION
  
            Item 1.   Legal Proceedings.........................................28
  
            Item 2.   Changes in Securities.....................................28
  
            Item 4.   Submission of Matters to a Vote of 
                      Security Holders.......................................28-29
  
            Item 6.   Exhibits and Reports on Form 8-K.......................29-30
  
            SIGNATURE...........................................................31
  
                         -----------------------------------
  
  This Quarterly  Report on Form 10-Q contains  forward  looking  statements  made
  pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
  Reform Act of 1995.  Readers are cautioned that such forward looking  statements
  involve  risks and  uncertainties  which  could  significantly  affect  expected
  results  in the  future  from  those  expressed  in  any  such  forward  looking
  statements  made by, or on behalf,  of the Company.  Certain  factors that could
  cause actual  results to differ  materially  include,  without  limitation,  the
  effects of  legislative  and  regulatory  changes;  the  potential for increased
  competition;  technological  changes; the need to generate substantial growth in
  the subscriber base by successfully launching,  marketing and providing services
  in  identified  markets;  pricing  pressures  which could affect  demand for the
  Company's services; the Company's ability to expand its distribution; changes in
  labor, programming, equipment and capital costs; the Company's continued ability
  to  create  or  acquire  programming  and  products  that  customers  will  find
  attractive;  future  acquisitions,   strategic  partnerships  and  divestitures;
  general business and economic conditions;  and other risks detailed from time to
  time in the Company's  periodic  reports filed with the  Securities and Exchange
  Commission.
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  PART I.        FINANCIAL INFORMATION
  
  ITEM 1.        FINANCIAL STATEMENTS
  
                        CONDENSED CONSOLIDATED BALANCE SHEET
                                     (Unaudited)
  (Dollars in millions, except share data)
                                                                                               June 30,           December 31,
                                                                                                 1997                 1996
  ASSETS
  CURRENT ASSETS
     Cash and cash equivalents....................................................             $1,264.6              $331.3
     Short-term investments.......................................................                144.4               208.3
     Accounts receivable, less allowance for doubtful
        accounts of $96.3 and $97.1...............................................                416.8               439.3
     Inventories, net.............................................................                305.3               258.4
     Other current assets.........................................................                154.7               168.5
                                                                                              ---------           ---------
          Total current assets....................................................              2,285.8             1,405.8
                                                                                              ---------           ---------
  INVESTMENTS, principally in affiliates..........................................              1,066.2             1,177.7
                                                                                              ---------           ---------
  PROPERTY AND EQUIPMENT..........................................................              3,905.6             3,600.1
     Accumulated depreciation.....................................................             (1,237.5)           (1,061.3)
                                                                                              ---------           ---------
     Property and equipment, net..................................................              2,668.1             2,538.8
                                                                                              ---------           ---------
  DEFERRED CHARGES................................................................              9,013.1             8,578.8
     Accumulated amortization.....................................................             (1,836.2)           (1,612.5)
                                                                                              ---------           ---------
     Deferred charges, net........................................................              7,176.9             6,966.3
                                                                                              ---------           ---------
                                                                                              $13,197.0           $12,088.6
                                                                                              =========           =========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES
     Accounts payable and accrued expenses........................................             $1,069.3            $1,044.3
     Accrued interest.............................................................                107.2                91.1
     Current portion of long-term debt, including optional
        debt repayments of $527.0 and $70.0.......................................                626.3               229.5
                                                                                              ---------           ---------
          Total current liabilities...............................................              1,802.8             1,364.9
                                                                                              ---------           ---------
  LONG-TERM DEBT, less current portion............................................              6,786.7             7,102.7
                                                                                              ---------           ---------
  DEFERRED INCOME TAXES...........................................................              2,078.1             2,140.5
                                                                                              ---------           ---------
  MINORITY INTEREST AND OTHER.....................................................              1,050.9               859.3
                                                                                              ---------           ---------
  COMMITMENTS AND CONTINGENCIES
  
  COMMON EQUITY PUT OPTIONS.......................................................                 31.4                69.6
                                                                                              ---------           ---------
  STOCKHOLDERS' EQUITY
     Preferred stock - authorized, 20,000,000 shares
        5% series A convertible, no par value, issued, 6,370 at redemption value..                 31.9                31.9
        5.25% series B mandatorily redeemable convertible, $1,000 par value,
          issued, 500,000 at redemption value.....................................                500.0
     Class A special common stock, $1 par value - authorized,
        500,000,000 shares; issued, 308,258,612 and 283,281,675...................                308.3               283.3
     Class A common stock, $1 par value - authorized,
        200,000,000 shares; issued, 31,793,767 and 33,959,368 ....................                 31.8                34.0
     Class B common stock, $1 par value - authorized,
        50,000,000 shares; issued, 8,786,250 .....................................                  8.8                 8.8
     Additional capital...........................................................              2,830.3             2,326.6
     Accumulated deficit..........................................................             (2,262.6)           (2,127.1)
     Unrealized gains on marketable securities....................................                  9.0                 0.1
     Cumulative translation adjustments...........................................                (10.4)               (6.0)
                                                                                              ---------           ---------
          Total stockholders' equity..............................................              1,447.1               551.6
                                                                                              ---------           ---------
                                                                                              $13,197.0           $12,088.6
                                                                                              =========           =========
  See notes to condensed consolidated financial statements.
  
                                          2
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
       CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
                                     (Unaudited)
  (Amounts in millions, except per share data)
                                                                              Six Months Ended              Three Months Ended
                                                                                  June 30,                       June 30,
                                                                            1997            1996           1997            1996
  REVENUES
      Service income............................................          $1,367.9        $1,040.5         $716.8          $539.9
      Net sales from electronic retailing.......................             947.4           855.8          467.7           405.7
                                                                         ---------       ---------      ---------       --------- 
                                                                           2,315.3         1,896.3        1,184.5           945.6
                                                                         ---------       ---------      ---------       --------- 
  COSTS AND EXPENSES
      Operating.................................................             611.3           453.5          313.9           223.7
      Cost of goods sold from electronic retailing..............             570.0           512.4          278.1           242.3
      Selling, general and administrative.......................             432.9           364.2          225.1           183.5
      Depreciation..............................................             221.5           142.7          125.7            74.3
      Amortization..............................................             240.9           181.6          124.3            93.1
                                                                         ---------       ---------      ---------       --------- 
                                                                           2,076.6         1,654.4        1,067.1           816.9
                                                                         ---------       ---------      ---------       --------- 
  
  OPERATING INCOME..............................................             238.7           241.9          117.4           128.7
  
  OTHER (INCOME) EXPENSE
      Interest expense..........................................             278.9           268.0          145.6           133.2
      Investment income.........................................             (88.6)          (47.5)         (76.4)          (28.9)
      Equity in net losses of affiliates........................             126.2            60.3           56.1            25.8
      Gain from equity offering of affiliate....................                             (40.6)                         (40.6)
      Other.....................................................               4.4            22.9           (4.5)           11.6
                                                                         ---------       ---------      ---------       --------- 
                                                                             320.9           263.1          120.8           101.1
                                                                         ---------       ---------      ---------       --------- 
  (LOSS) INCOME BEFORE INCOME TAX EXPENSE, MINORITY
      INTEREST AND EXTRAORDINARY ITEMS..........................             (82.2)          (21.2)          (3.4)           27.6
  
  INCOME TAX EXPENSE............................................              36.9            24.6           27.0            23.7
                                                                         ---------       ---------      ---------       --------- 
  
  (LOSS) INCOME BEFORE MINORITY INTEREST AND
      EXTRAORDINARY ITEMS.......................................            (119.1)          (45.8)         (30.4)            3.9
  
  MINORITY INTEREST.............................................             (39.8)          (29.0)         (15.8)          (13.9)
                                                                         ---------       ---------      ---------       --------- 
  
  (LOSS) INCOME BEFORE EXTRAORDINARY ITEMS......................             (79.3)          (16.8)         (14.6)           17.8
  
  EXTRAORDINARY ITEMS...........................................             (22.8)           (1.0)         (22.8)           (1.0)
                                                                         ---------       ---------      ---------       --------- 
  
  NET (LOSS) INCOME.............................................            (102.1)          (17.8)         (37.4)           16.8
  
  PREFERRED DIVIDENDS...........................................              (0.8)                          (0.4)
                                                                         ---------       ---------      ---------       --------- 
  
  NET (LOSS) INCOME FOR COMMON STOCKHOLDERS.....................           ($102.9)         ($17.8)        ($37.8)          $16.8
                                                                         =========       =========      =========       ========= 
  
  ACCUMULATED DEFICIT
      Beginning of period ......................................         ($2,127.1)      ($1,914.3)     ($2,205.3)      ($1,997.1)
      Net (loss) income.........................................            (102.1)          (17.8)         (37.4)           16.8
      Common dividends - $.0467, $.0467, $.0233 and $.0233
        per share...............................................             (15.7)          (11.0)          (8.2)           (5.4)
      Retirement of common stock................................             (17.7)          (87.5)         (11.7)          (44.9)
                                                                         ---------       ---------      ---------       --------- 
      End of period.............................................         ($2,262.6)      ($2,030.6)     ($2,262.6)      ($2,030.6)
                                                                         =========       =========      =========       ========= 
  
  (LOSS) INCOME FOR COMMON STOCKHOLDERS
    PER COMMON SHARE
      (Loss) income before extraordinary items..................             ($.25)          ($.07)         ($.05)           $.07
      Extraordinary items.......................................              (.07)                          (.07)
                                                                         ---------       ---------      ---------       --------- 
           Net (loss) income....................................             ($.32)          ($.07)         ($.12)           $.07
                                                                         =========       =========      =========       ========= 
  
  WEIGHTED AVERAGE NUMBER OF COMMON SHARES
      OUTSTANDING DURING THE PERIOD.............................             325.3           237.6          324.8           235.8
                                                                         =========       =========      =========       =========
  See notes to condensed consolidated financial statements.
  
                                          3
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                     (Unaudited)
  (Dollars in millions)
                                                                                                   Six Months Ended June 30,
                                                                                                  1997                 1996
  OPERATING ACTIVITIES
     Net loss.....................................................................              ($102.1)             ($17.8)
     Adjustments to reconcile net loss to net cash provided
       by operating activities:
        Depreciation..............................................................                221.5               142.7
        Amortization..............................................................                240.9               181.6
        Non-cash interest expense, net............................................                 26.8                32.2
        Equity in net losses of affiliates........................................                126.2                60.3
        Gains on long-term investments, net of losses.............................                (65.2)              (16.3)
        Gain from equity offering of affiliate....................................                                    (40.6)
        Minority interest.........................................................                (39.8)              (29.0)
        Extraordinary items.......................................................                 22.8                 1.0
        Deferred income taxes and other...........................................                (12.8)               12.2
                                                                                               --------              ------
                                                                                                  418.3               326.3
  
        Decrease in accounts receivable, net......................................                 43.4                55.2
        (Increase) decrease in inventories, net...................................                (46.9)                0.3
        Decrease in other current assets..........................................                  2.9                 0.7
        Increase (decrease) in accounts payable and accrued expenses..............                  2.6               (99.3)
        Increase in accrued interest..............................................                 16.1                 6.0
                                                                                               --------              ------
  
               Net cash provided by operating activities..........................                436.4               289.2
                                                                                               --------              ------
  
  FINANCING ACTIVITIES
     Proceeds from borrowings.....................................................              2,958.0               558.3
     Retirement and repayment of debt.............................................             (2,940.3)             (478.3)
     Issuance of preferred stock..................................................                500.0
     Issuances of common stock, net...............................................                498.5                 1.3
     Repurchases of common stock, net.............................................                (33.6)             (108.3)
     Dividends....................................................................                (16.5)              (11.0)
     Deferred financing costs.....................................................                (43.2)               (1.7)
     Other........................................................................                  1.8                (3.1)
                                                                                               --------              ------
  
               Net cash provided by (used in) financing activities................                924.7               (42.8)
                                                                                               --------              ------
  
  INVESTING ACTIVITIES
     Acquisitions, net of cash acquired...........................................               (125.8)              (46.5)
     Proceeds from sales of short-term investments, net...........................                127.2               237.0
     Investments, principally in affiliates.......................................                (78.5)             (357.4)
     Proceeds from sales of and distribution from long-term investments...........                 95.7                91.4
     Proceeds from investee's repayment of loan...................................                 25.2
     Capital expenditures.........................................................               (447.1)             (278.9)
     Additions to deferred charges................................................                (24.1)              (17.5)
     Other........................................................................                 (0.4)               (5.9)
                                                                                               --------              ------
  
               Net cash used in investing activities..............................               (427.8)             (377.8)
                                                                                               --------              ------
  
  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................                933.3              (131.4)
  
  CASH AND CASH EQUIVALENTS, beginning of period..................................                331.3               539.1
                                                                                               --------              ------
  
  CASH AND CASH EQUIVALENTS, end of period........................................             $1,264.6              $407.7
                                                                                               ========              ======
  See notes to condensed consolidated financial statements.
  
                                          4
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
  
  1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  
        Basis of Presentation
        The condensed  consolidated balance sheet as of December 31, 1996 has been
        condensed from the audited consolidated balance sheet as of that date. The
        condensed  consolidated  balance sheet as of June 30, 1997,  the condensed
        consolidated  statement of operations and accumulated  deficit for the six
        and  three  months  ended  June  30,  1997  and  1996  and  the  condensed
        consolidated  statement  of cash flows for the six  months  ended June 30,
        1997 and 1996 have been prepared by Comcast  Corporation  (the  "Company")
        and have not been audited by the Company's  independent  auditors.  In the
        opinion  of  management,   all  adjustments  (which  include  only  normal
        recurring adjustments) necessary to present fairly the financial position,
        results  of  operations  and cash  flows  as of June 30,  1997 and for all
        periods presented have been made.
  
        Certain  information  and  note  disclosures   normally  included  in  the
        Company's  annual  financial   statements   prepared  in  accordance  with
        generally accepted  accounting  principles have been condensed or omitted.
        These  condensed  consolidated  financial  statements  should  be  read in
        conjunction  with the financial  statements and notes thereto  included in
        the Company's  December 31, 1996 Annual Report on Form 10-K filed with the
        Securities  and Exchange  Commission.  The results of  operations  for the
        periods  ended June 30, 1997 are not  necessarily  indicative of operating
        results for the full year.
  
  2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  
        New Accounting Pronouncements
        Effective January 1, 1997, the Company adopted the provisions of Statement
        of  Financial  Accounting  Standards  ("SFAS")  No. 125,  "Accounting  for
        Transfers  and  Servicing  of  Financial  Assets  and  Extinguishments  of
        Liabilities," which was issued by the Financial Accounting Standards Board
        ("FASB") in June 1996. Under this statement, after a transfer of financial
        assets,  an  entity  recognizes  the  financial  and  servicing  assets it
        controls  and the  liabilities  it has  incurred,  derecognizes  financial
        assets when control has been surrendered and derecognizes liabilities when
        extinguished. Adoption of this statement did not have a significant impact
        on the Company's consolidated financial position or results of operations.
  
        In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share." This
        statement,  which  clarifies  and  supersedes  the  current  authoritative
        accounting literature regarding the computation and disclosure of earnings
        per share,  is  effective  for interim  and annual  periods  ending  after
        December  15, 1997 and may not be applied  earlier.  The Company  does not
        expect adoption of this statement to result in significant  changes to the
        Company's  calculation or presentation of loss for common stockholders per
        common share.
  
        In June 1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
        Income." This  statement,  which  establishes  standards for reporting and
        disclosure of  comprehensive  income,  is effective for interim and annual
        periods  beginning after December 15, 1997,  although  earlier adoption is
        permitted.  Reclassification of financial  information for earlier periods
        presented for comparative purposes is required under SFAS No. 130. As this
        statement   only  requires   additional   disclosures   in  the  Company's
        consolidated  financial statements,  its adoption will not have any impact
        on the Company's consolidated financial position or results of operations.
        The Company expects to adopt SFAS No. 130 effective January 1, 1998.
  
        In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
        an Enterprise and Related Information." This statement,  which establishes
        standards for the reporting of information  about  operating  segments and
        requires the reporting of selected information about operating segments in
        interim  financial  statements,  is effective  for fiscal years  beginning
        after  December 15,  1997,  although  earlier  application  is  permitted.
        Reclassification  of segment information for earlier periods presented for
        comparative  purposes is required under SFAS No. 131. The Company does not
        expect adoption of this statement to result in significant  changes to its
        presentation of financial data by business segment. The Company expects to
        adopt SFAS No. 131 effective January 1, 1998.
  
                                          5
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        (Loss) Income for Common Stockholders Per Common Share
        Loss for common  stockholders  per common share  amounts were  computed by
        dividing net loss and loss before  extraordinary items, after deduction of
        preferred stock dividends, by the weighted average number of common shares
        outstanding  during the period. For the six months ended June 30, 1997 and
        1996 and for the three months ended June 30, 1997,  the  Company's  common
        stock  equivalents have an antidilutive  effect on net loss per share and,
        therefore,  have not been used in determining  the total weighted  average
        number of common shares outstanding.
  
        For the three months ended June 30, 1996, the Company's  shares which were
        issuable upon conversion of its  convertible  debentures and upon exercise
        of its then  outstanding  common  equity put options  were not included as
        common stock  equivalents,  since  inclusion of these shares would have an
        antidilutive effect on net income per share. The Company's dilutive common
        stock  equivalents for such period,  consisting  solely of shares issuable
        under employee stock  programs,  did not have any impact on net income per
        share as presented in the Company's  condensed  consolidated  statement of
        operations  and  accumulated  deficit for the three  months ended June 30,
        1996.  Therefore,  primary and fully diluted net income per share have not
        been presented for such period.  For the three months ended June 30, 1996,
        the primary and fully diluted weighted average number of common shares and
        common share equivalents outstanding were 241.0 million and 241.3 million,
        respectively.
  
        Reclassifications
        Certain  reclassifications  have  been made to the  prior  year  condensed
        consolidated financial statements to conform to those classifications used
        in 1997.
  
  3.    ACQUISITIONS AND OTHER SIGNIFICANT EVENTS
  
        Microsoft Investment
        On June  30,  1997  (the  "Issuance  Date"),  the  Company  and  Microsoft
        Corporation  ("Microsoft")  completed  a  Stock  Purchase  Agreement  (the
        "Agreement")  under which Microsoft  purchased and the Company issued 24.6
        million shares of the Company's  Class A Special  Common Stock,  par value
        $1.00 per share (the "Class A Special  Stock"),  at $20.29 per share,  for
        $500.0  million and 500,000  shares of the  Company's  newly  issued 5.25%
        Series B Mandatorily  Redeemable  Convertible  Preferred  Stock, par value
        $1,000 per share (the "Series B Preferred Stock"), for $500.0 million.
  
        The Series B  Preferred  Stock has a 5.25%  pay-in-kind  annual  dividend.
        Dividends will be paid quarterly through the issuance of additional shares
        of  Series  B  Preferred  Stock  (the  "Additional  Shares")  and  will be
        cumulative from the Issuance Date (except that dividends on the Additional
        Shares will accrue from the date such Additional  Shares are issued).  The
        Series B Preferred Stock, including the Additional Shares, is convertible,
        at the option of  Microsoft,  into 21.2 million  shares of Class A Special
        Stock,  subject to  adjustment  in certain  limited  circumstances,  which
        equals an initial  conversion  price of $23.54 per share,  increasing as a
        result of the Additional  Shares to $33.91 per share on June 30, 2004. The
        Series B Preferred  Stock is mandatorily  redeemable on June 30, 2017, or,
        at the option of the Company  beginning  on June 30, 2004 or at the option
        of Microsoft on June 30, 2004 or on June 30, 2012.  Upon  redemption,  the
        Company, at its option, may redeem the Series B Preferred Stock with cash,
        Class A Special Stock or a combination  thereof.  As the Company currently
        intends to redeem the Series B Preferred  Stock with Class A Special Stock
        upon  redemption,  the Series B Preferred  Stock has been  classified as a
        component  of  stockholders'  equity  as of June 30,  1997.  The  Series B
        Preferred Stock is generally non-voting.
  
        Offerings of Subsidiary Debt
        On May 8, 1997, Comcast Cellular Holdings,  Inc. ("Comcast  Cellular"),  a
        wholly owned subsidiary of the Company, completed the sale of $1.0 billion
        principal  amount of 9 1/2% Senior Notes due 2007 (the  "Cellular  Notes")
        through a private offering with  registration  rights.  The Cellular Notes
        are  obligations  of  Comcast  Cellular  and are not  obligations  of, nor
        guaranteed  by, the Company.  Comcast  Cellular used the net proceeds from
        the offering to repay existing  borrowings by its subsidiaries,  including
        its senior participating redeemable zero coupon notes. Collectively, these
        transactions are referred to herein as the "Cellular Refinancing."
  
                                          6
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        On May 1, 1997,  Comcast Cable  Communications,  Inc. ("Comcast Cable"), a
        wholly owned subsidiary of the Company, completed the sale of $1.7 billion
        principal  amount of notes (the "Cable Notes") through a private  offering
        with  registration  rights.  The Cable Notes were issued in four tranches:
        $300.0 million  principal amount of 8 1/8% Notes due 2004,  $600.0 million
        principal amount of 8 3/8% Notes due 2007, $550.0 million principal amount
        of 8 7/8% Notes due 2017 and  $250.0  million  principal  amount of 8 1/2%
        Notes due 2027. The Notes due 2027 are subject to repurchase at the option
        of the holder in 2009.  The Cable Notes are  obligations  of Comcast Cable
        and are not obligations of, nor guaranteed by, the Company.  Comcast Cable
        used  substantially  all of the net  proceeds  from the  offering to repay
        existing borrowings by its subsidiaries.  Collectively, these transactions
        are referred to herein as the "Cable Refinancing."
  
        E! Entertainment
        On March 31, 1997, the Company, through Comcast Entertainment Holdings LLC
        (the  "LLC"),  which is owned  50.1% by the  Company and 49.9% by The Walt
        Disney Company ("Disney"),  purchased a 58.4% interest in E! Entertainment
        Television,  Inc.  ("E!  Entertainment"),   an  entertainment  programming
        service distributed to more than 42 million subscribers, from Time Warner,
        Inc.  ("Time  Warner") for $321.9 million (the "E!  Acquisition").  The E!
        Acquisition was funded by cash contributions to the LLC by the Company and
        Disney of $132.8 million and $189.1 million,  respectively.  In connection
        with the E! Acquisition,  the Company contributed its 10.4% interest in E!
        Entertainment  to the LLC.  Following these  transactions,  the LLC owns a
        68.8% interest in E!  Entertainment.  To fund the cash contribution to the
        LLC, the Company  borrowed  $132.8  million from Disney in the form of two
        10-year, 7% notes (the "Disney Notes").
  
        The Company accounted for the E! Acquisition under the purchase method and
        E!  Entertainment  was consolidated  with the Company  effective March 31,
        1997.  The  allocation  of the purchase  price  relating to the assets and
        liabilities of E! Entertainment is preliminary pending a final appraisal.
  
        After September 1998,  Disney,  in certain  circumstances,  is entitled to
        request that the LLC purchase  Disney's  entire interest in the LLC at its
        then fair market value (as determined by an appraisal process). If the LLC
        elects not to purchase  Disney's  interest,  Disney has the right,  at its
        option, to purchase either the Company's entire interest in the LLC or all
        of the shares of stock of E!  Entertainment  held by the LLC, in each case
        at fair market value.  In the event that Disney  exercises its rights,  as
        described above, a portion or all of the Disney Notes may be replaced with
        a three year note due to Disney.
  
        Scripps Cable
        In November 1996,  the Company  acquired the cable  television  operations
        ("Scripps Cable") of The E.W. Scripps Company ("E.W. Scripps") in exchange
        for  93.048  million  shares  of Class A  Special  Stock  valued at $1.552
        billion (the "Scripps Acquisition"). The Company accounted for the Scripps
        Acquisition  under the purchase method and Scripps Cable was  consolidated
        with the  Company  effective  November  1, 1996.  The terms of the Scripps
        Acquisition  provide for, among other things,  the  indemnification of the
        Company  by  E.  W.  Scripps  for  certain   liabilities,   including  tax
        liabilities, relating to Scripps Cable prior to the acquisition date.
  
        Comcast-Spectacor
        In July 1996, the Company  completed its acquisition  (the "Sports Venture
        Acquisition")  of a  66%  interest  in  the  Philadelphia  Flyers  Limited
        Partnership,  a Pennsylvania limited partnership  ("PFLP"),  the assets of
        which, after giving effect to the Sports Venture  Acquisition,  consist of
        (i) the  National  Basketball  Association  ("NBA")  franchise  to own and
        operate the  Philadelphia  76ers  basketball  team and related assets (the
        "Sixers"),  (ii) the National  Hockey League ("NHL")  franchise to own and
        operate the Philadelphia  Flyers hockey team and related assets, and (iii)
        two adjacent arenas, leasehold interests in and development rights related
        to the land  underlying  the  arenas  and other  adjacent  parcels of land
        located  in  Philadelphia,   Pennsylvania  (collectively,  the  "Arenas").
        Concurrent with the completion of the Sports Venture Acquisition, PFLP was
        renamed Comcast Spectacor, L.P. ("Comcast-Spectacor").
  
        The Sports Venture  Acquisition was completed in two steps. In April 1996,
        the Company  purchased the Sixers for $125.0  million in cash plus assumed
        net  liabilities  of  approximately  $11.0  million  through a partnership
        controlled by the Company. To complete the Sports Venture Acquisition,  in
        July 1996, the Company  contributed its interest 
  
                                          7
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        in the Sixers, exchanged approximately 3.5 million shares of the Company's
        Class A Special  Stock and 6,370 shares of the  Company's  newly issued 5%
        Series A  Convertible  Preferred  Stock and paid $15.0 million in cash for
        its current interest in  Comcast-Spectacor.  The remaining 34% interest in
        Comcast-Spectacor is owned by a group, including the former majority owner
        of PFLP, who also manages Comcast-Spectacor. In connection with the Sports
        Venture Acquisition, Comcast-Spectacor assumed the outstanding liabilities
        relating to the Sixers and the Arenas,  including a mortgage obligation of
        $155.0 million. The Company accounts for its interest in Comcast-Spectacor
        under the equity method (see Note 4).
  
        Unaudited Pro Forma Information
        The  following  unaudited pro forma  information  for the six months ended
        June 30, 1996 has been presented as if the Scripps Acquisition occurred on
        January  1,  1996.  This  unaudited  pro  forma  information  is  based on
        historical results of operations,  adjusted for acquisition costs, and, in
        the  opinion of  management,  is not  necessarily  indicative  of what the
        results  would have been had the  Company  operated  Scripps  Cable  since
        January 1, 1996 (dollars in millions, except per common share data).
  
                                                                  Six Months Ended
                                                                   June 30, 1996
             Revenues.......................................         $2,046.2
             Loss before extraordinary items................            (44.1)
             Net loss.......................................            (45.1)
             Net loss per common share......................            (0.14)
  
  4.    INVESTMENTS, PRINCIPALLY IN AFFILIATES
                                                     June 30,         December 31,
                                                      1997               1996
                                                       (Dollars in millions)
             Equity method..................         $936.4             $966.1
             Public companies...............           92.2              165.5
             Privately held companies.......           37.6               46.1
                                                   --------           --------
                                                   $1,066.2           $1,177.7
                                                   ========           ========
  
        Equity Method
        The Company records its  proportionate  interests in the net income (loss)
        of  substantially  all of its investees,  other than the UK Investees (see
        below), three months in arrears. The Company's recorded investments exceed
        its proportionate interests in the book value of the investees' net assets
        by  $227.6  million  as  of  June  30,  1997  (primarily  related  to  the
        investments in Comcast-Spectacor  and Sprint PCS (see below)). Such excess
        is being  amortized  to equity in net  income  or loss,  primarily  over a
        period of twenty years,  which is consistent  with the estimated  lives of
        the  underlying  assets.  The original cost of  investments  accounted for
        under the equity method  totaled  $1.324  billion and $1.271 billion as of
        June 30, 1997 and December 31, 1996,  respectively.  Summarized  financial
        information for the Company's  equity method  investees is presented below
        (dollars in millions).
  
                                          8
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  Sprint                      UK
                                                                  PCS         TCGI       Investees      Other     Combined
  Six Months Ended June 30, 1997:
  
     Combined Results of Operations
        Revenues, net..................................           $13.6       $184.2        $92.9      $442.3       $733.0
        Operating, selling, general and
          administrative expenses......................           351.5        171.9         82.2       453.0      1,058.6
        Depreciation and amortization..................            43.8         56.2         36.0        54.1        190.1
        Operating loss.................................          (381.7)       (43.9)       (25.3)      (64.8)      (515.7)
        Net loss (a)...................................          (398.8)       (87.7)       (44.8)      (89.6)      (620.9)
  
     Company's Equity in Net Loss
        Equity in current period net loss (b)..........          ($59.8)      ($14.2)      ($16.7)     ($31.3)     ($122.0)
        Amortization expense...........................            (0.1)        (0.4)        (0.3)       (3.4)        (4.2)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................          ($59.9)      ($14.6)      ($17.0)     ($34.7)     ($126.2)
                                                                =======      =======        =====       =====      =======
  
  Three Months Ended June 30, 1997:
  
     Combined Results of Operations
        Revenues, net..................................            $9.5        $96.8        $48.4      $241.2       $395.9
        Operating, selling, general and
          administrative expenses......................           165.9         90.7         42.0       239.1        537.7
        Depreciation and amortization..................            34.4         29.8         18.6        24.1        106.9
        Operating loss.................................          (190.8)       (23.7)       (12.2)      (22.0)      (248.7)
        Net loss (a)...................................          (215.5)       (45.0)       (22.6)      (38.8)      (321.9)
  
     Company's Equity in Net Loss
        Equity in current period net loss..............          ($32.3)       ($7.4)       ($8.3)      ($6.2)      ($54.2)
        Amortization expense...........................                         (0.2)        (0.2)       (1.5)        (1.9)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................          ($32.3)       ($7.6)       ($8.5)      ($7.7)      ($56.1)
                                                                =======      =======        =====       =====      =======
  
  Combined Financial Position
  
  As of June 30, 1997:
        Current assets.................................          $308.9       $657.4       $140.6      $304.1     $1,411.0
        Noncurrent assets..............................         4,599.5      1,474.2        706.0     1,268.9      8,048.6
        Current liabilities............................           251.5        206.4         89.5       793.4      1,340.8
        Noncurrent liabilities.........................         2,417.9      1,079.5        589.3       543.7      4,630.4
  ------------
  (a)   See footnote (1) on page 10.
  (b)   See footnote (2) on page 10.
  9
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  Sprint                      UK
                                                                  PCS         TCGI       Investees      Other     Combined
  Six Months Ended June 30, 1996:
  
     Combined Results of Operations
        Revenues, net..................................        $              $120.1        $77.1      $248.6       $445.8
        Operating, selling, general and
          administrative expenses......................            75.5        111.3         71.1       245.4        503.3
        Depreciation and amortization..................             0.3         32.1         28.2        30.8         91.4
        Operating loss.................................           (75.8)       (23.3)       (22.2)      (27.6)      (148.9)
        Net loss (1)...................................          (152.7)       (51.1)       (36.2)      (39.8)      (279.8)
  
     Company's Equity in Net Loss
        Equity in current period net loss..............          ($22.9)       ($9.7)      ($14.8)     ($10.7)      ($58.1)
        Amortization income (expense)..................             0.6         (0.8)                    (2.0)        (2.2)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................          ($22.3)      ($10.5)      ($14.8)     ($12.7)      ($60.3)
                                                                =======      =======        =====       =====      =======
  
  Three Months Ended June 30, 1996:
  
     Combined Results of Operations
        Revenues, net..................................        $               $63.7        $34.5      $126.5       $224.7
        Operating, selling, general and
          administrative expenses......................            30.7         59.0         32.0       121.7        243.4
        Depreciation and amortization..................             0.3         16.8         12.8        14.7         44.6
        Operating loss.................................           (31.0)       (12.1)       (10.3)       (9.9)       (63.3)
        Net loss (1)...................................           (67.4)       (26.0)       (15.9)      (16.9)      (126.2)
  
     Company's Equity in Net Loss
        Equity in current period net loss..............          ($10.1)       ($4.9)       ($6.2)      ($4.2)      ($25.4)
        Amortization income (expense)..................             0.6         (0.5)                    (0.5)        (0.4)
                                                                -------      -------        -----       -----      -------
          Total equity in net loss.....................           ($9.5)       ($5.4)       ($6.2)      ($4.7)      ($25.8)
                                                                =======      =======        =====       =====      =======
  --------
        (1)   Net loss also  represents  loss from  continuing  operations  before
              extraordinary  items and cumulative  effect of changes in accounting
              principle.
        (2)   As a result of the E!  Acquisition,  the  Company  recorded a charge
              representing the cumulative amount that would have been recorded had
              the Company accounted for its investment in E!  Entertainment  under
              the  equity  method  since  the  date  of  initial  investment  (the
              "Cumulative Charge").  Since the Company's proportionate share of E!
              Entertainment's  cumulative  losses  was in excess of the  Company's
              historical  cost basis in E!  Entertainment  and as the  Company was
              under  no   contractual   obligation   to  fund  the  losses  of  E!
              Entertainment,  the  Cumulative  Charge was limited to the Company's
              historical  cost basis of $12.1 million.  Such amount is included in
              equity  in net  losses  of  affiliates  in the  Company's  condensed
              consolidated statement of operations and accumulated deficit for the
              six  months  ended  June  30,  1997  as it is  not  significant  for
              restatement of the Company's prior year financial statements.
  Sprint  PCS.  The  Company,   Tele-Communications,   Inc.   ("TCI"),   Cox
        Communications,   Inc.  ("Cox")  and  Sprint  Corporation  ("Sprint,"  and
        together  with the  Company,  TCI and Cox,  the  "Parents"),  and  certain
        subsidiaries  of  the  Parents,  engage  in  the  wireless  communications
        business  through a limited  partnership  known as  "Sprint  Spectrum"  or
        "Sprint PCS," a development  stage  enterprise  through June 30, 1997. The
        Company  made its initial  investment  in 1994 and,  as of June 30,  1997,
        holds a general and limited partnership interest of 15% in Sprint PCS. The
        Company's  investment  in Sprint  PCS is  accounted  for under the  equity
        method  based  on the  Company's  general  partnership  interest  and  its
        representation on the partnership's board of directors.
  
        TCGI.  Through  June  1996,  the  Company  held  investments  in  Teleport
        Communications Group, Inc. ("TCGI"),  TCG Partners and certain local joint
        ventures (the "Teleport Joint Ventures") managed by TCGI and TCG Partners.
        TCGI 
  
                                         10
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        is one of the largest  competitive  alternative  access  providers  in the
        United States in terms of route miles.  The Company had a 20.0% investment
        in TCGI and interests in the Teleport Joint Ventures ranging from 12.4% to
        20.3%.  In June 1996,  TCGI sold  approximately  27 million  shares of its
        Class A Common Stock (the "TCGI Class A Stock"),  for $16 per share, in an
        initial public offering (the "TCGI IPO"). In connection with the TCGI IPO,
        TCGI, the Company and subsidiaries of Cox, TCI and Continental Cablevision
        ("Continental" and collectively with Cox, TCI and the Company,  the "Cable
        Stockholders")  entered  into an  agreement  pursuant  to  which  TCGI was
        reorganized (the "Reorganization"). The Reorganization consisted of, among
        other  things:  (i) the  acquisition  by TCGI of TCG  Partners;  (ii)  the
        acquisition by TCGI of additional interests in the Teleport Joint Ventures
        (including  100% of those  interests  held by the Company);  and (iii) the
        contribution  to TCGI of  $269.0  million  aggregate  principal  amount of
        indebtedness,  plus accrued  interest  thereon,  owed by TCGI to the Cable
        Stockholders  (except that TCI retained a $26 million subordinated note of
        TCGI),  including  $53.8  million  principal  amount  and $4.1  million of
        accrued   interest   owed  to  the  Company.   In   connection   with  the
        Reorganization, the Company received 25.6 million shares of TCGI's Class B
        Common Stock (the "TCGI Class B Stock").  Each share of TCGI Class B Stock
        is entitled to voting power equivalent to ten shares of TCGI Class A Stock
        and is  convertible,  at the option of the holder,  into one share of TCGI
        Class A Stock.  As a result of the TCGI IPO, the Company  recorded a $40.6
        million increase in its proportionate share of TCGI's net assets as a gain
        from equity offering of affiliate in its condensed  consolidated statement
        of operations and  accumulated  deficit for the six and three months ended
        June 30, 1996.
  
        During the three months ended March 31, 1997,  the Company  received  2.76
        million  shares  of TCGI  Class  A Stock  from  TCGI in  exchange  for the
        Company's shares of an alternate access provider. In May 1997, the Company
        sold  all of its  shares  of TCGI  Class A Stock  for  $68.9  million  and
        recognized a $68.9 million  pre-tax gain,  which is included in investment
        income  in  its  condensed   consolidated   statement  of  operations  and
        accumulated deficit for the six and three months ended June 30, 1997.
  
        As of June 30, 1997,  the Company owns TCGI Class B Stock  representing  a
        19.8% voting interest and a 15.5% equity interest.  The Company  continues
        to account for its  interest in TCGI under the equity  method based on its
        voting  interest   maintained   through  the  TCGI  Class  B  Stock,   its
        representation  on TCGI's board of directors  and its  participation  in a
        TCGI  stockholder  agreement  granting  certain rights to a control group.
        Assuming  conversion  of the TCGI Class B Stock held by the  Company  into
        TCGI Class A Stock, the Company's investment in TCGI, which had a carrying
        value of $131.1  million as of June 30,  1997,  would have a fair value of
        approximately $1.009 billion, based on the quoted market price of the TCGI
        Class A Stock as of July 31, 1997.
  
        UK  Investees.  As of June 30,  1997,  Comcast UK Cable  Partners  Limited
        ("Comcast UK Cable"),  a consolidated  subsidiary of the Company,  holds a
        27.5%  interest  in  Birmingham  Cable  Corporation  Limited  and a  50.0%
        interest in Cable London PLC. In addition,  Comcast UK Cable  historically
        held an  investment  in  Cambridge  Holding  Company  Limited  ("Cambridge
        Cable").  In March 1996,  Comcast UK Cable purchased the 50.0% interest in
        Cambridge   Cable  that  it  had  not   previously   owned  for  cash  and
        approximately  8.9 million of its Class A Common  Shares  (the  "Cambridge
        Acquisition").  Following the Cambridge Acquisition, Comcast UK Cable owns
        100.0% of Cambridge  Cable and  consolidated  the  financial  position and
        results of operations of Cambridge Cable effective March 31, 1996.
  
        Other. The Company's 11 other equity method investees include  investments
        in wired telecommunications  (including Garden State Cablevision,  L.P., a
        cable  communications  company serving 207,000  subscribers as of June 30,
        1997 in the State of New Jersey), wireless  telecommunications  (including
        Primestar - see below) and content providers (including  Comcast-Spectacor
        - see Note 3). The Company holds interests  representing  less than 20% of
        the total  outstanding  ownership  interest in certain of its other equity
        method  investees.  The equity  method of accounting is utilized for these
        investments  based on the type of  investment  (i.e.  general  partnership
        interest),  board representation,  participation in a controlling investor
        group,  significant shareholder rights or a combination of these and other
        factors. In addition,  the Company's 66% interest in Comcast- Spectacor is
        accounted  for under the equity  method  since the  Company  does not have
        control  over  Comcast-  Spectacor's  operations.  The  Company  does  not
        consider  these  other  equity  method   investments  to  be  individually
        significant to its consolidated financial position,  results of operations
        or liquidity.
  
                                         11
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        Roll-up of Primestar's Operations.  In June 1997, the Company entered into
        a binding  letter  agreement  (the  "Roll-up  Agreement")  with  PRIMESTAR
        Partners  L.P.  ("Primestar")  and the  affiliates  of  each of the  other
        partners  of  Primestar,  including  TCI  Satellite  Entertainment,   Inc.
        ("TSAT"), a publicly-traded company. Primestar, in which the Company holds
        a 10.4% general and limited partnership  interest,  is principally engaged
        in the business of  acquiring,  originating  and/or  providing  television
        programming   services   delivered  by  satellite  through  a  network  of
        distributors,  including the Company,  throughout the United  States.  The
        Roll-up  Agreement  sets forth the  principal  terms and  conditions  of a
        proposed  transaction  (the  "Roll-up  Transaction"),  through  which  the
        Company's direct broadcast satellite ("DBS") operations, Primestar and the
        Primestar-related   distribution  businesses  of  the  other  partners  of
        Primestar will be consolidated into a newly-formed publicly-traded company
        ("New Primestar").  In connection with the Roll-up Transaction,  TSAT will
        become a wholly owned  subsidiary of New Primestar.  The Company  provided
        DBS services,  through a  distributorship  arrangement with Primestar,  to
        152,000 subscribers as of June 30, 1997.
  
        New   Primestar   will  acquire  the  Primestar   partnership   interests,
        subscribers  and  related  assets,  as  applicable,  of the parties to the
        Roll-up  Transaction,  in exchange  for (i) cash,  (ii) shares of Series A
        Common Stock of New Primestar and (iii) shares of Series C Common Stock of
        New  Primestar,  in each  case in an  amount  determined  pursuant  to the
        Roll-up  Agreement.  The Company  will  continue to market and support the
        Primestar  programming  services on an agency basis after  consummation of
        the Roll-up  Transaction;  however, the terms of such arrangement have not
        yet been  determined.  Under  the  terms of the  Roll-up  Agreement,  upon
        closing of the  Roll-up  Transaction,  the  Company is expected to receive
        approximately  $90  million  in cash and to own  approximately  10% of New
        Primestar  common equity,  subject to  adjustments  based on the number of
        subscribers,  inventory  amounts and other  factors.  As of June 30, 1997,
        assets of the Company's DBS operations totaled $138.2 million.
  
        In  June  1997,   Primestar  entered  into  an  agreement  with  The  News
        Corporation Limited, MCI  Telecommunications  Corporation and American Sky
        Broadcasting LLC ("ASkyB"), pursuant to which Primestar (or, under certain
        circumstances,  New Primestar) will acquire certain assets relating to the
        high-power, DBS business of ASkyB. In exchange for such assets, ASkyB will
        receive  non-voting  securities of New Primestar  that will be convertible
        into  non-voting  common stock of New  Primestar  and,  accordingly,  will
        reduce  the  Company's   common  equity   interest  in  New  Primestar  to
        approximately 7% on a fully diluted basis.
  
        These  transactions  are not  conditioned  on  each  other  and may  close
        independently.  They are expected to close in 1998,  subject to receipt of
        all  necessary  governmental  and  regulatory  approvals,   including  the
        approval  of  the  Federal  Communications  Commission.  There  can  be no
        assurance that such approvals will be obtained.
  
        @Home.  On July 11,  1997 (the  "@Home  IPO  Date"),  At Home  Corporation
        ("@Home"), an equity method investee of the Company,  completed an initial
        public  offering of its Series A Common  Stock.  @Home  provides  Internet
        services  to  customers   and   businesses   over  the  cable   television
        infrastructure in a limited number of cities in the United States.  During
        the third quarter of 1997, due to the dilution of the Company's equity and
        voting interest and other factors,  the Company expects to discontinue the
        equity method of accounting for its  investment in @Home.  As of the @Home
        IPO Date,  the Company held 14.6  million  shares of @Home Series A Common
        Stock,   representing  a  12.2%  and  5.7%  equity  and  voting  interest,
        respectively.
  
        Investments - Public Companies
        The Company holds  unrestricted  equity  investments  in certain  publicly
        traded companies, including its investments in Nextel Communications, Inc.
        ("Nextel") and Time Warner (see below),  with an historical cost of $140.3
        million and $212.7  million as of June 30,  1997 and  December  31,  1996,
        respectively.  The  Company  has  recorded  these  investments,  which are
        classified as available for sale, at their estimated fair values of $154.2
        million and $212.9  million as of June 30,  1997 and  December  31,  1996,
        respectively.  The  unrealized  pre-tax  gains  as of June  30,  1997  and
        December 31, 1996 of $13.9  million and $0.2 million,  respectively,  have
        been reported in the Company's condensed  consolidated  balance sheet as a
        component of  stockholders'  equity,  net of related  deferred  income tax
        expense of $4.9 million and $0.1 million, respectively.
  
                                         12
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        As of June 30, 1997 and December  31,  1996,  the Company held 3.3 million
        shares of Nextel common stock.  In addition,  as of December 31, 1996, the
        Company  held  options to acquire an  additional  25.0  million  shares of
        Nextel  common  stock at $16 per share.  As of December  31,  1996,  these
        options,  which had an historical cost of $20.0 million,  were included in
        investments  in  publicly  traded  companies  at their fair value of $32.6
        million.  In February  1997,  the Company sold these options to Nextel for
        $25.0  million and  recognized  a pre-tax gain of $5.0  million,  which is
        included in investment income in its condensed  consolidated  statement of
        operations and accumulated deficit for the six months ended June 30, 1997.
        In July 1997,  the Company  sold its 3.3 million  shares of Nextel  common
        stock for $73.4  million  resulting  in a pre-tax  gain of $32.1  million,
        which will be recognized in the third quarter of 1997. Accordingly,  as of
        June 30, 1997,  the Company's  investment in Nextel,  which is recorded at
        its fair value of $62.1 million, is included in short-term  investments in
        the Company's condensed consolidated balance sheet.
  
        In February  1996, in  connection  with certain  preemptive  rights of the
        Company under  previously  existing  agreements  with Nextel,  the Company
        purchased  8.16 million shares of Nextel common stock at $12.25 per share,
        for $99.9  million.  During  the three  months  ended June 30,  1996,  the
        Company sold 4.4 million  shares of Nextel  common stock for $85.6 million
        and  recognized  a pre-tax  gain of $29.7  million,  which is  included in
        investment  income in its condensed  consolidated  statement of operations
        and accumulated deficit for the six and three months ended June 30, 1996.
  
        The Company  received 1.36 million shares of Time Warner common stock (the
        "Time Warner Stock") in exchange (the "Exchange") for all of the shares of
        Turner  Broadcasting  System, Inc. ("TBS") stock (the "TBS Stock") held by
        the  Company as a result of the  merger of Time  Warner and TBS in October
        1996. As a result of the Exchange,  the Company  recognized a pre-tax gain
        of  $47.3  million  in  the  fourth  quarter  of  1996,  representing  the
        difference between the Company's historical cost basis in the TBS Stock of
        $8.9 million and the new basis for the Company's investment in Time Warner
        Stock of $56.2  million,  which was based on the closing price of the Time
        Warner Stock on the merger date of $41.375 per share. In December 1996 and
        January  1997,  the Company sold 92,500  shares and 1.27  million  shares,
        respectively,  of the Time Warner Stock, representing the Company's entire
        interest in Time Warner, for $3.7 million and $48.6 million, respectively.
        In  connection  with the January  1997 sales,  the  Company  recognized  a
        pre-tax loss of $3.8 million,  which is included in  investment  income in
        its condensed consolidated statement of operations and accumulated deficit
        for the six months ended June 30, 1997. As of December 31, 1996,  the 1.27
        million  shares of Time Warner Stock held by the Company were  recorded at
        their  fair  value  of  $47.4  million  and were  included  in  short-term
        investments in the Company's condensed consolidated balance sheet.
  
  5.    LONG-TERM DEBT
  
        The Cable  Refinancing  and the  Cellular  Refinancing  had a  significant
        impact on the maturities of the Company's  long-term  debt.  Maturities of
        long-term debt outstanding as of June 30, 1997 through 2001 are as follows
        (dollars in millions).
  
             1997 (1)................................             $560.9
             1998....................................              117.6
             1999....................................              207.4
             2000....................................              301.7
             2001....................................              577.8
  
        ---------------
        (1)  Represents  maturities of long-term debt for the remaining six months
             of 1997,  which includes  $527.0 million of optional debt  repayments
             made in July 1997 (see below).
  
        As of June  30,  1997 and  December  31,  1996,  the  Company's  effective
        weighted average interest rate on its long-term debt outstanding was 8.02%
        and 7.68%, respectively.
  
        On  June  30,  1997,  the  Company  redeemed  all of its  outstanding  10%
        Subordinated  Debentures,  due 2003 (the "10%  Debentures").  An aggregate
        principal amount of $139.3 million of the 10% Debentures was redeemed at a
  
                                         13
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                     (Unaudited)
  
        redemption  price of 100% of the principal  amount thereof,  together with
        accrued interest  thereon.  On the date of redemption,  the 10% Debentures
        had an accreted value of $127.7 million.
  
        In connection with the Cable Refinancing, the Cellular Refinancing and the
        redemption of the 10% Debentures,  the Company  expensed  unamortized debt
        acquisition costs and incurred debt extinguishment costs of $35.1 million,
        resulting in an extraordinary  loss, net of tax, of $22.8 million or $0.07
        per common share during the six and three months ended June 30, 1997.
  
        In July 1997, the Company made optional debt repayments aggregating $527.0
        million with existing cash, cash  equivalents and short-term  investments.
        Current  portion  of  long-term  debt as of June 30,  1997  includes  such
        amount.  As a result of these debt  repayments,  the Company  will expense
        unamortized  debt  acquisition  costs  of $3.5  million,  resulting  in an
        extraordinary  loss,  net of tax, of $2.3 million in the third  quarter of
        1997.
  
        As of July 31, 1997, certain  subsidiaries of the Company had unused lines
        of credit of $1.129 billion.  The availability and use of the unused lines
        of credit is restricted  by the  covenants of the related debt  agreements
        and to subsidiary general purposes and dividend  declaration.  The Company
        continually  evaluates its debt  structure  with the intention of reducing
        its debt service requirements when desirable.
  
  6.    STOCKHOLDERS' EQUITY
  
        Concurrent  with the  announcement  of the Scripps  Acquisition in October
        1995,  the Company  announced  that its Board of  Directors  authorized  a
        market repurchase program (the "Repurchase Program") pursuant to which the
        Company  could  purchase,  at such  times  and on such  terms as it deemed
        appropriate,  up to  $500.0  million  of  its  outstanding  common  equity
        securities,  subject to certain restrictions and market conditions.  Based
        on the trade date for stock  repurchases,  during the six and three months
        ended June 30, 1997 and 1996, the Company  repurchased 2.3 million shares,
        6.5  million   shares,   1.6  million  shares  and  3.3  million   shares,
        respectively,  of its common stock for  aggregate  consideration  of $36.2
        million,  $116.6 million,  $24.7 million and $59.9 million,  respectively,
        pursuant  to the  Repurchase  Program.  During the term of the  Repurchase
        Program, which terminated on May 13, 1997, the Company repurchased a total
        of 13.5 million shares of its common stock for aggregate  consideration of
        $228.6 million.
  
        As part of the Repurchase Program,  the Company sold put options on shares
        of its Class A Special Stock.  Put options on 4.0 million shares,  sold by
        the Company  during 1996 and 1995 and  outstanding  at December  31, 1996,
        expired unexercised during the first quarter of 1997. Upon expiration, the
        Company  reclassified  $69.6  million,  the  amount  it  would  have  been
        obligated  to pay to  repurchase  such  shares  had the put  options  been
        exercised,  from common  equity put options to  additional  capital in the
        Company's condensed consolidated balance sheet.
  
        As part of the  Repurchase  Program,  in April 1997,  the Company sold put
        options  on 2.0  million  shares  of its Class A  Special  Stock.  The put
        options  give the holder the right to require  the  Company to  repurchase
        such shares at a specified  price on specific dates in April and May 1998.
        The amount the Company would be obligated to pay to repurchase such shares
        upon  exercise  of the put  options,  totaling  $31.4  million,  has  been
        reclassified  from additional  capital to common equity put options in the
        Company's June 30, 1997 condensed consolidated balance sheet.
  
  7.    STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
  
        The Company  made cash  payments for  interest of $233.8  million,  $229.7
        million, $116.7 million and $127.7 million during the six and three months
        ended June 30, 1997 and 1996, respectively.
  
        The Company made cash  payments for income taxes of $75.0  million,  $62.2
        million,  $56.7 million and $46.9 million  during the six and three months
        ended June 30, 1997 and 1996, respectively.
  
                                         14
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
                                     (Unaudited)
  
  8.    CONTINGENCIES
  
        The Company is subject to claims which arise in the ordinary course of its
        business and other legal  proceedings.  In the opinion of management,  the
        amount of  ultimate  liability  with  respect  to these  actions  will not
        materially  affect  the  financial  position,  results  of  operations  or
        liquidity of the Company.
  
  9.    FINANCIAL DATA BY BUSINESS SEGMENT
        (Dollars in millions)
  Domestic
                                                   Cable          Electronic         Cellular
                                              Communications       Retailing      Communications       Other (1)           Total
  Six Months Ended June 30, 1997
  Revenues, net........................          $1,021.9            $947.4            $220.3            $125.7          $2,315.3
  Depreciation and amortization........             306.8              51.6              61.5              42.5             462.4
  Operating income (loss)..............             169.9             103.0              27.1             (61.3)            238.7
  Interest expense.....................             119.9              27.9              52.1              79.0             278.9
  Capital expenditures.................             251.5              41.1              57.9              96.6             447.1
  Equity in net losses of affiliates...                                                                   126.2             126.2
  
  Three Months Ended June 30, 1997
  Revenues, net........................            $520.8            $467.7            $116.2             $79.8          $1,184.5
  Depreciation and amortization........             168.0              24.8              31.5              25.7             250.0
  Operating income (loss)..............              78.4              50.7              19.4             (31.1)            117.4
  Interest expense.....................              63.2              13.9              28.1              40.4             145.6
  Capital expenditures.................             144.9              26.1              40.0              56.1             267.1
  Equity in net losses of affiliates...                                                                    56.1              56.1
  
  As of June 30, 1997
  Assets...............................          $6,067.2          $2,144.6          $1,461.9          $3,523.3         $13,197.0
  Long-term debt, less current portion.           2,584.8             811.0           1,149.7           2,241.2           6,786.7
  
  Six Months Ended June 30, 1996
  Revenues, net........................            $778.3            $855.8            $207.1             $55.1          $1,896.3
  Depreciation and amortization........             192.6              51.9              56.8              23.0             324.3
  Operating income (loss)..............             190.6              87.5              14.3             (50.5)            241.9
  Interest expense.....................             110.8              35.1              44.0              78.1             268.0
  Capital expenditures.................             137.9              19.5              36.6              84.9             278.9
  Equity in net losses (income) of
      affiliates.......................               0.1              (0.1)                               60.3              60.3
  
  Three Months Ended June 30, 1996
  Revenues, net........................            $396.0            $405.7            $108.9             $35.0            $945.6
  Depreciation and amortization........              97.3              25.7              30.5              13.9             167.4
  Operating income (loss)..............             101.8              41.3              12.1             (26.5)            128.7
  Interest expense.....................              54.1              16.9              23.2              39.0             133.2
  Capital expenditures.................              83.9              13.4              21.7              48.5             167.5
  Equity in net losses (income) of
      affiliates.......................                                (0.1)                               25.9              25.8
  ---------------
  (1)   Other includes certain operating  businesses,  including E!  Entertainment
        (beginning on March 31, 1997), the Company's  consolidated  United Kingdom
        cable and telecommunications  operations and the Company's DBS operations,
        and elimination entries related to the segments presented.
  15
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                 RESULTS OF OPERATIONS
  
  Overview
  
  The Company has  experienced  significant  growth in recent  years both  through
  strategic  acquisitions and growth in its existing  businesses.  The Company has
  historically  met its cash  needs for  operations  through  its cash  flows from
  operating   activities.   Cash   requirements   for   acquisitions  and  capital
  expenditures have been provided through the Company's  financing  activities and
  sales of long-term  investments,  as well as its existing cash, cash equivalents
  and short-term investments.
  
  General Developments of Business
  
  Microsoft Investment
  On June 30, 1997 (the "Issuance  Date"),  the Company and Microsoft  Corporation
  ("Microsoft") completed a Stock Purchase Agreement (the "Agreement") under which
  Microsoft  purchased and the Company issued 24.6 million shares of the Company's
  Class A Special  Common  Stock,  par value $1.00 per share (the "Class A Special
  Stock"),  at $20.29 per share,  for $500.0  million  and  500,000  shares of the
  Company's  newly  issued  5.25%  Series  B  Mandatorily  Redeemable  Convertible
  Preferred  Stock,  par value $1,000 per share (the "Series B Preferred  Stock"),
  for $500.0 million.
  
  The Series B Preferred Stock has a 5.25% pay-in-kind annual dividend.  Dividends
  will be paid  quarterly  through the issuance of  additional  shares of Series B
  Preferred  Stock  (the  "Additional  Shares")  and will be  cumulative  from the
  Issuance Date (except that dividends on the  Additional  Shares will accrue from
  the date such  Additional  Shares are  issued).  The Series B  Preferred  Stock,
  including the Additional  Shares,  is  convertible,  at the option of Microsoft,
  into 21.2 million  shares of Class A Special  Stock,  subject to  adjustment  in
  certain  limited  circumstances,  which  equals an initial  conversion  price of
  $23.54 per share,  increasing as a result of the Additional Shares to $33.91 per
  share on June 30, 2004. The Series B Preferred  Stock is mandatorily  redeemable
  on June 30, 2017, or, at the option of the Company beginning on June 30, 2004 or
  at the  option  of  Microsoft  on  June  30,  2004  or on June  30,  2012.  Upon
  redemption,  the Company, at its option, may redeem the Series B Preferred Stock
  with  cash,  Class A Special  Stock or a  combination  thereof.  As the  Company
  currently  intends to redeem the Series B  Preferred  Stock with Class A Special
  Stock upon  redemption,  the Series B Preferred  Stock has been  classified as a
  component of  stockholders'  equity as of June 30, 1997.  The Series B Preferred
  Stock is generally non-voting.
  
  Offerings of Subsidiary Debt
  On May 8, 1997, Comcast Cellular Holdings,  Inc. ("Comcast Cellular"),  a wholly
  owned  subsidiary of the Company,  completed the sale of $1.0 billion  principal
  amount of 9 1/2% Senior Notes due 2007 (the "Cellular  Notes") through a private
  offering with registration rights. The Cellular Notes are obligations of Comcast
  Cellular and are not  obligations  of, nor guaranteed  by, the Company.  Comcast
  Cellular used the net proceeds from the offering to repay existing borrowings by
  its  subsidiaries,  including its senior  participating  redeemable  zero coupon
  notes. Collectively,  these transactions are referred to herein as the "Cellular
  Refinancing."
  
  On May 1, 1997, Comcast Cable  Communications,  Inc. ("Comcast Cable"), a wholly
  owned  subsidiary of the Company,  completed the sale of $1.7 billion  principal
  amount of notes (the "Cable Notes") through a private offering with registration
  rights.  The Cable Notes were issued in four tranches:  $300.0 million principal
  amount of 8 1/8% Notes due 2004, $600.0 million principal amount of 8 3/8% Notes
  due 2007,  $550.0 million  principal  amount of 8 7/8% Notes due 2017 and $250.0
  million  principal  amount  of 8 1/2%  Notes  due  2027.  The Notes due 2027 are
  subject to repurchase  at the option of the holder in 2009.  The Cable Notes are
  obligations of Comcast Cable and are not  obligations of, nor guaranteed by, the
  Company.  Comcast  Cable used  substantially  all of the net  proceeds  from the
  offering to repay existing borrowings by its subsidiaries.  Collectively,  these
  transactions are referred to herein as the "Cable Refinancing."
  
  E! Entertainment
  On March 31, 1997, the Company,  through Comcast Entertainment Holdings LLC (the
  "LLC"), which is owned 50.1% by the Company and 49.9% by The Walt Disney Company
  ("Disney"), purchased a 58.4% interest in E! Entertainment Television, Inc. ("E!
  Entertainment"),  an entertainment  programming service distributed to more than
  42 million
  
                                         16
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  subscribers,  from Time Warner, Inc. ("Time Warner") for $321.9 million (the "E!
  Acquisition"). The E! Acquisition was funded by cash contributions to the LLC by
  the Company and Disney of $132.8 million and $189.1  million,  respectively.  In
  connection with the E! Acquisition,  the Company  contributed its 10.4% interest
  in E!  Entertainment to the LLC.  Following these  transactions,  the LLC owns a
  68.8% interest in E!  Entertainment.  To fund the cash  contribution to the LLC,
  the Company  borrowed $132.8 million from Disney in the form of two 10-year,  7%
  notes (the "Disney Notes").
  
  The Company  accounted for the E!  Acquisition  under the purchase method and E!
  Entertainment  was consolidated  with the Company  effective March 31, 1997. The
  allocation of the purchase price relating to the assets and liabilities of E!
  Entertainment is preliminary pending a final appraisal.
  
  After September 1998, Disney, in certain  circumstances,  is entitled to request
  that the LLC  purchase  Disney's  entire  interest  in the LLC at its then  fair
  market value (as determined by an appraisal  process).  If the LLC elects not to
  purchase  Disney's  interest,  Disney has the right, at its option,  to purchase
  either the Company's entire interest in the LLC or all of the shares of stock of
  E!  Entertainment  held by the LLC,  in each case at fair market  value.  In the
  event that Disney exercises its rights,  as described above, a portion or all of
  the Disney Notes may be replaced with a three year note due to Disney.
  
  Scripps Cable
  In November 1996, the Company acquired the cable television operations ("Scripps
  Cable") of The E.W.  Scripps  Company  ("E.W.  Scripps")  in exchange for 93.048
  million  shares of Class A Special Stock valued at $1.552  billion (the "Scripps
  Acquisition").  The  Company  accounted  for the Scripps  Acquisition  under the
  purchase method and Scripps Cable was  consolidated  with the Company  effective
  November 1, 1996. The terms of the Scripps  Acquisition provide for, among other
  things,  the  indemnification  of the  Company  by E.  W.  Scripps  for  certain
  liabilities,  including tax liabilities,  relating to Scripps Cable prior to the
  acquisition date.
  
  Comcast-Spectacor
  In July 1996,  the  Company  completed  its  acquisition  (the  "Sports  Venture
  Acquisition") of a 66% interest in the Philadelphia Flyers Limited  Partnership,
  a Pennsylvania limited partnership  ("PFLP"),  the assets of which, after giving
  effect to the Sports Venture Acquisition, consist of (i) the National Basketball
  Association  ("NBA")  franchise  to  own  and  operate  the  Philadelphia  76ers
  basketball  team and related  assets (the  "Sixers"),  (ii) the National  Hockey
  League ("NHL") franchise to own and operate the Philadelphia  Flyers hockey team
  and related assets,  and (iii) two adjacent arenas,  leasehold  interests in and
  development  rights related to the land underlying the arenas and other adjacent
  parcels  of  land  located  in  Philadelphia,  Pennsylvania  (collectively,  the
  "Arenas").  Concurrent  with the completion of the Sports  Venture  Acquisition,
  PFLP was renamed Comcast Spectacor, L.P. ("Comcast-Spectacor").
  
  The Sports Venture  Acquisition  was completed in two steps.  In April 1996, the
  Company  purchased  the  Sixers  for $125.0  million  in cash plus  assumed  net
  liabilities of approximately  $11.0 million through a partnership  controlled by
  the  Company.  To complete the Sports  Venture  Acquisition,  in July 1996,  the
  Company  contributed  its interest in the Sixers,  exchanged  approximately  3.5
  million  shares of the  Company's  Class A Special Stock and 6,370 shares of the
  Company's  newly issued 5% Series A Convertible  Preferred  Stock and paid $15.0
  million in cash for its current interest in Comcast-Spectacor. The remaining 34%
  interest in Comcast-Spectacor is owned by a group, including the former majority
  owner of PFLP, who also manages Comcast-Spectacor. In connection with the Sports
  Venture  Acquisition,  Comcast-Spectacor  assumed  the  outstanding  liabilities
  relating to the Sixers and the Arenas, including a mortgage obligation of $155.0
  million.  The Company accounts for its interest in  Comcast-Spectacor  under the
  equity method.
  
  Liquidity and Capital Resources
  
  Cash, Cash Equivalents and Short-term Investments
  The  Company  has  traditionally  maintained  significant  levels of cash,  cash
  equivalents  and  short-term   investments  to  meet  its  short-term  liquidity
  requirements.  Cash, cash equivalents and short-term  investments as of June 30,
  1997 were $1.409 billion.  As of June 30, 1997,  $276.6 million of the Company's
  cash,  cash  equivalents  and  short-term  investments  was restricted to use by
  subsidiaries of the Company under contractual or other  arrangements,  including
  $132.5 million which is restricted to use by Comcast UK Cable  Partners  Limited
  ("Comcast UK Cable").
  
                                         17
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  The Company's cash, cash equivalents and short-term  investments are recorded at
  cost which  approximates  their fair value.  As of June 30, 1997,  the Company's
  short-term  investments of $144.4  million  include 3.3 million shares of Nextel
  Communications,  Inc.  ("Nextel")  common stock  recorded at their fair value of
  $62.1 million (see "Investments"). The remaining short-term investments of $82.3
  million had a weighted average maturity of approximately 13 months. However, due
  to the high  degree  of  liquidity  and the  intent of  management  to use these
  investments  as needed to fund its  commitments,  the  Company  considers  these
  current assets.
  
  Investments
  Sprint PCS. The Company, Tele-Communications,  Inc. ("TCI"), Cox Communications,
  Inc.  ("Cox," and together  with the Company and TCI, the "Cable  Parents")  and
  Sprint  Corporation   ("Sprint,"  and  together  with  the  Cable  Parents,  the
  "Parents"),   and   certain   subsidiaries   of  the   Parents   (the   "Partner
  Subsidiaries"), engage in the wireless communications business through a limited
  partnership  known as "Sprint  Spectrum" or "Sprint  PCS," a  development  stage
  enterprise  through  June 30,  1997.  The  Company  owns 15% of  Sprint  PCS and
  accounts for its investment in Sprint PCS under the equity method.
  
  Under the  provisions  of the  Sprint PCS  partnership  agreement,  the  Partner
  Subsidiaries  have  committed to  contribute  $4.2 billion in cash to Sprint PCS
  through 1999, of which the Company's  share is $630.0  million.  Of this funding
  requirement,  the  Company  has made total cash  contributions  to Sprint PCS of
  $501.3 million  through July 31, 1997 and issued a $105.0 million  guaranty on a
  portion of Sprint PCS' outstanding  debt, which may be satisfied  through making
  additional contributions to Sprint PCS under the remaining cash commitment.  The
  Company anticipates that Sprint PCS' capital  requirements over the next several
  years will be  significant.  Requirements  in excess of  committed  capital  are
  planned to be funded by Sprint PCS through external  financing,  including,  but
  not limited to, vendor financing,  bank financing and securities  offered to the
  public.  In August  1996,  Sprint PCS sold $750.0  million  principal  amount at
  maturity  of  Senior  Notes  and  Senior  Discount  Notes  due  2006 in a public
  offering. In October 1996, Sprint PCS closed three credit agreements providing a
  total of $5.1 billion in  available  financing,  including  $2.0 billion in bank
  financing  and $3.1  billion in vendor  financing.  The timing of the  Company's
  remaining  capital  contributions  to Sprint PCS is  dependent  upon a number of
  factors,  including  Sprint  PCS'  working  capital  requirements.  The  Company
  anticipates  funding its remaining capital commitments to Sprint PCS through its
  cash flows from  operating  activities,  its existing  cash,  cash  equivalents,
  short-term investments and lines of credit or other external financing,  or by a
  combination of these sources.
  
  TCGI. Through June 1996, the Company held investments in Teleport Communications
  Group,  Inc.  ("TCGI"),  TCG  Partners  and certain  local joint  ventures  (the
  "Teleport Joint Ventures") managed by TCGI and TCG Partners.  TCGI is one of the
  largest  competitive  alternative access providers in the United States in terms
  of route miles.  The Company had a 20.0% investment in TCGI and interests in the
  Teleport Joint  Ventures  ranging from 12.4% to 20.3%.  In June 1996,  TCGI sold
  approximately  27 million  shares of its Class A Common Stock (the "TCGI Class A
  Stock"),  for $16 per share,  in an initial public offering (the "TCGI IPO"). In
  connection with the TCGI IPO, TCGI, the Company and subsidiaries of Cox, TCI and
  Continental  Cablevision  ("Continental"  and collectively with Cox, TCI and the
  Company, the "Cable  Stockholders")  entered into an agreement pursuant to which
  TCGI was reorganized (the  "Reorganization").  The Reorganization  consisted of,
  among  other  things:  (i) the  acquisition  by TCGI of TCG  Partners;  (ii) the
  acquisition  by TCGI of  additional  interests  in the Teleport  Joint  Ventures
  (including  100%  of  those  interests  held  by the  Company);  and  (iii)  the
  contribution  to  TCGI  of  $269.0  million   aggregate   principal   amount  of
  indebtedness,  plus  accrued  interest  thereon,  owed  by  TCGI  to  the  Cable
  Stockholders (except that TCI retained a $26 million subordinated note of TCGI),
  including $53.8 million  principal  amount and $4.1 million of accrued  interest
  owed to the Company. In connection with the Reorganization, the Company received
  25.6  million  shares of TCGI's Class B Common Stock (the "TCGI Class B Stock").
  Each share of TCGI Class B Stock is entitled to voting power  equivalent  to ten
  shares of TCGI Class A Stock and is  convertible,  at the option of the  holder,
  into one share of TCGI Class A Stock.  As a result of the TCGI IPO,  the Company
  recorded  a $40.6  million  increase  in its  proportionate  share of TCGI's net
  assets as a gain from equity  offering of affiliate (the "TCGI IPO Gain") in its
  condensed  consolidated  statement of operations and accumulated deficit for the
  six and three months ended June 30, 1996.
  
  During the three months ended March 31, 1997, the Company  received 2.76 million
  shares of TCGI Class A Stock from TCGI in exchange for the  Company's  shares of
  an alternate access provider. In May 1997, the Company sold all of its shares of
  TCGI Class A Stock for $68.9 million and recognized a $68.9 million pre-tax gain
  (the "TCGI Class A Gain"),
  
                                         18
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  which is included in investment income in its condensed  consolidated  statement
  of operations  and  accumulated  deficit for the six and three months ended June
  30, 1997.
  
  As of June 30, 1997,  the Company owns TCGI Class B Stock  representing  a 19.8%
  voting interest and a 15.5% equity  interest.  The Company  continues to account
  for its interest in TCGI under the equity  method  based on its voting  interest
  maintained through the TCGI Class B Stock, its representation on TCGI's board of
  directors and its participation in a TCGI stockholder agreement granting certain
  rights to a control group. Assuming conversion of the TCGI Class B Stock held by
  the Company into TCGI Class A Stock, the Company's investment in TCGI, which had
  a carrying value of $131.1 million as of June 30, 1997,  would have a fair value
  of  approximately  $1.009 billion,  based on the quoted market price of the TCGI
  Class A Stock as of July 31, 1997.
  
  Roll-up of  Primestar's  Operations.  In June 1997,  the Company  entered into a
  binding letter agreement (the "Roll-up  Agreement") with PRIMESTAR Partners L.P.
  ("Primestar")  and the  affiliates  of each of the other  partners of Primestar,
  including TCI Satellite Entertainment, Inc. ("TSAT"), a publicly-traded company.
  Primestar,  in which the Company holds a 10.4%  general and limited  partnership
  interest,  is  principally  engaged in the  business of  acquiring,  originating
  and/or providing television  programming services delivered by satellite through
  a network of distributors,  including the Company, throughout the United States.
  The  Roll-up  Agreement  sets  forth the  principal  terms and  conditions  of a
  proposed  transaction (the "Roll-up  Transaction"),  through which the Company's
  direct   broadcast   satellite   ("DBS")    operations,    Primestar   and   the
  Primestar-related  distribution  businesses  of the other  partners of Primestar
  will  be  consolidated  into  a  newly-formed   publicly-traded   company  ("New
  Primestar").  In  connection  with the Roll-up  Transaction,  TSAT will become a
  wholly owned  subsidiary of New  Primestar.  The Company  provided DBS services,
  through a distributorship  arrangement with Primestar, to 152,000 subscribers as
  of June 30, 1997.
  
  New Primestar will acquire the Primestar partnership interests,  subscribers and
  related assets,  as applicable,  of the parties to the Roll-up  Transaction,  in
  exchange for (i) cash, (ii) shares of Series A Common Stock of New Primestar and
  (iii)  shares  of  Series C Common  Stock of New  Primestar,  in each case in an
  amount determined  pursuant to the Roll-up Agreement.  The Company will continue
  to market and  support the  Primestar  programming  services on an agency  basis
  after  consummation  of the  Roll-up  Transaction;  however,  the  terms of such
  arrangement  have not yet  been  determined.  Under  the  terms  of the  Roll-up
  Agreement,  upon closing of the Roll-up Transaction,  the Company is expected to
  receive  approximately  $90 million in cash and to own  approximately 10% of New
  Primestar  common  equity,  subject  to  adjustments  based  on  the  number  of
  subscribers, inventory amounts and other factors. As of June 30, 1997, assets of
  the Company's DBS operations totaled $138.2 million.
  
  In June 1997,  Primestar  entered  into an agreement  with The News  Corporation
  Limited,  MCI  Telecommunications  Corporation and American Sky Broadcasting LLC
  ("ASkyB"),  pursuant to which  Primestar (or, under certain  circumstances,  New
  Primestar) will acquire certain assets relating to the high-power,  DBS business
  of ASkyB. In exchange for such assets, ASkyB will receive non-voting  securities
  of New Primestar that will be convertible  into  non-voting  common stock of New
  Primestar and, accordingly,  will reduce the Company's common equity interest in
  New Primestar to approximately 7% on a fully diluted basis.
  
  These   transactions   are  not   conditioned   on  each  other  and  may  close
  independently.  They are  expected  to close in 1998,  subject to receipt of all
  necessary  governmental and regulatory approvals,  including the approval of the
  Federal Communications Commission. There can be no assurance that such approvals
  will be obtained.
  
  @Home. On July 11, 1997 (the "@Home IPO Date"),  At Home Corporation  ("@Home"),
  an equity method  investee of the Company,  completed an initial public offering
  of its Series A Common Stock.  @Home provides Internet services to customers and
  businesses  over the cable  television  infrastructure  in a  limited  number of
  cities in the  United  States.  During  the third  quarter  of 1997,  due to the
  dilution of the  Company's  equity and voting  interest and other  factors,  the
  Company  expects  to  discontinue  the  equity  method  of  accounting  for  its
  investment  in @Home.  As of the @Home IPO Date,  the Company  held 14.6 million
  shares of @Home Series A Common Stock,  representing a 12.2% and 5.7% equity and
  voting interest, respectively.
  
  Nextel.  As of June 30, 1997 and December 31, 1996, the Company held 3.3 million
  shares of Nextel common stock. In addition, as of December 31, 1996, the Company
  held options to acquire an additional 25.0 million shares of Nextel
  
                                         19
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  common stock at $16 per share. As of December 31, 1996, these options, which had
  an historical  cost of $20.0  million,  were included in investments in publicly
  traded  companies at their fair value of $32.6  million.  In February  1997, the
  Company sold these options to Nextel for $25.0 million and  recognized a pre-tax
  gain of $5.0 million,  which is included in  investment  income in its condensed
  consolidated  statement of operations and accumulated deficit for the six months
  ended June 30, 1997.  In July 1997,  the Company sold its 3.3 million  shares of
  Nextel  common  stock for $73.4  million  resulting  in a pre-tax  gain of $32.1
  million, which will be recognized in the third quarter of 1997. Accordingly,  as
  of June 30, 1997, the Company's  investment in Nextel,  which is recorded at its
  fair value of $62.1  million,  is  included  in  short-term  investments  in the
  Company's condensed consolidated balance sheet.
  
  In February 1996, in connection  with certain  preemptive  rights of the Company
  under previously  existing  agreements with Nextel,  the Company  purchased 8.16
  million  shares of Nextel common stock at $12.25 per share,  for $99.9  million.
  During the three months ended June 30, 1996, the Company sold 4.4 million shares
  of Nextel common stock for $85.6 million and  recognized a pre-tax gain of $29.7
  million  (the  "Nextel  Gain"),  which is included in  investment  income in its
  condensed  consolidated  statement of operations and accumulated deficit for the
  six and three months ended June 30, 1996.
  
  Time Warner/TBS.  The Company received 1.36 million shares of Time Warner common
  stock (the "Time  Warner  Stock") in exchange  (the  "Exchange")  for all of the
  shares of Turner Broadcasting  System, Inc. ("TBS") stock (the "TBS Stock") held
  by the Company as a result of the merger of Time Warner and TBS in October 1996.
  As a result of the  Exchange,  the Company  recognized  a pre-tax  gain of $47.3
  million in the fourth quarter of 1996,  representing the difference  between the
  Company's  historical  cost basis in the TBS Stock of $8.9  million  and the new
  basis for the Company's investment in Time Warner Stock of $56.2 million,  which
  was based on the closing  price of the Time  Warner  Stock on the merger date of
  $41.375 per share.  In December 1996 and January  1997,  the Company sold 92,500
  shares  and  1.27  million  shares,  respectively,  of the  Time  Warner  Stock,
  representing the Company's entire interest in Time Warner,  for $3.7 million and
  $48.6  million,  respectively.  In connection  with the January 1997 sales,  the
  Company  recognized  a  pre-tax  loss of $3.8  million,  which  is  included  in
  investment  income in its condensed  consolidated  statement of  operations  and
  accumulated  deficit for the six months ended June 30, 1997.  As of December 31,
  1996,  the 1.27  million  shares of Time Warner  Stock held by the Company  were
  recorded at their fair value of $47.4  million and were  included in  short-term
  investments in the Company's condensed consolidated balance sheet.
  
  The Company does not have any  additional  significant  contractual  commitments
  with respect to any of its investments.  However, to the extent the Company does
  not fund its  investees'  capital  calls,  it exposes  itself to dilution of its
  ownership interests.  The Company continually evaluates its existing investments
  as well as new investment opportunities.
  
  Financing
  The Company has  historically  utilized a strategy of financing its acquisitions
  through  senior debt at the  acquired  operating  subsidiary  level.  Additional
  financing  has also  been  obtained  by the  Company  through  the  issuance  of
  subordinated debt at the intermediate  holding company and parent company levels
  and, to some extent,  through public  offerings of a subsidiary  company's stock
  and debt instruments.
  
  The Cable Refinancing and the Cellular  Refinancing had a significant  impact on
  the  maturities of the Company's  long-term  debt.  Maturities of long-term debt
  outstanding  as of June  30,  1997  through  2001  are as  follows  (dollars  in
  millions).
  
             1997 (1).............................              $560.9
             1998.................................               117.6
             1999.................................               207.4
             2000.................................               301.7
             2001.................................               577.8
  
  ---------------
  (1)   Represents  maturities  of long-term  debt for the remaining six months of
        1997,  which includes  $527.0 million of optional debt  repayments made in
        July 1997 (see below).
  
  As of June 30, 1997 and December  31, 1996,  the  Company's  effective  weighted
  average  interest rate on its long-term  debt  outstanding  was 8.02% and 7.68%,
  respectively.
  
                                         20
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  On June 30, 1997, the Company  redeemed all of its outstanding 10%  Subordinated
  Debentures,  due 2003 (the "10% Debentures").  An aggregate  principal amount of
  $139.3 million of the 10% Debentures was redeemed at a redemption  price of 100%
  of the principal amount thereof,  together with accrued interest thereon. On the
  date of redemption, the 10% Debentures had an accreted value of $127.7 million.
  
  In July 1997,  the Company made  optional  debt  repayments  aggregating  $527.0
  million with existing cash, cash equivalents and short-term investments. Current
  portion of long-term debt as of June 30, 1997 includes such amount.  As a result
  of these debt repayments,  the Company will expense unamortized debt acquisition
  costs of $3.5 million,  resulting in an extraordinary  loss, net of tax, of $2.3
  million in the third quarter of 1997.
  
  As of July 31,  1997,  certain  subsidiaries  of the Company had unused lines of
  credit of $1.129 billion. The availability and use of the unused lines of credit
  is restricted by the covenants of the related debt  agreements and to subsidiary
  general purposes and dividend declaration. The Company continually evaluates its
  debt structure with the intention of reducing its debt service requirements when
  desirable.
  
  Concurrent with the announcement of the Scripps Acquisition in October 1995, the
  Company  announced  that its Board of Directors  authorized a market  repurchase
  program (the "Repurchase Program") pursuant to which the Company could purchase,
  at such times and on such terms as it deemed  appropriate,  up to $500.0 million
  of its outstanding common equity securities, subject to certain restrictions and
  market conditions. Based on the trade date for stock repurchases, during the six
  and three  months  ended June 30,  1997 and 1996,  the Company  repurchased  2.3
  million shares,  6.5 million shares,  1.6 million shares and 3.3 million shares,
  respectively,  of its common stock for aggregate consideration of $36.2 million,
  $116.6 million, $24.7 million and $59.9 million,  respectively,  pursuant to the
  Repurchase Program.  During the term of the Repurchase Program, which terminated
  on May 13, 1997,  the Company  repurchased a total of 13.5 million shares of its
  common stock for aggregate consideration of $228.6 million.
  
  As part of the Repurchase Program, the Company sold put options on shares of its
  Class A Special Stock.  Put options on 4.0 million  shares,  sold by the Company
  during 1996 and 1995 and outstanding at December 31, 1996,  expired  unexercised
  during the first  quarter of 1997.  Upon  expiration,  the Company  reclassified
  $69.6 million, the amount it would have been obligated to pay to repurchase such
  shares had the put options  been  exercised,  from common  equity put options to
  additional capital in the Company's condensed consolidated balance sheet.
  
  As part of the Repurchase  Program,  in April 1997, the Company sold put options
  on 2.0 million  shares of its Class A Special  Stock.  The put options  give the
  holder the right to require the Company to repurchase such shares at a specified
  price on specific  dates in April and May 1998.  The amount the Company would be
  obligated  to pay to  repurchase  such shares upon  exercise of the put options,
  totaling $31.4 million,  has been reclassified from additional capital to common
  equity put options in the Company's June 30, 1997 condensed consolidated balance
  sheet.
  
                              -------------------------
  
  Following  the Scripps  Acquisition,  the Company no longer had a  stockholders'
  deficiency.  However,  the Company expects to continue to recognize  significant
  losses for the  foreseeable  future,  resulting in  decreases  in  stockholders'
  equity.   The   telecommunications   industry,   including  cable  and  cellular
  communications,   and  the  electronic   retailing   industry  are  experiencing
  increasing  competition and rapid  technological  changes.  The Company's future
  results of operations will be affected by its ability to react to changes in the
  competitive  environment  and by its  ability  to  implement  new  technologies.
  However,  the Company believes that competition,  technological  changes and its
  significant  losses  will  not  significantly   affect  its  ability  to  obtain
  financing.
  
  The Company  believes  that it will be able to meet its  current  and  long-term
  liquidity and capital  requirements,  including fixed charges,  through its cash
  flows from operating  activities,  existing cash, cash  equivalents,  short-term
  investments and lines of credit and other external financing.
  
                                         21
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  Statement of Cash Flows
  
  Cash and cash  equivalents  increased  $933.3  million as of June 30,  1997 from
  December 31, 1996 and decreased $131.4 million as of June 30, 1996 from December
  31, 1995.  Changes in cash and cash  equivalents  resulted  from cash flows from
  operating, financing and investing activities which are explained below.
  
  Net cash provided by operating  activities amounted to $436.4 million and $289.2
  million  for the six months  ended  June 30,  1997 and 1996,  respectively.  The
  increase of $147.2 million is  principally  due to the increase in the Company's
  operating  income  before   depreciation  and  amortization   (see  "Results  of
  Operations"),  including the effects of the Scripps Acquisition,  and changes in
  working capital as a result of the timing of receipts and disbursements.
  
  Net cash  provided  by (used in)  financing  activities  was $924.7  million and
  ($42.8)  million for the six months ended June 30, 1997 and 1996,  respectively.
  During the six months ended June 30, 1997, the Company  borrowed $2.958 billion,
  including  the  Cable  Notes of $1.691  billion,  the  Cellular  Notes of $998.4
  million,  the Disney Notes of $132.8 million and  borrowings  under its existing
  lines of credit,  and repaid  $2.940  billion of its long-term  debt,  including
  $1.665 billion relating to the Cable Refinancing, $981.8 million relating to the
  Cellular  Refinancing  and $139.3 million  relating to the redemption of the 10%
  Debentures.  Deferred  financing costs of $43.2 million were incurred during the
  six months  ended June 30, 1997  related to the  issuance of the Cable Notes and
  the Cellular Notes. In addition,  during the six months ended June 30, 1997, the
  Company  received  $1.0 billion from  Microsoft  for the issuance of its Class A
  Special Stock and Series B Preferred Stock and repurchased  $33.6 million of its
  common stock.  During the six months ended June 30, 1996,  the Company  borrowed
  $558.3  million under its existing  lines of credit and repaid  $478.3  million,
  including the effects of  refinancings  and $88.9 million of repayments  under a
  vendor  financing  arrangement.  In  addition,  the Company  repurchased  $108.3
  million of its common stock during the six months ended June 30, 1996.
  
  Net cash used in investing  activities was $427.8 million and $377.8 million for
  the six months ended June 30, 1997 and 1996, respectively. During the six months
  ended June 30,  1997,  net cash used in  investing  activities  includes  the E!
  Acquisition,  net of cash acquired, of $118.7 million, investments in affiliates
  of $78.5  million  and capital  expenditures  of $447.1  million,  offset by the
  proceeds  from  the  sales  of  short-term  and  long-term   investments  and  a
  distribution  from an investee of $222.9  million and Sprint PCS' repayment of a
  $25.2 million loan.  During the six months ended June 30, 1996, net cash used in
  investing  activities  includes  investments  in affiliates  of $357.4  million,
  including   $125.0   million  for  the   purchase  of  the  Sixers  and  capital
  contributions to Sprint PCS of $69.3 million, and capital expenditures of $278.9
  million,  offset  by  proceeds  from  the  sales  of  short-term  and  long-term
  investments of $328.4 million.
  
  Results of Operations
  
  The effects of the Company's recent acquisitions, as well as increased levels of
  capital expenditures,  were to increase significantly the Company's revenues and
  expenses  resulting in  substantial  increases in its  operating  income  before
  depreciation and amortization,  depreciation  expense,  amortization expense and
  interest expense. In addition,  the Company's equity in net losses of affiliates
  has increased  principally as a result of the start-up  nature of certain of the
  Company's  equity  investees (see  "Operating  Results by Business  Segment" and
  "Consolidated  Analysis"). As a result of the increases in depreciation expense,
  amortization  expense,  interest expense and equity in net losses of affiliates,
  it is expected  that the Company will continue to recognize  significant  losses
  for the foreseeable future.
  
                                         22
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  Summarized  consolidated  financial  information for the Company for the six and
  three  months  ended June 30, 1997 and 1996 is as follows  (dollars in millions,
  "NM" denotes percentage is not meaningful):
  Six Months Ended
                                                                                      June 30,                   Increase / (Decrease)
                                                                                1997            1996             $              %
  Revenues...........................................................          $2,315.3       $1,896.3          $419.0          22.1%
  Cost of goods sold from electronic retailing.......................             570.0          512.4            57.6          11.2
  Operating, selling, general and administrative expenses............           1,044.2          817.7           226.5          27.7
                                                                               --------       --------
  Operating income before depreciation and
     amortization (1)................................................             701.1          566.2           134.9          23.8
  Depreciation.......................................................             221.5          142.7            78.8          55.2
  Amortization.......................................................             240.9          181.6            59.3          32.7
                                                                               --------       --------
  Operating income...................................................             238.7          241.9            (3.2)         (1.3)
                                                                               --------       --------
  Interest expense...................................................             278.9          268.0            10.9           4.1
  Investment income..................................................             (88.6)         (47.5)           41.1          86.5
  Equity in net losses of affiliates.................................             126.2           60.3            65.9            NM
  Gain from equity offering of affiliate.............................                            (40.6)          (40.6)           NM
  Other..............................................................               4.4           22.9           (18.5)        (80.8)
  Income tax expense.................................................              36.9           24.6            12.3          50.0
  Minority interest..................................................             (39.8)         (29.0)           10.8          37.2
  Extraordinary items................................................             (22.8)          (1.0)           21.8            NM
                                                                               --------       --------
  Net loss...........................................................           ($102.1)        ($17.8)          $84.3            NM
                                                                               ========       ========
  Three Months Ended
                                                                                      June 30,                   Increase / (Decrease)
                                                                                1997            1996             $              %
  Revenues...........................................................          $1,184.5         $945.6          $238.9          25.3%
  Cost of goods sold from electronic retailing.......................             278.1          242.3            35.8          14.8
  Operating, selling, general and administrative expenses............             539.0          407.2           131.8          32.4
                                                                               --------       --------
  Operating income before depreciation and
     amortization (1) ...............................................             367.4          296.1            71.3          24.1
  Depreciation.......................................................             125.7           74.3            51.4          69.2
  Amortization.......................................................             124.3           93.1            31.2          33.5
                                                                               --------       --------
  Operating income...................................................             117.4          128.7           (11.3)         (8.8)
                                                                               --------       --------
  Interest expense...................................................             145.6          133.2            12.4           9.3
  Investment income..................................................             (76.4)         (28.9)           47.5            NM
  Equity in net losses of affiliates.................................              56.1           25.8            30.3            NM
  Gain from equity offering of affiliate.............................                            (40.6)          (40.6)           NM
  Other..............................................................              (4.5)          11.6           (16.1)           NM
  Income tax expense.................................................              27.0           23.7             3.3          13.9
  Minority interest..................................................             (15.8)         (13.9)            1.9          13.7
  Extraordinary items................................................             (22.8)          (1.0)           21.8            NM
                                                                               --------       --------
  Net (loss) income..................................................            ($37.4)         $16.8          ($54.2)           NM
                                                                               ========       ========
  ------------
  (1)   Operating income before depreciation and amortization is commonly referred
        to in the Company's  businesses as "operating  cash flow."  Operating cash
        flow is a measure of a company's  ability to generate  cash to service its
        obligations,  including debt service  obligations,  and to finance capital
        and other expenditures. In part due to the capital intensive nature of the
        Company's  businesses  and the  resulting  significant  level of  non-cash
        depreciation  expense and  amortization  expense,  operating  cash flow is
        frequently  used  as one of the  bases  for  comparing  businesses  in the
        Company's  industries.  Operating  cash flow does not purport to represent
        net income or net cash  provided by operating  activities,  as those terms
        are defined under generally accepted accounting principles, and 
  
                                         23
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
        should not be  considered as an  alternative  to such  measurements  as an
        indicator of the  Company's  performance.  See  "Statement  of Cash Flows"
        above for a discussion of net cash provided by operating activities.
  Operating Results by Business Segment
  
  Domestic Cable Communications
  
  As a result of the Scripps Acquisition,  the Company commenced consolidating the
  financial  results of Scripps Cable  effective  November 1, 1996.  The following
  table presents actual  financial  information for the six and three months ended
  June 30, 1997 and pro forma  financial  information for the six and three months
  ended June 30, 1996 as if the Scripps  Acquisition  occurred on January 1, 1996.
  Pro forma financial information is presented herein for purposes of analysis and
  may not reflect what actual  operating  results  would have been had the Company
  owned Scripps Cable since January 1, 1996 (dollars in millions):
  Six Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  Service income...........................................    $1,021.9               $929.1              $92.8               10.0%
  Operating, selling, general and
        administrative expenses............................       545.2                479.4               65.8               13.7
                                                               --------               ------              -----
  Operating income before depreciation
        and amortization (a)...............................      $476.7               $449.7              $27.0                6.0%
                                                               ========               ======              =====
  
                                                                    Three Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  Service income...........................................      $520.8               $471.8              $49.0               10.4%
  Operating, selling, general and
        administrative expenses............................       274.4                238.8               35.6               14.9
                                                               --------               ------              -----
  Operating income before depreciation
        and amortization (a)...............................      $246.4               $233.0              $13.4                5.8%
                                                               ========               ======              =====
  ---------------
  (a) See footnote (1) on page 23.
  Of the  respective  $92.8 million and $49.0 million  increases in service income
  for the six and three month  periods from 1996 to 1997,  $19.6  million and $9.6
  million are attributable to subscriber  growth,  $61.3 million and $29.3 million
  relate to changes in rates and $11.9 million and $10.1  million  relate to other
  product offerings.
  
  Of the  respective  $65.8  million and $35.6  million  increases  in  operating,
  selling, general and administrative expenses for the six and three month periods
  from 1996 to 1997,  $17.1 million and $9.5 million are attributable to increases
  in the costs of cable programming as a result of subscriber  growth,  additional
  channel  offerings  and changes in rates,  $11.1  million  and $5.1  million are
  attributable to increases in costs  associated  with customer  service and $37.6
  million and $21.0  million  result from  increases  in the cost of labor,  other
  volume related expenses and costs associated with new product  offerings.  It is
  anticipated  that the Company's cost of cable  programming  will increase in the
  future as cable  programming  rates  increase  and  additional  sources of cable
  programming become available.
  
                                         24
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  Electronic Retailing
  
  The following  table sets forth operating  results for the Company's  electronic
  retailing   segment,   consisting  of  the  operations  of  QVC,  Inc.  and  its
  subsidiaries  ("QVC"), a majority owned and controlled subsidiary of the Company
  (dollars in millions):
  Six Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  Net sales from electronic retailing......................      $947.4               $855.8               $91.6              10.7%
  Cost of goods sold from electronic retailing.............       570.0                512.4                57.6              11.2
  Operating, selling, general and administrative
        expenses...........................................       222.8                204.0                18.8               9.2
                                                                 ------               ------               -----
  Operating income before depreciation
        and amortization (a)...............................      $154.6               $139.4               $15.2              10.9%
                                                                 ======               ======               =====
  
  Gross margin.............................................        39.8%                40.1%
  
                                                                    Three Months Ended
                                                                         June 30,                                 Increase
                                                                 1997                1996                   $                   %
  Net sales from electronic retailing......................      $467.7               $405.7               $62.0              15.3%
  Cost of goods sold from electronic retailing.............       278.1                242.3                35.8              14.8
  Operating, selling, general and administrative
        expenses...........................................       114.1                 96.4                17.7              18.4
                                                                 ------               ------               -----
  Operating income before depreciation
        and amortization (a)...............................       $75.5                $67.0                $8.5              12.7%
                                                                 ======               ======               =====
  
  Gross margin.............................................        40.5%                40.3%
  ---------------
  (a) See footnote (1) on page 23.
  The respective increases in net sales from electronic retailing of $91.6 million
  and $62.0  million  for the six and three  month  periods  from 1996 to 1997 are
  primarily  attributable  to the effects of a 7.1% increase during each period in
  the average  number of homes  receiving  QVC  services in the United  States and
  13.7%  and  13.5%  increases,  respectively,  in the  average  number  of  homes
  receiving QVC services in the United Kingdom.
  
  The  increases in cost of goods sold from  electronic  retailing  are  primarily
  related to the growth in net sales. The changes in gross margin from 1996 to the
  same  period in 1997 are a result of changes in product  mix and an  increase in
  shipping and handling costs.
  
  Of the respective  increases in operating,  selling,  general and administrative
  expenses of $18.8  million and $17.7 million for the six and three month periods
  from 1996 to 1997, $13.6 million and $7.3 million are primarily  attributable to
  start-up costs incurred by QVC in Germany,  which began operations in the fourth
  quarter of 1996.  The remaining  increases of $5.2 million and $10.4 million are
  primarily  attributable to higher sales volume offset, in part, by the reduction
  in expenses realized upon consolidation of QVC's multichannel  operations and an
  increase in net finance fee income from credit card operations for the six month
  period from 1996 to 1997.
  
                                         25
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  Cellular Communications
  
  The following table sets forth the operating results for the Company's  cellular
  communications segment (dollars in millions):
  Six Months Ended
                                                                         June 30,                            Increase/(Decrease)
                                                                 1997                1996                   $                   %
  Service income...........................................      $220.3               $207.1               $13.2               6.4%
  Operating, selling, general and administrative
        expenses...........................................       131.7                136.0                (4.3)             (3.2)
                                                                 ------               ------               -----
  Operating income before depreciation
        and amortization (a)...............................       $88.6                $71.1               $17.5              24.6%
                                                                 ======               ======               =====
  
                                                                    Three Months Ended
                                                                         June 30,                            Increase/(Decrease)
                                                                 1997                1996                   $                   %
  Service income...........................................      $116.2               $108.9                $7.3               6.7%
  Operating, selling, general and administrative
        expenses...........................................        65.3                 66.3                (1.0)             (1.5)
                                                                 ------               ------               ----- 
  Operating income before depreciation
        and amortization (a)...............................       $50.9                $42.6                $8.3              19.5%
                                                                 ======               ======               =====
  ---------------
  (a) See footnote (1) on page 23.
  Of the respective $13.2 million and $7.3 million increases in service income for
  the six and three  month  periods  from  1996 to 1997,  $14.6  million  and $6.1
  million are attributable to the Company's subscriber growth and $7.3 million and
  $4.9 million are  attributable to roamer growth.  Offsetting these increases are
  decreases of $8.7 million and $3.7 million resulting  primarily from a reduction
  in the  average  rate  per  minute  of use and the  average  minutes  of use per
  subscriber from 1996 to the same periods in 1997.
  
  The respective  $4.3 million and $1.0 million  decreases in operating,  selling,
  general and  administrative  expenses  for the six and three month  periods from
  1996 to 1997 are primarily  attributable to expense reductions  achieved through
  implementation of fraud management  programs and a reduction in commission costs
  resulting  from fewer gross  sales in 1997 as  compared  to the same  periods in
  1996.  These  reductions  were  partially  offset by increases in volume related
  expenses resulting from subscriber growth.
  
  Consolidated Analysis
  
  The respective $78.8 million and $51.4 million increases in depreciation expense
  for the six and three month periods from 1996 to 1997 are primarily attributable
  to  the  effects  of  the  Scripps   Acquisition  and  the  effects  of  capital
  expenditures.
  
  The respective $59.3 million and $31.2 million increases in amortization expense
  for the six and three month periods from 1996 to 1997 are primarily attributable
  to the effects of the Scripps Acquisition.
  
  The respective $10.9 million and $12.4 million increases in interest expense for
  the six and three month periods from 1996 to 1997 are  attributable to increased
  levels of debt and changes in the Company's  weighted average interest rate. The
  Company anticipates that, for the foreseeable future, interest expense will be a
  significant  cost to the Company and will have a significant  adverse  effect on
  the  Company's  ability to realize net  earnings.  The Company  believes it will
  continue to be able to meet its obligations through its ability both to generate
  operating  income before  depreciation  and  amortization and to obtain external
  financing.
  
                                         26
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  The respective  $41.1 million and $47.5 million  increases in investment  income
  for the six and three month periods from 1996 to 1997 are primarily attributable
  to the  TCGI  Class  A Gain  recognized  in  1997,  offset  by the  Nextel  Gain
  recognized in 1996.
  
  The respective $65.9 million and $30.3 million increases in equity in net losses
  of  affiliates  for  the six and  three  month  periods  from  1996 to 1997  are
  primarily  due to the effects of increased  losses  incurred by Sprint PCS, TCGI
  and certain of the Company's other equity  investees,  and the effects of the E!
  Acquisition (see below) and the Sports Venture Acquisition. Based on Sprint PCS'
  current  operations  and  business  plan,  the  Company   anticipates  that  its
  proportionate share of Sprint PCS' losses will be significant in future periods.
  In addition,  as a result of the E!  Acquisition,  the Company recorded a charge
  representing the cumulative amount that would have been recorded had the Company
  accounted for its investment in E!  Entertainment  under the equity method since
  the date of initial  investment (the "Cumulative  Charge").  Since the Company's
  proportionate share of E! Entertainment's cumulative losses was in excess of the
  Company's historical cost basis in E! Entertainment and as the Company was under
  no contractual obligation to fund the losses of E! Entertainment, the Cumulative
  Charge was limited to the Company's historical cost basis of $12.1 million. Such
  amount is  included  in equity in net  losses  of  affiliates  in the  Company's
  condensed  consolidated  statement of operations and accumulated deficit for the
  six months ended June 30, 1997 as it is not  significant  for restatement of the
  Company's prior year financial statements.
  
  Gain from equity  offering of affiliate  for the six and three months ended June
  30, 1996 represents the TCGI IPO Gain.
  
  The respective  $18.5 million and $16.1 million  decreases in other expenses for
  the six and three month periods from 1996 to 1997 are primarily  attributable to
  the settlement of certain litigation during the six months ended June 30, 1996.
  
  The $12.3  million  increase in income tax expense for the six month period from
  1996 to 1997 is  primarily a result of an  increase in state  income tax expense
  due to  increases  in the net income of certain of the  Company's  subsidiaries,
  increases  in  non-deductible  foreign  losses  and  equity  in  net  losses  of
  affiliates  and  increased  goodwill  amortization  resulting  from the  Scripps
  Acquisition,  offset by the effect of the increase in the Company's  loss before
  income tax expense, minority interest and extraordinary items.
  
  The $10.8  million  increase in minority  interest for the six month period from
  1996 to 1997 is  primarily  attributable  to the  effects  of changes in the net
  income (loss) of QVC and Comcast UK Cable.
  
  In  connection  with the Cable  Refinancing,  the Cellular  Refinancing  and the
  redemption  of  the  10%  Debentures,  the  Company  expensed  unamortized  debt
  acquisition  costs and  incurred  debt  extinguishment  costs of $35.1  million,
  resulting in an  extraordinary  loss,  net of tax, of $22.8 million or $0.07 per
  common share during the six and three months ended June 30, 1997.
  
  For the six and  three  months  ended  June 30,  1997 and  1996,  the  Company's
  distribution from an investee and earnings before  extraordinary  items,  income
  tax expense,  equity in net losses of  affiliates  and fixed  charges  (interest
  expense) were $364.5 million, $336.1 million, $214.1 million and $200.5 million,
  respectively.  Such earnings were adequate to cover the Company's fixed charges,
  including interest  capitalized of $18.0 million,  $14.7 million,  $9.4 million,
  and $7.6 million, of $296.9 million,  $282.7 million,  $155.0 million and $140.8
  million for the six and three months ended June 30, 1997 and 1996, respectively.
  Fixed charges include non-cash interest expense, net of interest capitalized, of
  $28.9 million,  $32.2  million,  $11.9 million and $16.1 million for the six and
  three months ended June 30, 1997 and 1996, respectively.
  
  The  Company  believes  that  its  losses  will  not  significantly  affect  the
  performance of its normal business activities because of its existing cash, cash
  equivalents and short-term investments, its ability to generate operating income
  before  depreciation  and  amortization  and  its  ability  to  obtain  external
  financing.
  
  The  Company  believes  that  its  operations  are not  materially  affected  by
  inflation.
  
                                         27
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
  PART II.       OTHER INFORMATION
  
  ITEM 1.        LEGAL PROCEEDINGS
  
        The  Company  is not party to  litigation  which,  in the  opinion  of the
        Company's management, will have a material adverse effect on the Company's
        financial position, results of operations or liquidity.
  
  ITEM 2.        CHANGES IN SECURITIES
  
        On June  30,  1997  (the  "Issuance  Date"),  the  Company  and  Microsoft
        Corporation  ("Microsoft")  completed  a  Stock  Purchase  Agreement  (the
        "Agreement")  under which Microsoft  purchased and the Company issued 24.6
        million shares of the Company's  Class A Special  Common Stock,  par value
        $1.00 per share (the "Class A Special  Stock"),  at $20.29 per share,  for
        $500.0  million and 500,000  shares of the  Company's  newly  issued 5.25%
        Series B Mandatorily  Redeemable  Convertible  Preferred  Stock, par value
        $1,000 per share (the "Series B Preferred Stock"), for $500.0 million.
  
        The Series B  Preferred  Stock has a 5.25%  pay-in-kind  annual  dividend.
        Dividends will be paid quarterly through the issuance of additional shares
        of  Series  B  Preferred  Stock  (the  "Additional  Shares")  and  will be
        cumulative from the Issuance Date (except that dividends on the Additional
        Shares will accrue from the date such Additional  Shares are issued).  The
        Series B Preferred Stock, including the Additional Shares, is convertible,
        at the option of  Microsoft,  into 21.2 million  shares of Class A Special
        Stock,  subject to  adjustment  in certain  limited  circumstances,  which
        equals an initial  conversion  price of $23.54 per share,  increasing as a
        result of the Additional  Shares to $33.91 per share on June 30, 2004. The
        Series B Preferred  Stock is mandatorily  redeemable on June 30, 2017, or,
        at the option of the Company  beginning  on June 30, 2004 or at the option
        of Microsoft on June 30, 2004 or on June 30, 2012.  Upon  redemption,  the
        Company, at its option, may redeem the Series B Preferred Stock with cash,
        Class A Special Stock or a combination  thereof.  As the Company currently
        intends to redeem the Series B Preferred  Stock with Class A Special Stock
        upon  redemption,  the Series B Preferred  Stock has been  classified as a
        component  of  stockholders'  equity  as of June 30,  1997.  The  Series B
        Preferred Stock is generally non-voting.
  
        The Class A Special Stock and the Series B Preferred  Stock were issued to
        Microsoft in a transaction exempt from the Securities Act of 1933 pursuant
        to Section 4(2) thereof.
  
  ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
        At the Annual  Meeting on June 18,  1997,  the  shareholders  approved the
        following proposals:
  
              To elect ten directors to serve for the ensuing year and until their
              respective successors shall have been duly elected and qualified.
  Director                          Class of Stock                           For                      Withheld
  Ralph J. Roberts                           Class A                             28,004,496                   272,389
                                                   Class B                            131,793,750
  
        Julian A. Brodsky                          Class A                             28,013,270                   263,615
                                                   Class B                            131,793,750
  
        Brian L. Roberts                           Class A                             28,009,647                   267,238
                                                   Class B                            131,793,750
  
        Daniel Aaron                               Class A                             27,297,721                   979,164
                                                   Class B                            131,793,750
  
        Gustave G. Amsterdam                       Class A                             28,008,461                   268,424
                                                   Class B                            131,793,750
  
        Sheldon M. Bonovitz                        Class A                             27,300,651                   976,234
                                                   Class B                            131,793,750
  28
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  Director                          Class of Stock                           For                      Withheld
  Joseph L. Castle II                        Class A                             28,025,126                   251,759
                                                   Class B                            131,793,750
  
        Bernard C. Watson                          Class A                             28,022,551                   254,334
                                                   Class B                            131,793,750
  
        Irving A. Wechsler                         Class A                             28,013,944                   262,941
                                                   Class B                            131,793,750
  
        Anne Wexler                                Class A                             26,770,145                 1,506,740
                                                   Class B                            131,793,750
  To  consider a proposal  to approve  the  Comcast  Corporation  1996
              Executive Cash Bonus Plan.
  Broker
          Class of Stock                      For                     Against                Abstain                 Nonvote
  Class A                         19,330,447                868,351                429,932                  7,648,155
            Class B                        131,793,750
  To ratify the  appointment  of Deloitte & Touche LLP as the Company's
             independent auditors for the 1997 fiscal year.
  Class of Stock                      For                     Against                Abstain
  Class A                         28,140,157                 62,099                 74,629
            Class B                        131,793,750
  ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K
  
        (a)   Exhibits required to be filed by Item 601 of Regulation S-K:
  
              3.1   Statement of Designations,  Preferences and Rights of Series B
                    Convertible Preferred Stock of the Company.
  
              10.1  Indenture  dated  as of May 1,  1997,  between  Comcast  Cable
                    Communications,  Inc. and Bank of Montreal Trust  Company,  as
                    Trustee,  in respect of Comcast Cable  Communications,  Inc.'s
                    8-1/8% Notes due 2004, 8-3/8% Notes due 2007, 8-7/8% Notes due
                    2017 and 8-1/2% Notes due 2027  (incorporated  by reference to
                    Exhibit 4.1(a) to the Registration Statement on Form S-4 (File
                    No. 333- 30745) of Comcast Cable Communications, Inc.).
  
              10.2  Indenture dated as of May 8, 1997,  between  Comcast  Cellular
                    Holdings,  Inc.  and The  Bank of New  York,  as  Trustee,  in
                    respect of Comcast  Cellular  Holdings,  Inc.'s  9-1/2% Senior
                    Notes due 2007  (incorporated  by  reference to Exhibit 4.1 to
                    the  Registration  Statement on Form S-4 (File No. 333- 31009)
                    of Comcast Cellular Holdings, Inc.).
  
              27.1  Financial Data Schedule.
  
        (b)   Reports on Form 8-K:
  
              (i)   Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on April 3, 1997  relating to its  announcement  of the
                    acquisition  of  a  majority  interest  in  E!   Entertainment
                    Television,  Inc.  by Comcast  Entertainment  Holdings  LLC, a
                    joint venture between Comcast  Corporation and The Walt Disney
                    Company.
  
              (ii)  Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on April 16, 1997 relating to its  announcement  of the
                    intention  of  its  wholly  owned  subsidiary,  Comcast  Cable
                    Communications,  Inc., to offer  approximately $1.0 billion of
                    notes in a private placement.
  
                                         29
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
              (iii) Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 7 on April 24, 1997  relating to the  acquisition  of the
                    cable television operations of the E.W. Scripps Company, which
                    included  the audited  consolidated  financial  statements  of
                    Comcast SCH Holdings, Inc. as of December 31, 1996 and for the
                    period  from  November  1, 1996 to  December  31, 1996 and the
                    audited  combined  financial  statements  of  the  Predecessor
                    Corporation  as of  December  31,  1995,  for the period  from
                    January 1, 1996 to October  31,  1996 and for the years  ended
                    December 31, 1995 and 1994.
  
              (iv)  Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on May 2, 1997  relating to its  announcement  that its
                    wholly owned subsidiary,  Comcast Cable Communications,  Inc.,
                    had  closed  on the sale of $1.7  billion  of notes  through a
                    private placement with registration rights.
  
              (v)   Comcast  Corporation  filed a Current Report on Form 8-K under
                    Item 5 on June 10,  1997  relating  to its  announcement  that
                    Microsoft Corporation will make an investment of $1 billion in
                    Comcast Corporation.
  
                                         30
  COMCAST CORPORATION AND SUBSIDIARIES
                                      FORM 10-Q
                             QUARTER ENDED JUNE 30, 1997
  
                                      SIGNATURE
  
             Pursuant to the  requirements  of the  Securities and Exchange Act of
  1934,  the  Registrant has duly caused this report to be signed on its behalf by
  the undersigned thereunto duly authorized.
  
                                          COMCAST CORPORATION
                                          ----------------------------------------
  
                                          /S/ LAWRENCE S. SMITH
                                          ----------------------------------------
                                          Lawrence S. Smith
                                          Executive Vice President
                                          (Principal Accounting Officer)
  
  Date: August 14, 1997
  
                                         31