Cautionary Note Regarding Forward-Looking Statements Certain statements in this Item 2 or elsewhere in this Form 10-Q, or that are otherwise made by us or on our behalf about our financial condition, results of operations and business constitute "forward-looking statements" within the meaning of federal securities laws. Hollywood Media Corp. ("Hollywood Media") cautions readers that certain important factors may affect Hollywood Media's actual results, levels of activity, performance or achievements and could cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements anticipated, expressed or implied by any forward-looking statements that may be deemed to have been made in this Form 10-Q or that are otherwise made by or on behalf of Hollywood Media. Without limiting the generality of the foregoing, "forward-looking statements" are typically phrased using words such as "may," "will," "should," "expect," "plans," "believe," "anticipate," "intend," "could," "estimate," "pro forma" or "continue" or the negative variations thereof or similar expressions or comparable terminology. Factors that may affect Hollywood Media's results and the market price of our common stock include, but are not limited to:
• our continuing operating losses,

• negative cash flows and accumulated deficit,

• the need to manage our growth,

• our ability to develop and maintain strategic relationships, including but not limited to relationships with exhibitors and live theater venues,

• our ability to compete with other online ticketing services and other competitors,

• our ability to maintain and obtain sufficient capital to finance our growth and operations,

• our ability to realize anticipated revenues and cost efficiencies,

• technology risks and risks of doing business over the Internet,

• government regulation,

• adverse economic factors such as recession, war, terrorism, international incidents or labor strikes and disputes,

• our ability to achieve and maintain effective internal controls,

• dependence on our founders, and our ability to recruit and retain key personnel, and

• the volatility of our stock price.

Hollywood Media is also subject to other risks detailed herein or detailed in our Annual Report on Form 10-K for the year ended December 31, 2007 and in other filings made by Hollywood Media with the Securities and Exchange Commission.
Because these forward-looking statements are subject to risks and uncertainties, we caution you not to place undue reliance on these statements, which speak only as of the date of this Form 10-Q. We do not undertake any responsibility to review or confirm analysts' expectations or estimates or to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this Form 10-Q, except as required by law. As a result of the foregoing and other factors, no assurance can be given as to the future results, levels of activity or achievements and neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Overview
Hollywood Media is comprised of various businesses focusing primarily on online ticket sales, deriving revenue primarily from Broadway, Off-Broadway and London's West End ticket sales to individuals and groups, as well as advertising and book development license fees and royalties. Our Broadway Ticketing business includes Broadway.com, 1-800-Broadway, Theatre Direct and Theatre.com. Hollywood Media's businesses also include an intellectual property business, the U.K. based CinemasOnline companies and a minority interest in MovieTickets.com.
Broadway Ticketing Division.
Hollywood Media's Broadway Ticketing Division is comprised of Broadway.com, 1-800-BROADWAY, Theatre Direct International ("TDI") and Theatre.com (collectively called "Broadway Ticketing"). Broadway tickets are sold online through our Broadway.com website and by telephone through our 1-800-BROADWAY number. Broadway Ticketing is a live theater ticketing seller that provides groups and individuals with access to theater tickets and knowledgeable service, covering shows on Broadway, Off-Broadway and, through a partnership arrangement between Theatre.com and a London-based ticket agency, in London's West End theatre district. Broadway.com features include shows' opening night video and photo coverage, show reviews, celebrity interviews and theater columns, as well as show information pages, including casting, synopses and venue information.
Ad Sales Division.
Hollywood Media's Ad Sales Division is comprised of the U.K. based CinemasOnline Limited, UK Theatres Online Limited, WWW.CO.UK Limited and Spring Leisure Limited (collectively known as "CinemasOnline") and holds Hollywood Media's investment in MovieTickets.com. CinemasOnline maintains websites for cinemas and theaters in the U.K. in exchange for the right to sell advertising on such websites. CinemasOnline also provides other marketing services, including advertising sales on plasma TV screens placed in various venues throughout the U.K. and Ireland, such as cinemas, hotels and car dealerships. MovieTickets.com, Inc. is one of the two leading destinations for the purchase of movie tickets through the Internet. MovieTickets.com is an online ticketing service owned by a joint venture formed by Hollywood Media and several major movie exhibitor chains. Hollywood Media currently owns 26.2% of the equity of MovieTickets.com.

Intellectual Properties Division.
Our Intellectual Properties Division includes a book development and book licensing business owned and operated by our 51% owned subsidiary, Tekno Books, which develops and executes book projects, frequently with best-selling authors. Tekno Books has worked with over 60 New York Times best-selling authors, including Isaac Asimov, Tom Clancy, Tony Hillerman, John Jakes, Jonathan Kellerman, Dean Koontz, Robert Ludlum, Nora Roberts and Scott Turow. Hollywood Media is also a 50% partner in NetCo Partners, a partnership that owns Tom Clancy's NetForce. Hollywood Media also owns directly additional intellectual property created for it by various best-selling authors such as Mickey Spillane, Anne McCaffrey and others.
Results of Operations
The following discussion and analysis should be read in conjunction with Hollywood Media's Unaudited Condensed Consolidated Financial Statements and the notes thereto included in Item 1 of Part I of this report.
The following table summarizes Hollywood Media's revenues, operating expenses and operating income (loss) from continuing operations by reportable segment for the nine months ended September 30, 2008 ("Y3-08") and 2007 ("Y3-07"), and the three months ended September 30, 2008 ("Q3-08") and 2007 ("Q3-07"), respectively:

                                                                             Intellectual
                                       Broadway                               Properties
                                      Ticketing           Ad Sales               (a)                 Other               Total
Y3-08
(unaudited)

Net Revenues                         $ 83,044,397        $ 3,959,304        $    1,036,065        $          -        $ 88,039,766
Operating Expenses                     80,705,834          4,276,357               824,965           8,093,022          93,900,178

Operating Income (Loss)              $  2,338,563        $  (317,053 )      $      211,100        $ (8,093,022 )      $ (5,860,412 )


% of Total Net Revenue                    94%                 5%                   1%                   -                  100%

Y3-07
(unaudited)

Net Revenues                         $ 83,930,445        $ 3,842,545        $      797,043        $          -        $ 88,570,033
Operating Expenses                     82,121,691          4,258,284               755,692           8,068,118          95,203,785

Operating Income (Loss)              $  1,808,754        $  (415,739 )      $       41,351        $ (8,068,118 )      $ (6,633,752 )


% of Total Net Revenue                    95%                 4%                   1%                   -                  100%

                                                                             Intellectual
                                       Broadway                               Properties
                                      Ticketing           Ad Sales               (a)                 Other               Total
Q3-08
(unaudited)

Net Revenues                         $ 23,981,802        $ 1,246,955        $      294,025        $          -        $ 25,522,782
Operating Expenses                     23,123,100          1,333,437               226,146           2,819,444          27,502,127

Operating Income (Loss)              $    858,702        $   (86,482 )      $       67,879        $ (2,819,444 )      $ (1,979,345 )


% of Total Net Revenue                    94%                 5%                   1%                   -                  100%

Q3-07
(unaudited)

Net Revenues                         $ 25,079,163        $ 1,360,457        $      318,350        $          -        $ 26,757,970
Operating Expenses                     24,222,163          1,571,056               276,878           2,644,874          28,714,971

Operating Income (Loss)              $    857,000        $  (210,599 )      $       41,472        $ (2,644,874 )      $ (1,957,001 )


% of Total Net Revenue                    94%                 5%                   1%                   -                  100%

a. Does not include Hollywood Media's 50% interest in NetCo Partners which is accounted for under the equity method of accounting and Hollywood Media's share of the income
(loss) is reported as Equity in Earnings of Unconsolidated Investees (discussed below).

Composition of our segments is as follows:
• Broadway Ticketing - sells tickets and related hotel and restaurant packages via Broadway.com, 1-800-BROADWAY and TDI to live theater events on Broadway, Off-Broadway and London's West End, to individual consumers, groups and domestic and international travel professionals, including travel agencies, tour operators, and educational institutions. Beginning in late September 2007, sales for events in London's West End are fulfilled through a partnership arrangement between Theatre.com and a London-based ticket agency. This segment also generates revenue from the sale of sponsorships and ad sales on Broadway.com.

• Ad Sales - includes CinemasOnline, which sells advertising on cinema and theater websites in the U.K. and plasma TV displays throughout the U.K. and Ireland and holds Hollywood Media's investment in MovieTickets.com.

• Intellectual Properties - owns or controls the exclusive rights to certain intellectual properties created by best-selling authors and media celebrities, which it licenses for books and other media. This segment includes a 51% interest in Tekno Books, and a book development business, and this segment does not include our 50% interest in NetCo Partners.

• Other - is comprised of payroll and benefits for corporate and administrative personnel as well as other corporate-wide expenses, such as audit fees, proxy costs, insurance, centralized information technology, and includes consulting and other fees and costs relating to compliance with the provisions of the Sarbanes-Oxley Act of 2002 that require Hollywood Media to assess and report on internal control over financial reporting, and related development of controls.

Results of Discontinued Operations
Showtimes.com, Inc.
On August 24, 2007, Hollywood Media entered into and simultaneously closed on a definitive asset purchase agreement with West World Media and its principal, a former employee, pursuant to which Hollywood Media sold to West World Media substantially all of the assets of its Showtimes business, for a cash purchase price of $23,000,000, subject to a working capital post-closing adjustment. The working capital post-closing adjustment was a price reduction of $114,454, which was paid by Hollywood Media to West World Media in January 2008.
The Showtimes business included the CinemaSource, EventSource and ExhibitorAds operations and constituted the remainder of Hollywood Media's Data Business Division, which previously included the Baseline/StudioSystems business unit until it was sold to The New York Times in August 2006. Hollywood.com and Totally Hollywood TV
On August 21, 2008, Hollywood Media entered into a purchase agreement with R&S Investments, LLC ("Purchaser") for the sale of Hollywood Media's subsidiaries Hollywood.com, Inc. and Totally Hollywood TV, LLC (collectively, the "Hollywood.com Business"). The Purchaser is owned by Mitchell Rubenstein, Hollywood Media's Chief Executive Officer and Chairperson of the Board, and Laurie S. Silvers, Hollywood Media's President and Vice-Chairperson of the Board. Pursuant to the purchase agreement, Hollywood Media sold the Hollywood.com Business for a potential purchase price of $10.0 million, which includes $1.0 million in cash that was paid to Hollywood Media at closing and potential earn-out payments totaling $9.0 million. For additional information about this transaction, see Note 3 "Discontinued Operations" in the Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1, of this Form 10-Q Report.
The Hollywood.com Business includes the Hollywood.com website and related URLs and celebrity fan websites and Hollywood.com Television, a free video on demand service, and constituted a portion of Hollywood Media's Ad Sales Division and all of the Cable TV Division. The sale of the Hollywood.com Business did not include the other components of Hollywood Media's Ad Sales Division, which are CinemasOnline and Hollywood Media's investment in MovieTickets.com.
Pursuant to SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company's condensed consolidated financial statements have been reclassified for all periods presented to reflect the operations, assets and liabilities of the Hollywood.com Business discontinued operations.

The net income (loss) from discontinued operations which includes the gain from the sale of Showtimes.com, the loss from the sale of the Hollywood.com Business, operating income from Showtimes.com and the operating loss from the Hollywood.com Business which have been classified in the accompanying condensed consolidated statements of operations as "Income (loss) from discontinued operations." Summarized results of discontinued operations for the nine and three months ended September 30, 2008 and 2007 were as follows:

                                                        Nine Months Ended          Nine Months Ended          Three Months Ended          Three Months Ended
                                                          September 30,              September 30,              September 30,               September 30,
                                                              2008                       2007                        2008                        2007
                                                           (unaudited)                (unaudited)                (unaudited)                 (unaudited)

Operating revenue                                      $         3,948,495        $         8,598,931        $          1,055,240        $          2,484,702


Income (loss) from discontinued operations             $        (1,635,750 )      $           319,315        $           (114,975 )      $           (133,481 )
Gain (loss) on sale of discontinued operations,
net of income taxes of $0 for the nine and three
months ended September 30, 2008 and $839,061 for
the nine and three months ended September 30,
2007, respectively                                              (4,303,717 )                9,953,105                  (4,303,717 )                 9,953,105


Income (loss) from discontinued operations, net
of income taxes                                        $        (5,939,467 )      $        10,272,420        $         (4,418,692 )      $          9,819,624

NET REVENUES
Total net revenues were $88,039,766 for Y3-08 as compared to $88,570,033 for Y3-07, a decrease of $530,267 or 1%, and $25,522,782 for Q3-08 as compared to $26,757,970 for Q3-07, a decrease of $1,235,188 or 5%. The decrease in net revenue from Y3-07 to Y3-08 was primarily due to a change in sales strategy at Theatre.com, as discussed below, in our Broadway Ticketing division, offset by an increase in our Intellectual Properties division. The decrease in revenue in Q3-08 as compared to Q3-07 is primarily due to the change in our sales strategy at Theatre.com. In Q3-08 and Q3-07 net revenues were derived 94% from Broadway Ticketing, 5% from Ad Sales and 1% from Intellectual Properties.
Broadway Ticketing net revenues were $83,044,397 and $83,930,445 for Y3-08 and Y3-07, respectively, a decrease of $886,048 or 1%, and $23,981,802 and $25,079,163 for Q3-08 and Q3-07, respectively, a decrease of $1,097,361 or 4%. The decrease in Broadway Ticketing net revenues in Y3-08 from Y3-07 was primarily attributable to the following: a decrease in revenue of $3,730,767 attributable to (i) a decrease in revenue of $3,270,500 from Theatre.com, and
(ii) a decrease in revenues of $460,267 due to a decrease in sales of hotel packages, offset in part by an increase in revenue of $3,075,144 attributable to
(i) an increase in revenue from ticket buyers of $2,608,484, which includes:
ticket price increases by theaters of $2,986,934 and increases in services fees of $1,858,544, partially offset by decreases in individual ticket sales of $1,914,186, decreases in sales of cancellation insurance of $285,521 and decreases in delivery revenue of $37,286 and (ii) an increase in sponsorship sales of $466,660.
The decrease in Broadway Ticketing net revenues in Q3-08 from Q3-07 was primarily attributable to the following: (a) a decrease in revenue of $1,077,920 attributable to (i) a decrease in revenue of $761,913 from Theatre.com and
(ii) a decrease in revenues of $267,407 due to a decrease in sales of hotel packages.

Ad Sales division net revenues by our CinemasOnline business were $3,959,304 for Y3-08 as compared to $3,842,545 for Y3-07, an increase of $116,759 or 3%, and such net revenues were $1,246,955 for Q3-08 as compared to $1,360,457 for Q3-07, a decrease of $113,502 or 8%. The increase in Ad Sales revenues in Y3-08 over Y3-07 is attributable primarily to increases in advertising sales on our plasma TV business in the U.K. and Ireland of $571,745, offset by a decrease in revenue generated by advertising sales in the U.K. and Ireland on posters, brochures, and websites for theaters or $454,986. The decrease from Q3-07 to Q3-08 relates to a decrease in advertising sales in the U.K. and Ireland on posters, brochures, and websites for theaters of $207,727, offset by an increase in revenue generated from advertising sales on plasma TV screens in the U.K. and Ireland of $94,225.
Net revenues from our Intellectual Properties division were $1,036,065 for Y3-08 as compared to $797,043 for Y3-07, an increase of $239,022 or 30%, and such net revenues were $294,025 for Q3-08 as compared to $318,350 for Q3-07, a decrease of $24,325 or 8%. The Intellectual Properties division generates revenues from several different activities including book development and licensing and intellectual property licensing. Revenues vary quarter to quarter depending on the timing of the delivery of the manuscripts to the publishers. Revenues are recognized when the earnings process is complete and ultimate collection of such revenues is no longer subject to contingencies. The Intellectual Properties division revenues do not include our 50% interest in NetCo Partners, which is accounted for under the equity method of accounting and under which Hollywood Media's share of the income is reported as Equity in Earnings of Unconsolidated Investees (discussed below).

EQUITY IN EARNINGS OF UNCONSOLIDATED INVESTEES
   Equity in earnings of unconsolidated investees consisted of the following:

                                    Nine Months Ended          Three Months Ended
                                      September 30,               September 30,
                                       (unaudited)                 (unaudited)
                                    2008          2007          2008          2007
          NetCo Partners (a)     $     1,522     $ 2,061     $    (4,891 )   $ 1,186
          MovieTickets.com (b)     1,311,100           -               -           -

                                 $ 1,312,622     $ 2,061     $    (4,891 )   $ 1,186

(a) NetCo Partners NetCo Partners owns Tom Clancy's NetForce and is primarily engaged in the development and licensing of Tom Clancy's NetForce. NetCo Partners recognizes revenues when the earnings process has been completed based on the terms of the various agreements, generally upon the delivery of the manuscript to the publisher and at the point where ultimate collection is substantially assured. When advances are received prior to completion of the earnings process, NetCo Partners defers recognition of revenue until the earnings process has been completed. Hollywood Media owns 50% of NetCo Partners and accounts for its investment under the equity method of accounting. Hollywood Media's 50% share of earnings by NetCo Partners was a net gain of $1,522 for Y3-08 compared to $2,061 for Y3-07, a decrease of $539. Hollywood Media's 50% share of earnings was a loss of $4,891 for Q3-08, as compared to a gain of $1,186 for Q3-07 a decrease of $6,077. NetCo Partners recognized $3,045 in income during Y3-08 and $9,780 in losses for Q3-08.

(b) MovieTickets.com Hollywood Media owns 26.2% of the total equity in the MovieTickets.com, Inc. joint venture. Hollywood Media records its investment in MovieTickets.com under the equity method of accounting, recognizing its percentage interest in MovieTickets.com's income or loss as equity in earnings of unconsolidated investees. Under applicable accounting principles, Hollywood Media has not recorded income from its investment in MovieTickets.com for Q3-08 and Q3-07 because accumulated losses from prior years exceed MovieTickets.com's accumulated net income. The MovieTickets.com web site generates revenues from service fees charged to users for the purchase of movie tickets online and the sale of advertising. The results above include $1,311,100 in dividends received by Hollywood Media in July 2008.
OPERATING EXPENSES
Cost of revenues - ticketing. Cost of revenues - ticketing was $69,416,062 for Y3-08 compared to $71,098,696 in Y3-07 for a decrease of $1,682,634 or 2%. Cost of revenues - ticketing for Q3-08 was $19,633,194 compared to $20,585,142 in Q3-07 for a decrease of $951,948 or 5%. Cost of revenue consists primarily of the cost of tickets and credit card fees for the Broadway Ticketing segment, partially offset by rebates received from certain producers based on exceeding certain ticketing sales goals. As a percentage of ticketing revenue, cost of revenues - ticketing was 84% and 85% for Y3-08 and Y3-07, respectively, and 82% for Q3-08 and Q3-07.
The decrease in Cost of revenues - ticketing in Y3-08 from Y3-07 was primarily attributable to the following: (a) a decrease in costs of revenue of $2,866,068 attributable to a decrease in ticket sales from Theatre.com, offset in part by (b) an increase in cost of revenues of $1,335,005 attributable to ticket price increases by theaters of $2,444,341 partially offset by a decrease in cost of revenues of $1,109,336 attributable to a lower quantity of ticket sales.
Editorial, Production, Development and Technology. Editorial, production, development and technology costs include commissions, royalties, media buying, production services and internet access for the UK based CinemasOnline companies and fees and royalties paid to authors and co-editors for the Intellectual Properties segment. Editorial, production, development and technology costs for Y3-08 were $2,685,058 as compared to $2,584,715 for Y3-07 and $783,695 for Q3-08 as compared to $915,921 for Q3-07. Editorial, production, development and technology costs increased $100,343 or 4% from Y3-07 to Y3-08 and decreased $132,226 or 14% from Q3-07 to Q3-08. As a percentage of aggregate net revenues from our Ad Sales and Intellectual Properties segments, these costs were 54% and 56% for Y3-08 and Y3-07, respectively, and 51% and 55% for Q3-08 and Q3-07, respectively. The Y3-08 over Y3-07 increase in Editorial, Production, Development and Technology costs was mainly due to an approximate $66,000 net increase in payments to writer/co-editors along with an approximately $38,000 increase in costs in the Ad Sales segment. This increase in the Ad Sales segment was

primarily due to an approximately $146,000 increase in commissions and royalties offset by an approximately $61,000 decrease in media buying and a $40,000 decrease in production services. The Q3-08 over Q3-07 decrease in Editorial, Production, Development and Technology costs was due to an approximate $51,000 net decrease in payments to writer/co-editors along with an approximately $78,000 decrease in costs in the Ad Sales segment. This decrease in the Ad Sales segment was primarily due to an approximately $45,000 decrease in media buying, an approximately $23,000 decrease in production services and an approximately $29,000 decrease in commissions offset by an approximately $25,000 increase in royalties.
Selling, General and Administrative.
Selling, general and administrative (SG&A) expenses consist of occupancy costs, professional and consulting service fees, telecommunications costs, provision for doubtful accounts receivable, general insurance costs and selling and marketing costs (such as advertising, marketing, promotional, business development, public relations, and commissions due to advertising agencies, advertising representative firms and other parties). SG&A expenses for Y3-08 were $10,098,009 compared to $10,348,169 for Y3-07, a decrease of $250,160 or 2%. SG&A expenses for Q3-08 were $3,143,408 compared to $3,410,662 in Q3-07, a . . .