~~CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in US$ 000’s, except share and per share data)~~

~~(Unaudited)~~

12. CONVERTIBLE REDEEMABLE PREFERRED SHARES

200,000 shares of our Series B Convertible Redeemable Preferred Stock, par value US$ 0.08 per share (the “Series B Preferred Shares”), were issued and outstanding as at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015.~~2016. As at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the carrying value of the Series B Preferred Shares was US$ ~~252.5~~259.7 million and US$ ~~241.2~~254.9 million, respectively. The Series B Preferred Shares are held by Time Warner Media Holdings B.V. ("TW Investor"). As of ~~September~~June 30, ~~2016,~~2017, the 200,000 ~~shares of~~ Series B ~~preferred stock~~Preferred Shares were convertible into approximately ~~104.2~~107.1 million shares of Class A common stock.

The initial stated value of the Series B Preferred Shares of US$ 1,000 per share accretes at an annual rate of 3.75%, compounded quarterly, from ~~and including~~ June 25, 2016 to ~~but excluding the fifth anniversary of the date of issuance.~~June 24, 2018. We have the right to pay cash to the holder in lieu of any further accretion. Each Series B Preferred Share may, at the holder's option, be converted into the number of shares of our Class A common stock determined by dividing (i) the accreted stated value plus accrued but unpaid dividends, if any, in each case as of the conversion date, by (ii) the conversion price, which was approximately US$ 2.42 at ~~September~~June 30, ~~2016,~~2017, but is subject to adjustment from time to time pursuant to customary weighted-average anti-dilution provisions with respect to our issuances of equity or equity-linked securities at a price below the then-applicable conversion price (excluding any securities issued under our benefit plans at or above fair market value). We have the right to redeem the Series B Preferred Shares in whole or in part upon 30 days' written notice. The redemption price of each outstanding Series B Preferred Share is equal to its accreted stated value plus accrued but unpaid dividends, if any, in each case as of the redemption date specified in the redemption notice. After receipt of a redemption notice, each holder of Series B Preferred Shares will have the right to convert, prior to the date of redemption, all or part of such Series B Preferred Shares to be redeemed by us into shares of our Class A common stock in accordance with the terms of conversion described above.

Holders of the Series B Preferred Shares have no voting rights on any matter presented to holders of any class of our capital stock, with the exception that they may vote with holders of shares of our Class A common stock (i) with respect to a change of control event or (ii) as provided by our Bye-laws or applicable Bermuda law. Holders of Series B Preferred Shares will participate in any dividends declared or paid on our Class A common stock on an as-converted basis. The Series B Preferred Shares rank pari passu with our Series A Convertible Preferred Stock and senior to all other equity securities of the Company in respect of payment of dividends and distribution of assets upon liquidation. The Series B Preferred Shares have such other rights, powers and preferences as are set forth in the Certificate of Designation for the Series B Preferred Shares.

We concluded that the Series B Preferred Shares were not considered a liability and that the embedded conversion feature in the Series B Preferred Shares was clearly and closely related to the host contract and therefore did not need to be bifurcated. The Series B Preferred Shares are required to be classified outside of permanent equity because such shares can be redeemed for cash in certain circumstances. The Series B Preferred Shares are carried on the balance sheet at redemption value. As the Series B Preferred Shares are redeemable, we have accreted changes in the redemption value since issuance. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, we recognized accretion on the Series B Preferred Shares of US$ 2.4 million and US$ ~~11.3~~4.8 million; and US$ 4.4 million and US$ ~~12.8~~9.0 million, respectively, with corresponding decreases in additional paid-in ~~capital, net of the effect of foreign exchange.~~capital.

13. EQUITY

Preferred Stock

5,000,000 shares of Preferred Stock were authorized as at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016.

One share of Series A Convertible Preferred Stock (the "Series A Preferred Share") was issued and outstanding as at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016. The Series A Preferred Share is convertible into 11,211,449 shares of Class A common stock on the date that is 61 days after the date on which the ownership of our outstanding shares of Class A common stock by a group that includes TW Investor and its affiliates would not be greater than 49.9%. The Series A Preferred Share is entitled to one vote per each share of Class A common stock into which it is convertible and has such other rights, powers and preferences, including potential adjustments to the number of shares of Class A common stock to be issued upon conversion, as are set forth in the Certificate of Designation for the Series A Preferred Share.

200,000 shares of Series B Preferred Shares were issued and outstanding as at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (see Note 12, "Convertible Redeemable Preferred Shares"). As of ~~September~~June 30, ~~2016,~~2017, the 200,000 Series B Preferred Shares were convertible into approximately ~~104.2~~107.1 million shares of Class A common stock.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in US$ 000’s, except share and per share data)

(Unaudited)

Class A and Class B Common Stock

440,000,000 shares of Class A common stock and 15,000,000 shares of Class B common stock were authorized as at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016. The rights of the holders of Class A common stock and Class B common stock are identical except for voting rights. The shares of Class A common stock are entitled to one vote per share and the shares of Class B common stock are entitled to ten votes per share. Shares of Class B common stock are convertible into shares of Class A common stock on a one-for-one basis for no additional consideration. Holders of each class of shares are entitled to receive dividends and upon liquidation or dissolution are entitled to receive all assets available for distribution to holders of our common stock. Under our Bye-laws, the holders of each class have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

There were ~~142.4~~144.8 million and ~~135.8~~143.4 million shares of Class A common stock outstanding at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016, respectively, and no shares of Class B common stock outstanding at ~~September~~June 30, ~~2016~~2017 or December 31, ~~2015~~2016.

As at ~~September~~June 30, ~~2016~~2017, TW Investor owns ~~43.1%~~42.4% of the outstanding shares of Class A common stock and has a ~~47.3%~~46.6% voting interest in the Company due to its ownership of the Series A Preferred Share.

Warrants

On May 2, 2014, we issued 114,000,000 warrants in connection with a rights offering. Each warrant may be exercised ~~from May 2, 2016~~ until May 2, 2018 and entitles the holder thereof to receive one share of our Class A common stock at an exercise price of US$ 1.00 per share in cash. During ~~2016, 5,947,010~~the six months ended June 30, 2017, 527,268 warrants were exercised resulting in net proceeds to us of approximately US$ ~~5.9~~0.5 million. As at ~~September~~June 30, ~~2016, 108,052,990~~2017, 106,475,777 warrants ~~remain~~remained outstanding. Time Warner and TW Investor collectively hold 100,926,996 of these ~~warrants (approximately 93.4%).~~warrants. The warrants are classified in additional paid-in capital, a component of equity, and are not subject to subsequent revaluation.

Accumulated Other Comprehensive Loss

The movement in accumulated other comprehensive loss during the six months ended June 30, 2017 comprised the following:



	Currency translation adjustment, net			(Loss) / Gain on derivative instruments designated as hedging instruments			TOTAL Accumulated Other Comprehensive Loss
BALANCE December 31, 2016	$	(239,537	)	$	(4,451	)	$	(243,988	)
Other comprehensive income / (loss) before reclassifications:
Foreign exchange gain on intercompany transactions ⁽¹⁾	6,682			—			6,682
Foreign exchange gain on the Series B Preferred Shares	20,451			—			20,451
Currency translation adjustment	6,388			—			6,388
Change in the fair value of hedging instruments	—			(178		)	(178		)
Amounts reclassified from accumulated other comprehensive loss⁽²⁾	—			1,396			1,396
Net other comprehensive income	33,521			1,218			34,739
BALANCE June 30, 2017	$	(206,016	)	$	(3,233	)	$	(209,249	)


⁽¹⁾	Represents foreign exchange gains on intercompany loans that are of a long-term investment nature which are reported in the same manner as translation adjustments.


⁽²⁾	Amounts reclassified from accumulated other comprehensive loss during the six months ended June 30, 2017 were reclassified to interest expense.

14. INTEREST EXPENSE

Interest expense comprised the following for the three and six months ended June 30, 2017 and 2016:



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Interest on long-term debt and other financing arrangements	$	20,484	$	26,901	$	42,805	$	59,553
Amortization of capitalized debt issuance costs	1,489		2,302		2,923		6,201
Amortization of debt issuance discount	—		342		—		12,945
Total interest expense	$	21,973	$	29,545	$	45,728	$	78,699

We paid cash interest (including mandatory cash-pay Guarantee Fees) of US$ 21.2 million and US$ 35.7 millionduring the six months ended June 30, 2017 and 2016, respectively. In addition, we paid US$ 7.1 million and US$ 20.0 million of Guarantee Fees in cash during the six months ended June 30, 2017 and 2016, respectively, for which we had the option to pay in kind.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in US$ 000’s, except share and per share data)

(Unaudited)

~~14. INTEREST EXPENSE~~

~~Interest expense comprised the following for the~~ ~~three and nine months~~ ~~ended~~ ~~September 30, 2016~~ ~~and~~ ~~2015~~:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2016
2015
2016
2015
Interest on long-term debt and other financing arrangements $ 26,139
$ 28,561
$ 85,692
$ 84,251
Amortization of capitalized debt issuance costs 1,497
3,902
7,698
11,603
Amortization of debt issuance discount —
11,535
12,945
30,008
Total interest expense $ 27,636
$ 43,998
$ 106,335
$ 125,862

~~We paid cash interest (including mandatory cash-pay Guarantee Fees) of US$~~ ~~40.9 million~~ ~~and US$~~ ~~10.7 millionduring the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2016~~ ~~and~~ ~~2015, respectively. In addition, we paid US$ 27.5 million of accrued Guarantee Fees during the nine months ended September 30, 2016, for which we had previously made an election to pay in kind.~~

15. OTHER NON-OPERATING INCOME / EXPENSE

Other non-operating income / expense comprised the following for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Interest income	$	90		$	109		$	483		$	339		$	110		$	285		$	189		$	393
Foreign currency exchange gain / (loss), net	630			(568		)	13,050			(9,768		)	8,086			(3,002		)	9,767			12,420
Change in fair value of derivatives (Note 11)	(398		)	(2,443		)	(11,904		)	(5,673		)	(1,100		)	2,544			(732		)	(11,506		)
Other income / (expense), net	65			(3,575		)	7			(7,020		)	45			6			242			(58		)
Total other non-operating income / (expense)	$	387		$	(6,477	)	$	1,636		$	(22,122	)	$	7,141		$	(167	)	$	9,466		$	1,249

~~Index~~

IV (d) Cash Outlook

Because cash flows from operating activities were negative infrom 2012 ~~2013 and~~to 2014, we relied on equity and debt financings to ensure adequate funding for our operations. While cash flows from operating activities were positive in 2015 and ~~are anticipated to be positive in~~ 2016, our average cost of borrowing was high and our election to pay certain interest ~~on the 2017 PIK Notes and the 2017 Term Loan~~ and Guarantee Fees in kind increased our leverage. ~~In response, we have sought other capital resources to fund our operations, our debt service~~Our financing transactions in 2016 and ~~other obligations, including the refinancing transaction below.~~

On April 7, 2016, we drew on the EUR 468.8 million (approximately US$ 534.0 million as at the transaction date) 2021 Euro Term Loan, the proceeds of which, together with cash on hand, were applied toward the repayment of the 2017 Term Loan plus accrued interest and the redemption and discharge of the 2017 PIK Notes plus accrued interest thereon. We also extended the maturity date of the 2018 Euro Term Loan by one year to November 1, 2018. In addition, we amended the interest rate applicable to amounts drawn on the 2021 Revolving Credit Facility such that interest is determined on the basis of our net leverage ratio (as defined in the Reimbursement Agreement) and ranges from 10.0% (if our net leverage ratio is greater than or equal to seven times) to 7.0% per annum (if our net leverage ratio is less than five times); and extended the maturity date of the 2021 Revolving Credit Facility to February 19, 2021, with a borrowing capacity of US$ 50.0 million with effect from January 1, 2018. Following these transactions, our nearest debt maturity is November 1, 2018 andsignificantly lowered our cost of ~~borrowing has decreased.~~borrowing.

WeFollowing the repricing transaction in March 2017, we are ~~continuing~~now required to ~~take actions~~pay a portion of the Guarantee Fees related to ~~conserve cash, including targeted reductions to our operating cost base through cost optimization programs, with~~all of the ~~intention of allocating any excess cash, including in respect of common stock warrant exercises, towards substantially repaying the 2018~~ Euro Term ~~Loan when it matures~~Loans in ~~November 2018. In this respect,~~cash. However, the total amount of cash paid for interest and Guarantee Fees will decrease significantly in ~~the nine months ended September 30, 2016 we paid US$ 27.5 million of previously accrued Guarantee Fees. We plan to pay the Guarantee Fee related~~2017 due to the ~~2018 Euro Term Loan~~lower all-in rate following this repricing transaction and non-repeating payments that were made in 2016 when we elected to repay in cash ~~when it is due in November 2016. Further, we intend to make all future payments of the~~accrued Guarantee Fees related to the 2018 Euro Term Loan that were previously paid in kind as well as when we paid accrued interest on the 2017 PIK Notes and 2017 Term Loan when they were refinanced.

As at June 30, 2017, we have repaid in cash all previously accrued Guarantee Fees related to the 2018 Euro Term Loan and intend to continue to make payments of such Guarantee Fees in cash when due, rather than electing to pay in kind. However, we expect improvements in unlevered free cash flow to exceed the amount of these payments, and therefore expect free cash flow to increase in 2017 compared to 2016.

As at June 30, 2017, we have US$ 95.4 million in cash and cash equivalents. In August 2017, we expect to repay approximately EUR 50.0 million (approximately US$ 57.1 million at June 30, 2017 rates) of the outstanding principal balance of the 2018 Euro Term Loan with cash on hand. Following this repayment, we anticipate using excess cash, including free cash flow from the business, expected proceeds from the Divestment Transaction and warrant exercises, to repay the remainder of the 2018 Euro Term Loan in full before it matures in November 2018. Following the repayment in full of the 2018 Euro Term Loan, we expect to apply any excess cash towards repaying a portion of the principal and related Guarantee Fees and Commitments Fee outstanding on the 2019 Euro Term Loan. We believe we have adequate cash resources to continue operating as a going concern.

Credit ratings and future debt issuances

Our corporate credit is rated B2 by Moody's Investors Service with a positive outlook and B+ by Standard & Poor's ~~both~~(currently on CreditWatch with ~~stable outlook.~~developing implications due to the announced Divestment Transaction). Ratings agencies have indicated that retention of these ratings is dependent on maintaining an adequate liquidity ~~profile. If~~profile, leverage ratios and cash flow profile as well as track record of strong financial support from Time Warner. Among other parameters, if we fail to meet ~~this~~adequate liquidity, ~~parameter,~~ it is likely that the rating agencies will downgrade us. The availability of additional liquidity is dependent upon our continued operating performance, improved financial performance and credit ratings. We are currently able to raise only a limited amount of additional debt (other than refinancing indebtedness) or under the ~~agreements for~~agreement governing the 2021 Revolving Credit Facility and the Reimbursement Agreement.

Index

Credit risk of financial counterparties

We have entered into a number of significant contracts with financial counterparties as follows:

Interest Rate Swaps

We are party to interest rate swap agreements to mitigate our exposure to interest rate fluctuations on our Euro Term Loans. These interest rate swaps, designated as cash flow hedges, provide the Company with variable-rate cash receipts in exchange for fixed-rate payments over the lives of the agreements, with no exchange of the underlying notional amount.

Foreign Exchange Forwards

We are exposed to movements in the USD to EUR exchange rates related to contractual payments under dollar-denominated agreements. To reduce this exposure, from time to time we enter into pay-Euro receive-dollar forward foreign exchange contracts. As at ~~September~~June 30, ~~2016, we had outstanding three~~2017, one forward foreign exchange ~~contracts~~contract with an aggregate notional ~~amounts~~amount of approximately US$ ~~28.3~~$11.3 million related to contractual operating ~~payments.~~payments was outstanding.

Cash Deposits

We deposit cash in the global money markets with a range of bank counterparties and review the counterparties we choose weekly. The maximum period of deposit is three months but we have more recently held amounts on deposit for shorter periods, from overnight to one month. The credit rating of a bank is a critical factor in determining the size of cash deposits and we will only deposit cash with banks of an investment rating of A or A3 or higher. In addition we also closely monitor the credit default swap spreads and other market information for each of the banks with which we consider depositing or have deposited funds.

IV (e) Off-Balance Sheet Arrangements

None.

V. Critical Accounting Policies and Estimates

Our accounting policies that have a material effect on our financial condition and results of operations are more fully described in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 filed with the Securities and Exchange Commission ("SEC") on February ~~22, 2016.~~9, 2017. The preparation of these financial statements requires us to make judgments in selecting appropriate assumptions for calculating financial estimates, which inherently contain some degree of uncertainty. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Using these estimates we make judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe our critical accounting policies are as follows: program rights, goodwill and intangible assets, impairment or disposal of long-lived assets, revenue recognition, income taxes, foreign exchange, determination of the fair value of financial instruments, contingencies and discontinued operations. These critical accounting policies affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements. See Item 1, Note 2, "Basis of Presentation" for a discussion of accounting standards adopted in the period, and recently issued accounting standards not yet adopted.

~~Index~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We engage in activities that expose us to various market risks, including the effect of changes in foreign currency exchange rates and interest rates. We do not engage in speculative transactions, nor do we hold or issue financial instruments for trading purposes. The table below sets forth our market risk sensitive instruments as at the following dates:

~~September~~June 30, ~~2016:~~2017:


Expected Maturity Dates	2016	2017		2018			2019		2020	Thereafter		2017		2018			2019		2020	2021		Thereafter
Long-term Debt (000's):
Variable rate (EUR)	—	—		250,800			235,335		—	468,800		—		250,800			235,335		—	468,800		—
Average interest rate ⁽¹⁾	—	—		1.50	%		1.50	%	—	1.50	%	—		1.50	%		1.50	%	—	1.50	%	—

Interest Rate Swaps (000's):
Variable to fixed (EUR)	—	250,800		250,800		⁽²⁾	235,335		—	468,800		250,800		250,800		⁽²⁾	235,335		—	468,800		—
Average pay rate	—	0.21	%	0.14	%		0.31	%	—	0.28	%	0.21	%	0.14	%		0.31	%	—	0.28	%	—
Average receive rate	—	—	%	—	%		—	%	—	—	%	—	%	—	%		—	%	—	—	%	—

⁽¹⁾

As discussed in Item 1, Note 4, "Long-term Debt and Other Financing Arrangements", as consideration for Time Warner's guarantee of the Euro Term Loans, we pay Guarantee Fees to Time Warner based on the amounts outstanding on the Euro Term Loans, each calculated such that the all-in borrowing rate on each of the ~~2018~~ Euro Term ~~Loan and the 2019 Euro Term Loan~~Loans is ~~8.5% per annum and the all-in borrowing rate on the 2021 Euro Term Loan is 10.0%~~currently 7.25% per annum.


⁽²⁾	The interest rate swaps maturing in 2018 are forward starting to coincide with the maturity date of the interest rate swaps maturing in 2017. See Item 1, Note 11, "Financial Instruments and Fair Value Measurements".

Index

December 31, ~~2015~~:2016:


Expected Maturity Dates	2016	2017		2018	2019		2020	Thereafter	2017		2018			2019		2020	2021		Thereafter
Long-term Debt (000's):
Variable rate (EUR)¹	—	250,800		—	235,335		—	—
Average interest rate	—	1.50	%	—	1.50	%	—	—
Fixed rate (US$)	—	540,698		—	—		—	—
Average interest rate	—	15.00	%	—	—		—	—
Variable rate (EUR)									—		250,800			235,335		—	468,800		—
Average interest rate ⁽¹⁾									—		1.50	%		1.50	%	—	1.50	%	—

Interest Rate Swaps (000's):
Variable to fixed (EUR)	—	250,800		—	235,335		—	—	250,800		250,800		⁽²⁾	235,335		—	468,800		—
Average pay rate	—	0.21	%	—	0.31	%	—	—	0.21	%	0.14	%		0.31	%	—	0.28	%	—
Average receive rate	—	—	%	—	—	%	—	—	—	%	—	%		—	%	—	—	%	—

~~Index~~

Item 4. Controls and Procedures

We have established disclosure controls and procedures designed to ensure that information required to be disclosed in our Quarterly Report on Form 10-Q is recorded, processed, summarized and reported within the specified time periods and is designed to ensure that information required to be disclosed is accumulated and communicated to management, including the co-Principal Executive Officers and the Principal Financial Officer, to allow timely decisions regarding required disclosure.

Our co-Principal Executive Officers and our Principal Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September~~June 30, ~~2016~~2017 and concluded that our disclosure controls and procedures were effective as of that date. There has been no change in our internal control over financial reporting during the three months ended ~~September~~June 30, ~~2016~~2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

General

We are from time to time party to legal proceedings, arbitrations and regulatory proceedings arising in the normal course of our business ~~operations.~~operations, including the proceeding described below. We evaluate, on a quarterly basis, developments in such matters and provide accruals for such matters, as appropriate. In making such decisions, we consider the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of a loss. An unfavorable outcome in any such proceedings, if material, could have an adverse effect on our business or consolidated financial statements.

In the fourth quarter of 2016, our Slovak subsidiary MARKIZA-SLOVAKIA, spol. s.r.o. (“Markiza”) was notified of claims that were filed in June 2016 in a court of first instance in Bratislava, the Slovak Republic to collect amounts allegedly owing under four promissory notes. These four promissory notes were purportedly issued in June 2000 by Pavol Rusko in his personal capacity and were purportedly guaranteed by Markiza under the signature of Mr. Rusko, who was an executive director of Markiza at that time as well as one of its shareholders. The notes purport to be issued in favor of Marian Kocner, a controversial Slovak businessman, and to a former associate of Mr. Kocner, and were supposedly assigned several times, ultimately to Sprava a inkaso zmeniek, s.r.o., a company owned by Mr. Kocner that is the plaintiff in these proceedings. The four notes purport to be in the aggregate amount of approximately EUR 69 million. A court of first instance in Bratislava has suspended proceedings in respect of one of the promissory notes (in the amount of approximately EUR 26 million) because the plaintiff failed to pay court fees. Two of the remaining notes allegedly matured in 2015 and the third in 2016. Despite a random case assignment system in the Slovak Republic, the three cases dealing with the other notes were initially assigned to the same judge. We do not believe that any of the promissory notes are authentic and are vigorously defending the claims.

Index

Item 1A. Risk Factors

This report and the following discussion of risk factors contain forward-looking statements as discussed in Part 1,I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations". Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks and uncertainties described below and elsewhere in this report. These risks and uncertainties are not the only ones we may face. Additional risks and uncertainties of which we are not aware, or that we currently deem immaterial, may also become important factors that affect our financial condition, results of operations and cash flows.

Risks Relating to Our Financial Position

Global or regional economic conditions ~~and the credit crisis have~~ adversely affected our financial position and results of operations. We cannot predict if the recovery in our operating countries will continue or how long it may last. A failure to achieve lasting recoveries ~~will continue to~~would adversely affect our results of operations.

The results of our operations depend heavily on advertising revenue, and demand for advertising is affected by general economic conditions in the region and globally. The ~~economic uncertainty affecting the global financial markets and banking system at the beginning of 2009 following the onset of the~~ global financial crisis in 2009 and the sustained recessionary period that followed had a ~~sustained~~prolonged adverse impact on consumer and business spending, access to credit, liquidity, investment spending, asset values and employment rates. These adverse economic conditions had a material negative impact on advertising spending in our markets ~~which negatively impacted~~and on our advertising ~~revenues in the periods that followed.~~revenues. Since 2014, our markets have experienced overall growth in real GDP (as adjusted for inflation) and advertising spending; however we cannot predict if the recovery that has begun will continue or how long it will last. ~~Any significant deterioration of general economic conditions in our markets would have an adverse economic impact on our advertising revenues.~~ In addition, although we believe the ~~economies~~advertising spend per capita of the countries in which we operate and advertising intensity (the ratio of total ~~advertising~~ad spend per capita to nominal GDP per capita) will converge with developed ~~nations,~~markets in Europe, such convergence may not occur in the time frame we expect, or at all. ~~Moreover,~~

Recessions or periods of low or negative growth in the ~~occurrence~~future may cause a deterioration of general economic conditions in one or more of our markets, which would have an adverse economic impact on our advertising revenues. Other factors that may affect general economic conditions in our markets include defaults by sovereigns or systemically important companies, austerity programs, natural disasters, acts of terrorism, civil or military conflicts or general political instability and responses to it, ~~such as the imposition~~any of ~~economic sanctions against Russia,~~which may also ~~cause a deterioration in general economic conditions that may~~ reduce advertising spending. For example, significant liquidity issues facing the largest private company and advertiser in Croatia, Agrokor d.d., contributed to the decline of the advertising market in Croatia for the quarter and could reduce Croatia’s economic growth for the year as well as television advertising spending in 2017. Furthermore, we may not be able to recover all receivables owed to us from Agrokor, which has entered government administration, in the event it is restructured. Any of these developments would have a significant negative effect on our financial position, results of operations and cash flows.

Concerns regarding the Eurozone and the impact on the region of the ~~outcome of the~~ United Kingdom’s ~~referendum to~~ exit from the European Union (“EU”) may adversely affect our financial position and results of operations.

Continued economic softness in the Eurozone, including a slowdown in the growth of consumer prices, prompted the European Central Bank to embark upon quantitative easing in 2015. Economic events related to the sovereign debt crisis in several EU countries have also highlighted issues relating to the strength of the banking sector in Europe and the Euro. ~~Though~~Although the EU has created external funding and stability mechanisms to provide liquidity and financial assistance to Eurozone member states and financial institutions, there can be no assurance that the market disruptions in Europe related to sovereign debt and the banking sector or otherwise, including the increased cost of funding for certain governments and financial institutions, will not continue and there can be no assurance that funding and stability packages utilized previously will be available or, if provided, will be sufficient to stabilize affected economies or institutions.

~~Economic~~On March 29, 2017, the United Kingdom formally initiated the process to leave the EU, commonly referred to as "Brexit", which is expected to be completed within the next two years. It is expected that economic conditions in the EU will be ~~further~~ impacted by the results of the referendum held in the United Kingdom on June 23, 2016 whereby the United Kingdom electorate voted in favor of the United Kingdom leaving the EU, commonly referred to as “Brexit”.Brexit. While the overall economic impact of Brexit on the EU and the Euro is difficult to estimate at present, decisions to conserve cash and reduce spending by consumers and businesses in the United Kingdom would have a negative impact on economic growth rates in the United Kingdom and, to a lesser extent, in the EU, in particular those countries that are significant exporters to the United Kingdom. There is also significant uncertainty regarding the ~~timing and~~ terms on which the United Kingdom ~~would~~will leave the EU, and it is expected that a more protracted process to set those terms would have a more prolonged economic impact. In addition, ~~there is concern that~~if other countries ~~may~~ seek to leave the EU, ~~following the Brexit decision, increasing~~that would increase uncertainty in the region, which may have a further negative impact on investment and economic growth rates. Furthermore, the departure of the United Kingdom from the EU may affect the budgetary contributions and allocations among the EU member states in the medium term, including the countries in which we operate, which are net recipients of EU funding. Economic uncertainty caused by Brexit or other instability in the EU could cause significant volatility in EU markets and reduce economic growth rates in the countries in which we operate, which would negatively impact our business.

~~Index~~

Our operating results will be adversely affected if we cannot generate strong advertising sales.

We generate the majority of our revenues from the sale of advertising airtime on our television channels. The reduction in advertising spending in our markets following the onset of the global financial crisis at the beginning of 2009 and the sustained recessionary period that followed had a negative effect on television advertising spending and prices. While we have attempted to combat this fall in prices by implementing new pricing strategies, the success of these strategies has varied from market to market and continues to be challenged by pressure from advertisers and discounting by competitors. In addition to advertising pricing, other factors that may affect our advertising sales include general economic conditions (described above), competition from other broadcasters and operators of other distribution platforms, changes in programming strategy, changes in distribution strategy, our channels’ technical reach, technological developments relating to media and broadcasting, seasonal trends in the advertising market, changing audience preferences and in how and when people view content and the accompanying advertising, increased competition for the leisure time of audiences and shifts in population and other demographics. Our advertising revenues also depend on our ability to maintain audience ratings and to generate GRPs. This requires us to have a distribution strategy that reaches a significant audience as well as ~~maintaining~~to maintain investments in programming at a sufficient level to continue to attract audiences. Changes in the distribution of our channels, such as our decision ~~not~~ to ~~broadcast in~~cease broadcasting on DTT in the Slovak Republic and Slovenia, may reduce the number of people who can view our channels, which may negatively impact our audience share and GRPs generated. Furthermore, significant or sustained reductions in investments in programming or other operating costs in response to reduced advertising revenues had and, if continued or repeated, may have an adverse impact on our television viewing levels. Reductions in advertising spending in our markets and resistance to price increases ~~and discounting of television advertising prices~~ as well as competition for ratings from broadcasters seeking to attract similar audiences have had and may continue to have an adverse impact on our ability to maintain our advertising sales. A failure to maintain and increase advertising sales could have a material adverse effect on our financial position, results of operations and cash flows.

~~Fluctuations in exchange rates may continue to adversely affect our results of operations.~~

Index

Our reporting currency is the dollar and CME Ltd.'s functional currency is the Euro. Our consolidated revenues and costs are divided across a range of European currencies. The strengthening of the dollar had a negative impact on reported revenues in 2015 when translated from the functional currencies of our operations. While we expect our revenues will continue to increase in 2016 in our operating currencies, a strong dollar would have a negative impact on our reported revenues. Furthermore, fluctuations in exchange rates may negatively impact programming costs. While local programming is generally purchased in local currencies, a significant portion of our content costs relate to foreign programming purchased pursuant to dollar-denominated agreements. If the dollar appreciates against the functional currencies of our operating segments, the cost of acquiring such content would be adversely affected, which could have a material adverse effect on our results of operations and cash flows.

Our liquidity constraints and debt service obligations may restrict our ability to fund our operations.

We have significant debt service obligations under the Euro Term Loans as well as the 2021 Revolving Credit Facility (when drawn). Furthermore, we are paying Guarantee Fees to Time Warner as consideration for its guarantees of the Euro Term Loans (collectively, the "TW Guarantees"). Although ~~the entire Guarantee Fee in respect of the 2018 Euro Term Loan and the 2019 Euro Term Loan are, and~~ a portion of the Guarantee Fee in respect of each of the ~~2021~~ Euro Term ~~Loan~~Loans can be non-cash pay at our option, accruing such fees will further increase the amounts to be repaid at the maturity of these facilities. Accordingly, the payment of Guarantee Fees in kind will increase our already significant leverage. In addition, if the Divestment Transaction does not close, the warrants are not exercised in full or cash flows from operations do not meet our forecasts, we would not be able to reduce our indebtedness as planned and would continue to bear higher average borrowing costs on our senior debt and pay more interest and Guarantee Fees. As a result of our debt service obligations and covenants contained in the related loan agreements, we are restricted under the Reimbursement Agreement and the 2021 Revolving Credit Facility (when drawn) in the manner in which our business is conducted, including but not limited to our ability to obtain additional debt financing to refinance existing indebtedness or to fund future working capital, capital expenditures, business opportunities or other corporate requirements. We may have a proportionally higher level of debt and debt service obligations than our competitors, which may put us at a competitive disadvantage by limiting our flexibility in planning for, or reacting to, changes in our business, economic conditions ~~and~~or our industry. For additional information regarding the Reimbursement Agreement and the TW Guarantees, see Part I, Item I,1, Note 4, "Long-term Debt and Other Financing Arrangements".

We may be unable to refinance our existing indebtedness and may not be able to obtain favorable refinancing terms.

We have a substantial amount of indebtedness and we face the risk that we will not be able to renew, repay or refinance our indebtedness when due, or that the terms of any renewal or refinancing will not be on better terms than those of such indebtedness being refinanced.indebtedness. Under the Reimbursement Agreement and the 2021 Revolving Credit Facility (when drawn), we can incur only limited amounts of additional indebtedness, other than indebtedness incurred to refinance existing indebtedness. In addition, pursuant to the Reimbursement Agreement, the all-in rates on each of the ~~2021~~ Euro Term ~~Loan and the 2018 Euro Term Loan~~Loans increase to ~~13% and 11%~~a maximum of 10.0% (or 3.5% above the then-current all-in rate, if lower), ~~respectively,~~ on the date that is 180 days following a change of control of CME Ltd. (as defined therein); and pursuant to the 2021 Revolving Credit Facility, all commitments terminate following a change of control (as defined therein) and the interest rate on amounts outstanding increases to 13% on the date that is 180 days following such change of control. We intend to repay the 2018 Euro Term Loan at or prior to maturity with cash flows from operations and the expected proceeds from the Divestment Transaction or if the Divestment Transaction does not close, the expected proceeds from warrant exercises. In the event the Divestment Transaction does not close, the warrants are not exercised in full or cash flows from operations do not meet our forecasts, we would be required to refinance the 2018 Euro Term Loan in whole or in part. Pursuant to the Reimbursement Agreement, all commitments under the 2021 Revolving Credit Facility terminate on the refinancing of any Euro Term Loan. We face the risk that we will not be able to renew, repay or refinance our indebtedness when due, or that the terms of any renewal or refinancing will not be on better terms than those of such indebtedness being refinanced. In the event we are not able to refinance our indebtedness, we might be forced to dispose of assets on disadvantageous terms or reduce or suspend operations, any of which would materially and adversely affect our financial condition, results of operations and cash flows.

We may be subject to changes in tax rates and exposure to additional tax liabilities.

We are subject to taxes in a number of foreign jurisdictions, including in respect of our operations as well as capital transactions undertaken by us. We are subject to regular review and audit by tax authorities, and in the ordinary course of our business there are ~~many~~ transactions and calculations where the ultimate tax determination is ~~uncertain.~~unknown. Significant judgment is required in determining our provision for taxes. The final determination of our tax liabilities resulting from tax audits, related proceedings or otherwise could be materially different from our tax provisions. Economic and political pressures to increase receipts in various jurisdictions may make taxation and tax rates subject to significant change and the satisfactory resolution of any tax disputes more difficult. The occurrence of any of these events could have a material adverse effect on our financial position, results of operations and cash flows.

A default by us in connection with our obligations under our outstanding indebtedness could result in our inability to continue to conduct our business.

Pursuant to the terms of the agreements governing the Reimbursement Agreement and the 2021 Revolving Credit Facility, we pledged all of the shares of CME NV and of CME BV, which together own substantially all of the interests in our operating subsidiaries, in favor of Time Warner as security for this indebtedness. If we or these subsidiaries were to default under the terms of any of the relevant ~~indentures or~~ agreements, ~~the secured parties under such indentures and agreements~~Time Warner would have the ability to sell all or a portion of the assets pledged to ~~them~~it in order to pay amounts outstanding under such debt instruments. This could result in our inability to conduct our business.

~~Index~~

Fluctuations in exchange rates may continue to adversely affect our results of operations.

Our reporting currency is the dollar and CME Ltd.'s functional currency is the Euro. Our consolidated revenues and costs are divided across a range of European currencies. The strengthening of the dollar had a negative impact on reported revenues in 2016 when translated from the functional currencies of our operations. Continued strengthening of the dollar would have a negative impact on our reported revenues. Furthermore, fluctuations in exchange rates may negatively impact programming costs. While local programming is generally purchased in local currencies, a significant portion of our content costs relates to foreign programming purchased pursuant to dollar-denominated agreements. If the dollar appreciates against the functional currencies of our operating segments, the cost of acquiring such content would be adversely affected, which could have a material adverse effect on our results of operations and cash flows.

Our strategies to enhance our carriage fees and diversify our revenues may not be successful.

We are focused on creating additional revenue streams from our broadcast operations as well as increasing revenues generated from broadcast advertising, which is how we generate most of our revenues. Our main efforts with respect to this strategy are on increasing carriage fees from cable, satellite and ~~satellite~~IPTV operators for carriage of our channels as well as continuing to seek improvements in advertising pricing. Agreements with operators generally have a term of ~~several~~one or more years, at which time agreements must be renewed. There can be no assurance that we will be successful in renewing carriage fee agreements on similar or better terms. During ~~prior~~ negotiations to implement our carriage fees strategy in prior years, some cable and satellite operators suspended the broadcast of our channels, which negatively affected the reach and audience shares of those operations and, as a result, advertising revenues. There is a risk that operators may refuse to carry our channels while carriage fee negotiations are ongoing, which would temporarily reduce the reach of those channels and may result in clients withdrawing advertising from our channels. The occurrence of any of these events may have an adverse impact on our financial position, results of operations and cash flows. If we are ineffective in negotiations with carriers or in achieving further carriage fee increases, our profitability will continue to be dependent primarily on television advertising revenues, which increases the importance placed on our ability to improve advertising pricing and generate advertising revenues. In addition to carriage fees, we are also working to build-out our offerings of advertising video-on-demand products and other opportunities for advertising online. There can be no assurances that our revenue diversification initiatives will ultimately be successful, and if unsuccessful, this may have an adverse impact on our financial position, results of operations and cash flows.

Index

A downgrading of our ratings may adversely affect our ability to raise additional financing.

Moody’s Investors Service rates our corporate credit as B2 with a ~~stable~~positive outlook. Standard & Poor’s rates our corporate credit B+ (currently on CreditWatch with ~~a stable outlook. These~~developing implications due to the announced Divestment Transaction). Our ratings ~~reflect~~show each ~~agency’s~~agency's opinion of our financial strength, operating performance and ability to meet our debt obligations as they become due. ~~Credit rating~~These ratings take into account the particular emphasis the ratings agencies ~~view~~place on metrics such as leverage ratio and cash flow, which they use as measurements of a company's liquidity and financial strength. They also reflect an emphasis placed by the ~~key ratios associated with it, such as gross leverage ratio, as~~ratings agencies on a ~~particular priority.~~track record of strong financial support from Time Warner. We may be subject to downgrades if our operating performance deteriorates or we fail to maintain adequate levels of liquidity. In addition, our ratings may be downgraded if the agencies form a view that material support from Time Warner is not as strong, or the strategic importance of CME Ltd. to Time Warner is not as significant as it has been in the past. In the event our ~~debt or~~ corporate credit ratings are lowered by the rating agencies, it will be more difficult for us to refinance our existing indebtedness or raise new indebtedness that may be permitted under the Reimbursement Agreement and the 2021 Revolving Credit Facility (when drawn) ~~and the Reimbursement Agreement,~~, and we will have to pay higher interest rates, which would have an adverse effect on our financial position, results of operations and cash flows.

If our goodwill, other intangible assets and long-lived assets become impaired, we may be required to record significant charges to earnings.

We review our long-lived assets for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Goodwill and indefinite-lived intangible assets are required to be assessed for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying amount of our goodwill, indefinite-lived intangible assets or long-lived assets may not be recoverable include slower growth rates in our markets, reduced expected future cash flows, increased country risk premium as a result of political uncertainty and a decline in stock price and market capitalization. We consider available current information when calculating our impairment charge. If there are indicators of impairment, our long-term cash flow forecasts for our operations deteriorate or discount rates increase, we may be required to recognize additional impairment charges in later periods. See Part I, Item I,1, Note 3, "Goodwill and Intangible Assets" for the carrying amounts of goodwill in each of our reporting units.

~~Changes to our business could result in future costs or charges.~~

We periodically adjust our business strategy in response to particular events and circumstances, including economic conditions, industry changes and technological developments. In connection with the implementation of new strategies, we may decide to restructure certain of our operations, businesses or assets in order to optimize our cost structure and capture operating efficiencies. Such events in the future could result in restructuring and other charges and the incurrence of additional costs or may require significant management time to implement. If any such charges are material, they could have an adverse impact on our results of operations and cash flows.

Risks Relating to Our Operations

Content may become more expensive to produce or acquire or we may not be able to develop or acquire content that is attractive to our audiences.

Television programming is one of the most significant components of our operating costs. The ability of our programming to generate advertising revenues depends substantially on our ability to develop, produce or acquire programming that matches audience tastes and attracts high audience shares, which is difficult to predict. The commercial success of a program depends on several tangible and intangible factors, including the impact of competing programs, the availability of alternate forms of entertainment and leisure time activities, our ability to anticipate and adapt to changes in consumer tastes and behavior, and general economic conditions. While we have been successful in reducing content costs compared to prior periods, the cost of acquiring content attractive to our viewers, such as feature films and popular television series and formats, may increase in the future. Our expenditures in respect of locally produced programming may also increase due to competition for talent and other resources, changes in audience tastes in our markets or from the implementation of any new laws and regulations mandating the broadcast of a greater number of locally produced programs. In addition, we typically acquire syndicated programming rights under multi-year commitments before knowing how such programming will perform in our markets. In the event any such programming does not attract adequate audience share, it may be necessary to increase our expenditures by investing in additional programming, subject to the availability of adequate financial resources, as well as to write down the value of any underperforming programming. Any material increase in content costs could have a material adverse effect on our financial condition, results of operations or cash flows.

~~Index~~

Our operations are vulnerable to significant changes in viewing habits and technology that could adversely affect us.

The television broadcasting industry is affected by rapid innovations in technology. The implementation of these new technologies and the introduction of non-traditional content distribution systems have increased competition for audiences and advertisers. Platforms such as direct-to-home cable and satellite distribution systems, the Internet, subscription and advertising video-on-demand, user-generated content sites and the availability of content on portable digital devices have changed consumer behavior by increasing the number of entertainment choices available to audiences and the methods for the distribution, storage and consumption of content. This development has fragmented television audiences in more developed markets and could adversely affect our ability to retain audience share and attract advertisers as such technologies penetrate our markets. As we adapt to changing viewing patterns, it may be necessary to expend substantial financial and managerial resources to ensure necessary access to new technologies or distribution systems. Such initiatives may not develop into profitable business models. Furthermore, technologies that enable viewers to choose when, how, where and what content to watch, as well as to fast-forward or skip advertisements, may cause changes in consumer behavior that could have a negative impact on our advertising revenues. In addition, compression techniques and other technological developments allow for an increase in the number of channels that may be broadcast in our markets and expanded programming offerings that may be offered to highly targeted audiences. Reductions in the cost of launching new channels could lower entry barriers and encourage the development of increasingly targeted niche programming on various distribution platforms. This could increase the competitive demand for popular programming, resulting in an increase in content costs as we compete for audiences and advertising revenues. A failure to successfully adapt to changes in our industry as a result of technological advances may have an adverse effect on our financial position, results of operations and cash flows.

Our operating results are dependent on the importance of television as an advertising medium.

We generate most of our revenues from the sale of our advertising airtime on television channels in our markets. Television competes with various other media, such as print, radio, the internet and outdoor advertising, for advertising spending. In all of the countries in which we operate, television constitutes the single largest component of all advertising spending. There can be no assurances that the television advertising market will maintain its current position among advertising media in our markets. Furthermore, there can be no assurances that changes in the regulatory environment or improvements in technology will not favor other advertising media or other television broadcasters. Increases in competition among advertising media arising from the development of new forms of advertising media and distribution could result in a decline in the appeal of television as an advertising medium generally or of our channels specifically. A decline in television advertising spending as a component of total advertising spending in any period or in specific markets would have an adverse effect on our financial position, results of operations and cash flows.

Index

We are subject to legal compliance risks and the risk of legal or regulatory proceedings being initiated against us.

We are required to comply with a wide variety of laws and other regulatory obligations in the jurisdictions in which we operate and compliance by our businesses is subject to scrutiny by regulators and other government authorities in these jurisdictions. Compliance with foreign as well as applicable U.S. laws and regulations related to our businesses, such as broadcasting content and advertising regulations, competition regulations, tax laws, employment laws, data protection requirements, and anti-corruption laws, increases the costs and risks of doing business in these jurisdictions. We believe we have implemented appropriate risk management and compliance policies and procedures that are designed to ensure our employees, contractors and agents comply with these laws and regulations; however, a violation of such laws and regulations or the Company’s policies and procedures could occur. ~~In addition, a~~A failure or alleged failure to comply with applicable laws and regulations, whether inadvertent or otherwise, may result in legal or regulatory ~~proceedings.~~ proceedings being initiated against us.

We have become aware of provisions in the tax regulations of one of our markets that shift the liability for taxes on gains resulting from certain capital transactions from the seller to the buyer. This provision may have been applicable to an acquisition made by us, although we do not believe we have any liability connected to this transaction. In addition, the prosecuting authorities in Romania ~~have~~ requested information in respect of an investigation into certain transactions entered into by Pro TV in 2014 primarily with certain related parties. We believe that the transactions under review are fully supported and are cooperating with the authorities in responding to the information request. ~~However,~~In Slovenia, the competition authorities have launched an investigation into whether our Slovenian subsidiary is dominant and abused its dominant position when concluding carriage fee agreements with platform operators in connection with its decision to cease broadcasting on DTT there. The investigation is in an early stage and there has been no determination that a breach of competition law has occurred. If these or other contingencies ~~may~~ result in legal or regulatory proceedings being initiated against ~~us. Any such legal and regulatory proceedings~~us, or if developments occur in respect of our compliance with existing laws or regulations, or there are changes in the interpretation or application of ~~existing~~such laws or regulations, we may ~~require us to~~ incur substantial costs, ~~cause us~~be required to change our business practices ~~damage~~(including on what terms and conditions we offer our channels under carriage agreements), our reputation may be damaged or ~~expose us~~we may be exposed to unanticipated civil or criminal liability, including fines and other penalties that may be substantial. This could have a material adverse effect on our business, financial position, results of operations and cash flows.

Piracy of our content may decrease revenues we can earn from our content and adversely impact our business and profitability.

Piracy of our content poses significant challenges in our markets. Technological developments, including digital copying, file compressing, the use of international proxies and the growing penetration of high bandwidth internet connections, have made it easier to create, transmit and distribute high quality unauthorized copies of content in unprotected digital formats. Furthermore, there are a growing number of video streaming sites, increasing the risk of online transmission of our content without consent. The proliferation of such sites broadcasting content pirated from us could result in a reduction of revenues that we receive from the legitimate distribution of our content, including through video-on-demand and other services. Protection of our intellectual property is in large part dependent on the manner in which applicable intellectual property laws in the countries in which we operate are construed and enforced. We seek to limit the threat of content piracy. However, detecting and policing the unauthorized use of our intellectual property is often difficult and remedies may be limited under applicable law. Steps we take may not prevent the infringement by third parties. There can be no assurance that our efforts to enforce our rights and protect our intellectual property will be successful in preventing piracy, which limits our ability to generate revenues from our content.

Our operations are in developing markets where there are additional risks related to political and economic uncertainty, biased treatment and compliance with evolving legal and regulatory systems.

Our revenue-generating operations are located in Central and Eastern Europe and we may be significantly affected by risks that may be different to those posed by investments in more developed markets. These risks include, but are not limited to, social and political instability, inconsistent regulatory or judicial practice, and increased taxes and other costs. The economic and political systems, legal and tax regimes, regulatory practices, standards of corporate governance and business practices of countries in this region continue to develop. Policies and practices may be subject to significant adjustments, including following changes in political leadership. This may result in social or political instability or disruptions and the potential for political influence on the media as well as inconsistent application of tax and legal regulations, arbitrary treatment before regulatory or judicial authorities and other general business risks. Other potential risks inherent in markets with evolving economic and political environments include exchange controls, higher taxes, tariffs and other levies as well as longer payment cycles. The relative level of development of our markets and the influence of local politics also present a potential for biased treatment of us before regulators or courts in the event of disputes. If such a dispute occurs, those regulators or courts might favor local interests over our interests. Ultimately, this could have a material adverse impact on our business, financial position, results of operations and cash flows.

~~Index~~

We may not be aware of all related party transactions, which may involve risks of conflicts of interest and result in transactions being concluded on less favorable terms than could be obtained in arm’s-length transactions.

In our markets, the officers, general directors, other members of management or employees of our operating companies may have other business interests, including interests in television and other media-related companies. We may not be aware of all business interests or relationships that exist with respect to entities with which our operating companies enter into transactions. Transactions with related parties, whether or not we are aware of any such relationships between our employees and third parties, may present conflicts of interest and may result in the conclusion of transactions on terms that are not arm’s-length. It is likely that we and our subsidiaries will continue to enter into related party transactions in the future. In the event there are transactions with persons who subsequently are determined to be related parties or affiliates, we may be required to make additional disclosure and, if such contracts are material, may not be in compliance with certain covenants under the 2021 Revolving Credit Facility (when drawn) or the Reimbursement Agreement. Any related party transaction that is entered into on terms that are not arm’s-length may result in a negative impact on our financial position, results of operations and cash flows.

We rely on network and information systems and other technology that may be subject to disruption or misuse, which could harm our business or our reputation.

We make extensive use of network and information systems and other technologies, including those related to our internal network management as well as our broadcasting operations. These systems are central to many of our business activities. Network and information systems-related events, such as computer hackings, computer viruses, worms or other destructive or disruptive software, process breakdowns, malicious activities or other security breaches could result in a disruption or degradation of our services, the loss of information or the improper disclosure of personal data. The occurrence of any of these events could negatively impact our business by requiring us to expend resources to remedy such a security breach or by harming our reputation. In addition, improper disclosure of personal data could subject us to liability under laws that protect personal data in the countries in which we operate. The development and maintenance of systems to prevent these events from occurring requires ongoing monitoring and updating as efforts to overcome security measures become more sophisticated. As technologies evolve, we will need to expend additional resources to protect our technology and information systems, which could have an adverse impact on our results of operations.

Our broadcasting licenses may not be renewed and may be subject to revocation.

We require broadcasting and, in some cases, other operating licenses as well as other authorizations from national regulatory authorities in our markets in order to conduct our broadcasting business. While our broadcasting licenses for our operations in Slovenia and the Slovak Republic are valid for indefinite time periods, our other broadcasting licenses expire at various times through 2028. While we expect that our material licenses and authorizations will be renewed or extended as required to continue to operate our business, we cannot guarantee that this will occur or that they will not be subject to revocation, particularly in markets where there is relatively greater political risk as a result of less developed political and legal institutions. The failure to comply in all material respects with the terms of broadcasting licenses or other authorizations or with applications filed in respect thereto may result in such licenses or other authorizations not being renewed or otherwise being terminated. Furthermore, no assurances can be given that renewals or extensions of existing licenses will be issued on the same terms as existing licenses or that further restrictions or conditions will not be imposed in the future. Any non-renewal or termination of any other broadcasting or operating licenses or other authorizations or material modification of the terms of any renewed licenses may have a material adverse effect on our financial position, results of operations and cash flows.

Index

Our success depends on attracting and retaining key personnel.

Our success depends partly upon the efforts and abilities of our key personnel and our ability to attract and retain key personnel. Our management teams have significant experience in the media industry and have made important contributions to our growth and success. Although we have been successful in attracting and retaining such people in the past, competition for highly skilled individuals is intense. There can be no assurance that we will continue to be successful in attracting and retaining such individuals in the future. The loss of the services of any of these individuals could have an adverse effect on our businesses, results of operations and cash flows.

Risks Relating to Enforcement Rights

We are a Bermuda company and enforcement of civil liabilities and judgments may be difficult.

We are a Bermuda company. Substantially all of our assets and all of our operations are located, and all of our revenues are derived, outside the United States. In addition, several of our directors and officers are non-residents of the United States, and all or a substantial portion of the assets of such persons are or may be located outside the United States. As a result, investors may be unable to effect service of process within the United States upon such persons, or to enforce against them judgments obtained in the United States courts, including judgments predicated upon the civil liability provisions of the United States federal and state securities laws. There is uncertainty as to whether the courts of Bermuda and the countries in which we operate would enforce (a) judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the United States federal and state securities laws or (b) in original actions brought in such countries, liabilities against us or such persons predicated upon the United States federal and state securities laws.

Our Bye-laws restrict shareholders from bringing legal action against our officers and directors.

Our Bye-laws contain a broad waiver by our shareholders of any claim or right of action in Bermuda, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken or concurred in by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. This waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud or dishonesty.

~~Index~~

Risks Relating to our Common Stock

Our share price may be adversely affected by sales of unregistered shares or future issuances of our shares.

Time Warner is the largest holder of shares of our Class A common stock, holding 61,407,775 unregistered shares of Class A common stock, one share of Series A preferred stock ("Series A Preferred Share"), 200,000 shares of Series B preferred stock ("Series B Preferred Shares") and warrants to acquire 100,926,996 shares of our Class A common stock (the "TW Warrants"). The share of Series A ~~preferred stock~~Preferred Shares is convertible into 11,211,449 shares of Class A common stock and the ~~shares of~~ Series B ~~preferred stock~~Preferred Shares are convertible into shares of Class A common stock at the option of Time Warner (subject to certain exceptions). As of ~~September~~June 30, ~~2016,~~2017, the 200,000 ~~shares of~~ Series B ~~preferred stock~~Preferred Shares were convertible into approximately ~~104.2~~107.1 million shares of Class A common stock. The TW Warrants are exercisable for shares of Class A common stock until May 2, 2018 at an exercise price of US$ 1.00 per share. Time Warner has registration rights with respect to all its shares of Class A common stock now held or hereafter acquired. Furthermore, there are additional unregistered shares of our Class A common stock outstanding that we may be obligated to register and shares of Class A common stock underlying other warrants that may enter into trading. For additional information on the Series A ~~preferred stock,~~Preferred Shares, Series B ~~preferred stock~~Preferred Shares and TW Warrants, see Part I, Item I, Note 12, "Convertible Redeemable Preferred Shares" and Note 13, "Equity". In October 2016, Time Warner announced it has entered into a definitive merger agreement with AT&T Inc. under which AT&T Inc. will acquire Time Warner. The merger is subject to regulatory approvals, including the U.S. Department of Justice. Following a successful completion of such merger, AT&T Inc. will become the beneficial owner of equity securities currently beneficially owned by Time Warner and the successor to rights related to such securities granted to Time Warner.

We cannot predict what effect, if any, the entry into trading of previously issued unregistered shares of Class A common stock will have on the market price of our shares. We may also issue additional shares of Class A common stock or securities convertible into our equity in the future. If more shares of our Class A common stock (or securities convertible into or exchangeable for shares of our Class A common stock) are issued to Time Warner, the economic interests of current shareholders may be diluted and the price of our shares may be adversely affected.

The interests of Time Warner may conflict with the interests of other investors.

Time Warner is able to exercise voting power in us with respect to ~~47.3%~~46.6% of our outstanding shares of Class A common stock. As such, Time Warner is in a position to exercise significant influence over the outcome of corporate actions requiring shareholder approval, such as the election of directors or certain transactions. Following the issuance of the TW Warrants, the aggregate economic interest of Time Warner in us is approximately 75.9% (without giving effect to the accretion of the Series B ~~preferred stock~~Preferred Shares after ~~September~~June 30, ~~2016)~~2017). Furthermore, Time Warner has the right to appoint one less than the number required to constitute a majority of our board of directors, provided that Time Warner continues to own not less than 40% of the voting power of the Company. ~~In addition, we~~

We are also party to an amended investor rights agreement with Time Warner and the other parties thereto under which, among other things, Time Warner was granted a contractual preemptive right (subject to certain exclusions) with respect to issuances of the Company’s equity securities, which permits it to maintain its pro rata economic interest as well as a right to top any offer that would result in a change of control of the Company. Under Bermuda law, there is no takeover code or similar legislation requiring an acquirer of a certain percentage of our Class A common stock to tender for the remaining publically held shares. In ~~certain circumstances, the interests of Time Warner as our largest shareholder could be in conflict with the interests of minority shareholders.~~

~~Furthermore, in~~ addition to being our largest shareholder, Time Warner is our largest secured creditor, as it guarantees 100% of our outstanding senior indebtedness and is the lender under the 2021 Revolving Credit Facility. The 2021 Revolving Credit Facility and the Reimbursement Agreement contain maintenance covenants in respect of interest cover, cash flow cover and total leverage ratios and ~~includes~~include covenants in respect of the incurrence of indebtedness (including refinancing indebtedness), the provision of guarantees, the payment of dividends or making other distributions, acquisitions and ~~disposal~~disposals, and granting security. As such, Time Warner may be in a position to determine whether to permit transactions, waive defaults or accelerate such indebtedness or take other steps in its capacity as a secured creditor in a manner that might not be consistent with the interests of the holders of our Class A common stock. Furthermore, in certain circumstances, the interests of Time Warner as our largest shareholder could be in conflict with the interests of minority shareholders.

Index

The price of our Class A common stock ~~is likely to remain~~has been volatile.

The market price of shares of our Class A common stock may be influenced by many factors, some of which are beyond our control, including but not limited to those described above under ~~“Risks~~"Risks Relating to Our ~~Operations”~~Operations","Risks Relating to Our Financial Position" as well as the following: ~~general economic and business trends,~~ variations in quarterly operating results, ~~license renewals, regulatory developments in our operating countries and the European Union,~~ the condition of the media industry in our operating countries, the volume of trading in shares of our Class A common stock, future issuances of shares of our Class A common stock and investors’ and securities analysts’ perception of us and other companies that investors or securities analysts deem comparable in the television broadcasting industry. In addition, stock markets in general have experienced extreme price and volume fluctuations that have often been unrelated to and disproportionate to the operating performance of broadcasting companies. These broad market and industry factors may materially reduce the market price of shares of our Class A common stock, regardless of our operating performance.

Our business could be negatively impacted as a result of shareholder activism.

On ~~November 18, 2015,~~January 17, 2017, TCS Capital Management, LLC ("TCS Capital"), a beneficial owner of ~~more than 10%~~9.8% of our shares, ~~submitted a letter~~filed an amendment to ~~the Board of Directors and filed a~~its Schedule 13D disclosing its ~~ownership interest.~~opinion that the Company should hire an investment bank to run a process to sell the Company as well as replace current members of the Company's Board of Directors with new directors recommended by TCS Capital. In recent years, shareholder activists, such as TCS Capital, have become involved in numerous public companies. Shareholder activists frequently propose to involve themselves in the governance, strategic direction and operations of the Company. Such proposals may disrupt our business and divert the attention of our management and employees, and any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners, all of which could adversely affect our business. In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Index

Item 6. Exhibits



Exhibit Number		Description
10.01		Consent, Waiver and Third Amendment as of June 22, 2017 to the Credit Agreement dated as of November 14, 2014, as amended, among Central European Media Enterprises Ltd., as borrower, BNP Paribas, as administrative agent, Time Warner Inc., as guarantor, and the lenders party thereto.

10.02		Consent, Waiver and Second Amendment as of June 22, 2017 to the Credit Agreement dated as of September 30, 2015, as amended, among Central European Media Enterprises Ltd., as borrower, BNP Paribas, as administrative agent, Time Warner Inc., as guarantor, and the lenders party thereto.

10.03		Consent, Waiver and First Amendment as of June 22, 2017 to the Credit Agreement dated as of February 19, 2016 among CME Media Enterprises B.V., as borrower, Central European Media Enterprises Ltd., as guarantor, BNP Paribas, as administrative agent, Time Warner Inc., as guarantor, and the lenders party thereto.

10.04		Second Amendment dated June 22, 2017, to the Amended and Restated Reimbursement Agreement dated as of November 14, 2014 as amended and restated as of February 19, 2016, as amended, among Central European Media Enterprises Ltd., CME Media Enterprises B.V., and Time Warner Inc., as credit guarantor.

10.05		First Amendment dated June 22, 2017, to the Amended and Restated Revolving Loan Facility Credit Agreement dated as of May 2, 2014 as amended and restated as of November 14, 2014, and as further amended and restated as of February 19, 2016, among Central European Media Enterprises Ltd., as borrower, Time Warner Inc. as administrative agent, and the lenders party thereto.

10.06*		Framework Agreement dated July 9, 2017 between CME Media Enterprises B.V. and Slovenia Broadband S.à r.l. (incorporated by reference to Exhibit 10.1 to the Company's Current Report in Form 8-K filed on July 10, 2017).

31.01		Certification of Co-Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification of Co-Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.03		Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01		Certifications of co-Principal Executive Officers and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only).

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.DEF		XBRL Taxonomy Definition Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

* Previously filed exhibits.

Index

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Central European Media Enterprises Ltd.
Date:	~~October~~July 25, ~~2016~~2017	/s/ David Sturgeon David Sturgeon Executive Vice President and Chief Financial Officer Principal Financial Officer and Principal Accounting Officer

Index

EXHIBIT INDEX



Exhibit Number		Description
10.01		Consent, Waiver and Third Amendment as of June 22, 2017 to the Credit Agreement dated as of November 14, 2014, as amended, among Central European Media Enterprises Ltd., as borrower, BNP Paribas, as administrative agent, Time Warner Inc., as guarantor, and the lenders party thereto.

10.02		Consent, Waiver and Second Amendment as of June 22, 2017 to the Credit Agreement dated as of September 30, 2015, as amended, among Central European Media Enterprises Ltd., as borrower, BNP Paribas, as administrative agent, Time Warner Inc., as guarantor, and the lenders party thereto.

10.03		Consent, Waiver and First Amendment as of June 22, 2017 to the Credit Agreement dated as of February 19, 2016 among CME Media Enterprises B.V., as borrower, Central European Media Enterprises Ltd., as guarantor, BNP Paribas, as administrative agent, Time Warner Inc., as guarantor, and the lenders party thereto.

10.04		Second Amendment dated June 22, 2017, to the Amended and Restated Reimbursement Agreement dated as of November 14, 2014 as amended and restated as of February 19, 2016, as amended, among Central European Media Enterprises Ltd., CME Media Enterprises B.V., and Time Warner Inc., as credit guarantor.

10.05		First Amendment dated June 22, 2017, to the Amended and Restated Revolving Loan Facility Credit Agreement dated as of May 2, 2014 as amended and restated as of November 14, 2014, and as further amended and restated as of February 19, 2016, among Central European Media Enterprises Ltd., as borrower, Time Warner Inc. as administrative agent, and the lenders party thereto.

10.06*		Framework Agreement dated July 9, 2017 between CME Media Enterprises B.V. and Slovenia Broadband S.à r.l. (incorporated by reference to Exhibit 10.1 to the Company's Current Report in Form 8-K filed on July 10, 2017).

31.01		Certification of Co-Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification of Co-Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.03		Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01		Certifications of co-Principal Executive Officers and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only).

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.DEF		XBRL Taxonomy Definition Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

* Previously filed exhibits.

5551



BERMUDA		98-0438382
(State or other jurisdiction of incorporation or organization)		(~~IRS~~I.R.S. Employer Identification No.)

O'Hara House, 3 Bermudiana Road, Hamilton, Bermuda		HM 08
(Address of principal executive offices)		(Zip Code)



Large accelerated filer £	Accelerated filer T	Non-accelerated filer £	Smaller reporting company £
			Emerging growth company £



Class	Outstanding as of ~~October~~July 21, ~~2016~~2017
Class A Common Stock, par value $0.08	~~142,799,769~~



			Page
Part I Financial Information
	Item 1. Financial Statements		21
		Condensed Consolidated Balance Sheets as at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016	21
		Condensed Consolidated Statements of Operations and Comprehensive Income / Loss for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016	32
		Condensed Consolidated Statement of Equity for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017	43
		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016	54
		Notes to the Condensed Consolidated Financial Statements	76
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		2624
	Item 3. Quantitative and Qualitative Disclosures About Market Risk		4641
	Item 4. Controls and Procedures		4742
Part II Other Information
	Item 1. Legal Proceedings		4742
	Item 1A. Risk Factors		4743
	Item 6. Exhibits		5349
Signatures			5450
Exhibit Index			5551


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	64,229	$	61,679	$	95,359	$	43,459
Accounts receivable, net (Note 6)	138,567		167,427		186,458		178,339
Program rights, net (Note 5)	98,604		85,972		91,002		86,151
Other current assets (Note 7)	31,327		43,206		30,191		32,471
Total current assets	332,727		358,284		403,010		340,420
Non-current assets
Property, plant and equipment, net (Note 8)	109,424		108,522		115,982		109,089
Program rights, net (Note 5)	193,678		169,073		202,933		179,356
Goodwill (Note 3)	639,073		622,243		667,159		602,069
Broadcast licenses and other intangible assets, net (Note 3)	148,989		151,162
Other intangible assets, net (Note 3)					147,786		138,340
Other non-current assets (Note 7)	20,345		31,133		21,516		21,443
Total non-current assets	1,111,509		1,082,133		1,155,376		1,050,297
Total assets	$	1,444,236	$	1,440,417	$	1,558,386	$	1,390,717


LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 9)	$	172,110		$	134,705		$	150,669		$	160,981
Current portion of long-term debt and other financing arrangements (Note 4)	1,258			1,155			2,386			1,494
Other current liabilities (Note 10)	23,210			10,448			29,117			9,089
Total current liabilities	196,578			146,308			182,172			171,564
Non-current liabilities
Long-term debt and other financing arrangements (Note 4)	1,059,670			908,521			1,087,992			1,002,028
Other non-current liabilities (Note 10)	51,820			65,749			87,103			68,758
Total non-current liabilities	1,111,490			974,270			1,175,095			1,070,786
Commitments and contingencies (Note 19)
TEMPORARY EQUITY
200,000 shares of Series B Convertible Redeemable Preferred Stock of $0.08 each (December 31, 2015 - 200,000) (Note 12)	252,512			241,198
200,000 shares of Series B Convertible Redeemable Preferred Stock of $0.08 each (December 31, 2016 - 200,000) (Note 12)							259,661			254,899
EQUITY
CME Ltd. shareholders’ equity (Note 13):
One share of Series A Convertible Preferred Stock of $0.08 each (December 31, 2015 – one)	—			—
142,398,021 shares of Class A Common Stock of $0.08 each (December 31, 2015 – 135,804,221)	11,392			10,864
Nil shares of Class B Common Stock of $0.08 each (December 31, 2015 – nil)	—			—
One share of Series A Convertible Preferred Stock of $0.08 each (December 31, 2016 – one)							—			—
144,789,334 shares of Class A Common Stock of $0.08 each (December 31, 2016 – 143,449,913)							11,583			11,476
Nil shares of Class B Common Stock of $0.08 each (December 31, 2016 – nil)							—			—
Additional paid-in capital	1,910,620			1,914,050			1,907,409			1,910,244
Accumulated deficit	(1,806,624		)	(1,605,245		)	(1,768,666		)	(1,785,536		)
Accumulated other comprehensive loss	(232,545		)	(242,409		)	(209,249		)	(243,988		)
Total CME Ltd. shareholders’ (deficit) / equity	(117,157		)	77,260
Total CME Ltd. shareholders’ deficit							(58,923		)	(107,804		)
Noncontrolling interests	813			1,381			381			1,272
Total (deficit) / equity	(116,344		)	78,641
Total deficit							(58,542		)	(106,532		)
Total liabilities and equity	$	1,444,236		$	1,440,417		$	1,558,386		$	1,390,717



PER SHARE DATA (Note 17):
Net loss per share:
Continuing operations attributable to CME Ltd. - Basic and diluted	$	(0.14	)	$	(0.17	)	$	(1.42	)	$	(0.79	)
Discontinued operations attributable to CME Ltd. - Basic and diluted	0.00			(0.01		)	0.00			(0.00		)
Net loss attributable to CME Ltd. - Basic and diluted	(0.14		)	(0.18		)	(1.42		)	(0.79		)

Weighted average common shares used in computing per share amounts (000’s):
Basic and diluted	153,494			147,054			149,898			146,803



PER SHARE DATA (Note 17):
Net income / (loss) per share:
Net income / (loss) attributable to CME Ltd. — basic	$	0.10	$	(0.98	)	$	0.05	$	(1.29	)
Net income / (loss) attributable to CME Ltd. — diluted	0.07		(0.98		)	0.04		(1.29		)

Weighted average common shares used in computing per share amounts (000’s):
Basic	155,738		149,083			155,269		148,080
Diluted	235,952		149,083			230,872		148,080


	CME Ltd.																								CME Ltd.
	Series A Convertible Preferred Stock			Class A Common Stock			Class B Common Stock																		Series A Convertible Preferred Stock			Class A Common Stock			Class B Common Stock
	Number of shares	Par value		Number of shares	Par value		Number of shares	Par value		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total Equity / (Deficit)			Number of shares	Par value		Number of shares	Par value		Number of shares	Par value		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total Deficit
BALANCE December 31, 2015	1	$	—	135,804,221	$	10,864	—	$	—	$	1,914,050		$	(1,605,245	)	$	(242,409	)	$	1,381		$	78,641
BALANCE December 31, 2016																									1	$	—	143,449,913	$	11,476	—	$	—	$	1,910,244		$	(1,785,536	)	$	(243,988	)	$	1,272		$	(106,532	)
Stock-based compensation	—	—		—	—		—	—		2,465			—			—			—			2,465			—	—		—	—		—	—		1,675			—			—			—			1,675
Exercise of warrants (Note 13)	—	—		5,947,010	476		—	—		5,471			—			—			—			5,947			—	—		527,268	42		—	—		485			—			—			—			527
Share issuance, stock-based compensation	—	—		646,790	52		—	—		(52		)	—			—			—			—			—	—		812,153	65		—	—		(65		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation																									—	—		—	—		—	—		(168		)	—			—			—			(168		)
Preferred dividend paid in kind	—	—		—	—		—	—		(11,314		)	—			—			—			(11,314		)	—	—		—	—		—	—		(4,762		)	—			—			—			(4,762		)
Net loss	—	—		—	—		—	—		—			(201,379		)	—			(387		)	(201,766		)
Unrealized loss on derivative instruments	—	—		—	—		—	—		—			—			(5,581		)	—			(5,581		)
Net income																									—	—		—	—		—	—		—			16,870			—			(346		)	16,524
Gain on derivative instruments																									—	—		—	—		—	—		—			—			1,218			—			1,218
Currency translation adjustment	—	—		—	—		—	—		—			—			15,445			(181		)	15,264			—	—		—	—		—	—		—			—			33,521			(545		)	32,976
BALANCE September 30, 2016	1	$	—	142,398,021	$	11,392	—	$	—	$	1,910,620		$	(1,806,624	)	$	(232,545	)	$	813		$	(116,344	)
BALANCE June 30, 2017																									1	$	—	144,789,334	$	11,583	—	$	—	$	1,907,409		$	(1,768,666	)	$	(209,249	)	$	381		$	(58,542	)



	For the Six Months Ended June 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income / (loss)	$	16,524		$	(181,943	)
Adjustments to reconcile net income / (loss) to net cash generated from continuing operating activities:
Amortization of program rights	150,111			149,260
Depreciation and other amortization	23,137			38,232
Interest and related Guarantee Fees paid in kind	15,606			22,257
Loss on extinguishment of debt	—			150,158
(Gain) / loss on disposal of fixed assets	(46		)	17
Deferred income taxes	(1,005		)	5,972
Stock-based compensation (Note 16)	1,675			1,717
Change in fair value of derivatives	621			11,219
Foreign currency exchange gain, net	(9,541		)	(13,177		)
Changes in assets and liabilities:
Accounts receivable, net	7,337			1,499
Accounts payable and accrued liabilities	(9,894		)	(5,914		)
Program rights	(148,732		)	(153,497		)
Other assets and liabilities	(1,873		)	(326		)
Accrued interest	(2,041		)	(18,713		)
Income taxes payable	3,076			(225		)
Deferred revenue	16,855			14,407
VAT and other taxes payable	(5,040		)	(3,394		)
Net cash generated from continuing operating activities	$	56,770		$	17,549

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment	$	(14,698	)	$	(11,287	)
Disposal of property, plant and equipment	117			32
Net cash used in continuing investing activities	$	(14,581	)	$	(11,255	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt	$	—		$	533,963
Repayment of debt	—			(540,699		)
Debt transaction costs	—			(9,541		)
Payment of credit facilities and capital leases	(1,208		)	(647		)
Settlement of forward currency swaps	—			(12,106		)
Proceeds from exercise of warrants	527			5,060
Proceeds from sale-leaseback transactions	2,746			—
Payments of withholding tax on net share settlement of share-based compensation	(168		)	—
Net cash provided by / (used in) continuing financing activities	$	1,897		$	(23,970	)

Net cash provided by discontinued operations - investing activities	1,045			705
Impact of exchange rate fluctuations on cash and cash equivalents	6,769			1,734
Net increase / (decrease) in cash and cash equivalents	$	51,900		$	(15,237	)
CASH AND CASH EQUIVALENTS, beginning of period	43,459			61,679
CASH AND CASH EQUIVALENTS, end of period	$	95,359		$	46,442


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest (including mandatory cash-pay Guarantee Fees)	$	40,877	$	10,712	$	21,173	$	35,712
Cash paid for Guarantee Fees previously paid in kind	27,502		—
Cash paid for Guarantee Fees that may be paid in kind					7,078		20,000
Cash paid for income taxes, net of refunds					7,512		172

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Accretion on Series B Convertible Redeemable Preferred Stock	$	11,314	$	12,796	$	4,762	$	8,950



	Bulgaria			Croatia			Czech Republic			Romania			Slovak Republic		Slovenia			Total
Gross Balance, December 31, 2015	$	172,365		$	11,005		$	759,491		$	85,443		$	47,605	$	19,400		$	1,095,309
Accumulated impairment losses	(144,639		)	(10,454		)	(287,545		)	(11,028		)	—		(19,400		)	(473,066		)
Balance, December 31, 2015	27,726			551			471,946			74,415			47,605		—			622,243
Foreign currency	596			24			11,961			3,048			1,201		—			16,830
Balance, September 30, 2016	28,322			575			483,907			77,463			48,806		—			639,073
Accumulated impairment losses	(144,639		)	(10,454		)	(287,545		)	(11,028		)	—		(19,400		)	(473,066		)
Gross Balance, September 30, 2016	$	172,961		$	11,029		$	771,452		$	88,491		$	48,806	$	19,400		$	1,112,139


	Principal Amount of Liability Component		Debt Issuance Costs ⁽¹⁾			Net Carrying Amount		Principal Amount of Liability Component		Debt Issuance Costs ⁽¹⁾			Net Carrying Amount
2018 Euro Term Loan	$	279,918	$	(764	)	$	279,154	$	286,213	$	(500	)	$	285,713
2019 Euro Term Loan	262,658		(545		)	262,113		268,565		(422		)	268,143
2021 Euro Term Loan	523,228		(7,053		)	516,175		534,995		(5,978		)	529,017
2021 Revolving Credit Facility	—		—			—		—		—			—
Total long-term debt and credit facilities	$	1,065,804	$	(8,362	)	$	1,057,442	$	1,089,773	$	(6,900	)	$	1,082,873


	Carrying Amount				Carrying Amount				Fair Value
	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016
2017 PIK Notes	$	—	$	359,789
2017 Term Loan	—		27,592
2018 Euro Term Loan	279,154		272,189		$	285,713	$	263,734	$	268,893	$	233,297
2019 Euro Term Loan	262,113		246,458		268,143		247,594		238,844		203,314
2021 Euro Term Loan	516,175		—		529,017		487,881		440,187		369,738
	$	1,057,442	$	906,028	$	1,082,873	$	999,209	$	947,924	$	806,349



Consolidated Net Leverage				Cash Rate⁽¹⁾		PIK Fee Rate		Total Rate
≥	7.0x			5.00	%	3.50	%	8.50	%
<	7.0x	-	6.0x	5.00	%	2.25	%	7.25	%
<	6.0x	-	5.0x	5.00	%	1.00	%	6.00	%
<	5.0x			5.00	%	—	%	5.00	%


			144,845,675


	September 30, 2016							December 31, 2015							June 30, 2017							December 31, 2016
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Indefinite-lived:
Trademarks	$	85,439	$	—		$	85,439	$	83,188	$	—		$	83,188	$	87,490	$	—		$	87,490	$	80,324	$	—		$	80,324
Amortized:
Broadcast licenses	196,641		(136,200		)	60,441		191,860		(127,613		)	64,247		206,536		(148,517		)	58,019		185,686		(130,325		)	55,361
Trademarks	636		(636		)	—		614		(614		)	—		638		(638		)	—		591		(591		)	—
Customer relationships	54,617		(51,856		)	2,761		53,120		(49,672		)	3,448		55,909		(53,825		)	2,084		51,338		(48,997		)	2,341
Other	1,612		(1,264		)	348		2,138		(1,859		)	279		1,659		(1,466		)	193		1,522		(1,208		)	314
Total	$	338,945	$	(189,956	)	$	148,989	$	330,920	$	(179,758	)	$	151,162	$	352,232	$	(204,446	)	$	147,786	$	319,461	$	(181,121	)	$	138,340



2017	$	1,296
2018	2,314
2019	1,980
2020	1,480
2021	590
2022 and thereafter	—
Total undiscounted payments	7,660
Less: amount representing interest	(155		)
Present value of net minimum lease payments	$	7,505



2016	$	353
2017	1,304
2018	1,034
2019	699
2020	196
2021 and thereafter	6
Total undiscounted payments	3,592
Less: amount representing interest	(106		)
Present value of net minimum lease payments	$	3,486


⁽¹⁾	Includes cash paid for interest for the Euro Term Loans and the related customary hedging arrangements.


	Base Rate		Rate Fixed Pursuant to Interest Rate Hedges			Guarantee Fee Rate			All-in Borrowing Rate			Base Rate			Rate Fixed Pursuant to Interest Rate Hedges			Guarantee Fee Rate		All-in Borrowing Rate
2018 Euro Term Loan	1.50	%	0.21	%	⁽¹⁾	6.79	%		8.50	%		1.50	%		0.21	%	⁽¹⁾	5.54	%	7.25	%
2019 Euro Term Loan	1.50	%	0.31	%		6.69	%		8.50	%		1.50	%		0.31	%		5.44	%	7.25	%
2021 Euro Term Loan	1.50	%	0.28	%		8.22	%	⁽²⁾	10.00	%	⁽²⁾	1.50	%		0.28	%		5.47	%	7.25	%
2021 Revolving Credit Facility ⁽³⁾⁽²⁾	10.00	%	—			—			10.00	%		9.30	%	⁽³⁾	—	%		—	%	9.30	%


⁽¹⁾	Effective until November 1, 2017. From November 1, 2017 through maturity on November 1, 2018, the rate fixed pursuant to interest rate hedges will decrease to 0.14%, with a corresponding increase in the ~~guarantee fee~~Guarantee Fee rate, such that the all-in borrowing rate remains ~~8.50%.~~7.25% if our net leverage ratio remains unchanged.


⁽²⁾	As at ~~September~~June 30, ~~2016. With effect from October 27, 2016~~2017, the ~~guarantee fee rate and the all-in borrowing rate will decrease to 7.22% and 9.00%, respectively.~~2021 Revolving Credit Facility was undrawn.


⁽³⁾	AsBased on the three month LIBOR of 1.30% as at ~~September~~June 30, ~~2016, the aggregate principal amount available under the 2021 Revolving Credit Facility was undrawn.~~2017.


⁽¹⁾	We have a cash pooling arrangement with Bank Mendes Gans (“BMG”), a subsidiary of ING Bank N.V. (“ING”), which enables us to receive credit across the group in respect of cash balances ~~which our subsidiaries deposit~~deposited with BMG. Cash deposited by our subsidiaries with BMG is pledged as security against the drawings of other subsidiaries up to the amount deposited.



	June 30, 2017			December 31, 2016
Program rights:
Acquired program rights, net of amortization	$	197,010		$	183,303
Less: current portion of acquired program rights	(91,002		)	(86,151		)
Total non-current acquired program rights	106,008			97,152
Produced program rights – feature films:
Released, net of amortization	997			1,039
Produced program rights – television programs:
Released, net of amortization	59,603			54,149
Completed and not released	4,636			2,593
In production	30,365			23,712
Development and pre-production	1,324			711
Total produced program rights	96,925			82,204
Total non-current acquired program rights and produced program rights	$	202,933		$	179,356


⁽¹⁾	~~Other is comprised of property, plant and equipment which were classified as assets held for sale in the third quarter of 2015 and subsequently sold in the fourth quarter of 2015.~~


⁽¹⁾	~~Amount represents accrued Guarantee Fees for which we have not yet paid in cash or made an election to pay in kind. See Note 4, "Long-term Debt and Other Financing Arrangements".~~


Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted instruments.


Level 2	Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.


Level 3	Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.


Trade Date	Number of Contracts	Description	Aggregate Notional Amount		Maturity Date	Objective	Fair Value as at September 30, 2016			Number of Contracts	Description	Aggregate Notional Amount		Maturity Date	Objective	Fair Value as at June 30, 2017
April 5, 2016	5	Interest rate swap	€	468,800	February 21, 2021	Interest rate hedge underlying 2021 Euro Term Loan	$	(3,817	)	5	Interest rate swap	EUR	468,800	February 21, 2021	Interest rate hedge underlying 2021 Euro Term Loan	$	(1,098	)
April 5, 2016	4	Interest rate swap	€	250,800	November 1, 2018	Interest rate hedge underlying 2018 Euro Term Loan, forward starting on November 1, 2017	$	(308	)	4	Interest rate swap	EUR	250,800	November 1, 2018	Interest rate hedge underlying 2018 Euro Term Loan, forward starting on November 1, 2017	$	(363	)
November 10, 2015	3	Interest rate swap	€	235,335	November 1, 2019	Interest rate hedge underlying 2019 Euro Term Loan	$	(2,182	)	3	Interest rate swap	EUR	235,335	November 1, 2019	Interest rate hedge underlying 2019 Euro Term Loan	$	(1,504	)
November 14, 2014	2	Interest rate swap	€	250,800	November 1, 2017	Interest rate hedge underlying 2018 Euro Term Loan	$	(646	)	2	Interest rate swap	EUR	250,800	November 1, 2017	Interest rate hedge underlying 2018 Euro Term Loan	$	(216	)



	Accumulated Other Comprehensive Loss
BALANCE December 31, 2015	$	(1,420	)
Loss on interest rate swaps	(7,302		)
Reclassified to interest expense	1,721
BALANCE September 30, 2016	$	(7,001	)



	Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2015	1,666,000		$	3.53	9.07	$	640
Granted	411,392		2.46
Expired	(63,000	)	32.62
Outstanding at September 30, 2016	2,014,392		$	2.40	8.82	$	32
Vested and expected to vest	2,014,392		2.40		8.82	32
Exercisable at September 30, 2016	403,000		$	2.69	8.61	$	8


	Number of Shares / Units		Weighted Average Grant Date Fair Value		Number of Shares / Units		Weighted Average Grant Date Fair Value
Unvested at December 31, 2015	2,554,597		$	2.72
Unvested at December 31, 2016					2,542,625		$	2.61
Granted	705,166		2.41		1,158,887		3.62
Vested	(626,126	)	2.83		(912,246	)	2.65
Unvested at September 30, 2016	2,633,637		$	2.61
Forfeited					(75,582	)	1.53
Unvested at June 30, 2017					2,713,684		$	3.06


Net revenues:	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Bulgaria	$	13,789		$	14,673		$	50,103		$	50,877		$	20,774		$	20,455		$	36,079		$	36,314
Croatia	9,833			9,949			38,037			38,184			16,521			16,559			27,589			28,204
Czech Republic	39,031			35,575			128,558			122,671			53,371			50,919			92,845			89,527
Romania	36,970			32,005			118,269			109,561			48,570			48,929			87,514			81,299
Slovak Republic	17,864			17,223			59,466			54,997			24,624			22,540			42,964			41,602
Slovenia	9,555			8,606			37,324			35,149			18,453			16,116			30,670			27,769
Intersegment revenues ⁽¹⁾	(336		)	(709		)	(845		)	(1,150		)	(457		)	(312		)	(803		)	(509		)
Total net revenues	$	126,706		$	117,322		$	430,912		$	410,289		$	181,856		$	175,206		$	316,858		$	304,206


⁽¹⁾	Reflects revenues earned from the sale of content to our other ~~country segments in CME Ltd.~~segments. All other revenues are third party revenues.



OIBDA and reconciliation of OIBDA to condensed consolidated statements of operations and comprehensive income / loss:	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Bulgaria	$	3,079		$	5,954		$	4,436		$	7,023
Croatia	5,171			4,501			6,257			5,902
Czech Republic	25,553			23,099			36,512			33,173
Romania	22,268			22,962			36,954			32,424
Slovak Republic	7,522			3,158			8,395			5,551
Slovenia	4,386			1,624			4,389			916
Elimination	39			(62		)	41			(68		)
Total operating segments	68,018			61,236			96,984			84,921
Corporate	(6,849		)	(7,604		)	(13,679		)	(14,181		)
Total OIBDA	61,169			53,632			83,305			70,740
Depreciation of property, plant and equipment	(8,293		)	(7,627		)	(16,052		)	(14,912		)
Amortization of broadcast licenses and other intangibles	(2,053		)	(2,114		)	(4,162		)	(4,174		)
Operating income	50,823			43,891			63,091			51,654
Interest expense (Note 14)	(21,973		)	(29,545		)	(45,728		)	(78,699		)
Loss on extinguishment of debt	—			(150,158		)	—			(150,158		)
Non-operating income / (expense), net (Note 15)	7,141			(167		)	9,466			1,249
Income / (loss) before tax	$	35,991		$	(135,979	)	$	26,829		$	(175,954	)



Total assets ⁽¹⁾:	June 30, 2017		December 31, 2016
Bulgaria	$	139,982	$	130,873
Croatia	60,255		49,135
Czech Republic	801,045		700,190
Romania	294,236		266,132
Slovak Republic	146,492		131,220
Slovenia	79,136		72,381
Total operating segments	1,521,146		1,349,931
Corporate	37,240		40,786
Total assets	$	1,558,386	$	1,390,717