UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2019

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

For the transition period from __________ to __________

Commission File Number: 0-24796

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

(Exact name of registrant as specified in its charter)



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

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

Registrant's telephone number, including area code: (441)296-1431

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.08	CETV	NASDAQ Global Select Market

Indicate by check mark whether registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for each shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesT☒ No £☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). YesT☒ No £☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” or “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated ~~filer~~ £ Filer	☐	Accelerated ~~filer~~ TFiler	☒
Non-accelerated ~~filer~~ £Filer	☐	Smaller reporting company£	☐
		Emerging growth company£	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £☐

Index

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act) Yes £☐ No T☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.



Class	Outstanding as of October ~~20, 2017~~15, 2019
Class A Common Stock, par value $0.08	~~144,963,821~~253,607,026

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

FORM 10-Q

For the ~~quarterly period ended~~ Quarterly Period Ended September 30, ~~2017~~2019



			Page
Part I Financial Information
	Item 1. Financial Statements		1
		Condensed Consolidated Balance Sheets as at September 30, ~~2017~~2019 and December 31, ~~2016~~2018	1
		Condensed Consolidated Statements of Operations and Comprehensive Income / Loss for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	2
		Condensed Consolidated ~~Statement~~Statements of Equity for the Three and Nine Months Ended September 30, ~~2017~~2019 and 2018	3
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	45
		Notes to the Condensed Consolidated Financial Statements	67
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		2427
	Item 3. Quantitative and Qualitative Disclosures About Market Risk		3744
	Item 4. Controls and Procedures		3845
Part II Other Information
	Item 1. Legal Proceedings		3845
	Item 1A. Risk Factors		3845
	Item 6. Exhibits		4451
Signatures			4552

Index

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(US$ 000’s, except share data)

(Unaudited)

September 30, 2017
December 31, 2016
ASSETS
Current assets
Cash and cash equivalents $ 67,034
$ 40,606
Accounts receivable, net (Note 7) 122,406
141,371
Program rights, net (Note 6) 70,510
69,662
Other current assets (Note 8) 28,197
27,541
Current assets held for sale (Note 3) 135,171
61,242
Total current assets 423,318
340,422
Non-current assets

Property, plant and equipment, net (Note 9) 100,308
89,080
Program rights, net (Note 6) 188,484
143,428
Goodwill (Note 4) 693,142
601,535
Other intangible assets, net (Note 4) 147,073
134,705
Other non-current assets (Note 8) 20,365
21,273
Non-current assets held for sale (Note 3) —
60,274
Total non-current assets 1,149,372
1,050,295
Total assets $ 1,572,690
$ 1,390,717



	September 30, 2019		December 31, 2018
ASSETS
Current assets
Cash and cash equivalents	$	34,154	$	62,031
Accounts receivable, net (Note 6)	130,784		193,371
Program rights, net (Note 5)	73,369		77,624
Other current assets (Note 7)	41,335		41,067
Total current assets	279,642		374,093
Non-current assets
Property, plant and equipment, net (Note 8)	104,553		117,604
Program rights, net (Note 5)	168,740		171,871
Goodwill (Note 3)	640,427		676,333
Other intangible assets, net (Note 3)	124,381		136,052
Other non-current assets (Note 7)	21,438		12,408
Total non-current assets	1,059,539		1,114,268
Total assets	$	1,339,181	$	1,488,361


LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 10)	$	157,322		$	134,378
Current portion of long-term debt and other financing arrangements (Note 5)	2,425			1,228
Other current liabilities (Note 11)	23,535			8,467
Current liabilities held for sale (Note 3)	32,246			27,492
Accounts payable and accrued liabilities (Note 9)							$	114,943		$	120,468
Current portion of long-term debt and other financing arrangements (Note 4)							6,063			5,545
Other current liabilities (Note 10)							24,285			13,679
Total current liabilities	215,528			171,565			145,291			139,692
Non-current liabilities
Long-term debt and other financing arrangements (Note 5)	1,067,153			1,001,408
Other non-current liabilities (Note 11)	87,230			67,963
Non-current liabilities held for sale (Note 3)	—			1,414
Long-term debt and other financing arrangements (Note 4)							581,101			782,685
Other non-current liabilities (Note 10)							78,207			67,293
Total non-current liabilities	1,154,383			1,070,785			659,308			849,978
Commitments and contingencies (Note 20)
TEMPORARY EQUITY
200,000 shares of Series B Convertible Redeemable Preferred Stock of $0.08 each (December 31, 2016 - 200,000) (Note 13)	262,115			254,899
200,000 shares of Series B Convertible Redeemable Preferred Stock of $0.08 each (December 31, 2018 - 200,000) (Note 13)							269,370			269,370
EQUITY
CME Ltd. shareholders’ equity (Note 14):
One share of Series A Convertible Preferred Stock of $0.08 each (December 31, 2016 – one)	—			—
144,881,732 shares of Class A Common Stock of $0.08 each (December 31, 2016 – 143,449,913)	11,590			11,476
Nil shares of Class B Common Stock of $0.08 each (December 31, 2016 – nil)	—			—
One share of Series A Convertible Preferred Stock of $0.08 each (December 31, 2018 – one)							—			—
253,607,026 shares of Class A Common Stock of $0.08 each (December 31, 2018 – 252,853,554)							20,288			20,228
Nil shares of Class B Common Stock of $0.08 each (December 31, 2018 – nil)							—			—
Additional paid-in capital	1,905,449			1,910,244			2,006,150			2,003,518
Accumulated deficit	(1,776,411		)	(1,785,536		)	(1,508,614		)	(1,578,076		)
Accumulated other comprehensive loss	(199,906		)	(243,988		)	(253,159		)	(216,650		)
Total CME Ltd. shareholders’ deficit	(59,278		)	(107,804		)
Total CME Ltd. shareholders’ equity							264,665			229,020
Noncontrolling interests	(58		)	1,272			547			301
Total deficit	(59,336		)	(106,532		)
Total equity							265,212			229,321
Total liabilities and equity	$	1,572,690		$	1,390,717		$	1,339,181		$	1,488,361

The accompanying notes are an integral part of these condensed consolidated financial statements.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / LOSS

(US$ 000’s, except per share data)

(Unaudited)

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017

2016
Net revenues $ 119,431
$ 107,527
$ 378,058
$ 356,147
Operating expenses:
Content costs 55,871
51,920
174,214
166,938
Other operating costs 12,612
13,482
35,747
40,773
Depreciation of property, plant and equipment 6,936
5,801
19,345
17,134
Amortization of broadcast licenses and other intangibles 2,187
2,073
6,349
6,247
Cost of revenues 77,606
73,276
235,655
231,092
Selling, general and administrative expenses 25,803
22,801
70,204
64,984
Operating income 16,022
11,450
72,199
60,071
Interest expense (Note 15) (18,352 ) (22,424 ) (54,773 ) (90,640 )
Loss on extinguishment of debt (Note 5) (101 ) —
(101 ) (150,158 )
Other non-operating income, net (Note 16) 3,643
350
12,783
1,638
Income / (loss) before tax 1,212
(10,624 ) 30,108
(179,089 )
Provision for income taxes (3,157 ) (1,145 ) (12,770 ) (6,706 )
(Loss) / income from continuing operations (1,945 ) (11,769 ) 17,338
(185,795 )
Loss from discontinued operations, net of tax (Note 3) (5,988 ) (8,054 ) (8,747 ) (15,971 )
Net (loss) / income (7,933 ) (19,823 ) 8,591
(201,766 )
Net loss attributable to noncontrolling interests 188
196
534
387
Net (loss) / income attributable to CME Ltd. $ (7,745 ) $ (19,627 ) $ 9,125
$ (201,379 )

Net (loss) / income $ (7,933 ) $ (19,823 ) $ 8,591
$ (201,766 )
Other comprehensive income
Currency translation adjustment 9,227
7,262
42,203
15,264
(Loss) / gain on derivative instruments (Note 12) (135 ) (1,360 ) 1,083
(5,581 )
Total other comprehensive income 9,092
5,902
43,286
9,683
Comprehensive income / (loss) 1,159
(13,921 ) 51,877
(192,083 )
Comprehensive loss attributable to noncontrolling interests 439
232
1,330
568
Comprehensive income / (loss) attributable to CME Ltd. $ 1,598
$ (13,689 ) $ 53,207
$ (191,515 )



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net revenues	$	138,851		$	137,038		$	469,009		$	475,655
Operating expenses:
Content costs	58,962			60,910			199,678			219,337
Other operating costs	13,274			13,260			40,328			41,929
Depreciation of property, plant and equipment	8,245			8,202			24,625			25,150
Amortization of broadcast licenses and other intangibles	2,029			2,216			6,336			6,839
Cost of revenues	82,510			84,588			270,967			293,255
Selling, general and administrative expenses	25,558			30,253			79,160			85,605
Operating income	30,783			22,197			118,882			96,795
Interest expense (Note 15)	(8,037		)	(9,977		)	(24,014		)	(40,206		)
Other non-operating (expense) / income, net (Note 16)	(3,963		)	1,574			(4,823		)	(1,144		)
Income before tax	18,783			13,794			90,045			55,445
Provision for income taxes	(5,261		)	(3,185		)	(20,694		)	(14,405		)
Income from continuing operations	13,522			10,609			69,351			41,040
Income from discontinued operations, net of tax	—			57,882			—			60,548
Net income	13,522			68,491			69,351			101,588
Net loss attributable to noncontrolling interests	223			80			111			274
Net income attributable to CME Ltd.	$	13,745		$	68,571		$	69,462		$	101,862

Net income	$	13,522		$	68,491		$	69,351		$	101,588
Other comprehensive (loss) / income
Currency translation adjustment	(32,525		)	12,137			(31,366		)	(10,707		)
Unrealized (loss) / gain on derivative instruments (Note 14)	(235		)	1,033			(4,786		)	(1,895		)
Total other comprehensive (loss) / income	(32,760		)	13,170			(36,152		)	(12,602		)
Comprehensive (loss) / income	(19,238		)	81,661			33,199			88,986
Comprehensive (income) / loss attributable to noncontrolling interests	(88		)	26			(246		)	(4		)
Comprehensive (loss) / income attributable to CME Ltd.	$	(19,326	)	$	81,687		$	32,953		$	88,982


PER SHARE DATA (Note 18):
Net (loss) / income per share:
Net income per share:
Continuing operations — basic	$	(0.03	)	$	(0.09	)	$	0.04		$	(1.31	)	$	0.04	$	0.03	$	0.18	$	0.11
Continuing operations — diluted	(0.03		)	(0.09		)	0.03			(1.31		)	0.04		0.03		0.18		0.10
Discontinued operations — basic	(0.04		)	(0.05		)	(0.06		)	(0.11		)	—		0.15		—		0.18
Discontinued operations — diluted	(0.04		)	(0.05		)	(0.06		)	(0.11		)	—		0.15		—		0.17
Net loss attributable to CME Ltd. — basic	(0.07		)	(0.14		)	(0.02		)	(1.42		)
Net loss attributable to CME Ltd. — diluted	(0.07		)	(0.14		)	(0.02		)	(1.42		)
Attributable to CME Ltd. — basic													0.04		0.18		0.18		0.29
Attributable to CME Ltd. — diluted													0.04		0.18		0.18		0.27

Weighted average common shares used in computing per share amounts (000’s):
Basic	156,189			153,494			155,579			149,898			264,833		263,829		264,536		219,267
Diluted	156,189			153,494			233,761			149,898			266,529		264,940		265,940		255,265

The accompanying notes are an integral part of these condensed consolidated financial statements.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(US$ 000’s, except share data)

(Unaudited)


	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 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 Equity
BALANCE December 31, 2016	1	$	—	143,449,913	$	11,476	—	$	—	$	1,910,244		$	(1,785,536	)	$	(243,988	)	$	1,272		$	(106,532	)
BALANCE June 30, 2019																									1	$	—	253,559,298	$	20,285	—	$	—	$	2,005,215		$	(1,522,359	)	$	(220,088	)	$	459		$	283,512
Stock-based compensation	—	—		—	—		—	—		2,140			—			—			—			2,140			—	—		—	—		—	—		932			—			—			—			932
Exercise of warrants (Note 14)	—	—		563,325	45		—	—		518			—			—			—			563
Share issuance, stock-based compensation	—	—		868,494	69		—	—		(69		)	—			—			—			—			—	—		47,728	3		—	—		(3		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation	—	—		—	—		—	—		(168		)	—			—			—			(168		)	—	—		—	—		—	—		6			—			—			—			6
Preferred dividend paid in kind	—	—		—	—		—	—		(7,216		)	—			—			—			(7,216		)
Net income																									—	—		—	—		—	—		—			13,745			—			(223		)	13,522
Unrealized loss on derivative instruments																									—	—		—	—		—	—		—			—			(235		)	—			(235		)
Currency translation adjustment																									—	—		—	—		—	—		—			—			(32,836		)	311			(32,525		)
BALANCE September 30, 2019																									1	$	—	253,607,026	$	20,288	—	$	—	$	2,006,150		$	(1,508,614	)	$	(253,159	)	$	547		$	265,212

																									CME Ltd.
																									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
BALANCE June 30, 2018																									1	$	—	252,121,007	$	20,170	—	$	—	$	1,999,610		$	(1,702,477	)	$	(213,434	)	$	48		$	103,917
Stock-based compensation																									—	—		—	—		—	—		3,898			—			—			—			3,898
Share issuance, stock-based compensation																									—	—		714,608	57		—	—		(57		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation																									—	—		—	—		—	—		(877		)	—			—			—			(877		)
Net income / (loss)	—	—		—	—		—	—		—			9,125			—			(534		)	8,591			—	—		—	—		—	—		—			68,571			—			(80		)	68,491
Gain on derivative instruments	—	—		—	—		—	—		—			—			1,083			—			1,083
Unrealized gain on derivative instruments																									—	—		—	—		—	—		—			—			1,033			—			1,033
Currency translation adjustment	—	—		—	—		—	—		—			—			42,999			(796		)	42,203			—	—		—	—		—	—		—			—			12,083			54			12,137
BALANCE September 30, 2017	1	$	—	144,881,732	$	11,590	—	$	—	$	1,905,449		$	(1,776,411	)	$	(199,906	)	$	(58	)	$	(59,336	)
BALANCE September 30, 2018																									1	$	—	252,835,615	$	20,227	—	$	—	$	2,002,574		$	(1,633,906	)	$	(200,318	)	$	22		$	188,599

The accompanying notes are an integral part of these condensed consolidated financial statements.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(US$ 000’s, except share data)

(Unaudited)



	CME Ltd.
	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
BALANCE December 31, 2018	1	$	—	252,853,554	$	20,228	—	$	—	$	2,003,518		$	(1,578,076	)	$	(216,650	)	$	301		$	229,321
Stock-based compensation	—	—		—	—		—	—		3,059			—			—			—			3,059
Share issuance, stock-based compensation	—	—		753,472	60		—	—		(60		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation	—	—		—	—		—	—		(367		)	—			—			—			(367		)
Net income	—	—		—	—		—	—		—			69,462			—			(111		)	69,351
Unrealized loss on derivative instruments	—	—		—	—		—	—		—			—			(4,786		)	—			(4,786		)
Currency translation adjustment	—	—		—	—		—	—		—			—			(31,723		)	357			(31,366		)
BALANCE September 30, 2019	1	$	—	253,607,026	$	20,288	—	$	—	$	2,006,150		$	(1,508,614	)	$	(253,159	)	$	547		$	265,212

	CME Ltd.
	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
BALANCE December 31, 2017	1	$	—	145,486,497	$	11,639	—	$	—	$	1,905,779		$	(1,735,768	)	$	(187,438	)	$	18		$	(5,770	)
Stock-based compensation	—	—		—	—		—	—		6,138			—			—			—			6,138
Exercise of warrants (Note 14)	—	—		105,652,401	8,452		—	—		97,200			—			—			—			105,652
Share issuance, stock-based compensation	—	—		1,696,717	136		—	—		(136		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation	—	—		—	—		—	—		(1,630		)	—			—			—			(1,630		)
Preferred dividend paid in kind	—	—		—	—		—	—		(4,777		)	—			—			—			(4,777		)
Net income / (loss)	—	—		—	—		—	—		—			101,862			—			(274		)	101,588
Unrealized loss on derivative instruments	—	—		—	—		—	—		—			—			(1,895		)	—			(1,895		)
Currency translation adjustment	—	—		—	—		—	—		—			—			(10,985		)	278			(10,707		)
BALANCE September 30, 2018	1	$	—	252,835,615	$	20,227	—	$	—	$	2,002,574		$	(1,633,906	)	$	(200,318	)	$	22		$	188,599

The accompanying notes are an integral part of these condensed consolidated financial statements.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(US$ 000’s)

(Unaudited)


	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income / (loss)	$	8,591		$	(201,766	)
Adjustments to reconcile net income / (loss) to net cash generated from continuing operating activities:
Loss from discontinued operations, net of tax (Note 3)	8,747			15,971
Net income							$	69,351		$	101,588
Adjustments to reconcile net income to net cash generated from continuing operating activities:
Income from discontinued operations, net of tax							—			(60,548		)
Amortization of program rights	174,214			166,938			199,678			219,337
Depreciation and other amortization	29,976			43,785			33,524			35,609
Interest and related Guarantee Fees paid in kind	14,733			14,300			—			2,934
Loss on extinguishment of debt (Note 5)	101			150,158
Loss on extinguishment of debt (Note 16)							340			415
Gain on disposal of fixed assets	(68		)	(45		)	(66		)	(93		)
Deferred income taxes	(1,300		)	6,783			(1,543		)	(249		)
Stock-based compensation (Note 17)	2,044			2,364			3,059			6,138
Change in fair value of derivatives	1,204			11,722			201			869
Foreign currency exchange gain, net	(12,459		)	(13,683		)
Foreign currency exchange loss / (gain), net							3,284			2,699
Changes in assets and liabilities:
Accounts receivable, net	35,280			19,530			55,124			33,322
Accounts payable and accrued liabilities	(5,435		)	(5,986		)	3,829			(4,894		)
Program rights	(183,625		)	(174,346		)	(203,271		)	(221,368		)
Other assets and liabilities	(1,559		)	(1,470		)	(1,637		)	(1,096		)
Accrued interest	10,668			11,665			2,908			(27,066		)
Income taxes payable	991			(255		)	(7,047		)	(8,463		)
Deferred revenue	11,645			12,576			11,970			16,227
VAT and other taxes payable	(3,110		)	(1,269		)	(1,731		)	(1,599		)
Net cash generated from continuing operating activities	$	90,638		$	56,972		$	167,973		$	93,762

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment	$	(16,389	)	$	(14,850	)	$	(15,639	)	$	(15,068	)
Disposal of property, plant and equipment	139			88			20			41
Net cash used in continuing investing activities	$	(16,250	)	$	(14,762	)	$	(15,619	)	$	(15,027	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt	$	—		$	533,963
Repayment of debt	(59,060		)	(540,699		)	$	(168,913	)	$	(270,780	)
Debt transaction costs	(106		)	(9,541		)	—			(10,746		)
Payment of credit facilities and capital leases	(1,757		)	(755		)
Settlement of forward currency swaps	—			(12,106		)
Settlement of derivative instruments							(1,712		)	—
Payment of credit facilities and finance leases							(5,106		)	(3,247		)
Proceeds from exercise of warrants	563			5,947			—			105,652
Proceeds from sale-leaseback transactions	2,746			—
Payments of withholding tax on net share settlement of share-based compensation	(168		)	—			(367		)	(1,630		)
Net cash used in continuing financing activities	$	(57,782	)	$	(23,191	)	$	(176,098	)	$	(180,751	)

Net cash provided by / (used in) discontinued operations - operating activities	3,273			(17,308		)
Net cash used in discontinued operations - investing activities	(3,125		)	(4,789		)
Net cash used in discontinued operations - financing activities	(210		)	(181		)
Net cash provided by discontinued operations - operating activities							—			4,403
Net cash provided by discontinued operations - investing activities							—			100,724

Impact of exchange rate fluctuations on cash and cash equivalents	9,884			2,005			(4,133		)	(2,382		)
Net increase / (decrease) in cash and cash equivalents	$	26,428		$	(1,254	)
Net (decrease) / increase in cash and cash equivalents							$	(27,877	)	$	729
CASH AND CASH EQUIVALENTS, beginning of period	40,606			59,120			62,031			58,748
CASH AND CASH EQUIVALENTS, end of period	$	67,034		$	57,866		$	34,154		$	59,477

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(US$ 000’s)

(Unaudited)



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest (including Guarantee Fees)	$	16,955	$	29,827
Cash paid for Guarantee Fees previously paid in kind	—		27,328
Cash paid for Guarantee Fees that previously could be paid in kind	—		812
Cash paid for income taxes, net of refunds	29,103		23,499

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Accretion on Series B Convertible Redeemable Preferred Stock	$	—	$	4,777

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest (including mandatory cash-pay Guarantee Fees) $ 22,206
$ 38,317
Cash paid for Guarantee Fees that may be paid in kind 1,411
5,483
Cash paid for income taxes, net of refunds 12,380
234

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Accretion on Series B Convertible Redeemable Preferred Stock $ 7,216
$ 11,314

The accompanying notes are an integral part of these condensed consolidated financial statements.

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)

1. ORGANIZATION AND BUSINESS

Central European Media Enterprises Ltd., a Bermuda company limited by shares, is a media and entertainment company operating in Central and Eastern Europe. Our assets are held through a series of Dutch and Curaçao holding companies. We manage our business on a geographical basis, with ~~four~~5 operating segments; Bulgaria, the Czech Republic, Romania, ~~and~~ the Slovak Republic and Slovenia, which are also our reportable segments and our main operating countries. See Note 19, "Segment Data" for financial information by segment. OnOur previously held Croatian operations, which were sold on July ~~9, 2017, we entered into a framework agreement with Slovenia Broadband S.à r.l., a wholly owned subsidiary~~31, 2018, are classified as discontinued operations in our condensed consolidated statements of ~~United Group B.V., relating to~~operations for the ~~sale of our Croatia~~three and ~~Slovenia operations. See Note 3, "Discontinued Operations and Assets Held for Sale" for further information.~~nine months ended September 30, 2018.

We are the market-leading broadcasters in each of our 5 operating countries with a combined portfolio of 2730 television channels. Each ~~of our broadcast operations~~country develops and produces content for their television channels. We generate advertising revenues ~~in our country operations~~ primarily through entering into agreements with advertisers, advertising agencies and sponsors to place advertising on the television channels that we operate. We generate additional revenues by collecting fees from cable, and direct-to-home ~~(“DTH”)~~ and internet protocol television ("IPTV") operators for carriage of our ~~channels. With the exception of~~channels as well as from advertising related to our ~~Bulgarian operations,~~digital initiatives. Unless otherwise indicated, we own 100% of our broadcast operating and license companies in each country.

Bulgaria

We operate ~~one~~1 general entertainment channel, BTV, and ~~five~~5 other channels, BTV CINEMA, BTV COMEDY, ~~RING,~~ BTV ACTION, BTV LADY and ~~BTV LADY.~~RING. We own ~~94.0%~~94% of CME Bulgaria B.V. ~~("CME Bulgaria")~~, the subsidiary that owns our Bulgaria operations.

Czech Republic

We operate ~~one~~1 general entertainment channel, TV NOVA, ~~(Czech Republic),~~ and ~~seven~~7 other channels, NOVA 2, NOVA CINEMA, NOVA SPORT 1, NOVA SPORT 2, NOVA ACTION, ~~NOVA 2,~~ NOVA GOLD and NOVA INTERNATIONAL, a general entertainment channel broadcasting in the Slovak Republic.

Romania

We operate ~~one~~1 general entertainment channel, PRO TV, and ~~eight~~6 other channels, PRO 2, ~~(formerly ACASA),~~PRO X, PRO GOLD, ~~(formerly ACASA GOLD),~~ PRO CINEMA, PRO ~~X (formerly SPORT.RO), MTV ROMANIA, PRO~~ TV INTERNATIONAL, as well as PRO TV CHISINAU, a general entertainment channel broadcasting in ~~Moldova, and ACASA IN MOLDOVA.~~Moldova.

Slovak Republic

We operate ~~one~~1 general entertainment channel, TV MARKIZA, and ~~three~~3 other channels, DOMA, ~~(Slovak Republic),~~ DAJTO, and MARKIZA INTERNATIONAL, a general entertainment channel broadcasting in the Czech Republic.

Slovenia

We operate 2 general entertainment channels, POP TV and KANAL A, and 3 other channels, KINO, BRIO and OTO.

2. BASIS OF PRESENTATION

The terms the ~~“Company”~~"Company", ~~“we”~~"we", ~~“us”~~"us", and “our” are used in this Form 10-Q to refer collectively to the parent company, Central European Media Enterprises Ltd. (“CME Ltd.”), and the subsidiaries through which ~~we operate.~~our various businesses are conducted. Unless otherwise noted, all statistical and financial information presented in this report has been converted into U.S. dollars using period-end exchange rates. All references to ~~“US$”~~"US$", ~~“USD”~~"USD" or ~~“dollars”~~"dollars" are to U.S. ~~dollars;~~dollars, all references to ~~“BGN”~~"BGN" are to the Bulgarian ~~leva;~~leva, all references to ~~“CZK”~~"CZK" are to the Czech ~~koruna;~~koruna, all references to ~~“RON”~~"RON" are to the New Romanian ~~lei;~~lei, and all references to ~~“Euro”~~"Euro" or ~~“EUR”~~"EUR" are to the European Union Euro. Where applicable, prior period presentation has been modified to conform to current year presentation.

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Quarterly Report on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States of America (“US GAAP”). Amounts as of December 31, ~~2016~~2018 included in the unaudited condensed consolidated financial statements have been derived from audited consolidated financial statements as of that date. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 filed with the Securities and Exchange Commission on February ~~9, 2017.~~6, 2019. Our significant accounting policies have not changed since December 31, ~~2016,~~2018, except as noted below.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring items and changes in US GAAP, necessary for their fair presentation in conformity with US GAAP for complete financial statements. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

~~Discontinued Operations and Assets Held for Sale~~

We present our results of operations, financial position and cash flows of operations that have either been sold or that meet the criteria for "held-for-sale accounting" as discontinued operations if the disposal represents a strategic shift that will have a major effect on our operations and financial results. At the time an operation qualifies for held-for-sale accounting, the operation is evaluated to determine whether or not the carrying amount exceeds its fair value less cost to sell. Any loss as a result of carrying amounts in excess of fair value less cost to sell is recorded in the period the operation qualifies for held-for-sale accounting. Management judgment is required to (1) assess the criteria required to qualify for held-for-sale accounting, and (2) estimate fair value. Our Croatia and Slovenia operations are classified as discontinued operations and assets held for sale for all periods presented. See Note 3, "Discontinued Operations and Assets Held for Sale".

~~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)~~

Basis of Consolidation

The unaudited condensed consolidated financial statements include the accounts of CME Ltd. and our subsidiaries, after the elimination of intercompany accounts and transactions. Entities in which we hold less than a majority voting interest but over which we have the ability to exercise significant influence are accounted for using the equity method. Other investments are accounted for using the cost method.

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)

Seasonality

We experience seasonality, with advertising sales tending to be lowest during the third quarter of each calendar year due to the summer holiday period (typically July and August), and highest during the fourth quarter of each calendar year due to the winter holiday season.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted

~~On January 1, 2017 we adopted guidance issued by~~In February 2016, the Financial Accounting Standards Board ~~(the “FASB”) which is intended to improve~~ ("the accounting for the income tax consequences of intercompany transfers of assets other than inventory. The guidance requires an entity to recognize the income tax consequences of such transfers in the period in which the transfer occurs, rather than defer recognition of current and deferred income taxes for the transfer until the asset is sold to a third party. The early adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

~~Recent Accounting Pronouncements Issued~~

In May 2014, the FASB issued guidance which is intended to improve the comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. The guidance supersedes existing revenue recognition guidance and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for our fiscal year beginning January 1, 2018. We have substantially completed our evaluation of the contractual terms of our significant revenue streams in each of our operating segments. While we are still in the process of evaluating the impact of the adoption of this guidance on our condensed consolidated financial statements, we currently do not expect the impact of this new guidance to be material. We expect to adopt the standard in 2018 using the modified retrospective transition method.

~~In February 2016, the FASB~~FASB") issued guidance to increase transparency and comparability among organizations by recognizing leasing assets and liabilities on the balance sheet and requiring additional disclosures about an entity's leasing arrangements. The guidance requires that a lessee recognize a liability to make lease payments and a right-of-use asset ("ROU"), with an available exception for leases with an initial term shorter than twelve months. Adoption of the guidance changes our accounting for operating leases while the accounting for our finance leases (previously called capital leases) remains substantially unchanged.

We determine if an arrangement includes a lease at inception. An ROU represents our right to use an underlying asset for the lease term and the corresponding lease liability represents our obligation to make periodic payments arising from that lease. Operating lease ROUs and liabilities are recognized at their commencement date based on the present value of the lease payments over the lease term. As most of our leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at the commencement date of a lease in determining the present value of the lease payments. The operating lease ROU also includes any lease payments made prior to commencement and excludes any lease incentives received or to be received under the agreement. Our determination of the lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise such option.

Where lease agreements include both lease and non-lease components, we generally account for each separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. We consider operating leases that are for a period less than 12 months, inclusive of options to extend that we are reasonably certain to exercise, as short-term. Short-term leases are not recognized on the balance sheet. Short-term lease cost is recognized on a straight-line basis over the lease term.

ROUs and related operating lease liabilities are included in other non-current assets, other current liabilities and other non-current liabilities, respectively on our condensed consolidated balance sheets. Operating lease costs are recognized on a straight-line basis over the lease term within content costs, other operating costs or sales, general and administrative expenses based on the use of the related ROU. ROUs and related finance lease liabilities are included in property and equipment, and long-term debt and other financing arrangements, respectively, on our condensed consolidated balance sheets. Depreciation of an asset held under a finance lease is recognized in depreciation of property, plant and equipment.

We adopted this guidance as of the transition date of January 1, 2019, using the modified retrospective approach and have elected the transition option which allows us to continue to apply the legacy guidance for comparative periods, including disclosure requirements, in the year of adoption. We have elected to use the package of practical expedients available to us, including the short-term lease exception, however we have not elected the use of hindsight and have not elected to combine lease and non-lease components for our main classes of assets.

On transition, we recorded US$ 11.9 million in operating lease liabilities and ROUs while our accounting for finance leases remains substantially unchanged.

Recent Accounting Pronouncements Issued

In June 2016, the FASB issued new guidance to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments replace the incurred loss impairment methodology in the current guidance with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for our fiscal year beginning January 1, ~~2019. We are currently in the process of evaluating the impact of the~~2020 with early adoption ~~of this guidance on our condensed consolidated financial statements.~~

In August 2016, the FASB issued guidance which is intended to reduce the existing diversity in practice related to specific cash flow issues. As applicable to us, the guidance requires that cash flows at the settlement of zero-coupon debt instruments or debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing be bifurcated between cash outflows for operating activities for the portion attributable to accrued interest, and cash outflows for financing activities for the portion attributable to the principal. The guidance requires a retrospective transition method and is effectivepermitted for our fiscal year beginning January 1, ~~2018, with early adoption permitted.~~2019. Based on our current assessment, the guidance will primarily apply to our accounts receivable but is not expected to substantially change our procedures for estimating our bad debt expense or the anticipated results of those procedures. We expect to adopt this guidance ~~as of~~on January 1, 2018. Upon adoption, our net cash flows generated from / used in continuing operating activities for the year ended December 31, 2016 will decrease by US$ 110.7 million with a corresponding increase in net cash used in / provided by continuing financing activities.2020.

In ~~January 2017,~~March 2019, the FASB issued new guidance ~~which is intended to simplify goodwill~~that aligns the accounting for production costs of an episodic television series with the accounting for production costs of films. The guidance further requires that an entity test a film or license agreement for program material for impairment ~~testing by eliminating Step 2,~~at a film group level and ~~instead recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds the~~under a fair value model when the film or license agreement is predominantly monetized with other films and/or license agreements. Further, content acquired under a license agreement is not required to be separately presented on the balance sheet based on the estimated time of the reporting unit. The guidance also eliminates the requirement to perform a qualitative analysis for reporting units with a negative carrying value. The guidance is effective for annual and interim impairment tests after January 1, 2020, with early adoption permitted for interim and annual impairment tests performed from January 1, 2017. We expect to early adopt the guidance in the fourth quarter of 2017.

In August 2017, the FASB issued guidance which is intended to simplify the application of hedge accounting and increase transparency of information about an entity's risk management activities. The guidance changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements.usage. Additional disclosures are required. The guidance is effective for our fiscal year beginning January 1, ~~2019,~~2020 with early adoption ~~during interim periods~~ permitted. ~~All requirements and elections should be applied to hedging relationships existing on the date of adoption and reflected as of the beginning of the fiscal year of adoption.~~ We ~~are currently in the process of evaluating the impact of the adoption of~~do not expect this guidance to significantly impact the condensed consolidated statements of operations and comprehensive income / loss, but we do anticipate the classification of all our acquired content as non-current on our condensed consolidated ~~financial statements.~~balance sheets. We expect to adopt this guidance on January 1, 2020.

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)

3. ~~DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE~~

On July 9, 2017, we entered into a framework agreement with Slovenia Broadband S.à r.l. (the "Purchaser"), a wholly owned subsidiary of United Group B.V., relating to the sale of our Croatia and Slovenia operations for cash consideration of EUR 230.0 million (approximately US$ 271.5 million) (the "Divestment Transaction"), subject to customary working capital adjustments. We expect the transaction to close by the end of 2017 or early 2018, subject to obtaining regulatory approvals and other customary closing conditions being satisfied. If the transaction is terminated by either party because the transaction has not closed prior to December 31, 2017 (which date may be extended under certain circumstances by the Purchaser to March 31, 2018), we would receive a termination fee of EUR 7.0 million (approximately US$ 8.3 million), subject to certain exceptions, including if the requisite regulatory approvals have not been obtained as a result of the Purchaser being required to make specified material divestitures as a condition to any requisite regulatory approvals or if a notification has not been declared complete by a relevant regulatory authority.

The carrying amounts of the major classes of assets and liabilities of our discontinued operations that are classified as held for sale in the condensed consolidated balance sheets at September 30, 2017 and December 31, 2016 were:

September 30, 2017
December 31, 2016
Assets held for sale
Current assets held for sale
Cash and cash equivalents $ 7,061
$ 2,853
Accounts receivable, net 29,064
36,969
Program rights, net 66,449
16,489
Property, plant and equipment, net 20,909
—
Other current assets 11,688
4,931
Total current assets held for sale $ 135,171
$ 61,242
Non-current assets held for sale
Program rights, net $ —
$ 35,927
Property, plant and equipment, net —
20,008
Other non-current assets —
4,339
Total non-current assets held for sale $ —
$ 60,274

Liabilities held for sale
Current liabilities held for sale
Accounts payable and accrued liabilities $ 27,922
$ 26,603
Other current liabilities 4,324
889
Total current liabilities held for sale $ 32,246
$ 27,492
Non-current liabilities held for sale
Other non-current liabilities $ —
$ 1,414
Total non-current liabilities held for sale $ —
$ 1,414

~~Loss from discontinued operations, net of tax, comprised the following for the three and nine months ended September 30, 2017 and 2016:~~

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017
2016
Net revenues $ 22,742
$ 19,179
$ 80,973
$ 74,765
Cost of revenues 18,893
17,866
61,120
62,788
Selling, general and administrative expenses 5,394
4,378
14,484
12,004
Operating (loss) / income (1,545 ) (3,065 ) 5,369
(27 )
Interest expense ⁽¹⁾
(4,913 ) (5,212 ) (14,220 ) (15,695 )
Other non-operating income / (expense), net 294
36
621
(8 )
Loss from discontinued operations, before tax (6,164 ) (8,241 ) (8,230 ) (15,730 )
Credit / (provision) for income taxes 176
187
(517 ) (241 )
Loss from discontinued operations, net of tax $ (5,988 ) $ (8,054 ) $ (8,747 ) $ (15,971 )

⁽¹⁾

For the nine months ended September 30, 2017 and 2016, we paid US$ 9.6 million and US$ 24.5 million, respectively, of interest and Guarantee Fees (as defined below) associated with the 2018 Euro Term Loan (as defined below). These payments were allocated to Net cash provided by / (used in) discontinued operations - operating activities in our Condensed Consolidated Statements of Cash Flows as we are required to apply the expected proceeds from the sale of our Croatia and Slovenia operations towards the repayment of the remaining principal amounts owing in respect of the 2018 Euro Term Loan. (see Note 5, "Long-term Debt and Other Financing Arrangements").

4. GOODWILL AND INTANGIBLE ASSETS

Goodwill:

Goodwill by reporting unit as at September 30, ~~2017~~2019 and December 31, ~~2016~~2018 was as follows:

Bulgaria Czech Republic Romania Slovak Republic Total
Gross Balance, December 31, 2016 $ 171,389
$ 744,483
$ 82,786
$ 46,089
$ 1,044,747
Accumulated impairment losses (144,639 ) (287,545 ) (11,028 ) —
(443,212 )
Balance, December 31, 2016 26,750
456,938
71,758
46,089
601,535
Foreign currency 3,208
75,461
7,386
5,552
91,607
Balance, September 30, 2017 29,958
532,399
79,144
51,641
693,142
Accumulated impairment losses (144,639 ) (287,545 ) (11,028 ) —
(443,212 )
Gross Balance, September 30, 2017 $ 174,597
$ 819,944
$ 90,172
$ 51,641
$ 1,136,354



	Bulgaria			Czech Republic			Romania			Slovak Republic			Slovenia			Total
Gross Balance, December 31, 2018	$	173,694		$	808,970		$	86,800		$	50,081		$	19,400		$	1,138,945
Accumulated impairment losses	(144,639		)	(287,545		)	(11,028		)	—			(19,400		)	(462,612		)
Balance, December 31, 2018	29,055			521,425			75,772			50,081			—			676,333
Foreign currency	(1,423		)	(27,295		)	(4,729		)	(2,459		)	—			(35,906		)
Balance, September 30, 2019	27,632			494,130			71,043			47,622			—			640,427
Accumulated impairment losses	(144,639		)	(287,545		)	(11,028		)	—			(19,400		)	(462,612		)
Gross Balance, September 30, 2019	$	172,271		$	781,675		$	82,071		$	47,622		$	19,400		$	1,103,039

Other intangible assets:

~~Changes in the~~The net book ~~value~~values of our other intangible assets as at September 30, ~~2017~~2019 and December 31, ~~2016~~ ~~are summarized~~2018 were as follows:


	September 30, 2017							December 31, 2016							September 30, 2019							December 31, 2018
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Indefinite-lived:
Trademarks	$	86,448	$	—		$	86,448	$	76,731	$	—		$	76,731	$	82,746	$	—		$	82,746	$	87,356	$	—		$	87,356
Amortized:
Broadcast licenses	213,532		(155,054		)	58,478		184,195		(128,876		)	55,319		199,525		(160,051		)	39,474		210,447		(162,936		)	47,511
Trademarks	420		(420		)	—		380		(380		)	—		594		(594		)	—		631		(631		)	—
Customer relationships	57,813		(55,863		)	1,950		51,338		(48,997		)	2,341		53,059		(52,533		)	526		56,024		(55,158		)	866
Other	1,723		(1,526		)	197		1,522		(1,208		)	314		3,375		(1,740		)	1,635		1,868		(1,549		)	319
Total	$	359,936	$	(212,863	)	$	147,073	$	314,166	$	(179,461	)	$	134,705	$	339,299	$	(214,918	)	$	124,381	$	356,326	$	(220,274	)	$	136,052

~~Broadcast~~Net broadcast licenses consist solely of our TV NOVA license in the Czech Republic, which is amortized on a straight-line basis through ~~the~~its expiration date ~~of the license~~ in 2025. Our customer relationships are deemed to have an economic useful life of, and are amortized on a straight-line basis, over five years to fifteen years. Other intangibles primarily consist of software licenses which are typically amortized on a straight-line basis over three years. to five years.

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)

5.4. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

Summary



	September 30, 2019			December 31, 2018
Long-term debt	$	572,357		$	772,339
Other credit facilities and finance leases	14,807			15,891
Total long-term debt and other financing arrangements	587,164			788,230
Less: current maturities	(6,063		)	(5,545		)
Total non-current long-term debt and other financing arrangements	$	581,101		$	782,685

September 30, 2017
December 31, 2016
Long-term debt $ 1,061,800
$ 999,209
Other credit facilities and capital leases 7,778
3,427
Total long-term debt and other financing arrangements 1,069,578
1,002,636
Less: current maturities (2,425 ) (1,228 )
Total non-current long-term debt and other financing arrangements $ 1,067,153
$ 1,001,408

~~Financing Transactions~~

Pursuant to an amendment in March 2017 to the Reimbursement Agreement (as defined below) with Time Warner Inc. ("Time Warner"), as guarantor of our obligations under the Euro Term Loans (as defined below), the grid pricing structure on the all-in rate that applied only to the 2021 Euro Term Loan (as defined below) was extended to the 2018 Euro Term Loan (as defined below) and the 2019 Euro Term Loan (as defined below), with a reduction in the pricing under the grid for each of the Euro Term Loans resulting in an all-in rate ranging from 8.5% (if our net leverage is greater than or equal to seven times) to 5.0% (if our net leverage is less than five times). As at September 30, 2017, we reduced our net leverage ratio to below six times and anticipate a reduction of our all-in rate to 6.0% from the end of October 2017. In addition, we can achieve a further 50 basis point reduction in the all-in rate if we reduce our long-term debt to less than EUR 815.0 million, subject to certain adjustments in respect of specified debt repayments, on or prior to September 30, 2018. We are required to pay the first 5.0% of the all-in rate (including the base rate and the rate paid pursuant to customary hedging arrangements) on the Euro Term Loans in cash and the remainder may be paid in cash or in kind, at our option. For details, see the table below under the heading "Reimbursement Agreement and Guarantee Fees".

On August 1, 2017, we elected to repay EUR 50.0 million (approximately US$ 59.1 million at August 1, 2017 rates) of the outstanding principal balance of the 2018 Euro Term Loan on which we recognized a loss on extinguishment of US$ 0.1 million.

We are required to apply the proceeds from the sale of our Croatia and Slovenia operations to the repayment of the remaining principal amounts owing in respect of the 2018 Euro Term Loan. Any excess amounts will then be applied to pay fees related to the 2019 Euro Term Loan, including Guarantee Fees and the Commitment Fee which we have previously paid in kind pursuant to the Reimbursement Agreement (see Note 3, "Discontinued Operations and Assets Held for Sale").

Overview

Total long-term debt and credit facilities comprised the following at September 30, ~~2017:~~2019:



	Principal Amount of Liability Component		Debt Issuance Costs ⁽¹⁾			Net Carrying Amount
2021 Euro Loan	$	65,699	$	(108	)	$	65,591
2023 Euro Loan	510,476		(3,710		)	506,766
2023 Revolving Credit Facility	—		—			—
Total long-term debt and credit facilities	$	576,175	$	(3,818	)	$	572,357

Principal Amount of Liability Component

Debt Issuance
Costs ⁽¹⁾

Net Carrying Amount
2018 Euro Term Loan $ 237,064
$ (351 ) $ 236,713
2019 Euro Term Loan 277,837
(411 ) 277,426
2021 Euro Term Loan 553,465
(5,804 ) 547,661
2021 Revolving Credit Facility —
—
—
Total long-term debt and credit facilities $ 1,068,366
$ (6,566 ) $ 1,061,800

⁽¹⁾

Debt issuance costs related to the ~~2018~~2021 Euro ~~Term~~ Loan, ~~2019~~the 2023 Euro ~~Term~~ Loan and ~~2021 Euro Term Loan~~the 2023 Revolving Credit Facility (each as defined ~~below and collectively, the “Euro Term Loans”)~~below) are being amortized on a straight-line basis, which approximates the effective interest method, over the life of the respective instruments. Debt issuance costs related to the ~~2021~~2023 Revolving Credit Facility are classified as non-current assets in our condensed consolidated balance ~~sheet and are being amortized on a straight-line basis over the life of the 2021 Revolving Credit Facility.~~sheet.

On January 31, 2019, and June 14, 2019, we paid EUR 60.0 million (approximately US$ 68.9 million at January 31, 2019 rates) and EUR 40.0 million (approximately US$ 45.1 million at June 14, 2019 rates), respectively, of the outstanding principal balance of the 2021 Euro Loan. On September 23, 2019, we paid a further EUR 50.0 million (approximately US$ 54.9 million at September 23, 2019 rates) of the outstanding principal balance of the 2021 Euro Loan.

At September 30, 2019, the maturity of our long-term debt and credit facilities was as follows:



2019	$	—
2020	—
2021	65,699
2022	—
2023	510,476
2024 and thereafter	—
Total long-term debt and credit facilities	576,175
Debt issuance costs	(3,818		)
Carrying amount of long-term debt and credit facilities	$	572,357

Long-term Debt

Our long-term debt comprised the following at September 30, ~~2017~~2019 and December 31, ~~2016:~~2018:



	Carrying Amount				Fair Value
	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
2021 Euro Loan	$	65,591	$	240,296	$	67,273	$	233,058
2023 Euro Loan	506,766		532,043		527,315		502,617
	$	572,357	$	772,339	$	594,588	$	735,675

Carrying Amount Fair Value
September 30, 2017
December 31, 2016
September 30, 2017
December 31, 2016
2018 Euro Term Loan $ 236,713
$ 263,734
$ 225,679
$ 233,297
2019 Euro Term Loan 277,426
247,594
251,012
203,314
2021 Euro Term Loan 547,661
487,881
464,212
369,738
$ 1,061,800
$ 999,209
$ 940,903
$ 806,349

~~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)~~

~~2018 Euro Term Loan~~

As at September 30, 2017, the principal amount of our floating rate senior unsecured term credit facility (as amended, the "2018 Euro Term Loan") outstanding was EUR 200.8 million (approximately US$ 237.1 million). On August 1, 2017, we elected to repay EUR 50.0 million (approximately US$ 59.1 million at August 1, 2017 rates) of the outstanding principal balance of that loan on which we recognized a loss on extinguishment of US$ 0.1 million.

The 2018 Euro Term Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 12, "Financial Instruments and Fair Value Measurements") plus a margin of between 1.1% and 1.9% depending on the credit rating of Time Warner. The all-in borrowing rate including the Guarantee Fee ranges from 8.5% to 5.0% per annum based on our net leverage (see the table below under the heading "Reimbursement Agreement and Guarantee Fees"). As at September 30, 2017, the all-in borrowing rate on amounts outstanding under the 2018 Euro Term Loan was 7.25%, the components of which are shown in the table below under the heading "Interest Rate Summary".

Interest on the 2018 Euro Term Loan is payable quarterly in arrears on each March 12, June 12, September 12 and December 12. The 2018 Euro Term Loan matures on November 1, 2018 and may currently be prepaid at our option, in whole or in part, without premium or penalty at any time. The 2018 Euro Term Loan is a senior unsecured obligation of CME Ltd., and is unconditionally guaranteed by our 100% owned subsidiary CME Media Enterprises B.V. ("CME BV") and by Time Warner and certain of its subsidiaries.

~~The~~estimated fair values of the ~~2018~~ Euro ~~Term Loan~~Loans (as defined below) as at September 30, ~~2017~~2019 and December 31, ~~2016~~2018 were determined ~~based on~~using the average yield curve of comparable ~~instruments that trade in active markets, plus an applicable spread. This measurement of estimated fair value uses~~bonds with equivalent credit ratings which is a Level 2 ~~inputs~~input as described in Note 12, "Financial Instruments and Fair Value Measurements". Certain derivative instruments, including contingent event of default and change of control put options, have been identified as being embedded in each of the ~~2018~~ Euro ~~Term Loan.~~Loans. The embedded derivatives are considered clearly and closely related to ~~the 2018~~their respective Euro ~~Term~~ Loan, and as such are not required to be accounted for separately.

~~2019~~

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)

2021 Euro ~~Term~~ Loan

As at September 30, ~~2017,~~2019, the principal amount of our floating rate senior unsecured term credit facility (the ~~"2019~~"2021 Euro ~~Term~~ Loan") outstanding was EUR ~~235.3~~60.3 million (approximately US$ ~~277.8~~65.7 million). The ~~2019~~2021 Euro ~~Term~~ Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 12, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Time Warner. The all-in borrowing rate including the Guarantee Fee ranges from 8.5% to 5.0% per annum based on our net leverage (see the table below under the heading "Reimbursement Agreement and Guarantee Fees").Warner Media. As at September 30, ~~2017,~~2019, the all-in borrowing rate on amounts outstanding under the ~~2019~~2021 Euro ~~Term~~ Loan was ~~7.25%~~3.25%, the components of which are shown in the table below under the heading "Interest Rate Summary".

Interest on the ~~2019~~2021 Euro ~~Term~~ Loan is payable quarterly in arrears on each February 13, May 13, August 13 and November 13. The ~~2019~~2021 Euro ~~Term~~ Loan matures on November 1, ~~2019~~2021 and may ~~currently~~ be prepaid at our option, in whole or in part, without premium or ~~penalty.~~penalty from cash generated from our operations. From April 26, 2020, the 2021 Euro Loan may be refinanced at our option. The ~~2019~~2021 Euro ~~Term~~ Loan is a senior unsecured obligation of CME Ltd., and is unconditionally guaranteed by CME BVMedia Enterprises B.V. ("CME BV") and by ~~Time~~ Warner Media, LLC ("Warner Media") and certain of its subsidiaries.

~~The fair values of the 2019~~2023 Euro ~~Term~~ Loan as

As at September 30, 2017 and December 31, 2016 were determined based on comparable instruments that trade in active markets, plus an applicable spread. This measurement of estimated fair value uses Level 2 inputs as described in Note 12, "Financial Instruments and Fair Value Measurements". Certain derivative instruments, including contingent event of default and change of control put options, have been identified as being embedded in the 2019 ~~Euro Term Loan. The embedded derivatives are considered clearly and closely related to the 2019 Euro Term Loan, and as such are not required to be accounted for separately.~~

~~2021 Euro Term Loan~~

~~As at September 30, 2017,~~, the principal amount of our floating rate senior unsecured term credit facility (the ~~"2021~~"2023 Euro ~~Term~~ Loan") outstanding was EUR 468.8 million (approximately US$ ~~553.5~~510.5 million). The ~~2021~~2023 Euro ~~Term~~ Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 12, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Time Warner. The all-in borrowing rate including the Guarantee Fee ranges from 8.5% to 5.0% per annum based on our net leverage (see the table below under the heading "Reimbursement Agreement and Guarantee Fees").Warner Media. As at September 30, ~~2017,~~2019, the all-in borrowing rate on amounts outstanding under the ~~2021~~2023 Euro ~~Term~~ Loan was ~~7.25%~~3.50%, the components of which are shown in the table below under the heading "Interest Rate Summary".

Interest on the ~~2021~~2023 Euro ~~Term~~ Loan is payable quarterly in arrears on each January 7, April 7, July 7 and October 7. The ~~2021~~2023 Euro ~~Term~~ Loan matures on ~~February 19, 2021~~April 26, 2023 and may be prepaid at our option, in whole or in part, without premium or penalty ~~upon~~from cash generated from our operations. From April 26, 2020, the ~~earlier of the occurrence of certain events, including if~~2023 Euro Loan may be refinanced at our ~~net leverage (as defined in the Reimbursement Agreement) decreases to below five times for two consecutive quarters, or at any time from February 19, 2020.~~option. The ~~2021~~2023 Euro ~~Term~~ Loan is a senior unsecured obligation of CME BV and is unconditionally guaranteed by CME Ltd. and by ~~Time~~ Warner Media and certain of its subsidiaries.

The fair values of the 2021 Euro Term Loan as at September 30, 2017 and December 31, 2016 were determined based on comparable instruments that trade in active markets, plus an applicable spread. This measurement of estimated fair value uses Level 2 inputs as described in Note 12, "Financial Instruments and Fair Value Measurements". Certain derivative instruments, including contingent event of default and change of control put options, have been identified as being embedded in the 2021 Euro Term Loan. The embedded derivatives are considered clearly and closely related to the 2021 Euro Term Loan, and as such are not required to be accounted for separately.

Reimbursement Agreement and Guarantee Fees

In connection with ~~Time Warner’s~~Warner Media’s guarantees of the 2021 Euro ~~Term Loans,~~Loan and 2023 Euro Loan (collectively, the "Euro Loans"), we entered into a reimbursement agreement (as amended, the “Reimbursement Agreement") with ~~Time Warner.~~Warner Media. The Reimbursement Agreement provides for the payment of guarantee fees (collectively, the "Guarantee Fees") to ~~Time~~ Warner Media as consideration for those guarantees, and the reimbursement to ~~Time~~ Warner Media of any amounts paid by them under any guarantee or through any loan purchase right exercised by it. The loan purchase right allows ~~Time~~ Warner Media to purchase any amount outstanding under the Euro ~~Term~~ Loans from the lenders following an event of default under the Euro ~~Term~~ Loans or the Reimbursement Agreement. The Reimbursement Agreement is jointly and severally guaranteed by both our 100% owned subsidiary Central European Media Enterprises N.V. ("CME NV") and CME BV and is secured by a pledge over 100% of the outstanding shares of each of CME NV and CME BV. The covenants and events of default under the Reimbursement Agreement are substantially the same as under the ~~2021~~2023 Revolving Credit Facility (described below).

We pay Guarantee Fees to Warner Media based on the amounts outstanding on the Euro Loans calculated on a per annum basis and on our consolidated net leverage (as defined in the Reimbursement Agreement) as shown in the tables below:

All-in Rate



Consolidated Net Leverage				2021 Euro Loan		2023 Euro Loan
≥	7.0x			6.00	%	6.50	%
<	7.0x	-	6.0x	5.00	%	5.50	%
<	6.0x	-	5.0x	4.25	%	4.75	%
<	5.0x	-	4.0x	3.75	%	4.25	%
<	4.0x	-	3.0x	3.25	%	3.75	%
<	3.0x			3.25	%	3.50	%

Our consolidated net leverage as at September 30, 2019 and December 31, 2018 was 2.5x and 3.5x, respectively. For the three and nine months ended September 30, 2019 and 2018, we recognized US$ 3.2 million and US$ 10.5 million; and US$ 5.2 million and US$ 22.5 million, respectively, of Guarantee Fees as interest expense in our condensed consolidated statements of operations and comprehensive income / loss.

The Guarantee Fees relating to the 2021 Euro Loan are payable semi-annually in arrears on each May 1 and November 1. The Guarantee Fees relating to the 2023 Euro Loan are payable semi-annually in arrears on each June 1 and December 1.

The Guarantee Fees on the 2023 Euro Loan that were previously paid in kind are presented as a component of other non-current liabilities (see Note 10, "Other Liabilities") and bear interest per annum at the applicable Guarantee Fee rate (as set forth in the table below). Guarantee Fees are included in cash flows from operating activities in our condensed consolidated statements of cash flows.

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)

We pay Guarantee Fees to Time Warner based on the amounts outstanding on the Euro Term Loans calculated on a per annum basis and on our consolidated net leverage (as defined in the Reimbursement Agreement) as shown in the table below:Interest Rate Summary



	Base Rate			Rate Fixed Pursuant to Interest Rate Hedges			Guarantee Fee Rate		All-in Borrowing Rate
2021 Euro Loan	1.28	%		0.31	%	⁽¹⁾	1.66	%	3.25	%
2023 Euro Loan	1.28	%		0.28	%	⁽²⁾	1.94	%	3.50	%
2023 Revolving Credit Facility (if drawn)	5.34	%	⁽³⁾	—	%		—	%	5.34	%

Consolidated Net Leverage
Cash Rate⁽¹⁾

PIK Fee Rate

Total Rate ⁽²⁾

≥ 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 %


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


⁽²⁾	Subject to certain adjustments in respect of specified debt repayments, if we reduce our long-term debt to less than EUR 815.0 million prior to September 30, 2018, a 50 basis point reduction in the all-in rate would be applied.

Our consolidated net leverage as at September 30, 2017 and December 31, 2016 was 5.8x and 6.9x, respectively. For the three and nine months ended September 30, 2017 and 2016, we recognized US$ 11.8 million and US$ 36.3 million and US$ 16.5 million and US$ 37.7 million, respectively, of Guarantee Fees as interest expense in our condensed consolidated statements of operations and comprehensive income / loss.

The Guarantee Fees relating to the 2018 Euro Term Loan and the 2019 Euro Term Loan are payable semi-annually in arrears on each May 1 and November 1, in cash or in kind, by adding such semi-annual Guarantee Fees to any such amount then outstanding. The Guarantee Fees relating to the 2021 Euro Term Loan are payable semi-annually in arrears on each June 1 and December 1. The first 5.0% of the all-in rate for each facility (including the base rate and the rate paid pursuant to the hedging arrangements) must be paid in cash and the remainder is payable at our election in cash or in kind.

The Guarantee Fees paid in kind are presented as a component of other non-current liabilities (see Note 11, "Other Liabilities") and bear interest per annum at their respective Guarantee Fee rate (as set forth in the table below). Guarantee Fees paid in cash are included in cash flows from operating activities in our condensed consolidated statements of cash flows.

~~Interest Rate Summary~~

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⁾
5.54 % 7.25 %
2019 Euro Term Loan 1.50 % 0.31 % 5.44 % 7.25 %
2021 Euro Term Loan 1.50 % 0.28 % 5.47 % 7.25 %
2021 Revolving Credit Facility ⁽²⁾
9.33 %
⁽³⁾
— % — % 9.33 %

⁽¹⁾

Effective until November 1, ~~2017.~~2019. From November 1, ~~2017~~2019 through maturity on November 1, ~~2018,~~2021, the rate fixed pursuant to interest rate hedges will ~~decrease~~increase to ~~0.14%~~0.47%, with a corresponding ~~increase~~decrease in the Guarantee Fee rate, such that the all-in borrowing rate ~~following an improvement of~~remains 3.25% if our net leverage ratio ~~will be 6.00% unless our net leverage ratio changes.~~remains unchanged.


⁽²⁾	~~As at September 30, 2017,~~Effective until February 19, 2021. From February 19, 2021 through maturity on April 26, 2023, the ~~2021 Revolving Credit Facility was undrawn.~~rate fixed pursuant to interest rate hedges will increase to 0.97%, with a corresponding decrease in the Guarantee Fee rate, such that the all-in borrowing rate remains 3.50% if our net leverage ratio remains unchanged.


⁽³⁾	Based on the ~~three month~~three-month LIBOR of ~~1.33%~~2.09% as at September 30, ~~2017.~~2019.

~~2021~~2023 Revolving Credit Facility

~~As at September 30, 2017, we~~We had no0 balance outstanding under the US$ ~~115.0~~75.0 million revolving credit facility (the ~~“2021~~"2023 Revolving Credit ~~Facility”~~Facility"), all of which was available to be drawn. The aggregate principal amount available decreases to US$ 50.0 million with effect from January 1, 2018 or, if earlier, upon the repayment of amounts owing in respect of the 2018 Euro Term Loan with the expected proceeds from the sale of our Croatia and Slovenia operations (see Note 3, "Discontinued Operations and Assets Held for Sale") as at September 30, 2019.

The ~~2021~~2023 Revolving Credit Facility bears interest at a rate per annum based on, at our option, an ~~alternative~~alternate base rate ("ABR Loans" as defined in the 2023 Revolving Credit Facility Agreement) plus ~~7.0%~~the spread applicable to ABR Loans based on our consolidated net leverage or an amount equal to the greater of (i) an adjusted ~~LIBOR~~LIBO rate and (ii) 1.0%, plus ~~in each case, 8.0%, with~~ the ~~first 5.0% payable in cash and the remainder payable at our election in cash or in kind by adding such accrued interest~~spread applicable to the ~~applicable principal amount outstanding under~~Eurodollar Loans (as defined in the ~~2021 Revolving Credit Facility. The interest rate on the 2021~~2023 Revolving Credit Facility ~~is determined~~Agreement) based on ~~the basis of~~ our consolidated net leverage ratio (as defined in the Reimbursement Agreement) ~~and ranges from LIBOR (subject to a floor of 1.0%) plus 9.0% (if our net leverage is greater than or equal to seven times) to 7.0% per annum (if our net leverage ratio is less than five times).~~, with all amounts payable in cash. The maturity date of the ~~2021~~2023 Revolving Credit Facility is ~~February 19, 2021.~~April 26, 2023. When drawn, the ~~2021~~2023 Revolving Credit Facility permits prepayment at our option in whole or in part without penalty.

As at September 30, 2019, the following spreads were applicable:



Consolidated Net Leverage				Alternate Base Rate Loans		Eurodollar Loans
≥	7.0x			5.25	%	6.25	%
<	7.0x	-	6.0x	4.25	%	5.25	%
<	6.0x	-	5.0x	3.50	%	4.50	%
<	5.0x	-	4.0x	3.00	%	4.00	%
<	4.0x	-	3.0x	2.50	%	3.50	%
<	3.0x			2.25	%	3.25	%

The ~~2021~~2023 Revolving Credit Facility is jointly and severally guaranteed by CME NV and CME BV and is secured by a pledge over 100% of the outstanding shares of each of CME NV and CME BV. The ~~2021~~2023 Revolving Credit Facility agreement contains limitations on ~~our~~CME’s ability to incur indebtedness, incur guarantees, grant liens, pay dividends or make other distributions, enter into certain affiliate transactions, consolidate, merge or effect a corporate reconstruction, make certain investments acquisitions and loans, and conduct certain asset sales. The agreement also contains maintenance covenants in respect of interest cover ~~cash flow cover~~ and total leverage ratios, and has covenants in respect of incurring indebtedness, the provision of guarantees, making investments and disposals, granting security and certain events of defaults.

Other Credit Facilities and Finance Lease Obligations

Cash Pooling

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 throughout the group in respect of cash balances which our subsidiaries deposit with BMG. Cash deposited by our subsidiaries with BMG is pledged as security against the drawings of other subsidiaries up to the amount deposited. As at September 30, 2019, we had deposits of US$ 17.8 million in and no drawings on the BMG cash pool. Interest is earned on deposits at the relevant money market rate. As at December 31, 2018, we had deposits of US$ 36.8 million in and 0 drawings on the BMG cash pool.

Factoring Arrangements

Under a factoring framework agreement with Factoring Česka spořitelna a.s., up to CZK 475.0 million (approximately US$ 20.0 million) of receivables from certain customers in the Czech Republic may be factored on a recourse or non-recourse basis. The facility has a factoring fee of 0.19% of any factored receivable and bears interest at one-month PRIBOR plus 0.95% per annum for the period that receivables are factored and outstanding.

Under a factoring framework agreement with Factoring KB, a.s., up to CZK 270.0 million (approximately US$ 11.4 million) from certain customers in the Czech Republic may be factored on a non-recourse basis. The facility has a factoring fee of 0.11% of any factored receivable and bears interest at one-month PRIBOR plus 0.95% per annum for the period that receivables are factored and outstanding up to a maximum of 60 days from the due date.

Under a factoring framework agreement with Global Funds IFN S.A., receivables from certain customers in Romania may be factored on a non-recourse basis. The facility has a factoring fee of 4.0% of any factored receivable and bears interest at 6.0% per annum from the date the receivables are factored to the due date of the factored receivable.

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)

~~Other Credit Facilities~~As at September 30, 2019 and ~~Capital Lease Obligations~~December 31, 2018, we had no outstanding liability balances on any of our factoring arrangements.

~~Other credit facilities and capital lease obligations~~Finance Leases

For additional information on finance leases, see Note 11, "Leases".

5. PROGRAM RIGHTS

Program rights comprised the following at September 30, ~~2017~~2019 and December 31, ~~2016~~2018:



	September 30, 2019			December 31, 2018
Program rights:
Acquired program rights, net of amortization	$	135,753		$	153,761
Less: current portion of acquired program rights	(73,369		)	(77,624		)
Total non-current acquired program rights	62,384			76,137
Produced program rights – Feature Films:
Released, net of amortization	525			653
Produced program rights – Television Programs:
Released, net of amortization	54,910			55,220
Completed and not released	18,394			8,347
In production	32,100			30,904
Development and pre-production	427			610
Total produced program rights	106,356			95,734
Total non-current acquired program rights and produced program rights	$	168,740		$	171,871

September 30, 2017
December 31, 2016
Credit facilities ^{(1) – (3)}
$ —
$ —
Capital leases 7,778
3,427
Total credit facilities and capital leases 7,778
3,427
Less: current maturities (2,425 ) (1,228 )
Total non-current credit facilities and capital leases $ 5,353
$ 2,199


⁽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 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.

~~As at~~ ~~September 30, 2017, we had deposits of US$ 26.2 million in and no drawings on the BMG cash pool. Interest is earned on deposits at the relevant money market rate. As at~~ ~~December 31, 2016, we had deposits of US$~~ ~~16.4 million~~ ~~in and~~ no ~~drawings on the BMG cash pool.~~

⁽²⁾

~~As at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, there were~~ no ~~drawings outstanding under a CZK~~ ~~575.0 million~~ ~~(approximately US$~~ ~~26.1 million) factoring framework agreement with Factoring České spořitelny, a.s. Under this facility, up to CZK~~ ~~575.0 million~~ ~~(approximately US$~~ ~~26.1 million~~) of receivables from certain customers in the Czech Republic may be factored on a recourse or non-recourse basis. The facility has a factoring fee of 0.19% of any factored receivable and bears interest at one-month PRIBOR plus ~~0.95%~~ ~~per annum for the period that receivables are factored and outstanding.~~

⁽³⁾

As at September 30, 2017 and December 31, 2016, there were RON 67.8 million (approximately US$ 17.4 million) and RON 105.7 million (approximately US$ 24.6 million), respectively, of receivables factored under a factoring framework agreement with Global Funds IFN S.A. Under this facility, receivables from certain customers in Romania may be factored on a non-recourse basis. The facility has a factoring fee of 4.0% of any factored receivable and bears interest at 6.0% per annum from the date the receivables are factored to the due date of the factored receivable.

~~Total Group~~

~~At September 30, 2017, the maturity of our long-term debt and credit facilities, excluding any future elections to pay interest in kind, was as follows:~~6. ACCOUNTS RECEIVABLE

2017 $ —
2018 237,064
2019 277,837
2020 —
2021 553,465
2022 and thereafter —
Total long-term debt and credit facilities 1,068,366
Debt issuance costs (6,566 )
Carrying amount of long-term debt and credit facilities $ 1,061,800

~~Capital Lease Commitments~~

We lease certain of our office and broadcast facilities as well as machinery and equipment under various leasing arrangements. The future minimum lease payments, by year and in the aggregate, under capital leases with initial or remaining non-cancellable lease terms in excess of one year, consisted ofAccounts receivable comprised the following at September 30, ~~2017~~2019 and December 31, 2018:



	September 30, 2019			December 31, 2018
Third-party customers	$	140,095		$	203,068
Less: allowance for bad debts and credit notes	(9,311		)	(9,697		)
Total accounts receivable	$	130,784		$	193,371

2017 $ 696
2018 2,512
2019 2,153
2020 1,872
2021 708
2022 and thereafter —
Total undiscounted payments 7,941
Less: amount representing interest (163 )
Present value of net minimum lease payments $ 7,778

7. OTHER ASSETS

Other current and non-current assets comprised the following at September 30, 2019 and December 31, 2018:



	September 30, 2019		December 31, 2018
Current:
Prepaid acquired programming	$	24,317	$	29,918
Other prepaid expenses	13,106		9,119
VAT recoverable	2,051		1,702
Other	1,861		328
Total other current assets	$	41,335	$	41,067

	September 30, 2019		December 31, 2018
Non-current:
Capitalized debt costs (Note 4)	$	7,587	$	9,660
Deferred tax	2,279		2,411
Operating lease - right-of-use asset (Note 11)	10,671		—
Other	901		337
Total other non-current assets	$	21,438	$	12,408

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)

~~6. PROGRAM RIGHTS~~8. PROPERTY, PLANT AND EQUIPMENT

~~Program rights~~Property, plant and equipment comprised the following at September 30, ~~2017~~2019 and December 31, ~~2016~~2018:



	September 30, 2019			December 31, 2018
Land and buildings	$	96,230		$	100,574
Machinery, fixtures and equipment	202,868			206,491
Other equipment	34,484			35,022
Software	66,815			68,239
Construction in progress	1,241			4,663
Total cost	401,638			414,989
Less: accumulated depreciation	(297,085		)	(297,385		)
Total net book value	$	104,553		$	117,604

Assets held under finance leases (included in the above)
Land and buildings	$	3,794		$	3,989
Machinery, fixtures and equipment	28,027			25,414
Total cost	31,821			29,403
Less: accumulated depreciation	(13,810		)	(10,705		)
Total net book value	$	18,011		$	18,698

September 30, 2017
December 31, 2016
Program rights:
Acquired program rights, net of amortization $ 165,283
$ 146,070
Less: current portion of acquired program rights (70,510 ) (69,662 )
Total non-current acquired program rights 94,773
76,408
Produced program rights – feature films:
Released, net of amortization 983
1,039
Produced program rights – television programs:

Released, net of amortization 49,286
43,970
Completed and not released 9,414
2,592
In production 33,181
19,109
Development and pre-production 847
310
Total produced program rights 93,711
67,020
Total non-current acquired program rights and produced program rights $ 188,484
$ 143,428
The movement in the net book value of property, plant and equipment during the nine months ended September 30, 2019 and 2018 was comprised of:



	For the Nine Months Ended September 30,
	2019			2018
Opening balance	$	117,604		$	119,349
Additions ⁽¹⁾	17,723			23,777
Disposals	(18		)	(34		)
Depreciation	(24,625		)	(25,150		)
Foreign currency movements	(6,131		)	(3,748		)
Ending balance	$	104,553		$	114,194


⁽¹⁾	Includes assets acquired under finance leases of US$ 3.5 million and US$ 9.5 million for the nine months ended September 30, 2019 and 2018, respectively.

7.9. ACCOUNTS ~~RECEIVABLE~~PAYABLE AND ACCRUED LIABILITIES

Accounts ~~receivable~~payable and accrued liabilities comprised the following at September 30, ~~2017~~2019 and December 31, ~~2016~~2018:



	September 30, 2019		December 31, 2018
Accounts payable and accrued expenses	$	53,692	$	48,708
Related party accounts payable	79		292
Programming liabilities	12,713		16,072
Related party programming liabilities	9,877		12,171
Duties and other taxes payable	7,382		9,014
Accrued staff costs	16,848		17,425
Accrued interest payable	2,004		2,456
Related party accrued interest payable (including Guarantee Fees)	4,829		1,749
Income taxes payable	4,566		10,415
Other accrued liabilities	2,953		2,166
Total accounts payable and accrued liabilities	$	114,943	$	120,468

September 30, 2017
December 31, 2016
Unrelated customers $ 132,051
$ 149,957
Less: allowance for bad debts and credit notes (9,645 ) (8,586 )
Total accounts receivable $ 122,406
$ 141,371

~~8. OTHER ASSETS~~

~~Other current and non-current assets comprised the following at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~:

September 30, 2017
December 31, 2016
Current:

Prepaid acquired programming $ 18,089
$ 19,123
Other prepaid expenses 6,657
4,610
VAT recoverable 358
635
Income taxes recoverable 321
166
Other 2,772
3,007
Total other current assets $ 28,197
$ 27,541

September 30, 2017
December 31, 2016
Non-current:

Capitalized debt costs $ 13,764
$ 15,019
Deferred tax 5,282
4,550
Other 1,319
1,704
Total other non-current assets $ 20,365
$ 21,273

~~Capitalized debt costs are being amortized over the term of the 2021 Revolving Credit Facility using the straight-line method.~~

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)

~~9. PROPERTY, PLANT AND EQUIPMENT~~10. OTHER LIABILITIES

~~Property, plant~~Other current and ~~equipment~~non-current liabilities comprised the following at September 30, ~~2017~~2019and December 31, ~~2016~~2018:



	September 30, 2019		December 31, 2018
Current:
Deferred revenue	$	20,404	$	9,906
Legal provisions	673		1,978
Operating lease liability (Note 11)	2,969		—
Other	239		1,795
Total other current liabilities	$	24,285	$	13,679

	September 30, 2019		December 31, 2018
Non-current:
Deferred tax	$	19,829	$	22,545
Derivative instruments	13,055		9,817
Operating lease liability (Note 11)	7,658		—
Related party Guarantee Fee payable (Note 4)	33,465		33,465
Other	4,200		1,466
Total other non-current liabilities	$	78,207	$	67,293

September 30, 2017
December 31, 2016
Land and buildings $ 84,300
$ 72,820
Machinery, fixtures and equipment 190,869
160,097
Other equipment 15,689
13,682
Software licenses 50,152
40,627
Construction in progress 2,092
5,311
Total cost 343,102
292,537
Less: accumulated depreciation (242,794 ) (203,457 )
Total net book value $ 100,308
$ 89,080

Assets held under capital leases (included in the above)

Machinery, fixtures and equipment $ 12,875
$ 6,338
Total cost 12,875
6,338
Less: accumulated depreciation (4,382 ) (2,579 )
Total net book value $ 8,493
$ 3,759

~~The movement in~~During the ~~net book value of property, plant~~three and ~~equipment during the~~ nine months ended September 30, 2019 and 2018, we recognized revenue of US$ 1.8 million and US$ 7.4 million; and US$ 1.3 million and US$ 5.4 million, which was deferred as at December 31, 2018 and 2017, ~~and 2016 was comprised of:~~

For the Nine Months Ended September 30,
2017
2016
Opening balance $ 89,080
$ 87,943
Additions 18,547
15,163
Disposals (71 ) (43 )
Depreciation (19,345 ) (17,134 )
Foreign currency movements 12,097
2,545
Ending balance $ 100,308
$ 88,474
respectively.

~~10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES~~

~~Accounts payable and accrued liabilities comprised the following at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~:

September 30, 2017
December 31, 2016
Accounts payable and accrued expenses $ 54,416
$ 45,037
Related party accounts payable 69
194
Programming liabilities 25,265
26,603
Related party programming liabilities 17,065
17,126
Duties and other taxes payable 7,797
10,325
Accrued staff costs 17,439
16,476
Accrued interest payable 3,228
2,935
Related party accrued interest payable (including Guarantee Fees) 24,176
9,588
Income taxes payable 7,159
5,091
Other accrued liabilities 708
1,003
Total accounts payable and accrued liabilities $ 157,322
$ 134,378

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)

11. ~~OTHER LIABILITIES~~LEASES

~~Other~~We enter into operating and finance leases for offices, production and related facilities, cars and certain equipment. Our leases have remaining lease terms up to ten years.

The components of lease cost for the three and nine months ended September 30, 2019 were as follows:



	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
Operating lease cost:
Short-term operating lease cost	$	1,354	$	4,166
Long-term operating lease cost	1,147		3,446
Total operating lease cost	$	2,501	$	7,612

Finance lease cost:
Amortization of right-of-use asset	$	1,600	$	4,319
Interest on lease liabilities	80		276
Total finance lease cost	$	1,680	$	4,595

The classification of cash flows related to our leases for the nine months ended September 30, 2019 was as follows:



	For the Nine Months Ended September 30,
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,371
Operating cash flows from finance leases	288
Financing cash flows from finance leases	5,106

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2,184
Finance leases	3,520

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)

Our current and non-current assets and liabilities related to our leasing arrangements comprised the following at September 30, ~~2017and~~ ~~December 31, 2016~~:2019:



	September 30, 2019
Operating Leases
Operating lease right-of-use-assets, gross	$	13,452
Accumulated amortization	(2,781		)
Operating lease right-of-use-assets, net	$	10,671

Other current liabilities	$	2,969
Other non-current liabilities	7,658
Total operating lease liabilities	$	10,627

Finance Leases
Property, plant and equipment, gross	$	31,821
Accumulated depreciation	(13,810		)
Property, plant and equipment, net	$	18,011

Current portion of long-term debt and other financing arrangements	$	6,063
Long-term debt and other financing arrangements	8,744
Total finance lease liabilities	$	14,807

Weighted Average Remaining Lease Term	Years
Operating leases	5.2
Finance leases	2.7

Weighted Average Discount Rate	Discount Rate
Operating leases	4.77		%
Finance leases	2.07		%

Our lease liabilities had the following maturities at September 30, 2019:



	Operating Leases			Finance Leases
2019	$	2,051		$	1,636
2020	2,134			6,194
2021	2,360			4,792
2022	1,600			2,143
2023	1,334			459
2024 and thereafter	2,649			—
Total undiscounted payments	12,128			15,224
Less: amount representing interest	(1,501		)	(417		)
Present value of net minimum lease payments	$	10,627		$	14,807

September 30, 2017
December 31, 2016
Current:
Deferred revenue $ 19,413
$ 4,979
Legal provision 2,926
2,412
Other 1,196
1,076
Total other current liabilities $ 23,535
$ 8,467

September 30, 2017
December 31, 2016
Non-current:

Deferred tax $ 21,527
$ 19,710
Related party Commitment Fee payable ⁽¹⁾
10,322
9,905
Related party Guarantee Fee payable (Note 5) 49,682
34,492
Other 5,699
3,856
Total other non-current liabilities $ 87,230
$ 67,963

⁽¹⁾

Represents the commitment fee (the "Commitment Fee") payable to Time Warner, including accrued interest, in respect of its obligation under a commitment letter dated November 14, 2014 between Time Warner and us whereby Time Warner agreed to provide or assist with arranging a loan facility to repay our 5.0% senior convertible notes at maturity in November 2015. The Commitment Fee is payable by November 1, 2019, the maturity date of the 2019 Euro Term Loan, or earlier if the repayment of the 2019 Euro Term Loan is accelerated. The Commitment Fee bears interest at 8.5% per annum and such interest is payable in arrears on each May 1 and November 1, and may be paid in cash or in kind, at our election.

12. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

ASC 820, ~~“Fair~~"Fair Value Measurements and ~~Disclosure”~~Disclosure", establishes a hierarchy that prioritizes the inputs to those valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are:

Basis of Fair Value Measurement


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.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

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)

We evaluate the position of each financial instrument measured at fair value in the hierarchy individually based on the valuation methodology we apply. The carrying amount of financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities, approximate their fair value due to the short-term nature of these items. The fair value of our long-term debt is included in Note 5,4, "Long-term Debt and Other Financing Arrangements".

Hedging Activities

Cash Flow Hedges of Interest Rate Risk

We are party to interest rate swap agreements to mitigate our exposure to interest rate fluctuations on the outstanding principal amount of the Euro ~~Term~~ Loans. These interest rate swaps ~~designated as cash flow hedges,~~ provide us 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. These instruments are carried at fair value on our condensed consolidated balance sheets as other current and other non-current liabilities based on their maturity, and the effective portion of the changes in the fair value is recorded in accumulated other comprehensive income / loss and subsequently reclassified to interest expense when the hedged item affects earnings. The ineffective portion of changes in the fair value is recognized immediately in other non-operating income, net in our condensed consolidated statements of operations and comprehensive income / loss. For the three and nine months ended September 30, 2017 and 2016, we did not recognize any charges related to hedge ineffectiveness.

~~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)~~

~~Information relating to financial instruments is as follows:~~

Trade Date Number of Contracts
Description Aggregate Notional Amount
Maturity Date Objective Fair Value as at September 30, 2017
April 5, 2016 5
Interest rate swap EUR 468,800
February 21, 2021 Interest rate hedge underlying 2021 Euro Term Loan $ (1,798 )
April 5, 2016 4
Interest rate swap EUR 200,800
November 1, 2018 Interest rate hedge underlying 2018 Euro Term Loan, forward starting on November 1, 2017 $ (338 )
November 10, 2015 3
Interest rate swap EUR 235,335
November 1, 2019 Interest rate hedge underlying 2019 Euro Term Loan $ (1,587 )
November 14, 2014 2
Interest rate swap EUR 200,800
November 1, 2017 Interest rate hedge underlying 2018 Euro Term Loan $ (52 )
maturity.

We value the interest rate swap agreements using a valuation model which calculates the fair value on the basis of the net present value of the estimated future cash flows. The most significant input used in the valuation model is the expected EURIBOR-based yield curve. These instruments were allocated to Level 2 of the fair value hierarchy because the critical inputs to this model, including current interest rates, relevant yield curves and the known contractual terms of the instruments, were readily observable.

~~In August we settled~~As at September 30, 2019 each instrument is fully designated as a cash flow hedge. All changes in ~~part~~ the interest rate swaps underlying the 2018 Euro Term Loan to align with the EUR 50.0 million reduction of the principal balance of that loan following the repayment on August 1, 2017 (see Note 5, "Long-term Debt and Other Financing Arrangements"). Changes in fair value ~~for the settled portion~~ of these ~~interest rate swaps is recognized within other non-operating income, net in our condensed consolidated statements of operations and comprehensive income / loss.~~

The expected proceeds from the sale of the Croatia and Slovenia segments will be used to satisfy amounts owing in respect of the 2018 Euro Term Loan (see Note 5, "Long-term Debt and Other Financing Arrangements"). It is probable the sale will complete prior to the initial interest payment on the interest rate swap maturing November 1, 2018 which precludes recognition of the effective portion of the changes in fair value within accumulated other comprehensive income / loss. All related fair value adjustments and those previously recognizedinstruments are recorded in accumulated other comprehensive income / loss ~~are recognized in other non-operating income, net in our condensed consolidated statements of operations~~ and ~~comprehensive income / loss (see Note 14, "Equity").~~subsequently reclassified to interest expense when the hedged item affects earnings.

~~Foreign Currency Risk~~

We have entered into the below forward foreign exchange contracts to reduce our exposure to movements in foreign exchange rates related to contractual payments under certain dollar-denominated agreements. Information relating to financial instruments ~~as at September 30, 2017~~ is as follows:



Trade Date	Number of Contracts	Aggregate Notional Amount		Maturity Date	Objective	Fair Value as at September 30, 2019
November 10, 2015	3	EUR	60,335	November 1, 2019	Interest rate hedge underlying 2021 Euro Loan	$	(19	)
April 26, 2018	3	EUR	60,335	November 1, 2021	Interest rate hedge underlying 2021 Euro Loan, forward starting on November 1, 2019	$	(618	)
April 5, 2016	5	EUR	468,800	February 19, 2021	Interest rate hedge underlying 2023 Euro Loan	$	(1,973	)
April 26, 2018	4	EUR	468,800	April 26, 2023	Interest rate hedge underlying 2023 Euro Loan, forward starting on February 19, 2021	$	(10,464	)

Trade Date Number of Contracts
Description Aggregate Notional Amount
Maturity Date Objective Fair Value as at September 30, 2017
January 31, 2017 1
EUR / USD forward $ 7,720
December 21, 2017 USD-denominated operating payments $ (687 )
July 21, 2017 1
EUR / USD forward $ 18,530
December 20, 2017 USD-denominated operating payments $ (228 )

These forward foreign exchange contracts are considered economic hedges but were not designated as hedging instruments, so changes in the fair value of the derivatives were recorded in other non-operating income, net in the condensed consolidated statements of operations and comprehensive income / loss and in the condensed consolidated balance sheet in other current liabilities. We valued these contracts using an industry-standard pricing model which calculated the fair value on the basis of the net present value of the estimated future cash flows receivable or payable. These instruments were allocated to Level 2 of the fair value hierarchy because the critical inputs to this model, including foreign exchange forward rates and the known contractual terms of the instruments, were readily observable.

Fair Value of Derivatives

The change in fair value of derivatives not recognized within accumulated other comprehensive income / loss comprised the following for the three and nine months ended September 30, ~~2017~~2019 and ~~2016:~~

2018:

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017
2016
Loss on currency swaps $ (696 ) $ (398 ) $ (1,428 ) $ (11,904 )
Loss on interest rate swaps (454 ) —
(454 ) —
Change in fair value of derivatives $ (1,150 ) $ (398 ) $ (1,882 ) $ (11,904 )



	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2019			2018		2019			2018
(Loss) / gain on interest rate swaps	(165		)	67		(201		)	(1,262		)
Change in fair value of derivatives	$	(165	)	$	67	$	(201	)	$	(1,262	)

~~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)~~

13. 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 30, ~~2017~~2019 and December 31, ~~2016. As at September 30, 2017 and December 31, 2016, the carrying value of the Series B Preferred Shares was US$ 262.1 million and US$ 254.9 million, respectively.~~2018. The Series B Preferred Shares are held by Time Warner Media Holdings B.V. ("TW Investor")., a wholly owned subsidiary of AT&T. As at September 30, 2019 and December 31, 2018, the accreted value of the Series B Preferred Shares was US$ 269.4 million. The Series B Preferred Shares have a stated value of US$ 1,000 per share and no longer accrete subsequent to June 24, 2018. As of September 30, ~~2017,~~2019, the 200,000 shares of Series B ~~Preferred Shares~~preferred stock were convertible into approximately ~~108.1~~111.1 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 June 25, 2016 to 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 30, ~~2017,~~2019, 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'~~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.

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)

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 will 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.~~not considered a liability and the embedded conversion feature does not require bifurcation. The Series B Preferred Shares are ~~carried on the balance sheet~~classified outside of permanent equity 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 months ended September 30, 2017 and 2016, we recognized accretion on the Series B Preferred Shares of US$ 2.5 million and US$ 7.2 million; and US$ 2.4 million and US$ 11.3 million, respectively, with corresponding decreases in additional paid-in capital.

14. EQUITY

Preferred Stock

5,000,000 shares of Preferred Stock were authorized as at September 30, ~~2017~~2019 and December 31, ~~2016~~2018.

~~One~~NaN share of Series A Convertible Preferred Stock (the "Series A Preferred Share") was issued and outstanding as at September 30, ~~2017~~2019 and December 31, ~~2016~~2018. 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 30, ~~2017~~2019 and December 31, ~~2016~~2018 (see Note 13, "Convertible Redeemable Preferred Shares"). As of September 30, ~~2017,~~2019, the 200,000 Series B Preferred Shares were convertible into approximately ~~108.1~~111.1 million shares of Class A common stock.

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 30, ~~2017~~2019 and December 31, ~~2016~~2018. 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~~1-for-~~one~~1 basis for no additional ~~consideration.~~consideration and automatically convert into shares of Class A common stock on a one-for-one basis when the number of shares of Class B common stock is less than 10% of the total number of shares of common stock outstanding. 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~~pre-emptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

There were ~~144.9~~253.6 million and ~~143.4~~252.9 million shares of Class A common stock outstanding at September 30, ~~2017~~2019 and December 31, ~~2016~~2018, respectively, and no0 shares of Class B common stock outstanding at September 30, ~~2017~~2019 or December 31, ~~2016~~2018.

As at September 30, ~~2017~~2019, TW Investor owns ~~42.4%~~64.0% of the outstanding shares of Class A common ~~stock~~stock. In connection with the exercise of warrants by Warner Media and ~~has a~~ ~~46.5%~~ ~~voting interest~~TW Investor in April 2018, each of them issued standing proxies to the independent directors of the Company, ~~due~~pursuant to which they granted the right to vote the approximately 100.9 million shares of Class A common stock received on the exercise of those warrants (the “Warrant Shares”) on all matters other than at any meeting where the agenda includes a change in control transaction. In accordance with these proxies, the Warrant Shares will be voted in proportion to votes cast at a general meeting of the Company, excluding such Warrant Shares. Warner Media and TW Investor have undertaken to maintain this proxy arrangement in effect until April 2020 and may at their option extend it for an additional year from that date. As a result of the standing proxies, after giving effect 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 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 the nine months ended September 30, 2017, 563,325 warrants were exercised resulting in net proceeds to us of approximately US$ 0.6 million. As at September 30, 2017, 106,439,720 warrants remained outstanding. Time Warner andShare, TW Investor ~~collectively hold 100,926,996 of these warrants. The warrants are classified~~has a 44.3% voting interest 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 ~~nine months ended September 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⁾
7,824
—
7,824
Foreign exchange gain on the Series B Preferred Shares 29,284
—
29,284
Currency translation adjustment 5,891
—
5,891
Change in the fair value of hedging instruments —
(1,484 ) (1,484 )
Amounts reclassified from accumulated other comprehensive loss:

Changes in fair value reclassified to interest expense —
2,120
2,120
Changes in fair value reclassified to other non-operating income, net ⁽²⁾
—
447
447
Net other comprehensive income 42,999
1,083
44,082
BALANCE September 30, 2017 $ (196,538 ) $ (3,368 ) $ (199,906 )


⁽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⁾

We will repay the 2018 Euro Term Loan with the expected proceeds from the sale of the Croatia and Slovenia segments (see Note 5, "Long-term Debt and Other Financing Arrangements"). It is probable the sale will complete prior to the initial interest payment on the interest rate swap maturing on November 1, 2018 which precludes recognition of the effective portion of the changes in fair value within accumulated other comprehensive income / loss. All related changes in fair value and those previously recognized in accumulated other comprehensive income / loss are recognized in other non-operating income, net in our condensed consolidated statements of operations and comprehensive income / loss. See Note 12, "Financial Instruments and Fair Value Measurements".

~~15. INTEREST EXPENSE~~

~~Interest expense comprised the following for the three and nine months ended September 30, 2017 and 2016:~~

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017
2016
Interest on long-term debt and other financing arrangements $ 16,850
$ 21,000
$ 50,491
$ 70,236
Amortization of capitalized debt issuance costs 1,502
1,424
4,282
7,459
Amortization of debt issuance discount —
—
—
12,945
Total interest expense $ 18,352
$ 22,424
$ 54,773
$ 90,640

~~We paid cash interest (including mandatory cash-pay Guarantee Fees) of US$ 22.2 million and US$ 38.3 million~~during the nine months ended September 30, 2017 and 2016, respectively. In addition, we paid US$ 1.4 million and US$ 5.5 million of Guarantee Fees in cash during the nine months ended September 30, 2017 and 2016, respectively, for which we had the option to pay in kind. Interest expense related to the 2018 Euro Term Loan has been allocated to results from discontinued operations (see Note 3, "Discontinued Operations and Assets Held for Sale").

~~16. OTHER NON-OPERATING INCOME / EXPENSE~~

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

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017
2016
Interest income $ 139
$ 89
$ 326
$ 466
Foreign currency exchange gain, net 4,609
602
14,085
13,099
Change in fair value of derivatives (Note 12) (1,150 ) (398 ) (1,882 ) (11,904 )
Other income / (expense), net 45
57
254
(23 )
Total other non-operating income $ 3,643
$ 350
$ 12,783
$ 1,638

~~17. STOCK-BASED COMPENSATION~~

Under our 2015 Stock Incentive Plan (the "2015 Plan"), 6,000,000 shares of Class A common stock are authorized for grants of stock options, restricted stock units ("RSU"), restricted stock and stock appreciation rights to employees and non-employee directors. In addition, any shares available under our Amended and Restated Stock Incentive Plan (which expired on June 1, 2015), including in respect of any awards that expire, terminate or are forfeited, will be available for awards under the 2015 Plan. Under the 2015 Plan, awards are made to employees and directors at the discretion of the Compensation Committee. Any awards previously issued under the Amended and Restated Stock Incentive Plan will continue to be governed by the terms of that plan.

For the three and nine months ended September 30, 2017 and 2016, we recognized charges for stock-based compensation of US$ 0.5 million and US$ 2.1 million; and US$ 0.7 million and US$ 2.5 million, respectively, presented as a component of selling, general and administrative expenses in our condensed consolidated statements of operations and comprehensive income / loss.

~~The charge for stock-based compensation in our condensed consolidated statement of operations and comprehensive income / loss was as follows:~~

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017
2016
Stock-based compensation expense from continuing operations $ 431
$ 722
$ 2,044
$ 2,364
Stock-based compensation expense from discontinued operations 34
26
96
101

~~Stock Options~~

~~There was no option activity during the nine months ended~~ ~~September 30, 2017. The summary of stock options outstanding as at September 30, 2017 and December 31, 2016 is presented below:~~

Shares
Weighted Average Exercise Price per Share
Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value
Outstanding at December 31, 2016 2,011,392
$ 2.32
8.58 $ 453
Outstanding at September 30, 2017 2,011,392
2.32
7.83 3,470
Vested and expected to vest 2,011,392
2.32
7.83 3,470
Exercisable at September 30, 2017 902,848
$ 2.31
7.76 $ 1,572
Company.

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)

Accumulated Other Comprehensive Loss

The ~~fair value of stock options is estimated on~~movement in accumulated other comprehensive loss during the ~~grant date using the Black-Scholes option-pricing model~~three and ~~recognized ratably over the requisite service period. The aggregate intrinsic value (the difference between the stock price on the last day of trading of the third quarter of~~nine months ended September 30, ~~2017~~2019 and 2018 comprised the ~~exercise prices multiplied by~~following:



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
BALANCE, beginning of period	$	(220,088	)	$	(213,434	)	$	(216,650	)	$	(187,438	)

Currency translation adjustment, net
Balance, beginning of period	$	(206,555	)	$	(207,324	)	$	(207,668	)	$	(184,256	)
Foreign exchange (loss) / gain on intercompany loans ⁽¹⁾	(2,966		)	4,894			(710		)	1,370
Foreign exchange loss on the Series B Preferred Shares	(11,882		)	(1,902		)	(13,533		)	(9,579		)
Currency translation adjustments	(17,988		)	9,091			(17,480		)	(2,776		)
Balance, end of period	$	(239,391	)	$	(195,241	)	$	(239,391	)	$	(195,241	)

Unrealized loss on derivative instruments designated as hedging instruments
Balance, beginning of period	$	(13,533	)	$	(6,110	)	$	(8,982	)	$	(3,182	)
Change in the fair value of hedging instruments	(840		)	480			(6,242		)	(5,115		)
Amounts reclassified from accumulated other comprehensive loss:
Changes in fair value of hedging instruments reclassified to interest expense	440			553			1,291			1,784
Changes in fair value of hedging instruments reclassified to other non-operating income / expense, net	165			—			165			1,436
Balance, end of period	$	(13,768	)	$	(5,077	)	$	(13,768	)	$	(5,077	)

BALANCE, end of period	$	(253,159	)	$	(200,318	)	$	(253,159	)	$	(200,318	)


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

15. INTEREST EXPENSE

Interest expense comprised the ~~number of in-the-money options) represents~~following for the ~~value that would have been received by the option holders had they exercised all in-the-money options as at~~ three and nine months ended September 30, ~~2017. This amount changes based on~~2019 and 2018:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Interest on long-term debt and other financing arrangements	$	7,201	$	9,070	$	21,451	$	36,585
Amortization of capitalized debt issuance costs	836		907		2,563		3,621
Total interest expense	$	8,037	$	9,977	$	24,014	$	40,206

We paid cash interest (including mandatory cash-pay Guarantee Fees) of US$ 17.0 million and US$ 30.6 millionduring the ~~fair value of our Class A common stock. As at~~ nine months ended September 30, ~~2017, there was~~2019 and 2018, respectively. In addition, we paid US$ ~~1.4~~27.3 million of ~~unrecognized compensation expense related to stock options which is expected to be recognized over a weighted-average period of 1.9 years.~~

~~Restricted Stock Units~~

Each RSU represents a right to receive one share of Class A common stock according to its vesting conditions. The majority of RSU issued have time-based vesting conditions and vest ratably over one to four years fromaccrued Guarantee Fees during the date of grant. Vesting of RSU with performance-based vesting conditions ("PRSU") is contingent on the achievement of cumulative OIBDA and unlevered free cash flow targets over a multi-year period. Upon vesting, shares of Class A common stock are issued from authorized but unissued shares. Holders of RSU and PRSU awards are not entitled to receive cash dividend equivalents and are not entitled to vote. The grant date fair values of RSU and PRSU are calculated as the closing price of our Class A common stock on the date of grant.

~~The following table summarizes information about unvested RSU and PRSU as at~~ nine months ended September 30, ~~2017~~:2018, which we had previously elected to pay in kind.

Number of
Shares / Units

Weighted Average
Grant Date
Fair Value

Unvested at December 31, 2016 2,542,625
$ 2.61
Granted 1,158,887
3.62
Vested (912,246 ) 2.65
Forfeited (75,582 ) 1.53
Unvested at September 30, 2017 2,713,684
$ 3.06

~~As at~~ ~~September 30, 2017, the intrinsic value of unvested RSUs was US$~~ ~~11.0 million. Total unrecognized compensation cost related to unvested RSUs as at~~ ~~September 30, 2017~~ ~~was US$~~ ~~5.1 million~~ ~~and is expected to be recognized over a weighted-average period of~~ ~~2.1 years~~.

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)

16. OTHER NON-OPERATING INCOME / EXPENSE, NET

Other non-operating income / expense, net comprised the following for the three and nine months ended September 30, 2019 and 2018:



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Interest income	$	80		$	142		$	347		$	549
Foreign currency exchange (loss) / gain, net	(3,869		)	1,363			(4,791		)	(481		)
Change in fair value of derivatives (Note 12)	(165		)	67			(201		)	(1,262		)
Loss on extinguishment of debt	(105		)	(127		)	(340		)	(415		)
Other income, net	96			129			162			465
Total other non-operating (expense) / income, net	$	(3,963	)	$	1,574		$	(4,823	)	$	(1,144	)

17. STOCK-BASED COMPENSATION

Subsequent to the amendment approved at our Annual General Meeting on May 20, 2019, our 2015 Stock Incentive Plan (the "2015 Plan"), has 16,000,000 shares of Class A common stock authorized for grants of stock options, restricted stock units ("RSU"), restricted stock and stock appreciation rights to employees and non-employee directors. Under the 2015 Plan, awards are made to employees and directors at the discretion of the Compensation Committee.

For the three and nine months ended September 30, 2019 and 2018, we recognized charges for stock-based compensation of US$ 0.9 million and US$ 3.1 million; and US$ 3.9 million and US$ 6.1 million respectively, presented as a component of selling, general and administrative expenses in our condensed consolidated statements of operations and comprehensive income / loss. Share-based compensation expense recognized during the three and nine months ended September 30, 2018 includes US$ 2.9 million related to the accelerated vesting of RSUs with performance conditions in accordance with the terms of the corresponding award agreement following the completion of sale of the Company's Croatian operations on July 31, 2018.

Stock Options

Grants of options allow the holders to purchase shares of Class A common stock at an exercise price, which is generally the market price prevailing at the date of the grant, with vesting between one and four years after the awards are granted. There was no option activity during the nine months ended September 30, 2019. The summary of stock options outstanding as at September 30, 2019 and December 31, 2018 is presented below:



	Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2018	2,011,392	$	2.32	6.58	$	916
Outstanding at September 30, 2019	2,011,392	2.32		5.83	4,375
Vested and expected to vest	2,011,392	2.32		5.83	4,375
Exercisable at September 30, 2019	1,908,544	$	2.32	5.80	$	4,165

When options are vested, holders may exercise them at any time up to the maximum contractual life of the instrument which is specified in the option agreement. At September 30, 2019, the maximum life of options that were issued under the 2015 Plan was ten years. Upon providing the appropriate written notification, holders pay the exercise price and receive shares. Shares delivered in respect of stock option exercises are newly issued shares.

The aggregate intrinsic value (the difference between the stock price on the last day of trading of the third quarter of 2019 and the exercise prices multiplied by the number of in-the-money options) represents the total intrinsic value that would have been received by the option holders had they exercised all in-the-money options as at September 30, 2019. This amount changes based on the fair value of our Class A common stock. As at September 30, 2019, there was US$ 0.1 million of unrecognized compensation expense related to stock options which is expected to be recognized over a weighted-average period of 0.44 years with all options vesting by March 2020.

Restricted Stock Units with Time-Based Vesting

Each RSU represents a right to receive 1 share of Class A common stock of the Company for each RSU that vests in accordance with a time-based vesting schedule, generally between one to four years from the date of grant. Holders of RSU awards are not entitled to receive cash dividend equivalents prior to the vesting of awards and are not entitled to vote shares underlying awards.

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)

The following table summarizes information about unvested RSUs as at September 30, 2019 and December 31, 2018:



	Number of Shares / Units		Weighted Average Grant Date Fair Value
Unvested at December 31, 2018	1,996,355		$	3.68
Granted	1,191,586		3.57
Vested	(855,260	)	3.49
Unvested at September 30, 2019	2,332,681		$	3.69

The intrinsic value of unvested RSUs was US$ 10.5 million as at September 30, 2019. Total unrecognized compensation cost related to unvested RSUs as at September 30, 2019 was US$ 6.8 million and is expected to be recognized over a weighted-average period of 2.4 years.

Restricted Stock Units with Performance Conditions

Each RSU with performance conditions (“PRSU”) represents a right to receive one share of Class A common stock of the Company for each PRSU that vests in accordance with a performance-based vesting schedule. The performance-based vesting schedule sets forth specified objectives for unlevered free cash flow and OIBDA over defined periods and by defined dates. Holders of PRSU awards are not entitled to receive cash dividend equivalents prior to the vesting of awards and are not entitled to vote shares underlying awards.

On December 4, 2018, the 2018 PRSU Award was granted with unlevered free cash flow and OIBDA targets corresponding to two, three and four-year performance periods ending December 31, 2020, 2021 and 2022, respectively. The maximum achievement under the 2018 PRSU Award is 200% of the shares allotted to the corresponding target. There was no PRSU activity during the nine months ended September 30, 2019 and we have not recognized any related compensation cost to date.

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)

18. EARNINGS PER SHARE

We determined that the Series B Preferred Shares are a participating security, and accordingly, our basic and diluted net income / loss per share is calculated using the two-class method. Under the two-class method, basic net income / loss per common share is computed by dividing the net income available to common shareholders after deducting contractual amounts of accretion on our Series B Preferred Shares and the income allocated to these shares by the weighted-average number of common shares outstanding during the period. Diluted net income / loss per share is computed by dividing the adjusted net income by the weighted-average number of dilutive shares outstanding during the ~~period.~~period after adjusting for the impact of those dilutive shares on the allocation of income to the Series B Preferred Shares.

The components of basic and diluted earnings per share are as follows:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
(Loss) / income from continuing operations	$	(1,945	)	$	(11,769	)	$	17,338		$	(185,795	)
Income from continuing operations													$	13,522		$	10,609		$	69,351		$	41,040
Net loss attributable to noncontrolling interests	188			196			534			387			223			80			111			274
Less: preferred share accretion paid in kind (Note 13)	(2,454		)	(2,364		)	(7,216		)	(11,314		)	—			—			—			(4,777		)
Less: income allocated to Series B Preferred Shares	—			—			(4,334		)	—			(4,063		)	(3,168		)	(20,549		)	(12,243		)
(Loss) / income from continuing operations available to common shareholders, net of noncontrolling interest	(4,211		)	(13,937		)	6,322			(196,722		)
Loss from discontinued operations, net of tax (Note 3)	(5,988		)	(8,054		)	(8,747		)	(15,971		)
Net loss attributable to CME Ltd. available to common shareholders — basic	(10,199		)	(21,991		)	(2,425		)	(212,693		)
Income from continuing operations available to common shareholders, net of noncontrolling interest													9,682			7,521			48,913			24,294
Income from discontinued operations, net of tax													—			57,882			—			60,548
Less income allocated to Series B Preferred Shares													—			(17,156		)	—			(20,290		)
Net income attributable to CME Ltd. available to common shareholders — basic													9,682			48,247			48,913			64,552

Effect of dilutive securities
Dilutive effect of Series B Preferred Shares	—			—			—			—
Net loss attributable to CME Ltd. available to common shareholders — diluted	$	(10,199	)	$	(21,991	)	$	(2,425	)	$	(212,693	)
Dilutive effect of employee stock options, RSUs and Series B Preferred Shares													18			60			77			3,202
Net income attributable to CME Ltd. available to common shareholders — diluted													$	9,700		$	48,307		$	48,990		$	67,754

Weighted average outstanding shares of common stock — basic ⁽¹⁾	156,189			153,494			155,579			149,898			264,833			263,829			264,536			219,267
Dilutive effect of common stock warrants, employee stock options and RSUs	—			—			78,182			—
Dilutive effect of employee stock options, RSUs and common stock warrants													1,696			1,111			1,404			35,998
Weighted average outstanding shares of common stock — diluted	156,189			153,494			233,761			149,898			266,529			264,940			265,940			255,265

Net (loss) / income per share:
Net income per share:
Continuing operations — basic	$	(0.03	)	$	(0.09	)	$	0.04		$	(1.31	)	$	0.04		$	0.03		$	0.18		$	0.11
Continuing operations — diluted	(0.03		)	(0.09		)	0.03			(1.31		)	0.04			0.03			0.18			0.10
Discontinued operations — basic	(0.04		)	(0.05		)	(0.06		)	(0.11		)	—			0.15			—			0.18
Discontinued operations — diluted	(0.04		)	(0.05		)	(0.06		)	(0.11		)	—			0.15			—			0.17
Net loss attributable to CME Ltd. — basic	(0.07		)	(0.14		)	(0.02		)	(1.42		)
Net loss attributable to CME Ltd. — diluted	(0.07		)	(0.14		)	(0.02		)	(1.42		)
Attributable to CME Ltd. — basic													0.04			0.18			0.18			0.29
Attributable to CME Ltd. — diluted													0.04			0.18			0.18			0.27

⁽¹⁾

For the purpose of computing basic earnings per share, the 11,211,449 shares of Class A common stock underlying the Series A Preferred Share are included in the weighted average outstanding shares of common stock - basic, because the ~~holder~~rights of the Series A Preferred Share ~~is entitled~~are considered substantially similar to ~~receive any dividends payable when dividends are declared by the Board~~that of ~~Directors with respect to any shares of~~our Class A common stock.

~~The following weighted-average,~~Weighted-average equity awards and convertible shares ~~were~~are excluded from the calculation of diluted earnings per share ~~because~~if their effect would ~~have been~~be anti-dilutive. The following instruments were anti-dilutive for the periods ~~presented:~~

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017
2016
Employee stock options —
2,014
—
2,014
RSUs 719
1,290
719
1,469
Series B Preferred Shares 107,643
103,699
—
104,182
Total 108,362
107,003
719
107,665

~~These instruments~~presented but may ~~become~~be dilutive in ~~the future. As set forth in the Certificate of Designation for the Series B Preferred Shares, the holders of our Series B Preferred Shares are not contractually obligated to share in our losses.~~future periods:



	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2019	2018	2019	2018
RSUs	502	1,004	1,234	1,004
Total	502	1,004	1,234	1,004

~~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)~~

19. SEGMENT DATA

We manage our business on a geographical basis, with ~~four~~5 operating segments: Bulgaria, the Czech Republic, Romania, ~~and~~ the Slovak Republic and Slovenia, which are also our reportable segments and our main operating countries. These segments reflect how CME Ltd.’s operating performance is evaluated by our chief operating decision makers, who we have identified as our co-Chief Executive Officers; how operations are managed by segment managers; and the structure of our internal financial reporting.

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)

Our segments generate revenues primarily from the sale of advertising and sponsorship on our ~~channels.~~channels and digital properties. This is supplemented by revenues from cable and satellite television service providers that carry our channels on their platforms and from revenues through the sale of distribution rights to third parties. We do not rely on any single major customer or group of major customers. Intersegment revenues and profits have been eliminated in consolidation.

We evaluate our consolidated results and the performance of our segments based on net revenues and OIBDA (as defined below). We believe OIBDA is useful to investors because it provides a meaningful representation of our performance as it excludes certain items that either do not impact our cash flows or do not impact the operating results of our operations. OIBDA is also used as a component in determining management bonuses.

OIBDA includes amortization and impairment of program rights and is calculated as operating income / loss before depreciation, amortization of intangible assets, impairments of assets and certain unusual or infrequent items that are not considered by our chief operating decision makers when evaluating our performance. ~~Stock-based compensation and certain other items are not allocated to our segments for purposes of evaluating their performance and therefore are not included in their respective OIBDA.~~

Below are tables showing our net revenues, OIBDA, total assets, capital expenditures and long-lived assets for our continuing operations by segment for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 for condensed consolidated statements of operations and comprehensive income / loss data and condensed consolidated statements of cash flow data; and as at September 30, ~~2017~~2019 and December 31, ~~2016~~2018 for condensed consolidated balance sheet data.


Net revenues:	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Bulgaria	$	16,039		$	13,789		$	52,118		$	50,103		$	16,062		$	16,348		$	57,962		$	59,208
Czech Republic	42,681			39,031			135,526			128,558			46,857			45,489			161,552			158,051
Romania	40,469			36,970			127,983			118,269			39,684			41,128			126,856			136,683
Slovak Republic	20,384			17,864			63,348			59,466			22,146			20,867			70,791			70,590
Slovenia													14,368			13,586			54,494			53,483
Intersegment revenues ⁽¹⁾	(142		)	(127		)	(917		)	(249		)	(266		)	(380		)	(2,646		)	(2,360		)
Total net revenues	$	119,431		$	107,527		$	378,058		$	356,147		$	138,851		$	137,038		$	469,009		$	475,655


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



OIBDA:	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
OIBDA:	2019			2018			2019			2018
Bulgaria	$	2,430		$	4,481		$	16,439		$	13,084
Czech Republic	17,505			15,388			64,745			59,009
Romania	16,941			15,607			59,717			58,696
Slovak Republic	7,071			5,032			17,355			10,041
Slovenia	3,816			2,158			14,960			12,010
Elimination	(7		)	(15		)	17			18
Total operating segments	47,756			42,651			173,233			152,858
Corporate	(6,345		)	(6,884		)	(20,423		)	(20,922		)
Total OIBDA	41,411			35,767			152,810			131,936
Depreciation of property, plant and equipment	(8,245		)	(8,202		)	(24,625		)	(25,150		)
Amortization of broadcast licenses and other intangibles	(2,029		)	(2,216		)	(6,336		)	(6,839		)
Other items ⁽¹⁾	(354		)	(3,152		)	(2,967		)	(3,152		)
Operating income	30,783			22,197			118,882			96,795
Interest expense (Note 15)	(8,037		)	(9,977		)	(24,014		)	(40,206		)
Other non-operating (expense) / income, net (Note 16)	(3,963		)	1,574			(4,823		)	(1,144		)
Income before tax	$	18,783		$	13,794		$	90,045		$	55,445

OIBDA and reconciliation of OIBDA to condensed consolidated statements of operations and comprehensive income / loss: For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2017
2016
2017
2016
Bulgaria $ 2,537
$ 1,943
$ 6,973
$ 8,966
Czech Republic 12,618
13,180
49,130
46,353
Romania 15,496
12,606
52,450
45,030
Slovak Republic 2,944
(383 ) 11,339
5,168
Elimination 10
6
27
9
Total operating segments 33,605
27,352
119,919
105,526
Corporate (8,460 ) (8,028 ) (22,026 ) (22,074 )
Total OIBDA 25,145
19,324
97,893
83,452
Depreciation of property, plant and equipment (6,936 ) (5,801 ) (19,345 ) (17,134 )
Amortization of broadcast licenses and other intangibles (2,187 ) (2,073 ) (6,349 ) (6,247 )
Operating income 16,022
11,450
72,199
60,071
Interest expense (Note 15) (18,352 ) (22,424 ) (54,773 ) (90,640 )
Loss on extinguishment of debt (Note 5) (101 ) —
(101 ) (150,158 )
Non-operating income, net (Note 16) 3,643
350
12,783
1,638
Income / (loss) before tax $ 1,212
$ (10,624 ) $ 30,108
$ (179,089 )

⁽¹⁾

Other items during the three and nine months ended September 30, 2019 reflects costs relating to our strategic review, primarily financial and professional fees. Other items during the three and nine months ended September 30, 2018 consists solely of expense related to the accelerated vesting of RSUs with performance conditions in accordance with the terms of the corresponding award agreement following the completion of sale of the Company's Croatian operations on July 31, 2018.

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)


Total assets ⁽¹⁾:	September 30, 2017		December 31, 2016
Total assets: ⁽¹⁾					September 30, 2019		December 31, 2018
Bulgaria	$	146,813	$	130,873	$	129,160	$	142,165
Czech Republic	801,791		700,190		708,404		771,286
Romania	294,202		266,132		263,825		297,937
Slovak Republic	156,006		131,220		137,321		146,252
Slovenia					76,963		89,440
Total operating segments	1,398,812		1,228,415		1,315,673		1,447,080
Corporate	38,707		40,786		23,508		41,281
Assets held for sale	135,171		121,516
Total assets	$	1,572,690	$	1,390,717	$	1,339,181	$	1,488,361


⁽¹⁾	Segment assets exclude any intercompany balances.



Capital expenditures:	For the Nine Months Ended September 30,
	2019		2018
Bulgaria	$	4,738	$	2,939
Czech Republic	4,555		5,450
Romania	2,234		2,009
Slovak Republic	1,087		1,210
Slovenia	2,769		2,970
Total operating segments	15,383		14,578
Corporate	256		490
Total capital expenditures	$	15,639	$	15,068

Capital expenditures: For the Nine Months Ended September 30,

2017

2016
Bulgaria $ 2,487
$ 2,828
Czech Republic 6,768
4,317
Romania 4,369
5,027
Slovak Republic 1,520
1,286
Total operating segments 15,144
13,458
Corporate 1,245
1,392
Total capital expenditures $ 16,389
$ 14,850


Long-lived assets ⁽¹⁾:	September 30, 2017		December 31, 2016
Long-lived assets: ⁽¹⁾					September 30, 2019		December 31, 2018
Bulgaria	$	7,511	$	6,280	$	12,734	$	10,627
Czech Republic	43,867		39,529		33,773		39,314
Romania	26,917		22,796		28,236		33,368
Slovak Republic	17,956		15,326		14,643		16,376
Slovenia					13,919		15,955
Total operating segments	96,251		83,931		103,305		115,640
Corporate	4,057		5,149		1,248		1,964
Total long-lived assets	$	100,308	$	89,080	$	104,553	$	117,604


⁽¹⁾	Reflects property, plant and equipment, net.

Revenues from contracts with customers comprised the following for the three and nine months ended September 30, 2019 and 2018:


Consolidated revenue by type:	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2017		2016		2017		2016		2019		2018		2019		2018
Television advertising	$	93,830	$	85,282	$	303,486	$	289,975	$	103,430	$	103,574	$	361,661	$	373,542
Carriage fees and subscriptions	21,547		17,940		61,597		53,323		29,568		28,168		88,357		85,044
Other	4,054		4,305		12,975		12,849		5,853		5,296		18,991		17,069
Total net revenues	$	119,431	$	107,527	$	378,058	$	356,147	$	138,851	$	137,038	$	469,009	$	475,655

Management reviews the performance of our operations based on the above revenue types as well as on a geographic basis as described above. Management does not review other disaggregations of revenues from contracts with customers.

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)

20. COMMITMENTS AND CONTINGENCIES

Commitments

a) Programming Rights Agreements and Other Commitments

At September 30, ~~2017~~2019, we had total commitments of US$ ~~138.9~~81.7 million (December 31, ~~2016:~~2018: US$ ~~128.2~~62.8 million) in respect of future programming, including contracts signed with license periods starting after the balance sheet date. In addition, we have digital transmission obligations ~~future minimum operating lease payments for non-cancellable operating leases with remaining terms in excess of one year~~ and other commitments as follows:



	Programming purchase obligations		Other commitments
2019	$	6,133	$	4,131
2020	37,074		10,087
2021	20,542		5,447
2022	16,593		5,437
2023	732		5,630
2024 and thereafter	618		—
Total	$	81,692	$	30,732

Programming purchase
obligations

Other
commitments

Operating
leases

Capital
expenditures

2017 $ 20,465
$ 6,802
$ 1,029
$ 2,055
2018 41,150
10,334
2,953
32
2019 32,450
11,733
1,436
13
2020 26,094
1,410
687
—
2021 12,115
429
514
—
2022 and thereafter 6,612
474
1,971
—
Total $ 138,886
$ 31,182
$ 8,590
$ 2,100

Contingencies

Litigation

We are from time to time party to legal proceedings, arbitrations and regulatory proceedings arising in the normal course of our business 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 condensed consolidated financial statements.

In the fourth quarter of 2016, our Slovak subsidiary MARKIZA-SLOVAKIA, spol. s.r.o. ~~(“Markiza”~~("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~~4 promissory ~~notes.~~notes that have a collective face value of approximately EUR 69.0 million. These ~~four~~4 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~~NaN of the notes purport to be issued in favor of Marian Kocner, a controversial Slovak businessman, and the other two to a ~~former~~long-time associate of Mr. ~~Kocner, and~~Kocner. All four notes were supposedly assigned several times, for no apparent consideration, to companies owned by or associated with Mr. Kocner and ultimately to Sprava a inkaso zmeniek, s.r.o., a company owned by Mr. Kocner that isinitiated the ~~plaintiff~~claims for payment in these proceedings. ~~Two~~

NaN of the notes, each of which purportedly has a face value of approximately EUR 8.3 million, allegedly matured in ~~2015 and the~~2015. The other ~~two~~2 notes, which were purportedly issued in ~~2016. The four notes purport to be in the aggregate amount of approximately EUR 69.0 million.~~

Despite a random case assignment system in the Slovak Republic, claims in respect of three of the notes were initially assigned to the same judge. The judge who was assigned the claim in respect of the fourth promissory note (inblank, had the amount of approximately EUR ~~26.0 million) terminated proceedings~~26.2 million inserted on each of them by Mr. Kocner or someone associated with him in ~~January 2017 because the plaintiff failed to pay court fees.~~mid-2016, shortly before their alleged maturity. The plaintiff refiled this claim in June 2017; the judge who was assigned the refiled claim terminated proceedings in September after the plaintiff again failed to pay court fees. In responses to the claims in respect of the other three promissory4 notes ~~that were filed in August 2017,~~accrue interest from their purported maturity dates. Although Mr. Rusko has asserted in testimony in the civil proceedings that he signed the ~~three~~ notes in June ~~2000. We~~2000, we do not believe that the notes were signed in June 2000 or that any of the notes are authentic. ~~We are vigorously defending~~

Despite a random case assignment system in the ~~claims.~~Slovak Republic, claims in respect of 3 of the notes were initially assigned to the same judge. NaN of those claims, concerning 1 of the promissory notes having a face value of approximately EUR 8.3 million (the "First PN Case"), was subsequently reassigned. Proceedings on the claim in respect of the fourth promissory note (in the amount of approximately EUR 26.2 million) (the “Fourth PN Case”) were initially terminated in January 2017 by the presiding judge because the plaintiff failed to pay court fees and were terminated a second time by a different presiding judge in September 2017 after the plaintiff refiled but failed to pay court fees a second time.

During the first quarter of 2018, the court of first instance began to schedule hearings in respect of the First PN Case as well in respect of the claims relating to the second promissory note having a face value of approximately EUR 8.3 million (the "Second PN Case") and one of the promissory notes having a face value of approximately EUR 26.2 million (the "Third PN Case").

On April 26, 2018, the judge in the First PN Case ruled in favor of the plaintiff. Markiza appealed that decision.

On May 14, 2018, Markiza filed a criminal complaint with the Special Prosecutor's Office of the Slovak Republic (the "Special Prosecutor’s Office") alleging that Mr. Kocner and Mr. Rusko committed the offenses of (1) counterfeiting, falsification, and illegal production of money and securities and (2) obstruction or perversion of justice. The Special Prosecutor’s Office opened criminal proceedings in the matter at that time.

On June 20, 2018, the Special Prosecutor’s Office issued a decision to formally charge Mr. Kocner and Mr. Rusko with counterfeiting, falsification, and illegal production of money and securities and with obstruction or perversion of justice. Following this decision, Mr. Kocner has been taken into pre-trial custody by the Slovak authorities, where he has remained. Subsequently, the Special Prosecutor’s Office has charged Mr. Kocner’s long-time associate, who received two of the alleged promissory notes as the original beneficial owner and purported to endorse those notes to a company controlled by Mr. Kocner, with counterfeiting, falsification, and illegal production of money and securities.

On October 12, 2018, the court of first instance terminated proceedings in respect of the Second PN Case because the plaintiff failed to pursue the claim, which the plaintiff appealed.

On December 14, 2018, the appellate court suspended proceedings in respect of the First PN Case until a final and enforceable decision has been rendered in the criminal proceedings.

On December 21, 2018, the appellate court reversed the decision of the court of first instance to terminate the Second PN Case and directed the case be tried on the merits.

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)

On March 19, 2019, following the conclusion of the pre-trial investigation, the Special Prosecutor’s Office formally indicted Mr. Kocner and Mr. Rusko with counterfeiting, falsification, and illegal production of money and securities and with obstruction or perversion of justice and filed the indictment with the Special Criminal Court of the Slovak Republic.

On March 25, 2019, Markiza filed a complaint with the Slovak Constitutional Court in respect of the appellate court decision in the Second PN Case, which was accepted on October 2, 2019.

On May 14, 2019, the court of first instance decided to suspend proceedings in respect of the Second PN Case until a final and enforceable decision has been rendered in the criminal proceedings.

There have been no hearings held in respect of the Third PN Case since the initiation of the criminal proceedings. On May 14, 2019, the court of first instance decided to suspend proceedings in respect of the Third PN Case until a final and enforceable decision has been rendered in the criminal proceedings.

The plaintiff re-filed its claim with respect to the Fourth PN Case, which purportedly has a face value of approximately EUR 26.2 million, on May 13, 2019 and subsequently paid the requisite court fees. On June 6, 2019, the court of first instance decided to suspend proceedings in respect of the Fourth PN Case until a final and enforceable decision has been rendered in the criminal proceedings.

Accordingly, civil proceedings in respect of all four promissory notes have now been suspended until a final and enforceable decision is rendered in the criminal proceedings. Criminal proceedings commenced in July 2019 and are ongoing. The Special Criminal Court overseeing the criminal proceedings has scheduled hearing dates into December 2019.

In the event any of the civil proceedings are not dismissed as a result of the successful conclusion of the criminal proceedings, Markiza will continue to vigorously defend the claims.

Based on the facts and circumstances of these cases, we have not accrued any amounts in respect of these claims.

21. RELATED PARTY TRANSACTIONS

We consider our related parties to be our officers, directors and shareholders who have direct control and/or influence over the Company as well as other parties that can significantly influence management. We have identified transactions with individuals or entities associated with ~~Time Warner,~~AT&T, which is represented on our Board of Directors and holds a ~~46.5%~~44.3% voting interest in CME Ltd. (see Note 14, "Equity") as at September 30, ~~2017~~2019, as material related party transactions.

~~Time Warner~~AT&T


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2017		2016		2017		2016		2019		2018		2019		2018
Cost of revenues	$	4,504	$	4,052	$	11,696	$	11,961	$	5,462	$	5,931	$	15,097	$	17,419
Interest expense	14,170		17,930		41,423		74,832		4,175		6,332		13,544		26,583



	September 30, 2019		December 31, 2018
Programming liabilities	$	9,877	$	12,171
Other accounts payable and accrued liabilities	79		292
Accrued interest payable ⁽¹⁾	4,829		1,749
Other non-current liabilities⁽²⁾	33,465		33,465

September 30, 2017
December 31, 2016
Programming liabilities $ 17,065
$ 17,126
Other accounts payable and accrued liabilities 69
194
Accrued interest payable ⁽¹⁾
24,176
9,588
Other non-current liabilities⁽²⁾
60,004
44,397


⁽¹⁾	Amount represents accrued Guarantee Fees for which we have not yet ~~paid in cash or made an election to pay in kind.~~paid. See Note 5,4, "Long-term Debt and Other Financing Arrangements".


⁽²⁾	Amount represents Guarantee Fees for which we ~~have~~had previously made an election to pay in ~~kind and the Commitment Fee. See Note 5, "Long-term Debt and Other Financing Arrangements".~~kind.

Index

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

The following defined terms are used in this Quarterly Report on Form 10-Q:

"~~2017 PIK Notes" refers to our 15.0% senior secured notes due 2017, redeemed in April 2016;~~

"~~2017 Term Loan" refers to our 15.0% term loan facility due 2017, dated as of February 28, 2014, as amended and restated on November 14, 2014, repaid in April 2016;~~

"~~2018 Euro Term Loan~~" refers to CME Ltd.'s floating rate senior unsecured term credit facility due 2018, guaranteed by CME BV and Time Warner, dated as of November 14, 2014 and amended on March 9, 2015, February 19, 2016 and June 22, 2017;

"~~2019 Euro Term Loan~~" refers to CME Ltd.'s floating rate senior unsecured term credit facility due 2019, guaranteed by CME BV and Time Warner, dated as of September 30, 2015 and amended on February 19, 2016 and June 22, 2017;

"~~2021 Euro Term Loan" refers to CME BV's floating rate senior unsecured term credit facility due 2021, guaranteed by Time Warner and CME Ltd., dated as of February 19, 2016 and amended on June 22, 2017;~~

"~~2021 Revolving Credit Facility~~" refers to our amended and restated revolving credit facility dated as of February 28, 2014, as amended and restated as of November 14, 2014, further amended and restated on February 19, 2016 and amended on June 22, 2017;

"~~CME BV" refers to CME Media Enterprises B.V., our 100% owned subsidiary;~~

"~~CME NV" refers to Central European Media Enterprises N.V., our 100% owned subsidiary;~~

"~~Divestment Transaction~~" refers to the framework agreement dated July 9, 2017 with Slovenia Broadband S.à r.l. for the sale of our Croatia and Slovenia operations (see Note 3, "Discontinued Operations and Assets Held for Sale" for further information);

"~~Euro Term Loans" refers collectively to the 2018 Euro Term Loan, 2019 Euro Term Loan and 2021 Euro Term Loan;~~

"~~Guarantee Fees" refers to amounts accrued and payable to Time Warner as consideration for Time Warner's guarantees of the Euro Term Loans;~~

"~~Reimbursement Agreement~~" refers to an agreement with Time Warner which provides that we will reimburse Time Warner for any amounts paid by them under any guarantee or through any loan purchase right exercised by Time Warner, dated as of November 14, 2014, amended and restated on February 19, 2016 and amended on March 2, 2017 and June 22, 2017;

"~~Time Warner" refers to Time Warner Inc.; and~~

"~~TW Investor" refers to Time Warner Media Holdings B.V.~~


•	"2019 Euro Loan" refers to our floating rate senior unsecured term credit facility guaranteed by Warner Media, dated as of November 14, 2014, as amended on March 9, 2015, February 19, 2016, June 22, 2017 and February 5, 2018 which was repaid in full on July 31, 2018;


•	"2021 Euro Loan" refers to our floating rate senior unsecured term credit facility due November 1, 2021, guaranteed by Warner Media, dated as of September 30, 2015, as amended on February 19, 2016, June 22, 2017 and April 25, 2018;


•	"2023 Euro Loan" refers to our floating rate senior unsecured term credit facility due April 26, 2023, entered into by CME BV (as defined below), guaranteed by Warner Media and CME Ltd., dated as of February 19, 2016, as amended on June 22, 2017 and April 25, 2018;


•	"Euro Loans" refers collectively to the 2021 Euro Loan and 2023 Euro Loan;


•	"2023 Revolving Credit Facility" refers to our revolving credit facility due April 26, 2023, dated as of May 2, 2014, as amended and restated as of February 19, 2016, and as further amended and restated on April 25, 2018;


•	"Guarantee Fees" refers to amounts accrued and payable to Warner Media as consideration for Warner Media's guarantees of the Euro Loans;


•	"Reimbursement Agreement" refers to our reimbursement agreement with Warner Media which provides that we will reimburse Warner Media for any amounts paid by them under any guarantee or through any loan purchase right exercised by Warner Media, dated as of November 14, 2014, as amended and restated on February 19, 2016, and as further amended and restated on April 25, 2018;


•	"CME BV" refers to CME Media Enterprises B.V., our 100% owned subsidiary;


•	"CME NV" refers to Central European Media Enterprises N.V., our 100% owned subsidiary;


•	"AT&T" refers to AT&T, Inc.


•	"Warner Media" refers to Warner Media, LLC. (formerly Time Warner, Inc.), a wholly owned subsidiary of AT&T; and


•	"TW Investor" refers to Time Warner Media Holdings B.V., a wholly owned subsidiary of Warner Media.

The exchange rates used in this report are as at September 30, ~~2017,~~2019, unless otherwise indicated.

Please note that we may announce information using SEC filings, press releases, public conference calls, webcasts and posts to the "Investors" section of our website, www.cme.net. We intend to continue to use these channels to communicate important information about CME Ltd. and our operations. We encourage investors, the media, our customers and others interested in the Company to review the information we post at www.cme.net.

I. Forward-looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 22E of the Securities Exchange Act of 1934 (the "Exchange Act"), including those relating to our capital needs, business strategy, expectations and intentions. Statements that use the terms ~~“believe”~~"believe", ~~“anticipate”~~"anticipate", ~~“trend”~~"trend", ~~“expect”~~"expect", ~~“plan”~~"plan", ~~“estimate”~~"estimate", ~~“forecast”~~"forecast", ~~“should”~~"should",~~“intend”~~ "intend" and similar expressions of a future or forward-looking nature identify forward-looking statements for purposes of the U.S. federal securities laws or otherwise. In particular, information appearing under the sections entitled "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes forward looking-statements. For these statements and all other forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy or are otherwise beyond our control and some of which might not even be anticipated. Forward-looking statements reflect our current views with respect to future events and because our business is subject to such risks and uncertainties, actual results, our strategic plan, our financial position, results of operations and cash flows could differ materially from those described in or contemplated by the forward-looking statements contained in this report.

Important factors that contribute to such risks include, but are not limited to, those factors set forth under "Risk Factors” as well as the following: the ~~expected timing~~effect of ~~the closing of the sale of our operations in Croatia and Slovenia and the application of proceeds from it;~~ changes in global orand regional economic ~~conditions~~conditions; the effect of ending the quantitative easing program implemented by the European Central Bank; the economic, political and ~~Eurozone instability~~monetary impacts of Brexit in our markets; the outcome of our strategic review and its impact on our business; the impact of changes in local tax legislation; levels of television advertising spending and the rate of development of the advertising markets in the countries in which we operate; our ability to refinance our existing indebtedness; the extent to which our ~~liquidity constraints and~~ debt service obligations and covenants may restrict our business; our exposure to additional tax liabilities as well as liabilities resulting from regulatory or legal proceedings initiated against us; ~~our ability to refinance our existing indebtedness;~~ our success in continuing our initiatives to diversify and enhance our revenue streams; our ability to make cost-effective investments in our television businesses, including investments in programming; our ability to develop and acquire necessary programming and attract audiences; and changes in the political and regulatory environments where we operate and in the application of relevant laws and regulations.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this report. All forward-looking statements speak only as of the date of this report. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

Index

II. Overview

Central European Media Enterprises Ltd. ("CME Ltd.") is a media and entertainment company operating mainly in ~~four~~five countries in Central and Eastern Europe. We manage our business on a geographical basis, with ~~four~~five operating segments: Bulgaria, the Czech Republic, Romania, ~~and~~ the Slovak Republic and Slovenia, which are also our reportable segments. These operating segments reflect how CME Ltd.’s operating performance is evaluated by our chief operating decision makers, who we have identified as our co-Chief Executive Officers, how our operations are managed by segment managers, and the structure of our internal financial reporting.

On July 9, 2017, we entered into a framework agreement with Slovenia Broadband S.à r.l., a wholly owned subsidiary of United Group B.V., relating to the sale of our Croatia and Slovenia operations. Accordingly, these operations are classified as held for sale and they are presented as discontinued operations for all periods in this report; and the discussion below relates to our continuing operations in the four remaining operating segments.

Non-GAAP Financial Measures

In this report we refer to several non-GAAP financial measures, including OIBDA, OIBDA margin, free cash flow and unlevered free cash flow. We believe that each of these metrics is useful to investors for the reasons outlined below. Non-GAAP financial measures may not be comparable to similar measures reported by other companies. Non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, US GAAP financial measures.

We evaluate our consolidated results and the performance of our segments based on net revenues and OIBDA. We believe OIBDA is useful to investors because it provides a meaningful representation of our performance, as it excludes certain items that do not impact either our cash flows or the operating results of our operations. OIBDA and unlevered free cash flow are also used as components in determining management bonuses.

OIBDA includes amortization and impairment of program rights and is calculated as operating income / loss before depreciation, amortization of intangible assets and impairments of assets and certain unusual or infrequent items that are not considered by our co-Chief Executive Officers when evaluating our performance. ~~Stock-based compensation and certain other items are not allocated to our segments for purposes of evaluating their performance and therefore are not included in their respective OIBDA.~~ Our key performance measure of the efficiency of our consolidated operations and our segments is OIBDA margin. We define OIBDA margin as the ratio of OIBDA to net revenues.

Following a repricing of our Guarantee Fees ~~completed~~ in March 2017 ~~the proportion of~~and April 2018, we pay interest and related Guarantee Fees on our outstanding indebtedness ~~that must be paid~~ in ~~cash has increased.~~cash. In addition to this obligation to pay ~~more interest and related~~ Guarantee Fees in cash, we expect to use cash generated by the business to pay certain Guarantee Fees that ~~are payable~~were previously paid in kind. These cash payments are all reflected in free cash flow; accordingly, we believe unlevered free cash flow, defined as free cash flow before cash payments for interest and Guarantee Fees, best illustrates the cash generated by our operations when comparing periods. We define free cash flow as net cash generated from continuing operating activities less purchases of property, plant and equipment, net of disposals of property, plant and equipment and excluding the cash impact of certain unusual or infrequent items that are not included in costs charged in arriving at OIBDA because they are not considered by our co-Chief Executive Officers when evaluating performance.

For additional information regarding our business segments, including a reconciliation of OIBDA to US GAAP financial measures, see Item 1, Note 19, "Segment Data". For a reconciliation of free cash flow and unlevered free cash flow to a US GAAP financial ~~measure,~~measures, see "Free Cash Flow and Unlevered Free Cash Flow" below.

While our reporting currency is the dollar, our consolidated revenues and costs are divided across a range of European currencies and CME Ltd.’s functional currency is the Euro. Given the significant movement of the currencies in the markets in which we operate against the dollar, we believe that it is useful to provide percentage movements based on actual percentage movements (“% Act”), which includes the effect of foreign exchange, as well as like-for-like percentage movements (“% Lfl”). The like-for-like percentage movement references reflect the impact of applying the current period average exchange rates to the prior period revenues and costs. Since the difference between like-for-like and actual percentage movements is solely the impact of movements in foreign exchange rates, our discussion in the following analysis is focused on constant currency percentage movements in order to highlight those factors influencing operational performance. The incremental impact of foreign exchange rates is presented in the tables preceding such analysis. Unless otherwise stated, all percentage increases or decreases in the following analysis refer to year-on-year percentage changes between the three and nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018.

Executive Summary

The following table provides a summary of our consolidated results of our continuing operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016:~~2018:


	For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)										For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement										Movement										Movement
	2017			2016			% Act		% Lfl		2017			2016			% Act		% Lfl		2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Net revenues	$	119,431		$	107,527		11.1	%	4.8	%	$	378,058		$	356,147		6.2	%	6.0	%	$	138,851		$	137,038		1.3	%	7.3	%	$	469,009		$	475,655		(1.4	)%	5.7	%
Operating income	16,022			11,450			39.9	%	34.8	%	72,199			60,071			20.2	%	21.4	%	30,783			22,197			38.7	%	48.7	%	118,882			96,795			22.8	%	32.1	%
Operating margin	13.4		%	10.6		%	2.8 p.p.		3.0 p.p.		19.1		%	16.9		%	2.2 p.p.		2.4 p.p.		22.2		%	16.2		%	6.0 p.p.		6.2 p.p.		25.3		%	20.3		%	5.0 p.p.		5.0 p.p.
OIBDA	$	25,145		$	19,324		30.1	%	23.6	%	$	97,893		$	83,452		17.3	%	17.8	%	$	41,411		$	35,767		15.8	%	23.2	%	$	152,810		$	131,936		15.8	%	24.2	%
OIBDA margin	21.1		%	18.0		%	3.1 p.p.		3.2 p.p.		25.9		%	23.4		%	2.5 p.p.		2.6 p.p.		29.8		%	26.1		%	3.7 p.p.		3.8 p.p.		32.6		%	27.7		%	4.9 p.p.		4.9 p.p.

Our consolidated net revenues increased at actual rates in the third quarter, but decreased at actual rates in the nine months ended September 30, 2019, compared to the corresponding periods in 2018. Net revenues increased at constant rates in both the three and nine months ended September 30, ~~2017~~2019 compared to the corresponding periods in ~~2016~~2018, due to ~~growth~~increases in both television advertising revenues and carriage fees and subscription revenues. Television advertising spending overall in the markets of the countries in which we operate ~~grew~~increased an estimated ~~6% overall~~3% at constant rates in the first nine months of ~~2017~~2019 compared to ~~2016.~~2018. Our television advertising revenues ~~grew 5%~~decreased 3% at actual rates, ~~and~~but increased 4% at constant rates during the same period, ~~due primarily to significant year-on-year~~as all of our businesses have seen growth in ~~Romania, as well as higher levels of spending in Bulgaria and the Czech Republic.~~average prices this year. Carriage fees and subscription revenues increased ~~16%~~4% at actual rates and 11% at constant rates in the first nine months ~~ended September 30, 2017 compared~~of 2019 as the subscriber base continued to ~~the corresponding period in 2016 primarily due to additional carriage fees from contracts with cable, satellite~~grow and ~~internet protocol television ("IPTV") operators in the Slovak Republic since January of this year.~~

~~Index~~

average prices increased.

Costs charged in arriving at OIBDA in the third quarter decreased 4% at actual rates, but increased ~~7% and~~2% at constant rates compared to the corresponding period in 2018. Content costs increased 3% at constant rates due to higher costs from changes to the mix of programming in the schedules in Bulgaria and the Slovak Republic, which was partially offset by more cost-effective foreign programming in the Czech Republic, Romania and Slovenia. In the first nine months of 2019, costs charged in arriving at OIBDA decreased 8% at actual rates and 1% at constant rates compared to the corresponding period in 2018, due primarily to a 2% decrease in content costs resulting from savings in the spring season this year.

Index

We saw a successful start to the fall season during the third quarter, leading to an increase in prime time audience share in each of our country operations in the period. Our focus remains on efficient spending for programming to achieve an unrivaled audience leadership position in each market. Our ability to monetize that reach provides the resources necessary to continue investing in high quality local content.

Since we continue to focus on controlling costs, the growth in net revenues increased our OIBDA margin in the three and nine months ended September 30, ~~2017~~2019 compared to the ~~corresponding~~same periods in 2016. At constant rates, costs were broadly flat in the third quarter, and increased 2% in the first nine months of 2017 compared to 2016. Content costs increased 2% and 5% at constant rates in the third quarter and first nine months of 2017, respectively, as we made targeted investments in our programming line-up to monetize additional ratings in Romania when available, to improve our competitive positioning in Bulgaria and the Czech Republic, and to support the change in the way our channels are distributed in the Slovak Republic. Other operating costs decreased in the third quarter and first nine months of 2017 due to savings from transmission costs, which offset higher bad debt charges.

~~Since the growth in revenue outpaced the increase in costs, our OIBDA margin increased in the three and nine months ended September 30, 2017.~~2018. This dynamic also drove an increase in operating income, ~~with a similar~~and improvement in the operating margin. We expect ~~revenues~~this trend of margin expansion to ~~grow~~continue for the full year, albeit at a ~~faster~~slower pace ~~than costs~~compared to the first nine months of 2019.

Improving Capital Structure

On September 23, 2019, we used cash generated by the business to repay EUR 50.0 million (approximately US$ 54.9 million at September 23, 2019 rates) of the outstanding principal balance of the 2021 Euro Loan. Combined with the additional debt payments made in ~~2017~~January and ~~for~~June, we have paid a total of EUR 150.0 million (approximately US$ 168.9 million at transaction date rates) of the ~~next few years, leading to continued OIBDA margin expansion year~~2021 Euro Loan in the first nine months of 2019. Following these payments, there is now EUR 60.3 million (approximately US$ 65.7 million at September 30, 2019 rates) outstanding on ~~year although trends may vary from quarter to quarter.~~our nearest debt maturity in November 2021.

The ~~improvement~~lower balance of gross debt, together with improved financial results in ~~our operations during~~ the ~~twelve month period ended September 30, 2017~~first nine months of 2019, reduced our net leverage ratio to ~~5.8x~~2.5x at the end of September, down from 3.5x at the ~~quarter, which will result in our cost~~start of ~~borrowing decreasing by 125 basis points to 6.0% from~~ the ~~end~~year.

Review of ~~October 2017.~~

We rolled-out the fall season in the third quarter, and its results contributed to our prime time and all day audience shares increasing in three out of four countries during the first nine months of 2017 compared to the same period in 2016. We continue to leverage popular content we produce for our prime time schedules, and supplement that with both foreign and locally acquired content to ensure we continue to attract the largest audience in each of our countries in the most profitable manner.

~~Divestment Transaction to Accelerate Deleveraging~~Strategic Alternatives

On ~~July 9, 2017,~~March 25, 2019, we ~~agreed~~announced that our Board of Directors had commenced a process to ~~sell our operations in Croatia~~explore and ~~Slovenia to Slovenia Broadband S.à r.l., a subsidiary~~evaluate potential strategic alternatives focused on maximizing shareholder value. These alternatives may include, among other things, the sale of ~~United Group B.V. (“United Group”), subject to obtaining regulatory approvals and other customary closing conditions. The transaction is expected to close by the end of 2017~~part or ~~early 2018.~~

Total cash consideration for the transaction is EUR 230.0 million (approximately US$ 271.5 million), subject to customary working capital adjustments. Upon closing, the proceeds will be used to repay the remaining balanceall of the ~~2018 Euro Term Loan in full,~~Company, a merger with ~~any excess proceeds applied~~another strategic partner, a recapitalization, or continuing to ~~repay the Commitment Fee and a portion of the 2019 Euro Term Loan and related Guarantee Fees, which will result in a significant decrease in our indebtedness and in our net leverage ratio. Based~~execute on our ~~results for the period ended September 30, 2017, this would reduce CME’s net leverage ratio from 5.8x to 4.8x.~~

~~Once debt is repaid following closing of the transaction, our current average borrowing cost is expected to decrease from 6.0% to 4.5%~~long-term business plan (see Part II, Item 1A, Risk Factors). We estimate the annual savings from interest and Guarantee Fees resulting from the transaction will exceed both income and cash generated by the combined operations of Croatia and Slovenia in 2016. The net assets of these businesses, which are presented as held for sale on the Condensed Consolidated Balance Sheet, were approximately US$ 102.9 million as at September 30, 2017.

Free Cash Flow and Unlevered Free Cash Flow


	For the Nine Months Ended September 30, (US$ 000's)								For the Nine Months Ended September 30, (US$ 000's)
	2017			2016			Movement		2019			2018			Movement
Net cash generated from continuing operating activities	$	90,638		$	56,972		59.1	%	$	167,973		$	93,762		79.1	%
Capital expenditures, net	(16,250		)	(14,762		)	(10.1	)%	(15,619		)	(15,027		)	3.9	%
Other items ⁽¹⁾									1,242			—			NM ⁽²⁾
Free cash flow	74,388			42,210			76.2	%	153,596			78,735			95.1	%
Cash paid for interest (including mandatory cash-pay Guarantee Fees)	22,206			38,317			(42.0	)%
Cash paid for Guarantee Fees that may be paid in kind	1,411			5,483			(74.3	)%
Cash paid for interest (including Guarantee Fees)									16,955			29,827			(43.2	)%
Cash paid for Guarantee Fees previously paid in kind									—			27,328			(100.0	)%
Cash paid for Guarantee Fees that previously could be paid in kind									—			812			(100.0	)%
Unlevered free cash flow	$	98,005		$	86,010		13.9	%	$	170,551		$	136,702		24.8	%


⁽¹⁾	Reflects costs relating to our strategic review, primarily financial and professional fees.


⁽²⁾	Number is not meaningful.


(US$ 000's)	September 30, 2017		December 31, 2016		Movement		September 30, 2019		December 31, 2018		Movement
Cash and cash equivalents	$	67,034	$	40,606	65.1	%	$	34,154	$	62,031	(44.9	)%

~~Our unlevered~~Unlevered free cash flow increased during the ~~first~~ nine months ~~of 2017~~ended September 30, 2019 compared to the same period in ~~2016 reflecting~~2018, due to higher cash collections from ~~revenue growth,~~improved operating performance. We also paid less for programming, which was partially offset by higher ~~cash spending on programming as well as higher cash paid~~payments for income ~~taxes and capital expenditures. Free~~taxes. Net cash ~~flow increased significantly more than unlevered free cash flow due to a significant decrease in~~generated from continuing operating activities also benefited from lower cash paid for interest and Guarantee Fees, ~~because last year we paid accrued interest~~which was partially offset by payments related to the ~~2017 PIK Notes and 2017 Term Loan when they were refinanced in April 2016, and we also repaid accrued Guarantee Fees previously paid in kind in the first nine months of 2016.~~strategic review.

~~In August 2017 we repaid EUR 50.0 million (approximately US$ 59.1 million at August 1, 2017 rates) of the principal outstanding on the 2018 Euro Term Loan.~~

Following the repricing of our Guarantee Fees completed in March 2017, we are now required to pay a portion of the Guarantee Fees related to all of the Euro Term Loans in cash. However, the total amount of cash paid for interest and Guarantee Fees is expected to decrease significantly in 2017 due to the lower all-in rate payable following that transaction, the lower principal balance following the August repayment of debt and additional non-repeating payments that were made in 2016 when we elected to repay in cash a portion of the accrued Guarantee Fees related to the 2018 Euro Term Loan that were previously paid in kind. As a result, we expect free cash flow to increase significantly in 2017 compared to 2016.

Index

Market Information

The following table sets out our estimates of the year-on-year changes in real GDP, real private consumption and the television advertising market, net of discounts, in our countries for the nine months ended September 30, ~~2017~~2019:


	For the Nine Months Ended September 30, 2017						For the Nine Months Ended September 30, 2019
Country	Real GDP Growth		Real Private Consumption Growth		Net TV Ad Market Growth		Real GDP Growth		Real Private Consumption Growth		Net TV Ad Market Growth
Bulgaria	3.4	%	4.1	%	4.7	%	3.6	%	3.0	%	(0.8	)%
Czech Republic	3.6	%	3.5	%	3.7	%	2.6	%	2.8	%	5.7	%
Romania*	5.4	%	6.6	%	12.4	%	4.1	%	5.7	%	(0.6	)%
Slovak Republic	3.2	%	3.4	%	2.6	%	2.9	%	1.9	%	6.5	%
Slovenia							3.0	%	3.0	%	(0.4	)%
Total CME Ltd. Markets	4.1	%	4.6	%	6.1	%	3.2	%	3.6	%	2.8	%

* Romanian market excludes Moldova.

Sources: Real GDP Growth and Real Private Consumption Growth, CME Ltd. estimates based on market consensus; TV Ad Market Growth, CME Ltd. estimates at constant exchange rates.

After adjusting for inflation, ~~we estimate that during~~in the first nine months of ~~2017,~~2019 we estimate that GDP grew in each of the countries in which we operate at a rate that exceeded the average growth rate for Western ~~Europe. Romania continued~~Europe, a trend that has been ongoing for more than four years. Overall growth is lower than the same period in 2018, as exports have weakened slightly in certain countries, which is reported to be ~~one of the fastest growing economies~~connected to a slowdown in the ~~European Union,~~German economy, and isuncertainty around the impact of tariffs on global trade as well as the final terms under which the UK will exit the EU. However, domestic private consumption remains generally robust, supported by historically low unemployment and higher average wages, and analysts forecast tothis level of overall growth will be ~~the leader~~sustained for the ~~remainder~~duration of 2017. Similar to the last few years, it has been reported that GDP growth in our markets has been less reliant on growth in exports, and domestic demand has played a larger role in economic expansion. In Romania, increases to the minimum wage have provided support for higher disposable income. Consumer confidence remains strong in the Czech and Slovak Republics, reflecting historically low rates of unemployment in those countries. We believe the growth in real private consumption forecast for 2017 will support overall growth in the television advertising markets across the four countries where we continue to operate.

On March 29, 2017, the United Kingdom formally initiated the process to leave the European Union, commonly referred to as “Brexit”, triggering a two-year period to finalize the terms of that separation. While the negotiations over the exact terms of Brexit may negatively impact economic growth in the UK and Europe, the contribution of domestic demand as a component of GDP growth has reduced the sensitivity of our markets to external shocks affecting exports. Additionally, we have not seen an appreciable impact on the behavior of advertisers in the countries in which we operate since the UK electorate voted in favor of Brexit in June 2016.

On April 6, 2017, the Czech National Bank determined that the recent increase in inflation in the country was sustainable and its mandate for price stability had been met. As a result, it ended its commitment to intervene in currency markets and withdrew the floor related to the EUR/CZK exchange rate. Following the announcement, the Czech Koruna has since strengthened more than 10% against the dollar, also reflecting some appreciation of the Euro versus the dollar. If the currency continues to appreciate, this will improve the results of our largest operation in dollar terms.2019.

We estimate that the TV advertising markets in the countries in which we operate increased overall by 6%3% on average at constant rates in the nine months ended September 30, ~~2017~~2019 compared to the same period in ~~2016.~~2018. In Bulgaria, ~~we estimate that all broadcasters increased their~~the market declined slightly, as lower average market prices ~~which~~ more than offset ~~selling fewer~~a slight increase in gross ratings points ("GRPs"). sold. In both the Czech and Slovak Republics average market prices increased significantly, which was partially offset by selling fewer GRPs. Growth in the Slovak Republic also reflected additional government spending on informational campaigns. The market ~~growth was driven~~decline in Romania reflected reduced spending by advertisers, primarily in the first quarter of 2019, who were directly impacted by ~~higher average prices. In~~new incremental taxes imposed early in 2019 on certain sectors of the economy, including telecommunications and banking. However, the decline in Romania ~~the market grew because the increase in demand for advertising that started in 2016 also led to significant increases in average prices~~from selling fewer GRPs overall in the first nine months of ~~2017 compared to~~ the same period in 2016. In the second and third quarters of 2016, our main channel aired the European football championship, which increased inventory available and sold last year. If the benefit of the tournament last year was ~~excluded,~~mostly offset by higher average market prices. In Slovenia, fewer GRPs were sold due to lower spending by larger multinationals and telecommunications operators, which was mostly offset by higher average market prices, reflecting more spending from smaller advertisers.

We expect the overall trend of higher spending on television advertising to continue for the remainder of 2019, supported by a forecast of strong growth in real private consumption for the year. In Romania, we ~~estimate the market grew 15%~~anticipate additional spending on advertising in the first nine months of 2017. In the Slovak Republic, the market grew due to higher average prices while inventory sold in the year-to-date period was flat compared to last year following the end of spending on informational and political campaigns that took place during the first half of 2016. If this spending in the first half of 2016 is excluded, we estimate the market grew 11% in the year-to-date period, reflecting continued strong demandfourth quarter by advertisers who were directly impacted by the ~~private sector.~~new incremental taxes imposed early in 2019, which will result in full year growth for both the television advertising market and our television advertising revenues.

Index

Segment Performance

Our total Net Revenues and OIBDA by segment were as follows:


	NET REVENUES																				NET REVENUES
	For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)										For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement										Movement										Movement
	2017			2016			% Act		% Lfl		2017			2016			% Act		% Lfl		2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Bulgaria	$	16,039		$	13,789		16.3	%	10.4	%	$	52,118		$	50,103		4.0	%	4.3	%	$	16,062		$	16,348		(1.7	)%	3.2	%	$	57,962		$	59,208		(2.1	)%	4.1	%
Czech Republic	42,681			39,031			9.4	%	(0.1	)%	135,526			128,558			5.4	%	3.5	%	46,857			45,489			3.0	%	8.9	%	161,552			158,051			2.2	%	9.4	%
Romania	40,469			36,970			9.5	%	6.4	%	127,983			118,269			8.2	%	9.7	%	39,684			41,128			(3.5	)%	3.3	%	126,856			136,683			(7.2	)%	0.6	%
Slovak Republic	20,384			17,864			14.1	%	8.1	%	63,348			59,466			6.5	%	6.6	%	22,146			20,867			6.1	%	11.7	%	70,791			70,590			0.3	%	6.8	%
Slovenia																					14,368			13,586			5.8	%	11.2	%	54,494			53,483			1.9	%	8.5	%
Intersegment revenues	(142		)	(127		)	NM ⁽¹⁾		NM ⁽¹⁾		(917		)	(249		)	NM ⁽¹⁾		NM ⁽¹⁾		(266		)	(380		)	NM ⁽¹⁾		NM ⁽¹⁾		(2,646		)	(2,360		)	NM ⁽¹⁾		NM ⁽¹⁾
Total net revenues	$	119,431		$	107,527		11.1	%	4.8	%	$	378,058		$	356,147		6.2	%	6.0	%	$	138,851		$	137,038		1.3	%	7.3	%	$	469,009		$	475,655		(1.4	)%	5.7	%

⁽¹⁾~~Number is not meaningful.~~


⁽¹⁾	Number is not meaningful.


	OIBDA																				OIBDA
	For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)										For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement										Movement										Movement
	2017			2016			% Act		% Lfl		2017			2016			% Act		% Lfl		2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Bulgaria	$	2,537		$	1,943		30.6	%	24.6	%	$	6,973		$	8,966		(22.2	)%	(22.0	)%	$	2,430		$	4,481		(45.8	)%	(43.1	)%	$	16,439		$	13,084		25.6	%	32.6	%
Czech Republic	12,618			13,180			(4.3	)%	(12.8	)%	49,130			46,353			6.0	%	3.7	%	17,505			15,388			13.8	%	21.0	%	64,745			59,009			9.7	%	17.2	%
Romania	15,496			12,606			22.9	%	19.6	%	52,450			45,030			16.5	%	18.3	%	16,941			15,607			8.5	%	16.0	%	59,717			58,696			1.7	%	10.2	%
Slovak Republic	2,944			(383		)	NM ⁽¹⁾		NM ⁽¹⁾		11,339			5,168			119.4	%	125.7	%	7,071			5,032			40.5	%	48.2	%	17,355			10,041			72.8	%	83.0	%
Slovenia																					3,816			2,158			76.8	%	86.2	%	14,960			12,010			24.6	%	32.8	%
Eliminations	10			6			NM ⁽¹⁾		NM ⁽¹⁾		27			9			NM ⁽¹⁾		NM ⁽¹⁾		(7		)	(15		)	NM ⁽¹⁾		NM ⁽¹⁾		17			18			NM ⁽¹⁾		NM ⁽¹⁾
Total operating segments	33,605			27,352			22.9	%	15.9	%	119,919			105,526			13.6	%	13.6	%	47,756			42,651			12.0	%	18.9	%	173,233			152,858			13.3	%	21.5	%
Corporate	(8,460		)	(8,028		)	(5.4	)%	2.2	%	(22,026		)	(22,074		)	0.2	%	2.0	%	(6,345		)	(6,884		)	7.8	%	3.0	%	(20,423		)	(20,922		)	2.4	%	(4.3	)%
Consolidated OIBDA	$	25,145		$	19,324		30.1	%	23.6	%	$	97,893		$	83,452		17.3	%	17.8	%	$	41,411		$	35,767		15.8	%	23.2	%	$	152,810		$	131,936		15.8	%	24.2	%

⁽¹⁾~~Number is not meaningful.~~


⁽¹⁾	Number is not meaningful.

Index

Bulgaria


	Three Months Ended September 30, (US$ 000's)										Nine Months Ended September 30, (US$ 000's)										For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement										Movement										Movement
	2017			2016			% Act		% Lfl		2017			2016			% Act		% Lfl		2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Television advertising	$	10,239		$	8,192		25.0	%	18.6	%	$	34,550		$	32,838		5.2	%	5.7	%	$	9,498		$	10,071		(5.7	)%	(0.9	)%	$	38,039		$	40,051		(5.0	)%	1.1	%
Carriage fees and subscriptions	4,923			4,824			2.1	%	(3.1	)%	14,378			14,036			2.4	%	2.1	%	5,479			5,267			4.0	%	9.3	%	16,083			15,775			2.0	%	8.3	%
Other	877			773			13.5	%	7.6	%	3,190			3,229			(1.2	)%	(0.7	)%	1,085			1,010			7.4	%	13.0	%	3,840			3,382			13.5	%	20.6	%
Net revenues	16,039			13,789			16.3	%	10.4	%	52,118			50,103			4.0	%	4.3	%	16,062			16,348			(1.7	)%	3.2	%	57,962			59,208			(2.1	)%	4.1	%
Costs charged in arriving at OIBDA	13,502			11,846			14.0	%	8.1	%	45,145			41,137			9.7	%	10.0	%	13,632			11,867			14.9	%	20.8	%	41,523			46,124			(10.0	)%	(4.0	)%
OIBDA	$	2,537		$	1,943		30.6	%	24.6	%	$	6,973		$	8,966		(22.2	)%	(22.0	)%	$	2,430		$	4,481		(45.8	)%	(43.1	)%	$	16,439		$	13,084		25.6	%	32.6	%

OIBDA margin	15.8		%	14.1		%	1.7 p.p.		1.8 p.p.		13.4		%	17.9		%	(4.5) p.p.		(4.5) p.p.		15.1		%	27.4		%	(12.3) p.p.		(12.4) p.p.		28.4		%	22.1		%	6.3 p.p.		6.1 p.p.

~~The~~We estimate the television advertising market in Bulgaria ~~increased an estimated 5%~~declined 1% at constant rates in the nine months ended September 30, ~~2017~~2019 compared to the same period in ~~2016.~~2018.

Our television advertising revenues ~~increased at~~decreased on a constant ~~rates~~currency basis in the third quarter due to lower sponsorship and product placement. In the first nine months of ~~2017 compared to~~2019, television advertising revenues increased on a constant currency basis and outperformed the ~~same periods in 2016 due to higher prices~~market as an increase in our ~~sales policy for the year, which were particularly strong year-on-year in the third quarter.~~average prices more than offset selling fewer GRPs. Carriage fees and subscription revenues ~~decreased slightly at constant rates during~~increased in the ~~third quarter, but increased year to-date~~quarter- and year-to-date periods due primarily to ~~continued efforts to secure new contracts with cable, satellite and IPTV operators with improved pricing.~~price inflation in existing contracts.

On a constant currency basis, costs charged in arriving at OIBDA increased in the third quarter ~~and first nine months~~due to higher content costs. The start of ~~2017 compared to~~ the ~~same periods of 2016 due primarily to increases in content costs, resulting primarily from higher quality productions in certain time slots~~fall season included more entertainment formats compared to the schedule in 2018 and such costs, together with higher charges related to foreign fiction programming, exceeded the ~~prior year, as well as higher~~savings from not continuing to broadcast last year's very successful locally produced telenovela. In the first nine months of 2019, lower bad debt ~~charges.~~charges, together with lower costs for local production in the first half of the year and a planned reduction in the volume of sports rights, resulted in a decrease in costs charged in arriving at OIBDA for the year-to-date period.

Czech Republic


	Three Months Ended September 30, (US$ 000's)										Nine Months Ended September 30, (US$ 000's)										For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement										Movement										Movement
	2017			2016			% Act		% Lfl		2017			2016			% Act		% Lfl		2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Television advertising	$	37,792		$	34,518		9.5	%	0.0	%	$	121,453		$	115,981		4.7	%	2.8	%	$	40,065		$	39,530		1.4	%	7.2	%	$	139,815		$	138,920		0.6	%	7.7	%
Carriage fees and subscriptions	3,269			2,612			25.2	%	14.6	%	8,790			7,743			13.5	%	11.2	%	4,406			4,004			10.0	%	15.9	%	13,007			11,847			9.8	%	17.2	%
Other	1,620			1,901			(14.8	)%	(22.3	)%	5,283			4,834			9.3	%	6.1	%	2,386			1,955			22.0	%	29.0	%	8,730			7,284			19.9	%	28.0	%
Net revenues	42,681			39,031			9.4	%	(0.1	)%	135,526			128,558			5.4	%	3.5	%	46,857			45,489			3.0	%	8.9	%	161,552			158,051			2.2	%	9.4	%
Costs charged in arriving at OIBDA	30,063			25,851			16.3	%	6.4	%	86,396			82,205			5.1	%	3.4	%	29,352			30,101			(2.5	)%	2.8	%	96,807			99,042			(2.3	)%	4.7	%
OIBDA	$	12,618		$	13,180		(4.3	)%	(12.8	)%	$	49,130		$	46,353		6.0	%	3.7	%	$	17,505		$	15,388		13.8	%	21.0	%	$	64,745		$	59,009		9.7	%	17.2	%

OIBDA margin	29.6		%	33.8		%	(4.2) p.p.		(4.3) p.p.		36.3		%	36.1		%	0.2 p.p.		0.1 p.p.		37.4		%	33.8		%	3.6 p.p.		3.8 p.p.		40.1		%	37.3		%	2.8 p.p.		2.7 p.p.

The television advertising market in the Czech Republic increased an estimated 4%6% at constant rates in the nine months ended September 30, ~~2017~~2019 compared to the same period in ~~2016.~~2018.

~~Television~~Our television advertising revenues increased at constant rates in the first nine months of 2017 compared to the same period in 2016 due to higher average prices. Third quarter revenues were flat at constant rates, as higher average prices were offset by selling fewer GRPs during the period. Carriage fees and subscription revenues increased on a constant currency basis in the third quarter and first nine months of ~~2017~~2019 primarily due ~~primarily~~ to our higher average prices. Carriage fees and subscription revenues increased on a constant currency basis in the quarter- and year-to-date periods due to price inflation in existing contracts ~~for Nova International that became effective late~~as well as an increase in ~~2016.~~the number of subscribers.

Costs charged in arriving at OIBDA increased ~~on a~~at constant ~~currency basis~~rates in the third quarter ~~and first nine months of 2017 compared to the same periods in 2016~~ due to ~~an increase in~~higher licensing costs and staff costs, including additional personnel to support our digital initiatives, which were partially offset by lower content costs from ~~higher quality productions this year~~broadcasting more cost-effective foreign programming compared to the schedule in ~~2016, an earlier start~~2018. The increase in costs in the first nine months of 2019 also reflected marketing activities in the first quarter to ~~certain key shows, and increased costs for sport rights and news, which was partially offset by lower transmission costs.~~celebrate the 25th anniversary of TV Nova broadcasting in the Czech Republic.

Index

Romania


	Three Months Ended September 30, (US$ 000's)										Nine Months Ended September 30, (US$ 000's)										For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement										Movement										Movement
	2017			2016			% Act		% Lfl		2017			2016			% Act		% Lfl		2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Television advertising	$	28,445		$	25,763		10.4	%	7.3	%	$	92,782		$	85,256		8.8	%	10.4	%	$	27,318		$	28,485		(4.1	)%	2.7	%	$	90,421		$	98,712		(8.4	)%	(0.6	)%
Carriage fees and subscriptions	11,260			10,104			11.4	%	8.3	%	32,781			30,268			8.3	%	9.7	%	11,189			11,462			(2.4	)%	4.5	%	33,372			34,846			(4.2	)%	3.7	%
Other	764			1,103			(30.7	)%	(32.6	)%	2,420			2,745			(11.8	)%	(11.3	)%	1,177			1,181			(0.3	)%	6.0	%	3,063			3,125			(2.0	)%	5.5	%
Net revenues	40,469			36,970			9.5	%	6.4	%	127,983			118,269			8.2	%	9.7	%	39,684			41,128			(3.5	)%	3.3	%	126,856			136,683			(7.2	)%	0.6	%
Costs charged in arriving at OIBDA	24,973			24,364			2.5	%	(0.4	)%	75,533			73,239			3.1	%	4.5	%	22,743			25,521			(10.9	)%	(4.5	)%	67,139			77,987			(13.9	)%	(6.6	)%
OIBDA	$	15,496		$	12,606		22.9	%	19.6	%	$	52,450		$	45,030		16.5	%	18.3	%	$	16,941		$	15,607		8.5	%	16.0	%	$	59,717		$	58,696		1.7	%	10.2	%

OIBDA margin	38.3		%	34.1		%	4.2 p.p.		4.2 p.p.		41.0		%	38.1		%	2.9 p.p.		3.0 p.p.		42.7		%	37.9		%	4.8 p.p.		4.7 p.p.		47.1		%	42.9		%	4.2 p.p.		4.1 p.p.

The television advertising market in Romania ~~increased an estimated 12%~~declined 1% at constant rates in the nine months ended September 30, ~~2017~~2019 compared to the same period in ~~2016.~~2018.

Our television advertising revenues increased at constant rates in the third quarter ~~of 2017 compared to the same period last year~~ due to ~~higher~~a significant increase in our average prices, ~~and the year-to-date period in 2017 also benefited~~which was mostly offset by selling fewer GRPs from ~~selling more GRPs. The market continues to be largely sold-out in 2017 and we have increased our all-day audience share compared to 2016, and consequently our~~less inventory available to sell. In ~~addition, in~~ the ~~second and third quarters~~first nine months of 2016 our main channel aired the European football championship, which significantly increased the volume of inventory available and sold last year. If the benefit of the tournament last year was excluded, we estimate2019 our television advertising revenues ~~increased approximately 16%~~were broadly flat as an increase in average prices was mostly offset by reduced spending by advertisers, primarily in the ~~year-to-date period.~~first quarter of 2019, who were directly impacted by new incremental taxes imposed early in 2019 on certain sectors of the economy, including telecommunications and banking. We anticipate additional spending on advertising in the fourth quarter from these advertisers will result in full year growth for both the television advertising market and our television advertising revenues. Carriage fees and subscription revenues ~~grew~~increased on a constant currency basis ~~during~~in the ~~third quarter~~quarter- and ~~first nine months of 2017~~year-to-date periods primarily due to an increase in the average number of ~~reported~~ subscribers.

Costs charged in arriving at OIBDA increased at constant rates during the first nine months of 2017 primarily due to a increase in content costs, as we invested more in local productions of entertainment formats and aired more popular foreign programming to increase ratings. In the third quarter of 2017, these costs were mostly offset by savings from the European football championship that was broadcast in 2016.

~~Slovak Republic~~

Three Months Ended September 30, (US$ 000's) Nine Months Ended September 30, (US$ 000's)
Movement Movement
2017
2016
% Act
% Lfl
2017
2016
% Act
% Lfl
Television advertising $ 17,354
$ 16,809
3.2 % (2.0 )% $ 54,701
$ 55,900
(2.1 )% (2.0 )%
Carriage fees and subscriptions 2,095
400

NM⁽¹⁾

NM⁽¹⁾

5,649
1,276

NM⁽¹⁾

NM⁽¹⁾

Other 935
655
42.7 % 30.6 % 2,998
2,290
30.9 % 27.0 %
Net revenues 20,384
17,864
14.1 % 8.1 % 63,348
59,466
6.5 % 6.6 %
Costs charged in arriving at OIBDA 17,440
18,247
(4.4 )% (9.4 )% 52,009
54,298
(4.2 )% (4.4 )%
OIBDA $ 2,944
$ (383 )
NM⁽¹⁾

NM⁽¹⁾

$ 11,339
$ 5,168
119.4 % 125.7 %

OIBDA margin 14.4 % (2.1 )% 16.5 p.p.
16.5 p.p.
17.9 % 8.7 % 9.2 p.p.
9.4 p.p.

⁽¹⁾~~Number is not meaningful.~~

~~The television advertising market in the Slovak Republic increased an estimated 3% at constant rates in the nine months ended September 30, 2017 compared to the same period in 2016.~~

Our television advertising revenues decreased on a constant currency basis during the third quarter of 2017 compared to the same period in 2016 from selling fewer GRPs due to lower coverage for our channels, which have been distributed exclusively on cable, satellite and IPTV platforms in the country since January of this year. Demand for GRPs was also lower in the first nine months of 2017 compared to 2016 due to informational and political campaigns that took place in the first half of 2016. If this spending is excluded, our television advertising revenues increased 3% at constant rates in the first nine months of 2017. The change in the way our channels are distributed resulted in a significant increase in carriage fees and subscriptions revenue, as well as a cost reduction from significantly lower transmission costs. During the remainder of 2017 we anticipate reduced pressure on our ratings as additional households transition to cable, satellite and IPTV platforms and the measurement panel is updated to better reflect how viewers watch television.

On a constant currency basis, costs charged in arriving at OIBDA decreased during the third quarter and first nine months of 2019 primarily due to ~~lower transmission~~a decrease in content costs ~~which~~as we utilized fewer hours and more cost-effective foreign content. Costs were ~~partially offset~~also lower in the first nine months of ~~2017 by~~2019 from fewer sport rights in the first half of the year since we no longer broadcast UEFA Champions League matches.

Slovak Republic



	For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement
	2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Television advertising	$	19,126		$	17,929		6.7	%	12.4	%	$	60,575		$	61,067		(0.8	)%	5.6	%
Carriage fees and subscriptions	2,186			2,080			5.1	%	10.4	%	6,749			6,516			3.6	%	10.1	%
Other	834			858			(2.8	)%	1.7	%	3,467			3,007			15.3	%	22.5	%
Net revenues	22,146			20,867			6.1	%	11.7	%	70,791			70,590			0.3	%	6.8	%
Costs charged in arriving at OIBDA	15,075			15,835			(4.8	)%	0.2	%	53,436			60,549			(11.7	)%	(6.0	)%
OIBDA	$	7,071		$	5,032		40.5	%	48.2	%	$	17,355		$	10,041		72.8	%	83.0	%

OIBDA margin	31.9		%	24.1		%	7.8 p.p.		7.8 p.p.		24.5		%	14.2		%	10.3 p.p.		10.2 p.p.

The television advertising market in the Slovak Republic increased an estimated 7% at constant rates in the nine months ended September 30, 2019 compared to the same period in 2018.

Our television advertising revenues increased on a constant currency basis in the third quarter due to an increase in our average prices and selling more GRPs, including additional spending on government informational campaigns. In the first nine months of 2019, the higher average prices and additional spending on government informational campaigns was partially offset by selling fewer GRPs and less product placement in the first half of the year. Carriage fees and subscriptions revenue increased in the third quarter and first nine months of 2019 from higher prices in new contracts in effect from the start of 2019.

On a constant currency basis, costs charged in arriving at OIBDA were flat in the third quarter as slightly higher investment in both foreign fiction and local productions was offset by savings from professional fees and lower transmission costs. Costs decreased in the first nine months of 2019 due to lower content costs ~~as we made targeted adjustments~~from broadcasting fewer locally produced formats in the ~~programming line-up since we changed the way our channels are distributed.~~spring season of 2019 and a decrease in professional fees.

Index

Slovenia



	For the Three Months Ended September 30, (US$ 000's)										For the Nine Months Ended September 30, (US$ 000's)
							Movement										Movement
	2019			2018			% Act		% Lfl		2019			2018			% Act		% Lfl
Television advertising	$	7,423		$	7,559		(1.8	)%	3.4	%	$	32,811		$	34,792		(5.7	)%	0.5	%
Carriage fees and subscriptions	6,308			5,355			17.8	%	23.7	%	19,146			16,060			19.2	%	26.7	%
Other	637			672			(5.2	)%	(0.3	)%	2,537			2,631			(3.6	)%	2.5	%
Net revenues	14,368			13,586			5.8	%	11.2	%	54,494			53,483			1.9	%	8.5	%
Costs charged in arriving at OIBDA	10,552			11,428			(7.7	)%	(2.9	)%	39,534			41,473			(4.7	)%	1.4	%
OIBDA	$	3,816		$	2,158		76.8	%	86.2	%	$	14,960		$	12,010		24.6	%	32.8	%

OIBDA margin	26.6		%	15.9		%	10.7 p.p.		10.7 p.p.		27.5		%	22.5		%	5.0 p.p.		5.1 p.p.

The television advertising market in Slovenia was broadly flat at constant rates in the nine months ended September 30, 2019 compared to the same period in 2018.

Our television advertising revenues increased on a constant currency basis in the third quarter, when we saw a positive impact from broadcasting the European Volleyball Championships, which included additional sponsorship. Our television advertising revenues in the first nine months of 2019 were broadly flat, as the increased spending in the third quarter was mostly offset by lower spending from larger multinationals and telecommunications operators in the first half of 2019. Carriage fees and subscription revenues increased in the third quarter and first nine months of 2019 due to price inflation in existing agreements, and the year-to-date period also benefited from additional subscribers.

On a constant currency basis, costs charged in arriving at OIBDA decreased in the third quarter from lower content costs, due to more cost-effective foreign programming being broadcast in the summer compared to the schedule last year. Costs charged in arriving at OIBDA increased in the first nine months of 2019 because the increase in the cost of content broadcast in the first quarter of 2019 more than offset the savings from foreign programming during the second and third quarters of this year.

Index

III. Analysis of the Results of Operations and Financial Position


	For the Three Months Ended September 30, (US$ 000's)								For the Three Months Ended September 30, (US$ 000's)
					Movement								Movement
	2017		2016		% Act		% Lfl		2019		2018		% Act		% Lfl
Revenue:
Television advertising	$	93,830	$	85,282	10.0	%	3.5	%	$	103,430	$	103,574	(0.1	)%	5.8	%
Carriage fees and subscriptions	21,547		17,940		20.1	%	14.9	%	29,568		28,168		5.0	%	11.2	%
Other revenue	4,054		4,305		(5.8	)%	(12.1	)%	5,853		5,296		10.5	%	16.7	%
Net Revenues	119,431		107,527		11.1	%	4.8	%	138,851		137,038		1.3	%	7.3	%
Operating expenses:
Content costs	55,871		51,920		7.6	%	1.8	%	58,962		60,910		(3.2	)%	2.5	%
Other operating costs	12,612		13,482		(6.5	)%	(12.3	)%	13,274		13,260		0.1	%	5.6	%
Depreciation of property, plant and equipment	6,936		5,801		19.6	%	11.8	%	8,245		8,202		0.5	%	6.1	%
Amortization of broadcast licenses and other intangibles	2,187		2,073		5.5	%	(3.1	)%	2,029		2,216		(8.4	)%	(3.6	)%
Cost of revenues	77,606		73,276		5.9	%	(0.1	)%	82,510		84,588		(2.5	)%	3.2	%
Selling, general and administrative expenses	25,803		22,801		13.2	%	5.8	%	25,558		30,253		(15.5	)%	(11.0	)%
Operating income	$	16,022	$	11,450	39.9	%	34.8	%	$	30,783	$	22,197	38.7	%	48.7	%


	For the Nine Months Ended September 30, (US$ 000's)								For the Nine Months Ended September 30, (US$ 000's)
					Movement								Movement
	2017		2016		% Act		% Lfl		2019		2018		% Act		% Lfl
Revenue:
Television advertising	$	303,486	$	289,975	4.7	%	4.4	%	$	361,661	$	373,542	(3.2	)%	3.8	%
Carriage fees and subscriptions	61,597		53,323		15.5	%	15.9	%	88,357		85,044		3.9	%	11.3	%
Other revenue	12,975		12,849		1.0	%	(0.4	)%	18,991		17,069		11.3	%	18.6	%
Net Revenues	378,058		356,147		6.2	%	6.0	%	469,009		475,655		(1.4	)%	5.7	%
Operating expenses:
Content costs	174,214		166,938		4.4	%	4.5	%	199,678		219,337		(9.0	)%	(2.3	)%
Other operating costs	35,747		40,773		(12.3	)%	(13.0	)%	40,328		41,929		(3.8	)%	2.7	%
Depreciation of property, plant and equipment	19,345		17,134		12.9	%	11.8	%	24,625		25,150		(2.1	)%	4.6	%
Amortization of broadcast licenses and other intangibles	6,349		6,247		1.6	%	(0.2	)%	6,336		6,839		(7.4	)%	(1.0	)%
Cost of revenues	235,655		231,092		2.0	%	1.8	%	270,967		293,255		(7.6	)%	(1.0	)%
Selling, general and administrative expenses	70,204		64,984		8.0	%	6.7	%	79,160		85,605		(7.5	)%	(1.3	)%
Operating income	$	72,199	$	60,071	20.2	%	21.4	%	$	118,882	$	96,795	22.8	%	32.1	%

Revenue:

Television advertising revenues: We estimate television advertising spending in our markets ~~grew~~increased on average by 6%3% at constant rates in the nine months ended September 30, ~~2017~~2019 as compared to the same period in ~~2016,~~2018, positively impacting our television advertising revenues. See "Overview - Segment Performance" above for additional information on television advertising revenues for each of our operating countries.

Carriage fees and subscriptions: Carriage fees and subscriptions ~~revenue increased~~revenues during the three and nine months ended September 30, ~~2017 to 18% and 16% of total net revenues, respectively,~~2019 grew approximately 11% at constant rates as compared to ~~17% and 15% for~~ the same periods in ~~2016. The increases arose~~2018 primarily due to new contracts with higher prices and an increase in the ~~Slovak Republic where our channels are exclusively available on cable, satellite and IPTV platforms since January 2017 and in Romania due to higher subscriber counts.~~number of subscribers. See "Overview - Segment Performance" above for additional information on carriage fees and subscription revenues for each of our operating countries.

Other revenues: Other revenues include primarily internet advertising revenues and revenues generated through the licensing of our own productions. Other revenues ~~decreased~~increased during the three and nine months ended September 30, ~~2017~~2019 as compared to the same ~~period~~periods in ~~2016~~2018 primarily due to ~~lower internet advertising~~higher online revenues in the Czech Republic and fewer special events in Romania, offset by increases in production services in the Slovak Republic. Other revenues for the nine months ended September 30, 2017 remained in line with those of the same period in 2016.Romania.

Operating Expenses:

Content costs: ~~Content~~ At constant rates, content costs (including production costs and amortization and impairment of program rights) increased during the three months ended September 30, 2019, compared to the same period in 2018 primarily due to the inclusion in our broadcast schedule of more local entertainment formats and foreign fiction in Bulgaria and local entertainment formats in the Slovak Republic, offset by fewer sporting rights in Romania and the use of more cost-effective acquired programming in the Czech Republic, Romania and Slovenia. Content costs decreased during the nine months ended September 30, ~~2017 compared to the same periods in 2016~~2019 primarily due to there being fewer sporting rights in Romania and Bulgaria as well as the ~~inclusion~~use of ~~both~~more cost effective acquired programming in Romania. The decrease was partially offset by higher quality ~~acquired programming and more hours of~~ local productions in ~~our broadcast schedules.~~the Czech Republic.

Other operating costs: ~~Other~~ At constant rates, other operating costs (excluding content costs, depreciation of property, plant and equipment, amortization of broadcast licenses and other intangibles as well as selling, general and administrative expenses) decreased during the three and nine months ended September 30, 2017 compared to the same periods in 2016, primarily due to cost savings in the Slovak Republic following our decision not to renew our contract for the terrestrial distribution of our channels there.

~~Index~~

~~Depreciation of property, plant and equipment:~~ ~~Total depreciation of property, plant and equipment~~ increased during the three and nine months ended September 30, ~~2017~~2019 compared to the same periods in ~~2016~~2018 primarily due to higher licensing costs in the Czech Republic, offset by the savings in transmission costs in the Slovak Republic and Slovenia.

Index

Depreciation of property, plant and equipment: Total depreciation of property, plant and equipment increased at constant rates during the three and nine months ended September 30, 2019 compared to the same periods in 2018 primarily due to depreciation ~~on production~~of machinery and ~~technical~~ equipment in Romania and Bulgaria that was placed in service ~~as we replaced fully depreciated assets.~~during 2018 and 2019.

Amortization of broadcast licenses and other intangibles: Total amortization of broadcast licenses and other intangibles decreased for the three and nine months ended September 30, 2019 compared to the same periods in 2018 primarily due to certain customer relationships in the Czech Republic becoming fully amortized in the second quarter of 2019.

Selling, general and administrative expenses: Selling, general and administrative expenses decreased during the three months ended September 30, 2019 compared to the same period in 2018 primarily due to a reduction in share-based compensation, and lower bad debt charges in Bulgaria and Romania.

Selling, general and administrative expenses during the nine months ended September 30, 2019 compared to the same period in 2018, primarily reflects lower legal fees in the Slovak Republic, lower bad debt charges in Bulgaria, and the revision of a legal accrual as well as changes in local VAT legislation in Romania. The decreases were offset by costs incurred in the first quarter of 2019 related to the 25th anniversary event in the Czech Republic and costs relating to our review of strategic alternatives.

Non-cash stock-based compensation charges for the three and nine months ended September 30, 2019 and 2018 were US$ 0.9 million and US$ 3.1 million; and US$ 3.9 million and US$ 6.1 million, respectively. Share-based compensation expense recognized during the three and nine months ended September 30, ~~2017~~2018 includes US$ 2.9 million related to the accelerated vesting of RSUs with performance conditions in accordance with the terms of the corresponding award agreement following the completion of sale of the Company's Croatian operations on July 31, 2018 See Item 1, Note 17, "Stock-based Compensation".

Operating income: At constant rates, operating income increased during the three months ended September 30, 2019 compared to the same ~~periods~~period in ~~2016~~2018 primarily ~~due to certain intangibles in Romania becoming fully amortized, partly offset by an increase in amortization of certain of our trademarks in the Czech Republic.~~

~~Selling, general and administrative expenses:~~ Selling, general and administrative expenses increased for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 primarily due to increased bad debt charges in Bulgaria.

~~Operating income:~~ ~~Operating income during the three and nine months ended September 30, 2017 increased compared to the same periods in 2016~~ due to increases in television advertising and carriage fee revenues ~~which outpaced the increases in content costs~~ and a reduction of selling, general and administrative expenses.

At constant rates, operating income increased during the nine months ended September 30, 2019 compared to the same period in 2018 primarily due to increases in television advertising and carriage fee revenues and a reduction in content costs.

Our operating margin, which is determined as operating income ~~/ loss~~ divided by net revenues, was ~~13%~~22.2% and ~~19%~~25.3% for the three and nine months ended September 30, ~~2017~~2019 compared to ~~11%~~16.2% and ~~17%~~20.3% for the three and nine months ended September 30, ~~2016.~~2018.

Other income / ~~expense:~~(expense):


	For the Three Months Ended September 30, (US$ 000's)								For the Nine Months Ended September 30, (US$ 000's)								For the Three Months Ended September 30, (US$ 000's)								For the Nine Months Ended September 30, (US$ 000's)
	2017			2016			% Act		2017			2016			% Act		2019			2018			% Act		2019			2018			% Act
Interest expense	$	(18,352	)	$	(22,424	)	18.2	%	$	(54,773	)	$	(90,640	)	39.6	%	$	(8,037	)	$	(9,977	)	19.4	%	$	(24,014	)	$	(40,206	)	40.3	%
Other non-operating income / (expense):
Interest income																	80			142			(43.7	)%	347			549			(36.8	)%
Foreign currency exchange (loss) / gain, net																	(3,869		)	1,363			NM ⁽¹⁾		(4,791		)	(481		)	NM ⁽¹⁾
Change in fair value of derivatives																	(165		)	67			NM ⁽¹⁾		(201		)	(1,262		)	84.1	%
Loss on extinguishment of debt	(101		)	—			NM ⁽¹⁾		(101		)	(150,158		)	99.9	%	(105		)	(127		)	17.3	%	(340		)	(415		)	18.4	%
Non-operating income / (expense):
Interest income	139			89			56.2	%	326			466			(30.0	)%
Foreign currency exchange gain, net	4,609			602			NM ⁽¹⁾		14,085			13,099			7.5	%
Change in fair value of derivatives	(1,150		)	(398		)	(188.9	)%	(1,882		)	(11,904		)	84.2	%
Other income / (expense), net	45			57			(21.1	)%	254			(23		)	NM ⁽¹⁾
Other income, net																	96			129			(25.6	)%	162			465			(65.2	)%
Provision for income taxes	(3,157		)	(1,145		)	(175.7	)%	(12,770		)	(6,706		)	(90.4	)%	(5,261		)	(3,185		)	(65.2	)%	(20,694		)	(14,405		)	(43.7	)%
Loss from discontinued operations, net of tax	(5,988		)	(8,054		)	25.7	%	(8,747		)	(15,971		)	45.2	%
Income from discontinued operations, net of tax																	—			57,882			NM ⁽¹⁾		—			60,548			NM ⁽¹⁾
Net loss attributable to noncontrolling interests	188			196			(4.1	)%	534			387			38.0	%	223			80			178.8	%	111			274			(59.5	)%


⁽¹⁾	Number is not meaningful.

Interest expense: Interest expense during the three and nine months ended September 30, ~~2017~~2019 decreased compared to the ~~three and nine months ended September 30, 2016~~same periods in 2018, primarily due to lower amortization of debt discount and issuance costs following the extinguishment of the 2017 PIK Notes and 2017 Term Loan in April 2016 and due to a lower effective interest rate on the replacement facility. We also realized interest expense savings as a result of the repricing of our Guarantee Fees in ~~March~~April 2018, the repayment of ~~2017.~~outstanding amounts of the 2019 Euro Loan during 2018, the partial repayment of the 2021 Euro Loan as well as reduced borrowing costs following a reduction in our net leverage ratio as defined within the Reimbursement Agreement. See Item 1, Note 5,4, "Long-term Debt and Other Financing Arrangements".

~~Loss on extinguishment of debt:~~ During the nine months ended September 30, 2017, we recognized a loss on extinguishment of debt related to our repayment of EUR 50 million (approximately US$ 59.1 million at August 1, 2017 rates) of the 2018 Euro Term Loan. During the nine months ended September 30, 2016, we recognized a loss on extinguishment of debt related to the redemption and discharge of the 2017 PIK Notes, repayment of the 2017 Term Loan and modifications of the 2018 Euro Term Loan and the 2019 Euro Term Loan, which were accounted for in a similar manner to a debt extinguishment.

Interest income: Interest income primarily reflects earnings on cash balances and was not material.

Foreign currency exchange (loss) / gain, net: We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary. This includes third party receivables and payables, as well as ~~certain of our~~those intercompany loans which are not considered to be of a long-term investment nature. Our subsidiaries generally receive funding via loans that are denominated in currencies other than the ~~dollar, and~~functional currency of the lender, therefore any change in the relevant exchange rate will require us to recognize a transaction gain or loss on revaluation. Certain of our intercompany loans are classified as long-term in nature, and therefore gains or losses on revaluation are not recorded through the statement of operations and comprehensive income / loss. See the discussion under "Currency translation adjustment, net" below.

~~During the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017, we recognized a net gain of US$ 14.1 million comprised of transaction gains of US$~~ ~~7.7 million~~ ~~relating to the revaluation of intercompany loans, transaction gains of approximately US$~~ ~~2.4 million~~ ~~on our long-term debt and other financing arrangements and transaction gains of US$~~ ~~4.0 million~~ ~~relating to the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary.~~

~~During the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2016, we recognized a net gain of US$ 13.1 million comprised of transaction gains of US$~~ ~~38.1 million~~ ~~relating to the revaluation of intercompany loans, transaction losses of approximately US$~~ ~~25.3 million~~ ~~on our long-term debt and other financing arrangements and transaction gains of US$~~ ~~0.3 million~~ ~~relating to the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary.~~



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Revaluation of intercompany loans	$	(908	)	$	1,604		$	(149	)	$	447
Transaction losses on long-term debt and other financing arrangements	(1,612		)	(124		)	(1,917		)	(2,654		)
Transaction (losses) / gains on revaluation of monetary assets and liabilities	(1,349		)	(117		)	(2,725		)	1,726
Transaction (losses) / gains	$	(3,869	)	$	1,363		$	(4,791	)	$	(481	)

Index

Change in fair value of derivatives: ~~During~~ For the three and nine months ended September 30, ~~2017~~,2019, and 2018 we recognized losses as a result of the ~~change in the fair value~~partial settlement of our ~~USD/EUR foreign currency forward contracts entered into on January 31, 2017, May 16, 2017 and July 21, 2017 and the~~ interest rate swaps ~~we use as hedging instruments for interest payments on~~in connection with the ~~2018 Euro Term Loan. During the~~ ~~three and nine months~~ ~~ended September 30, 2016, we recognized losses as a result~~repayment of ~~the change in the fair value of certain USD/EUR foreign currency forward contracts which matured in 2016.~~debt. See Item 1, Note 12, "Financial Instruments and Fair Value Measurements".

Loss on extinguishment of debt: During the three and nine months ended September 30, 2019, we recognized losses on extinguishment of debt related to our partial repayment of the 2021 Euro Loan. During the three and nine months ended September 30, 2018, we recognized losses on extinguishment of debt related to our repayment of the 2019 Euro Loan and the partial repayment of the 2021 Euro Loan.

Other income, ~~/ (expense),~~ net: Our other income / expense, net during the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 was not material.

Provision for income taxes: The provision for income taxes for the three and nine months ended September 30, ~~2017~~2019 reflects income tax charges on profits in each of our operating segments and ~~for~~ the ~~same periods in 2016 reflects~~impact of losses on which no tax benefit has been ~~received~~received.

The provision for income taxes for the three and annine months ended September 30, 2018 reflects income tax ~~charge~~charges on profits in the Czech Republic, Romania, the Slovak Republic and Slovenia and the ~~Slovak Republic.~~impact of losses on which no tax benefit has been received.

Our operating subsidiaries are subject to income taxes at statutory rates ~~ranging from 10.0%~~of 10% in Bulgaria, ~~to 21.0%~~16% in Romania, 19% in the Czech Republic, 19% in Slovenia and 21% in the Slovak Republic.

~~Index~~

~~Loss~~Income from discontinued operations, net of ~~tax:~~ ~~Loss~~tax: Income from discontinued operations, net of tax for the three and nine months ended September 30, ~~2017 and 2016 is~~2018 comprised of the ~~operational~~gain on sale of our Croatian operations, the results of the ~~Croatia~~Croatian operations through the date of sale and ~~Slovenia segments including~~ the allocation of interest expense and Guarantee Fees ~~from the 2018 Euro Term Loan~~ and transaction costs. ~~See Item 1, Note 3, "Discontinued Operations and Assets Held for Sale" and Note 5, "Long-term Debt and Other Financing Arrangements".~~

Net loss attributable to noncontrolling interests: The results attributable to noncontrolling interests for the three and nine months ended September 30, ~~2017~~2019 and ~~2016 relates~~2018 relate to the noncontrolling interest share of our Bulgaria operations.

Other comprehensive (loss) / income:


	For the Three Months Ended September 30, (US$ 000's)								For the Nine Months Ended September 30, (US$ 000's)							For the Three Months Ended September 30, (US$ 000's)						For the Nine Months Ended September 30, (US$ 000's)
	2017			2016			% Act		2017		2016			% Act		2019			2018		% Act	2019			2018			% Act
Currency translation adjustment, net	$	9,227		$	7,262		27.1	%	$	42,203	$	15,264		176.5	%	$	(32,525	)	$	12,137	NM ⁽¹⁾	$	(31,366	)	$	(10,707	)	NM ⁽¹⁾
(Loss) / gain on derivative instruments	(135		)	(1,360		)	90.1	%	1,083		(5,581		)	NM ⁽¹⁾
Unrealized (loss) / gain on derivative instruments																(235		)	1,033		NM ⁽¹⁾	(4,786		)	(1,895		)	NM ⁽¹⁾


⁽¹⁾	Number is not meaningful.

Currency translation adjustment, net: The underlying equity value of our investments (which are denominated in the functional currency of the relevant entity) are converted into dollars at each balance sheet date, with any change in value of the underlying assets and liabilities being recorded as a currency translation adjustment to the balance sheet rather than net income / ~~loss. Other comprehensive income /~~ (loss) ~~due to currency translation adjustment, net comprised the following for the three and nine months ended September 30, 2017 and 2016:~~

For the Three Months Ended
September 30, (US$ 000's)

For the Nine Months Ended
September 30, (US$ 000's)
2017
2016
% Act
2017
2016
% Act
Foreign exchange gain on intercompany transactions $ 1,142
$ 2,263
(49.5 )% $ 7,824
$ 10,757
(27.3 )%
Foreign exchange gain / (loss) on the Series B Preferred Shares 8,833
1,334

NM ⁽¹⁾

29,284
(4,919 )
NM ⁽¹⁾

Currency translation adjustment (748 ) 3,665

NM ⁽¹⁾

5,095
9,426
(45.9 )%
Currency translation adjustment, net $ 9,227
$ 7,262
27.1 % $ 42,203
$ 15,264
176.5 %


⁽¹⁾	~~Number is not meaningful.~~

. Certain of our intercompany loans are denominated in currencies other than the functional currency of the lender and are considered to be of a long-term investment nature as the repayment of these loans is neither planned nor anticipated for the foreseeable future. The foreign exchange gains ~~/ (losses)~~ on the remeasurement of these intercompany loans to the lender's functional currency are treated in the same manner as currency translation adjustments. Other comprehensive (loss) / income due to currency translation adjustment, net comprised the following for the three and nine months ended September 30, 2019 and 2018:



	For the Three Months Ended September 30, (US$ 000's)							For the Nine Months Ended September 30, (US$ 000's)
	2019			2018			% Act	2019			2018			% Act
Foreign exchange (loss) / gain on intercompany loans	$	(2,966	)	$	4,894		NM ⁽¹⁾	$	(710	)	$	1,370		NM ⁽¹⁾
Foreign exchange loss on the Series B Preferred Shares	(11,882		)	(1,902		)	NM ⁽¹⁾	(13,533		)	(9,579		)	NM ⁽¹⁾
Currency translation adjustment	(17,677		)	9,145			NM ⁽¹⁾	(17,123		)	(2,498		)	NM ⁽¹⁾
Currency translation adjustment, net	$	(32,525	)	$	12,137		NM ⁽¹⁾	$	(31,366	)	$	(10,707	)	NM ⁽¹⁾


⁽¹⁾	Number is not meaningful.

Index

The following charts depict the movement of the dollar versus the functional currencies of our operations, based on monthly closing rates, during the nine months ended September 30, ~~2017~~2019 and September 30, ~~2016~~2018.

Percent Change During the Nine Months Ended September 30, ~~2017~~2019

~~Index~~

Percent Change During the Nine Months Ended September 30, ~~2016~~2018

~~(Loss)~~Unrealized (loss) / gain on derivative ~~instruments:~~ instruments: The ~~(losses)~~unrealized (loss) / ~~gains~~gain on derivatives ~~classified as cash flow hedges of the Euro Term Loans, which are recognized in accumulated other comprehensive income / loss, for the three and nine months ended September 30, 2017 and 2016 are~~is due to the ~~effective~~ portion of ~~the~~ changes in the fair value of our interest rate ~~swap on the 2019~~swaps designated as cash flow hedges and ~~2021 Euro Term Loans.~~recognized in accumulated other comprehensive (loss) / income. See Item 1, Note 12, "Financial Instruments and Fair Value Measurements".

Index

Condensed consolidated balance sheets as at September 30, ~~2017~~2019 and December 31, ~~2016:~~2018:


	Condensed Consolidated Balance Sheet (US$ 000’s)										Condensed Consolidated Balance Sheet (US$ 000’s)
	September 30, 2017			December 31, 2016			% Act		% Lfl		September 30, 2019		December 31, 2018		% Act		% Lfl
Current assets	$	423,318		$	340,422		24.4	%	10.6	%	$	279,642	$	374,093	(25.2	)%	(20.9	)%
Non-current assets	1,149,372			1,050,295			9.4	%	(4.4	)%	1,059,539		1,114,268		(4.9	)%	0.5	%
Current liabilities	215,528			171,565			25.6	%	11.1	%	145,291		139,692		4.0	%	9.9	%
Non-current liabilities	1,154,383			1,070,785			7.8	%	(3.4	)%	659,308		849,978		(22.4	)%	(18.6	)%
Temporary equity	262,115			254,899			2.8	%	2.8	%	269,370		269,370		—	%	—	%
CME Ltd. shareholders’ deficit	(59,278		)	(107,804		)	45.0	%	43.1	%
CME Ltd. shareholders’ equity											264,665		229,020		NM ⁽¹⁾		NM ⁽¹⁾
Noncontrolling interests in consolidated subsidiaries	(58		)	1,272			NM ⁽¹⁾		NM ⁽¹⁾		547		301		81.7	%	(17.0	)%


⁽¹⁾	Number is not meaningful.

Note: The analysis below is intended to highlight the key factors at constant rates that led to the movements from December 31, ~~2016,~~2018, excluding the impact of foreign currency translation.

Current assets: ~~Excluding the impact of assets held for sale, current~~Current assets at September 30, ~~2017~~2019 decreased from December 31, ~~2016~~2018 primarily due to ~~lower trade receivables from increased collection and higher bad debt provisions. Further decreases are due to seasonality and lower prepayments for program rights.~~

~~Non-current assets:~~ ~~Excluding~~ the impact of ~~assets held for sale,~~seasonality on our receivables balance and the use of cash collected from receivables to partially repay the 2021 Euro Loan.

Non-current assets: At constant rates, non-current assets at September 30, ~~2017~~2019 increased from December 31, ~~2016~~2018 primarily due to ~~higher program rights from foreign acquired and own-produced content partly~~the inclusion of operating lease right-of-use assets following the adoption of the new accounting guidance, offset by ~~increased~~ depreciation of property, plant and equipment ~~and amortization~~in excess of ~~intangible assets.~~acquisitions.

Current liabilities: ~~Excluding the impact of liabilities held for sale, current~~ Current liabilities at September 30, ~~2017~~2019 increased from December 31, ~~2016. The increase is~~2018 primarily due to higher deferred revenue from customer prepayments ~~for~~on their fall 2019 advertising campaigns and the ~~fall season and accrued interest and Guarantee Fees.~~recognition of operating lease liabilities following the adoption of new accounting guidance.

Non-current liabilities: ~~Excluding the impact of liabilities held for sale, non-current~~ Non-current liabilities at September 30, ~~2017~~2019 decreased from December 31, ~~2016~~2018 primarily due to ~~our election to repay a portion~~the repayments of amounts outstanding on the ~~2018~~2021 Euro ~~Term Loan in August 2017.~~Loan. See Item 1, Note 5,4, "Long-term Debt and Other Financing Arrangements".

Temporary equity: Temporary equity at ~~September 30, 2017~~ ~~increased from~~ ~~December 31, 2016~~ ~~due to~~represents the ~~accretion on~~accreted value of the Series B Preferred Shares.

CME Ltd. shareholders’ ~~deficit:~~ ~~CME Ltd. shareholders’ deficit decreased from December 31, 2016. This primarily~~equity: The increase in shareholders' equity reflects ~~a decrease in accumulated other comprehensive loss due to currency translation adjustments and~~ the net income attributable to CME Ltd. during the nine months ended September 30, ~~2017,~~2019 which was ~~partly~~partially offset by ~~accretion~~the impact of ~~the preferred dividend paid~~unrealized losses on derivative instruments recorded in ~~kind on our Series B Preferred Shares.~~accumulated other comprehensive loss.

~~Index~~

Noncontrolling interests in consolidated subsidiaries: Noncontrolling interests in consolidated subsidiaries at ~~September 30, 2017~~ ~~decreased from~~ ~~December 31, 2016~~ ~~due to the net loss attributable to~~represents the noncontrolling interest in Bulgaria.

Index

IV. Liquidity and Capital Resources

IV (a) Summary of Cash Flows

Cash and cash equivalents ~~increased~~decreased by US$ ~~26.4~~27.9 million during the nine months ended September 30, ~~2017~~2019. The change in cash and cash equivalents for the periods presented below is summarized as follows:


	For the Nine Months Ended September 30, (US$ 000's)						For the Nine Months Ended September 30, (US$ 000's)
	2017			2016			2019			2018
Net cash generated from continuing operating activities	$	90,638		$	56,972		$	167,973		$	93,762
Net cash used in continuing investing activities	(16,250		)	(14,762		)	(15,619		)	(15,027		)
Net cash used in continuing financing activities	(57,782		)	(23,191		)	(176,098		)	(180,751		)
Net cash used in discontinued operations	(62		)	(22,278		)
Net cash provided by discontinued operations							—			105,127
Impact of exchange rate fluctuations on cash and cash equivalents	9,884			2,005			(4,133		)	(2,382		)
Net increase / (decrease) in cash and cash equivalents	$	26,428		$	(1,254	)
Net increase in cash and cash equivalents							$	(27,877	)	$	729

Operating Activities

~~The increase in~~Net cash generated from continuing operations increased during the nine months ended September 30, ~~2017 reflects a significant decrease in cash paid for interest and Guarantee Fees. In 2016, we paid accrued interest related~~2019 when compared to the ~~2017 PIK Notes and 2017 Term Loan when they were refinanced~~same period in ~~April 2016 and we also repaid US$ 5.5 million of accrued Guarantee Fees in the first half of 2016 which were previously paid in kind. The increase also reflects~~2018 primarily due to higher cash collections from ~~revenue growth~~improved operating performance. We also paid less for programming and interest, which ~~are partly~~was partially offset by higher payments of cash ~~paid for programming and taxes in 2017.~~taxes. We paid cash interest (including mandatory cash-pay Guarantee Fees) of US$ ~~22.2~~17.0 million during the nine months ended September 30, ~~2017~~2019 compared to US$ ~~38.3~~58.0 million during the nine months ended September 30, ~~2016.~~2018 including US$ 27.3 million of which we had previously elected to pay in kind.

Investing Activities

~~Our net~~Net cash used in continuing investing activities for the nine months ended September 30, ~~2017~~2019 and ~~2016 relates to~~2018 primarily reflects capital expenditures for ~~property, plant~~production related facilities and ~~equipment.~~equipment in the Czech Republic, Bulgaria and Slovenia.

Financing Activities

Net cash used in continuing financing activities during the nine months ended September 30, 2019 primarily reflects EUR 150.0 million (US$ 168.9 million at transaction date rates) of principal repayments made on our obligations under the 2021 Euro Loan. Cash used in continuing financing activities during the nine months ended September 30, ~~2017~~2018 primarily reflected principal repayments ~~made~~ on our ~~2018~~obligations under the 2019 Euro ~~Term Loan. The cash used in continuing financing activities during the nine months ended September 30, 2016 primarily reflected the refinancing~~Loan and 2021 Euro Loan, net of ~~the 2017 PIK Notes and the 2017 Term Loan, partly offset by proceeds from the exercise of stock warrants.~~warrant proceeds.

Discontinued Operations

The net cash ~~used in~~provided by discontinued operations during the nine months ended September 30, ~~2017~~2018 primarily reflected ~~capital expenditures for property, plant and equipment. The net cash used in discontinued~~the proceeds from the sale of our Croatia operations ~~during the nine months ended September 30, 2016 primarily reflected~~offset by the payment of Guarantee Fees and interest related to the ~~2018~~2019 Euro ~~Term~~ Loan.

IV (b) Sources and Uses of Cash

Our ongoing source of cash is primarily the receipt of payments from advertisers, advertising agencies and distributors of our television channels. WeAs at September 30, 2019, we also ~~have~~had available the ~~2021~~aggregate principal amount of US$ 75.0 million under the 2023 Revolving Credit Facility (see Item 1, Note 5,4, "Long-term Debt and Other Financing Arrangements"). As at September 30, 2017, the aggregate principal amount available under the 2021 Revolving Credit Facility was US$ 115.0 million and was undrawn. The available amount decreases to US$ 50.0 million with effect from January 1, 2018 or, if earlier, upon the repayment of the 2018 Euro Term Loan with the expected proceeds from the Divestment Transaction. Surplus cash, after funding ongoing operations, may be remitted to us, where appropriate, by our subsidiaries in the form of debt interest payments, ~~and capital~~principal repayments, dividends, and other distributions and loans from our subsidiaries.

Corporate law in the Central and Eastern European countries in which we operate stipulates generally that dividends may be declared by the partners or shareholders out of yearly profits subject to the maintenance of registered capital, required reserves (if applicable) and after the recovery of accumulated losses. The reserve requirement restriction generally provides that before dividends may be distributed, a portion of annual net profits (typically at least 5.0%) be allocated to a reserve, which is capped at a proportion of the registered capital of a company (ranging from 5.0% to 20.0%). There are no third-party restrictions that limit our subsidiaries' ability to transfer amounts to us in the form of loans or advances.

IV (c) Contractual Obligations, Commitments and Off-Balance Sheet Arrangements

Our future contractual obligations as at September 30, ~~2017~~2019 were as follows:


	Payments due by period (US$ 000’s)										Payments due by period (US$ 000’s)
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt – principal	$	1,068,366	$	—	$	514,901	$	553,465	$	—	$	576,175	$	—	$	65,699	$	510,476	$	—
Long-term debt – interest	253,560		56,089		127,104		70,367		—		113,446		22,338		41,716		49,392		—
Unconditional purchase obligations	140,986		54,344		62,223		20,509		3,910		81,692		36,574		39,471		5,169		478
Operating leases	8,590		3,430		2,530		958		1,672
Capital lease obligations	7,941		2,606		4,172		1,163		—
Operating lease obligations											12,128		3,440		4,322		2,314		2,052
Finance lease obligations											15,224		6,308		8,088		828		—
Other long-term obligations	31,182		15,554		14,376		1,134		118		30,732		13,219		11,213		6,300		—
Total contractual obligations	$	1,510,625	$	132,023	$	725,306	$	647,596	$	5,700	$	829,397	$	81,879	$	170,509	$	574,479	$	2,530

Index

Long-Term Debt

For more information on our long-term debt, see Item 1, Note 5,4, "Long-term Debt and Other Financing Arrangements". Interest payable on our long-term debt is calculated using ~~exchange~~interest rates and ~~interest~~exchange rates in effect as at September 30, ~~2017~~2019. For the purposes of the above table, it is assumed that the Guarantee Fees eligible to be paid in kind will be paid in kind at each interest payment date through the maturity dates of the respective Euro Term Loan. However, we intend to allocate excess cash towards paying the Guarantee Fees related to the 2018 Euro Term Loan in cash rather than electing to pay any portion in kind.

Unconditional Purchase Obligations

Unconditional purchase obligations primarily comprise future programming commitments. At September 30, ~~2017,~~2019, we had commitments in respect of future programming of US$ ~~$138.9~~81.7 million. This includes contracts signed with license periods starting after September 30, ~~2017.~~2019.

Operating and Finance Leases

For more information on our operating and finance lease commitments, see Item 1, Note ~~20, "Commitments and Contingencies"~~11, "Leases".

Other Long-Term Obligations

Other long-term obligations are primarily comprised of digital transmission commitments.

Other

Top Tone Media Holdings Limited has exercised its right to acquire additional equity in CME Bulgaria. However, the closing of this transaction has not yet occurred because ~~the~~ purchaser financing is still pending. If consummated, we would own 90.0% of our Bulgaria broadcast operations. The option strike price is the fair value of the equity in CME Bulgaria, as determined by an independent valuation.

IV (d) Cash Outlook

~~Because~~For the nine months ending September 30, 2019, net cash generated from continuing operations and unlevered free cash flows ~~from operating activities~~ were ~~negative from 2012~~US$ 168.0 million and US$ 170.6 million compared to ~~2014,~~US$ 93.8 million and US$ 136.7 million for the nine months ended September 30, 2018 (See Section II, Overview). As at September 30, 2019, we ~~relied on equity~~had US$ 34.2 million in cash and ~~debt financings to ensure adequate funding for~~cash equivalents.

On January 31, 2019, June 14, 2019, and September 23, 2019, we paid EUR 60.0 million (approximately US$ 68.9 million at January 31, 2019 rates), EUR 40.0 million (approximately US$ 45.1 million at June 14, 2019 rates), and EUR 50.0 million (approximately US$ 54.9 million at September 23, 2019 rates), respectively, of the outstanding principal balance of the 2021 Euro Loan with cash generated by our operations. ~~While cash flows from operating activities were positive~~Following these payments, there is now EUR 60.3 million (approximately US$ 65.7 million at September 30, 2019 rates) outstanding on our nearest debt maturity in 2015 and 2016, our average cost of borrowing was high and our election to pay certain interest and Guarantee Fees in kind increased our leverage. Our financing transactions in 2016 and 2017 significantly lowered our cost of borrowing.

Following the repricing of our Guarantee Fees completed in March 2017, we are now required to pay a portion of the Guarantee Fees related to all of the Euro Term Loans in cash. However, the total amount ofNovember 2021. We expect cash paid for interest and Guarantee Fees ~~will decrease significantly~~to decline in ~~2017~~2019 compared to 2018 due to the reduction in our overall indebtedness and a lower weighted average all-in ~~rate following this repricing transaction~~rate.

We expect our unlevered free cash flow to grow due to continued improvement in our operating results. We anticipate the amounts of cash paid for income taxes to continue to increase in 2019 and ~~non-repeating payments that~~to further converge with local statutory tax rates as our operating companies in each jurisdiction have returned to generating profits and previous tax losses were made in 2016 when we elected to repay in cash 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.utilized.

As at September 30, ~~2017, we have repaid in cash all previously accrued~~2019, the weighted average all-in rate applicable to the Euro Loans and Guarantee Fees ~~related to the 2018 Euro Term Loan and intend to continue to make payments of such Guarantee Fees~~previously paid 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.

kind was approximately 3.4%. As at September 30, ~~2017, we had US$ 67.0 million in cash and cash equivalents. In August 2017, we paid down EUR 50.0 million (approximately US$ 59.1 million~~2019, our net leverage ratio improved to 2.5x from 3.5x at August 1, 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 expected proceeds from warrant exercises, to repay the remainder of the 2018 Euro Term Loan in full before it matures in NovemberDecember 31, 2018. In the event that the Divestment Transaction does not close or we do not receive the expected warrant proceeds, we will need to secure other external sources of capital to repay the 2018 Euro Term Loan and fund our operations, including through public or private debt or equity financing transactions, which may not be available to us or may not be available on acceptable terms. If these actions are not successful, we will not have sufficient liquidity to repay the 2018 Euro Term Loan prior to its maturity on November 1, 2018.

~~Index~~

Credit ratings and future debt issuances

Our corporate credit is rated B2B1 by Moody's Investors Service with a positive outlook and B+ by Standard & Poor's ~~(currently~~with a positive outlook. Our ratings show each agency's opinion of our financial strength, operating performance and ability to meet our debt obligations as they become due. These ratings take into account the particular emphasis the ratings agencies place on CreditWatch with 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,metrics such as leverage ~~ratios~~ratio and cash flow, ~~profile~~which they use as ~~well as track record~~measurements of a company's liquidity and financial strength. They also reflect an emphasis by the ratings agencies on the strong financial support from ~~Time Warner. Among other parameters,~~Warner Media historically. We may be subject to downgrades if our operating performance deteriorates or we fail to ~~meet~~maintain adequate ~~liquidity, it is likely that the rating agencies will downgrade us. The availability~~levels 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 agreement governing the 2021 Revolving Credit Facility and the Reimbursement Agreement.liquidity.

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, certain of which are 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~~we may decide to ~~time we~~ enter into pay-Euro receive-dollar forward foreign exchange contracts. ~~As at~~We had no such agreements outstanding during the period ending September 30, ~~2017, two forward foreign exchange contract with an aggregate notional amount of approximately US$ 26.3 million related to contractual operating payments were outstanding.~~2019.

Cash Deposits

We may deposit cash in the global money markets with a range of bank counterparties and review the counterparties we choose ~~weekly.~~regularly. 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.~~mainly overnight. 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 investment grade rating. 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.

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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, ~~2016~~2018 filed with the Securities and Exchange Commission ("SEC") on February ~~9, 2017.~~6, 2019. 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, leases, 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 30, ~~2017:~~2019:


Expected Maturity Dates	2017		2018			2019		2020	2021		Thereafter	2019		2020	2021			2022	2023			Thereafter
Long-term Debt (000's):
Variable rate (EUR)	—		200,800			235,335		—	468,800		—	—		—	60,335			—	468,800			—
Average interest rate ⁽¹⁾	—		1.50	%		1.50	%	—	1.50	%	—	—		—	1.28	%		—	1.28	%		—

Interest Rate Swaps (000's):
Variable to fixed (EUR)	200,800		200,800		⁽²⁾	235,335		—	468,800		—	60,335		—	529,135		⁽²⁾	—	468,800		⁽³⁾	—
Average pay rate	0.21	%	0.14	%		0.31	%	—	0.28	%	—	0.31	%	—	0.30	%		—	0.97	%		—
Average receive rate	—	%	—	%		—	%	—	—	%	—	—	%	—	—	%		—	—	%		—

⁽¹⁾

As discussed in Item 1, Note 5,4, "Long-term Debt and Other Financing Arrangements", as consideration for ~~Time Warner's~~Warner Media's guarantee of the Euro ~~Term~~ Loans, we pay Guarantee Fees to ~~Time~~ Warner Media based on the amounts outstanding on the Euro ~~Term~~ Loans, each calculated such that the all-in borrowing rate on ~~each~~the 2021 Euro Loan was 3.25% per annum and the all-in borrowing rate on the 2023 Euro Loan was 3.50% per annum as of ~~the Euro Term Loans will be 6.0% from the end of October 2017 due to the reduction of our net leverage ratio at~~ September 30, ~~2017.~~2019.


⁽²⁾	The interest rate swaps related to the 2021 Euro Loan maturing in ~~2018~~2021 are forward starting to coincide with the maturity date of the interest rate swaps maturing in ~~2017.~~2019. See Item 1, Note 12, "Financial Instruments and Fair Value Measurements".

~~December 31, 2016:~~

Expected Maturity Dates 2017
2018 2019
2020
2021
Thereafter
Long-term Debt (000's):
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
250,800
⁽²⁾
235,335
—
468,800
—
Average pay rate 0.21 % 0.14 % 0.31 % —
0.28 % —
Average receive rate — % — % — % —
— % —


⁽¹⁾⁽³⁾	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 the 2018 Euro Term Loan and the 2019 Euro Term Loan was 8.5% per annum and the all-in borrowing rate on the 2021 Euro Term Loan was 9.0% per annum.


⁽²⁾	The interest rate swaps related to the 2023 Euro Loan maturing in ~~2018~~2023 are forward starting to coincide with the maturity date of the interest rate swaps maturing in ~~2017.~~2021. See Item 1, Note 12, "Financial Instruments and Fair Value Measurements".

December 31, 2018:



Expected Maturity Dates	2019		2020	2021			2022	2023			Thereafter
Long-term Debt (000's):
Variable rate (EUR)	—		—	210,335			—	468,800			—
Average interest rate ⁽¹⁾	—		—	1.28	%		—	1.28	%		—

Interest Rate Swaps (000's):
Variable to fixed (EUR)	210,335		—	679,135		⁽²⁾	—	468,800		⁽³⁾	—
Average pay rate	0.31	%	—	0.33	%		—	0.97	%		—
Average receive rate	—	%	—	—	%		—	—	%		—

⁽¹⁾

As discussed in Item 1, Note 4, "Long-term Debt and Other Financing Arrangements", as consideration for Warner Media's guarantee of the Euro Loans, we pay Guarantee Fees to Warner Media based on the amounts outstanding on the Euro Loans, each calculated such that the all-in borrowing rate on the 2021 Euro Loan was 3.25% per annum and the all-in borrowing rate on the 2023 Euro Loan was 3.75% per annum as of December 31, 2018.


⁽²⁾	The interest rate swaps related to the 2021 Euro Loan maturing in 2021 are forward starting to coincide with the maturity date of the interest rate swaps maturing in 2019. See Item 1, Note 12, "Financial Instruments and Fair Value Measurements".


⁽³⁾	The interest rate swaps related to the 2023 Euro Loan maturing in 2023 are forward starting to coincide with the maturity date of the interest rate swaps maturing in 2021. See Item 1, Note 12, "Financial Instruments and Fair Value Measurements".

Foreign Currency Exchange Risk Management

We conduct business in a number of currencies other than our functional currencies. As a result, we are subject to foreign currency exchange rate risk due to the effects that foreign exchange rate movements of these currencies have on our costs and on the cash flows we receive from our subsidiaries. In limited instances ~~including the transactions noted below,~~ we enter into forward foreign exchange contracts to minimize foreign currency exchange rate risk.

We periodically enter into forward foreign exchange contracts to reduce our exposure to movements in the USD to EUR exchange rates related to contractual payments under dollar-denominated agreements. At September 30, ~~2017, two~~2019, no forward foreign exchange contracts ~~with an aggregate notional amount of approximately US$ 26.3 million~~ were outstanding.

Interest Rate Risk Management

The Euro ~~Term~~ Loans each bear interest at a variable rate based on EURIBOR plus an applicable margin. We are party to a number of interest rate swap agreements intended to reduce our exposure to interest rate movements (see Item 1, Note 12, "Financial Instruments and Fair Value Measurements").

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 30, ~~2017~~2019 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 30, ~~2017~~2019 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~~See Part 1, Item 1, Note 20, "Commitments and ~~regulatory proceedings arising in the normal course~~Contingencies" for a discussion of our business 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. Two of the notes allegedly matured in 2015 and the other two in 2016. The four notes purport to be in the aggregate amount of approximately EUR 69 million.

Despite a random case assignment system in the Slovak Republic, claims in respect of three of the notes were initially assigned to the same judge. The judge who was assigned the claim in respect of the fourth promissory note (in the amount of approximately EUR 26 million) terminated proceedings in January 2017 because the plaintiff failed to pay court fees. The plaintiff refiled this claim in June 2017; the judge who was assigned the refiled claim terminated proceedings in September after the plaintiff again failed to pay court fees. In responses to the claims in respect of the other three promissory notes that were filed in August 2017, Mr. Rusko asserted that he signed the three notes in June 2000. We do not believe that the notes were signed in June 2000 or that any of the notes are authentic. We are vigorously defending the claims.ongoing litigation.

Item 1A. Risk Factors

This report and the following discussion of risk factors contain forward-looking statements as discussed in Part 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

Changes in global or regional economic conditions may adversely affect our financial position and 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. Our markets have experienced overall growth in real GDP (as adjusted for inflation) and advertising spending ~~since 2014;~~over the last several years; however, we cannot predict if the ~~recovery that has begun~~current growth trends will continue ~~or how long it will last.~~in the future. Recessions or periods of low or negative growth in the region or globally in the 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. The United States has imposed tariffs on certain products from many of its trading partners, including Europe and China, and has threatened to impose additional tariffs. If trade tensions between the United States and Europe escalate, this may result in the imposition of tariffs on cars and auto part exports from Europe. Such tariffs could have a significant adverse impact on the economies of our countries of operation. Additionally, a slowdown in China resulting from existing or increased tariffs on Chinese products may have an adverse impact on the global economy, which may ultimately reduce demand for European exports and the rate of GDP growth in the countries in which we operate. 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, any of which may also reduce advertising spending. In addition, although we believe the advertising spend per capita of the countries in which we operate and advertising intensity (the ratio of total adadvertising spend per capita to nominal GDP per capita) will eventually converge with developed markets in Europe, such convergence may not occur in the time frame we expect, or at all. Any of these developments would have a significant negative effect on our financial position, results of operations and cash flows.

~~Concerns regarding~~Ending the ~~Eurozone~~quantitative easing program implemented by the European Central Bank ("ECB") and the impact on the region of the United Kingdom’s exit from the European Union ~~(“EU”~~("EU") may adversely affect our financial position and results of operations.

~~Continued~~The ECB embarked upon quantitative easing in 2015 to address economic softness ~~in the Eurozone, including~~and a slowdown in ~~the~~ growth of consumer prices ~~prompted~~in the ~~European Central Bank to embark upon quantitative easing in 2015. Economic events related to the sovereign debt crisis in several EU countries have~~Eurozone. The ECB also ~~highlighted issues relating to the strength of the banking sector in Europe and the Euro. 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~~institutions. Economic growth in recent years in the Eurozone has been helped by the ECB’s quantitative easing program which was recalibrated in January 2018. Although the ECB, citing improved economic conditions, ended its original quantitative easing program at the end of December 2018, it announced in September 2019 that it would restart quantitative easing again in November 2019. While the ~~market disruptions~~duration of the current quantitative easing program is not known, the cessation of quantitative easing may adversely impact future growth in ~~Europe related to sovereign debt and the banking sector or otherwise,~~Eurozone countries, 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.countries in which we operate would negatively impact our business.

~~Index~~

~~On March 29, 2017,~~At present, the period during which the United Kingdom ~~formally initiated~~is to finalize the terms and process ~~to leave~~for leaving the EU, commonly referred to as "Brexit", ~~triggering a two-year period to finalize~~will expire on October 31, 2019. There is significant uncertainty regarding the specific timing and the terms ~~for its leaving~~on which the ~~EU. It~~United Kingdom will leave the EU, and it is expected that economic conditions in the EU will be impacted by Brexit. ~~While~~Given the ongoing uncertainty over the final terms of Brexit, the overall economic impact of Brexit on the EU and the Euro iscontinues to be difficult to estimate ~~at present,~~as 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 terms on which the United Kingdom 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, if other countries seek to leave the EU, 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 further affect the budgetary contributions and allocations among the EU member states in the medium term, including the countries in which we operate, which ~~are~~have historically been net recipients of EU funding. Economic uncertainty caused by Brexit or other instability in the EU resulting from Brexit could cause significant volatility in EU markets and reduce economic growth rates in the countries in which we operate, which would negatively impact the demand for advertising and consequently our ~~business.~~financial position, results of operations and cash flows.

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. While we have implemented ~~new~~ pricing strategies to increase sales and television advertising spending, 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 ability to secure distribution on cable, satellite or IPTV operators, 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 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 to cease broadcasting on ~~DTT~~digital terrestrial television ("DTT") in the Slovak Republic and Slovenia in 2017, 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 repeated, may have an adverse impact on our television viewing levels. Reductions in advertising spending in our markets and resistance to price increases as well as competition for ratings from broadcasters seeking to attract similar audiences may 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.

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

We have a substantial amount of indebtedness. Under the Reimbursement Agreement and the 2023 Revolving Credit Facility (when drawn), we can incur only limited amounts of additional indebtedness, other than indebtedness incurred to refinance existing indebtedness. In addition, all commitments under the 2023 Revolving Credit Facility also terminate on the refinancing of any Euro 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. Furthermore, pursuant to the Reimbursement Agreement, the all-in rates on each of the Euro Loans increase to a maximum of 10.0% (or 3.5% above the then-current all-in rate, if lower), on the date that is 365 days following a change of control of CME Ltd. (as defined therein); and pursuant to the 2023 Revolving Credit Facility, all commitments terminate following a change of control (as defined therein) and the interest rate on amounts outstanding increases to 10% plus LIBOR or 9% plus the alternate base rate on the date that is 365 days following such change of control. 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.

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

We have significant debt service obligations under the Euro ~~Term~~ Loans as well as the ~~2021~~2023 Revolving Credit Facility (when drawn)~~. Furthermore, we are paying~~, including the Guarantee Fees to ~~Time~~ Warner Media as consideration for its guarantees of the Euro ~~Term~~ Loans (collectively, the ~~"TW~~"WM Guarantees"). Although a portion of the Guarantee Fees in respect of each of the Euro Term 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~~our financial performance 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~~may 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~~2023 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,~~requirements, which may ~~put us at a competitive disadvantage by limiting~~limit our flexibility in planning for, or reacting to, changes in our business, economic conditions or our industry. For additional information regarding the Reimbursement Agreement, the ~~2021~~2023 Revolving Credit Facility and the TWWM Guarantees, see Part I, Item 1, Note 5,4, "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. 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 Euro Term Loans increase to a maximum of 10.0% (or 3.5% above the then-current all-in rate, if lower), 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 transactions and calculations where the ultimate tax determination is 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.

~~Index~~

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 Reimbursement Agreement and the ~~2021~~2023 Revolving Credit Facility, we pledged all of the shares of CME NV and of CME BV, which together own ~~substantially~~ all of ~~the~~our interests in our operating subsidiaries, in favor of ~~Time~~ Warner Media as security for this indebtedness. If we or these subsidiaries were to default under the terms of any of the relevant agreements, ~~Time~~ Warner Media would have the ability to sell all or a portion of the assets pledged to it in order to pay amounts outstanding under such debt instruments. This could result in our inability to conduct our business.

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~~Any 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~~will 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.

Index

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~~television 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 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 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 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.

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

Moody’s Investors Service rates our corporate credit as B2B1 with a positive outlook. Standard & Poor’s rates our corporate credit B+ ~~(currently on CreditWatch with developing implications due to the announced Divestment Transaction)~~(with a positive outlook). Our ratings show each agency's opinion of our financial strength, operating performance and ability to meet our debt obligations as they become due. These ratings take into account the particular emphasis the ratings agencies 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 ratings agencies on ~~a track record of~~the strong financial support from ~~Time Warner.~~Warner Media historically. 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 corporate credit ratings are lowered by the rating agencies, ~~it will~~we may not be ~~more difficult for us~~able to refinance our existing indebtedness or raise new indebtedness that may be permitted under the Reimbursement Agreement and the ~~2021~~2023 Revolving Credit Facility (when drawn), and we will have to pay higher interest rates, all of 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 1, Note 4,3, "Goodwill and Intangible Assets" for the carrying amounts of goodwill in each of our reporting units.

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.

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. The cost of acquiring content attractive to our viewers, such as feature films and popular television series and formats, is likely to increase in the future. Our expenditures in respect of locally produced programming may also increase due to competition for talent and other resources, wage inflation, 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 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~~assurance 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.

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 (including the Economic Substance Act in Bermuda which came into force in July 2019), employment laws, data protection requirements including the EU General Data Protection Regulation, 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. A failure or alleged failure to comply with applicable laws and regulations, whether inadvertent or otherwise, may result in legal or regulatory proceedings being initiated against us and fines or other penalties being levied 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, in 2016 the prosecuting authorities in Romania 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. In Slovenia, the competition law authorities ~~have~~ launched an investigation in 2017 into whether our ~~Slovenian~~Slovenia 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. To date there has been no determination that a breach of competition ~~law~~ has occurred. If these or other contingencies result in legal or regulatory proceedings being initiated against 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 such laws or regulations, we may incur substantial costs, be required to change our business practices (including on what terms and conditions we offer our channels under carriage agreements), our reputation may be damaged or 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.

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, changes in local regulatory requirements including restrictions on foreign ownership, inconsistent regulatory or judicial practice, corruption 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, as well as to the influence of commercial and governmental actors. This may result in inconsistent application of tax and legal regulations, arbitrary or biased treatment, and other general business risks as well as social or political instability or disruptions and the potential for political influence on the media. The relative level of development of our markets, the risk of corruption, and the influence of local commercial and governmental actors also present a potential for biased or unfair treatment of us before regulators or courts in the event of disputes. If such a dispute occurs, those regulators or courts may not act with integrity or may favor local interests over our interests. 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. Ultimately, the occurrence of any of these could have a material adverse impact 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.

~~Index~~

~~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, changes in local regulatory requirements including restrictions on foreign ownership, 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.

We rely on network and information systems and other technology that may be subject to disruption, security breaches 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~~if we are required to expend resources to remedy such a security breach or ~~by harming~~if they result in legal claims or proceedings or our ~~reputation.~~reputation is harmed. In addition, improper disclosure of personal data could subject us to liability under laws, including the EU General Data Protection Regulation, 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.~~operations and cash flows.

Index

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 and Slovenia are valid for indefinite time periods, our other broadcasting licenses expire at various times from November 2019 through 2028. While we expect that our material licenses and authorizations will continue to 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.

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~~AT&T, through its wholly owned subsidiaries Warner Media and TW Investor, is the largest ~~holder~~beneficial owner of shares of our Class A common stock, holding ~~61,407,775~~162,334,771 unregistered shares of Class A common stock, one share of Series A preferred stock ("Series A Preferred Share"), and 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 Shares is convertible into 11,211,449 shares of Class A common stock and the Series B Preferred Shares are convertible into approximately 111.1 million shares of Class A common stock at the option of ~~Time~~ Warner Media (subject to certain exceptions). As of September 30, 2017, the 200,000 Series B Preferred Shares were convertible into approximately 108.1 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 Media 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 Shares, Series B Preferred Shares and ~~TW Warrants,~~warrants, see Part I, Item I,1, Note 13, "Convertible Redeemable Preferred Shares" and Note 14, "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 Media, the economic interests of current shareholders may be diluted and the price of our shares may be adversely affected.

The interests of ~~Time Warner~~AT&T may conflict with the interests of other investors.

~~Time~~Through its wholly owned subsidiaries Warner Media and TW Investor, the aggregate beneficial ownership interest of AT&T in the Company is ~~able~~approximately 75.7%. In connection with the exercise of the warrants by Warner Media and TW Investor in April 2018, each of them issued standing proxies to the independent directors of the Company, pursuant to which it granted the right to vote the 100,926,996 shares received on the exercise of those warrants (the “Warrant Shares”) on all matters other than at any meeting where the agenda includes a change in control transaction. In accordance with these proxies, the Warrant Shares will be voted in proportion to votes cast at a general meeting of the Company, excluding such Warrant Shares. Warner Media and TW Investor have undertaken to maintain this proxy arrangement until April 2020 and may extend it for an additional year at their option. As a result of the standing proxies, after giving effect to its ownership of the Series A Preferred Share, AT&T has a 44.3% voting interest in the Company. Furthermore, AT&T has the right to appoint one less than the number required to constitute a majority of our board of directors, provided that AT&T continues to own not less than 40% of the voting power ~~in us with respect to 46.5%~~ of ~~our outstanding shares of Class A common stock.~~the Company. As such, ~~Time Warner~~AT&T is in a position to exercise significant influence over the outcome of corporate actions requiring shareholder approval, such as the election of directors, amendments to our Bye-laws, or certain ~~transactions. Following the issuance~~transactions, including transactions resulting in a change of the TW Warrants, the aggregate economic interest of Time Warner in us is approximately 76.0% (without giving effect to the accretion of the Series B Preferred Shares after September 30, 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.control.

Index

We are also party to an amended investor rights agreement with ~~Time~~ Warner Media and the other parties thereto under which, among other things, ~~Time~~ Warner Media was granted a contractual ~~preemptive~~pre-emptive 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~~publicly held shares. ~~In addition to being our largest shareholder, Time~~ Warner Media is also our largest secured creditor, as it guarantees 100% of our outstanding senior indebtedness and is the lender under the ~~2021~~2023 Revolving Credit Facility. The ~~2021~~2023 Revolving Credit Facility (when drawn) and the Reimbursement Agreement contain maintenance covenants in respect of interest cover ~~cash flow cover~~ and total leverage ratios and ~~include~~includes 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 ~~disposals,~~disposal and granting security. As such, ~~Time~~ Warner Media 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~~AT&T as our largest ~~shareholder~~beneficial owner could be in conflict with the interests of minority ~~shareholders.~~shareholders

We are subject to risk and uncertainties related to our review of strategic alternatives that may adversely affect our business.

On March 25, 2019, we announced that our Board of Directors, working with the Company's management team and its legal and financial advisors, commenced a process to explore and evaluate potential strategic alternatives for the Company focused on maximizing shareholder value. Our Board has formed a committee of independent directors to lead this process. The potential alternatives may include, among others, the sale of part or all of the Company, a merger with another strategic partner, a recapitalization or the Company's continuing to execute on the long-term business plan.

The process of exploring strategic alternatives involves the dedication of significant resources and the incurrence of fees and expenses and will likely result in the incurrence of significant fees and expenses if we determine to move forward with any of the strategic alternatives. In addition, our exploration of strategic alternatives may expose our business to other risks and uncertainties, including the diversion of management and employee attention and time; difficulty in recruiting, hiring, and retaining necessary personnel; and disruption to our relationships with clients and suppliers as well as to other commercial and strategic relationships. Furthermore, speculation regarding any developments related to the review of strategic alternatives and or uncertainty regarding the outcome could cause our share price to fluctuate significantly. There is no timeline for the completion of the strategic review and we do not intend to provide updates or further information on developments related to the strategic review unless we determine that additional disclosure is necessary or appropriate. There can be no assurance that our exploration of strategic alternatives will result in the Company determining to proceed with any transaction and it is not possible to predict the impact of the conclusion of the strategic review on our business or share price. If we are unable to effectively mitigate the risks related to the strategic review, it may disrupt our business and adversely impact our financial results, results of operations and cash flows.

The price of our Class A common stock ~~has been~~may be 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 in the Risk Factor above ”We are subject to risk and uncertainties related to our review of strategic alternatives that may adversely affect our business” and under "Risks Relating to Our 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~~impact 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 January 17, 2017, TCS Capital Management, LLC ("TCS Capital"), a beneficial owner of 7.0% of our shares, filed an amendment to its Schedule 13D disclosing its 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.~~Company, as occurred when TCS Capital Management, LLC ("TCS Capital"), filed an amendment to its Schedule 13D in January 2017 in which it disclosed its opinions on the Company’s governance and strategic direction. 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 INDEX



Exhibit Number		Description
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

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 ~~24, 2017~~17, 2019	/s/ David Sturgeon David Sturgeon Executive Vice President and Chief Financial Officer Principal Financial Officer and Principal Accounting Officer

4552



Consolidated Net Leverage				Cash Rate⁽¹⁾		PIK Fee Rate		Total Rate ⁽²⁾
≥	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	%



	September 30, 2017			December 31, 2016
Credit facilities ^{(1) – (3)}	$	—		$	—
Capital leases	7,778			3,427
Total credit facilities and capital leases	7,778			3,427
Less: current maturities	(2,425		)	(1,228		)
Total non-current credit facilities and capital leases	$	5,353		$	2,199



2017	$	—
2018	237,064
2019	277,837
2020	—
2021	553,465
2022 and thereafter	—
Total long-term debt and credit facilities	1,068,366
Debt issuance costs	(6,566		)
Carrying amount of long-term debt and credit facilities	$	1,061,800



2017	$	696
2018	2,512
2019	2,153
2020	1,872
2021	708
2022 and thereafter	—
Total undiscounted payments	7,941
Less: amount representing interest	(163		)
Present value of net minimum lease payments	$	7,778



	September 30, 2017			December 31, 2016
Unrelated customers	$	132,051		$	149,957
Less: allowance for bad debts and credit notes	(9,645		)	(8,586		)
Total accounts receivable	$	122,406		$	141,371



	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⁾	7,824			—			7,824
Foreign exchange gain on the Series B Preferred Shares	29,284			—			29,284
Currency translation adjustment	5,891			—			5,891
Change in the fair value of hedging instruments	—			(1,484		)	(1,484		)
Amounts reclassified from accumulated other comprehensive loss:
Changes in fair value reclassified to interest expense	—			2,120			2,120
Changes in fair value reclassified to other non-operating income, net ⁽²⁾	—			447			447
Net other comprehensive income	42,999			1,083			44,082
BALANCE September 30, 2017	$	(196,538	)	$	(3,368	)	$	(199,906	)



	Number of Shares / Units		Weighted Average Grant Date Fair Value
Unvested at December 31, 2016	2,542,625		$	2.61
Granted	1,158,887		3.62
Vested	(912,246	)	2.65
Forfeited	(75,582	)	1.53
Unvested at September 30, 2017	2,713,684		$	3.06



	Programming purchase obligations		Other commitments		Operating leases		Capital expenditures
2017	$	20,465	$	6,802	$	1,029	$	2,055
2018	41,150		10,334		2,953		32
2019	32,450		11,733		1,436		13
2020	26,094		1,410		687		—
2021	12,115		429		514		—
2022 and thereafter	6,612		474		1,971		—
Total	$	138,886	$	31,182	$	8,590	$	2,100