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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 1999 Commission File Number: 0-24796

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
(Exact name of registrant as specified in its charter)

Bermuda Not Applicable
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)

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Clarendon House
Church Street
Hamilton HM CX
Bermuda
(Address of principal executive offices)

(441) 296-1431
(Registrant's telephone number)

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Securities registered pursuant to Section 12(b) of the Act: NONE
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Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $0.08 par value
9.375% Notes Due 2004
8.125% Notes Due 2004

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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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.

YES X NO
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. | |

The aggregate market value of the voting stock of registrant held by
non-affiliates of the registrant as of March 9, 2000 was approximately
$29,710,605.

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Number of shares of Class A Common Stock outstanding as of March 9,
2000: 2,313,346

Number of shares of Class B Common Stock outstanding as of March 9,
2000: 991,842
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DOCUMENTS INCORPORATED BY REFERENCE

Location in Form 10-K in Which
Document Document is Incorporated
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Registrant's Proxy Statement Part III
for the Annual General Meeting of
Shareholders to be held on May 11,2000

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TABLE OF CONTENTS

Page
PART I

Item 1. Business...................................................................................3
Item 2. Properties................................................................................21
Item 3. Legal Proceedings.........................................................................22
Item 4. Submission of Matters to a Vote of Security Holders.......................................25

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.....................26
Item 6. Selected Financial Data...................................................................26
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.............................................................................28
Item 7a. Quantitative and Qualitative Disclosures About Market Risk................................42
Item 8. Financial Statements and Supplementary Data...............................................42
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure......................................................................67

PART III

Item 10. Directors and Officers of the Registrant..................................................67
Item 11. Executive Compensation....................................................................67
Item 12. Security Ownership of Certain Beneficial Owners and Management............................67
Item 13. Certain Relationships and Related Transactions............................................67

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...........................68

SIGNATURES

PART I

Item 1. BUSINESS

General

Central European Media Enterprises Ltd. ("CME") is a Bermuda
corporation. All references to the "Company" include CME and its direct and
indirect Subsidiaries, and all references to "Subsidiaries" include each
corporation or partnership in which CME has a direct or indirect equity or
voting interest.

The Company's national private television stations and networks in the
Slovak Republic and Slovenia had the leading nationwide audience shares for 1999
and the Company's television network in Romania had the leading average audience
share within its area of broadcast reach for 1999. The Company's television
studios, production facilities and editing suites at its national television
stations produced over 11,000 hours of original programming in 1999 to support
the Company's broadcasting operations.

The Company's television stations and networks, which reach an
aggregate of approximately 70 million people in four countries, consist of the
following:

Population Technical Economic Voting
Country (1) Stations and Networks Reach (2) Interest (3) Interest (3)
------- --- --------------------- --------- ------------ ------------

Romania...................... 22.3 PRO TV / Acasa.................. 16.1 66.0% 66.0%
Slovenia (4)................. 2.0 POP TV / Gajba TV............... 1.7 85.5% 78.0%
Slovak Republic.............. 5.4 Markiza TV...................... 5.0 80.0% 49.0%
Ukraine...................... 49.8 Studio 1+1...................... 47.3 60.0% 60.0%
---- ----
Total.................... 79.5 70.1
==== ====

(1) Country population in millions. Source: United States Bureau of the Census,
February 2000

(2) "Technical Reach" measures the number of people in millions who are able to
receive the signals of the indicated stations and networks. Source: CME stations

(3) See discussion below under the heading "Corporate Structure"

(4) See discussion below under the heading "SBS Transaction"

Note: See "Status of Nova TV Dispute" below for a further discussion on Nova TV
and the ongoing dispute between CNTS and CET.

Unless otherwise noted, all statistical and financial information
presented in this report has been converted into United States dollars using
exchange rates as of December 31, 1999. All references to '$' or 'dollars' are
to United States dollars, all references to 'Kc' are to Czech korunas, all
references to 'ROL' are to Romanian lei, all references to 'SIT' are to Slovenia
tolar, all references to 'Sk' are to Slovak korunas, all references to 'Hrn' are
to Ukrainian hryvna and all references to 'DM' are to German marks. The exchange
rates as of December 31, 1999 used in this report are 35.98 Kc/$; 18,255 ROL/$;
196.77 SIT/$; 42.27 Sk/$; 5.22 Hrn/$; and 1.95 DM/$.

Status of Nova TV Dispute

The Company owns a 99% voting and economic interest in Ceska nezavisla
televizni spolecnost, spol. s.r.o. ("CNTS"). CET 21, spol. s.r.o. ("CET") holds
a terrestrial television broadcast license in the Czech Republic that expires in
January 2005. Beginning in 1994, CNTS provided television programming and other
services to CET, which broadcasts the Nova TV signal, and Nova TV became one of
the most successful television stations in Europe. Pursuant to a Services
Agreement with CET dated May 21, 1997 (the "Services Agreement"), CNTS provided
substantially all of the television and programming services to Nova TV, and in
consideration therefor, CNTS collected all of Nova TV's advertising and other
revenues, and retained as compensation for its services the balance of those
revenues net of Nova TV's operating expenses less kc 100,000 ($2,800) per month
payable to CET.

On August 5, 1999, CET pre-empted CNTS's transmission and began
broadcasting a substitute signal for Nova TV from a site other than CNTS's
studios. In addition, on the same day, CNTS received notification from CET that
CET was withdrawing from the Services Agreement due to CNTS's alleged failure to
supply CET with the daily program log for Nova TV on August 4, 1999. CET
representatives also stated publicly that CET would not utilize the services of
CNTS for Nova TV in the future. CET has continued to pre-empt all of CNTS's
programming for Nova TV. CNTS believes that CET's withdrawal from the Services
Agreement was not legally effective since CNTS did not materially breach the
Services Agreement and that the Services Agreement therefore remains in effect.
CNTS filed a request for a preliminary injunction with the Regional Commercial
Court in Prague to enjoin CET from entering into service relationships with
other companies and requested the court to declare the Services Agreement to be
in full force and effect, which was denied. A decision on the merits is pending.
See Item 3, "Legal Proceedings." In connection with CET's actions, CNTS and the
Company requested the Czech Media Council to call an extraordinary meeting to
address breaches of the Czech media laws and destabilization of the Czech media
market, and to institute proceedings against CET for the revocation of the
broadcast license. To date, the Czech Media Council has taken no action in
connection with this dispute.

As a result of CET's actions, CNTS has been unable to generate revenues
and its operations have been suspended. On September 9, 1999, the Company
announced the suspension of technical and production operations at CNTS and CNTS
has since dismissed 265 employees.

CNTS is governed by a Memorandum of Association and Investment
Agreement (the "Memorandum of Association"). The Company believes that the
Memorandum of Association, the Services Agreement and course of dealing over the
life of Nova TV establish that CNTS is legally entitled to be the exclusive
provider of television and related services to CET for Nova TV.

On April 19, 1999, CNTS dismissed Dr. Vladimir Zelezny from his
position as Executive and General Director of CNTS, for taking actions that
exceeded his authority, that breached his fiduciary duties and that were against
the interests of CNTS. After an internal investigation, it was learned that Dr.
Zelezny

had executed an unlimited CNTS guarantee for the liabilities of a Czech
television program acquisition company, AQS a.s. ("AQS"), without any
authorization. The investigation also indicated that Dr. Zelezny had reassigned
the program acquisition department of CNTS to AQS, notified international
providers of television programming that AQS would replace CNTS as the program
service provider to Nova TV, and taken other actions contrary to the interests
of CNTS.

On April 26, 1999, a wholly-owned subsidiary of the Company filed an
arbitration claim against Dr. Zelezny before the International Chamber of
Commerce Court of Arbitration in Paris, France. The Company seeks the return of
$23,350,000 paid to Dr. Zelezny, plus interest, and other unspecified damages,
based on breaches by Dr. Zelezny of a share purchase agreement entered into in
1997 under which the Company purchased from Dr. Zelezny a company owned by him
whose sole asset was a 5.8% interest in CNTS. The Company is also seeking the
forgiveness of the $5,188,000 unpaid balance of the purchase price under the
1997 share purchase agreement.

On November 10, 1999, the arbitral tribunal issued a preliminary order
directing Dr. Zelezny to take steps to restore CNTS to its prior position as an
exclusive provider of critical services for TV Nova. See Item 3, "Legal
Proceedings". Among other things, the order requires Dr. Zelezny to sever all
dealings between CET and other service providers and to resume exclusive
relations with CNTS in the areas where CNTS was previously providing these
services, including program acquisition, programming and broadcasting services,
and brokerage of advertising and receipt of advertising revenues. The
preliminary order will remain in effect until the arbitral tribunal directs
otherwise. Dr. Zelezny has indicated that he will not comply with the tribunal's
order.

CME has requested that the arbitral tribunal issue a partial final
award against Dr. Zelezny, which would include substantially all of the terms of
the preliminary order and substantial fines against Dr. Zelezny for
noncompliance with the preliminary order. The arbitral tribunal has scheduled an
oral hearing on CME's request for a partial final award for March 16, 2000. A
final award in the arbitration, following a final hearing in Amsterdam, The
Netherlands, is expected during the second half of the year 2000.

In December 1999, the Czech Media Council approved CET's request for a
share capital increase, which was subsequently approved by CET. As a result of
the CET share capital increase, Dr. Zelezny's participation interest in CET was
reduced from 60% to 11.8% since he did not subscribe to any of the additional
share capital. CME believes that the reduction of Dr. Zelezny's participation
interest in CET was designed to frustrate the enforcement of the preliminary
order, the partial final award the Company is now seeking, and any possible
final award of damages against Dr. Zelezny in the ongoing arbitration
proceedings between the Company and Dr. Zelezny. The Company has filed several
legal actions in the Czech courts to invalidate the CET share capital increase.
These actions are pending.

On August 23, 1999, Ronald S. Lauder, the non-Executive Chairman of the
Company's Board of Directors, instituted arbitration proceedings against the
Czech Republic under the 1992 Bilateral Investment Treaty between the United
States and the Czech Republic. Mr. Lauder initiated the proceedings in his
personal capacity as a U.S. national who owns or controls (by virtue of his
voting control over CME) an investment in the Czech Republic. The claim asserts
that the Czech Republic

harmed Mr. Lauder's investment in CNTS by taking unfair and discriminatory
actions -- in the form of expressly approving an exclusive relationship between
the service company and the license holder for Nova TV to entice CME's
investment of foreign capital, and later changing its position -- and by failing
to act to remedy the effects of those actions or the improper actions of Dr.
Zelezny. Mr. Lauder seeks monetary damages and other relief arising from harm
caused to CNTS by the Czech Republic's actions. The arbitration is taking place
before a tribunal of three arbitrators pursuant to the Arbitration Rules of the
United Nations Commission on International Trade Law.

On February 22, 2000, a wholly owned subsidiary of the Company
instituted arbitration proceedings against the Czech Republic under the 1991
Bilateral Investment Treaty between The Netherlands and the Czech Republic. The
claims asserted by the Company are substantially similar to those asserted by
Mr. Lauder in the arbitration proceedings that he has instituted in his personal
capacity against the Czech Republic. The claim seeks monetary damages and other
relief arising from harm caused to CNTS by the Czech Republic's actions. The
arbitration will take place before a tribunal of three arbitrators pursuant to
the Arbitration Rules of the United Nations Commission on International Trade
Law.

The Company believes that the recent actions by CET violate the
Services Agreement and CET's obligations under the CNTS Memorandum of
Association, as well as Czech media laws. The continued suspension of CNTS's
operations has had a material adverse effect on the Company. Despite the
suspension of CNTS's operations, the recent transaction with SBS and in
particular the CME Put Option on the ITI Note (see below under "SBS
Transaction") should result in the Company having adequate cash resources to
meet its debt service and other financial obligations for the next 12 months.

SBS Transaction

On September 28, 1999, the Company announced that the Reorganization
Agreement dated March 29, 1999 between the Company and SBS Broadcasting S.A.
("SBS") (the "Reorganization Agreement") had been mutually terminated. Under the
Reorganization Agreement, SBS would have acquired all the assets and assumed all
the liabilities of the Company, and each holder of Common Stock of the Company
would have received 0.5 shares of SBS Common Stock for each share of Common
Stock of the Company owned by such holder. In connection with the termination of
the Reorganization Agreement, the Company received $8,250,000 as a termination
fee from SBS. It was further agreed that the Company would sell substantially
all of its Hungarian operations to SBS and the Company would acquire an option
to acquire from SBS a controlling interest in Kanal A for $12,000,000. Kanal A
is the second leading commercial television station in Slovenia. The Company and
SBS are documenting the final terms to implement this transaction, which is
subject to the completion of a Kanal A reorganization, regulatory approval and
certain other conditions.

On February 21, 2000 the Company sold to SBS substantially all of its
Hungarian operations for $16,000,000. $12,700,000 of the purchase price will be
applied to pay the programming liabilities for the territory of Hungary which
were assumed by SBS from CME and $3,300,000 plus the net current assets of the
Hungarian operations has been settled in cash in March 2000. The net current
assets of the Hungarian operations are subject to final determination in April
2000. In addition, SBS has agreed to secure the release, within 45 days, of the
$3,500,000 cash deposit that supports a $3,500,000 letter of credit in favor of
CPT Holdings Inc. In connection with this transaction the Company and its
Hungarian subsidiary IRISZ TV withdrew all pending claims against the Hungarian
National Radio and Television Commission and the two successful consortia in
connection with the award of national television licenses in 1997 and have
waived all rights to assert any related legal claims.

Holding S.A. ("ITI") in December 1998. The ITI Note is in the principal amount
of $40,000,000 and bears interest at a rate of 5% per annum. It matures in
December 2001 and is convertible into equity securities of ITI at the option of
the holder after September 10, 2001, and may be redeemed for cash by ITI at any
time prior thereto. The Company recorded the ITI Note at a net present value of
$19,836,000 due to the prevailing interest rates on similar instruments at the
date of the transaction. Ronald S. Lauder, the non-executive Chairman of the
Board of Directors of the Company, owns a non-controlling indirect minority
interest in ITI.

Under the ITI Note Option Agreement, SBS has an option to acquire all
but not less than all of the ITI Note for a cash consideration of $37,250,000
(the "SBS Call Option"). The SBS Call Option may be exercised on or before June
30, 2000. In addition, SBS granted CME an option to sell the ITI Note to SBS for
a cash consideration of $25,000,000 (the "CME Put Option"). The CME Put Option
may be exercised on or before June 30, 2000. CME may extend the term of the CME
Put Option until December 31, 2000 by delivering written notice thereof to SBS
prior to June 30, 2000. In the event of such extension, the SBS Call Option will
be automatically extended until September 30, 2000. If CME receives a bona fide
offer to purchase the ITI Note prior to the expiration of the SBS Call Option,
it may deliver to SBS written notice of the price (the "Offer Price") which CME
has been offered for the ITI Note. Upon receipt of notice of an offer for the
ITI Note, SBS will have the option to purchase the ITI Note for the lesser of
(i) the Offer Price and (ii) $40,000,000. If prior to June 30, 2000, SBS
exercises the SBS Call Option or CME exercises the CME Put Option, $12,000,0000
of the purchase price will be held in escrow until the earlier of the closing of
the Kanal A acquisition or June 30, 2000.

One-For-Eight Reverse Stock Split

On December 15, 1999, the Board of Directors and shareholders of the
Company determined that it was in the best interest of the Company and its
shareholders to effect a one-for-eight reverse stock split (the "Reverse Split")
of the issued and outstanding shares of the Company's Class A Common Stock,
Class B Common Stock and Preferred Stock. The Reverse Split: (i) increased the
par value of the Company's Class A Common Stock, Class B Common Stock and
Preferred Stock from $0.01 to $0.08 per share; (ii) increased the authorized
share capital of the Company's Class A Common Stock by $7,000,000; (iii)
increased the authorized share capital of the Company's Class B Common Stock by
$1,050,000; and (iv) increased the authorized share capital of the Company's
Preferred Stock by $350,000, but did not change the number of the authorized
shares of the Company's Class A Common Stock, Class B Common Stock or Preferred
Stock.

The Board of Directors and the shareholders effected the Reverse Spilt
in order to continuing the listing of the Company's Class A Common Stock on the
Nasdaq National Market System. Despite the Reverse Split, the Class A Common
Stock may in the future be delisted if the Company fails to satisfy Nasdaq's
continued listing criteria, including minimum public float and minimum market
capitalization, the satisfaction of which may be beyond the control of the
Company. The Company is currently not in compliance with the minimum market
capitalization criterion but if the closing price of the Company's Class A
Common Stock exceeds $11.85 per share for 10 consecutive trading days before
April 26, 2000, Nasdaq may waive this non compliance. Except as otherwise noted,
all share and per share information in this Form 10-K has been retroactively
adjusted to reflect the one-for-eight reverse stock split.

Corporate Structure

Central European Media Enterprises Ltd. was incorporated on June 15,
1994 under the laws of Bermuda. CME's assets are held through a series of Dutch
and Netherlands Antilles holding companies.

Laws, regulations and policies in CME's markets generally restrict the
level of direct or indirect interests that any non-local investor such as CME
may hold in companies holding broadcast licenses. As a result, broadcast
licenses are generally held by companies majority owned by CME's local partners
and CME owns controlling interests in service companies which provide
programming, advertising and other services to the licenseholding companies.
References to POP TV, Gajba TV, PRO TV, Acasa, Markiza TV and Studio 1+1 in this
report may be to either the license company or the service companies or both, as
the case may be.

CME CME
License Voting TV Services Voting
Country Expiration TV License Company Interest Company Interest
------- ---------- ------------------ -------- ------- --------

Romania................... 2004 -2008 Pro TV S.R.L.................... 49% MPI .................... 66%
Media Pro S.R.L................. 0%
Slovenia.................. 2003 -2007 Tele 59 ........................ 10% Pro Plus................ 78%
MMTV............................ 10%
Slovak Republic........... 2007 Markiza-Slovakia s.r.o.......... 0% STS..................... 49%
Ukraine................... 2007 Studio 1+1...................... 15% Innova, IMS, UAH........ 60%
Prioritet 50% (1)

(1) 50% interest owned by Ukraine Advertising Holding B.V. (UAH).
Note: See "Status of Nova TV Dispute" above for a discussion on the ongoing
dispute between CNTS and CET.

Romania

The Company's interest in PRO TV is governed by a Cooperation Agreement
(the "Romanian Agreement") among the Company, Adrian Sarbu and Ion Tiriac,
forming Media Pro International S.A. ("MPI"), through which PRO TV and Acasa are
operated. MPI provides programming to and sells advertising for the stations
which comprise the PRO TV and Acasa network. Pursuant to the Romanian Agreement,
the Company owns 66% of the equity of MPI. Interests in profits of MPI are equal
to the partners' equity interests. The Company has the right to appoint three of
the five members of the Council of Administration which directs the affairs of
MPI. Although the Company has majority voting power in MPI, with respect to
certain fundamental financial and corporate matters the affirmative vote of
either Mr. Sarbu or Mr. Tiriac is required. The Company owns 49% of the equity
of PRO TV, SRL which holds 20 of the 23 licenses for the stations which comprise
the PRO TV and Acasa network. Messrs. Sarbu and Tiriac own substantially all of
the remainder of PRO TV, SRL. The remaining three licenses for the PRO TV
network together with the licenses for the PRO FM and PRO AM radio networks are
held by Media Pro SRL, a company owned by Messrs. Sarbu and Tiriac. In addition,
in Romania, the Company owns 70% of each of Media Vision SRL ("Media Vision"), a
production and dubbing company, and Video Vision International SRL ("Video
Vision"), a post-production company.

Slovenia

The Company's interest in POP TV and Gajba TV is governed by a
Partnership Agreement among the Company, MMTV 1 d.o.o. Ljubljana ("MMTV") and
Tele 59 d.o.o. Maribor ("Tele 59"), forming Produkcija Plus d.o.o. ("Pro Plus").
Pro Plus provides programming to and sells advertising for the broadcast
licenseholders MMTV and Tele 59 as well as additional affiliates. The Company
currently owns 78% of the equity in Pro Plus, but has an effective economic
interest of 85.5% as a result of its right to 33% of the profits of MMTV and 33%
of the profits of Tele 59. Tele 59 currently owns a 21% equity interest in Pro
Plus, and MMTV currently owns a 1% equity interest in Pro Plus. The Company owns
10% of the equity of Tele 59 and a 10% direct equity interest in MMTV. The
Company also owns a 20% equity interest in MTC Holding d.o.o. ("MTC") which owns
the remaining 90% equity interest in MMTV. 76% of MTC's equity is being
separately held by a Slovene person, in trust for the Company, until the Slovene
media law is clarified or until the Company determines final ownership. Voting
power and interests in profits of Pro Plus are equal to the partners' equity
interests. All major decisions concerning the

affairs of Pro Plus are made by the general meeting of partners and require a
70% affirmative vote. Certain fundamental financial and corporate matters
require an 85% affirmative vote of the partners.

In July 1996, the Company, together with MMTV and Tele 59, entered into
an agreement to purchase a 66% equity interest in Kanal A, a privately owned
television station in Slovenia, which competes with POP TV (the "Kanal A
Agreement"). There is currently an injunction in effect preventing the
completion of the Kanal A Agreement. See Item 3, "Legal Proceedings". In
connection with the termination of the Reorganization Agreement with SBS, it was
agreed that the Company would acquire an option to purchase a controlling voting
and economic interest in Kanal A. See above under the heading "SBS Transaction".
As a condition to the closing of this transaction the Company would cease all
litigation against SBS, Kanal A and certain affiliates.

Slovak Republic

The Company's interest in Markiza TV is governed by a Participants
Agreement dated September 28, 1995 (the "Slovak Agreement") between the Company
and Markiza-Slovakia s.r.o. ("Markiza") forming Slovenska Televizna Spolocnost,
s.r.o. ("STS"). Pursuant to the Slovak Agreement, the Company is required to
fund all of the capital requirements of, and holds a 49% voting interest and an
80% economic interest in STS. Markiza, which holds the television broadcast
license, and STS have entered into an agreement under which STS is entitled to
conduct television broadcast operations pursuant to the license. On an ongoing
basis, the Company is entitled to 80% of the profits of STS, except that until
the Company is repaid its capital contributions plus a priority return at the
rate of 6% per annum on such capital contributions, 90% of the profits will be
paid to the Company. A Board of Representatives directs the affairs of STS, the
composition of which includes two designees of the Company and three designees
(two of whom have been named) of Markiza; however, all significant financial and
operational decisions of the Board of Representatives require a vote of 80% of
its members. In addition, certain fundamental corporate matters are reserved for
decision by a general meeting of partners and require a 67% affirmative vote of
the partners. There is currently litigation pending with respect to the
ownership of Markiza. See Item 3, "Legal Proceedings".

Ukraine

The Studio 1+1 Group consists of several entities in which the Company
holds direct or indirect interests. The Company owns a 60% equity interest in
each of Innova Film GmbH ("Innova"), Ukraine Advertising Holding B.V. ("UAH")
and International Media Services ("IMS"). UAH holds a 50% equity interest in
Prioritet, a Ukrainian company engaged in advertising sales. Innova holds 100%
of Intermedia, a Ukrainian company ("Intermedia"), which in turn holds a 30%
equity interest in a separate Ukrainian company which holds the license to
broadcast programming and sell advertising on UT-2 (the "UT-2 License"). Innova,
IMS, Intermedia and Prioritet have entered into arrangements regarding the
provision of programming and advertising sales services to Studio 1+1. Interests
in profits of each entity in the Studio 1+1 Group are equal to equity interests
held in such entities. All significant decisions of the entities in the Studio
1+1 Group are reserved for decision of the shareholders, requiring a majority
vote (other than decisions of the shareholders of the Ukrainian company which
holds the UT-2 broadcast license, which require a 75%

vote). Certain fundamental corporate matters of these entities require 61%
shareholder approval.

Corporate

CME Development Corporation, a wholly owned subsidiary of the Company,
provides sales, financial and legal services to the Company. CME Programming
Services, Inc., a wholly owned subsidiary of the Company, provides programming
and satellite transmission services to the Company's television broadcast
operations in Central and Eastern Europe. See below under the heading "Corporate
Operations."

The Company's registered offices are located at Clarendon House, Church
Street, Hamilton HM CX Bermuda, and its telephone number is 441-296-1431.
Certain of the Subsidiaries maintain offices at 52-53 Poland Street, London, W1V
3DF, England, telephone number 44-207-292-7900.

Operating Environment

Private commercial television stations (those which derive the majority
of their revenues from the sale of advertising) generally began broadcasting in
the United States in the 1940s, in most parts of Western Europe in the 1980s,
but not until the 1990s in Central and Eastern Europe. Commercial television has
become an important medium for advertisers in the more developed advertising
markets. Despite the reduction in advertising expenditure experienced in the
markets in which the Company operates during 1999 the Company believes that,
over time, television advertising expenditures in Central and Eastern European
countries, which are currently relatively low, will follow a pattern of
development similar to that of Western Europe and the United States.

The following two tables set forth (i) the population, number of TV
households, per capita GDP and cable penetration for those countries of Central
and Eastern Europe where the Company has broadcast operations and (ii) the
recent growth in television advertising expenditures in those countries.

Country Population (1) TV Households (2) Per Capita GDP % Cable
------- (in millions) (in millions) 1999 (3) Penetration (4)
-------------- -------------- -------- ---------------

Romania............................. 22.3 6.7 $865 51%
Slovenia............................ 2.0 0.6 $10,074 40%
Slovak Republic..................... 5.4 1.8 $3,943 31%
Ukraine............................. 49.8 18.6 $595 18%
-------------- --------------
Total........................... 79.5 27.7
============== ==============

(1) Source: United States Bureau of the Census, February 2000

(2) Source: IP European Key Facts: Television '99. A TV household is a
residential dwelling with one or more television sets

(3) Source: Business Central Europe (except Ukraine, Source: CME Station)

(4) Source: IP European Key Facts: Television '99 (except Slovenia, Source: CME
stations)

Television Advertising Expenditures

Country 1995 1996 1997 1998 1999
------- ---- ---- ---- ---- ----
US dollars (millions)
-----------------------------------------------------
Romania............. 25 44 74 87 69
Slovenia ........... 30 35 39 51 49
Slovak Republic..... 26 39 47 56 43
Ukraine............. 9 21 53 65 32

Note: All figures are current Company estimates.

All the countries in which the Company operates experienced a reduction in
television advertising revenues, when expressed in US dollars, during 1999. In
Romania and Ukraine, the reduction was due to the slowdown in the economies as a
result of the Russian financial crisis and the subsequent flight of capital from
Central and Eastern Europe. In the Slovak Republic, television advertising
revenues decreased in dollar terms due to the 14% devaluation of the Slovak
koruna which resulted from the reform measures being introduced by the current
government and general weak economic conditions. In Slovenia, television
advertising revenues increased by 3% in local currency terms but the Slovenian
tolar depreciated by 22% against the US dollar during 1999, thus the television
advertising expenditures decreased in dollar terms.

European Regulations

Access to the available frequencies is controlled by regulatory bodies
in each country in which the Company operates. New awards of licenses to use
broadcast frequencies occur infrequently.

The European Union

If any Central or Eastern European country in which the Company
operates becomes a member of the European Union (the "EU"), the Company's
broadcast operations in such country would be subject to relevant legislation of
the EU, including programming content regulations. Romania, the Slovak Republic
and Slovenia have entered into or signed Association Agreements with the EU and
some or all of these countries may be admitted to the EU in the first wave of
the enlargement process.

The EU's Television Without Frontiers directive (the "EU Directive")
sets forth the legal framework for television broadcasting in the EU. It
requires broadcasters, where "practicable and by appropriate means," to reserve
a majority proportion of their broadcast time for "European works." Such works
are defined as originating from an EU member state or a signatory to the Council
of Europe's Convention on Transfrontier Television, as well as written and
produced mainly by residents of the EU or Council of Europe member states. In
addition, the EU Directive provides for a 10% quota of either broadcast time or
programming budget for programs made by European producers who are independent
of broadcasters. News, sports, games, advertising, teletext services and
teleshopping are excluded from the calculation of these quotas. Further, the EU
Directive provides for regulations on advertising, including limits on the
amount of time that may be devoted to advertising spots, including direct sales
advertising. Member states are free to introduce stricter content requirements
than those in the EU Directive for broadcasters within their

jurisdiction. The Company intends to align its broadcast operations with any
applicable EU legislation. The Company believes that the EU Directive, as
currently drafted, will not have a material adverse effect on its operations.

Council of Europe

The Company's broadcast operations are all located in countries which
are members of the Council of Europe, a supranational body through which
international conventions are negotiated. In 1990, the Council of Europe adopted
a Convention on Transfrontier Television, which provides for European
programming content quotas similar to those in the EU Directive. This Convention
has been ratified by some of the countries in which the Company operates, but
all countries in which the Company operates have already implemented its
principles into their national media legislation.

Corporate Operations

The Company's London based central service organization provides each
television operation with a central resource. The service functions provided
include sales, financial and legal services, including financial planning and
analysis, cost control and network management. Through CME Programming Services
Inc, the Company also provides program-related services including facilitating
international contacts, satellite acquisition, schedule advisory and
co-ordinating the exchange of best practices and expertise among the stations
and various programming related studies.

As seen in the table below, the Company's stations occupy one of the
top two positions in their respective markets.

Launch Date Technical 1999 Audience Rank in
CME Station (1) ----------- Reach (2) Share (3) market (3)
- --------------- --------- --------- ----------
PRO TV ......... December 1995 71% 28.5% 1
POP TV ......... December 1995 84% 40.0% 1
Markiza TV ..... August 1996 92% 54.0% 1
Studio 1+1 ..... January 1997 95% 28.0% 2

(1) Second channels in Romania (Acasa) and Slovenia (Gajba TV) are not included
in this table.

(2) Source: CME stations.

(3) Nationwide audience share and rank (except Romania, which is audience share
and rank within coverage area). Source:(Romania: CSOP Gallup/Taylor Nelson,
SOFRES, Slovenia: Gral Marketing/AGB Slovenia/CATI, Slovak Republic:
Visio/MVK, Ukraine: Peoplemeters AGB Ukraine).

Operations in Romania: PRO TV and Acasa

General

Romania is a parliamentary democracy of approximately 22.3 million
people. Per capita GDP was an estimated $865 in 1999. Approximately 86% of
Romanian households have one or more television sets, and cable penetration is
approximately 51%. According to the Company's estimates, television advertising
totalled approximately $69 million in 1999.

PRO TV is a national television broadcast network in Romania which was
launched in December 1995. PRO TV reaches approximately 71% of the Romanian
population of 22.3 million, including 100% of the urban population. PRO TV
broadcasts from studios located in Bucharest via digitally encoded satellite
signals which deliver programming to terrestrial broadcast facilities and to
approximately 417 cable systems throughout Romania. The Company anticipates that
PRO TV will be able to continue to increase its reach from current levels
through utilizing additional regional licenses which have been granted to
entities currently controlled by PRO TV, SRL and through affiliations with other
local broadcasters and agreements with cable carriers. Independent research from
Peoplemeters and CSOP Gallup International in Romania shows that PRO TV is
currently the top-rated television station in its broadcast area, with an
average television viewer share of approximately 28% for 1999.

In February 1998, MPI launched Acasa, a station reaching approximately
53% of the Romanian population, including approximately 86% of the urban
population via satellite and cable distribution. For 1999 Acasa had an average
television viewer share in its broadcast area of approximately 9%.

The Company has a controlling interest in Media Vision and Video
Vision. Media Vision is the leading television production company in Romania and
produces a significant portion of PRO TV's entertainment programming, including
gameshows, concerts, music videos and live special events, and performs dubbing.
Media Vision produces advertising spots for third party clients such as Coca
Cola, Procter & Gamble and Unilever. Video Vision, Romania's leading provider of
television post-production and graphics, provides a significant portion of PRO
TV's and Acasa's graphics.

MPI also operates PRO FM, a radio network which is broadcast through
owned and affiliate stations to approximately 9.5 million people in Romania. In
1999, PRO FM had an average audience share of 17% in the Bucharest area.

Programming

PRO TV's programming strategy is to appeal to a mass market audience
through a wide range of programming, including movies and series, news, sitcoms,
telenovellas, soap operas and game shows. PRO TV broadcasts 24 hours of
programming daily. Approximately 40% of PRO TV's programming is comprised of
locally produced programming, including, news and news related programs, sports,
a breakfast show, game shows and talk shows.

PRO TV has secured exclusive broadcast rights in Romania to a large
number of quality American and Western European programs and films produced by
such companies as Warner Bros. and Fox. PRO TV also receives foreign news
reports and film footage from Reuters, APTN and ENEX to integrate into its news
programs. All foreign language programs and films are subtitled in Romanian.

Acasa broadcasts 19 hours of programming daily and its programming
strategy is to target a female audience through programming including
telenovellas, films and soap operas. Acasa's viewer demographics are
complementary to PRO TV's, providing an attractive advertising medium for small
to

medium sized companies that would not otherwise advertise on television. There
are two hours of local programming per week.

Advertising

PRO TV derives revenues principally from the sale of commercial
advertising time, sold both through independent agencies and media buying
groups. PRO TV currently serves approximately 180 advertisers, including
multinational companies such as Unilever, Coca Cola, Wrigley, Colgate and
Procter & Gamble. Procter & Gamble was the largest advertiser on PRO TV and
Acasa and accounted for 10.5% and 12% of the stations revenues, respectively.

PRO TV is permitted to broadcast advertising for up to 20% of its
broadcast time in any hour, subject to an overall daily limit of 15% of
broadcast time. An additional 5% of broadcast time may be used for direct sales
advertising. There are also restrictions on the frequency of advertising breaks
(for example, news and children's programs shorter than 30 minutes cannot be
interrupted). These restrictions are the same for public and private
broadcasters.

Competition

Prior to the launch of PRO TV, TVR 1, a public station, was the
dominant broadcaster in Romania. In 1999, PRO TV achieved an average audience
share of 28% in its coverage area, while TVR 1's 1999 average audience share in
PRO TV's coverage area was approximately 17%. TVR 1 reaches 99% of the Romanian
population. Other competitors include the second public national station, TVR 2,
with a 70% broadcast reach, and privately owned Antena 1, Tele 7 ABC and Prima
TV, which reach approximately 60%, 40% and 40% of the population, respectively.

Additional competitors include cable and satellite stations. Cable and
satellite currently penetrate approximately 51% and 9%, respectively, of the
Romanian market. PRO TV competes for advertising revenues with other media such
as newspapers, radio, magazines, outdoor advertising, telephone directory
advertising and direct mail.

Regulation

Licenses for the television stations which show programming provided by
PRO TV and which broadcast advertising sold by PRO TV are regulated by Romania's
National Audio-Visual Commission. PRO TV's television licenses have been granted
for nine-year periods. Licenses which cover 17% of the Romanian population,
including the license for Bucharest expire in 2003. The remaining licenses
expire on dates ranging from 2004 to 2008. Under regulations established by the
National Audio-Visual Commission and the various licenses of stations which
broadcast PRO TV, programming and advertising provided by PRO TV is required to
comply with certain restrictions. These restrictions include a requirement that
at least 40% of programming be "own" produced.

Regulations related to advertising content include (i) a ban on tobacco
and restrictions on alcohol advertising, (ii) advertising targeted at children
or during children's programming must account for the overall sensitivity of
that age group and

(iii) members of the news department of PRO TV are prohibited from appearing in
advertisements.

Operations in Slovenia: POP TV and Gajba TV

General

Slovenia, a parliamentary democracy of 2.0 million people, had an
estimated per capita GDP of approximately $10,074 in 1999, the highest among the
former Eastern bloc countries. Approximately 96% of Slovenian households have
one or more televisions. According to the Company's estimates, television
advertising totalled $49 million in 1999.

The national television broadcast network POP TV reaches approximately
84% of the population of Slovenia, including Ljubljana, the capital of Slovenia,
and Maribor, Slovenia's second largest city. Independent research shows that in
the areas of Slovenia in which POP TV can be seen, the network had an average
television viewer share of approximately 40% for 1999, the largest share of
television viewers in Slovenia.

In October 1997, the Company launched Gajba TV, the Company's second
television broadcast network in Slovenia. Gajba TV is operated through Pro Plus
and provides programming to, and sells advertising for, its affiliate
broadcasters. The Gajba TV signal is also carried by a cable channel operated by
Tele 59 in Maribor. Gajba TV reaches approximately 45% of the population of
Slovenia. In 1999 it had an average television viewer share of approximately 2%
in its coverage area.

Programming

POP TV's programming strategy is to appeal to a mass market audience
through a wide variety of programming including movies, news, variety shows,
features and dramatic series. POP TV broadcasts for 20 hours of programming
daily, of which approximately 25% is locally produced programming, including
news, game shows, music shows and variety shows.

POP TV has secured exclusive program rights in Slovenia to a number of
successful American and Western European programs and films produced by studios
such as Warner Bros., Fox and Paramount. Special events aired in 1999 included
the Academy Awards, Miss World and Formula One racing. Pro Plus has agreements
with CNN, Reuters and APTN to receive foreign news reports and film footage to
integrate into news programs. All foreign language programs and films are
subtitled in Slovenian.

Gajba TV's programming strategy is to complement the POP TV profile
with a variety of series and features including sci-fi, adventure and youth
series as well as hourly local community shows. Gajba TV broadcasts for 10 hours
per day, and features movies and series from international distributors as well
as locally produced news, variety shows and other programs.

Advertising

POP TV derives revenues principally from the sale of commercial
advertising time. Current multinational advertisers include firms such as
Benckiser, Henkel, Procter & Gamble, Wrigley and Colgate, though no one
advertiser dominates the market. During 1998 and 1999 "Peoplemeter" devices were
placed in a number of television homes, although they are not yet the primary
source for POP TV's rating information. POP TV is permitted to broadcast
advertising for up to 15% of its daily broadcast time and there are also
restrictions on the frequency of advertising breaks during films and other
programs. The same rules apply to its competitors.

Competition

Historically, the television market in Slovenia has been dominated by
SLO 1, a national public television station. The other national public station,
SLO 2 provides programming which is complementary to SLO 1. SLO 1 reaches nearly
all of Slovenia's TV households, and SLO 2 reaches 97% of Slovenia's TV
households. No national private television frequency has been made available in
Slovenia. Two private television stations which compete with POP TV in Slovenia,
Kanal A and TV3, have achieved a relatively small audience share, together less
than 14%, due primarily to their low budget programming and lack of extensive
news programming.

POP TV also competes with foreign television stations, particularly
Croatian, Italian, German and Austrian stations. Cable penetration at 40% is
relatively high compared with other countries in Central and Eastern Europe and
approximately 21% of households have satellite dishes. In addition, POP TV
competes for revenues with other media, such as newspapers, radio, magazines,
outdoor advertising, telephone directory advertising and direct mail.

In connection with the termination of the Reorganization Agreement with
SBS, it was agreed that the Company would acquire an option to acquire a
controlling interest in Kanal A, the second leading commercial television
station in Slovenia. See above under the heading "SBS Transaction".

Regulation

The POP TV and Gajba TV network stations operate under licenses
regulated pursuant to the Law on Public Media adopted in 1994 and pursuant to
the Law on Telecommunications adopted in 1997. The licenses granted to POP TV's
affiliate stations have been granted for 10-year terms expiring in 2003 with
respect to licenses reaching 53% of the population and in 2006 and 2007 with
respect to the remaining licenses. Under Slovenian television regulations, POP
TV and its affiliate stations are required to comply with a number of
restrictions on programming and advertising. These restrictions include that 10%
of the station's broadcast time must be internally produced programming, certain
films and other programs may only be broadcast between 11:00 p.m. and 6:00 am,
and POP TV news editors, journalists and correspondents must not reflect a
biased approach toward news reporting.

In addition to the restrictions discussed above and under
"--Advertising," advertising is not permitted during news, documentary or
children's programming under 30 minutes in duration, or during religious
programming. Restrictions on advertising content include a prohibition on
tobacco advertising and on the advertising of alcoholic beverages other than low
alcohol content beer.

Operations in the Slovak Republic: Markiza TV

General

The Slovak Republic is a parliamentary democracy with a population of
5.4 million where nearly 96% of households have television. Per capita GDP was
an estimated $3,943 in 1999. Television advertising was approximately $43
million in 1999, according to the Company's estimates.

Markiza TV was launched as a national television station in the Slovak
Republic in August 1996. Markiza TV reaches approximately 92% of the Slovak
Republic's population of 5.4 million, including virtually all of its major
cities. According to independent research, Markiza TV had an average national
television viewer share for 1999 of approximately 54% versus 14% for its nearest
competitor, STV 1. See Item 3, "Legal Proceedings".

Programming

Markiza TV's programming strategy is to appeal to a broad audience with
specific groups targeted in marginal broadcasting hours. Markiza TV provides an
average of 20 hours of programming daily, including news, movies, entertainment
programmes and sport (including coverage of European Champion's League soccer,
Formula One racing and Ice Hockey World Championships). Approximately 39% of
Markiza TV's programming is locally produced, including a daily breakfast show,
game shows, talk shows and news.

Markiza TV has secured exclusive broadcast rights in the Slovak
Republic to a large number of popular United States and European series, films
and telenovellas produced by major international studios including Warner Bros.,
Columbia Tri Star, Polygram, Paramount Pictures and Twentieth Century Fox. All
foreign language programming (other than that in the Czech language) is dubbed
into the Slovak language. Markiza TV also receives foreign news reports and film
footage from CNN, Reuters and APTN, which it integrates into news programs.

Advertising

Markiza TV derives revenues principally from the sale of commercial
advertising time through media buying groups and independent agencies.
Advertisers include large multinational firms such as Procter & Gamble, Henkel,
Unilever, Wrigley and Benckiser though no one advertiser dominates the market.
Television stations are permitted to broadcast advertising for up to 10% of
total daily broadcast time and up to 20% of broadcast time in any single hour.

Currently, approximately 55% of Markiza TV's advertising revenues are
sourced from agencies based in the Czech Republic. The Company expects that a
greater proportion of advertising revenues will be sourced from the Slovak
Republic as the local advertising market develops.

Competition

The Slovak Republic is served by two national public television
stations, STV1 and STV2, which dominated the ratings until Nova TV and Markiza
TV began broadcasting in 1994 and 1996, respectively. STV1 and STV2 reach nearly
all of the Slovak population. Nova TV had an approximately 10% audience share in
the Slovak Republic for 1999. Markiza TV also competes with VTV and TV Luna,
both private satellite broadcasters reaching 47% and 30% of the population,
respectively; public television stations located in Austria, the Czech Republic
and Hungary with signals that reach the Slovak Republic; additional foreign
private television stations; and foreign satellite stations.

Regulation

Markiza TV's broadcast operations are subject to regulations imposed by
the Act on Radio and Television Broadcasting, the Act on Advertising and
conditions contained in the license granted by the Council of the Slovak
Republic for Broadcasting and Television Transmission (the "Slovak Television
Council"). The Slovak Television Council granted the license to operate Markiza
TV to the Company's local partner in STS for a period of 12 years, expiring in
September 2007, under terms requiring the Company's local partner to enter into
a partnership with the Company to found STS.

Under the license pursuant to which Markiza TV operates, Markiza TV is
required to comply with several restrictions on programming. These restrictions
include the following broadcast time rules: a minimum of 40% must be Slovak
production; 10% must be programming for children or youth; broadcasts of first
run films and series must have a minimum of 47% European production (of which
there must be a minimum of 8% Slovak production) and no more than 45% United
States production; and no more than 40% of foreign first run films and series
may be in the Czech language (decreasing to 20% by the fourth year of
broadcasting). Markiza TV's programming is required to be consistent with the
Slovak Constitution and not promote violence, hate, intolerance, or immoral
behavior or intentionally use indecent language. Programming endangering the
psychological or moral growth of children and youth cannot be broadcast between
6:00 am and 10:00 p.m., and Markiza TV's news broadcasts must be objective and
balanced and clearly differentiate between opinion and news.

In addition to the restrictions discussed above and under
"--Advertising", regulations relating to advertising content include that (a)
the news may not be sponsored and news staff may not appear in advertisements
(b) tobacco advertising is prohibited, (c) advertising for children or in which
children perform and which promotes behavior endangering the health,
psychological or moral development of children is prohibited, and (d)
advertising which endangers the viewer's morality, health, safety and
environmental protection is prohibited. The advertisement of beer is permitted;
however, advertisement of other alcoholic beverage is prohibited. There are also
restrictions on the frequency of advertising breaks within a program.

Operations in Ukraine: Studio 1+1 Group

General

Ukraine, a parliamentary democracy of 49.8 million people, is the most
populous market served by the Company. Nearly 100% of Ukrainian households have
television, cable penetration is approximately 18% and satellite penetration is
negligible. Per capita GDP of $595 for 1999 is the lowest of all the Company's
markets. Ukraine experienced a severe recession throughout 1999 as a result of
the Russian financial crisis and the subsequent flight of capital.

Studio 1+1 broadcasts programming and sells advertising on Ukrainian
National Channel Two ("UT-2"), one of Ukraine's state-owned television channels.
UT-2 reaches approximately 95% of Ukraine's population. Television advertising
in Ukraine decreased dramatically from $65 million in 1998 to $32 million in
1999 ($0.64 per capita). According to independent research, average national
audience share in 1999 was 28% for Studio 1+1, 40% for Inter and 7% for UT-1.
Studio 1+1 began broadcasting on UT-2 in January 1997.

Programming

Studio 1+1's programming strategy is to appeal to a mass market
audience. The station broadcasts for 13 hours per day, including locally
produced news, variety shows, game shows and magazine programmes as well as a
broad range of popular and high quality films from international distributors.
In 1999, Studio 1+1 produced and co-produced approximately 1,200 hours of
programming (or approximately 35% of total programming hours), which primarily
consists of a daily breakfast show, news broadcasts and news related programmes,
talk shows, karaoke, game shows, a sport magazine, lifestyle magazine and comedy
shows. In 1999, such original local programming together with other Ukrainian
programming considered local programming by Ukrainian laws comprised
approximately 49% of Studio 1+1's total broadcast time.

Studio 1+1 has secured exclusive territorial or local language
broadcast rights in Ukraine to a large number of successful high quality
American, Russian and Western European programs and films from many of the major
studios, including Twentieth Century Fox, Warner Bros., Paramount Pictures, Walt
Disney, Universal Pictures, CBS, Worldvision and PolyGram. Special events aired
include the Academy Awards ceremony and the European Soccer Champions' League.
Studio 1+1 has agreements with Reuters for foreign news packages and other
footage to be integrated into its programming. All foreign language programs and
films (other than those in the Russian language) are dubbed into the Ukrainian
language. Studio 1+1 broadcasts more than 80% of its total air time in the
Ukrainian language.

Advertising

Studio 1+1 derives revenues principally from the sale of commercial
advertising time through both media buying groups and independent agencies.
Advertisers include large multinational firms such as Wrigley, Procter & Gamble,
Colgate - Palmolive, Coca-Cola, Unilever, Nestle and Kraft Jacobs. In 1999
Wrigley accounted for 11% of Studio 1+1's advertising revenues. Studio 1+1 is
permitted to sell 15% of its overall broadcast time for advertising and is
subject to restrictions on the frequency of advertising breaks. The advertising
restrictions are the same for public and private broadcasters.

Competition

Ukraine is served by five television channels: UT-1, UT-2 (on which
Studio 1+1 broadcasts) and UT-3 (all with effective national coverage), which
are state owned, and ICTV and STB, which are private broadcasters. Studio 1+1,
through UT-2, has a broadcast reach of 95% of the Ukrainian population. The
state run station UT-1 has a broadcast reach of approximately 98% of the
Ukrainian population. ICTV and STB, both private stations, reach approximately
32% of Ukraine's population. The private station Inter, through UT-3, has a
broadcast reach of approximately 78% of the Ukrainian population. Inter's
program schedule consists primarily of rebroadcasts of the Russian-language ORT
network. In addition, there are numerous cable and satellite stations that
provide pirate broadcasting of European and US networks.

Regulation

Studio 1+1 provides programming to UT-2 pursuant to a ten-year
television broadcast license contract expiring in January 2007. Broadcasts of
Studio 1+1's programming and advertising on UT-2 are regulated by the State
Committee on Television and Radio of Ukraine and the National Council on
Television and Radio of Ukraine. These agencies enforce Ukraine's media laws,
which include restrictions on the content of programming and advertising and
limitations on the amount and placement of advertising in programs. All
advertising of alcohol and tobacco on TV is banned in Ukraine. Programming
produced in Ukraine must account for at least 70% of all programming and
programming produced by Studio 1+1 must account for 49% of all programming
(including dubbing of purchased programming into the Ukranian language).

Seasonality

The Company, like other television operators, experiences seasonality,
with advertising sales tending to be lowest during the third quarter of each
calendar year, which includes the summer holiday period (typically July and
August), and highest during the fourth quarter of each calendar year.

Employees

As of March 9, 2000, CME had a corporate operations staff of 16
employees (versus 49 as of December 31, 1998) and its Subsidiaries had a total
of approximately 2,000 employees (versus 2,900 as of December 31, 1998). None of
CME's employees or the employees of any of its Subsidiaries are covered by a
collective bargaining agreement. The Company believes that its relations with
its employees are good.

Item 2. PROPERTIES

CME Development Corporation leases office space in London in one
location. The lease, for 2,205 square feet of office space, expires in 2006.

The Company has entered into an agreement on behalf of MPI which gives
the Company the option to acquire the facility in Bucharest which contains PRO
TV's studios for a purchase price of approximately $1.8 million. The Company
owns a

portion of a building in Ljubljana which contains POP TV's studios and offices.
STS owns its principal office facility near Bratislava. Studio 1+1 leases office
and studio space.

CNTS owns a building of approximately 65,000 square feet which contains
modern studios in Prague, Czech Republic.

Item 3. LEGAL PROCEEDINGS

On April 26, 1999, a wholly-owned subsidiary of the Company filed an
arbitration claim against Dr. Vladimir Zelezny before the International Chamber
of Commerce Court of Arbitration in Paris, France. The Company seeks the return
of $23,350,000 paid to Dr. Zelezny, plus interest, and other unspecified
damages, based on breaches by Dr. Zelezny of a share purchase agreement entered
into in 1997 under which the Company purchased from Dr. Zelezny a company owned
by him whose sole asset was a 5.8% interest in CNTS. The Company is also seeking
the forgiveness of the $5,188,000 unpaid balance of the purchase price under the
1997 share purchase agreement.

On November 10, 1999, the arbitral tribunal issued a preliminary order
directing Dr. Zelezny to take steps to restore CNTS to its prior position as an
exclusive provider of critical services for TV Nova. Among other things, the
order requires Dr. Zelezny to sever all dealings between CET and other service
providers and to resume exclusive relations with CNTS in the areas where CNTS
was previously providing these services, including program acquisition,
programming and broadcasting services, and brokerage of advertising and receipt
of advertising revenues. The preliminary order will remain in effect until the
arbitral tribunal directs otherwise. Dr. Zelezny has indicated that he will not
comply with the tribunal's order.

In May 1999, CET filed an action with the Regional Commercial Court in
Prague, requesting that the court declare the Services Agreement invalid for
vagueness and other reasons. The action is pending.

In June 1999, CNTS filed a request for a preliminary injunction against
CET with the Regional Commercial Court in Prague seeking to have CET enjoined
from entering into contractual relations with other providers of television
services or advertising sales services, pursuant to the Memorandum of
Association. CNTS's request for a preliminary injunction was rejected by the
court in July 1999. CNTS has filed an appeal of the court's decision, which is
pending. On June 30, 1999, CNTS filed an action with the Regional Commercial
Court of Prague requesting that the court declare invalid an agreement between
CET and another Czech company, Produkce, a.s. under which CET purported to
transfer CET's 1% participation interest in CNTS to Produkce, a.s., since such
transfer did not comply with the CNTS Memorandum of Association. This action is
pending.

On August 9, 1999, CNTS filed an action against CET in the Regional
Commercial Court of Prague in which CNTS requested the court to declare the
withdrawal of CET from the Services Agreement to be invalid and the Services
Agreement to be in full force and effect, to issue an order prohibiting CET from
entering into television or advertising service relationships with other
companies since CNTS is entitled to provide such services to CET for Nova TV on
an exclusive basis under the Services Agreement, and to issue an order
compelling CET to broadcast programming supplied by CNTS on Nova TV. This action
is pending.

CNTS has filed several legal actions against Dr. Zelezny, including a
damages claim for breaches of his fiduciary duties while serving as an executive
of CNTS. On October 26, 1999, CNTS filed an unfair competition claim against Dr.
Zelezny and CET with the Regional Commercial Court in Prague, and requested that
the court order them to cease their competitive activities with CNTS. These
actions are pending.

On February 22, 2000, a wholly owned subsidiary of the Company
instituted arbitration proceedings against the Czech Republic under the 1991
Bilateral Investment Treaty between The Netherlands and the Czech Republic. The
claims asserted by the Company are substantially similar to those asserted by
Mr. Lauder in the arbitration proceedings that he has instituted in his personal
capacity against the Czech Republic. See Item 1, "Status of Nova TV Dispute".
The claim seeks monetary damages and other relief arising from harm caused to
CNTS by the Czech Republic's actions. The arbitration will take place before a
tribunal of three arbitrators pursuant to the Arbitration Rules of the United
Nations Commission on International Trade Law.

On April 30, 1997, Perekhid Media Enterprise Ltd. ("Perekhid") filed a
complaint in the Supreme Court of New York County, State of New York, against
CME and Ronald S. Lauder, the non-Executive Chairman of the Company's Board of
Directors. Perekhid alleged that the issuance of a license to the Studio 1+1
Group pursuant to which Studio 1+1 has been broadcasting programming on
Ukrainian National Channel 2 ("UT-2"), constitutes a tortious interference by
CME and Mr. Lauder with a Perekhid contract with the Ukrainian authorities for
Perekhid to provide programming for and sell advertising time on UT-2.
Perekhid's complaint sought compensatory damages of $250 million, punitive
damages of $500 million, and an injunction against the Company and Mr. Lauder to
prevent the continuation of the alleged conduct. On July 2, 1997, CME and Mr.
Lauder filed a motion to dismiss the complaint. On April 8, 1998, the Court
dismissed the complaint on grounds of forum non-conveniens. In June 1998,
Perekhid filed a notice of appeal with the Court.

Perekhid failed to proceed with such appeal within nine months from the date it
filed the notice of appeal and as a result the appeal lapsed automatically in
March 1999. On February 19, 1999, Atlantic Group Limited (formerly known as
Perekhid Media Enterprise Ltd.) initiated proceedings against CME in the High
Court in London, seeking $81,772,759 in damages. As in the New York proceedings,
Atlantic Group Limited alleged that CME conspired with others to use unlawful
means to procure the termination of Atlantic Group Limited's right to provide
programming and advertising sales on UT-2. On March 17, 1999, CME issued a
summons to stay the London proceedings on grounds inter alia, of forum
non-conveniens. After a three day hearing, the English High Court of Justice
accepted CME's summons and on December 8, 1999 granted an order staying the
proceedings on the grounds of forum non-conveniens. The court further ordered
the Atlantic Group Limited to pay CME's costs associated with the proceedings.
On February 29, 2000 the court ordered the Atlantic Group Limited to pay to CME
(pound)50,000 ($78,000) by March 31, 2000, and a second instalment of
(pound)50,000 ($78,000) by April 28, 2000. Negotiation and, if necessary,
further court action in respect of the balance of CME's costs continues.

In August 1998, Gamatex Ltd., a Slovak company, asserted that it had
obtained 100% ownership of Markiza-Slovakia s.r.o. through an auction process
arising out of an unsatisfied claim against Markiza-Slovakia s.r.o.
Markiza-Slovakia s.r.o. holds the Markiza TV broadcast license and owns a 51%
voting interest in STS. In December 1998, the Regional Court of Bratislava
removed Gamatex as the registered owner of Markiza. Following this decision, the
General Meeting of STS in February 1999 approved the transfer of the 50.5%
voting interest to the company Mirox s.r.o. ("Mirox"), a company owned by Dr.
Pavol Rusko, the current General Director of STS. The transfer of the voting
interest is pending registration. There was no material change in the economic
interest in STS which will be owned 80% by the Company, 19.8% by Markiza and
0.2% by Mirox. A number of legal proceedings are still pending in the District
Court of Bratislava and Regional Court of Bratislava in which the original
owners of Markiza-Slovakia s.r.o. have claimed that Gamatex's ownership claims
are not legally valid. STS has materially supported Markiza-Slovakia s.r.o. in a
number of such proceedings, in particular proceedings to; (i) confirm the
interests of the original owners of Markiza-Slovakia s.r.o.; (ii) declare
invalid Markiza-Slovakia s.r.o. and STS shareholders' meetings called by Gamatex
without proper notice; and (iii) declare invalid Gamatex's claim to ownership in
Markiza-Slovakia s.r.o.

In July 1996, the Company, together with MMTV and Tele 59, entered into
an agreement to purchase a 66% equity interest in Kanal A, a privately owned
television station in Slovenia (the "Kanal A Agreement"). SBS claims to have
certain rights to the equity of Kanal A pursuant to various agreements and has
challenged the validity of the CME-Kanal A Agreement in a United Kingdom court.
The Court has enjoined both SBS and the Company from taking certain actions
either to enforce such entity's claim to equity in Kanal A or to block the claim
of the other entity to equity in Kanal A. The Company has instituted a number of
actions in courts in Slovenia to resolve these claims. See Item 1, under the
heading "SBS Transaction" for information regarding the possible resolution of
this dispute.

The Company is, from time to time, a party to litigation that arises in
the normal course of its business operations. The Company is not presently a
party to

any such litigation which could reasonably be expected to have a material
adverse effect on its business or operations.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The following are the results of voting by shareholders present or
represented at the Annual General Meeting of Shareholders on December 14, 1999.

Note that the data in this Item 4 has not been retroactively stated to
reflect the one-for-eight reverse stock split mentioned in (b) that was
approved.

a. Each of the nominees considered at the Annual General Meeting of
Shareholders was elected to serve as a Director of CME until the next
Annual Meeting of Shareholders or until their respective successors have
been elected and qualified. The persons named below were elected to serve
as Directors and received the number of votes set forth opposite their
respective names:

For Withheld
--- --------

Ronald S. Lauder 86,382,993 39,900
Frederic T. Klinkhammer 86,382,993 39,900
Peter R. Goldscheider 86,382,993 39,900
Robert R. Grusky 86,382,993 39,900
Nicolas G. Trollope 86,382,993 39,900
Jacob Z. Schuster (nominee for initial election) 86,382,993 39,900
Marie-Monique Steckel (nominee for initial election) 86,382,993 39,900

Peter R. Goldscheider resigned as a Director on February 14, 2000. Robert
R. Grusky resigned as a Director on February 15, 2000.

b. The proposal to consider and act upon an amendment to CME's Bye-laws to
effect a one-for-eight reverse stock split of the Company's Class A Common
Stock, Class B Common Stock and Preferred Stock, and in connection with
the reverse stock split, to increase the authorized share capital of CME
was approved, with 86,300,193 votes cast for approval, 118,500 votes cast
against approval and 4,200 votes abstaining.

c. The proposal to consider and act upon an amendment to CME's Bye-laws
permitting the Board of Directors to (i) set the maximum number of
directors to serve on the Board of Directors and (ii) fill vacancies on
the Board of Directors was approved, with 86,164,362 votes cast for
approval, 239,531 votes cast against approval and 19,000 votes abstaining.

d. The financial statements of CME for fiscal year ended December 31,
1998, together with the auditors' report thereon, were approved, with
86,403,993 votes cast for approval and 3,100 votes cast against approval
and 15,800 votes abstaining.

e. The proposal to appoint Arthur Andersen as auditors of CME and to
authorize the directors to approve their fees was approved, with
86,419,793 votes cast for approval and 3,100 votes cast against approval
with no abstentions.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

CME's Class A Common Stock began trading on the Nasdaq National Market
on October 13, 1994 under the trading symbol "CETV." On March 9, 2000, the last
ed sales price for the Class A Common Stock was $12.375. The following
table sets forth the high and low sales prices for the Class A Common Stock for
each quarterly period during the last two fiscal years of the Company and for
the first quarter of 2000, as reported by the Nasdaq National Market. All share
information has been adjusted to reflect the one-for-eight reverse stock split
which took effect on December 15, 1999.

Price Period High Low
- ------------ ---- ---

1998
First Quarter..................................... 233.000 171.000
Second Quarter.................................... 234.500 160.000
Third Quarter..................................... 177.000 77.000
Fourth Quarter.................................... 77.000 38.000
1999
First Quarter..................................... 104.000 55.000
Second Quarter.................................... 100.000 41.000
Third Quarter..................................... 63.000 8.000
Fourth Quarter.................................... 22.000 9.504
2000
First Quarter (through March 9, 2000)............. 14.938 6.500

At March 9, 2000, there were 35 holders of record (including brokerage
firms and other nominees) of the Class A Common Stock and eight holders of
record of the Class B Common Stock. There is no established public trading
market for the Class B Common Stock.

On December 22, 1998, RSL Capital, a company wholly-owned by Ronald S.
Lauder, the non-executive Chairman of the Company's Board of Directors, made an
equity investment of $22.725 million in the Company in exchange for 1,515,000
shares of the Company's Class B Common Stock, which is a price equal to $15.00
per share, pursuant to the terms of a Stock Purchase Agreement, dated as of
December 3, 1998, between the Company and RSL Capital (the "Stock Purchase
Agreement"). Under the Stock Purchase Agreement, because the last reported daily
trading price of the Class A Common Stock on Nasdaq Stock Market did not equal
or exceed $15.00 for at least 20 consecutive trading days during the period that
commenced on November 13, 1998 and ended on November 12, 1999, the Company on
November 19, 1999 issued 757,500 additional shares of Class B Common Stock to
RSL Capital for no additional consideration. The issuance of all these shares of
Class B Common Stock was exempt from the registration requirements of the
Securities Act of 1933 pursuant to Section 4(2) of the Securities Act. The
issuance was made pursuant to a privately negotiated transaction between the
Company and RSL Capital, which, as described above, is wholly-owned by Ronald
Lauder, the non-executive Chairman of the Company's Board of Directors.

DIVIDEND POLICY

The Company has not declared or paid and has no present intention to
declare or pay in the foreseeable future any cash dividends in respect to any
class of its Common Stock. The Company's ability to pay cash dividends is
primarily dependent upon receipt of dividends or distributions from its
Subsidiaries over which it has limited control. In addition, the indentures
which govern the Company's 9.375% Senior Notes Due 2004 and 8.125% Senior Notes
Due 2004 restrict the ability of CME to declare and pay cash dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Item 6. SELECTED FINANCIAL DATA

(Selected Financial Data begins on the following page and ends on the
page immediately preceding Item 7).

SELECTED CONSOLIDATED FINANCIAL DATA
(dollars in thousands, except per share data)

The selected financial information presented below for the five years
ended December 31, 1999 is derived from the audited Consolidated Financial
Statements of the Company. The following selected financial information should
be read in conjunction with the Company's Consolidated Financial Statements and
Notes thereto for the years ended December 31, 1999, 1998 and 1997, included
elsewhere herein.

Years Ended December 31,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Operating Data: (dollars in thousands)

Net revenues ..................................... $ 129,323 $ 174,291 $ 146,155 $ 134,278 $ 98,919
--------- --------- --------- --------- ---------
Total station operating costs and expenses ....... 139,405 112,836 92,925 83,888 52,542
Selling, general and administrative expenses ..... 25,898 25,250 21,162 20,458 7,725
Corporate operating costs and development
Expenses ................................ 18,753 22,670 25,467 15,782 10,669
Amortization of goodwill and allowance for
Development costs ....................... 49,091 10,606 14,584 2,940 3,442
Non-cash stock compensation charge ............... -- -- -- -- 858
Capital registration tax ......................... -- -- -- 809 1,375
Restructuring charge ............................. -- 2,552 -- -- --
--------- --------- --------- --------- ---------
Total operating expenses ......................... 233,147 173,914 154,138 123,877 76,611
--------- --------- --------- --------- ---------
Operating (loss)/income .......................... (103,824) 377 (7,983) 10,401 22,308
Equity in loss of unconsolidated
Affiliates .............................. (11,021) (3,398) (10,340) (17,867) (14,816)
Loss on impairment of investments in
Unconsolidated affiliates (1) ........... -- -- (20,707) -- --
Interest and other income ........................ 5,974 25,094 10,087 2,590 1,238
Interest expense ................................. (20,003) (42,644) (15,858) (4,700) (4,959)
Foreign currency exchange gains/(losses) ......... 12,983 (6,999) (5,283) (2,861) 324
Gain on sale of investment ....................... 25,870 -- -- -- --
Other Income ..................................... 8,250 -- -- -- --
--------- --------- --------- --------- ---------
Loss before provision for income taxes,
minority interest and discontinued operations .... (81,771) (27,570) (50,084) (12,437) 4,095
Provision for income taxes ....................... (1,518) (15,856) (14,608) (16,410) (16,340)
--------- --------- --------- --------- ---------
Loss before minority interest and discontinued
operations ....................................... (83,289) (43,426) (64,692) (28,847) (12,245)
Minority interest in loss/(income) of
Consolidated subsidiaries ............... 213 (156) 1,066 (1,072) (6,491)
--------- --------- --------- --------- ---------
Net loss from continuing operations .............. (83,076) (43,582) (63,626) (29,919) (18,736)

Discontinued operations (2):
Operating loss of discontinued operations
(Hungary) ................................ (10,208) (37,576) (4,480) (84) --
Gain on disposal of discontinued
Operations (Hungary) .................... 3,414 -- -- -- --

Operating loss on discontinued operations
(Poland) ................................ -- (15,289) -- -- --
Loss on disposal of discontinued ....
operations (Poland) ..................... -- (28,805) (16,986) -- --
--------- --------- --------- --------- ---------
Net loss ......................................... $ (89,870) $(125,252) $ (85,092) $ (30,003) $ (18,736)
========= ========= ========= ========= =========
Net loss per common share from:
Continuing operations - basic and diluted $ (25.78) $ (14.45) $ (21.29) $ (12.36) $ (10.22)
Discontinued operations - basic and
Diluted ................................. (2.11) (27.08) (7.18) (0.03) --
--------- --------- --------- --------- ---------
$ (27.89) $ (41.53) $ (28.47) $ (12.39) $ (10.22)
========= ========= ========= ========= =========

Common shares used in computing per share
amounts (000s)
Basic and diluted ....................... 3,223 3,016 2,988 2,421 1,834
========= ========= ========= ========= =========
Other Data:
Broadcast cash flow (3) .......................... $ 13,700 $ 42,405 $ 42,695 $ 41,444 $ 38,182
Cash flow from operations ........................ (12,702) (9,172) (21,210) (2,537) 2,555
Balance Sheet Data:
Current assets ................................... $ 103,070 $ 152,283 $ 174,631 $ 145,515 $ 116,728
Total assets ..................................... 236,187 374,507 447,997 364,380 222,027
Total debt ....................................... 198,128 230,771 230,720 55,096 20,285
Shareholders' (deficit)/equity ................... (35,236) 65,707 157,582 249,320 138,936

(1) On May 13, 1997, the Company announced its decision to discontinue funding
of 1A TV Beteiligungsgessellschaft GmbH & Co. Betriebs KG ("1A TV"), which
operated PULS, a regional television station in the Berlin-Brandenburg area
of Germany. In May 1997, 1A TV declared bankruptcy. The Company wrote down
its investments in Germany by $20,707,000 in 1997, thereby fully
eliminating the carrying value of such investments.

(2) During the third quarter of 1999 the Company announced that is was selling
substantially all of its Hungarian operations to SBS (Item 8, Consolidated
Financial Statements, Note 18, "Subsequent Events"). The Company's
financial statements have been restated for all periods presented in order
to reflect the operations of Hungary as discontinued operations. During the
fourth quarter of 1998, the Company sold its interests in the TVN
television operations in Poland at a loss, resulting in the treatment of
these interests and related operations as discontinued operations for all
periods presented. The Company's financial statements have been restated
for all periods presented in order to reflect the operations of Poland as
discontinued operations.

(3) "Broadcast cash flow", a broadcasting industry measure of performance, is
defined as net broadcast revenues, less (i) station operating costs and
expenses (excluding depreciation and amortization of acquired programming
and of intangible assets), (ii) broadcast selling, general and
administrative expenses, and (iii) cash program rights costs. Cash program
rights costs are included in the period in which payment is made, which may
not necessarily correspond to the timing of program use or amortization.
Broadcast cash flow should not be considered as a substitute measure of
operating performance or liquidity prepared in accordance with GAAP (see
the accompanying Consolidated Financial Statements).

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Introduction

The Company's revenues are derived principally from the sale of
television advertising to local, national and international advertisers. To a
limited extent, the Company engages in barter transactions in which its stations
exchange commercial advertising time for goods and services. The Company, like
other television operators, experiences seasonality, with advertising sales
tending to be lowest during the third quarter of each calendar year, which
includes the summer holiday period, and highest during the fourth quarter of
each calendar year. The primary expenses incurred in television operations are
programming and production costs, employee salaries, broadcast transmission
expenses and selling, general and administrative expenses.

The primary internal sources of cash available for corporate operating
costs are dividends and other distributions from Subsidiaries. To date, the only
Subsidiary to distribute dividends has been CNTS which suspended operations on
August 5, 1999. See Part 1, Item 1, "Status of Nova TV Dispute" and below for a
further discussion on Nova TV and the ongoing dispute between CNTS and CET. This
suspension has resulted in CNTS being unable to distribute dividends in the
future and consequently affected the major internal source of cash available for
corporate operating costs and development expenses. The Company's ability to
obtain

dividends or other distributions is subject to, among other things, restrictions
on dividends under applicable local laws and foreign currency exchange
regulations of the jurisdictions in which its Subsidiaries operate. The
Subsidiaries' ability to make distributions is also subject to the legal
availability of sufficient operating funds not needed for operations,
obligations or other business plans and, in some cases, the approval of the
other partners, shareholders or creditors of these entities. The laws under
which the Company's operating Subsidiaries are organized provide generally that
dividends may be declared by the partners or shareholders out of yearly profits
subject to the maintenance of registered capital and required reserves and after
the recovery of accumulated losses.

Selected Combined and Attributable Financial Information

The following two tables are neither required by United States
generally accepted accounting principles ("GAAP") nor intended to replace the
Consolidated Financial Statements prepared in accordance with GAAP. The tables
set forth certain combined and attributable financial information for the years
ended December 31, 1999, 1998 and 1997 for the Company's operating entities.
This financial information departs materially from GAAP.

In the table "Selected Combined Financial Information," revenues and
operating expenses of Markiza TV and Studio 1+1 (for 1998 and 1997 only) not
consolidated in the Consolidated Statements of Operations during the periods
shown, are aggregated with those of the Company's consolidated operations. In
the table "Selected Attributable Financial Information", combined information is
adjusted for CME's economic interest in each entity, which economic interest is
the basis used for consolidation and equity method accounting in the Company's
GAAP Consolidated Financial Statements as of December 31, 1999.

The tables are presented solely for additional analysis and not as a
presentation of results of operations of each component, nor as combined or
consolidated financial data presented in accordance with GAAP. See "Application
of Accounting Principles". The following supplementary unaudited combined and
attributable information includes certain financial information of Markiza TV
and Studio 1+1 on a line-by-line basis, similar to that of the Company's
consolidated entities. Intercompany transactions such as management service
charges are not reflected in the tables. The Company believes that this
unaudited combined and attributable information provides useful disclosure.

Total Stations refer to CNTS, PRO TV, POP TV, Markiza TV and Studio
1+1. CNTS began operations in February 1994. See Part 1, Item 1, "Status of Nova
TV Dispute" and below for a further discussion on Nova TV and the ongoing
dispute between CNTS and CET. PRO TV and POP TV began operations in December
1995, Markiza TV began operations in August 1996 and Studio 1+1 began to
generate significant revenues during the second quarter of 1997.

EBITDA consists of earnings before interest, income taxes, depreciation
and amortization of intangible assets (which does not include programming
rights). EBITDA is provided because it is a measure of operating performance
commonly used in the television industry. It is presented to enhance an
understanding of the Company's operating results and is not intended to
represent cash flow or results of operations in accordance with GAAP for the
periods indicated.

The term "station expenses" used in the discussion of EBITDA
immediately following the tables refers to the total of a station's (i) other
operating costs and expenses, (ii) amortization of programming rights and (iii)
selling, general and administrative expenses.

"Broadcast cash flow", a broadcasting industry measure of performance,
is defined as net broadcast revenues, less (i) station operating costs and
expenses (excluding depreciation and amortization of acquired programming and of
intangible assets), (ii) broadcast selling, general and administrative expenses,
and (iii) cash program rights costs. Cash program rights costs are included in
the period in which payment is made, which may not necessarily correspond to the
timing of program use or amortization. Broadcast cash flow should not be
considered as a substitute measure of operating performance or liquidity
prepared in accordance with GAAP (see the accompanying Consolidated Financial
Statements).

SELECTED COMBINED FINANCIAL INFORMATION (1)
(unaudited)
($000s)
Year
Ended December 31,

-----------------------------------------
Net Revenue
=========================================
1999 1998 1997
---- ---- ----
CNTS (2)...................... 53,363 108,826 99,163
PRO TV........................ 40,627 41,937 30,155
Markiza TV ................... 32,217 37,793 31,296
POP TV........................ 23,347 22,122 14,989
Studio 1+1.................... 14,501 23,598 16,661
------------ ------------- -------------
Total Stations..................... 164,055 234,276 192,264
============ ============= =============

SELECTED COMBINED FINANCIAL INFORMATION (1)
(unaudited)
($000s)
Year
Ended December 31,
(continued)

---------------------------------------------------------------------------------
EBITDA Broadcast Cash Flow

========================================= =======================================
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----

CNTS (2)..................... (13,038) 54,886 49,921 8,197 47,489 48,326
PRO TV....................... (3,087) (2,016) (1,298) 3,555 (3,070) (3,889)
Markiza TV .................. 2,639 2,483 5,259 5,114 2,634 4,044
POP TV....................... 4,555 (808) (1,613) 4,272 (2,014) (1,742)
Studio 1+1................... (8,544) (2,048) 19 (6,370) (4,150) (1,419)
------------- ------------ ------------- ------------- ------------ -------------
Total Stations.................... (17,475) 52,497 52,288 14,768 40,889 45,320
============= ============ ============= ============= ============ =============

(1) Important information about this table appears under the heading "Selected
Combined and Attributable Financial Information" immediately preceding this
table.

(2) CNTS data for 1999 reflects revenue earned until the Company's Czech
Republic operations were suspended. See Part I, Item 1, "Status of Nova TV
Dispute".

SELECTED ATTRIBUTABLE FINANCIAL INFORMATION (1)
(unaudited)
($000s)
Year Ended December 31,

-----------------------------------------------
Economic Net Revenue
Interest (2)
============ ----------------------------------
1999 1998 1997
---- ---- ----
CNTS (3).................... 99% 52,829 107,738 98,171
PRO TV...................... 66% 26,814 27,678 19,902
Markiza TV.................. 80% 25,774 30,234 25,037
POP TV ..................... 85.5% 19,962 18,914 12,816
Studio 1+1.................. 60% 8,701 14,159 9,997
--------- ------------- -----------
Total Stations................. 134,080 198,723 165,923
========= ============= ===========

-------------------------------------------------------------------------------
EBITDA Broadcast Cash Flow
====================================== ========================================
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----

CNTS (3).................... (12,908) 54,337 49,422 8,115 47,014 47,843
PRO TV...................... (2,037) (1,331) (857) 2,346 (2,026) (2,567)
Markiza TV.................. 2,111 1,986 4,207 4,091 2,107 3,235
POP TV ..................... 3,895 (691) (1,379) 3,653 (1,722) (1,489)
Studio 1+1.................. (5,126) (1,229) 11 (3,822) (2,490) (851)
------- ------- ------- --------- --------- ---------
Total Stations................... (14,065) 53,072 51,404 14,383 42,883 46,171
======== ======== ======== ========= ========= =========

(1) Important information about this table appears under the heading "Selected
Combined and Attributable Financial Information" immediately preceding this
table.

(2) Economic interest as of December 31, 1999. For comparison between the years
ended December 31, 1999, 1998 and 1997, all results in this table are pro
forma as if the December 31, 1999 percentages had also been in place during
the years ended December 31, 1997 and 1998.

(3) CNTS data for 1999 reflects revenue earned until the Company's Czech
Republic operations were suspended. See Part I, Item 1, "Status of Nova TV
Dispute".

Combined EBITDA for the year ended December 31, 1999 compared to the year ended
December 31, 1998

The total combined EBITDA for the Company's Stations decreased by
$69,972,000 from $52,497,000 to negative $17,475,000 for the year ended December
31, 1999 compared to the year ended December 31, 1998. The decrease was due to
decreases in EBITDA at CNTS of $67,924,000, Studio 1+1 of $6,496,000 and PRO TV
of $1,071,000 offset by increases in EBITDA at POP TV and Markiza TV of
$5,363,000 and $156,000, respectively.

CNTS's EBITDA decreased by $67,924,000, to negative $13,038,000 for
1999, compared to positive $54,886,000 for 1998. This decrease was due to the
suspension of the broadcasting operations of CNTS beginning August 5, 1999. See
Part 1, Item 1, "Status of Nova TV Dispute" and below for a further discussion
on Nova TV and the ongoing dispute between CNTS and CET. As a result of the
suspension of its broadcast operations and the material impact of this
suspension upon its results, CNTS has taken a write-down of $21,480,000 on the
full value of its programming library.

Studio 1+1 recorded negative EBITDA of $8,544,000 for 1999 compared to
negative EBITDA of $2,048,000 for 1998. Since the Russian financial crisis of
August/September 1998 the economic situation in Ukraine has remained very weak
and consequently the advertising market has not recovered to pre-crisis levels.
This has resulted in a drop in the net revenues of Studio 1+1 of $9,097,000 or
nearly 39%. Studio 1+1 reduced operating costs by $2,601,000, or 10%, during
1999 compared to 1998. This reduction was primarily the result of a decrease of
$5,851,000 in salary and benefit costs, selling, general and administrative
costs and broadcast operations and engineering expenses partially offset by an
increase in programming rights costs. As a result of the weak economy and the
50% decline in the television advertising market Studio 1+1 determined that
additional amortization of $3,250,000 of programming rights costs was required
to reduced the value of the programming library to its net realizable value.

POP TV's EBITDA improved from negative $808,000 for 1998 to positive
$4,555,000 for 1999. This increase of $5,363,000 was partially due to an
increase of $1,225,000, or 6%, in net revenues as POP TV capitalized on its
market leading position and took full advantage of the slight growth in the
Slovenian advertising market. The majority of the increase in EBITDA was a
result of the $4,138,000, or 18%, reduction in the operating costs of POP TV
during 1999 compared to 1998, including reductions in production costs,
programming rights costs, marketing and selling costs and general overhead
costs.

PRO TV's EBITDA decreased by $1,071,000, or 53%, from negative
$2,016,000 for 1998 to negative $3,087,000 for 1999. The decrease was due to a
combination of an increase in programming rights costs of $5,691,000 and the
reduction in net revenues of $1,310,000 during 1999 compared to 1998. The
economic situation in Romania did not improve in 1999 and the television
advertising market decreased by 20%. In light of the economic situation PRO TV
reviewed its program library and took an additional $5,520,000 in amortization
to reduce the library to its net realizable value. The decrease in EBITDA was
partially offset by reductions in PRO TV's salary and benefit costs, marketing
and selling costs and general overhead costs.

Markiza TV recorded an EBITDA increase of $156,000, or 6%, from
$2,483,000 for 1998 to $2,639,000 for 1999. This increase was achieved despite a
reduction in the dollar net revenues of Markiza TV of $5,576,000, or nearly 15%.
This reduction in dollar net revenues was a result of the 14% devaluation of the
Slovak koruna against the dollar during 1999. In local currency terms, the net
revenues of Markiza TV for 1999 increased

slightly compared to 1998. Markiza TV reduced operating costs by $5,732,000, or
16%, during 1999 compared to 1998 which offset the decrease in dollar net
revenues. This reduction in operating costs was primarily due to reduced
programming rights costs and a reduction in marketing and selling costs.

Primarily as a result of the suspension of the broadcasting operations
of CNTS, the total combined EBITDA decreased by $69,972,000 from positive
$52,497,000 in 1998 to negative $17,475,000 in 1999.

Broadcast Cash Flow

Differences between EBITDA and broadcast cash flow are the result of
timing differences between programming use and programming payments.

Application of Accounting Principles

Although the Company conducts operations largely in foreign currencies,
the Company prepares its consolidated financial statements in United States
dollars and in accordance with GAAP. In CME's Consolidated Statements of
Operations, consolidated entities include wholly-owned subsidiaries and the
results of CNTS, PRO TV, POP TV, Studio 1+1 (for 1999 only), Media Vision and
Video Vision and separately set forth the minority interests attributable to
other owners of such companies. The results of Markiza TV and Studio 1+1 (for
the years ending December 31, 1998 and 1997) have been accounted for using the
equity method such that CME's interests in net earnings or losses of those
operations is included in the consolidated earnings and an adjustment is made to
the carrying value at which the investment is recorded on the Consolidated
Balance Sheet. The Company records other investments at the lower of cost or
market value.

In late December 1998 the Company increased its equity interest in
Studio 1+1 to a 60% controlling interest and, due to the timing of this
transaction, the Studio 1+1 balance sheet was consolidated in the Company's
Consolidated Balance Sheet as of December 31, 1998, but on the Company's
Consolidated Statements of Operations and Consolidated Statements of Cash Flows
for the years ended December 31, 1997 and 1998, Studio 1+1 results are accounted
for under the equity method. From January 1, 1999, Studio 1+1 is consolidated in
the Company's financial statements.

Foreign Currency

The Company generates revenues primarily in Czech korunas ("Kc"),
Romanian lei ("ROL"), Slovak korunas ("Sk"), Slovenian tolar ("SIT") and
Ukrainian hryvna ("Hrn") and incurs expenses in those currencies as well as
German marks, British pounds and United States dollars. The Romanian lei, Slovak
koruna, Slovenian tolar and Ukrainian hryvna are managed currencies with limited
convertibility. The Company incurs operating expenses for acquired programming
in United States dollars and other foreign currencies. For entities operating in
economies considered non-highly inflationary, including CNTS, POP TV, Markiza TV
and certain Studio 1+1 entities, balance sheet accounts are translated from
foreign currencies into United States dollars at the relevant period end
exchange rate and statement of operations accounts are translated from foreign
currencies into United States dollars at the weighted average exchange rates for
the respective periods. The resulting translation adjustments are reflected in a
component of shareholders' equity (in accumulated other comprehensive income
(loss)) with no effect on the consolidated statements of operations.

PRO TV and certain Studio 1+1 entities operate in economies considered
highly inflationary. Accordingly, non-monetary assets are translated at
historical exchange rates, monetary assets are translated at current exchange
rates and translation adjustments are included in the determination of net
income. Currency translation adjustments relating to transactions of the Company
in currencies other than the functional currency of the entity involved are
reflected in the operating results of the Company.

The exchange rates at the end of and for the periods indicated are
shown in the table below.

Balance Sheet Income Statement
------------------------------ -------------------------------------
At December 31, Weighted average for the years
ending December 31,
1999 1998 % Change 1999 1998 % Change
---- ---- -------- ---- ---- --------

Czech koruna equivalent of $1.00 35.98 29.86 (20.5)% 34.73 31.96 (8.7)%
German mark equivalent of $1.00 1.95 1.67 (16.8)% 1.89 1.76 (7.4)%
Romanian lei equivalent of $1.00 18,255 10,983 (66.2)% 15,310 8,863 (72.7)%
Slovak koruna equivalent of $1.00 42.27 36.91 (14.5)% 41.71 35.20 (18.5)%
Slovenian tolar equivalent of $1.00 196.77 161.20 (22.1)% 183.98 165.99 (10.8)%
Ukrainian hryvna equivalent of $1.00 5.22 3.43 (52.2)% 4.13 2.45 (68.6)%

The Company's results of operations and financial position during 1999
were impacted by changes in foreign currency exchange rates since December 31,
1998.

Results of Operations

Discontinued Operations

On February 21, 2000, the Company sold substantially all of its
operations in Hungary to SBS - see Item 8, Consolidated Financial Statements,
Note 18, "Subsequent Events". This has resulted in these operations being
treated as discontinued operations for all periods described in Results of
Operations. The Company's financial statements have been restated for all
periods presented in order to reflect the operations in Hungary as discontinued
operations.

During the fourth quarter of 1998, the Company sold its interests in
the TVN television operations in Poland at a loss, resulting in the treatment of
these interests and operations as discontinued operations. The Company's
financial statements have been restated for 1998 and 1997 to reflect these
operations in Poland as discontinued operations.

Year ended December 31, 1999 compared to year ended December 31, 1998

CME's consolidated net revenues decreased by $44,968,000, or 26%, to
$129,323,000 for 1999 from $174,291,000, for 1998. The decrease was due to a
decrease of $55,463,000 in the net revenues of CNTS and the decrease of
$1,310,000 in the net revenues of PRO TV, offset by a $1,225,000 increase in net
revenues at POP TV and the inclusion of Studio 1+1 as a consolidated entity for
the year ended December 31, 1999. CNTS suspended broadcast operations on August
5, 1999 and has not generated any material revenues since that time. See Part I,
Item 1, "Status of Nova TV Dispute" and below for a further discussion on Nova
TV and the ongoing dispute between CNTS and CET. The suspension of operations at
CNTS has led to a large reduction in net revenues in 1999 compared to 1998.

POP TV's net revenues increased as it continued to capitalize on its
market leading position. In Ukraine and Romania the advertising markets declined
year over year as the economies experienced recessionary effects from the
Russian financial crisis and lack of economic reform.

Total station operating costs and expenses (including amortization of
program rights and depreciation of fixed assets and other intangibles) increased
by $26,569,000, or 24%, to $139,405,000 for 1999 from $112,836,000 for 1998. The
increase in total station operating costs and expenses was primarily due to the
inclusion of Studio 1+1 as a consolidated entity for the year ended December 31,
1999 and an increase in amortization of programming rights of $30,132,000. This
increase is primarily due to the write-down of $21,480,000 on the full value of
the CNTS programming library and the increase of $5,691,000 in amortization of
programming rights at PRO TV. See Part I, Item 1 "Status of Nova TV Dispute" and
below for a further discussion on Nova TV and the ongoing dispute between CNTS
and CET. The increase in amortization of programming rights was partially offset
by a reduction in amortization of programming rights at POP TV of $1,204,000.
The increase in total station operating costs and expenses was partially offset
by reductions in station operating costs and expenses at PRO TV of $2,594,000,
due to reduced salary and benefit costs and POP TV of $1,382,000, primarily due
to lower production expenses and reduced salary and benefit costs.

Station selling, general and administrative expenses increased by
$648,000, or 3%, to $25,898,000 for 1999 from $25,250,000 for 1998. The increase
is attributable to the inclusion of Studio 1+1 as a consolidated entity for the
year ended December 31, 1999 offset by reductions in selling, general and
administrative costs at PRO TV of $3,337,000 and POP TV of $1,553,000. In 1999,
PRO TV reduced marketing costs and administrative costs and POP TV reduced
marketing costs compared to 1998.

Corporate operating costs and development expenses decreased by
$3,917,000, or 17%, from $22,670,000 in 1998 to $18,753,000 in 1999, mainly due
to reduced corporate headcount and lower corporate operating expenses.

Amortization of goodwill and allowance for development costs increased
by $38,485,000 from $10,606,000 for 1998 to $49,091,000 for 1999. This increase
is attributable to the additional $40,511,000 write-down of the
goodwill relating to the purchases of additional equity interests in CNTS made
by the Company in August 1996 and August 1997. See Item 8, Consolidated
Financial Statements, Note 5, "Impairment of CNTS Goodwill" and below for a
further discussion on CNTS and Nova TV and the ongoing dispute between CNTS and
CET.

In the second quarter of 1998, the Company recorded a restructuring
charge of $2,552,000 based on its decision to change its focus from aggressive
development and growth to further enhancing the operating performance of the
Company's existing assets and pursuing opportunities for focused growth. The
restructuring charge was comprised of severance and other associated costs and
has been fully expensed.

As a result of the above factors, the Company generated an operating
loss of $103,824,000 for 1999 compared to operating income of $377,000 for 1998.

Equity in loss of unconsolidated affiliates increased by $7,623,000 to
a loss of $11,021,000 for 1999 from a loss of $3,398,000 for 1998. This increase
is a result of Markiza TV recording a higher loss for 1999 than 1998 and certain
entities of the Studio 1+1 group that are not consolidated recording a loss
$6,810,000 for 1999.

Net interest and other income changed by $3,521,000 to an expense of
$14,029,000 for 1999 from an expense of $17,550,000 for 1998. This decrease is
due to reduced borrowing at all stations with the exception of POP TV.

The net foreign currency exchange gain of $12,983,000 for 1999 compared
to the net foreign exchange loss of $6,999,000 for 1998 was primarily
attributable to the effect of a weaker German mark on the Deutsche mark
denominated portion of CME's Senior Notes obligations and the effect of a weaker
Czech koruna on the Czech koruna debt funding for the 1996 purchase by the
Company of CS Bank's economic interest in CNTS.

Gain on sale of investment of $25,870,000 in 1999 relates to the sale
by the Company of its interest in a Romanian mobile telephone company MobilRom
S.A.

Other income of $8,250,000 relates to the cash received from SBS on the
termination of the Reorganization Agreement. See Item 8, Consolidated Financial
Statements, Note 1, "Organization and Business".

Provision for income taxes was $1,518,000 for 1999 compared to
$15,856,000 for 1998. This decrease is due to the suspension of the broadcasting
operations of CNTS and the resulting decrease in net income. See Part I, Item 1,
"Status of Nova TV Dispute" and below for a further discussion on Nova TV and
the ongoing dispute between CNTS and CET.

Minority interest in loss of consolidated subsidiaries was $213,000 in
1999 compared to minority interest in income of $156,000 for 1998. This change
was due to the losses incurred by CNTS. See Part I, Item 1, "Status of Nova TV
Dispute" and below for a further discussion on Nova TV and the ongoing dispute
between CNTS and CET.

As a result of these factors, the net loss of the Company was
$89,870,000 for 1999 compared to $125,252,000 for 1998.

Year ended December 31, 1998 compared to year ended December 31, 1997

CME's consolidated net revenues increased by $28,136,000, or 19%, to
$174,291,000 for 1998 from $146,155,000, for 1997. Net revenues increased for
each of the consolidated television operations (CNTS, PRO TV, and POP TV).
However, the Russian financial crisis resulted in a number of advertisers
reducing their advertising budgets in the fourth quarter of 1998 in many markets
in Central and Eastern Europe, which adversely impacted net revenues at all CME
stations.

CNTS, PRO TV and POP TV's net revenues improved primarily due to growth
in their respective television advertising markets despite the lingering effects
of the Russian financial crisis on the advertising market in Romania and
economic difficulties during 1998 in the Czech Republic.

Total station operating costs and expenses (including amortization of
program rights and depreciation of fixed assets and other intangibles) increased
by $19,911,000, or 21%, to $112,836,000 for 1998 from $92,925,000 for 1997. The
increase in total station operating costs and expenses was due to increases in
operating costs and expenses at PRO TV of $13,137,000, POP TV of $5,012,000 and
CNTS of $2,757,000.

PRO TV's station operating costs and expenses rose primarily as a
result of expansion of network affiliates, higher prices for acquired
programming and increased hours of self-production. In addition, programming
amortization increased due to the second channel Acasa and depreciation
increased due to the

second channel Acasa and depreciation increased due to the increase in network
and broadcast equipment needed to expand the signal reach. Both CNTS and POP
TV's operating costs and expenses increases were primarily attributable to
higher production costs as a result of increased local production in response to
audience demand and, in the case of POP TV, higher acquired programming costs
due to an increase in programming prices.

Station selling, general and administrative expenses increased by
$4,088,000, or 19%, to $25,250,000 for 1998 from $21,162,000 for 1997. The
increase is primarily attributable to increases at PRO TV and POP TV.

PRO TV's 1998 selling, general and administrative expenses were
$2,763,000 higher as a result of administrative and marketing expenses related
to the addition of Acasa and the development of production and post-production
businesses. POP TV's selling, general and administrative expenses increased by
$923,000 primarily due to increased marketing activity.

Corporate operating costs and development expenses decreased by
$2,797,000, or 11%, from $25,467,000 in 1997 to $22,670,000 in 1998 due to
reduced development activity and lower corporate headcount.

The decrease in amortization of goodwill and allowance for development
costs of $3,978,000 in 1998 compared to 1997 is primarily attributable to lower
development activity.

As a result of the above factors, the Company generated operating
income of $377,000 for 1998 compared to an operating loss of $7,983,000 for
1997.

Equity in loss of unconsolidated affiliates changed by $6,942,000 to a
loss of $3,398,000 for 1998 from a loss of $10,340,000 for 1997. This is a
result of the Company's termination of its German operations as of December 31,
1997.

Net interest and other income changed by $11,779,000 to negative
$17,550,000 for 1998 from negative $5,771,000 for 1997. This was primarily
attributable to a full year of interest expense related to CME's $100,000,000
principal amount 9.375% Senior Notes and DM 140,000,000 principal amount 8.125%
Senior Notes, each due 2004, issued in August 1997 (collectively, the "Senior
Notes").

The net foreign currency exchange loss increased to $6,999,000 for 1998
from $5,283,000 for 1997. The loss increased due to the effect of the
appreciation of the German mark against the United States dollar on the
Company's DM denominated Senior Notes and the effect of the appreciation of
Czech koruna against the United States dollar on the Company's Czech koruna
denominated loan with Ceska Sporitelna Bank ("CS"). This increase was offset in
part by the effect of the appreciation of the Czech koruna on the Company's
Czech koruna cash balances.

Provision for income taxes was $15,856,000 for 1998, an increase of
$1,248,000 from $14,608,000 for 1997 due to an increase in CNTS's taxable
income.

Minority interest in income of consolidated subsidiaries was $156,000
in 1998 and minority interest in loss of consolidated subsidiaries was
$1,066,000 in 1997. This results from changes in profitability and, to a lesser
extent, changes in ownership of the consolidated subsidiaries.

As a result of these factors, the net loss of the Company was
$125,252,000 for 1998 compared to $85,092,000 for 1997.

Czech Republic

As discussed in Part I, Item 1, under the heading "Status of Nova TV
Dispute" and Part I, Item 3, "Legal Proceedings", CNTS suspended operations on
August 5, 1999 and has not generated any revenues since that date. Consequently,
the Company's results of operations have been materially adversely affected.
Despite the suspension of CNTS's operations, the Company believes that the
recent transaction with SBS and in particular the CME Put Option on the ITI Note
(see Part I, Item 1, under "SBS Transaction") should result in the Company
having adequate cash resources to meet its debt service and other financial
obligations for the next 12 months. This suspension was caused by CET, the
license holder for Nova TV. On August 5, 1999, CET pre-empted CNTS's
transmission of programming for Nova TV and announced their withdrawal from the
Services Agreement between CNTS and CET. Dr. Zelezny was removed as General
Director and Executive of CNTS on April 19, 1999.

The Company has taken a write-down of $21,480,000 on the full value of
the programming library of CNTS and in addition, the Company has taken a
write-down of $40,511,000 on the full carrying value of the goodwill relating to
purchases of additional equity interests in CNTS made by the Company in August
1996 and August 1997 (see Item 8, Consolidated Financial Statements, Note 5,
"Impairment of CNTS Goodwill").

Liquidity and Capital Resources

Net cash used in operating activities was $12,702,000 in 1999 compared
to $9,172,000 in 1998.

Net cash provided by investing activities was $14,364,000 in 1999
compared to net cash used in investing activities of $74,857,000 in 1998. The
increase of $89,221,000 was primarily attributable to the proceeds received on
the sale of the Company's interest in MobilRom S.A., lower investments in
discontinued operations during 1999 and lower investments in fixed assets.

Net cash used in financing activities for 1999 was $6,377,000 compared
to net cash provided by financing activities of $22,267,000 in 1998. The
decrease of $28,644,000 was primarily due to the equity investment from RSL
Capital LLC in 1998 and higher loan repayments in 1999.

In October 1999, the Company received $8,250,000 in cash from SBS in
connection with the termination of the Reorganization Agreement.

The Company had cash and cash equivalents of $36,990,000 at December
31, 1999 compared to $43,354,000 at December 31, 1998.

On March 2, 2000, the Company added to its cash balances by receiving
approximately $4,400,000 from the sale of its assets in Hungary. See Item 8,
Consolidated Financial Statements, Note 18, "Subsequent Events".

In August 1997, CME issued the Senior Notes, which raised net proceeds
of approximately $170,000,000. The Senior Notes are denominated in United States
dollars, in part, and in German marks, in part. The United States dollar
denominated Senior Notes bear interest at a rate of 9.375% per annum, and the
German mark denominated Senior Notes bear interest at a rate of 8.125% per
annum. The principal amount of the Senior Notes is repayable on their maturity
date, August 15, 2004. The indentures governing the Senior Notes contain certain
restrictions relating to the ability of CME and its Subsidiaries and affiliates
to incur additional indebtedness, incur liens on assets, make investments in

unconsolidated companies, declare and pay dividends (in the case of CME), sell
assets and engage in extraordinary transactions.

On August 1, 1996, the Company purchased CS's 22% economic interest and
virtually all of CS's voting rights in CNTS for a purchase price of Kc 1 billion
($36,590,000). The Company also entered into a loan agreement with CS to finance
85% of the purchase price. The principal outstanding at December 31, 1999 was Kc
462,580,600 ($12,857,000). Quarterly repayments on the loan are required in the
amount Kc 42,500,000 ($1,181,000) during the period from February 2000 through
May 2002, and Kc 37,580,000 ($1,045,000) in August 2002.

In April 1998, POP TV entered into a multicurrency $5,000,000 loan
agreement with Creditanstalt AG which matures in May 2005. As of December 31,
1999, the loan was fully drawn. The loan is secured by the land, buildings and
equipment of POP TV and is guaranteed by CME. This credit agreement contains
certain covenants with which the Company was not in compliance, but for which
the Company has received a waiver.

PRO TV has two borrowing facilities with Tiriac Bank in Romania. The
first facility consists of a $2,000,000 line of credit which matures in June
2000. At December 31, 1999, $502,000 was outstanding under this facility. The
second facility for $4,000,000 matures in December 2002. At December 31, 1999,
$2,838,000 was borrowed under this facility. These facilities are secured by PRO
TV's equipment and vehicles.

The laws under which CME's operating Subsidiaries are organized provide
generally that dividends may be declared by the partners or shareholders out of
yearly profits subject to the maintenance of registered capital, required
reserves and after the recovery of accumulated losses. In the case of the
Company's Dutch and Netherlands Antilles subsidiaries, the Company's voting
power is sufficient to compel the making of distributions. The Company's voting
power is sufficient to compel CNTS to make distributions. As discussed above
under the heading "Czech Republic", the continuing dispute between CNTS and CET
has resulted in the suspension of the operations of CNTS. Unless CNTS is able to
resume operations, it will not be able to pay dividends to the Company in the
future. In the case of PRO TV, distributions may be paid from the profits of PRO
TV subject to a reserve of 5% of annual profits until the aggregate reserves
equal 20% of PRO TV's registered capital. A majority vote can compel PRO TV to
make distributions. There are no legal reserve requirements in Slovenia. In the
case of Markiza TV, distributions may be paid from net profits subject to an
initial reserve requirement of 10% of net profits until the reserve fund equals
5% of registered capital. Subsequently, the reserve requirement is equal to 5%
of net profits until the reserve fund equals 10% of registered capital. The
Company's voting power in Markiza TV is not sufficient to compel the
distribution of dividends. The Company's voting power in the Studio 1+1 Group is
sufficient to compel the distribution of dividends.

The Company's future cash needs, over and above working capital
requirements, will depend on the Company's overall financial performance and its
future acquisition and development decisions. The Company believes that, taken
together, its current cash balances, internally generated cash flow, local
financing of broadcast operations and the CME Put Option on the ITI Note (see
Item 8, Consolidated Financial Statements, Note 18, "Subsequent Events") should
result in the Company having adequate cash resources to meet its debt service
and other financial obligations for the next 12 months.

Year 2000

Our comprehensive program to address Year 2000 issues was successful in
that our business activities continued without disruption through the days
before and after January 1, 2000. In terms of supply chain readiness, on the
basis of the information available to us, we do not expect disruptions caused by
the failures of third parties to remediate their Year 2000 issues. Costs related
to the Year 2000 program were not significant.

Euro Conversion

As part of the European Economic and Monetary Union (EMU), a single
currency, the euro, will replace the national currencies of many of the member
countries of the European Union. Although the Company does not currently conduct
business in any of the countries which are adopting the euro, it holds debt
denominated in German marks, one of the currencies scheduled to be replaced by
the euro. Additionally, it is expected that several of the countries in which
the Company operates are likely to join EMU at some point in the future.

The conversion rates between the euro and the participating nations'
currencies were fixed irrevocably as of January 1, 1999 and the participating
national currencies will be removed from circulation between January 1, and June
30, 2002 and replaced by euro notes and coinage. During the "transition period"
from January 1, 1999 through December 31, 2001, public and private entities as
well as individuals may pay for goods and services using either checks, drafts,
or wire transfers denominated in euro or the participating country's national
currency.

Under the regulations governing the transition to a single currency,
there is a "no compulsion, no prohibition" rule which states that no one is
obliged to use the euro until the notes and coinage have been introduced on
January 1, 2002. In keeping with this rule, the Company expects to be euro
"compliant" (able to receive euro denominated payments and able to invoice in
euros as requested by vendors and suppliers, respectively) by the time national
currencies are removed from circulation. The cost of software and business
process conversion is not expected to be material.

Forward-looking Statements

Statements made in Part I, Item 1, under the heading "Status of Nova TV
Dispute", Part II, Item 7, under "Results of Operations", "Czech Republic" and
under "Liquidity and Capital Resources" regarding future operations of CNTS, the
ongoing dispute between CNTS and CET, future investments in existing television
broadcast operations, business strategies and commitments and the timing of the
need for additional cash resources are forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, financial and otherwise, could
differ materially from those described in or contemplated by the forward-looking
statements. Important factors that contribute to such risks include the ability
to acquire programming, the ability to attract audiences, the rate of
development of advertising markets in countries where the Company currently
operates and general market and economic conditions in these countries.
Important factors with respect to the future operations of CNTS in the Czech
Republic and the ongoing dispute between CNTS and CET, include legal, political
and regulatory conditions and developments in the Czech Republic.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

The Company conducts business in a number of foreign currencies. As a
result, it is subject to foreign currency exchange rate risk due to the effects
that foreign exchange rate movements of these currencies have on the Company's
costs and on the cash flows it receives from certain subsidiaries. Several of
the Company's subsidiaries hold long-term debt under credit facilities that
provide for interest at a spread above a basis rate (such as LIBOR). A
significant rise in these basis rates would not materially adversely affect the
Company's business, financial condition or results of operations. The Company
does not utilize derivative financial instruments to hedge against changes in
interest rates. The Company believes that it currently has no material exposure
to market risk associated with activities in derivative or other financial
instruments.

In limited instances the Company enters into forward foreign exchange
contracts to hedge foreign currency exchange rate risk. At December 31, 1999 the
Company held no foreign exchange contracts.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

(Financial Statements and Supplementary data begin on the following
page and end on the page immediately preceding Item 9.)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Central European Media Enterprises Ltd.:

We have audited the accompanying consolidated balance sheets of Central
European Media Enterprises Ltd. as of December 31, 1999 and 1998, and the
related consolidated statements of operations, shareholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Central European
Media Enterprises Ltd. as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with United States generally accepted
accounting principles.

ARTHUR ANDERSEN

Hamilton, Bermuda
March 15, 2000

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(US$ 000s, except per share data)

ASSETS December 31,
--------------------------
1999 1998
----- ----

CURRENT ASSETS:
Cash and cash equivalents ................................................. $ 36,990 $ 43,354
Restricted cash ............................................................ 4,784 67
Accounts receivable (net of allowances of $2,597, $3,193) .................. 15,099 39,846
Program rights costs ....................................................... 9,883 25,981
Advances to affiliates ..................................................... 20,507 14,478
Income taxes Receivable .................................................... 7,640 --
Other short-term assets .................................................... 8,167 28,557
--------- ---------
Total current assets ....................................... 103,070 152,283

Investments in unconsolidated affiliates ................................... 23,095 29,357
Loans to affiliates ........................................................ 4,863 5,873
Property, plant and equipment (net of depreciation of $56,292, $49,293) .... 48,471 61,926
Program rights costs ....................................................... 8,911 21,206
License costs and other intangibles (net of amortization of $10,376, $6,705) 2,912 6,365
Goodwill (net of amortization of $79,263, $27,504) ......................... 19,393 70,196
Note receivable (Note 18) .................................................. 20,071 20,071
Deferred Tax Asset ......................................................... 138 --
Other assets ............................................................... 5,263 7,230
--------- ---------
Total assets ............................................... $ 236,187 $ 374,507
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Net Liabilities of discontinued operations ................................. $ - $ 2,579
Accounts payable and accrued liabilities ................................... 51,504 57,269
Duties and other taxes payable ............................................. 11,678 11,541
Income taxes payable ....................................................... 864 1,157
Current portion of credit facilities and obligations under capital leases 6,409 9,670
Investments payable ........................................................ 5,188 12,281
Advances from affiliates ................................................... 1,028 2,533
--------- ---------
Total current liabilities .................................. 76,671 97,030

Deferred income taxes ...................................................... -- 302
Long-term portion of credit facilities and obligations
under capital leases ....................................................... 15,115 22,653
Investments payable ........................................................ -- 2,563
$100,000,000 9 3/8% Senior Notes ........................................... 99,897 99,875
DM 140,000,000 8 1/8% Senior Notes ......................................... 71,519 83,729
Other Liabilities .......................................................... 7,843 1,946
Minority interest in consolidated subsidiaries ............................. 378 702

Commitments and contingencies (Note 13)

SHAREHOLDERS' (DEFICIT) EQUITY:
Class A Common Stock, $0.08 par value: authorized:
100,000,000 shares at December 31, 1999 and December 31, 1998; issued
and outstanding: 2,313,346 at December 31, 1999 and 2,258,859 at
December 31, 1998 ........................................................ 185 181
Class B Common Stock, $0.08 par value: authorized:
15,000,000 shares at December 31, 1999 and December 31, 1998; issued
and outstanding: 991,842 at December 31, 1999 and 947,166 at December
31, 1998 ................................................................. 79 76
Additional paid-in capital ................................................. 356,385 356,378
Accumulated deficit ........................................................ (378,218) (288,348)
Accumulated other comprehensive loss ....................................... (13,667) (2,580)
--------- ---------

Total shareholders' (deficit) equity ....................... (35,236) 65,707
--------- ---------

Total liabilities and shareholders' equity ................................. $ 236,187 $ 374,507
========= =========

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

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(US$ 000s, except per share data)

For the years
ended December, 31
-----------------------------------
1999 1998 1997
---- ---- ----

Gross revenues .................................................... $ 158,388 $ 225,442 $ 189,832
Discounts and agency commissions .................................. (29,065) (51,151) (43,677)
--------- --------- ---------
Net revenues ...................................................... 129,323 174,291 146,155

STATION EXPENSES:
Other operating costs and expenses .......................... 59,747 68,799 56,947
Amortization of programming rights .......................... 57,991 27,859 21,080
Depreciation of station fixed assets and other intangibles .. 21,667 16,178 14,898
--------- --------- ---------
Total station operating costs and expenses .................. 139,405 112,836 92,925
Selling, general and administrative expenses ................ 25,898 25,250 21,162

CORPORATE EXPENSES:
Corporate operating costs and development expenses .......... 18,753 22,670 25,467
Amortization of goodwill and allowance for development costs 49,091 10,606 14,584
Restructuring charge (Note 6) ............................... -- 2,552 --
--------- --------- ---------
67,844 35,828 40,051
--------- --------- ---------

Operating (loss)/income ........................................... (103,824) 377 (7,983)

Equity in loss of unconsolidated affiliates (Note 15) ............. (11,021) (3,398) (10,340)
Loss on impairment of investments in unconsolidated affiliates .... -- -- (20,707)
Net interest and other income/(expense) ........................... (14,029) (17,550) (5,771)
Foreign currency exchange gain/(loss),net ......................... 12,983 (6,999) (5,283)
Gain on sale of investment (Note 17) .............................. 25,870 -- --
Other Income (Note 1) ............................................. 8,250 -- --
--------- --------- ---------

Loss before provision for income taxes, minority interest and
discontinued operations ........................................... (81,771) (27,570) (50,084)
Provision for income taxes ........................................ (1,518) (15,856) (14,608)
--------- --------- ---------

Loss before minority interest and discontinued operations ......... (83,289) (43,426) (64,692)
Minority interest in loss/(income) of consolidated subsidiaries ... 213 (156) 1,066
--------- --------- ---------

Net loss from continuing operations ............................... (83,076) (43,582) (63,626)

Discontinued operations:
Operating loss of discontinued operations (Hungary) ......... (10,208) (37,576) (4,480)
Gain on disposal of discontinued operations (Hungary) ....... 3,414 -- --

Operating loss on discontinued operations (Poland) .......... -- (15,289) (16,986)
Loss on disposal of discontinued operations (Poland) ........ -- (28,805) --
--------- --------- ---------
(6,794) (81,670) (21,466)
--------- --------- ---------

Net loss .......................................................... $ (89,870) $(125,252) $ (85,092)
========= ========= =========

PER SHARE DATA
Net loss per share (Note 3)
Continuing operations - Basic and diluted ................... $ (25.78) $ (14.45) $ (21.29)
Discontinued operations - Basic and diluted ................. (2.11) (27.08) (7.18)
--------- --------- ---------
Total ....................................................... $ (27.89) $ (41.53) $ (28.47)
========= ========= =========

Weighted average common shares used in computing per share amounts:
Basic and diluted ........................................... 3,223 3,016 2,988
========= ========= =========

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

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the Period from December 31, 1996 to December 31, 1999
(US$ 000s, except per share data)

Accumulated
Class A Class B Other Total
Comprehensive Common Common Capital Accumulated Comprehensive Shareholders'
Income (Loss) Stock Stock Surplus Deficit Income Equity/(Deficit)
(a) (Loss) (b)
---------------------------------------------------------------------------------------

BALANCE, December 31, 1996 ............. 167 72 330,315 (78,004) (3,230) 249,320

Comprehensive income (loss):
Net Loss ............................... (85,092) (85,092) (85,092)
Other comprehensive income (loss):
Unrealized translation adjustments (8,717) (8,717) (8,717)
-------
Comprehensive loss ..................... (93,809)
=======

Stock issued:
Capital contributed by
shareholders ........................... 2 (1) 2,071 -- -- 2,072
-------------------------------------------------------------------

BALANCE, December 31, 1997 ............. 169 71 332,386 (163,096) (11,947) 157,583

Comprehensive income (loss):
Net Loss ............................... (125,252) (125,252) (125,252)
Other comprehensive income (loss):
Unrealized translation adjustments 9,367 9,367 9,367
-------

Comprehensive loss ..................... (115,885)
========

Stock issued:
Capital contributed by
shareholders, net of costs of $ 227..... 12 5 23,992 -- -- 24,009
-------------------------------------------------------------------

BALANCE,December 31, 1998 .............. 181 76 356,378 (288,348) (2,580) 65,707

Comprehensive income (loss):
Net Loss ............................... (89,870) (89,870) (89,870)
Other comprehensive income (loss):
Unrealized translation adjustments (11,087) (11,087) (11,087)
-------

Comprehensive loss ..................... (100,957)
========

Stock issued:
Capital contributed by shareholders..... 4 3 7 -- -- 14
-------------------------------------------------------------------

BALANCE, December 31, 1999 ............. 185 79 356,385 (378,218) (13,667) (35,236)
====================================================================

(a) Of the accumulated deficit of $378,218 at December 31, 1999, $96,185
represents accumulated losses in unconsolidated affiliates.

(b) Represents foreign currency translation adjustments.

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

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$ 000s)

For the years ended December 31,
-----------------------------------
1999 1998 1997
--------- --------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ....................................................................... $ (89,870) $(125,252) $ (85,092)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in loss of unconsolidated affiliates ............................... 11,021 3,398 10,340
Loss on impairment of investments in unconsolidated affiliates ............ -- -- 20,707
Depreciation and amortization (excluding amortization of barter programs).. 130,361 55,817 49,658
Discontinued operations ................................................... 6,794 81,670 21,466
Gain on sale of investment ................................................ (25,870) -- (2,255)
Minority interest in (loss) income of consolidated subsidiaries ........... (213) 156 (1,066)
Valuation allowance for development costs ................................. -- -- 1,125
Foreign currency exchange (gain) loss, net ................................ (12,983) 6,999 5,283
Accounts receivable ....................................................... 19,007 705 (4,440)
Cash paid for program rights .............................................. (28,312) (30,304) (28,449)
Advances to affiliates .................................................... (7,000) (1,158) (5,348)
Other short-term assets ................................................... 6,398 (3,417) (1,943)
Accounts payable and accrued liabilities .................................. (14,361) 3,062 (1,860)
Income and other taxes payable ............................................ (7,674) (848) 664
--------- --------- ---------
Net cash used in operating activities ................................ (12,702) (9,172) (21,210)
--------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in unconsolidated affiliates .................................. -- (7,148) (8,264)
Other Investments ......................................................... (6,063) (34) (5,133)
Investments in discontinued operations .................................... (9,373) (46,770) (61,934)
Cash proceeds from disposal of discontinued operations .................... 39,260 10,000 --
Restricted cash ........................................................... (4,717) 733 1,949
Acquisition of fixed assets ............................................... (6,052) (14,884) (10,479)
Acquisition of minority interest .......................................... -- (9,930) (16,950)
Purchase of business, net of cash acquired ................................ -- -- (2,471)
Loans to affiliates ....................................................... 1,383 (5,051) (8,827)
Payments for license costs, other assets and intangibles .................. (74) (1,773) (3,432)
Development costs ......................................................... -- -- (121)
--------- --------- ---------
Net cash provided by (used in) investing activities ................. 14,364 (74,857) (115,662)
--------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Credit facilities and payments under capital leases ....................... (6,358) (2,495) (11,051)
Dividends paid to minority shareholders ................................... -- (1,777) (3,090)
Issuance of debt, net of related costs .................................... -- -- 169,572
Capital contributed by shareholders ....................................... 14 24,007 2,072
Other long term liabilities ............................................... (33) 2,532 (42)
Investments by minority shareholders in consolidated subsidiaries ......... -- -- 2,652
--------- --------- ---------
Net cash (used in) provided by financing activities ....................... (6,377) 22,267 160,113
--------- --------- ---------

IMPACT OF EXCHANGE RATE FLUCTUATIONS ON CASH ................................... (1,649) 1,344 (665)
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents ...................... (6,364) (60,418) 22,576
CASH AND CASH EQUIVALENTS, beginning of period ................................. 43,354 103,772 81,196
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period ....................................... $ 36,990 $ 43,354 $ 103,772
========= ========= =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Interest ............................................................. $ 19,522 $ 20,413 $ 4,590
Income Taxes ......................................................... $ 9,488 $ 16,519 $ 23,318

SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING TRANSACTIONS
Capital lease obligations incurred.............................................. $ 516 -- --

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

1. ORGANIZATION AND BUSINESS

Central European Media Enterprises Ltd., a Bermuda corporation ("CME"),
was formed in June 1994. CME has been in operation since 1991. CME, together
with its subsidiaries and affiliates (CME and its subsidiaries and affiliates
are collectively referred to as the "Company"), invests in, develops, and
operates national and regional commercial television stations and networks in
Central and Eastern Europe.

The Company and Ronald S. Lauder, the non-executive Chairman of the
Company's Board of Directors, have sought remedies in a number of court and
arbitration proceedings, each of which is pending final decision. The Company is
seeking various forms of relief, reinstatement of its status and rights, and
reimbursement of previous amounts paid to Dr. Zelezny and of costs incurred and
damages sustained during or as a result of this dispute. No gains for such
claims have been recorded and, furthermore, the Company has recorded a provision
to reflect the impairment of its goodwill in CNTS (see Note 5, "Impairment of
CNTS Goodwill").

In Romania, the Company and its local partners operate PRO TV, a
commercial television network, and a second channel, Acasa, through Media Pro
International S.A. ("Media Pro International"). The Company owns a 66% equity
interest in Media Pro International. The Company owns 49% of the equity of PRO
TV, SRL, an affiliate station of Media Pro International holding many of the
licenses for the stations comprising the PRO TV network.

In Slovenia, the Company operates POP TV, together with MMTV 1 d.o.o.
Ljubljana ("MMTV") and Tele 59 d.o.o. Maribor ("Tele 59"), through Produkcija
Plus d.o.o. ("Pro Plus"). Under the names POP TV and Gajba TV, Pro Plus provides
programming to, and sells advertising for, affiliated stations. The Company owns
78% of the equity of Pro Plus, but has an effective economic interest of 85.5%
as a result of a 33% economic interest in MMTV and a 33% economic interest in
Tele 59. Tele 59 owns a 21% equity interest in Pro

Plus, and MMTV currently owns a 1% equity interest in Pro Plus. The Company also
owns a 20% equity interest in MTC Holding d.o.o. ("MTC") which owns the
remaining 90% equity interest in MMTV. 76% of MTC's equity is being separately
held by a Slovene person, in trust for the Company, until the Slovene media law
is clarified or until the Company determines final ownership.

In the Slovak Republic, the Company owns an 80% non-controlling
economic interest and a 49% voting interest in Slovenska Televizna Spolocnost
s.r.o. ("STS"), which operates the national television station Markiza TV.
Markiza-Slovakia s.r.o., the broadcast license holder, and STS have entered into
an agreement pursuant to which STS is entitled to provide exclusive commercial
television services to Markiza-Slovakia s.r.o.

In Ukraine, the Company owns a 60% interest in a group of companies
(collectively, the "Studio 1+1 Group"), which have the right to broadcast
programming and sell advertising on Ukrainian National Channel 2 ("UT-2").

On September 28, 1999, the Company announced that the Reorganization
Agreement dated March 29, 1999 between the Company and SBS Broadcasting S.A.
("SBS") (the "Reorganization Agreement") had been mutually terminated. In
connection with the termination of the Reorganization Agreement, the Company
received $8,250,000 as a termination fee from SBS, which has been recorded as
other income in the Company's accompanying Consolidated Statement of Operations.
It was further agreed that the Company would sell substantially all of its
Hungarian operations to SBS and the Company would acquire an option to acquire
from SBS a controlling interest in Kanal A for $12,000,000. Kanal A is the
second leading commercial television station in Slovenia. See Note 18,
"Subsequent Events"

2. FINANCING OF OPERATING AND CAPITAL NEEDS

In 1999, the Company continued to use the cash proceeds from the equity
investment from RSL Capital LLC ("RSL"), a company wholly owned by Ronald S.
Lauder, the non-executive Chairman of the Company's Board of Directors and the
cash received from the sale of MobilRom in Romania.

Despite the suspension of CNTS's operations, the Company believes that
the recent transaction with SBS and in particular the CME Put Option on the ITI
Note (see Note 18, "Subsequent Events") should result in the Company having
adequate cash resources to meet its debt service and other financial obligations
for the next 12 months.

The Company had cash of $36,990,000 at December 31, 1999 to enable it
to finance its future activities.

Dividends from Consolidated Subsidiaries and Unconsolidated Affiliates

CNTS. Unless CNTS is able to resume operations, it will not be able to pay
dividends to the Company in the future. In the case of PRO TV, distributions may
be paid from the profits of PRO TV subject to a reserve of 5% of annual profits
until the aggregate reserves equal 20% of PRO TV's registered capital. A
majority vote can compel PRO TV to make distributions. There are no legal
reserve requirements in Slovenia. In the case of Markiza TV, distributions may
be paid from net profits subject to an initial reserve requirement of 10% of net
profits until the reserve fund equals 5% of registered capital. Subsequently,
the reserve requirement is equal to 5% of net profits until the reserve fund
equals 10% of registered capital. The Company's voting power in Markiza TV is
not sufficient to compel the distribution of dividends. The Company's voting
power in the Studio 1+1 Group is sufficient to compel the distribution of
dividends.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. The significant
accounting policies are summarized as follows:

Discontinued Operations

On February 21, 2000, the Company sold substantially all of its
operations in Hungary to SBS - see Note 18, "Subsequent Events". This has
resulted in these operations being treated as discontinued operations for all
periods described in Results of Operations. The Company's financial statements
have been restated for all periods presented in order to reflect the operations
in Hungary as discontinued operations.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts
of the Company's wholly-owned subsidiaries and the results of CNTS, PRO TV, POP
TV, Studio 1+1 (for 1999 only), Media Vision and Video Vision (the "Consolidated
Affiliates"), as consolidated entities and reflect the interests of the minority
owners of these entities for the periods presented, as applicable. The results
of Markiza TV and Studio 1+1 (for 1998 and 1997), (the "Unconsolidated
Affiliates") in which the Company has, or during the periods presented had,
minority or non-controlling ownership interests, are included in the
accompanying Consolidated financial statements using the equity method.

In late December 1998 the Company increased its equity interest in
Studio 1+1 to a 60% controlling interest and, due to the timing of this
transaction, the Studio 1+1 balance sheet is consolidated in the Company's
Consolidated Balance Sheet as of December 31, 1998. However, in the Company's
Consolidated Statements of Operations and Consolidated Statements of Cash Flows
for the years ending December 31, 1998 and 1997, Studio 1+1 results are
accounted for under the equity method. From January 1, 1999, Studio 1+1 is
consolidated in all of the Company's financial statements.

Revenue Recognition

Revenues primarily result from the sale of advertising time and are
recognized in the period in which advertising is aired.

Barter Transactions

Revenue from barter transactions (television advertising time provided
in exchange for goods and services) is recognized as income when commercials are
broadcast, and programming, merchandise or services received are charged to
expense or capitalized as appropriate when received or used.

The Company records barter transactions at the estimated fair market
value of goods or services received. In cases where bartered programs can only
be obtained through a barter agreement, the Company values the barter at the
value of the asset conveyed in exchange for the programs. In other cases where
the Company has elected to enter into barter agreements as an alternate method
of payment, strictly for economic reasons, the Company values the barter
agreement at the value of the asset received. If merchandise or services are
received prior to the broadcast of a commercial, a liability is recorded.
Likewise, if a commercial is broadcast by the Company's station prior to
receiving the merchandise or services, a receivable is recorded.

Cash and cash equivalents

Cash and cash equivalents includes unrestricted cash in banks and
highly liquid investments with original maturities of less than three months.
Restricted cash (restricted for guarantees to third parties or vendors) at
December 31, 1999 and 1998 is $4,784,000 and $67,000 respectively.

Long-lived assets

The Company periodically evaluates its long-lived assets using
projected undiscounted future cash flows and operating income for each
subsidiary. (See Note 5, "Impairment of CNTS Goodwill").

Program Rights and Production Costs

Program rights acquired by the Company under license agreements and the
related obligations incurred are recorded as assets and liabilities when the
program is available and the license period begins. The assets are amortized
using straight-line and accelerated methods based on the estimated period of
usage, ranging from one to five years. The unamortized cost of such rights and
liability for future payments under these agreements are included in the
accompanying Consolidated Balance Sheets. Amortization estimates for program
rights are reviewed periodically and adjusted prospectively.

Payments made for program rights in which the license period has not
begun before year end are classified as prepaid expenses.

Production costs for self-produced programs are expensed when first
broadcast except where the programming has potential to generate future
revenues. When this is the case, production costs are capitalized and amortized
on the same basis as programming obtained from third parties.

Intangible Assets

Intangible assets include goodwill, broadcast license, license
acquisition costs and capitalized debt costs.

Goodwill represents the Company's excess cost over the fair value of
net assets acquired and is being amortized on a straight-line basis over the
estimated useful life of the assets. Amounts recognized to date have been
amortized over periods ranging from 2 to 8 1/2 years from the original date of
acquisition. (See Note 5, "Impairment of CNTS Goodwill").

License costs and other intangibles reflect the costs of acquiring
licenses to broadcast and the excess of the Company's investment above the
Company's share of net assets received from newly formed, consolidated entities
as well as the amounts paid to secure licenses. Broadcast license costs are
capitalized and amortized over the life of the related license. License
acquisition costs are amortized over the lives of the related licenses which
range from 5 to 10 years. These costs are reviewed for impairment whenever
events or circumstances provide evidence that suggests that the carrying amount
of license acquisition costs may not be recoverable.

Capitalized debt costs represent the costs incurred in connection with
obtaining debt financing. These costs are amortized over the life of the related
debt instrument.

Fair Value of Financial Instruments

The Company accounts for the fair value of financial instruments in
accordance with SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments". To meet the reporting requirements of SFAS No. 107, the Company
calculates the fair value of financial instruments and includes this additional
information in the notes to financial statements when the fair value is
different from book value of those financial instruments. When the fair value is
equal to the book value, no additional disclosure is made. The Company uses
quoted market prices whenever available to calculate these fair values. When
quoted market prices are not available, the Company uses standard pricing models
for various types of financial instruments which take into account the present
value of estimated future cash flows. At December 31, 1999 and 1998, the
carrying value of all financial instruments (primarily loans payable and
receivable and, in limited circumstances, foreign exchange contracts)
approximated fair value.

Income Taxes

Deferred income taxes are provided on temporary differences between
financial statement and taxable income. The primary sources of these differences
are depreciation, amortization and tax losses carried forward.

Foreign Currency Translation

into United States dollars at the relevant period end exchange rate; statement
of operations accounts are translated from foreign currencies into United States
dollars at the weighted average exchange rates for the respective periods. The
resulting translation adjustments are reflected in a component of shareholders'
equity with no effect on the consolidated statements of operations.

The exchange rates at the end of and for the periods indicated are
shown in the table below.

Balance Sheet Income Statement
--------------------------------- ---------------------------------------
At December 31, Weighted average for the years ending
December 31,
1999 1998 % Change 1999 1998 % Change
---- ---- -------- ---- ---- --------

In the accompanying notes, $ equivalents of Kc, DM, ROL, Sk, SIT and
Hrn amounts have been included at December 31, 1999, 1998 or historical rates,
as applicable, for illustrative purposes only. In limited instances, the Company
enters into forward foreign exchange contracts and purchases foreign currency
options to hedge foreign currency transactions for periods consistent with its
identified exposures. Premiums on foreign currency options are amortized over
the option period being hedged.

Earnings per Share

The Company accounts for earnings per share pursuant to SFAS No. 128,
"Earnings Per Share." Basic net income per common share ("Basic EPS") is
computed by dividing net income by the weighted average number of common shares
outstanding. Diluted net income per common share ("Diluted EPS") is computed by
dividing net income by the weighted average number of common shares and dilutive
common share equivalents then outstanding. SFAS No. 128 requires the
presentation of both Basic EPS and Diluted EPS on the face of the consolidated
statement of operations. A reconciliation between the numerator and denominator
of Basic EPS and Diluted EPS is as follows:

For the year ending December 31, 1999

Net Loss Common Shares Net Loss Per
-------- ------------- Common Share
------------
Basic EPS

Net loss attributable to common stock $(89,870) 3,223 (27.89)
Effect of dilutive securities: stock options - - -
---------------- ------------------- ------------------

Diluted EPS

Net loss attributable to common stock and
assumed option exercises.................. $(89,870) 3,223 (27.89)
================ =================== ==================

Diluted EPS, for the year ending December 31, 1999, does not include
the impact of stock options then outstanding as their inclusion would be
anti-dilutive.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles 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 year. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications were made to prior period amounts to conform
to current period classifications.

Derivative Instruments and Hedging Activities - New Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.

Pursuant to SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 -
An Amendment of FASB Statement No. 133", which was issued in June 1999, SFAS No.
133 will be effective for fiscal years beginning after June 15, 2000. A company
may also implement the Statement as of the beginning of any fiscal quarter after
issuance (that is, fiscal quarters beginning June 16, 1999 and thereafter). SFAS
No. 133 cannot be applied retroactively. SFAS No. 133 must be applied to (a)
derivative instruments and (b) certain derivative instruments embedded in hybrid
contracts that were issued, acquired, or substantively modified after either
December 31, 1997 or 1998, at the company's election.

The Company occasionally enters into forward foreign exchange
contracts. No material impact is expected as a result of the adoption of SFAS
No. 133 when it is applicable. The Company will adopt this SFAS No. 133 on the
effective date noted above.

4. REVERSE STOCK SPLIT

The Company effected a one-for-eight reverse stock split on December
15, 1999. All share and per share data in the accompanying financial statements
and notes have been retroactively adjusted to reflect this reverse stock split.

5. IMPAIRMENT OF CNTS GOODWILL

Due to the indefinite suspension of the Company's operations in the
Czech Republic the Company has written down the goodwill relating to purchases
of additional equity interests in CNTS made by the Company in August 1996 and
August 1997 to give effect to the impairment of value. This has resulted in a
charge of $40,511,000 in the year ending December 31, 1999.

6. RESTRUCTURING CHARGE

In the second quarter of 1998, the Company recorded a restructuring
charge of $2,552,000 based on its decision to change its focus from aggressive
development and growth to further enhancing the operating performance of the
Company's existing assets and pursuing opportunities for focused growth. The
restructuring charge is comprised of severance and other associated costs.
During the year ended December 31, 1999, there have been no significant changes
to the restructuring plans and all payments related to this charge have been
finalized.

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is carried at cost, less accumulated
depreciation. Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets. It consists of the following:

Useful December 31,
Lives --------------------------
1999 1998
----- ---- ----
Years $000 $000

Land and buildings............................................. 25-50 23,170 16,736
Leasehold improvements......................................... 4-15 - 8,031
Station machinery, fixtures and equipment...................... 4-8 67,887 75,277
Other equipment................................................ 3-8 10,114 6,933
Construction in progress....................................... -- 3,592 4,242
------------ -------------
104,763 111,219
Less - Accumulated depreciation................................ (56,292) (49,293)
------------ -------------
48,471 61,926
============ =============

8. OTHER ASSETS

Other assets consist of the following:

December 31,
------------------------------
1999 1998
---- ----
$000 $000
Current:

Net receivable on Hungary Disposal.................................. 3,353 -
Prepaid program rights and dubbing.................................. 509 4,968
VAT recoverable..................................................... 492 2,419
Investment in Unimedia.............................................. - 15,310
Other............................................................... 3,813 5,860
---------------- ---------------
8,167 28,557
================ ===============
Long term:
Satellite transponder deposits (See Note 13, "Commitments and
Contingencies") .................................................... 824 1,440
Capitalized debt costs.............................................. 4,379 5,502
Other............................................................... 60 288
---------------- ---------------
5,263 7,230
================ ===============

Capitalized debt costs represent the costs incurred in connection with
obtaining debt financing. These costs are amortized over the life of the related
debt instrument.

9. INCOME TAXES PAYABLE

(a) Provision for income taxes related primarily to the profits of
CNTS. Due to the suspension of the CNTS operations and the resulting elimination
of revenues, CNTS recorded a net loss for 1999 and therefore income taxes paid
will be recoverable in future periods.

December 31,
-----------------------------------------
1999 1998 1997
---- ---- ----
$000 $000 $000

Current, domestic taxes............................................. 1,743 15,712 15,342
Deferred foreign taxes.............................................. (225) 144 (734)
------------- ------------- -------------
1,518 15,856 14,608
============= ============= =============

In the past income taxes were provided on CNTS profits, which cannot be
offset against losses incurred elsewhere in the group or against corporate costs
incurred in other jurisdictions. The effective income tax rate in the Czech
Republic was 35%, 35% and 39% for the years ended December 31, 1999, 1998 and
1997, respectively.

At the present time no income, profit, capital or capital gain taxes
are levied in Bermuda and, accordingly, no provision for such taxes has been
recorded by the Company. In the event that such taxes are levied, the Company
has received an undertaking from the Bermuda Government exempting it from all
such taxes until March 28, 2016.

Deferred income tax assets

December 31,
----------------------------
1999 1998
---- ----
$000 $000

Provisions against receivables...................................... - 1,046
Tax loss carryforwards.............................................. 175 175
Other............................................................... - 45
------------- -------------
175 1,266
Valuation allowance on deferred tax asset........................... - -
------------- -------------
175 1,266
------------- -------------

Deferred income tax liabilities

December 31,
----------------------------
1999 1998
---- ----
$000 $000

Valuation allowance................................................. - 489
Depreciation and amortization....................................... - 467
Lease payments...................................................... - 289
Other............................................................... 37 323
------------- --------------
37 1,568
------------- --------------
Net deferred tax asset/ (liability)................................. 138 (302)
============= ==============

Net operating losses incurred in 1999, 1998 and 1997 in Romania,
Slovenia, Slovakia and Ukraine are available for offset against taxable income
in those countries in the future. Net operating losses experienced in these
jurisdictions in certain years may not be fully available for offset against
taxable income in the future in those countries.

A valuation allowance has been provided for net operating loss
carryforwards in these jurisdictions, as it is more likely than not, for a
variety of reasons, including the uncertainties in the tax regimes, that they
may not be fully utilized.

10. INVESTMENTS PAYABLE

December 31,
-----------------------------
1999 1998
---- ----
$000 $000
Short Term:

CNTS....................................................... 5,188 5,312
Radio Alfa................................................. - 69
Unimedia................................................... - 6,900
-------------- -------------
5,188 12,281
============== =============

Long Term:
CNTS....................................................... - 2,563
============== =============

CNTS

On August 11, 1997, the Company made the Second 1997 CNTS Purchase when
it purchased Nova Consulting a.s. ("NC") from certain of the partners of CET,
for a purchase price of $28,537,000, to be paid on an installment basis through
February 15, 2000. Due to the ongoing dispute between CNTS and CET, CME has
withheld the last two payments, totalling $5,188,000, that were due on August
15, 1999 and February 15, 2000, awaiting the final ruling from the International
Chamber of Commerce Court of Arbitration.

11. LOAN AND OVERDRAFT OBLIGATIONS

Group loan obligations and overdraft facilities consist of the
following:

December 31,
-----------------------------
1999 1998
---- ----
$000 $000
CME B.V.

Ceska Sporitelna Loan...................................... (a) 12,874 21,207
Tele 59 loan............................................... (b) 348 572

CME DC
Capital Lease (vehicle), net of interest.................. - 22

CNTS
Mortgage Loan.......................................... - 2,010

PRO TV
Line of credit............................................. (c) 502 1,290
Long-term loan............................................. (d) 2,838 3,662

POP TV
Long-term loan............................................. (e) 4,446 3,554
Capital lease, net of interest, and unsecured short-term
loans...................................................... 516 6
-------------- -------------
21,524 32,323
Less current maturities..................................... (6,409) (9,670)
-------------- -------------
15,115 22,653
============== =============

CME B.V.

(a) On August 1, 1996, the Company entered into an agreement for the
purchase of the 22% economic interest of Ceska Sporitelna Bank ("CS") and
virtually all of CS's voting rights in CNTS for a purchase price of Kc 1 billion
($36,590,000). The Company has also entered into a loan agreement with CS to
finance 85% of the purchase price. Quarterly repayments are required in the
amount of Kc 42,500,000 during the period from February 2000 through May 2002,
and Kc 37,580,000 in August 2002. The loan bears interest at 12.9% per annum.

(b) The Company entered into a loan agreement on November 21, 1996 with
Tele 59 to finance a loan to Tele 59 from SKB banka d.d. ("SKB"). The principal
amount of the loan is DM 1,496,000 with principal repayments of DM 136,000 twice
yearly. This loan matures in May 2004 and bears interest at 7.8% per annum.

PRO TV

(c) The line of credit, obtained from Tiriac Bank, provides a maximum
facility of $2,000,000. This facility matures in June 2000 and bears interest at
a rate of 9.12% at December 31, 1999.

(d) The long-term loan, also obtained from Tiriac Bank, has a maximum
facility of $4,000,000. This facility matures in December 2002 and bears
interest at a rate of 9.12% at December 31, 1999.

POP TV

(e) Multicurrency $5,000,000 loan agreement with Creditanstalt AG. This
loan matures in May 2005 and has been drawn down in DM and euros and bears
interest at a rate of 3% over the respective LIBOR rates ( 6.50% and 6.56%
respectively, at December 31, 1999) until the loan is equal to or less than
$2,000,000 then the interest rate falls to 2% over the respective LIBOR rates.
This credit agreement contains certain covenants with which the Company was not
in compliance, but for which the Company has received a waiver.

At December 31, 1999, maturities of debt are as follows:

Total
$000
----

2000.................................. 6,409
2001.................................. 5,853
2002.................................. 5,483
2003.................................. 3,779
------------
21,524
============

Loan notes payable

On August 20, 1997, the Company issued Senior Notes of $100,000,000 at
9.375% and DM 140,000,000 at 8.125%, due 2004 (collectively the "Senior Notes").
The Senior Notes are unsecured senior indebtedness of the Company and rank pari
passu with all existing and future unsecured unsubordinated indebtedness of the
Company and are

effectively subordinated to all existing and future indebtedness of the
Company's subsidiaries.

The Senior Notes are redeemable at the option of the Company, in whole
or in part, at any time on or after August 15, 2001 at the redemption prices set
forth below.

Dollar Note DM Note
Redemption Redemption
Price Price
----- -----

2001.................................................. 104.68750% 104.06250%
2002.................................................. 102.34375% 102.03125%
2003 and thereafter................................... 100.00000% 100.00000%

In addition, in the event of one or more equity offerings or placings
prior to August 15, 2000, the Company may, at its option, redeem up to 35% of
the original principal amount of each series of Senior Notes from the net
proceeds thereof at 109.375% of the principal amount in the case of the US
dollar denominated Senior Notes and 108.125% of the principal amount in the case
of the DM denominated Senior Notes, plus accrued and unpaid interest, if any, to
the date of redemption.

Interest is payable semi-annually in arrears on each February 15 and
August 15, commencing February 15, 1998. Interest expense on the US dollar
denominated Senior Notes and DM denominated Senior Notes for the year ending
December 31, 1999 was $9,375,000 and DM 11,375,000 ($5,999,000), respectively.

The indentures pursuant to which the Senior Notes were issued contain
certain restrictive covenants, which among other things, restrict the ability of
the Company and its subsidiaries to: (i) incur additional indebtedness, (ii)
pay dividends or make certain other distributions, (iii) make certain
investments and other restricted payments, (iv) enter into certain transactions
with affiliates, (v) create liens, (vi) sell assets and also create restrictions
on the ability of certain of its subsidiaries to make certain payments to the
Company. Management believes that, as of December 31, 1999, the Company was in
compliance with such restrictive covenants.

12. STOCK OPTION PLAN

The Company adopted the 1994 Stock Option Plan in 1994 and the 1995
Stock Option Plan in August 1995. The 1995 Stock Option Plan was amended and
restated in October 1999 ("Revised and Restated 95 Stock Option Plan"). In
December 1999 the Company affected a one-for-eight reverse stock split the
following note has been amended as if the reverse stock split occurred at the
beginning of the reporting period. The effect of the reverse stock split is to
increase the option exercise price by eight fold and reduce the number of
options granted, exercised and forfeited by eight fold. Under the 1994 Stock
Option Plan, the Compensation Committee is authorized to grant options for up to
112,500 shares of the Company's Class A Common Stock. Under the Revised and
Restated 95 Stock Option Plan the Compensation Committee is authorized to grant
options for up to 400,000 shares of the Company's Class A Common Stock. Under
the 1995 Amended Stock Option Plan options can be given to eligible persons on
Class B Common Stock. The Stock Option Plans allow grants to consultants and
non-affiliated directors. The maximum term of the options granted under the
Stock Option Plans is ten years. Options granted may be either incentive stock
options under the Internal Revenue Code of 1986, as amended (the "Code"), or
non-qualified stock options. Under the 1995 Amended Stock Option Plan, non-

affiliated directors are automatically granted each year options to purchase
1,250 shares of Class A Common Stock or Class B Common Stock if eligible. The
Compensation Committee has granted substantially all options to purchase the
112,500 shares of Class A Common Stock created by the 1994 Stock Option Plan and
does not intend to issue any more options under the 1994 Stock Option Plan.

Under both plans the option exercise price is either equal to or
greater than the stock's market price on the date of grant. Options granted
under the 1994 Stock option plan vest after two years and expire after ten
years. Options granted under the Revised and Restated 95 Stock Option Plan can
have vesting periods of up to five years and expire at the latest after ten
years. The exercise price of options granted under the Revised and Restated 95
Stock Option Plan can be made at market value subject to an increase by the
interest rate on US Treasury securities, compounded annually, with a maturity
equal to that of the options.

On September 18, 1998, the Company adopted the Stock Appreciation
Rights Plan. This plan allows the company to grant up to 125,000 Stock
Appreciation Rights (SAR's). The SAR's are subject to the same vesting and other
general conditions as options granted under the Revised and Restated 95 Stock
Option Plan. When the SARs are exercised the employees will receive in cash the
amount by which the CME stock price exceeds the exercise price at the time of
exercise, if any, rather than purchase CME shares. No SAR's were granted in the
year ending December 31, 1999.

A summary of the status of the Company's two stock option plans at
December 31, 1999, 1998 and 1997 and changes during the years 1999, 1998 and
1997 is presented in the table and narrative below. The following table does not
include the SARs and no compensation costs were required to be recognized in the
current year.

1999 1998 1997
-------------------------------------------------------------------------------------------------------------------
Wtd. Wtd. Wtd.
Avg. Avg. Avg.
Exercise Option Exercise Option Exercise Option
Shares Price $ Price $ Shares Price $ Price $ Shares Price $ Price $
-------------------------------------------------------------------------------------------------------------------

Outstanding
at start of year 322,692 164.32 1.60-268.00 288,619 162.48 1.60-268.00 191,763 139.28 1.60-174.00
Granted......... 61,250 79.05 6.688-104.00 72,500 162.24 91.52-196.48 121,806 194.40 184.00-268.00
Exercised....... (4,500) 1.60 1.60 (16,719) 92.64 1.60-174.00 (17,969) 113.04 1.60-174.00
Forfeited ...... (69,988) 169.26 1.60-268.00 (21,708) 188.80 117.00-268.00 (6,982) 209.60 160.00-268.00
---------- ------------ --------
Outstanding
at end of year.. 309,454 148.66 1.60-268.00 322,692 164.32 1.60-268.00 288,619 162.48 1.60-268.00
========== ======== ============== ============ ========= ============== ======== ======= =============

At December 31, 1999, 1998 and 1997, 283,423, 205,484 and 183,265
shares were exercisable, respectively.

The Company accounts for these plans under APB No. 25, under which no
compensation cost was recognized for stock options granted to employees with an
exercise price at or above the prevailing market price on the date of the grant.
Had compensation cost for these plans been determined consistent with the fair
value approach required by SFAS No. 123, the Company's net loss and net loss per
common share would increase to the following pro forma amounts:

Year ended
December 31,
---------------------------------------------
1999 1998 1997
---- ---- ----
$000s $000s $000s

Net Loss from continuing operations As Reported (83,076) (43,582) (63,626)
Pro Forma (87,779) (51,001) (70,462)

Net Loss from discontinued operations As Reported (6,794) (81,670) (21,466)
Pro Forma (6,794) (81,670) (21,466)

Net Loss As Reported (89,870) (125,252) (85,092)
Pro Forma (94,573) (132,671) (91,928)

Net Loss Per Common Share from ($) As Reported (25.78) (14.45) (21.29)
Continuing operations - basic and diluted Pro Forma (27.24) (16.91) (23.58)

Net Loss Per Common Share from ($) As Reported (2.11) (27.08) (7.18)
Discontinued operations - basic and diluted Pro Forma (2.11) (27.08) (7.18)

Total net Loss Per Common Share ($) As Reported (27.89) (41.53) (28.47)
Basic and Diluted....................... Pro Forma (29.34) (43.99) (30.77)

The fair value of each option grant is estimated on the date of the
grant using the Black-Scholes option pricing model, with the following
assumptions used.

Expected dividends yield are assumed to be 0% for each grant; expected
lives range from 4 to 5 years; expected stock price volatility of 47.19%, 59.14%
and 110% for 1997, 1998 and 1999, respectively.

Risk Free
Date of Option Grant Interest Rate
----------------------------------- -------------------

February 27, 1997 6.30%
August 1, 1997 6.03%
January 19, 1998 5.55%
February 23, 1998 5.55%
March 23, 1998 5.63%
June 9, 1998 5.57%
September 3, 1998 4.91%
March 23, 1999 5.26%
June 4, 1999 5.94%
August 1, 1999 6.05%
December 20, 1999 6.50%

The effects of applying SFAS No. 123 in this pro forma disclosure may
not be indicative of future amounts because SFAS No. 123 does not apply to stock
options granted prior to January 1, 1995 and additional stock option grants are
anticipated in future years.

13. COMMITMENTS AND CONTINGENCIES

Litigation

The Company is, from time to time, a party to litigation that arises in
the normal course of its business operations. The Company is not presently a
party to any such litigation which could reasonably be expected to have a
material adverse effect on its business or operations.

Financial Commitments -- Existing Entities

The Company anticipates that the majority of the Company's existing
operations will be self-supporting in terms of funding during 2000, with cash
being available through local

credit facilities and/or generated from operations. Existing operations that
could require the Company to provide additional funding are as follows:

Studio 1+1 Group

The Company anticipates that up to an additional $5,000,000 may be
required throughout 2000. The local partners have expressed an intent to secure
additional funding. Alternative sources of finance will be sought in an effort
to reduce the liability on the Company.

Satellite Costs

In June 1995 the Company, through CME Programming Services Inc.,
obtained leasehold rights for a 12 year period to a 33 MHz transponder on the
Eutelsat Hot Bird 3 satellite ("Hot Bird 3"), which launched in October 1997.
The Company has paid a deposit of $350,000 against this lease. The annual charge
for the lease is euro 3,443,000. Provided that the contract does not terminate
before the expiration date (September 2009), the deposit is repayable to the
Company by deduction from the final two invoices.

In October 1997, the Company, through CME Media Enterprises B.V.,
obtained leasehold rights for an approximate 12 year period to a 16.5 MHz
transponder on the Eutelsat Hot Bird 5 satellite ("Hot Bird 5"), which launched
in November 1998. The Company has paid a deposit of euro 475,000 ($474,000). The
annual charge for the lease is euro 1,900,000. Provided that the contract does
not terminate before the expiration date (October 2010), the deposit is
repayable to the Company by deduction from the final three invoices.

Licenses

The Company has no reason to believe that the licenses for stations
will not be renewed. However, no statutory or regulatory presumption exists for
the current license holder, and there can be no assurance that licenses will be
renewed upon expiration of their initial terms. The failure of any such licenses
to be renewed may adversely affect the results of the Company's operations.

Currency exchange rate fluctuation

The Company and its subsidiaries generate revenues and incur expenses
in a variety of currencies. Fluctuations in the value of foreign currencies may
cause United States dollar translated amounts to change in comparison with
previous periods. Other than as described below under "Foreign Exchange
Contracts", the Company has not hedged against fluctuations in foreign currency
rates. Due to the number of currencies involved, the constantly changing
currency exposures and the fact that all foreign currencies do not fluctuate in
the same manner against the United States dollar, the Company cannot anticipate
the effect of exchange rate fluctuations on its financial condition.

Foreign Exchange Contracts

In limited instances, the Company enters into forward foreign exchange
contracts to hedge foreign currency transactions for periods consistent with its
identified exposures. At December 31, 1999, there were no foreign exchange
contracts outstanding.

Station Programming Rights Agreements

The Company had programming rights commitments for $4,999,000 in
respect of future programming which includes contracts signed with license
periods starting after December 31, 1999.

Lease Commitments

For the fiscal years ended December 31, 1999, 1998 and 1997, the
Company paid aggregate rent on all facilities of $1,972,000, $1,937,000 and
$1,799,000 respectively. Future minimum lease payments at December 31, 1999 for
non-cancellable operating leases with remaining terms in excess of one year (net
of amounts to be recharged to third parties) are payable as follows:

At December 31,
1999
-----------------------
$000s
2000............................. 4,370
2001............................. 4,212
2002............................. 4,104
2003............................. 3,824
2004............................. 3,795
2005 and thereafter.............. 18,037
-----------------------
38,342
=======================

14. RELATED PARTY TRANSACTIONS

Related party transactions involve transactions between the Company and
its stations, shareholders and partners and transactions between the stations
and their shareholders and partners.

Consolidated Balance Sheet Items As of
December 31,
-----------------------------
1999 1998
---- ----
Advances to Affiliates $000 $000

Amounts due from Unconsolidated Affiliates

Markiza TV................................................. 6,321 4,539

Advances to Affiliates
Innova/Studio 1+1 ......................................... 8,150 3,469
POP TV..................................................... 872 1,029
PRO TV..................................................... 1,626 1,112
Adrian Sarbu............................................... 2,561 3,302
Radio Alfa................................................. - 74
Alexander Rodnyansky....................................... 900 150
Other...................................................... 77 803
-------------- -------------
Total 20,507 14,478
============== =============

Loans to Affiliates

Loans to Unconsolidated Affiliates
Adrian Sarbu............................................... - 246
Alexander Rodnyansky....................................... 4,100 4,850
Markiza ................................................... 777 777
Other...................................................... (14) -

-------------- -------------
Total 4,863 5,873
============== =============

The Company from time to time enters into transactions with entities
controlled wholly or in part by Ronald S. Lauder, the non-executive Chairman of
the Company's Board of Directors. The Company's management believes that these
transactions were on a basis which approximates an arm's-length value.

Consolidated Statements of Operations Items Year Ended
December 31,
1999 1998 1997
---- ---- ----
$000 $000 $000

Corporate Operating Costs and Development Expenses
Shareholder controlled affiliates............................... 386 364 111

15. SUMMARY FINANCIAL INFORMATION FOR MARKIZA TV and THE STUDIO 1+1 GROUP

December 31, December 31,
1999 1998
------------------- ------------------
Markiza TV Markiza TV
------------------- ------------------
$000s $000s

Current assets................................. 16,303 17,863
Non-current assets............................. 15,864 26,682
Current liabilities............................ (16,354) (17,703)
Non-current liabilities........................ (835) (1,089)
---------- -----------
Net assets (liabilities)....................... 14,978 25,753
========== ===========

For the years ended
December 31, 1999
1999 December 31, 1998
------------------- ---------------------------------------
Studio 1+1
Markiza TV Markiza TV Group
------------------- ------------------ -------------------
$000s $000's $000s
----- ----- -----

Net revenues................................... 32,217 37,793 23,598
Operating loss................................. (2,767) (3,503) (3,150)
Net loss....................................... (7,613) (3,619) (3,555)

The Company's share of the losses in Unconsolidated Affiliates (after
inter-company eliminations) for 1999 was $4,611,000 for Markiza and $6,410,000
for certain of the Studio 1+1 Group entities.

16. SEGMENT DATA

The Company manages its business segments primarily on a geographic
basis. The Company's reportable segments are comprised of CNTS (Czech Republic),
PRO TV (Romania), Markiza TV (Slovakia), POP TV (Slovenia) and Studio 1+1 Group
(Ukraine). Each operating segment provides products and services as further
described below.

The Company evaluates the performance of its segments based on segment
EBITDA (earnings before interest, taxes, depreciation and amortization). Costs
for programming amortization are included in segment EBITDA. Costs excluded from
segment EBITDA primarily consist of interest and foreign exchange gains and
losses, corporate expenses and goodwill amortization and equity in losses of
unconsolidated affiliates and other non-recurring charges for impairment of
investments or discontinued operations. The assets and liabilities of the
Company are managed centrally and are reported internally in the same manner as
the consolidated financial statements, thus no additional information is
provided. Summary information by segment as of and for the years ended December
31, 1999, 1998 and 1997 is as follows:

SEGMENT FINANCIAL INFORMATION

For the years ended December 31,
--------------------------------------------------------------------------
($000s)
--------------------------------------------------------------------------
Net Revenues EBITDA
--------------------------------- ----------------------------------------
Station 1999 1998 1997 1999 1998 1997
------- ---- ---- ---- ---- ---- ----

CNTS.............................. 53,363 108,826 99,163 (13,038) 54,886 49,921
PRO TV ........................... 40,627 41,937 30,155 (3,087) (2,016) (1,298)
POP TV ........................... 23,347 22,122 14,989 4,555 (808) (1,613)
Studio 1+1........................(1) 11,976 - - (3,022) - -
Other Operations.................. 10 1,406 1,848 (21) (514) (764)
---------- ---------- ---------- ------------- ------------ ------------
Total Consolidated Operations 129,323 174,291 146,155 (14,613) 51,548 46,246

Studio 1+1 Group.................. - 23,598 16,661 - (2,048) 19
Markiza TV........................ 32,217 37,793 31,296 2,639 2,483 5,259
---------- ---------- ---------- ------------- ------------ ------------
Total Unconsolidated Operations 32,217 61,391 47,957 2,639 435 5,278

---------- ---------- ---------- ------------- ------------ ------------
Total Operations....................... 161,540 235,682 194,112 (11,974) 51,983 51,524
========== ========== ========== ============= ============ ============

Reconciliation to Consolidated Statements of Operations:

Consolidated Operations $(14,613) $ 51,548 $ 46,246

Intercompany elimination 300 835 720
Station depreciation (21,667) (16,178) (14,898)
Corporate expenses (67,844) (35,828) (40,051)

------------- ------------ ------------
Operating (loss)/income from continuing operations $(103,824) $ 377 $ (7,983)
============= ============ ============

(1) Studio 1+1 Group was consolidated effective December 23, 1998. Amounts shown
in the table above for Net Revenues and EBITDA for the year ended December 31,
1999 differ by $2,525,000 and $(5,522,000), respectively, from similar
information shown in Selected Combined Financial Information in Part II, Item 7.
These differences relate to the use of consolidated numbers in the table above
and combined numbers (which includes Studio 1+1 entities which are accounted for
under the equity method) in Item 2.

17. SALE OF INVESTMENT IN MOBILROM

On March, 18, 1999, the Company sold its interest in a Romanian mobile
telephone company, MobilRom S.A. As a result of this transaction the Company
realized a gain of $25,870,000. The impact of MobilRom S.A. on the Company's
operating results for 1998 and 1999 was not material.

18. SUBSEQUENT EVENTS

SBS Transaction

On February 21, 2000, SBS and the Company entered into an agreement
with regard to the sale of substantially all of the Company's Hungarian assets.
Previously, SBS agreed to grant the Company an option to acquire from SBS a
controlling interest in Kanal A for $12,000,000. Kanal A is the second leading
commercial television station in Slovenia. The Company and SBS are documenting
the final terms to implement the transaction, which is subject to the completion
of a Kanal A reorganization, regualtory approval and certain other conditions.

On February 21, 2000, the Company and SBS also entered into an option
agreement with respect to the ITI Note (the "ITI Note Option Agreement"). The
ITI Note was acquired by the Company in connection with the sale of its interest
in the TVN television operations in Poland to International Trading and
Investments Holding S.A. ("ITI") in December 1998. The ITI Note is in the
principal amount of $40,000,000 and bears interest at a rate of 5% per annum. It
matures in December 2001 and is convertible into equity securities of ITI at the
option of the holder after September 10, 2001, and may be redeemed for cash by
ITI at any time prior thereto. The Company recorded the ITI Note at a net
present value of $19,836,000 due to the prevailing interest rates on similar
instruments at the date of the transaction. Ronald S. Lauder, the non-executive
Chairman of the Board of Directors of the Company, owns a non-controlling
indirect minority interest in ITI.

On February 21, 2000 the Company sold to SBS substantially all of its
Hungarian operations for $16,000,000. $12,700,000 of the purchase price will be
applied to pay the

programming liabilities for the territory of Hungary which were assumed by SBS
from CME and $3,300,000 plus the net current assets of the Hungarian operations
has been settled in cash in March 2000. The net current assets of the Hungarian
operations are subject to final determination in April 2000. In addition, SBS
has agreed to secure the release, within 45 days, of the $3,500,000 cash deposit
that supports a $3,500,000 letter of credit in favor of CPT Holdings Inc. In
connection with this transaction the Company and its Hungarian subsidiary IRISZ
TV withdrew all pending claims against the Hungarian National Radio and
Television Commission and the two successful consortia in connection with the
award of national television license in 1997 and have waived all rights to
assert any related legal claims.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 is incorporated herein by reference
to the section entitled "Election of Directors and Executive Officers" in the
Company's Proxy Statement for the 2000 Annual General Meeting of Shareholders.

Item 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference
to the sections entitled "Executive Compensation," "Compensation Committee
Report on Executive Compensation" and "Performance Graph" in the Company's Proxy
Statement for the 2000 Annual General Meeting of Shareholders.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated herein by reference
to the section entitled "Security Ownership of Certain Beneficial Owners and
Management" in the Company's Proxy Statement for the 2000 Annual General Meeting
of Shareholders.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated herein by reference
to the section entitled "Certain Relationships and Related Transactions" in the
Company's Proxy Statement for the 2000 Annual General Meeting of Shareholders.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) The following Financial Statements of the Company are included
in Part II, Item 8 of this Report:

Report of Independent Public Accountants

Consolidated Balance Sheets as of December 31, 1999 and 1998

Consolidated Statements of Operations for the years ended December 31,
1999, 1998 and 1997

Consolidated Statements of Shareholders' Equity (Deficit) for the years
ended December 31, 1999, 1998 and 1997

Consolidated Statements of Cash Flows for the years ended December 31,
1999, 1998 and 1997

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules (included at pages S-1 to S-3 of
this Form 10-K

(a)(3) The following exhibits are included in this
report:

EXHIBIT INDEX

Exhibit
Number Description
- ------ -----------

3.01* -- Memorandum of Association (incorporated by reference to
Exhibit 3.01 to the Company's Registration Statement No. 33-80344
on Form S-1, filed June 17, 1994).

3.02* -- Bye-Laws of Central European Media Enterprises Ltd., as
amended, dated as of May 2, 1997 (incorporated by reference to
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997).

3.03* -- Amendment to Bye-Laws of Central European Media Enterprises
Ltd., as amended, dated as of December 14, 1999 (incorporated by
reference to Exhibit A and Exhibit B of the Company's Proxy
Statement dated November 19, 1999).

3.04* -- Memorandum of Increase of Share Capital (incorporated by
reference to Exhibit 3.03 to Amendment No. 1 to the Company's
Registration Statement No. 33-80344 on Form S-1, filed August 19,
1994).

3.05* -- Memorandum of Reduction of Share Capital (incorporated by
reference to Exhibit 3.04 to Amendment No. 2 to the Company's
Registration Statement No. 33-80344 on Form S-1, filed September
14, 1994).

3.06* -- Certificate of Deposit of Memorandum of Increase of Share
Capital executed by Registrar of Companies on May 20, 1997
(incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1997).

4.01* -- Specimen Class A Common Stock Certificate (incorporated by
reference to Exhibit 4.01 to Amendment No. 1 to the Company's
Registration Statement No. 33-80344 on Form S-1, filed August 19,
1994).

4.02* -- Specimen Note for 9 3/8% Senior Notes Due 2004 (incorporated by
reference to Exhibit 4.1 to the Company's Amendment No. 3 to Form
S-3 filed on August 14, 1997)

4.03* -- Specimen Note for 8 1/8% Senior Notes Due 2004 (incorporated by
reference to Exhibit 4.1 to the Company's Amendment No. 3 to Form
S-3 filed on August 14, 1997)

4.04* -- Form of Indenture for 9 3/8% Senior Notes Due 2004 (incorporated
by reference to Exhibit 4.2 to the Company's Amendment No. 3 to
Form S-3 filed on August 14, 1997)

4.05* -- Form of Indenture for 8 1/8% Senior Notes Due 2004 (incorporated
by reference to Exhibit 4.2 to the Company's Amendment No. 3 to
Form S-3 filed on August 14, 1997)

10.01+*-- Central European Media Enterprises Ltd. Amended and Restated
1994 Stock Option Plan, as amended to October 17, 1995.
(incorporated by reference to Exhibit 10.01A to Amendment No. 1 to
the Company's Registration Statement No. 33-96900 on Form S-1,
filed October 18, 1995).

10.02+*-- Central European Media Enterprises Ltd. 1995 Stock Option
Plan, as amended and restated to September 3, 1998 (incorporated
by reference to Exhibit 10.02 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998)

10.03* -- Memorandum of Association and Investment Agreement by and
between CME Czech Republic B.V. and CET 21 spol s.r.o dated May 4,
1993 and as amended (incorporated by reference to Exhibit 10.02 to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998)

10.04* -- Credit Agreement between Ceska Sporitelna, a.s. and Ceska
Nezavisla Televizni Spolecnost, s.r.o. (incorporated by reference
to Exhibit 10.16 to Amendment No. 1 to the Company's Registration
Statement No. 33-80344 on Form S-1, filed August 19, 1994).

10.05* -- Term Promissory Note in favor of Ronald S. Lauder dated
September 9, 1994 and Warrant for the Purchase of Shares of Common
Stock issued to Ronald S. Lauder dated as of September 9, 1994
(incorporated by reference to Exhibit 10.17 to Amendment No. 2 to
Registration Statement No. 33-80344 on Form S-1, filed September
14, 1994).

10.06* -- Partnership Agreement of Produkcija Plus d.o.o. Ljubljana,
dated February 10, 1995 among CME Media Enterprises B.V., Boutique
MMTV d.o.o. Ljubljana, and Tele 59 d.o.o. Maribor. (incorporated
by reference to Exhibit 10.20 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994).

10.07* -- Letter Agreement, dated March 23, 1995, among, Kanal A,
Boutique MMTV d.o.o. Ljubljana, Tele 59 d.o.o. Maribor, Euro 3 and
Baring Communications Equity as advisor to Baring Communications
Equity Limited, regarding Produkcija Plus d.o.o. (incorporated by
reference to Exhibit 10.21 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994).

10.08* -- Credit Agreement, dated as of November 14, 1994, between
Ceska Sportelma, a.s. and Ceska Nezavisla Televizni Spolecnost,
s.r.o. (incorporated by reference to Exhibit 10.22 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).

10.09* -- Contract for Space Segment Service dated June 9, 1995, between
British Telecommunications plc ('BT') and CME Programming
Services, Inc. for the provision of programming transmission
services by BT and the payment thereon (incorporated by reference
to Exhibit 10.25A to the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1995).

10.09A*-- Guarantee by Central European Media Enterprises Ltd. in respect
of obligations due to British Telecommunications plc by CME
Programming Services, Inc. dated June 9, 1995 (incorporated by
reference to Exhibit 10.25B to the Company's Report on Form 10-Q
for the quarterly period ended June 30, 1995).

10.10* -- Cooperation Agreement among CME Media Enterprises B.V., Ion
Tiriac and Adrian Sarbu (incorporated by reference to Exhibit
10.27 to the Company's Registration Statement No.33- 96900 on Form
S-1 filed September 13, 1995).

10.11* -- Preliminary Agreement, dated June 12, 1995, between CME
Media Enterprises B.V. and Markiza-Slovakia s.r.o. (incorporated
by reference to Exhibit 10.28 to the Company's Registration
Statement No. 33-96900 on Form S-1, filed September 13, 1995).

10.11A*-- Memorandum of Association between CME Media Enterprises, B.V.
and Markiza-Slovakia s.r.o. (incorporated by reference to Exhibit
10.28A to Amendment No. 1 to the Company's Registration Statement
No. 33-96900 on Form S-1, filed October 18, 1995).

10.11B*-- Articles of Association of Slovenska Televizna Spolocnost,
s.r.o. founded by CME Media Enterprises, B.V. and Markiza-Slovakia
s.r.o. (incorporated by reference to Exhibit 10.28B to Amendment
No. 1 to the Company's Registration Statement No. 33-96900 on Form
S-1, filed October 18, 1995).

10.12* -- Contract of Sale, dated July 7, 1995 between In Razvoj in
Svetovanje d.o.o. Ljubljana and Produkcija Plus d.o.o. Ljubljana
and Central European Media Enterprises Group (incorporated by
reference to Exhibit 10.29 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995).

10.13* -- Loan Agreement, dated December 4, 1995, between CME Media
Enterprises, B.V., and Inter Media S.R.L. (incorporated by
reference to Exhibit 10.30 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995).

10.14* -- Transfer Agreement between Ceska Sporitelna and CME BV
(incorporated by reference to Exhibit 10.03 to the Company's
Report on Form 10-Q for the quarterly period ended June 30, 1996).

10.15A*-- Annex to Transfer Agreement between Ceska Sporitelna and CME BV
(incorporated by reference to Exhibit 10.04 to the Company's
Report on Form 10-Q for the quarterly period ended June 30, 1996).

10.16* -- Loan Agreement between Ceska Sporitelna and CME BV
(incorporated by reference to Exhibit 10.05 to the Company's
Report on Form 10-Q for the quarterly period ended June 30, 1996).

10.17* -- Agreement on a Future Agreement between Ceska Sporitelna and
CME BV (incorporated by reference to Exhibit 10.06 to the
Company's Report on Form 10-Q for the quarterly period ended June
30, 1996).

10.18* -- Loan Agreement between Vladimir Zelezny and CME dated August 1,
1996 (incorporated by reference to Exhibit 10.01 to the Company's
Report on Form 10-Q for the quarterly period ended September 30,
1996).

10.18A*-- Amendment to the Loan Agreement of August 1, 1996 and agreements
referred to as Security Documents between Vladimir Zelezny and
CME, dated as of March 11, 1997 (incorporated by reference to
Exhibit 10.38A to the

Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996).

10.19* -- Ronald S. Lauder Warrant for the Purchase of Shares, dated
October 2, 1996 (incorporated by reference to Exhibit 10.03 to the
Company's Report on Form 10-Q for the quarterly period ended
September 30, 1996).

10.20* -- Agreement between CME, Boris Fuchsmann, Alexander Rodniansky
and Innova Film GmbH in English, dated October 25, 1996
(incorporated by reference to Exhibit 10.10 to the Company's
Report on Form 10-Q for the quarterly period ended September 30,
1996).

10.21* -- Agreement between CME, Boris Fuchsmann, Alexander Rodniansky
and Innova Film GmbH in German, dated October 25, 1996
(incorporated by reference to Exhibit 10.11 to the Company's
Report on Form 10-Q for the quarterly period ended September 30,
1996).

10.22* -- Poland Street Lease Agreement, dated April 2, 1996
(incorporated by reference to Exhibit 10.18 to the Company's
Report on Form 10-Q for the quarterly period ended September 30,
1996).

10.23* -- Share Purchase Agreement between Ceska Sporitelna a.s. and CME
Media Enterprises B.V., dated December 12, 1996 (incorporated by
reference to Exhibit 10.58 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996).

10.24* -- Agreement on Assignment of Claim between Ceska Sporitelna, a.s.
and CME Media Enterprises B.V., dated December 12, 1996
(incorporated by reference to Exhibit 10.59 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996).

10.25* -- Assignment of Shares Agreement between Balaclava B.V., Adrian
Sarbu (as shareholders of PRO TV Ltd.), CME Media Enterprises
B.V., Grigoruta Roxana Dorina and Petrovici Liana, dated December
6, 1996 (incorporated by reference to Exhibit 10.60 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).

10.26* -- Net Reimbursement Agreement by and among International
Teleservices Limited, International Media Services, Limited and
Limited Liability Company 'Prioritet', dated February 13, 1997
(incorporated by reference to Exhibit 10.64 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996).

10.27* -- Agreement by and between International Media Services, Ltd and
Innova Film GmbH, dated January 23, 1997 (incorporated by
reference to Exhibit 10.65 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996).

10.28* -- Amended and Restated Charter of the Enterprise 'Inter-Media',
dated January 23, 1997 (incorporated by reference to Exhibit 10.66
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996).

10.29* -- Amended and Restated Charter of the Broadcasting Company
'Studio 1+1', dated January 23, 1997 (incorporated by reference to
Exhibit 10.67 to the

Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996).

10.30* -- Amended and Restated Foundation Agreement on the Establishment
and Operation of the Broadcasting Company 'Studio 1+1,' dated
January 23, 1997 (incorporated by reference to Exhibit 10.68 to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).

10.31* -- Protocol of the Participants' Assembly of the Broadcasting
Company 'Studio 1+1,' dated January 23, 1997 (incorporated by
reference to Exhibit 10.69 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996).

10.32* -- Marketing, Advertising and Sales Agreement by and between
International Media Services Ltd and Innova Film GmbH, dated
January 23, 1997 (incorporated by reference to Exhibit 10.70 to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).

10.32A*-- Amendment Agreement to Marketing, Advertising and Sales Agreement
between Innova Film GmbH and International Media Services Limited,
dated May 7, 1997 (incorporated by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997).

10.33* -- Marketing and Sales Agreement by and between International
Media Services Ltd. and Prioritet, dated January 23, 1997
(incorporated by reference to Exhibit 10.71 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996).

10.33A*-- Termination Agreement between International Media Services Ltd.
and Prioritet, dated May 7, 1997 (incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1997).

10.34* -- IMS Advertising Service Agreement between International Media
Services Ltd. and Limited Liability Company --Prioritet--, dated
May 7, 1997 (incorporated by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1997).

10.35* -- Advertising Consultancy Agreement between Intermedia and
Limited Liability Company --Prioritet--, dated May 7, 1997
(incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1997).

10.36* -- Contract on Purchase of Real Estate between Central European
Development Corporation Praha, spol s.r.o. and Ceska Nezavisla
Televizni Spolecnost, spol. s.r.o., dated May 21, 1997
(incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1997).

10.37+*-- Employment Agreement between CME Development Corporation and Fred
Klinkhammer, dated as of January 1, 1998 (incorporated by
reference to Exhibit 10.72 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997).

10.38A+*-- Amendment No. 1 to Employment Agreement between CME Development
Corporation and Fred Klinkhammer, dated as of March 23, 1999
(incorporated by reference to Exhibit 10.02 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998).

10.39+*-- Employment Agreement between Central European Media
Enterprises Ltd. and Fred Klinkhammer, dated as of January 1, 1998
(incorporated by reference to Exhibit 10.72 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1997).

10.39A+*-- Amendment No. 1 to Employment Agreement between Central European
Media Enterprises Ltd. and Fred Klinkhammer, dated as of March 23,
1999 (incorporated by reference to Exhibit 10.02 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998).

10.40* -- Sale and Purchase Agreement, dated December 10, 1998, between
Central European Media Enterprise Ltd. and International Trading
and Investments Holding S.A. (incorporated by reference to Exhibit
2.1 to Form 8-K filed on December 28, 1998)

10.41+*-- Central European Media Enterprises Ltd. Stock Appreciation Rights
Plan, effective as of September 3, 1998 (incorporated by reference
to Exhibit 10.02 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998).

10.42+*-- Central European Media Enterprises Ltd. Director, Officer and
Senior Executive Co-Investment Plan, effective as of June 5, 1998
(incorporated by reference to Exhibit 10.02 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998).

10.43* -- Contract on cooperation in ensuring service for television
broadcasting between Ceska Nezavisla Televizni Spolecnost, spol.
s.r.o. and CET 21, spol. s.r.o. dated May 21, 1997 and Supplement
dated May 21, 1997 (incorporated by reference to Exhibit 10.02 to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).

10.44* -- Stock Purchase Agreement between Central European Media
Enterprises Ltd. and RSL Capital, dated as of December 3, 1998
(incorporated by reference to

Exhibit 10.02 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998).

10.45+ -- Employment Agreement between Central European Media Enterprises
Ltd. and John Schwallie dated August 1, 1999

10.46+ -- Employment Agreement between CME Development Corporation and John
Schwallie dated August 1, 1999

10.47 -- Share Purchase Agreement between SBS Magyarorszagi Befektetesi
Kft and CME Hungary B.V. dated February 21, 2000

10.48 -- Quota Purchase Agreement between SBS Magyarorszagi Befektetesi
Kft and CME Hungary B.V. dated February 21, 2000

10.49 -- Option Agreement between SBS Broadcasting S.A. and Central
European Media Enterprises Ltd. dated February 21, 2000

21.01 -- List of subsidiaries.

23.01 -- Consent of Arthur Andersen

24.01 -- Power of Attorney, dated as of March 10, 2000, authorizing Fred T.
Klinkhammer and John A. Schwallie as attorney for Ronald S.
Lauder, Fred T. Klinkhammer, Jacob Z. Schuster, Marie-Monique
Steckel, Nicolas G. Trollope and John A. Schwallie.

27.01 -- Financial data schedule.

* -- Previously filed exhibits
+ -- Exhibit is a management contract or compensatory plan

(b)-- Current Reports on Form 8-K: None

(c)-- Exhibits: See (a)(3) above for a listing of the exhibits
included as part of this report.

(d)-- Report of Independent Public Accountants on Schedule
II-- Schedule of Valuation Allowances. (See pages S-1 to
S-3 of this Form 10-K)

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.

By: /s/ John A. Schwallie
---------------------------
John A. Schwallie
Vice President - Finance and Chief
Financial Officer

March 15, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

*
- ---------------------------

Ronald S. Lauder Chairman of the Board of Directors March 15, 2000

/s/ Frederic T. Klinkhammer
- ---------------------------
Frederic T. Klinkhammer President, Chief Executive Officer and March 15, 2000
Director (Principal Executive Officer)

/s/ John A. Schwallie
- ---------------------------
John A. Schwallie Vice President - Finance and Chief March 15, 2000
Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
*
- ---------------------------
Nicolas G. Trollope Vice President, Secretary and Director March 15, 2000

*
- ---------------------------
Jacob Z. Schuster Director March 15, 2000

*
- ---------------------------
Marie-Monique Steckel Director March 15, 2000

* By: /s/ John A. Schwallie
---------------------
John A. Schwallie
Attorney-in-fact

INDEX TO SCHEDULES

Report of Independent Public Accountants on Schedule:........................S-2
Schedule II: Schedule of Valuation Allowances...............................S-3

S-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

To: Central European Media Enterprises Ltd.:

We have audited in accordance with auditing standards generally
accepted in the United States, the financial statements of Central European
Media Enterprises Ltd. included in this filing and have issued our report
thereon dated March 15, 2000. Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The schedule listed
in the accompanying index is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

Arthur Andersen

Hamilton, Bermuda
March 15, 2000

S-2

Schedule II

Schedule of Valuation Allowances
$000s

Balance at Charged to Charged to Balance at
January 1, Costs and Other December
1999 Expenses Accounts Deductions 31, 1999

Bad debt provision................ 3,193 367 (33) (930) 2,597
Development costs................. 3,487 (267) -- -- 3,754
Restructuring costs............... 510 -- -- (510) --

Balance at Charged to Charged to Balance at
January 1, Costs and Other December
1999 Expenses Accounts Deductions 31, 1999
Bad debt provision................ 3,494 (194) (500) 393 3,193
Development costs................. 3,213 274 -- -- 3,487
Restructuring costs............... -- 2,552 -- (2,042) 510

Balance at Charged to Charged to Balance at
January 1, Costs and Other December
1999 Expenses Accounts Deductions 31, 1999
Bad debt provision................ 3,200 998 -- (704) 3,494
Development costs................. 1,276 1,673 264 -- 3,213

S-3