[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 0-24796

(Exact name of registrant as specified in its charter)

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

Indicate by check mark whether registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for each shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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

The interim statements for the six months ended June 30, 2002 should be read in conjunction with the Notes to the Consolidated Financial Statements contained in the Company's December 31, 2001 audited consolidated financial statements included in the Company's 2001 Annual Report on Form 10-K filed with the SEC on March 27, 2002. In the opinion of management, the interim unaudited financial statements included herein reflect all adjustments necessary, consisting of normal recurring adjustments, for a fair presentation in conformity with United States Generally Accepted Accounting Principles ("US GAAP"). The consolidated results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

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

The accompanying consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries and the results of the following entities (the "Consolidated Affiliates") as consolidated entities and reflect the interests of the minority owners of these entities for the periods presented, as applicable: Romania (PRO TV and Media Vision); Slovenia (POP TV and Kanal A), Ukraine (the Studio 1+1 Group), and the Czech Republic (CNTS). The results of operations in the Slovak Republic (Markiza TV) and certain entities in Ukraine (the Studio 1+1 Group) (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 of accounting.

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 that are majority owned by CME's local partners while controlling interests in service companies which provide programming, advertising and other services to the license holding companies are generally owned by CME. References to PRO TV, POP TV, Kanal A, Markiza TV and the Studio 1+1 Group in this report may be to either the license company or the service companies or both, as the case may be.

See Part II, Item 1, "Legal Proceedings" for a discussion on the ongoing dispute between the Company's subsidiary in the Czech Republic, CNTS, and CET in connection with Nova TV. The outcome of these legal proceedings will have a significant impact on the Company's ability to continue operating.

The Company owns 66% of Media Pro International S.A ("MPI"), through which PRO TV, ACASA and PRO TV International are operated. MPI provides programming to and sells advertising for the stations which comprise the PRO TV, ACASA and Pro TV International networks.

The Company owns 49% equity of PRO TV s.r.l. which holds 19 licenses for the stations that comprise the PRO TV and ACASA networks. A further three television licenses and the licenses for PRO FM and PRO AM radio networks are held by Media Pro s.r.l , a company 44% owed by the Company.

The Company is involved in ongoing disputes with a minority shareholder in MPI including disputes relating to administration, operational and share ownership issues, the effect of which thus far has been to delay certain decisions requiring shareholder approval. (For further discussion see Part II Item 1 "Legal Proceedings" below and the Company's 10K filing of March 27, 2002, Part 1, Item 1 "Business")

The Company's interest in POP TV d.o.o. is governed by a Partnership Agreement between MMTV and Tele 59. The Company controls 51% of POP TV .d.o.o which holds all the licenses for Slovenia apart from those effectively held by Kanal A. The Company controls 90% of Kanal A, the second leading commercial broadcaster in Slovenia.

The Company has an 85.5% economic interest in Pro Plus which provides all programming to POP TV d.o.o. and Kanal A and sells all of its advertising. (For further discussion, see the Company's 10K filing of March 27, 2002, Part 1, Item 1 "Business")

The Company has a 34% interest in Markiza -Slovakia s.r.o. ("Markiza") the licence holding company for the Markiza TV licence, and has 49% voting rights and is entitled to 70% of economic rights in Slovenska Televizna Spolocnost s.r.o. ("STS") the operating company for Markiza. (For further discussion, see the Company's 10K filing of March 27, 2002, Part 1, Item 1 "Business")

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 the operating companies servicing the license holding company, Studio 1+1. The Company has 18% indirect ownership in Studio 1+1 (For further discussion sees the Company's 10K filing of March 27, 2002 Part 1, Item 1 "Business"). Studio 1+1 is involved in a lawsuit challenging certain aspects of the granting of its television broadcasting licence. (For further discussion see Part II, Item 1 "Legal Proceedings")

In June 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" ("SFAS 141"), and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives (but with no maximum life). The amortization provisions of SFAS 142 apply to goodwill and intangible assets acquired after June 30, 2001. SFAS 142 was fully adopted with effect from January 1, 2002. The Company has performed the required impairment tests of goodwill as of January 1, 2002. There was no impairment of goodwil l upon adoption of SFAS 142.

Net loss and loss per share for the three and six months ended June 30, 2002 and 2001, adjusted to exclude amortization expense (net of taxes) related to goodwill which are no longer amortized are as follows:

In August 2001, the FASB issued SFAS No 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS 144 was effective for financial statements of fiscal years beginning after December 15, 2001. The Company has adopted this statement as of January 1, 2002, and no impairment charges were taken.

The Company manages its business segments primarily on a geographic basis. The Company's reportable segments are comprised of Romania (PRO TV and Media Vision), the Slovak Republic (Markiza TV), Slovenia (POP TV and Kanal A), Ukraine (the Studio 1+1 Group) and the Czech Republic (CNTS).

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. See Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more detail on EBITDA. 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. The following table represents a reconciliation between the EBITDA basis upon which the Company evaluates the performance of its combined entities, as stated in the Selected Combined Financial Information in Part I, Item 2, and the Consolidated Statements of Operations for the three and six months ended June 30, 2002 and 2001:

The Company's share of income in Unconsolidated Affiliates for the six months ended June 30, 2002 was a loss of $571,000 for certain entities of the Studio 1+1 Group and a profit of $1,917,000 for Markiza TV. Included within the equity in income of unconsolidated affiliates is $787,000 for the first six months of 2002 and $375,000 for the first six months of 2001, of charges levied by CME on their affiliates.

The Company accounts for earnings per share pursuant to SFAS No. 128, "Earnings Per Share." Basic net income/ loss per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents then outstanding.

Diluted EPS for the three months ended June 30, 2002 and 2001 do not include the impact of 316,364 stock options then outstanding as their inclusion would be anti-dilutive.

A gain on resolution of disputed investment payable of $5,188,000 was recorded in the first quarter of 2001. This represents an amount the Company owed to Dr. Vladimir Zelezny, the former General Director of CNTS, relating to the acquisition of a portion of CNTS. This was originally recorded as an investment payable and is no longer payable following the ICC Arbitration Tribunal award of $27,100,000 on February 9, 2001. (For further discussion see Part II, Item 1,"Legal Proceedings").

7. Stock Based Compensation

In March 2000 the Board of Directors, acting without the participation of Mr Frederic Klinkhammer, the Company's President and Chief Executive Officer, on the recommendation of the Compensation Committee cancelled all previously granted options to acquire shares of Class A Common Stock, which had been granted under employment agreements. The Compensation Committee then awarded Mr Klinkhammer the option to acquire shares of Class A Common Stock at an exercise price equal to the market price on that day. The new award was approved by the shareholders at the 2000 Annual General Meeting of Shareholders.

On July 1, 2000, primary guidance for the treatment of reissued and repriced stock options, FASB Interpretation 44 "Accounting for Certain Transactions Involving Stock Compensation" ("FIN 44") became effective. Under the Interpretation of FIN 44, any modification or sequence of actions by a grantor to directly or indirectly reduce the price of an option award causes variable accounting for the repriced or replacement award for the remainder of the award's life. The change from a fixed to a variable plan results in a compensation charge to the Statement of Operations reflecting the difference in the market price of the options, at the reporting date, less the option strike price for the number of options vested.

In accordance with FIN 44, the Company has charged $417,000 to the Statement of Operations in the first six months of 2002.

The Company occasionally enters into forward foreign exchange contracts. As of January 1, 2001, the Company adopted SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). There was no impact upon the application of SFAS No 133. The Company's 2001 interest rate swap transaction with the Royal Bank of Scotland, which did not qualify for hedge accounting, resulted in the Company recognizing a charge of $1,576,000 in the fourth quarter of 2001 and a further $306,000 in the first quarter of 2002. The Company received $191,000 in February 2002 from the Royal Bank of Scotland as a result of the swaption agreement. In May 2002, the Company cancelled the arrangement upon its payment of $659,000 to the Royal Bank of Scotland.

9. Subsequent events

Compensation is payable in the form of interest, commitment and drawdown fee, and investment fee. Interest is applied at 12% per annum to any balances drawn down. A commitment fee of 1.5% on $30 million was paid on signing and a draw down fee of 1.5 % of the borrowed amount was paid on drawdown. A 1.5% fee will be payable on any additional drawdown. An investment fee is payable in the form of new share warrants amounting to a maximum of 348,000 shares of Class A common stock of the Company. These warrants are issuable on drawdown and maturity of the loan. On draw down, a maximum of 174,000 warrants equivalent to 87,000 shares per $15 million of borrowing are issuable by the Company. On maturity, which may be on June 15, 2004 or earlier, a maximum of a further 174,000 warrants may be issued. Assuming repayment occurs on the date of full maturity on June 15, 2004, such number of warrants will be issued that are calculated to provide a 40% net rate of return per annum to the lender (inclusive of interest at 12%); should the warrants fall short, there is no further liability. Upon early repayment, the Company has to pay such compensation by way of cash or warrants, at the option of the Company, that provides a 40% net rate of return per annum (inclusive of interest at 12%). The financing agreement contains negative covenants, including those restricting the Company's ability to incur additional debt, make new investments, pledge assets or sell assets other than in the normal course of business.

Security has been provided in the form of guarantees and pledges. Guarantees have been provided by the Company and Central European Media Enterprises N.V. Pledges, which are exerciseable in the event of default, secure the shares of CME Media Enterprises B.V., CME Ukraine B.V., CME Slovenia B.V. and CME Romania B.V.

No account has been taken of any adjustment in the share capital of the Company in the financial statements included within this submission and as a result of the above transactions since no draw down of any loan had taken place at June 30, 2002.

On August 5, 2002 a duly authorised committee of the Board approved a two for one stock split by way of the issue of one pari-passu bonus share in respect of each share of Class A or Class B Common Stock. This applied to stockholders as at the record date of August 16, 2002. Payment has been made in full by way of a transfer from share premium account. No account of this bonus issue has been taken when compiling the financial statements or explanatory notes included herein.

On July 25, 2002 the Company received $8,713,002 from CET 21 being a part payment of the amounts owed by Vladimir Zelezny.

A Slovak bank, Vseobecna uverova banka a.s., "VUB", has agreed to lend STS s.r.o., a 49% owned subsidiary of the Company, SKK 150 million (over USD 3 million), a facility supported by charges over the assets and receivables of STS. This will be partly used to lend cash to the Company by way of advances on dividends in the order of $2 million, thereby improving cashflow to the Company. The facility is provided by way of a loan of up to SKK 100 million and by way of an overdraft facility of up to SKK 50 million.

Repayments are due to the lender by way of six-monthly instalments of SKK 5 million commencing on June 25, 2003 and ending on December 20, 2005 on which date an additional balloon payment of SKK 70 million is due. Interest is payable monthly and is variable based on a calculation of 1.7% over BRIBOR. A facility fee of SKK 350,000 is payable. The overdraft is available for the period from July 18, 2002 to July 16, 2003 when it is repayable in full. Interest is debited monthly and is variable based on a calculation of 1.7% over BRIBOR. A facility fee of SKK 175,000 is payable.

STS s.r.o has agreed a loan with the Company for SKK187million. The first tranche $2.2million was drawn down on August 2, 2002, other tranches can be drawn down on demand

The Company's consolidated net revenues increased by 21% compared with the first six months of 2001 primarily due to the significant growth in the Ukrainian operation's net revenues. The Ukraine television advertising market grew significantly in 2001.This growth has continued in 2002, driving the growth in the consolidated net revenues.

Romania and Slovenia. The Romanian operations have experienced difficulties generating sufficient cash funds to continue operations and it is anticipated that this will continue unless the collection of accounts receivables is accelerated.

As at June 30, 2002, 34% (compared with 35% as at December 31, 2001) of the Romanian subsidiaries' accounts receivable balance was more than 360 days old. Management has increased the Company's bad debt provision by an additional $150,000 in the first six months of 2002. On the Company's Consolidated Balance Sheet, the total provision for bad debt is $8,487,000, of which the provision for Romanian bad debts is $6,789,000.

In the Company's Consolidated Balance Sheet are current tax liabilities and estimated interest and penalties on overdue tax liabilities. A significant portion of these balances relates to the outstanding liability at the Company's Romanian subsidiaries. The Romanian subsidiaries have applied to the tax authorities for rescheduling of their tax liability and the associated penalties and interest. Media Vision has received the approval for the restructuring of its tax liability while the Romanian tax authorities are still considering the applications of MPI and PRO TV s.r.l. Should such re-scheduling not be granted and the Romanian tax authorities demand full payment of all potential tax liabilities, the Romanian operation would experience difficulties in continuing to operate.

The Company is aware that there are certain related party barter arrangements in place in Romania. Under US GAAP these should be accounted for at fair market value. Due to the limited local market for many specialist television services in Romania, the Company has not yet been able to ascertain the fair value of these barter arrangements. Accordingly no revenue or cost has been recognised for the period. The accounting for barter arrangements equally impacts both revenues and costs but has no impact on net operating profit.

The Company is involved in ongoing disputes in Romania with a minority shareholder in MPI, including disputes relating to administration, operational and share ownership issues and related party transactions. (For a further discussion See Part II, Item 1 "Legal Proceedings").

On July 16, 2002 the Company received notification from the Slovene agency for Telecommunications of the renewal of all of its broadcast licenses in Slovenia for its two license companies, POP TV d.o.o and Kanal A d.d. This means that the Slovene operations now have full broadcast licenses for both channels renewed until July 14, 2012.

On October 23, 2001, the Slovak Media Council awarded a TV transmission license to TV Global, who launched the station "Joj" which began broadcasting in March 2002. Should "Joj" capture a significant portion of the advertising market it will adversely affect the results of the Company's Slovak operations. Joj has not captured significant ratings or revenues as of to date.

On November 1, 2001, the Slovak Media Council announced it would monitor the political content of Markiza TV's news coverage as a result of Mr. Rusko, a shareholder in Markiza-Slovakia s.r.o., launching the ANO political party. Should the actions of Markiza-Slovakia s.r.o. be found to be in violation of the Slovak Media Act, significant financial or non-financial penalties may be imposed. Under existing agreements, STS would be liable to cover the costs of any potential financial penalties.

On May 1, 2002, Studio 1+1 General Director Alexander Rodnyansky accepted the position of General Director for the Russian broadcaster CTC based in Moscow. Effective June 1, 2002, Studio 1+1 appointed his deputy, Vladimir Oseledchyuk as the new General Director and appointed Alexander

Rodnyansky, who continues as the 70% shareholder in the license company, as Honorary President. Studio 1+1 conducts regular co-production business with CTC and hopes to extend that commercial co-operation for future projects.

The Company, through a wholly owned subsidiary, is still a party to arbitration proceedings against the Czech Republic. (For a further discussion See Part II, Item 1, "Legal Proceedings").

Following the dispute between CNTS and CET, the Company minimized its operations in the Czech Republic during 2001. The Company intends to sell its building and all of its remaining assets in the Czech Republic as required to mitigate the Company's damage claim. CNTS will continue to operate and pursue the outstanding legal claims against Dr Zelezny and the Czech Government. (See Part II, Item 1, "Legal Proceedings" for a further discussion). In the six months to June 30, 2002, the Company collected $90,901 in respect of amounts owed by Vladimir Zelezny. On July 25, the Company received $8,713,002 from CET 21 being a part payment of the amounts owed by Vladimir Zelezny.

The Company recently paid in its share of a capital increase in CET 21.

The Company has agreed with the Dutch tax authorities an assessment of $3,000,000 to cover all years up to and including 2000. This to be paid out of receipts arising from the forthcoming arbitration hearing involving the Company and the Czech Republic. The Company and the Dutch tax authorities have jointly requested that the question of taxability of the proceeds from the forthcoming arbitration hearing involving the Company and the Czech Republic be addressed through the Dutch judicial process.

The audit opinion for the year ended December 31, 2001, for the Company was modified. (See the Company's 10K filing of March 27, 2002, page 44 "Report of the Independent Public Accountants"). As identified in the 10K and 10Q the Company has been actively seeking additional sources of finance. The Company received $8.7million from CET21 (see Part II, Item 1, "Legal Proceedings") on July 25, 2002.

In August 2002, the Company secured additional financing of $30 million from affiliates of GoldenTree Asset Management. On August 5, 2002 the Company drew down the first $15 million of the facility and has also drawn $2.2 million of additional financing in Slovakia. Corporate cash at August 5, 2002 amounted to $35 million. 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, agreed financing, internally generated cash flow and local financing of broadcast operations 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 has received cash payments of $7,968,000 from its operations in the first six months of 2002 compared with $7,062,000 in the first six months of 2001.

The Senior Notes mature in August 2004. (For further discussion see the Company's 10K filing of March 27, 2002, Part II Item 7, "Management's Discussion and Analysis of Financial Conditions and Results of Operations - Liquidity and Capital Resources"). The Company's ability to refinance or repay the Senior Notes or to attract an equity investor or investors will depend upon market conditions, pending litigation (see Part II, Item 1, "Legal Proceedings"), renewals of broadcasting licenses, the financial performance of the Company and other factors through August 2004. If the Company is unsuccessful in refinancing or repaying the Senior Notes, the Company is likely to be unable to continue operations.

Although the Company conducts operations largely in foreign currencies, the Company prepares its consolidated financial statements in United States dollars and in accordance with US GAAP. The results of Markiza TV and certain entities of the Studio 1+1 Group have been accounted for using the equity method such that CME's interests in net earnings or losses of those operations are 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.

The Company generates revenues primarily in Romanian lei ("ROL"), Slovak korunas ("Sk"), Slovenian tolar ("SIT"), Ukrainian hryvna ("Hrn") and Czech korunas ("Kc") and incurs expenses in those currencies as well as British pounds, United States dollars and Euros. 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 operations in Slovenia, the Slovak Republic and certain entities in the Studio 1+1 group, balance sheet accounts are translated from foreign currencies into United States dollars at the relevant period end exchange rate, while 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 tra nslation adjustments are reflected as a component of shareholders' equity with no effect on the consolidated statements of operations.

Operations in Romania operate in an economy 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.

The Company's results of operations and financial position during the six months ended June 30, 2002 were impacted by changes in foreign currency exchange rates since December 31, 2001.

The Company's consolidated net revenues increased by $6,493,000 or 32%, to $27,096,000 for the second quarter of 2002 from $20,603,000 for the second quarter of 2001. This increase was primarily attributable to the increases in net revenues at the Ukrainian and Slovenian operations, partially offset by decreases in the Romanian operations.

The net consolidated revenues of the Company's Ukrainian operations increased by $4,642,000 or 222% to $6,737,000 for the second quarter of 2002 from $2,095,000 for the second quarter of 2001 as result of the continued growth in the Ukraine advertising market, and increased sales from a subsidiary to an associate.

The net revenues of the Company's Slovenian operations increased by $2,451,000, or 27%, to

$11,615,000 for the second quarter of 2002 compared to $9,164,000 for the second quarter of 2001. This increase is primarily attributable to spot sales and sponsorship revenue generated by the FIFA World Cup.

The net revenues of the Company's Romanian operations decreased by $213,000 or 2%, to $8,607,000 for the second quarter of 2002 compared to $8,820,000 for the second quarter of 2001, primarily due to sale of the Company's interest in Video Vision in November 2001.

The Czech Republic operation are no longer in business due to the ongoing dispute between the Company's subsidiary in the Czech Republic, CNTS, and CET 21 in connection with Nova TV. (For a further discussion see Part II, Item 1, "Legal Proceedings".)

Total station operating costs and expenses (including amortization of program rights and depreciation of fixed assets and other intangibles) increased by $2,262,000 or 14%, to $18,058,000 for the second quarter of 2002 from $15,796,000 for the second quarter of 2001. The increase in total station operating costs and expenses was primarily attributable to increases at the Company's Slovenian operations. The station operating costs and expenses of the Slovenian operations increased by $1,674,000 due to increased production costs associated with the FIFA World Cup. The amortization charges have decreased by $280,000 from the second quarter of 2001, as the goodwill arising on the acquisition of Kanal A was written down in 2001. Due to the introduction of SFAS No.142 "Goodwill and Other Intangible Assets" adopted January 1, 2002 no goodwill has been amortized in 2002. Management believe that there has been no impairment of the unamortized goodwill.

The Company's Romanian operations recorded an increase of $374,000, in station operating costs and expenses for the second quarter of 2002 compared to the second quarter of 2001. The Company has restructured its Romanian subsidiary's operations and implemented controls to reduce costs in line with the declining revenues. The Company also sold its interest in Video Vision in November 2001.

The Company's Ukrainian operations recorded an increase of $801,000 in station operating costs and expenses for the second quarter of 2002 compared to the second quarter of 2001 primarily as a result of the increase in acquired programming costs. The Company has significantly increased its investment in programming for 2002 as a response to the competitive environment and on the basis of expected and budgeted revenue growth.

Station selling, general and administrative expenses decreased by $548,000 or 16%, to $2,944,000 for the second quarter of 2002 from $3,492,000 for the second quarter of 2001. The decrease in total station selling, general, and administrative expenses was primarily attributable to reductions at the Company's Romanian operations.

The Company's Romanian operations decreased station selling, general and administrative expenses by $887,000 for the second quarter of 2002 compared to the second quarter of 2001 primarily as a result of the Company taking a lower bad debt charge in the second quarter of 2002 compared with the second quarter of 2001, restructuring of its operations in line with the declining revenues, and the sale of its interest in Video Vision in November 2001.

Corporate operating costs and development expenses for the second quarter of 2002 and 2001 were $5,557,000 and $3,549,000 respectively, an increase of $2,008,000. This increase is primarily due to $1,400,000 of payments for legal costs in the second quarter of 2002 relating to the dispute between CNTS and CET. (For a further discussion, see Part II, Item 1, "Legal Proceedings".)

The stock based compensation credit for the second quarter of 2002 was $159,000. (For further discussion, see Note 7 to the Consolidated Financial Statements above, "Stock Based Compensation".)

 As a result of the above factors, the Company generated an operating profit of $696,000 for the second quarter of 2002 compared to an operating loss of $2,588,000 for the second quarter of 2001.

Equity in income of unconsolidated affiliates was $938,000 for the second quarter of 2002 compared to an equity in income of $3,737,000 for the second quarter of 2001. The overall reduction in equity in income of unconsolidated affiliates was a result of the Company's share of the net income of $1,850,000 from its Slovak operations for the second quarter of 2002, compared to the Company's share of the net income of $1,678,000 for the second quarter of 2001, and the Company's share of the net loss of $912,000 from its Ukrainian operations that are not consolidated for the second quarter of 2002 compared to the Company's share of net income of $2,059,000 for the second quarter of 2001. Included within the equity in income of unconsolidated affiliates is $443,000 for the second quarter of 2002 and $188,000 for the second quarter of 2001 being income to the Company in respect of services provided to affiliates.

Net interest and other expenses increased by $3,924,000 to $7,704,000 for the second quarter of 2002 from $3,780,000 for the second quarter of 2001, primarily as a result of the Company increasing its provision for interest and penalty charges relating to Romanian tax obligations in the three months ended June 30, 2002

The Company entered into a "swaption" agreement with the Royal Bank of Scotland in the third quarter of 2001 which was cancelled in the second quarter of 2002. (See "Liquidity and Capital Resources" for a further discussion). The change in fair value of Derivative of $1,414,000 is the net result of the cancellation in the second quarter of 2002.

A net foreign currency exchange loss of $5,380,000 for the second quarter of 2002 compares to a net foreign currency exchange gain of $1,993,000 for the second quarter of 2001. The increase in the foreign currency exchange loss is primarily a result of restating the German Mark denominated Senior Notes as Euro and then converting Euro to US Dollars in the second quarter of 2002, compared with converting German Mark to US Dollars in the second quarter of 2001.

Provision for income taxes increased by $3,456,000 to $3,611,000 for the second quarter of 2002 from a provision of $155,000 for the second quarter of 2001. This was a result of a provision being made in respect of Dutch tax. The Company has agreed with the Dutch tax authorities this assessment of $3,000,000 to cover all years up to and including 2000. This to be paid out of receipts arising from the forthcoming arbitration hearing involving the Company and the Czech Republic. The Company and the Dutch tax authorities have jointly requested that the question of taxability of the proceeds from the forthcoming arbitration hearing involving the Company and the Czech Republic be addressed through the Dutch judicial process.

Minority interest in loss of consolidated subsidiaries was $1,331,000 for the second quarter of 2002 compared to $8,000 for the second quarter of 2001. Under US GAAP, the controlling shareholder normally consolidates all losses on the basis that other shareholders cannot be compelled to and are not expected to be able to fund the subsidiary's losses. A cash contribution of $1,330,000 by the minority shareholders of MPI has allowed the Company to recoup a like amount of previously recognised losses. Other small movements reflect changes in the minority interest in other group companies.

As a result of these factors, the net loss of the Company was $12,316,000 for the second quarter of 2002 compared to a net loss of $785,000 for the second quarter of 2001.

The Company's net revenues increased by $7,749,000, or 21%, to $44,357,000 for the first six months of 2002 from $36,608,000 for the first six months of 2001. The increase was primarily attributable to an increase in net revenues at the consolidated entities of the Company's Ukrainian and Slovenian operations which were partially offset by a decrease in the Company's Romanian operations.

The net revenues of the Company's Slovenian operations increased by $2,633,000, or 17% to $17,682,000, for the first six months of 2002 compared to the first six months of 2001. This increase is primarily attributable to spot sales and sponsorship revenue generated by the FIFA World Cup. In local currency terms, the net revenues of the Company's Slovenian operations increased by approximately SIT865,487,000, or 24%, for the first six months of 2002 compared to the first six months of 2001.

The Company's Romanian operations' net revenues decreased by $381,000 or 2%, for the first six months of 2002 compared to the first six months of 2001. This decrease is as a result of the sale of the Company's interest in Video Vision in November 2001.

The net revenues of the consolidated entities of the Company's Ukrainian operations increased by $6,392,000, or 133%, for the first six months of 2002 compared to the first six months of 2001, primarily a result of the continuing recovery of the Ukrainian television advertising market, and increased sales from a subsidiary to an associate.

Total station operating costs and expenses (including amortization of program rights and depreciation of fixed assets and other intangibles) decreased by $1,177,000 or 4%, to $31,324,000 for the first six months of 2002 from $32,501,000 for the first six months of 2001. The decrease in total station operating costs and expenses was primarily attributable to reductions at the Company's Romanian operations partially offset by an increase at the Company's Slovenian operations and Ukrainian operations.

The station operating costs and expenses of the Company's Slovenian operations increased by $508,000 primarily as a result of the FIFA World Cup and the appreciation of the Slovenian Tolar against the US Dollars, offset by savings on the amortization charges from the second quarter 2001, as the goodwill arising on the acquisition of Kanal A was written down in 2001. Due to introduction of SFAS NO.142 "Goodwill and Other Intangible Assets" adopted January 1, 2002 no goodwill has been amortized in 2002. Management believe that there has been no impairment of the unamortized goodwill.

The Czech Republic operations are no longer in business due to the ongoing dispute between the Company's subsidiary in the Czech Republic CNTS and CET in connection with Nova TV. (For a further discussion see Part II, Item 1, "Legal Proceedings".)

The Company's Romanian operations recorded a decrease of $1,989,000 in station operating costs and expenses for the first six months of 2002 compared to the first six months of 2001 primarily as a result of the Company taking restructuring of its operations in line with the declining revenues, and the sale of its interest in Video Vision in November 2001.

The Company's Ukrainian operations recorded a increase of $1,327,000 in station operating costs and expenses for the first six months of 2002 compared to the first six months of 2001 primarily as a result of the increase in acquired programming costs. The Company has significantly increased its investment in programming for 2002 as a response to the competitive environment and on the basis of expected and budgeted revenue growth.

Station selling, general and administrative expenses decreased by $2,267,000, or 28%, to $5,797,000 for the first six months of 2002 from $8,064,000 for the first six months of 2001. The decrease in station selling, general and administrative expenses was primarily attributable to decreases at the Romanian operations.

The Company's Romanian operations decreased station selling, general and administrative expenses by $2,234,000 primarily as a result of a decrease in all expense categories.

Corporate operating costs and development expenses for the first six months of 2002 and 2001 were $11,007,000 and $5,830,000, respectively, an increase of $5,177,000, or 89%. This increase is primarily due to increased legal costs relating to the dispute between CNTS and CET see Part II, Item 1, "Legal Proceedings".

The stock based compensation charge for the first six months of 2002 was $417,000. (For further discussion, see Note 7 to the Consolidated Financial Statements above, "Stock Based Compensation".)

Amortization of goodwill and allowance for development costs for the first six months of 2002 was $nil compared to $707,000 for first six months of 2001. This decrease was a result of the Company adopting FAS 142 "Goodwill and Intangible Assets". The Company has reviewed its intangible assets and believes that they are not impaired.

As a result of the above factors, the Company generated an operating loss of $4,188,000 for the first six months of 2002 compared to an operating loss of $10,494,000 for the first six months of 2001.

The loss on the write down of investment for the first six months of  2002 was $2,685,000 compared to $nil in the first six months of 2001. This increase is due to the 12.5% write down of the Company's investment in STS due a change in the Company's ownership. On January 18, 2002, the Company entered into an interest participation transfer agreement to acquire a 34% interest in Markiza. As a result of this acquisition, the Company will generally be entitled to 70% of STS' profits as opposed to 80% prior to the acquisition. (For further discussion see the Company's 10K filing of March 27, 2002 Part 1, Item 1 "Business") 

Equity in income of unconsolidated affiliates was $1,346,000 for the first six months of 2002 compared to an equity in income of unconsolidated affiliates of $4,066,000 for the first six months of 2001. This change of $2,720,000 is as a result of the Company's share of the net income of $1,917,000 from its Slovakian operations for the first six months of 2002 compared to the Company's share of the net income of $1,157,000 for the first six months of 2001 and the Company's share of the net loss of $571,000 from its Ukrainian operations that are not consolidated for the first six months of 2002 compared to a profit of $2,909,000 for the first six months of 2001.

Net interest and other expense increased by $2,722,000 to $11,837,000 for the first six months of 2002 from $9,115,000 for the first six months of 2001 as a result of the Company increasing its provision for interest charges relating to Romanian tax obligations in the six months ended June 30, 2002.

The Company entered into a "swaption" agreement with the Royal Bank of Scotland in the third quarter of 2001 which was cancelled in the second quarter 2002. (See 'Liquidity and Capital Resources' for a further discussion). The net change in fair value of Derivative of $1,108,000 is the net result of the cancellation in the second quarter of 2002

A net foreign currency exchange loss of $5,522,000 for the first six months of 2002 compares to a net foreign currency exchange gain of $3,808,000 for the first six months of 2001. This foreign currency exchange loss is a result of a stronger Euro on the Euro denominated portion of CME's Senior Notes obligations and the effect of a stronger Czech koruna on the outstanding Czech koruna denominated debt of the Company incurred in connection with the Company's 1996 purchase of an additional economic interest in CNTS.

Provision for income taxes increased by $3,469,000 to $3,780,000 for the first six months of 2002 compared to $311,000 for the first six months of 2001. This was a result of a provision being made in respect of Dutch Tax.

Minority interest in loss of consolidated subsidiaries was $1,339,000 for the first six months of 2002 compared to $71,000 for the first six months of 2001.

As a result of these factors, the net loss of the Company was $24,219,000 for the first six months of 2002 compared to a net loss of $4,071,000 for the first six months of 2001.

Liquidity and Capital Resources

Net cash used in operating activities was $8,252,000 for the six months ended June 30, 2002 compared to $5,715,000 for the six months ended June 30, 2001. The increase of $2,537,000 was primarily the result of a higher consolidated net loss recorded for the six months ended June 30, 2002 compared to the six months ended June 30, 2001 and the Czech tax authorities returning Kc281,790,000 ($7,256,000) in cash to the Company in February 2001.

Net cash provided by investing activities was $1,488,000 for the six months ended June 30, 2002 compared to $2,622,000 for the six months ended June 30, 2001. The decrease of $1,134,000 was primarily attributable to a decrease in amounts received from affiliates. Net cash used in financing activities was $1,439,000 for the six months ended June 30, 2002 compared to $440,000 for the six months ended June 30, 2001. The change of $999,000 was primarily attributable to a decrease in credit facilities as a result of repayments.

The Company had cash and cash equivalents of $14,639,000 at June 30, 2002 compared to $22,053,000 at December 31, 2001.

On the Company's Consolidated Balance Sheet are the following amounts relating to current tax liabilities and estimated interest and penalties on overdue tax liabilities:

In current tax liabilities, the significant movement is a result of the Company making a provision for $3 million related to its settlement with the Dutch Tax authorities. The remaining movement in these balances represents the Company's increase in provision to ensure that it remains adequately provided for tax liabilities in Romania. As disclosed in the Company's 10K filing of March 27, 2002, a significant portion of these balances relates to the outstanding tax liability at the Company's Romanian subsidiaries. The Romanian subsidiaries have applied to the tax authorities for rescheduling of their outstanding tax liability and the associated penalties and interest. In respect of this application, MPI made on July 2, 2002 a $1.5 million payment to the Romanian Tax authorities. Media Vision has received approval for restructuring of its tax liability and the MPI and PRO TV s.r.l applications are still being considered by the Romanian tax authorities. Should such re-scheduling fail to be gr anted and the Romanian tax authorities demand full payment of all potential tax liabilities, the Romanian operation would experience difficulties in continuing to operate.

At June 30, 2002, the Company had three main tranches of debt. (1) Senior Notes which are denominated in United States dollars, in part, and in euros in part. The principal amount of the Senior Notes $170,541,000 is repayable on their maturity date, August 15, 2004. (2) A loan agreement with Ceska Sporitelna which had an outstanding principal balance at December 31, 2001 of Kc 249,764,513 ($8,445,000), maturing November 2005, the payment of which is secured by an assignment of a dividend receivable by the Company from CNTS and a first mortgage on the Company's owned building in the Czech Republic. This agreement provides for the Company to pay approximately $150,000 in interest payments each quarter with a balloon payment on the outstanding principal in November 2005. (3) Pro TV's borrowing facility with Tiriac Bank in Romania, includes a loan for $4,000,000 maturing in December 2002 and an overdraft facility for $3,000,000 maturing in October 2002. At June 30, 2002, $457,000 was borrowed under the loan facility and a further $242,000 was drawn under the overdraft facility.

The United States dollar tranche of the Senior Notes totals $100,000,000 in principal amount and bears interest at a rate of 9⅜% per annum. The German Mark tranche of the Senior Note totals DM 140,000,000 and is now stated as Euro 71,581,961 ($70,588,000) in principal amount and bears interest at a rate of 8⅛% per annum.

On January 1, 2002 the Euro was introduced and replaced a number of European currencies, including the German Mark. Accordingly, the Senior Notes originally denominated in German Mark have been restated as a Euro denominated note. At the time of changeover, the Euro was fixed against the German Mark at a rate of 1.9558, and this is the rate that has been applied in the restatement of the principal amount repayable to the note holders.

Pro Plus has been the subject of an income tax inspection by the Republic of Slovenia tax authorities for the years 1995 to 1998. As a result of the inspections the Slovene tax authorities have levied an assessment seeking unpaid income taxes, customs duties and interest charges of SIT 636,800,000 ($2,806,807). Pro Plus is contesting this assessment to the courts in Slovenia and has received a temporary order delaying the payment of the assessment pending the final outcome of the court proceedings. (For further discussion see Republic of Slovenia Tax Audit below.)

In February 2002, Pro Plus's transaction account was blocked by a court decision for an amount of $1.5 million. This resulted from a ruling made by the Regional Court in Ljubljana in relation to a lawsuit initiated by the Slovene Author's Organization for the payment of $2 million. The $1.5 million has been included in the Company's Consolidated Balance Sheet as restricted cash. No provision has been made in respect of this amount as Management believe that the likelihood of an unfavourable outcome is remote.

In November 2001, the Company entered into an interest rate swap transaction through the Royal Bank of Scotland plc (RBS) to exchange its 9⅜% $100 million fixed rate debt for floating rate debt. (For further discussion see the Company's 10K filing of March 27, 2002, Part II Item 7, "Management Discussion and Analysis of Financial Conditions and Results of Operations - Liquidity and Capital Resources.) In May 2002, the Company chose to unwind the transaction by paying RBS $659,000.

Cash (including CNTS dividends, inter-company charges, repayment of related party personal loans and net advances) received from the Company's subsidiaries and partners for first six months of 2002 was $10,918,000 compared to $8,489,000 for the first six months of 2001.

The audit opinion for the year ended December 31, 2001, for the Company was modified. (See the Company's 10K filing of March 27, 2002, page 44 "Report of the Independent Public Accountants"). As identified in the 10K and 10Q the Company has been actively seeking additional sources of finance. The Company received $8.7million from CET21 (see Part II, Item 1, "Legal Proceedings") on July 25, 2002.

In August 2002, the Company secured additional financing of $30 million from affiliates of GoldenTree Asset Management. On August 5, 2002 the Company drew down the first $15 million of the facility and has also drawn $2.2 million of additional financing in Slovakia. Corporate cash at August 5, 2002 amounted to $35 million. 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, agreed financing, internally generated cash flow and local financing of broadcast operations 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 has received cash payments of $7,968,000 from its operations in the first six months of 2002 compared with $7,062,000 in the first six months of 2001

The Senior Notes mature in August 2004. The Company's ability to refinance or repay the Senior Notes

or to attract an equity investor or investors will depend upon market conditions, pending litigation (see Part II, Item 1, "Legal Proceedings"), renewals of broadcasting licenses, the financial performance of the Company and other factors through August 2004. If the Company is unsuccessful in refinancing or repaying the Senior Notes, the Company is likely to be unable to continue operations.

The following tables are neither required by US GAAP nor intended to replace the Consolidated Financial Statements prepared in accordance with US GAAP. The tables set forth certain combined and attributable financial information for the three and six months ended June 30, 2002 and 2001 for the Company's operating entities. This financial information departs materially from US GAAP. The tables are presented solely for additional analysis and not as a presentation of results of operations of each component. Inter-company 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.

In the table "Selected Combined Financial Information", revenues and operating expenses of Markiza TV and certain entities of the Studio 1+1 Group 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 US GAAP Consolidated Financial Statements as of June 30, 2002.

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