[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 nine months ended September 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 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), certain entities in Romania and certain entities in Ukraine (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 some CME 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, in some countries broadcast licenses are held by companies that are majority owned by CME's local partners. The 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% of the 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 active 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. All decisions require a super majority, therefore without the Company's affirmative vote no action can be taken.

The Company's local partners Mr. Tiriac and Mr. Sarbu have entered into an agreement by which Mr. Sarbu will purchase the 19% of the business currently owned by Mr. Tiriac. As part of this agreement Mr. Tiriac has suspended certain legal actions in which the Company and Mr. Sarbu were defendants. Upon Mr. Sarbu meeting certain purchase payment obligations these legal actions will be formally withdrawn. (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 the Company's operations in 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% voting interest in Markiza-Slovakia s.r.o. ("Markiza") the licence holding company for the Markiza TV licence, and has a 49% voting interest and is entitled to 70% of the 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")

Following elections in the Slovak Republic on September 20, 2002, the ANO political party, founded by Mr. Pavol Rusko, a shareholder in Markiza, obtained a number of seats in the national parliament. On November 1, 2002, Mr. Rusko was appointed a deputy chairman of the parliament. In order to comply with Slovak conflict of interest rules, Mr. Rusko has resigned from his position as an executive of STS and of Markiza In addition, following receipt of approval from the Company, Mr. Rusko has transferred his indirect 17% ownership interest in Markiza to a third party. The Company does not believe that the resignation of Mr. Rusko will have a significant impact on its Slovak operations.

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 see 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. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). Under SFAS 142, goodwill is no longer amortized but is reviewed annually (or more frequently if impairment indicators arise) for impairment. Intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives. 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 goodwill upon adoption of SFAS 142.

Net income/(loss) and income/(loss) per share for the three and nine months ended September 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 nine months ended September 30, 2002 and 2001:

The Company's share of income/(loss) in Unconsolidated Affiliates for the nine months ended September 30, 2002 was a loss of $1,702,000 for certain entities of the Studio 1+1 Group, a profit of $1,763,000 for Markiza TV and loss of $1,254,000 for certain entities of the Company's Romanian operations. Included within the equity in income of unconsolidated affiliates is $1,363,000 for the first nine months of 2002 and $685,000 for the first nine 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 September 30, 2001 and the nine months ended September 30, 2002 and 2001 do not include the impact of 573,542 stock options then outstanding as their inclusion would be anti-dilutive. Except as otherwise noted, all share and per share information in this Form 10-Q has been retroactively adjusted to reflect the two-for-one stock split (For further discussion, see Note 12, Two-For-One Stock Split).

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 pursuant to the final order of the ICC Arbitration Tribunal on February 9, 2001. (For further discussion, see Part II, Item 1,"Legal Proceedings").

On July 25, 2002 the Company received $8,713,002 from CET 21 as payment of the amounts owed by Dr. Zelezny pursuant to the final order of the ICC Arbitration Tribunal on February 9, 2001. On September 20, 2002, a further $20,240,000 was received from MEF Holding on behalf of Dr. Zelezny. The Company has treated the total receipt of $28,953,002 as a credit to the income statement as detailed in the table below. Arbitration Costs include all costs of and relating to the ICC Arbitration Tribunal against Dr Zelezny, and additionally, all costs relating to the arbitration proceedings against the Czech Republic (For further discussion see Part II, Item 1,"Legal Proceedings").

8. Stock Based Compensation

In March 2000 the Board of Directors, acting without the participation of Fred T. 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 Fred T. 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.

This modification resulted in variable accounting for the 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 $1,884,000 to the Statement of Operations in the first nine months of 2002.

9. Accounting for Derivative Instruments

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 credit of $1,108,000 in the second 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.

On July 31, 2002 CME Media Enterprises BV, a wholly owned subsidiary of the Company, agreed to new additional financing by way of a loan of up to $30 million provided by affiliates of GoldenTree Asset Management LLC. This financing will be used to supplement partial repayment of inter-company debt due to the Company from its subsidiaries, and as additional working capital. The Company drew down the first $15 million tranche on August 5, 2002 and has an option to drawn down an additional tranche of $15 million. The loan matures on June 15, 2004 with the facility of early repayment at the option of the Company. The principal terms of the loan are as follows:-

Compensation is payable in the form of interest, commitment and draw-down fee, and the issuance of warrants. Any warrants issued are at the average price of the last 25 days of trading prior to the closing of the arrangement.

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 the first draw-down. A 1.5% fee will be payable on any additional draw-down.

On draw down of each tranche of $15 million, 174,000 new share warrants are issuable by the Company. In the event of early repayment the company at its option may make a cash payment or issue additional warrants, to a maximum of 174,000 additional warrants, so that a 40% annual rate of return inclusive of the interest of 12% is achieved. At maturity the Company, to meet its obligations, may make a cash payment or issue additional warrants, to a maximum of 174,000 additional warrants.

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.

The Company has accounted for this financing in compliance with Paragraph 16 of APB 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants ("APB 14"). Under APB 14, the Issuance and Repayment Warrants must be fair valued at the time of issuance. The fair valuation as at the date of completion has been determined using the Black-Scholes option pricing model. The fair valuation of the initial warrants was $524,000. The fair valuation of the additional warrants was also $524,000 giving a total of $1,048,000.

A letter of resignation from Arthur Andersen was received by the Company on July 31, 2002.

Deloitte & Touche have been appointed as auditors by the Audit Committee and will be proposed to the shareholders as the Company's auditors at the next AGM.

On August 5, 2002 a duly authorized 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 the share premium account.

The two-for-one stock split: (i) had no effect on the par value of the company's Class A and Class B Common Stock; (ii) increased the value of the authorized share capital of the Company's Class A Common Stock from $185,138 to $370,276; and (iii) increased the value of the authorized share capital of the Company's Class B Common Stock from $79,347 to $158,694.

Except as otherwise noted, all share and per share information in this Form 10-Q has been retroactively adjusted to reflect the two-for-one stock split.

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 (approximately $3 million), a facility supported by charges over the assets and receivables of STS s.r.o. This will be partly used by STS to lend cash to the Company and will offset future payments of dividends in the order of SKK 90 million (approximately $2 million), thereby improving cashflow to the Company. The facility is provided by way of a loan to STS of up to SKK 100 million (approximately $2.2 million) and by way of an overdraft facility of up to SKK 50 million (approximately $1.1 million).

Repayments by STS are due to the lender by way of six-monthly instalments of SKK 5 million (approximately $110,000) commencing on June 25, 2003 and ending on December 20, 2005 on which date an additional balloon payment of SKK 70 million (approximately $1.5 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 (approximately $8,000) was paid. 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 (approximately $4,000) is payable.

STS s.r.o has agreed a loan to the Company for SKK187million (approximately $4.1 million). The first tranche of SKK100 million ($2.2 million) was drawn down on August 2, 2002. Other tranches can be drawn down on demand.

The Company's consolidated net revenues increased by 23% compared with the first nine months of 2001 primarily due to the significant growth in the Ukrainian operation's net revenues. Total station operating costs have declined by 2% compared with the first nine months of 2001 primarily attributable to reductions at the Romanian operations, partially offset by planned increases at the Ukrainian operations.

The Company's combined net revenues increased by 15% compared with the first nine months of 2001 primarily due to the significant growth in the Ukrainian operation's net revenues.

Total combined station operating expenses have increased by 2% compared with the first nine months of 2001 primarily attributable to planned increases at the Ukrainian operations partially offset by reductions at the Romanian operations.

The Company has undertaken a review of all its operations and the majority of cost savings are a result of restructuring in Romania and the implementation of cost reduction programs in Romania.

As at September 30, 2002, 35% of the Romanian subsidiaries' accounts receivable balance was more than 360 days old. This represents neither an improvement nor an erosion of the position as at December 31, 2001, but represents a significant increase compared to the position as at September 30, 2001. Management has increased the Company's bad debt provision by an additional $386,000 in the first nine months of 2002. On the Company's Consolidated Balance Sheet, the total provision for bad debt is $8,312,000, of which the provision for Romanian bad debts is $6,862,000.

In the Company's Consolidated Balance Sheet are current tax liabilities and estimated interest and penalties on overdue tax liabilities. A significant portion of estimated interest and penalties on overdue tax liabilities relate to the outstanding tax liability at the Company's Romanian subsidiaries. A recent agreement with the Romanian tax authorities has reduced and re-scheduled a portion of these interest and penalty charges in return for specific deposits and an agreed repayment schedule. This rescheduling is permitted under Romanian law subject to written application demonstrating compliance with a series of objective criteria. Penalties of up to $5 million may be imposed if the repayment schedule and the conditions of the agreement are not met. Should the Romanian tax authorities demand immediate payment of all potential tax liabilities, the Romanian operations 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 are accounted for at fair market value. Due to the limited local market for many specialist television services in Romania, and as many of the companies providing these services are related parties, the Company has devised an appropriate method of valuation for the receipt of programming. This methodology takes into account the average cost per hour of acquired programming to Pro TV as well as the time at which the bartered programming is shown.

In 1995 the Company loaned Inter Media srl, a company related to Adrian Sarbu (the General Manager and shareholder in the Company's Romanian operations), $1.3 million to purchase an interest in the building in which Pro TV operates. This interest in the building was to be sold to MPI at a fair market valuation that was to be

determined. In 2002 an independent valuation of the building was obtained by MPI. This valuation was substantially less than Mr. Sarbu's view of the buildings value and the transaction could not therefore be concluded. Adrian Sarbu argues that in anticipation of the sale of the building to MPI, his affiliated company charged a substantially lower rental fee and is now claiming the difference and intends to offset the outstanding rental fee against the loan. MPI in anticipation of the sale made substantial improvements to the building that would normally be done at the cost of the building owner. As a result the Company, Pro TV and Adrian Sarbu (via his affiliated company) are in negotiation regarding the amount of monies that may be outstanding to unwind this transaction. The Company has accrued $600,000 as a potential liability.

A new audio-visual law came into force in Romania on July 22, 2002, harmonising Romanian legislation with that of the European Union. The law now permits a change in ownership of licence holding companies or the transfer of the licences to another company at the discretion of the Media Council. This was previously not permitted under the old audio-visual law. There is no restriction on foreign ownership under Romanian law.

In September 2002, the Media Council notified all television stations in Romania that they would like to see their operations restructured by January 2003 so that the licence holding companies become the main operators of the broadcasting licences they hold. The Media Council has given some guidance on how it interprets the new audio-visual law in relation to this restructuring. At a formal meeting on September 19, 2002 the Council expressed their view that exclusive operating agreements, such as exists between the Company's subsidiary MPI and the two Romanian licence holding companies, are not permissible under the new law. It is therefore possible that once the time period for restructuring is over in January 2003, the exclusive operating agreement that MPI has with the licence holding companies will be unenforceable.

The co-operation agreement signed by CME with its two partners in Romania, Mr. Sarbu and Mr. Tiriac, on August 14, 1995, sets out a restructuring scenario that complies with the Media Council's requirements. Specifically, the agreement provides for the eventuality of the audio-visual law changing to permit the transfer of licences and the steps that should then be taken. It states "The parties agree that such licences [the licences presently owned by the two licence holding companies] may be transferred to MPI at a future date, provided that such transfer is permitted by and takes place in accordance with Romanian law". The agreement further states that "the Parties agree to take all steps and execute all documents necessary to accomplish such transfer and agree that such transfer shall be done without the payment of any additional consideration."

The Company therefore believes that it is entitled, under Romanian law and the partners co-operation agreement, to cause the licence holding companies to request from the Media Council permission to transfer the licences presently held by them to the Company's subsidiary, MPI. Implementation of this scenario would satisfy the Media Council that the Company has complied with its request to restructure its Romanian business. The Company has notified both Mr. Sarbu and Mr. Tiriac that it wishes to implement this anticipated transfer. An alternative restructuring scenario is to transfer the business currently transacted by MPI to the licence companies, whilst increasing the Company's control over these licence holding entities.

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. Consequently, the Slovene operations now have full broadcast licenses for both channels renewed until August 13, 2012.

In February 2002, the transaction account of Pro Plus, the programming company for POP TV, was blocked by a court decision for an amount of $1.5 million with respect to a ruling made by the Regional Court in Ljubljana in relation to the lawsuit initiated by the Slovene Author's Organization for the payment of $2 million. As a result, $1.5 million is included in the Company's Consolidated Balance Sheet as restricted cash. In October 2002, Pro Plus entered into a settlement agreement with the Slovene Author's Organization pursuant to which an application has been filed to remove the restriction on the transaction account of Pro Plus and all litigation in respect of this matter will be terminated by the parties.

On October 23, 2001, the Slovak Media Council awarded a TV transmission license to TV Global, which 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 to date.

Following elections in the Republic of Slovakia in September 20, 2002, the ANO political party, founded by Mr. Pavol Rusko, a shareholder in Markiza-Slovakia s.r.o., obtained a number of seats in the national parliament. On November 1, 2002, Mr. Rusko was appointed a deputy chairman of the parliament. In order to comply with Slovak conflict of interest rules, Mr. Rusko has resigned from his position as an executive of STS (the operating company for Markiza TV) and of Markiza-Slovakia s.r.o. In addition, following receipt of approval from CME, he has transferred his indirect 17% ownership interest in Markiza-Slovakia s.r.o. to a third party. The Company does not believe that the resignation of Mr. Rusko will have a significant impact on its Slovak operations.

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 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 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 plans to extend that commercial co-operation for future projects.

In the Company's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2000, it was reported that AITI, a television station in Ukraine, commenced a court action in Ukraine against the National Council for TV and Radio Broadcasting (the "Ukraine TV Council") challenging certain aspects of the granting to Studio 1+1 of its television broadcast license in Ukraine. Studio 1+1 was involved in this litigation as a third party acting together with the Ukraine TV Council. After the appeal process was completed, the challenge to the Studio 1+1 license was dismissed on April 5, 2001 by the Supreme Arbitration Court of Ukraine.

Subsequent to that, AITI commenced another action, this time in the Economic Court in the City of Kiev, a lower court to the Supreme Arbitration Court of Ukraine, making almost identical allegations. These were that Studio 1+1 has, in effect, been granted two licenses by the Ukraine TV Council, entitling it to in excess of 32 hours of broadcast time a day on Ukraine's nationwide Channel N2 (UT-2). Further, AITI alleged that Studio 1+1 never paid the required license fee. On February 1, 2002, the Economic Court of the City of Kiev ruled in AITI's favour. The Ukraine TV Council, Studio 1+1, and the Public Prosecutor's Office of Kiev, the latter two acting as interested third parties, appealed the Economic Court's decision to the Kiev Economic Court of Appeal.

The Kiev Economic Court of Appeal upheld the Economic Court of Kiev's decision of February 1, 2002. This decision was appealed to the Court of Cassation, the same court that ruled in favour of Studio 1+1 on April 5, 2001. At the final hearing on November 1, 2002 the Court of Cassation ruled that the decisions taken by the two lower courts were void on the basis that neither court had taken into account all the facts surrounding the case. It further ruled that the case be returned to the Economic Court in Kiev.Studio 1+1, as an interested third party, has filed a request with the Supreme Court of Ukraine to accept an appeal of the Court of Cassation decision. If the appeal is accepted, the Supreme Court will be asked to annul the ruling of the Court of Cassation and to terminate these legal proceedings in favour of Studio 1+1 and the Ukraine TV Council.

The Company will continue to defend its position vigorously at the court of first instance level.

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). On July 25, 2002 the Company received $8,713,002 from CET 21 a payment of the amounts pursuant to the final order of the ICC Arbitration Tribunal dated February 9, 2001. On September 20, 2002, a further $20,240,000 was received from MEF Holding on behalf of Dr. Zelezny.

The Company recently paid in its share of a capital increase in CET 21 of $270,000 to maintain its current ownership percentage.

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 is to be paid out of any net amount collected from the Czech Republic pursuant to the Netherlands-Czech Bilateral Investment Treaty arbitration proceedings. The Company and the Dutch tax authorities have agreed that the question of taxability of any award against the Czech Republic shall be determined by the Dutch courts based upon an agreed statement of fact. Until that court decision, the Company has agreed with the Dutch Tax authorities to deposit 35% of the net proceeds of any amount collected from the Czech Republic pursuant to the Netherlands-Czech Bilateral Investment Treaty arbitration proceedings in a separate account and accordingly treat this deposit as restricted cash.

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 November 1, 2002 amounted to $41.3 million

Total Cash received from the Company's subsidiaries and partners for first nine months of 2002 was $19,247,000 compared to $10,610,000 for the first nine months of 2001. Cash received, net of costs paid by corporate which are recharged, was $16,723,000 for the first nine months of 2002 compared to $8,231,000 for the first nine 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 or arbitration (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 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.

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, certain entities of the Romanian operations 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.

The Company's Romanian entities 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 nine months ended September 30, 2002 were impacted by changes in foreign currency exchange rates since December 31, 2001.

Below is a discussion of the results for period and the year to date of the Company's Consolidated entities. This excludes certain entities of the Ukrainian and Romanian operations and the entire Slovak operation. For discussion on the Company Combined Results, see "Selected Combined and Attributable Financial Information - Non US GAAP".

The Company's consolidated net revenues increased by $3,587,000 or 26%, to $17,177,000 for the third quarter of 2002 from $13,590,000 for the third quarter of 2001. This increase was attributable to the increases in net revenues at all of the Company's operations.

The net consolidated revenues of the Company's Ukrainian operations increased by $2,587,000 or 125% to $4,658,000 for the third quarter of 2002 from $2,071,000 for the third quarter of 2001 as result of the continued growth in the Ukraine advertising market, and increased sales from a subsidiary to an associated company.

The net revenues of the Company's Slovenian operations increased by $737,000, or 17%, to $5,060,000 for the third quarter of 2002 compared to $4,323,000 for the third quarter of 2001. This increase is primarily attributable to an increase in market share.

The net revenues of the Company's Romanian operations increased by $441,000 or 6%, to $7,422,000 for the third quarter of 2002 compared to $6,981,000 for the third quarter of 2001, as a result of including barter revenue from the Pro Sports Group in respect of sports programming.

The Czech Republic operation is 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 $298,000 or 2%, to $13,136,000 for the third quarter of 2002 from $12,838,000 for the third quarter of 2001. The increase in total station operating costs and expenses was primarily attributable to increases at the Company's Ukrainian and Slovenian operations.

The Company's Ukrainian operations recorded an increase of $709,000 in station operating costs and expenses for the third quarter of 2002 compared to the third 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 revenue growth.

The station operating costs and expenses of the Slovenian operations increased by $649,000 due to increased program syndication charges. The amortization charges have decreased by $287,000 from the third 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. The Company has performed the required impairment tests of goodwill as of January 1, 2002. There was no impairment of goodwill on adoption of SFAS 142.

The Company's Romanian operations recorded a decrease of $564,000 in station operating costs and expenses for the third quarter of 2002 compared to the third 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.

Station selling, general and administrative expenses decreased by $2,491,000 or 41%, to $3,622,000 for the third quarter of 2002 from $6,113,000 for the third quarter of 2001. The decrease in total station selling, general, and administrative expenses was primarily attributable to the Company not requiring an additional bad debt provision in the third quarter of 2002 compared to the provision of $2.75 million in the third quarter of 2001.

Corporate operating costs and development expenses for the third quarter of 2002 and 2001 were $2,698,000 and $2,290,000 respectively, an increase of $408,000.

Net Arbitration Related (Proceeds)/Costs were $24,274,000 for the third quarter of 2002. This is substantially due to the Company recognizing a credit of $28,953,000 with regard to payment on behalf of Dr. Zelezny, pursuant to the final order of the ICC Arbitration Tribunal dated February 9, 2001. (For further discussion, see Note 7 to the Consolidated Financial Statements above, "Net Arbitration Related (Proceeds)/Costs".)

The stock based compensation charge for the third quarter of 2002 was $1,467,000. (For further discussion, see Note 8 to the Consolidated Financial Statements above, "Stock Based Compensation".)

As a result of the above factors, the Company generated an operating income of $20,528,000 for the third quarter of 2002 compared to an operating loss of $8,565,000 for the third quarter of 2001.

Equity in loss of unconsolidated affiliates was $2,539,000 for the third quarter of 2002 compared to $338,000 for the third quarter of 2001. This change of $2,201,000 is detailed below:

Net interest and other expenses was an income of $2,850,000 for the third quarter of 2002 compared to an expense of $2,450,000 for the third quarter of 2001. This was primarily a result of a re-scheduling agreement relating to the Company's Romanian tax liabilities which enabled the Company to reverse a provision for possible penalties and interest.

A net foreign currency exchange gain of $59,000 for the third quarter of 2002 compares to a net foreign currency exchange loss of $3,082,000 for the third quarter of 2001.

A diminution in the value of assets held for resale of $3,742,000 was recognized in the third quarter of 2002.

Provision for income taxes increased by $776,000 to $904,000 for the third quarter of 2002 from $128,000 for the third quarter of 2001.

Minority interest in income of consolidated subsidiaries was $1,410,000 for the third quarter of 2002 compared to $13,000 for the third quarter of 2001.

As a result of these factors, the net income of the Company was $14,842,000 for the third quarter of 2002 compared to a net loss of $14,576,000 for the third quarter of 2001.

The Company's net revenues increased by $11,336,000, or 23%, to $61,534,000 for the first nine months of 2002 from $50,198,000 for the first nine 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.

The net revenues of the consolidated entities of the Company's Ukrainian operations increased by $8,979,000, or 131% to $15,829,000, for the first nine months of 2002 compared to the first nine 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.

The net revenues of the Company's Slovenian operations increased by $3,370,000, or 17% to $22,742,000, for the first nine months of 2002 compared to the first nine months of 2001. This increase is primarily attributable to spot sales and sponsorship revenue generated by the FIFA World Cup.

The Company's Romanian operations' net revenues increased by $60,000 for the first nine months of 2002 compared to the first nine months of 2001.

Total station operating costs and expenses (including amortization of program rights and depreciation of fixed assets and other intangibles) decreased by $879,000 or 2%, to $44,460,000 for the first nine months of 2002 from $45,339,000 for the first nine 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 $1,157,000 primarily as a result of the FIFA World Cup and the appreciation of the Slovenian Tolar against the US Dollar, offset by savings on the amortization charges from the third 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. The Company has performed the required impairment tests of goodwill as of January 1, 2002. There was no impairment of goodwill on adoption of SFAS 142.

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 $2,536,000 in station operating costs and expenses for the first nine months of 2002 compared to the first nine months of 2001 primarily as a result of the Company restructuring its operations, and the sale of its interest in Video Vision in November 2001.

The Company's Ukrainian operations recorded an increase of $2,036,000 in station operating costs and expenses for the first nine months of 2002 compared to the first nine 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 revenue growth.

Station selling, general and administrative expenses decreased by $4,758,000, or 34%, to $9,419,000 for the first nine months of 2002 from $14,177,000 for the first nine months of 2001. The decrease in total station selling, general, and administrative expenses was primarily attributable to the Company not requiring an additional bad debt provision in the first nine months of 2002 compared to the provision of $3.24 million in the first nine months of 2001.

Corporate operating costs and development expenses for the first nine months of 2002 and 2001 were $8,895,000 and $6,080,000, respectively, an increase of $2,815,000, or 46% relating mainly to an increase in professional and legal costs.

Net Arbitration Related (Proceeds)/Costs were $19,464,000 for the nine months to September 30, 2002 compared to net costs of $2,601,000 for the nine months to September 30, 2001. This is substantially due to the Company recognizing a credit of $28,953,000 with regard to payment by Dr. Zelezny, pursuant to the final order of the ICC Arbitration Tribunal dated February 9, 2001. (For further discussion, see Note 7 to the Consolidated Financial Statements above, "Net Arbitration Related (Proceeds)/Costs".)

The stock based compensation charge for the first nine months of 2002 was $1,884,000. (For further discussion, see Note 8 to the Consolidated Financial Statements above, "Stock Based Compensation".)

Amortization of goodwill and allowance for development costs for the first nine months of 2002 was $nil compared to $1,060,000 for first nine 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 income of $16,340,000 for the first nine months of 2002 compared to an operating loss of $19,059,000 for the first nine months of 2001.

The loss on the write down of investment for the first nine months of 2002 was $2,685,000 compared to $nil in the first nine 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 loss of unconsolidated affiliates was $1,193,000 for the first nine months of 2002 compared to an equity in income of unconsolidated affiliates of $3,728,000 for the first nine months of 2001. This change of $4,921,000 is detailed below:

Net interest and other expense decreased by $2,578,000 to $8,987,000 for the first nine months of 2002 from $11,565,000 for the first nine months of 2001. This was primarily a result of a re-scheduling agreement relating to the Company's Romanian tax liabilities which enabled the Company to reverse a provision for possible penalties and interest.

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 $5,463,000 for the first nine months of 2002 compares to a net foreign currency exchange gain of $726,000 for the first nine months of 2001. This foreign currency exchange loss is a result of a significant weakening of the US dollar in the second quarter of 2002 against the Euro and the Czech koruna. This affected the Company's Euro denominated portion of CME's Senior Notes obligations and 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.

A diminution in the value of assets held for resale of $3,742,000 was recognised in the nine months to September 30, 2002.

A gain on discharge of obligation of $5,188,000 was recorded in the first nine months of 2001. This represents a debt the Company owed Dr. Vladimir Zelezny, the former General Director of CNTS, which is no longer payable pursuant to the final order of the ICC Arbitration Tribunal dated February 9, 2001. (For further discussion, see Note 7 to the Consolidated Financial Statements above, "Net Arbitration Related (Proceeds)/Costs" and Part II, Item 1,"Legal Proceedings").

Provision for income taxes increased by $4,245,000 to $4,684,000 for the first nine months of 2002 compared to $439,000 for the first nine months of 2001. This was primarily as a result of a provision being made in respect of Dutch Tax.

Minority interest in income of consolidated subsidiaries was $71,000 for the first nine months of 2002 compared to a loss of $58,000 for the first nine months of 2001.

As a result of these factors, the net loss of the Company was $9,377,000 for the first nine months of 2002 compared to a net loss of $18,647,000 for the first nine months of 2001.

Liquidity and Capital Resources

Net cash provided by operating activities was $13,699,000 for the nine months ended September 30, 2002 compared to the cash used by operating activities of $13,603,000 for the nine months ended September 30, 2001. The increase of $27,302,000 was primarily the result of: (1) a $28,953,000 cash receipt with regard to the Company's arbitration with Dr Zelezny (For further discussion, see Part II, Item 1,"Legal Proceedings"); (2) an equity in loss of unconsolidated affiliates of $1,193,000 for the nine months to September 30, 2002 compared to an equity in income unconsolidated affiliates of $3,728,000 for the nine months to September 30, 2001; (3) a gain on resolution of disputed investment payable being recorded in the nine months to September 30, 2001; (4) a net foreign currency loss of $5,463,000 in the nine months to September 30, 2002 as a result of a significant weakening of the US Dollar against the Euro; and (5) an increase in the income and other taxes payable in the nine months to September 30, 2002 compared to the nine months to September 30,2001.

Net cash used by investing activities was $6,000 for the nine months ended September 30, 2002 compared to net cash provided from investing activities of $3,811,000 for the nine months ended September 30, 2001. The decrease of $3,817,000 was primarily attributable to a decrease in amounts received from affiliates.

Net cash provided by financing activities was $15,298,000 for the nine months ended September 30, 2002 compared to net cash used by financing activities of $2,822,000 for the nine months ended September 30, 2001. The change of $18,120,000 was primarily attributable to the company drawing down the first $15 million tranche of the GoldenTree facility and receiving $2.2 million as a loan from STS s.r.o. (For further discussion, see Note 10 "Financing arrangement with GoldenTree Asset Management" and Note 13, "Other Financing" to the Consolidated Financial Statements above).

The Company had cash and cash equivalents of $51,624,000 at September 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:

At September 30, 2002, the Company had five main tranches of debt as follows:-

1. Senior Notes which are denominated in United States dollars, in part, and in euros in part. The principal amount of the Senior Notes $169,697,000 is repayable on their maturity date, August 15, 2004. 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 ($69,739,000 as at September 30, 2002) in principal amount and bears interest at a rate of 8⅛% per annum.
2. A loan agreement with Ceska Sporitelna which had an outstanding principal balance at December 31, 2001 of Kc 249,764,513 ($8,128,000), 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 loan with Tiriac Bank in Romania. As at September 30, 2002, $228,000 was borrowed under the loan facility. Management believes this will be fully repaid by December 31,2002.
4. A loan of up to $30 million provided by affiliates of GoldenTree Asset Management LLC, maturing in June 2004. The Company drew down the first $15 million tranche on August 5, 2002 and has an option to drawn down an additional tranche of $15 million. This agreement provides for the Company to pay approximately $450,000 in interest payments each quarter with a balloon payment on the outstanding principal in June 2004. An investment fee is payable in the form of new share warrants amounting to a maximum of 696,000 shares of Class A common stock of the Company. (For further discussion, see Note 10 to the Consolidated Financial Statements above, "Financing arrangement with GoldenTree Asset Management ".)
5. A loan of SKK100million (approximately $2.2 million) from the Company's unconsolidated affiliate, STS s.r.o. (For further discussion, see Note 13 to the Consolidated Financial Statements above, "Other Financing".)

In addition to the above, two non-consolidated entities of the Company have loans.

1. As at September 30, 2002, Studio 1+1, an 18% owned subsidiary of the Company and the licence holder within the Studio 1+1 Group, had $2.2 million outstanding on loan with Va Bank in Ukraine. This loan matures in November 2003 and bears interest at 16%. By way of security, Intermedia, one of the consolidated entities of the Studio 1+1 Group, has pledged fixed assets in the amount of $1,100,000 and 4,864 minutes of advertising time (nominal value of $1,000 per minute).
2. 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 (approximately $3 million), a facility supported by charges over the assets and receivables of STS s.r.o. (For further discussion, see Note 13 to the Consolidated Financial Statements above, "Other Financing".)

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 Marks 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. In October 2002, Pro Plus entered into a settlement agreement with the Slovene Author's Organization

pursuant to which an application has been filed to remove the restriction on the transaction account of Pro Plus and all litigation in respect of this matter will be terminated by the parties. Pro Plus expects the restriction on the use of these funds to be officially lifted by the end of November.

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.

Total Cash received from the Company's subsidiaries and partners for first nine months of 2002 was $19,247,000 compared to $10,610,000 for the first nine months of 2001. Cash received, net of costs paid by corporate which are recharged, was $16,723,000 for the first nine months of 2002 compared to $8,231,000 for the first nine months of 2001.

The Company received from CET21 $8.7 million on July 25, 2002 and $20.2million from MEF Holdings on September 20, 2002. (see Part II, Item 1, "Legal Proceedings")

Corporate cash at November 1, 2002 amounted to $41.3 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 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 nine months ended September 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 September 30, 2002.