10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2001

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

For the transition period from __________ to __________

Commission File Number 0-24796

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

(Exact name of registrant as specified in its charter)

BERMUDA	N/A
(State or other jurisdiction of incorporation and organisation)	(IRS Employer Identification No.)
Clarendon House, Church Street, Hamilton	HM CX Bermuda
(Address of principal executive offices)	(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Class A Common Stock, $0.08 par value

9⅜% Notes Due 2004

8⅛% Notes Due 2004

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

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

The aggregate market value of the voting stock of registrant held by non-affiliates of the registrant as of March 21, 2002 was approximately $44.4 million

Number of shares of Class A Common Stock outstanding as of March 21, 2002 : 2,314,221

Number of shares of Class B Common Stock outstanding as of March 21, 2002 : 991,842

DOCUMENTS INCORPORATED BY REFERENCE

Document	Location in Form 10-K in Which Document is Incorporated
Registrant's Proxy Statement for the Annual General Meeting of Shareholders to be held on May 15, 2002	Part III

TABLE OF CONTENTS

			Page
PART I
	Item 1	Business	3
	Item 2	Properties	16
	Item 3	Legal Proceedings	16
	Item 4	Submission of Matters to a Vote of Security Holders	20
PART II
	Item 5	Market for Registrant's Common Equity and Related Stockholder Matters	21
	Item 6	Selected Financial Data	21
	Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operation	24
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	41
	Item 8	Financial Statements and Supplementary Data	43
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	71
PART III
	Item 10	Directors and Executive Officers of the Registrant	72
	Item 11	Executive Compensation	72
	Item 12	Security Ownership of Certain Beneficial Owners and Management	72
	Item 13	Certain Relationships and Related Transactions	72
PART IV
	Item 14	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	73
SIGNATURES

PART I

Item 1. BUSINESS

GENERAL

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

CME, together with its subsidiaries and affiliates, invests in, develops and operates national and regional commercial television stations and networks in Central and Eastern Europe.

The Company's registered offices are located at Clarendon House, Church Street, Hamilton HM CX Bermuda, and its telephone number is 441-296-1431. Certain of the Subsidiaries maintain offices at, 8^th Floor, Aldwych House, 71-91 Aldwych, London, WC2B 4HN, England, telephone number 44-20-7430-5430/1.

Unless otherwise noted, all statistical and financial information presented in this report has been converted into United States dollars using exchange rates as of December 31, 2001. All references to '$' or 'dollars' are to United States dollars, all references to 'Kc' are to Czech korunas, all references to 'ROL' are to Romanian lei, all references to 'SIT' are to Slovenian tolar, all references to 'Sk' are to Slovak korunas, all references to 'Hrn' are to Ukrainian hryvna, all references to 'DM' are to German marks and all references to Euros are to European Euro. The exchange rates as of December 31, 2001 used in this report are 31,597 ROL/$; 250.95 SIT/$; 48.47 Sk/$; 5.30 Hrn/$; 2.20 DM/$ 36.27 Kc/$, and 0.89 Euro/$.

CORPORATE STRUCTURE

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

Laws, regulations and policies in CME's markets generally restrict the level of direct or indirect interests that any non-local investor such as CME may hold in companies holding broadcast licenses. As a result, broadcast licenses are generally held by companies majority owned by CME's local partners and CME owns controlling interests in service companies which provide programming, advertising and other services to the license holding companies. References to POP TV, Kanal A, PRO TV, Acasa, Markiza TV and Studio 1+1 in this report may be to either the license company or the service companies or both, as the case may be. The Company does not own a controlling voting interest in its Slovakian operations but is entitled to and obligated for 70% of the economics.

Czech Republic

See Part I, Item 3, "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.

Continuing Operations

The following table shows the key license companies, license expiration date, service companies, economic and voting interests of the Company in each of its operations.

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Country	License Expiration	TV License Company	CME Voting Interest	TV Services Company	Economic Interest	CME Voting Interest
Romania	2003-2008	Pro TV S.R.L.	49%	MPI	66%	66%
		Media Pro S.R.L.	44%		-	-
Slovenia	2003-2007	POP TV	51% (1)	Pro Plus	85.5%	78%
	2003-2010	Kanal A	90%		-	-
Slovak Republic	2007	Markiza-Slovakia s.r.o.	34%	STS	70% (2)	49%
Ukraine	2006	Studio 1+1	18%	Innova, IMS	60%	60%

(1) As a result of share transfers in December 2001, Tele 59 owns 49% and MMTV 51% in POP TV d.o.o. This transfer means that the Company controls 51% of POP TV d.o.o. which holds all the licenses for the Slovenian operations apart from those held by Kanal A. This compares to a 45% indirect interest in POP d.o.o. TV as of December 31, 2000.

(2) 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.

License Renewal

The Company has no reason to believe that the licenses for the television license companies will not be renewed prior to expiry. However, in the Slovak Republic, Romania and Ukraine, no statutory or regulatory presumption exists for current license holders and there can be no assurance that any of the licenses will be renewed upon expiration of their initial term. The failure of any such license to be renewed could adversely affect the results of the Company's operations. However, to date, licenses have been renewed in the ordinary course of business. Access to the available frequencies is controlled by regulatory bodies in each country in which the Company operates. New awards of licenses to use broadcast frequencies occur infrequently.

OPERATING ENVIRONMENT

The Company's television stations and networks reach an aggregate of approximately 71 million people in four countries. The Company's national private television stations and networks in the Slovak Republic and Slovenia had the leading nationwide audience shares for 2001 and the Company's television network in Romania had the leading average audience share within its area of broadcast reach for 2001. In Ukraine, for 2001, the Company's national private television station and network had the leading nationwide average audience share for television stations broadcasting in the Ukrainian language.

The market ratings of the Company's stations in their respective markets are reflected below.

Country	CME Station and Networks	Launch Date	Technical Reach (1)	2001 Audience Share (2)	Market Rank (2)
Romania	PRO TV	December 1995	77%	23.7%	1
	Acasa	February 1998	63%	10.0%	4
Slovenia	POP TV	December 1995	85%	32.5%	1
	Kanal A	October 2000	80%	11.5%	3
Slovakia	Markiza TV	August 1996	94%	50.3%	1
Ukraine	Studio 1+1	January 1997	95%	21.9%	2

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

(2) Nationwide audience share and rank (except Romania and Ukraine, which is audience share and rank within coverage area). Source: (Romania: CSOP Gallop/Taylor Nelson Sofres (peoplemeter data), Slovenia: AGB Media Services, Slovak Republic: Visio/MVK, Ukraine: Peoplemeters AGB Ukraine).

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The following table sets forth the population, technical reach, number of TV households, per capita GDP and cable penetration for those countries of Central and Eastern Europe where the Company has broadcast operations.

Country	Population (in millions) (1)	Technical Reach (in millions) (2)	TV Households (in millions) (3)	Per Capita GDP 2000 (4)	Cable Penetration (5)
Romania	22.4	17.2	6.3	$1,637	48%
Slovenia	2.0	1.7	0.6	$8,984	52%
Slovak Republic	5.4	5.1	1.8	$3,478	32%
Ukraine	49.6	47.1	18.6	$650	27%
Total	79.4	71.1	27.3

(1) Source: World Bank Group, 2000.

(2) Source: CME Stations.

(3) Source: IP European Key Facts: Television 2001, except Ukraine: IP European Key Facts: Television 1999. A TV household is a residential dwelling with one or more television sets.

(4) Source: National Bank of Romania, Central Bank of Slovenia, Statistical Office of Slovak Republic and National Bank of Ukraine.

(5) Source: IP European Key Facts: Television 2001. Ukraine data refers to Urban only. Penetration refers to the percentage of TV Households who are connected to cable television.

Television Advertising Expenditures

The following table sets out the recent levels of television advertising expenditures in those countries where the Company does business.

Country	1997	1998	1999	2000	2001
Romania	74	87	69	69	63
Slovenia	39	51	49	47	47
Slovak Republic	47	56	43	42	42
Ukraine	53	65	32	35	50

 Note: All figures are current Company estimates and are in $US millions.

In Romania, strong sales competition between the television stations appears to have caused the television advertising market to decline in 2001 from $69 million to $63 million. In the Slovak Republic and Slovenia, television advertising revenues increased by 5% and 8%, expressed in local currency terms, respectively. However the Slovak koruna depreciated by 4% and the Slovenian tolar depreciated by 8% against the dollar. Therefore television advertising expenditures remained flat in these two countries. In Ukraine, television advertising revenues experienced a significant increase of 43% from the very low levels recorded in 2000 and 1999.

THE EUROPEAN UNION

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

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The EU's Television Without Frontiers directive (the "EU Directive") sets forth the legal framework for television broadcasting in the EU. It requires broadcasters, where "practicable and by appropriate means," to reserve a majority proportion of their broadcast time for "European works." Such works are defined as originating from an EU member state or a signatory to the Council of Europe's Convention on Transfrontier Television, as well as written and produced mainly by residents of the EU or Council of Europe member states. In addition, the EU Directive provides for a 10% quota of either broadcast time or programming budget for programs made by European producers who are independent of broadcasters. News, sports, games, advertising, teletext services and teleshopping are excluded from the calculation of these quotas. Further, the EU Directive provides for regulations on advertising, including limits on the amount of time that may be devoted to advertising spots, including direct sales ad vertising. Member states are free to introduce stricter content requirements than those in the EU Directive for broadcasters within their jurisdiction. The Company intends to align its broadcast operations with any applicable EU legislation. The Company believes that the EU Directive, as currently drafted, will not have a material adverse effect on its operations.

COUNCIL OF EUROPE

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

OPERATIONS BY COUNTRY

ROMANIA

General

Romania is a parliamentary democracy of approximately 22.4 million people. Per capita GDP was an estimated $1,704 in 2001 ($1,637 in 2000). Approximately 87% of Romanian households have one or more television sets, and cable penetration is approximately 48%. According to the Company's estimates, television advertising totalled approximately $63 million in 2001.

Service Companies : MPI and Media Vision

The Company's interest in its Romanian operation is governed by a Co-operation Agreement (the "Romanian Agreement") among the Company, Adrian Sarbu and Ion Tiriac, forming 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.

Pursuant to the Romanian Agreement, the Company owns 66% of the equity of MPI. Interests in profits of MPI are equal to the partners' equity interests. The Company has the right to appoint three of the five members of the Council of Administration which directs the affairs of MPI. Although the Company has majority voting power in MPI, with respect to certain fundamental financial and corporate matters, the affirmative vote of either Mr. Sarbu or Mr. Tiriac is required.

With specific reference to MPI, the "certain fundamental financial and corporate matters" which require approval of the minority shareholders are in the nature of "protective" rights which are not an impediment to consolidation for accounting purposes.

In addition, in Romania, the Company owns 70% of Media Vision SRL ("Media Vision"), a production and dubbing company. On November 22, 2001 the Company sold its 70% interest in Video Vision International SRL ("Video Vision"), a Romanian post-production company and the gain recognized on this sale was $1.8 million.

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License Companies : PRO TV Srl and Media Pro Srl

The Company owns 49% of the equity of PRO TV, Srl which holds 20 of the 23 licenses for the stations which comprise the PRO TV, Acasa and Pro TV International network. Messrs. Sarbu and Tiriac own substantially all of the remainder of PRO TV, Srl. The remaining three licenses for the PRO TV network together with the licenses for the PRO FM and PRO AM radio networks are held by Media Pro Srl, in which the Company holds 44% of the equity. The remainder is owned by Messrs. Sarbu and Tiriac.

Operations : PRO TV, Acasa and PRO TV International

PRO TV is a national television broadcast network in Romania which was launched in December 1995. PRO TV reaches approximately 77% of the Romanian population of 22.4 million, including 100% of the urban population. PRO TV broadcasts from studios located in Bucharest via digitally encoded satellite signals which deliver programming to terrestrial broadcast facilities and to approximately 490 cable systems throughout Romania. Independent research from CSOP Gallup/Taylor Nelson Sofres (peoplemeter) in Romania shows that PRO TV is currently the top-rated television station in its broadcast area, with an average television viewer share for December 2001 of 22% for the whole day and 23% for prime time.

In February 1998, MPI launched Acasa, a station reaching approximately 63% of the Romanian population, including approximately 100% of the urban population via satellite and cable distribution. For September to December 2001, Acasa had an average television viewer share in its broadcast area of approximately 10% for the whole day and 14% for prime time, making it the fourth ranked station in Romania.

PRO TV International rebroadcasts PRO TV and Acasa programming throughout Europe and in Israel, using the existing PRO TV and Acasa satellite infrastructure. In 2002 MPI entered into an agreement under which PRO TV International will provide Romanian language program content for broadcast in the US at no direct cost to PRO TV International. The agreement is for four years and broadcast in the US is expected to commence in April 2002.

Media Vision is the leading television production company in Romania and produces a significant portion of PRO TV's entertainment programming, performs dubbing and produces advertising spots for third party clients such as Coca Cola, Procter & Gamble and Unilever.

MPI also operates PRO FM, a radio network which is broadcast through owned and affiliate stations to approximately 9.5 million people in Romania. In 2001, PRO FM had an average audience share of 24% in the Bucharest area.

Programming

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

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

Acasa broadcasts 24 hours of programming daily by means of cable and satellite. Its programming strategy is to target a female audience with programming including telenovellas, films and soap operas as well as news, daily local production for women and family, talk shows and entertainment. Acasa's viewer demographics are complementary to PRO TV's, providing an attractive advertising medium for small to medium sized companies that would not otherwise advertise on television. Approximately 40% of Acasa's total programming is locally produced.

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Advertising

PRO TV derives revenues principally from the sale of commercial advertising time, sold both through independent agencies and media buying groups. PRO TV currently serves approximately 250 advertisers, including multinational companies such as Wrigley, Henkel, Mobifon and Procter & Gamble. Procter & Gamble was the largest advertiser on PRO TV and Acasa, accounting for 13% of each station's revenue.

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

Competition

Prior to the launch of PRO TV, TVR 1, a public station, was the dominant broadcaster in Romania. In December 2001, PRO TV achieved an average audience share of 23% in its coverage area, while TVR 1's December 2001 average audience share in PRO TV's coverage area was approximately 13%. TVR 1 reaches 99% of the Romanian population. Other competitors include the second public national station, TVR 2, with a 70% broadcast reach, and privately owned Antena 1, Tele 7 ABC and Prima TV, which reach approximately 72%, 60% and 65% of the population respectively.

Additional competitors include cable and satellite stations. Cable and satellite currently penetrate approximately 46% and 2%, respectively, of the Romanian market. PRO TV competes for advertising revenues with other media such as newspapers, radio, magazines, outdoor advertising, telephone directory advertising and direct mail.

Regulation

Licenses for the television stations which show programming provided by PRO TV and which broadcast advertising sold by PRO TV are regulated by Romania's National Audio-Visual Commission. PRO TV's television licenses have been granted for nine-year periods. Licenses which cover 19% of the Romanian population, including the license for Bucharest, expire in 2003. The remaining licenses expire on dates ranging from 2004 to 2008. Under regulations established by the National Audio-Visual Commission and the various licenses of stations which broadcast PRO TV, programming and advertising provided by PRO TV is required to comply with certain restrictions. These restrictions include a requirement that at least 40% of programming be "own" produced.

Regulations relating to advertising content include (i) a ban on tobacco and restrictions on alcohol advertising, (ii) advertising targeted at children or during children's programming must account for the overall sensitivity of that age group and (iii) members of the news department of PRO TV are prohibited from appearing in advertisements.

License Renewal

The PRO TV licenses consist of many local licenses, with varying expiry dates. The licensing procedure in Romania is governed by the 1992 Audiovisual Law ("Audiovisual Law"). According to the Audiovisual Law, the National Council of Audiovisual ("Audiovisual Council") is in charge of issuing and renewing licenses. Renewal, as a separate procedure is not described in the Audiovisual Law and therefore expired licenses are subject to bidding procedures similar to those applicable to new licenses. A decision of the Audiovisual Council, however, provides that past broadcasting experience, is a deciding factor in the renewal procedure. All renewal applications have been granted so far by the Audiovisual Council. However there is no assurance that PRO TV's licence will be renewed. A local PRO TV license, covering certain parts of Bucharest, will expire in 2003.

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SLOVENIA

General

Slovenia, a parliamentary democracy of 2.0 million people, had an estimated per capita GDP $9,388 in 2001 ($8,984 in 2000), the highest among the former Eastern bloc countries. Approximately 96% of Slovenian households have one or more televisions. According to the Company's estimates, television advertising totalled $47 million in 2001.

Service Company : Pro Plus

The Company's interest in Produkcija Plus d.o.o. (Pro Plus) is governed by a Partnership Agreement among the Company, MMTV 1 d.o.o. Ljubljana ("MMTV") and Tele 59 d.o.o. Maribor ("Tele 59"), forming Pro Plus. Pro Plus provides programming to and sells advertising for the broadcast licenseholders POP TV d.o.o and Kanal A as well as additional affiliates. The Company currently owns 78% of the equity in Pro Plus, but has an effective economic interest of 85.5% as a result of its right to 33% of the profits of Tele 59. Tele 59 currently owns a 21% equity interest in Pro Plus and MMTV currently owns a 1% equity interest in Pro Plus.

Voting power and interests in profits of Pro Plus are equal to the partners' equity interests. All major decisions concerning the affairs of Pro Plus are made by the general meeting of partners and require a 70% affirmative vote. Certain fundamental financial and corporate matters require an 85% affirmative vote of the partners. In January 2001, Pro Plus entered into an agreement with Kanal A, under which Pro Plus provides all programming to Kanal A and sells its advertising

License Companies : POP TV d.o.o and Kanal A

The Company's interest in POP TV d.o.o. is governed by a Partnership Agreement between MMTV and Tele 59. As a result of two share transfers in December 2001, Tele 59 owns 49% and MMTV 51% in POP TV d.o.o. This transfer means that the Company controls 51% of POP TV d.o.o. through the Company's ownership interests in Tele 59 and MMTV, as described below which holds all the licenses for the Slovenian operations apart from those effectively held by Kanal A. These transfers are still subject to registration with the Slovenian Commercial Registry. Voting power and interests in profits of POP TV d.o.o. are equal to the partners' equity interests. All decisions concerning the affairs of POP TV d.o.o. are made by the general meeting of partners and require a 51% affirmative majority vote. The Company owns 10% of the equity of both Tele 59 and MMTV. The Company also owns a 20% equity interest in MTC Holding d.o.o. ("MTC") which owns the remaining 90% equity interest in MMTV. A Slovene holds 76% of MTC's equity in trust for the Company.

In December 2001, following the consolidation of POP TV licences into the POP TV d.o.o. licence company, Pro Plus entered into an agreement with POP TV d.o.o., under which Pro Plus provides all programming to POP TV d.o.o. and sells its advertising.

The Company controls the operations, economics and the programming of Kanal A, which is the second leading commercial television broadcaster in Slovenia. 90% of the equity interest in Kanal A is being held by Superplus Holding d.d. ("Superplus") which is owned by individuals who are holding the share of Superplus in trust for the Company.

Operations : POP TV and Kanal A

POP TV is the leading national commercial television broadcaster in Slovenia which reaches approximately 85% of the population of Slovenia, including Ljubljana, the capital of Slovenia, and Maribor, Slovenia's second largest city. Independent research shows that in the areas of Slovenia in which POP TV can be seen, the network had an average television viewer share of approximately 32.5% for 2001, the largest share of television viewers in Slovenia.

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Kanal A, a national television broadcaster reaches approximately 80% of the population of Slovenia, including Ljubljana and Maribor. Independent research shows that in the areas of Slovenia in which Kanal A can be seen, the network had an average television viewer share of approximately 11.5% for 2001, making it the third most watched television channel in Slovenia.

Programming

POP TV's programming strategy is to appeal to a mass market audience through a wide variety of programming including series, movies, news, variety shows and features. POP TV broadcasts 18 hours of programming daily, of which approximately 25% is locally produced programming, including news, game shows, music shows and variety shows.

Pro Plus, the broadcast servicing company for POP TV, has secured exclusive program rights in Slovenia to a number of successful American and Western European programs and films produced by studios such as Warner Bros., Twentieth Century Fox and Paramount. POP TV currently holds exclusive rights for the Slovenian version of "Who Wants to be a Millionaire". Pro Plus has agreements with CNN, Reuters and APTN to receive foreign news reports and film footage to integrate into news programs. All foreign language programs and films are subtitled in Slovenian.

Kanal A's programming strategy is to complement the programming strategy of POP TV with a mixture of locally produced and acquired foreign programs including films and series. Kanal A broadcasts for 16 hours daily, including locally produced formats for Blind Date, the Newlywed game show, music shows and basketball.

Advertising

POP TV derives revenues principally from the sale of commercial advertising time. Current multinational advertisers include firms such as Benckiser, Henkel, Procter & Gamble, Wrigley and Colgate, though no one advertiser dominates the market. During 1999 and 2000, "Peoplemeter" devices were placed in a number of television homes, although they are not yet the primary source for POP TV's rating information. POP TV is permitted to broadcast advertising for up to 20% of its daily broadcast time and there are also restrictions on the frequency of advertising breaks during films and other programs. The same rules apply to its competitors.

Kanal A derives revenues principally from the sale of commercial advertising time and has clients similar to those of POP TV.

Competition

Historically, the television market in Slovenia has been dominated by SLO 1, a national public television station. The other national public station, SLO 2 provides programming which is complementary to SLO 1. SLO 1 reaches nearly all of Slovenia's TV households, and SLO 2 reaches 97% of Slovenia's TV households. No national private television frequency has been made available in Slovenia. One other private television station, TV3, competes with POP TV and Kanal A in Slovenia. It has achieved a relatively small audience share, less than 1.2%, due primarily to its low budget programming and lack of extensive news programming.

POP TV and Kanal A also compete with foreign television stations, particularly Croatian, Italian, German and Austrian stations. Cable penetration at 52% is relatively high compared with other countries in Central and Eastern Europe and approximately 12% of households have satellite dishes. In addition, POP TV and Kanal A compete for revenues with other media, such as newspapers, radio, magazines, outdoor advertising, telephone directory advertising and direct mail.

Regulation

The POP TV and Kanal A network stations operate under licenses regulated pursuant to the Law on Media adopted in 2001 and pursuant to the Law on Telecommunications adopted in 2001. The licenses granted to POP TV's affiliate stations have been granted for 10-year terms expiring in 2003 with respect to licenses reaching 53% of the population and in 2006 and 2007 with respect to the remaining licenses. The licenses granted to Kanal A expire between 2003 and 2010.

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Under Slovenian television regulations, POP TV, its affiliate stations and Kanal A are required to comply with a number of restrictions on programming and advertising. These restrictions include that 20% of the station's daily broadcast time must be internally produced programming (or programming produced on order and on behalf of the broadcaster itself), of which at least 60 minutes must be broadcast between 6:00 p.m. and 10:00 p.m.; and 2% of the station's annual broadcast time must be Slovenian origin films (or other works from the field of literature, science and art). In the future a majority (at present at least 20%) of the station's annual broadcast time will required to be European origin films (or other works from the field of literature, science and art); of which at least 10% of the station's annual broadcast time will be required to be works produced by independent producers, (a broadcaster presently not broadcasting such percentage of works produced by independent European pro ducers, must increase its present percentage each year), of which at least 50% has to be produced in the last 5 years. Certain films and other programs may only be broadcast between 12:00 p.m. and 5:00 am, and POP TV or Kanal A news editors, journalists and correspondents must not reflect a biased approach toward news reporting.

In addition to the restrictions discussed above and under the sub-heading "Advertising," advertising is not permitted during news, documentary or children's programming and programming with religious content under 30 minutes in duration, or during religious ceremonials and state celebrations. Advertising is not permitted during individual programming units, unless such units are divided into independent parts (advertising is allowed between such independent parts). Restrictions on advertising content include a prohibition on tobacco advertising and on the advertising of alcoholic beverages other than low alcohol content beer.

License Renewals

The Pop TV and the Kanal A licenses each consist of several local licenses, which have various expiry dates. The Company has regularly applied for and obtained renewals. Two of the local licenses will be subject to renewal in 2003. The Slovenian Telecommunications Act stipulates that a license may be prolonged after the expiry of its original term, provided, that all conditions for obtaining such license, as such conditions are in force at the time of the expiry date, are met. A licensee seeking the prolongation of the license shall submit an application 30 days before the expiry date. Such application is considered as an application for the change of the license term, and not as an application for a new license. Therefore, no public bidding procedure is involved. The licensing authority reviews only whether the applicant meets all conditions necessary to obtain a broadcasting license and may grant the prolongation for up to 10 years. However, there is no assurance that the POP TV broa dcast licences will be renewed.

SLOVAK REPUBLIC

General

The Slovak Republic is a parliamentary democracy with a population of 5.4 million where nearly 99% of households have television. Per capita GDP was an estimated $3,589 in 2001 ($3,478 in 2000). Television advertising was approximately $42 million in 2001, according to the Company's estimates.

Service Company : STS

The Company's interest in Slovenska Televizna Spolocnost, s.r.o.("STS") is governed by a Participants Agreement (the "Slovak Agreement") between the Company and Markiza-Slovakia s.r.o. ("Markiza") forming STS. Pursuant to the Slovak Agreement, the Company is required to fund all of the capital requirements of, and holds a 49% voting interest and a 70% economic interest in, STS. Markiza, which holds the television broadcast license, and STS have entered into an agreement under which STS is entitled to conduct television broadcast operations pursuant to the license. On an ongoing basis, the Company is entitled to 70% of the profits of STS, except that the Company's share in STS' profit shall be increased by 3% for every additional $1 million invested in STS by the Company. A Board of Representatives directs the affairs of STS, the composition of which includes two designees of the Company and three designees (two of whom have been named) of Markiza; however, all significant financial and operational decisions of the Board of Representatives require a vote of 80% of its members. In addition, certain fundamental corporate matters are reserved for decision by a general meeting of partners and require a 67% affirmative vote of the partners.

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License Company : Markiza

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. The Company now has the right to appoint one of three authorized co-signatories of Markiza, which gives CME a blocking control over Markiza's significant activities. The ownership transfer to the Company was approved by the Slovak Media Council at its meeting on February 11, 2002. The transfer was registered with the Slovak Commercial Registry on March 13, 2002.

As a result of the change in the Company's entitlement to distribution of profits, the Company will charge the Consolidated Statement of Operations with approximately $2.7 million in the first quarter 2002, to reflect the reduction in the economic interest based on the Company's value of the investment as at December 31, 2001.

Operations : Markiza TV

Markiza TV was launched as a national television station in the Slovak Republic in August 1996. Markiza TV reaches approximately 94% of the Slovak Republic's population, including virtually all of its major cities. According to independent research, Markiza TV had an average national television viewer share for 2001 of approximately 50% versus 16% for its nearest competitor, STV 1.

Programming

Markiza TV's programming strategy is to appeal to a broad audience with specific groups targeted in marginal broadcasting hours. Markiza TV provides an average of 21 hours of programming daily, including news, movies, entertainment programs and sport (including coverage of European Champion's League soccer, Formula One racing and Ice Hockey World Championships). Approximately 40% of Markiza TV's programming is locally produced, including a daily breakfast show, game shows, talk shows and news.

Markiza TV has secured exclusive broadcast rights in the Slovak Republic to a large number of popular United States and European series, films and telenovellas produced by major international studios including Warner Bros., Universal, IFD, MGM, Carey-Werner, Paramount Pictures, Twentieth Century Fox, Walt Disney Television International and RTL Television. Markiza TV currently holds exclusive rights for the Slovakian version of "Who Wants to be a Millionaire". All foreign language programming (other than that in the Czech language) is dubbed into the Slovak language. Markiza TV also receives foreign news reports and film footage from CNN, Reuters, APTN and SNTV, which it integrates into news programs.

Advertising

Markiza TV derives revenues principally from the sale of commercial advertising time through media buying groups and independent agencies. Advertisers include large multinational firms such as Procter & Gamble, Henkel, Unilever, Wrigley, Kraft Jacobs, Ferrero, Suchard, Danone Group, Nestle and Benckiser, though no one advertiser dominates the market. Television stations are permitted to broadcast advertising for up to 15% of total daily broadcast time and up to 20% of broadcast time in any single hour.

Competition

The Slovak Republic is served by two national public television stations, STV1 and STV2, which dominated the ratings until Markiza TV began broadcasting in 1996. STV1 and STV2 reach nearly all of the Slovak population. The Czech Republic based Nova TV had an approximate 10% audience share in the Slovak Republic for 2001. Markiza TV also competes with the private broadcasters Global TV (launched April 2000) and TA3 (launched September 2001). Global TV and TA3 reach 33% and 42% of the population respectively. Markiza TV also competes with public television stations located in Austria, the Czech Republic and Hungary with signals that reach the Slovak Republic, additional foreign private television stations and foreign satellite stations.

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On October 23, 2001, the Slovak Media Council awarded a TV transmission license to TV Global, a company controlled by Ceska Produckcni 2000 and managed by Vladimir Zelezny, with whom the Company is in dispute in connection with Nova TV in the Czech Republic. TV Global has 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.

Regulation

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

Under the license pursuant to which Markiza TV operates and the new legal regulatory framework, Markiza TV is required to comply with several restrictions on programming, including but not limited to the origin of the programming content. These restrictions include the following broadcast rules: a minimum of 40% must be Slovak production; 10% must be programming for children or youth; broadcasts of first run films and series must have a minimum of 50% European production; and no more than 20% of foreign first run films and series may be in the Czech language.

In addition to the restrictions discussed above and under "Advertising", there are additional regulations that relate to advertising content. These include, but are not limited to, (a) a ban on tobacco advertising, and (b) a ban on advertisements of alcoholic beverages between 6.00am and 10.00pm, save for beer. There are also restrictions as to the frequency of advertising breaks both during and between programs.

License Renewal

The Markiza license will expire in 2007. According to the 2000 Act on Broadcasting and Retransmission, a license can be extended once, for an additional 12 years. The Council for Broadcasting and Retransmission ("Media Council") decides on the extension. Applications for extension must be filed 19 months prior to the expiry date. The Media Council has discretion to grant an extension following its observation of the performance of the station in the preceding license period, including, in particular, the station's contribution to Slovak culture and the development of the Slovak media market.

UKRAINE

General

Ukraine, a parliamentary democracy of 49.6 million people, is the most populous market served by the Company. Nearly 100% of Ukrainian households have television, and cable penetration is approximately 27% in cities with a population over 50,000. An estimated per capita GDP of $673 in 2001 ($650 in 2000) is the lowest of all the Company's markets. After a decade of negative growth, 2001 saw a recovery with GDP rising by approximately 5%. However, economic, political and privatization programs have lagged behind schedule.

The Key Agreement among Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd, Innova Film GmbH, International Media Services Ltd, Ukraine Advertising B.V. CME Ukraine Holding GmbH and CME Ukraine B.V., entered into as of December 23, 1998, permits the Company 60% of the economics of the Studio 1+1 Group.

In addition to its ownership in the Studio 1+1 Group, the Company also has a passive 30% interest in Gravis, a local television station. No value is currently ascribed to this ownership interest.

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Service Companies : Innova, IMS

The Studio 1+1 Group consists of several entities in which the Company holds direct or indirect interests. The Company owns a 60% equity interest in each of Innova Film GmbH ("Innova"), Ukraine Advertising Holding B.V. ("UAH") and International Media Services ("IMS"). Innova holds 100% of Intermedia, a Ukrainian company, which in turn holds a 30% equity interest in Studio 1+1, the license holding company in the Ukraine. UAH held a 50% interest in Prioritet, the main vehicle for advertising sales up until January 1, 2001. UAH will be dissolved in 2002 following the registration of the sale of its shares in Prioritet.

Innova and IMS provide programming and production services to Studio 1+1 Ltd, the license holding company. UAH was responsible for selling Studio 1+1 Ltd advertising air time until January 2001 when this function was out-sourced to Video International ("VI").

License Company : Studio 1+1

Current Ukrainian legislation limits direct foreign equity holdings in broadcasting companies to 30%. At present the Company's interest in Studio 1+1 Ltd is, indirectly, 18%. Existing agreements commit all the shareholders of Studio 1+1 to increase the direct holding of the Company, or one of its subsidiaries, when legislation permits this.

Studio 1+1 Group entered into an agreement with VI to sell advertising for Studio 1+1 on an exclusive basis from January 1, 2001 for the remaining term of the license. On July 15, 2001, it was agreed with VI that it would also be permitted to sell advertising on behalf of ICTV, a minor television station based in Kiev. The Company believes that this will enhance the overall ability of VI to increase advertising revenue for the Ukraine operation.

All significant decisions of the entities in the Studio 1+1 Group are taken by the shareholders, requiring a majority vote (other than decisions of the shareholders of the Studio 1+1 Ltd, the license holding company, which require a 75% vote). Certain fundamental corporate matters of the other entities require 61% shareholder approval.

Operations : Studio 1+1

Studio 1+1 broadcasts programming and sells advertising on Ukrainian National Channel Two ("UT-2"), one of Ukraine's state-owned television channels. UT-2 reaches approximately 95% of Ukraine's population. Television advertising revenue continued to recover in 2001 to approximately $50 million. Studio 1+1 attained 22% average prime time audience share during 2001 (32% in the target under 45 age group). Studio 1+1 began broadcasting on UT-2 in January 1997.

Programming

Studio 1+1's programming strategy is to appeal to a mass market audience with an emphasis on the below aged 45 target audience. The rating success of Studio 1+1 has been achieved through a new programming strategy that has resulted in a balanced combination of both United States originated programming and new, popular, local programs, including Russian criminal and action series and self-produced Ukrainian shows, programs and news scheduled in prime-time. The station broadcasts for 14 hours per day during the week and 15 hours per day on the weekend, including locally produced news, variety shows, game shows and magazine programs as well as a broad range of popular and high quality films from international distributors. Studio 1+1 broadcasts a Ukrainian version of "Who Wants to be a Millionaire". In 2001, Studio 1+1 produced and co-produced approximately 1,500 hours of programming, which primarily consists of a daily breakfast show, news broadcasts and news related programs, talk shows , criminal investigations, game shows, sport and lifestyle magazine shows and comedy shows. In 2001, such original local programming together with other Ukrainian programming considered local programming by Ukrainian laws comprised approximately 55% of Studio 1+1's total broadcast time.

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Studio 1+1 has secured exclusive territorial or local language broadcast rights in Ukraine to a large number of successful high quality American, Russian and Western European programs and films from many of the major studios, including Twentieth Century Fox, Warner Bros., Paramount Pictures, Walt Disney, Universal Pictures and CBS. Special events aired include coverage of the Pope's visit to Ukraine, an anniversary program remembering the atrocities at Baba Yar, a documentary on Osama Bin Laden and a terrorism related special broadcast. Studio 1+1 has agreements with Reuters for foreign news packages and other footage to be integrated into its programming. All foreign language programs and films (other than those in the Russian language) are dubbed into the Ukrainian language. Studio 1+1 broadcasts more than 80% of its total air time in the Ukrainian language.

Advertising

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

An agreement was signed to transfer UAH's 50% interest in Prioritet to Video International ("VI"), a Russian based company. This transfer forms part of an overall agreement signed with VI on March 14, 2001, for VI to sell advertising for Studio 1+1 on an exclusive basis up until the end of the broadcasting license in 2006.

Competition

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

Regulation

Studio 1+1 provides programming to UT-2 pursuant to a ten-year television broadcast license contract expiring in 2006. Broadcasts of Studio 1+1's programming and advertising on UT-2 are regulated by the State Committee on Television and Radio of Ukraine and the National Council on Television and Radio of Ukraine. These agencies enforce Ukraine's media laws, which include restrictions on the content of programming and advertising and limitations on the amount and placement of advertising in programs. All advertising of alcohol and tobacco on TV is banned in Ukraine. Programming produced in Ukraine must account for at least 70% of all programming (including dubbing of purchased programming into the Ukrainian language) and programming produced by Studio 1+1 must account for 49% of all programming.

License Renewal

The Studio 1+1 license expires in 2006. Licenses in Ukraine are renewed by the National Council for Television and Radio Broadcasting ("Media Council") in accordance with the terms of the 1995 Act on Television and Radio Broadcasting ("Media Act"). The Media Council may extend the license term in an administrative procedure. The license must be extended for another 7 years, if the applicant meets all conditions set forth for a broadcaster in the Media Act.

CORPORATE OPERATIONS

The Company's London based central service organization provides each television operation with a central resource. The service functions provided include sales, financial and legal services, including financial planning and analysis, cost control and network management.

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SEASONALITY

The Company, like other television operators, experiences seasonality, with advertising sales tending to be lowest during the third quarter of each calendar year, which includes the summer holiday period (typically July and August), and highest during the fourth quarter of each calendar year. See Item 6, "Quarterly Results and Seasonality" for further discussion.

EMPLOYEES

As of March 1, 2002, CME had a corporate operations staff of 18 employees (compared to 19 as of December 31, 2000) and its Subsidiaries had a total of approximately 1,796 employees (compared to 1,910 as of December 31, 2000). None of CME's employees or the employees of any of its Subsidiaries are covered by a collective bargaining agreement. The Company believes that its relations with its employees are good.

For additional information with regard to Segment Data see Part II, Item 8, Note 13 "Segment Data".

Item 2. PROPERTIES

CME Development Corporation leases office space in London in one location. The lease, for 3,958 square feet of office space, expires in 2015.

The Company has previously entered into an agreement on behalf of MPI which gives the Company the option to acquire the facility in Bucharest which contains some of PRO TV's studios. The purchase price is currently being negotiated. The Company owns a portion of a building in Ljubljana which contains POP TV and Kanal A's studios and offices. STS owns its principal office facility near Bratislava. Studio 1+1 leases offices in central Kiev and studio space outside Kiev.

The Company's Czech Republic operation owns a building of approximately 65,000 square feet which contains modern studios in Prague, Czech Republic.

Item 3. LEGAL PROCEEDINGS

The Company owns a 99% voting and economic interest in Ceska nezavisla televizni spolecnost, spol. s.r.o. ("CNTS"). In January 1993, CET 21, spol. s.r.o. ("CET") was awarded a terrestrial television broadcast license in the Czech Republic. This license, which was recently extended, expires in January 2017. CET was awarded the license with the full knowledge and understanding of the Council of the Czech Republic for Radio and Television Broadcasting (the "Media Council") that CEDC (the Company's direct predecessor in interest) was a direct participant in the license application. With the involvement of the Media Council, the Company and CET entered into a Memorandum of Association and Investment (the "Memorandum of Association") that provided for the creation of a company, CNTS, to operate and broadcast the planned television station. An associated agreement further provided that CET did not have the authority to broadcast without the direct participation of CEDC. Betw een 1993 and August 1999, CNTS performed essentially all of the activities associated with operating and broadcasting Nova TV. Nova TV became one of the most successful television stations in Europe.

In 1996 and 1997, however, under compulsion resulting from proceedings initiated by the Media Council, the Company and CET amended the Memorandum of Association and entered into other contracts to reflect the change in the Memorandum of Association. One such contract (the "Cooperation Contract") expressly identified CET as the license holder and the "television broadcasting operator" of TV Nova. Pursuant to the Cooperation Contract CNTS prepared, completed and delivered television programming that was then distributed by CET, which broadcast the Nova TV signal. CNTS also collected all of Nova TV's advertising and other revenues, and retained the balance of those revenues net of Nova TV's operating expenses less Kc 100,000 ($2,600) per month payable to CET.

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On August 5, 1999, CET pre-empted CNTS's transmission and began broadcasting a substitute signal for Nova TV from a site other than CNTS's studios. In addition, on the same day, CNTS received notification from CET that CET was withdrawing from the Cooperation Contract due to CNTS's alleged failure to supply CET with the daily program log for Nova TV on August 4, 1999. CET representatives also stated publicly that, in future, CET would not use CNTS to provide services for Nova TV. CET has continued to pre-empt all of CNTS's programming for Nova TV. CET carried out these actions with the active support and encouragement of the Media Council. CNTS believes that CET's withdrawal from the Cooperation Contract was not legally effective since CNTS did not materially breach the Cooperation Contract and that the Cooperation Contract therefore remains in effect.

On August 9, 1999, CNTS filed a motion in the Regional Commercial Court in Prague for an injunction enjoining CET from entering into service relationships with other companies and further requested the court to declare the Cooperation Contract to be in full force and effect. The Regional Commercial Court issued a favorable ruling on May 4, 2000 which was subsequently reversed by a December 14, 2000 ruling from the High Court. On November 14, 2001, the Czech Supreme Court cancelled the High Court's decision and remanded the case to the trial court for a fuller development of the record.

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

The Company believes that the Memorandum of Association, the Cooperation Contract and the course of dealing over the life of Nova TV establish that CNTS is legally entitled and authorized to operate Nova TV in cooperation with CET.

On April 19, 1999, CNTS dismissed Dr. Vladimir Zelezny from his position as Executive and General Director of CNTS, for taking actions that exceeded his authority, breached his fiduciary duties and were against the interests of CNTS. After an internal investigation, it was learned that Dr. Zelezny had executed an unlimited CNTS guarantee for the liabilities of a Czech television program acquisition company, AQS a.s. ("AQS"), without any authorization. The investigation also indicated that Dr. Zelezny had reassigned the program acquisition department of CNTS to AQS, had notified international providers of television programming that AQS would replace CNTS as the program service provider to Nova TV, and had taken other serious and substantial actions contrary to the interests of CNTS.

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

On February 9, 2001, the ICC Arbitration Tribunal issued a final award in this proceeding, finding that Dr. Zelezny had breached the share purchase agreement and that the share purchase agreement was a valid and enforceable contract. In light of those holdings, the Tribunal ordered Dr. Zelezny to immediately refund to the Company the $23,350,000 it had paid him pursuant to the share purchase agreement, plus interest (a total of approximately $27,100,000, accruing further interest at approximately $3,200 per day) and costs of $250,000. On March 24, 2002 the total amount was $28,388,000. The Tribunal ordered the Company to return the Nova Consulting shares to Dr. Zelezny, but only after receipt of the money owed by Dr. Zelezny. The Tribunal also rejected Dr. Zelezny's claim for the balance of the purchase price of $5,188,000. The Czech courts have ruled that the Amsterdam award against Dr. Zelezny is valid and enforceable in the Czech Republic. The Com pany is aggressively pursuing enforcement and collection of the award in several legal actions in several jurisdictions and will continue to do so until the award is satisfied. As of March 18, 2002 the Company has not been able to collect any part of the award. There can be no assurance that the Company will be able to collect all or any significant part of the award plus accrued interest.

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On June 30, 1999, CNTS filed an action with the Regional Commercial Court of Prague requesting that the court declare invalid an agreement between CET and another Czech company, Produkce, a.s. under which CET purported to transfer CET's 1% participation interest in CNTS to Produkce, a.s., since that transfer did not comply with the CNTS Memorandum of Association. The Court determined that the transfer was invalid; CET and Produkce have appealed and the appeal is pending.

On August 9, 1999, CNTS filed a motion in the Regional Commercial Court of Prague for an injunction enjoining CET from entering into service relationships with other companies and further requested the court to declare Cooperation Contract to be in full force and effect. The Regional Commercial Court issued a favorable ruling on May 4, 2000, which was subsequently reversed by a December 14, 2000 ruling from the High Court. CNTS then appealed the High Court ruling to the Supreme Court which subsequently referred the case back to a first instance court. The litigation before the first instance court is currently pending.

On July 24, 2001, CNTS filed an action against CET with the Municipal Court of Prague seeking the refund by CET of certain payments in an aggregate amount of approximately $4.5 million. The hearing on this action is currently pending.

In December 1999, the Media Council approved CET's request for a share capital increase, which was subsequently approved by CET. As a result of the CET share capital increase, Dr. Zelezny's participation interest in CET was reduced from 60% to 11.8% since he did not subscribe to any of the additional share capital. CME believes that the reduction of Dr. Zelezny's participation interest in CET was designed to frustrate the enforcement of the preliminary order issued in the arbitration, as well as any final award of damages against Dr. Zelezny. CME, CEDC and CNTS filed an action and an administration complaint with the Municipal Court in Prague requesting the Court to cancel the decision of the Media Council. Both actions were denied and CME, CEDC and CNTS will file an appeal.

On August 23, 1999, Ronald S. Lauder, the non-Executive Chairman of the Company's Board of Directors, instituted arbitration proceedings against the Czech Republic under the 1992 Bilateral Investment Treaty between the United States and the Czech Republic. Mr. Lauder initiated the proceedings in his personal capacity as a U.S. national who owns or controls (by virtue of his voting control over the Company) an investment in the Czech Republic. The claim asserted that the Czech Republic harmed Mr. Lauder's investment in CNTS by, among other things, taking unfair and discriminatory actions by reversing its initial approval of an exclusive relationship between CNTS and CET, and by failing to act to remedy the effects of the improper actions of Dr. Zelezny. Mr. Lauder sought monetary damages arising from harm caused to CNTS by the Czech Republic's actions.

On September 3, 2001, the UNCITRAL Tribunal in Mr. Lauder's arbitration issued a final award, finding that the Czech Republic committed a breach of its obligation under the U.S.-Czech Bilateral Investment Treaty to refrain from arbitrary and discriminatory measures when, in early 1993, the Czech Media Council changed its original position allowing Mr. Lauder to make an equity investment in the television license holder (CET) and insisted that Mr. Lauder's participation could be made only through a joint venture company (CNTS). However, the Tribunal denied Mr. Lauder's claim for a declaration that the Czech Republic committed further breaches of the Treaty and denied all of Mr. Lauder's claims for damages. The Tribunal ordered that each party should bear its own legal costs and that the costs of the arbitration should be borne equally by the parties.

On February 22, 2000, a wholly owned subsidiary of the Company instituted arbitration proceedings against the Czech Republic under the 1991 Bilateral Investment Treaty between The Netherlands and the Czech Republic. The claims asserted, remedies sought and procedure followed are substantially similar to those in the arbitration proceedings initiated by Mr. Lauder against the Czech Republic.

On September 13, 2001, the Tribunal in this arbitration issued a final partial award on liability, finding that, by the actions and inactions of the Czech Media Council in 1996 and 1999, the Czech Republic violated several provisions of the Netherlands-Czech Bilateral Investment Treaty, including the obligation not to deprive an investor of its investment. The Tribunal ruled that the Czech Republic is obligated to remedy the injury that CME suffered as a result of its violations of the Treaty by payment of the fair market value of CME's investment as it was before consummation of the Czech Republic's breach of the Treaty in 1999, in an amount to be determined at a second phase of the arbitration. The Tribunal further ordered the Czech Republic immediately to pay $1,008,000 to CME as a refund to CME of its legal costs and expenditures and of its payments of the Tribunal's fees and disbursements. The Czech Republic has filed a collateral challenge of the final partial award in the

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Swedish courts. The Czech Republic alleges in their collateral challenge that their party appointed arbitrator was not allowed to fully participate in the deliberations leading to the Partial Final Award, that Czech law was not given precedence and should have been, and that the entire matter had already been dealt with by the London based tribunal in the Lauder arbitration and should not have been heard again on the basis of the principal of res judicata. The Czech Republic also argues in its pleadings that the Tribunal acted beyond its mandate in a number of ways including by declaring that in the upcoming quantum phase of the hearings CME's damages should correspond with the fair market value of the destroyed CNTS investment, instead of just finding the Czech Republic liable and leaving all other questions for this upcoming phase. All of these claims are in the Company's opinion incorrect as matters of fact or law and have been raised by the Czech Republic solely for the purpose of atte mpting to delay enforcement of any award. The Company will file its response to the collateral challenge on April 1, 2002 and anticipates that this matter will be heard in the fourth quarter of 2002.

The hearings to quantify CME's damages will take place from June 24 to July 5, 2002, and it is expected that a final award will be issued by the Tribunal later in 2002. CME has submitted to the Tribunal evidence claiming $526.9 million plus interest at 12.5% from August 1999 as the amount of damages due from the Czech Republic. The Czech Republic's response to the Company's $526.9 million dollar claim is due to be filed not later than May 1, 2002.

The Company believes that CET's actions violate the Cooperation Contract and CET's obligations under the CNTS Memorandum of Association, as well as Czech media laws, and that the actions of the Czech republic violate its obligations with respect to foreign investments under international law. The continued suspension of CNTS's operations has had a material adverse effect on the Company.

In our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2000, we 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 Ukraine's Supreme Arbitration Court.

Subsequent to that, AITI commenced another action, this time in the Arbitration Court in the City of Kiev, a lower court to the Ukraine Supreme Arbitration Court, 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 24 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 Arbitration Court of the City of Kiev ruled in AITI's favor. The Ukraine TV Council, and Studio 1+1, acting as an interested third party, have appealed the Arbitration Court's decision to the Court of Appeal. The judgement of this appeal court is ultimately subject to any party obtaining leave to appeal to the Court of Cassation (previously called Supreme Arbitration Court), the same court that ruled in favor of Studio 1+1 on April 5, 2001 in relation to the almost identical claim also brought by A ITI.

The Public Prosecutor's Office of the City of Kiev is also involved in the appeal of this decision. The reason for this is that the Prosecutor's Office acts on behalf of the State of Ukraine when a State institution is a defendant in a court action and there is a claim against funds in the State budget. Pending a decision of the Court of Appeal (and ultimately the Supreme Arbitration Court if leave is granted to appeal to it) the decision of the Arbitration Court of the City of Kiev has been stayed and Studio 1+1 continues to broadcast without interruption. The Company believes that the decision of the Arbitration Court of the City of Kiev is wrong on both its facts and its determination of law and wholly inconsistent with the previous decision of the Ukraine Supreme Arbitration Court, and will assist in the pursuit of the appeal vigorously. Should the Courts find against the Ukraine Media Council and the Studio 1+1 licence is withdrawn, Studio 1+1 would have to cease broadcasting immediat ely.

The Company is involved in ongoing disputes with a minority shareholder in MPI, including disputes relating to administration, operational and share ownership issues and related party transactions. As part of this dispute, Mr Tiriac or his representatives have commenced three court actions against MPI, one of which it withdrew, a second that continues but it is not believed by the Company to have any merit.

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The third action was brought on December 20, 2001, by Rootland Trading Limited ("Rootland"), the vehicle through which Mr. Tiriac holds his stake in MPI. It was brought in the Bucharest Commercial Court against MPI and its remaining shareholders, including the Company. The basis of the claim is that due to Rootland contributing to a share capital increase in advance of the remaining MPI shareholders, it has been uniquely allotted additional shares in MPI, thereby increasing its stake from 19% to a controlling 64.9%. The Company believes that this claim was initiated as part of a partnership dispute involving Mr. Tiriac and Mr Sarbu. The Company believes that Rootland's claim is without merit and will defend the claim vigorously.

On February 11, 2002, the Securities and Exchange Commission requested that the Company voluntarily allow the Commission's Staff to inspect certain documents and records, related primarily to actual or potential liabilities payable by the Company or Media Pro International SA (the Romanian operating company in which the Company has a 66% interest) to any government entity in Romania. The Company believes that it has fully disclosed all its liabilities (actual and potential) in relation to all the jurisdictions within which it operates, including liabilities to governmental entities, in its filings with the Securities and Exchange Commission. The Company has and will continue to cooperate fully with the Commission's staff in the conduct of its inquiry.

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

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

None.

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PART II

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

CME's Class A Common Stock began trading on the Nasdaq National Market on October 13, 1994 under the trading symbol "CETV." On October 10, 2000, CME's Class A Common Stock was delisted from the Nasdaq National Market and began trading on the quotation service provided by the National Quotation Bureau, LLC "Pink Sheets" and on the OTC Bulletin Board under the trading symbol "CETVF.OB".

On March 21, 2002 the last reported sales price for the Class A Common Stock was $18.80.

The following table sets forth the high and low sales prices for the Class A Common Stock for each quarterly period during the last two fiscal years of the Company and for the first quarter of 2002.

Price Period	High	Low
2000
First Quarter	19.250	6.500
Second Quarter	12.063	6.750
Third Quarter	10.813	1.594
Fourth Quarter	3.125	0.219
2001
First Quarter	3.250	0.344
Second Quarter	2.700	1.500
Third Quarter	10.600	1.100
Fourth Quarter	11.350	6.500
2002
First Quarter (to March 21, 2002)	24.000	9.30

At March 21, 2002, there were 29 holders of record (including brokerage firms and other nominees) of the Class A Common Stock and five holders of record of the Class B Common Stock. There is no established public trading market for the Class B Common Stock.

DIVIDEND POLICY

The Company has not declared or paid and has no present intention to declare or pay in the foreseeable future any cash dividends in respect to any class of its Common Stock. The Company's ability to pay cash dividends is primarily dependent upon receipt of dividends or distributions from its Subsidiaries over some of which it has limited control. In addition, the indentures which govern the Company's 9⅜% Senior Notes Due 2004 and 8⅛% Senior Notes Due 2004 restrict the ability of CME to declare and pay cash dividends. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Item 6. SELECTED FINANCIAL DATA

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

SELECTED CONSOLIDATED FINANCIAL DATA

(dollars in thousands, except per share data)

The selected financial information presented below for the five years ended December 31, 2001 is derived from the audited Consolidated Financial Statements of the Company. The following selected financial information should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto for the years ended December 31, 2001, 2000 and 1999, included elsewhere herein.

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	Years Ended December 31,
	2001	2000	1999	1998	1997
	(dollars in thousands)
OPERATING DATA:
Net Revenues	$ 73,238	$ 76,813	$ 129,323	$ 174,291	$ 146,155
Total station operating costs and expenses	60,469	77,808	139,405	112,836	92,925
Selling, general and administrative expenses	19,992	19,402	25,898	25,250	21,162
Corporate operating costs and development expenses	13,057	11,417	18,753	22,670	25,467
Amortization of goodwill	1,747	1,670	49,091	10,606	14,584
Restructuring charge	-	-	-	2,552	-
Total operating expenses	95,265	110,297	233,147	173,914	154,138
Operating (loss)/income	(22,027)	(33,484)	(103,824)	377	(7,983)
Equity in income/(loss) of unconsolidated affiliates	7,137	(514)	(11,021)	(3,398)	(10,340)
Loss on impairment of investments in unconsolidated affiliates (1)	-	-	-	-	(20,707)
Interest and other income	1,943	3,543	5,974	25,094	10,087
Interest and other expense	(19,702)	(21,788)	(20,003)	(42,644)	(15,858)
Change in the fair value of derivative	(1,576)	-	-	-	-
Gain on sale of Subsidiaries (2)	1,802	-	-	-	-
Foreign currency exchange gain/ (loss)	1,651	(2,286)	12,983	(6,999)	(5,283)
Gain on resolution of disputed investment payable (note 7)	5,188	-	-	-	-
Gain on sale of investment	-	17,186	25,870	-	-
Other income	-	-	8,250	-	-
Loss before provision for income taxes, minority interest and discontinued operations	(25,584)	(37,343)	(81,771)	(27,570)	(50,084)
Provision for income taxes	(1,381)	(96)	(1,518)	(15,856)	(14,608)
Loss before minority interest and discontinued operations	(26,965)	(37,439)	(83,289)	(43,426)	(64,692)
Minority interest in loss/(income) of consolidated subsidiaries	2,138	(59)	213	(156)	1,066
Net loss from continuing operations	(24,827)	(37,498)	(83,076)	(43,582)	(63,626)
Discontinued operations (3) :
Operating income/(loss) of discontinued operations (Hungary)	-	-	(10,208)	(37,576)	(4,480)
Gain on disposal of discontinued operations (Hungary)	2,716	-	3,414	-	-
Operating loss of discontinued operations (Poland)	-	-	-	(15,289)	-
Loss on disposal of discontinued operations (Poland)	-	-	-	(28,805)	(16,986)
Net loss	$ (22,111)	$ (37,498)	$ (89,870)	$ (125,252)	$ (85,092)
Net loss per common share from :
Continuing operations - basic and diluted	$ (7.50)	$ (11.35)	$ (25.78)	$ (14.45)	$ (21.29)
Discontinued operations - basic and diluted	0.82	-	(2.11)	(27.08)	(7.18)
	$ (6.68)	$ (11.35)	$ (27.89)	$ (41.52)	$ (28.47)
Common shares used in computing per share amounts (000s)	3,306	3,305	3,223	3,016	2,988
BALANCE SHEET DATA:
Current assets	66,474	91,666	103,070	152,283	174,631
Total assets	151,265	197,099	236,187	374,507	447,997
Total debt	176,311	191,482	198,128	230,771	230,720
Shareholders' (deficit)/equity	(86,796)	(65,878)	(35,236)	65,707	157,582
OTHER DATA:
Broadcast cash flow (4)	$1,277	$ 4,260	$ 15,366	$ 49,938	$ 42,695
Cash flow from operations	(15,004)	(15,529)	(12,702)	(9,172)	(21,210)
Cash flow from investing activities	5,550	19,516	14,364	(74,857)	(115,662)
Cash flow from financing activities	(5,899)	(2,398)	(6,377)	22,267	160,113

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

(2) On November 22, 2001 the Company sold its 70% interest in Video Vision International Srl and a gain of $1,802,000 has been recognized..

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

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

Quarterly Results and Seasonality

The following table sets forth unaudited financial data for each of CME's last eight fiscal quarters

		Year Ended December 31, 2001
		First Quarter	Second Quarter	Third Quarter	Fourth Quarter
		(US dollars in thousands)
Income Statement data:
	Net Revenues	16,005	20,603	13,590	23,040 (1)
	Operating Loss	(7,906)	(2,588)	(8,565)	(2,968)
	Net Loss	(3,286)	(785)	(14,576)	(3,464)
Net Loss per Share:
	Basic and Diluted	(0.99)	(0.24)	(4.41)	(1.04)

		Year Ended December 31, 2000
		First Quarter	Second Quarter	Third Quarter	Fourth Quarter
		(US dollars in thousands)
Income Statement data:
	Net Revenues	15,370	19,955	13,940	27,548 (1)
	Operating Loss	(9,732)	(11,720)	(8,458)	(3,574)
	Net Loss	(13,669)	(3,105)	(10,994)	(9,730)
Net Loss per Share:
	Basic and Diluted	(4.14)	(0.94)	(3.33)	(2.94)

(1)The fourth quarter results have declined in 2001 compared with 2000 as result of the declining revenues at the Romanian and the Czech Republic operations. The Romanian operations reported a $3,561,000 decline in fourth quarter 2001 revenues compared to 2000, while the Czech Republic declined by $851,000.

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

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

Overview

The operating results for the twelve months ended December 31, 2001 in the Slovak Republic, Slovenia and Ukraine exceeded the Company's expectations. The results of the Company's Romanian operations for the twelve months ended December 31, 2001 are significantly below expectations.

The results of the Company's Slovenian operations have improved considerably compared to 2000 as a result of the Company acquiring control over the economics and programming of Kanal A on October 11, 2000.

The results of the Ukrainian operations have improved compared to 2000, due to the continued recovery of the Ukrainian advertising market, a restructured sales force at Studio 1+1 and improved annual average prime time audience share compared to 2000. In 2002, the Company expects further growth in net revenues for Ukraine, where the television advertising market grew by 43% in 2001. 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.

Inter, the main competitor in Ukraine market has extended its co-operation agreement with ORT, the dominant Russian Broadcaster, allowing Inter to add to its schedule a significant amount of very successful Russian series. Inter now has the opportunity to increase its average audience share and change its programming structure to appeal to a younger audience, the target audience of Studio 1+1.

The Ukraine operations are a third party to litigation involving the Ukraine TV Council which challenges the validity of the modifications made to certain licenses, including the license granted to Studio 1+1. The Company believes that this action has no merit and will be rejected by the higher Ukraine courts. On April 5, 2001 the Supreme Arbitration Court of Ukraine found in favor of the Ukraine TV Council in an almost identical action by AITI in January 2001. Should the courts find against the Ukraine TV Council and the Studio 1+1 license is withdrawn, Studio 1+1 would be compelled to immediately cease broadcasting and this would materially adversely affect the operating results of the Company. (See Part I, Item 3, "Legal Proceedings" for a further discussion.)

The results of the Company's Slovak operations are in line with the continued general economic recovery in the Slovak Republic. On January 18, 2002, the Company entered into an interest participation transfer agreement to acquire a 34% interest in Markiza and to re-adjust CME's share in STS' profits. As a result of this acquisition, the Company will generally be entitled to 70% of STS' distribution of profits as opposed to 80% prior to the acquisition. The Company also has the right to appoint one of three authorized co-signatories of Markiza, which give CME a blocking control over Markiza's significant activities. The ownership transfer to the Company was approved by the Slovak Media Council at its meeting on February 11, 2002. The transfer was registered with the Slovak Commercial Registry on March 13, 2002.

On October 23, 2001, the Slovak Media Council awarded a TV transmission license to TV Global, a company controlled by Ceska Produckcni 2000, managed by Dr Vladimir Zelezny. TV Global has 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.

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 Mr Rusko be found to be in violation of the Slovak Media Act, significant financial or non-financial penalties may be imposed on Markiza-Slovakia s.r.o.

In Romania, despite positive national economic statistics, strong sales competition between the local stations appears to have caused the TV advertising market to decline from $69 million in 2000 to $63 million in 2001. The increasingly competitive market appears to have allowed major advertisers to either reallocate or reduce their advertising budgets in Romania during 2001. The Company has restructured its Romanian subsidiary's operations and implemented controls to reduce costs in line with the declining revenues. The Romanian operation has experienced difficulties generating sufficient cash funds to continue operations and it is anticipated that

Page 24

this will continue unless the collection of accounts receivable is accelerated. MPI has requested a re-scheduling of its tax liabilities. Should such re-scheduling fail to be granted and the Romanian tax authorities demand immediate payment in full of all potential tax liabilities, the Romanian operation would experience difficulties in continuing to operate.

As at December 31, 2001, 35% of the Romanian subsidiary's accounts receivable balance was more than 360 days old. Accordingly, Management increased the Company's bad debt provision by an additional $2,183,000 in the fourth quarter. On the Company's balance sheet, the total provision for bad debt is $8,219,000 of which the provision for Romanian bad debts is $6.5 million. Unless the collection of accounts receivable improves, a further provision could be required in 2002.

On February 11, 2002, the Securities and Exchange Commission requested that the Company voluntarily allow the Commission's Staff to inspect certain documents and records, related primarily to actual or potential liabilities payable by the Company or MPI (the Romanian operating company in which the Company has a 66% interest) to any government entity in Romania. The Company believes that it has fully disclosed all its liabilities (actual and potential) in relation to all the jurisdictions within which it operates, including liabilities to governmental entities, in its filings with the Commission. The Company has and will continue to cooperate fully with the Commission's staff in the conduct of its inquiry.

The Company is involved in ongoing disputes with a minority shareholder in MPI including disputes relating to administration, operational and share ownership issues and related party transactions. As part of this dispute, the minority shareholder has commenced three court actions against MPI, one of which it withdrew, a second that continues but it is not believed by the Company to have any merit, and a third under which the minority shareholder is claiming that its stake has increased to a controlling interest in MPI following an alleged unilateral share capital increase (see Part I, Item 3 "Legal Proceedings" for a more detailed description of this third claim).

PRO TV International rebroadcasts PRO TV and Acasa programming throughout Europe and Israel, using the existing PRO TV and Acasa satellite infrastructure. In 2002 MPI entered into an agreement under which PRO TV International will provide program content for broadcast in the USA at no direct cost to Pro TV International. The agreement is for four years and broadcast in the USA is expected to commence in April 2002. PRO TV International should be profitable by April 2002, two years after its launch.

On November 22, 2001 the Company sold its 70% interest in Video Vision International Srl ("Video Vision"), a Romanian post-production company, for the initial price that CME paid for its 70% stake. The gain on sale of the subsidiary, Video Vision, was $1,802,000 which reflects a write back of prior years losses from this subsidiary. This has been disclosed in the Consolidated Statements of Operations.

Following the dispute between CNTS and CET, the Company minimized its operations in the Czech Republic during 2001. On July 31, 2001, 47 of the 56 remaining staff at CNTS had their employment terminated. The Company intends to sell its building and all of its remaining assets in the Czech Republic, as required to mitigate the Company's damages claim. CNTS will continue to operate and pursue the outstanding legal claims against Dr Zelezny and the Czech Government. (See Part I, Item 3, "Legal Proceedings" for a further discussion).

The Company's revenues are derived principally from the sale of television advertising to local, national and international advertisers. At this time, the slowdown in the US and Western European appears to have had limited impact on the economies in the markets in which the Company operates. Should the major fast-moving consumer goods multinationals decide to restrict their European expenditures, there may be an adverse material effect on the Company's financial position, results of operations and cash flows. To date there has been no indication that this will occur.

The Company, through a wholly-owned subsidiary, is still party to arbitration proceedings against the Czech Republic. See Part I, Item 3, "Legal Proceedings". On September 13, 2001, the Tribunal in this arbitration issued a partial final award, finding the Czech Republic liable for breaches of the Netherlands-Czech Bilateral Investment Treaty. This partial final award establishes a second round of hearings to quantify damages. CME has submitted to the Tribunal evidence claiming $526.9

Page 25

million plus interest as the amount of damages due from the Czech Republic. Should the Company receive and collect a substantial award, the Company may be in a position to refinance or otherwise satisfy its Senior Notes, which currently have $163,563,000 of principal outstanding (the "Senior Notes"), on or before August 15, 2004. There can be no assurance that the Company will be awarded substantial damages in the second round of hearings, and if awarded such damages, that the Company will be able to collect the award. If substantial damages are not awarded and collected, the Company is likely to experience difficulties in refinancing the Senior Notes without additional external investment. If the Company is unsuccessful in refinancing the Senior Notes, the Company is likely to be unable to continue operations. See "Liquidity and Capital Resources".

The Company's future cash needs, over and above working capital requirements, will depend on the Company's overall financial performance and its future acquisition and development decisions. The Company believes that, taken together, its current cash balances, internally generated cash flow, the sale of Czech Republic assets 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. However, the Company is dependent on cash flows which are outside its direct control and the Company has little margin for error in its twelve month cash flow projections. Under the Senior Notes covenants, the Company's subsidiaries are permitted to raise up to $100 million of secured debt, to which the Senior Notes are structurally subordinate. The Company is currently utilizing less than $15 million of this permission. The Company is currently attempting to secure a line of credit in a n effort to improve liquidity. There can be no certainty that this line of credit will be secured.

Additional Information

The Company, like other television operators, experiences seasonality (seen Item 6 "Quarterly Results and Seasonality"), with advertising sales tending to be lowest during the third quarter of each calendar year, which includes the summer holiday period, and highest during the fourth quarter of each calendar year. The primary expenses incurred in television operations are programming and production costs, employee salaries, broadcast transmission expenses and selling, general and administrative expenses. The Company has incurred and might in the future incur expenses conducting pre-operating activities, as well as reorganizing existing affiliate entities which hold the broadcast licenses. The Company also engages in barter transactions in which its stations exchange commercial advertising time for goods and services.

Application of Accounting Principles

Although the Company conducts operations largely in foreign currencies, the Company prepares its consolidated financial statements in United States dollars and in accordance with 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.

New Accounting Standards

Business Combinations and Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets". FAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under FAS 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 FAS 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and

Page 26

intangible assets acquired prior to July 1, 2001, the Company is required to adopt FAS 142 effective January 1, 2002. The Company has evaluated the effect of implementing FAS 142 on its total goodwill of $16.8 million and does not believe that any material impact will occur.

Derivative Instruments and Hedging Activities

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

Pursuant to SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 - An Amendment of FASB Statement No. 133", which was issued in June 1999, SFAS No. 133 became effective for fiscal years beginning after June 15, 2000 (January 1, 2001 for CME).

The Company occasionally enters into forward foreign exchange contracts. As of January 1, 2001, the Company adopted SFAS No. 133. The application of SFAS No 133 resulted in no impact on adoption and the Company's 2001 interest rate swap transaction with the Royal Bank of Scotland resulted in the Company recognizing a charge of $1,576,000 in 2001.

Impairment or Disposal of Long-Lived Assets

In August 2001, the Financial Accounting Standards Board issued SFAS No 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 will be effective for financial statements of fiscal years beginning after December 15, 2001. The Company expects to adopt this statement for our fiscal year ending December 31, 2002, and does not anticipate that it will have a material impact on the consolidated financial results.

Foreign Currency

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 German marks, 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 Ukraine, 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 transl ation adjustments are reflected as a component of shareholders' equity with no effect on the consolidated statements of operations.

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

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

Page 27

	Balance Sheet At December 31,			Income Statement Weighted average for the years ended December 31,
	2001	2000	% change	2001	2000	% change
Czech koruna equivalent of $1.00	36.27	37.81	4.1%	38.04	38.60	1.5%
German mark equivalent of $1.00	2.20	2.08	(5.8)%	2.18	2.12	(2.8)%
Romanian lei equivalent of $1.00	31,597	25,880	(22.1)%	29,032	21,659	(34.0)%
Slovak koruna equivalent of $1.00	48.47	47.39	(2.3)%	48.51	46.76	(3.7)%
Slovenian tolar equivalent of $1.00	250.95	227.38	(10.4)%	243.99	226.05	(7.9)%
Ukrainian hryvna equivalent of $1.00	5.30	5.43	2.4%	5.29	5.44	2.8%
European Euro equivalent of $1.00	0.89	0.94	5.3%	0.90	0.87	(3.4)%

The Company's results of operations and financial position during 2001 were impacted by changes in foreign currency exchange rates.

Results of Operations

Year ended December 31, 2001 compared to year ended December 31, 2000

The Company's consolidated net revenues decreased by $3,575,000 or 5%, to $73,238,000 for 2001 from $76,813,000 for 2000. This decrease was primarily attributable to a decrease in the net revenues of its Romanian operations. This decrease was partially offset by increases in the net revenues of the Company's Ukrainian and Slovenian operations.

The net revenues of the Romanian operations declined by $7,038,000 or 18% from $39,591,000 in 2000 to $32,553,000 in 2001. This appears to be due to strong sales competition between the TV stations operating in Romania.

The net revenues of the Company's Slovenian operations increased by $4,296,000 or 18% for 2001 compared to 2000 primarily as a result of the Company acquiring control over the operations, economics and programming of Kanal A on October 11, 2000. Kanal A accounted for $6,512,000 of the Slovenian operation's net revenue, an increase of $3,995,000 over the 2000 results. This increase was principally due to Kanal A results being included for a full year in 2001 compared with three months in 2000. The net revenue increase would have been greater had the US Dollar not continued to appreciate against the Slovenian tolar (SIT) during 2001. In local currency terms, net revenues increased by SIT 1,713,974 or 31%.

The net revenues of the consolidated entities of the Company's Ukrainian operations (which includes IMS and Innova but excludes Studio 1+1 Ltd) increased by $556,000, or 6%, from $9,795,000 in 2000 to $10,351,000 in 2001. This increase was a result of the continued recovery in the Ukraine advertising market and outsourcing of the sales force at Studio 1+1 to Video International. The strong market recovery in Ukraine is expected to continue in 2002.

Total station operating costs and expenses (including amortization of program rights and depreciation of fixed assets and other intangibles) decreased by $17,339,000 or 22%, from $77,808,000 in 2000 to $60,469,000 in 2001. The decrease in total station operating costs was primarily attributable to reductions at the Company's Romanian and Ukrainian operations, partially offset by an increase at the Company's Slovenian operations.

The station operating costs of the Company's Slovenian operations increased by $2,133,000 or 12% to $19,424,000 in 2001 from $17,291,000 in 2000. This is the result of the Company acquiring control over the operations, economics and programming of Kanal A on October 11, 2000.

The Romanian operations recorded a decrease in station operating costs of $8,863,000 or 25% from $35,513,000 in 2000 to $26,650,000 in 2001. This is a result of reducing the operations and implementing cost control measures which have reduced costs in all operating categories, in particular reductions in the depreciation of

Page 28

station fixed assets and acquired programming costs. As a result of improved program library management, in particular the renegotiation of licence contracts, a corporate provision of $2,100,000 was reversed, reducing program syndication charges for the year.

The Ukrainian operations recorded a decrease of $9,837,000 in operating costs from $21,275,000 in 2000 to $11,438,000 in 2001, a result of the Company's decision to write down $9,836,000 of the carrying value of the goodwill relating to the Studio 1+1 assets in 2000. The review of goodwill was conducted according to SFAS 121 "Accounting for the Impairment of Long Lived Assets and for Long Lived Assets Disposed of." Partially offsetting the decrease in depreciation and amortization charges, are increased salaries, production costs and acquired programming charges.

Station selling, general and administrative expenses were $19,992,000 in 2001 compared with $19,402,000 in 2000, an increase of $590,000. The increase in selling, general and administrative expenses was attributable to a $5,185,000 increase in the bad debt expense at the Romanian operations, and an increase in Ukraine across all categories, offset by savings at CNTS. CNTS has achieved a decrease of $3,643,000 to $225,000 in 2001 from $3,868,000 in 2000 as a result of a reversal of a provision for legal costs which were not subsequently incurred, based on legal progress in 2001. See Part I Item 3" Legal Proceedings" for further discussion on the ongoing dispute between CNTS and CET.

The Romanian operations had an increase in selling, general and administrative costs of $3,392,000 to $13,359,000 in 2001 from $9,967,000 in 2000. This is a result of the increase of $5,185,000 in the bad debt expense to $6,241,000 in 2001 from $1,056,000 in 2000, partially offsetting savings in all other cost categories.

The Ukraine operation had an increase in selling, general, and administrative costs of $927,000 to $3,466,000 in 2001 from $2,539,000 in 2001 as a result of increases in all cost categories. The Slovenian operations decreased selling, general and administrative costs by $43,000 to $2,946,000 in 2001 from $2,989,000 in 2000 primarily as a result of decrease in marketing and consulting costs.

Corporate operating costs and development expenses increased by $1,640,000, or 14%, to $13,057,000 in 2001 from $11,417,000 in 2000. This increase was primarily a result of a $4,484,000 charge for legal costs relating to the Czech Republic litigation and arbitration. See Part I Item 3, "Legal Proceedings".

Amortization of goodwill and allowance for development costs increased by $77,000, or 5%, to $1,747,000 in 2001 from $1,670,000 in 2000 mainly due to a full year amortization charge against the purchase cost of Kanal A being included in 2001 compared to three months in 2000.

As a result of the above factors, the Company generated an operating loss of $22,027,000 in 2001 compared to an operating loss of $33,484,000 in 2000.

Equity in income of unconsolidated affiliates increased by $7,651,000 to an income of $7,137,000 in 2001 compared to a loss of $514,000 in 2000. The increase is a result of the Slovak operation recording a net income of $1,832,000 compared to a $1,773,000 loss in 2000 and certain entities of the Ukraine operations that are not consolidated recording a net income of $5,305,000 compared to $1,259,000 in 2000. For a further discussion of Slovak and Ukraine operations in total see the section "EBITDA of Combined Operations for the twelve months to December 31,2001 - Non US GAAP"

Net interest and other expense decreased by $486,000 to $17,759,000 in 2001 compared to an expense of $18,245,000 in 2000.

The 2001 change in the fair value of the derivative was a provision for a net loss of $1,576,000 due to the mark to market revaluation of the Royal Bank of Scotland interest rate swap transaction which has been valued in accordance with FAS 133. See "Liquidity and Capital Resources" for a further discussion.

A gain on the sale of a subsidiaries of $1,802,000 was realized in 2001, relating to the sale of Video Vision. On November 22, 2001 the Company sold its 70% interest in Video Vision for the initial price that the Company paid for its 70% stake. The gain on sale of the subsidiary, Video Vision, was $1,802,000 which reflects a write back of prior year's losses from this subsidiary.

Page 29

Net foreign currency exchange gain of $1,651,000 in 2001 compares to a net foreign exchange loss of $2,286,000 in 2000. The increase in the foreign currency exchange gain is a result of the effect of a weaker US Dollar on the Deutsche mark denominated portion of CME's Senior Notes obligations partially offset by the effect of a weaker 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, and by losses on non-US dollar denominated assets and the re-translation of US dollar denominated obligations held by the Company's non-US Subsidiaries. In addition, the Company recorded a foreign exchange loss as a result of a dividend paid by CNTS in February 2000 and a foreign exchange loss on the CNTS dividend declared (but not paid) in the second quarter of 2000.

Gain on sale of investment of $17,186,000 in 2000 relates to the sale by the Company of a note that it received in connection with the Company's sale of a subsidiary in Poland.

A gain on resolution of a disputed investment of $5,188,000 was recorded in the first quarter of 2001. This represents a debt the Company owed Dr. Vladimir Zelezny, the former General Director of CNTS, which is no longer payable following the ICC Arbitration Tribunal award of $27,100,000 on February 9, 2001. See Part I Item 3 "Legal Proceedings".

Provision for income taxes was $1,381,000 in 2001 compared to $96,000 in 2000, due to increases in the income tax provision for Ukraine ($592,000), the Czech Republic ($374,000) and at corporate ($415,000).

Minority interest in the loss of consolidated subsidiaries was $2,138,000 in 2001 compared to a minority interest in income of $59,000 in 2000. 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 company's losses. A cash contribution of $2,070,000 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 from the continuing operations of the Company was $24,827,000 in 2001 compared to $37,498,000 in 2000.

The operating gain of $2,716,000 on discontinued operations in Hungary relates to the release of provisions no longer deemed necessary as the company is in liquidation.

Year ended December 31, 2000 compared to year ended December 31, 1999

The Company's consolidated net revenues decreased by $52,510,000, or 41%, to $76,813,000 for 2000 from $129,323,000 for 1999. The decrease was primarily attributable to the suspension of the broadcast operations of CNTS and partially due to decreases in the net revenues of the Slovenian, Romanian and the consolidated entities of the Ukraine operations. CNTS suspended broadcast operations on August 5, 1999 and has not generated any material revenues since that time. See Part I Item 3 "Legal Proceedings" and below for a further discussion on Nova TV and the ongoing dispute between CNTS and CET.

The Slovenia operations, US dollar net revenues declined for 2000 compared to 1999; however in local currency terms, net revenues increased by 14%. The net revenues of the Romanian operations declined year over year as a result of increased competition in an advertising market which showed no growth year over year. The Romanian advertising market was adversely affected by the elections at the end of 2000 and a lack of Government reforms.

Total station operating costs and expenses (including amortization of program rights and depreciation of fixed assets and other intangibles) decreased by $61,597,000, or 44%, to $77,808,000 for 2000 from $139,405,000 for 1999. The decrease in total station operating costs and expenses was primarily due to the cessation of broadcasting by CNTS and partially attributable to reductions in total station operating costs and expenses at the Romanian and Slovenian operations. See Part I Item 3, "Legal Proceedings" for a further discussion of Nova TV and the on-going dispute between CNTS and CET.

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The decrease at the Romanian operations was a result of a reduction in amortization of programming rights of $5,984,000 and a reduction in depreciation of station fixed assets and other intangibles of $1,053,000. This reduction was partially off-set by an increase in other operating costs and expenses of $475,000 as a result of an increase in production expenses relating to new show formats.

The decrease at the Slovenian operations was a result of a reduction in amortization of programming rights of $879,000, other operating costs and expenses of $735,000 and depreciation of station fixed assets and other intangibles of $377,000 for 2000 compared to 1999.

The consolidated entities of the Ukrainian operations recorded a decrease in amortization of programming rights of $2,716,000 and a decrease in other operating costs and expenses of $1,080,000 for 2000 compared to 1999. These decreases were off-set by an increase in depreciation of station fixed assets and other intangibles of $9,235,000. This increase was primarily the result of a Company review of the carrying value of the goodwill relating to the Studio 1+1 asset and the subsequent determination to write the goodwill down. This review was conducted according to SFAS 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of", and the remaining goodwill relating to the Studio 1+1 asset is $4,916,000.

Station selling, general and administrative expenses decreased by $6,496,000, or 25%, to $19,402,000 for 2000 from $25,898,000 for 1999. The decrease is primarily attributable the cessation of broadcasting by CNTS and partially attributable to reductions in total station selling, general and administrative expenses at the Romanian and Slovenian operations. See Part I Item 3 , "Legal Proceedings" for a further discussion of Nova TV and the on-going dispute between CNTS and CET.

The Romanian operations recorded a reduction in station selling, general and administrative expenses of $78,000. The Slovenian operations recorded a reduction in station selling, general and administrative expenses of $381,000 primarily due to a reduction in taxes. The consolidated entities of the Ukraine operations recorded an increase in station selling, general and administrative expenses of $62,000.

Corporate operating costs and development expenses decreased by $7,336,000, or 39%, to $11,417,000 in 2000 from $18,753,000 in 1999, mainly due to lower corporate operating expenses.

Amortization of goodwill and allowance for development costs decreased by $47,421,000, or 97%, to $1,670,000 in 2000 from $49,091,000 in 1999. This decrease is primarily attributable to the charge of $40,511,000 recorded in 1999 which resulted from a write-down of the goodwill relating to the purchases of additional equity interests in CNTS made by the Company in August 1996 and August 1997. No such charge was recorded in 2000. See Part I Item 3, "Legal Proceedings" for a further discussion of Nova TV and the on-going dispute between CNTS and CET.

As a result of the above factors, the Company generated an operating loss of $33,484,000 in 2000 compared to an operating loss of $103,824,000 in 1999.

Equity in loss of unconsolidated affiliates decreased by $10,507,000 to a loss of $514,000 in 2000 compared to a loss of $11,021,000 in 1999. This decrease was a result of the Slovakia operation recording a loss of $1,773,000 in 2000 compared to a loss of $4,611,000 in 1999 and certain entities of the Ukraine operations that are not consolidated recording net income of $1,259,000 in 2000 compared to a loss of $6,410,000 in 1999.

Net interest and other income changed by $4,216,000 to an expense of $18,245,000 in 2000 compared to an expense of $14,029,000 in 1999. This increase was a result of a Company review of the potential interest and penalties relating to outstanding tax obligations of the Romanian operations and a determination to provide for these charges in the amount of $4,000,000.

Net foreign currency exchange loss of $2,286,000 in 2000 compares to a net foreign exchange gain of $12,983,000 in 1999. In 1999 the Company recorded a large foreign exchange gain due to the significant weakening of the German mark and the Czech koruna. In 2000, the Company recorded a loss on the dividends declared by CNTS due to weakening of the Czech Koruna against the Dollar between the date of declaration and the date the income was recorded.

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Gain on sale of investment of $17,186,000 in 2000 relates to the sale by the Company of a note that it received in connection with the Company's sale of a subsidiary in Poland.

Provision for income taxes was $96,000 in 2000 compared to $1,518,000 in 1999. This decrease is due to the suspension of the broadcasting operations of CNTS and the resulting decrease in net income. See Part I Item 3, "Legal Proceedings" for a further discussion on Nova TV and the ongoing dispute between CNTS and CET.

Minority interest in income of consolidated subsidiaries was $59,000 in 2000 compared to a minority interest in loss of $213,000 in 1999. This change was due to the losses incurred by CNTS off-set by income of Kanal A. See Part I Item 3, "Legal Proceedings" for a further discussion on Nova TV and the ongoing dispute between CNTS and CET and see Item 8, Consolidated Financial Statements".

As a result of these factors, the net loss of the Company was $37,498,000 in 2000 compared to $89,870,000 in 1999.

Liquidity and Capital Resources

Net cash used in operating activities was $15,004,000 in 2001 compared to $15,529,000 in 2000. The decrease of $525,000 was primarily the result of a lower consolidated net loss being recorded in 2001 and the Czech tax authorities returning Kc 281,790,000 ($7,256,000) in cash to the Company in February 2001, partially offset by a decrease in accounts payable and accrued liabilities, and an increase in program payments.

Net cash provided by investing activities was $5,550,000 in 2001 compared to $19,516,000 in 2000. The decrease of $13,966,000 was primarily attributable to the cash proceeds received during 2000 as a result of the sale by the Company of a note it received in connection with the Company's sale of its operations in Poland offset by increase in 2001 cash proceeds from the disposals of fixed assets and loans and advances from affiliates.

The Company had cash and cash equivalents of $22,053,000 at December 31, 2001 compared to $37,510,000 at December 31, 2000.

Included in accounts payable and accrued liabilities, and Duties and other taxes payable as stated in the Company's Consolidated Balance Sheet are the following amounts relating to current tax liabilities and estimated interest and penalties on overdue tax liabilities :

	As at December 31, 2001	As at December 31, 2000
Current tax liabilities	$ 9,421,000	$ 8,524,000
Estimated interest and penalties on overdue tax liabilities	$ 11,706,000	$10,897,000

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 its outstanding tax liability and the associated penalties and interest. Media Vision has received approval for restructuring of its tax liability and the MPI application is still being considered by the Romanian tax authorities. Should such re-scheduling fail to 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 has three main tranches of debt. (1) Senior Notes which are denominated in United States dollar, in part, and in German marks, in part. The principal amount of the Senior Notes ($163,563,000) is repayable on their maturity date, August 15, 2004. (2) A loan agreement with CS which had an outstanding principal balance at December 31, 2001 of Kc 249,764,513 ($7,028,000), 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 paying

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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, include a loan for $4,000,000 maturing in December 2002 and an over draft facility for $3,000,000 maturing October 2002. At December 31, 2001, $989,000 was borrowed under the loan facility and a further $2,660,000 was drawn under the overdraft facility. The $3,000,000 overdraft facility which was due to mature in October 2001 has been extended to October 2002.

In August 1997, CME issued two tranches of Senior Notes (the "Senior Notes") the principal of which becomes due in August 2004. The United States dollar tranche totals $100,000,000 in principal amount and bears interest at a rate of 9⅜% per annum. The German mark tranche totals DM 140,000,000 ($63,621,000) in principal amount and bears interest at a rate of 8⅛% per annum. The Senior Notes raised net proceeds of approximately $170,000,000. The Senior Notes are denominated in United States dollars, in part, and in German marks, in part. The indentures governing the Senior Notes contain certain restrictions relating to the ability of CME and its Subsidiaries and affiliates to incur additional indebtedness, incur liens on assets, make investments in unconsolidated companies, declare and pay dividends (in the case of CME), sell assets and engage in extraordinary transactions.

Under the Senior Notes covenants, the Company's subsidiaries are permitted to raise up to $100 million of secured debt, to which the Senior Notes are structurally subordinate. The Company is currently utilizing less than $15 million of this permission.

In April 1998, the Slovenia operations, Pro Plus, entered into a multicurrency $5,000,000 loan agreement with Creditanstalt AG which matures in May 2005. As at December 31, 2000, the loan was fully drawn. This loan secured by the land, buildings and equipment of POP TV and guaranteed by CME was fully repaid in 2001.

CNTS was the subject of a VAT inspection by the Czech Republic tax authorities for the years 1997 and 1998. As a result of this inspection the Czech tax authorities had levied an assessment seeking VAT payments of Kc 232,777,000 ($6,418,000). The Czech authorities asserted that CNTS was providing certain services to CET and that these services should have been subject to VAT. On February 28, 2001, CNTS received notification from the Czech Republic tax authorities that all tax investigations and assessments had been cancelled. The Czech tax authorities had previously frozen CNTS' 1998 and 1999 income tax prepayments in the amount of Kc 281,790,000 ($7,256,000). These income tax prepayments were returned to CNTS on February 20, 2001.

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 these inspections the Slovene tax authorities had levied an assessment seeking unpaid income taxes, customs duties and interest charges of SIT 1,073,000,000 ($4,276,000). The Slovene authorities have asserted that capital contributions and loans made by CME in the years 1995 and 1996 to Pro Plus should be extraordinary revenue to Pro Plus. On this basis, the Slovene authorities claim that Pro Plus made a profit in 1995 and 1996 for which it owes income taxes and interest. Additionally, the Slovene tax authorities claim that the fixed assets imported as capital contributions were subject to customs duties which were not paid. On February 9, 2001, the Slovene tax authorities approved the cash capital contributions for 1995 and 1996. This has reduced the assessment to SIT 636,800,000 ($2,538,000). The Administrative Court of Ljubljana has issued an i njunction to prevent the tax authorities from demanding payment until a hearing on the matter has been concluded. There is currently no date set for this hearing.

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. The transaction has an expiration date of August 10, 2004 and has two phases. Until August 10, 2002, RBS has guaranteed an interest rate of 8⅜%, thereafter the interest rate is determined by the Dollar (USD) 6 month LIBOR rate plus 5.69%. Therefore on its $100 million of fixed rate debt, the Company receives 9⅜% from RBS, but only pays 8⅜% until August 10, 2002. Thereafter the Company will continue to receive 9⅜%, but will pay the USD 6 month LIBOR rate plus 5.69%. To cover the bank's risk, the Company was required to place on a restricted deposit $3,270,000, and this will remain on deposit until the swap transaction is cancelled or the term is completed.

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On August 10, 2002 and every six months thereafter, the swap counterparty (RBS) has an option to terminate the swap at no cost. If the counterparty cancels the swap on August 10, 2002, a $645,000 cash benefit will have been received by the Company. If the counterparty does not exercise this right and unless the Company exercises its option to unwind the transaction at the cost of the market value of the swap, the Company automatically enters into a new swap for the next six months.

Below is a table showing the fair value of this transaction as prescribed by FAS 133. It represents the total cash cost to the Company through August 2004, based on the futures market rates as at December 31, 2001.

Date	Implied USD 6 Month LIBOR Rate as at 12/31/01	Total Cash Benefit / (Cost)
February 2002	2.685%	$ 191,000
August 2002	2.685%	$ 448,000
February 2003	3.011%	$ 303,000
August 2003	4.376%	$ (412,000)
February 2004	5.434%	$ (966,000)
August 2004	5.908%	$ (1,140,000)
Total		$ (1,576,000)

The Company has an option to unwind the transaction at any time by paying RBS the market valuation of the transaction based on the prevailing profile of the yield curve through to August 2004. As at December 31, 2001, the estimate of the cost to unwind the transaction was $1,576,000, as described in the above table. As at February 28, 2002, the estimate of this cost was $862,000.

As at December 31, 2001, the Company held Euro 4,000,000 and Euro 2,600,000 (a total of US$ 5,877,000) with RBS on dual currency deposit. This form of deposit is designed to enhance the yield on a given deposit. The Company contracts to a strike rate in an alternative currency at the time of maturity of the deposit. On the day of maturity, if the spot rate is less favorable than the contracted strike rate, the Company will receive its money in the alternative currency. Consequently, should there be a favorable exchange rate fluctuation between the contract date and the maturity date, the Company would not be in a position to take advantage of this. The Company uses this form of deposit to enhance the interest rate on its deposits because it makes payments in US Dollars, Euros and British Pounds which means that the Company is relatively indifferent if the deposit is returned in an alternative currency.

The primary internal sources of cash available for corporate operating costs and development expenses are debt repayment, dividends and other distributions from its Subsidiaries.

The laws under which CME's operating Subsidiaries are organized provide generally that dividends may be declared by the partners or shareholders out of yearly profits subject to the maintenance of registered capital, required reserves and after the recovery of accumulated losses. In the case of the Company's Dutch and Netherlands Antilles Subsidiaries, the Company's voting power is sufficient to compel the making of distributions. In the case of PRO TV, distributions may be paid from the profits of PRO TV subject to a reserve of 5% of annual profits until the aggregate reserves equal 20% of PRO TV's registered capital. A majority vote can compel PRO TV to make distributions. There are no legal reserve requirements in Slovenia. In the case of Markiza TV, distributions may be paid from net profits subject to an initial reserve requirement of 10% of net profits until the reserve fund equals 5% of registered capital. Subsequently, the reserve requirement is equal to 5% of net profits until the reserve fund equals 10% of registered capital. The Company cannot compel the distributions of dividends by Markiza TV. The Company's voting power in the Studio 1+1 Group is sufficient to compel the distribution of dividends. To date, the only Subsidiary to distribute dividends has been CNTS which suspended operations on August 5, 1999.

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 2001 was $17,018,000 compared to $16,241,000 for 2000. During 2001, the Company received the following amounts from its operations: Ukraine $2,167,000 Romania $4,846,000 Slovenia $2,210,000 Slovakia $2,646,000, and the Czech Republic $5,149,000.

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The Company's cash flow relies on cash generated by its subsidiary operations. In 2002, the Company will depend on receiving cash from the Slovak operations, a non-controlled entity from which the Company cannot compel the making of distributions, and from the sale of its building in the Czech Republic. Cash is mainly repatriated to the Company by the operations making payments on their inter company payables, loans and accrued interest. As at December 31, 2001 the operations had the following unsecured balances owing to the Company :

Country	Total Outstanding
Ukraine	$ 19,215,000
Romania	42,953,000
Slovenia (1)	6,374,000
Slovakia	3,513,000
Czech Republic	125,000
Total	72,180,000

(1) In 1998 the Company converted intercompany debt to equity in the Slovenian operations in exchange for a $17.6 million preferential dividend distribution. The Company shall receive 92.5% of any dividend declared until the Company has received $17.6 million, after which it will receive its previous 85% of dividends paid. No dividends have been received by the Company to date.

The Company's future cash needs, over and above working capital requirements, will depend on the Company's overall financial performance and its future acquisition and development decisions. The Company believes that, taken together, its current cash balances, internally generated cash flow, the sale of Czech Republic assets 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. However, the Company is dependent on cash flows which are outside its direct control and the Company has little margin for error in its twelve month cash flow projections. Under the Senior Notes covenants, the Company's subsidiaries are permitted to raise up to $100 million of secured debt, to which the Senior Notes are structurally subordinate. The Company is currently utilizing less than $15 million of this permission. The Company is currently attempting to secure a line of credit in a n effort to improve liquidity. There can be no certainty that this line of credit will be secured.

As discussed above, 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 I, Item 3, "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.

Selected Combined and Attributable Financial Information - Non US GAAP

The following two tables are neither required by United States generally accepted accounting principles ("GAAP") nor intended to replace the Consolidated Financial Statements prepared in accordance with GAAP. The tables set forth certain combined and attributable financial information for the years ended December 31, 2001, 2000 and 1999 for the Company's operating entities. This financial information departs materially from GAAP.

In the table "Selected Combined Financial Information," revenues and operating expenses of the Slovak and Ukraine operations not consolidated in the Consolidated Statements of Operations during the periods shown, are aggregated with those of the Company's consolidated operations. Certain entities of the Ukraine operations not consolidated in the Consolidated Statements of Operations during the periods shown, are aggregated with those of the Company's consolidated operations. In the table "Selected Attributable Financial Information", combined information is adjusted for CME's economic interest in each entity, which economic interest is the basis used for consolidation and equity method accounting in the Company's GAAP Consolidated Financial Statements as of December 31, 2001.

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

Total Stations refer to the Company's operations in Romania, Slovenia, Slovakia and Ukraine. The Romanian and Slovenian operations began in December 1995, the Slovakian operation began in August 1996, and the Ukrainian operations began to generate significant revenue during the second quarter of 1997. Kanal A, the second of the Slovenian stations was acquired on October 11, 2000.

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

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

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

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Selected Combined Financial Information (1)

Non - US GAAP

(unaudited)

($000s)

Year Ended December 31,

	Net Revenue
	2001	2000	1999
Romania (PRO TV & Media Vision)	$ 32,553	$ 39,591	$40,627
Slovak Republic (Markiza TV)	34,696	33,155	32,217
Slovenia (POP TV and Kanal A) (2)	28,465	24,168	23,347
Ukraine (Studio 1+1 Group)	23,098	17,164	14,501
Total	$ 118,812	$ 114,078	$ 110,692

	EBITDA
	2001	2000	1999
Romania (PRO TV & Media Vision)	$ (2,007)	$ 1,564	$ (2,987)
Slovak Republic (Markiza TV)	6,033	4,368	2,739
Slovenia (POP TV and Kanal A) (2)	8,367	6,024	4,655
Ukraine (Studio 1+1 Group)	4,613	775	(8,443)
Total	$ 17,006	$ 12,731	$ (4,036)

	Broadcast Cash Flow
	2001	2000	1999
Romania (PRO TV & Media Vision)	$ (3,522)	$ 1,584	$ 3,655
Slovak Republic (Markiza TV)	6,922	4,670	5,214
Slovenia (POP TV and Kanal A) (2)	7,932	7,206	4,372
Ukraine (Studio 1+1 Group)	4,509	581	(6,270)
Total	$ 15,841	$ 14,041	$ 6,971

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

(2) The Company acquired control over the economics and the programming of Kanal A on October 11, 2000. Consequently, amounts shown in the above table for Slovenian operations in the twelve months ended December 31, 2000 represent results for nine months of POP TV and three months of POP TV and Kanal A.

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Selected Attributable Financial Information (1)

Non- US GAAP

(unaudited)

($000s)

Year Ended December 31,

		Economic Interest	Net Revenue
			2001	2000	1999
Romania	(PRO TV & Media Vision)	66%	$ 21,485	$ 26,130	$ 26,814
Slovak Republic	(Markiza TV)	80%	27,757	26,524	25,774
Slovenia	POP TV Kanal A (2)	85.5% 90%	24,338	20,777	19,962
Ukraine	(Studio 1+1 Group)	60%	13,859	10,298	8,701
Total			$ 87,439	$ 83,729	$ 81,251

		Economic Interest	EBITDA
			2001	2000	1999
Romania	(PRO TV & Media Vision)	66%	$ (1,325)	$ 1,032	$ (1,971)
Slovak Republic	(Markiza TV)	80%	4,826	3,494	2,191
Slovenia	POP TV Kanal A (2)	85.5% 90%	7,098	5,199	3,980
Ukraine	(Studio 1+1 Group)	60%	2,768	465	(5,066)
Total			$ 13,367	$ 10,190	$ (866)

		Economic Interest	Broadcast Cash Flow
			2001	2000	1999
Romania	(PRO TV & Media Vision)	66%	$ (2,325)	$ 1,045	$ 2,412
Slovak Republic	(Markiza TV)	80%	5,538	3,736	4,171
Slovenia	POP TV Kanal A (2)	85.5% 90%	6,711	6,204	3,738
Ukraine	(Studio 1+1 Group)	60%	2,705	349	(3,762)
Total			$12,629	$ 11,334	$ 6,559

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

(2) The Company acquired control over the economics and the programming of Kanal A on October 11, 2000. Consequently, amounts shown in the above table for Slovenian operations in the twelve months ended December 31, 2000 represent results for nine months of POP TV and three months of POP TV and Kanal A. 

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EBITDA of Combined Operations for the twelve months to December 31, 2001 - Non US GAAP

The total combined EBITDA for the Company's stations increased by $4,275,000 from $12,731,000 to $17,006,000 for the year ended December 31, 2001 compared to the year ended December 31, 2000. This improvement was as a result of EBITDA increases at the Company's Ukrainian operations of $3,838,000, the Company's Slovenian operations of $2,343,000, and the Company's Slovak operations of $1,665,000, partially offset by a decrease in the Company's Romanian operations of $3,571,000.

The Company's Ukrainian operations' EBITDA increased by $3,838,000 to $4,613,000 for 2001 compared to $775,000 for 2000. This improvement was achieved as a result of an increase of $5,934,000 in Studio 1+1's net revenues, partially offset by an increase of $2,096,000 in costs. The increase in net revenues was as a result of the continuing recovery of the Ukrainian advertising market and outsourcing the sales force to Video International.

The Company's Romanian operations' EBITDA decreased by $3,571,000 to negative $2,007,000 for 2001 compared to positive $1,564,000 for 2000. This decrease was a result of a net revenue decrease of $7,038,000 partially offset by a decrease of $3,467,000 in costs, including an increase of $5,185,000 in the bad debt expense year on year. The reduction in net revenues appears to be a result of strong sales competition between the television station which has allowed major advertisers to reallocate or reduce their advertising budgets during 2001. In response, the Company has reduced operations and has implemented cost control measures to reduce costs in line with the decline in revenues.

The Company's Slovak operations' EBITDA increased by $1,665,000 to $6,033,000 for 2001 compared to $4,368,000 for 2000. This improvement was as a result of an increase in net revenues of $1,541,000 and a decrease in costs of $124,000 for 2001 compared to 2000. The decrease in costs was primarily as a result of lower program syndication charges and lower depreciation of fixed and intangible assets.

The Company's Slovenian operations' EBITDA increased by $2,343,000 to $8,367,000 for 2001 compared to $6,024,000 for 2000. The improvement was primarily a result of additional revenues of $4,297,000, partially offset by additional costs of $1,954,000. Net revenues and costs of $6,512,000 and $3,812,000, respectively, were attributable to Kanal A. POP TV's net revenues increased by $301,000. The flat growth in POP TV revenues was primarily the result of the continued depreciation of the Tolar against the US Dollar. In local currency terms, the net revenues of the Company's Slovenian operations increased by approximately 1,713,974 Slovenian tolars (SIT), or 31%, for 2001 compared to 2000.

For the reasons described above total combined EBITDA increased by $4,275,000 to $17,006,000 in 2001 compared to $12,731,000 in 2000.

Broadcast Cash Flow

Differences between EBITDA and broadcast cash flow are the result of timing differences between programming use and programming payments. See "Liquidity and Capital Resources" for a complete discussion of cash flows from operating, investing and financing activities.

Euro Conversion

As part of the European Economic and Monetary Union (EMU), a single currency, the euro, replaced the national currencies of many of the member countries of the European Union on January 1, 2002. Although the Company does not currently conduct business in any of the countries which are adopting the euro, it holds debt denominated in German marks, one of the currencies replaced by the euro. Additionally, it is expected that the countries in which the Company operates are likely to join EMU at some point in the future.

The Company's program to address the adoption of the single euro currency was successful in that our business activities have continued without disruption since its introduction and the associated costs were not significant.

Page 39

Forward-looking Statements

This report contains forward-looking statements, including statements regarding the potential damages to be awarded to the Company in connection with the arbitration tribunal's decision finding that the Czech Republic violated the Netherlands - Czech Republic Bilateral Investment Treaty, the Company's operations in the Czech Republic, the ongoing dispute between CNTS and CET, the future economic climate in the Company's markets, the Company's anticipated 2002 results, future investments in existing television broadcast operations, business strategies and commitments, anticipated corporate cash expenditures, the repayment of the Senior Notes and the timing of the need for additional cash resources. For these statements and all other forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, m any of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, affecting the financial position, results of operations and cash flows of the Company, could differ materially from those described in or contemplated by the forward-looking statements. Important factors that contribute to such risks include, but are not limited to, the renewals of broadcasting licenses, the regulatory environment and compliance, the relationship with our operating partners, the ability to acquire programming, the ability to attract audiences, the rate of development of advertising markets in countries where the Company currently operates and general market and economic conditions in these countries, the US and Western Europe. Important factors with respect to the ongoing dispute between CNTS and CET, include, but are not limited to, legal, political and regulatory conditions and developments in the Czech Republic. Important factors with regard to re payment of the Senior Notes include, but are not limited to, the ability to attract an equity investor or investors and the ability to collect on the Czech Republic arbitration award.

Page 40

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

The Company engages in activities that expose it to various market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company does not regularly engage in speculative transactions, nor does it regularly hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk Management

The Company conducts business in a number of foreign currencies. As a result, it is subject to foreign currency exchange rate risk due to the effects that foreign exchange rate movements of these currencies have on the Company's costs and on the cash flows it receives from certain Subsidiaries. In limited instances the Company enters into forward foreign exchange contracts to hedge foreign currency exchange rate risk. At December 31, 2001 the Company held no foreign exchange contracts.

As at December 31, 2001, the Company held Euro 4,000,000 and Euro 2,600,000 (a total of US$ 5,877,000) with RBS on dual currency deposit. This form of deposit is designed to enhance the yield on a given deposit. The Company contracts to a strike rate in an alternative currency at the time of maturity of the deposit. On the day of maturity, if the spot rate is less favourable than the contracted strike rate, the Company will receive its money in the alternative currency. Consequently, should there be a favorable exchange rate fluctuation between the contract date and the maturity date, the Company would not be in a position to take advantage of this. The Company uses this form of deposit to enhance the interest rate on its deposits and because it makes payments in US Dollars, Euros and British Pounds the Company is relatively indifferent if the deposit is returned in an alternative currency.

Interest Rate Risk Management

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. The transaction has an expiry date of August 10, 2004 and has two phases. Until August 10, 2002, RBS has guaranteed an interest rate of 8⅜%, thereafter the interest rate is determined by the USD 6 month LIBOR rate plus 5.69%. Therefore on its $100 million of fixed rate debt, the Company receives 9⅜% from RBS, but only pays 8⅜% until August 10, 2002, thereafter the Company will continue to receive 9⅜%, but will pay the USD 6 month LIBOR rate plus 5.69%.

On August 10, 2002 and every six months thereafter, the swap counterparty (RBS) has an option to terminate the swap at no cost. If the counterparty cancels the swap on August 10, 2002, a $645,000 cash benefit will have been received by the Company. If the counterparty does not exercise this right and unless the Company exercises its option to unwind the transaction at a cost of the market value of the swap, the Company automatically enters into a new swap for the next six months.

Below is a table showing the fair value of this transaction as prescribed by FAS 133. It represents the total cash cost to the Company through to August 2004, based on the futures market rates as at December 31, 2001.

Date	Implied USD 6 Month LIBOR Rate as at 12/31/01	Total Cash Benefit / (Cost)
February 2002	2.685%	$ 191,000
August 2002	2.685%	$ 448,000
February 2003	3.011%	$ 303,000
August 2003	4.376%	$ (412,000)
February 2004	5.434%	$ (966,000)
August 2004	5.908%	$ (1,140,000)
Total		$ (1,576,000)

Page 41

The Company has an option to unwind the transaction at any time by paying RBS the market valuation of the transaction based on the prevailing profile of the yield curve through to August 2004. As at December 31, 2001, the estimate of the cost to unwind the transaction was $1,576,000. As at February 28, 2002, the estimate of the cost to unwind the transaction was $862,000, the USD 6 month LIBOR rate was 2.03% and the 2.5 year spot rate was 3.97%.

Following the interest rate swap transaction which the Company entered into with RBS in November 2001, approximately 37% of the Company's debt was maintained with a fixed interest rate as at December 31, 2001 compared to 96% as at December 31, 2000. The Company has two tranches of debt that provide for interest at a spread above a basis rate (such as LIBOR) and the RBS interest rate swap transaction which expose the Company to interest rate fluctuations. A significant rise in these base rates would materially adversely affect the Company's business, financial condition or results of operations.

Interest Rate Table as at December 31, 2001

Expected Maturity Dates	2002	2003	2004	2005	Thereafter
	US$000s
Total Debt:
Fixed Rate	$ 989	-	$ 63,621	-	-
Average Interest Rate	9.1%	-	8.2%	-	-
Variable Rate	2,660	-	99,942	7,028	-
Average Interest Rate	5.4%	-	8.4%	8.4%	-

Interest Rate Table as at December 31, 2000

Expected Maturity Dates	2001	2002	2003	2004	Thereafter
	US$000s
Total Debt:
Fixed Rate	$6,664	$4,221	-	$166,954	-
Average Interest Rate	12.3%	12.0%	-	8.9%	-
Variable Rate	$3,302	$825	$825	$825	$824
Average Interest Rate	9.3%	7.1%	7.1%	7.1%	7.1%

Variable Interest Rate Sensitivity as at December 31, 2001

Value of debt as at 12/31/01 ($000's)	Present Interest Rate	Yearly interest Charge ($000s)	Yearly interest charge if interest rates increase by ($000s):
			1%	2%	3%	4%	5%
7,028	8.4%	593	663	734	804	874	945
2,660	5.4%	143	169	196	223	249	276
		736	832	930	1,027	1,123	1,221
	(1)		5,115	5,115	5,115	5,115	5,115
	(1)		3,644	4,032	4,421	4,810	5,198
99,942	8.4%	8,370	8,759	9,147	9,536	9,925	10,313
		9,106	9,591	10,077	10,563	11,048	11,534

(1) As described above, the Company entered into an interest rate swap transaction through RBS to exchange its 9⅜% $100 million fixed rate debt for floating rate debt. The transaction has an expiry date of August 10, 2004 and has two phases. Until August 10, 2002, RBS has guaranteed an interest rate of 8⅜%, thereafter the interest rate is determined by the USD 6 month LIBOR rate plus 5.69%. Therefore the above table shows the fixed interest rate of 8⅜% for the period January 1, 2002 to August 10, 2002 and a floating interest rate thereafter.

Page 42

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

Page 43

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Central European Media Enterprises Ltd:

We have audited the accompanying consolidated balance sheets of Central European Media Enterprises Ltd. (a Bermuda corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, shareholders' equity (deficit) and cash flows for the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Produkcija Plus d.o.o. and Super Plus Holding d.d. (acquired on October 11, 2000) which statements reflect total assets of 21 percent and total revenues of 39 percent in 2001, and 18 percent and 31 percent, respectively in 2000, of the related consolidated totals. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those entities, is based solely on the reports of the other auditors.

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

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Central European Media Enterprises Ltd. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

The Company's financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses and in its cash flow projections is relying on cash inflows that are outside the Company management's direct control. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

ARTHUR ANDERSEN

Hamilton, Bermuda

March 27, 2002

Page 44

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Partners of Produkcija Plus d.o.o.

Ljubljana, Slovenia

We have audited the accompanying balance sheets of Produkcija Plus d.o.o. as of December 31, 2001 and 2000, and related statements of operations and cash flows for the years ended December 31, 2001 and 2000 (not presented separately herein). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material respects, the financial position of the Produkcija Plus d.o.o. at December 31, 2001 and 2000, and the results of its operations and cash flows for the years ended December 31, 2001 and 2000 in conformity with United States generally accepted accounting principles.

Deloitte & Touche

Ljubljana, Slovenia

February 15, 2002

Page 45

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Partners of Super Plus Holding d.d.

Ljubljana, Slovenia

We have audited the accompanying consolidated balance sheets of Super Plus Holding d.d. and its subsidiary (the Company), as of December 31, 2001 and 2000, and the related consolidated statements of operations and cash flows for the year ended December 31, 2001 and for the period from October 11, 2000 to December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements, referred to in the first paragraph above, present fairly, in all material respects, the financial position of the Company at December 31, 2001 and 2000, and the consolidated results of operations and cash flows for the year ended December 31, 2001 and for the period from October 11, 2000 until December 31, 2000 in conformity with United States generally accepted accounting principles.

The consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses and in its cash flow projections is relying on cash inflows that are outside the Company's management's control and depend on the Company's parent company's ability to continue as a going concern. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Deloitte & Touche

Ljubljana, Slovenia

March 27, 2002

Page 46

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED BALANCE SHEETS

December 31, 2001 and 2000

(US$000s, except per share data)

		December 31, 2001	December 31, 2000
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$ 22,053	$ 37,510
	Restricted cash	3,562	1,527
	Accounts receivable (net of allowances of $8,219, $3,539)	19,451	23,785
	Program rights costs	8,754	7,090
	Advances to affiliates	7,346	9,081
	Income taxes receivable	-	7,452
	Other short-term assets	5,308	5,221
Total current assets		66,474	91,666
	Investments in unconsolidated affiliates	21,502	20,428
	Loans to affiliates	7,276	15,606
	Property, plant and equipment (net of depreciation of $41,225, $63,343)	16,642	32,824
	Asset held for sale	8,679	-
	Program rights costs	6,497	6,305
	License costs and other intangibles (net of amortization of $9,867, $6,609)	2,119	2,158
	Goodwill (net of amortization of $87,594, $90,674)	16,811	20,909
	Deferred tax asset	-	175
	Other assets	5,265	7,028
Total assets		$151,265	$ 197,099

LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
	Short term payables to bank	$ 1,576	$ -
	Accounts payable and accrued liabilities	46,436	50,799
	Duties and other taxes payable	12,273	11,421
	Income taxes payable	602	374
	Current portion of credit facilities and obligations under capital leases	10,785	10,006
	Investments payable	1,256	6,444
	Advances from affiliates	1,155	2,241
Total current liabilities		74,083	81,285
NON-CURRENT LIABILITIES:
	Long-term portion of credit facilities and obligations under capital leases	707	8,078
	$100,000,000 9⅜% Senior Notes due 2004	99,942	99,920
	DM 140,000,000 8⅛% Senior Notes due 2004	63,621	67,034
	Other liabilities	1,618	6,493
Total non-current liabilities		165,888	181,525
	Minority interests in consolidated subsidiaries	90	167
Commitments and Contingencies (Note 10)
SHAREHOLDERS' DEFICIT:
	Class A Common Stock, $0.08 par value: authorized: 100,000,000 shares at December 31, 2001 and December 31, 2000; issued and outstanding : 2,314,221 at December 31, 2001 and 2,313,346 December 31, 2000	185	185
	Class B Common Stock, $0.08 par value: authorized: 15,000,000 shares at December 31, 2001 and December 31, 2000; issued and outstanding: 991,842 at December, 2001 and December 31, 2000	79	79
	Additional paid-in capital	356,385	356,385
	Accumulated deficit	(437,827)	(415,716)
	Accumulated other comprehensive loss	(7,618)	(6,811)
Total shareholders' deficit		(88,796)	(65,878)
Total liabilities and shareholders' deficit		$151,265	$ 197,099

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

Page 47

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(US$000s, except per share data)

		For the years ended December 31,
		2001	2000	1999
Net revenues		$ 73,238	$ 76,813	$ 129,323
STATION EXPENSES:
	Other operating costs and expenses	36,323	37,160	59,747
	Amortization of programming rights	12,815	15,994	57,991
	Depreciation of station fixed assets and other intangibles	11,331	24,654	21,667
	Total station operating costs and expenses	60,469	77,808	139,405
	Selling, general and administrative expenses	19,992	19,402	25,898
CORPORATE EXPENSES:
	Corporate operating costs and development expenses	13,057	11,417	18,753
	Amortization of goodwill	1,747	1,670	49,091
		14,804	13,087	67,844
Operating income/(loss)		(22,027)	(33,484)	(103,824)
Equity in loss of unconsolidated affiliates (Note 12)		7,137	(514)	(11,021)
Net interest and other income/(expense)		(17,759)	(18,245)	(14,029)
Change in fair value of derivative		(1,576)	-	-
Gain on sale of subsidiaries		1,802	-	-
Foreign currency exchange gain/(loss), net		1,651	(2,286)	12,983
Gain on sale of Investment		-	17,186	25,870
Gain on resolution of disputed investment payable (Note 7)		5,188
Other Income		-	-	8,250
Loss before provision for income taxes, minority interest and discontinued operations		(25,584)	(37,343)	(81,771)
Provision for income taxes		(1,381)	(96)	(1,518)
Loss before minority interest and discontinued operations		(26,965)	(37,439)	(83,289)
Minority interest in loss/(income) of consolidated subsidiaries		2,138	(59)	213
Net loss from continuing operations		(24,827)	(37,498)	(83,076)
Discontinued operations:
	Operating income/(loss) of discontinued operations (Hungary)	-	-	(10,208)
	Gain on disposal of discontinued operations (Hungary)	2,716	-	3,414
Net loss		$ (22,111)	$ (37,498)	$ (89,870)
PER SHARE DATA
Net loss per share (Note 3)
	Continuing operations - Basic and diluted	$ (7.50)	$ (11.35)	$ (25.78)
	Discontinued operations - Basic and diluted	0.82	-	(2.11)
	Total	$ (6.68)	$ (11.35)	$ (27.89)
Weighted average common shares used in computing per share amounts:
	Basic and diluted	3,306	3,305	3,223

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

Page 48

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

For the Period from December 31, 1998 to December 31, 2001

(US$000s, except per share data)

	Comprehensive Income/(Loss)	Class A Common Stock	Class B Common Stock	Additional Paid In Capital	Accumulated Deficit (a)	Accumulated Other Comprehensive Income/(Loss) (b)	Total Shareholders' Equity/(Deficit)
BALANCE, December 31, 1998		181	76	356,378	(288,348)	(2,580)	65,707
Comprehensive income/(loss):
Net loss.	(89,870)				(89,870)		(89,870)
Other comprehensive income:
Unrealized translation adjustments	(11,087)					(11,087)	(11,087)
Comprehensive loss........	$ (100,957)
Stock issued:
Capital contributed by shareholders		4	3	7	-	-	14
BALANCE, December 31, 1999		185	79	356,385	(378,218)	(13,667)	(35,236)
Comprehensive income/(loss):
Net loss.	(37,498)				(37,498)		(37,498)
Other comprehensive income:
Unrealized translation adjustments	6,856					6,856	6,856
Comprehensive loss........	$ (30,642)
Stock issued:
Capital contributed by shareholders		-	-	-	-	-	-
BALANCE, December 31, 2000		185	79	356,385	(415,716)	(6,811)	(65,878)
Comprehensive income/(loss):
Net loss.	(22,111)				(22,111)		(22,111)
Other comprehensive income:
Unrealized translation adjustments	(807)					(807)	(807)
Comprehensive loss........	(22,918)
Stock issued:
Capital contributed by shareholders		-	-	-	-	-	-
BALANCE, December 31, 2001		$ 185	$ 79	$ 356,385	$ (437,827)	(7,618)	(88,796)

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

Page 49

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS

(US$000s)

		2001	2000	1999
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Loss	$ (22,111)	$ (37,498)	$ (89,870)
Adjustments to reconcile net loss to net cash used in operating activities:
	Equity in (income) loss of unconsolidated affiliates	(7,137)	514	11,021
	Depreciation and amortization	26,674	42,864	129,811
	Provision for bad debt	6,399	1,066	550
	Discontinued operations	-	-	6,794
	Gain on resolution of disputed investment payable	(5,188)	-	-
	Gain on disposal of investment	-	(17,186)	(25,870)
	Minority interest in (loss) income of consolidated subsidiaries	(2,138)	59	(213)
	Foreign currency exchange (gain) loss, net	(1,651)	2,286	(12,983)
	Accounts receivable	(2,580)	(9,033)	19,007
	Cash paid for program rights	(15,647)	(15,518)	(28,312)
	Advances from (to) affiliates	1,855	10,756	(7,000)
	Other short-term assets	7,876	2,238	6,398
	Accounts payable and accrued liabilities	(5,023)	4,736	(14,361)
	Short term payable due to bank	1,576	-	-
	Income and other taxes payable	2,091	(813)	(7,674)
	Net cash used in operating activities	(15,004)	(15,529)	(12,702)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Other investments	-	(13,163)	(6,063)
	Investments in discontinued operations	-	-	(9,373)
	Cash proceeds from disposal of discontinued operations	-	4,416	39,260
	Cash proceeds from disposal of investment	-	37,250	-
	Restricted cash	(2,110)	3,161	(4,717)
	Acquisition of fixed assets	(2,333)	(617)	(6,052)
	Disposal of fixed assets	2,371	-	-
	Loans and advances from affiliates	6,892	(8,171)	1,383
	License costs, other assets and intangibles	730	(3,360)	(74)
Net cash provided by investing activities		5,550	19,516	14,364
CASH FLOWS FROM FINANCING ACTIVITIES:
	Credit facilities and payments under capital leases	(5,899)	(2,087)	(6,358)
	Dividends paid to minority shareholders	-	(311)	-
	Capital contributed by shareholders	-	-	14
	Other long term liabilities	-	-	(33)
Net cash (used in) provided by financing activities		(5,899)	(2,398)	(6,377)
IMPACT OF EXCHANGE RATE FLUCTUATIONS ON CASH		(104)	(1,069)	(1,649)
	Net (decrease) increase in cash and cash equivalents	(15,457)	520	(6,364)
CASH AND CASH EQUIVALENTS, beginning of period		37,510	36,990	43,354
CASH AND CASH EQUIVALENTS, end of period		$ 22,053	$ 37,510	$ 36,990
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
	Interest	$15,106	$ 16,664	$ 19,522
	Income Taxes	$ 261	$ 623	$ 9,488
SUPPLEMENTAL DISCLOSURES OF NON CASH FINANCING TRANSACTIONS
	Capital lease obligations incurred	$ 344	$ 195	$ 516

 License costs of $1,235,000 were acquired through the conversion of debt receivable from an affiliated party.

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

Page 50

1. ORGANIZATION AND BUSINESS

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

On December 15, 1999, the Company effected a one-for-eight reverse stock split. Except as otherwise noted, all share and per share information in this Form 10-K has been retroactively adjusted to reflect the one-for-eight reverse stock split.

The Company owns a 99% voting and economic interest in Ceska nezavisla televizni spolecnost, spol. s.r.o. ("CNTS"). In January 1993, CET 21, spol. s.r.o. ("CET") was awarded a terrestrial television broadcast license in the Czech Republic. That license expires in January 2005. CET was awarded that license with the full knowledge and understanding of the Council of the Czech Republic for Radio and Television Broadcasting (the "Media Council") that CEDC (the Company's direct predecessor in interest) was a direct participant in the license application. With the involvement of the Media Council, the Company and CET entered into a Memorandum of Association and Investment (the "Memorandum of Association") that provided for the creation of a company, CNTS, to operate and broadcast the planned television station. An associated agreement further provided that CET did not have the authority to broadcast without the direct participation of CEDC. Between 1993 and August 1999, CNTS performed essentiall y all of the activities associated with operating and broadcasting Nova TV.

On August 5, 1999, CET pre-empted CNTS's transmission and began broadcasting a substitute signal for Nova TV from a site other than CNTS's studios. In addition, on the same day, CNTS received notification from CET that CET was withdrawing from the Cooperation Contract CET has continued to pre-empt all of CNTS's programming for Nova TV. As a result of this situation, CNTS has been unable to generate revenues and its operations have been suspended. On September 9, 1999, the Company announced the suspension of technical and production operations at CNTS and CNTS has since dismissed a majority of the employees.

The Company and Ronald S. Lauder, the non-executive Chairman of the Company's Board of Directors, have sought remedies in a number of court and arbitration proceedings. The Company is seeking various forms of relief, reinstatement of its status and rights, and reimbursement of previous amounts paid to Dr. Zelezny and of costs incurred and damages sustained during or as a result of this dispute.

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

In Slovenia, the Company operates POP TV, together with MMTV 1 d.o.o. Ljubljana ("MMTV") and Tele 59 d.o.o. Maribor ("Tele 59"), through Produkcija Plus d.o.o. ("Pro Plus"). Under the name POP TV, Pro Plus provides programming to, and sells advertising for, affiliated stations. As a result of two shares transfers in December 2001, Tele 59 owns 49% and MMTV 51% in POP TV d.o.o. The Company owns 78% of the equity of Pro Plus, but has an effective economic interest of 85.5% as a result of a 33% economic interest in Tele 59. Tele 59 owns a 21% equity interest in Pro Plus, and MMTV currently owns a 1% equity interest in Pro Plus. The Company also owns a 20% equity interest in MTC Holding d.o.o. ("MTC") which owns the remaining 90% equity interest in MMTV. A Slovene holds 76% of MTC's equity in trust for the Company. The Company controls the operations, economics and the programming of Kanal A, which is the second leading commercial television broadcaster in Slovenia. 90% of the equity interest in Kanal A is being held by Superplus Holding d.d. ("Superplus") which is owned by individuals who are holding the share of Superplus in trust for the Company.

Page 51

In the Slovak Republic, the Company presently owns a 70% non-controlling economic interest and a 49% voting interest in Slovenska Televizna Spolocnost s.r.o. ("STS"), which operates the national television station Markiza TV. Markiza-Slovakia s.r.o., the broadcast license holder, and STS have entered into an agreement pursuant to which STS is entitled to provide exclusive commercial television services to Markiza-Slovakia s.r.o. On January 18, 2002, the Company entered into an interest participation transfer agreement to acquire a 34% interest in Markiza for a purchase price equal to the nominal value of such interest. Consideration for the purchase also included an adjustment of CME's share in STS' profits. As a result of this acquisition, the Company will generally be entitled to 70% of STS' distribution of profits as opposed to 80% prior to the acquisition. The Company also has the right to appoint one of three authorized co-signatories of Markiza, which give CME a blocking control over Markiza's significant activities. The ownership transfer to the Company was approved by the Slovak Media Council at its meeting on February 11, 2002.

In Ukraine, the Company owns a 60% interest in a group of companies (collectively, the "Studio 1+1 Group"), which have the right to broadcast programming and sell advertising on Ukrainian National Channel 2 ("UT-2"). The Company owns a 60% equity interest in each of Innova Film GmbH ("Innova"), Ukraine Advertising Holding B.V. ("UAH") and International Media Services ("IMS"). Innova holds 100% of Intermedia, a Ukrainian company, which in turn holds a 30% equity interest in Studio 1+1, the license holding company in the Ukraine. UAH held a 50% interest in Prioritet, the main vehicle for advertising sales up until January 1, 2001.

2. FINANCING OF OPERATING AND CAPITAL NEEDS

The Company had cash of $22,053,000 at December 31, 2001 to enable it to finance its future activities. The Company continues to suffer operating losses.

In 2001, the Company used its December 31, 2000 balance of $37,510,000 and receipts from Czech Republic tax rebates, cash from sale of assets in the Czech Republic and cash received from its stations.

The Company intends to sell the building and remaining assets in the Czech Republic. This sale will be an important component of cash resources in 2002.

The Company's future cash needs, over and above working capital requirements, will depend on the Company's overall financial performance and its future acquisition and development decisions. The Company believes that, taken together, its current cash balances, internally generated cash flow, the sale of Czech Republic assets 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. However, the Company is dependent on cash flows which are outside its direct control and the Company has little margin for error in its twelve month cash flow projections. Under the Senior Notes covenants, the Company's subsidiaries are permitted to raise up to $100 million of secured debt, to which the Senior Notes are structurally subordinate. The Company is currently utilizing less than $15 million of this permission. The Company is currently attempting to secure a line of credit in a n effort to improve liquidity. There can be no certainty that this line of credit will be secured.

The Senior Notes in the amount of $163,563,000 mature in August 2004. The Company's ability to refinance or repay the Senior Notes will depend upon market conditions, pending litigation, renewals of broadcasting licenses, the financial performance of the Company and other factors through August 2004.

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Dividends from Consolidated Subsidiaries and Unconsolidated Affiliates

The laws under which CME's operating Subsidiaries are organized provide generally that dividends may be declared by the partners or shareholders out of yearly profits subject to the maintenance of registered capital, required reserves and after the recovery of accumulated losses. In the case of the Company's Dutch and Netherlands Antilles Subsidiaries, the Company's voting power is sufficient to compel the making of distributions. In the case of PRO TV, distributions may be paid from the profits of PRO TV subject to a reserve of 5% of annual profits until the aggregate reserves equal 20% of PRO TV's registered capital. A majority vote can compel PRO TV to make distributions. There are no legal reserve requirements in Slovenia (See Note 16 "Subsequent Events"). In the case of Markiza TV, distributions may be paid from net profits subject to an initial reserve requirement of 10% of net profits until the reserve fund equals 5% of registered capital. Subsequently, the reserve requirement i s equal to 5% of net profits until the reserve fund equals 10% of registered capital. The Company cannot compel the distributions of dividends by Markiza TV. The Company's voting power in the Studio 1+1 Group is sufficient to compel the distribution of dividends. To date, the only Subsidiary to distribute dividends has been CNTS which suspended operations on August 5, 1999.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Discontinued Operations

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

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries and the results of the Romanian, Slovenian, and certain entities of the Ukraine operations , and the Czech Republic (the "Consolidated Affiliates"), as consolidated entities and reflect the interests of the minority owners of these entities for the periods presented, as applicable. The results of the Slovakian and certain entities of the Ukrainian operations, (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.

Since October 2000, the Kanal A shares held by Superplus are held in trust for CME and are to be voted at CME's direction. The Trust Agreement was structured such that the Kanal A shares could not be transferred without the consent of CME. Furthermore, CME at all times retains the ability to terminate the trust agreement, upon which event the Kanal A shares are automatically transferred to CME. Accordingly, CME has the requisite control required by generally accepted accounting principals for inclusion of Kanal A as a subsidiary in the consolidated financial statements.

Revenue Recognition

Revenues primarily result from the sale of advertising time and are recognized in the period in which advertising is aired. The Company's policy is that discounts and agency commission is recognized in the period in which the advertising is aired and is reflected as a reduction in net revenue.

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Barter Transactions

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

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

In January 2000, the Emerging Issues Task Force (the "EITF") of the Financial Standards Accounting Board ("FASB") reached a consensus on EITF Issue 99-17, "Accounting for Advertising Barter Transactions." The EITF agreed that advertising barter transactions entered into after January 20, 2000 should be accounted for at fair value on a one-for-one basis with revenue from similar advertising sold in a cash transaction that occurred in the preceding six months with comparable terms, such as length of program, cost and type of advertisement. A cash transaction may be used only once as the basis for providing fair value evidence for a barter transaction. As a result, revenue from barter is effectively limited to no more than 50% of total revenue per year.

EITF 99-17 is applicable only to transactions entered into after January 20, 2000. The Company has adopted EITF 99-17 effective January 1, 2000. The Company's barter revenue was $498,000 and $690,000 for the years ended December 31, 2001 and 2000, respectively.

Cash and cash equivalents

Cash and cash equivalents includes unrestricted cash in banks and highly liquid investments with original maturities of less than three months. Restricted cash (restricted for guarantees to third parties or vendors) at December 31, 2001 and 2000 is $3,562,000 and $1,527,000 respectively.

Long-lived assets

The Company periodically evaluates its long-lived assets using projected undiscounted future cash flows and operating income for each subsidiary as a measure of the expected recovery of these assets. (Note 4)

Program Rights and Production Costs

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

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

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

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Intangible Assets

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

Goodwill represents the Company's excess cost over the fair value of net assets acquired and is being amortized on a straight-line basis over the estimated useful life of the assets. Amounts recognized to date have been amortized over periods ranging from 2 to 10 years from the original date of acquisition.

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

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

Fair Value of Financial Instruments

The Company accounts for the fair value of financial instruments in accordance with SFAS No. 107, "Disclosures about Fair Value of Financial Instruments". To meet the reporting requirements of SFAS No. 107, the Company calculates the fair value of financial instruments and includes this additional information in the notes to financial statements when the fair value is different from book value of those financial instruments. When the fair value is equal to the book value, no additional disclosure is made. The Company uses quoted market prices whenever available to calculate these fair values. When quoted market prices are not available, the Company uses standard pricing models for various types of financial instruments which take into account the present value of estimated future cash flows. The market value of the Senior Notes as at December 31, 2001 was $52,000,000 with regard to the $100,000,000 9⅜% Senior Notes and DM 72,800,000 ($33,090,000) with regard to the DM 140,000,000 8⅛% Senior Notes. These are approximate values as the market for these bonds is illiquid. The Company does not record these at market value because the Company is obligated to pay the Senior Notes in full in August 2004. At December 31, 2001 and 2000, the carrying value of all financial instruments (primarily loans payable and receivable, the interest rate swap and, in limited circumstances, foreign exchange contracts) approximated fair value.

Income Taxes

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

Foreign Currency Translation

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

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The 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.

	Balance Sheet At December 31,			Income Statement Weighted average for the years ended December 31,
	2001	2000	% change	2001	2000	% change
Czech koruna equivalent of $1.00	36.27	37.81	4.1%	38.04	38.60	1.5%
German mark equivalent of $1.00	2.20	2.08	(5.8)%	2.18	2.12	(2.8)%
Romanian lei equivalent of $1.00	31,597	25,880	(22.1)%	29,032	21,659	(34.0)%
Slovak koruna equivalent of $1.00	48.47	47.39	(2.3)%	48.51	46.76	(3.7)%
Slovenian tolar equivalent of $1.00	250.95	227.38	(10.4)%	243.99	226.05	(7.9)%
Ukrainian hryvna equivalent of $1.00	5.30	5.43	2.4%	5.29	5.44	2.8%
European Euro equivalent of $1.00	0.89	0.94	5.3%	0.90	0.87	(3.4)%

In the accompanying notes, $ equivalents of Kc, DM, ROL, Sk, SIT and Hrn amounts have been included at December 31, 2001, 2000 or historical rates, as applicable, for illustrative purposes only. In limited instances, the Company enters into forward foreign exchange contracts and purchases foreign currency options to hedge foreign currency transactions for periods consistent with its identified exposures. Premiums on foreign currency options are amortized over the option period being hedged.

Earnings per Share

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

	For the Years Ended December 31,
	Net Loss			Common Shares			Net Loss per Common Share
	2001	2000	1999	2001	2000	1999	2001	2000	1999
Basic EPS
Net loss attributable to Common stock	$ (22,111)	$ (37,498)	$ (89,870)	3,306	3,305	3,223	$ (6.68)	$ (11.35)	$ (27.89)
Effect of dilutive securities : Stock options	-	-	-	-	-	-	-	-	-
Diluted EPS
Net loss attributable to Common stock and Assumed option exercises	$ (22,111)	$ (37,498)	$ (89,870)	3,306	3,305	3,223	$ (6.68)	$ (11.35)	$ (27.89)

Diluted EPS for the years ended December 31, 2001, 2000, and 1999 do not include the impact of stock options then outstanding as their inclusion would be anti-dilutive. See Note 10, "Stock Option Plans".

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Use Of Estimates

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

Reclassifications

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

Derivative Instruments and Hedging Activities

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

As at December 31, 2001, the Company had three derivative instruments. The Company swapped its $100,000,000 9⅜% Senior Notes fixed rate debt for floating rate debt. This instrument had a fair value liability of $1,576,000 as at December 31, 2001. The Company also held two dual currency deposits. This form of deposit is designed to enhance the yield on a given deposit. The Company contracts to a strike rate in an alternative currency at the time of maturity of the deposit. On the day of maturity, if the spot rate is less favorable than the contracted strike rate, the Company will receive its money in the alternative currency. Consequently, should there be a favorable exchange rate fluctuation between the contract date and the maturity date, the Company would not be in a position to take advantage of this.

4. IMPAIRMENT OF GOODWILL

In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets". FAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under FAS 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 FAS 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company is required to adopt FAS 142 effective January 1, 2002. The Company has evaluated the effect of implementing FAS 142 on its total goodwill of $16.8 million and does not believe that any material impact will occur.

In August 2001, the Financial Accounting Standards Board issued SFAS No 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 will be effective for financial statements of fiscal years beginning after December 15, 2001. The Company expects to adopt this statement for our fiscal year ending December 31, 2002, and does not anticipate that it will have a material impact on the consolidated financial results.

The Company continues to conduct regular reviews, in compliance with SFAS 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of". In 2001, no additional impairment was recognized.

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During 1999 and 2000 the following impairments were recognized :

Studio 1+1

Regular reviews of the Studio 1+1 goodwill have been conducted in compliance with SFAS 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of". It was decided in 2000 that the business was not likely to rebound to past levels and future forecasts were adjusted downwards. This led to the recognition of an impairment of $9,836,000 in 2000. The remaining goodwill related to Studio 1+1 at December 31, 2001 amounted to $4,096,000.

Studio 1+1 has a license to broadcast in Ukraine. The economic useful life of six years is determined by reference to the unexpired period of the license.

CNTS

The Company owns a 99% voting and economic interest in Ceska nezavisla televizni spolecnost, spol. s.r.o. ("CNTS"). In 1996 and 1997, under compulsion resulting from proceedings initiated by the Czech Media Council, the Company and CET amended the Memorandum of Association and entered into other contracts to effect a change in the Memorandum of Association. At this time, the Company made significant additional equity investments in CNTS.

As mentioned in Part I Item 3. Legal Proceedings, on August 5, 1999, CET 21, spol. s.r.o. ("CET") pre-empted CNTS's transmission and began broadcasting a substitute signal for Nova TV from a site other than CNTS's studios. In addition, on the same day, CNTS received notification from CET that CET was withdrawing from the Cooperation Contract in 1999. As a result of CET's actions, CNTS has been unable to generate revenues and its operations have been suspended. On September 9, 1999, the Company announced the suspension of technical and production operations at CNTS and CNTS has since dismissed a majority of its employees.

As a result of this fundamental change in business forecasts, the goodwill relating to the purchases of additional equity interests in CNTS, made by the Company in August 1996 and 1997, and development costs, were reviewed and the decision was made to write down the value of these in 1999 in accordance FAS121.

No such charge has been made in 2000 or 2001, and no goodwill related to CNTS remains recorded in the financial statements.

5. PROPERTY, PLANT AND EQUIPMENT

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

		December 31
	Useful Lives Years	2001 $000	2000 $000
Land and buildings	25-50	8,903	20,036
Station machinery, fixtures and equipment	4-8	44,587	69,782
Other equipment	3-8	2,216	4,174
Construction in progress	-	2,161	2,175
		57,867	96,167
Less - Accumulated depreciation		(41,225)	(63,343)
		16,642	32,824

In addition to the above assets, the asset held for sale relates to the Company's building and other remaining assets in the Czech Republic.

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6. OTHER ASSETS

Other assets consist of the following:

		December 31,
		2001 $000	2000 $000
Current:
	VAT recoverable	318	419
	Other	4,990	4,802
		5,308	5,221
Long term:
	Satellite transponder deposits (See Note 11, "Commitments and Contingencies)	773	796
	Capitalized debt costs	2,451	3,415
	Other	2,041	2,817
		5,265	7,028

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

7. INCOME TAXES PAYABLE

Provision for income taxes related primarily to the profits of CNTS. Due to the suspension of the CNTS operations and the resulting elimination of revenues, CNTS recorded a net loss for 1999, 2000, and 2001.

	December 31,
	2001	2000	1999
	$000	$000	$000
Current, domestic taxes	-	-	-
Current foreign taxes	1,206	299	1,743
Deferred foreign taxes	175	(203)	(225)
	1,381	96	1,518

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

Deferred income tax assets

	December 31
	2001	2000
	$000	$000
Tax loss carry forwards	-	175

Deferred income tax liabilities

	December 31
	2001	2000
	$000	$000
Net deferred tax asset	-	175

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Net operating losses incurred in 2001, 2000, 1999 and 1998 in Romania, net operating losses incurred in 2000, 1999 and 1998 in Slovakia and Ukraine and net operating losses incurred in 1999 and 1998 in Slovenia are available for offset against taxable income in those countries in the future.

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

The Company does not disclose the specific amounts of the net operating losses by country, nor the related gross deferred income tax assets, because of the risk that it would present information which could be misleading to an investor. Due to the multinational aspects of these net operating losses, the opportunity to reduce future taxes depends on the ability to either offset or realize value in the jurisdiction in which the loss arose, and that opportunity may not materialize.

8. INVESTMENTS PAYABLE

	December 31
	2001	2000
	$000	$000
Short Term:
CNTS	-	5,188
Payable to other	1,256	1,256
	1,256	6,444

CNTS

On August 11, 1997, the Company purchased Nova Consulting a.s. ("NC") from certain of the partners of CET, for a purchase price of $28,537,000, to be paid on an instalment basis through February 15, 2000. Due to the ongoing dispute between CNTS and CET, CME withheld the last two payments, totalling $5,188,000, that were due on August 15, 1999 and February 15, 2000. On February 9, 2001 the ICC Arbitration Tribunal issued a final award in these proceedings, finding that Dr Zelezny had breached the share purchase agreement and ordered him to refund the monies paid to him under the agreement and rejected his claim for the balance of the purchase price. Accordingly the Company has reversed this amount and included the associated gain as gain on resolution of disputed investment payable in the statement of operations. See Part I Item 3 "Legal Proceedings" for a further discussion.

9. LOAN AND OVERDRAFT OBLIGATIONS

Group loan obligations and overdraft facilities consist of the following:

			December 31,
			2001 $000	2000 $000
CME B.V.
	Ceska Sporitelna Loan	(a)	7,028	8,862
	Tele 59 loan	(b)	-	196
Romanian Operation
	Long-term loan	(c)	989	1,827
	Overdraft Facility	(d)	2,660	2,477
Slovenian Operations
	Long-term loan	(e)	-	4,124
	Capital lease, net of interest, and unsecured short-term loans		530	598
Ukrainian Operations
Capital lease, net of interest, and unsecured short-term loans		(f)	285	-
			11,492	18,084
Less current maturities			(10,785)	(10,006)
			707	8,078

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CME B.V.

(a) On August 1, 1996, the Company entered into an agreement for the purchase of the 22% economic interest of Ceska Sporitelna Bank ("CS") in CNTS and virtually all of CS's voting rights in CNTS for a purchase price of Kc 1 billion ($36,590,000). The Company has also entered into a loan agreement with CS to finance 85% of the purchase price which is secured by an assignment of a dividend receivable by the Company from CNTS. The loan which had an outstanding principal balance at December 31, 2001 of Kc 249,764,513 ($6,886,000) and matures November 2005 has been restructured. The agreement provides for the Company paying approximately $150,000 in interest payments each quarter with a balloon payment of the principal in November 2005. This loan has been classified as a current liability as a consequence of a decision to sell the Czech Republic building in 2002, on which this loan is secured.

(b) The Company entered into a loan agreement on November 21, 1996 with Tele 59 to finance a loan to Tele 59 from SKB banka d.d. ("SKB"). The principal amount of the loan is DM 1,496,000 ($680,000) with principal repayments of DM 136,000 ($61,818) twice yearly. This loan matures in May 2004 and bears interest at 7.8% per annum. This loan was repaid during 2001.

Romania

(c) The long-term loan, obtained from Tiriac Bank, has a maximum facility of $4,000,000. This facility matures in December 2002 and bears interest at a rate of 9.12% at December 31, 2001.

(d) The overdraft facility, obtained from Tiriac Bank, has a maximum value of $3,000,000. This overdraft facility matures in October 2002 and bears interest at a rate of US LIBOR + 3.5%, 5.37% as at December 31, 2001.

Slovenia

(e) The multicurrency $5,000,000 loan agreement with Creditanstalt AG was repaid during 2001.

Ukraine

(f) In 2001 Innova signed a lease agreement for an uplink transmission equipment. The lease matures in 2003 and bears interest at a rate 10%.

Total Group

At December 31, 2001, maturities of debt excluding Senior Notes are as follows:

	Total $000
2002	3,757
2003	113
2004	116
2005	7,148
2006	357
Total	11,491

It is the Company's intention to sell its Czech assets during 2002. The sale of these assets will trigger repayment of $7,028,000 currently not due until 2005.

Loan notes payable

On August 20, 1997, the Company issued Senior Notes of $100,000,000 at 9⅜% and DM 140,000,000 ($63,621,000) at 8⅛%, due 2004 (collectively the "Senior Notes"). The Senior Notes are unsecured senior indebtedness of the Company and rank pari passu with all existing and future unsecured unsubordinated indebtedness of the Company and are effectively subordinated to all existing and future indebtedness of the Company's subsidiaries.

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

	Dollar Note	DM Note
	Redemption Price	Redemption Price
2002	102.34375%	102.03125%
2003 and thereafter	100.00000%	100.00000%

Interest is payable semi-annually in arrears on each February 15 and August 15, commencing February 15, 1998. Interest expense on the US dollar denominated Senior Notes and DM denominated Senior Notes for the year ended December 31, 2001 was $9,375,000 and DM 11,375,000 ($5,204,000), respectively. The Company made the semi-annual interest payments on the Senior Notes which were due on February 15, 2001, August 15, 2001 and February 15, 2002.

The indentures pursuant to which the Senior Notes were issued contain certain restrictive covenants, which among other things, restrict the ability of the Company and its subsidiaries to: (i) incur additional indebtedness, (ii) pay dividends or make certain other distributions, (iii) make certain investments and other restricted payments, (iv) enter into certain transactions with affiliates, (v) create liens, (vi) sell assets and also create restrictions on the ability of certain of its subsidiaries to make certain payments to the Company. Management believes that, as of December 31, 2001, the Company was in compliance with such restrictive covenants.

10. STOCK OPTION PLANS

The Company may award employee stock options under two plans. The Company adopted the 1994 Stock Option Plan on July 12, 1994 by resolution of the Board of Directors. When the 1994 plan approached being fully utilized the Company adopted the 1995 Stock Option Plan on August 2 1995. This plan has been amended and restated a number of times, most recently on May 17, 2001 ("Revised and Restated 95 Stock Option Plan"). Under the 1994 Stock Option Plan, the compensation committee is authorized to grant options up to 112,500 shares of Class A Common Stock. Under the Revised and Restated 95 Stock Option Plan the Compensation Committee is authorized to grant options for up to 400,000 shares of the Company's Class A or Class B Common Stock. The maximum term of the options granted under both of the Stock Option Plan is ten years. Options granted may be either incentive stock options under the Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified stock options. Under the 1995 A mended Stock Option Plan, non-affiliated directors are automatically granted each year options to purchase 1,250 shares of Class A Common Stock or Class B Common Stock. On March 22, 2001, the Board of Directors agreed to increase the number of options automatically granted to non-affiliated directors to 2,000 shares effective from the 2001 /2002 AGM period.

Under both the 1994 Stock Option Plan and the Revised and Restated 95 Stock Option Plan the option exercise price is either equal to or greater than the stock's market price on the date of grant. The non-affiliate director A class options are granted at the average price for the ten business days preceding the grant of the option and the B class options are granted at 105% of the A class option price. Options granted under either the 1994 Stock Option Plan or the Revised and Restated 95 Stock Option Plan can have vesting periods of up to five years and expire, at the latest, after ten years.

On September 18, 1998, the Company adopted the Stock Appreciation Rights Plan. This plan allows the Company to grant up to 125,000 Stock Appreciation Rights (SARs). The SARs are subject to the same vesting and other general conditions as options granted under the Revised and Restated 95 Stock Option Plan. When the SARs are exercised the employees will receive in cash the amount by which the CME stock price exceeds the exercise price at the time of exercise, if any, rather than purchase CME shares. No SARs were granted in the year ended December 31, 2001; 3,750 SARs were granted in 1998 and are still exercisable. No amount has been charged to the Statement of Operations in respect of these SARs in any year.

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A summary of the status of the Company's two stock option plans at December 31, 2001, 2000, and 1999 and changes during the years 2001, 2000, and 1999 are presented in the table and narrative below. The following table does not include the SARs and no compensation costs were required to be recognized in the current year.

	December 31, 2001
	Shares	Weighted Average Exercise Price $	Option Price $
Outstanding at start of year	244,999	74.24	1.60 - 268.00
Granted	31,000	1.38	1.25 - 2.10
Exercised	(875)	1.60	1.60
Forfeited	(15,760)	161.51	91.50 - 268.00
Outstanding at end of year	259,364	60.01	1.25 - 268.00
	December 31, 2000
	Shares	Weighted Average Exercise Price $	Option Price $
Outstanding at start of year	309,454	148.66	1.60-268.00
Granted	173,250	11.88	11.88
Exercised	-	-	-
Forfeited	(237,705)	125.67	6.69-268.00
Outstanding at end of year	244,999	74.24	1.60-268.00
	December 31, 1999
	Shares	Weighted Average Exercise Price $	Option Price $
Outstanding at start of year	322,692	164.32	1.60-268.00
Granted	61,250	79.05	6.688-104.00
Exercised	(4,500)	1.60	1.60
Forfeited	(69,988)	169.26	1.60-268.00
Outstanding at end of year	309,454	148.66	1.60-268.00

At December 31, 2001, 2000 and 1999 145,437, 99,516 and 283,423 shares were exercisable, respectively.

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

		Year Ended December 31,
		2001	2000	1999
Net Loss from continuing operations	As Reported	(24,827)	(37,498)	(83,076)
	Pro Forma	(25,500)	(40,150)	(87,779)
Net income/(Loss) from discontinued operations	As Reported	2,716	-	(6,794)
	Pro Forma	2,716	-	(6,794)
Net Loss	As Reported	(22,111)	(37,498)	(89,870)
	Pro Forma	(22,784)	(40,150)	(94,573)
Net Loss Per Common Share from ($)	As Reported	(7.50)	(11.35)	(25.78)
Continuing operations - basic and diluted	Pro Forma	(7.71)	(12.15)	(27.24)
Net Loss Per Common Share from ($)	As Reported	(0.82)	-	(2.11)
Discontinued operations - basic and diluted	Pro Forma	(0.82)	-	(2.11)
Total net Loss Per Common Share ($)	As Reported	(6.68)	(11.35)	(27.89)
Basic and Diluted	Pro Forma	(6.89)	(12.15)	(29.34)

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

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Date of Option Grant	Average Risk Free Interest Rate
18 May 2001 - 3 year rate	5.14%

Expected dividend yields are assumed to be 0% for each grant; expected lives range from 4 to 9 years; expected stock price volatility of 94%%, 110% and 59.14% for 2001, 2000, and 1999, respectively. 2001 volatility is calculated on the prior three (3) month's daily closing prices to reflect the underlying volatility given the illiquid market.

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

11. COMMITMENTS AND CONTINGENCIES

Litigation

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

Financial Commitments - Existing Entities

The Company's existing operations are expected to be self-supporting in terms of funding during 2002, with cash being available through local credit facilities and/or generated from operations.

Satellite Costs

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

In October 1997, the Company, through CME Media Enterprises B.V., obtained leasehold rights for an approximate 12 year period to a 16.5 MHz transponder on the Eutelsat Hot Bird 5 satellite ("Hot Bird 5"), which launched in November 1998. The Company has paid a deposit of Euro 475,000 ($446,000). The annual charge for the lease is Euro 1,900,000. Provided that the contract does not terminate before the expiration date (October 2010), the deposit is repayable to the Company by deduction from the final three invoices.

Pledged Assets

Enterprise Intermedia, one of the consolidated entities of the Studio 1+1 Group, has pledged fixed assets in the amount of $1,100,000 as security for a bank loan given to Studio 1+1, a non-consolidated entity of the Studio 1+1 Group.

Licenses

The Company has no reason to believe that the licenses for the television license companies will not be renewed when they expire. However, in the Slovak Republic, Romania, and Ukraine, no statutory or regulatory presumption exists for current license holders and there can be no assurance that licenses will be renewed upon expiration of their initial term. The failure of any such license to be renewed could adversely affect the results of the Company's operations. However, to date, licenses have been renewed in the ordinary course of business. Access to the available frequencies is controlled by regulatory bodies in each country in which the Company operates. New awards of licenses to use broadcast frequencies occur infrequently.

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The Ukraine operations are a third party to litigation involving the Ukraine TV Council which has challenged the validity of the modifications made to certain licenses, including the license granted to Studio 1+1. The Company believes that this action has no merit and will be rejected by the higher Ukraine courts. On April 5, 2001 the Supreme Arbitration Court of Ukraine found in favor of the Ukraine TV Council in an almost identical action by AITI in January 2001. Should the courts find against the Ukraine TV Council and the Studio 1+1 license is withdrawn, Studio 1+1 would be compelled to immediately cease broadcasting. (See Part I, Item 3, "Legal Proceedings" for a further discussion.)

Currency exchange rate fluctuation

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

Foreign Exchange Contracts

In limited instances, the Company enters into forward foreign exchange contracts to hedge foreign currency transactions for periods consistent with its identified exposures. At December 31, 2001, there were no foreign exchange contracts outstanding.

Station Programming Rights Agreements

The Company had programming rights commitments for $6,749,000 in respect of future programming which includes contracts signed with license periods starting after December 31, 2001.

Lease Commitments

For the fiscal years ended December 31, 2001, 2000, and 1999 the Company paid aggregate rent on all facilities of $1,250,000, $1,178,000, and $1,972,000 respectively. Future minimum lease payments at December 31, 2001 for non-cancellable operating leases with remaining terms in excess of one year (net of amounts to be recharged to third parties) are payable as follows:

	At December 31, 2001
2002	$ 1,070,000
2003	1,143,000
2004	1,128,000
2005	1,090,000
2006	1,072,000
2007 and thereafter	3,868,000
Total	$ 9,371,000

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12. RELATED PARTY TRANSACTIONS

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

Consolidated Balance Sheet Items
			At December 31
			2001	2000
Advances to Affiliates			-	-
	Amounts due from Unconsolidated Affiliates
		Markiza TV	3,513	3,000
	Advances to Affiliates
		Innova/Studio 1 + 1	-	-
		POP TV	700	916
		PRO TV		2,316
		Media Vision	96	90
		Video Vision	-	1,480
		CNTS	-	352
		Innova/Studio 1 + 1	1,004	-
		Adrian Sarbu	170	-
		Alexander Rodnyansky (1)	1,600	1,000
		Other	264	(73)
		Total	7,347	9,081
Loans to Affiliates
	Amounts due from Unconsolidated Affiliates
		Markiza TV	-	2,341
	Loans to Unconsolidated Affiliates
		Innova/Studio 1 + 1	-	6,077
		Adrian Sarbu	1,347	1,259
		Intermedia	1,302	1,302
		Alexander Rodnyansky	2,850	3,850
		Markiza TV	-	777
		PRO TV	1,777
		Other		-
		Total	7,276	15,606
Advance From Affiliates
	Advances From Affiliates
		Marijan Jurenec	25	13
		MMTV	253	244
		Tele 59	39	53
		Pro TV	552	966
		Media Vision	286	775
		Video Vision	-	190
		Innova/Studio 1+1		-
		Total	1,155	2,241

(1) In 2001, the Company received $400,000 from Alexander Rodnyansky against a payment schedule of $1,000,000, therefore the 2002 current portion of his loan includes $600,000 of outstanding 2001 payments as well as the expected 2002 payments. The overdue amount was received in January 2002.

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RELATED PARTY DISCLOSURES

Statement of Financial Accounting Standards No. 57 (FAS 57), Related Party Disclosures, sets forth the requirements under GAAP concerning transactions with related parties. Item 404 of Regulation S-K requires disclosure of certain relationships and transactions with related parties. The Company complies with this directive.

Notwithstanding that compliance, the Company has considered whether investors would better understand financial statements if the MD&A included descriptions of all material transactions involving related persons or entities. The Company has also considered the need for disclosure about parties that fall outside the definition of "related parties," but with whom the Company or its related parties have a relationship that enables the parties to negotiate terms of material transactions that may not be available from other, more clearly independent, parties on an arm's-length basis.

There is a limited local market for many specialist TV services in the countries in which the Company operates. Therefore, the Company does not feel it is possible to provide an assurance that fair market prices and payment terms are in place for such services, many of which are provided by parties known to be connected to or friendly with the Company's local partners. The Company continues to review all of these arrangements.

There are a number of agreements between licence and service companies for the sale of air time and the purchase of programming. These agreements are disclosed within Part 1. A number of partners have loans from the Company or are shareholders in companies to which loans have been made. See table above in "Related Party Transactions".

Accordingly the following disclosure is made:

ROMANIA

The Company has a number of transactions and arrangements with companies owned or connected to Adrian Sarbu, one of the local partners and General Director of MPI. The total purchases from companies owned by or connected to Mr Sarbu in 2001 were approximately $11.1 million. Many of these companies are paid by our Romanian operations more rapidly than third parties. The total sales to companies owned or connected to Mr Sarbu were approximately $1.8 million. The company also made sales of $2,932,498 to companies indirectly connected to Mr Sarbu and as at December 31, 2001 these companies had an outstanding balance of $2,807,000.

MPI has a loan and overdraft facility with Tiriac Bank. MPI also contracts with companies connected to Mr Tiriac, our other local partner, for the provision of security and other services, these amounts are not material.

The shareholders of MPI have unanimously approved resolutions requiring a higher level of review and control over related party transactions. The Board of MPI has also instructed the management of MPI to review all services currently contracted with both third parties and related parties and to prepare plans to perform these services in house where this could be done more efficiently.

SLOVENIA

There are no material agreements or relationships other than those already discussed.

SLOVAKIA

STS, the services company of our investment in Slovakia, has a number of contracts with companies connected to Pavel Rusko and Jan Kovacik, our local partners, for the provision of TV programs. Many of these contracts are for programs such as "Millionaire" that require specialist studios and specific broadcast rights. STS also sells advertising time through an advertising agency controlled by Jan Kovacik. The total 2001 sales were $2,386,000, and the total amount due to STS from this agency at December 31, 2001 was $1,720,000.

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UKRAINE

The Company contracts with Contact Film Studios for the production of some TV programs. This is a company connected to the minority shareholder and joint Managing Director of Innova Film GmbH, Boris Fuchsmann.

CORPORATE

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

Consolidated Statements of Operations Items
	Year Ended December 31,
	2001	2000	1999
	$000	$000	$000
Corporate Operating Costs and Development Expenses
Shareholder controlled affiliates	-	246	386

13. SUMMARY FINANCIAL INFORMATION

	Markiza TV		Studio 1+1
	At December 31, 2001	At December 31, 2000	At December 31, 2001	At December 31, 2000
	$000's	$000's	$000's	$000's
Current assets	$ 14,083	$ 13,206	4,241	$ 2,976
Non-current assets	10,768	10,567	1,290	1,452
Current liabilities.	(12,703)	(12,432)	(6,194)	(10,396)
Non-current liabilities	(802)	(1,121)	-	-
Net Assets	$11,346	$ 10,220	$ (663)	$ (5,968)

	Markiza TV		Studio 1+1
	For the Years Ended		For the Years Ended
	December 31, 2001	December 31, 2000	December 31, 2001	December 31, 2000
	$000's	$000's	$000's	$000's
Net revenues	$ 34,696	$ 33,155	$ 15,865	$ 7,895
Operating (loss)/profit	5,235	(1,273)	6,887	1,162
Net (loss)/profit	1,353	(3,154)	5,305	1,177

The Company's share of the income in Unconsolidated Affiliates (after inter-company eliminations) for 2001 was $1,832,000 for Markiza TV and $5,305,000 for certain entities of the Studio 1+1 Group.

14. SEGMENT DATA

The Company manages its business segments primarily on a geographic basis. The Company's reportable segments are comprised of Romania, Slovakia, Slovenia, Ukraine and the Czech Republic. Each operating segment provides products and services as further described below.

The Company evaluates the performance of its segments based on segment EBITDA (earnings before interest, taxes, depreciation and amortization). Costs for programming amortization are included in segment EBITDA. Costs excluded from segment EBITDA primarily consist of interest and foreign exchange gains and losses, corporate expenses and goodwill amortization and equity in losses of unconsolidated affiliates and other non-recurring charges for impairment of investments

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or discontinued operations. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements, thus no additional information is provided. Summary information by segment as of and for the years ended December 31, 2001, 2000, and 1999 is as follows:

	Segment Financial Information
	For the Years Ended December 31, ($000s)
	Net Revenues			EBITDA
	2001	2000	1999	2001	2000	1999
Station
Romania	$ 32,553	$ 39,591	$ 40,627	$ (2,007)	$ 1,564	$ (2,987)
Slovak Republic (Markiza TV)	34,696	33,155	32,217	6,033	4,368	2,739
Slovenia (POP TV and Kanal A)	28,465	24,168	23,347	8,367	6,024	4,655
Ukraine (Studio 1+1 Group)	23,098	17,164	14,501	4,613	775	(8,443)
Total Combined Operations Net Revenues / EBITDA	118,812	114,078	110,692	17,006	12,731	(4,036)
Reconciliation to Consolidated Statement of Operations:
Other Consolidated Entities:
Czech Republic (CNTS)	1,869	3,257	53,363	630	(1,933)	(13,038)
Corporate Expenses	-	-	-	(14,804)	(13,087)	(67,844)
Unconsolidated Affiliates:
Ukraine (Studio 1+1 Group)	(12,747)	(7,369)	(2,525)	(7,495)	(2,144)	5,521
Slovak Republic (Markiza TV)	(34,696)	(33,155)	(32,217)	(6,033)	(4,368)	(2,739)
Other operations (Hungary)	-	2	10	-	(29)	(21)
Station Depreciation	-	-	-	(11,331)	(24,654)	(21,667)
Net Revenues / Operating Loss	$ 73,238	$ 76,813	$ 129,323	$ (22,027)	$ (33,484)	$ (103,824)

Studio 1+1 Group was consolidated effective December 23, 1998. Amounts shown in the table above for Net Revenues for the year ended December 31, 2001 and 2000 differ by $12,747,0000 and $7,369,000, respectively and amounts shown in the table above for EBITDA for the year ended December 31, 2001 and 2000 differ by $7,494,000 and $2,144,000, respectively, from similar information shown in Selected Combined Financial Information in Part II. These differences relate to the use of consolidated numbers in the table above and combined numbers (which includes Studio 1+1 entities which are accounted for under the equity method) in Item 7.

CNTS ceased broadcast operations during 1999. See Part I Item 3, "Legal Proceedings" for a further discussion on Nova TV and the on-going dispute between CNTS and CET.

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15. MARKIZA

On January 18, 2002, the Company entered into an interest participation transfer agreement to acquire a 34% interest in Markiza and an adjustment of CME's share in STS' profits. As a result of this acquisition, the Company will generally only be entitled to 70% of STS' distribution of profits as opposed to 80% prior to the acquisition. The Company also has the right to appoint one of three authorized co-signatories of Markiza, which gives CME a blocking control over Markiza's significant activities. The ownership transfer to the Company was approved by the Slovak Media Council at its meeting on February 11, 2002. The transfer was registered with the Slovak Commercial Registry on March 13, 2002. As a result of the change in the Company's entitlement to distribution of profits, the Company will charge the Consolidated Statement of Operations with approximately $2.7 million in the first quarter 2002, to reflect the reduction in the economic interest based on the Company's value of the inv estment as at December 31, 2001.

16. SUBSEQUENT EVENTS

Ukraine

In our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2000, we 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 Ukraine's Supreme Arbitration Court.

Subsequent to that, AITI commenced another action, this time in the Arbitration Court in the City of Kiev, a lower court to the Ukraine Supreme Arbitration Court, 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 24 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 Arbitration Court of the City of Kiev ruled in AITI's favor. The Ukraine TV Council, and Studio 1+1, acting as an interested third party, have appealed the Arbitration Court's decision to the Court of Appeal. The judgement of this appeal court is ultimately subject to any party obtaining leave to appeal to the Court of Cassation (previously called Supreme Arbitration Court), the same court that ruled in favor of Studio 1+1 on April 5, 2001 in relation to an almost identical claim also brought by AI TI.

The Public Prosecutor's Office of the City of Kiev is also involved in the appeal of this decision. The reason for this is that the Prosecutor's Office acts on behalf of the State of Ukraine when a State institution is a defendant in a court action and there is a claim against funds in the State budget. Pending a decision of the Court of Appeal (and ultimately the Supreme Arbitration Court if leave is granted to appeal to it) the decision of the Arbitration Court of the City of Kiev has been stayed and Studio 1+1 continues to broadcast without interruption. The Company believes that the decision of the Arbitration Court of the City of Kiev is wrong on both its facts and its determination of law and wholly inconsistent with the previous decision of the Ukraine Supreme Arbitration Court, and will assist in the pursuit of the appeal vigorously. Should the Courts find against the Media Council and the Studio 1+1 licence is withdrawn, Studio 1+1 would have to cease broadcasting immediately.

Romania

On February 11, 2002, the Securities and Exchange Commission requested that the Company voluntarily allow the Commission's staff to inspect certain documents and records, related primarily to actual or potential liabilities payable by the Company or Media Pro International SA (the Romanian operating company in which the Company has a 66% interest) to any government entity in Romania. The Company believes that it has fully disclosed all its liabilities (actual and potential) in relation to all the jurisdictions within which it operates, including liabilities to governmental entities, in its filings with the Securities and Exchange Commission. The Company will cooperate fully with the Commission's staff in the conduct of its inquiry.

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Slovenia

As of January 1, 2002, changes were made to the legal reserve requirements in Slovenia. As a result, distributions may be paid from the profits of POP TV and Kanal A subject to a reserve equal to 10% of registered capital being established from accumulated profits.

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

None.

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PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 is incorporated herein by reference to the section entitled "Election of Directors and Executive Officers" in the Company's Proxy Statement for the 2002 Annual General Meeting of Shareholders.

Item 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to the sections entitled "Executive Compensation," "Compensation Committee Report on Executive Compensation" and "Performance Graph" in the Company's Proxy Statement for the 2002 Annual General Meeting of Shareholders.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated herein by reference to the section entitled "Security Ownership of Certain Beneficial Owners and Management" in the Company's Proxy Statement for the 2002 Annual General Meeting of Shareholders.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated herein by reference to the section entitled "Certain Relationships and Related Transactions" in the Company's Proxy Statement for the 2002 Annual General Meeting of Shareholders.

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PART IV

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

(a)(1) The following Financial Statements of the Company are included in Part II, Item 8111 of this Report:

Report of Independent Public Accountants

Consolidated Balance Sheets as of December 31, 2001 and 2000

Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999

Consolidated Statements of Shareholders' Equity (Deficit) for the years ended December 31, 2001, 2000 and 1999

Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999

Notes to Consolidated Financial Statements

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

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

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EXHIBIT INDEX

Exhibit Number	Description
3.01*	Memorandum of Association (incorporated by reference to Exhibit 3.01 to the Company's Registration Statement No. 33-80344 on Form S-1, filed June 17, 1994).
3.02*	Bye-Laws of Central European Media Enterprises Ltd., as amended, dated as of May 25, 2000. (incorporated by reference to Exhibit 3.02 to the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2000)
3.03*	Memorandum of Increase of Share Capital (incorporated by reference to Exhibit 3.03 to Amendment No. 1 to the Company's Registration Statement No. 33-80344 on Form S-1, filed August 19, 1994).
3.04*	Memorandum of Reduction of Share Capital (incorporated by reference to Exhibit 3.04 to Amendment No. 2 to the Company's Registration Statement No. 33-80344 on Form S-1, filed September 14, 1994).
3.05*	Certificate of Deposit of Memorandum of Increase of Share Capital executed by Registrar of Companies on May 20, 1997 (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1997).
4.01*	Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.01 to Amendment No. 1 to the Company's Registration Statement No. 33-80344 on Form S-1, filed August 19, 1994).
4.02*	Specimen Note for 9⅜% Senior Notes Due 2004 (incorporated by reference to Exhibit 4.1 to the Company's Amendment No. 3 to Form S-3 filed on August 14, 1997).
4.03*	Specimen Note for 8⅛% Senior Notes Due 2004 (incorporated by reference to Exhibit 4.1 to the Company's Amendment No. 3 to Form S-3 filed on August 14, 1997).
4.04*	Form of Indenture for 9⅜% Senior Notes Due 2004 (incorporated by reference to Exhibit 4.2 to the Company's Amendment No. 3 to Form S-3 filed on August 14, 1997).
4.05*	Form of Indenture for 8⅛% Senior Notes Due 2004 (incorporated by reference to Exhibit 4.2 to the Company's Amendment No. 3 to Form S-3 filed on August 14, 1997).
10.01+*	Central European Media Enterprises Ltd. Amended and Restated 1994 Stock Option Plan, as amended to October 17, 1995. (incorporated by reference to Exhibit 10.01A to Amendment No. 1 to the Company's Registration Statement No. 33-96900 on Form S-1, filed October 18, 1995).
10.01A+	Central European Media Enterprises Ltd. 1995 Stock Option Plan, as amended and restated to May 17, 2001
10.02*	Memorandum of Association and Investment Agreement by and between CME Czech Republic B.V. and CET 21 spol s.r.o dated May 4, 1993 and as amended (incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
10.03*	Credit Agreement between Ceska Sporitelna, a.s. and Ceska Nezavisla Televizni Spolecnost, s.r.o. (incorporated by reference to Exhibit 10.16 to Amendment No. 1 to the Company's Registration Statement No. 33-80344 on Form S-1, filed August 19, 1994).
10.04*	Partnership Agreement of Produkcija Plus d.o.o. Ljubljana, dated February 10, 1995 among CME Media Enterprises B.V., Boutique MMTV d.o.o. Ljubljana, and Tele 59 d.o.o. Maribor. (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994).
10.05*	Letter Agreement, dated March 23, 1995, among, Kanal A, Boutique MMTV d.o.o. Ljubljana, Tele 59 d.o.o. Maribor, Euro 3 and Baring Communications Equity as advisor to Baring Communications Equity Limited, regarding Produkcija Plus d.o.o. (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994).
10.06*	Credit Agreement, dated as of November 14, 1994, between Ceska Sportelna, a.s. and Ceska Nezavisla Televizni Spolecnost, s.r.o. (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994).
10.07*	Contract for Space Segment Service dated June 9, 1995, between British Telecommunications plc ('BT') and CME Programming Services, Inc. for the provision of programming transmission services by BT and the payment thereon (incorporated by reference to Exhibit 10.25A to the Company's Report on Form 10-Q for the quarterly period ended June 30, 1995).
10.07A*	Guarantee by Central European Media Enterprises Ltd. in respect of obligations due to British Telecommunications plc by CME Programming Services, Inc. dated June 9, 1995 (incorporated by reference to Exhibit 10.25B to the Company's Report on Form 10-Q for the quarterly period ended June 30, 1995).
10.08*	Cooperation Agreement among CME Media Enterprises B.V., Ion Tiriac and Adrian Sarbu (incorporated by reference to Exhibit 10.27 to the Company's Registration Statement No.33 - 96900 on Form S-1 filed September 13, 1995).
10.09*	Preliminary Agreement, dated June 12, 1995, between CME Media Enterprises B.V. and Markiza-Slovakia s.r.o. (incorporated by reference to Exhibit 10.28 to the Company's Registration Statement No. 33-96900 on Form S-1, filed September 13, 1995).
10.09A*	Memorandum of Association between CME Media Enterprises, B.V. and Markiza-Slovakia s.r.o. (incorporated by reference to Exhibit 10.28A to Amendment No. 1 to the Company's Registration Statement No. 33-96900 on Form S-1, filed October 18, 1995).
10.09B*	Articles of Association of Slovenska Televizna Spolocnost, s.r.o. founded by CME Media Enterprises, B.V. and Markiza-Slovakia s.r.o. (incorporated by reference to Exhibit 10.28B to Amendment No. 1 to the Company's Registration Statement No. 33-96900 on Form S-1, filed October 18, 1995).
10.10*	Contract of Sale, dated July 7, 1995 between In Razvoj in Svetovanje d.o.o. Ljubljana and Produkcija Plus d.o.o. Ljubljana and Central European Media Enterprises Group (incorporated by reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.11*	Loan Agreement, dated December 4, 1995, between CME Media Enterprises, B.V., and Inter Media S.R.L. (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.12*	Transfer Agreement between Ceska Sporitelna and CME BV (incorporated by reference to Exhibit 10.03 to the Company's Report on Form 10-Q for the quarterly period ended June 30, 1996).
10.12A*	Annex to Transfer Agreement between Ceska Sporitelna and CME BV (incorporated by reference to Exhibit 10.04 to the Company's Report on Form 10-Q for the quarterly period ended June 30, 1996).
10.13*	Loan Agreement between Ceska Sporitelna and CME BV (incorporated by reference to Exhibit 10.05 to the Company's Report on Form 10-Q for the quarterly period ended June 30, 1996).
10.14*	Agreement on a Future Agreement between Ceska Sporitelna and CME BV (incorporated by reference to Exhibit 10.06 to the Company's Report on Form 10-Q for the quarterly period ended June 30, 1996).
10.15*	Agreement between CME, Boris Fuchsmann, Alexander Rodniansky and Innova Film GmbH in English, dated October 25, 1996 (incorporated by reference to Exhibit 10.10 to the Company's Report on Form 10-Q for the quarterly period ended September 30, 1996).
10.16*	Agreement between CME, Boris Fuchsmann, Alexander Rodniansky and Innova Film GmbH in German, dated October 25, 1996 (incorporated by reference to Exhibit 10.11 to the Company's Report on Form 10-Q for the quarterly period ended September 30, 1996).
10.17*	Share Purchase Agreement between Ceska Sporitelna a.s. and CME Media Enterprises B.V., dated December 12, 1996 (incorporated by reference to Exhibit 10.58 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.18*	Agreement on Assignment of Claim between Ceska Sporitelna, a.s. and CME Media Enterprises B.V., dated December 12, 1996 (incorporated by reference to Exhibit 10.59 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.19*	Assignment of Shares Agreement between Balaclava B.V., Adrian Sarbu (as shareholders of PRO TV Ltd.), CME Media Enterprises B.V., Grigoruta Roxana Dorina and Petrovici Liana, dated December 6, 1996 (incorporated by reference to Exhibit 10.60 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.20*	Net Reimbursement Agreement by and among International Teleservices Limited, International Media Services, Limited and Limited Liability Company 'Prioritet', dated February 13, 1997 (incorporated by reference to Exhibit 10.64 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.21*	Agreement by and between International Media Services Ltd and Innova Film GmbH, dated January 23, 1997 (incorporated by reference to Exhibit 10.65 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.22*	Amended and Restated Charter of the Enterprise 'Inter-Media', dated January 23, 1997 (incorporated by reference to Exhibit 10.66 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.23*	Amended and Restated Charter of the Broadcasting Company 'Studio 1+1', dated January 23, 1997 (incorporated by reference to Exhibit 10.67 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.24*	Amended and Restated Foundation Agreement on the Establishment and Operation of the Broadcasting Company 'Studio 1+1,' dated January 23, 1997 (incorporated by reference to Exhibit 10.68 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.25*	Protocol of the Participants' Assembly of the Broadcasting Company 'Studio 1+1,' dated January 23, 1997 (incorporated by reference to Exhibit 10.69 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.26*	Marketing, Advertising and Sales Agreement by and between International Media Services Ltd and Innova Film GmbH, dated January 23, 1997 (incorporated by reference to Exhibit 10.70 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.26A*	Amendment Agreement to Marketing, Advertising and Sales Agreement between Innova Film GmbH and International Media Services Limited, dated May 7, 1997 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997).
10.27*	IMS Advertising Service Agreement between International Media Services Ltd. and Limited Liability Company -Prioritet-, dated May 7, 1997 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997).
10.28*	Contract on Purchase of Real Estate between Central European Development Corporation Praha, spol s.r.o. and Ceska Nezavisla Televizni Spolecnost, spol. s.r.o., dated May 21, 1997 (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997).
10.29+*	Employment Agreement between CME Development Corporation and Fred Klinkhammer, dated as of January 1, 1998 (incorporated by reference to Exhibit 10.72 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997).
10.29A+*	Amendment No. 1 to Employment Agreement between CME Development Corporation and Fred Klinkhammer, dated as of March 23, 1999 (incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
10.29B+*	Employment Agreement between Central European Media Enterprises Ltd. and Fred Klinkhammer, dated as of January 1, 1998 (incorporated by reference to Exhibit 10.72 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997).
10.29C+*	Amendment No. 1 to Employment Agreement between Central European Media Enterprises Ltd. and Fred Klinkhammer, dated as of March 23, 1999 (incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
10.30+*	Central European Media Enterprises Ltd. Stock Appreciation Rights Plan, effective as of September 3, 1998 (incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
10.31+*	Central European Media Enterprises Ltd. Director, Officer and Senior Executive Co-Investment Plan, effective as of June 5, 1998 (incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
10.32*	Contract on cooperation in ensuring service for television broadcasting between Ceska Nezavisla Televizni Spolecnost, spol. s.r.o. and CET 21, spol. s.r.o. dated May 21, 1997 and Supplement dated May 21, 1997 (incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
10.33+*	Employment Agreement between Central European Media Enterprises Ltd. and Mark J. L. Wyllie dated July 26, 2000 (incorporated by reference to Exhibit 10.45 to the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2000)
10.34*	Aldwych House Lease Agreement, dated September 29, 2000 (incorporated by reference to Exhibit 10.46 to the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2000)
10.35x*	Advertising Sales Agency Agreement between Studio 1+1 and Servland Continental S.A. dated March 14, 2001 (incorporated by reference to Exhibit 10.47 to the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2000)
10.36*	Share Purchase Agreement for shares in Media Pro S.R.L. dated as of May 3, 2001, among Mr. Adrian Sarbu, Mr. Ion Tiriac and CME Romania B.V. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001).
10.37*	Employment Agreement between CME Development Corporation and Robert E. Burke dated July 6, 2001 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001).
10.38*	Loan Agreement between Ceska Sporitelna, a.s. and CME Media Enterprises B.V. dated October 5, 2001 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001).
10.39*	Ceska Sporitelna, a.s. General Terms and Conditions for the Provision of Loans dated October 5, 2001 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001).
10.40*	Contract of Security Assignment of a Receivable between Ceska Sporitelna, a.s. and CME Media Enterprises B.V. dated October 5, 2001 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001).
10.41*	Exclusive Contract of Providing and Broadcasting of Television Signal between Markiza -Slovakia s.r.o. and Slovenska Televizna Spolocnost s.r.o. dated August 30, 1996 (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001).
10.42*	Exclusive Rights Transfer Agreement between Markiza- Slovakia s.r.o and Slovenska Televizna Spolocnost s.r.o. dated October 3, 2001 (incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001).
10.43	Key Agreement Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd, Innova Film GmbH, International Media Services Ltd, Ukraine Advertising Holding, CME Ukraine GmbH and CME Ukraine B.V entered into as of December 23, 1998
10.44	Memorandum of Association of Slovenska televizna spolocnost s.r.o
10.45	Articles of Association of Slovenska televizna spolocnost s.r.o
10.46	Amended Memorandum of Association Markiza - Slovakia spol. s.r.o
21.01	List of subsidiaries
23.01	Consent of Arthur Andersen
24.01	Power of Attorney, dated as of March 9, 2002, authorizing Fred T. Klinkhammer and Mark J. L. Wyllie as attorney for Ronald S. Lauder, Fred T. Klinkhammer, Jacob Z. Schuster, Marie-Monique Steckel, Nicolas G. Trollope, Alfred W. Langer, Charles Frank, Herb Granath, and Mark J. L. Wyllie
99.01	Representation Letter to the Securities and Exchange Commission.
*	Previously filed exhibits
+	Exhibit is a management contract or compensatory plan
X	Confidential Treatment has been requested with respect to certain information contained in this Exhibit
b)	Current Reports on Form 8-K: None
c)	Exhibits: See (a)(3) above for a listing of the exhibits included as part of this report.
d)	Report of Independent Public Accountants on Schedule II- Schedule of Valuation Allowances. (See pages S-1 to S-3 of this Form 10-K)

Page 77

SIGNATURES

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

Central European Media Enterprises Ltd.

By: /s/ Mark J. L. Wyllie

Mark J. L. Wyllie

Vice President - Finance

March 27, 2002

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

Signature	Title	Date
* Ronald S. Lauder	Chairman of the Board of Directors	March 27, 2002
/s/ Frederic T. Klinkhammer Frederic T. Klinkhammer	President, Chief Executive Officer and Director (Principal Executive Officer)	March 27, 2002
/s/ Mark J. L. Wyllie Mark J. L. Wyllie	Vice President - Finance (Principal Financial Officer and Principal Accounting Officer)	March 27, 2002
* Nicolas G. Trollope	Vice President, Secretary and Director	March 27, 2002
* Jacob Z. Schuster	Director	March 27, 2002
* Marie-Monique Steckel	Director	March 27, 2002
* Alfred W. Langer	Director	March 27, 2002
* Charles Frank Ph..D.	Director	March 27, 2002
* Herb Granath	Director	March 27, 2002
	* By: /s/ Mark J. L. Wyllie Mark J. L. Wyllie Attorney-in-fact

Page 78

INDEX TO SCHEDULES

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

Page 79

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

To: Central European Media Enterprises Ltd.:

We have audited, in accordance with auditing standards generally accepted in the United States, the financial statements of Central European Media Enterprises Ltd. included in this filing and have issued our report thereon dated March 27, 2002. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the accompanying index is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

Arthur Andersen

Hamilton, Bermuda

March 27, 2002

Page 80

Schedule II

Schedule of Valuation Allowances

$000s

	Balance at January 1, 2001	Charged to Costs and Expenses	Charged to Other Accounts	Deductions	Balance at December 31, 2001
Bad debt provision	3,539	6,399	(211)	(1,508)	8,219
Development costs	-	-	-	-	-
	Balance at January 1, 2000	Charged to Costs and Expenses	Charged to Other Accounts	Deductions	Balance at December 31, 2000
Bad debt provision (1)	3,221	419	(48)	(53)	3,539
Development costs	-	-	-	-	-
	Balance at January 1, 1999	Charged to Costs and Expenses	Charged to Other Accounts	Deductions	Balance at December 31, 1999
Bad debt provision	3,193	367	(33)	(930)	2,597
Development costs	267	267	-	-	-
Restructuring costs	510	-	-	(510)	-

(1) This includes $624,000 of bad debt provision that was recorded on Kanal A's books on the acquisition date of October 11, 2000.

Page 81

Exhibit 21.01

Subsidiaries as at March 27, 2002
Company Name	Jurisdiction of Organization
Media Pro International S.A.	Romania
Media Vision S.R.L.	Romania
Media Pro S.R.L	Romania
Pro TV S.R.L.	Romania
Video Vision International S.R.L.	Romanian ( sold November 22, 2001)
Media Pro Chisinau S.R.L	Moldovia
MPI Romanian B.V	Netherlands
International Media Services Ltd.	Bermuda
Innova Film GmbH	Germany
Enterprise "Intermedia"	Ukraine
Broadcasting Company "Studio 1+1"	Ukraine
Ukraine Advertising Holding B.V.	Netherlands
Gravis	Ukraine
Ceska Nezavisla Televizni Spolecnost, spol. s.r.o.	Czech Republic
CET 21 spol. s.r.o.	Czech Republic
Nova Consulting	Czech Republic
Slovenska Televizna Spolocnost, spol. s.r.o.	Slovakia
Media Pro Slovakia	Slovakia
Markiza s.ro. Slovakia	Slovakia
Gamatex s.r.o.	Slovakia
ADAM (Slovakia)	Slovakia
ARJ Slovakia	Slovakia
MKTV Rt (Irisz TV)	Hungary
GammaSat Media Investment Holding Kft	Hungary
MM TV 1, d.o.o.	Slovenia
Tele 59, d.o.o.	Slovenia
MTC Holding, d.o.o.	Slovenia
Produkcija Plus, d.o.o.	Slovenia
POP TV d.o.o.	Slovenia
Kanal A d.d.	Slovenia
Superplus Holding d.d.	Slovenia
CME Media Enterprises B.V.	Netherlands
CME Czech Republic B.V.	Netherlands
CME Czech Republic II B.V.	Netherlands
CME Germany B.V.	Netherlands
CME Hungary B.V.	Netherlands
CME Poland B.V.	Netherlands
CME Romania B.V.	Netherlands
CME Slovakia B.V.	Netherlands
CME Slovenia B.V.	Netherlands
CME Ukraine B.V.	Netherlands
CME Media Enterprises Ltd	UK
CME Ukraine Holding GmbH	Austria
CME Germany GmbH	Germany
CME Development Corporation	USA
CME Programming Services B.V.	Netherlands
Central European Media Enterprises N.V.	Netherlands Antilles

Page 83

Exhibit 23.01

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K, into the Company's previously filed Registration Statements File Nos. 333-1560 and 333-60295.

ARTHUR ANDERSEN

Hamilton, Bermuda

March 27, 2002

Page 84

Exhibit 24.01

POWER OF ATTORNEY

Each person whose signature appears below, constitutes and appoints Frederic T. Klinkhammer and Mark J. L. Wyllie, and each of them, with full power to act without the other, such person's true and lawful attorney-in-fact, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year 2001 of Central European Media Enterprises Ltd., a Bermuda corporation, and any and all amendments to such Annual Report on Form 10-K and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorneys-in-fact, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

March 27, 2002

/s/ Ronald S. Lauder ________________ Ronald S. Lauder	/s/ Fred T. Klinkhammer ________________ Fred T. Klinkhammer
/s/ Jacob Z. Schuster ________________ Jacob Z. Schuster	/s/ Marie-Monique Steckel ________________ Marie-Monique Steckel
/s/ Nicolas G. Trollope ________________ Nicolas G. Trollope	/s/ Mark J. L. Wyllie ________________ Mark J. L. Wyllie
/s/ Alfred W. Langer ________________ Alfred W. Langer	/s/ Charles Frank Ph.D ________________ Charles Frank
/s/ Herb Granath ________________ Herb Granath

Page 85

EX-10

T r a n s l a t i o n

from the Slovak language

Amended Memorandum of Association

- full version of Memorandum of Association

(effective from the day when the part of participation interest of MEDIA INVEST, spol. s r.o. in MARKIZA-SLOVAKIA, spol. s r.o. has been effectively transferred to CME Media Enterprises, B.V. upon the Transfer Agreement)

Participants:

1) MEDIA INVEST, spol. s r.o. having its registered office at Skuteckeho 23, 974 01 Bratislava, Registration No. 36 044 024, represented by Jan Kovacik, Executive of the Company, and

2) A.R.J., a.s, having its registered office at 14, Kalinciakova, 010 01 Zilina, Registration No. 36 379 921, represented by Radka Doehring, President of the Board of Directors, PhDr. Pavol Rusko, Jan Kovacik and Ivan Petricek, Directors

having held a General Meeting of MARKIZA-SLOVAKIA, spol. s r.o., a Company having its registered office at 334 Blatne 900 82, Registration No. 31 444 473, on 18^th January 2002, resolved, as of the effective date of transfer of participation interest ofMEDIA INVEST, spol. sr.o. in MARKIZA-SLOVAKIA, spol. s r.o. to CME Media Enterprises, B.V, as approved by the General Meeting of MARKIZA-SLOVAKIA, spol. s r.o. held on 18^th January, 2002, to pass the following

Amended Memorandum of Association

(Full Version of Memorandum of Association)

Article1

Founding of the Company and the Amended Memorandum of Association

1. MARKIZA-SLOVAKIA, spol. s r.o., a Company having its registered office at 334 Blatne, 900 82 Bratislava, Slovak Republic, Registration No. 31 444 873 (hereinafter the "Company"), was established as a limited liability company by PhDr. Pavol Rusko, the sole Founder by a Foundation Deed of September 14, 1993 in he form of Notarial Deed N 107/93, Nz 100/93 drawn up by JUDr. Miriam Bukovcakova, a Notary, to which an amendment of October 12, 1993 was made by a Notarial Deed N 122/93, Nz 115/93 of October 12, 1993.

2. As of January 20, 1994 the Foundation Deed of the Company was transformed into a Memorandum of Association as a result of the transfer of a part of participation interest of PhDr. Pavol Rusko in the Company to Sylvia Volzova, and as of the same day an Amendment to the Memorandum of Association was adopted. The Memorandum of Association was further modified by Amendment (No. 1) of January 20, 1994, Amendment (No. 2) of May 3, 1995, Amendment (No. 3) of July 28, 1998 as a result of the transfer of participation interest in the Company under the agreements on transfer of participation interest of September 28, 2000 and November 2, 2001 respectively. The Memorandum of Association was also modified by Amendments (No. 4 and 5) of November 13, 2001. On 30^th June 2000, Mr. Pavol Rusko, Mr. Jan Kovacik, Forza, a.s. and CME MEDIA ENTERPRISES, B.V. entered into the Agreement for the procurement of transfer of a 34 per cent. participation interest in the company pursuant to which Mr. Pavol R usko, Mr. Jan Kovacik and Forza, a.s. undertook to procure the transfer to CME MEDIA ENTERPRISES, B.V. of a 34 per cent. participation interest in the company at the price equal to the nominal value of such participation interest (i.e. the contribution of MEDIA INVEST, spol. s r.o. into the registered capital of the company corresponding to such participation interest). Mr. Jan Kovacik is, as of the approval date of this amended Memorandum of Association - full version of Memorandum of Association, the sole participant of MEDIA INVEST, spol. s r.o. As of the approval date of this amended Memorandum of Association - full version of Memorandum of Association, MEDIA INVEST, spol. s r.o. and CME MEDIA ENTERPRISES, B.V. shall enter into an Agreement on the Transfer of a Part of a Participation Interest in MARKIZA-SLOVAKIA, spol. s r.o. (the "Transfer Agreement"), pursuant to which MEDIA INVEST, spol. s r.o. agree to transfer to CME MEDIA ENTERPRISES, B.V. a 34 per cent. participation interest in the company. At t he General Meeting held on 18^th January 2002, MEDIA INVEST, spol. s r.o. and A.R.J. approved as of the effective day of the transfer of a part of the participation interest of MEDIA INVEST, spol. s r.o. in MARKIZA-SLOVAKIA, spol. s r.o. to CME Media Enterprises, B.V., the amended Memorandum of Association -full version of the Memorandum of Association, which is to replace the previous wording of the Memorandum of Association as previously amended. The current Memorandum of Association including the amendments of 18^th January 2002, was acceded by CME Media Enterprises, B.V. in the Transfer Agreement.

3. The Company has been established in conformity with Slovak law and all legal relations between the Participants and the Company shall be governed by Slovak law.

Article 2

Participants of the Company

Participants of the Company are:

a) A.R.J., a.s, having its registered office at 14, Kalinciakova, 010 01 Zilina, Registration No. 36 379 921, Slovak Republic

b) MEDIA INVEST, spol. s r.o., having its registered office Skuteckeho 23, 974 01 Banska Bystrica, Registration No. 36 044 024, Slovak Republic, and

c) CME Media Enterprises, B.V., having its registered office at Hoogoorddreef 9, 1101 BA, Amsterdam - Zuidoost, the Netherlands

Article 3

Name of the Company

The name of the Company shall be: MARKIZA - SLOVAKIA, spol. s r.o.

Article 4

Registered Office

The registered office of the Company shall be: 334 Blatné 900 82.

Article 5

Business Activities of the Company

Business activities of the Company shall include:

a) textile production;

b) advertising and brokerage activities;

c) purchase and sale of goods within unregulated business, in particular in textile and textile products;

d) book publishing;

e) book binding and final design

f) printing and making printing copies

g) newspaper publishing;

h) publishing magazines and other periodicals;

i) production of master sound track recordings;

j) reproduction of master video and audio recordings;

k) reproduction of master sound-track recordings;

l) reproduction of master video tape recordings;

m) video program production, rental and distribution;

n) organising contests and games for sales promotion;

o) using the products of intellectual property with the prior permission of authors;

p) real estate agency and brokerage activities;

r) market research and opinion polls;

s) news and press agency activities;

t) technical and organisational planning of and arrangement of exhibitions and shows

u) television broadcasting within third T.V. network of T.V. MARKÍZA station under licence No.T/41 granted by the Radio and Television Broadcasting Council of the Slovak Republic of August 7, 1995 issued under No.. T/41/RUL/95.

Article 6

Capital of the Company and Participant's Contributions

1. The capital of the Company shall be SKK 200,000 (two hundred thousand Slovak crowns)

2. The capital of the Company shall be made by monetary contributions fully paid up by the Participants as follows

a) A.R.J., a.s. with a contribution in the amount of SKK100,000 (one hundred thousand Slovak crowns),

b) MEDIA INVEST, spol. s r.o. with a contribution in the amount of SKK 32,000 (thirty-two thousand Slovak crowns), and

c) CME Media Enterprises, B.V. with a contribution in the amount of SKK 68,000 (sixty-eight thousand Slovak crowns).

Article 7

Participation interest and Property Rights of Participants

1. The participation interest shall represent the rights and duties of a Participant and the corresponding participation in the Company. It shall be determined by the proportion of a Participant's contribution in the Company's capital. The participation interest of Participants shall consist of the following parts:

a) A.R.J., a.s. shall have a 50% participation interest in the Company;

b) MEDIA INVEST, spol. s r.o. shall have a 16% participation interest in the Company, and

c) CME Media Enterprises, B.V. shall have a 34%. participation interest in the Company.

The participation interests as specified above shall be without prejudice to the particular determination of individual property rights of Participants as defined in this Article below.

2. Any Participant intending to sell his/her participation interest shall be obligated to offer it first to the incumbent Participants.

3. A Participant can transfer his/her participation interest or its part to another Participant or to a third party not being a Participant subject to a prior consent of the General Meeting, otherwise such transfer shall be null and void.

4. The dividing of a participation interest shall be possible only where it is transferred or assigned to a Participant's heir or legal successor. Such dividing shall require the consent of the General Meeting.

5. If a legal entity holding a participation interest is wound up, the participation interest shall be transferred to its legal successor. On the death of a Participant, his/her participation interest shall be transferred to his/her heir.

6. Participants shall be entitled to a share in the Company's profits which may be allotted for distribution in the proportion as follow:

a) A.R.J., a.s. shall be entitled to a share in the Company's profits allotted for distribution in the amount of 8.34% (eight point thirty-four percent);

b) MEDIA INVEST, spol. s r.o. shall be entitled to a share in the Company's profits allotted for distribution in the amount of 91.56% (ninety-five point fifty-six percent);

c) CME Media Enterprises, B.V. shall be entitled to a share in the Company's profits allotted for distribution in the amount of 0.1% (zero point one percent).

7. The distribution mechanism of the profits of the Company among the Participants under section 6 of this Article shall for the first time apply to the distribution of profits generated in the calendar year following the calendar year in which CME Media Enterprises, B.V will be registered in the Commercial Registry as the owner of a 34% participation interest in the Company. The profits of the calendar year in which CME Media Enterprises, B.V will be registered in the Commercial Registry as the owner of a 34% participation interest in the Company shall be distributed as follows:

a) a part of profits allotted for distribution among Participants for the period between January 1 of this calendar year and the day preceding the date when CME Media Enterprises, B.V will be registered in the Commercial Registry as the owner of a 34% participation interest in the Company shall be equally divided between MEDIA INVEST, spol. s r.o. and A.R.J., a.s.;

b) a part of profits allotted for distribution among Participants for the period between the date when CME Media Enterprises, B.V. will be registered in the Commercial Registry as the owner of a 34% participation interest in the Company and December 31 of this calendar year shall be distributed among all Participants in compliance with section 6 of this Article.

8. A Participant terminating his/her participation in the Company during the Company's existence, shall be entitled to receive a proportional settlement amount. A Participant's settlement amount shall be determined as follows:

a) settlement for A.R.J., a.s. shall be determined at 8.34% (eight point thirty-four percent) of the net value of the Company's capital verified by an expert as of the date of termination of its participation in the Company.

b) settlement for MEDIA INVEST, spol. s r.o. shall be determined at 91.56% (ninety-five point fifty-six percent) of the net value of the Company's capital verified by an expert as of the date of termination of its participation in the Company;

c) settlement for CME Media Enterprises, B.V. shall be determined at 0.1% (zero point one percent) of the net value of the Company's capital verified by an expert as of the date of termination of its participation in the Company.

9. In case the company is wound up with liquidation, each Participant shall be entitled to receive a portion in the liquidation balance which shall be determined in the same manner as the settlement amount under the above paragraph.

Article 8

Contributions at the Time of Founding the Company

and Administration of the Contributions

PhDr. Pavol Rusko, the Founder of the Company made a contribution in the capital of the Company of SKK 100,000, which sum was fully paid up before the establishment of the Company. The administration of the paid-up contribution prior to the establishment of the Company had been vested in PhDr. Pavol Rusko, the Founder.

Article 9

Duration of the Company

The Company shall be established for an indefinite period of time.

Article 10

Governing Bodies of the Company

The governing bodies of the Company shall consist of the General Meeting and three Executives.

Article 11

General Meeting

1. The General Meeting shall be the supreme governing body of the Company, having the exclusive powers:

a) to decide on changes in the Memorandum of Association;

b) to decide on the increase or the reduction of the capital of the Company and on contributions in kind;

c) to decide on winding-up, taking over, merging or dividing the Company, and on transforming the legal form of the Company;

d) to decide on the approval of a transfer of participation interest or its part;

e) to approve the dividing of participation interest;,

f) to appoint, recall and remunerate the Executives of the Company;

g) to approve the regular, extraordinary or consolidated financial statement, and the decision to distribute profits and to cover losses;

h) to decide on other matters in which the powers have been vested in the General Meeting by law, or this Memorandum.

2. The General Meeting of the Company shall be convened by the Executives at least once a year. The Executives shall be obliged to convene the General Meeting and submit to the General Meeting the relevant proposals whenever they learn or anticipate that losses of the Company exceed one third of the value of the capital of the Company, or whenever it is so requested by a Participant whose contribution in the Company equals 10% of the capital of the Company. The Executives failing to convene the General Meeting within one month of this request, such Participant shall have the right to convene the General Meeting by himself/herself.

3. The venue, the day and time and the agenda of the General Meeting shall be communicated to the Participants at least fifteen days in prior by a written invitation delivered by registered mail to each Participant or personally served on at the latest notified address of each Participant. Under the consent of all Participants a General Meeting can be convened also without a written invitation or within a shorter period of time.Under the consent of all Participants, the General Meeting can be convened also by an oral communication of the venue, day and time and the agenda of the General Meeting which shall be held on the same day when such oral information has been announced.

4. Each Participant shall have one vote per every SKK 1,000 of his/her contribution in the Company.

5. The General Meeting shall constitute a quorum only if Participants holding 100% of all votes are attending.

6. Any resolution of the General Meeting in any matter shall be approved by Participants holding 100% of all votes.

7. A Participant cannot exercise his/her voting rights whenever the General Meeting decides on

a) his/her contribution in kind,

b) his/her exclusion from the Company or a proposed exclusion from his/her participation in the Company.

8. As regards the quorum of the General Meeting required for a decision to be made or a vote taken, the votes of Participants whose exercise of their voting rights is excluded under section 7, i.e. in matters to be resolved by the General Meeting under section 7, shall be ignored, and in such cases the 100% of Participants who are allowed to exercise their voting rights shall be required.

9. The Participants can make resolutions also outside the General Meeting. In such cases the proposed resolution shall be submitted for review by the Participants within a time limit in which the Participants must deliver their written opinion to the address of the registered office of the Company. The proposals under the preceding clause shall be submitted to the Participants either by the Executives acting jointly or by the Participant or Participants holding 10% participation in the capital of the Company. A failure to submit his/her opinion within the fixed time limit, shall be deemed as a Participant's denial of the proposal. Thereafter, the Executives shall communicate the results of voting to each Participant. The majority of votes necessary for a resolution to be passed in this manner shall be calculated on the basis of the total number of votes held by all Participants. In passing resolutions under this paragraph, the provisions of section 8 of this Article shall apply as appropriate.

Article 12

Executives

The Company shall have three Executives acting jointly on behalf of the Company and binding the Company. Having statutory authority, the Executives shall be entitled to act on behalf of the Company in respect of any matter. The Executives shall manage the business of the Company and decide on any matter of the Company, unless the matter falls within the powers of the General Meeting under the law or this Memorandum. The first Executive, so designated upon the establishment of the Company under the Foundation Deed, was PhDr. Pavol Rusko, Personal No. 630820/7147, residing at 10, Ľ. Fullu, 841 05 Bratislava.

Article 13

Signing on Behalf of the Company

Signing on behalf of the Company in any matter concerning the Company shall be vested in the Executives with all three Executives signing jointly. Singing shall be executed by the Executives each of whom shall affix his/her signature next to the printed name of the Company, his/her name and position held in the Company.

Article 14

Particular Rights and Duties of the Participants

1. The Participants shall have the right to be informed, at any time, of the financial situation and business activities of the Company and, to this aim, to inspect ledgers and accounting documents and require explanations and justifications of the data contained in the books. They shall be entitled also to request all available information to be reviewed by independent experts at their own costs.

2. The Participants shall be bound, during their participation in the business of the Company and also after the termination of the Company, to keep confidential any information disclosed by the Company and concerning the business of the Company, the publication of which could or might be harmful to the Company.

Article 15

Winding-Up and Transforming the Legal Form of the Company

1. The Company shall cease to exist on the day of its deletion from the Companies Register. The Company's deletion from the Companies Register shall be preceded by its winding-up with or without the Company's liquidation. The Company shall be wound up:

a) upon a dismissal of a bankruptcy proceeding after an order of bankruptcy has been complied with, or a dismissal of a bankruptcy proceeding where the assets of the Company become insufficient to cover the expenses and remuneration of the bankruptcy trustee, or upon a dismissal of a petition for bankruptcy due to lack of assets;

b) as of the date determined by a resolution of the General Meeting on winding-up of the Company with or without the Company's liquidation in connection with its merging with, or taking over by, another Company, or in connection with its dividing, otherwise as of the date of passing such resolution;

c) by a court order;

d) by other procedures as provided by law ..

2. Should the Company be wound-up with liquidation by a resolution of the General Meeting, the General Meeting shall appoint a liquidator/receiver or liquidators/receivers, to whom the powers of the Executives to act on behalf of the Company shall be assigned upon their appointment.

3. The legal form of the Company can be transformed into another legal form or a co-operative. Upon such transformation, the Company shall not cease to exist as a legal entity.

Article 16

The Method of Increasing or Reducing the Capital of the Company

1. The capital of the Company can be increased or reduced only under a resolution of the General Meeting.

2. The capital can be increased by:

a) a new monetary or in-kind contribution of a Participant or a third party;

b) undistributed profits or the funds obtained from the profits which can be used by the Company without any restriction for the purpose of increasing the capital.

3. The Company can reduce the capital by a contribution of a Participant who has terminated his/her participation in the Company during its existence or by reducing all Participants' contributions. The capital of the Company must not drop below SKK 200,000 (two hundred thousand Slovak crowns) and the sum of a single Participant's contribution must not drop below SKK 30,000 (thirty thousand Slovak crowns).

Article 17

Reserve Fund

1. At the time of its founding, the Company shall create a Reserve Fund of SKK 5,000 (five thousand Slovak crowns), i.e. 5% of the capital of the Company at the time of its founding.

2. Annually, the reserve fund shall be piled up by an amount of 5% of the profits achieved in the current accounting year, as shown in the approved regular financial statement ("net profits"), until reaching 10% of the capital of the Company. When increasing the capital of the Company by additional contributions of Participants or third parties taking over the obligations to new contributions, additional sums in excess of the new contributions can be contributed to the Reserve Fund.

3. The Reserve Fund can be used exclusively to cover the Company's losses, unless otherwise provided by law.

4. Apart from the Reserve Fund under section 1 and 2 above, the Company acquiring its own participation interest shown as account assets in the balance sheet, shall create an additional reserve fund as provided by law to cover these assets. Such reserve fund can be increased or reduced by the Company only in cases listed in the Commercial Code.

5. The Executives shall decide on the use of the Reserve Fund. The General Meeting shall decide on the use of the Reserve Fund for the purpose of covering the losses of the Company.

Article 18

General and Final Provisions

1. The Company has not granted any special benefits to any person involved in the foundation of the Company or in any action taken to ensure the licensing of the Company's business activities.

2. This Amended Memorandum of Association - Full Version of the Memorandum of Association shall be executed in six counterparts, two for the Registration Court, one for the Council for Broadcasting and Retransmission, one for the Company's archive and one for each Participant.

Done in Bratislava, this 18^th day of January, 2002

/s/ Radka Doehring	/s/ Jan Kovacik
Radka Doehring	Jan Kovacik
Chairman of the Board of Directors of A.R.J., a.s.	Executive of MEDIA INVEST, spol. s r.o.
/s/ PhDr. Pavol Rusko
PhDr. Pavol Rusko
Director of A.R.J., a.s.
/s/ Ivan Petricek
Ivan Petricek
Director of A.R.J., a.s.
/s/ Jan Kovacik
Jan Kovacik
Director of A.R.J., a.s.

EX-10

ARTICLES OF ASSOCIATION

(consolidated version in effect as from the effective date of the transfer of a part of the participation interest of MEDIA INVEST, spol. s r.o. in MARKIZA-SLOVAKIA, spol. s r.o. of 34 per cent to CME Media Enterprises, B.V., as approved at the general meeting of MARKIZA-SLOVAKIA, spol. s r.o. on 18^th January, 2002)

of

SLOVENSKA TELEVIZNA SPOLOCNOST, S. R. O.

("STS")

FOUNDED BY

MAKRIZA-SLOVAKIA, spol. s r. o.,

registered office at Blatne 334, 900 82 Bratislava, the Slovak Republic

("MARKIZA")

and

CME Media Enterprises, B. V.,

registered office at Hoogoorddreef 9, 1101BA Amsterdam Zuidoost, The Netherlands

("CME")

ARTICLES OF ASSOCIATION

1. GENERAL
2. OBJECTS OF BUSINESS
3. RIGHTS AND OBLIGATIONS OF PARTICIPANTS
4. CORPORATE GOVERNANCE
5. GENERAL MEETING OF PARTICIPANTS
6. BOARD OF REPRESENTATIVES
7. EXECUTIVES
8. SENIOR MANAGEMENT
9. PROHIBITIONS ON COMPETITIVE CONDUCT
10. DISTRIBUTION OF PROFITS
11. SALE OF PARTICIPATION INTERESTS AND RELATION OF ASSIGNEES
12. LIQUIDATION
13. INCREASE IN REGISTERED CAPITAL
14. CONFIDENTIALITY
15. PUBLIC ANNOUNCEMENTS
16. NOTICES

ARTICLES OF ASSOCIATION

1. GENERAL

1.1 The company is a limited liability company, having the company ID No.34 128 611.

1.2 The business name of the company is Slovenska televizna spolocnost, s. r. o., (hereinafter referred to as "STS" or the "Company").

1.3 The Company is registered into the Commercial Register of the District Court Bratislava 1, section Sro, insert No. 12516/B.

1.4 The Company shall be founded for an indefinite period.

1.5 The Company's business year shall be the calendar year.

1.6 The Company shall be governed by its Memorandum of Association and these Articles of Association according to section 110(2) of the Slovak Commercial Code.

2. BUSINESS ACTIVITIES

The business activities of the Company shall be:

• carrying out the business of developing an independent private television station in the field of programming, organising and technically securing the preparation of television broadcasting. The Company will produce full scale television programming to be broadcast by Markiza under the licence granted to Markiza through Slovak Telecommunications in the territory of the Slovak Republic by technological means known or yet to be known independently and free from the influence of any political or special interest group and in accordance with the terms of these Articles of Association;
• advertising and mediation activities;
• purchase and sale in the range of free business;
• publishing books;
• book binding and final working;
• design and manufacturing of posters;
• publishing newspapers;
• publishing magazines and other periodicals;
• publishing of sound recordings;
• mimeographing sound - picture recordings;
• mimeographing sound recordings;
• mimeographing picture recordings;
• production, rental and distribution of video recordings;
• organising promotional competitions for marketing of products;
• publishing artistic performances with the permission of the author;
• textile production;
• real estate agent activities;
• research of public opinion;
• activities of a news press agency;
• technical and organisational securing of exhibitions; and
• provision of the telecommunication service AUDIOTEX.

3. RIGHTS AND OBLIGATIONS OF PARTICIPANTS

3.1 The rights and obligations of the Participants shall be governed by the relevant provisions of the Slovak Commercial Code, the Memorandum of Association of STS and these Articles of Association.

3.2 The Participants may exercise their rights through the General Meeting of Participants.

3.3

(1) The Participants may exercise their rights to make resolutions outside the General Meeting. This procedure shall be commenced by the submission of draft resolutions, by the Executives (as defined in Article 7) upon the request of any Participant, to all Participants with a request for a written record of the Participant's vote and comments within a specified period which shall not exceed 10 (ten) days. Participants shall send their votes and comments to the Company within such period. Draft resolutions sent by Executives and written records of the Participant's vote shall be sent by facsimile or by courier. Any Participant not responding to the request within the specified period shall be deemed to have voted in the negative to such resolution. The Executives shall notify each Participant of the outcome of voting upon each resolution.

(2) The Participants may also exercise their rights to adopt resolutions by duly signing and executing unanimous resolutions in writing.

(3) Resolutions under this Article 3.3 shall require the same majority voting requirements, and have the same effect as, resolutions duly passed in a properly convened General Meeting of Participants as provided for in Article 5 below.

3.4 A Participant's voting right shall be proportionate to its Participation Interest set out in the Memorandum of Association.

3.5 The Participants and their duly authorised representatives (including internal and external auditors) shall be:

(1) permitted to visit and inspect any of the properties and assets of the Company, including the books of account of the Company, and to the extent necessary and subject to the confidentiality obligations of Article 14, to make copies and take extracts therefrom; and

(2) authorised to discuss its affairs, finances and accounts with its officers and independent public accountants retained by the Company at such reasonable times and as often as may be reasonably requested.

4. CORPORATE GOVERNANCE

4.1 The Company shall be governed by the following bodies:

(1) the General Meeting of Participants with corresponding voting rights;

(2) a Board of Representatives (which shall not be a statutory body of the Company for the purposes of the Commercial Code); and

(3) the Executives of the Company (known legally as "Konatelia")

5. GENERAL MEETING OF PARTICIPANTS

5.1 A General Meeting is constituted by the attendance of Participants collectively holding 60% of voting rights in the Company.

5.2 The General Meeting shall:

(a) approve the actions of the founders prior to incorporation of the Company;

(b) approve regular, extraordinary or consolidated annual financial statements;

(c) approve the distribution of profits and coverage of losses;

(d) approve the Articles of Association and their amendment;

(e) decide upon the amendment of the Memorandum of Association;

(f) decide upon the increase or reduction of registered capital and to decide on contributions in kind;

(g) decide upon the expulsion of a Participant and to decide on the filing of a motion in accordance with Section 149 of the Commercial Code;

(h) appoint or dismiss Executives (referred to in Slovak as "Konateľ") of the Company; and

(i) decide upon the winding up, amalgamation, merger and split-off of the Company as well as on the change of its legal form.

5.3 A 67% majority vote of Participants present shall be required for all acts of the General Meeting including but not limited to those described in 5.2.

5.4 A Participant may exercise its rights at the General Meeting in person or through an authorised proxy. In order to represent a Participant at the General Meeting, a proxy must be authorised by written power of attorney signed by the Participant who will be represented at the General Meeting, and the Participant's signature must be officially verified. Such power of attorney shall enable a proxy to act as chairman of the General Meeting. Where a Participant has authorised a proxy to attend a General Meeting, the authority of such proxy shall be terminated if the Participant also attends the General Meeting and the Participant's signature appears on the list of attendees.

5.5 The General Meeting of Participants shall be convened by the Company's Executives at least once each year.

5.6 The Executives shall convene a General Meeting by sending to Participants written notice of the date and agenda of the meeting not less than 21 days in advance. With the consent of all Participants a General Meeting can also be convened without a written notice or within a shorter period of time.

5.7 The General Meeting of Participants is the highest body of the Company. It has the authority to take all kinds of decisions that normally fall within the competence of other bodies of the Company. In the event of a conflict between a decision of the General Meeting and another body of the Company the decision of the General Meeting shall prevail.

6. BOARD OF REPRESENTATIVES

6.1 The Participants shall each be entitled to appoint representatives to the Company's board of representatives (the "Board of Representatives"). The Board of Representatives shall not constitute a statutory body for the purposes of the Commercial Code. The Board of Representatives shall consist of 5 Representatives appointed and removed by the Participants as follows:

(a) Markiza appoints and removes three Representatives; and

(b) CME appoints and removes two Representatives.

6.2 In the event of a vacancy in the Board of Representatives (whether occurring by reason of death, resignation, removal or otherwise) the Participant who nominated the previous incumbent shall nominate a successor to fill such vacancy.

6.3 The Board of Representatives shall elect 2 (two) Co-chairmen. The Representatives of CME shall have the right to nominate one Co-chairman and the Representatives of Markiza shall have the right to nominate one Co-chairman. Each of CME and Markiza shall cause their respective Representatives to vote for the election of the other party's nominee. Each of the elected Co-chairmen shall be authorised to chair the meetings of the Board of Representatives so that the Co-chairman nominated by CME shall chair every odd meeting of the Board of Representatives and the Co-chairman nominated by Markiza, every even meeting of the Board of Representatives held in a calendar year. The Co-chairmen shall not assign, delegate or appoint a proxy to his/her rights to chair the Board of Representatives meetings.

6.4 Any Representative may call a meeting of the Board of Representatives by giving no less than 30 days prior notice to all other Representatives in writing. If all the Representatives agree before a vote is taken at a meeting of the Board of Representatives, the form and/or time of the notice may be waived.

6.5 Any Representative may propose items for the agenda of a Board of Representatives meeting.

6.6 Attendance at a Board of Representatives meeting of four Representatives or their duly authorised proxies shall constitute a quorum. Each proxy shall submit an original power of attorney at the Board of Representatives meeting. A separate power of attorney shall be required for each Board of Representatives meeting and it shall either expressly specify the scope and/or limitations of such power of attorney, or in the absence of any specification, the power of attorney shall be deemed to be unlimited and to authorise the proxy in respect of any matters at the Board of Representatives meeting or in connection therewith including (for the avoidance of doubt) any waiver of notice or other similar matter.

6.7 The following actions shall not be taken by Executives or employees of the Company on the Company's behalf without the approval of the Board of Representatives:

(a) the appointment of members of Senior Management (as defined below), except for (i) the Executives, who are elected by the General Meeting of Participants and (ii) the Finance Director who (if he is not an Executive) is appointed in accordance with Article 6.9;

(b) the dismissal of Senior Management (as defined below), except for (i) the Executives, who are dismissed by the General Meeting of Participants; and (ii) the Finance Director who (if he is not an Executive) is dismissed in accordance with Article 6.9. and provided that the General Director or Deputy General Director shall be dismissed by Executives without the approval of the Board of Representatives if such dismissal is requested by the company CME or Markiza;

(c) the determination of compensation for Senior Management (as defined below) and managerial contracts of the Senior Management based on the proposals of the Compensation Committee (as defined below);

(d) any expenditure over 75,000 US Dollars;

(e) borrowing, increasing, repayment or retirement of debt;

(f) effecting changes in equity or ownership, transfers of interests, etc.;

(g) entering into long term (over 12 months) contractual commitments for programming, services or materials;

(h) any legal activities or activities related to licensing of a material nature;

(i) determination of employee benefits packages; and

(j) making material changes in programming philosophy or broadcasting structure and content.

6.8 The approval of actions in 6.7. above shall require an affirmative vote of 80% of members of the Board of Representatives.

6.9

(a) The representatives of CME shall have the right to nominate 1 (one) Executive of the Company and the representatives of Markiza, shall have the right to nominate 1 (one) Executive of the Company, to be appointed by the General Meeting of Participants. Each of CME and Markiza shall vote at the General Meeting of Participants for the election of the other party's nominee.

(b) The Company shall have a General Director who is a member of the Senior Management. The duty of the General Director shall be to implement instructions of the Executives given to him in accordance with Article 7. The General Director of the Company shall be appointed by the Board of Representatives.

(c) Each of CME and Markiza has the right to require the dismissal of the General Director and Deputy General Director.

(d) The Company shall have a Deputy General Director. The Deputy General Director shall be a member of the Senior Management and shall be appointed by the Board of Representatives on the proposal of the General Director (unless the General Director has been dismissed, in which case the Board of Representatives shall select the Deputy General Director). If the General Director is not able to exercise his duties for a period of more than 30 days, the Deputy General Director shall be entrusted by the Board of Representatives to exercise the duties of the General Director with effect from the day following the last day of such 30 day period and until a new General Director is appointed, however for no longer period than 30 days from the date the Deputy General Director assumes the duties of the General Director. The Deputy General Director shall perform the General Director's duties and shall act in accordance with Article 6.9(b).

(e) If the General Director is dismissed at the request of CME or Markiza, the party which did not request the dismissal shall have the right to nominate a new General Director. The Board of Representatives shall not unreasonably withhold its consent to the appointment of such nominated candidate.

(f) If:

(1) the Board of Representatives shall not reach consensus regarding the appointment of the General Director of the Company until the expiration of the period of time when the Deputy General Director is acting as the General Director in accordance with the paragraph (d) above; or

(2)

(i) the General Director is not able to exercise his duties for a period of more than 30 days and the Board of Representatives members do not agree in advance on the appointment of a Deputy General Director; or

(ii) the Board of Representatives does not entrust the Deputy General Director to exercise the duties of the General Director in accordance with paragraph (d) above,

the day-to-day business management of the Company shall be taken over by the Executives.

(g) The Company shall have a Financial Director who is a member of the Senior Management. Unless the Financial Director is also an Executive, he shall be appointed and may be dismissed by the Executives following the nomination and approval of CME.

6.10 The Board of Representatives shall appoint Members of Senior Management of the Company in the following way:

(1) The members of the Board of Representatives appointed by Markiza, shall appoint the Director of News and Current News. Such appointment shall be valid and require no further approval unless it is rejected by the members of the Board of Representatives appointed by CME;

(2) The members of the Board of Representatives appointed by CME shall appoint one of the two Advertising - Sales Directors. Such appointment shall be valid and require no further approval unless it is rejected by the members of the Board of Representatives appointed by Markiza; and

(3) The members of the Board of Representatives appointed by Markiza shall appoint all other members of Senior Management, being one of the two Advertising-Sales Directors, the Technical Director, the Program Director, the Director of Artistic Genre and Dubbing, the Legal Director and the Marketing Director. Each such appointment shall be valid and require no further approval unless it is rejected by the members of the Board of Representatives appointed by CME.

6.11 The members of the Board of Representatives appointed by Markíza, shall appoint the Chief of Production (within the Department of News and Public Affairs), an employee who shall not be a member of Senior Management. Such appointment shall be valid and require no further approval unless it is rejected by the members of the Board of Representatives appointed by CME.

6.12 The members of the Board of Representatives may, at any time, inspect the books and records of the Company.

6.13 All members of the Board of Representatives shall be paid reasonable remuneration for attending the Board of Representatives meetings, such remuneration to be determined by the Participants and reimbursed by the Company.

6.14 The Board of Representatives shall elect a secretary at each Board of Representatives meeting who will be responsible for taking the minutes of the meeting in English and for the arrangement of an official translation of the minutes into the Slovak language.

6.15

(a) The Company shall have a special compensation committee (the "Compensation Committee") which shall propose to the Board of Representatives the rules for compensation of the General Director, Executives and other members of the Senior Management of the Company and managerial agreements of Senior Management. The Compensation Committee will be in charge of monitoring the compensation of the General Director, Executives and other members of the Senior Management of the Company, their status and relationship within the Company, their spending authorities, monitoring of related party transactions and adherence to the non-competition rules.

(b) The Compensation Committee shall consist of 3 (three) members, (1) one of whom will be a representative appointed by Markíza, and (2) two representatives will be appointed by CME. The Compensation Committee adopts its decisions by simple majority of votes.

7. EXECUTIVES

7.1 The Company shall have two Executives (referred to in Slovak as "Konateľ"). The Executives shall be responsible for the management of the Company on a day-to-day basis. The Executives shall be the statutory body of the Company for the purposes of the Slovak Commercial Code, however, their authority shall be limited under Section 133 paragraph 3 of the Slovak Commercial Code such provisions shall be and the relevant provisions of the Memorandum of Association. In the event the provisions of the Articles of Association impose any restrictions upon the Executives' powers, pursuant to Section 133 paragraph 3 of the Slovak Commercial Code deemed as restrictions imposed under the Memorandum of Association, whereas such relevant provisions of the Articles of Association, including but not limited to Articles 6.7, 6.8., 7.4. and 7.5. of the Articles of Association shall be fully incorporated into the Memorandum of Association (as clauses 10(4), (5), (6) and (7)).

7.2 The Executives shall be elected by the General Meeting of Participants.

7.3 The Executives shall only act on behalf of the Company if both Executives act jointly.

7.4

(1) The Executives shall have full authority to manage the Company and make day-to-day operating decisions in accordance with the operating plan as approved by the Board of Representatives subject to Articles 7.4(2), (3) and (4) below.

(2) The Executives shall have no authority to initiate or take actions which require the approval of the Board of Representatives under the Memorandum of Association or the Articles of Association, or which are reserved for the Participants in General Meeting.

(3) The Executives shall have no authority to cause any deviation from the Business Plan (as defined below).

(4) The Executives shall manage the Company together with other members of Senior Management (as provided herein) collectively and shall delegate authority accordingly. In relation to such management the Executives and Senior Management shall be obliged to comply with resolutions, views and recommendations of the Board of Representatives and of the Participants.

(5) Articles 7.4(2), (3) and (4) constitute limitations on the authority of the Executives pursuant to section 133(2) of the Slovak Commercial Code. These limitations are ineffective in relation to third parties.

7.6 Except as provided in Article 6.9(g), the Executives shall not be authorised to appoint members of Senior Management or decide upon their remuneration.

7.7 The Executives shall be engaged to provide their services under mandate contract. Such contract shall be for multiple year periods and include incentives based on the achieving and exceeding of financial goals.

7.8 If any change of the Company's Memorandum of Association or Articles of Association is adopted by the Company's General Meeting of Participants, the Executives will be in charge of compiling a full version of the affected document, provided that such full version shall be used for the ease of reference only and shall not be binding unless formally approved by the General Meeting of Participants.

7.9 The Executives shall be obliged to take all steps necessary or desirable to give effect to the provisions of these Articles of Association, including without limitation Articles 6.9 and 8.1.

8. SENIOR MANAGEMENT

8.1 The Company shall have a Senior Management consisting of :

(a) two (2) Executives elected by the General Meeting of Participants;

(b) General Director and Finance Director appointed and dismissed in accordance with Articles 6.7 and 6.9; and

(c) Director of New and Current News, two Advertising-Sales Directors, Technical Director, Program Director, Director of Artistic Centre, Legal Director, Director of Centre of Creative Services and Marketing Director appointed and dismissed in accordance with Articles 6.7.

The members of Senior Management, other than the Executives, report to the General Director.

8.2 Senior Management shall prepare and submit a budget and an operating plan (together referred to as the "Business Plan") and broadcasting schedule to the Board of Representatives for approval prior to the end of each year for the operations of the following year. Such budget shall include targets for revenue, expenses and profits.

8.3 Senior Management shall:

(1) keep true and accurate accounts and records of all operations as required by applicable Slovak regulations. In addition to any other books and records as may be required under Slovak law, accounts and records for the Company shall be kept in English and in U. S. Dollars and in accordance with the standards of the U. S. GAAP;

(2) prepare annual financial statements in accordance with applicable Slovak regulations and instruct an international accounting firm agreed upon by the Participants to audit such statements. Such statements shall be delivered to the Board of Representatives and the Participants as soon as practicable but not later than 75 days following the end of each fiscal year;

(3) cause quarterly financial statements to be prepared by an international accounting firm agreed upon by the Participants. Such statements shall be delivered to the Board of Representatives and the Participants as soon as practicable, but not later than 30 days following the end of each fiscal quarter;

(4) prepare monthly financial statements. Such statements shall be delivered to the Board of Representatives and the Participants as soon as practicable but not later than 10 days following the end of each month; and

(5) the statements in subparagraphs (2), (3) and (4) shall be prepared in accordance with the standards of the U. S. GAAP.

8.4 Senior Management shall deliver to any Participant upon request, such information as may be reasonably requested to enable such Participant or its Affiliates to comply with applicable tax filing requirements, and for other legitimate purposes related to taxes. In the case of any withholding taxes on payments to CME, Senior Management shall furnish promptly official tax receipts evidencing such withholding tax in respect of such payments to CME.

9. PROHIBITIONS ON COMPETITIVE CONDUCT

9.1 Executives and member of Senior Management shall not without the approval of the General Meeting of Participants:

(1) enter into transactions in their own name and on their own account that are related to the business activities of the Company;

(2) negotiate on behalf of any other person with the Company;

(3) participate in another company's business as a partner with unlimited liability;

(4) act as, or be, members of a statutory body of any other legal entities with the exception of the Participants' companies and Affiliates of the Participants; and

(5) have an interest in any other legal entity exceeding 5% of the registered capital of such legal entity.

9.2 Remedies for breach of 9.1. by Executives in the Commercial Code shall also apply to breaches of 9.1. by members of Senior Management.

10. DISTRIBUTION OF PROFITS

10.1 The profit sharing mechanism between the Participants in relation to the distribution of the Company's net profit (if any and if duly approved for distribution among the Participants) ("Net Profit") are set out in this Article 10.1 and Article 10.2.

10.1.1 Profit sharing mechanism prior to Registration Date

Prior to the Registration Date (as defined in Article 10.1.2), the Net Profit shall be distributed as follows:

(a) CME shall receive 95 per cent. of the Net Profit; and

(b) Markiza shall receive 5 per cent. of the Net Profit.

10.1.2 Profit sharing mechanism from Registration Date

With effect from the date on which CME is registered in the Commercial Register as the owner of the 34% participation interest in Markiza (the "Registration Date") and until the profit sharing mechanism is altered in accordance with Article 10.2, the Net Profit shall be distributed as follows:

(a) CME shall receive 70 per cent. of the Net Profit; and

(b) Markiza shall receive 30 per cent. of the Net Profit.

10.1.3 Profit sharing in the Registration Year

Pursuant to Articles 10.1.1 and 10.1.2, the Net Profit achieved in the calendar year in which CME is registered as the owner of the 34% participation interest in Markiza (the "Registration Year") and designated for distribution among the Participants, shall be distributed as follows:

(a) the proportional part of such Net Profit achieved from 1^st January of the Registration Year to the day preceding the Registration Date shall be distributed among the Participants as follows: Markiza shall receive 5 per cent. and CME 95 per cent. of such part of the Net Profit;

(b) the proportional part of such Net Profit achieved from the Registration Date to 31^st December of the Registration Year (subject to any Further CME Investments and corresponding adjustments to the profit sharing mechanism pursuant to Article 10.2) shall be distributed among the Participants as follows: Markiza shall receive 30 per cent and CME 70 per cent of such part of the Net Profit.

10.2 Adjustment to profit sharing mechanism on Further CME Investment as defined below)

The profit sharing mechanism shall be adjusted each time CME makes a Further CME Investment, such adjustment to take effect from the earlier of the registration date of the relevant increase of the registered capital of the Company in the Commercial Register reflecting the Further CME Investment and day of the full payment of the Further CME Investment Amount (as defined below) (the "Adjustment Date"), so that:

(a) the then current share of Markiza in the Net Profit (expressed as a percentage of the total Net Profit designed for distribution) shall be reduced by the Additional Share; and

(b) the then current share of CME in the Net Profit (expressed as a percentage of the total Net Profit designed for distribution) shall be increased by the Additional Share.

Adjustments to the profit sharing mechanism shall be applied as set out in Article 10.2.3.

10.2.1 For the purposes of this Article 10.2, CME makes a further investment in the registered capital of the Company ("Further CME Investment") if:

(a) the registered capital of the Company is increased by new contributions of either or both of the existing Participants, (i.e. CME and/or Markiza); and

(b) CME assumes a commitment to make a contribution for the purpose of increasing the registered capital of the Company and:

(i) CME's commitment is to contribute a sum higher than the sum Markiza has committed to contribute; or

(ii) Markiza makes no commitment to make any contribution,

(the amount by which CME's contribution commitment exceeds Markiza's contribution commitment being hereinafter referred to as the "Further CME Investment Amount"); and

(c) notwithstanding Article 10.2.1(b), the amount of the Participation Interests and the ratio of the voting rights as between Markiza and CME remain unaffected and no other change is effected as a result of which the legal position of CME in the Company becomes more beneficial compared to the legal position of Markiza.

10.2.2 For the purposes of this Article 10.2, the Additional Share shall be:

A	=	B	x	3
		V

where:

A = CME's additional share in the Net Profit, (to be expressed as a percentage of the total Net Profit designed for distribution) (the "Additional Share")

B = the Further CME Investment Amount

V = equivalent of USD 1,000,000 (one million U.S. Dollars) converted in to Slovak Crowns at the exchange rate announced by the National Bank of Slovakia on the Adjustment Date.

10.2.3 Application of profit sharing mechanism

Subject to Article 10.1.3, in any given calendar year, the parties shall calculate the distribution of the Net Profit generated in such calendar year as follows:

(a) in relation to the period from 1^st January until the earlier of 31^st December and the day preceding the Adjustment Date (if any), the proportional part of the Net Profit generated during such period shall be distributed among the Participants according to the previous profit sharing mechanism; and

(b) in relation to the period from the Adjustment Date until the earlier of 31st December and the day preceding any subsequent Adjustment Date (if any), the proportional part of the Net Profit generated during such period shall be distributed among the Participants according to the adjusted profit sharing mechanism calculated in accordance with this Article 10.2.

11. SALE OF PARTICIPATION INTERESTS AND RELATION OF ASSIGNEES

11.1

(1) The Participants shall not transfer, sell, assign, pledge, create an option, mortgage, hypothecate or enter into any agreement which contemplates any other disposal of, or charges, creates or permits to be created any pledge or security in their respective ownership interest except by the means described in this Article 11 and Article 13.

(2) A Participant shall not transfer its Participation Interest to third parties, including Affiliates, in accordance with this Article 11 and Article 13 without the consent of the majority of the other Participants (such consent shall not be unreasonably withheld).

11.2.

(1) A Participant may transfer its Participation Interest to a corporation, which at the time of transfer is its Affiliate provided that the provision shall be made whereby the transferee shall reassign the Participation Interest to the transferor prior to ceasing to be an Affiliate.

(2) "Affiliate" shall mean any entity which controls, is controlled by, or is under common control with the subject entity. A natural person or entity which controls an Affiliate under the foregoing shall also be deemed to be an Affiliate of such entity.

The term "control" shall mean the power to direct or cause the direction of the management and policies of any such entity, or the power to veto major policy decisions of any such entity, whether through the ownership of voting securities, by contract or otherwise.

(3) Affiliates of CME are: CME Media Enterprises N.V.; CME Limited; CME Programming Services Incorporated; CME Development Corporation; and any other company which becomes a member of the CME Group. CME shall notify Markíza of any other company that becomes an Affiliate of CME within 30 days of such company so becoming.

There are no Affiliates of Markíza except for A.R.J., a.s.

11.3.

(1) In the event that a Participant desires to dispose of any of its Participation Interest in the Company, such Participant (herein referred to as the "offeror") shall first offer pre-emptively to sell such Participation Interest to the other Participant (herein referred to as the "offeree"), upon the terms and conditions and in the manner herein provided.

(2) The price of a Participation Interest offered by the offeror shall be determined by an international reputable accounting firm agreed upon by the Participants provided that such firm will not be the accountant or auditor for any Participant at that time.

(3) The offeror shall send a notice in writing to the offeree indicating its desire to sell its interest pursuant to this Article.

(4) The offeree shall be deemed to have rejected an offer unless accepting it in writing within a period of sixty (60) days.

(5) In the event that the Participation Interest so offered is not purchased by the offeree within such period, the offeror shall be entitled to dispose of the Participation Interest to third parties at the price determined under Article 11.3(2).

(6) If the offeror desires to sell such Participation Interest at a price which is less than the price determined under Article 11.3(2) or on terms more advantageous to the purchaser, the offeror shall first offer to sell the Participation Interest to the offeree at such lower price and on such terms in accordance with Articles 11.3(3), (4), (5). In the event that the Participation Interest offered is not purchased by the offeree, the offeror shall be entitled to dispose of the Participation Interest to third parties at such lower price or on such advantageous terms.

11.4.

(1) Compliance with Slovak ownership requirements: In the event that CME is prevented from holding its Participation Interest in the Company as provided in the Memorandum of Association and Articles of Association, by any law, regulation or policy of the Slovak Government limiting or restricting the maximum percentage of foreign ownership of certain Slovak companies CME may transfer as much of its Participation Interest as is necessary to comply with such limitations to a nominated person(s) who is (are) not prohibited from holding such a Participation Interest. Markíza shall agree to such transfer of Participation Interest.

11.5 Upon:

(a) the mutual agreement of Markíza and CME; or

(b) any necessary approvals, permissions or licenses (including the television license issued to Markíza-Slovakia, spol. s r. o.) being revoked or lapsing without being renewed such that the Company is unable to carry out its objects of business;

CME shall have the right to sell its Participation Interest to any third party, if permitted by applicable law and regulations, subject to all required and necessary approvals, Markíza, or a subsequent assignee, at a price equivalent to the higher of CME's total contributions to the Company increased cumulatively by 6% for each year of the Company's operation or the fair market value of CME's Participation Interest as determined by an accounting firm of international reputation.

11.6 Any transfer of Participation Interest shall be subject to strict compliance with the applicable terms of Markíza's television license.

12. LIQUIDATION

12.1 Where:

(a) a Participant is declared bankrupt; or

(b) a Participant's Participation Interest is transferred or encumbered in violation of Article 11.5.; or

(c) CME is unable to complete a sale of its Participation Interest under Article 11.5.; or

(d) where the Participants resolve to wind-up the Company;

the Company shall be liquidated.

12.2 In the event of liquidation of the Company, after satisfying claims of third parties in accordance with the relevant law, the remaining assets of the Company shall be distributed as follows:

(1) if CME has not received by way of distributed profits an amount equivalent to its total capital contribution increased cumulatively by 6% for each year of the Company's operation it shall receive such amount less the total of distributed profits received;

(2) thereafter, the remaining assets of the Company shall be distributed between the Participants in the same proportions as the Company's Net Profit would be distributed under the then valid profit sharing mechanism pursuant to Article 10.

The Parties acknowledge their entitlement to assets set out herein shall constitute the Parties' respective share in the Company's liquidated surplus (referred to in Slovak as "podiel na likvidačnom zostatku").

13. INCREASE IN REGISTERED CAPITAL

13.1 Any increase of the Company's registered capital shall be decided by the General Meeting in accordance with Articles 5.2. and 5.3. and in accordance with clause 6A. of the Memorandum of Association.

13.2 No third parties shall make a contribution to the Company or be granted a corresponding Participation Interest or Vklad upon the increasing of the Company's capital unless such contribution and corresponding Participation Interest or Vklad has been approved by a 67% majority vote of the Participants.

13.3 The Executives shall submit a petition requesting that an approved increase in capital be recorded in the Commercial Register without undue delay. Such petition shall record the Participation Interest of the Parties in accordance with clause 6A. of the Memorandum of Association.

14. CONFIDENTIALITY

14.1 The Participants acknowledge that in the course of the business of the Company it shall be necessary for the Participants to reveal to each other certain information concerning operations or secret technical know-how. The Participants shall keep confidential and not disclose to any third party (other than their respective financial advisors, attorneys and other agents and representatives) all proprietary and confidential information relating to the Company or the Participant providing such information, the business and operations of the Company or the Participant providing such information or any transactions contemplated thereby nor use any such information for their own purposes outside the context contemplated by the Memorandum of Association and these Articles. Such information may be disclosed to a Participant's Affiliates provided that such Affiliates agree to be bound by this Confidentiality provision. Each Participant shall, and shall cause each of its Affiliates, as well as each of its r espective financial advisors, attorneys and other agents and representatives to, take such reasonable precautions as are necessary to prevent use or disclosure of confidential information by or to others.

14.2 Upon another Participant's request, a Participant shall promptly return any records, drawings, plans, specifications, equipment lists or other documents that may have been supplied by the requesting Participant. The requested Participant shall destroy any note or memoranda of any kind relating to such provided information.

14.3 The Participants agree that in the event that the Company is liquidated all confidential information relating to the Company and any license applications and any information gained through related research shall be the joint property of CME and Markíza.

14.4 The Participants agree that in the event that the Company is liquidated all confidential information provided by a Participant to other Participants, their Affiliates, directors, employees or professional advisors shall be returned to such Participant by the other Participants. The other Participants shall destroy any notes or memoranda of any kind relating to such provided information.

14.5 Information that becomes generally available to the public other than through a breach of these Articles shall not be subject this provision of confidentiality.

15. PUBLIC ANNOUNCEMENTS

15.1.

(1) The Participants and their respective Affiliates shall not, without the prior written consent of the other Participants, issue any press release or otherwise make any statement or cause the Company to make any such statement, except as required by law, any agreements entered into by the Participants with or relating to the Company or the business and affairs of the Company, if such statement would, or is reasonably likely to, be disseminated to the public. Such consent must given in writing 36 hours after receipt of notification of the intention make such statement.

(2) Article 15.1(1) shall not prohibit any Participant from making required disclosures to its shareholders or to regulatory authorities. If any Participant is required by law to issue a press release or otherwise make a public statement relating to any of the foregoing matters, it shall deliver to the other Participants prior notice of such requirement and the disclosure proposed to be made.

16. NOTICES

All notices, consents, requests, instructions, approvals and other communications provided for herein shall be in writing and shall be deemed validly given upon personal delivery or one day after being sent by telecopy or overnight courier to such address and telecopy numbers as CME or Markiza or other Participants may designate by written notice to the other Participants.

IN WITNESS HEREOF and adopted hereby by the Participants on the day and year first mentioned above.

MARKIZA-SLOVAKIA, spol. s r. o.

By.

/s/ PhDr. Pavol Rusko

PhDr. Pavol Rusko

and

/s/ Mr. Jan Kovacik

Mr. Jan Kovacik

Executives

CME Media Enterprises B. V.

By:

/s/ Jana Murinova

Jana Murinova,

under power of attorney

EX-10

MEMORANDUM OF ASSOCIATION

(consolidated version in effect as from the effective date of the transfer of a part of the participation interest of MEDIA INVEST, spol. s r.o. in MARKÍZA-SLOVAKIA, spol. s r.o. representing 34 per cent of Markiza-Slovakia, spol. s r.o.'s capital registered to CME Media Enterprises, B.V., as approved at the general meeting of MARKIZA-SLOVAKIA, spol. s r.o. on 18^th January, 2002)

between

MARKIZA-SLOVAKIA, spol. s r. o.

a company established and existing pursuant to the law of the Slovak Republic, with its registered office at BlatnE 334, 900 82 Bratislava, Slovak Republic, Identification Number: 31 444 873, ("MarkIza")

and

CME Media Enterprises B. V.

a company established and existing pursuant to the law of the Netherlands, with its registered office at Hoogoorddreef 9, 1101BA Amsterdam Zuidoost , The Netherlands, ("CME")

All parties referred to as the "Participants"

The Participants have entered into this agreement on the change to the Memorandum of Association pursuant to the decision of the general meeting of the company Slovenska televizna spolocnost, s.r.o. with registered office at Blatne 18, 900 82, Reg. No. 34 128 611.

1. ESTABLISHMENT OF THE COMPANY

2. NAME OF THE COMPANY

3. REGISTERED OFFICE OF THE COMPANY

4. TERM OF FOUNDING

4.A DISTRIBUTION OF THE PROFIT

5. BUSINESS OBJECTS

6. REGISTERED CAPITAL

6A. FURTHER CAPITAL CONTRIBUTIONS

7. ARTICLES OF ASSOCIATION

8. OBLIGATIONS OF THE PARTICIPANTS IN THE COMPANY

9. GENERAL MEETING

10. EXECUTIVES

11. BOARD OF REPRESENTATIVES

12. SALE OF PARTICIPATION INTERESTS AND RELATION OF ASSIGNEES

13. LIQUIDATION

14. RESERVE FUND

15. REPRESENTATIONS OF MARKÍZA

16. REPRESENTATIONS OF CME

17. ADMINISTRATION OF CONTRIBUTIONS (VKLAD)

18. NOTICES

19. GOVERNING LAW

20. PREVAILING LANGUAGE

21. COMMON AND FINAL PROVISIONS

1. ESTABLISHMENT OF THE COMPANY

The company Slovenska televizna spolocnost, s.r.o. with registered office at Blatne 18, 900 82, Reg. No. 34 128 611 (the "Company") has been established by the Memorandum of Association dated 28^th September, 1995 in accordance with section 24 (1), sections from 56 to 75 and section 105 and following of the Slovak Commercial Code (Act No. 513/1991 Coll. as amended)

In relation with the agreement entered into on 18^th January, 2002 between MEDIA INVEST, spol. s r.o. and CME on the transfer of a part of the participation interest of 34 per cent in Markiza to CME, the general meeting of the Company decided on 18^th January, 2002 on the modification of the Memorandum of Association approving the full version of the Memorandum of Association which is to replace the existing Memorandum of Association dated 3^rd May, 2001 as previously amended and modified and to take effect as from the effective date of the transfer of a part of the participation interest of 34 per cent held by MEDIA INVEST, spol. s r.o. in Markiza to CME, as approved in the general meeting of MARKÍZA-SLOVAKIA, spol. s r.o. on 18^th January, 2002.

2. NAME OF THE COMPANY

The business name of the Company shall be Slovenska televizna spolocnost, s. r. o. ("STS").

3. REGISTERED OFFICE OF THE COMPANY

The registered office of the Company shall be 900 82 Blatne No. 18, the Slovak Republic.

4. TERM OF FOUNDING

The Company is established for an indefinite period. The first business year shall commence upon the registration of the Company into the Commercial Register and end on the following December 31. Thereafter the business year shall be the calendar year.

4A. DISTRIBUTION OF THE PROFIT

4.1 The profit sharing mechanism between the Participants in relation to the distribution of the Company's net profit (if any and if duly approved for distribution among the Participants) ("Net Profit") are set out in this Article 4.1 and Article 4.2.

4.1.1 Profit sharing mechanism prior to Registration Date

Prior to the Registration Date (as defined in Article 4.1.2), the Net Profit shall be distributed as follows:

(a) CME shall receive 95 per cent. of the Net Profit; and

(b) Markiza shall receive 5 per cent. of the Net Profit.

4.1.2 Profit sharing mechanism from Registration Date

With effect from the date on which CME is registered in the Commercial Register as the owner of the 34% participation interest in Markiza (the "Registration Date") and until the profit sharing mechanism is altered in accordance with Article 4.2, the Net Profit shall be distributed as follows:

(a) CME shall receive 70 per cent. of the Net Profit; and

(b) Markiza shall receive 30 per cent. of the Net Profit.

4.1.3. Profit sharing in the Registration Year

Pursuant to Articles 4.1.1 and 4.1.2, the Net Profit achieved in the calendar year in which CME is registered as the owner of the 34% participation interest in Markíza (the "Registration Year") and designated for distribution among the Participants, shall be distributed as follows:

(a) the proportional part of such Net Profit achieved from 1^st January of the Registration Year to the day preceding the Registration Date shall be distributed among the Participants as follows: Markíza shall receive 5 per cent. and CME 95 per cent. of such part of the Net Profit;

(b) the proportional part of such Net Profit achieved from the Registration Date to 31^st December of the Registration Year (subject to any Further CME Investments and corresponding adjustments to the profit sharing mechanism pursuant to Article 4.2) shall be distributed among the Participants as follows: Markíza shall receive 30 per cent and CME 70 per cent of such part of the Net Profit.

4.2 Adjustment to profit sharing mechanism on Further CME Investment (as defined below)

The profit sharing mechanism shall be adjusted each time CME makes a Further CME Investment, such adjustment to take effect from the earlier of the registration date of the relevant increase of the registered capital of the Company in the Commercial Register reflecting the Further CME Investment and day of the full payment of the Further CME Investment Amount (as defined below) (the "Adjustment Date"), so that:

(a) the then current share of Markíza in the Net Profit (expressed as a percentage of the total Net Profit designed for distribution) shall be reduced by the Additional Share; and

(b) the then current share of CME in the Net Profit (expressed as a percentage of the total Net Profit designed for distribution) shall be increased by the Additional Share.

Adjustments to the profit sharing mechanism shall be applied as set out in Article 4.2.3.

4.2.1. For the purposes of this Article 4.2, CME makes a further investment in the registered capital of the Company ("Further CME Investment") if:

(a) the registered capital of the Company is increased by new contributions of either or both of the existing Participants, (i.e. CME and/or Markíza); and

(b) CME assumes a commitment to make a contribution for the purpose of increasing the registered capital of the Company and:

(i) CME's commitment is to contribute a sum higher than the sum Markíza has committed to contribute; or

(ii) Markíza makes no commitment to make any contribution,

(the amount by which CME's contribution commitment exceeds Markíza's contribution commitment being hereinafter referred to as the "Further CME Investment Amount"); and

(c) notwithstanding Article 4.2.1(b), the amount of the Participation Interests and the ratio of the voting rights as between Markíza and CME remain unaffected and no other change is effected as a result of which the legal position of CME in the Company becomes more beneficial compared to the legal position of Markíza.

2. For the purposes of this Article 4.2, the Additional Share shall be:

A	=	B	x	3
		V

where:

A = CME's additional share in the Net Profit, (to be expressed as a percentage of the total Net Profit designed for distribution) (the "Additional Share")

B = the Further CME Investment Amount

V = equivalent of USD 1,000,000 (one million U.S. Dollars) converted in to Slovak Crowns at the exchange rate announced by the National Bank of Slovakia on the Adjustment Date.

4.2.3 Application of profit sharing mechanism

Subject to Article 4.1.3, in any given calendar year, the parties shall calculate the distribution of the Net Profit generated in such calendar year as follows:

(a) in relation to the period from 1^st January until the earlier of 31^st December and the day preceding the Adjustment Date (if any), the proportional part of the Net Profit generated during such period shall be distributed among the Participants according to the previous profit sharing mechanism; and

(b) in relation to the period from the Adjustment Date until the earlier of 31st December and the day preceding any subsequent Adjustment Date (if any), the proportional part of the Net Profit generated during such period shall be distributed among the Participants according to the adjusted profit sharing mechanism calculated in accordance with this Article 4.2.

5. BUSINESS ACTIVITIES

The business objects of the Company shall be:

• carrying out the business of developing an independent private television station in the field of programming, organizing and technically securing the preparation of television broadcasting. The Company will produce full scale television programming broadcast by Markiza under the license granted to Markiza through Slovak Telecommunications on the territory of the Slovak Republic by technological means known or yet to be known independently and free from the influence of any political or special interest group and in accordance with the terms of this Memorandum of Association and the license granted to Markiza;
• advertising and mediation activities;
• purchase and sale in the range of free business;
• publishing books, book binding and final working;
• preparation of prints and printing samples;
• design and manufacturing of posters;
• publishing newspapers;
• publishing magazines and other periodicals;
• publishing of sound recordings;
• mimeographing sound - picture recordings;
• mimeographing sound recordings;
• mimeographing picture recordings;
• production, rental and distribution of video recordings;
• organizing promotional competitions for the marketing of products;
• publishing artistic performances with the permission of the author;
• textile production;
• real estate agent activities;
• research of public opinion;
• activities of a news press agency;
• technical and organization securing of exhibitions
• provision of telecommunication service AUDIOTEX.

6. REGISTERED CAPITAL

1. The Registered Capital of the Company shall be 200,000 Slovak Crowns (in words: two hundred thousand crowns). The increase of the Company's Registered Capital shall be effected by cash contributions of the Participants.

2. The Participants contribute to the Company the following, by way of forming registered capital in exchange for their designated Contribution and Participation Interests in the Company:

Markiza-Slovakia, spol. s r. o.:	Contribution SKK 102,000;
	51% Participation Interest;
CME Media Enterprises:	Contribution SKK 98,000;
	49% Participation Interest;

3.

(1) CME shall bear all initial costs and expenses which are incurred prior to the Registration of the Company in the Commercial Register.

(2) Upon the establishment of the Company, the Participants shall pay their contributions, representing the Participant's paid-up contributions as of the establishment of the Company, as follows:

Markiza	Contribution SKK 51,000
CME	Contribution SKK 49,000

prior to submission of the petition for registration of the Company in the Commercial Register.

6A. FURTHER CAPITAL CONTRIBUTIONS

1. In the event that the Participants resolve in the General Meeting to increase the registered capital of the Company, CME shall contribute an amount equal to the capital increase and the Participants shall continue to have their Participation Interests and Contribution in the Company unchanged. Increases in the registered capital shall affect the distribution of profits in accordance with Article 10.1(1) of the Articles of Association.

2. In the event that the Participants pass a resolution for the increase of the registered capital of the Company, the Executives shall submit a petition to the Commercial Court requesting that such increase be recorded in the Commercial Register. Such petition shall record an increase in the a Contribution of Markiza and CME such that Markiza maintains a Contribution equal to 51% of the registered capital of the Company and CME maintains Contribution equal to 49% of the registered capital of the Company after such increase of registered capital.

7. ARTICLES OF ASSOCIATION

1. The Participants shall hereby approve and adopt the Company's Articles of Association (referred to as "Stanovy" in Slovak) in the form attached to this Memorandum of Association (the "Articles").

2. The Company shall be governed and organized in accordance with the Articles and this Memorandum of Association (both as amended).

8. OBLIGATIONS OF THE PARTICIPANTS IN THE COMPANY

1. Once the Company is incorporated into the Companies Registry:

(i) The Participants shall be present in person or by proxy and shall exercise all of their respective voting rights at General Meetings of Participants of the Company in such manner as to give effect to the provisions of this Memorandum of Association.

(ii) The Participants shall cause members of both the Board of Representatives (as defined below) and Senior Management (as defined below) nominated and elected by them to vote and act at all meetings of such bodies in such manner as to give effect to the provisions of this Memorandum of Association.

2. If at any time any provisions of this Memorandum of Association or the Articles are held to be invalid pursuant to a decision of a Court of competent jurisdiction or such a Court does not give effect to such Articles then the Participants shall exercise their rights to obtain, to the extent permitted by law, realization such give action as will effect to such Articles of Association.

3. If any provision of the Articles is at any time in conflict with any of the provisions of this Memorandum, the provisions of this Memorandum shall prevail and the Participants shall exercise all voting and other rights and powers available to them as Participants and otherwise to give effect to the provisions of this Memorandum and shall further, if necessary, procure any required amendment of the Articles. Without limiting the generality of the foregoing, the Participants shall take all actions necessary to cause the Articles to be at all times consistent with, and to give full effect to, the provisions of this Memorandum and shall exercise their voting and take all other reasonable measures to cause such amendment to be filed with and approved by the appropriate governmental authority as soon as practicable following the date of this Memorandum.

4. If any provisions of this Memorandum of Association is held to be unenforceable for any reason, it shall be revised rather than voided, if possible, in order to achieve the intent of the Participants to this Memorandum of Association to the greatest extent possible. In any event, the invalidity or unenforcability of any provision of this Memorandum of Association in any jurisdiction shall not affect the validity or enforceability of the remainder of this Memorandum of Association in that jurisdiction or the validity or enforceability of this Memorandum of Association elsewhere.

9. GENERAL MEETING

The General Meeting of Participants is the supreme body of the Company.

1. The first General Meeting of the Company's Participants shall be held no later than 14 days after registration of the Company in the Commercial Register and shall be convened and held in accordance with the Articles.

2. At the first General Meeting the Participants shall appoint their representatives to the Board of Representatives in accordance with the Articles of Association.

3. At the first General Meeting the Participants shall confirm the appointment of the Executives as set out in Paragraph 10 below.

4. The General Meeting may delegate its rights and duties to the Board of Representatives subject to the binding provisions of the applicable laws of the Slovak Republic.

5. The General Meeting shall constitute a quorum if attended by those Participants holding together at least 67% of all votes. A resolution of the General Meeting shall be adopted if the shareholders holding together at least 67% of all the votes held by the Participants vote for the Resolution.

6. The General Meeting shall be exclusively authorised:

(a) to approve (and adapt) actions of the founders prior to the incorporation of the Company;

(b) to approve regular, extraordinary or consolidated financial statements;

(c) to decide upon the distribution of profits and payment of losses of the Company;

(d) to amend the Articles;

(e) to amend the Memorandum of Association;

(f) to decide on the increase or the reduction of the Registered Capital of the Company and to decide on contributions in kind;

(g) to exclude a Participant from the Company and to decide on the filing of a motion according to Section 149 of the Commercial Code;

(h) to elect and recall executives of the Company;

(i) to decide on the winding-up, amalgamation, merger and split-off of the Company as well as on the change of its legal form;

(j) to decide on other matters entrusted to the exclusive authority of the General Meeting by law, the Memorandum of Association or the Articles.

7. The General Meeting may reserve the right to decide on the matters otherwise falling under the authority of the Company's other bodies.

8. Any Participant may exercise its rights at the General Meeting either in person or through an authorised representative. In order to represent a Participant at the General Meeting the representative shall be authorised on the basis of the power of attorney and the signature of the Participant who will be represented at the General Meeting must be officially verified. Such power of attorney enables the representative to act as the Chairman of the General Meeting where the Participant would have been so entitled. If the Participant who gave the power of attorney to his representative attends the General Meeting and the name of this Participant is included in the list of the Participants the given power of attorney shall automatically become invalid.

9. The General Meeting shall be convened by the executives of the Company at least once a year, so that it is held on or before 30th June.

10. The executives of the Company shall be obliged to convene the General Meeting upon request of the Participant whose contribution amounts to at least 10 % of the registered capital. If the executive fails to convene the General Meeting so that it is held within one month of the day when he was asked to do so by the above mentioned Participants these Participants are entitled to convene the General Meeting themselves.

11. The place, the date, the hour and the agenda of the General Meeting shall be announced to the Participants at least 21 days in advance of the General Meeting in the invitation to the General Meeting. The General Meeting may be convened in a manner different from the above stated manner or without keeping the stipulated term if all the Participants give their agreement to do so.

10. EXECUTIVES

1. The executives are the statutory body of the Company and shall be elected as set forth in the Articles.

2. The first executives of the Company are hereby appointed by the Participants as follows:

Mr. Pavol Rusko, residing at Ludovita Fullu 10, Bratislava (birth number: 630820/1141), as General Director;

Jeffrey Silverberg residing at Broskynova 10, Bratislava (birth number: 631006/0000) as Financial Director

3. The Company has two Executives. The Executives act for the Company by both Executives acting or signing jointly.

4. In the event that the provisions of the Articles impose any restrictions upon the executives' powers, such provisions shall be deemed pursuant to Section 133 paragraph 3 of the Slovak Commercial Code as restrictions imposed under the Memorandum of Association, whereas the relevant provisions of the Articles, including but not limited to articles 6.7, 6.8., 7.4. and 7.5. of the Articles shall be fully incorporated into the Memorandum of Association (as clauses 10(4), (5), (6) and (7)).

11. BOARD OF REPRESENTATIVES

1. The members of the Board of Representatives shall be elected and recalled in a manner defined in the Articles. Any physical person may become a member of the Board of Representatives including executives of the Company and executives of the Participants.

12. SALE OF PARTICIPATION INTERESTS AND RELATION OF ASSIGNEES

1.

(1) The Participants shall not transfer, sell, assign, pledge, create an option over, mortgage, hypothecate or enter into any agreement which contemplates such or otherwise disposes of, or charges, creates or permits to be created any pledge or security over their respective Participation Interest except for cases specified in this Memorandum of Association.

(2) A Participant shall not transfer its Participation Interest to third parties, including Affiliates without the consent of the other Participants (such consent shall not be unreasonably be withheld).

2. This Memorandum of Association shall be binding upon the successor and permitted assignees of the respective Participants hereunder.

For this purpose the Participants and any subsequent assignees shall:

(i) disclose the terms of this Memorandum of Association to any potential bona fidetransferee or recipient of the Participation Interest subject to undertakings as to the continued confidentiality of the terms;

(ii) make as a written condition to any transfer of a Participation Interest the terms of this Memorandum of Association (such as to incorporate these terms into any Memorandum of Association for the transfer of such Participation Interest) and secure a written undertaking from the transferee to comply with such conditions.

3. All of the provisions of this Memorandum of Association shall apply to all Participation Interests in the Company now owned or which may be created or transferred hereafter to the Participants, as a result of any additional issuance, purchase, exchange or reclassification of these Participation Interests into shares, corporate reorganization or any other form of recapitalization or consolidation, merger and distribution of profits.

4.

(1) A Participant may transfer its Participation Interest to a corporation, which at the time of transfer, is its Affiliate provided that provision shall be made whereby the transferee shall reassign the Participation Interest to the transferor prior to ceasing to be an Affiliate.

(2) "Affiliate" shall mean any entity which controls, is controlled by, or is under common control with the subject entity; a natural person or entity which controls an Affiliate under the foregoing shall also be deemed to be an Affiliate of such entity. The term "control" shall mean the power to direct or manage the direction of the management and policies of any such entity, or the power to veto major policy decisions of any such entity, whether through the ownership of voting securities, by contract or otherwise.

5.

(1) In the event that a Participant desires to dispose of any part of its Participation Interest in the Company, such Participant (herein referred to as the "Transferor") shall first offer preemptively to sell such Participation Interest or part thereof to the other Participants (herein referred to as the "Future Transferees"), upon the terms and conditions and in the manner herein provided.

(2) The price of the Participation Interest or its part offered by a Participant shall be determined by an international reputable accounting firm agreed upon by the Participants provided that such firm will not be the accountant or auditor for any Participant at that time.

(3) The Transferor shall send notices in writing to the other Participants indicating its desire to sell its Participation Interest pursuant to this Article. These notices will constitute offers for the purpose of 12.5.(1) above.

(4) A Future Transferee shall be deemed to have rejected an offer unless it has accepted such offer in writing within a period of 60 days from the date of receipt of such offer.

(5) In the event that the Participation Interest so offered is not purchased by the other Participants within such period, the Transferor shall be entitled to dispose of the Participation Interest to third parties at the price determined under 12.5(2).

(6) If the Transferor desires to sell such Participation Interest at a price which is less than the price determined under 12.5(2) or terms more advantageous to the purchaser, the Transferor shall first offer to sell the Participation Interest to the other Participant(s) at such lower price and terms in accordance with the provisions (3), (4), (5). In the event that the Participation Interest offered is not purchased by the other Participants the Transferor shall be entitled to dispose of Participation Interest to third Parties at such lower price or terms more advantageous to the purchaser.

6.

(1) Compliance with Slovak law:

In the event that CME is prevented from holding the Participation Interest in the Company provided for in this Memorandum of Association and Articles of Association, by any law, regulation or policy of the Slovak Government limiting or restricting the maximum percentage of foreign ownership of certain Slovak companies CME may transfer as much of its Participation Interest as is necessary to comply with such limitations to a person(s) designated by CME who is (are) not prohibited from having such a Participation Interest. Markíza shall agree to such transfer of Participation Interest or its part and hereby waives any pre-emptive right it may have under the Commercial Code.

7.

(1) Upon:

(a) the mutual agreement of the Participants; or

(b) the revocation or lapsing without renewal of any necessary approvals, permissions or licenses (including the television license issued to Markiza-Slovakia, spol. s r. o.) such that the Company is unable to carry out its objects of business;

CME shall have the right to sell its Participation Interest to any third party, if permitted by law and regulations applicable, subject to all required and necessary approvals, to Markiza, or a subsequent assignee, at a price equivalent to the higher of CME's total investments to the Company increased cumulatively by 6% for each year of the Company's operation or the fair market value of CME's Participation Interest as determined by an accounting firm of international reputation.

8. Any transfer of a Participation Interest shall be subject to strict compliance with the applicable terms of Markiza's televisions license.

9. In the event that the other Participants waive the pre-emption right for the acquisition of the Participation Interest or the part thereof owned by the Participant who intends to transfer it to another person , it would not be required to comply with the procedures and conditions which must be otherwise followed pursuant to this Article 12 and such transfer of the Participation Interest to a person other than the Participant is permitted subject only to the consent by all the other Participants granted at the General Meeting. Furthermore, it is not required in such case to comply with the procedures and conditions applicable pursuant to Article 11 of the Articles of Association. If all other Participants approve the transfer of the Participation Interest to a third party, the provisions of the Memorandum of Association and Articles of Association which are not in compliance with this provision, shall not apply.

13. LIQUIDATION

1. Except for instances set forth by law when:

(a) a Participant is declared bankrupt; or

(b) a Participant's Participation Interest is the subject of an execution proceeding; or

(c) a Participant's Participation Interest is transferred or encumbered in violation of Article 12.1; or

(d) CME is unable to complete a sale of its Participation Interest under Article 12.5 or 12.7; or

(e) where the Participants resolve to wind-up the Company;

the Company shall be liquidated.

2. In the event of liquidation of the Company the remaining assets of the Company shall be distributed, after satisfying claims of other third parties in accordance with the relevant law, as follows:

(1) If CME has not received by way of distributed profits an amount equivalent to its total capital contributions increased cumulatively by 6% for each year of the Company's operation it shall receive such amount less the total of distributed profits received by CME.

(2) Thereafter, CME and Markiza shall receive 70% and 30% of the remaining assets respectively.

(3) In case that the profit sharing mechanism set forth in Article 4A of this Memorandum of Association and in section 10.1. of the Articles of Association is amended by the Participants in accordance with Article 4a of this Memorandum of Association and section 10.4. of the Articles, each Participant shall receive such share of the remaining Company's assets that is equal to its share in the Company's net profit designed for distribution among the Participants under the then valid profit sharing mechanism as specified in section 10 of the Articles of Association.

The Participants acknowledge that their entitlement to assets set out herein shall constitute the Participants respective share in the Company's liquidated surplus (referred to in Slovak as "podiel na likvidacnom zostatku").

14. RESERVE FUNDS

The Company has a reserve fund in the amount equal to 5 % of the Company's Registered Capital. The Company shall, from the first year of making a net after tax profit, transfer to the reserve fund not less than 5 percent of its net (after tax) income shown in the Company's annual financial statements each year, until the amount of the reserve fund is equal to 10% of the Company's Registered Capital. The Executives shall decide upon the use of the reserve double remove spare fund in accordance with section 67 of the Commercial Code..

15. REPRESENTATIONS OF MARKÍZA

Markiza hereby represents and warrants to CME as follows:

1. Markiza is a limited liability company duly organized, validly existing and in good standing under the laws of the Slovak Republic and has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and proposed to be conducted.

2. Markiza has the power and authority to execute and deliver this Memorandum of Association and to perform its obligations under this Memorandum of Association. Such executions, delivery and performance have been duly authorized by all necessary corporate actions on its part. This Memorandum of Association has been duly executed and delivered by its duly authorized representatives, and constitutes valid and legally binding obligations enforceable against it in accordance with the terms hereof, except as the same may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws from time to time in effect affecting creditors' rights generally and except for the availability of equitable remedies.

3. The execution, delivery and performance of this Memorandum of Association will not:

(i) violate or conflict with any provision of Markiza's Articles;

(ii) violate in any material respect any law, statute, rule, regulation or order of any governmental authority; or

(iii)

(A) violate, conflict with or constitute a breach of or default in any material respect under (without any person);

(B) permit or result in the termination, suspension or material modification of;

(C) result in the acceleration of (or give any person the right to accelerate) the performance of Markiza under; or

(D) result in the creation or imposition of any material encumbrance or lien under,

any material contract, agreement, arrangement, commitment or plan to which Markiza is a party or by which Markiza or any of its assets is bound or affected, except such violations, conflicts, breaches, defaults, terminations, suspensions, modifications, and accelerations, as would not, individually or in aggregate, have a material adverse effect on Markiza's ability to perform its obligations under this Memorandum of Association.

4. There are no claims, actions, suits, proceedings or investigation pending or, to the best of Markiza's knowledge, threatened, in any court or before any governmental agency or authority, or before any arbitration, by or against or affecting or relating to Markíza or any of its Affiliates which, if adversely determined, would restrain or enjoin the consummation of the transactions contemplated by this Memorandum of Association or declare unlawful the transactions or events contemplated by this Memorandum of Association or cause any of such transactions to be rescinded.

5. There are no judgments, injunctions, orders or other judicial or administrative mandates outstanding against or affecting Markiza or any of its Affiliates which would materially hinder or delay the consummation of the transactions contemplated by this Memorandum of Association.

16. REPRESENTATIONS OF CME

CME hereby represents and warrants to Markiza as follows:

1. CME is a limited liability company duly organized, validly existing and in good standing under the laws of the Netherlands and has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted.

2. CME has the power and authority to execute and deliver this Memorandum of Association and to perform its obligations hereunder. Such execution, delivery and performance have been duly authorized by all necessary corporate actions on its part. This Memorandum of Association has been duly executed and delivered by its duly authorized representatives, and constitutes its valid and legally binding obligations enforceable against it in accordance with the terms hereof, except as the same may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws from time to time in effect affecting creditors' rights generally.

3. The execution, delivery and performance of this Memorandum of Association will not:

(i) violate or conflict with any provision of CME' s deed of incorporation;

(ii) violate in any material respect any law, statute, rule, regulation or order of any governmental authority; or

(iii)

(A) violate, conflict with or constitute a breach of or default in any material respect under (without any person);

(B) permit or result in the termination, suspension or material modification;

(C) result in the acceleration of (or give any person the right to accelerate) the performance of CME under; or

(D) result in the creation or imposition of any material encumbrance or lien under,

any material contract, agreement, arrangement, commitment or plan to which CME is a party or by which CME or any of its assets is bound or affected, except such violations, conflicts, breaches, defaults, terminations, suspensions, modifications, and accelerations as would not, individually or in the aggregate, have a material adverse effect on CME's ability to perform its obligations under this Memorandum of Association.

4. There are no claims, actions, suits, proceedings or investigations pending or, to the best of CME's knowledge, threatened, in any court or any governmental agency or authority, or before any arbitrator, by or against or affecting or relating to CME or any of its Affiliates which, if adversely determined, would restrain or enjoin the consummation of the transactions contemplated by this Memorandum of Association or declare unlawful the transactions or events contemplated by this Memorandum of Association or cause any of such transaction to be rescinded.

5. There are no judgments, injections, orders or other judicial or administrative mandates outstanding against or affecting CME or any of its Affiliates which would materially hinder or delay the consummation of the transactions contemplated by this Memorandum of Association.

17 ADMINISTRATION OF CONTRIBUTIONS (VKLAD)

The Participants have jointly appointed as the administrator of their contributions MARKIZA-SLOVAKIA, spol. s r. o., through Mr. Pavol Rusko, residing at L'. Fullu 10, Bratislava.

18. NOTICES

All notices, consents, requests, instructions, approvals and other communications provided for herein shall be in writing and shall be deemed validly given upon personal delivery or one day after being sent by telecopy or courier service at such address and telecopy numbers as CME or Markiza or other Participants may designate by written notice to other Participants.

19. GOVERNING LAW

This Memorandum of Association shall be governed by and construed in accordance with the laws of the Slovak Republic.

20. PREVAILING LANGUAGE

This Memorandum of Association shall be in both Slovak and English. The Slovak version is prevailing in the event of dispute.

21. COMMON AND FINAL PROVISIONS

The Company has not granted any special privileges to any person involved in the foundation of the Company or in any action taken to ensure the licensing of the Company's business activities. This is an amended Memorandum of Association - the full version of the Memorandum of Association shall be executed in six counterparts, two for the Registration Court, one for the Council for Broadcasting and Retransmission, one for the Company archive and one for each Participant.

MARKIZA-SLOVAKIA, spol. s r. o.

By:

/s/ PhDr. Pavol Rusko

PhDr. Pavol Rusko

and

/s/ Mr. Jan Kovacik

Mr. Jan Kovacik

executives

CME Media Enterprises B. V.

By:

/s/ Jana Murínova

Jana Murínova,

under power of attorney

EX-10

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

1995 STOCK OPTION PLAN

As Amended and Restated as of May 17th 2001

1. Purpose

The purpose of the 1995 Stock Option Plan (the "Plan") is to induce employees, nonemployee consultants and directors who are not employees of the Company or a Subsidiary ("nonemployee directors") to retain their association with Central European Media Enterprises Ltd (the "Company"), its affiliates and its present and future subsidiaries (each a "Subsidiary"), as defined in Section 424(f) of the Internal Revenue Code of 1986 of the USA, as amended (the "Code"), to attract new employees, nonemployee consultants and directors who are not employees and to encourage such employees, nonemployee consultants and directors who are not employees to secure or increase on reasonable terms their stock ownership in the Company. The Board of Directors of the Company (the "Board") believes that the granting of stock options (the "Options") under the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company by those who are or may become primarily responsib le for shaping and carrying out the long range plans of the Company and securing its continued growth and financial success. Options granted hereunder are intended to be either (a) "incentive stock options" (which term, when used herein, shall have the meaning ascribed thereto by the provisions of Section 422(b) of the Code) or (b) options which are not incentive stock options ("non-incentive stock options") or (c) a combination thereof, as determined by the Committee (the "Committee") referred to in Section 5 hereof at the time of the grant thereof.

2. Effective Date of the Plan

The Plan was adopted by resolution of the Board of Directors of the Company (the "Board") on August 2, 1995 and ratified by a majority of the votes cast by holders of outstanding shares of the common stock, $.01 par value, of the Company (the "Common Stock"), at the Company's annual general meeting of shareholders held on May 3, 1996. The Plan was amended by the Board on March 17, October 4, 1997 and March 11, 1998 (the "March 11 Board Meeting"). The decision of the March 11 Board Meeting was ratified in certain respects by the Company's annual general meeting of shareholders held on June 5 1998. The Plan was further amended by the Board on September 3 1998, October 29, 1999 and May 17, 2001.

3. Stock Subject to Plan

1400,000 of the authorized but unissued shares of the Class A Common Stock (the "Class A Common Stock") and ²40,000 of the authorized but unissued shares of the Class B Common Stock (the "Class B Common Stock"), are hereby reserved for issue upon the exercise of Options granted under the Plan; provided, however, that the aggregate number of shares of Common Stock that may be issued under the Plan shall not exceed ¹400,000, provided further, however, that the number of shares so reserved may from time to time be reduced to the extent that a corresponding number of issued and outstanding shares of the Class A Common Stock or Class B Common Stock are purchased by the Company and set aside for issue upon the exercise of Options; and provided further, however, that the number of shares of Class A Common Stock reserved shall be reduced by the number of shares of Class B Common Stock that are delivered pursuant to the exercise of Options hereunder. If any Options expire or terminate for any reason without having been exercised in full, the unpurchased shares subject thereto shall again be available for the purposes of the Plan.

1Number reduced to 400,000 as a result of 8 for 1 reverse share split approved at the A.G.M. on December 14, 1999.

2Number reduced to 40,000 as a result of 8 for 1 reverse share split approved at the A.G.M. on December 14, 1999.

4. Administration

The Plan shall be administered by the Committee referred to in Section 5 hereof. Subject to the express provisions of the Plan, the Committee shall have complete authority, in its discretion, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the respective option agreements or certificates (which need not be identical), to determine the individuals (each a "Participant") to whom and the times and the prices at which Options shall be granted, the period during which each Option shall be exercisable and the vesting schedule therefor (which may vary with each optionee and may be granted on a basis less favourable to the optionee than that provided in Section 10 hereof), the number of shares of the Class A Common Stock of Class B Common Stock to be subject to each

Option and whether such Option shall be incentive stock or Class B Common Stock to be subject to each Option and whether such Option shall be incentive stock option or a non-incentive stock option and to make all other determinations necessary or advisable for the administration of the Plan; provided, however, that Options on Class B Common Stock shall be granted only to persons eligible to be a holder of Class B Common Stock pursuant to the Company's Bye-laws; and provided further, however, that only the Board shall grant Options to nonemployee directors, other than Options granted to nonemployee directors pursuant to Section 20.B. hereof, and to determine the terms thereof. In making such determinations, the Committee or the Board, as the case may be, may take into account the nature of the services rendered by the respective employees, nonemployee consultants and nonemployee directors, their present and potential contributions to the success of the Company and the Subsidiaries and such other fac tors as the Committee or the Board in its discretion shall deem relevant. The Committee's or Board's determination on the matters referred to in this Section 4 shall be conclusive. Any dispute or disagreement which may arise under or as a result of or with respect to any Option shall be determined by the committee, in its sole discretion, and any interpretations by the Committee of the terms of any Option shall be final, binding and conclusive.

5. Committee

The Committee shall consist of two or more members of the Board both or all of whom shall be "Non-Employee Directors" within the meaning of Rule 16b 3(b)(i) promulgated under the Securities Exchange Act of 1934, as amended of the USA (the "Exchange Act"). The Committee shall be appointed annually by the Board, which may at any time and from time to time remove any members of the Committee, with or without cause, appoint additional members to the Committee and fill vacancies, however caused, in the Committee. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members present at a meeting duly called and held. Any decision or determination of the Committee reduced to writing and signed by all of the members of the Committee shall be fully as effective as if it had been made at a meeting duly called and held.

6. Eligibility

An Option may be granted only to a key employee or nonemployee consultant of the Company or a Subsidiary. A director of the Company or a Subsidiary who is not an employee of the Company or a Subsidiary shall be eligible to receive an Option, but only as provided in Section 4 and 20 hereof.

7. Option Prices

A. The initial per share option price of an Option which is an incentive stock option shall be the price determined by the Committee, but not less than the fair market value of a share of the Class A Common Stock or Class B Common Stock on the date of grant; provided, however, that, in the case of a Participant who owns more than 10% of the total combined voting power of the Common Stock at the time an Option which is an incentive stock option is granted to him, the initial per share option price shall not be less than 110% of the fair market value of a share of the Class A Common Stock or Class B Common Stock on the date of grant.

B. The initial per share option price of any Option which is a non-incentive stock option granted to an employee or nonemployee consultant shall be the price determined by the committee, but not less than either the fair market value of a share of Class A Common Stock on the date of grant or the average fair market value of a share of Class A Common Stock over a period specified in the grant following the date the Option is granted not to exceed 20 business days. The Committee may provide that the option price per share will increase to reflect the cost of the capital or any other objective measure or may set the initial exercise price at an amount in excess of the fair market value at the time of grant. The per share option price of any Option granted to a nonemployee director pursuant to Section 20.A. shall be determined in the same manner as the per share option price for options granted to employees and nonemployee consultants, and the per share option price of an Option granted to a nonemployee di rector pursuant to Section 20.B. shall be determined as provided in Section 20.B.

C. For all purposes of the Plan, the fair market value of a share of the Class A Common Stock or the Class B Common Stock on any date shall be equal to (i) if, on such day, shares of the Class A Common Stock shall be traded on a national securities exchange, the closing sales price of a share of the Class A Common Stock as published by such national securities exchange or if there is no sale of the Class A Common Stock on such date, the average of the bid and asked price on such exchange at the close of trading on such date, or (ii) if the shares of the Class A Common Stock are not listed on a national securities exchange on such date, and are traded on a national securities market, the average of the bid and asked price in the over-the-counter market at the close of trading on such date, or (iii) if the provisions of clause (i) and clause (ii) shall not be applicable, such amount as shall be determined in good faith by the Board.

8. Option Term

Participants shall be granted Options for such term as the Committee shall determine, not in excess of ten years from the date of the granting thereof; provided, however, that, in the case of a Participant who owns more than 10% of the total combined voting power of the Common Stock at the time an Option which is an incentive stock option is granted to him, the term with respect to such Option shall not be in excess of five years from the date of the granting thereof. The Committee may provide that the length of the term of an Option will vary with the length of the period over which the Option first becomes exercisable.

9. Limitations on Amount of Incentive Stock Options Granted

The Aggregate fair market value of the shares of the Class A Common Stock or Class B Common Stock for which any Participant may be granted incentive stock options which are exercisable for the first time in any calendar year (whether under the terms of the Plan or any other stock option plan of the Company) shall not exceed $100,000.

10. Exercise of Options

A. Each Option shall be exercisable and the total number of shares subject thereto shall be purchasable in installments, which need not be equal, as specified in the Option. Except as otherwise determined by the Committee, the first installment shall not become exercisable during the period commencing on the date of the granting of such Option and ending on the day next preceding the first anniversary of such date. An installment once exercisable shall remain exercisable until the Option expires or is terminated.

B. Except as hereinbefore otherwise set forth, an Option may be exercised either in whole at any time or in part from time to time.

C. An Option may be exercised only by a written notice of intent to exercise such Option with respect to a specific number of shares of the Class A Common Stock or Class B Common Stock and payment to the Company of the amount of the option price for the number of shares of the Class A Common Stock or the Class B Common Stock so specified; provided, however, that all or any portion of such payment may be made in kind by the delivery of shares of the Class A Common Stock or Class B Common Stock, as the case may be, having a fair market value equal to the portion of the option price so paid; provided, further, however, that, subject to the requirements of Regulation T (as in effect from time to time) promulgated under the Exchange Act, the Committee may implement procedures to allow a broker chosen by a Participant to make payment of all of any portion of the option price payable upon the exercise of an Option and receive, on behalf of such Participant, all or any portion of the shares of th e Class A Common Stock or Class B Common Stock issuable upon such exercise.

D. Notwithstanding the terms of this Section 10, the Board may, in its discretion, permit any Option to be exercised, in whole or in part, prior to the time when it would otherwise be exercisable.

11. Transferability

No Option shall be assignable or transferable except by will and/or by the laws of descent and distribution and, during the life of any Participant, each Option granted to him may be exercised only by him; provided, however that the Board or Committee may provide that a Participant may transfer an Option for no consideration to any member of his or her immediate family or to any trust for the benefit of the Participant's immediate family.

12. Termination of Employment or Service

In the event a Participant leaves the employ of the Company and the Subsidiaries, or the services or the contract of a nonemployee consultant of the Company and the Subsidiaries is terminated or a Participant ceases to serve as a nonemployee director (a "Termination"), an Option may thereafter be exercised only as hereinafter provided:

(a) If Termination occurs by reason of (i) disability, (ii) death or (iii) retirement at or after age 65, each Option theretofore granted to him which shall not have theretofore expired or otherwise been cancelled shall become exercisable in full and shall, to the extent not theretofore exercised, terminate upon the earlier to occur of the expiration of one (1) year after the date of such Termination and the date of termination specified in such Option;

(b) If Termination occurs by reason of (i) termination by the Company or a Subsidiary other than for Cause or (ii) the Participant's voluntary termination, each Option theretofore granted to him which shall not have theretofore expired or otherwise have been cancelled shall, to the extent not theretofore exercised, terminate upon the earlier to occur of the expiration of ninety (90) days after the date of Termination and the date of termination specified in such Option, and

(c) If termination occurs by reason of termination by the Company for Cause, each Option theretofore granted to him which shall not have theretofore expired or otherwise been cancelled shall immediately terminate;

"Cause" shall mean (i) the commission by a Participant of any act or omission that would constitute a felony under United States federal, state or equivalent foreign law, or an indictable offense under Bermuda law, (ii) a Participant's gross negligence, recklessness, dishonesty, fraud, disclosure of trade secrets or confidential information, willful malfeasance or willful misconduct in the performance of services to the Company or its Subsidiaries, (iii) willful misrepresentation to shareholders or directors which is injurious to the Company; (iv) a willful failure without reasonable justification to comply with reasonable directions of a Participant's supervisor; or (v) a willful and material breach of a Participant's duties or obligations under any agreement with the Company or a Subsidiary.

13. Adjustment of Number of Shares

A. In the event that a dividend shall be declared upon the Class A Common Stock payable in shares of the Class A Common Stock, the number of shares of the Class A Common Stock then subject to any Option, the number of shares of the Class A Common Stock reserved for issuance in accordance with the provisions of the Plan but not yet covered by an Option and the number of shares referred to in Section 20.B. hereof shall be adjusted by adding to each share the number of shares which would be distributable thereon if such shares had been outstanding on the date fixed for determining the stockholders entitled to receive such stock dividend.

B. In the event that the outstanding shares of the Class A Common Stock shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, stock split-up, combination of shares, sale of assets, merger or consolidation in which the Company is the surviving corporation, then, there shall be substituted for each share of the Class A Common Stock then subject to any Option, for each share of the Class A Common Stock reserved for issuance in accordance with the provisions of the Plan but not yet covered by an Option and for each share of the Class A Common Stock referred to in Section 20.B. hereof, the number and kind of shares of stock or other securities into which each outstanding share of the Class Common Stock shall be so changed or for which each such share shall be exchanged.

C. In the event that there shall be any change, other than as specified in this Section 13, in the number or kind of outstanding shares of the Class A Common Stock, or of any stock or other securities into which the Class A Common Stock shall have been changed, or for which it shall have been exchanged, then, if the Committee shall, in its sole discretion, determine that such change equitably requires an adjustment in the number or kind of shares then subject to any Option, the number or kind of shares reserved for issuance in accordance with the provisions of the Plan but not yet covered by an Option and the number or kind of shares referred to in Section 20.B. hereof, such adjustment shall be made by the Committee and shall be effective and binding for all purposes of the Plan and of each stock option agreement or certificate entered into in accordance with the provisions of the Plan.

D. In the case of any substitution or adjustment in accordance with the provisions of this Section 13, the option price in each stock option agreement or certificate for each share covered thereby prior to such substitution or adjustment shall be the option price for all shares of stock or other securities which have been substituted for such share or to which such share shall have been adjusted in accordance with the provisions of this Section 13.

E. No adjustment or substitution provided for in this Section 13 shall require the Company to sell a fractional share under any stock option agreement or certificate.

F. In the event of the dissolution or liquidation of the Company, or a merger, reorganization or consolidation in which the Company is not the surviving corporation, then, except as otherwise provided in second sentence of this Section 13, each Option, to the extent not theretofore exercised, shall be immediately exercisable in full.

G. This Section 13 shall apply, pari passu, with respect to Class B Common Stock.

14. Purchase for Investment, Withholding and Waivers.

Unless the shares to be issued upon the exercise of an Option by a Participant shall be registered prior to the issuance thereof under the Securities Act of 1933, as amended of the USA, such Participant will, as a condition of the Company's obligation to issue such shares, be required to give a representation in writing that he is acquiring such shares, be required to give a representation in writing that he is acquiring such shares for his own account as an investment and not with a view to, or for sale in connection with, the distribution of any thereof. In the event of the death of a Participant, a condition of exercising any Option shall be the delivery to the Company of such tax waivers and other documents as the Committee shall determine. In the case of each stock option, a condition of exercising the same shall be the entry by the person exercising the same into such arrangements with the Company with respect to all federal, state, local and foreign withholding tax requirements as the Committee may determine.

15. No Stockholder Status.

Neither any Participant nor his legal representatives, legatees or distributees shall be or be deemed to be the holder of any share of the Class A Common Stock or Class B Common Stock covered by an Option unless and until a certificate for such share has been issued. Upon payment of the purchase price thereof, a share issued upon exercise of an Option shall be fully paid and non-assessable.

16. No Restrictions on Corporate Acts.

Neither the existence of the Plan nor any Option shall in any way affect the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Class A Common Stock or Class B Common Stock or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding whether of a similar character or otherwise.

17. No Employment Right or Right to Continued Service.

Neither the existence of the Plan nor the grant of any Option shall require the Company or any Subsidiary to continue any Participant in the employ of the Company or such Subsidiary, as a nonemployee consultant of the Company or a Subsidiary or as a director of the Company.

18. Termination and Amendment of the Plan.

The Board may at any time terminate the Plan or make such modifications of the Plan as it shall deem advisable; provided, however, that the Board may not without further approval of the holders of a majority of the shares of the Common Stock voting as a single class as provided in the Company's Bye-Laws present in person or by proxy at any special or annual meeting of the stockholders, increase the number of shares as to which Options may be granted under the Plan (as adjusted in accordance with the provisions of Section 13 hereof), or change the manner of determining the option prices, or extend the period during which an Option may be granted or exercised. Except as otherwise provided in Section 13 hereof, no termination or amendment of the Plan may, without the consent of the Participant to whom any Option shall theretofore have been granted, adversely affect the rights of such Participant under such Option.

19. Expiration and Termination of the Plan.

The Plan shall terminate on the business day preceding the tenth anniversary of its effective date or at such earlier time as the Board may determine. Options may be granted under the Plan at any time and from time to time prior to its termination. Any Option outstanding under the Plan at the time of the termination of the Plan shall remain in effect until such Option shall have been exercised or shall have expired in accordance with its terms.

20. Options for Outside Directors.

A. A nonemployee director shall be eligible to receive Options. Except as otherwise provided in this Section 20, each such Option shall be subject to all of the terms and conditions of the Plan.

B. I. Upon the effective date of the Company's first registration statement under the Securities Act of 1933, as amended of the USA, each nonemployee Director shall be granted an Option to purchase 10,000 shares of the Class A Common Stock.

II. At each annual meeting of the Company, each nonemployee director who shall have served as a nonemployee director since the immediately preceding annual meeting shall be granted a non-incentive stock option to purchase ³1,250 shares of Common Stock, which shall be Class B Common Stock in the case of a nonemployee director who is eligible to be a holder of Class B Common Stock pursuant to the Company's Bye-laws or otherwise shall be Class A Common Stock, provided, however, that commencing with the annual meeting to be held in 2002, the number of common shares subject to such option shall be 2,000.

III. The initial per share option price of each Option granted to a nonemployee director pursuant to this Section 20.B. shall be equal to the average fair market value of a share of Class A Common Stock for the ten (10) consecutive business days immediately following the date the Option is granted, or 105% of the ten (10) consecutive business day average thereof, in the case of a grant of an Option on shares of Class B Common Stock. Notwithstanding the preceding sentence, the Committee may provide that the option price per share will increase to reflect the cost of capital or any other objective measure or may set the initial exercise price at an amount in excess of the fair market value at the time of grant.

IV. The term of each Option granted to a nonemployee director pursuant to this Section 20.B. shall be ten years from the date of the granting thereof.

V. All or any portion of the payment required upon the exercise of an Option granted to a nonemployee director may be made in kind by the delivery of shares of the Class A Common Stock or Class B Common Stock, as the case may be, having a fair market value on the date the Option is exercised equal to the portion of the option price so paid.

3. The provisions of this Section 20 may not be amended except by the vote of a majority of the members of the Board and by the vote of a majority of the members of the Board who are nonemployee directors.

3 Number reduced to 1,250 as a result of 8 for 1 reverse share split approved at the A.G.M. on December 14, 1999.

21. Governing Law.

The Plan shall be governed by the laws of Bermuda. 

EX-10

Key Agreement Among Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd., Innova Film GmbH, International Media Services Ltd., Ukraine Advertising Holding B.V., CME Ukraine Holding GmbH and CME Ukraine B.V., entered into as of December 23, 1998

This Key Agreement (the "Agreement") is entered into among Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd., Innova Film GmbH ("Innova"), International Media Services Ltd ("IMS"), Ukraine Advertising Holding B.V. ("UAH"), CME Ukraine Holding GmbH and CME Ukraine B.V ("CME") (collectively, the "Parties").

WHEREAS, IMS is owned 50% by CME, 25% by Mr. Fuchsmann and 25% by International Teleservices Ltd ("ITS")

WHEREAS, Innova is owned 50% by CME, 25% by Mr. Fuchsmann and 25% by Mr. Rodniansky;

WHEREAS, UAH is owned 50% by CME, 25% by Mr. Fuchsmann and 25% by ITS;

WHEREAS, Studio 1+1 Ltd is owned 70% by Mr. Rodniansky and 30% by a wholly owned subsidiary of Innova;

WHEREAS, pursuant to the Loan Agreement, dated May 7, 1997, between CME Media Enterprises B.V. and IMS, CME Media Enterprises B.V. has loaned $5 million to IMS without interest (the "$5 Million Loan") and pursuant to the Promissory Note, dated November 17, 1997, between CME Media Enterprises B.V. and IMS, CME Media Enterprises B.V. has loaned $1 million to IMS with interest at a rate per annum of 9.50% due November 17, 1998 (the "$1 Million Loan", together with the $5 Million Loan, the "Existing Loans"); and

WHEREAS, the Parties wish to establish general terms and conditions for (i) the purchase by CME and Messrs. Rodniansky and Fuchsmann of additional shares in Innova, IMS and UAH; (ii) a loan from CME to Mr. Rodniansky to finance his purchase of shares in IMS and UAH; and (iii) new loans from CME to IMS and the rescheduling of the Existing Loans from CME to IMS;

NOW, THEREFORE, the Parties agree as follows:

I Purchase of Shares

A. Mr. Fuchsmann shall either purchase from Vadim Rabinovich 100% of ITS or purchase from ITS 25% of each of IMS and UAH.

B. CME or its designated subsidiary shall purchase from Mr. Fuchsmann 10% of each of IMS and UAH for purchase prices of $4,965,000 and $10,000 respectively.

C. CME or its designated subsidiary shall purchase from Mr. Rodniansky 10% of Innova for a purchase price of $25,000.

D. Mr. Fuchsmann shall purchase from Mr. Rodniansky 5.2% of Innova for a purchase price of $12,500.

E. Mr. Rodniansky shall purchase from Mr. Fuchsmann 10% one less share of each of IMS and UAH for purchase prices of $4,990,000 and $10,000 respectively.

F. Each of the Parties shall pay their own legal and other advisory fees.

G. Consummation of the share purchases described in this subsection shall result in the following ownership interests (taking into account direct and indirect interests) in IMS, UAH and Innova:

IMS and UAH	Innova
CME - 60%	CME - 60%
Mr. Fuchsmann - 30% plus one share	Mr. Fuchsmann - 30.2%
Mr. Rodniansky - 10% less one share	Mr. Rodniansky - 9.8%

H. If Mr. Fuchsmann purchases 100% of ITS then he shall use his best efforts to transfer ITS's interests in IMS and UAH to himself or to a holding company interests in which he owns at least 51% and whose only assets are interests in Studio 1+1 group companies. "Studio 1+1 group" companies, as used herein, refers to IMS, UAH, Innova, Intermedia, Studio 1+1 Ltd and Prioritet and any of their subsidiaries existing or formed in the future.

II CME Loan to Mr. Rodniansky

On the terms and subject to the conditions set forth in Annex 1 hereto, CME shall loan to Mr. Rodniansky $5 million to be used exclusively to purchase 10% less one share of each of IMS and UAH, as described above (the "AR Loan").

III Closing Conditions

CME's obligation to acquire shares from Mr. Fuchsmann and Mr. Rodniansky and make the AR Loan is subject to the satisfaction (or waiver by CME) of conditions precedent appropriate for investments and loans of this kind generally and for this kind of transaction in particular, including, without limitation, the following:

A. The Parties shall have executed an agreement or amended an existing agreement which provides CME and Mr. Fuchsmann with options acceptable to them either to acquire for no additional consideration a direct or indirect interest in Studio 1+1 Ltd up to the amount of each of their ownership interests in IMS or to cause the merger of Studio 1+1 with another company owned by CME and Mr. Fuchsmann (after the merger) such that CME and Mr. Fuchsmann have interests in the surviving company that is not less than their percentage interests in IMS. Messrs. Fuchsmann and Rodniansky shall have covenanted to use their best efforts, including political lobbying efforts, to cause such options to be exercisable and enforceable. Notwithstanding the exerciseability of the options or the completion of the merger, the Parties shall to the maximum extent possible carry out their intention to have their ownership interests in Studio 1+1 Ltd correspond to their ownership interests in IMS. CME shall not exercise its rights as a holder of interests in Studio 1+1 Ltd to cause Studio 1+1 Ltd to broadcast programming content relating to Ukrainian politics that is not fair and objective, or otherwise violate any law in Ukraine relating to the content of programming broadcast by Studio 1+1 Ltd.

B. CME, Mr. Fuchsmann, Mr. Rabinovich, Mr. Rodniansky and the other Studio 1+1 group companies shall have executed and delivered to each other mutual releases of claims.

IV. Covenants and Further Agreements

A. As soon as possible after the closing of the share purchases by CME described in Section I, but not later than March 31, 1999, the articles of association, bye-laws, shareholder agreements or similar document setting forth the governing rules for each of Innova, IMS and UAH (and any of their subsidiaries) (the "Management Documents") and the Investment, Acquisition and Cooperation Agreement dated as of September 30, 1996 (the "Cooperation Agreement") will be amended in form and substance satisfactory to CME to reflect CME's newly acquired controlling share of such companies and agreements which have been entered into among the parties since the date of the Cooperation Agreement. Identical changes will be made in Studio 1+1 Ltd upon consummation of the transactions contemplated in Section III.A. Non-operative or defunct agreements shall be terminated. Amendments to the Management Documents of Innova, IMS, UAH and when applicable, Studio 1+1, and their existing or future wholly owned subsidiaries shall i nclude, but not be limited to, the following terms:

1. Shareholders Quorum for general meeting of shareholders is 75%. If after proper notice a quorum of 75% does not attend, then the unresolved issues from the failed meeting shall go on an agenda for a general meeting which is automatically called for ten business days following the day of the failed meeting and at which the quorum required will be 61%. If a quorum of 61% cannot be reached at the second attempted meeting then the unresolved issues shall go on an agenda for a general meeting which is automatically called for ten business days following the day of the failed second meeting and at which the quorum required will be 51%.

Except as described below, the approval of a general meeting shall require the majority of votes cast.

The following decisions and issues shall require approval of 61% of votes of shareholders:

a. Acquisition or sale of assets with value in excess of $7.5 million.

b. Approval of entering into, material amendment or termination of agreements not in approved budgets with a value of $7.5 million.

c. Entering into any joint venture with any third party if the Studio 1+1 group potential investment in the joint venture exceeds $2 million and is not in the ordinary course of business.

d. Any contract or other business relationship with a shareholder or shareholder affiliate.

e. Change of scope of business.

f. Any amendment to the articles of association or bye-laws.

g. Voluntary liquidation or winding-up.

h. Annual statement of accounts. However, if annual accounts are not approved after two votes, they may be approved at a meeting of the shareholders (at which the quorum may be 51%) if such annual accounts are the subject of an unqualified opinion from the applicable company's auditor.

i. Increases in issued shares.

j. Appointment of directors and management board members nominated by Messrs. Fuchsmann and Rodniansky.

The following decisions and issues shall require approval of 61% of votes, provided that if a 61% vote is not reached then a second meeting of the shareholders (for which the quorum will be 51%) shall automatically be called for the day which is ten business days following the initial vote. The unresolved issues shall automatically be on the agenda of the second meeting. During the period preceding the second meeting the shareholders shall use their best efforts to come to an agreement through consultation. At any second meeting, the decisions and issues on the agenda automatically carried over from the first meeting shall require approval by a majority of votes.

k. Distribution of profits, methods of covering losses.

l. Annual budgets and amendments to budgets.

m. Determination of compensation of any director.

n. Acquisition or sale of assets with value above $2 million and below or equal to $7.5 million.

o. Approval of entering into, material amendment or termination of agreements not in approved budgets with a value above $2 million and below or equal to $7.5 million or with a duration of more than one year irrespective of the value.

p. Designation of persons authorized to sign checks and other financial documents on behalf of the company.

q. Appointment of directors and management board members nominated by CME.

If the applicable law requires that an issue listed in this sub-section be approved by a higher percentage of votes than is required herein then the minimum percentage required by law shall apply.

2. Management Boards. Five (5) member management boards. Three management board members nominated by CME (General Director, Co-Deputy General Director and Finance Director) and two nominated by Messrs. Fuchsmann and Rodniansky (Co-Deputy General Director and Sales Director). Nominees confirmed to one year terms by affirmative vote, not to be unreasonably withheld, of 61% of shareholders subject to the consultative arrangement applicable to IV.A.1.(q) above. Removal by affirmative vote of 61% of shareholders subject to the consultative arrangement applicable to IV.A.1.(q) above or for cause. Quorum for meetings is 3, with at least 2 CME nominees and one nominee of Messrs. Fuchsmann and Rodniansky present. If after proper notice a quorum cannot be reached as a result of the failure to attend of a nominee of Messrs. Fuchsmann and Rodniansky then the unresolved issues from the failed meeting shall automatically go on an agenda for a board meeting at which the quorum required will be 3, with at least 2 CME nominees. Management board approval shall require a majority of votes cast.

3. Officers. Appointed and removed by majority vote of management board.

For the avoidance of doubt and notwithstanding any other provision of this Agreement, it is the intent of the Parties that upon consummation of the share purchases described in Section I of this Agreement, CME will ultimately control the determination of all matters, decisions and issues of IMS, Innova, UAH, Intermedia, Prioritet (through CME's controlling interest in UAH) and, as soon as permissible, Studio 1+1 Ltd except as described in (a) through (j) above and subject to the consultative arrangement applicable to (k) through (q) above.

B. The Parties agree to use their best efforts to restructure their jointly owned companies to form a single joint venture holding company which may be used as a vehicle for a public offering of shares. The Parties will use their best efforts and take all necessary steps to ensure that the restructuring takes place to maximise potential tax savings and other financial objectives.

C. The Parties agree to use their best efforts to cause Limited Liability Company Prioritet to become a wholly owned subsidiary of IMS or another company with the same ownership structure as IMS for no additional consideration.

D. The Parties agree that the application for any additional licenses to be obtained in Ukraine by any of the Parties, and the renewal of the current Studio 1+1 license will all be done in the name of a joint venture with CME or otherwise through a company to be approved in advance by CME such that CME's economic interest and management control in such company is the same as in IMS. The Parties shall use their best efforts to cause such a license renewal.

E. The Parties agree to transfer as soon as practicable the Studio 1+1 tradename and trademark to IMS or another company with the same ownership structure as IMS such that CME, Mr. Fuchsmann and Mr. Rodniansky derive economic benefit from any use of such intellectual property in proportion to their direct and indirect interests in IMS.

V. CME Loans to IMS

A. New Loans. On the terms and subject to the conditions set forth in Annex 2 hereto, CME shall loan up to $10 million to IMS (the "New Loan").

B. Existing Loans. The Existing Loans shall be rescheduled on the terms and subject to the conditions set forth in Annex 3 hereto.

C. For so long as the New Loans or the rescheduled Existing Loans are outstanding and IMS is current on principal and interest obligations to CME, the Parties agree to vote in favour of the declaration dividends equal to not less than 20% of the distributable profits of IMS, Innova or UAH. The Parties agree to vote in favour of the declaration of dividends equal to not less than 50% of distributable profits of IMS, Innova or UAH for so long as no loans, including principal and interests, or other obligations are owing, whether or not due, to CME from IMS, Innova, UAH or any other Studio 1+1 group company.

VI. Future Financing and Commitments

Mr. Fuchsmann, Mr. Rodniansky and CME agree that any shareholder equity investment, loan to, or guarantee or commitment on behalf of any of their jointly owned companies shall be provided by CME, Mr. Fuchsmann and Mr. Rodniansky severally in proportion to their then current ownership interests in IMS. Mr. Fuchsmann and Mr. Rodniansky acknowledge that they have no expectation of CME providing future financing or other financial support that is proportionately greater than its interests.

VII. Auditors

Innova will pay the outstanding fees due to Arthur Andersen for work performed in connection with the Studio 1+1 group audits for 1997 and 1998. Mr. Fuchsmann and Central European Media Enterprises Ltd's Chief Financial Officer will discuss and resolve certain issues regarding Arthur Andersen's performance. CME will have the right to appoint the auditors for the Studio 1+1 group of companies after consultation with Mr. Fuchsmann and Mr. Rodniansky. CME agrees to consider Innova's proposal to retain the firm PriceWaterhouseCoopers as the primary accounting and auditing firm for the Studio 1+1 group of companies, subject to CME's financial and reporting requirements, cost and timeliness.

VIII. Program Acquisitions; Interlink

The Parties acknowledge the continuing relationship between CMEPS and Innova pursuant to the Innova-CMEPS Programming Services Agreement, dated December 1, 1996. CMEPS representatives shall meet with Innova and other Studio 1+1 group representatives to address all outstanding issues and problems related to programming contracts entered into by CMEPS on behalf of Innova and other Studio 1+1 group companies. Innova will promptly execute and deliver all program rights contracts for programming that have been acquired by CMEPS on behalf of Innova and other Studio 1+1 group companies. CME acknowledges that CMEPS shall not enter into agreements on behalf of Innova or other Studio 1+1 group companies without the prior written approval of Alexander Rodniansky or his designee.

Innova agrees to pay all amounts owing, whether or not due, by Innova to Interlink Network Corp. ("Interlink") under invoices from Interlink, or to reimburse CME for any amounts paid to Interlink by CME on behalf of Innova, in either case such that the total amount owing, whether or not due, to Interlink is paid in full in the following amounts by the following dates: one-third of such amount on or before April 30, 1999; one-half of the amount then outstanding on or before May 31, 1999; and the remaining balance outstanding on or before June 30, 1999. CME agrees to use its best efforts to negotiate with Interlink to reduce the amounts outstanding owed by Innova.

IX. Investment Opportunities

Mr. Fuchsmann, Mr. Rodniansky and CME agree to offer a participation interest to the other parties for any potential media investment opportunities in Ukraine, including but not limited to television, radio and print media. The first refusal right procedures of the Cooperation Agreement will apply to such investment opportunities.

Notwithstanding the foregoing, in the event that an investment opportunity arises that requires immediate action by one party (the "Investing Party"), then such party may go forward with the investment opportunity notwithstanding the procedures set forth in the Cooperation Agreement so long as the Investing Party informs the other parties of such opportunity in writing before the Investing Party makes any investment. In the event that the non-investing parties cannot meet the legitimate time-frame required to make the investment, then the Investing Party may take action unilaterally under the following conditions:

The Investing Party must obtain the right to offer the newly acquired ownership interest or investment to IMS or another company with the same ownership structure as IMS (the "Optionee").

The Optionee will then have a right of first refusal for a period of three months to acquire the Investing Parties newly acquired interest on the same terms and conditions as acquired by the Investing Party. During such three month period the Optionee will have the right to undertake any due diligence required to make an informed decision regarding the possible investment.

X. Salaries; Employment Agreement

The Parties agree that all salaries of employees of the Studio 1+1 group of companies shall be paid by the employing company regardless of which party appointed such employee. For the avoidance of doubt, IMS, Innova or UAH will pay for the salary and/or consulting fees and associated costs of Basil Danchuk and any Finance Director. The Parties agree to negotiate in good faith an execute an employment agreement between Rodniansky and a Studio 1+1 group company with a term ending on or after June 23, 2002.

XI. Choice of Law; Disputes; Other

A. This Agreement shall be governed by and construed in accordance with the laws of Bermuda.

B. Any dispute, controversy or claim arising out of, relating to, or in connection with, this Agreement, or the breach, termination or validity hereof, shall be finally settled by arbitration in accordance with (i) the Amended and Restated Arbitration Agreement, dated as of January 23, 1997, among the Parties hereto and the several other parties thereto (the "Arbitration Agreement"), until such date as the Arbitration Agreement may be terminated or (ii) any arbitration provisions contained in any agreement to which each party hereto is a party that by its terms explicitly supersedes the Arbitration Agreement.

C. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Should any provisions of this Agreement be unenforceable or inconsistent with applicable law, the parties shall amend the terms of such provision in a way that, as amended, it is valid and legal and to the maximum extent possible carries out the original intent of the Parties as to the issue in question.

D. The Parties agree that copies of this Agreement shall not be distributed or made available generally except (i) as required by law or regulation or the requirements of any stock exchange or other regulatory organization or (ii) to the Parties' directors, officers, agents, representatives, counsel, accountants and financial advisors.

E. This Agreement may be executed in one or more counterparts, all of which together shall constitute one and the same instrument.

F. Nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective successors and permitted assigns.

G. All notices and other communications to any party hereunder shall be in writing and shall be effective (a) if given by facsimile transmission, when received, or (b) if given by any other means, when delivered at the address of the recipient party.

The address of CME is: c/o CME Group, The Legal Department, 18 D'Arblay Street, London W1V 3FP, U.K., Attn: Erik T. Moe

The address of Fuchsmann is: Lewitstr. 16, 40547 Dusseldorf, Germany.

The address of Rodniansky is: Dusseldorf Str 111, 40545 Dusseldorf, Germany.

The address of Studio 1+1 Ltd is: until February 1, 1999, Mechnikova Boulevard, 14/1 (5^th floor), Kiev 252023, Ukraine; after February 1, 1999, Khretchatik Boulevard 7/11 (7^th floor), Kiev 252001, Ukraine.

The address of Innova is: Friedrich-Ebert-Str. 31-33, 40210 Dusseldorf, Germany.

The address of IMS is: Clarendon House, 2 Church Street, P.O. Box HM 1022, Hamilton HM, Bermuda Islands.

The address of Ukraine Advertising Holding B.V. is:

H. None of the terms of this Agreement may be waived, altered or amended except by an instrument in writing duly executed by the waiving party or, in the case of alteration or amendments, each of the parties hereto.

I. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns. The parties may not assign their rights or obligations under this Agreement, except that Fuchsmann, Rodniansky and CME may at any time assign, in part or in whole, their rights under this Agreement to the same extent they are permitted to transfer their shares in IMS under the bye-laws of IMS as currently in effect.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the date first written above.

	CME Ukraine B.V.
/s/ Boris Fuchsmann	/s/ Michel Delloye
Boris Fuchsmann	Michel Delloye
	Managing Director A
/s/ Alexander Rodnyanskii	Studio 1+1 Ltd
Alexander Rodnyanskii	/s/ Alexander Rodnyanskii
	Alexander Rodnyanskii
	General Director
	/s/ Basil Danchuk
	Basil Danchuk
	Finance Director
Innova Film GmbH	International Media Services Ltd
/s/ Boris Fuchsmann	/s/ Pius Nigg
Boris Fuchsmann	Pius Nigg
Managing Director	General Director
/s/ Basil Danchuk	/s/ Michel Delloye
Basil Danchuk	Michel Delloye
Managing Director	Deputy General Director
Ukraine Advertising Holding B.V.	CME Ukraine Holding GmbH
/s/ Boris Fuchsmann	/s/ Michel Delloye
Boris Fuchsmann	Michel Delloye
Managing Director	Managing Director
/s/ Michel Delloye
Michel Delloye
Managing Director

IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the date first written above.

	CME Ukraine B.V.
/s/ Boris Fuchsmann	/s/ Michel Delloye
Boris Fuchsmann	Michel Delloye
	Managing Director A
	Studio 1+1 Ltd
/s/ Alexander Rodniansky	/s/ Alexander Rodniansky
Alexander Rodniansky	Alexander Rodniansky
	General Director
	/s/ Basil Danchuk
	Basil Danchuk
	Finance Director
Innova Film GmbH	International Media Services Ltd
/s/ Boris Fuchsmann	/s/ Pius Nigg
Boris Fuchsmann	Pius Nigg
Managing Director	General Director
/s/ Basil Danchuk	/s/ Michel Delloye
Basil Danchuk	Michel Delloye
Managing Director	Deputy General Director
Ukraine Advertising Holding B.V.	CME Ukraine Holding GmbH
/s/ Boris Fuchsmann	/s/ Michel Delloye
Boris Fuchsmann	Michel Delloye
Managing Director	Managing Director
/s/ Michel Delloye
Michel Delloye
Managing Director

Annex 1

Principal Terms and Conditions of $5 Million Loan from CME to Alexander Rodniansky (the "AR Loan")

This Annex 1 is attached to and forms a part of the Agreement.

Borrower:	Alexander Rodniansky
Lender:	CME Ukraine B.V.
Amount:	US $5 million
Interest:	10% per annum on the outstanding principal amount, payable semi-annually in arrears beginning six months following the disbursement date.
Principal:	Repayable in semi-annual instalments beginning one year following the date of disbursement in the following amounts: Instalment 1: $150,000 Instalment 2: $750,000 Instalment 3: $500,000 Instalment 4: $600,000 Instalment 5: $600,000 Instalment 6: $2,400,000
Security:	CME or an entity designated by CME shall have obtained a fully perfected first right in (i) Mr. Rodniansky's 10% interests in each of Innova, IMS and UAH, (ii) to the fullest extent permissible under applicable laws, Mr. Rodniansky's 70% interest in Studio 1+1 Ltd and (iii) Mr. Fuchsmann's and ITS's aggregate 30% interests in each of Innova, IMS and UAH.
Prepayment:	For so long as there is outstanding interest or principal on the AR Loan, if any dividend is declared by any Studio 1+1 group company and is payable to Mr. Rodniansky, Mr. Rodniansky shall assign the right to such payment to CME Ukraine B.V. (or a company designated by CME Ukraine B.V.) and such amount shall be credited first against interest due, then against principal due, then as prepayment of the next due principal payments. The proceeds of any sale by Mr. Rodniansky of any interest in any Studio 1+1 group company shall be used to prepay the AR Loan and shall be credited in the same order.
Other Terms:	The AR Loan will contain other terms customary to loans of this type, including customary representations and warranties, covenants, conditions, events of default and acceleration provisions. Events of default shall include but not be limited to any breach of the Agreement by Mr. Fuchsmann or Mr. Rodniansky, the failure to consummate the share purchases described in Section I of the Agreement and the failure to complete the changes to the Management Documents prescribed in Section IV.A. of the Agreement by March 31, 1999. Cross-default with respect to Studio 1+1 group commitments and obligations to CME and its affiliates. Mr. Rodniansky will have entered into a non-compete agreement with CME and the Studio 1+1 group with respect to media in Ukraine, including television, radio and print media for a term which is the longer of his General Directorship of Studio 1+1 Ltd and the period during which there is unpaid interest or principal on the AR Loan.

Annex 2

Principal Terms and Conditions of $10 Million Loan from CME to IMS (the "New Loan")

This Annex 2 is attached to and forms a part of the Agreement.

Borrower:	IMS
Lender:	CME Ukraine B.V.
Disbursements:	Disbursements to be made according to a mutually agreed schedule in the following amounts: 1998 : $1.0 million ($0.6 before closing, $o.4 million at closing) 1999 : $3.0 million 2000 : $6.0 million Disbursements shall be conditional upon payment of all amounts owed by any Studio 1+1 group company to CME or its affiliates for programming and other amounts owed to CME or its affiliates.
Use of Proceeds:	Up to $2 million for general working capital. Up to $8 million for the purchase and renovation of an existing television production facility or the building of a new television production facility for the Studio 1+1 group operations. No funds will be disbursed by CME for any other purpose without the prior written approval of Central European Media Enterprises Ltd's Chief Executive Officer or Chief Financial Officer. The prior approval of the production facility project by the shareholders of IMS will be required prior to disbursement by CME.
Interest:	9 3/8% per annum on the outstanding principal amount, payable quarterly in arrears, commencing with the first business day of the first full calendar quarter following a disbursement. The interest rate shall increase by 0.25% on each six month anniversary of the date of disbursement.
Principal Repayment:	The principal amount of the Loans will be repaid in three or more instalments over a five-year period in accordance with the following schedule: One-third of the outstanding principal amount not later than December 31, 2001; One-half of the outstanding principal amount not later than December 31, 2002; and 100% of the outstanding principal amount not later than December 31, 2003. Principal repayments made prior to December 31 in any year will be applied to reduce the outstanding principal amount for these calculations.
Security:	CME will be granted a perfected interest on any land, building or other material asset acquired or produced by the Studio 1+1 group of companies with the loan proceeds. IMS will take all steps necessary to ensure that CME has the highest priority security interest under the laws of Ukraine.
Other Terms:	Other terms customary to loans of this type, including customary representations and warranties, covenants, conditions, events of default and acceleration provisions. Events of default shall include but not be limited to any breach of the Agreement by Mr. Fuchsmann or Mr. Rodniansky, the failure to consummate the share purchases described in Section I of the Agreement and the failure to complete the changes to the Management Documents prescribed in Section IV.A. of the Agreement by March 31, 1999. Cross-default with respect to Studio 1+1 group commitments and obligations to CME and its affiliates.

Annex 3

Principal Terms and Conditions for Rescheduling of the Existing Loans from CME to IMS

This Annex 3 is attached to and forms a part of the Agreement.

The parties agree that the Existing Loans will be rescheduled as follows:

$1 Million Loan:
Term:	$1.0 Million Loan will be repayable not later than December 31, 2001.
Interest:	The $1.0 Million Loan will bear interest from November 17, 1998 at a rate of 9 3/8% per annum. The interest rate shall increase by 0.25% every six months beginning six months from November 17, 1998. Any accrued and unpaid interest on the initial $1.0 Million Loan will be payable upon signing of the Agreement. Thereafter, interest will be payable quarterly in arrears.
$5 Million Loan:
Term:	$2.0 million principal amount of the $5.0 Million Loan will be repayable not later than December 31, 2001. $3.0 million principal amount of the $5.0 Million Loan will be repayable not later than December 31, 2002.
Interest:	Interest will accrue on the outstanding principal amount of $5.0 Million Loan from March 15, 1999 at a rate of 9 3/8% per annum and will be payable quarterly in arrears. The interest rate shall increase by 0.25% every six months beginning six months from March 15, 1999.
Other Terms:	Other terms customary to loans of this type, including customary representations and warranties, covenants, conditions, events of default and acceleration provisions. Events of default shall include but not be limited to any breach of the Agreement by Mr. Fuchsmann or Mr. Rodniansky, the failure to consummate the share purchases described in Section I of the Agreement and the failure to complete the changes to the Management Documents prescribed in Section IV.A. of the Agreement by March 31, 1999. Cross-default with respect to Studio 1+1 group commitments and obligations to CME and its affiliates.

Amendment to the Key Agreement Among Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd., Innova Film GmbH, International Media Services Ltd., Ukraine Advertising Holding B.V., CME Ukraine Holding GmbH and CME Ukraine B.V. entered into as of March 31, 1999

This Amendment (the "Agreement") to the Key Agreement (as defined below) is entered into among Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd., Innova Film GmbH ("Innova"), International Media Services Ltd ("IMS"), Ukraine Advertising Holding B.V. ("UAH"), CME Ukraine Holding GmbH and CME Ukraine B.V. ("CME") (collectively, the "Parties").

WHEREAS, the Parties have entered into an agreement (the "Key Agreement"), as of December 23, 1998, governing the general terms and conditions of transfers of interests in IMS, Innova and UAH, certain corporate governance matters, certain loans and certain other matters;

WHEREAS, pursuant to the terms and conditions of Section IV.A. of the Key Agreement, the articles of association, bye-laws, shareholder agreements or similar documents setting forth the governing rules for each of Innova, IMS, UAH and any of their subsidiaries (the "Management Documents") and the Investment, Acquisition and Cooperation Agreement, dated as of September 30, 1996 (the "Cooperation Agreement") were to be amended not later than March 31, 1999 to the satisfaction of CME;

AND WHEREAS, the Parties are desirous of extending and mutually agree to extend, the date by which the Management Documents and Cooperation Agreement can be amended.

NOW, THEREFORE, the Parties agree as follows:

1 Section IV.A. of the Key Agreement is hereby amended to delete the reference therein to "March 31, 1999" and to substitute therefore a reference to "April 30, 1999".

2 This Agreement may be executed in one or more counterparts, all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the date first written above.

	CME Ukraine B.V.
/s/ Boris Fuchsmann	/s/ Fred Klinkhammer
Boris Fuchsmann	Fred Klinkhammer
	Studio 1+1 Ltd
/s/ Alexander Rodniansky	/s/ Alexander Rodniansky
Alexander Rodniansky	Alexander Rodniansky
	General Director
	/s/ Basil Danchuk
Innova Film GmbH	Basil Danchuk
/s/ Boris Fuchsmann	Finance Director
Boris Fuchsmann
Managing Director	International Media Services Ltd
/s/ Basil Danchuk	/s/ Frederic Thomas Klinkhammer
Basil Danchuk	Frederic Thomas Klinkhammer
Managing Director	Co-Deputy General Director
	/s/ John Alan Schwallie
Ukraine Advertising Holding B.V.	John Alan Schwallie
/s/ Fred Klinkhammer	Finance Director
Fred Klinkhammer
/s/ Boris Fuchsmann	CME Ukraine Holding GmbH
Boris Fuchsmann	/s/ Fred Klinkhammer
Managing Director	Fred Klinkhammer

EX-99.1 CHARTER

Central European Media Enterprises Limited

Clarendon House

Church Street Hamilton

Bermuda

LETTER TO COMMISSION PURSUANT TO TEMPORARY NOTE 3T

March 27, 2002

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549-0408

Ladies and Gentlemen:

Pursuant to Temporary Note 3T to Article 3 of Regulation S-X, Central European Media Enterprises Limited has obtained a letter of representation from Arthur Andersen ("Andersen") stating that the December 31, 2001 audit was subject to their quality control system for the U.S. accounting and auditing practice to provide reasonable assurance that the engagement was conducted in compliance with professional standards, that there was appropriate continuity of Andersen personnel working on the audit, availability of the US headquarters consultation and availability of personnel at foreign affiliates of Andersen to conduct the relevant portions of the audit.

Very truly yours,

Central European Media Enterprises Limited

/s/ Mark J. L. Wyllie

Mark J. L. Wyllie.

Vice President - Finance (Principal Financial Officer and Principal Accounting Officer)