Contents

II. Executive Summary

III. Analysis of Segment Results

IV. Analysis of the Results of Consolidated Operations

VI. Critical Accounting Policies and Estimates

I. Forward-looking Statements

This report contains forward-looking statements, including those relating to our capital needs, business strategy, expectations and intentions. Statements that use the terms "believe", "anticipate", "expect", "plan", "estimate", "intend" and similar expressions of a future or forward-looking nature identify forward-looking statements for purposes of the U.S. federal securities laws or otherwise. For these statements and all other forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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

Important factors that contribute to such risks include, but are not limited to, those factors set forth under "Risk Factors" as well as the following: the effect of the credit crisis and economic downturn in our markets as well as in the United States and Western Europe; decreases in television advertising spending and the rate of development of the advertising markets in the countries in which we operate; the impact of any additional investments we make in our Bulgaria, Croatia and Ukraine operations; our effectiveness in implementing our strategic plan for our Ukraine operations or our Bulgaria operations; the successful completion of our transaction with TWMH; our ability to make future investments in television broadcast operations; our ability to develop and implement strategies regarding sales and multi-channel distribution; changes in the political and regulatory environments where we operate and application of relevant laws and regulations; the timely renewal of broadcasting licenses and our ability to obtain additional frequencies and licenses; and our ability to acquire necessary programming and attract audiences. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this report. We undertake no obligation to publically update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

The following discussion should be read in conjunction with our interim financial statements and notes included elsewhere in this report.

II. Executive Summary

Continuing Operations

The following table provides a summary of our consolidated results for the three
months ended March 31, 2009 and 2008:

                                                           For the Three Months Ended March 31,
                                                                       (US$ 000's)
                                                              2009                2008       Movement
Net revenues                                         $     141,221       $     223,023          (36.7 )%
Operating (loss) / income                                  (84,482 )            45,473             Nm (1)
Net (loss) / income                                  $     (46,940 )     $      14,922             Nm (1)
Net cash (used in) / generated by continuing
operating activities                                 $      22,548       $      84,618         ( 73.4 )%

(1) Number is not meaningful.

The reduction in net revenues of US$ 81.8 million reflects lower demand for advertising across most of our markets as a result of weaker economic conditions, as well as the impact of a stronger dollar on our local currency revenues in the three months ended March 31, 2009 compared to the same period in 2008. The deterioration in our operating income is principally due to the recognition of a non-cash impairment charge of US$ 81.8 million in respect of our operations in Bulgaria (see Item 1, Note 4, "Goodwill and Intangible Assets").

Operating Performance

In the following discussion we describe our operating performance in terms of EBITDA, which is equal to total EBITDA of each of our segments less corporate costs (which include non-cash stock-based compensation). In previous reports we have described our operating performance in terms of Segment EBITDA, which reflects our station operating performance but excludes corporate costs. Comparative numbers reflect this change. (EBITDA is defined in Item 1, Note 17, "Segment Data").

Despite maintaining audience share leadership in most of our established markets, the deterioration in the economic and general market conditions across the region in which we operate has resulted in much weaker financial performance in the first quarter of 2009, particularly when compared to the unusually strong results delivered in the same period in 2008. Television advertising demand has fallen sharply across all our markets, with estimated declines in our five established markets ranging from 8% to 30% in the quarter. Increasing our share of television advertising revenues in each of our established markets has only partially mitigated the impact of the declining advertising markets and revenues. In EBITDA terms, cost reduction programs have been unable to compensate for the decline in revenues. In addition, the dollar was considerably stronger against the currencies in which we operate than in the same period last year.

As a result of these market conditions, we are reporting a reduction in Net Revenues of 37% and in EBITDA of 76% in the first quarter. In constant currency terms, which excludes the impact of the appreciation of the dollar on our local revenues, we have seen a decline in revenues of 24% and a decline in EBITDA of 69%.

Losses in our developing markets of Ukraine and Bulgaria have contributed significantly to the reduction in reported EBITDA. In Ukraine, where the television advertising market fell by an estimated 55% in the quarter, we generated EBITDA losses of US$ 12.3 million compared to US$ 2.7 million in the first quarter of 2008. Our new operations in Bulgaria generated EBITDA losses of US$ 6.7 million. Excluding these losses, the reduction in our EBITDA would have been 6.2%.

Our net cash generated from continuing operations fell by 73% in the quarter.

Key Events

On March 22, 2009, we entered into a subscription agreement with TW Media Holdings LLC ("TWMH") (the "Subscription Agreement"). Pursuant to the Subscription Agreement, we have agreed to issue to TWMH 14.5 million shares of Class A Common Stock at a price of $12.00 per share and 4.5 million shares of Class B Common Stock at a price of $15.00 per share, for an aggregate offering price of $241.5 million. The completion of this issuance of these shares of Class A Common Stock and Class B Common Stock is subject to a vote of our shareholders and other customary closing conditions.

Future Trends

Advertising market conditions in the countries in which we operate deteriorated sharply in the first quarter of 2009. We anticipate GDP decline in all our markets in 2009, and consensus economic projections continue to worsen. Although it is difficult to predict the depth or duration of the recession, we currently expect the market to stabilize between the second half of 2009 and the first half of 2010.

The first quarter of the year is the main period in which we negotiate advertising contracts with our clients, but in light of the economic conditions, advertisers remain uncertain about the level of spending they are prepared to commit and the level of sales committed to contract is lower than at the same time last year. As a result forward visibility on sales remains poor. We currently expect that television advertising spending will decline in 2009 in Ukraine by 55% and in our other markets by between 10% and 30.

Since June 30, 2008, the dollar has strengthened considerably against most European currencies, including the Euro and the local currencies of our station operations. In general, an increase in the value of the dollar against the functional currencies of the markets in which we operate will reduce the dollar value of the segment sales and segment EBITDA that we report. This trend has continued in the first quarter of 2009. We cannot predict future exchange rate trends.

We have taken actions to reduce costs in order to protect profits and to conserve liquidity. These steps include staff reductions in our operations and our headquarters, pay constraints, the deferral of certain operating expenditures, the deferral or cancellation of capital expenditures and managing our broadcast schedules to reduce the rate of programming cost growth. We have also modified our development strategies for Ukraine and Bulgaria and significantly reduced our planned levels of investment expenditure. Notwithstanding these cost reductions, our goal continues to be to maintain the high audience shares and the strength of our brands that we currently enjoy in our key markets, as we believe this is essential to the long term value of our operations. We intend to maintain sufficient investment to protect these strengths. Taking all these factors into account, we expect that we will see a decline in Net Revenues and EBITDA in 2009 in local currency in all of our markets except Croatia.

When the global economic climate improves, we expect growth will resume in our markets. As a result, we expect that over the medium term we will see a return to higher levels of GDP growth, as higher well as general advertising and television advertising spending growth in our markets than in Western European or U.S. markets.

Broadcast

The large audience share that we enjoy in most of our markets is due both to the commercial strength of our brands and channels and to the constraints on bandwidth that limit the number of free-to-air broadcasters in our markets. The only markets where we currently face significant competition from other distribution platforms are Romania and Slovenia, where cable penetration exceeds 50% of television households.

As our markets mature, we anticipate more intense competition for audience share and advertising spending from other incumbent terrestrial broadcasters and from cable, satellite and digital terrestrial broadcasters as the coverage of these technologies grows. The advent of digital terrestrial broadcasting as well as the introduction of alternative distribution platforms for content (including additional direct-to-home ("DTH") services, the internet, internet protocol TV ("IPTV"), mobile television and video-on-demand services) will cause audience fragmentation and change the competitive dynamics in our operating countries in the medium term. Due to our integrated multichannel and internet business model, we do not expect that the impact on our advertising share will be significant.

We believe that our leading position in our operating countries and the strength of our existing brands place us in a solid position to manage increased competition, including by launching new niche channels to target niche audiences as these new technologies develop.

Internet

Internet broadband penetration is low in all of our markets in comparison to Western European and U.S. markets. We anticipate broadband penetration will increase significantly over the medium term and will foster the development of significant new opportunities for generating advertising and other revenues in new media. We operate a complex internet business in each of our markets and expect to continue to launch targeted services in order to support or achieve leading positions in terms of unique users. We believe that the strength of our brands, our news programming and other locally produced content, our relationships with advertisers and the opportunities for cross promotion afforded by the large audiences of our broadcast operations put us in a strong position to achieve leading positions in these new forms of media as they develop and to monetize those assets over time. We intend to continue the development of our non-broadcast activities in order to create offerings and launch services on the internet and mobile platforms that complement our broadcast schedules and generate additional revenues.

Financial Position

We believe our financial resources are sufficient to meet our current financial obligations. Although further deterioration in the advertising markets or continued strengthening of the dollar against the currencies of the markets in which our cash flow is generated could reduce our liquidity reserves, the anticipated investment by Time Warner provides adequate financial security. We do not have any imminent refinancing need as the earliest maturity date of our Senior Notes or Convertible Notes is in 2012 and our EBRD Loan, which amortizes from May 2009, and matures until 2011. We may be constrained in accessing new funding due to prevailing credit market conditions and our increasing leverage as Segment EBITDA falls. We recognize the need to remain alert to the financial consequences of rapidly changing market conditions and in order to protect and develop our business we will continue to review opportunities to raise additional liquidity. This may include restructuring our debt, issuing equity or additional local debt as market conditions allow, or seeking solutions to reduce the financing burden of our developing market operations.

CME Strategy

We enjoy very strong positions in our established markets. This is based on brand strength, audience share leadership, the depth and experience of local management and local content production. Historically, these strengths have supported price leadership, high margins, and strong cash flows. We expect these strengths will give our operations resilience in the current economic downturn and the opportunity to benefit as and when growth resumes.

We intend also to take a number of steps to enhance the performance of the business over the medium term. Our priorities in this regard include:

Optimizing the value of our resources through diversification of revenue sources:

· we intend to reorganize our operating structure into three areas - (broadcast) channel operations, content, and internet - to leverage our content strengths to develop a significant new revenue source over the medium term; and

· as this structure becomes established, we intend to continue our transformation from a television broadcaster to a broad based media company by capitalizing on our core strengths and expanding our revenue base into five main sources: advertising, subscription, content distribution, internet and management services.

Further development of our operations:

· we will continue developing our Bulgaria and Ukraine operations in a controlled manner to secure consistent performance and a leading position in those markets; and.

· we will assess opportunities arising from current economic conditions to launch, acquire or operate additional channels and internet operations in our region in order to expand our offerings, target niche audiences and increase our advertising inventory when financially prudent.

In the near term, while current difficult economic conditions continue, we will maintain a strong focus on cost control to protect both profitability and liquidity, while ensuring that this does not lead to the erosion of our brands and competitive strength.

III. Analysis of Results

OVERVIEW

We manage our business on a geographic basis and review the performance of each segment using data that reflects 100% of operating and license company results. We also consider how much of our total revenues and earnings are derived from our broadcast and non-broadcast operations. Our segments are Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic, Slovenia and Ukraine.

We evaluate the performance of our segments based on Net Revenues and EBITDA.

Our key performance measure of the efficiency of our segments is EBITDA margin. We define EBITDA margin as the ratio of EBITDA to Net Revenues.

EBITDA is determined as net income/loss, which includes program rights amortization costs, before interest, taxes, depreciation and amortization of intangible assets. Items that are not allocated to our segments for purposes of evaluating their performance, and therefore are not included in EBITDA, include:

· foreign currency exchange gains and losses;

· change in fair value of derivatives; and

· certain unusual or infrequent items (e.g. impairments of assets or investments).

EBITDA may not be comparable to similar measures reported by other companies. Non-GAAP measures should be evaluated in conjunction with, and are not a substitute for, US GAAP financial measures.

We believe EBITDA is useful to investors because it provides a more meaningful representation of our performance as it excludes certain items that either do not impact our cash flows or the operating results of our stations. EBITDA is also used as a component in determining management bonuses.

A summary of our total Net Revenues, EBITDA and EBITDA margin showing the relative contribution of each segment, is as follows:

                                 SEGMENT FINANCIAL INFORMATION
                       For the Three Months Ended March 31, (US$ 000's)

                                                2009           (1)           2008           (1)
Net Revenues
Bulgaria (TV2, RING TV) (2)                $     596             - %    $       -             - %
Croatia (NOVA TV)                             10,203             7 %       11,534             5 %
Czech Republic (TV NOVA, NOVA CINEMA and
NOVA SPORT)                                   56,127            40 %       85,558            38 %
Romania (3)                                   35,689            25 %       57,996            26 %
Slovak Republic (TV MARKIZA)                  20,571            15 %       26,234            12 %
Slovenia (POP TV, KANAL A)                    13,134             9 %       17,951             8 %
Ukraine (STUDIO 1+1, KINO) (4)                 4,901             4 %       23,750            11 %
Total Net Revenues                         $ 141,221           100 %    $ 223,023           100 %
Represented by:
Broadcast operations                         139,433            99 %    $ 221,050            99 %
Non-broadcast operations                       1,788             1 %        1,973             1 %
Total Net Revenues                         $ 141,221           100 %    $ 223,023           100 %

EBITDA
Bulgaria (TV2, RING TV) (2)                $  (6,730 )         (44 )%   $       -             - %
Croatia (NOVA TV)                                (43 )           - %       (2,730 )          (4 )%
Czech Republic (TV NOVA, NOVA CINEMA and
NOVA SPORT)                                   24,893           161 %       43,845            66 %
Romania (3)                                    7,147            46 %       23,376            36 %
Slovak Republic (TV MARKIZA)                   3,728            24 %        9,137            14 %
Slovenia (POP TV and KANAL A)                  3,010            20 %        4,340             7 %
Ukraine (STUDIO 1+1, KINO) (4)               (12,280 )         (79 )%      (2,694 )          (4 )%
                                           $  19,725                    $  75,274
Corporate                                     (4,259 )         (28 )%      (9,806 )         (15 )%
Total EBITDA                               $  15,466           100 %    $  65,468           100 %
Represented by:
Broadcast operations                       $  21,611           139 %    $  76,752           117 %
Non-broadcast operations                      (1,886 )         (11 )%      (1,478 )          (2 )%
Corporate                                     (4,259 )         (28 )%      (9,806 )         (15 )%
Total EBITDA                               $  15,466           100 %    $  65,468           100 %

EBITDA Margin (5)                                 11 %                         29 %

(1) Percentage of Net Revenues and EBITDA.

(2) We acquired our Bulgaria operations on August 1, 2008.

(3) Romania channels are PRO TV, PRO CINEMA, ACASA, PRO TV INTERNATIONAL, SPORT.RO and MTV Romania.

(4) Ukraine channels are STUDIO 1+1 and KINO. From January 1, 2009 the operations of our KINO channel were combined with those of our STUDIO 1+1 channel and are no longer reported as a separate segment.

(5) We define EBITDA margin as the ratio of EBITDA to Net Revenues.

ANALYSIS BY GEOGRAPHIC SEGMENT

We, like other television operators, experience seasonality, with advertising sales tending to be lower during the first and third quarters of each calendar year, particularly during the summer holiday period (typically July and August) and higher during the second and fourth quarters of each calendar year, particularly toward the end of the year.

Spot and Non-Spot Revenues. For the purposes of our management's discussion and analysis of financial condition and results of operations, total television and radio advertising revenue net of rebates is referred to as "spot revenues". "Non-spot revenues" refers to all other revenues, including those from sponsorship, game shows, program sales, short message service ("SMS") messaging, cable subscriptions and barter transactions. The total of spot revenues and non-spot revenues is equal to Net Revenues.

Our goal is to increase revenues from advertising in local currency year-on-year in every market through disciplined management of our advertising inventory. In any given period, revenue increases can be attributable to combinations of price increases, higher inventory sales, seasonal or time-of-day incentives, target-audience delivery of specific campaigns, introductory pricing for new clients or audience movements based on our competitors' program schedules.

Audience Ratings and Share. When describing our performance we refer to "audience share", which represents the share attracted by a channel as a proportion of the total audience watching television, and "ratings", which represents the number of people watching a channel (expressed as a proportion of the total population measured). Audience share and ratings information is measured in each market by international measurement agencies, using peoplemeters, which quantify audiences for different demographics and sub geographies of the population measured throughout the day. Our channels schedule programming intended to attract audiences within specific "target" demographics that we believe will be attractive to advertisers. For each of our segments we show all day and prime time audience share and program ratings information for our channels and their major competitors, based on our channels' target demographics.

Spot Sales. Our main unit of sale is the commercial gross rating point ("GRP"). This is a measure of the number of people watching when the advertisement is aired. Generally we will contract with a client to provide an agreed number of GRPs for an agreed price ("cost per point" or "CPP"). Much less frequently, and usually only for small niche channels, we may sell on a fixed spot basis where an advertisement is placed at an agreed time for a negotiated price that is independent of the number of viewers. The price per GRP package varies depending on the season and time of day the advertisement is aired, the volume of GRPs purchased, requirements for special positioning of the advertisement, the demographic group that the advertisement is targeting (in a multi-channel environment) and other factors. Our larger advertising customers generally enter into annual contracts which usually run from April to March and set the pricing for a committed volume of GRPs.

Generally, demand for broadcast advertising is highest in the fourth quarter of the year, followed by the second quarter; demand for broadcast advertising tends to be lowest in the third quarter of the year.

The following analysis contains references to like-for-like ("% Lfl") or constant currency percentage movements. These references reflect the impact of applying the current period average exchange rates to the prior period revenues and costs. Given the significant movement of the currencies in the markets in which we operate against the dollar, we believe that it is more useful to provide percentage movements based on like-for-like ("% Lfl") or constant currency percentage movements as well as actual ("% Act") percentage movements (which includes the effect of foreign exchange).

(A) BULGARIA

We acquired our Bulgaria operations on August 1, 2008. We hold an indirect 80.0% voting and economic interest in each of TV2, a start-up national terrestrial channel, and RING TV, a cable sports channel. TV2 was launched in November 2007.

Since acquiring our Bulgaria operations, we have continued to focus on establishing the necessary infrastructure and resources for the development of the operations, drawing on experienced management support from Romania and other markets while we build the new local management team. We continue to enhance our management team and have commenced in-house productions to be aired later in the year. We intend to relaunch TV2 and RING TV in the second half of 2009.

Market Background: We estimate that the net television advertising market in Bulgaria was approximately US$ 175 to US$ 185 million in 2008. We estimate that the local currency television advertising market declined by 30% in the first quarter. Economic projections for Bulgaria in 2009 are poor, resulting in uncertainty among advertisers. As a result we are closing sales contracts for 2009 more slowly than we anticipated and cannot accurately predict future market development. However, we currently expect the local currency television advertising market to decline by between 15% and 20% in 2009. If market conditions continue to worsen, a larger decline in the total advertising market could occur.

Audience Share and Ratings Performance

. . .