<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                  FORM 10-Q/A
                                AMENDMENT NO. 1

                                   (MARK ONE)

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

         FOR THE PERIOD ENDED MARCH 31, 1999

                                       OR

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

         FOR THE TRANSITION PERIOD FROM               TO

                          COMMISION FILE NUMBER 1-5706

                            ------------------------

                      METROMEDIA INTERNATIONAL GROUP, INC.

            (Exact name of registrant, as specified in its charter)

                  DELAWARE                             58-0971455
      (State or other jurisdiction of               (I.R.S. Employer
       incorporation or organization)              Identification No.)

             ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NJ 07073-2137
             (Address and zip code of principal executive offices)

                                 (201) 531-8000
              (Registrant's telephone number, including area code)

                         ------------------------------

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 SUCH 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 / /

THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF AUGUST 27, 1999 WAS
69,175,254.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
                                    INDEX TO
                         QUARTERLY REPORT ON FORM 10-Q

                         PART I--FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
Item 1.  Financial Statements (unaudited)

Consolidated Condensed Statements of Operations............................................................           2

Consolidated Condensed Balance Sheets......................................................................           3

Consolidated Condensed Statements of Cash Flows............................................................           4

Consolidated Condensed Statement of Stockholders' Equity...................................................           5

Consolidated Condensed Statements of Comprehensive Loss....................................................           6

Notes to Consolidated Condensed Financial Statements.......................................................           7

Item 2.  Management's Discussion and Analysis of Financial Condition
        and Results of Operations..........................................................................          27

Item 3.  Quantitative and Qualitative Disclosures about Market Risk........................................          69

                                               PART II--OTHER INFORMATION

Item 1.  Legal Proceedings.................................................................................          71

Item 3.  Defaults Upon Senior Securities...................................................................          74

Item 6.  Exhibits and Reports on Form 8-K..................................................................          74

Signature..................................................................................................          75
</TABLE>

                                       1
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                          --------------------
                                                                          MARCH 31,  MARCH 31,
                                                                            1999       1998
                                                                          ---------  ---------
<S>                                                                       <C>        <C>
Revenues:
  Communications Group..................................................  $   7,608  $   8,962
  Lawn and garden equipment.............................................     60,034     51,257
                                                                          ---------  ---------
                                                                             67,642     60,219
Cost and expenses:
  Cost of sales and operating expenses--Communications Group............        655      1,568
  Cost of sales--lawn and garden equipment..............................     39,941     35,749
  Selling, general and administrative...................................     32,425     34,730
  Depreciation and amortization.........................................      4,367      5,315
                                                                          ---------  ---------
Operating loss..........................................................     (9,746)   (17,143)
Other income (expense):
  Interest expense......................................................     (3,406)    (5,003)
  Interest income.......................................................      1,700      3,034
  Equity in losses of unconsolidated investees..........................     (1,685)    (5,500)
  Foreign currency gain (loss)..........................................       (508)        97
                                                                          ---------  ---------
Loss before income tax expense and minority interest....................    (13,645)   (24,515)
Income tax expense......................................................        (94)      (487)
Minority interest.......................................................      2,469      2,039
                                                                          ---------  ---------
Net loss................................................................    (11,270)   (22,963)
Cumulative convertible preferred stock dividend requirement.............     (3,752)    (3,752)
                                                                          ---------  ---------
Net loss attributable to common stockholders............................  $ (15,022) $ (26,715)
                                                                          ---------  ---------
                                                                          ---------  ---------

Weighted average number of common shares--Basic.........................     69,123     68,572
                                                                          ---------  ---------
                                                                          ---------  ---------

Loss per share attributable to common stockholders--Basic:
  Net loss..............................................................  $   (0.22) $   (0.39)
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       2
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

                     CONSOLIDATED CONDENSED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                         MARCH 31,        DECEMBER 31,
                                                                           1999               1998
                                                                        -----------       -------------
                                                                        (unaudited)
<S>                                                                     <C>               <C>
ASSETS:
Current assets:
  Cash and cash equivalents...........................................  $   123,845        $   137,625
  Accounts receivable:
    Snapper, net......................................................       36,846             27,055
    Other, net........................................................        9,145             18,826
  Inventories.........................................................       61,186             62,777
  Other assets........................................................        6,129              5,441
                                                                        -----------       -------------
      Total current assets............................................      237,151            251,724
Investments in and advances to joint ventures:
  Eastern Europe and the Republics of the Former Soviet Union.........       84,200             87,163
  China...............................................................       72,855             71,559
Property, plant and equipment, net of accumulated depreciation........       35,523             36,067
Intangible assets, less accumulated amortization......................      159,304            159,530
Other assets..........................................................        4,007              3,598
                                                                        -----------       -------------
      Total assets....................................................  $   593,040        $   609,641
                                                                        -----------       -------------
                                                                        -----------       -------------

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Accounts payable....................................................  $    24,704        $    28,779
  Accrued expenses....................................................       66,333             63,329
  Current portion of long-term debt...................................        1,303              1,723
                                                                        -----------       -------------
      Total current liabilities.......................................       92,340             93,831
Long-term debt........................................................       53,259             50,111
Other long-term liabilities...........................................        4,769              5,410
                                                                        -----------       -------------
      Total liabilities...............................................      150,368            149,352
                                                                        -----------       -------------
Minority interest.....................................................       32,560             34,749

Commitments and contingencies
Stockholders' equity:
  7 1/4% Cumulative Convertible Preferred Stock.......................      207,000            207,000
  Common Stock, $1.00 par value, authorized 400,000,000 shares, issued
    and outstanding 69,123,841 and 69,118,841 shares at March 31, 1999
    and December 31, 1998, respectively...............................       69,124             69,119
  Paid-in surplus.....................................................    1,012,816          1,012,794
  Accumulated deficit.................................................     (872,315)          (857,293)
  Accumulated other comprehensive loss................................       (6,513)            (6,080)
                                                                        -----------       -------------
      Total stockholders' equity......................................      410,112            425,540
                                                                        -----------       -------------
      Total liabilities and stockholders' equity......................  $   593,040        $   609,641
                                                                        -----------       -------------
                                                                        -----------       -------------
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       3
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                          --------------------
                                                                          MARCH 31,  MARCH 31,
                                                                            1999       1998
                                                                          ---------  ---------
<S>                                                                       <C>        <C>
Operating activities:
  Net loss..............................................................  $ (11,270) $ (22,963)
Adjustments to reconcile net loss to net cash used in operating
  activities:
  Equity in losses of unconsolidated investees..........................      1,685      5,500
  Depreciation and amortization.........................................      4,367      5,315
  Minority interest.....................................................     (2,469)    (2,039)
  Other.................................................................         --        553
Changes in operating assets and liabilities, net of acquisitions:
  (Increase) decrease in accounts receivable............................         33     (8,091)
  Decrease in inventories...............................................      1,600      6,272
  Increase in other assets..............................................     (1,626)    (1,217)
  Decrease in accounts payable and accrued expenses.....................     (1,177)    (6,571)
  Other operating activities, net.......................................        435         19
                                                                          ---------  ---------
    Cash used in operating activities...................................     (8,422)   (23,222)
                                                                          ---------  ---------
Investing activities:
  Investments in and advances to joint ventures.........................     (5,065)   (13,091)
  Distributions from joint ventures.....................................      2,719      1,400
  Purchase of short-term investments....................................         --       (953)
  Cash paid for acquisitions and additional equity in subsidiaries......       (455)    (3,926)
  Additions to property, plant and equipment............................     (1,560)    (2,794)
  Other investing activities, net.......................................         --        188
                                                                          ---------  ---------
      Cash used in investing activities.................................     (4,361)   (19,176)
                                                                          ---------  ---------
Financing activities:
  Proceeds from issuance of long-term debt..............................      8,149         --
  Payments on notes and subordinated debt...............................     (5,421)    (1,998)
  Proceeds from issuance of common stock related to incentive plans.....         27      4,565
  Preferred stock dividends paid........................................     (3,752)    (3,752)
                                                                          ---------  ---------
      Cash used in financing activities.................................       (997)    (1,185)
                                                                          ---------  ---------
  Net decrease in cash and cash equivalents.............................    (13,780)   (43,583)
  Cash and cash equivalents at beginning of period......................    137,625    129,661
                                                                          ---------  ---------
  Cash and cash equivalents at end of period............................  $ 123,845  $  86,078
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       4
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

            CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                    7 1/4% CUMULATIVE
                                       CONVERTIBLE
                                     PREFERRED STOCK            COMMON STOCK                                   ACCUMULATED
                                  ----------------------  ------------------------                                OTHER
                                   NUMBER OF               NUMBER OF                 PAID-IN   ACCUMULATED    COMPREHENSIVE
                                    SHARES      AMOUNT      SHARES       AMOUNT      SURPLUS     DEFICIT          LOSS
                                  -----------  ---------  -----------  -----------  ---------  ------------  ---------------
<S>                               <C>          <C>        <C>          <C>          <C>        <C>           <C>
Balances, December 31, 1998.....   4,140,000   $ 207,000  69,118,841    $  69,119   $1,012,794  $ (857,293)     $  (6,080)
Issuance of stock and stock
  options related to incentive
  plans.........................          --          --       5,000            5          22           --             --
Dividends on 7 1/4% cumulative
  convertible preferred stock...          --          --          --           --          --       (3,752)            --
Other comprehensive loss........          --          --          --           --          --           --           (433)
Net loss........................          --          --          --           --          --      (11,270)            --
                                  -----------  ---------  -----------  -----------  ---------  ------------       -------
Balances, March 31, 1999........   4,140,000   $ 207,000  69,123,841    $  69,124   $1,012,816  $ (872,315)     $  (6,513)
                                  -----------  ---------  -----------  -----------  ---------  ------------       -------
                                  -----------  ---------  -----------  -----------  ---------  ------------       -------

<CAPTION>

                                    TOTAL
                                  ---------
<S>                               <C>
Balances, December 31, 1998.....  $ 425,540
Issuance of stock and stock
  options related to incentive
  plans.........................         27
Dividends on 7 1/4% cumulative
  convertible preferred stock...     (3,752)
Other comprehensive loss........       (433)
Net loss........................    (11,270)
                                  ---------
Balances, March 31, 1999........  $ 410,112
                                  ---------
                                  ---------
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       5
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

            CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
                                 (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                              THREE MONTHS ENDED
                                                                                            ----------------------
                                                                                            MARCH 31,   MARCH 31,
                                                                                               1999        1998
                                                                                            ----------  ----------
<S>                                                                                         <C>         <C>
Net loss..................................................................................  $  (11,270) $  (22,963)
Other comprehensive loss, net of tax:
  Foreign currency translation adjustment.................................................        (433)       (195)
                                                                                            ----------  ----------
Other comprehensive loss..................................................................        (433)       (195)
                                                                                            ----------  ----------
Comprehensive loss........................................................................  $  (11,703) $  (23,158)
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       6
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND LIQUIDITY

BASIS OF PRESENTATION

The accompanying interim consolidated condensed financial statements include the
accounts of Metromedia International Group, Inc. ("MMG" or the "Company") and
its wholly-owned subsidiaries, Metromedia International Telecommunications, Inc.
and Snapper Inc. Metromedia International Telecommunications and its majority
owned subsidiary, Metromedia China Corporation, are together known as the
"Communications Group". All significant intercompany transactions and accounts
have been eliminated.

Investments in other companies, including those of the Communications Group's
joint ventures that are not majority owned, or in which the Company does not
have control but exercises significant influence, are accounted for using the
equity method. The Company reflects its net investments in joint ventures under
the caption "Investments in and advances to joint ventures." The Company reports
the results of the operations of the Communications Group's operations in
Eastern Europe and the republics of the former Soviet Union, and the
distributable cash flow generated by the telephony systems of China Unicom, on a
three month lag.

The accompanying interim consolidated condensed financial statements have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations although the Company believes that the disclosures made are adequate
to make the information presented not misleading. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
financial position of the Company as of March 31, 1999, and the results of its
operations and its cash flows for the three-month periods ended March 31, 1999
and 1998, have been included. The results of operations for the interim period
are not necessarily indicative of the results which may be realized for the full
year.

LIQUIDITY

MMG is a holding company, and accordingly, does not generate cash flows from
operations. The Communications Group is dependent on MMG for significant capital
infusions to fund its operations, its commitments to make capital contributions
and loans to its joint ventures and subsidiaries and any acquisitions. Such
funding requirements are based on the anticipated funding needs of its joint
ventures and subsidiaries and certain acquisitions committed to by the Company.
Future capital requirements of the Communications Group, including future
acquisitions, will depend on available funding from the Company or alternative
sources of financing and on the ability of the Communications Group's joint
ventures and subsidiaries to generate positive cash flows. In addition, Snapper
is restricted under covenants contained in its credit agreement from making
dividend payments or advances to MMG.

In the near-term, the Company intends to satisfy its working capital and capital
commitments with available cash on hand. However, the Communications Group's
businesses in the aggregate are capital intensive and require the investment of
significant amounts of capital in order to construct and develop operational
systems and market its services. As a result, the Company will require
additional financing in order to satisfy its on-going working capital,
acquisition and expansion requirements and to achieve its long-term business
strategies. Such additional capital may be provided through the public or
private

                                       7
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

1. BASIS OF PRESENTATION AND LIQUIDITY (CONTINUED)
sale of equity or debt securities of the Company or by separate equity or debt
financings by the Communications Group or companies of the Communications Group.
No assurance can be given that additional financing will be available to the
Company on acceptable terms, if at all. If adequate additional funds are not
available, the Company may be required to curtail significantly its long term
business objectives and the Company's results from operations may be materially
and adversely affected.

Management believes that its long term liquidity needs will be satisfied through
a combination of the Company's successful implementation and execution of its
growth strategy to become a global communications and media company and through
the Communications Group's joint ventures and subsidiaries achieving positive
operating results and cash flows through revenue and subscriber growth and
control of operating expenses.

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION

The Communications Group records its investments in other companies and joint
ventures which are less than majority-owned, or which the Company does not
control but in which it exercises significant influence, at cost, net of its
equity in earnings or losses. Advances to the joint ventures or subsidiaries
under the line of credit agreements between the Company or one of its
subsidiaries and the joint ventures are reflected based on amounts recoverable
under the credit agreement, plus accrued interest.

Advances are made to joint ventures and subsidiaries in the form of cash, for
working capital purposes and for payment of expenses or capital expenditures, or
in the form of equipment purchased on behalf of the joint ventures. Interest
rates charged to the joint ventures and subsidiaries range from prime rate to
prime rate plus 6%. The credit agreements generally provide for the payment of
principal and interest from 90% of the joint ventures' and subsidiaries
available cash flow, as defined, prior to any substantial distributions of
dividends to the joint venture partners. The Communications Group has entered
into charter fund and credit agreements with its joint ventures and subsidiaries
to provide up to $214.9 million in funding of which $52.2 million in funding
obligations remain at March 31, 1999. The Communications Group's funding
commitments are contingent on its approval of the joint ventures' and
subsidiaries business plans.

In 1998, the Communications Group's paging business continued to incur operating
losses. Accordingly, the Communications Group developed a revised operating plan
to stabilize its paging operations. Under the revised plan, the Communications
Group is managing its paging business to a level that should not require
significant additional funding for its operations. As a result of the revised
plan, in 1998 the Company took a non-cash, nonrecurring charge on its paging
assets of $49.9 million, which included a $35.9 million write off of goodwill
and other intangibles. The non-cash, nonrecurring charge adjusted the carrying
value of goodwill and other intangibles, fixed assets and investments in and
advances to joint ventures and wrote down inventory. The write down relates to
both consolidated joint ventures and joint ventures recorded under the equity
method. The Company has adjusted its investments in certain paging operations
which are recorded under the equity method to zero, and unless it provides
future funding will no longer record its proportionate share of any future net
losses of these investees.

At March 31, 1999 and December 31, 1998, the Communications Group's
unconsolidated investments in the joint ventures and subsidiaries in Eastern
Europe and the republics of the former Soviet Union,

                                       8
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
at cost, net of adjustments for its equity in earnings or losses, write downs,
and distributions were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                         YEAR
                                                                                                      OPERATIONS
NAME                                                             1999       1998     OWNERSHIP %     COMMENCED (8)
-------------------------------------------------------------  ---------  ---------  ------------  -----------------
<S>                                                            <C>        <C>        <C>           <C>
CELLULAR TELECOMMUNICATIONS
Baltcom GSM, Latvia (1)......................................  $   9,699  $   9,817      22%                1997
Magticom, Georgia (1)........................................     12,398     13,048      35%                1997
                                                               ---------  ---------
                                                                  22,097     22,865
                                                               ---------  ---------
FIXED TELEPHONY
Instaphone, Kazakhstan.......................................        986      1,168      50%                1998
                                                               ---------  ---------
INTERNATIONAL AND LONG DISTANCE TELEPHONY
Telecom Georgia, Georgia.....................................      5,534      5,922      30%                1994
                                                               ---------  ---------
CABLE TELEVISION
Kosmos TV, Moscow, Russia....................................      1,262      1,385      50%                1992
Baltcom TV, Riga, Latvia.....................................      4,515      4,003      50%                1992
Ayety TV, Tbilisi, Georgia...................................      2,803      3,045      49%                1993
Kamalak TV, Tashkent, Uzbekistan.............................      2,961      2,976      50%                1993
Sun TV, Chisinau, Moldova....................................      4,290      4,731      50%                1994
Cosmos TV, Minsk, Belarus....................................      3,084      2,934      50%                1996
Alma TV, Almaty, Kazakhstan..................................      6,015      5,994      50%                1995
Teleplus, St. Petersburg, Russia.............................      1,813      1,941      45%                1998
                                                               ---------  ---------
                                                                  26,743     27,009
                                                               ---------  ---------
PAGING
Baltcom Plus, Latvia (2).....................................         --         --      50%                1995
Paging One, Georgia (2)......................................         --         --      45%                1994
Raduga Poisk, Nizhny Novgorod, Russia (2)....................         --         --      45%                1994
PT Page, St. Petersburg, Russia (2)..........................         --         --      40%                1995
Paging Ajara, Batumi, Georgia (2)............................         --         --      35%                1997
Kazpage, Kazakhstan (2) (3)..................................         --         --     26-41%              1997
Alma Page, Almaty, Kazakhstan (2)............................         --         --      50%                1995
Kamalak Paging, Tashkent, Uzbekistan.........................      2,228      2,260      50%                1993
Mobile Telecom, Russia (4)...................................      7,272      7,405      50%                1998
                                                               ---------  ---------
                                                                   9,500      9,665
                                                               ---------  ---------
</TABLE>

                                       9
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         YEAR
                                                                                                      OPERATIONS
NAME                                                             1999       1998     OWNERSHIP %     COMMENCED (8)
-------------------------------------------------------------  ---------  ---------  ------------  -----------------
<S>                                                            <C>        <C>        <C>           <C>
RADIO BROADCASTING
Radio Katusha, St. Petersburg, Russia........................  $      --  $      --      75%                1995
Radio Nika, Socci, Russia....................................        251        244      51%                1995
AS Trio LSL, Estonia.........................................      1,862      1,903      49%                1997
                                                               ---------  ---------
                                                                   2,113      2,147
                                                               ---------  ---------
OTHER
Trunked mobile radio ventures (5)............................         --         --
                                                               ---------  ---------
PRE-OPERATIONAL (6)
ATK, Archangelsk, Russia (7).................................         --      1,746      81%                  --
Tyumenruskom, Russia.........................................      3,711      2,228      46%                  --
Caspian American Telecom, Azerbaijian (9)....................      7,553      5,488      38%                  --
Telephony related ventures and equipment.....................      2,510      2,612
Other........................................................      3,453      6,313
                                                               ---------  ---------
                                                                  17,227     18,387
                                                               ---------  ---------
TOTAL........................................................  $  84,200  $  87,163
                                                               ---------  ---------
                                                               ---------  ---------
</TABLE>

------------------------------

(1) In August 1998, the Communications Group increased its ownership at Baltcom
    GSM from 21% to 22% and in Magticom from 34% to 35%.

(2) Investment balance reflects write down of investment.

(3) Kazpage is comprised of a service entity and 10 paging joint ventures. The
    Company's interests in the paging joint ventures range from 26% to 41% and
    its interest in the service entity is 51%.

(4) In January 1998, the Communications Group signed a definitive agreement to
    purchase 50% of Mobile Telecom. The purchase closed during June 1998 at a
    price of $7.0 million plus two future contingent payments of $2.5 million
    each, to be adjusted up or down based on performance of the business.
    Simultaneously with the purchase of Mobile Telecom, the Company purchased a
    50% interest in a paging distribution company for $500,000. Approximately
    $7.0 million of the purchase price was allocated to goodwill.

(5) In July 1998, the Communications Group sold its investment in Protocall
    Ventures Limited. The Company's interest in Spectrum, a trunked mobile radio
    venture in Kazakhstan, was written off in 1998.

(6) At March 31, 1999 and December 31, 1998, amounts disbursed for proposed
    joint ventures, pre-operational joint ventures and amounts expended for
    equipment for future wireless local loop projects are included in
    pre-operational joint ventures.

(7) Included in the Company's consolidated financial statements in the current
    period.

(8) Indicates year operations commenced, or in the case of the acquisitions of
    operational entities, the year of acquisition.

(9) Caspian American Telecommunications launched commercial service in April
    1999.

                                       10
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
Summarized combined balance sheet financial information of unconsolidated joint
ventures as of March 31, 1999 and December 31, 1998, and combined statement of
operations financial information for the three months ended March 31, 1999 and
1998 accounted for under the equity method that have commenced operations as of
the dates indicated are as follows (in thousands):

COMBINED INFORMATION OF UNCONSOLIDATED JOINT VENTURES

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         MARCH 31,   DECEMBER 31,
                                                                                            1999         1998
                                                                                         ----------  ------------
<S>                                                                                      <C>         <C>
Assets:
  Current assets.......................................................................  $   28,549   $   34,617
  Investments in systems and equipment.................................................     114,102      111,114
  Other assets.........................................................................       4,340        7,103
                                                                                         ----------  ------------
    Total assets.......................................................................  $  146,991   $  152,834
                                                                                         ----------  ------------
                                                                                         ----------  ------------
Liabilities and Joint Ventures' Deficit:
  Current liabilities..................................................................  $   32,869   $   31,934
  Amount payable under credit facility.................................................      77,828       66,574
  Other long-term liabilities..........................................................      70,161       82,314
                                                                                         ----------  ------------
                                                                                            180,858      180,822
  Joint ventures' deficit..............................................................     (33,867)     (27,988)
                                                                                         ----------  ------------
    Total liabilities and joint ventures' deficit......................................  $  146,991   $  152,834
                                                                                         ----------  ------------
                                                                                         ----------  ------------
</TABLE>

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                THREE MONTHS ENDED
                                                                                             ------------------------
                                                                                              MARCH 31,    MARCH 31,
                                                                                                1999         1998
                                                                                             -----------  -----------
<S>                                                                                          <C>          <C>
Revenues...................................................................................   $  26,388    $  23,143
Costs and Expenses:
  Cost of sales and operating expenses.....................................................       5,944        7,815
  Selling, general and administrative......................................................      13,938       13,427
  Depreciation and amortization............................................................       6,712        6,371
  Other....................................................................................          --           30
                                                                                             -----------  -----------
    Total expenses.........................................................................      26,594       27,643
                                                                                             -----------  -----------
Operating loss.............................................................................        (206)      (4,500)
Interest expense...........................................................................      (3,655)      (2,579)
Other loss.................................................................................         (11)        (898)
Foreign currency transactions..............................................................        (966)        (862)
                                                                                             -----------  -----------
Net loss...................................................................................   $  (4,838)   $  (8,839)
                                                                                             -----------  -----------
                                                                                             -----------  -----------
</TABLE>

                                       11
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
For the three months ended March 31, 1999 and 1998 the results of operations
presented above are before the elimination of intercompany interest. Financial
information for joint ventures which are not yet operational is not included in
the above summary.

The following tables represent summary financial information for all operating
entities being grouped as indicated as of and for the three months ended March
31, 1999 and 1998. For the three months ended March 31, 1999 and 1998 the
results of operations presented below are before the elimination of intercompany
interest (in thousands):
<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED MARCH 31, 1999
                                       ----------------------------------------------------------------------------------------
<S>                                    <C>                <C>            <C>              <C>          <C>        <C>
                                                                          INTERNATIONAL
                                                                            AND LONG
                                        CELLULAR TELE-        FIXED         DISTANCE         CABLE                    RADIO
                                        COMMUNICATIONS      TELEPHONY       TELEPHONY     TELEVISION    PAGING    BROADCASTING
                                       -----------------  -------------  ---------------  -----------  ---------  -------------
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES (1)
Revenues.............................      $      --        $      --       $      --      $   1,248   $     944    $   5,189
Depreciation and amortization........             --               --              --            443         291          383
Operating income (loss)..............             --               --              --            (58)     (1,153)        (464)
Interest income......................             --               --              --             --          --           16
Interest expense.....................             --               --              --            240         845          133
Net loss.............................             --               --              --           (419)     (2,175)        (531)

Assets...............................             --               --              --          8,351       3,276       12,596
Capital expenditures.................             --               --              --            320         329          267

UNCONSOLIDATED JOINT VENTURES
Revenues.............................      $   8,956        $      20       $   6,149      $   6,733   $   3,827    $     703
Depreciation and amortization........          2,916               15             526          3,012         175           68
Operating income (loss)..............           (454)            (106)          1,141         (1,102)        276           39
Interest income......................              1               --              --             65          --           --
Interest expense.....................          2,314               47               6          1,238          39           11
Net income (loss)....................         (2,031)            (291)           (998)        (1,737)        231          (12)

Assets...............................         81,411              983          23,814         33,647       5,806        1,330
Capital expenditures.................         10,281               49             732          3,243         224           24

Net investment in joint ventures.....         22,097              986           5,534         26,743       9,500        2,113
Equity in income (losses) of
  unconsolidated investees...........           (528)            (379)           (299)          (362)        162          (14)

<CAPTION>

<S>                                    <C>

                                         TOTAL
                                       ---------
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES (1)
Revenues.............................  $   7,381
Depreciation and amortization........      1,117
Operating income (loss)..............     (1,675)
Interest income......................         16
Interest expense.....................      1,218
Net loss.............................     (3,125)
Assets...............................     24,223
Capital expenditures.................        916
UNCONSOLIDATED JOINT VENTURES
Revenues.............................  $  26,388
Depreciation and amortization........      6,712
Operating income (loss)..............       (206)
Interest income......................         66
Interest expense.....................      3,655
Net income (loss)....................     (4,838)
Assets...............................    146,991
Capital expenditures.................     14,553
Net investment in joint ventures.....     66,973
Equity in income (losses) of
  unconsolidated investees...........     (1,420)
</TABLE>

                                       12
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED MARCH 31, 1998
                                        ----------------------------------------------------------------------------------------
<S>                                     <C>                <C>              <C>          <C>          <C>            <C>
                                                            INTERNATIONAL
                                                              AND LONG
                                         CELLULAR TELE-       DISTANCE         CABLE                      RADIO
                                         COMMUNICATIONS       TELEPHONY     TELEVISION     PAGING     BROADCASTING    OTHER(2)
                                        -----------------  ---------------  -----------  -----------  -------------  -----------
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES (1)
Revenues..............................      $      --         $      --      $     709    $     887     $   5,528     $   1,751
Depreciation and amortization.........             --                --            327          559           291           251
Operating income (loss)...............             --                --           (779)      (2,857)        1,203          (128)
Interest income.......................             --                --             10           10            40            14
Interest expense......................             --                --            237          300           119            34
Net income (loss).....................             --                --         (1,010)      (3,187)          332          (200)

Assets................................             --                --          8,401        7,627        18,116         9,576
Capital expenditures..................             --                --            478          315           179            --

UNCONSOLIDATED JOINT VENTURES
Revenues..............................      $   4,017         $   7,049      $   6,541    $   3,842     $     620     $   1,074
Depreciation and amortization.........          2,302               538          2,755          454            44           278
Operating income (loss)...............         (2,940)            2,016         (2,173)        (375)          (54)         (974)
Interest income.......................             --                --              1            2            --            --
Interest expense......................          1,088               167          1,079          171             5            69
Net income (loss).....................         (4,222)            1,369         (4,015)        (880)          (66)       (1,025)

Assets................................         60,663            29,164         28,858       11,841           997         7,384
Capital expenditures..................         18,568               652          2,082            5            34         1,437
Net investment in joint ventures......         18,308             6,007         22,527        8,325         1,876         4,061
Equity in income (losses) of
  unconsolidated investees............         (1,372)              411         (2,746)        (862)          (30)         (423)

<CAPTION>

<S>                                     <C>

                                          TOTAL
                                        ---------
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES (1)
Revenues..............................  $   8,875
Depreciation and amortization.........      1,428
Operating income (loss)...............     (2,561)
Interest income.......................         74
Interest expense......................        690
Net income (loss).....................     (4,065)
Assets................................     43,720
Capital expenditures..................        972
UNCONSOLIDATED JOINT VENTURES
Revenues..............................  $  23,143
Depreciation and amortization.........      6,371
Operating income (loss)...............     (4,500)
Interest income.......................          3
Interest expense......................      2,579
Net income (loss).....................     (8,839)
Assets................................    138,907
Capital expenditures..................     22,778
Net investment in joint ventures......     61,104
Equity in income (losses) of
  unconsolidated investees............     (5,022)
</TABLE>

------------------------

(1) Does not reflect the Communications Group's headquarter's revenue and
    selling, general and administrative expenses for the three months ended
    March 31, 1999 and 1998.

(2) Other includes the results of Protocall Ventures, the Communications Group's
    trunked mobile radio operations, consolidated and unconsolidated joint
    ventures and subsidiaries through the three months ended December 31, 1997.

                                       13
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA

At March 31, 1999 and December 31, 1998 the Company's investments, through
Metromedia China, in the joint ventures in China, at cost, net of adjustments
for its equity in earnings or losses, were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                    YEAR          YEAR
                                                                                                   VENTURE     OPERATIONS
NAME                                                      1999       1998        OWNERSHIP %       FORMED       COMMENCED
------------------------------------------------------  ---------  ---------  -----------------  -----------  -------------
<S>                                                     <C>        <C>        <C>                <C>          <C>
Sichuan Tai Li Feng Telecommunications Co.,
  Ltd. ("Sichuan JV").................................  $  19,215  $  19,292             92%           1996          1999

Chongqing Tai Le Feng Telecommunications Co.,
  Ltd. ("Chongqing JV")...............................     15,360     15,504             92%           1997          1999

Ningbo Ya Mei Telecommunications Co.,
  Ltd. ("Ningbo JV")..................................     29,873     29,741             70%           1996          1997

Ningbo Ya Lian Telecommunications Co.,
  Ltd. ("Ningbo JV II")...............................      8,407      7,022             70%           1998          1998
                                                        ---------  ---------

                                                        $  72,855  $  71,559
                                                        ---------  ---------
                                                        ---------  ---------
</TABLE>

The joint ventures participate in cooperation contracts with China Unicom that
entitle the joint ventures to specified percentages of the projects'
distributable cash flows. The joint ventures amortize the contributions to these
cooperation contracts over the cooperation contract periods of benefit (15 to 25
years). Because legal restrictions in China prohibit foreign participation in
the operation or ownership in the telecommunications sector, the Company's joint
ventures in China are limited to providing financing, technical advice,
consulting and other services for the construction and development of telephony
networks for China Unicom. The completed networks are operated by China Unicom.
In return, the Company receives payments from China Unicom based on the
distributable cash flow generated by the networks.

Subsequent to June 30, 1999, Ningbo JV received a letter from China Unicom
stating that the supervisory department of the Chinese government had requested
that China Unicom terminate the project with Ningbo JV. The Communications Group
has been informed by China Unicom that the letter also applies to Ningbo JV II.
The notification letter from China Unicom requested that negotiations begin
immediately regarding the amounts to be paid to the Ningbo JV, including return
of investment made and appropriate compensation and other matters related to the
winding up of the Ningbo JV's activities as a result of this notice.
Negotiations regarding the terms of the termination have begun and are
continuing. The content of the negotiations includes determining the investment
principal of the Ningbo joint ventures, appropriate compensation and other
matters related to termination of contracts. The letter further stated that due
to technical reasons which were not specified, the cash distribution plan for
the first half of 1999 had not been decided and that China Unicom also expected
to discuss this subject with the Ningbo JV. As a result, the Company cannot
currently determine the amount of compensation the Ningbo joint ventures will
receive.

While there can be no assurance that China Unicom will provide similar letters
to the Company's other two sino-sino-foreign telephony-related joint ventures
(Chongqing JV and Sichuan JV), the Company expects that these joint ventures
will also be the subject of project termination negotiations. The Company cannot
yet predict the effect on it of the Ningbo joint ventures' negotiations and the
expected

                                       14
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
winding up of the Company's other two telephone-related joint ventures, but the
Company believes such negotiations, if adversely concluded, or the failure to
make scheduled cash distributions, could have a material adverse effect on its
financial position and results of operation. Depending on the amount of
compensation it receives, the Company will record a non cash charge equal to the
difference between the sum of the carrying values of its investment and advances
made to joint ventures plus goodwill less the cash compensation it receives from
the joint ventures which China Unicom has paid. The Company's investment in and
advances to joint ventures and goodwill balance at June 30, 1999 were
approximately $71 million and $67 million respectively. The Company is currently
reviewing other investment opportunities in China and has recently announced the
establishment of a new joint venture in China to develop and operate an
e-commerce system.

(A) SICHUAN JV

On May 21, 1996, Asian American Telecommunications Corporation, an indirect
majority-owned subsidiary of the Company, entered into a Joint Venture Agreement
with China Huaneng Technology Development Corp. for the purpose of establishing
Sichuan Tai Li Feng Telecommunications Co., Ltd., known as Sichuan JV. Also on
May 21, 1996, Sichuan JV entered into a network systems cooperation contract
with China Unicom. This contract covers the funding, construction and
development of a fixed line public switched telephone network providing local
telephone service in cities within Sichuan Province and long distance telephone
service among those cities. The initial project covered by the contract includes
development of 50,000 local telephone lines in Chengdu and Chongqing cities, and
construction of a fiber optic long distance facility between these two cities.
Subsequent projects covered by the contract and the existing and future joint
ventures may expand services to one million local telephone lines in cities
throughout Sichuan Province, and construct fiber optic long distance facilities
among these cities. The contract has a cooperation term of twenty-five years.

Under the contract, China Unicom will be responsible for the construction and
operation of the Sichuan network, while Sichuan JV will provide financing and
consulting services for the project. Distributable cash flows, as defined in the
contract, are to be distributed 22% to China Unicom and 78% to Sichuan JV
throughout the term of the contract. Sichuan JV holds non-transferable title to
all assets acquired or constructed with the funds that it provides to China
Unicom, except for any assets used to provide inter-city long distance service,
title to which immediately passes to China Unicom. On the tenth anniversary of
completion of the Sichuan network's initial phase, title to assets held by
Sichuan JV will transfer to China Unicom. Sichuan JV and China Unicom consider
the cost of all assets acquired or constructed with investment funds from
Sichuan JV to be part of Sichuan JV's contribution to the contract, regardless
of whether Sichuan JV holds title to such assets.

The total amount to be invested in Sichuan JV is $29.5 million with equity
contributions from its shareholders amounting to $12.0 million. Asian American
Telecommunications has made capital contributions to Sichuan JV of $11.1 million
of its $11.4 million share and China Huaneng has contributed $600,000. The
remaining investment will be in the form of up to $17.5 million of loans from
Asian American Telecommunications, plus deferred payment credit from the
manufacturers of the equipment used in construction of the Sichuan Network. As
of March 31, 1999, Asian American Telecommunications had loans outstanding to
Sichuan JV in the amount of $9.5 million. These loans bear interest at 10% per
annum. Ownership of the Sichuan JV is 92% by Asian American Telecommunications
and 8% by China Huaneng.

                                       15
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
Asian American Telecommunications also has a consulting contract with China
Huaneng covering the latter's assistance with operations in China. Under the
contract, Asian American Telecommunications is obligated to pay China Huaneng an
annual consulting fee of RMB 15.0 million (U.S. $1.8 million at March 31, 1999
exchange rates).

As described above, the Company believes that it will receive a notice from
China Unicom that China Unicom intends to terminate the project with Sichuan JV.

(B) CHONGQING JV

In May 1997, Chongqing Municipality was made a separate region from Sichuan
Province administered directly by the Chinese government. In an amendment to the
existing network systems cooperation contract, China Unicom agreed to recognize
Chongqing Municipality as being covered by the terms of that contract, thereby
explicitly extending Sichuan JV's rights and obligations under that contract to
include the newly independent Chongqing Municipality, including rights and
obligations for any long distance services developed by China Unicom between
cities in Chongqing Municipality and those of Sichuan Province. On September 9,
1997, Asian American Telecommunications entered into a Joint Venture Agreement
with China Huaneng for the purpose of establishing Chongqing JV. Sichuan JV and
Chongqing JV entered into an agreement whereby Chongqing JV assumed the rights
and obligations of Sichuan JV under the contract, as amended, that relate to
financing of and consulting services for those portions of the originally
contemplated Sichuan Network that would now lie within Chongqing Municipality.
Rights and obligations under the contract, as amended, that relate to financing
and consulting services for those portions of the originally contemplated
Sichuan network lying within the redefined boundaries of Sichuan Province would
remain with Sichuan JV.

The total amount to be invested in Chongqing JV is $29.5 million with registered
capital contributions from its shareholders amounting to $14.8 million. Asian
American Telecommunications has made capital contributions of $13.6 million of
its total $14.1 million contribution and China Huaneng has contributed $740,000.
The remaining investment in Chongqing JV will be in the form of up to $14.7
million of loans from Asian American Telecommunications plus deferred payment
credit from the manufacturers of the equipment used in construction of the
Chongqing Network. As of March 31, 1999, Asian American Telecommunications had
loans outstanding to Chongqing JV in the amount of $2.5 million. The loans bear
interest at 10% per annum. Ownership in Chongqing JV is 92% by Asian American
Telecommunications and 8% by China Huaneng.

Commercial operations were launched on the Chongqing network and Sichuan network
in January 1999.

As described above, the Company believes that it will receive a notice from
China Unicom that China Unicom intends to terminate the project with Chongqing
JV.

                                       16
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)

(C) NINGBO JV

Asian American Telecommunications entered into a Joint Venture Agreement with
Ningbo United Telecommunications Investment Co., Ltd. on September 17, 1996 for
the purpose of establishing Ningbo Ya Mei Telecommunications Co., Ltd., known as
Ningbo JV. Previously Ningbo United had entered into a network system
cooperation contract with China Unicom covering development of a GSM
telecommunications project in the City of Ningbo, Zhejiang Province, for China
Unicom. The project entails construction of a mobile communications network with
a total capacity of 50,000 subscribers. China Unicom constructed and operates
the network. Under the contract, Ningbo United is to provide financing and
consulting services to China Unicom. The cooperation period for the contract is
fifteen years.

With the formation of Ningbo JV, Ningbo United assigned all of its rights and
obligations under the contract to Ningbo JV. This assignment of rights and
obligations was explicitly ratified by China Unicom in an amendment to the
contract. Ningbo United also agreed to assign rights of first refusal on
additional telecommunications projects to Ningbo JV in the event such rights are
granted to Ningbo United by China Unicom. Distributable cash flows, as defined
in the amended contract, are to be distributed 27% to China Unicom and 73% to
Ningbo JV throughout the contract's cooperation period. Under the amended
contract, Ningbo JV will hold non-transferable title to 70% of all assets
acquired or constructed by China Unicom with investment funds provided by Ningbo
JV. Ningbo JV's title to these assets will transfer to China Unicom as Ningbo
JV's funding of the assets is returned by distributions from China Unicom.
Ningbo JV and China Unicom consider the cost of all assets acquired with funding
from Ningbo JV to be part of Ningbo JV's contribution to the contract,
regardless of whether Ningbo JV holds title to such assets.

The initial amount to be invested in Ningbo JV was $29.5 million with registered
capital contributions from its investors amounting to $11.9 million. Asian
American Telecommunications has currently provided $8.3 million in capital
contributions, representing 70% of Ningbo JV's registered capital. Ningbo United
provided $3.6 million of registered capital contributions to Ningbo JV,
representing 30% of Ningbo JV's equity. Ningbo JV arranged loans with Asian
American Telecommunications, manufacturers of the equipment for the project and
banks. As of March 31, 1999, Asian American Telecommunications had long term
loans to Ningbo JV in the amount of $23.5 million. A substantial portion of
these loans was incurred to refinance previous loans from manufacturers. These
loans bear interest at 10% per annum. Ownership in Ningbo JV is 70% by Asian
American Telecommunications and 30% by Ningbo United.

As described above, the Company has received a notice from China Unicom that
China Unicom intends to terminate the project with Ningbo JV.

(D)  NINGBO JV II

On March 26, 1998, Ningbo JV and China Unicom signed an amendment to the Ningbo
United contract covering expansion of China Unicom's GSM service throughout
Ningbo Municipality. The expansion is being undertaken as a separate project,
and provides capacity for an additional 25,000 GSM subscribers within Ningbo
Municipality. The feasibility study for the expansion project was completed on
March 6, 1998 and forecasts a total budget of approximately $17.0 million. The
terms of the Ningbo Expansion Agreement match those of the underlying Ningbo
United contract, except that

                                       17
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
the amendment will have its own cooperation period of fifteen years. In the
amendment, China Unicom and Ningbo JV explicitly contemplated establishment of a
separate joint venture to provide financing and consulting services to the
expansion project.

Pursuant to the amendment, Asian American Telecommunications and Ningbo United
entered into a second joint venture agreement and formed Ningbo Ya Lian
Telecommunications Co., Ltd., known as Ningbo JV II. In a further amendment
dated July 8, 1998, China Unicom and Ningbo JV agreed to assign all rights and
obligations originally held by Ningbo JV under the first amendment to Ningbo JV
II.

The total amount to be invested in Ningbo JV II is $18.0 million with registered
capital contributions from its investors amounting to $7.2 million. As of March
31, 1999, Asian American Telecommunications had made its $5.0 million registered
capital contribution, and Ningbo United had made its $2.2 million registered
capital contribution. The remaining investment in Ningbo JV II beyond planned
registered capital contributions from its investors will be in the form of up to
$10.8 million of loans from Asian American Telecommunications plus deferred
payment credit from the manufacturers of the equipment used in construction of
the expansion network. As of March 31, 1999, Asian American Telecommunications
had loans outstanding to Ningbo JV II in the amount of $3.4 million. The loans
bear interest ranging from 8% to 10% per annum. Ownership in Ningbo JV II is 70%
by Asian American Telecommunications and 30% by Ningbo United.

Commercial services commenced on the completed portions of the Ningbo expansion
in November 1998. The network was fully completed and in service in February
1999.

As described above, the Company has been informed by China Unicom that China
Unicom intends to terminate the project with Ningbo JV II.

                                       18
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
The following tables represent summary financial information for the joint
ventures and their related projects in China as of and for the three months
ended March 31, 1999 and 1998, respectively, (in thousands, except subscribers):

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED MARCH 31, 1999
                                                            -------------------------------------------------------
<S>                                                         <C>        <C>        <C>        <C>          <C>
                                                             NINGBO     NINGBO     SICHUAN    CHONGQING
                                                               JV        JV II       JV          JV         TOTAL
                                                            ---------  ---------  ---------  -----------  ---------
Revenues..................................................  $     988  $      --  $      --   $      24   $   1,012
Depreciation and amortization.............................        608         --         16          58         682
Operating income (loss)...................................        293        (15)       (83)       (143)         52
Interest expense, net.....................................       (862)       (36)      (234)        (80)     (1,212)
Net loss..................................................       (569)       (51)      (317)       (223)     (1,160)
Equity in losses of joint ventures........................        (16)        (8)       (93)       (148)       (265)

Assets....................................................     33,095     16,176     22,028      18,179      89,478
Net investment in project.................................     30,718     12,162     19,877      10,882      73,639
Subscribers...............................................     52,305         --         --          --      52,305
</TABLE>

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED MARCH 31, 1998
                                                                       --------------------------------------------
<S>                                                                    <C>        <C>        <C>          <C>
                                                                        NINGBO     SICHUAN    CHONGQING
                                                                          JV         JV          JV         TOTAL
                                                                       ---------  ---------  -----------  ---------
Revenues.............................................................  $     638  $      --   $      --   $     638
Depreciation and amortization........................................        560          9          --         569
Operating income (loss)..............................................         47       (169)       (232)       (354)
Interest income (expense), net.......................................       (715)         7          --        (708)
Net loss.............................................................       (668)      (162)       (232)     (1,062)
Equity in losses of joint ventures...................................       (115)      (149)       (214)       (478)

Assets...............................................................     35,713     11,803      14,689      62,205
Net investment in project............................................     32,967     10,186       2,075      45,228
Subscribers..........................................................     19,085         --          --      19,085
</TABLE>

For the three months ended March 31, 1999 and 1998 the results of operations
presented above are before the elimination of intercompany interest. Ningbo JV
records revenues from the Ningbo China Unicom GSM project based on amounts of
revenues and profits reported to it by China Unicom through the period October
1, 1998 to December 31, 1998 and October 1, 1997 to December 31, 1997. Chongqing
JV records revenues from the lease of space currently unused by China Unicom
within a building that was purchased by Chongqing JV for China Unicom's long
term use as a switching and operations center. As of March 31, 1999, Chongqing
JV directly owned this building, but Chongqing JV plans to eventually transfer
the building to China Unicom as part of its funding and support under the
network systems cooperation contract. The Communications Group has received
notification from China Unicom stating that a department of the Chinese
government has requested termination of two of its four joint telecommunications
projects in China and the Communications Group expects that the other two
telecommunications projects in which it has invested will receive similar
notifications.

                                       19
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. EARNINGS PER SHARE OF COMMON STOCK

Basic earnings per share excludes all dilutive securities. It is based upon the
weighted average number of common shares outstanding during the period. Diluted
earnings per share reflects the potential dilution that would occur if
securities exercisable for or convertible into common stock were exercised or
converted into common stock. In calculating diluted earnings per share, no
potential shares of common stock are to be included in the computation when a
loss from continuing operations available to common stockholders exists. For the
three months ended March 31, 1999 and in 1998 the Company had losses from
continuing operations.

The computation of basic earnings per share for the three months ended March 31,
1999 and 1998 is as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                               LOSS          SHARES        PER-SHARE
                                                                           (NUMERATOR)    (DENOMINATOR)     AMOUNT
                                                                           ------------  ---------------  -----------
<S>                                                                        <C>           <C>              <C>
1999:
Loss from continuing operations..........................................   $  (11,270)
Less: Preferred stock dividend requirement...............................        3,752
                                                                           ------------
Loss from continuing operations attributable to common stockholders......   $  (15,022)        69,123      $   (0.22)
                                                                           ------------        ------     -----------
                                                                           ------------        ------     -----------
1998:
Loss from continuing operations..........................................   $  (22,963)
Less: Preferred stock dividend requirement...............................        3,752
                                                                           ------------
Loss from continuing operations attributable to common stockholders......   $  (26,715)        68,572      $   (0.39)
                                                                           ------------        ------     -----------
                                                                           ------------        ------     -----------
</TABLE>

The Company had at March 31, 1999 and 1998, potentially dilutive shares of
common stock of 18,901,000 and 19,136,000, respectively.

5. LONG-TERM DEBT

At March 31, 1999, Snapper was not in compliance with all financial covenants
under its loan and security agreement. On May 14, 1999, the lenders under the
loan and security agreement waived any event of default arising from such
noncompliance.

6. BUSINESS SEGMENT DATA

The Communications Group's joint ventures in Eastern Europe and the republics of
the former Soviet Union currently offer cellular telecommunications, fixed
telephony, international and long distance telephony, cable television, paging
and radio broadcasting. The Communications Group's joint ventures in China
provide financing, technical assistance and consulting service for
telecommunications projects. The revenues, operating results and assets by the
Communications Group's operations in Eastern Europe and the republics of the
former Soviet Union are disclosed in note 2 and the Communication Group's
operations in China are disclosed in note 3. Snapper manufactures
Snapper-Registered Trademark- brand premium priced power lawnmowers, lawn
tractors, garden tillers, snow throwers and related parts and accessories. The
Company evaluates the performance of its operating segments based on earnings,
before interest, taxes, depreciation, and amortization.

                                       20
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

<TABLE>
<CAPTION>
                                                                                               1999        1998
                                                                                            ----------  ----------
<S>                                                                                         <C>         <C>
                                                                                                (IN THOUSANDS)
COMMUNICATIONS GROUP--EASTERN EUROPE AND
  THE REPUBLICS OF THE FORMER SOVIET UNION:
Revenues..................................................................................  $    7,608  $    8,962
Direct operating costs....................................................................     (13,742)    (19,585)
                                                                                            ----------  ----------
Earnings before interest, taxes, depreciation, and amortization...........................      (6,134)    (10,623)
Depreciation and amortization.............................................................      (2,027)     (2,744)
                                                                                            ----------  ----------
  Operating loss..........................................................................      (8,161)    (13,367)
                                                                                            ----------  ----------
                                                                                            ----------  ----------
Equity in losses of unconsolidated investees..............................................      (1,420)     (5,022)
Foreign currency gain (loss)..............................................................        (508)         97
Minority interest.........................................................................         293          95
                                                                                            ----------  ----------
                                                                                            ----------  ----------
Assets at March 31, 1999 and December 31, 1998............................................     191,680     194,864
Capital expenditures......................................................................  $      928  $    4,429
                                                                                            ----------  ----------
                                                                                            ----------  ----------

COMMUNICATIONS GROUP--CHINA:
Revenues..................................................................................  $       --  $       --
Direct operating costs....................................................................      (2,763)     (2,594)
                                                                                            ----------  ----------
Earnings before interest, taxes, depreciation, and amortization...........................      (2,763)     (2,594)
Depreciation and amortization.............................................................        (784)       (756)
                                                                                            ----------  ----------
  Operating loss..........................................................................      (3,547)     (3,350)
                                                                                            ----------  ----------
                                                                                            ----------  ----------
Equity in losses of unconsolidated investees..............................................        (265)       (478)
Foreign currency gain.....................................................................          --          --
Minority interest.........................................................................       2,176       1,944
                                                                                            ----------  ----------
                                                                                            ----------  ----------
Assets at year end........................................................................     140,491     139,726
Capital expenditures......................................................................  $        2  $      403
                                                                                            ----------  ----------
                                                                                            ----------  ----------

SNAPPER:
Revenues..................................................................................  $   60,034  $   51,257
Direct operating costs....................................................................     (55,160)    (48,579)
                                                                                            ----------  ----------
Earnings before interest, taxes, depreciation, and amortization...........................       4,874       2,678
Depreciation and amortization.............................................................      (1,555)     (1,814)
                                                                                            ----------  ----------
  Operating income........................................................................       3,319         864
                                                                                            ----------  ----------
                                                                                            ----------  ----------
Assets at March 31, 1999 and December 31, 1998............................................     142,158     134,460
Capital expenditures......................................................................  $      630  $      932
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>

                                       21
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

<TABLE>
<CAPTION>
                                                                                               1999        1998
                                                                                            ----------  ----------
                                                                                                (IN THOUSANDS)
<S>                                                                                         <C>         <C>
OTHER:
Revenues..................................................................................  $       --  $       --
Direct operating costs....................................................................      (1,356)     (1,289)
                                                                                            ----------  ----------
Earnings before interest, taxes, depreciation, and amortization...........................      (1,356)     (1,289)
Depreciation and amortization.............................................................          (1)         (1)
                                                                                            ----------  ----------
  Operating loss..........................................................................      (1,357)     (1,290)
                                                                                            ----------  ----------
                                                                                            ----------  ----------
Assets at March 31, 1999 and December 31, 1998, including eliminations....................  $  118,711  $  140,591
                                                                                            ----------  ----------
                                                                                            ----------  ----------

CONSOLIDATED:
Revenues..................................................................................  $   67,642  $   60,219
Direct operating costs....................................................................     (73,021)    (72,047)
                                                                                            ----------  ----------
Earnings before interest, taxes, depreciation, and amortization...........................      (5,379)    (11,828)
Depreciation and amortization.............................................................      (4,367)     (5,315)
                                                                                            ----------  ----------
  Operating loss..........................................................................      (9,746)    (17,143)
Interest expense..........................................................................      (3,406)     (5,003)
Interest income...........................................................................       1,700       3,034
Equity in losses of unconsolidated investees..............................................      (1,685)     (5,500)
Foreign currency gain (loss)..............................................................        (508)         97
Minority interest.........................................................................       2,469       2,039
                                                                                            ----------  ----------
  Loss before income tax expense..........................................................     (11,176)    (22,476)
Income tax expense........................................................................         (94)       (487)
                                                                                            ----------  ----------
  Net loss................................................................................     (11,270)    (22,963)
                                                                                            ----------  ----------
                                                                                            ----------  ----------
Assets at March 31, 1999 and December 31, 1998............................................     593,040     609,641
Capital expenditures......................................................................  $    1,560  $    2,794
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>

                                       22
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)
Information about the Communications Group's operations in different geographic
locations for the three months ended March 31, 1999 and 1998 and as of March 31,
1999 and December 31, 1998 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                              REVENUES                ASSETS
                                                                        --------------------  ----------------------
<S>                                                                     <C>        <C>        <C>         <C>
COUNTRY                                                                   1999       1998        1999        1998
----------------------------------------------------------------------  ---------  ---------  ----------  ----------
Austria...............................................................  $     140  $     182  $      654  $    1,049
Azerbaijan............................................................         --         --       6,962       5,172
Belarus...............................................................         --         --       3,084       2,934
Czech Republic........................................................        588         47       3,460       3,527
Estonia...............................................................        205        306       1,985       2,026
Georgia...............................................................        120         --      23,384      24,412
Germany...............................................................         28        115       4,336       4,941
Hungary...............................................................      2,593      3,282       5,748       6,288
Kazakhstan............................................................         --         --       6,940       7,162
Latvia................................................................        229        224      14,617      14,219
Lithuania.............................................................        251        139       2,096       2,141
Moldova...............................................................         --         --       4,455       4,896
People's Republic of China............................................         --         --     140,491     139,726
Romania...............................................................      1,326        968       5,353       6,115
Russia................................................................      1,745      1,860      19,658      17,676
Ukraine...............................................................        165         --       3,020       3,640
United Kingdom........................................................         --      1,489         819       1,568
United States (1).....................................................        218        350      79,920      81,862
Uzbekistan............................................................         --         --       5,189       5,236
                                                                        ---------  ---------  ----------  ----------
                                                                        $   7,608  $   8,962  $  332,171  $  334,590
                                                                        ---------  ---------  ----------  ----------
                                                                        ---------  ---------  ----------  ----------
</TABLE>

------------------------------

(1) Assets include goodwill of $53.9 million, and $54.5 million at March 31,
    1999 and December 31, 1998, respectively.

The revenues and assets by the Communications Group's line of business
operations are disclosed in notes 2 and 3. All remaining assets and
substantially all remaining revenue relate to operations in the United States.

7. INVESTMENT IN RDM SPORTS GROUP, INC.

The Company owns approximately 39% of the outstanding common stock of RDM Sports
Group, Inc.. In August 1997, RDM and certain of its affiliates filed a voluntary
bankruptcy petition under chapter 11 of the Bankruptcy Code. The chapter 11
trustee is in the process of selling all of RDM's assets to satisfy its
obligations to its creditors and the Company believes that its equity interest
will not be entitled to receive any distribution. The Company also holds certain
claims in the RDM proceedings, although there can be no assurance that the
Company will receive any distributions with respect to such claims.

On August 19, 1998, a purported class action lawsuit, THEOHAROUS V. FONG, ET
AL., Civ. No. 1:98CV2366, was filed in United States District Court for the
Northern District of Georgia. On October 19, 1998, a second purported class
action lawsuit with substantially the same allegations, SCHUETTE V. FONG, ET
AL.,

                                       23
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INVESTMENT IN RDM SPORTS GROUP, INC. (CONTINUED)
Civ. No. 1:98CV3034, was filed in United States District Court for the Northern
District of Georgia. On June 7, 1999, plaintiffs in each of these lawsuits filed
amended complaints. The amended complaints allege that certain officers,
directors and shareholders of RDM, including the Company and current and former
officers of the Company who served as directors of RDM, are liable under federal
securities laws for misrepresenting and failing to disclose information
regarding RDM's alleged financial condition during the period between November
7, 1995 and August 22, 1997, the date on which RDM disclosed that its management
had discussed the possibility of filing for bankruptcy. The amended complaints
also allege that the defendants, including the Company and current and former
officers of the Company who served as directors of RDM, are secondarily liable
as controlling persons of RDM. Plaintiffs in these lawsuits seek the following
relief: unspecified compensatory damages, reasonable costs and expenses,
including counsel fees and expert fees, and such other and further relief as the
court may deem just and proper.

On December 30, 1998, the chapter 11 trustee of RDM brought an adversary
proceeding in the bankruptcy of RDM, HAYS, ET AL. V. FONG, ET AL., Adv. Proc.
No. 98-1128, in the United States Bankruptcy Court, Northern District of
Georgia, alleging that current and former officers of the Company, while serving
as directors on the board of RDM, breached fiduciary duties allegedly owed to
RDM's shareholders and creditors in connection with the bankruptcy of RDM. On
January 25, 1999, the plaintiff filed a first amended complaint. The official
committee of unsecured creditors of RDM has moved to proceed as co-plaintiff or
to intervene in this proceeding, and the official committee of bondholders of
RDM has moved to intervene in or join the proceeding. Plaintiffs in this
adversary proceeding seek the following relief against current and former
officers of the Company who served as directors of RDM: actual damages in an
amount to be proven at trial, reasonable attorney's fees and expenses, and such
other and further relief as the court deems just and proper.

On February 16, 1999, the creditors' committee brought an adversary proceeding,
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF RDM SPORTS GROUP, INC. AND
RELATED DEBTORS V. METROMEDIA INTERNATIONAL GROUP, INC., Adv. Proc. No. 99-1023,
seeking in the alternative to recharacterize as contributions to equity a
secured claim in the amount of $15 million made by the Company arising out of
the Company's financing of RDM, or to equitably subordinate such claim made by
Metromedia against RDM and other debtors in the bankruptcy proceeding. On March
3, 1999, the bondholders' committee brought an adversary proceeding, THE
OFFICIAL COMMITTEE OF BONDHOLDERS OF RDM SPORTS GROUP, INC. V. METROMEDIA
INTERNATIONAL GROUP, INC., Adv. Proc. No. 99-1029, with substantially the same
allegations as the above proceeding. In addition to the equitable and injunctive
relief sought by plaintiffs described above, plaintiffs in these adversary
proceedings seek actual damages in an amount to be proven at trial, reasonable
attorneys' fees, and such other and further relief as the court deems just and
proper.

The Company believes it has meritorious defenses and plans to vigorously defend
these actions. Due to the early stage of these proceedings, the Company cannot
evaluate the likelihood of an unfavorable outcome or an estimate of the likely
amount or range of possible loss, if any.

8. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION

ACCOUNTS RECEIVABLE

The total allowance for doubtful accounts at March 31, 1999 and December 31,
1998 was $2.4 million and $2.2 million, respectively.

                                       24
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION (CONTINUED)
INVENTORIES

Inventories consist of the following as of March 31, 1999 and December 31, 1998
(in thousands):

<TABLE>
<CAPTION>
                                                                                                1999       1998
                                                                                              ---------  ---------
<S>                                                                                           <C>        <C>
Lawn and garden equipment:
  Raw materials.............................................................................  $   9,301  $   8,388
  Finished goods............................................................................     52,830     55,488
                                                                                              ---------  ---------
                                                                                                 62,131     63,876
Less: LIFO reserve..........................................................................      1,660      1,660
                                                                                              ---------  ---------
                                                                                                 60,471     62,216
                                                                                              ---------  ---------
Telecommunications:
  Pagers....................................................................................        289         --
  Cable.....................................................................................        426        561
                                                                                              ---------  ---------
                                                                                                    715        561
                                                                                              ---------  ---------
                                                                                              $  61,186  $  62,777
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</TABLE>

STOCK OPTION PLANS

On March 31, 1998, the Company granted approximately 200,000 stock options at an
exercise price of $11.69 under the 1996 Metromedia International Group, Inc.
Incentive Stock Plan. This resulted in a compensation expense of approximately
$550,000 which is included in selling, general and administrative expense for
the three months ended March 31, 1998.

9. CONTINGENCIES

RISKS ASSOCIATED WITH THE COMPANY

The ability of the Communications Group and its joint ventures and subsidiaries
to establish profitable operations is subject to, among other things,
significant political, economic and social risks inherent in doing business in
emerging markets such as Eastern Europe, the former Soviet Union and China.
These include matters arising out of government policies, economic conditions,
imposition of or changes in government regulations or policies, imposition of or
changes to taxes or other similar charges by government bodies, exchange rate
fluctuations and controls, civil disturbances, deprivation or unenforceability
of contractual rights, and taking of property without fair compensation. These
and other risks associated with the Company are discussed more fully in the
Company's Form 10-K Item 1--Risks Associated with Company.

The Communications Group's strategy is to minimize its foreign currency risk. To
the extent possible, in countries that have experienced high rates of inflation,
the Communications Group bills and collects all revenues in U.S. dollars or an
equivalent local currency amount adjusted on a monthly basis for exchange rate
fluctuations. The Communications Group's joint ventures are generally permitted
to maintain U. S. dollar accounts to serve their U.S. dollar debt and current
account obligations, thereby reducing foreign currency risk. As the
Communications Group and its joint ventures expand their operations and become
more dependent on local currency based transactions, the Communications Group
expects that its foreign currency exposure will increase. The Communications
Group does not hedge against foreign exchange rate risks at the current time
and, therefore, could be subject in the

                                       25
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. CONTINGENCIES (CONTINUED)
future to any declines in exchange rates between the time a joint venture
receives its funds in local currencies and the time it distributes such funds in
U.S. dollars to the Communications Group.

The Communications Group's investments in joint ventures in China have been made
through a structure known as the sino-sino-foreign joint venture, an arrangement
in which the foreign invested sino-sino-foreign joint venture is a provider of
telephony equipment, financing and technical services to telecommunications
operators and not a direct provider of telephone service. Since mid-1998,
positions unofficially taken by some departments of the Chinese Government have
raised uncertainty regarding the continued viability of the sino-sino-foreign
structure and, as a result, the Communications Group's associated financing,
service and consulting arrangements with China Unicom. No formal decisions or
regulations on the resolution of sino-sino-foreign issues have yet been
announced by the Chinese government. There is a risk that the Communications
Group, along with other telecommunications participants in China, may be
required to substantially restructure the terms of its current sino-sino-foreign
joint venture arrangements with China Unicom to meet new Chinese government
regulations. It can not be determined at this time what effects, if any, such
actions would have on the future value of the Communication Group's
sino-sino-foreign joint ventures and the joint ventures' ability to generate
revenue, cash flow or net income. The Communications Group has received
notification from China Unicom stating that a department of the Chinese
government has requested termination of two of its four joint telecommunications
projects in China and the Communications Group expects that the other two
telecommunications projects in which it has invested will receive similar
notifications. See "--Recent Developments--Chinese Joint Ventures." The Company
is currently reviewing other investment opportunities in China and recently
announced the establishment of a new joint venture in China to develop and
operate an e-commerce system.

LITIGATION

The Company is involved in various legal and regulatory proceedings and while
the results of any litigation or regulatory issue contain an element of
uncertainty, management believes that, subject to the information disclosed in
note 7, the outcome of any known, pending or threatened legal proceedings will
not have a material effect on the Company's consolidated financial position and
results of operations.

                                       26
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the Company's
consolidated condensed financial statements and related notes thereto.

The business activities of Metromedia International Group, Inc. ("MMG" or "the
Company") are composed of two operating groups, the Communications Group and
Snapper. The Communications Group consists of two geographic business segments,
Eastern Europe and the republics of the former Soviet Union, and China. There
are four lines of business in Eastern Europe and the former Soviet Union as
follows: (i) various types of telephony services; (ii) cable television; (iii)
paging services; and (iv) radio broadcasting. The Company's investments in
various telephony services in China is a separate segment. The Company's third
segment is the manufacture of lawn and garden products through Snapper.

In 1998, the Communications Group's paging business continued to incur operating
losses. Accordingly, the Communications Group developed a revised operating plan
to stabilize its paging operation. Under the revised plan, the Communications
Group intends to manage its paging business to a level that will not require
significant additional funding for its operations. As a result of the revised
plan, in 1998 the Company recorded a non-cash, nonrecurring charge on its paging
assets of $49.9 million, which included a $35.9 million write off of goodwill
and other intangibles. The non-cash, nonrecurring charge adjusted the carrying
value of goodwill and other intangibles, fixed assets and investments in and
advances to Joint Ventures and wrote down inventory. It is anticipated that
under the revised plan the Communications Group paging business's operating
losses will decrease significantly. In addition, the Company has reviewed the
amortization periods for the remaining goodwill and intangibles associated with
licenses for its operations in Eastern Europe and the republics of the former
Soviet Union and will revise these amortization periods commencing in the
quarter ending September 30, 1999.

The Company will amortize intangibles associated with licenses and goodwill over
a period not to exceed ten (10) years. This change in estimates will be
accounted for prospectively and will result in additional annual amortization
expense of approximately $4.4 million.

On November 1, 1995, as a result of the mergers of Orion Pictures Corporation
and Metromedia International Telecommunications, Inc. with and into wholly-owned
subsidiaries of the Company and MCEG Sterling Incorporated with and into the
Company, the Company changed its name from "The Actava Group Inc." to
"Metromedia International Group, Inc." As part of the November 1, 1995 merger,
the Company acquired approximately 39% of RDM Sports Group, Inc. On August 29,
1997, RDM and certain of its affiliates filed voluntary bankruptcy petitions
under chapter 11. The Company does not believe it will be entitled to any funds
from its equity interest in RDM.

Certain statements set forth below under this caption constitute
"Forward-Looking Statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. See "Special Note Regarding Forward-Looking Statements" on page 70.

COMMUNICATIONS GROUP

The Company, through the Communications Group, is the owner of various interests
in joint ventures that are currently in operation or planning to commence
operations in Eastern Europe, the former Soviet Union, China and other selected
emerging markets. The Communications Group's joint ventures currently offer
cellular telecommunications, fixed telephony, international and long distance
telephony services, cable television, paging, and radio broadcasting. The
Communications Group's joint ventures' partners are often governmental agencies
or ministries.

                                       27
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The Communications Group reports its activity and invests in communications
businesses in two primary geographic areas, Eastern Europe and the former Soviet
Union, and the People's Republic of China. In Eastern Europe and the former
Soviet Union, the Communications Group generally owns 50% or more of the
operating joint ventures in which it invests. Because legal restrictions in
China prohibit foreign participation in the operation or ownership in the
telecommunications sector, the Company's joint ventures in China are limited to
providing financing, technical advice, consulting and other services for the
construction and development of telephony networks for China United
Telecommunications Incorporated, known as China Unicom, a Chinese
telecommunications operator. The completed networks are operated by China
Unicom. The Company receives payments in return from China Unicom based on the
distributable cash flow generated by the networks. Statistical data in this
document regarding subscribers, population, etc. for the joint ventures in China
relate to the telephony systems of China Unicom to which such joint ventures
provide funding and services.

The Communications Group has received notification from China Unicom stating
that a department of the Chinese government has requested termination of two of
its four joint telecommunications projects in China and the Communications Group
expects that the other two telecommunications projects in which it has invested
will receive similar letters. The Ningbo joint ventures are currently conducting
negotiations with China Unicom regarding termination of the projects on which
the joint ventures are assisting China Unicom. See "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Communications Group--Risks
Associated with the Company--Recent Developments--Chinese Joint Ventures."

The Company's financial statements consolidate only the accounts and results of
operations of 16 of the Communications Group's 47 operating joint ventures at
March 31, 1999. Investments in other companies and joint ventures which are not
majority owned, or which the Communications Group does not control, but over
which the Communications Group exercises significant influence, have been
accounted for using the equity method. Investments of the Communications Group
or its consolidated subsidiaries over which significant influence is not
exercised are carried under the cost method. See Notes 2 and 3 to the "Notes to
Consolidated Condensed Financial Statements" of the Company, for those joint
ventures recorded under the equity method and their summary financial
information.

The Communications Group accounts for the majority of its joint ventures under
the equity method of accounting since it generally does not exercise control.
Under the equity method of accounting, the Communications Group reflects the
cost of its investments, adjusted for its share of the income or losses of the
joint ventures, on its balance sheet. The losses recorded for the three months
ended 1999 and 1998 represent the Communications Group's equity in the losses of
the Joint Ventures in Eastern Europe, the former Soviet Union and China. Equity
in the losses of the joint ventures by the Communications Group are generally
reflected according to the level of ownership of the Joint Venture by the
Communications Group until such joint venture's contributed capital has been
fully depleted. The Communications Group recognizes the full amount of losses
generated by the joint venture when the Communications Group is the sole funding
source of the joint ventures.

                                       28
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The following table summarizes the Communications Group's joint ventures and
subsidiaries at March 31, 1999, as well as the amounts contributed, amounts
loaned net of repayments and total amounts invested in such joint ventures and
subsidiaries at March 31, 1999 (in thousands).

<TABLE>
<CAPTION>
                                                                              AMOUNT       AMOUNT        TOTAL
                                                                            CONTRIBUTED    LOANED     INVESTED IN
                                                                             TO JOINT     TO JOINT       JOINT
                                                                COMPANY      VENTURE/     VENTURE/     VENTURE/
JOINT VENTURE (1)                                             OWNERSHIP %   SUBSIDIARY   SUBSIDIARY  SUBSIDIARY(2)
-----------------------------------------------------------  -------------  -----------  ----------  -------------
<S>                                                          <C>            <C>          <C>         <C>
CELLULAR TELECOMMUNICATIONS
Baltcom GSM (Latvia).......................................       22%        $  13,736   $       --   $    13,736
Magticom (Tbilisi, Georgia)................................       35%            2,450       17,564        20,014
Tyumenruskom (Tyumen, Russia) (3)..........................       46%            1,908        1,997         3,905
Ningbo Ya Mei Telecommunications Co., Ltd. (Ningbo City,
  China) (4)...............................................       41%            9,530       23,518        33,048
Ningbo Ya Lian Telecommunications Co., Ltd. (Ningbo
  Municipality, China) (3) (4).............................       41%            5,046        3,429         8,475
                                                                            -----------  ----------  -------------
                                                                                32,670       46,508        79,178
                                                                            -----------  ----------  -------------
FIXED TELEPHONY
Sichuan Tai Li Feng Telecommunications Co., Ltd.
(Sichuan Province, China) (3) (5)..........................       54%           11,087        9,531        20,618
Chongqing Tai Le Feng Telecommunications Co.,
  Ltd.(Chongqing Municipality, China) (3) (5)..............       54%           13,581        2,540        16,121
Instaphone (Kazakhstan)....................................       50%               93        1,675         1,768
Caspian American Telecommunications
  (Azerbaijan) (3) (7).....................................       38%              200        7,625         7,825
                                                                            -----------  ----------  -------------
                                                                                24,961       21,371        46,332
                                                                            -----------  ----------  -------------
INTERNATIONAL AND LONG DISTANCE TELEPHONY
Telecom Georgia (Tbilisi, Georgia).........................       30%            2,554           --         2,554
                                                                            -----------  ----------  -------------
CABLE TELEVISION
Romsat Cable TV (Bucharest, Romania) (6) (13)..............      100%            2,405        6,291         8,696
Viginta (Vilnius, Lithuania) (6)...........................       55%              397        3,253         3,650
ATK (Archangelsk, Russia)..................................       81%            2,053          153         2,206
Kosmos TV (Moscow, Russia).................................       50%            1,093       13,311        14,404
Baltcom TV (Riga, Latvia)..................................       50%              819       12,352        13,171
Ayety TV (Tbilisi, Georgia)................................       49%              779        8,887         9,666
Kamalak TV (Tashkent, Uzbekistan)..........................       50%              400        3,004         3,404
Sun TV (Chisinau, Moldova).................................       50%              400        7,276         7,676
Alma TV (Almaty, Karaganda, Actau and Ust-Kamenogorsk,
  Kazakhstan)..............................................       50%              222        6,394         6,616
Cosmos TV (Minsk, Belarus).................................       50%              400        4,593         4,993
Teleplus (St. Petersburg, Russia)..........................       45%              990        1,446         2,436
                                                                            -----------  ----------  -------------
                                                                                 9,958       66,960        76,918
                                                                            -----------  ----------  -------------
</TABLE>

                                       29
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

<TABLE>
<CAPTION>
                                                                             AMOUNT       AMOUNT        TOTAL
                                                                           CONTRIBUTED    LOANED     INVESTED IN
                                                                            TO JOINT     TO JOINT       JOINT
                                                               COMPANY      VENTURE/     VENTURE/     VENTURE/
JOINT VENTURE (1)                                            OWNERSHIP %   SUBSIDIARY   SUBSIDIARY  SUBSIDIARY(2)
-----------------------------------------------------------  ------------  -----------  ----------  -------------
<S>                                                          <C>           <C>          <C>         <C>
PAGING
Baltcom Paging (Tallinn, Estonia) (6)......................      85%        $   3,715   $    2,741   $     6,456
CNM (Romania) (6)..........................................      54%              490       13,129        13,619
Paging One Services (Austria) (6) (13).....................      100%           1,036       11,661        12,697
Eurodevelopment (Ukraine) (6)..............................      51%            1,000        1,448         2,448
Kamalak Paging (Tashkent, Samarkand, Bukhara and Andijan,
  Uzbekistan)..............................................      50%              435        2,046         2,481
Mobile Telecom (Russia) (10)...............................      50%            7,277          200         7,477
Baltcom Plus (Riga, Latvia) (8)............................      50%               --           --            --
Paging One (Tbilisi, Georgia) (8)..........................      45%               --           --            --
Raduga Poisk (Nizhny Novgorod, Russia) (8).................      45%               --           --            --
PT Page (St. Petersburg, Russia) (8).......................      40%               --           --            --
Kazpage (Kazakhstan) (8) (9)...............................     26-41%             --           --            --
Alma Page (Almaty and Ust-Kamenogorsk, Kazakhstan) (8).....      50%               --           --            --
Paging Ajara (Batumi, Georgia) (8).........................      35%               --           --            --
                                                                           -----------  ----------  -------------
                                                                               13,953       31,225        45,178
                                                                           -----------  ----------  -------------
RADIO BROADCASTING
Radio Juventus (Budapest, Hungary) (6).....................      100%           8,107        1,027         9,134
SAC (Moscow, Russia) (6)...................................      83%              631        2,560         3,191
Radio Skonto (Riga, Latvia) (6)............................      55%              302           --           302
Radio One (Prague, Czech Republic) (6).....................      80%              627          495         1,122
NewsTalk Radio (Berlin, Germany) (6).......................      85%            2,758        6,596         9,354
Radio Vladivostok, (Vladivostok, Russia) (6)...............      51%              267           58           325
Country Radio (Prague, Czech Republic) (6).................      85%            2,043           --         2,043
Radio Georgia (Tbilisi, Georgia) (6) (11)..................      51%              705          179           884
Radio Katusha (St. Petersburg, Russia) (6) (11)............      75%              464          705         1,169
Radio Nika (Socci, Russia).................................      51%              260           --           260
AS Trio LSL (Tallinn, Estonia) (11)........................      49%            1,536          395         1,931
                                                                           -----------  ----------  -------------
                                                                               17,700       12,015        29,715
                                                                           -----------  ----------  -------------
OTHER (12)
Spectrum (Kazakhstan) (8) (12).............................      33%               --           --            --
                                                                           -----------  ----------  -------------
TOTAL......................................................                 $ 101,796   $  178,079   $   279,875
                                                                           -----------  ----------  -------------
                                                                           -----------  ----------  -------------
</TABLE>

------------------------------

(1) Each parenthetical notes the area of operations for each operational joint
    venture or the area for which each pre-operational joint venture is
    licensed.

(2) Total investment does not include any income or losses.

(3) Pre-operational systems as of March 31, 1999.

(4) Ningbo Ya Mei Telecommunications is supporting the development by China
    Unicom, a Chinese telecommunications operator, of a GSM mobile telephone
    system in Ningbo City, China. Ningbo Ya Lian Telecommunications is similarly
    supporting development by China Unicom of expansion of GSM services
    throughout Ningbo Municipality, China. Both joint

                                       30
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
    ventures provide financing, technical assistance and consulting services to
    the Chinese operator. The Communications Group has received notification
    from China Unicom stating that a department of the Chinese government has
    requested termination of two of its four joint telecommunications projects
    in China and the Communications Group expects that the other two
    telecommunications projects in which it has invested will receive similar
    letters. See "--Recent Developments-- Chinese Joint Ventures."

(5) Sichuan Tai Li Feng Telecommunications and Chongqing Tai Le Feng
    Telecommunications are supporting the development by China Unicom of
    fixed-line, public switched telephone networks in Sichuan Province and
    Chongqing Municipality, China, respectively. Both joint ventures provide
    financing, technical assistance and consulting services to the Chinese
    operator. In January 1999, the fixed wireline telephony systems in Sichuan
    and Chongqing commenced commercial operations. The Communications Group has
    received notification from China Unicom stating that a department of the
    Chinese government has requested termination of two of its four joint
    telecommunications projects in China and the Communications Group expects
    that the other two telecommunications projects in which it has invested will
    receive similar letters. See "--Recent Developments--Chinese Joint
    Ventures."

(6) Results of operations are consolidated with the Company's financial
    statements.

(7) In August 1998, the Communications Group acquired a 76% interest in
    Omni-Metromedia Caspian, Ltd., a company that owns 50% of a joint venture in
    Azerbaijan, Caspian American. Caspian American has been licensed by the
    Ministry of Communications of Azerbaijan to provide high speed wireless
    local loop services and digital switching throughout Azerbaijan.
    Omni-Metromedia has committed to provide up to $40.5 million in loans to
    Caspian American for the funding of equipment acquisition and operational
    expenses in accordance with Caspian American's business plans. Caspian
    American Telecommunications launched commercial operations in April 1999. In
    May 1999, the Communications Group sold 2.2% of Omni-Metromedia thereby
    reducing its ownership interest in Caspian American Telecommunications to
    37%.

(8) Balances reflect write down of investment.

(9) Kazpage is comprised of a service entity and 10 paging joint ventures that
    provide services in Kazakhstan. The Company's interest in the joint ventures
    ranges from 26% to 41% and its interest in the service entity is 51%.
    Amounts described as loaned in the above table represent loans to the
    service entity which in turn funds the joint ventures. The results of
    operations of the service entity are consolidated with the Company's
    financial statements.

(10) The Company's purchase of Mobile Telecom closed during June 1998. The
    Company purchased its 50% interest in Mobile Telecom for $7.0 million plus
    two additional earnout payments to be made on February 14, 2000 and February
    14, 2001. Each of the two earnout payments is to be equal to $2.5 million,
    adjusted up or down based upon performance compared to certain financial
    targets. Simultaneously with the purchase of Mobile Telecom, the Company
    purchased 50% of a related pager distribution company for $500,000.

(11) Radio Katusha includes two radio stations operating in St. Petersburg,
    Russia and AS Trio LSL includes five radio stations operating in various
    cities throughout Estonia. Radio Georgia includes two radio stations
    operating in Georgia.

(12) In July 1998 the Communications Group sold its share of Protocall Ventures
    Limited. As part of the transaction, Protocall Ventures Limited repaid its
    outstanding debt to the Communications Group. The Communications Group
    retained Protocall Ventures Limited's interest in Spectrum. The Company
    recorded a gain of approximately $7.1 million on the sale. The Company's
    interest in Spectrum of $1.6 million was written down and offset against the
    gain on the sale of Protocall Ventures.

(13) On July 7, 1999, Paging One Services entered into an agreement to sell
    certain of its assets and transfer its customers to a competing service
    provider in Austria. Pursuant to such agreement, Paging One shall transfer
    title to such assets and complete the transfer of its customers to the buyer
    by September 3, 1999.

(14) In June 1999, Ala TV, a joint venture 51% owned by the Communications Group
    and 4% owned by its 50% owned Kazakh joint venture Alma TV, launched cable
    television services in Bishkek, Kyrgyzstan.

                                       31
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The following table summarizes by country the amounts contributed, amounts
loaned net of repayments and total amounts invested in the Communications
Group's joint ventures and subsidiaries at March 31, 1999 (in thousands):

<TABLE>
<CAPTION>
                                                        AMOUNT                  AMOUNT                 TOTAL
                                                      CONTRIBUTED               LOANED                INVESTED
                                                       TO JOINT                TO JOINT               IN JOINT
                                                       VENTURE/                VENTURE/               VENTURE/
COUNTRY                                               SUBSIDIARY       %      SUBSIDIARY      %      SUBSIDIARY      %
----------------------------------------------------  -----------  ---------  ----------  ---------  ----------  ---------
<S>                                                   <C>          <C>        <C>         <C>        <C>         <C>
Austria.............................................   $   1,036         1.0  $   11,661        6.6  $   12,697        4.5
Azerbaijan..........................................         200         0.2       7,625        4.3       7,825        2.8
Belarus.............................................         400         0.4       4,593        2.6       4,993        1.8
Czech Republic......................................       2,670         2.6         495        0.3       3,165        1.1
Estonia.............................................       5,251         5.2       3,136        1.8       8,387        3.0
Georgia.............................................       6,488         6.4      26,630       14.9      33,118       11.8
Germany.............................................       2,758         2.7       6,596        3.7       9,354        3.4
Hungary.............................................       8,107         8.0       1,027        0.6       9,134        3.3
Kazakhstan..........................................         315         0.3       8,069        4.5       8,384        3.0
Latvia..............................................      14,857        14.6      12,352        6.9      27,209        9.7
Lithuania...........................................         397         0.4       3,253        1.8       3,650        1.3
Moldova.............................................         400         0.4       7,276        4.1       7,676        2.7
People's Republic of China(1).......................      39,244        38.5      39,018       21.9      78,262       28.0
Romania.............................................       2,895         2.8      19,420       10.9      22,315        8.0
Russia..............................................      14,943        14.7      20,430       11.5      35,373       12.6
Ukraine.............................................       1,000         1.0       1,448        0.8       2,448        0.9
Uzbekistan..........................................         835         0.8       5,050        2.8       5,885        2.1
                                                      -----------  ---------  ----------  ---------  ----------  ---------
                                                       $ 101,796       100.0  $  178,079      100.0  $  279,875      100.0
                                                      -----------  ---------  ----------  ---------  ----------  ---------
                                                      -----------  ---------  ----------  ---------  ----------  ---------
</TABLE>

The Communications Group has received notification from China Unicom stating
that a department of the Chinese government has requested termination of two of
its four joint telecommunications projects in China and the Communications Group
expects that the other two telecommunications projects in which it has invested
will receive similar notifications. See "--Recent Developments--Chinese Joint
Ventures."

SNAPPER

Snapper manufactures Snapper-Registered Trademark- brand premium-priced power
lawnmowers, lawn tractors, garden tillers, snowthrowers and related parts and
accessories. The lawnmowers include rear engine riding mowers, front-engine
riding mowers or lawn tractors, and self-propelled and push-type walk-behind
mowers. Snapper also manufactures a line of commercial lawn and turf equipment
under the Snapper brand. Snapper provides lawn and garden products through
distribution channels to domestic and foreign retail markets.

The following tables set forth operating results for the three months ended
March 31, 1999 and 1998, for the Company's Communications Group's two geographic
areas and the lawn and garden products operation.

                                       32
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

                              SEGMENT INFORMATION
                       THREE MONTHS ENDED MARCH 31, 1999
                                 (IN THOUSANDS)
                                   SEE NOTE 1
<TABLE>
<CAPTION>
                                                        COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
                                                                                           UNION
                                                        ----------------------------------------------------------------------------
<S>                                                     <C>          <C>          <C>            <C>          <C>        <C>
                                                                                  INTERNATIONAL
                                                         CELLULAR                   AND LONG                                RADIO
                                                         TELECOM-       FIXED       DISTANCE        CABLE                  BROAD-
                                                        MUNICATIONS   TELEPHONY     TELEPHONY    TELEVISION    PAGING      CASTING
                                                        -----------  -----------  -------------  -----------  ---------  -----------
COMBINED
Revenues..............................................   $   8,956    $      20     $   6,149     $   7,981   $   4,771   $   5,892
Depreciation and amortization.........................       2,916           15           526         3,455         466         451
Operating income (loss)...............................        (454)        (106)        1,141        (1,160)       (877)       (425)

CONSOLIDATED
Revenues..............................................          --           --            --         1,248         944       5,189
Gross profit..........................................
Depreciation and amortization.........................          --           --            --           443         291         383
Operating income (loss)...............................          --           --            --           (58)     (1,153)       (464)

UNCONSOLIDATED JOINT VENTURES
Revenues..............................................       8,956           20         6,149         6,733       3,827         703
Depreciation and amortization.........................       2,916           15           526         3,012         175          68
Operating income (loss)...............................        (454)        (106)        1,141        (1,102)        276          39
Net income (loss).....................................      (2,031)        (291)         (998)       (1,737)        231         (12)
Equity in income (losses) of
  unconsolidated investees (Note 2)...................        (528)        (379)         (299)         (362)        162         (14)

Foreign currency loss.................................
Minority interest.....................................

Interest expense......................................
Interest income.......................................
Income tax expense....................................
Net loss..............................................

<CAPTION>

<S>                                                     <C>

                                                          SEGMENT               COMMUNICATIONS
                                                           HEAD-                    GROUP -                  CORPORATE
                                                         QUARTERS      TOTAL         CHINA        SNAPPER   HEADQUARTERS
                                                        -----------  ---------  ---------------  ---------  ------------
COMBINED
Revenues..............................................   $     227   $  33,996
Depreciation and amortization.........................         910       8,739
Operating income (loss)...............................      (6,486)     (8,367)
CONSOLIDATED
Revenues..............................................         227       7,608     $      --     $  60,034   $       --
Gross profit..........................................                                              20,093
Depreciation and amortization.........................         910       2,027           784         1,555            1
Operating income (loss)...............................      (6,486)     (8,161)       (3,547)        3,319       (1,357)
UNCONSOLIDATED JOINT VENTURES
Revenues..............................................          --      26,388         1,012
Depreciation and amortization.........................          --       6,712           682
Operating income (loss)...............................          --        (206)           52
Net income (loss).....................................          --      (4,838)       (1,160)
Equity in income (losses) of
  unconsolidated investees (Note 2)...................          --      (1,420)         (265)           --           --
Foreign currency loss.................................                    (508)           --            --           --
Minority interest.....................................                     293         2,176            --           --
Interest expense......................................
Interest income.......................................
Income tax expense....................................

Net loss..............................................

<CAPTION>

                                                        CONSOLIDATED
                                                        ------------
COMBINED
Revenues..............................................
Depreciation and amortization.........................
Operating income (loss)...............................
CONSOLIDATED
Revenues..............................................   $   67,642
Gross profit..........................................
Depreciation and amortization.........................        4,367
Operating income (loss)...............................       (9,746)
UNCONSOLIDATED JOINT VENTURES
Revenues..............................................
Depreciation and amortization.........................
Operating income (loss)...............................
Net income (loss).....................................
Equity in income (losses) of
  unconsolidated investees (Note 2)...................       (1,685)
Foreign currency loss.................................         (508)
Minority interest.....................................        2,469
Interest expense......................................       (3,406)
Interest income.......................................        1,700
Income tax expense....................................          (94)
                                                        ------------
Net loss..............................................   $  (11,270)
                                                        ------------
                                                        ------------
</TABLE>

------------------------------

Note 1: The Company evaluates the performance of its operating segments based on
earnings before interest, taxes, depreciation, and amortization or EBITDA. The
above segment information and the discussion of the Company's operating segments
is based on operating income (loss) which includes depreciation and
amortization. In addition, the Company evaluates the performance of the
Communications Group's operating segment in Eastern Europe and the republics of
the former Soviet Union on a combined basis. The Company is providing as
supplemental information an analysis of combined revenues and operating income
(loss) for its consolidated and unconsolidated joint ventures in Eastern Europe
and the republics of the former Soviet Union. As previously discussed, legal
restrictions in China prohibit foreign participation in the operations or
ownership in the telecommunications sector. The above segment information for
the Communications Group's China joint ventures represents the investment in
network construction and development of telephony networks for China Unicom. The
above segment information does not reflect the results of operations of China
Unicom's telephony networks. The Communications Group has received notification
from China Unicom stating that a department of the Chinese government has
requested termination of two of its four joint telecommunications projects in
China and the Communications Group expects that the other two telecommunications
projects in which it has invested will receive similar notifications. See
"--Recent Developments--Chinese Joint Ventures."

Note 2: Equity in income (losses) of unconsolidated investees reflects
elimination of intercompany interest expense.

                                       33
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

                              SEGMENT INFORMATION
                       THREE MONTHS ENDED MARCH 31, 1998
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                         COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER
                                                                                     SOVIET UNION
                                                       ------------------------------------------------------------------------
<S>                                                    <C>          <C>            <C>          <C>        <C>        <C>
                                                                    INTERNATIONAL
                                                        CELLULAR      AND LONG                               RADIO
                                                        TELECOM-      DISTANCE        CABLE                 BROAD-
                                                       MUNICATIONS    TELEPHONY    TELEVISION    PAGING     CASTING     OTHER
                                                       -----------  -------------  -----------  ---------  ---------  ---------
COMBINED
Revenues.............................................   $   4,017     $   7,049     $   7,250   $   4,729  $   6,148  $   2,825
Depreciation and amortization........................       2,302           538         3,082       1,013        335        529
Operating income (loss)..............................      (2,940)        2,016        (2,952)     (3,232)     1,149     (1,102)

CONSOLIDATED
Revenues.............................................          --            --           709         887      5,528      1,751
Gross profit.........................................
Depreciation and amortization........................          --            --           327         559        291        251
Operating income (loss)..............................          --            --          (779)     (2,857)     1,203       (128)

UNCONSOLIDATED JOINT VENTURES
Revenues.............................................       4,017         7,049         6,541       3,842        620      1,074
Depreciation and amortization........................       2,302           538         2,755         454         44        278
Operating income (loss)..............................      (2,940)        2,016        (2,173)       (375)       (54)      (974)
Net income (loss)....................................      (4,222)        1,369        (4,015)       (880)       (66)    (1,025)
Equity in income (losses) of
  unconsolidated investees (Note 2)..................      (1,372)          411        (2,746)       (862)       (30)      (423)

Foreign currency gain................................
Minority interest....................................

Interest expense.....................................
Interest income......................................
Income tax expense...................................
Net loss.............................................

<CAPTION>

<S>                                                    <C>

                                                        SEGMENT                COMMUNICATIONS
                                                         HEAD-                     GROUP -                  CORPORATE
                                                        QUARTERS     TOTAL          CHINA        SNAPPER   HEADQUARTERS
                                                       ----------  ----------  ---------------  ---------  ------------
COMBINED
Revenues.............................................  $       87  $   32,105
Depreciation and amortization........................       1,316       9,115
Operating income (loss)..............................     (10,806)    (17,867)
CONSOLIDATED
Revenues.............................................          87       8,962     $      --     $  51,257   $       --
Gross profit.........................................                                              15,508
Depreciation and amortization........................       1,316       2,744           756         1,814            1
Operating income (loss)..............................     (10,806)    (13,367)       (3,350)          864       (1,290)
UNCONSOLIDATED JOINT VENTURES
Revenues.............................................          --      23,143           638
Depreciation and amortization........................          --       6,371           569
Operating income (loss)..............................          --      (4,500)         (354)
Net income (loss)....................................          --      (8,839)       (1,062)
Equity in income (losses) of
  unconsolidated investees (Note 2)..................          --      (5,022)         (478)           --           --
Foreign currency gain................................                      97            --            --           --
Minority interest....................................                      95         1,944            --           --
Interest expense.....................................
Interest income......................................
Income tax expense...................................

Net loss.............................................

<CAPTION>

                                                       CONSOLIDATED
                                                       ------------
COMBINED
Revenues.............................................
Depreciation and amortization........................
Operating income (loss)..............................
CONSOLIDATED
Revenues.............................................   $   60,219
Gross profit.........................................
Depreciation and amortization........................        5,315
Operating income (loss)..............................      (17,143)
UNCONSOLIDATED JOINT VENTURES
Revenues.............................................
Depreciation and amortization........................
Operating income (loss)..............................
Net income (loss)....................................
Equity in income (losses) of
  unconsolidated investees (Note 2)..................       (5,500)
Foreign currency gain................................           97
Minority interest....................................        2,039
Interest expense.....................................       (5,003)
Interest income......................................        3,034
Income tax expense...................................         (487)
                                                       ------------
Net loss.............................................   $  (22,963)
                                                       ------------
                                                       ------------
</TABLE>

                                       34
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS--THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE
  MONTHS ENDED
  MARCH 31, 1998

LEGEND

C = Consolidated
E = Equity method
P = Pre-operational
N/A = Not applicable
N/M = Not meaningful

COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
  UNION

The following sets forth, by line of business, the Communications Group's
consolidated and unconsolidated subsidiaries and joint ventures, the
Communications Group's ownership percentage and selected income statement
information for the three months ended March 31, 1999 and 1998 (in thousands):

TELEPHONY

CELLULAR TELECOMMUNICATIONS

<TABLE>
<CAPTION>
                                                                                            MARCH 31,
                                                                                      ----------------------
JOINT VENTURE/SUBSIDIARY                                              OWNERSHIP %        1999        1998
-----------------------------------------------------------------  -----------------     -----     ---------
<S>                                                                <C>                <C>          <C>
Baltcom GSM (Latvia).............................................             22%              E           E
Magticom (Tbilisi, Georgia)......................................             35%              E           E
Tyumenruskom (Tyumen, Russia)....................................             46%              P         N/A
</TABLE>

UNCONSOLIDATED JOINT VENTURES

The following table sets forth the revenues, operating loss, net loss and equity
in losses of the Communications Group's investment in unconsolidated joint
ventures recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
                                                                                      % CHANGE
                                                               1999       1998      1999 TO 1998
                                                             ---------  ---------  ---------------
<S>                                                          <C>        <C>        <C>
Revenues...................................................  $   8,956  $   4,017           123%
Operating loss.............................................  $    (454) $  (2,940)          (85)%
Net loss...................................................  $  (2,031) $  (4,222)          (52)%
Equity in losses of joint ventures.........................  $    (528) $  (1,372)          (62)%
</TABLE>

REVENUES.  Revenues for cellular communications reflects the result of
operations in Latvia and Georgia, both of which commenced operations in 1997.
There is limited wireline telephone service in these markets, thus the demand
for reliable and mobile telephone service is increasing. Increased revenue of
$3.0 million and $1.8 million in Latvia and Georgia, respectively, for the three
months ended March 31, 1999 as compared to the three months ended March 31, 1998
is consistent with the growth in total subscribers from 28,510 in 1998 to 65,601
in 1999.

OPERATING LOSS.  Included in operating loss for 1999 were cost of services
provided of $1.7 million, selling, general and administrative expenses of $4.8
million and depreciation and amortization of $2.9

                                       35
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
million. For 1998 the operating loss included cost of services provided of $2.2
million, selling, general and administrative expenses of $2.5 million and
depreciation and amortization of $2.3 million. The decreased operating loss in
1999 as compared to 1998 is a result of increasing revenue while controlling
selling, general and administrative costs.

NET LOSS.  Included in net losses in 1999 and 1998 was interest expense of $2.3
million and $1.1 million, respectively. The increase in interest expense in 1999
from the prior year represents additional borrowings by the joint ventures to
fund and expand their operations.Additionally included in net losses in 1999 and
1998 were foreign currency gains of $735,000 and foreign currency losses of
$195,000, respectively. Foreign currency losses represent the remeasurement of
the joint ventures' financial statements, using the U.S. dollar as the
functional currency.

EQUITY IN LOSSES OF JOINT VENTURES.  The Communications Group initially
recognizes its proportionate share of the net income or loss of its joint
ventures. However, since 1998, the Communications Group recognized the full
amount of losses generated by the joint ventures since the contributed capital
of the joint venture had been depleted and the Communications Group was
generally the sole funding source.

FIXED TELEPHONY

<TABLE>
<CAPTION>
                                                                                            MARCH 31,
                                                                                      ----------------------
JOINT VENTURE/SUBSIDIARY                                              OWNERSHIP %        1999        1998
-----------------------------------------------------------------  -----------------     -----     ---------
<S>                                                                <C>                <C>          <C>
Instaphone (Kazakhstan)..........................................             50%              E           P
Caspian American Telecommunications (Azerbaijan).................             38%              P         N/A
</TABLE>

UNCONSOLIDATED JOINT VENTURES

The following table sets forth the revenues, operating loss, net loss and equity
in losses of the Communications Group's investment in unconsolidated joint
ventures recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
                                                                                          % CHANGE
                                                                   1999       1998      1999 TO 1998
                                                                 ---------  ---------  ---------------
<S>                                                              <C>        <C>        <C>
Revenues.......................................................  $      20  $      --           N/A
Operating loss.................................................  $    (106) $      --           N/A
Net loss.......................................................  $    (291) $      --           N/A
Equity in losses of joint ventures.............................  $    (379) $      --           N/A
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES.  Results above are those of the
Communications Group's joint venture in Kazakhstan. Operations have been delayed
by the lack of success in securing an interconnection agreement with the local
ministry. Included in the operating loss are cost of services provided of
$4,000, selling, general and administrative expenses of $107,000 and
depreciation and amortization of $15,000. Included in net loss are interest
charges of $47,000 and foreign currency losses of $138,000.

An interconnection agreement is required to access public switched traffic from
a private overlay network such as the Company's Instaphone fixed telephony
venture in Kazakstan. The lack of an interconnection agreement essentially
precludes the joint venture from establishing viable commercial operations, even
though it meets the Company's requirement to be classified as an operational
joint venture. When Instaphone is granted an interconnection agreement it will
begin to market its services and implement its business plan. At the current
time the Communications Group can not determine when Instaphone will be able to
enter into an acceptable interconnection agreement.

                                       36
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
INTERNATIONAL AND LONG DISTANCE TELEPHONY

<TABLE>
<CAPTION>
                                                                                              MARCH 31,
                                                                                            -------------
JOINT VENTURE/SUBSIDIARY                                               OWNERSHIP %        1999         1998
------------------------------------------------------------------  -----------------     -----        -----
<S>                                                                 <C>                <C>          <C>
Telecom Georgia (Tbilisi, Georgia)................................             30%              E            E
</TABLE>

UNCONSOLIDATED JOINT VENTURES

The following table sets forth the revenues, operating income, net income (loss)
and equity in income (loss) of the Communications Group's investment in Telecom
Georgia which is recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
                                                                                        % CHANGE
                                                                 1999       1998      1999 TO 1998
                                                               ---------  ---------  ---------------
<S>                                                            <C>        <C>        <C>
Revenues.....................................................  $   6,149  $   7,049           (13)%
Operating income.............................................  $   1,141  $   2,016           (43)%
Net income (loss)............................................  $    (998) $   1,369           N/M
Equity in income (loss) of joint venture.....................  $    (299) $     411           N/M
</TABLE>

REVENUES.  International and long distance calling revenues are generated at
Telecom Georgia which handles international calls inbound to and outbound from
the Republic of Georgia. Revenues for the quarter ended March 31, 1999 as
compared to the quarter ended March 31, 1998 decreased as a result of increasing
competition from other international telephone service providers and the
devaluation of the Georgian lari. During the quarter ended March 31, 1998,
Telecom Georgia was the only entity licensed to handle international call
traffic in and out of Georgia.

OPERATING INCOME.  Included in operating income for 1999 were cost of services
provided of $2.7 million, selling, general and administrative expenses of $1.8
million and depreciation and amortization of $526,000. For 1998 the operating
income included cost of services provided of $2.7 million, selling, general and
administrative expenses of $1.8 million and depreciation and amortization of
$538,000. Operating income in the first quarter of 1999 decreased as a result of
contractual reductions in termination accounting rates in international
settlement agreements for traffic with overseas carriers.

NET INCOME (LOSS).  Included in net income (loss) in 1999 and 1998 were interest
charges of $6,000 and $167,000, respectively. Additionally included in net
losses in 1999 and 1998 were foreign currency losses of $2.0 million and
$250,000, respectively. Foreign currency losses represent the remeasurement of
the joint ventures' financial statements, using the U.S. dollar as the
functional currency. Also included in net losses in 1999 and 1998 were income
taxes of $92,000 and $230,000, respectively. The net loss in the quarter ended
March 31, 1999 as compared to the net income in the quarter ended March 31, 1998
is attributable to the significant devaluation of the Georgian lari.

EQUITY IN INCOME (LOSS) OF JOINT VENTURE.  Equity in income (loss) of joint
venture represents the Communications Group's proportionate share of Telecom
Georgia's net income (loss) in 1999 and 1998.

                                       37
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
CABLE TELEVISION

<TABLE>
<CAPTION>
                                                                                          MARCH 31,
                                                                                    ----------------------
JOINT VENTURE/SUBSIDIARY                                             OWNERSHIP %       1999        1998
-----------------------------------------------------------------  ---------------     -----     ---------
<S>                                                                <C>              <C>          <C>
Romsat Cable TV (Bucharest, Romania).............................           100%             C           C
Viginta (Vilnius, Lithuania).....................................            55%             C           C
ATK (Archangelsk, Russia)........................................            81%             C         N/A
Kosmos TV (Moscow, Russia).......................................            50%             E           E
Baltcom TV (Riga, Latvia)........................................            50%             E           E
Ayety TV (Tbilisi, Georgia)......................................            49%             E           E
Kamalak TV (Tashkent, Uzbekistan)................................            50%             E           E
Sun TV (Chisinau, Moldova).......................................            50%             E           E
Alma TV (Almaty, Kazakhstan).....................................            50%             E           E
Cosmos TV (Minsk, Belarus).......................................            50%             E           E
Teleplus (St. Petersburg, Russia)................................            45%             E           P
</TABLE>

CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

The following table sets forth the consolidated revenues and operating loss for
cable television (in thousands):

<TABLE>
<CAPTION>
                                                                                         % CHANGE
                                                                  1999       1998      1999 TO 1998
                                                                ---------  ---------  ---------------
<S>                                                             <C>        <C>        <C>
Revenues......................................................  $   1,248  $     709            76%
Operating loss................................................  $     (58) $    (779)          (93)%
</TABLE>

REVENUES.  The revenue increases from cable television consolidated subsidiaries
and joint ventures for the quarter ended March 31, 1999 as compared to the
quarter ended March 31, 1998, were the result of increases of $322,000 and
$112,000 at the operations in Romania and Lithuania, respectively, as well as
the acquisition of a system in the Archangelsk region of Russia.

OPERATING LOSS.  Included in operating loss for 1999 were cost of services
provided of $224,000, selling, general and administrative expenses of $639,000
and depreciation and amortization of $443,000. For 1998 the operating loss
included cost of services provided of $334,000, selling, general and
administrative expenses of $827,000 and depreciation and amortization of
$327,000. The decreased operating loss for the quarter ended March 31, 1999 as
compared to the quarter ended March 31, 1998 reflects the successful
implementation of the Communications Group's strategy to increase the customer
base by wiring buildings in advance and targeting for a lower priced, broader
based program package to a system in Romania that was acquired during the first
quarter of 1998.

                                       38
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
UNCONSOLIDATED JOINT VENTURES

The following table sets forth the revenues, operating loss, net loss and equity
in losses of the Company's investment in unconsolidated joint ventures recorded
under the equity method (in thousands):

<TABLE>
<CAPTION>
                                                                                      % CHANGE
                                                               1999       1998      1999 TO 1998
                                                             ---------  ---------  ---------------
<S>                                                          <C>        <C>        <C>
Revenues...................................................  $   6,733  $   6,541             3%
Operating loss.............................................  $  (1,102) $  (2,173)          (49)%
Net loss...................................................  $  (1,737) $  (4,015)          (57)%
Equity in losses of joint ventures.........................  $    (362) $  (2,746)          (87)%
</TABLE>

REVENUES.  During the first quarter of 1999 as compared to the first quarter of
1998, revenues increased at the cable operations in Almaty, Kazakhstan and
Minsk, Belarus by approximately $400,000 and $419,000 respectively, and were
offset by decreases of $281,000, $273,000 and $201,000 experienced at the
operations in Moscow, Russia, Tashkent, Uzbekistan and Chisinau, Moldova,
respectively as well as the devaluation of the Russian rouble. The
Communications Group is intentionally slowing the growth of its joint venture in
Belarus, as a result of policies adopted by various governmental entities which
may adversely affect the operations of the venture. These include foreign
exchange controls which, coupled with scarcity of hard currency, limit the
ability of the joint venture to purchase equipment abroad. Additionally, the
Communications Group decided not to move ahead with a proposal to wire certain
parts of the city of Minsk for cable television after it was informed by the
city of Minsk that this expansion would be subject to the payment of an
additional fee.

OPERATING LOSS.  Included in operating loss for 1999 were cost of services
provided of $939,000, selling, general and administrative expenses of $3.9
million and depreciation and amortization of $3.0 million. For 1998 the
operating loss included cost of services provided of $1.2 million, selling,
general and administrative expenses of $4.7 million and depreciation and
amortization of $2.8 million. The improvements in operating results reflect the
fact that certain operating costs are fixed and the number of subscribers
increased, reducing the operating loss per subscriber, combined with cost
savings achieved through economies of scale resulting from contract
renegotiation with programmers and other suppliers.

NET LOSS.  Included in net losses in 1999 and 1998 was interest expense of $1.2
million and $1.0 million, respectively. The increase in interest expense in 1999
relates to additional borrowings by the joint ventures to fund and expand their
operations. Additionally included in net losses in 1999 and 1998 were foreign
currency gains of $549,000 and losses of $430,000, respectively. Foreign
currency gains and losses represent the remeasurement of the joint ventures'
financial statements, using the U.S. dollar as the functional currency. The 1998
net loss also included income taxes of $251,000 and other expenses of $84,000.
The decreased net loss is comprised of improved results at the operations in
Moscow, Russia, Riga, Latvia and Almaty, Kazakstan of approximately $322,000,
$1.4 million and $431,000, respectively.

EQUITY IN LOSSES OF JOINT VENTURES.  The Communications Group initially
recognizes its proportionate share of the net income or loss of its joint
ventures. However, for 1999 and 1998, the Communications Group recognized the
full amount of losses generated in certain joint ventures since the contributed
capital of the joint venture has been depleted and the Communications Group was
generally the sole funding source.

                                       39
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
COMBINED RESULTS OF OPERATIONS

The following table sets forth the revenues, depreciation and amortization and
operating loss on a combined basis of the Communications Group's consolidated
and unconsolidated subsidiaries and joint ventures (in thousands):

<TABLE>
<CAPTION>
                                                                                      % CHANGE
                                                               1999       1998      1999 TO 1998
                                                             ---------  ---------  ---------------
<S>                                                          <C>        <C>        <C>
Revenues...................................................  $   7,981  $   7,250            10%
Depreciation and amortization..............................  $  (3,455) $  (3,082)          (12)%
Operating loss.............................................  $  (1,160) $  (2,952)          (61)%
</TABLE>

ANALYSIS OF COMBINED RESULTS OF OPERATIONS.  As noted above, subscriber growth
and revenue increases in 1999 were the result of further implementation of the
strategy by which buildings were wired in advance and targeted for a lower
priced, broader band program package. Total subscribers increased from 255,116
in 1998 to 374,537 in 1999. In 1999, the improvement in operating results
reflects the favorable relationship between certain fixed operating costs and
the increase in subscribers as described above, combined with cost savings
achieved through economies of scale resulting in advantageous contract
renegotiations with programmers and other suppliers.

PAGING

OVERVIEW.  In 1998, the Communications Group's paging business continued to
incur operating losses. Accordingly, the Communications Group developed a
revised operating plan to stabilize its paging operations. Under the revised
plan, the Communications Group intends to manage its paging business to a level
that should not require significant additional funding for its operation. It is
anticipated that under the revised plan the Communications Group's paging
business operating losses will decrease significantly. The Company has adjusted
its investment in certain paging operations which were recorded under the equity
method to zero, and unless it provides future funding, will no longer record its
proportionate share of any future net losses of these investees and is reflected
in the following table as E*.

<TABLE>
<CAPTION>
                                                                                                          MARCH 31,
                                                                                                     --------------------
JOINT VENTURE/SUBSIDIARY                                                               OWNERSHIP %     1999       1998
-------------------------------------------------------------------------------------  ------------  ---------  ---------
<S>                                                                                    <C>           <C>        <C>
Paging One Services (Austria)........................................................         100%           C          C
Baltcom Paging (Tallinn, Estonia)....................................................          85%           C          C
CNM (Romania)........................................................................          54%           C          C
Eurodevelopment (Ukraine)............................................................          51%           C        N/A
Kamalak Paging (Tashkent, Samarkand, Bukhara and
Andijan, Uzbekistan).................................................................          50%           E          E
Mobile Telecom (Russia)..............................................................          50%           E        N/A
Baltcom Plus (Riga, Latvia)..........................................................          50%           E*         E
Alma Page (Almaty and Ust-Kamenogorsk, Kazakhstan)...................................          50%           E*         E
Paging One (Tbilisi, Georgia)........................................................          45%           E*         E
Raduga Poisk (Nizhny Novgorod, Russia)...............................................          45%           E*         E
PT Page (St. Petersburg, Russia).....................................................          40%           E*         E
Kazpage (Kazakhstan).................................................................       26-41%           E*         E
Paging Ajara (Batumi, Georgia).......................................................          35%           E*         E
</TABLE>

                                       40
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

The following table sets forth the consolidated revenues and operating loss for
paging (in thousands):

<TABLE>
<CAPTION>
                                                                                      % CHANGE
                                                               1999       1998      1999 TO 1998
                                                             ---------  ---------  ---------------
<S>                                                          <C>        <C>        <C>
Revenues...................................................  $     944  $     887             6%
Operating loss.............................................  $  (1,153) $  (2,857)          (60)%
</TABLE>

REVENUES.  The increase in revenues in the quarter ended March 31, 1999 as
compared to the quarter ended March 31, 1998 is attributable to the acquisition
during the fourth quarter of 1998 of a paging operation in Ukraine, offset by a
decrease at the operation in Estonia.

OPERATING LOSS.  Included in operating loss for 1999 were cost of services
provided of $117,000, selling, general and administrative expenses of $1.7
million and depreciation and amortization of $291,000. For 1998 the operating
loss included cost of services provided of $1.0 million, selling, general and
administrative expenses of $2.2 million and depreciation and amortization of
$559,000. The decreased operating loss for the quarter ended March 31, 1999 is
partially attributable to the sale during the quarter of inventory and material
relating to a promotional campaign in Romania that was written off at December
31, 1998. Additionally, during the quarter ended March 31, 1998, increased
marketing, advertising, technical and distribution expenses were incurred to
introduce calling party pays service.

UNCONSOLIDATED JOINT VENTURES

The following table sets forth the revenues, operating income (loss), net loss
and equity in losses of the Communications Group's investment in unconsolidated
joint ventures, which are recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
                                                                                        % CHANGE
                                                                 1999       1998      1999 TO 1998
                                                               ---------  ---------  ---------------
<S>                                                            <C>        <C>        <C>
Revenues.....................................................  $   3,827  $   3,842        --
Operating income (loss)......................................  $     276  $    (375)       N/M
Net income (loss)............................................  $     231  $    (880)       N/M
Equity in income (losses) of joint ventures..................  $     162  $    (862)       N/M
</TABLE>

REVENUES.  The change in revenue for the quarter ended March 31, 1999 as
compared to March 31, 1998 is attributable to the acquisition, during the third
quarter of 1998, of an operation in Moscow, Russia, which generated revenue of
$3.3 million for the three months ended March 31, 1999, offset by the effect of
discontinuing the application of the equity method of accounting to those
investments which were written down to zero at December 31, 1998.

OPERATING INCOME (LOSS).  Included in operating income for 1999 were cost of
services provided of $649,000, selling, general and administrative expenses of
$2.7 million and depreciation and amortization of $175,000. For 1998 the
operating loss included cost of services provided of $1.1 million, selling,
general and administrative expenses of $2.7 million and depreciation and
amortization of $454,000.

NET INCOME (LOSS).  Included in net income (loss) in the three months ended
March 31, 1999 and March 31, 1998 were interest expenses of $39,000 and
$171,000, respectively. Additionally included in net income in 1999 and net loss
in 1998 were foreign currency losses of $16,000 and $115,000, respectively.
Foreign currency losses represent the remeasurement of the joint ventures'
financial statements, using the U.S. dollar as the functional currency. Another
item included in net income in 1999 and net loss in 1998 were income taxes of
$65,000 and $219,000, respectively. The 1999 net

                                       41
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
income included $75,000 in other income as well. The operating income and net
income for the three months ended March 31, 1999 as compared to the net loss for
the three months ended March 31, 1998 is attributable to the acquisition, as
noted above, of an operation in Moscow, Russia, and by the effect of
discontinuing the application of the equity method of accounting to those
investments which were written down to zero at December 31, 1998.

EQUITY IN INCOME (LOSSES) OF JOINT VENTURES.  As noted above, the Communications
Group recognizes its proportionate share of the net income or loss of its joint
ventures, however, for 1998, the Communications Group recognized the full amount
of losses generated by the joint ventures since the contributed capital of the
joint venture had been depleted and the Communications Group was generally the
sole funding source. During 1998, the Company adjusted its investments in
certain paging operations which were recorded under the equity method to zero,
and as noted above, unless it provides future funding will no longer record its
proportionate share of any future net losses of these investees.

COMBINED RESULTS OF OPERATIONS

The following table sets forth the revenues, depreciation and amortization and
operating loss on a combined basis of the Communications Group's consolidated
and unconsolidated subsidiaries and joint ventures (in thousands):

<TABLE>
<CAPTION>
                                                                                       % CHANGE
                                                                1999       1998      1999 TO 1998
                                                              ---------  ---------  ---------------
<S>                                                           <C>        <C>        <C>
Revenues....................................................  $   4,771  $   4,729             1%
Depreciation and amortization...............................  $    (466) $  (1,013)         (54)%
Operating loss..............................................  $    (877) $  (3,232)         (73)%
</TABLE>

ANALYSIS OF COMBINED RESULTS OF OPERATIONS.  Total subscribers increased from
64,975 in 1998 to 113,379 in 1999. Revenues of investments written off at
December 31, 1998 are not included in the results of the unconsolidated or
combined joint ventures above. Subscribers reported in 1999 does not include
35,430 subscribers of these investments. Calling party pays subscribers are not
included in the subscriber count. Decreases in operating loss in 1999 were due
to the implementation during the quarter ended March 31, 1999 of the
Communications Group's revised operating plan.

RADIO BROADCASTING

<TABLE>
<CAPTION>
                                                                                            MARCH 31,
                                                                                          -------------
JOINT VENTURE/SUBSIDIARY                                              OWNERSHIP %       1999         1998
------------------------------------------------------------------  ---------------     -----        -----
<S>                                                                 <C>              <C>          <C>
Radio Juventus (Budapest, Hungary)................................           100%             C            C
Country Radio (Prague, Czech Republic)............................            85%             C            P
NewsTalk Radio (Berlin, Germany)..................................            85%             C            C
SAC (Moscow, Russia)..............................................            83%             C            C
Radio One (Prague, Czech Republic)................................            80%             C            C
Radio Katusha (St. Petersburg, Russia)............................            75%             C            E
Radio Skonto (Riga, Latvia).......................................            55%             C            C
Radio Vladivostok, (Vladivostok, Russia)..........................            51%             C            P
Radio Georgia (Tbilisi, Georgia)..................................            51%             C            P
Radio Nika (Socci, Russia)........................................            51%             E            E
AS Trio LSL (Tallinn, Estonia)....................................            49%             E            E
</TABLE>

                                       42
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

The following table sets forth the consolidated revenues and operating income
(losses) for radio broadcasting (in thousands):

<TABLE>
<CAPTION>
                                                                                        % CHANGE
                                                                 1999       1998      1999 TO 1998
                                                               ---------  ---------  ---------------
<S>                                                            <C>        <C>        <C>
Revenues.....................................................  $   5,189  $   5,528       (6)%
Operating income (loss)......................................  $    (464) $   1,203        N/M
</TABLE>

REVENUES.  The decrease in revenues in the three months ended ended March 31,
1999 as compared to the three months ended March 31, 1998 is primarily comprised
of a decrease of $689,000 at the radio operation in Hungary offset by revenues
of $427,000 generated at the operation in the Czech Republic, which was
purchased in the first quarter of 1998. The decrease in revenues at the radio
operation in Hungary was the result of increased competition from television and
from a new national radio network and the devaluation of the Hungarian forint.

OPERATING INCOME (LOSS).  Included in the operating loss for 1999 were cost of
services provided of $42,000, selling, general and administrative expenses of
$5.2 million and depreciation and amortization of $383,000. For 1998 the
operating income included cost of services provided of $210,000, selling,
general and administrative expenses of $3.8 million and depreciation and
amortization of $291,000. The operating loss for the quarter ended March 31,
1999 as compared to the operating income for the quarter ended March 31, 1998 is
primarily attributable to an increased loss of approximately $457,000 at the
radio station in Berlin, Germany coupled with a $1.2 million decrease in
operating income at the radio station in Budapest, Hungary. At the Berlin
station, increased programming and other expenses associated with the News Talk
format account for the loss. The News Talk format has higher start up costs than
traditional music radio stations. The decrease in revenues at the station in
Hungary, as noted above, combined with increased advertising costs, account for
the decrease in operating income.

UNCONSOLIDATED JOINT VENTURES

The following table sets forth the revenues, operating income (loss), net loss
and equity in losses of the Communications Group's investment in unconsolidated
joint ventures, which are recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
                                                                                          % CHANGE
                                                                    1999       1998     1999 TO 1998
                                                                  ---------  ---------  ------------
<S>                                                               <C>        <C>        <C>
Revenues........................................................  $     703  $     620      13%
Operating income (loss).........................................  $      39  $     (54)     N/M
Net loss........................................................  $     (12) $     (66)    (82)%
Equity in losses of Joint Ventures..............................  $     (14) $     (30)    (53)%
</TABLE>

REVENUES.  The increase in revenues in the quarter ended March 31, 1999 as
compared to the quarter ended March 31, 1998 is primarily attributable to the
purchase of an additional station at the radio operation in Tallinn, Estonia.

OPERATING INCOME (LOSS).  Included in the operating income for 1999 were
selling, general and administrative expenses of $596,000 and depreciation and
amortization of $68,000. For 1998 the operating loss included selling, general
and administrative expenses of $601,000, depreciation and amortization of
$44,000 and other expenses of $29,000. The operating income in 1999 is a result
of the increases in revenue growth and is reflective of management's philosophy
to continually develop

                                       43
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
existing audience share and revenue base. Additionally included in net losses in
1999 and 1998 were foreign currency losses of $49,000 and $7,000, respectively.
Foreign currency losses represent the remeasurement of the joint ventures'
financial statements, using the U.S. dollar as the functional currency. The 1999
net loss also included $9,000 in other income.

NET LOSS.  Included in net loss in 1999 and 1998 were interest charges of
$11,000 and $5,000, respectively.

EQUITY IN LOSSES OF JOINT VENTURES.  The Communications Group initially
recognizes its proportionate share of the net income or loss of its joint
ventures. However, since 1996, the Communications Group recognized the full
amount of losses generated by the joint ventures since the contributed capital
of the joint venture had been depleted and the Communications Group was
generally the sole funding source.

                                       44
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

COMBINED RESULTS OF OPERATIONS

The following table sets forth the revenues, depreciation and amortization, and
operating income (loss) on a combined basis of the Communications Group's
consolidated and unconsolidated subsidiaries
and joint ventures (in thousands):

<TABLE>
<CAPTION>
                                                          % CHANGE
                                         1999    1998   1999 TO 1998
                                        ------  ------  ------------
<S>                                     <C>     <C>     <C>
Revenues..............................  $5,892  $6,148       (4)%
Depreciation and amortization.........  $ (451) $ (335)      35%
Operating income (loss)...............  $ (425) $1,149    N/M
</TABLE>

ANALYSIS OF COMBINED RESULTS OF OPERATIONS.  As noted above, decreases in the
quarter ended March 31, 1999 as compared to the quarter ended March 31, 1998 are
primarily due to lower operating income at the station in Hungary and increased
losses at the radio station in Berlin, Germany, partially offset by the addition
of a station in Tallinn, Estonia.

OTHER

OVERVIEW.  In July 1998, the Communications Group sold its investment in
Protocall Ventures Limited. Additionally, the Company has adjusted its
investment in Spectrum to zero, and unless it provides future funding, will no
longer record its proportionate share of any future net losses of this
investment and is reflected in the following table as E*.

<TABLE>
<CAPTION>
                                                                             MARCH 31,
                                                                            -----------
<S>                                                           <C>           <C>    <C>
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %   1999   1998
------------------------------------------------------------  -----------   ----   ----
Spectrum (Kazakhstan).......................................      33%         E*    E
Protocall Ventures Ltd......................................                 N/A    C/E
</TABLE>

CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

The following table sets forth the consolidated revenues and operating income
(loss) for trunked mobile radio (in thousands):

<TABLE>
<CAPTION>
                                                                                      % CHANGE
                                                               1999       1998      1999 TO 1998
                                                             ---------  ---------  ---------------
<S>                                                          <C>        <C>        <C>
Revenues...................................................  $  --      $   1,751           N/A
Operating loss.............................................  $  --      $    (128)          N/A
</TABLE>

REVENUES AND OPERATING LOSS.  Operations of the consolidated trunked mobile
radio ventures for the quarter ended March 31, 1998 reflect the activities of
the Protocall Venture's operations in Portugal, Spain and Belgium. In July 1998,
the Communications Group sold its investment in Protocall Ventures Limited.
Included in the operating loss for 1998 were selling, general and administrative
expenses of $1.6 million and depreciation and amortization of $251,000.

                                       45
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
UNCONSOLIDATED JOINT VENTURES

The following table sets forth the revenues, operating loss, net loss and equity
in losses of the Communications Group's investment in unconsolidated joint
ventures, which are recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
                                                                                     % CHANGE
                                                              1999       1998      1999 TO 1998
                                                            ---------  ---------  ---------------
<S>                                                         <C>        <C>        <C>
Revenues..................................................  $  --      $   1,074           N/A
Operating loss............................................  $  --      $    (974)          N/A
Net loss..................................................  $  --      $  (1,025)          N/A
Equity in losses of joint ventures........................  $  --      $    (423)          N/A
</TABLE>

REVENUES, OPERATING LOSS AND NET LOSS.  For 1998 the operating loss included
cost of services provided of $686,000, selling, general and administrative
expenses of $1.1 million and depreciation and amortization of $278,000. The 1998
net loss included interest charges of $69,000, foreign currency gains of
$13,000, and other income of $5,000. Results for the quarter ended March 31,
1998, include results of Protocall Ventures' equity investments as well as
results of Spectrum. As has been noted, the Communications Group sold its
interest in Protocall Ventures in July 1998. Additionally, the Company's
interest in Spectrum was written off during the fourth quarter of 1998.

EQUITY IN LOSSES OF JOINT VENTURES.  Equity in losses of joint ventures
represent the Communications Group's proportionate share of the net losses of
the joint ventures.

COMBINED RESULTS OF OPERATIONS

The following table sets forth the revenues, depreciation and amortization, and
operating loss on a combined basis of the Communications Group's consolidated
and unconsolidated subsidiaries and joint ventures (in thousands):

<TABLE>
<CAPTION>
                                                                                         % CHANGE
                                                                  1999       1998      1999 TO 1998
                                                                ---------  ---------  ---------------
<S>                                                             <C>        <C>        <C>
Revenues......................................................  $      --  $   2,825           N/A
Depreciation and amortization.................................  $      --  $    (529)          N/A
Operating loss................................................  $      --  $  (1,102)          N/A
</TABLE>

ANALYSIS OF COMBINED RESULTS OF OPERATIONS.  As noted above, in July 1998 the
Communications Group sold its investment in Protocall Ventures, and at December
31, 1998 has written down the investment in Spectrum to zero.

SEGMENT HEADQUARTERS

Segment headquarters represents the costs associated with executives,
administration, logistics and joint venture support of the consolidated and
unconsolidated joint ventures. The following table sets forth the consolidated
revenues and operating losses for the segment headquarters (in thousands):

<TABLE>
<CAPTION>
                                                                                      % CHANGE
                                                              1999        1998      1999 TO 1998
                                                            ---------  ----------  ---------------
<S>                                                         <C>        <C>         <C>
Revenues..................................................  $     227  $       87           161%
Operating loss............................................  $  (6,486) $  (10,806)          (40)%
</TABLE>

                                       46
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
REVENUES.  The increased revenue from 1998 to 1999 reflects an increase in
programming and management fee revenues from the Communications Group's
unconsolidated subsidiaries.

OPERATING LOSS.  Included in operating losses in 1999 and 1998 were depreciation
and amortization charges of $910,000, and $1.3 million, respectively. The
decreased operating loss from 1998 to 1999 is primarily a result of reductions
to headcount made in the fourth quarter of 1998, and the ensuing decreases in
salary, employee benefits and travel expenses. These reductions were made in
accordance with the Communications Group's plan to decrease corporate management
and administration operating expenses.

The following table sets forth minority interest and foreign currency gain
(loss) for the consolidated operations of the Communications Group--Eastern
Europe and the Republics of the Former
Soviet Union.

<TABLE>
<CAPTION>
                                                               % CHANGE
                                               1999   1998   1999 TO 1998
                                               -----  ----   ------------
<S>                                            <C>    <C>    <C>
Foreign currency gain (loss).................  $(508) $97      N/M
Minority interest............................  $ 293  $95        208%
</TABLE>

FOREIGN CURRENCY GAIN (LOSS) AND MINORITY INTEREST.  For the three months ended
March 31, 1999 and 1998, foreign currency gain (loss) includes losses from
consolidated joint ventures and subsidiaries operating in highly inflationary
economies. Foreign currency losses represent the remeasurement of the joint
ventures' financial statements, in all cases using the U.S. dollar as the
functional currency. U.S. dollar transactions are shown at their historical
value. Monetary assets and liabilities denominated in local currencies are
translated into U.S. dollars at the prevailing period-end exchange rate. All
other assets and liabilities are translated at historical exchange rates.
Results of operations have been translated using the monthly average exchange
rates. The foreign currency loss is the transaction differences resulting from
the use of these different rates. For the three months ended March 31, 1999 and
1998, minority interest represents the allocation of losses by the
Communications Group's majority owned subsidiaries and joint ventures to its
minority ownership interest. The increase in 1999 represents the allocation of
losses from Telcell Wireless, LLC, a subsidiary of Metromedia International
Telecommunications that owns the interest in Magticom Limited.

                                       47
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
COMMUNICATIONS GROUP--CHINA
<TABLE>
<CAPTION>
                                                                                                                MARCH 31,
                                                                                                               -----------
<S>                                                                                         <C>                <C>
JOINT VENTURE/SUBSIDIARY                                                                       OWNERSHIP %        1999
------------------------------------------------------------------------------------------  -----------------     -----
CELLULAR TELECOMMUNICATIONS
Ningbo Ya Mei Telecommunications Co., Ltd. (Ningbo City, China)...........................             70%              E
Ningbo Ya Lian Telecommunications Co., Ltd. (Ningbo Municipality, China)..................             70%              P
FIXED TELEPHONY
Sichuan Tai Li Feng Telecommunications Co., Ltd. (Sichuan Province, China)................             92%              P
Chongqing Tai Le Feng Telecommunications Co., Ltd. (Chongqing Municipality, China)........             92%              P

<CAPTION>

<S>                                                                                         <C>
JOINT VENTURE/SUBSIDIARY                                                                      1998
------------------------------------------------------------------------------------------  ---------
CELLULAR TELECOMMUNICATIONS
Ningbo Ya Mei Telecommunications Co., Ltd. (Ningbo City, China)...........................      E
Ningbo Ya Lian Telecommunications Co., Ltd. (Ningbo Municipality, China)..................     N/A
FIXED TELEPHONY
Sichuan Tai Li Feng Telecommunications Co., Ltd. (Sichuan Province, China)................      P
Chongqing Tai Le Feng Telecommunications Co., Ltd. (Chongqing Municipality, China)........      P
</TABLE>

<TABLE>
<CAPTION>
                                                                                  DISTRIBUTABLE
                                                                                   CASH FLOW %
CHINA UNICOM PROJECT                                                            TO JOINT VENTURE
-----------------------------------------------------------------------------  -------------------
<S>                                                                            <C>
Ningbo Project I.............................................................              73%
Ningbo Project II............................................................              73%
Sichuan Province.............................................................              78%
Chongqing Municipality.......................................................              78%
</TABLE>

JOINT VENTURE INFORMATION

<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED MARCH 31, 1999
                                                                 -------------------------------------------------------------
<S>                                                              <C>          <C>          <C>          <C>          <C>
                                                                   NINGBO       NINGBO       SICHUAN     CHONGQING
                                                                     JV          JV II         JV           JV         TOTAL
                                                                 -----------  -----------  -----------  -----------  ---------
Revenues.......................................................   $     988    $      --    $      --    $      24   $   1,012
Depreciation and amortization..................................   $    (608)   $      --    $     (16)   $     (58)  $    (682)
Operating income (loss)........................................   $     293    $     (15)   $     (83)   $    (143)  $      52
Net loss.......................................................   $    (569)   $     (51)   $    (317)   $    (223)  $  (1,160)
Equity in losses of joint ventures.............................   $     (16)   $      (8)   $     (93)   $    (148)  $    (265)
</TABLE>

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED MARCH 31, 1998
                                                                          ------------------------------------------------
<S>                                                                       <C>          <C>          <C>          <C>
                                                                            NINGBO       SICHUAN     CHONGQING
                                                                              JV           JV           JV         TOTAL
                                                                          -----------  -----------  -----------  ---------
Revenues................................................................   $     638    $      --    $      --   $     638
Depreciation and amortization...........................................   $    (560)   $      (9)   $      --   $    (569)
Operating income (loss).................................................   $      47    $    (169)   $    (232)  $    (354)
Net loss................................................................   $    (668)   $    (162)   $    (232)  $  (1,062)
Equity in losses of joint ventures......................................   $    (115)   $    (149)   $    (214)  $    (478)
</TABLE>

The Communications Group has received notification from China Unicom stating
that a department of the Chinese government has requested termination of two of
its four joint telecommunications projects in China and the Communications Group
expects that the other two telecommunications projects in which it has invested
will receive similar notifications. See "--Recent Developments--Chinese Joint
Ventures."

The following table sets forth operating loss, equity in losses of joint
ventures and minority interests for the Communications Group's various
telephony-related in China (in thousands):

<TABLE>
<CAPTION>
                                                                                      % CHANGE
                                                               1999       1998      1999 TO 1998
                                                             ---------  ---------  ---------------
<S>                                                          <C>        <C>        <C>
Operating loss.............................................  $  (3,547) $  (3,350)            6%
Equity in losses of joint ventures.........................  $    (265) $    (478)          (45)%
Minority interests.........................................  $   2,176  $   1,944            12%
</TABLE>

                                       48
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
OPERATING LOSS.  The operating loss increased $197,000 to $3.5 million for the
three months ended March 31, 1999 as compared to the same period in 1998. The
increase in operating loss is principally attributable to the increase in
selling, general and administrative expenses by $170,000. The increase relates
to expenses associated with employee compensation in 1999. The Company launched
two new joint ventures, Chongqing Tai Le Feng Telecommunications Co., Ltd. and
Ningbo Ya Lian Telecommunications Co., Ltd., each of which necessitated
recruitment of additional support staff. The wireline telephone network project
in China began actual network construction in early 1998 and launched commercial
service in January 1999. Expansion of the Ningbo City GSM network was undertaken
with the Company's Chinese partners during the second half of 1998 and the first
quarter of 1999. These measures necessitated recruitment of additional
engineering staff to support the activities. Finally, the Company undertook an
aggressive effort in 1998 to secure additional projects in China, including due
diligence and discussion of draft documentation of joint venture contracts with
several potential partners. This necessitated expansion of the Company's
business development staff during 1998. Some 1998 staff expansions have since
been offset by outplacement of employees no longer required for continuing
operations, and all separation related costs have been expensed in the first
quarter of 1999. Depreciation and amortization expenses are approximately the
same as the prior year.

EQUITY IN LOSSES OF JOINT VENTURES.  Equity in losses of the Communications
Group's joint ventures in China amounted to $265,000 in 1999 as compared to
$478,000 in 1998. The majority of the 1999 and 1998 losses arise from the
absence of any joint venture revenues during the pre-operational state of the
projects each venture supports. The joint ventures in the pre-operational stage
contributed $241,000 and $363,000 of the 1999 and 1998 losses, respectively. The
Company's wireline telephone network joint venture in Sichuan Province and the
Chongqing Municipality remained in a pre-operational state until the commercial
service launch in January 1999. The Company's operational ventures in China
during the fourth quarter of 1998, supporting the Ningbo City and Ninbgo
Municipality GSM network, recorded losses of $24,000 in 1999 and $115,000 in
1998. The Ningbo City project generated $988,000 in year to date 1999 revenues
to the Joint Ventures, but this was not yet sufficient to overcome the joint
ventures' $1.5 million of the amortization and interest expenses during the same
period. Amortization and interest accounted for 94% of the joint ventures' total
expenses. These expenses will remain essentially constant as the joint ventures'
revenues grow.

MINORITY INTERESTS.  For the three months ended March 31, 1999 and 1998,
minority interests represents the allocation of losses to Metromedia China
Corporation's minority ownership.

INFLATION AND FOREIGN CURRENCY

Certain of the Communications Group's subsidiaries and joint ventures operate in
countries where the rate of inflation is extremely high relative to that in the
United States. While the Communications Group's subsidiaries and joint ventures
attempt to increase their subscription rates to offset increases in operating
costs, there is no assurance that they will be able to do so. Therefore,
operating costs may rise faster than associated revenue, resulting in a material
negative impact on operating results. The Company itself is generally negatively
impacted by inflationary increases in salaries, wages, benefits and other
administrative costs, the effects of which to date have not been material to the
Company.

In 1998, a number of emerging market economies suffered significant economic and
financial difficulties resulting in liquidity crises, devaluation of currencies,
higher interest rates and reduced opportunities for financing. At this time, the
prospects for recovery by the economies of Russia and other republics of the
former Soviet Union and Eastern Europe negatively affected by the economic
crisis remain unclear. The economic crisis has resulted in a number of defaults
by borrowers in Russia

                                       49
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
and other countries and a reduced level of financing available to investors in
these countries. The devaluation of many of the currencies in the region has
also negatively affected the U.S. dollar value of the revenues generated by
certain of the Company's joint ventures and may lead to certain additional
restrictions on the convertibility of certain local currencies. The Company
expects that these problems will negatively affect certain of its cable
television, telephony, radio broadcasting and paging ventures.

The Communications Group's strategy is to minimize its foreign currency risk. To
the extent possible, the Communications Group bills and collects all revenues in
U.S. dollars or an equivalent local currency amount adjusted on a monthly basis
for exchange rate fluctuations. The Communications Group's subsidiaries and
joint ventures are generally permitted to maintain U.S. dollar accounts to
service their U.S. dollar denominated debt and current account obligations,
thereby reducing foreign currency risk. As the Communications Group's
subsidiaries and joint ventures expand their operations and become more
dependent on local currency based transactions, the Communications Group expects
that its foreign currency exposure will increase. The Communications Group does
not hedge against foreign exchange rate risks at the current time and therefore
could be subject in the future to any declines in exchange rates between the
time a subsidiary or a joint venture receives its funds in local currencies and
the time it distributes such funds in U.S. dollars to the Communications Group.

SNAPPER

The following table sets forth Snapper's results of operations for the three
months ended March 31, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                                                                 % CHANGE
                                                          1999       1998      1999 TO 1998
                                                        ---------  ---------  ---------------
<S>                                                     <C>        <C>        <C>
Revenues..............................................  $  60,034  $  51,257            17%
Gross profit..........................................  $  20,093  $  15,508            30%
Operating income......................................  $   3,319  $     864           284%
</TABLE>

REVENUES.  Snapper's 1999 first quarter sales were $60.0 million as compared to
$51.3 million in 1998. Sales of lawn and garden equipment contributed the
majority of the revenues during both periods. Current year sales were higher due
primarily to an increase of $6.2 million snowthrower sales due to heavy snow in
the Midwest in January.

GROSS PROFIT.  Gross profit during 1999 was $20.1 million as compared to $15.5
million in 1998. The lower gross profit in 1998 was due to lower sales noted
above, as well as sales of older equipment during the quarter at incentive
pricing to assist eliminating older inventory acquired from distributor
inventory repurchases during 1997.

OPERATING INCOME.  Operating income was $3.3 million in 1999 as compared to
$864,000 in 1998. The current year operating income increased due to additional
sales and higher gross profit margins as noted above. The current year operating
income was negatively impacted by a $1.8 million judgment related to a lawsuit
filed by a former distributor.

CORPORATE HEADQUARTERS

The following table sets forth the operating loss for Corporate Headquarters (in
thousands):

<TABLE>
<CAPTION>
                                                                                   % CHANGE
                                                           1999       1998       1999 TO 1998
                                                         ---------  ---------  -----------------
<S>                                                      <C>        <C>        <C>
Operating loss.........................................  $  (1,357) $  (1,290)             5%
</TABLE>

                                       50
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
OPERATING LOSS.  For the three months ended March 31, 1999 and 1998, Corporate
Headquarters had general and administrative expenses of approximately $1.4
million and $1.3 million, respectively. Corporate headquarters includes general
and administrative expenses.

MMG CONSOLIDATED

The following table sets forth on a consolidated basis the following items for
the three months ended March 31, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                                                        % CHANGE
                                                    1999      1998    1999 TO 1998
                                                  --------  --------  ------------
<S>                                               <C>       <C>       <C>
Interest expense................................  $ (3,406) $ (5,003)     (32)%
Interest income.................................  $  1,700  $  3,034      (44)%
Income tax expense..............................  $    (94) $   (487)   N/M
Net loss........................................  $(11,270) $(22,963)     (51)%
</TABLE>

INTEREST EXPENSE.  Interest expense decreased $1.6 million to $3.4 million for
the three months ended March 31, 1999. The decrease in interest was due to the
repayment of debt at Corporate Headquarters and the Communications Group, and a
decrease in borrowings at Snapper.

INTEREST INCOME.  Interest income decreased $1.3 million to $1.7 million in
1999, principally from the reduction of funds at Corporate Headquarters which
have been utilized in the operation of the Company.

INCOME TAX EXPENSE.  For the three months ended March 31, 1999 and 1998, the
income tax benefit that would have resulted from applying the federal statutory
rate of 35% was $3.9 million and $7.9 million, respectively. The income tax
benefit in 1999 and 1998 was reduced principally by losses attributable to
foreign operations, equity losses in joint ventures currently not deductible and
a 100% valuation allowance on the current year loss not utilized. The income tax
expense in 1999 and 1998 reflects foreign taxes in excess of the federal credit.

NET LOSS.  Net loss decreased to $11.3 million for the three months ended March
31, 1999 from $23.0 million for the three months ended March 31, 1998. The
decrease in operating loss and net loss in 1999 is primarily from a reduction in
the Communications Group's operating loss and equity in losses of unconsolidated
investees in the current year, $5.0 million and $3.8 million, respectively, and
an increase in the operating income of Snapper in the current year of $2.5
million.

LIQUIDITY AND CAPITAL RESOURCES

THE COMPANY

The Company is a holding company and, accordingly, does not generate cash flows
from operations. The Communications Group is dependent on the Company for
significant capital infusions to fund its operations and make acquisitions, as
well as to fulfill its commitments to make capital contributions and loans to
its joint ventures. Such funding requirements are based on the anticipated
funding needs of its joint ventures and certain acquisitions committed to by the
Company. Cash amounts to be expended in connection with the Company's proposed
acquisition of PLD Telekom (see "Recent Developments") is expected to be funded
from cash on hand. In addition, future capital requirements of the
Communications Group, including future acquisitions, will depend on available
funding from the Company and on the ability of the Communications Group's joint
ventures to generate positive cash flows. Snapper is restricted under covenants
contained in its credit agreement from making dividend payments or advances,
other than certain permitted debt repayments, to the Company and the Company has
periodically funded the short-term working capital needs of Snapper.

                                       51
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
There are 70,000,000 shares of preferred stock authorized and 4,140,000 shares
were outstanding as of December 31, 1998 and 1997.

On September 16, 1997 the Company completed a public offering of 4,140,000
shares of $1.00 par value, 7 1/4% cumulative convertible preferred stock with a
liquidation preference of $50.00 per share, generating net proceeds of
approximately $199.4 million. Dividends on the preferred stock are cumulative
from the date of issuance and payable quarterly, in arrears, commencing on
December 15, 1997. The Company may make any payments due on the preferred stock,
including dividend payments and redemptions (i) in cash; (ii) through issuance
of the Company's common stock or (iii) through a combination thereof. If the
Company were to elect to continue to pay the dividend in cash, the annual cash
requirement would be $15.0 million. During 1998 and March 15, 1999, the Company
paid its quarterly dividends on the preferred stock in cash. The preferred stock
is convertible at the option of the holder at any time, unless previously
redeemed, into the Company's common stock, at a conversion price of $15.00 per
share equivalent to a conversion rate of 3 1/3 shares of common stock for each
share of preferred stock, subject to adjustment under certain conditions.

The preferred stock is redeemable at any time on or after September 15, 2000, in
whole or in part, at the option of the Company, initially at a price of $52.5375
and thereafter at prices declining to $50.00 per share on or after September 15,
2007, plus in each case all accrued and unpaid dividends to the redemption date.
Upon any change of control, as defined in the certificate of designation of the
preferred stock each holder of preferred stock shall, in the event that the
market value at such time is less than the conversion price of $15.00, have a
one-time option to convert the preferred stock into the Company's common stock
at a conversion price equal to the greater of (i) the market value, as of the
change of control date, as defined in the certificate of designation, and (ii)
$8.00. In lieu of issuing shares of the Company's common stock, the Company may,
at its option, make a cash payment equal to the market value of the Company's
common stock otherwise issuable.

Since each of the Communications Group's joint ventures operates or invests in
businesses, such as cable television, fixed telephony and cellular
telecommunications, that are capital intensive and require significant capital
investment in order to construct and develop operational systems and market its
services, the Company will require in addition to its cash on hand, additional
financing in order to satisfy its long-term business objectives including its
on-going working capital requirements, funding of pre-operational joint ventures
and acquisition and expansion requirements. Such additional capital may be
provided through the public or private sale of equity or debt securities of the
Company, or by separate equity or debt financings by the Communications Group or
certain companies of the Communications Group or proceeds from the sale of
assets. No assurance can be given that such additional financing will be
available to the Company on acceptable terms, if at all. If adequate additional
funds are not available, the Company may be required to curtail significantly
its long-term business objectives and the Company's results of operations may be
materially and adversely affected. The Company believes that its cash on hand
will be sufficient to fund the Company's working capital requirements for the
remainder of 1999.

Management believes that its long-term liquidity needs will be satisfied through
a combination of the Company's successful implementation and execution of its
growth strategy to become a global communications and media company and the
Communications Group's joint ventures achieving positive operating results and
cash flows through revenue and subscriber growth and control of operating
expenses.

As the Communications Group is in the early stages of development, the Company
expects to generate significant consolidated net losses for the foreseeable
future as the Communications Group continues to build out and market its
services.

                                       52
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
COMMUNICATIONS GROUP

The Communications Group has invested significantly (in cash or equipment
through capital contributions, loans and management assistance and training) in
its joint ventures. The Communications Group has also incurred significant
expenses in identifying, negotiating and pursuing new telecommunications
opportunities in selected emerging markets.

The Communications Group and many of its joint ventures are experiencing
continuing losses and negative operating cash flow since many of the businesses
are in the development and start-up phase of operations. The Communications
Group's primary source of funds was from the Company in the form of
inter-company loans.

Until the Communications Group's operations generate positive cash flow, the
Communications Group will require significant capital to fund its operations,
and to make capital contributions and loans to its joint ventures. The
Communications Group relies on the Company to provide the financing for these
activities. The Company believes that as more of the Communications Group's
joint ventures commence operations and reduce their dependence on the
Communications Group for funding, the Communications Group will be able to
finance its own operations and commitments from its operating cash flow and will
be able to attract its own financing from third parties. There can be no
assurance, however, that additional capital in the form of debt or equity will
be available to the Communications Group at all or on terms and conditions that
are acceptable to the Communications Group or the Company, and as a result, the
Communications Group will continue to depend upon the Company for its financing
needs. In addition, the Communications Group has received notification from
China Unicom stating that a department of the Chinese government has requested
termination of two of its four joint telecommunications projects in China and
the Communications Group expects that the other two telecommunications projects
in which it has invested will receive similar notifications. See "--Recent
Developments--Chinese Joint Ventures."

Credit agreements between the joint ventures and the Communications Group are
intended to provide such ventures with sufficient funds for operations and
equipment purchases. The credit agreements generally provide for interest to
accrue at rates ranging from the prime rate to the prime rate plus 6% and for
payment of principal and interest from 90% of the joint venture's available cash
flow, as defined, prior to any distributions of dividends to the Communications
Group or its joint venture partners. The credit agreements also often provide
the Communications Group the right to appoint the general director of the joint
venture and the right to approve the annual business plan of the joint venture.
Advances under the credit agreements are made to the joint ventures in the form
of cash for working capital purposes, as direct payment of expenses or
expenditures, or in the form of equipment, at the cost of the equipment plus
cost of shipping. As of March 31, 1999, the Communications Group was committed
to provide funding under various charter fund agreements and credit lines in an
aggregate amount of approximately $214.9 million, of which $52.2 million
remained unfunded. The Communications Group's funding commitments under a credit
agreement are contingent upon its approval of the joint venture's business plan.
To the extent that the Communications Group does not approve a joint venture's
business plan, the Communications Group is not required to provide funds to the
joint venture under the credit line.

The Communications Group's consolidated and unconsolidated joint ventures'
ability to generate positive operating results is dependent upon their ability
to attract subscribers to their systems, the sale of commercial advertising time
and their ability to control operating expenses. Management's current plans with
respect to the joint ventures are to increase subscriber and advertiser bases
and thereby operating revenues by developing a broader band of programming
packages for cable television and

                                       53
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
radio broadcasting and by offering additional services and options for telephony
services. By offering the large local populations of the countries in which the
joint ventures operate desired services at attractive prices, management
believes that the joint ventures can increase their subscriber and advertiser
bases and generate positive operating cash flow, reducing their dependence on
the Communications Group for funding of working capital. Additionally, advances
in the price performance of telephony technology are expected to reduce capital
requirements per subscriber. Further initiatives to develop and establish
profitable operations include reducing operating costs as a percentage of
revenue and assisting joint ventures in developing management information
systems and automated customer care and service systems. No assurances can be
given that such initiatives will be successful or if successful, will result in
such reductions. Additionally, if the joint ventures do become profitable and
generate sufficient cash flows in the future, there can be no assurance that the
joint ventures will pay dividends or will return capital at any time.

EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION

The fixed telephony, cellular, international and long distance telephony and
cable television businesses in the aggregate are capital intensive. The
Communications Group generally provides the primary source of funding for its
joint ventures both for working capital and capital expenditures, with the
exception of its GSM Joint Ventures. The Communications Group's joint venture
agreements generally provide for the initial contribution of cash or assets by
the joint venture partners, and for the provision of a line of credit from the
Communications Group to the joint venture. Under a typical arrangement, the
Communications Group's joint venture partner contributes the necessary licenses
or permits under which the joint venture will conduct its business, studio or
office space, transmitting tower rights and other equipment. The Communications
Group's contribution is generally cash and equipment, but may consist of other
specific assets as required by the applicable joint venture agreement.

In June 1997, the Communications Group's Latvian GSM Joint Venture, Baltcom GSM,
entered into certain agreements with the European Bank for Reconstruction and
Development pursuant to which the European Bank for Reconstruction and
Development agreed to lend up to $23.0 million to Baltcom GSM in order to
finance its system buildout and operations. Baltcom GSM's ability to borrow
under these agreements is conditioned upon reaching certain gross revenue
targets. The loan has an interest rate equal to the 3-month London interbank
offered rate or LIBOR plus 4% per annum, with interest payable quarterly. The
principal amount must be repaid in installments starting in March 2002 with
final maturity in December 2006. The shareholders of Baltcom GSM were required
to provide $20.0 million to Baltcom GSM as a condition precedent to European
Bank for Reconstruction and Development funding the loan. In addition, the
Communications Group and Western Wireless agreed to provide or cause one of the
shareholders of Baltcom GSM to provide an additional $7.0 million in funding to
Baltcom GSM if requested by EBRD which amount has been provided. In August 1998,
the European Bank for Reconstruction and Development and Baltcom GSM amended
their loan agreement in order to provide Baltcom GSM the right to finance the
purchase of up to $3.5 million in additional equipment from Nortel. As part of
such amendment, the Communications Group and Western Wireless agreed to provide
Baltcom GSM the funds needed to repay Nortel, if necessary, and to provide
Baltcom GSM debt service support for the loan agreement with the European Bank
for Reconstruction and Development in an amount not to exceed the greater of
$3.5 million or the aggregate of the additional equipment purchased from Nortel
plus interest payable on the financing.

                                       54
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)

As part of the financing, the European Bank for Reconstruction and Development
was also provided a 5% interest in the joint venture which it can put back to
Baltcom GSM at certain dates in the future at a multiple of Baltcom GSM's
earnings before interest, taxes, depreciation and amortization or EBITDA, not to
exceed $6.0 million. The Company and Western Wireless have guaranteed the
obligation of Baltcom GSM to pay such amount. All of the shareholders of Baltcom
GSM, including Metromedia International Telecommunications, pledged their
respective shares to the European Bank for Reconstruction and Development as
security for repayment of the loan. Under the European Bank for Reconstruction
and Development agreements, amounts payable to the Communications Group are
subordinated to amounts payable to the European Bank for Reconstruction and
Development.

In April 1997, the Communications Group's Georgian GSM Joint Venture, Magticom,
entered into a financing agreement with Motorola, Inc. pursuant to which
Motorola agreed to finance 75% of the equipment, software and service it
provides to Magticom up to $15.0 million. Interest on the financed amount
accrues at 6-month London interbank offered rate or LIBOR plus 5% per annum,
with interest payable semi-annually. Repayment of principal with respect to each
drawdown commences twenty-one months after such drawdown with the final payment
being due 60 months after such drawdown. All drawdowns must be made within 3
years of the initial drawdown date. Magticom is obligated to provide Motorola
with a security interest in the equipment provided by Motorola to the extent
permitted by applicable law. As additional security for the financing, the
Company has guaranteed Magticom's repayment obligation to Motorola. In June
1998, the financing agreement was amended and Motorola agreed to make available
an additional $10.0 million in financing. Interest on the additional $10.0
million accrues at 6-month LIBOR plus 3.5%.

The Company has guaranteed Magticom's repayment obligation to Motorola, under
such amendment to Motorola.

The Communications Group and Western Wireless have funded the balance of the
financing to Magticom through a combination of debt and equity. Repayment of
indebtedness owed to such partners is subject to certain conditions set forth in
the Motorola financing agreements.

In January 1998, the Communications Group entered into a loan agreement with DSC
Finance Corporation pursuant to which DSC agreed to finance 50% of the equipment
it provides to the Communications Group up to $35.0 million. In June 1998, the
Company agreed to guarantee the Communications Group's obligation to repay DSC
under such loan agreement.

As of August 1998, the Communication Group acquired a 76% interest in
Omni-Metromedia Caspian, Ltd., a company that owns 50% of a Joint Venture in
Azerbaijan, Caspian American. Caspian American has been licensed by the Ministry
of Communications of Azerbaijan to provide high speed wireless local loop
services and digital switching throughout Azerbaijan. Omni-Metromedia has
committed to provide up to $40.5 million in loans to Caspian American for the
funding of equipment acquisition and operational expense in accordance with
Caspian American's business plans. The Communications Group is obligated to
contribute approximately $5.0 million in equity to Omni-Metromedia and to lend
up to $36.5 million in accordance with Caspian American's business plan. In May
1999, the Communications Group sold 2.2% of the shares of Omni-Metromedia to
Verbena Servicos e Investimentos, S.A., thereby reducing its ownership interest
in Caspian American from 38% to 37%.

As part of the transaction, the Communications Group has sold a 17.1%
participation in the $36.5 million loan to AIG Silk Road Fund, Ltd., which
requires AIG Silk Road Fund to provide the Communications Group 17.1% of the
funds to be provided under the loan agreement and entitles AIG Silk Road Fund to
17.1% of the repayments to the Communications Group. The Communications

                                       55
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
Group agreed to repurchase such loan participation from AIG Silk Road Fund in
August 2005 on terms and conditions agreed by the parties. In addition, the
Communications Group provided AIG Silk Road Fund the right to put its 15.7%
ownership interest in Omni-Metromedia to the Communications Group starting in
February 2001 for a price equal to seven times the EBITDA of Caspian American
minus debt, as defined, multiplied by AIG Silk Road Fund's percentage ownership
interest.

In addition, in May 1999, the Communications Group sold a 2.35% participation in
the $36.5 million loan to Verbena Servicos e Investimentos, which requires
Verbena Servicos e Investimentos to provide the Communications Group 2.35% of
the funds to be provided under the loan agreement and entitles Verbena Servicos
e Investimentos to 2.35% of the repayments to the Communications Group. The
Communications Group has agreed to repurchase such loan participation from
Verbena Servicos e Inestimentos in August 2005 on terms and conditions agreed by
the parties. In addition, the Communications Group provided Verbena Servicos e
Investimentos the right to put its 2.20% ownership interest in Omni Metromedia
to the Communications Group starting in February 2001 for a price equal to seven
times the EBITDA of Caspian American minus debt, as defined, multiplied by
Verbena Servicos e Investimentos percentage ownership interest.

In January 1999, Caspian American entered into an equipment purchase agreement
with Innowave Tadiran Telecommunications Wireless Systems, Ltd. to purchase
wireless local loop telecommunications equipment. In connection with such
agreement, the Communications Group provided Innowave Tadiran a payment
guarantee of $2.0 million.

As part of its investment in Tyumenruskom announced in November 1998, the
Communications Group agreed to provide a guarantee of payment of $6.1 million to
Ericsson Radio Systems, A.B. for equipment financing provided by Ericsson to one
of the Communication Group's wholly owned subsidiaries and to its 46% owned
Joint Venture, Tyumenruskom. Tyumenruskom is purchasing a digital advanced
mobile phone or DAMPS system cellular system from Ericsson in order to provide
fixed and mobile cellular telephone in the regions of Tyumen and Tobolsk,
Russian Federation. The Communications Group has agreed to make a $1.7 million
equity contribution to Tyumenruskom and to lend the joint venture up to $4.0
million for start-up costs and other operating expenses. Tyumenruskom also
intends to provide wireless local loop telephone services.

The license pursuant to which the Communications Group's radio joint venture in
Hungary, Radio Juventus, was renewed on January 1, 1999 for a period of 8 years.
The license fee to be paid over the term of the license is approximately $8.0
million in Hungarian forints adjusted for inflation.

CHINA

SICHUAN JV AND CHONGQING JV

On May 21, 1996, Asian American Telecommunications, an indirect majority-owned
subsidiary of the Company, entered into a joint venture agreement with China
Huaneng Technology Development Corp. for the purpose of establishing Sichuan Tai
Li Feng Telecommunications Co., Ltd., known as Sichuan JV. Also on May 21, 1996,
Sichuan JV entered into a network systems cooperation contract, with China
Unicom. The contract covers the funding, construction and development of a fixed
line public services telephone network providing local telephone service in
cities within Sichuan Province and long distance telephone service among those
cities known as the Sichuan network. The initial project covered by the contract
includes development of 50,000 local telephone lines in Chengdu and Chongqing
cities, and construction of a fiber optic long distance facility between these
two cities. Subsequent projects covered by the contract and the existing and
future joint ventures may expand services to one million local telephone lines
in cities throughout Sichuan Province, and to construct fiber optic long
distance facilities among these cities. The contract has a cooperation term of
twenty-five years.

                                       56
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
Under the contract, China Unicom will be responsible for the construction and
operation of the Sichuan network, while Sichuan JV will provide financing and
consulting services for the project. Distributable cash flows, as defined in the
contract, are to be distributed 22% to China Unicom and 78% to Sichuan JV
throughout the term of the contract. Sichuan JV holds non-transferable title to
all assets acquired or constructed with the funds that it provides to China
Unicom, except for any assets used to provide inter-city long distance service,
title to which immediately passes to China Unicom. On the tenth anniversary of
completion of the Sichuan network's initial phase, title to assets held by
Sichuan JV will transfer to China Unicom. Sichuan JV and China Unicom consider
the cost of all assets acquired or constructed with investment funds from
Sichuan JV to be part of Sichuan JV's contribution to the contract, regardless
of whether Sichuan JV holds title to such assets.

The total amount to be invested in Sichuan JV is $29.5 million with equity
contributions from its shareholders amounting to $12.0 million. Asian American
Telecommunications has made capital contributions to Sichuan JV of $11.1 million
of its total $11.4 million contribution and China Huaneng Technology Development
has contributed $600,000. The remaining investment will be in the form of up to
$17.5 million of loans from Asian American Telecommunications, plus deferred
payment credit from the manufacturers of the equipment used in construction of
the Sichuan network. As of March 31, 1999, Asian American Telecommunications had
loans outstanding to Sichuan JV in the amount of $9.5 million. These loans bear
interest at 10% per annum. Ownership of the Sichuan JV is 92% by Asian American
Telecommunications and 8% by China Huaneng Technology Development.

Asian American Telecommunications also has a consulting contract with China
Huaneng Technology Development covering the latter's assistance with operations
in China. Under the contract, Asian American Telecommunications is obligated to
pay China Huaneng Technology Development an annual consulting fee of RMB 15.0
million (U.S. $1.8 million at March 31, 1999 exchange rates).

In May 1997, Chongqing Municipality was made a separate region from Sichuan
Province administered directly by the Chinese government. In an amendment to the
network systems cooperation contract China Unicom agreed to recognize Chongqing
Municipality as being covered by the terms of that contract, thereby explicitly
extending Sichuan JV's rights and obligations under that contract to include the
newly independent Chongqing Municipality, including rights and obligations for
any long distance services developed by China Unicom between cities in Chongqing
Municipality and those of Sichuan Province. On September 9, 1997, Asian American
Telecommunications entered into a Joint Venture Agreement with China Huaneng
Technology Development for the purpose of establishing Chongqing JV. Sichuan JV
and Chongqing JV entered into an agreement whereby Chongqing JV assumed the
rights and obligations of Sichuan JV under the contract, as amended, that relate
to financing of and consulting services for those portions of the originally
contemplated Sichuan network that would lie within Chongqing Municipality.
Rights and obligations under the contract, as amended, that relate to financing
and consulting services for those portions of the originally contemplated
Sichuan network lying within the redefined boundaries of Sichuan Province (a
redefinition of the Sichuan network) would remain with Sichuan JV.

The total amount to be invested in Chongqing JV is $29.5 million with registered
capital contributions from its shareholders amounting to $14.8 million. Asian
American Telecommunications has made capital contributions of $13.6 million of
its total $14.1 million contribution and China Huaneng has contributed $740,000.
The remaining investment in Chongqing JV will be in the form of up to $14.7
million of loans from Asian American Telecommunications plus deferred payment
credit from the manufacturers of the equipment used in construction of the
Chongqing network. As of March 31, 1999, Asian American Telecommunications had
loans outstanding to Chongqing JV in the amount of $2.5

                                       57
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
million. The loans bear interest at 10% per annum. Ownership in Chongqing JV is
92% by Asian American Telecommunications and 8% by China Huaneng Technology
Development.

Commercial operations were launched on the Chongqing network and Sichuan network
in January 1999.

Sichuan JV and Chongqing JV may also provide additional capital for China
Unicom's later expansion of the public switched telephone network within and
between Sichuan Province and Chongqing Municipality up to a capacity of one
million total subscribers. China Unicom is responsible for construction,
operation, management and maintenance of the public switched telephone network.
Sichuan JV and Chongqing JV provide financing, consulting and technical support
services to China Unicom in exchange for receiving 78% of distributable cash
flow from China Unicom's public switched telephone network and long distance
operations within and between Sichuan Province and Chongqing Municipality for a
25-year period, payable semi-annually.

In December 1997, Sichuan JV and Chongqing JV entered into a phase 1 loan with
Northern Telecom Communications, known as Nortel, for the purchase of up to
$20.0 million of Nortel equipment during the first phase of the Sichuan
Chongqing project. The Company secured the phase 1 loan repayment with a $20.0
million letter of credit. Nortel had the right to draw on the $20.0 million
letter of credit in January and July of 1999 for amounts due Nortel at such
times for phase 1 equipment purchases. In December 1998, Nortel, Sichuan JV,
Chongqing JV, China Unicom and the Company executed a settlement of various
outstanding matters pertaining to this phase 1 loan. Under this settlement,
except for amounts owed for equipment and interest of $3.4 million which are
payable in July 1999, all outstanding deferred amounts owed to Nortel were paid.
The loan agreements between Nortel and the joint ventures were terminated. The
$20.0 million letter of credit associated with the phase 1 loan agreement was
reduced to $3.4 million and Nortel has the right to draw on the $3.4 million in
July 1999. Commercial service was launched on the phase 1 network in January
1999.

The estimated total investment for phase 1 is approximately $29.5 million in
Sichuan Province and approximately $29.5 million in Chongqing Municipality. As
of March 31, 1999 Asian American Telecommunications, the Company's
majority-owned subsidiary has contributed in registered capital and loans $20.6
million and $16.1 million to Sichuan JV and Chongqing JV, respectively.

The Communications Group has received notification from China Unicom stating
that a department of the Chinese government has requested termination of two of
its four joint telecommunications projects in China and the Communications Group
expects that the other two telecommunications projects in which it has invested
will receive similar letters. See "--Recent Developments--Chinese Joint
Ventures."

NINGBO JV

Asian American Telecommunications entered into a joint venture agreement with
Ningbo United Telecommunications Investment Co., Ltd. on September 17, 1996 for
the purpose of establishing Ningbo Ya Mei Telecommunications Co., Ltd. known as
Ningbo JV. Previously Ningbo United Telecommunications had entered into a
network system cooperation contract with China Unicom, covering development of a
GSM telecommunications project in the City of Ningbo, Zhejiang Province, for
China Unicom. The project entails construction of a mobile communications
network with a total capacity of 50,000 subscribers. China Unicom constructed
and operates the network. Under the contract, Ningbo United Telecommunications
is to provide financing and consulting services to China Unicom. The cooperation
period for the this contract is fifteen years.

                                       58
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
With the formation of Ningbo JV, Ningbo United Telecommunications assigned all
of its rights and obligations under the network system cooperation contract to
Ningbo JV. This assignment of rights and obligations was explicitly ratified by
China Unicom in an amendment to the contract. Ningbo United Telecommunications
also agreed to assign rights of first refusal on additional telecommunications
projects to Ningbo JV in the event such rights are granted to Ningbo United
Telecommunications by China Unicom. Distributable cash flows, as defined in the
amended contract, are to be distributed 27% to China Unicom and 73% to Ningbo JV
throughout the contract's cooperation period. Under the amended contract, Ningbo
JV will hold non-transferable title to 70% of all assets acquired or constructed
by China Unicom with investment funds provided by Ningbo JV. Ningbo JV's title
to these assets will transfer to China Unicom as Ningbo JV's funding of the
assets is returned by distributions from China Unicom. Ningbo JV and China
Unicom consider the cost of all assets acquired with funding from Ningbo JV to
be part of Ningbo JV's contribution to the contract, regardless of whether
Ningbo JV holds title to such assets.

The initial amount to be invested in Ningbo JV was $29.5 million with registered
capital contributions from its investors amounting to $11.9 million. Asian
American Telecommunications has currently provided $8.3 million in capital
contributions, representing 70% of Ningbo JV's registered capital Ningbo United
Telecommunications provided $3.6 million of registered capital contributions to
Ningbo JV, representing 30% of Ningbo JV's equity. Ningbo JV has arranged loans
with Asian American Telecommunications, manufacturers of the equipment for the
project and banks. As of March 31, 1999, Asian American Telecommunications had
long term loans to Ningbo JV in the amount of $23.5 million. A substantial
portion of these loans was incurred to refinance previous loans from
manufacturers. These loans bear interest at 10% per annum. Ownership in Ningbo
JV is 70% by Asian American Telecommunications and 30% by Ningbo United
Telecommunications.

The project was completed and put into commercial service in mid-August 1997.

Ningbo JV has received a letter from China Unicom stating that the supervisory
department of the Chinese government had requested that China Unicom terminate
the project with Ningbo JV. The Communications Group has been informed by China
Unicom that the letter also applies to Ningbo JV II. The notification letter
from China Unicom requested that negotiations begin immediately regarding the
amounts to be paid to Ningbo JV, including return of investment made and
appropriate compensation and other matters related to the winding up of Ningbo
JV's activities as a result of this notice. Negotiations regarding the terms of
the termination have begun and are continuing. The content of the negotiations
includes determining the investment principal of the Ningbo joint ventures,
appropriate compensation and other matters related to termination of contracts.
The letter further stated that due to technical reasons which were not
specified, the cash distribution plan for the first half of 1999 had not been
decided, and that China Unicom also expected to discuss this subject with Ningbo
JV. As a result, the Company cannot currently determine the amount of
compensation the Ningbo joint ventures will receive.

While there can be no assurance that China Unicom will provide similar letters
to the Company's other two sino-sino-foreign telephony-related joint ventures,
the Company expects that these joint ventures will also be the subject of
project termination negotiations. The Company cannot yet predict the effect on
it of the Ningbo joint ventures' negotiations and the expected winding up of the
Company's other two telephony-related joint ventures, but the Company believes
such negotiations, if adversely concluded, or the failure to make scheduled cash
distributions, could have a material adverse effect on its financial position
and results of operations. Depending on the amount of compensation it receives,
the Company will record a non cash charge equal to the difference between the
sum of the carrying values of its investment and advances made to joint ventures
plus goodwill less the cash compensation

                                       59
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
it receives from the joint ventures which China Unicom has paid. The Company's
investment in and advances to joint ventures and goodwill balance at June 30,
1999 were approximately $71 million and $67 million respectively. The Company is
currently evaluating other investment opportunities in China and recently
announced the establishment of a new joint venture in China to develop and
operate an e-commerce system.

NINGBO JV II

On March 26, 1998, Ningbo JV and China Unicom signed an amendment to the
original Ningbo contract covering expansion of China Unicom's GSM service
throughout Ningbo Municipality. The expansion is being undertaken as a separate
project, and provides capacity for an additional 25,000 GSM subscribers within
Ningbo Municipality. The feasibility study for the expansion project was
completed on March 6, 1998 and forecasts a total budget of approximately $17.0
million. The terms of the Ningbo expansion agreement match those of the
underlying Ningbo United contract, except that the Ningbo expansion agreement
will have its own cooperation period of fifteen years. In the Ningbo expansion
agreement, China Unicom and Ningbo JV explicitly contemplated establishment of a
separate joint venture to provide financing and consulting services to the
expansion project.

Pursuant to the Ningbo expansion agreement, Asian American Telecommunications
and Ningbo United Telecommunications entered into a second Joint Venture
Agreement and formed Ningbo Ya Lian Telecommunications Co., Ltd., known as
Ningbo JV II. In an amendment to the Ningbo expansion agreement dated July 1,
1998, China Unicom and Ningbo JV agreed to assign all rights and obligations
originally held by Ningbo JV under the Ningbo Expansion Agreement to Ningbo JV
II.

The total amount to be invested in Ningbo JV II is $18.0 million with registered
capital contributions from its investors amounting to $72 million. As of March
31, 1999, Asian American Telecommunications had made its $5.0 million registered
capital contribution, and Ningbo United Telecommunications had made its $2.2
million registered capital contribution. The remaining investment in Ningbo JV
II beyond planned registered capital contributions from its investors will be in
the form of up to $10.8 million of loans from Asian American Telecommunications
plus deferred payment credit from the manufacturers of the equipment used in
construction of the expansion network. As of March 31, 1999, Asian American
Telecommunications had loans outstanding to

Ningbo JV II in the amount of $2.0 million. This loan bears interest at 8% per
annum. Ownership in Ningbo JV II is 70% by Asian American Telecommunications and
30% by Ningbo United Telecommunications.

Commercial services commenced on the completed portions of the Ningbo expansion
in November 1998. The network was fully completed and in service in February
1999.

As described above, the Company has received notification from China Unicom that
Chinese governmental authorities intend to terminate the project with Ningbo JV
II.

The Communications Group's China joint ventures' ability to generate positive
operating results is heavily dependent on the ability of China Unicom to
successfully construct commercially viable networks and attract customers to
these networks. Chinese regulations currently prohibit the joint ventures from
taking a direct role in either construction or operation. Management seeks to
minimize the construction and operations risks facing those China Unicom
entities with which the Joint Ventures have contracted through a program of
active technical and management consulting. Experts within the Joint Ventures
and the Company's other China offices work directly with the Chinese operators
to enhance the operators' technical, marketing and operational plans. Training
of the Chinese operators' personnel is provided in both classroom and on-the-job
formats. Joint Venture personnel assist the Chinese operators with general
project management and vendor contract administration. The

                                       60
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
Company's efforts in each of these areas have continued despite uncertainty over
continuation of Joint Venture's sino-sino-foreign contracts with China Unicom,
although the extent of the Company's engagement with China Unicom has been
moderated by both parties pending resolution of this uncertainty.

RISKS ASSOCIATED WITH THE COMPANY

The ability of the Communications Group and its joint ventures to establish
profitable operations is subject to significant political, economic and social
risks inherent in doing business in emerging markets such as Eastern Europe, the
former Soviet Union and China. These include matters arising out of government
policies, economic conditions, imposition of or changes in government
regulations or policies, imposition of or changes to taxes or other similar
charges by governmental bodies, exchange rate fluctuations and controls, civil
disturbances, deprivation or unenforceablility of contractual rights, and taking
of property without fair compensation. See "--Recent Developments--Chinese Joint
Ventures."

The Communications Group's strategy is to minimize its foreign currency risk. To
the extent possible, in countries that have experienced high rates of inflation,
the Communications Group bills and collects all revenues in U.S. dollars or an
equivalent local currency amount adjusted on a monthly basis for exchange rate
fluctuations. The Communications Group's joint ventures are generally permitted
to maintain U. S. dollar accounts to serve their U.S. dollar obligations,
thereby reducing foreign currency risk. As the Communications Group and its
joint ventures expand their operations and become more dependent on local
currency based transactions, the Communications Group expects that its foreign
currency exposure will increase. The Communications Group does not hedge against
foreign exchange rate risks at the current time and, therefore, could be subject
in the future to any declines in exchange rates between the time a joint venture
receives its funds in local currencies and the time it distributes such funds in
U.S. dollars to the Communications Group.

The Communications Group's investments in joint ventures in China have been made
through a structure known as the sino-sino-foreign joint venture. Because legal
restrictions in China prohibit foreign participation in the operation or
ownership in the telecommunications sector, the Company's joint ventures in
China are limited to providing financing, technical advice, consulting and other
services for the construction and development of telephony networks for China
United Telecommunications Incorporated, known as China Unicom, a Chinese
telecommunications operator. The completed networks are operated by China
Unicom. In return the Company receives payments from China Unicom based on the
distributable cash flow generated by the networks.

Ningbo JV has received a letter from China Unicom stating that the supervisory
department of the Chinese government had requested that China Unicom terminate
the project with Ningbo JV. The Communications Group has been informed by China
Unicom that the letter also applies to Ningbo JV II. The notification from China
Unicom requested that negotiations begin immediately regarding the amounts to be
paid to Ningbo JV, including return of investment made and appropriate
compensation and other matters related to the winding up of Ningbo JV's
activities as a result of this notification. Negotiations regarding the terms of
the termination have begun and are continuing. The content of the negotiations
includes determining the investment principal of the Ningbo joint ventures,
appropriate compensation and other matters related to termination of contracts.
The letter further stated that due to technical reasons which were not
specified, the cash distribution plan for the first half of 1999 had not been
decided, and that China Unicom also expected to discuss this subject with Ningbo
JV. As a result, the Company cannot currently determine the amount of
compensation the Ningbo joint ventures will receive.

                                       61
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
While there can be no assurance that China Unicom will provide similar letters
to the Company's other two sino-sino-foreign telephony-related joint ventures,
the Company expects that these joint ventures will also be the subject of
project termination negotiations. The Company cannot yet predict the effect on
it of the Ningbo joint ventures' negotiations and the expected winding up of the
Company's other two telephony-related joint ventures, but the Company believes
such negotiations, if adversely concluded, or the failure to make scheduled cash
distributions, could have a material adverse effect on its financial position
and results of operations. Depending on the amount of compensation it receives,
the Company will record a non cash charge equal to the difference between the
sum of the carrying values of its investment and advances made to joint ventures
plus goodwill less the cash compensation it receives from the joint ventures
which China Unicom has paid. The Company's investment in and advances to joint
ventures and goodwill balance at June 30, 1999 were approximately $71 million
and $67 million respectively. The Company is currently evaluating other
investment opportunities in China and recently announced the establishment of a
new joint venture in China to develop and operate an e-commerce system.

SNAPPER

Snapper's liquidity is generated from operations and borrowings. On November 11,
1998, Snapper entered into a loan and security agreement with the Lenders named
therein and Fleet Capital Corporation, as agent and as the initial lender,
pursuant to which the lenders have agreed to provide Snapper with a $5.0 million
term loan facility and a $55.0 million revolving credit facility, the proceeds
of which were used to refinance Snapper's then outstanding obligations under its
prior revolving credit agreement and will also be used for working capital
purposes. The Snapper loan will mature in November 2003 (subject to automatic
one-year renewals), and is guaranteed by the Company up to $10.0 million
(increasing to $15.0 million on the occurrence of specified events). Interest on
the Snapper Loan is payable at Snapper's option at a rate equal to prime plus up
to 0.5% or London interbank offered rate or LIBOR plus between 2.5% and 3.25%,
in each case depending on Snapper's leverage ratio under the Snapper loan
agreement. The agreements governing the Snapper loan contain standard
representation and warranties, covenants, conditions precedent and events of
default, and provide for the grant of a security interest in substantially all
of Snapper's assets other than real property. At March 31, 1999, Snapper was not
in compliance with a financial covenant required under the loan agreement; on
May 14, 1999 the lenders waived the event of default arising from such
noncompliance. At June 30, 1998 Snapper was in compliance with all the financial
covenants required under the loan agreement.

Snapper has entered into various long-term manufacturing and purchase agreements
with certain vendors for the purchase of manufactured products and raw
materials. As of March 31, 1999, noncancellable commitments under these
agreements amounted to approximately $17.7 million.

Snapper has an agreement with a financial institution which makes available
floor plan financing to dealers of Snapper products. This agreement provides
financing for dealer inventories and accelerates Snapper's cash flow. Under the
terms of the agreement, a default in payment by a dealer is nonrecourse to
Snapper. However, Snapper is obligated to repurchase any new and unused
equipment recovered from the dealer. At March 31, 1999, there was approximately
$119.0 million outstanding under this floor plan financing arrangement. The
Company has guaranteed Snapper's payment obligations under this agreement.

The Company believes that Snapper's available cash on hand, the cash flow
generated by operating activities, borrowings from the Snapper loan agreement
and, on an as needed basis, short-term working

                                       62
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
capital funding from the Company, will provide sufficient funds for Snapper to
meet its obligations and capital requirements.

RECENT DEVELOPMENTS

ACQUISITION OF PLD

On May 18, 1999, Metromedia International Group, Inc. entered into an agreement
and plan of merger with PLD Telekom Inc. pursuant to which a wholly owned
subsidiary of the Company will be merged with and into PLD Telekom with PLD
Telekom as the surviving corporation. Following the consummation of the merger,
PLD Telekom will become a wholly owned subsidiary of the Company.

PLD Telekom is a major provider of high quality, long distance and international
telecommunications services in the former Soviet Union. Its five principal
business units are PeterStar, which provides integrated local, long distance and
international telecommunications in St. Petersburg through a fully digital fiber
optic network; Teleport-TP, which provides international telecommunications
services from Moscow and operates a pan-Russian satellite-based long distance
network; Baltic Communications Limited, which provides dedicated international
telecommunications services in St. Petersburg; ALTEL, which is the principal
provider of cellular service in the republic of Kazakhstan; and BELCEL, which
provides the only national cellular service in Belarus.

METROMEDIA BRIDGE LOAN AGREEMENT

The Company entered into a bridge loan agreement with PLD Telekom pursuant to
which it has agreed to extend revolving bridge loans to PLD Telekom of up to
$7.0 million at an annual interest rate of 10.0% to fund PLD Telekom's ongoing
operations during the period from the execution of the merger agreement to the
earlier of the consummation of the merger or the termination or expiration of
the merger agreement. All amounts payable under the bridge loan agreement are
due and payable on the earlier of (x) termination or expiration of the merger
agreement or (y) October 31, 1999. The loans under this agreement are secured by
a pledge by PLD Telekom of approximately 58% of the capital stock of PLD
Telekom's Technocom Limited subsidiary. The bridge loan agreement contains
negative covenants that restrict PLD Telekom's activities during this period.

TECHNOCOM ARRANGEMENTS

The Company and PLD Telekom have also entered into option modification
agreements with the two minority shareholders of Technocom Limited, a subsidiary
of PLD, pursuant to which PLD Telekom will purchase all of these two
shareholders' shares of Technocom Limited for an aggregate purchase price of
$12.6 million, equal to 50% of the price PLD Telekom would have been otherwise
obligated to pay for these shares beginning on June 30, 1999.

AGREEMENT TO EXCHANGE AND CONSENT; TERMS OF METROMEDIA NOTES

It is a condition to the completion of the merger that the holders of at least
95% in aggregate principal amount of each of PLD Telekom's 14% senior discount
notes due 2004 and 9% convertible subordinated notes due 2006 agree to exchange
their PLD Telekom notes for new Metromedia notes with the terms described below
and consent to certain amendments to the existing indentures for their PLD
Telekom notes.

In order to ensure satisfaction of this condition, the Company has entered into
an agreement to exchange and consent with holders of $122,230,000 in aggregate
principal amount of PLD Telekom's senior discount notes (or approximately 99.4%
of the outstanding senior discount notes) and holders of

                                       63
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
$25,000,000 in aggregate principal amount of PLD Telekom's convertible
subordinated notes (or approximately 94.3% of the outstanding convertible
subordinated notes), in which such noteholders have agreed to:

    (a) exchange $1,000 principal amount of their PLD Telekom notes for $1,000,
       in the case of PLD Telekom's 14.0% senior discount notes, or $900, in the
       case of PLD Telekom's 9.0% convertible subordinated notes, accreted
       amount of new Metromedia notes subject only to consummation of the merger
       and the registration with the Securities and Exchange Commission of
       exchange notes that will be identical to the new MMG notes and will be
       exchanged for the new MMG notes 20 business days after consummation of
       the merger;

    (b) consent to certain amendments to the PLD Telekom note indentures that
       will eliminate substantially all restrictive covenants from these
       indentures and release the properties and assets of PLD from the security
       and collateral arrangements that currently secure the payment of all
       amounts due on the PLD Telekom notes; and

    (c) waive certain events of default under the PLD Telekom notes that would
       result from the consummation of the merger as well as the payment of
       interest that would become due under the PLD Telekom notes until the
       earlier of the termination of the merger agreement or October 31, 1999.

In order to satisfy the noteholders' condition with respect to the registration
of Metromedia exchange notes, the Company has filed a registration statement on
Form S-4 to register the exchange notes that will be offered to holders of PLD
Telekom notes that accept new Metromedia notes upon consummation of the merger.

The new MMG notes and the exchange notes will have identical terms. The MMG
notes will mature on the anniversary of the closing of the merger in 2007 and
will accrete in value until the date that is 2 1/2 years from the closing of the
merger, at a rate of 10 1/2% per year, compounded semi-annually, to a principal
amount of $1,291.55 for each $1,000 accreted value at original issuance on the
date that is 2 1/2 years from the closing of the merger. The notes will not pay
cash interest before the date that is 2 1/2 years from the closing of the
merger. Thereafter, the notes will pay interest in cash semi-annually at a rate
of 10 1/2% per year. The Company will not be able to redeem any of the notes
before the date that is 2 1/2 years form the closing of the merger. The Company
will be able to redeem the notes at any time thereafter, at the Company's sole
option, in whole or in part, at a redemption price equal to the principal amount
of the notes, plus accrued and unpaid interest, if any, through but excluding
the date of redemption.

If a change in control of the Company occurs, holders of the MMG notes will have
the right to require the Company to make an offer to repurchase all of the notes
at a purchase price in cash equal to 101% of their accreted value, plus accrued
and unpaid interest, if any, through but excluding the date of repurchase.

The indenture under which the MMG notes will be issued will limit the Company's
ability and its subsidiaries' ability to:

    (a) incur additional indebtedness or issue capital stock or preferred stock,

    (b) pay dividends on, and repurchase or redeem the Company and subsidiaries'
       capital stock and repurchase or redeem subordinated obligations,

    (c) invest and sell assets and subsidiary stock,

    (d) engage in transactions with related entities, and

    (e) incur additional liens.

                                       64
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
In addition, the indenture for the notes will limit the Company's ability to
engage in consolidations, mergers and transfers of substantially all of its
assets and also contains limitations on restrictions on distributions from its
subsidiaries. All of these limitations and prohibitions have a number of
important qualifications and exceptions.

TRAVELERS NOTE AND WARRANT MODIFICATION AGREEMENT

Metromedia and PLD Telekom have also entered into a Note and Warrant
Modification Agreement, dated as of May 18, 1999, with The Travelers Insurance
Company and The Travelers Indemnity Company. This agreement provides that all
principal payable by PLD Telekom to Travelers under their Revolving Credit Note
and Warrant Agreement, dated as of November 26, 1997, with PLD Telekom will be
deferred until the earlier of (x) the date of the consummation of the merger or
(y) termination of the merger agreement. Furthermore, upon the consummation of
the merger, Travelers will relinquish all warrants held or to which it may be
entitled to purchase shares of common stock of PLD Telekom.

In consideration for Traveler's agreement to defer the payment of principal and
to relinquish its PLD Telekom warrants at closing, PLD Telekom will repay $8.5
million of the Travelers loan upon consummation of the merger and the remaining
amount outstanding under the Travelers credit agreement, $4.9 million, on the
earlier of (x) August 30, 2000 or (y) one year from the closing date of the
merger. The interest rate on the amount outstanding will be an annual rate of
10.5% payable monthly. Travelers will also be entitled to receive at the closing
of the merger, 100,000 shares of PLD Telekom common stock, which will be
converted in the merger into shares of Metromedia common stock at the applicable
exchange ratio, and 10-year warrants to purchase 700,000 shares of the Company's
common stock at a price to be determined in December 2000 that will be between
$10.00 and $15.00 per share. However, if the amount outstanding has not fully
been repaid by the earlier of August 30, 2000 or one year from the closing date,
then the exercise price of the warrants will be reset to $.01. Travelers will
also maintain its existing security interests in certain PLD Telekom assets and
its debt will be guaranteed by the Company and three of PLD Telekom's
subsidiaries.

NEWS LETTER AGREEMENT

The Company has also entered into a Letter Agreement, dated as of May 18, 1999,
with News America Incorporated. Pursuant to this agreement, News America has
agreed that it will not exercise its rights upon the occurrence of any defaults
of PLD Telekom under the Revolving Credit Agreement, dated as of September 30,
1998, with PLD Telekom until the earlier of the completion of the merger or the
termination or expiration of the merger agreement. News America has also agreed
not to exercise any rights that it may have to convert its loans under the
credit agreement into shares of common stock of PLD Telekom between the signing
and the closing of the merger. At closing all principal, $6.5 million
outstanding as of June 30, 1998, and accrued interest, payable at a reduced
10.0% interest rate, will be payable in full and News America will also be
released from its obligations under $3.1 million of guarantees made of amounts
outstanding under the Travelers Credit Agreement.

VOTING AGREEMENT AND REGISTRATION RIGHTS AGREEMENT

In connection with the Company's agreement to merge with PLD, the Company
entered into an agreement with News America and its affiliate, which together
hold 14,381,780 shares of PLD Telekom common stock representing approximately
38% of the outstanding voting power of PLD Telekom common stock. These
stockholders have agreed to vote in favor of the merger and against any
competing proposal at the special meeting of stockholders of PLD Telekom that
will vote on the merger. In return, the Company has entered into a registration
rights agreement with News America and its affiliate which provides that the
Company will put in place a shelf registration statement no

                                       65
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
later than six months after the merger is consummated to register the shares of
common stock of the Company that News America and its affiliate will receive in
the merger.

In addition, Metromedia Company, which with its partners is the largest
stockholder of the Company, has agreed to grant News America and its affiliate
tag-along rights on sales by Metromedia Company of the Company's common stock.
So long as News America and its affiliate own more than 5% of the stock of the
Company, each time Metromedia Company and its partners sell their stock of the
Company, News America and its affiliate will have the right to sell a
proportionate amount of their stock of the Company to the buyer.

The voting agreement will terminate if the merger agreement is terminated.

CHINESE JOINT VENTURES

Ningbo JV has received a letter from China Unicom stating that the supervisory
department of the Chinese government had requested that China Unicom terminate
the project with Ningbo JV. The Communications Group has been informed by China
Unicom that the letter also applies to Ningbo JV II. The notification from China
Unicom requested that negotiations begin immediately regarding the amounts to be
paid to the Ningbo JV, including return of investment made and appropriate
compensation and other matters related to the winding up of the Ningbo JV's
activities as a result of this notification. Negotiations regarding the terms of
the termination have begun and are continuing. The content of the negotiations
includes determining the investment principal of the Ningbo joint ventures,
appropriate compensation and other matters related to termination of contracts.
The notification further stated that due to technical reasons which were not
specified, the cash distribution plan for the first half of 1999 had not been
decided, and that China Unicom also expected to discuss this subject with the
Ningbo JV. As a result, the Company cannot currently determine the amount of
compensation the Ningbo joint ventures will receive.

While there can be no assurance that China Unicom will provide similar letters
to the Company's other two sino-sino-foreign telephony-related joint ventures,
the Company expects that these joint ventures will also be the subject of
project termination negotiations. The Company cannot yet predict the effect on
it of the Ningbo joint ventures' negotiations and the expected winding up of the
Company's other two telephony-related joint ventures, but the Company believes
such negotiations, if adversely concluded, or the failure to make scheduled cash
distributions, could have a material adverse effect on its financial position
and results of operations. Depending on the amount of compensation it receives,
the Company will record a non cash charge equal to the difference between the
sum of the carrying values of its investment and advances made to joint ventures
plus goodwill less the cash compensation it receives from the joint ventures
which China Unicom has paid. The Company's investment in and advances to joint
ventures and goodwill balance at June 30, 1999 were approximately $71 million
and $67 million respectively. The Company is currently evaluating other
investment opportunities in China and recently announced the establishment of a
new joint venture in China to develop and operate an e-commerce system.

MMG CONSOLIDATED

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operations for the three months ended March 31, 1999 was $8.4
million, a decrease in cash used in operations of $14.8 million from the same
period in the prior year.

                                       66
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
Losses from operations include significant non-cash items such as depreciation,
amortization, equity in losses of unconsolidated investees and losses allocable
to minority interests. Non-cash items decreased $5.7 million from $9.3 million
to $3.6 million for the three months ended March 31, 1998 and 1999,
respectively. The decrease related principally to the decrease in depreciation
and amortization expenses and a reduction in the equity in losses of
unconsolidated investees. Changes in operating assets and liabilities, net of
the effect of acquisitions, decreased cash flows for the three months ended
March 31, 1999 by $735,000 and decreased cash flows by $9.6 million for the
three months ended March 31, 1998.

The decrease in cash flows used in operating activities for the three months
ended March 31, 1999 resulted from the decreased losses in the Communications
Group's operations, improved operating results of Snapper and the collection of
a tax refund in connection with the sale of a discontinued operation.

CASH FLOWS FROM INVESTING ACTIVITIES

Cash used in investing activities decreased $14.8 million to $4.4 million for
the three months ended March 31, 1999. The principal components of investing
activities are investments in and advances to joint ventures of $5.1 million and
$13.1 million in 1999 and 1998, respectively, and the Communications Group
utilized $455,000 and $3.9 million of funds for acquisitions during the three
months ended March 31, 1999 and 1998, respectively.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash used in financing activities was $997,000 for the three months ended March
31, 1999 a decrease of $188,000 from the same period in the prior year. For the
three months ended March 31, 1999 the Company used $3.8 million to pay its
preferred stock dividend, and there were $5.4 million of debt payments and $8.1
million of additions to long-term debt borrowed under the Snapper loan. For the
three months ended March 31, 1998 the Company used $3.8 million to pay its
preferred stock dividend and $2.0 million for debt repayments, which were
partially offset by proceeds of $4.6 million from the issuance of common stock
from the exercise of stock options.

YEAR 2000 SYSTEM MODIFICATIONS

The Company is currently working to evaluate and resolve the potential impact of
the Year 2000 on the processing of date-sensitive information and network
systems. The Year 2000 problem is the result of computer programs being written
using two digits (rather than four) to define the Year 2000, which could result
in miscalculations or system failures resulting from recognition of a date using
"00" as the year 1900 rather than the year 2000. The Company expects to make
some of the necessary modifications through its ongoing investment in system
upgrades.

The Company has delegated responsibility to a group of executives to coordinate
the identification, evaluation and implementation of changes to computer systems
and applications necessary to achieve the Company's goal of a Year 2000 date
conversion which would minimize the effect on the Company's subsidiaries, joint
ventures and their subscribers and customers, and avoid disruption to business
operations. The Company is also focusing on outside forces that may affect the
Company's operations, including the Company's and its subsidiaries' and joint
ventures' vendors, banks and utility companies. The Company's analysis of the
Year 2000 problem is on-going and will be continuously updated through the
remainder of 1999 as necessary.

                                       67
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

The Company has developed a Year 2000 project plan for the Company, its
subsidiaries and unconsolidated joint ventures. However, The Company is not
directly responsible for Year 2000 readiness of many of its joint ventures and
in some cases has no access to the joint venture's management regarding these
matters. Executives of the Company are responsible for monitoring Year 2000
activities across all subsidiaries and joint ventures. Individual joint ventures
and subsidiaries are responsible for initiating and executing specific Year 2000
action plans.

The Company has completed its inventory of information technology and
non-information technology systems. Joint venture information technology and
non-information technology systems have principally been reviewed on a line of
business basis for cable television, telephony, radio and paging ventures. The
mission critical systems identified for the Company's joint ventures are those
that relate to revenue generation, customer service and collection and billing.
Non-information technology mission critical systems include GSM switches,
ACS/Tocom systems, satellite program delivery systems and paging terminals and
related equipment.

The Company has initiated communications with all of its suppliers and its joint
ventures' suppliers of mission critical systems. The Company has accepted the
service providers' statement of Year 2000 compliance as evidence in its
assessment phase. For those mission critical systems determined not to be
compliant, the Company is in the process of replacing or remediating the system
at each significant joint venture or subsidiary. In addition, limited testing
has been performed at certain joint ventures and at the subsidiaries and joint
venturers' technical facilities.

The Company recognizes that to the extent its remediation efforts and those of
its joint ventures fail to prevent Year 2000 problems from arising a temporary
interruption of service and loss of revenue may occur. High level contingency
plans have been developed which include the removal of noncompliant technology
from service on a temporary basis, replacing systems or reverting to manual
processes to deal with such possible occurrences. The Company expects to
complete this project prior to January 1, 2000.

Based on the preliminary data, the Company's estimate is that the Year 2000
effort will cost approximately $750,000, covering the period from January 1,
1998 through December 31, 1999, out of a total expected cost of information
systems of $10.4 million for this period, although there can be no assurance as
to the ultimate cost of the Year 2000 effort or the total cost of information
systems. Such costs will be expensed as incurred, except to the extent such
costs are incurred for the purchase or lease of capital equipment.

As of March 31, 1999, the Company has incurred $595,000 in respect of its Year
2000 conversion effort, or 79% of the total estimated cost. The Company expects
that the source of funds for Year 2000 costs will be cash on hand. No other
information systems projects of the Company and its subsidiaries and joint
ventures have been deferred due to the Year 2000 efforts.

The Company's Communications Group is heavily dependent on third parties, many
of whom are themselves heavily dependent on technology. In some cases, the
Company's third-party dependence is on vendors of technology who are themselves
working toward solutions to Year 2000 problems. Moreover, the Company is
dependent on the continued functioning of basic, heavily computerized services
such as banking and telephony. Further, the Company's Communications Group's
businesses are located in countries where basic services are operated by the
government or other governmental entities and the Company may not be able to
obtain information on Year 2000 problems. In certain joint ventures within the
Communications Group, the Company does not have a controlling management
interest and cannot unilaterally cause the joint venture to commit the necessary
resources

                                       68
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
to solve any Year 2000 problems. However, substantially all of the Company's
joint ventures operate or are planned to operate in countries where reliance on
automated systems is substantially less significant, and more recent, than in
the United States. Therefore, the Company believes that, in the event Year 2000
problems arise in such joint ventures, the local operators of such joint
ventures and customers and vendors should be able to revert to manual methods.
If the Company, its joint ventures in which it does not have a controlling
management interest, and their respective customers and vendors are unable to
solve any Year 2000 issues, a material adverse effect on the Company's results
of operations and financial condition could result.

The above information is based on the Company's current estimates using numerous
assumptions of future events. Given the complexity of the Year 2000 issues and
possible unidentified risks, actual results may vary from those anticipated and
discussed above.

This document constitutes a Year 2000 Readiness Disclosure Statement, and the
Statements in this Form 10-Q are subject to the Year 2000 Information and
Readiness Disclosure Act, and the Company hereby claims the protection of this
Act for this document and all information contained herein.

NEW ACCOUNTING DISCLOSURES

ACCOUNTING FOR DERIVATIVES

In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", was issued. Statement 133
established accounting and reporting standards for derivative instruments and
for hedging activities. Statement 133 requires that an entity recognize all
derivatives as either assets or liabilities and measure those instruments at
fair value. The accounting for the gain or loss due to changes in fair value of
the derivative instrument depends on whether the derivative instrument qualifies
as a hedge. Statement 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. Statement 133 can not be applied retroactively to
financial statements of prior periods. The Company anticipates that the adoption
of Statement 133 will not have a material impact on the Company's consolidated
financial position and results of operations.

ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, the financial position of the Company is
routinely subjected to a variety of risks. In addition to the market risk
associated with interest rate movements on outstanding debt and currency rate
movements on non-U.S. dollar denominated assets and liabilities, other examples
of risk include collectibility of accounts receivable and significant political,
economic and social risks inherent in doing business in emerging markets such as
Eastern Europe, the former Soviet Union and China.

With the exception of Snapper, the Company did not have any significant long
term obligations at March 31, 1999. Since Snapper's bank debt is a floating rate
instrument, its carrying value approximates its fair value. A 100 basis point
increase in the level of interest rates with all other variables held constant
would result in an increase in interest expense of $10,000. In addition, a 100
basis point increase in interest rates on Snapper's floor plan financing to its
distributors and dealers would have resulted in an increase in interest expense
of $23,000.

The Company does not hedge against foreign exchange rate risks at the current
time. In the majority of the countries that the Communications Group's joint
ventures operate, there currently do not exist derivative instruments to allow
the Communications Group to hedge foreign currency risk. In addition, at the
current time the majority of the Communications Group's joint ventures are in
the early stages

                                       69
<PAGE>
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (CONTINUED)
of development and the Company does not expect in the near term to repatriate
significant funds from the Communications Group's joint ventures. "Item 2.
Management's Discussion and Analysis of Financial Conditions and Results of
Operations--Inflation and Foreign Currency" contains additional information on
risks associated with the Company's investments in Eastern Europe, the former
Soviet Union and China.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q including, without limitation, statements
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Legal Proceedings" constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not
necessarily all, of such forward-looking statements can be identified by the use
of forward-looking terminology, such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involves risks and
uncertainties. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, which will, among other
things, affect demand for the Company's products and services; industry
capacity, which tends to increase during strong years of the business cycle;
changes in public taste and industry trends; demographic changes; competition
from other communications companies, which may affect the Company's ability to
enter into or acquire new joint ventures or to generate revenues; political,
social and economic conditions and laws, rules and regulations, and changes
therein, particularly in Eastern Europe and the former Soviet Union, China and
selected other emerging markets, which may affect the Company's results of
operations; timely completion of construction projects for new systems for the
Joint Ventures in which the Company has invested, which may impact the costs of
such projects; developing legal structures in Eastern Europe and the former
Soviet Union, China and other selected emerging markets, which may affect the
Company's results of operations; cooperation of local partners for the Company's
communications investments in Eastern Europe and the former Soviet Union, China
and other selected emerging markets, which may affect the Company's results of
operations; exchange rate fluctuations; license renewals for the Company's
communications investments in Eastern Europe and the former Soviet Union, China
and other selected emerging markets; the loss of any significant customers;
changes in business strategy or development plans; quality of management;
availability of qualified personnel; changes in or the failure to comply with
government regulations; and other factors referenced herein. Any forward-looking
statement speaks only as of the date on which it is made. New factors emerge
from time to time and it is not possible for the Company to predict which will
arise. In addition, the Company cannot assess the impact of each factor on its
business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking
statement.

                                       70
<PAGE>
                           PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Updated information on litigation and environmental matters subsequent to
December 31, 1998 is as follows:

FUQUA INDUSTRIES, INC. SHAREHOLDER LITIGATION

IN RE FUQUA INDUSTRIES, INC. SHAREHOLDER LITIGATION, Del. Ch., Consolidated C.A.
No. 11974, plaintiff Virginia Abrams filed a purported class and derivative
action in the Delaware Court of Chancery on February 22, 1991 against Fuqua
Industries, Inc., Intermark, Inc., the then-current directors of Fuqua
Industries and certain past members of the board of directors. The action
challenged certain transactions which were alleged to be part of a plan to
change control of the board of Fuqua Industries from J.B. Fuqua to Intermark and
sought a judgment against defendants in the amount of $15.7 million, other
unspecified money damages, an accounting, declaratory relief and an injunction
prohibiting any business combination between Fuqua Industries and Intermark in
the absence of approval by a majority of Fuqua Industries' disinterested
shareholders. Subsequently, two similar actions, styled BEHRENS V. FUQUA
INDUSTRIES, INC. ET AL., Del. Ch., C.A. No. 11988 and FREBERG V. FUQUA
INDUSTRIES, INC. ET AL., Del. Ch., C.A. No. 11989 were filed with the Court. On
May 1, 1991, the Court ordered all of the foregoing actions consolidated. On
October 7, 1991, all defendants moved to dismiss the complaint. Plaintiffs
thereafter took three depositions during the next three years.

On December 28, 1995, plaintiffs filed a consolidated second amended derivative
and class action complaint, purporting to assert additional facts in support of
their claim regarding an alleged plan, but deleting their prior request for
injunctive relief. On January 31, 1996, all defendants moved to dismiss the
second amended complaint. After the motion was briefed, oral argument was held
on November 6, 1996. On May 13, 1997, the Court issued a decision on defendants'
motion to dismiss, the Court dismissed all of plaintiffs' class claims and
dismissed all of plaintiffs' derivative claims except for the claims that Fuqua
Industries board members (i) entered into an agreement pursuant to which Triton
Group, Inc. (which was subsequently merged into Intermark) was exempted from 8
Del. C. 203 and (ii) undertook a program pursuant to which 4.9 million shares of
Fuqua Industries common stock were repurchased, allegedly both in furtherance of
an entrenchment plan. On January 16, 1998, the Court entered an order
implementing the May 13, 1997 decision. The order also dismissed one of the
defendants from the case with prejudice and dismissed three other defendants
without waiver of any rights plaintiffs might have to reassert the claims if the
opinion were to be vacated or reversed on appeal.

On February 5, 1998, plaintiffs filed a consolidated third amended derivative
complaint and named as defendants Messrs. J.B. Fuqua, Klamon, Sanders, Scott,
Warner and Zellars. The complaint alleged that defendants (i) entered into an
agreement pursuant to which Triton was exempted from 8 Del. C. 203 and (ii)
undertook a program pursuant to which 4.9 million shares of Fuqua Industries
common stock were repurchased, both allegedly in furtherance of an entrenchment
plan. For their relief, plaintiffs seek damages and an accounting of profits
improperly obtained by defendants.

In March 1998, defendants J. B. Fuqua, Klamon, Sanders, Zellars, Scott and
Warner filed their answers denying each of the substantive allegations of
wrongdoing contained in the third amended complaint. The Company also filed its
answer, submitting itself to the jurisdiction of the Court for a proper
resolution of the claims purported to be set forth by the plaintiffs.

Discovery is ongoing. The individual defendants have also filed motions to
disqualify Abrams and Freberg as derivative plaintiffs. No decision has been
rendered with respect to either motion.

                                       71
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
MICHAEL SHORES V. SAMUEL GOLDWYN COMPANY, ET AL.

On May 20, 1996, a purported class action lawsuit, MICHAEL SHORES V. SAMUEL
GOLDWYN COMPANY, ET AL., Case No. BC 150360, was filed in the Superior Court of
the State of California. Plaintiff Michael Shores alleged that, in connection
with the merger of the Samuel Goldwyn Company , Samuel Goldwyn Company's
directors and majority shareholder breached their fiduciary duties to the public
shareholders of Samuel Goldwyn Company. In amended complaints, plaintiff
subsequently added claims that the Company had aided and abetted other
defendants' fiduciary breaches and had negligently misrepresented and/or omitted
material facts in the Company's prospectus issued in connection with the merger.
The Company successfully demurred to the first and second amended complaints and
plaintiff filed a third amended complaint, which included only the negligent
misrepresentation claim against the Company. The plaintiff agreed to settle the
action in exchange for a payment by defendants in the amount of $490,000, which
payment constitutes a complete and final satisfaction of the claims asserted by
the plaintiff and a plaintiff class certified solely for the purposes of the
settlement. The settlement and the settlement class were approved by the court
on October 8, 1998. Members of the class have been notified of the settlement
and were able to file proofs of claim until February 15, 1999, which claims are
now being processed. At a hearing on July 7, 1999 the court approved the final
distribution of the settlement fund.

SAMUEL GOLDWYN, JR. V. METRO-GOLDWYN-MAYER INC., ET AL.

On October 29, 1997, Samuel Goldwyn, Jr., the former chairman of Samuel Goldwyn
Company, filed SAMUEL GOLDWYN, JR. V. METRO-GOLDWYN-MAYER INC., ET AL., Case No.
BC 180290, in Superior Court of the State of California, alleging that the
Company fraudulently induced him and the Samuel Goldwyn, Jr. Family Trust to
enter into various agreements in connection with the merger of the Samuel
Goldwyn Company (since renamed Goldwyn Entertainment Company); breached an
agreement to guarantee the performance of Goldwyn Entertainment Company's
obligations to the Trust; and used, without permission, the "Goldwyn" trademark.
The action also alleged that the Company and other defendants breached Mr.
Goldwyn's employment agreement and fiduciary duties owed to him and the trust,
both before and after the sale of Goldwyn Entertainment Company to
Metro-Goldwyn-Mayer Inc. After the Company successfully demurred to the
trademark and the breach of fiduciary duty claims, the plaintiffs amended their
pleading, revising and reasserting the trademark and breach of fiduciary duty
claims. Following a period of discovery, the Company reached a settlement with
the plaintiffs. The court ordered the plaintiffs' claims against the Company
dismissed with prejudice on January 11, 1999.

SYDNEY H. SAPSOWITZ AND SID SAPSOWITZ & ASSOCIATES, INC. V. JOHN W KLUGE, STUART
  SUBOTNICK, METROMEDIA INTERNATIONAL GROUP, ET AL.

On June 30, 1997, the plaintiffs in SYDNEY H. SAPSOWITZ AND SID SAPSOWITZ &
ASSOCIATES, INC. V. JOHN W. KLUGE, STUART SUBOTNICK, METROMEDIA INTERNATIONAL
GROUP, INC., ORION PICTURES CORPORATION, LEONARD WHITE, ET AL. filed a lawsuit
in Superior Court of the State of California alleging $28.7 million in damages
from the alleged breach of an oral agreement to pay a finder's fee in connection
with the Entertainment Group Sale. The Company denies the existence of any such
contract and believes it has meritorious defenses and is vigorously defending
this action. Discovery is proceeding.

ANTHONY NICHOLAS GEORGIOU, ET AL. V. MOBIL EXPLORATION AND PRODUCING SERVICES,
  INC., METROMEDIA INTERNATIONAL TELECOMMUNICATIONS, INC., ET AL.

On January 14, 1998, ANTHONY NICHOLAS GEORGIOU, ET AL. V. MOBIL EXPLORATION AND
PRODUCING SERVICES, INC., METROMEDIA INTERNATIONAL TELECOMMUNICATIONS, INC., ET
AL., Civil Action No. H-98-0098, was filed in the

                                       72
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
United States District Court for the Southern District of Texas. Plaintiffs
claim that MITI conspired against and tortiously interfered with plaintiffs'
potential contracts involving certain oil exploration and production contracts
in Siberia and telecommunications contracts in the Russian Federation.
Plaintiffs are claiming damages, for which all defendants could be held jointly
and severally liable, of an amount in excess of $395.0 million. On or about
February 27, 1998 MITI filed its answer denying each of the substantive
allegations of wrongdoing contained in the complaint. The contracts between
plaintiff Tiller International Limited ("Tiller") and defendant Mobil
Exploration and Producing Services, Inc. ("MEPS") which are at issue in this
case contain broad arbitration clauses. In accordance with these arbitration
clauses, MEPS instituted arbitration proceeding before the London Court of
International Arbitration on July 31, 1997. On August 27, 1998, Judge David
Hittner entered an order staying and administratively closing the Houston
litigation pending final completion of arbitration proceedings in Great Britain.
As such, this matter is presently inactive. The parties have engaged in some
discovery. The Company believes it has meritorious defenses and is vigorously
defending this action.

LEGAL PROCEEDINGS IN CONNECTION WITH RDM.

On August 19, 1998, a purported class action lawsuit, THEOHAROUS V. FONG, ET AL,
Civ. No. 1:98CV2366, was filed in United States District Court for the Northern
District of Georgia. On October 19, 1998, a second purported class action
lawsuit with substantially the same allegations, SCHUETTE V. FONG, ET AL., Civ.
No. 1:98CV3034, was filed in United States District Court for the Northern
District of Georgia. On June 7, 1999, plaintiffs in each of these lawsuits filed
amended complaints The amended complaints allege that certain officers,
directors and shareholders of RDM, including the Company and current and former
officers of the Company who served as directors of RDM, are liable under federal
securities laws for misrepresenting and failing to disclose information
regarding RDM's alleged financial condition during the period between November
7, 1995 and August 22, 1997, the date on which RDM disclosed that its management
had discussed the possibility of filing for bankruptcy. The amended complaints
also allege that the defendants, including the Company and current and former
officers of the Company who served as directors of RDM, are secondarily liable
as controlling persons of RDM. Plaintiffs in these lawsuits seek the following
relief: unspecified compensatory damages, reasonable costs and expenses,
including counsel fee and expert fees, and such other and further relief as the
court may deem just and proper.

On December 30, 1998, the chapter 11 trustee of RDM brought an adversary
proceeding in the bankruptcy of RDM, HAYS, ET AL. v. FONG, ET AL., Adv. Proc.
No. 98-1128, in the United States Bankruptcy Court, Northern District of
Georgia, alleging that former officers or directors of the Company, while
serving as directors on the board of RDM, breached fiduciary duties allegedly
owed to RDM's shareholders and creditors in connection with the bankruptcy of
RDM. On January 25, 1999, the plaintiff filed a first amended complaint. The
official committee of unsecured creditors of RDM has moved to proceed as
co-plaintiff or to intervene in this proceeding, and the official committee of
bondholders of RDM has moved to intervene in or join the proceeding. Plaintiffs
in this adversary proceeding seek the following relief against current and
former officers of the Company who served as directors of RDM: actual damages in
an amount to be proven at trial, reasonable attorney's fees and expenses, and
such other and further relief as the court deems just and proper.

On February 16, 1999, the creditors' Committee brought an adversary proceeding,
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF RDM SPORTS GROUP, INC. AND
RELATED DEBTORS V. METROMEDIA INTERNATIONAL GROUP, INC., Adv. Proc. No. 99-1023,
seeking in the alternative to recharacterize as contributions to equity a
secured claim in the amount of $15 million made by the Company arising out of
the Company's financing of RDM, or to equitably subordinate such claim made by
Metromedia against RDM and other debtors in the bankruptcy proceeding. On March
3, 1999, the bondholders'

                                       73
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
committee brought an adversary proceeding, THE OFFICIAL COMMITTEE OF BONDHOLDERS
OF RDM SPORTS GROUP, INC. v. METROMEDIA INTERNATIONAL GROUP, INC., Adv. Proc.
No. 99-1029, with substantially the same allegations as the above proceeding. In
addition to the equitable and injunctive relief sought by plaintiffs described
above, plaintiffs in these adversary proceedings seek actual damages in an
amount to be proven at trial, reasonable attorneys' fees, and such other and
further relief as the court deems just and proper.

The Company believes it has meritorious defenses and plans to vigorously defend
these actions. Due to the early stage of these proceedings, the Company cannot
evaluate the likelihood of an unfavorable outcome or an estimate of the likely
amount or range of possible loss, if any.

INDEMNIFICATION AGREEMENTS

In accordance with Section 145 of the General Corporation Law of the State of
Delaware, pursuant to the Company's Restated Certificate of Incorporation, the
Company has agreed to indemnify its officers and directors against, among other
things, any and all judgments, fines, penalties, amounts paid in settlements and
expenses paid or incurred by virtue of the fact that such officer or director
was acting in such capacity to the extent not prohibited by law.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

At March 31, 1999, Snapper was not in compliance with all financial covenants
under its loan and security agreement. On May 14, 1999, the lenders of the Loan
and Security Agreement waived any event of default arising from such
noncompliance.

ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                                  DESCRIPTION
---------  --------------------------------------------------------------------------------------------------------
<S>        <C>
11*        Computation of Earnings Per Share
27*        Financial Data Schedule

(b)        Reports on Form 8-K

           None
</TABLE>

------------------------

*   Filed herewith

                                       74
<PAGE>
                                   SIGNATURE

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

<TABLE>
<S>                             <C>  <C>
                                METROMEDIA INTERNATIONAL GROUP, INC.

                                By:              /s/ SILVIA KESSEL
                                     ------------------------------------------
                                                   Silvia Kessel
                                              EXECUTIVE VICE PRESIDENT
                                              CHIEF FINANCIAL OFFICER
                                                   AND TREASURER
</TABLE>

Dated: August 31, 1999

                                       75