<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-Q
                                   (MARK ONE)
 
/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934
 
     FOR THE PERIOD ENDED SEPTEMBER 30, 1998
 
                                       OR
 
/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934
 
     FOR THE TRANSITION PERIOD FROM                     TO
 
                         COMMISSION FILE NUMBER 1-5706
 
                            ------------------------
 
                      METROMEDIA INTERNATIONAL GROUP, INC.
            (Exact name of registrant, as specified in its charter)
 
<TABLE>
<CAPTION>
                  DELAWARE                                      58-0971455
<S>                                            <C>
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                       Identification No.)
</TABLE>
 
             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 NOVEMBER 5, 1998 WAS
69,118,841.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
                                    INDEX TO
                         QUARTERLY REPORT ON FORM 10-Q
 
<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
                                            PART I -- FINANCIAL INFORMATION
 
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
Notes to Consolidated Condensed Financial Statements.......................................................           6
 
Item 2. Management's Discussion and Analysis of Financial
       Condition and Results of Operations.................................................................          28
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........................................          55
 
                                              PART II -- OTHER INFORMATION
 
Item 1. Legal Proceedings..................................................................................          56
 
Item 3. Defaults upon Senior Securities....................................................................          58
 
Item 4. Submission of Matters to a Vote of Security Holders................................................          58
 
Item 6. Exhibits and Reports on Form 8-K...................................................................          58
 
Signature..................................................................................................          59
</TABLE>
 
                                       1
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED            NINE MONTHS ENDED
                                                       ----------------------------  ----------------------------
                                                       SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,
                                                           1998           1997           1998           1997
                                                       -------------  -------------  -------------  -------------
<S>                                                    <C>            <C>            <C>            <C>
Revenues:
  Communications Group...............................   $     7,722    $     5,772    $    24,351    $    14,924
  Lawn and garden equipment..........................        47,330         30,773        165,159        132,596
                                                       -------------  -------------  -------------  -------------
                                                             55,052         36,545        189,510        147,520
Cost and expenses:
  Cost of sales and operating expenses...............        38,282         22,011        124,715         91,493
  Selling, general and administrative................        37,716         31,390        115,635         91,778
  Depreciation and amortization......................         5,058          3,974         15,500         12,071
                                                       -------------  -------------  -------------  -------------
Operating loss.......................................       (26,004)       (20,830)       (66,340)       (47,822)
Other income (expense):
  Interest expense...................................        (2,927)        (4,417)       (12,487)       (16,463)
  Interest income....................................         5,241          4,560         16,367          9,360
  Equity in losses of Joint Ventures.................        (3,800)        (5,376)       (15,358)        (7,561)
  Gain on sale Protocall Ventures....................         7,091             --          7,091             --
  Equity in losses of and writedown of investment in
    RDM Sports Group, Inc............................            --        (19,934)            --        (45,056)
  Foreign currency gain (loss).......................          (314)            27              7           (204)
                                                       -------------  -------------  -------------  -------------
                                                              5,291        (25,140)        (4,380)       (59,924)
Loss before income tax benefit (expense), minority
  interest, discontinued operations and extraordinary
  items..............................................       (20,713)       (45,970)       (70,720)      (107,746)
Income tax benefit (expense).........................          (573)        12,262         (1,203)        11,948
Minority interest....................................         1,937          2,429          7,422          5,056
                                                       -------------  -------------  -------------  -------------
Loss from continuing operations......................       (19,349)       (31,279)       (64,501)       (90,742)
Discontinued operations:
  Gain on sale.......................................            --        266,294          5,267        266,294
  Income (loss) from discontinued operations.........            --          2,778             --        (31,889)
                                                       -------------  -------------  -------------  -------------
Income (loss) before extraordinary items.............       (19,349)       237,793        (59,234)       143,663
Extraordinary items:
  Loss and equity in loss on early extinguishment of
    debt.............................................            --        (13,598)            --        (14,692)
                                                       -------------  -------------  -------------  -------------
Net income (loss)....................................       (19,349)       224,195        (59,234)       128,971
Cumulative convertible preferred stock dividend
  requirement........................................        (3,752)          (584)       (11,256)          (584)
                                                       -------------  -------------  -------------  -------------
Net income (loss) attributable to common
  stockholders.......................................   $   (23,101)   $   223,611    $   (70,490)   $   128,387
                                                       -------------  -------------  -------------  -------------
                                                       -------------  -------------  -------------  -------------
Weighted average number of common
  shares--Basic......................................        69,076         67,131         68,900         66,491
                                                       -------------  -------------  -------------  -------------
                                                       -------------  -------------  -------------  -------------
Income (loss) per common share--Basic:
  Continuing operations..............................   $     (0.33)   $     (0.48)   $     (1.10)   $     (1.37)
  Discontinued operations............................   $        --    $      4.01    $      0.08    $      3.52
  Extraordinary items................................   $        --    $     (0.20)   $        --    $     (0.22)
  Net income (loss)..................................   $     (0.33)   $      3.33    $     (1.02)   $      1.93
                                                       -------------  -------------  -------------  -------------
                                                       -------------  -------------  -------------  -------------
</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>
                                          SEPTEMBER 30,   DECEMBER 31,
                                              1998            1997
                                          -------------   ------------
                                           (UNAUDITED)
<S>                                       <C>             <C>
ASSETS:
Current assets:
  Cash and cash equivalents.............   $  171,957      $  129,661
  Short-term investments................        3,008         100,000
  Accounts receivable:
    Snapper, net........................       22,216          26,494
    Other, net..........................        8,928           5,190
  Inventories...........................       56,008          96,436
  Other assets..........................        5,205           4,021
                                          -------------   ------------
      Total current assets..............      267,322         361,802
Investments in and advances to Joint
  Ventures:
  Eastern Europe and the Republics of
    the Former Soviet Union.............      101,390          86,442
  China.................................       64,577          45,851
Net assets of Landmark Theatre Group....           --          48,531
Property, plant and equipment, net of
  accumulated depreciation..............       41,628          44,010
Intangible assets, less accumulated
  amortization..........................      196,067         200,120
Other assets............................        3,764           2,516
                                          -------------   ------------
      Total assets......................   $  674,748      $  789,272
                                          -------------   ------------
                                          -------------   ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Accounts payable......................   $   19,615      $   30,036
  Accrued expenses......................       69,884          73,349
  Current portion of long-term debt.....          707          21,478
                                          -------------   ------------
      Total current liabilities.........       90,206         124,863
Long-term debt..........................       46,884          57,938
Other long-term liabilities.............        5,308           8,225
                                          -------------   ------------
      Total liabilities.................      142,398         191,026
                                          -------------   ------------
Minority interest.......................       36,662          37,564
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 69,118,841
    and 68,390,800 shares at September
    30, 1998 and December 31, 1997,
    respectively........................       69,119          68,391
  Paid-in surplus.......................    1,012,568       1,007,272
  Accumulated deficit...................     (789,105)       (718,615)
  Accumulated other comprehensive
    loss................................       (3,894)         (3,366)
                                          -------------   ------------
      Total stockholders' equity........      495,688         560,682
                                          -------------   ------------
      Total liabilities and
        stockholders' equity............   $  674,748      $  789,272
                                          -------------   ------------
                                          -------------   ------------
</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>
                                                                                           NINE MONTHS ENDED
                                                                                      ----------------------------
                                                                                      September 30,  September 30,
                                                                                          1998           1997
                                                                                      -------------  -------------
<S>                                                                                   <C>            <C>
Operating activities:
  Net income (loss).................................................................    $ (59,234)     $ 128,971
Adjustments to reconcile net income (loss) to net cash used in operating activities:
  Gain on sale of discontinued operations...........................................       (5,267)      (266,294)
  Loss from discontinued operations.................................................           --         31,889
  Gain on sale of Protocall Ventures................................................       (7,091)            --
  Loss and equity in loss on early extinguishment of debt...........................           --         14,692
  Equity in losses and writedown of investment in RDM Sports Group, Inc.............           --         45,056
  Equity in losses of Joint Ventures................................................       15,358          7,561
  Depreciation and amortization.....................................................       15,500         12,071
  Minority interest.................................................................       (7,422)        (5,056)
  Other.............................................................................          684          5,536
Changes in operating assets and liabilities, net of acquisitions and dispositions:
  Decrease in accounts receivable...................................................        2,851         15,328
  (Increase) decrease in inventories................................................       39,847        (32,629)
  Increase in other assets..........................................................       (2,277)          (134)
  Decrease in accounts payable and accrued expenses.................................      (15,977)       (31,706)
  Other operating activities, net...................................................         (701)          (227)
                                                                                      -------------  -------------
    Cash used in operating activities...............................................      (23,729)       (74,942)
                                                                                      -------------  -------------
Investing activities:
  Investments in and advances to Joint Ventures.....................................      (50,646)       (37,283)
  Distributions from Joint Ventures.................................................        4,385          4,003
  Purchase of short--term investments...............................................       (3,069)            --
  Proceeds from sale of short--term investments.....................................      100,000             --
  Purchase of additional equity in subsidiaries.....................................       (4,262)        (4,389)
  Business acquisitions.............................................................       (4,999)        (4,750)
  Net proceeds from sale of discontinued operations.................................       57,298        276,607
  Proceeds from sale of Protocall Ventures..........................................       14,533             --
  Additions to property, plant and equipment........................................       (9,325)        (9,484)
  Other investing activities, net...................................................         (156)        (8,934)
                                                                                      -------------  -------------
    Cash provided by investing activities...........................................      103,759        215,770
                                                                                      -------------  -------------
Financing activities:
  Proceeds from issuance of long--term debt.........................................           --         19,858
  Payments on notes and subordinated debt...........................................      (31,825)      (156,716)
  Proceeds from issuance of stock related to public stock offering..................           --        199,442
  Proceeds from issuance of common stock related to incentive plans.................        5,347         14,965
  Preferred stock dividends paid....................................................      (11,256)            --
  Due from discontinued operations..................................................           --          3,672
                                                                                      -------------  -------------
    Cash provided by (used in) financing activities.................................      (37,734)        81,221
                                                                                      -------------  -------------
  Net increase in cash and cash equivalents.........................................       42,296        222,049
  Cash and cash equivalents at beginning of period..................................      129,661         88,208
                                                                                      -------------  -------------
  Cash and cash equivalents at end of period........................................    $ 171,957      $ 310,257
                                                                                      -------------  -------------
                                                                                      -------------  -------------
</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     INCOME (LOSS)
                                  -----------  ---------  -----------  -----------  ---------  ------------  --------------
<S>                               <C>          <C>        <C>          <C>          <C>        <C>           <C>
Balances, December 31, 1997.....   4,140,000   $ 207,000  68,390,800    $  68,391   $1,007,272  $ (718,615)    $   (3,366)
Issuance of stock and stock
  options related to incentive
  plans.........................          --          --     728,041          728       5,296           --             --
Dividends on 7 1/4% cumulative
  convertible preferred stock...          --          --          --           --          --      (11,256)            --
Other comprehensive loss........          --          --          --           --          --           --           (528)
Net loss........................          --          --          --           --          --      (59,234)            --
                                  -----------  ---------  -----------  -----------  ---------  ------------  --------------
Balances, September 30, 1998....   4,140,000   $ 207,000  69,118,841    $  69,119   $1,012,568  $ (789,105)    $   (3,894)
                                  -----------  ---------  -----------  -----------  ---------  ------------  --------------
                                  -----------  ---------  -----------  -----------  ---------  ------------  --------------
 
<CAPTION>
 
                                    TOTAL
                                  ---------
<S>                               <C>
Balances, December 31, 1997.....  $ 560,682
Issuance of stock and stock
  options related to incentive
  plans.........................      6,024
Dividends on 7 1/4% cumulative
  convertible preferred stock...    (11,256)
Other comprehensive loss........       (528)
Net loss........................    (59,234)
                                  ---------
Balances, September 30, 1998....  $ 495,688
                                  ---------
                                  ---------
</TABLE>
 
     See accompanying notes to consolidated condensed financial statements.
 
                                       5
<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.
("MITI" or the "Communications Group"), and Snapper, Inc. ("Snapper"). The
Communications Group includes its consolidated subsidiaries and joint ventures,
and unconsolidated joint ventures. All significant intercompany transactions and
accounts have been eliminated.
 
The Company completed the sale of Landmark Theatre Group ("Landmark") on April
16, 1998 (see note 4). Accordingly, Landmark has been recorded as a
discontinuance of a business segment, and the consolidated condensed balance
sheet at December 31, 1997 reflects the net assets of the discontinued segment.
In addition, the consolidated condensed statements of operations reflect
Landmark's results of operations for the three and nine months ended September
30, 1997 as a discontinued operation.
 
In addition, on July 10, 1997, the Company completed the sale of substantially
all of its entertainment assets ( the "Entertainment Group Sale") (see note 4).
The Entertainment Group Sale was recorded as a discontinuance of a business
segment, and accordingly, the consolidated condensed statements of operations
for the three and nine months ended September 30, 1997 reflect the results of
operations of the Entertainment Group as a discontinued operation.
 
Investments in other companies, including those of the Communications Group's
joint ventures ("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, including
loans and accrued interest, in Joint Ventures under the caption "Investments in
and advances to Joint Ventures." The Company accounts for its equity in earnings
(losses) of the Joint Ventures 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 (the "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, 1997 (the "1997 Form 10-K").
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 September 30, 1998, the results of its operations and its cash
flows for the three and nine month periods ended September 30, 1998 and 1997
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. 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 any acquisitions. Such funding requirements are based on
the anticipated funding needs of its Joint Ventures and certain acquisitions
committed to by the
 
                                       6
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
1. BASIS OF PRESENTATION AND LIQUIDITY (CONTINUED)
Company. Future capital requirements of the Communications Group, including
future acquisitions, will depend on the available funding from the Company or
alternative sources of financing and on the ability of the Communications
Group's Joint Ventures 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
requirements 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 long-term
business objectives including its on-going working capital, 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. 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 achieving positive operating results
and cash flows through revenue and subscriber growth and through control of
operating expenses.
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--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 under the line of
credit agreements between the Company or one of its subsidiaries and the Joint
Ventures are reflected based on the amounts recoverable under the credit
agreement, plus accrued interest.
 
Advances are made to Joint Ventures 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 range from the prime rate to the prime rate plus 6%. The
credit agreements generally provide for the payment of principal and interest
from 90% of the Joint Ventures' 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 to provide up to $164.6 million in funding of which $18.7
million in funding obligations remain at September 30, 1998. The Communications
Group's funding commitments are contingent on its approval of the Joint
Ventures' business plans.
 
At September 30, 1998 and December 31, 1997, the Communications Group's
unconsolidated investments in Joint Ventures in Eastern Europe and the republics
of the former Soviet Union, at cost, net of adjustments for its equity in
earnings or losses, were as follows (in thousands):
 
                                       7
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                              YEAR
                                                                                                             VENTURE
NAME                                                                     1998       1997     OWNERSHIP %     FORMED
---------------------------------------------------------------------  ---------  ---------  ------------  -----------
<S>                                                                    <C>        <C>        <C>           <C>
CABLE TELEVISION
Kosmos TV, Moscow, Russia............................................  $      59  $    (123)     50%             1991
Baltcom TV, Riga, Latvia.............................................      4,445      6,093      50%             1991
Ayety TV, Tbilisi, Georgia...........................................      3,129      3,732      49%             1991
Kamalak TV, Tashkent, Uzbekistan.....................................      2,846      2,824      50%             1992
Sun TV, Chisinau, Moldova............................................      4,983      4,671      50%             1993
Cosmos TV, Minsk, Belarus............................................      2,764      2,135      50%             1993
Alma TV, Almaty, Kazakstan...........................................      5,028      2,597      50%             1994
Teleplus, St. Petersburg, Russia (1).................................      1,893      1,093      45%             1996
TV-21, Riga, Latvia..................................................        403        458      48%             1996
                                                                       ---------  ---------
                                                                          25,550     23,480
                                                                       ---------  ---------
PAGING
Baltcom Plus, Latvia.................................................        613      1,232      50%             1994
Paging One, Georgia..................................................        851      1,037      45%             1993
Raduga Poisk, Nizhny Novgorod, Russia................................        660        549      45%             1993
PT Page, St. Petersburg, Russia......................................        924      1,006      40%             1994
Paging Ajara, Batumi, Georgia........................................        316        277      35%             1996
Kazpage, Kazakstan (2)...............................................      1,028        864     26-41%           1996
Kamalak Paging, Tashkent, Uzbekistan.................................      2,412      2,243      50%             1992
Alma Page, Almaty, Kazakstan.........................................        898      1,936      50%             1994
Mobile Telecom, Moscow, Russia (5)...................................      7,466         --      50%             1998
Eurodevelopment Ukraine, Kiev
  and Dnepropetrovsk, Ukraine (6)....................................        919         --      51%             1998
                                                                       ---------  ---------
                                                                          16,087      9,144
                                                                       ---------  ---------
RADIO BROADCASTING
Eldoradio, St. Petersburg, Russia (3)................................         --        971      75%             1993
Radio Nika, Socci, Russia............................................        290        337      51%             1995
AS Trio LSL, Estonia.................................................      1,899      1,593      49%             1997
                                                                       ---------  ---------
                                                                           2,189      2,901
                                                                       ---------  ---------
INTERNATIONAL TOLL CALLING
Telecom Georgia, Georgia.............................................      5,869      6,080      30%             1994
                                                                       ---------  ---------
CELLULAR TELECOMMUNICATIONS
Baltcom GSM, Latvia (4)..............................................     12,467     11,996      22%             1996
Magticom, Georgia....................................................     12,287      6,951      35%             1996
                                                                       ---------  ---------
                                                                          24,754     18,947
                                                                       ---------  ---------
FIXED TELEPHONY
Instaphone, Kazakstan (1)............................................      1,262        684      50%             1998
                                                                       ---------  ---------
TRUNKED MOBILE RADIO
Trunked mobile radio ventures (7)....................................      1,770      5,390
                                                                       ---------  ---------
PRE-OPERATIONAL (8)
Telephony related ventures and equipment.............................      9,003      9,003
Other................................................................     14,906     10,813
                                                                       ---------  ---------
                                                                          23,909     19,816
                                                                       ---------  ---------
TOTAL................................................................  $ 101,390  $  86,442
                                                                       ---------  ---------
                                                                       ---------  ---------
 
<CAPTION>
                                                                            YEAR
                                                                         OPERATIONS
NAME                                                                      COMMENCED
---------------------------------------------------------------------  ---------------
<S>                                                                    <C>
CABLE TELEVISION
Kosmos TV, Moscow, Russia............................................          1992
Baltcom TV, Riga, Latvia.............................................          1992
Ayety TV, Tbilisi, Georgia...........................................          1993
Kamalak TV, Tashkent, Uzbekistan.....................................          1993
Sun TV, Chisinau, Moldova............................................          1994
Cosmos TV, Minsk, Belarus............................................          1996
Alma TV, Almaty, Kazakstan...........................................          1995
Teleplus, St. Petersburg, Russia (1).................................          1998
TV-21, Riga, Latvia..................................................          1997
PAGING
Baltcom Plus, Latvia.................................................          1995
Paging One, Georgia..................................................          1994
Raduga Poisk, Nizhny Novgorod, Russia................................          1994
PT Page, St. Petersburg, Russia......................................          1995
Paging Ajara, Batumi, Georgia........................................          1997
Kazpage, Kazakstan (2)...............................................          1997
Kamalak Paging, Tashkent, Uzbekistan.................................          1993
Alma Page, Almaty, Kazakstan.........................................          1995
Mobile Telecom, Moscow, Russia (5)...................................          1998
Eurodevelopment Ukraine, Kiev
  and Dnepropetrovsk, Ukraine (6)....................................          1998
RADIO BROADCASTING
Eldoradio, St. Petersburg, Russia (3)................................          1995
Radio Nika, Socci, Russia............................................          1995
AS Trio LSL, Estonia.................................................          1997
INTERNATIONAL TOLL CALLING
Telecom Georgia, Georgia.............................................          1994
CELLULAR TELECOMMUNICATIONS
Baltcom GSM, Latvia (4)..............................................          1997
Magticom, Georgia....................................................          1997
FIXED TELEPHONY
Instaphone, Kazakstan (1)............................................          1998
TRUNKED MOBILE RADIO
Trunked mobile radio ventures (7)....................................
PRE-OPERATIONAL (8)
Telephony related ventures and equipment.............................
Other................................................................
TOTAL................................................................
</TABLE>
 
------------------------
 
(1) Included in pre-operational at December 31, 1997.
 
                                       8
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)
(2) Kazpage is comprised of a service entity and 10 paging Joint Ventures. The
    Company's interest in the paging Joint Ventures ranges from 26% to 41% and
    its interest in the service entity is 51%.
 
(3) In November 1997, the Communications Group purchased an additional interest
    in Eldoradio, increasing its ownership to 75%.
 
(4) In August 1998, the Communications Group increased its ownership at Baltcom
    GSM from 21% to 22%.
 
(5) 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.
 
(6) In September 1998, the Communications Group purchased 51% of Eurodevelopment
    Ukraine, a paging venture in the Ukraine.
 
(7) In July 1998, the Communications Group sold its share of Protocall Ventures
    Limited, a holding company for the Communications Group's ownership
    interests in trunked mobile radio. At September 30, 1998, the investment
    represents the Company's interest in Spectrum, a trunked mobile radio
    venture in Kazakstan, in which the Communications Group has retained a 33%
    ownership interest.
 
(8) At September 30, 1998 and December 31, 1997 amounts for proposed joint
    ventures and amounts expended for equipment for future wireless local loop
    projects are included in pre-operational Joint Ventures.
 
Summarized combined financial information of unconsolidated Joint Ventures
accounted for on a three-month lag under the equity method that have commenced
operations as of the dates indicated are as follows (in thousands):
 
COMBINED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                                      SEPTEMBER 30,  DECEMBER 31,
                                                                                          1998           1997
                                                                                      -------------  ------------
<S>                                                                                   <C>            <C>
Assets:
  Current assets....................................................................   $    37,964    $   30,563
  Investments in systems and equipment..............................................       102,653        84,875
  Other assets......................................................................         8,355         9,758
                                                                                      -------------  ------------
    Total assets....................................................................   $   148,972    $  125,196
                                                                                      -------------  ------------
                                                                                      -------------  ------------
Liabilities and Joint Ventures' Deficit:
  Current liabilities...............................................................   $    35,283    $   28,280
  Amount payable under MITI credit facility.........................................        62,432        50,692
  Other long-term liabilities.......................................................        75,572        49,232
                                                                                      -------------  ------------
                                                                                           173,287       128,204
  Joint Ventures' deficit...........................................................       (24,315)       (3,008)
                                                                                      -------------  ------------
    Total liabilities and Joint Ventures' deficit...................................   $   148,972    $  125,196
                                                                                      -------------  ------------
                                                                                      -------------  ------------
</TABLE>
 
                                       9
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)
COMBINED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                              NINE MONTHS
                                                                          ENDED SEPTEMBER 30,
                                                                          --------------------
                                                                            1998       1997
                                                                          ---------  ---------
<S>                                                                       <C>        <C>
Revenues................................................................  $  71,570  $  49,720
Costs and Expenses:
  Cost of sales and operating expenses..................................     20,559     10,931
  Selling, general and administrative...................................     37,208     26,269
  Depreciation and amortization.........................................     19,485      9,335
  Other.................................................................         47         39
                                                                          ---------  ---------
    Total expenses......................................................     77,299     46,574
                                                                          ---------  ---------
 
Operating income (loss).................................................     (5,729)     3,146
Interest expense........................................................     (9,428)    (4,367)
Other loss..............................................................     (2,237)    (1,889)
Foreign currency transactions...........................................     (2,573)    (2,148)
                                                                          ---------  ---------
Net loss................................................................  $ (19,967) $  (5,258)
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>
 
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 nine months ended
September 30, 1998 and 1997 (in thousands, except subscribers):
 
                                       10
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)
<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED SEPTEMBER 30, 1998
                                      ----------------------------------------------------------------------------------
                                                                                                               TRUNKED
                                         CABLE                    RADIO      CELLULAR TELE-   INTERNATIONAL    MOBILE
                                      TELEVISION    PAGING    BROADCASTING   COMMUNICATIONS   TOLL CALLING    RADIO (2)
                                      -----------  ---------  -------------  ---------------  -------------  -----------
<S>                                   <C>          <C>        <C>            <C>              <C>            <C>
COMBINED
Revenues............................   $  23,336   $  13,525    $  15,276       $  15,152       $  21,062     $   5,888
Depreciation and amortization.......      10,067       2,226        1,077           7,226           1,404         1,071
Operating income (loss) before
  taxes.............................      (4,561)     (6,550)         (14)         (5,814)          6,100        (2,500)
Interest income.....................          14          15          322               3              14            29
Interest expense....................       3,985       1,760          375           4,968             290           284
Net income (loss)...................      (9,499)    (10,309)      (1,614)        (11,554)          4,399        (2,867)
 
Assets..............................      42,844      24,314       22,284          67,741          25,987         2,630
Capital expenditures................       4,817       1,831          705          28,726           2,682         2,497
Contributions to Joint Ventures.....      13,013      24,005        4,414          10,270              --         1,054
Subscribers.........................     291,664     122,166          n/a          41,446             n/a           998
 
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES
Revenues............................   $   2,439   $   3,317    $  13,713       $      --       $      --     $   3,200
Depreciation and amortization.......       1,092       1,092          927              --              --           481
Operating income (loss) before
  taxes.............................      (1,265)     (6,571)         157              --              --          (186)
Interest income.....................          11          12          322              --              --            29
Interest expense....................         691       1,122          366              --              --           106
Net loss............................      (1,784)     (8,207)      (1,428)             --              --          (364)
 
Assets..............................       8,223       8,776       20,898              --              --            --
Capital expenditures................         531         555          469              --              --            --
 
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $  20,897   $  10,208    $   1,563       $  15,152       $  21,062     $   2,688
Depreciation and amortization.......       8,975       1,134          150           7,226           1,404           590
Operating income (loss) before
  taxes.............................      (3,296)         21         (171)         (5,814)          6,100        (2,314)
Interest income.....................           3           3           --               3              14            --
Interest expense....................       3,294         638            9           4,968             290           178
Net income (loss)...................      (7,715)     (2,102)        (186)        (11,554)          4,399        (2,503)
 
Assets..............................      34,621      15,538        1,386          67,741          25,987         2,630
Capital expenditures................       4,286       1,276          236          28,726           2,682         2,497
 
Net investment in Joint Ventures....      25,550      16,087        2,189          24,754           5,869         1,770
Equity in income (losses) of
  unconsolidated investees..........      (7,176)     (2,307)         (97)         (4,028)          1,320          (688)
 
<CAPTION>
 
                                         FIXED
                                       TELEPHONY     TOTAL
                                      -----------  ---------
<S>                                   <C>          <C>
COMBINED
Revenues............................   $      --   $  94,239
Depreciation and amortization.......           6      23,077
Operating income (loss) before
  taxes.............................        (255)    (13,594)
Interest income.....................          --         397
Interest expense....................          51      11,713
Net income (loss)...................        (306)    (31,750)
Assets..............................       1,069     186,869
Capital expenditures................         242      41,500
Contributions to Joint Ventures.....       8,305      61,061
Subscribers.........................          --     456,274
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES
Revenues............................   $      --   $  22,669(1)
Depreciation and amortization.......          --       3,592
Operating income (loss) before
  taxes.............................          --      (7,865)(1)
Interest income.....................          --         374
Interest expense....................          --       2,285
Net loss............................          --     (11,783)(1)
Assets..............................          --      37,897
Capital expenditures................          --       1,555
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $      --   $  71,570
Depreciation and amortization.......           6      19,485
Operating income (loss) before
  taxes.............................        (255)     (5,729)
Interest income.....................          --          23
Interest expense....................          51       9.428
Net income (loss)...................        (306)    (19,967)
Assets..............................       1,069     148,972
Capital expenditures................         242      39,945
Net investment in Joint Ventures....       1,262      77,481
Equity in income (losses) of
  unconsolidated investees..........        (302)    (13,278)
</TABLE>
 
                                       11
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)
<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED SEPTEMBER 30, 1997
                                      ----------------------------------------------------------------------------------
                                                                                                               TRUNKED
                                         CABLE                    RADIO      CELLULAR TELE-   INTERNATIONAL    MOBILE
                                      TELEVISION    PAGING    BROADCASTING   COMMUNICATIONS   TOLL CALLING    RADIO (2)
                                      -----------  ---------  -------------  ---------------  -------------  -----------
<S>                                   <C>          <C>        <C>            <C>              <C>            <C>
COMBINED
Revenues............................   $  17,029   $   9,629    $  11,456       $   1,021       $  21,373     $   2,972
Depreciation and amortization.......       6,719       1,169          256             848             872           715
Operating income (loss) before
  taxes.............................      (2,677)     (2,421)       4,205          (4,396)         11,649        (2,720)
Interest income.....................           4          22           94              12              20            --
Interest expense....................       2,898         823          371             759             107           340
Net income (loss)...................      (6,362)     (4,147)       2,299          (5,606)          9,399        (3,156)
 
Assets..............................      39,445      13,568        7,534          48,123          22,856        10,041
Capital expenditures................       7,729       1,737          313          34,793           7,329         2,336
Contributions to Joint Ventures.....      17,997       9,035        4,128           7,803              --         6,159
Subscribers (unaudited).............     169,033      53,321          n/a           5,865             n/a        12,054
 
CONSOLIDATED SUBSIDIARIES ANDJOINT
  VENTURES
Revenues............................   $   1,560   $   2,301    $   9,899       $      --       $      --     $      --
Depreciation and amortization.......         495         562          187              --              --            --
Operating income (loss) before
  taxes.............................        (845)     (2,621)       3,960              --              --            --
Interest income.....................          --          18           88              --              --            --
Interest expense....................         380         260          291              --              --            --
Net income (loss)...................      (1,311)     (3,125)       2,121              --              --            --
 
Assets..............................       6,794       7,006        5,927              --              --            --
Capital expenditures................       1,226         730          181              --              --            --
 
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $  15,469   $   7,328    $   1,557       $   1,021       $  21,373     $   2,972
Depreciation and amortization.......       6,224         607           69             848             872           715
Operating income (loss) before
  taxes.............................      (1,832)        200          245          (4,396)         11,649        (2,720)
Interest income.....................           4           4            6              12              20            --
Interest expense....................       2,518         563           80             759             107           340
Net income (loss)...................      (5,051)     (1,022)         178          (5,606)          9,399        (3,156)
 
Assets..............................      32,651       6,562        1,607          48,123          22,856        10,041
Capital expenditures................       6,503       1,007          132          34,793           7,329         2,336
 
Net investment in Joint Ventures....      26,374       8,586        1,977          16,842           5,046         6,223
Equity in income (losses) of
  unconsolidated investees..........      (5,325)     (1,105)         168          (1,309)          2,820        (1,235)
 
<CAPTION>
 
                                         FIXED
                                       TELEPHONY     TOTAL
                                      -----------  ---------
<S>                                   <C>          <C>
COMBINED
Revenues............................   $      --   $  63,480
Depreciation and amortization.......          --      10,579
Operating income (loss) before
  taxes.............................          --       3,640
Interest income.....................          --         152
Interest expense....................          --       5,298
Net income (loss)...................          --      (7,573)
Assets..............................          --     141,567
Capital expenditures................          --      54,237
Contributions to Joint Ventures.....         509      45,631
Subscribers (unaudited).............          --     240,273
CONSOLIDATED SUBSIDIARIES ANDJOINT
  VENTURES
Revenues............................   $      --   $  13,760(1)
Depreciation and amortization.......          --       1,244
Operating income (loss) before
  taxes.............................          --         494(1)
Interest income.....................          --         106
Interest expense....................          --         931
Net income (loss)...................          --      (2,315)(1)
Assets..............................          --      19,727
Capital expenditures................          --       2,137
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $      --   $  49,720
Depreciation and amortization.......          --       9,335
Operating income (loss) before
  taxes.............................          --       3,146
Interest income.....................          --          46
Interest expense....................          --       4,367
Net income (loss)...................          --      (5,258)
Assets..............................          --     121,840
Capital expenditures................          --      52,100
Net investment in Joint Ventures....          --      65,048
Equity in income (losses) of
  unconsolidated investees..........          --      (5,986)
</TABLE>
 
                                       12
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)
<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED SEPTEMBER 30, 1998
                                      ----------------------------------------------------------------------------------
                                                                                                               TRUNKED
                                         CABLE                    RADIO      CELLULAR TELE-   INTERNATIONAL    MOBILE
                                      TELEVISION    PAGING    BROADCASTING   COMMUNICATIONS   TOLL CALLING    RADIO (2)
                                      -----------  ---------  -------------  ---------------  -------------  -----------
<S>                                   <C>          <C>        <C>            <C>              <C>            <C>
COMBINED
Revenues............................   $   7,706   $   4,543    $   5,612       $   6,302       $   7,436     $     908
Depreciation and amortization.......       3,912         732          395           2,501             489           109
Operating income (loss) before
  taxes.............................      (1,191)     (1,518)          (8)         (1,173)          2,988          (716)
Interest income.....................           1           1          157               1              --            --
Interest expense....................       1,489         748          107           1,985              59            67
Net income (loss)...................      (3,272)     (2,631)        (304)         (3,489)          2,515          (788)
 
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES
Revenues............................   $     863   $   1,160    $   5,019       $      --       $      --     $      --
Depreciation and amortization.......         426         318          337              --              --            --
Operating income (loss) before
  taxes.............................        (181)     (1,420)          13              --              --            --
Interest income.....................          --          --          157              --              --            --
Interest expense....................         237         483          103              --              --            --
Net income (loss)...................        (343)     (2,070)        (280)             --              --            --
 
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $   6,843   $   3,383    $     593       $   6,302       $   7,436     $     908
Depreciation and amortization.......       3,486         414           58           2,501             489           109
Operating income (loss) before
  taxes.............................      (1,010)        (98)         (21)         (1,173)          2,988          (716)
Interest income.....................           1           1           --               1              --            --
Interest expense....................       1,252         265            4           1,985              59            67
Net income (loss)...................      (2,929)       (561)         (24)         (3,489)          2,515          (788)
 
Equity in income (losses) of
  unconsolidated investees..........      (2,915)       (674)         (13)             14             755           (44)
 
<CAPTION>
 
                                         FIXED
                                       TELEPHONY     TOTAL
                                      -----------  ---------
<S>                                   <C>          <C>
COMBINED
Revenues............................   $      --   $  32,507
Depreciation and amortization.......           6       8,144
Operating income (loss) before
  taxes.............................        (255)     (1,873)
Interest income.....................          --         160
Interest expense....................          51       4,506
Net income (loss)...................        (306)     (8,275)
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES
Revenues............................   $      --   $   7,042(1)
Depreciation and amortization.......          --       1,081
Operating income (loss) before
  taxes.............................          --      (1,588)(1)
Interest income.....................          --         157
Interest expense....................          --         823
Net income (loss)...................          --      (2,693)(1)
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $      --   $  25,465
Depreciation and amortization.......           6       7,063
Operating income (loss) before
  taxes.............................        (255)       (285)
Interest income.....................           3
Interest expense....................          51       3,683
Net income (loss)...................        (306)     (5,582)
Equity in income (losses) of
  unconsolidated investees..........        (302)     (3,179)
</TABLE>
 
                                       13
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
 
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)
<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED SEPTEMBER 30, 1997
                                      ----------------------------------------------------------------------------------
                                                                                                               TRUNKED
                                         CABLE                    RADIO      CELLULAR TELE-   INTERNATIONAL    MOBILE
                                      TELEVISION    PAGING    BROADCASTING   COMMUNICATIONS   TOLL CALLING    RADIO (2)
                                      -----------  ---------  -------------  ---------------  -------------  -----------
<S>                                   <C>          <C>        <C>            <C>              <C>            <C>
COMBINED
Revenues............................   $   6,497   $   3,459    $   4,829       $     913       $   6,364     $   1,201
Depreciation and amortization.......       2,591         405          109             668             349           291
Operating income (loss) before
  taxes.............................      (1,631)       (326)       2,827          (2,948)          1,960          (916)
Interest income.....................           2          19           56              12              12            --
Interest expense....................       1,138         306          112             599               5           132
Net income (loss)...................      (3,064)       (744)       1,538          (3,424)         (1,743)       (1,062)
 
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES
Revenues............................   $     481   $     842    $   4,069       $      --       $      --     $      --
Depreciation and amortization.......         232         216           64              --              --            --
Operating income (loss) before
  taxes.............................        (158)       (549)       2,660              --              --            --
Interest income.....................          --          18           50              --              --            --
Interest expense....................         174         139           85              --              --            --
Net income (loss)...................        (550)       (668)       1,421              --              --            --
 
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $   6,016   $   2,617    $     760       $     913       $   6,364     $   1,201
Depreciation and amortization.......       2,359         189           45             668             349           291
Operating income (loss) before
  taxes.............................       1,473)        223          167          (2,948)          1,960          (916)
Interest income.....................           2           1            6              12              12            --
Interest expense....................         964         167           27             599               5           132
Net income (loss)...................      (2,514)        (76)         117          (3,424)         (1,743)       (1,062)
 
Equity in income (losses) of
  unconsolidated investees..........      (2,041)       (102)          88            (796)           (523)         (427)
 
<CAPTION>
 
                                         FIXED
                                       TELEPHONY     TOTAL
                                      -----------  ---------
<S>                                   <C>          <C>
COMBINED
Revenues............................   $      --   $  23,263
Depreciation and amortization.......          --       4,413
Operating income (loss) before
  taxes.............................          --      (1,034)
Interest income.....................          --         101
Interest expense....................          --       2,292
Net income (loss)...................          --      (8,499)
CONSOLIDATED SUBSIDIARIES AND JOINT
  VENTURES
Revenues............................   $      --   $   5,392(1)
Depreciation and amortization.......          --         512
Operating income (loss) before
  taxes.............................          --       1,953(1)
Interest income.....................          --          68
Interest expense....................          --         398
Net income (loss)...................          --         203(1)
UNCONSOLIDATED JOINT VENTURES
Revenues............................   $      --   $  17,871
Depreciation and amortization.......          --       3,901
Operating income (loss) before
  taxes.............................          --      (2,987)
Interest income.....................          --          33
Interest expense....................          --       1,894
Net income (loss)...................          --      (8,702)
Equity in income (losses) of
  unconsolidated investees..........          --      (3,801)
</TABLE>
 
------------------------
 
(1) Does not reflect the Communications Group's and Protocall's headquarters'
    revenue and selling, general and administrative expenses for the three and
    nine months ended September 30, 1998 and 1997, respectively.
 
(2) Trunked Mobile Radio includes the results of the Protocall's consolidated
    and unconsolidated Joint Ventures through the six months ended June 30, 1998
    and the results of Spectrum through the nine months ended September 30,
    1998.
 
In July 1998 the Communications Group sold its share of Protocall Ventures
Limited ("Protocall Ventures"). As part of the transaction, Protocall Ventures
repaid the outstanding amount of its debt to the Communications Group. The
Company recorded a gain on the sale of Protocall Ventures of approximately $7.1
million.
 
As of 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 Telecommunications, LLC ("CAT"). CAT 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 CAT for
the funding of equipment acquisition and operational expenses in accordance with
CAT's business plans.
 
In November 1998, the Communications Group announced its investment in a fixed
mobile cellular telephone system in the regions of Tyumen and Tobolsk, Russian
Federation ("Russia"). The Communications Group has agreed to make a $1.7
million equity contribution to its Joint Venture, Tyumen Ruskom, and to lend the
Joint Venture up to $4.0 million for start-up costs and other operating
expenses. Tyumen Ruskom also intends to provide wireless local loop telephone
services.
 
                                       14
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA
 
At September 30, 1998 and December 31, 1997 the Company's investments, through
its majority-owned subsidiary Metromedia China Corporation, 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                                                1998       1997        OWNERSHIP %       FORMED         COMMENCED
------------------------------------------------  ---------  ---------  -----------------  -----------  -----------------
<S>                                               <C>        <C>        <C>                <C>          <C>
Sichuan Tai Li Feng
  Telecommunications Co.,
  Ltd. ("Sichuan JV")...........................  $  17,191  $  10,946             92%           1996    Pre-operational
Chongqing Tai Le Feng
  Telecommunications Co.,
  Ltd. ("Chongqing JV").........................     13,074      7,425             92%           1997    Pre-operational
Ningbo Ya Mei
  Telecommunications Co.,
  Ltd. ("Ningbo JV")............................     29,496     27,480             70%           1996         1997
Ningbo Ya Lian
  Telecommunications Co.,
  Ltd. ("Ningbo JV II").........................      4,816         --             70%           1998    Pre-operational
                                                  ---------  ---------
                                                  $  64,577  $  45,851
                                                  ---------  ---------
                                                  ---------  ---------
</TABLE>
 
The Joint Ventures participate in project cooperation contracts with China
United Telecommunications Incorporated ("China Unicom") that entitle the Joint
Ventures to certain percentages of the projects' distributable cash flows. The
Joint Ventures amortize the contributions to these cooperation contracts over
the cooperation periods of benefit (15 to 25 years).
 
(A) SICHUAN JV
 
On May 21, 1996, Asian American Telecommunications, Inc. ("AAT"), a
majority-owned subsidiary of the Company, entered into a Joint Venture Agreement
with China Huaneng Technology Development Corp. ("CHTD") for the purpose of
establishing Sichuan Tai Li Feng Telecommunications Co., Ltd. ("Sichuan JV").
Also on May 21, 1996, Sichuan JV entered into a Network Systems Cooperation
Contract (the "STLF Contract") with China Unicom. The STLF Contract covers
establishment of a fixed line Public Services Telephone Network ("PSTN")
providing local telephone service in cities within Sichuan Province and long
distance telephone service among those cities (the "Sichuan Network"). The
initial project covered by the STLF 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. The Company expects
subsequent projects covered by the STLF Contract and the existing and future
Joint Ventures to expand services to 1,000,000 local telephone lines in cities
throughout Sichuan Province, and to construct fiber optic long distance
facilities among these cities. The STLF Contract has a cooperation term of
twenty-five years.
 
Under the STLF 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 STLF Contract, are to be distributed 22% to China Unicom and 78% to Sichuan
JV throughout the cooperation term of the contract. Sichuan JV holds non-
transferable title to all assets acquired or constructed with investment funds
that it provides to China
 
                                       15
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
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 with investment funds from Sichuan JV to be part
of Sichuan JV's contribution to the STLF 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. AAT has made
capital contributions to Sichuan JV of $11.1 million, representing 95% of
Sichuan JV's equity. CHTD has contributed $600,000, representing 5% of Sichuan
JV's equity. The remaining investment will be in the form of up to $17.5 million
of loans from AAT, plus deferred payment credit from the manufacturers of the
equipment used in construction of the Sichuan Network. As of September 30, 1998,
AAT had loans outstanding to Sichuan JV in the amount of $6.8 million. These
loans bear interest at 10% per annum. Ownership of the Sichuan JV is 92% by AAT
and 8% by CHTD.
 
AAT also has a consulting contract with CHTD covering the latter's assistance
with operations in China. Under the contract, AAT is obligated to pay CHTD an
annual consulting fee of RMB 15.0 million (U.S. $1.8 million at September 30,
1998 exchange rates).
 
(B) CHONGQING JV
 
In May 1997, China established Chongqing Municipality as a Special Autonomous
Region (the "Chongqing S.A.R."), thereby separating it from the Province of
Sichuan. In an amendment to the STLF Contract, China Unicom agreed to recognize
Chongqing S.A.R 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 S.A.R., including rights and obligations
for any long distance services developed by China Unicom between cities in
Chongqing S.A.R. and those of Sichuan Province. On September 9, 1997, AAT
entered into a Joint Venture Agreement with CHTD for the purpose of establishing
Chongqing Tai Le Feng Telecommunications Co., Ltd. ("Chongqing JV"). Sichuan JV
and Chongqing JV entered into an agreement whereby Chongqing JV assumed the
rights and obligations of Sichuan JV under the STLF Contract, as amended, that
relate to financing and consulting services for those portions of the originally
contemplated Sichuan Network that would now lie within Chongqing S.A.R. (the
"Chongqing Network"). Rights and obligations under the STLF 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 equity
contributions from its shareholders amounting to $14.8 million. AAT has made
capital contributions of $13.6 million representing 95% of Chongqing JV's
equity. CHTD has contributed $740,000 representing 5% of Chongqing JV's equity.
The remaining investment in Chongqing JV will be in the form of up to $14.7
million of loans from AAT plus deferred payment credit from the manufacturers of
the equipment used in construction of the Chongqing Network. As of September 30,
1998, AAT had no loans outstanding to Chongqing JV. Ownership in Chongqing JV is
92% by AAT and 8% by CHTD.
 
(C) NINGBO JV
 
AAT entered into a Joint Venture Agreement with Ningbo United Telecommunications
Investment Co., Ltd. ("NUT") on September 17, 1996 for the purpose of
establishing Ningbo Ya Mei Telecommunications
 
                                       16
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
Co., Ltd. ("Ningbo JV"). Previously NUT had entered into a Network System
Cooperation Contract with China Unicom (the "NUT Contract") 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 will construct
and operate the network. Under the NUT Contract, NUT is to provide financing and
consulting services to China Unicom. The cooperation period for the NUT Contract
is fifteen years.
 
With the formation of Ningbo JV, NUT assigned all of its rights and obligations
under the NUT Contract to Ningbo JV. This assignment of rights and obligations
was explicitly ratified by China Unicom in an amendment to the NUT Contract. NUT
also agreed to assign rights of first refusal on additional telecommunications
projects to Ningbo JV in the event such rights are granted to NUT by China
Unicom. Distributable Cash Flows, as defined in the amended NUT Contract, are to
be distributed 27% to China Unicom and 73% to Ningbo JV throughout the
contract's cooperation period. Under the amended NUT Contract, Ningbo JV will
hold a 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 investment in the
assets is returned by distributions from China Unicom. Ningbo JV and China
Unicom consider the cost of all assets acquired with investment funds from
Ningbo JV to be part of Ningbo JV's contribution to the NUT Contract, regardless
of whether Ningbo JV holds title to such assets.
 
The total amount to be invested in Ningbo JV is $29.5 million with equity
contributions from its shareholders amounting to $11.9 million. AAT provided
$8.3 million in capital contributions, representing 70% of Ningbo JV's equity.
NUT provided $3.6 million of capital contributions to Ningbo JV, representing
30% of Ningbo JV's equity. Ningbo JV arranged loans with AAT, manufacturers of
the equipment for the project and banks in the amount of $17.8 million.
 
As of September 30, 1998, AAT had long term loans to Ningbo JV in the amount of
$20.1 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 AAT and 30% by NUT.
 
(D) NINGBO JV II
 
On March 26, 1998, Ningbo JV and China Unicom signed an amendment to the NUT
Contract covering expansion of China Unicom's GSM service throughout Ningbo
Municipality (the "Ningbo Expansion Agreement"). The expansion will be
undertaken as a separate project, and will provide 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 NUT Contract, however, 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, AAT and NUT entered into a second
Joint Venture Agreement and formed Ningbo Ya Lian Telecommunications Co., Ltd.
("Ningbo JV II"). In an amendment to the Ningbo Expansion Agreement dated July
8, 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.
 
                                       17
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
The total amount to be invested in Ningbo JV II is $18.0 million with equity
contributions from its shareholders amounting to $7.2 million. As of September
30, 1998, AAT had made $4.8 million of its planned $5.0 million equity
contribution, and NUT had made $500,000 of its planned $2.2 million equity
contribution. The remaining investment in Ningbo JV II beyond planned equity
contributions from its shareholders will be in the form of up to $10.8 million
of loans from AAT plus deferred payment credit from the manufacturers of the
equipment used in construction of the expansion network. As of September 30,
1998, AAT had no loans outstanding to Ningbo JV II. Ownership in Ningbo JV II is
70% by AAT and 30% by NUT.
 
The following table represents summary financial information for the Joint
Ventures and their related projects in China as of and for the nine months ended
September 30, 1998 (in thousands, except subscribers):
 
<TABLE>
<CAPTION>
                                                              NINGBO     NINGBO     SICHUAN    CHONGQING
                                                                JV        JV II       JV          JV         TOTAL
                                                             ---------  ---------  ---------  -----------  ---------
<S>                                                          <C>        <C>        <C>        <C>          <C>
Revenues...................................................  $   2,375  $      --  $      --   $      51   $   2,426
Depreciation and amortization..............................      1,784         --         28         148       1,960
Operating income (loss)....................................        404        (11)      (483)       (540)       (630)
Interest income (expense), net.............................     (1,706)         5       (150)         17      (1,834)
Net loss...................................................     (1,300)        (6)      (636)       (533)     (2,463)
Assets.....................................................     34,731      5,304     18,404      14,484      72,923
Net investment in project..................................     32,051        920     12,642       5,968      51,581
AAT equity in loss of Joint Venture........................       (996)        (4)      (587)       (493)     (2,080)
Subscribers................................................     32,829         --         --          --      32,829
</TABLE>
 
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, 1997 to June 30, 1998. 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 September 30, 1998, Chongqing JV directly owned this
building, however, Chongqing JV plans to eventually contribute the building to
China Unicom as part of its investment under the STLF Contract.
 
4. DISCONTINUED OPERATIONS
 
SALE OF LANDMARK THEATRE GROUP
 
On April 16, 1998, the Company sold to Silver Cinemas, Inc. (the "Landmark
Sale") all of the assets of Landmark, except cash, for an aggregate cash
purchase price of approximately $62.5 million and the assumption of certain
Landmark liabilities. The Landmark Sale has been recorded as a discontinuance of
a business segment in the accompanying consolidated condensed financial
statements.
 
                                       18
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
4. DISCONTINUED OPERATIONS (CONTINUED)
The gain on the Landmark sale reflected in the consolidated condensed statement
of operations for the nine months ended September 30, 1998, is as follows:
 
<TABLE>
<S>                                                                  <C>
Net proceeds.......................................................  $  57,298
Net assets of Landmark at November 12, 1997........................    (48,531)
Income taxes.......................................................     (3,500)
                                                                     ---------
    Gain on Landmark Sale..........................................  $   5,267
                                                                     ---------
                                                                     ---------
</TABLE>
 
The net assets of Landmark at December 31, 1997 and November 12, 1997, the date
the Company adopted a plan to dispose of Landmark, were as follows (in
thousands):
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,  NOVEMBER 12,
                                                                       1997          1997
                                                                   ------------  ------------
<S>                                                                <C>           <C>
Current assets...................................................   $      793    $      906
Non-current assets...............................................       57,183        57,523
Current liabilities..............................................       (6,286)       (4,738)
Non-current liabilities..........................................       (4,922)       (5,160)
                                                                   ------------  ------------
  Net assets.....................................................   $   46,768    $   48,531
                                                                   ------------  ------------
                                                                   ------------  ------------
</TABLE>
 
Landmark's revenues for the three and nine months ended September 30, 1997 were
$14.3 million and $43.1 million, respectively. Income (loss) from operations for
the three and nine months ended September 30, 1997 include income taxes of
$401,000 and $410,000, respectively.
 
THE ENTERTAINMENT GROUP SALE
 
On July 10, 1997, the Company completed the sale of substantially all of its
entertainment assets (the "Entertainment Group"). The net gain on sale reflected
in the consolidated condensed statement of operations for the three and nine
months ended September 30, 1997 is as follows (in thousands):
 
<TABLE>
<S>                                                                 <C>
Net proceeds......................................................  $ 276,607
Net liabilities of Entertainment Group at May 2, 1997.............     22,089
Transaction costs.................................................     (6,000)
Income taxes......................................................    (26,402)
                                                                    ---------
    Gain on Entertainment Group Sale..............................  $ 266,294
                                                                    ---------
                                                                    ---------
</TABLE>
 
The Entertainment Group's revenues for the four months ended April 30, 1997 were
$41.7 million. The Entertainment Group's revenues for the period May 2, 1997 to
July 10, 1997 were $29.3 million and the loss from operations was $6.4 million.
 
Income (loss) from discontinued operations for the three and nine months ended
September 30, 1997 include income tax benefits of $6.6 million and $6.4 million,
respectively.
 
5. EARNINGS PER SHARE OF COMMON STOCK
 
Statement of Financial Standards No. 128 ("SFAS 128"), "Earnings per Share,"
specifies the computation, presentation and disclosure requirements for earning
per share ("EPS"). All prior period EPS data has
 
                                       19
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
5. EARNINGS PER SHARE OF COMMON STOCK (CONTINUED)
been restated to conform with SFAS 128. SFAS 128 replaces the presentation of
primary and fully diluted EPS with basic and diluted EPS.
 
Basic EPS excludes all dilutive securities. It is based upon the weighted
average number of common shares outstanding during the period. Diluted EPS
reflects the potential dilution that would occur if securities to issue common
stock were exercised or converted into common stock. In calculating diluted EPS,
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 and nine months ended September 30, 1998 and 1997 the Company had
losses from continuing operations.
 
At September 30, 1998 and 1997, the Company had potentially dilutive shares of
common stock of 18,993,000 and 20,103,000, respectively.
 
6. INVESTMENT IN RDM
 
In connection with the acquisition of The Actava Group, Inc. on November 1,
1995, RDM Sports Group, Inc. ("RDM") was classified as an asset held for sale
and the Company excluded its equity in earnings and losses of RDM from its
results of operations. At November 1, 1995, the Company recorded its investment
in RDM to reflect the anticipated proceeds from its sale. During 1996, the
Company reduced the carrying value of its investment in RDM to its then
estimated net realizable value of $31.2 million.
 
On April 1, 1997, for financial statement reporting purposes, the Company no
longer qualified to treat its investment in RDM as a discontinued operation. For
the three months ended June 30, 1997 the Company recorded in its results of
operations, a reduction in the carrying value of its investment in RDM of $18.0
million and its share of the expected net loss of RDM of $8.2 million.
 
On June 20, 1997, RDM entered into a $100.0 million revolving and term credit
facility (the "RDM Credit Facility"). The RDM Credit Facility was guaranteed by
a letter of credit in the amount of $15.0 million in favor of the lenders
thereunder (the "Lenders"), which was obtained for the account of Metromedia
Company, and could not be drawn until five days after a payment default and
fifteen days after Non-Payment Default (as defined under the RDM Credit
Facility). In consideration of providing the letter of credit, Metromedia
Company was granted warrants to purchase 3 million shares of RDM Common Stock
(approximately 5% of RDM) ("RDM Warrants") at an exercise price of $.50 per
share. The RDM Warrants had a ten year term and are exercisable beginning
September 19, 1997. In accordance with the terms of the agreement entered into
in connection with the RDM Credit Facility, Metromedia Company offered the
Company the opportunity to substitute its letter of credit for Metromedia
Company's letter of credit and to receive the RDM Warrants. On July 10, 1997,
the Company's Board of Directors elected to substitute its letter of credit for
Metromedia Company's letter of credit and the RDM Warrants were assigned to the
Company.
 
On August 22, 1997, RDM announced that it had failed to make the August 15, 1997
interest payment due on its subordinated debentures and that it had no present
ability to make such a payment. As a result of the foregoing, on August 22,
1997, the Lenders declared an Event of Default, as defined under the RDM Credit
Facility, and accelerated all amounts outstanding under such facility. On August
28, 1997, an involuntary bankruptcy petition was filed against a subsidiary of
RDM in Federal bankruptcy court in Montgomery, Alabama. RDM and certain of its
affiliates each subsequently filed voluntary petitions for relief under chapter
11 of the Bankruptcy Code. Since the commencement of their respective chapter 11
 
                                       20
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
 
6. INVESTMENT IN RDM (CONTINUED)
cases, RDM and its affiliates have proceeded with the liquidation of their
assets and properties and discontinued ongoing business operations. The Company
does not currently anticipate that it will receive any distributions on account
of its RDM common stock or the RDM Warrants. The Company recorded in its results
of operations for the three months ended September 30, 1997 a further reduction
in the carrying value of RDM of $4.9 million and a loss of $15.0 million on the
letter of credit.
 
After the commencement of RDM's and its affiliates' chapter 11 cases, the
Lenders drew upon the entire amount of the letter of credit. Consequently, the
Company will become subrogated to the Lenders' secured claims against the
Company in an amount equal to the drawing under the letter of credit following
payment in full of the Lenders. The Company intends to vigorously pursue its
subrogation claims in the chapter 11 cases. However, it is uncertain what
recovery the Company will obtain in respect of such subrogation claims.
 
On February 18, 1998, the Office of the United States Trustee filed a motion to
appoint a chapter 11 trustee in the United States Bankruptcy Court for the
Northern Division of Georgia. RDM and its affiliates subsequently filed a motion
to convert the chapter 11 cases to cases under chapter 7 of the Bankruptcy Code.
On February 19, 1998, the bankruptcy court granted the United States Trustee's
motion and ordered that a chapter 11 trustee be appointed. On February 25, 1998,
each of the Company's designees on RDM's Board of Directors submitted a letter
of resignation.
 
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. The complaint alleges that certain officers, directors and
shareholders of RDM, including the Company, are liable under federal securities
laws for misrepresenting and failing to disclose information regarding RDM's
alleged financial condition during the period between July 19, 1996 and August
22, 1997, on which date RDM disclosed that its management had discussed the
possibility of filing for bankruptcy. The complaint also alleges that the
plaintiffs, including the Company, are secondarily liable as controlling persons
of RDM. 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. The Company believes it has meritorious defenses and plans to
vigorously defend these actions.
 
7. LONG-TERM DEBT
 
As of June 30, 1998, Snapper was not in compliance with certain financial
covenants under the Snapper Credit Agreement. The Company and AmSouth had
amended the Snapper Credit Agreement which provided for a reduction of the line
of credit from $55.0 million to $51.0 million as of August 13, 1998. As part of
the amendment to the Snapper Credit Agreement, AmSouth waived the covenant
defaults as of June 30, 1998. As of September 30, 1998, Snapper was not in
compliance with certain financial covenants under the Snapper Credit Agreement.
 
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 "Snapper Loan"), the proceeds of which were used to refinance
Snapper's obligations to AmSouth 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 $10,000,000
(increasing to $15,000,000 on the occurrence of specified events). The
agreements governing the Snapper Loan contain standard representations 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.
 
                                       21
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
 
8. BUSINESS SEGMENT DATA
 
The business activities of the Company consist of two business segments and are
set forth as of and for the nine months ended September 30, 1998 and 1997 in the
following table (in thousands):
 
<TABLE>
<CAPTION>
                                                                                               1998        1997
                                                                                            ----------  ----------
<S>                                                                                         <C>         <C>
COMMUNICATIONS GROUP CONSOLIDATED:
Revenues..................................................................................  $   24,351  $   14,924
Depreciation and amortization.............................................................     (10,017)     (6,854)
Operating loss............................................................................     (49,597)    (33,605)
Equity in losses of Joint Ventures........................................................     (15,358)     (7,561)
Gain on sale of Protocall Ventures........................................................       7,091          --
Foreign currency gain (loss)..............................................................           7        (204)
Minority interest.........................................................................       7,422       5,056
Loss before income tax expense (benefit)..................................................     (45,030)    (31,443)
Assets at September 30, 1998 and December 31, 1997........................................     383,064     346,437
Capital expenditures......................................................................  $    6,303  $    4,928
                                                                                            ----------  ----------
                                                                                            ----------  ----------
SNAPPER:
Revenues..................................................................................  $  165,159  $  132,596
Depreciation and amortization.............................................................      (5,478)     (5,208)
Operating loss............................................................................     (12,245)     (9,969)
Loss before income tax expense (benefit)..................................................     (25,119)    (16,841)
Assets at September 30, 1998 and December 31, 1997........................................     123,743     167,858
Capital expenditures......................................................................  $    3,022  $    4,556
                                                                                            ----------  ----------
                                                                                            ----------  ----------
OTHER:
Revenues..................................................................................  $       --  $       --
Depreciation and amortization.............................................................          (5)         (9)
Operating loss............................................................................      (4,498)     (4,248)
Income (loss) before income tax expense (benefit).........................................       6,851     (54,406)
Assets at September 30, 1998 and December 31, 1997, including discontinued operations and
  eliminations............................................................................  $  167,941  $  274,977
                                                                                            ----------  ----------
                                                                                            ----------  ----------
CONSOLIDATED:
Revenues..................................................................................  $  189,510  $  147,520
Depreciation and amortization.............................................................     (15,500)    (12,071)
Operating loss............................................................................     (66,340)    (47,822)
Equity in losses of Joint Ventures........................................................     (15,358)     (7,561)
Gain on sale of Protocall Ventures........................................................       7,091          --
Foreign currency gain (loss)..............................................................           7        (204)
Minority interest.........................................................................       7,422       5,056
Loss before income tax expense (benefit)..................................................     (63,298)   (102,690)
Assets at September 30, 1998 and December 31, 1997........................................     674,748     789,272
Capital expenditures......................................................................  $    9,325  $    9,484
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
The revenues and assets among the Communications Group's lines of business are
disclosed in notes 2 and 3.
 
                                       22
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
 
8. BUSINESS SEGMENT DATA (continued)
Information about the Communication's Group's operations in different geographic
locations as of September 30, 1998 and the three and nine months ended September
30, 1998 is as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                                             PERIODS ENDED SEPTEMBER 30, 1998
                                                                                       --------------------------------------------
                                                                                            THREE MONTHS           NINE MONTHS
                                                                                       ----------------------  --------------------
COUNTRY                                                           ASSETS        %       REVENUES        %      REVENUES       %
--------------------------------------------------------------  ----------  ---------  -----------  ---------  ---------  ---------
<S>                                                             <C>         <C>        <C>          <C>        <C>        <C>
Austria.......................................................  $    3,867        1.0   $     470         6.1  $     976        4.0
Azerbaijan....................................................       4,203        1.1          --          --         --         --
Belarus.......................................................       2,764        0.7          --          --         --         --
Czech Republic................................................       3,678        1.0         418         5.4        677        2.8
Estonia.......................................................       5,173        1.3         275         3.6        849        3.5
Georgia.......................................................      25,192        6.6         308         4.0        334        1.3
Germany.......................................................       4,579        1.2          20         0.3        148        0.6
Hungary.......................................................       8,636        2.2       2,128        27.5      6,470       26.6
Kazakstan.....................................................       9,986        2.6          --          --         --         --
Latvia........................................................      18,408        4.8         173         2.2        499        2.0
Moldova.......................................................       4,983        1.3          --          --         --         --
Peoples Republic of China.....................................     135,828       35.5          --          --         --         --
Portugal......................................................          --         --          --          --      2,963       12.2
Romania.......................................................      14,471        3.8       1,055        13.7      3,232       13.3
Russia........................................................      14,352        3.8       2,202        28.5      5,811       23.9
Spain.........................................................          --         --          --          --        158        0.6
Ukraine.......................................................         919        0.2          --          --         --         --
United Kingdom................................................       2,276        0.6          --          --        369        1.5
United States.................................................     116,072       30.3(1)        494       6.4      1,382        5.7
Uzbekistan....................................................       5,358        1.4          --          --         --         --
                                                                ----------  ---------  -----------  ---------  ---------  ---------
                                                                $  364,656      100.0   $   7,549       100.0  $  24,351      100.0
                                                                ----------  ---------  -----------  ---------  ---------  ---------
                                                                ----------  ---------  -----------  ---------  ---------  ---------
</TABLE>
 
------------------------
 
(1) Includes goodwill of $89.4 million.
 
9. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION
 
ACCOUNTS RECEIVABLE
 
The total allowance for doubtful accounts at September 30, 1998 and December 31,
1997 was $2.2 million and $2.6 million, respectively.
 
INVENTORIES
 
Lawn and garden equipment inventories and pager inventories are stated at the
lower of cost or market. Lawn and garden equipment inventories are valued
utilizing the last-in, first-out ("LIFO") method. Telecommunications inventories
are valued on the weighted-average method.
 
                                       23
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
 
9. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION (continued)
Inventories consist of the following as of September 30, 1998 and December 31,
1997 (in thousands):
 
<TABLE>
<CAPTION>
                                                                            1998       1997
                                                                          ---------  ---------
<S>                                                                       <C>        <C>
Lawn and garden equipment:
  Raw materials.........................................................  $   6,668  $  11,031
  Finished goods........................................................     49,501     84,523
                                                                          ---------  ---------
                                                                             56,169     95,554
  Less: LIFO reserve....................................................      1,576      1,306
                                                                          ---------  ---------
                                                                             54,593     94,248
                                                                          ---------  ---------
Telecommunications:
  Pagers................................................................        912      1,083
  Telephony.............................................................         --        425
  Cable.................................................................        503        680
                                                                          ---------  ---------
                                                                              1,415      2,188
                                                                          ---------  ---------
                                                                          $  56,008  $  96,436
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>
 
STOCK OPTION PLANS
 
For the nine months ended September 30, 1998, the Company granted stock options
and stock appreciation rights under the 1996 Metromedia International Group,
Inc. Incentive Stock Plan, which has resulted in compensation expense of
approximately $661,000 included in selling, general and administrative expenses.
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 
Interest expense includes amortization of debt discount of $355,000 and $1.7
million for the three and nine months ended September 30, 1997, respectively.
 
10. ACCOUNTING PRONOUNCEMENTS
 
In June 1998, Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities", was issued. SFAS
133 established accounting and reporting standards for derivative instruments
and for hedging activities. SFAS 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. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. SFAS 133 can not be applied retroactively to
financial statements of prior periods. The Company anticipates that the adoption
of SFAS 133 will not have a material impact on the Company's consolidated
financial position and results of operations.
 
11. CONTINGENCIES
 
RISKS ASSOCIATED WITH THE COMMUNICATIONS GROUP'S INVESTMENTS
 
The ability of the Communications Group and its Joint Ventures to establish
profitable operations is subject to, among other things, significant political,
economic and social risks inherent in doing business in
 
                                       24
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
 
11. CONTINGENCIES (continued)
Eastern Europe, the republics of the former Soviet Union and China. These
include potential risks arising out of government policies, economic conditions,
imposition of taxes or other similar charges by government bodies, foreign
exchange fluctuations and controls, civil disturbances, deprivation or
unenforceablility of contractual rights, and taking of property without fair
compensation.
 
In recent months, a number of emerging market economies have suffered
significant economic and financial difficulties. In 1998, adverse economic
conditions in the Russian Federation resulted in a national liquidity crisis,
devaluation of the rouble, higher interest rates and reduced opportunity for
refinancing or refunding of maturing debts. Although the Russian Federation
government announced policies intended to address the structural weakness in the
Russian economy and financial sector, it is unclear if such policies will
improve the economic situation.
 
The financial crisis and the government's planned response may result in reduced
economic activity, a reduction in the availability of credit and the ability to
service debt, further increases in interest rates, an increased rate of
inflation or hyperinflation, further devaluation of the rouble, restrictions on
convertibility of the rouble and movements of hard currency, an increase in the
number of bankruptcies of entities, including bank failures, labor unrest and
strikes. At this time, it is unclear the extent to which the Russian Federation
economic problems will affect the economies of the other countries of the former
Soviet Union.
 
If the economic and financial situation in Russian Federation and other emerging
markets does not improve, the reduced level of economic activity and the
opportunity to obtain financing in these markets could have a material adverse
effect on the operations of the Communications Group. The Company expects such
factors to affect its cable television, paging and radio broadcasting businesses
in Russia and Belarus.
 
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 may also be materially and adversely affected by laws
restricting foreign investment in the field of communications. Certain countries
have extensive restrictions on foreign investment in the communications field
and the Communications Group attempts to structure its prospective projects in
order to comply with such laws. However, there can be no assurance that such
legal and regulatory restrictions will not increase in the future or, as
currently promulgated, will not be interpreted in a manner giving rise to
tighter restrictions, and thus may have a material adverse effect on the
Communications Group's existing and prospective projects in the country. The
Russian Federation has periodically proposed legislation that would limit the
ownership percentage that foreign companies can have in radio and television
businesses and more recently has proposed legislation that would limit the
number of radio and television businesses that any company could own in a single
market. While such proposed legislation
 
                                       25
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
 
11. CONTINGENCIES (continued)
has not been enacted, it is possible that such legislation could be enacted in
Russia and that other countries in Eastern Europe and the republics of the
former Soviet Union may enact similar legislation which could have a material
adverse effect on the business operations, financial condition or prospects of
the Communications Group. The proposed foreign investment legislation could be
similar to United States Federal law which limits foreign ownership in entities
owning broadcasting licenses. There is no way of predicting whether additional
ownership limitations will be enacted in any of the Communications Group's
markets, or whether any such law, if enacted, will force the Communications
Group to reduce or restructure its ownership interest in any of the ventures in
which the Communications Group currently has an ownership interest. If
additional ownership limitations are enacted in any of the Communications
Group's markets and the Communications Group is required to reduce or
restructure its ownership interests in any ventures, it is unclear how such
reduction or restructuring would be implemented, or what impact such reduction
or restructuring would have on the Communications Group.
 
Current Chinese law and regulation prohibits foreign companies and joint
ventures in which they participate from providing telehony services to customers
in China and generally limit the role that foreign companies or their joint
ventures may play in the telecommunications industry As a result the
Communications Group's investments in Joint Ventures in China have been made
through a structure known as the Sino-Sino-Foreign ("SSF") joint venture, a
widely used method for foreign investment in the Chinese telecommunications
industry, in which SSF is a provider of telephony equipment, financing and
technical services to telecommunications operators and not direct providers of
telephone service.
 
Since July 1998, a number of press reports have stated that China may limit the
use of the SSF method to restrict foreign investment in the telecommunications
industry, or significantly change the permitted methods and character of
investment by foreigners. While there has been no official statement or new
regulation, as yet announced, the reports indicate that China may curtail
foreign involvement in future projects. Some reports imply that existing joint
ventures may be restructured, while other reports indicate that at least some
existing ventures will proceed in accordance with their existing terms. As a
result, the Communications Group is not now holding discussions regarding new
projects in the Chinese telecommunications sector, and the Company believes that
no such discussions can be productive until more definitive information is
available. In light of the current regulatory uncertainty, the Company is unable
to estimate the impact such restrictions, if any, would have on the
Communications Group's Chinese Joint Ventures ability to generate significant
revenue, cash flow or net income, or whether or when the Company will enter into
additional Joint Ventures in China.
 
The foregoing factors relating to economic and financial conditions in the
Russian Federation and other emerging markets, and to Chinese law and regulation
relating to foreign investment in the telecommunications industry, have not had
an effect on the Company's financial condition or results of operations as of
and for the nine months ended September 30, 1998. As is noted above, the Company
can not yet predict the impact that such factors may have on its financial
condition or results of operations. In addition, 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 networks of China Union on a three month lag and
therefore the impact of such factors, if any, are not yet reflected.
 
The licenses pursuant to which the Communications Group's businesses operate are
issued for limited periods. Certain of these licenses expire over the next
several years. One license held or used by the Communications Group will expire
during 1998, the license for Radio Juventus, the Company's radio
 
                                       26
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
 
11. CONTINGENCIES (continued)
operation in Hungary. Other licenses held or used by the Communications Group
will expire at the end of their terms in future years. The failure of such
licenses to be renewed may have a material adverse effect on the Company's
results of operations. Additionally, certain of the licenses pursuant to which
the Communications Group's businesses operate contain network build-out
milestone clauses. The failure to satisfy such milestones could result in the
loss of such licenses which may have a material adverse effect on the
Communications Group.
 
While there can be no assurance that any license will be renewed at the end of
its term, based on past experience, the Communications Group expects to obtain
such renewals. In the case of Radio Juventus, the Communications Group is
participating in a competitive tender for a regional broadcasting license to
cover Budapest and certain other areas in Hungary. The Company believes that
Radio Juventus' prospects for winning such tender, which will be determined by
the strength of its bid in the tender, in comparison to the bids of other
participants in the tender, are good, although there can be no assurance that
Radio Juventus will win the tender.
 
LITIGATION
 
The Company is involved in various legal and regulatory proceedings. While the
results of any legal or regulatory proceeding contain an element of uncertainty,
management believes that 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.
 
                                       27
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS.
 
The following discussion should be read in conjunction with the Company's
consolidated condensed financial statements and related notes thereto.
 
Metromedia International Group, Inc. ("MMG" or the "Company") is a global
communications and media company engaged in the development and operation of a
variety of communications businesses, including cable television, AM/FM radio
broadcasting, paging, cellular telecommunications, international toll calling,
fixed telephony and trunked mobile radio, in Eastern Europe, the republics of
the former Soviet Union (the "FSU") and the People's Republic of China ("China")
and other selected emerging markets, through its Communications Group (the
"Communications Group").
 
The Communications Group's investments in communications businesses are made in
two primary geographic areas: Eastern Europe and the FSU, and China. In Eastern
Europe and the FSU, the Communications Group generally owns 50% or more of the
operating Joint Ventures ("Joint Ventures") in which it invests. Currently,
legal restrictions in China prohibit foreign participation in the operations or
ownership in the telecommunications sector. The Communications Group's existing
China Joint Ventures invest in network construction and development of telephony
networks for China United Telecommunications Incorporated ("China Unicom"). The
completed networks are operated by China Unicom. The China Joint Ventures
receive payments from China Unicom based upon distributable cash flow generated
by the networks, for a cooperation period of 15-25 years for each expansion
phase financed and developed. These payments are in return for the Joint Venture
providing financing, technical advice, consulting and other services.
Hereinafter, all references to the Communications Group's Joint Ventures relate
to the operating Joint Ventures in Eastern Europe and the FSU and the
Communications Group's Joint Ventures in China. Statistical data regarding
subscribers, population, etc. for the Joint Ventures in China relate to the
telephony networks of China Unicom.
 
Investments in other companies, including the Communications Group's Joint
Ventures which 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 accounts
for its equity in earnings (losses) of the Joint Ventures in Eastern Europe and
the FSU and the telephony networks of China Unicom on a three month lag.
 
The Company also wholly owns a subsidiary, Snapper, Inc. ("Snapper"). Snapper
manufacturers Snapper-Registered Trademark- brand premium-priced power
lawnmowers, lawn tractors, garden tillers, snowthrowers and related parts and
accessories. On April 16, 1998 the Company completed the sale of Landmark
Theatre Group ("Landmark") and on July 10, 1997 the Company sold substantially
all of its entertainment assets (the "Entertainment Group Sale"). Each
transaction was recorded as a discontinuance of a business segment. See note 4
to the Notes to Consolidated Condensed Financial Statements.
 
The Company owns approximately 39% of the outstanding common stock of RDM Sports
Group, Inc. ("RDM"). On August 29, 1997, RDM and certain of its affiliates filed
a voluntary bankruptcy petition under chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Northern District of Georgia (the
"Bankruptcy Court"). On February 18, 1998 the Office of the United States
Trustee filed a motion to appoint a chapter 11 trustee. RDM and its affiliates
subsequently filed a motion to convert the chapter 11 cases to cases under
chapter 7 of the Bankruptcy Code. On February 19, 1998, the Bankruptcy Court
granted the United States Trustee's motion and ordered that a chapter 11 trustee
be appointed. The Bankruptcy Court also ordered that the chapter 11 cases not
convert to cases under chapter 7 of the Bankruptcy Code. On February 25, 1998,
each of the Company's designees on RDM's Board of Directors submitted a letter
of resignation. The chapter 11 trustee is in the process of selling all of RDM's
assets to
 
                                       28
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS. (CONTINUED)
satisfy its obligations to its creditors and the Company believes that it will
not receive any distributions in respect of 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 (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). See "Special Note
Regarding Forward-Looking Statements" on page 55.
 
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 FSU, China and other selected emerging
markets.
 
The Communications Group's Joint Ventures currently offer cable television,
AM/FM radio broadcasting, paging, cellular telecommunications, international
toll calling, fixed telephony and trunked mobile radio. The Communications
Group's Joint Ventures' partners are often governmental agencies or ministries.
 
The Company's financial statements consolidate the accounts and results of
operations of 16 of the Communications Group's 44 operating Joint Ventures at
September 30, 1998. 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 these Joint
Ventures and their summary financial information.
 
The following table summarizes the Communications Group's Joint Ventures and
subsidiaries at September 30, 1998, as well as the amounts contributed, amounts
loaned net of repayments and total amounts invested in such Joint Ventures and
subsidiaries at September 30, 1998 (in thousands):
 
<TABLE>
<CAPTION>
                                                                           AMOUNT                            TOTAL
                                                                         CONTRIBUTED   AMOUNT LOANED      INVESTMENT
                                                                          TO JOINT        TO JOINT         IN JOINT
                                                             COMPANY      VENTURE/        VENTURE/         VENTURE/
JOINT VENTURE (1)                                          OWNERSHIP %   SUBSIDIARY      SUBSIDIARY     SUBSIDIARY (8)
--------------------------------------------------------  -------------  -----------  ----------------  ---------------
<S>                                                       <C>            <C>          <C>               <C>
 
CABLE TELEVISION
Romsat Cable TV (Bucharest, Romania) (2)................          100%    $   2,405     $      6,427      $     8,832
Viginta (Vilnius, Lithuania) (2)........................           55%          397            2,973            3,370
Kosmos TV (Moscow, Russia)..............................           50%        1,093           12,339           13,432
Baltcom TV (Riga, Latvia)...............................           50%          819           12,389           13,208
Ayety TV (Tbilisi, Georgia).............................           49%          779            8,209            8,988
Kamalak TV (Tashkent, Uzbekistan).......................           50%          400            3,023            3,423
Sun TV (Chisinau, Moldova)..............................           50%          400            7,008            7,408
Alma TV (Almaty, Kazakstan).............................           50%          222            5,476            5,698
Cosmos TV (Minsk, Belarus)..............................           50%          400            3,974            4,374
Teleplus (St. Petersburg, Russia).......................           45%          990            1,152            2,142
                                                                         -----------        --------    ---------------
                                                                              7,905           62,970           70,875
                                                                         -----------        --------    ---------------
</TABLE>
 
                                       29
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS. (CONTINUED)
 
<TABLE>
<CAPTION>
                                                                           AMOUNT                            TOTAL
                                                                         CONTRIBUTED   AMOUNT LOANED      INVESTMENT
                                                                          TO JOINT        TO JOINT         IN JOINT
                                                             COMPANY      VENTURE/        VENTURE/         VENTURE/
JOINT VENTURE (1)                                          OWNERSHIP %   SUBSIDIARY      SUBSIDIARY     SUBSIDIARY (8)
--------------------------------------------------------  -------------  -----------  ----------------  ---------------
<S>                                                       <C>            <C>          <C>               <C>
PAGING
Baltcom Paging (Estonia) (2)............................           85%        3,715            2,582            6,297
CNM (Romania) (2).......................................           54%          490           12,602           13,092
Paging One Services (Austria) (2).......................          100%        1,036            9,846           10,882
Baltcom Plus (Latvia)...................................           50%          250            3,068            3,318
Paging One (Georgia)....................................           45%          250            1,521            1,771
Raduga Poisk (Nizhny Novgorod, Russia)..................           45%          330               40              370
PT Page (St. Petersburg, Russia)........................           40%        1,100               23            1,123
Kazpage (Kazakstan) (9).................................        26-41%          521              923            1,444
Kamalak Paging (Tashkent, Samarkand, Bukhara
  and Andijan, Uzbekistan)..............................           50%          435            1,937            2,372
Alma Page (Almaty and Ust-Kamenogorsk,
Kazakstan)..............................................           50%           --            2,108            2,108
Paging Ajara (Batumi, Georgia)..........................           35%           43              273              316
Mobile Telecom (Russia) (11)............................           50%        7,500               --            7,500
Eurodevelopment Ukraine (Kiev and Dnepropetrovsk,
  Ukraine) (13).........................................           51%          800              119              919
                                                                         -----------        --------    ---------------
                                                                             16,470           35,042           51,512
                                                                         -----------        --------    ---------------
 
RADIO BROADCASTING
Radio Juventus (Budapest, Hungary) (2)..................          100%        8,107               --            8,107
SAC (Moscow, Russia) (2)................................           83%          631            2,531            3,162
Radio Skonto (Riga, Latvia) (2).........................           55%          302              153              455
Radio One (Prague, Czech Republic) (2)..................           80%          627              313              940
NewsTalk Radio (Berlin, Germany) (2)....................           85%        2,758            3,947            6,705
Radio Vladivostok, (Vladivostok, Russia) (2)............           51%          267               45              312
Country Radio (Prague, Czech Republic) (2)..............           85%        2,040               --            2,040
Radio Georgia (Tbilisi, Georgia) (2)....................           51%          336              363              699
Eldoradio (formerly Radio Katusha)
  (St. Petersburg, Russia) (2) (5)......................           75%          464              656            1,120
Radio Nika (Socci, Russia)..............................           51%          260               32              292
AS Trio LSL (Estonia) (5)...............................           49%        1,536              402            1,938
                                                                         -----------        --------    ---------------
                                                                             17,328            8,442           25,770
                                                                         -----------        --------    ---------------
 
INTERNATIONAL TOLL CALLING
Telecom Georgia (Georgia)...............................           30%        2,554               --            2,554
                                                                         -----------        --------    ---------------
 
TRUNKED MOBILE RADIO (3)
Spectrum (Kazakstan) (10)...............................           33%          200            1,614            1,814
                                                                         -----------        --------    ---------------
</TABLE>
 
                                       30
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS. (CONTINUED)
 
<TABLE>
<CAPTION>
                                                                           AMOUNT                            TOTAL
                                                                         CONTRIBUTED   AMOUNT LOANED      INVESTMENT
                                                                          TO JOINT        TO JOINT         IN JOINT
                                                             COMPANY      VENTURE/        VENTURE/         VENTURE/
JOINT VENTURE (1)                                          OWNERSHIP %   SUBSIDIARY      SUBSIDIARY     SUBSIDIARY (8)
--------------------------------------------------------  -------------  -----------  ----------------  ---------------
<S>                                                       <C>            <C>          <C>               <C>
CELLULAR TELECOMMUNICATIONS
Baltcom GSM (Latvia)....................................           22%       13,736               --           13,736
Magticom (Georgia)......................................           35%       12,658               --           12,658
Ningbo Ya Mei Telecommunications Co., Ltd. (Ningbo City,
  China) (6)............................................           41%        9,530           22,380           31,910
Ningbo Ya Lian Telecommunications Co., Ltd. (Ningbo
  Municipality, China) (4) (6)..........................           41%        4,820               --            4,820
                                                                         -----------        --------    ---------------
                                                                             40,744           22,380           63,124
                                                                         -----------        --------    ---------------
 
FIXED TELEPHONY
Sichuan Tai Li Feng Telecommunications Co., Ltd.
  (Sichuan Province, China) (4) (7).....................           54%       11,087            6,831           17,918
Chongqing Tai Le Feng Telecommunications Co., Ltd.
  (Chongqing Municipality, China) (4) (7)...............           54%       13,581               --           13,581
Instaphone (Kazakstan)..................................           50%            4            1,560            1,564
Caspian American Telecommunications (Azerbaijan) (4)
  (12)..................................................           38%        4,873               --            4,873
                                                                         -----------        --------    ---------------
                                                                             29,545            8,391           37,936
                                                                         -----------        --------    ---------------
    TOTAL...............................................                  $ 114,746     $    138,839      $   253,585
                                                                         -----------        --------    ---------------
                                                                         -----------        --------    ---------------
</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) Results of operations are consolidated with the Company's financial
    statements.
 
(3) 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
    Communications Group recorded a gain of approximately $7.1 million on the
    sale.
 
(4) Pre-operational systems as of September 30, 1998.
 
(5) Eldoradio includes two radio stations operating in St. Petersburg, Russia
    and AS Trio LSL includes four radio stations operating in various cities
    throughout Estonia.
 
(6) 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 Ventures provide
    financing, technical assistance and consulting services to the Chinese
    operator.
 
(7) Sichuan Tai Li Feng Telecommunications and Chongqing Tai Le Feng
    Telecommunications are supporting the development by China Unicom of
    fixed-line, Public Service Telephone Networks
 
                                       31
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS. (CONTINUED)
    ("PSTNs") in Sichuan Province and Chongqing Municipality, China,
    respectively. Both Joint Ventures provide financing, technical assistance
    and consulting services to the Chinese operator.
 
(8) Total investment does not include any incurred losses.
 
(9) Kazpage is comprised of a service entity and 10 paging Joint Ventures that
    provide services in Kazakstan. 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) In April 1998, Spectrum and its shareholders, including the Communications
    Group, completed a transaction pursuant to which the European Bank for
    Reconstruction and Development ("EBRD") and the Fund New Europe ("FNE")
    purchased 30% and 3%, respectively, of the shares of Spectrum in return for
    making equity contributions to Spectrum of $181,800 and $18,200,
    respectively. In connection with such investment, the EBRD has agreed to
    make a loan of up to $2.0%million to Spectrum. In addition, the EBRD and FNE
    were provided the right to put their shares back to Spectrum at a price
    equal to four times earnings before interest, tax and depreciation for the
    year preceding the put, multiplied by a fraction, the numerator of which is
    the number of shares held by either the EBRD or FNE and the denominator of
    which is all issued shares. The put may be exercised at any time starting 6
    years after the date of the transaction. As part of the Company's sale of
    Protocall Ventures Limited, in July 1998, the Company increased its
    ownership interest in Spectrum to 33%.
 
(11) The Company's purchase of Mobile Telecom closed during September 1998. The
    Company purchased its 50% interest in Mobile Telecom for $7.0 million plus
    two additional earnout payments to be made on either February 14, 1999 and
    February 14, 2000, or on February 14, 2000 and February 14, 2001, as may be
    determined by the seller. 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 pager distribution company for $500,000.
 
(12) As of August 1998, the Communications Group owns a 76% interest in
    Omni-Metromedia Caspian, Ltd., a company that owns 50% of a joint venture in
    Azerbaijan, Caspian American Telecommunications, LLC ("CAT"). CAT 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 CAT for the funding of equipment acquisition and operational
    expenses in accordance with CAT's business plans.
 
(13) In September 1998, the Communication Group acquired a 51% interest in
    Eurodevelopment Ukraine, a company that provides paging services in the
    Ukraine. The Communication Group's partner in Eurodevelopment Ukraine has
    the right to purchase from the Communications Group 2% of Eurodevelopment
    Ukraine in the event such partner provides Eurodevelopment Ukraine with an
    additional $3.0 million in credit in 1999 on terms agreed with the
    Communications Group. Such partner must notify the Communications Group of
    its intention to exercise such right by January 31, 1999.
 
                                       32
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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 September 30, 1998 (in thousands):
 
<TABLE>
<CAPTION>
                                                  AMOUNT CONTRIBUTED TO    AMOUNT LOANED TO      TOTAL INVESTMENT IN
                                                     JOINT VENTURE/         JOINT VENTURE/         JOINT VENTURE/
                                                       SUBSIDIARY             SUBSIDIARY             SUBSIDIARY
                                                  ---------------------  ---------------------  ---------------------
COUNTRY                                             AMOUNT        %        AMOUNT        %        AMOUNT        %
------------------------------------------------  ----------  ---------  ----------  ---------  ----------  ---------
<S>                                               <C>         <C>        <C>         <C>        <C>         <C>
Austria.........................................  $    1,036        0.9  $    9,846        7.1  $   10,882        4.3
Azerbaijan......................................       4,873        4.3          --         --       4,873        1.9
Belarus.........................................         400        0.4       3,974        2.9       4,374        1.7
Czech Republic..................................       2,667        2.3         313        0.2       2,980        1.2
Estonia.........................................       5,251        4.6       2,984        2.2       8,235        3.3
Georgia.........................................      16,620       14.4      10,366        7.5      26,986       10.6
Germany.........................................       2,758        2.4       3,947        2.8       6,705        2.6
Hungary.........................................       8,107        7.1          --         --       8,107        3.2
Kazakstan.......................................         947        0.9      11,681        8.4      12,628        5.0
Latvia..........................................      15,107       13.2      15,610       11.3      30,717       12.1
Lithuania.......................................         397        0.3       2,973        2.1       3,370        1.3
Moldova.........................................         400        0.3       7,008        5.0       7,408        2.9
Peoples Republic of China.......................      39,018       34.0      29,211       21.0      68,229       26.9
Romania.........................................       2,895        2.5      19,029       13.7      21,924        8.7
Russia..........................................      12,635       11.0      16,818       12.1      29,453       11.6
Ukraine.........................................         800        0.7         119        0.1         919        0.4
Uzbekistan......................................         835        0.7       4,960        3.6       5,795        2.3
                                                  ----------  ---------  ----------  ---------  ----------  ---------
                                                  $  114,746      100.0  $  138,839      100.0  $  253,585      100.0
                                                  ----------  ---------  ----------  ---------  ----------  ---------
                                                  ----------  ---------  ----------  ---------  ----------  ---------
</TABLE>
 
SNAPPER
 
Snapper manufacturers 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-Registered Trademark- brand. Snapper provides lawn and garden
products through distribution channels to domestic and foreign retail markets.
 
The following table sets forth the operating results for the three and nine
months ended September 30, 1998 and 1997 of the Company's Communications Group
and lawn and garden products segments.
 
                                       33
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS. (CONTINUED)
                              SEGMENT INFORMATION
                   MANAGEMENT'S DISCUSSION AND ANALYSIS TABLE
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED            NINE MONTHS ENDED
                                                       ----------------------------  ----------------------------
                                                       SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,
                                                           1998           1997           1998           1997
                                                       -------------  -------------  -------------  -------------
<S>                                                    <C>            <C>            <C>            <C>
COMMUNICATIONS GROUP:
  Revenues...........................................    $   7,722      $   5,772      $  24,351      $  14,924
  Cost of sales and operating expenses...............       (1,288)          (491)        (4,204)        (1,837)
  Selling, general and administrative................      (18,407)       (13,290)       (59,727)       (39,838)
  Depreciation and amortization......................       (3,301)        (2,567)       (10,017)        (6,854)
                                                       -------------  -------------  -------------  -------------
    Operating loss...................................      (15,274)       (10,576)       (49,597)       (33,605)
  Equity in losses of Joint Ventures.................       (3,800)        (5,376)       (15,358)        (7,561)
  Gain on sale of Protocall Ventures.................        7,091             --          7,091             --
  Foreign currency gain (loss).......................         (314)            27              7           (204)
  Minority interest..................................        1,937          2,429          7,422          5,056
                                                       -------------  -------------  -------------  -------------
                                                           (10,360)       (13,496)       (50,435)       (36,314)
SNAPPER:
  Revenues...........................................       47,330         30,773        165,159        132,596
  Cost of sales and operating expenses...............      (36,994)       (21,520)      (120,511)       (89,656)
  Selling, general and administrative................      (17,707)       (16,358)       (51,415)       (47,701)
  Depreciation and amortization......................       (1,756)        (1,404)        (5,478)        (5,208)
                                                       -------------  -------------  -------------  -------------
    Operating loss...................................       (9,127)        (8,509)       (12,245)        (9,969)
CORPORATE HEADQUARTERS AND ELIMINATIONS:
  Revenues...........................................           --             --             --             --
  Cost of sales and operating expenses...............           --             --             --             --
  Selling, general and administrative................       (1,602)        (1,742)        (4,493)        (4,239)
  Depreciation and amortization......................           (1)            (3)            (5)            (9)
                                                       -------------  -------------  -------------  -------------
    Operating loss...................................       (1,603)        (1,745)        (4,498)        (4,248)
CONSOLIDATED:
  Revenues...........................................       55,052         36,545        189,510        147,520
  Cost of sales and operating expenses...............      (38,282)       (22,011)      (124,715)       (91,493)
  Selling, general and administrative................      (37,716)       (31,390)      (115,635)       (91,778)
  Depreciation and amortization......................       (5,058)        (3,974)       (15,500)       (12,071)
                                                       -------------  -------------  -------------  -------------
    Operating loss...................................      (26,004)       (20,830)       (66,340)       (47,822)
Interest expense.....................................       (2,927)        (4,417)       (12,487)       (16,463)
Interest income......................................        5,241          4,560         16,367          9,360
Equity in losses of Joint Ventures...................       (3,800)        (5,376)       (15,358)        (7,561)
Gain on sale of Protocall Ventures...................        7,091             --          7,091             --
Equity in losses of and writedown of investment in
  RDM Sports Group, Inc..............................           --        (19,934)            --        (45,056)
Foreign currency gain (loss).........................         (314)            27              7           (204)
Income tax (expense) benefit.........................         (573)        12,262         (1,203)        11,948
Minority interest....................................        1,937          2,429          7,422          5,056
Discontinued operations..............................           --        269,072          5,267        234,405
Extraordinary items..................................           --        (13,598)            --        (14,692)
                                                       -------------  -------------  -------------  -------------
Net income (loss)....................................    $ (19,349)     $ 224,195      $ (59,234)     $ 128,971
                                                       -------------  -------------  -------------  -------------
                                                       -------------  -------------  -------------  -------------
</TABLE>
 
                                       34
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
 
MMG CONSOLIDATED--RESULTS OF OPERATIONS
 
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
  30, 1997.
 
For the three months ended September 30, 1998 net loss was $19.3 million as
compared to a net income of $224.2 million for the comparable period in the
prior year. Net loss for the three months ended September 30, 1998 includes the
gain of $7.1 million from the sale of the Communications Group's trunked mobile
radio investment, Protocall Ventures. The net income for the three months ended
September 30, 1997 includes the gain on the Entertainment Group Sale of $266.3
million, an extraordinary loss of $13.6 million relating to the early
extinguishment of the Company's debentures and a further writedown of the
investment in RDM of $19.9 million.
 
Operating loss increased to $26.0 million for the three months ended September
30, 1998 from $20.8 million for the three months ended September 30, 1997. The
increase in operating loss is due to increases in Snapper's operating loss of
$618,000 and increases in selling, general and administrative costs by the
Communications Group in supporting the continued expansion of operations in
Eastern Europe, the FSU and China.
 
Interest expense decreased $1.5 million to $2.9 million for the three months
ended September 30, 1998. The decrease in interest expense was due to the
repayment of debt at corporate headquarters in August 1997, partially offset by
an increase in borrowings at Snapper.
 
Interest income increased $681,000 to $5.2 million for the three months ended
September 30, 1998, principally from funds invested at corporate headquarters
due to cash from the Preferred Stock offering in September 1997 and the sale of
Landmark in April 1998.
 
The income tax benefit for continuing operations in 1997 was principally the
result of the utilization of the current year operating loss to offset the gain
on the Entertainment Group sale.
 
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
  1997.
 
Net loss was $59.2 million for the nine months ended September 30, 1998. The net
loss for 1998 includes a gain from discontinued operations from the sale of the
Landmark Theatre Group of $5.3 million and the gain of $7.1 million from the
sale of the Communications Group's trunked mobile radio investment, Protocall
Ventures. For the nine months ended September 30, 1997 net income was $129.0
million. The net income for the nine months ended September 30, 1997 includes
the gain on the Entertainment Group Sale of $266.3 million and losses from the
discontinued operations of $31.9 million, an extraordinary loss of $13.6 million
relating to the early extinguishment of the Company's debentures and equity loss
and a further writedown of the investment in RDM amounting to $45.1 million.
 
Operating loss increased to $66.3 million for the nine months ended September
30, 1998 from $47.8 million for the nine months ended September 30, 1997. The
increase in operating loss reflects an increase in operating losses at Snapper
of $2.3 million, nine months of operations in 1998 as compared to seven months
of operations in 1997 for the Communications Group's Joint Ventures in China and
an increase in selling, general and administrative costs by the Communications
Group in supporting the continued expansion of operations in Eastern Europe and
the FSU.
 
Interest expense decreased $4.0 million to $12.5 million for the nine months
ended September 30, 1998. The decrease in interest expense was due to the
repayment of debt at corporate headquarters in March and August 1997, partially
offset by an increase in borrowings at Snapper.
 
                                       35
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
Interest income increased $7.0 million to $16.4 million, principally from funds
invested at corporate headquarters due to the cash from the Preferred Stock
offering in September 1997 and the sale of Landmark in April 1998.
 
The income tax benefit for continuing operations in 1997 was principally the
result of the utilization of the current year operating loss to offset the gain
of the Entertainment Group sale.
 
COMMUNICATIONS GROUP--RESULTS OF OPERATIONS
 
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
  30, 1997.
 
REVENUES
 
Revenues increased to $7.7 million for the three months ended September 30, 1998
from $5.8 million for the three months ended September 30, 1997. The growth in
revenue of the consolidated Joint Ventures has resulted primarily from the
increase in radio operations in Russia, the increase in cable operations in
Romania, and the increase in paging operations in Austria. Revenues from radio
broadcasting operations in Russia increased to $2.2 million and from $1.1
million for the three months ended September 30, 1998 and 1997, respectively.
Revenues from cable television operations in Romania increased to $684,000 from
$331,000 for the three months ended September 30, 1998 and 1997, respectively.
Revenues from paging operations in Austria increased by $347,000 from the third
quarter of 1997 to the third quarter of 1998.
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
 
Selling, general and administrative expenses increased by $5.1 million or 39%
for the three months ended September 30, 1998 as compared to the three months
ended September 30, 1997. The increase relates to additional expenses associated
with the increase in the number of Joint Ventures and the need for the
Communications Group to support and assist the operations of the Joint Ventures.
In addition, increased staffing has been necessary at the radio broadcasting
stations, cable television operations and paging operations.
 
DEPRECIATION AND AMORTIZATION EXPENSE
 
Depreciation and amortization expense increased to $3.3 million from $2.6
million. The increase is primarily the result of the increased number of
consolidated joint ventures with depreciable fixed assets.
 
EQUITY IN LOSSES OF JOINT VENTURES
 
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 and reflects generally only its
proportionate share of income or losses of the Joint Ventures in its statement
of operations. The losses recorded in the third quarter of 1998 and 1997
represent the Communications Group's equity in the losses of the Joint Ventures
in Eastern Europe, the FSU and the distributable cash flow of the telephony
networks of China Unicom for the three months ended June 30, 1998 and 1997,
respectively. 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. Subsequently, the Communications Group
recognizes the full amount of losses generated by the Joint Venture since the
Communications Group is generally the sole funding source of the Joint Ventures.
 
                                       36
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION
 
Revenues generated by unconsolidated Joint Ventures were $25.5 million in the
third quarter of 1998, compared to $17.9 million in the third quarter of 1997.
The Communications Group recognized equity in losses of its Joint Ventures of
approximately $3.2 million in the third quarter of 1998, compared to $3.8
million in the third quarter of 1997.
 
The decrease in equity in the losses of the Joint Ventures of $600,000 from the
three months ended September 30, 1997 to the three months ended September 30,
1998, is primarily attributable to (i) adjustment of the allocation of equity
losses taken related to the Latvian GSM venture resulting in a $1.5 million
increase in equity income in the quarter ended September 30, 1998 as compared to
the quarter ended September 30, 1997 and (ii) increased equity income of the
international toll calling venture in Georgia of $1.3 million offset by (i) the
commencement of operations of the Communications Group's Georgian GSM venture
which increased the loss by $1.1 million, and (ii) $1.1 million increased loss
from cable operations in Russia.
 
CHINA
 
Equity in losses of the Communications Group's Joint Ventures in China amounted
to $621,000 for the three months ended September 30, 1998 as compared to losses
of $1.6 million for the same period in 1997. The majority of these third quarter
losses arise from the absence of any Joint Venture revenues during the
pre-operational state of the projects each Joint Venture supports. Since
September 30, 1997, the Company launched two new Joint Ventures, both of which
were still pre-operational as of September 30, 1998. These new Joint Ventures
contributed $115,000 of the third quarter 1998 losses. The Company's fixed line
telephone network Joint Venture in Sichuan Province also is pre-operational as
of September 30, 1998, but network construction activity which precedes the
planned service launch in late 1998 was aggressive throughout third quarter.
This Joint Venture contributed $299,000 of the 1998 third quarter losses. The
Company's only operational Joint Venture in China, supporting the Ningbo City
GSM network, recorded third quarter losses of $207,000. The Ningbo City project
generated $980,000 in third quarter revenues to the Joint Venture, but this was
not yet sufficient to overcome the Joint Venture's $1.2 million of amortization
and interest expenses during the same period. Amortization and interest,
accounted for 92% of the Joint Venture's total expenses. These expenses will
remain essentially constant as the Joint Venture's revenues grow.
 
MINORITY INTEREST
 
Losses allocable to minority interests decreased to $1.9 million in the third
quarter of 1998 from $2.4 million in the third quarter of 1997. The loss
attributable to minority shareholders in 1997 included amounts specifically
attributable to minority shareholders which were not included in the current
year.
 
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
  1997.
 
REVENUES
 
Revenues increased to $24.4 million for the nine months ended September 30, 1998
from $14.9 million for the nine months ended September 30, 1997. The growth in
revenue of the consolidated Joint Ventures has resulted primarily from trunked
mobile radio operations of Protocall Ventures in Portugal and Spain, the
increase in radio operations in Russia, the increase in cable operations in
Romania, and the increase in paging operations in Austria. Trunked mobile radio
operations were first consolidated upon the purchase of an additional interest
in operations in Portugal during the fourth quarter of 1997 and increased
through
 
                                       37
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
the purchase of an additional interest in operations in Spain during the first
quarter of 1998. The revenue from trunked mobile radio operations was $3.2
million in the first six months of 1998. In July 1998, the Communications Group
sold its share of Protocall Ventures. Revenues from radio broadcasting
operations in Russia increased to $5.8 million from $3.2 million for the nine
months ended September 30, 1998 and 1997, respectively. Revenues from cable
television operations in Romania increased to $2.0 million from $561,000 for the
nine months ended September 30, 1998 and 1997, respectively. Revenues from
paging operations in Austria increased by $797,000 from the first nine months of
1997 to the first nine months of 1998.
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
 
Selling, general and administrative expenses increased by $19.9 million or 50%
for the nine months ended September 30, 1998 as compared to the nine months
ended September 30, 1997. The increase relates to additional expenses associated
with the increase in the number of Joint Ventures and the need for the
Communications Group to support and assist the operations of the Joint Ventures.
In addition, increased staffing has been necessary at the radio broadcasting
stations, cable television operations and paging operations.
 
DEPRECIATION AND AMORTIZATION EXPENSE
 
Depreciation and amortization expense increased to $10.0 million from $6.9
million. The increase is primarily the result of the increased number of
consolidated joint ventures with depreciable fixed assets.
 
EQUITY IN LOSSES OF JOINT VENTURES
 
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 and reflects generally only its
proportionate share of income or losses of the Joint Ventures in its statement
of operations. The losses recorded in the first nine months of 1998 and 1997
represent the Communications Group's equity in the losses of the Joint Ventures
in Eastern Europe and the FSU and the distributable cash flow of the telephony
networks of China Unicom for the nine months ended June 30, 1998 and 1997,
respectively. 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. Subsequently, the Communications Group
recognizes the full amount of losses generated by the Joint Venture since the
Communications Group is generally the sole funding source of the Joint Ventures.
 
EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION
 
Revenues generated by unconsolidated Joint Ventures were $71.6 million in the
first nine months of 1998, compared to $49.7 million in the first nine months of
1997. The Communications Group recognized equity in losses of its Joint Ventures
of approximately $13.3 million in the first nine months of 1998, compared to
$6.0 million in the first nine months of 1997.
 
The increase in equity in the losses of the Joint Ventures of $7.3 million from
the nine months ended September 30, 1997 to the nine months ended September 30,
1998 is primarily attributable to (i) the commencement of operations of the
Communications Group's Georgian GSM venture which increased the loss by $4.0
million, (ii) decreased equity income of the international toll calling venture
in Georgia of $1.5 million, (iii) increased losses of $2 million from the cable
operation in Moscow, (iv) increased losses of
 
                                       38
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
$696,000 and $641,000 from the cable operations in Latvia and Georgia, (v)
offset by an adjustment of the allocation of equity losses taken related to the
Latvian GSM venture resulting in a $1.5 million increase in equity income for
the nine months ended September 30, 1998 as compared to the nine months ended
September 30, 1997.
 
CHINA
 
Equity in losses of the Communications Group's Joint Ventures in China amounted
to $2.1 million for the nine months ended September 30, 1998 as compared to
losses of $1.6 million for the same period in 1997. The majority of these year
to date 1998 losses arise from the absence of any Joint Venture revenues during
the pre-operational state of the projects each Joint Venture supports. Since
September 30, 1997, the Company launched two new Joint Ventures, both of which
were still pre-operational as of September 30, 1998. These new Joint Ventures
contributed $497,000 of the reported year to date 1998 losses. The Company's
fixed line telephone network Joint Venture in Sichuan Province also remained
pre-operational as of September 30, 1998, but network construction activity
which precedes the planned service launch in late 1998 was aggressive throughout
the year. This Joint Venture contributed $587,000 of the reported year to date
1998 losses. The Company's only operational Joint Venture in China, supporting
the Ningbo City GSM network, recorded year to date 1998 losses of $1.0 million.
The Ningbo City project generated $2.4 million in year to date 1998 revenues to
the Joint Venture, but this was not yet sufficient to overcome the Joint
Venture's $3.4 million of amortization and interest expenses during the same
period. Amortization and interest accounted for 95% of the Joint Venture's total
expenses. These expenses will remain essentially constant as the Joint Venture's
revenues grow.
 
MINORITY INTEREST
 
Losses allocable to minority interests increased to $7.4 million for the nine
months ended September 30, 1998 from $5.1 million for the nine months ended
September 30, 1997.
 
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
  30, 1997.
 
ANALYSIS OF COMBINED RESULTS OF OPERATIONS
 
EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION
 
The Company is providing as supplemental information the following analysis of
combined revenues and operating income (loss) for its consolidated and
unconsolidated Joint Ventures in Eastern Europe and the FSU. The Company
believes that an analysis of combined operating results provides a meaningful
presentation of the performance of its investments. Such combined operating
results are provided as a supplement, and not as a substitute, for the
consolidated financial statements set forth elsewhere herein. Note 2 to the
Consolidated Financial Condensed Statements provides a listing of the Company's
ownership percentages in each of its unconsolidated Joint Ventures.
 
Total revenues for the Communications Group's cable television, paging, radio
broadcasting, cellular telecommunications, international toll calling and
trunked mobile radio businesses were $32.5 million and $23.3 million in the
three months ended September 30, 1998 and 1997, respectively. The percentage
increase in revenues was 39%. Combined operating loss for all of the
Communication Group's businesses were $1.9 million and $1.0 million in the three
months ended September 30, 1998 and 1997, respectively.
 
Cable television revenues were $7.7 million and $6.5 million in the third
quarter of 1998 and 1997, respectively, an increase of 18%. Total subscribers
increased from 169,033 at September 30, 1997 to
 
                                       39
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
291,664 at September 30, 1998. Combined operating losses for cable television
were $1.2 million and $1.6 million in the three months ended September 30, 1998
and 1997, respectively. Included in operating losses in the third quarters of
1998 and 1997 were depreciation and amortization charges of $3.9 million and
$2.6 million, respectively.
 
Subscriber growth and revenue increases from cable television were the result of
the expansion 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. The revenue increases were most significant at operations
in Kazakstan, Moldova and Romania. The decrease in operating loss in the three
months ended September 30, 1998 as compared to the three months ended September
30, 1997 was primarily attributable to improved operating results realized at
the ventures in Kazakstan and Uzbekistan that resulted from increased subscriber
growth coupled with cost containment initiatives.
 
The Communications Group is intentionally slowing the growth in its Belarus
cable television Joint Venture, Cosmos TV, as a result of new regulations
instituted by various governmental ministries which may adversely affect the
operations of the Joint Venture.
 
Paging revenues were $4.5 million in the third quarter of 1998 and $3.5 million
in the third quarter of 1997. This represents an increase of 29%. Total
subscribers increased from 53,321 at September 30, 1997 to 122,166 at September
30, 1998. Combined operating losses for paging were $1.5 million and $326,000 in
the third quarter of 1998 and the third quarter of 1997, respectively. Included
in operating losses in the three months ended September 30, 1998 and 1997 were
depreciation and amortization charges of $732,000 and $405,000, respectively.
 
During the third quarter of 1998, revenue and subscriber growth were primarily
attributable to the acquisition of a paging operation in Moscow, Russia. The
operating loss in the three months ended September 30, 1998 was primarily
comprised of operating losses of $796,000, $333,000 and $250,000 at paging
operations in Austria, Romania and Estonia, respectively. These losses were
partially due to increased marketing, advertising, technical and distribution
expenses incurred to introduce Calling Party Pays service. Calling Party Pays
subscribers are not required to pay a monthly fee for service. Instead, the
calling party sending the paging message is required to call a toll line for
which the calling party is billed by the local telephone company. The joint
venture then receives a fee from the local telephone company for each call made
to the pager.
 
Radio broadcasting revenues were $5.6 million in the third quarter of 1998 and
$4.8 million in the third quarter of 1997, an increase of 17%. Combined
operating income from radio broadcasting was at break-even and $2.8 million in
the three months ended September 30, 1998 and 1997, respectively. Included in
operating income in the third quarter of 1998 and 1997 were depreciation and
amortization charges of $395,000 and $109,000, respectively.
 
The revenue growth is due to increases in the number of advertising spots sold
and increases in the price of the advertising spots. The ability to sell
additional spots at a higher rate is dependent on an increase in audience
ratings. The Company has increased its audience share through the use of market
research to determine programming formats and marketing strategies, including
employing U.S. trained sales managers. The increase was partially offset by a
decrease in revenue at the radio operation in Hungary. This was the result of
increased competition from television and from a new national radio network.
 
For the three months ended September 30, 1998, operating income includes losses
of $1.7 million attributable to increased programming and other expenses
associated with the News Talk format at the radio station in Berlin, which was
acquired during the third quarter of 1997. The News Talk format has more
start-up costs than traditional music radio stations, however, the
Communications Group expects to
 
                                       40
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
achieve its targeted rate of return through its future operation of the radio
station. Also included is a decrease in operating income of $1.8 million
attributable to the effects of increased competition experienced by the radio
station in Hungary.
 
Telephony revenues were $14.6 million in the third quarter of 1998 and $8.5
million in the third quarter of 1997. This represents an increase of 72%. Total
subscribers increased from 17,919 at September 30, 1997 to 42,444 at September
30, 1998. International toll calling revenues were $7.4 million in the third
quarter of 1998 compared to $6.4 million in the third quarter of 1997. Trunked
mobile radio revenues were $908,000 and $1.2 million in the three months ended
September 30, 1998 and 1997, respectively. Cellular telecommunications revenues
were $6.3 million in the third quarter of 1998 versus $913,000 in the third
quarter of 1997.
 
Combined operating income (loss) for telephony was $844,000 and ($1.9) million
in the third quarter of 1998 and in the third quarter of 1997, respectively.
Included in operating income (loss) in the third quarter of 1998 and 1997 were
depreciation and amortization charges of $3.1 million and $1.3 million,
respectively. Operating income from international toll calling operations was
$3.0 million and $2.0 million in the third quarter of 1998 and 1997,
respectively. Trunked mobile radio's operating losses were $716,000 and $916,000
in three months ended September 30, 1998 and 1997, and the operating losses for
cellular telecommunications were $1.2 million and $2.9 million in the third
quarters of 1998 and 1997, respectively. Operating losses from fixed telephony
were $255,000 in the third quarter of 1998.
 
International toll calling revenue is generated at the joint venture in Georgia,
which handles international calls inbound to and outbound from the Republic of
Georgia. The increase in toll calling revenues were primarily attributable to
interconnection agreements with cellular phone providers that were not in
service in 1997. Decreased trunked mobile radio revenue was due to the sale of
the Communication Group's interest in Protocall Ventures Limited during July
1998. As part of the sale, the Communications Group's trunked mobile radio
ventures in Western Europe were sold. The Communications Group retained an
interest in the trunked mobile radio joint venture in Kazakstan. The operating
loss for cellular telecommunications reflects the operating results of its
operations in Latvia and Georgia, which commenced operations in April 1997 and
September 1997, respectively. The Communications Group expects these start-up
operations to incur losses for the near term.
 
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
  1997.
 
ANALYSIS OF COMBINED RESULTS OF OPERATIONS
 
EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION
 
Total revenues for the Communications Group's cable television, paging, radio
broadcasting, cellular telecommunications, international toll calling and
trunked mobile radio businesses were $94.2 million and $63.5 million in the
first nine months of 1998 and 1997, respectively. The percentage increase in
revenues was 48%. Combined operating income (loss) for all of the Communication
Group's businesses were ($13.6) million and $3.6 million in the first nine
months of 1998 and 1997, respectively.
 
Cable television revenues were $23.3 million and $17.0 million in the first nine
months of 1998 and 1997, respectively, an increase of 37%. Total subscribers
increased from 169,033 at September 30, 1997 to 291,664 at September 30, 1998.
Combined operating losses for cable television were $4.6 million and $2.7
million in the first nine months of 1998 and 1997, respectively. Included in
operating losses in the first nine months of 1998 and 1997 were depreciation and
amortization charges of $10.0 million and $6.7 million, respectively.
 
                                       41
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
Subscriber growth and revenue increases from cable television were the result of
the expansion 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, coupled with acquisitions of systems in Moldova and
Romania. The increase in operating loss in the first nine months of 1998 as
compared to the first nine months of 1997 was primarily attributable to
operating losses at Joint Ventures that recently became operational in St.
Petersburg and Romania, as well as additional marketing and programming costs
incurred at operations in Moscow and Latvia, respectively. In addition, the
Communications Group's operations in Georgia and Latvia have experienced
increased competition which has adversely affected operating results in the
first nine months of 1998. The Communications Group is intentionally slowing the
growth in its Belarus cable television Joint Venture, Cosmos TV, as a result of
new regulations instituted by various governmental ministries which may
adversely affect the operations of the Joint Venture.
 
Paging revenues were $13.5 million in the first nine months of 1998 and $9.6
million in the first nine months of 1997. This represents an increase of 41%.
Total subscribers increased from 53,321 at September 30, 1997 to 122,166 at
September 30, 1998. Combined operating losses for paging were $6.6 million and
$2.4 in the nine months ended September 30, 1998 and 1997, respectively.
Included in operating losses in the first nine months of 1998 and 1997 were
depreciation and amortization charges of $2.2 million and $1.2 million,
respectively.
 
During the first nine months of 1998, revenue and subscriber growth were
partially attributable to the acquisition of a paging operation in Moscow,
Russia. Additionally, revenue growth was partially attributable to increases of
approximately $617,000, $797,000 and $679,000 at paging operations in St.
Petersburg, Russia, Vienna, Austria, and Kazakstan, respectively. The operating
loss in the first nine months of 1998 was primarily comprised of operating
losses of $1.7 million, $1.3 million, $826,000 and $430,000 at paging operations
in Austria, Romania, Estonia and Latvia, respectively. These losses were
partially due to increased marketing, advertising, technical and distribution
expenses incurred to introduce Calling Party Pays service. Calling Party Pay
subscribers are not required to pay a monthly fee for service. Instead the
calling party sending the paging message is required to call a toll line for
which the calling party is billed by the local telephone company. The joint
venture then receives a fee from the local telephone company for each call made
to the pager.
 
Radio broadcasting revenues were $15.3 million in the first nine months of 1998
and $11.5 million in the first nine months of 1997, an increase of 33%. Combined
operating income from radio broadcasting was at break-even and $4.2 million in
the first nine months of 1998 and the first nine months of 1997, respectively.
Included in operating income in the nine months ended September 30, 1998 and the
nine months ended September 30, 1997 were depreciation and amortization charges
of $1.1 million and $256,000, respectively. The revenue growth is due to
increases in the number of advertising spots sold and increases in the price of
the advertising spots. The ability to sell additional spots at a higher rate is
dependent on an increase in audience ratings. The Company has increased its
audience share through the use of market research to determine programming
formats and marketing strategies, including employing U.S. trained sales
managers. The increase was partially offset by a decrease in revenue at the
radio operation in Hungary. This was the result of increased competition from
television and from a new national radio network.
 
For the nine months ended September 30, 1998, operating income includes a loss
of $3.8 million attributable to increased programming and other expenses
associated with the News Talk format at the radio station in Berlin, which was
acquired during the third quarter of 1997. The News Talk format has more
start-up costs than traditional music radio stations, however, the
Communications Group expects to achieve its targeted rate of return through its
future operation of the radio station. Also included is a
 
                                       42
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
decrease in operating income of $1.8 million attributable to the effects of
increased competition experienced by the radio station in Hungary.
 
Telephony revenues were $42.1 million in the first nine months of 1998 and $25.4
million in the first nine months of 1997. This represents an increase of 66%.
Total subscribers increased from 17,919 at September 30, 1997 to 42,444 at
September 30, 1998. International toll calling revenues were $21.1 million in
the nine months ended September 30, 1998 compared to $21.4 million in the nine
months ended September 30, 1997. Trunked mobile radio revenues were $5.9 million
and $3.0 million in the first nine months of 1998 and the first nine months of
1997, respectively. Cellular telecommunications revenues were $15.2 million in
the first nine months of 1998 versus $1.0 million in the first nine months of
1997.
 
Combined operating income (loss) for telephony was ($2.5) million and $4.5
million in the first nine months of 1998 and in the first nine months of 1997,
respectively. Included in operating income (loss) in the nine months ended
September 30, 1998 and 1997 were depreciation and amortization charges of $9.7
million and $2.4 million, respectively. This increase is attributable to an
increased amount of assets in service at the cellular providers in Georgia and
Latvia. Operating income from international toll calling operations was $6.1
million and $11.6 million in the first nine months of 1998 and in the first nine
months of 1997, respectively. Trunked mobile radio's operating losses were $2.5
million and $2.7 million in the nine months ended September 30, 1998 and 1997,
respectively and the operating losses for cellular telecommunications were $5.8
million and $4.4 million in the first nine months of 1998 and 1997,
respectively. Operating losses from fixed telephony were $255,000 in the nine
months ended September 30, 1998.
 
International toll calling revenue is generated at the joint venture in Georgia,
which handles international calls inbound to and outbound from the Republic of
Georgia. Although minutes of use increased during the first nine months of 1998
as compared to the first nine months of 1997, revenue and operating income in
the first nine months of 1998 decreased due to the change in the incoming and
outgoing mix in telephone traffic and the contractual reductions in termination
accounting rates in its international settlement agreements for traffic with its
overseas carriers. In addition, payments made to local carriers for call
terminations increased during 1998. Operating income in the first nine months of
1997 included the impact of favorable settlements, of approximately $2.0
million, with international carriers for costs related to 1996 call revenues.
Increased trunked mobile radio revenue was primarily due to an increase of
approximately $1.4 million realized at the Portugal operations of Protocall
Ventures. In July 1998, the Communications Group sold its share of Protocall
Ventures. As part of the sale, the Communications Group's trunked mobile radio
Joint Ventures in Western Europe were sold. The Communications Group retained an
interest in the remaining Joint Venture in Kazakstan. The operating loss for
cellular telecommunications reflects the operating results of its operations in
Latvia and Georgia, which commenced operations in April 1997 and September 1997,
respectively. The Communications Group expects these start-up operations to
incur losses for the near term.
 
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 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.
 
                                       43
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
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 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--RESULTS OF OPERATIONS
 
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
  30, 1997.
 
REVENUES
 
Snapper's 1998 third quarter sales in 1998 were $47.3 million compared to $30.8
million in 1997. Sales of lawn and garden equipment contributed the majority of
the revenues during both periods. Sales were lower in 1997 due to $17.3 million
of sales reductions for repurchases of certain distributor inventory.
 
Gross profit during 1998 was $10.3 million compared to $9.3 million in 1997. The
1997 lower gross profit results were caused by lower sales noted above. The 1998
gross profit includes a $2.7 million inventory writedown for excess parts.
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
 
Selling, general and administrative expenses were $17.7 million in 1998 compared
to $16.4 million in 1997. The 1998 period expenses were higher due to sales
commissions of $500,000 from increased sales during the period and advertising
expenses were up $500,000 related to a one time credit received in 1997. In
addition, Snapper accrued $1.3 million for estimated legal fees related to
distributor repurchases completed prior to 1997.
 
DEPRECIATION AND AMORTIZATION
 
Depreciation and amortization charges were $1.8 million for 1998 and $1.4
million for 1997. Depreciation and amortization reflected the depreciation of
Snapper's property, plant and equipment as well as the amortization of the
goodwill associated with the acquisition of Snapper.
 
                                       44
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
 
OPERATING LOSS
 
In 1998, Snapper experienced an operating loss of $9.1 million as compared to a
1997 operating loss of $8.5 million during the quarter. The 1998 operating loss
was the result of higher advertising and distribution costs as noted above as
well as selling through older equipment repurchases at lower gross profit
margins. The 1997 operating loss was the result of unseasonably cool weather
during the first two months of the period and the acquisition of the
distributorships' inventory during the period.
 
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
  1997.
 
REVENUES
 
For the nine months ended September 30, 1998 Snapper sales were $165.2 million,
compared to $132.6 million for the same period in 1997. Sales of lawn and garden
equipment contributed the majority of the revenues during both periods. Sales
were lower in 1997 due to unseasonably cool weather during April and May, as
well as $23.6 million of sales reductions in 1997 due to repurchases of certain
distributor inventory.
 
Gross profit during the period was $44.6 million and $42.9 million for 1998 and
1997, respectively. The 1998 gross profit percentage decreased due to sales of
older equipment during the period at special pricing to help eliminate older
inventory acquired in the distributor repurchases during 1997 and a $2.7 million
inventory writedown for excess parts in 1998.
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
 
Selling, general and administrative expenses for the nine months ended September
30, 1998 and 1997 were $51.4 million and $47.7 million, respectively. The 1998
distribution expenses were $3.7 million higher than 1997 due to $600,000 in
additional cost for two warehouses included in all of 1998 but not added until
the third quarter of 1997 and $600,000 in additional freight costs due to
increased sales. In addition, Snapper accrued $1.3 million in 1998 for estimated
legal fees related to distributor repurchases completed prior to 1997. In
addition to normal selling, general and administrative expenses, 1997 expenses
reflect inventory repurchases expenditures related to seven large
distributorship repurchases during the second and third quarters.
 
DEPRECIATION AND AMORTIZATION EXPENSE
 
Depreciation and amortization charges for the period were $5.5 million and $5.2
million for 1998 and 1997, respectively. Depreciation and amortization reflected
the depreciation of Snapper's property, plant and equipment as well as the
amortization of the goodwill associated with the acquisition of Snapper.
 
OPERATING LOSS
 
Snapper had an operating loss of $12.2 million in 1998 and $10.0 million in
1997. The 1998 operating loss was the result of higher distribution and legal
costs as noted above as well as selling through older equipment repurchases at
lower gross profit margins. The 1997 loss was the result of unseasonably cool
weather during April and May and the acquisition of the distributorship
inventory during the period.
 
                                       45
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
 
THE COMPANY
 
MMG is a holding company and, accordingly, does not generate cash flows. The
Communications Group is dependent on MMG for significant capital infusions to
fund its operations and make acquisitions, as well as 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. 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. The Company, at its discretion, can make dividend
payments on its 7 1/4% Cumulative Convertible Preferred Stock ("Preferred
Stock") in either cash or Common Stock. 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, the Company has paid the first three quarterly dividends of the
Preferred Stock in cash.
 
Since each of the Communications Group's Joint Ventures operates businesses,
such as cable television, fixed telephony, paging 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, 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. 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 near term.
 
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.
 
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 wireless
telecommunications opportunities in selected emerging markets. The
Communications Group and virtually all 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.
 
                                       46
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
For the nine months ended September 30, 1998, the Communications Group's primary
source of funds was from the Company in the form of non-interest bearing
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.
 
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 September 30, 1998, the Communications Group was
committed to provide funding under the various charter fund agreements and
credit lines in an aggregate amount of approximately $164.6 million, of which
$18.7 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 wireless cable and radio broadcasting and by offering additional
services and options for paging and 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 wireless subscriber equipment
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.
 
                                       47
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION
 
The cable television, paging, fixed wireless local loop telephony, GSM and
international toll calling 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 ("EBRD") pursuant to which the EBRD 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 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 EBRD 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 EBRD 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 Northern Telecom, B.V. As part
of such amendment, the Communications Group and Western Wireless agreed to
provide Baltcom GSM the funds needed to repay Northern Telecom, B.V., if
necessary, and to provide Baltcom GSM debt service support for the loan
agreement with the EBRD in an amount not to exceed the greater of $3.5 million
or the aggregate of the additional equipment purchased from Northern Telecom,
N.V. plus interest payable on the financing.
 
As part of the financing, the EBRD 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 ("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 MITI, pledged their respective
shares to the EBRD as security for repayment of the loan. Under the EBRD
agreements, amounts payable to the Communications Group are subordinated to
amounts payable to the EBRD.
 
In April 1997, the Communications Group's Georgian GSM Joint Venture, Magticom,
entered into a financing agreement with Motorola, Inc. ("Motorola") pursuant to
which Motorola agreed to finance 75% of the equipment, software and service it
provides to Magticom up to an amount equal to $15.0 million. Interest on the
financed amount accrues at 6-month 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
 
                                       48
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
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 owned to such partners is subordinated to Motorola.
 
In January 1998, the Communications Group entered into a loan agreement with DSC
Finance Corporation ("DSC") 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 Telecommunications, LLC ("CAT"). CAT 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 CAT for
the funding of equipment acquisition and operational expense in accordance with
CAT'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 CAT's business plan.
 
As part of the transaction, the Communications Group has sold a 17.12%
participation in the $36.5 million loan to AIG Silk Road Fund, LTd., ("AIG")
which requires AIG to provide the Communications Group 17.12% of the funds to be
provided under the loan agreement and entitles AIG to 17.12% of the repayments
to the Communications Group. The Communications Group has agreed to repurchase
such loan participation from AIG in August 2005 on terms and conditions agreed
by the parties. In addition, the Communications Group has provided AIG the right
to put its 15.70% ownership interest in Omni-Metromedia and to the
Communications Group starting in February 2001 for a price equal to seven times
the EBITDA of CAT minus debt, as defined, multiplied by AIG's percentage
ownership interest.
 
As part of its investment in Tyumen Ruskom announced in November 1998 the
Communications Group agreed to provide a guarantee of payment of $6.1 million to
Ericsson Radio Systems, A.B. ("Ericsson") for equipment financing provided by
Ericsson to one of the Communication Group's wholly owned subsidiaries and to
its 46% owned Joint Venture, Tyumen Ruskom. Tyumen Ruskom is purchasing a DAMPS
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
Tyumen Ruskom and to lend the joint venture up to $4.0 million for startup costs
and other operating expenses. Tyumen Ruskom also intends to provide wireless
local loop telephone services.
 
CHINA
 
Sichuan JV is a party to a Network System Cooperation Contract dated May 1996,
with China Unicom (the "STLF Contract"). The STLF Contract covers establishment
of a fixed line Public Services Telephone Network ("PSTN") providing local
telephone service in cities within Sichuan Province (as it's borders were
defined in May 1996) and long distance telephone service among those cities (the
"PSTN Network"). The initial project ("Phase 1") covered by the STLF 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 STLF Contract will expand
services to 1,000,000 local telephone lines in cities throughout Sichuan
Province (as its borders were defined in May 1996), and will
 
                                       49
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
construct fiber optic long distance facilities among these cities. The STLF
Contract has a cooperation term of twenty-five years.
 
Chongqing JV subsequently assumed certain obligations and rights associated with
the STLF Contract through an agreement executed between Sichuan JV and Chongqing
JV and endorsed by China Unicom. The STLF Contract was further amended to
explicitly cover establishment for PSTNs and inter-city long distance services
throughout and between Sichuan Province (as its borders were redefined after
establishment of Chongqing Municipality as an autonomous government entity) and
the newly formed Chongqing Special Administrative Region (the "Chongqing
S.A.R."). Under the terms of the amended STLF Contract, Sichuan JV and Chongqing
JV are each responsible for providing China Unicom with the capital to develop
the Phase 1 PSTN Network within Sichuan Province and Chongqing S.A.R.
respectively.
 
Sichuan JV and Chongqing JV are also responsible to provide additional capital
for China Unicom's later expansion the PSTN Network within and between Sichuan
Province and Chongqing S.A.R. up to a capacity of 1,000,000 total subscribers.
China Unicom is responsible for construction, operation, management and
maintenance of the PSTN 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 PSTN and long
distance operations within and between Sichuan Province and Chongqing S.A.R. for
a 25-year period, payable semi-annually.
 
Sichuan JV and Chongqing JV have entered into a Phase 1 loan with Northern
Telecom Communications ("Nortel") for the purchase of up to $20.0 million of
Nortel equipment during Phase 1. The Company secured the Phase 1 loan repayment
with a $20.0 million letter of credit. Nortel has 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.
 
The estimated budget for Phase 1 is approximately $29.5 million in Sichuan
Province and approximately $29.5 million in Chongqing S.A.R. As of September 30,
1998 AAT has contributed in equity and loans $17.9 million and $13.6 million in
Sichuan Province and Chongqing S.A.R.
 
Ningbo United Telecommunications Investment Co., Ltd. ("NUT") was party to a
Network System Cooperation Contract with China Unicom (the "NUT Contract")
covering China Unicom's development of a GSM telecommunications project in the
City of Ningbo, Zhejiang Province. The project entails construction of a mobile
communications network with a total capacity of 50,000 subscribers (the "Phase 1
GSM Network"). The cooperation period for the NUT Contract is fifteen years. NUT
has assigned its rights and obligations under the NUT Contract to Ningbo JV with
China Unicom's explicit concurrence. In accordance with the terms of the NUT
Contract, Ningbo JV is responsible for providing China Unicom with the capital
to develop the Phase 1 GSM Network in Ningbo City. China Unicom is responsible
for the construction, operation, management and maintenance of the GSM Network.
Ningbo JV will provide financing, consulting and technical support services to
China Unicom in exchange for 73% of the distributable cash flow from China
Unicom's Phase 1 GSM Network operations for a 15-year period.
 
The total budget for the Phase 1 GSM Network project was approximately $29.7
million. The Phase 1 GSM Network was completed and put into commercial service
in mid-August 1997.
 
On March 26, 1998, Ningbo JV and China Unicom signed an amendment to the NUT
Contract covering expansion of China Unicom's GSM service throughout Ningbo
Municipality (the "Ningbo Expansion Agreement"). The expansion work will be
undertaken as a separate project, and will provide capacity for an additional
25,000 GSM subscribers within Ningbo Municipality (the "Phase 2 GSM Network").
The terms of the Ningbo Expansion Agreement match those of the underlying NUT
Contract, however, the Ningbo Expansion Agreement will have its own cooperation
period of fifteen years. In the Ningbo
 
                                       50
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
Expansion Agreement, China Unicom and Ningbo JV explicitly contemplated
establishment of a separate joint venture to provide financing and consulting
services to the Phase 2 GSM Network project. Ningbo JV assigned all of its
rights and obligations as regards the Phase 2 GSM Network to Ningbo JV II. The
feasibility study for the Phase 2 GSM Network project was completed on March 6,
1998 and forecasts a total budget of approximately $17.0 million. As of
September 30, 1998, AAT has made equity contributions of $4.8 million.
 
The Communications Group's China Joint Venture's ability to generate positive
operating results is heavily dependent on the ability of their Chinese operating
partners 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 the
Joint Ventures' Chinese operating partners 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
latter' technical, marketing and operational plans. Training of the Chinese
operators' personnel is also provided in both classroom and on-the-job formats.
Joint Venture personnel also assist the Chinese operators with general project
management and vendor contract administration. These measures are all permitted
under the Chinese regulations and are supported by explicit provisions of the
Joint Ventures' cooperation contracts.
 
At present, management's primary focus is on bringing pre-operational systems to
the point of commercial service launch as quickly as possible. For the single
system already in commercial service in Ningbo City, management works closely
with the Chinese operator to more rapidly grow the base of subscribers. In each
Joint Venture, attention is given to distinguish the venture cooperation
partner's network and operation on the basis of technical and service quality.
Management views these parameters as offering the Chinese operator better
opportunity for long term success in the China market than could be achieved
solely through price and cost competition. As a result, the Joint Ventures
encourage moderate additional investment in quality factors on the part of the
Chinese operators. No assurance can be given that Management's measures or the
efforts of the Chinese operators will be successful. Additionally, if the Joint
Ventures do become profitable, there can be no assurance that the Joint Ventures
will pay dividends or return the capital invested by the Company.
 
RISKS ASSOCIATED WITH THE COMMUNICATIONS GROUP'S INVESTMENTS
 
The ability of the Communications Group and its Joint Ventures to establish
profitable operations is also subject to significant political, economic and
social risks inherent in doing business in emerging markets such as Eastern
Europe, the FSU and China. These include matters arising out of government
policies, economic conditions, imposition of or changes in government
regulations, 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.
 
In addition, note 11 to the "Notes to Consolidated Condensed Financial
Statements" contains a description of the risks associated with the Company's
investments in Russia and China.
 
SNAPPER
 
Snapper's liquidity is generated from operations and borrowings. On November 26,
1996, Snapper entered into a credit agreement (the "Snapper Credit Agreement")
with AmSouth Bank of Alabama ("AmSouth") pursuant to which AmSouth agreed to
make available to Snapper a revolving line of credit up to $55.0 million, (the
"Snapper Revolver"). The Snapper Revolver was to terminate on January 1, 1999
and is
 
                                       51
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
guaranteed by the Company. The Snapper Revolver contains covenants regarding
minimum quarterly cash flow and equity requirements.
 
On November 12, 1997, Snapper amended and restated the Snapper Credit Agreement
to increase the amount of the revolving line of credit from $55.0 million to
$80.0 million. At June 30, 1998, Snapper was not in compliance with certain
financial covenants under the Snapper Revolver. The Company and AmSouth amended
the Snapper Credit Agreement to provide for a reduction of the line of credit
from $55.0 million to $51.0 million, as of August 11, 1998. As part of the
amendment to the Snapper Credit Agreement, AmSouth waived the covenant defaults
as of June 30, 1998. At September 30, 1998 Snapper was not in compliance with
certain financial covenants under the Snapper Credit Agreement.
 
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 "Snapper Loan"), the proceeds of which were used to refinance
Snapper's obligations to AmSouth 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 $10,000,000
(increasing to $15,000,000 on the occurrence of specified events). 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.
 
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 September 30, 1998, noncancellable commitments under these
agreements amounted to approximately $25.0 million.
 
Snapper has an agreement with a financial institution which makes available
floor plan financing to distributors and 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 September 30, 1998, there was
approximately $83.9 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 Revolver and, on
an as needed basis, short-term working capital funding from the Company, will
provide sufficient funds for Snapper to meet its obligations and capital
requirements.
 
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
 
                                       52
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
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' 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 1998 and 1999 as necessary.
 
The Company has written and distributed a questionnaire and project plan to the
Company's systems personnel, its subsidiaries and the majority of its Joint
Ventures, to identify all business and computer applications, so the Company can
identify potential compliance problems. The Company has initiated communications
with all of its and its Joint Ventures' significant suppliers to determine their
plans for remediating any Year 2000 issues that arise in the interface with the
Company and its Joint Ventures. The Company is currently compiling a database of
information based upon these responses. However, until this process is complete
the Company will not be able to assess the Year 2000 readiness of its Joint
Ventures. To the extent problems are identified, the Company will implement
corrective procedures where necessary. 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 to $1.0 million, covering the period
from January 1, 1998 through December 31, 2000, 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 September 30, 1998, the Company has incurred $440,000 in respect of its
Year 2000 conversion effort, or 44% to 59% 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 and media business 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
and media 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 the Company's communications and
media segment, in certain Joint Ventures, the Company does not have a
controlling management interest and cannot unilaterally cause the Joint Venture
to commit the necessary resources 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 accounting and control 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 accounting and control 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.
 
                                       53
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
MMG CONSOLIDATED
 
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
  1997.
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
Cash used in operations for the nine months ended September 30, 1998 was $23.7
million, a decrease in cash used in operations of $51.2 million from the same
period in the prior year.
 
Losses from operating activities include significant non-cash items such as
discontinued operations, depreciation, amortization, equity in losses of joint
ventures and investees, early extinguishment of debt, gain on sale of assets,
and losses allocable to minority interests. Excluding discontinued operations,
non-cash items decreased $62.8 million from $79.8 million to $17.0 million for
the nine months ended September 30, 1997 and 1998, respectively. The decrease
relates principally to equity losses allocable to RDM of $45.1 million and early
extinguishment of debt of $14.7 million, partially offset by the increase in
equity losses of the Communications Group's Joint Ventures of $7.8 million.
Changes in operating assets and liabilities, net of the effect of acquisitions
and dispositions, increased cash flows for the nine months ended September 30,
1998 by $23.7 million and decreased cash flows by $49.4 million, for the nine
months ended September 30, 1997.
 
The increase in cash flows for the nine months ended September 30, 1998 resulted
from the Company's decision to significantly decrease its production of
inventory at Snapper in the current year partially offset by increased losses in
the Communications Group's operations due to the start-up nature of these
operations and increases in selling, general and administrative expenses to
support the increase in the number of joint ventures.
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
Cash provided by investing activities for the nine months ended September 30,
1998 and 1997 was $103.8 million and $215.8 million, respectively. The principal
sources of funds from investing activities in 1998 were proceeds from maturities
of short-term investments of $100.0 million and the net proceeds of $57.3
million from the sale of Landmark and proceeds of $14.5 million from the sale of
Protocall Ventures. The principal source of funds from investing activities in
1997 was the net proceeds from the Entertainment Group Sale of $276.6 million.
The principal uses of funds for the nine months ended September 30, 1998 were
investments in and advances to Joint Ventures of $50.6 million, acquisitions by
the Communications Group of $9.3 million and additions to property, plant and
equipment of $9.3 million. The principal uses of funds for the nine months ended
September 30, 1997 were investments in and advances to Joint Ventures of $37.3
million, acquisitions by the Communications Group of $9.1 million and additions
to property, plant and equipment of $9.5 million.
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
Cash used in financing activities was $37.7 million, for the nine months ended
September 30, 1998 as compared to cash provided by financing activities of $81.2
million, for the nine months ended September 30, 1997. Funds used in financing
activities in 1998 were for the Preferred Stock dividend of $11.3 million and
the repayment of debt of $31.8 million, principally the Snapper Revolver, which
was partially offset by proceeds of $5.3 million from the exercise of stock
options. Financing activities in 1997 includes the proceeds from the issuance of
4,140,000 shares of 7 1/4% cumulative convertible preferred stock of $199.4
million. Of the $156.7 million of payments of debt, $155.5 million relates to
the payment on the Company's debentures.
 
                                       54
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
The Company will be required to provide both quantitative and qualitative
disclosures about market risk in its December 31, 1998 Annual Report on Form
10-K.
 
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 FSU, 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 FSU, 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 FSU, 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
FSU, 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. The
Company does not undertake, and specifically declines, any obligation to release
publicly any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
 
                                       55
<PAGE>
                           PART II--OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
Updated information on litigation and environmental matters subsequent to
December 31, 1997 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 this purported class and
derivative action in the Delaware Court of Chancery (the "Court") on February
22, 1991 against Fuqua, Intermark, Inc. ("Intermark"), the then-current
directors of Fuqua and certain past members of the board of directors. This
action is described in the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998. There have been no material developments in this
action since prior to June 30, 1998.
 
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 ("Goldwyn"), Goldwyn's directors
and majority shareholder breached their fiduciary duties to the public
shareholders of Goldwyn. 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 may file proofs of claim until February 15, 1999, after which time the
settlement fund will be distributed.
 
SAMUEL GOLDWYN, JR. V. METRO-GOLDWYN-MAYER INC., ET AL.
 
On October 29, 1997, Samuel Goldwyn, Jr., the former chairman of Goldwyn, 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 (the "Trust")
to enter into various agreements in connection with the merger of the Samuel
Goldwyn Company; breached an agreement to guarantee the performance of Goldwyn
Entertainment Company's obligations to the Trust; and is used, without
permission, the "Goldwyn" trademark. The action also alleges 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 the trademark and breach of
fiduciary duty claims and reasserting the other causes of action against the
Company. The Company believes it has meritorious defenses and is vigorously
defending the action. The parties are currently engaged in discovery.
 
THEOHAROUS V. FONG, ET AL.
 
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. The complaint alleges that
 
                                       56
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
certain officers, directors and shareholders of RDM Sports Group, Inc. ("RDM"),
including the Company, are liable under federal securities laws for
misrepresenting and failing to disclose information regarding RDM's alleged
financial condition during the period between July 19, 1996 and August 22, 1997,
on which date RDM disclosed that its management had discussed the possibility of
filing for bankruptcy. The complaint also alleges that the plaintiffs, including
the Company, are secondarily liable as controlling persons of RDM. 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. The Company believes
it has meritorious defenses and plans to vigorously defend these actions.
 
SYDNEY H. SAPSOWITZ AND SID SAPSOWITZ & ASSOCIATES, INC. V. JOHN W. KLUGE,
  STUART SUBOTNICK, METROMEDIA INTERNATIONAL GROUP, INC., 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 breach of an agreement to pay a finder's fee in connection with the
Entertainment Group Sale. The Company believes it has meritorious defenses and
is vigorously defending such action.
 
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 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.
 
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.
 
                                       57
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
At June 30, 1998, Snapper was not in compliance with certain financial covenants
under the Snapper Revolver. The Company and AmSouth amended the Snapper Credit
Agreement to provide for a reduction of the line of credit from $55.0 million to
$51.0 million, as of August 11, 1998. As part of the amendment to the Snapper
Credit Agreement, AmSouth waived the covenant defaults as of June 30, 1998. At
September 30, 1998, Snapper was not in compliance with certain financial
covenants under the Snapper Credit Agreement.
 
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 "Snapper Loan"), the proceeds of which were used to refinance
Snapper's obligations to AmSouth 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 $10,000,000
(increasing to $15,000,000 on the occurrence of specified events). 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.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
None
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
 
(a) Exhibits
 
<TABLE>
<CAPTION>
   EXHIBIT
    NUMBER   DESCRIPTION
-----------  ---------------------------------------------------------------------------------------
<S>          <C>
 10*......   Loan and Security Agreement dated as of November 11, 1998 among Snapper,
             Inc., the financial institutions signatory thereto and Fleet Capital Corporation, as
             Agent
 11*......   Computation of Earnings Per Share
 27*......   Financial Data Schedule
</TABLE>
 
(b) Reports on Form 8-K
 
None
 
------------------------
 
*   Filed herewith
 
                                       58
<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: November 16, 1998
 
                                       59