<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

                                   (MARK ONE)

<TABLE>
<C>     <S>
 /X/    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

        FOR THE PERIOD ENDED SEPTEMBER 30, 1999
</TABLE>

                                       OR

<TABLE>
<C>     <S>
 / /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

        FOR THE TRANSITION PERIOD FROM               TO
</TABLE>

                         COMMISSION FILE NUMBER 1-5706

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

                      METROMEDIA INTERNATIONAL GROUP, INC.

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

<TABLE>
<S>                                            <C>
               DELAWARE                                     58-0971455
    (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, 1999 WAS
93,282,703.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<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
Consolidated Condensed Statements of Comprehensive Loss.....      6
Notes to Consolidated Condensed Financial Statements........      7

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................     35

Item 3. Quantitative and Qualitative Disclosures about
  Market Risk...............................................     85

                      PART II--OTHER INFORMATION

Item 1. Legal Proceedings...................................     87

Item 3. Defaults upon Senior Securities.....................     90

Item 4. Submission of Matters to a Vote of Security
  Holders...................................................     90

Item 6. Exhibits and Reports on Form 8-K....................     91

Signature...................................................     92
</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,
                                                1999            1998            1999            1998
                                            -------------   -------------   -------------   -------------
<S>                                         <C>             <C>             <C>             <C>
Revenues:
  Communications Group....................    $  5,945        $  7,722        $  19,374       $ 24,351
  Lawn and garden equipment...............      46,989          47,330          166,207        165,159
                                              --------        --------        ---------       --------
                                                52,934          55,052          185,581        189,510
Cost and expenses:
  Cost of sales and operating expenses--
    Communications Group..................         317           1,288            1,214          4,204
  Cost of sales--lawn and garden
    equipment.............................      33,652          36,994          112,327        120,511
  Selling, general and administrative.....      30,461          37,716           91,063        115,635
  Depreciation and amortization...........      57,971           5,058           66,558         15,500
                                              --------        --------        ---------       --------
Operating loss............................     (69,467)        (26,004)         (85,581)       (66,340)
Other income (expense):
  Interest expense........................      (2,792)         (2,927)          (9,721)       (12,487)
  Interest income.........................       1,852           2,734            6,098          9,947
  Equity in losses of unconsolidated
    investees.............................        (909)         (1,293)          (6,842)        (8,938)
  Gain (loss) on disposition of
    business..............................      (1,200)          7,091           (1,200)         7,091
  Foreign currency gain (loss)............      (1,260)           (314)          (4,054)             7
                                              --------        --------        ---------       --------
Loss before income tax expense, minority
  interest and discontinued operations....     (73,776)        (20,713)        (101,300)       (70,720)
Income tax expense........................        (153)           (573)            (358)        (1,203)
Minority interest.........................      22,382           1,937           27,234          7,422
                                              --------        --------        ---------       --------
Loss from continuing operations...........     (51,547)        (19,349)         (74,424)       (64,501)
Discontinued operations:
  Gain (loss) on disposition..............     (12,776)             --          (12,776)         5,267
                                              --------        --------        ---------       --------
Net loss..................................     (64,323)        (19,349)         (87,200)       (59,234)
Cumulative convertible preferred stock
  dividend requirement....................      (3,752)         (3,752)         (11,256)       (11,256)
                                              --------        --------        ---------       --------
Net loss attributable to common
  stockholders............................    $(68,075)       $(23,101)       $ (98,456)      $(70,490)
                                              ========        ========        =========       ========
Weighted average number of common shares--
  Basic...................................      69,172          69,076           69,149         68,900
                                              ========        ========        =========       ========
Loss per share attributable to common
  stockholders--Basic:
  Continuing operations...................    $  (0.80)       $  (0.33)       $   (1.24)      $  (1.10)
  Discontinued operations.................    $  (0.18)       $     --        $   (0.18)      $   0.08
  Net loss................................    $  (0.98)       $  (0.33)       $   (1.42)      $  (1.02)
                                              ========        ========        =========       ========
</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,
                                                                  1999            1998
                                                              -------------   ------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
ASSETS:
Current assets:
  Cash and cash equivalents.................................   $   62,051      $  137,625
  Accounts receivable:
    Snapper, net............................................       22,042          27,055
    Other, net..............................................       19,495          18,826
  Inventories...............................................       51,275          62,777
  Other assets..............................................       23,324           5,441
                                                               ----------      ----------
      Total current assets..................................      178,187         251,724
Investments in and advances to joint ventures:
  Eastern Europe and the Republics of the Former Soviet
    Union...................................................       91,389          87,163
  China.....................................................       70,412          71,559
Property, plant and equipment, net of accumulated
  depreciation..............................................      204,362          36,067
Intangible assets, less accumulated amortization............      268,439         159,530
Other assets................................................       12,547           3,598
                                                               ----------      ----------
      Total assets..........................................   $  825,336      $  609,641
                                                               ==========      ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Accounts payable..........................................   $   42,009      $   28,779
  Accrued expenses..........................................       79,024          63,329
  Current portion of long-term debt.........................       13,279           1,723
                                                               ----------      ----------
    Total current liabilities...............................      134,312          93,831
Long-term debt..............................................      210,271          50,111
Other long-term liabilities.................................        8,038           5,410
                                                               ----------      ----------
      Total liabilities.....................................      352,621         149,352
                                                               ----------      ----------
Minority interest...........................................       30,327          34,749
Commitments and contingencies
Stockholders' equity:
  7 1/4% Cumulative Convertible Preferred Stock.............      207,000         207,000
  Common Stock, $1.00 par value, authorized 400,000,000
    shares, issued and outstanding 93,282,703 and 69,118,841
    shares at September 30, 1999 and December 31, 1998,
    respectively............................................       93,283          69,119
  Paid-in surplus...........................................    1,102,300       1,012,794
  Accumulated deficit.......................................     (955,749)       (857,293)
  Accumulated other comprehensive loss......................       (4,446)         (6,080)
                                                               ----------      ----------
      Total stockholders' equity............................      442,388         425,540
                                                               ----------      ----------
      Total liabilities and stockholders' equity............   $  825,336      $  609,641
                                                               ==========      ==========
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       3
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

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

<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                              -----------------------------
                                                              SEPTEMBER 30,   SEPTEMBER 30,
                                                                  1999            1998
                                                              -------------   -------------
<S>                                                           <C>             <C>
Operating activities:
  Net loss..................................................    $ (87,200)      $(59,234)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  (Gain) loss on disposition of discontinued operations.....       12,776         (5,267)
  (Gain) loss on disposition of business....................        1,200         (7,091)
  Equity in losses of unconsolidated investees..............        6,842          8,938
  Depreciation and amortization.............................       66,558         15,500
  Minority interest.........................................      (27,234)        (7,422)
  Other.....................................................          283            684
Changes in operating assets and liabilities, net of
  acquisitions and dispostions:
  Decrease in accounts receivable...........................       17,510          2,851
  Decrease in inventories...................................       14,844         39,847
  Increase in other assets..................................       (2,611)        (2,277)
  Decrease in accounts payable and accrued expenses.........      (11,704)       (15,977)
  Other operating activities, net...........................        1,696           (701)
                                                                ---------       --------
      Cash used in operating activities--continuing
        operations..........................................       (7,040)       (30,149)
                                                                ---------       --------
      Cash used in operating activities--discontinued
        operations..........................................       (5,000)            --
                                                                ---------       --------
Investing activities:
  Investments in and advances to joint ventures.............      (14,467)       (44,226)
  Distributions from joint ventures.........................        8,354          4,385
  Cash paid in acquisition of PLD Telekom, net..............      (19,622)            --
  Cash paid for acquisitions and additional equity in
    subsidiaries............................................       (1,435)        (9,261)
  Additions to property, plant and equipment................       (4,284)        (9,325)
  Net proceeds from sale of discontinued operations.........           --         57,298
  Proceeds from sale of business............................                      14,533
  Purchase of short-term investments........................           --         (3,069)
  Proceeds from sale of short-term investments..............           --        100,000
  Other investing activities, net...........................       (5,500)          (156)
                                                                ---------       --------
      Cash provided by (used in) investing activities.......      (36,954)       110,179
                                                                ---------       --------
Financing activities:
  Payments on notes and subordinated debt...................      (15,423)       (31,825)
  Proceeds from issuance of common stock related to
    incentive plans.........................................           99          5,347
  Preferred stock dividends paid............................      (11,256)       (11,256)
                                                                ---------       --------
      Cash used in financing activities.....................      (26,580)       (37,734)
                                                                ---------       --------
  Net increase (decrease) in cash and cash equivalents......      (75,574)        42,296
  Cash and cash equivalents at beginning of period..........      137,625        129,661
                                                                ---------       --------
  Cash and cash equivalents at end of period................    $  62,051       $171,957
                                                                =========       ========
</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
                                          ---------------------   ------------------------
                                          NUMBER OF               NUMBER OF                   PAID-IN     ACCUMULATED
                                            SHARES      AMOUNT      SHARES       AMOUNT       SURPLUS       DEFICIT
                                          ----------   --------   ----------   -----------   ----------   ------------
  <S>                                     <C>          <C>        <C>          <C>           <C>          <C>
  Balances, December 31, 1998...........  4,140,000    $207,000   69,118,841   $    69,119   $1,012,794    $(857,293)
  Issuance of stock and valuation of
    stock options and warrants related
    to the acquisition of PLD Telekom
    Inc.................................         --          --   24,107,449        24,107       89,254           --
  Issuance of stock and stock options
    related to incentive and other
    plans...............................         --          --      56,413             57          252           --
  Dividends on 7 1/4% cumulative
    convertible preferred stock.........         --          --          --             --           --      (11,256)
  Other comprehensive income............         --          --          --             --           --           --
  Net loss..............................         --          --          --             --           --      (87,200)
                                          ---------    --------   ----------   -----------   ----------    ---------
  Balances, September 30, 1999..........  4,140,000    $207,000   93,282,703   $    93,283   $1,102,300    $(955,749)
                                          =========    ========   ==========   ===========   ==========    =========

<CAPTION>

                                           ACCUMULATED
                                              OTHER
                                          COMPREHENSIVE
                                               LOSS          TOTAL
                                          --------------   ---------
  <S>                                     <C>              <C>
  Balances, December 31, 1998...........    $  (6,080)     $ 425,540
  Issuance of stock and valuation of
    stock options and warrants related
    to the acquisition of PLD Telekom
    Inc.................................           --        113,361
  Issuance of stock and stock options
    related to incentive and other
    plans...............................           --            309
  Dividends on 7 1/4% cumulative
    convertible preferred stock.........           --        (11,256)
  Other comprehensive income............        1,634          1,634
  Net loss..............................           --        (87,200)
                                            ---------      ---------
  Balances, September 30, 1999..........    $  (4,446)     $ 442,388
                                            =========      =========
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       5
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

            CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                              -----------------------------
                                                              SEPTEMBER 30,   SEPTEMBER 30,
                                                                  1999            1998
                                                              -------------   -------------
<S>                                                           <C>             <C>
Net loss....................................................    $(87,200)       $(59,234)
Other comprehensive income (loss), net of tax:
  Foreign currency translation adjustment...................       1,634            (528)
                                                                --------        --------
Other comprehensive income (loss)...........................       1,634            (528)
                                                                --------        --------
Comprehensive loss..........................................    $(85,566)       $(59,762)
                                                                ========        ========
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       6
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND LIQUIDITY

BASIS OF PRESENTATION

The accompanying interim consolidated condensed financial statements include the
accounts of Metromedia International Group, Inc. ("Metromedia", "MMG" or the
"Company") and its wholly-owned subsidiaries, Metromedia International
Telecommunications, Inc., Snapper Inc. and as of September 30, 1999 PLD
Telekom Inc. (see note 2). PLD Telekom, Metromedia International
Telecommunications and its majority owned subsidiary, Metromedia China
Corporation, are together known as the "Communications Group". For the financial
reporting period ending September 30, 1999, PLD Telekom is included in the
Company's balance sheet at September 30, 1999. PLD Telekom will be included in
the Company's results of operations subsequent to September 30, 1999. All
significant intercompany transactions and accounts have been eliminated. The
Company completed the sale of Landmark Theatre Group on April 16, 1998.

Investments in other companies, including those of the Communications Group's
joint ventures that are not majority owned, or in which the Company does not
have control but exercises significant influence, are accounted for using the
equity method. The Company reflects its net investments in joint ventures under
the caption "Investments in and advances to joint ventures." The Company reports
the results of the operations of Metromedia International Telecommunications'
operations in Eastern Europe and the republics of the former Soviet Union, and
the distributable cash flow generated by the telephony systems of China Unicom
through June 30, 1999, on a three month lag (see notes 3 and 4).

The accompanying interim consolidated condensed financial statements have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the consolidated financial
statements and related footnotes included in the Company's Annual Report on
Form 10-K/A (Amendment No. 2) for the year ended December 31, 1998. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of September 30, 1999, the results of its operations and its cash flows for
the three and nine month periods ended September 30, 1999 and 1998 have been
included. The results of operations for the interim period are not necessarily
indicative of the results which may be realized for the full year.

LIQUIDITY

MMG is a holding company and, accordingly, does not generate cash flows from
operations. In connection with the acquisition of PLD Telekom, the Company has
incurred $163.0 million of debt. The Communications Group is dependent on MMG
for significant capital infusions to fund its operations, its commitments to
make capital contributions and loans to its joint ventures and subsidiaries and
any acquisitions. Such funding requirements are based on the anticipated funding
needs of its joint ventures and subsidiaries and certain acquisitions committed
to by the Company. The ability to meet the future capital requirements of the
Communications Group, including future acquisitions, will depend on available
funding from the Company or alternative sources of financing and on the ability
of the Communications Group's joint ventures and subsidiaries to generate
positive

                                       7
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

1. BASIS OF PRESENTATION AND LIQUIDITY (CONTINUED)

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 and other
alternative sources of funds. However, the Communications Group's businesses are
capital intensive and require the investment of significant amounts of capital
in order to construct and develop operational systems and market its services.
In addition, the Company will be required to pay interest on the debt incurred
in the acquisition of PLD Telekom commencing September 30, 2002. As a result,
the Company will require additional financing in order to satisfy its on-going
working capital, debt service, acquisition and expansion requirements and to
achieve its long-term business strategies. 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
companies of the Communications Group. The indenture for the Metromedia Notes
described below permits the Company to finance the development of its
communications operations. 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 (including debt service)
will be satisfied through a combination of the Company's successful
implementation and execution of its growth strategy to become a global
communications and media company and through the Communications Group's joint
ventures and subsidiaries and PLD Telekom achieving positive operating results
and cash flows through revenue and subscriber growth and control of operating
expenses.

2. ACQUISITION OF PLD TELEKOM INC.

On September 30, 1999, the Company consummated the acquisition of PLD
Telekom Inc. pursuant to which a wholly owned subsidiary of the Company was
merged with and into PLD Telekom with PLD Telekom as the surviving corporation.
Following the consummation of the merger, PLD Telekom became a wholly owned
subsidiary of the Company.

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

Holders of PLD Telekom common stock received .6353 shares of the Company's
common stock for each share of PLD Telekom common stock in accordance with a
formula set forth in the agreement and plan of merger. Pursuant to the agreement
and plan of merger, the Company issued 24,107,449 shares of its common stock
valued at $4.3125 per share.

                                       8
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION OF PLD TELEKOM INC. (CONTINUED)

As part of the merger, each share of Series II and Series III preferred stock of
PLD Telekom (a total of 446,884 shares) is being redeemed for cash at a
redemption price of Cdn. $1.00 per share. Each outstanding option and warrant to
acquire shares of PLD Telekom common stock was converted into an option or
warrant to acquire shares of the Company on the basis of the exchange ratio
described above.

In the agreement and plan of merger, the Company agreed to increase the size of
its board of directors in connection with the consummation of the merger from 9
members to 11 members and to cause the designation of two persons as directors
specified by PLD Telekom, one of whom will be nominated by News America
Incorporated ("News"), which was a 38% shareholder of PLD Telekom prior to the
consummation of the merger and, following the merger is a 9.8% shareholder of
the Company.

In connection with the merger, the Company and a shareholder, Metromedia
Company, granted certain tag-along rights to News upon a sale by Metromedia
Company of Company common stock. In addition, the Company and News executed a
registration rights agreement granting News certain shelf and piggy-back
registration rights with customary terms and conditions for their shares of
Company common stock.

In connection with the merger, the holders of all of PLD Telekom's 14% Senior
Discount Notes due 2004 ($123.0 million in aggregate principal amount) and of
$25.0 million in aggregate principal amount of its 9.0% Convertible Subordinated
Notes due 2006 (together, the "PLD Notes") exchanged their PLD Notes and all
accrued but unpaid interest on these notes through the date of the merger for
$210.6 million in aggregate principal amount at maturity of 10 1/2% Senior
Discount Notes due 2007 from the Company. At September 30, 1999, the carrying
value of these 10 1/2% Senior Discount Notes due 2007 was $163.0 million. The
Company also purchased $1.5 million in aggregate principal amount of PLD
Telekom's 9.0% Convertible Subordinated Notes at a purchase price of 101% of the
principal amount of such notes plus accrued but unpaid interest on such notes
through the date of the merger.

Also at completion of the merger, PLD Telekom repaid The Travelers Insurance
Company and The Travelers Indemnity Company (together, "Travelers")
approximately $8.7 million of amounts due under the revolving credit and warrant
agreement dated November 26, 1997 between PLD Telekom and Travelers (the "Old
Travelers Agreement"). PLD Telekom and Travelers also entered into an amended
and restated revolving credit note agreement (the "New Travelers Agreement")
pursuant to which PLD Telekom has agreed to repay Travelers the remaining
$4.9 million due under the Old Travelers Agreement on August 30, 2000. In
addition, Travelers received at the closing of the merger 100,000 shares of PLD
Telekom common stock (which were converted in the merger into shares of common
stock of the Company at the .6353 exchange ratio) and 10-year warrants to
purchase 700,000 shares of common stock of the Company at an exercise price to
be determined in December 2000 that will be between $10.00 and $15.00 per share.
However, if the amount outstanding under the New Travelers Agreement has not
been fully repaid by August 30, 2000, the exercise price of the warrants will be
reset to $.01 per share. Travelers retained its existing security interests in
certain of PLD Telekom's assets. The performance by PLD Telekom of its
obligations under the New Travelers Agreement is guaranteed by the Company and
certain subsidiaries of PLD Telekom.

Also in connection with the consummation of the merger, PLD Telekom repaid all
its outstanding loans under a revolving credit agreement including interest (or
approximately $6.9 million) to News.

                                       9
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION OF PLD TELEKOM INC. (CONTINUED)

PLD Telekom also purchased the remaining shares of its subsidiary, Technocom
Limited, that it did not already own from Technocom's existing minority
shareholders for an aggregate purchase price of approximately $12.6 million.
Technocom is now a wholly owned subsidiary of PLD Telekom.

PLD Telekom used funds held in the cash collateral account, working capital and
borrowings from the Company under the revolving intercompany note to make all
the payments described above.

The Company has determined that the purchase price for PLD Telekom was
$305.8 million. The purchase price of $305.8 million includes the issuance of
common stock, the value of existing PLD Telekom options and warrants exchanged,
warrants issued to Travelers, funds advanced to PLD Telekom that were utilized
in the repayment of the News credit agreement and related interest, the purchase
of Technocom's minority interests, partial repayment of the Travelers debt,
payment for the PLD Telekom preferred stock and working capital, issuance of
10 1/2% Senior Discount Notes and transaction costs. The acquisition has been
accounted for under the purchase method of accounting. The purchase price has
been preliminarily allocated based on estimated fair values at the date of
acquisition, pending final determination of certain acquired balances. This
preliminary allocation has resulted in intangible assets and goodwill of
$100.9 million and $65.1 million, respectively, which are being amortized on a
straight-line basis over four to ten years and ten years, respectively. The
results of operations of PLD Telekom will be included in the consolidated
financial statements subsequent to the acquisition date.

The allocation of the purchase price is as follows (in thousands):

<TABLE>
<S>                                                           <C>
Cash........................................................  $  9,703
Accounts Receivable.........................................    13,025
Inventories.................................................     3,333
Property, plant and equipment...............................   170,832
Other investments...........................................     6,523
Intangible assets...........................................   100,915
Other assets................................................    19,241
Accounts payable and accrued expenses.......................   (36,175)
Debt........................................................   (24,056)
Minority interests..........................................   (22,677)
                                                              --------
Fair value of net assets acquired...........................   240,664
Purchase price..............................................   305,771
                                                              --------
Goodwill....................................................  $ 65,107
                                                              ========
</TABLE>

The following unaudited pro forma information illustrates the effect of the
acquisition of PLD Telekom on revenue, loss from continuing operations and loss
per share from continuing operations attributable to common stockholders for the
nine months ended September 30, 1999 and 1998, and assumes that

                                       10
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION OF PLD TELEKOM INC. (CONTINUED)

the acquisition of PLD Telekom occurred at the beginning of each period
presented (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              -----------   -----------
                                                              (UNAUDITED)   (UNAUDITED)
<S>                                                           <C>           <C>
Revenues....................................................   $ 269,875     $ 301,499
                                                               =========     =========
Loss from continuing operations.............................   $(132,481)    $(104,259)
                                                               =========     =========
Loss per share from continuing operations attributable to
  common stockholders.......................................   $   (1.42)    $   (1.12)
                                                               =========     =========
</TABLE>

These unaudited pro forma results have been prepared for comparative purposes
only and include certain adjustments, such as additional amortization expense as
a result of goodwill and increased interest expense on acquisition debt. They do
not purport to be indicative of the results of operations that actually would
have resulted had the acquisition occurred at the beginning of each period, or
of future results of operations of the consolidated entity.

                                       11
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. 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 $227.8 million in funding of which
$47.0 million in funding obligations remain at September 30, 1999. The
Communications Group's funding commitments are contingent on its approval of the
joint ventures' business plans.

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

At September 30, 1999 and December 31, 1998, the Communications Group's,
including PLD Telekom, 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, write downs, and distributions were as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                           YEAR
                                                                                        OPERATIONS
NAME                                                 1999       1998     OWNERSHIP %   COMMENCED (1)
----                                               --------   --------   -----------   -------------
<S>                                                <C>        <C>        <C>           <C>
CELLULAR TELECOMMUNICATIONS
Baltcom GSM, Latvia (2)..........................  $ 8,319    $ 9,817          22%         1997
Magticom, Georgia (2)............................   12,848     13,048          35%         1997
BELCEL, Belarus..................................    1,089         --          50%         1999
                                                   -------    -------
                                                    22,256     22,865
                                                   -------    -------
</TABLE>

                                       12
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)

<TABLE>
<CAPTION>
                                                                                           YEAR
                                                                                        OPERATIONS
NAME                                                 1999       1998     OWNERSHIP %   COMMENCED (1)
----                                               --------   --------   -----------   -------------
<S>                                                <C>        <C>        <C>           <C>
FIXED TELEPHONY
Instaphone, Kazakhstan...........................       96      1,168          50%         1998
Caspian American Telecom, Azerbaijan (3).........   11,848      5,488          37%         1999
MTR-Sviaz, Russia................................    2,870         --          49%         1999
                                                   -------    -------
                                                    14,814      6,656
                                                   -------    -------
INTERNATIONAL AND LONG DISTANCE TELEPHONY
Telecom Georgia, Georgia.........................    4,812      5,922          30%         1994
                                                   -------    -------
CABLE TELEVISION
Kosmos TV, Moscow, Russia........................      605      1,385          50%         1992
Baltcom TV, Riga, Latvia.........................    5,042      4,003          50%         1992
Ayety TV, Tbilisi, Georgia.......................    2,389      3,045          49%         1993
Kamalak TV, Tashkent, Uzbekistan.................    3,077      2,976          50%         1993
Sun TV, Chisinau, Moldova........................    3,873      4,731          50%         1994
Cosmos TV, Minsk, Belarus........................    2,859      2,934          50%         1996
Alma TV, Almaty, Kazakhstan......................    6,789      5,994          50%         1995
Teleplus, St. Petersburg, Russia.................    1,765      1,941          45%         1998
                                                   -------    -------
                                                    26,399     27,009
                                                   -------    -------
PAGING
Baltcom Plus, Latvia (4).........................       --         --          50%         1995
Paging One, Georgia (4)..........................       --         --          45%         1994
Raduga Poisk, Nizhny Novgorod, Russia (4)........       --         --          45%         1994
PT Page, St. Petersburg, Russia (4)..............       --         --          40%         1995
Paging Ajara, Batumi, Georgia (4)................       --         --          35%         1997
Kazpage, Kazakhstan (4) (5)......................       --         --       26-41%         1997
Alma Page, Almaty, Kazakhstan (4)................       --         --          50%         1995
Kamalak Paging, Tashkent, Uzbekistan.............    2,115      2,260          50%         1993
Mobile Telecom, Russia (6).......................    7,072      7,405          50%         1998
                                                   -------    -------
                                                     9,187      9,665
                                                   -------    -------
RADIO BROADCASTING
Radio Nika, Socci, Russia........................      285        244          51%         1995
AS Trio LSL, Estonia.............................    1,841      1,903          49%         1997
                                                   -------    -------
                                                     2,126      2,147
                                                   -------    -------
</TABLE>

                                       13
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)

<TABLE>
<CAPTION>
                                                                                           YEAR
                                                                                        OPERATIONS
NAME                                                 1999       1998     OWNERSHIP %   COMMENCED (1)
----                                               --------   --------   -----------   -------------
<S>                                                <C>        <C>        <C>           <C>
OTHER (7)........................................      553         --                      1999
                                                   -------    -------
PRE-OPERATIONAL (8)
ATK, Archangelsk, Russia (9).....................       --      1,746          81%           --
Tyumenruskom, Russia.............................    4,469      2,228          46%           --
Telephony related ventures and equipment.........      636      2,612
Other (10).......................................    6,137      6,313
                                                   -------    -------
                                                    11,242     12,899
                                                   -------    -------
Total............................................  $91,389    $87,163
                                                   =======    =======
</TABLE>

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

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

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

(3) In April 1999, Caspian American Telecom became operational; however, like
    all of the Metromedia International Telecommunications joint ventures, its
    operational results are reported on a three-month lag. In May 1999, the
    Communications Group sold 2.2% of its shares of Omni-Metromedia, thereby
    reducing its ownership interest in Caspian American Telecom to 37%.

(4) Investment balance reflects write down of investment.

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

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

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

(8) At September 30, 1999 and December 31, 1998, amounts disbursed for proposed
    joint ventures, pre-operational joint ventures and amounts expended for
    equipment for future wireless local loop projects are included in
    pre-operational joint ventures.

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

(10) Included in pre-operational other is Ala-TV, a joint venture in Bishkek,
    the capital of Kyrgzstan, which became operational during June 1999;
    however, since the results of operations for this period were immaterial,
    its operational results will be reported on a three month lag and will be
    reported subsequent to September 30, 1999.

                                       14
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)

Summarized combined balance sheet financial information of unconsolidated joint
ventures, excluding PLD Telekom, as of September 30, 1999 and December 31, 1998,
and combined statement of operations financial information for the nine months
ended September 30, 1999 and 1998 accounted for under the equity method,
excluding PLD Telekom, that have commenced operations as of the dates indicated
are as follows (in thousands):

COMBINED INFORMATION OF UNCONSOLIDATED JOINT VENTURES

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,   DECEMBER 31,
                                                                  1999            1998
                                                              -------------   ------------
<S>                                                           <C>             <C>
Assets:
  Current assets............................................    $ 27,181        $ 34,617
  Investments in systems and equipment......................     115,486         111,114
  Other assets..............................................       4,324           7,103
                                                                --------        --------
    Total assets............................................    $146,991        $152,834
                                                                --------        --------
Liabilities and Joint Ventures' Deficit:
  Current liabilities.......................................    $ 25,789        $ 31,934
  Amount payable under credit facility......................      88,978          66,574
  Other long-term liabilities...............................      75,119          82,314
                                                                --------        --------
                                                                 189,886         180,822
  Joint ventures' deficit...................................     (42,895)        (27,988)
                                                                --------        --------
    Total liabilities and joint ventures' deficit...........    $146,991        $152,834
                                                                ========        ========
</TABLE>

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Revenues....................................................  $ 76,311   $ 71,570
Costs and Expenses:
  Cost of sales and operating expenses......................    18,459     20,559
  Selling, general and administrative.......................    39,081     37,255
  Depreciation and amortization.............................    19,374     19,485
                                                              --------   --------
    Total expenses..........................................    76,914     77,299
                                                              --------   --------
Operating loss..............................................      (603)    (5,729)
Interest expense............................................   (12,134)    (9,428)
Other income (expense)......................................       203     (2,237)
Foreign currency transactions...............................    (2,978)    (2,573)
                                                              --------   --------
Net loss....................................................  $(15,512)  $(19,967)
                                                              ========   ========
</TABLE>

For the nine months ended September 30, 1999 and 1998 the results of operations
presented above are before the elimination of intercompany interest. Financial
information for joint ventures which are not yet operational is not included in
the above summary.

                                       15
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--EASTERN EUROPE AND THE
REPUBLICS OF THE FORMER SOVIET UNION (CONTINUED)

The following tables represent summary financial information for all operating
entities, excluding PLD Telecom, being grouped as indicated as of and for the
three and nine months ended September 30, 1999 and 1998. For the three and nine
months ended September 30, 1999 and 1998 the results of operations presented
below are before the elimination of intercompany interest, other than equity in
income (loss) of unconsolidated investees (in thousands):

<TABLE>
<CAPTION>
                                                         NINE MONTHS ENDED SEPTEMBER 30, 1999
                             --------------------------------------------------------------------------------------------
                                                          INTERNATIONAL
                                                            AND LONG
                             CELLULAR TELE-     FIXED       DISTANCE        CABLE                    RADIO
                             COMMUNICATIONS   TELEPHONY     TELEPHONY     TELEVISION    PAGING    BROADCASTING    TOTAL
                             --------------   ---------   -------------   ----------   --------   ------------   --------
<S>                          <C>              <C>         <C>             <C>          <C>        <C>            <C>
CONSOLIDATED SUBSIDIARIES
  AND JOINT VENTURES (1)
Revenues...................      $    --       $   --        $    --        $ 4,100     $2,483       $11,531     $18,114
Depreciation and
  amortization.............           --           --             --          1,366        646         3,360       5,372
Operating income (loss)....           --           --             --           (212)    (1,757)       (4,271)     (6,240)
Interest income............           --           --             --             --         --            27          27
Interest expense...........           --           --             --            714      2,359           328       3,401
Net loss...................           --           --             --         (1,435)    (6,276)       (6,101)    (13,812)

Assets.....................           --           --             --         11,149      3,551        17,963      32,663
Capital expenditures.......           --           --             --            572        789           477       1,838

UNCONSOLIDATED JOINT
  VENTURES
Revenues...................      $27,624       $  331        $17,232        $20,410     $8,919       $ 1,795     $76,311
Depreciation and
  amortization.............        9,981          210          1,876          6,700        417           190      19,374
Operating income (loss)....         (579)      (1,890)         1,346            560        (52)           12        (603)
Interest income............           19           --             --            224         --            --         243
Interest expense...........        7,371          549            149          3,907        126            32      12,134
Net loss...................       (6,474)      (3,388)        (1,429)        (3,741)      (472)           (8)    (15,512)

Assets.....................       80,307        8,074         19,036         33,477      4,926         1,171     146,991
Capital expenditures.......       14,470        6,299            885          6,083        358            39      28,134

Net investment in joint
  ventures.................       21,167       11,944          4,812         26,399      9,187         2,126      75,635
Equity in income (losses)
  of unconsolidated
  investees................       (2,860)      (3,040)          (430)           199        (35)          (24)     (6,190)
</TABLE>

                                       16
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. 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
                       --------------------------------------------------------------------------------------------------------
                                                    INTERNATIONAL
                                                      AND LONG
                       CELLULAR TELE-     FIXED       DISTANCE        CABLE                    RADIO
                       COMMUNICATIONS   TELEPHONY     TELEPHONY     TELEVISION    PAGING    BROADCASTING   OTHER (2)    TOTAL
                       --------------   ---------   -------------   ----------   --------   ------------   ---------   --------
<S>                    <C>              <C>         <C>             <C>          <C>        <C>            <C>         <C>
CONSOLIDATED
  SUBSIDIARIES AND
  JOINT VENTURES (1)
Revenues.............      $    --        $  --        $    --        $ 2,439    $ 3,317       $13,713      $ 3,200    $ 22,669
Depreciation and
  amortization.......           --           --             --          1,092      1,092           927          481       3,592
Operating income
  (loss).............           --           --             --         (1,265)    (6,571)          157         (186)     (7,865)
Interest income......           --           --             --             11         12           322           29         374
Interest expense.....           --           --             --            691      1,122           366          106       2,285
Net loss.............           --           --             --         (1,784)    (8,207)       (1,428)        (364)    (11,783)

Assets...............           --           --             --          8,223      8,776        20,898           --      37,897
Capital
  expenditures.......           --           --             --            531        555           469           --       1,555

UNCONSOLIDATED JOINT
  VENTURES
Revenues.............      $15,152        $  --        $21,062        $20,897    $10,208       $ 1,563      $ 2,688    $ 71,570
Depreciation and
  amortization.......        7,226            6          1,404          8,975      1,134           150          590      19,485
Operating income
  (loss).............       (5,814)        (255)         6,100         (3,296)        21          (171)      (2,314)     (5,729)
Interest income......            3           --             14              3          3            --           --          23
Interest expense.....        4,968           51            290          3,294        638             9          178       9,428
Net income (loss)....      (11,554)        (306)         4,399         (7,715)    (2,102)         (186)      (2,503)    (19,967)

Assets...............       67,741        1,069         25,987         34,621     15,538         1,386        2,630     148,972
Capital
  expenditures.......       28,726          242          2,682          4,286      1,276           236        2,497      39,945

Net investment in
  joint ventures.....       24,754        1,262          5,869         25,550     16,087         2,189        1,770      77,481
Equity in income
  (losses) of
  unconsolidated
  investees..........       (2,622)        (251)         1,320         (4,015)    (1,736)          (94)        (666)     (8,064)
</TABLE>

                                       17
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. 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, 1999
                              --------------------------------------------------------------------------------------------
                                                           INTERNATIONAL
                                                             AND LONG
                              CELLULAR TELE-     FIXED       DISTANCE        CABLE                    RADIO
                              COMMUNICATIONS   TELEPHONY     TELEPHONY     TELEVISION    PAGING    BROADCASTING    TOTAL
                              --------------   ---------   -------------   ----------   --------   ------------   --------
<S>                           <C>              <C>         <C>             <C>          <C>        <C>            <C>
CONSOLIDATED SUBSIDIARIES
  AND JOINT VENTURES (1)
Revenues....................      $   --        $   --        $   --         $1,439      $  738       $ 3,426     $ 5,603
Depreciation and
  amortization..............          --            --            --            413         339         2,829       3,581
Operating loss..............          --            --            --            (34)       (458)       (3,018)     (3,510)
Interest income.............          --            --            --             --          --             1           1
Interest expense............          --            --            --            239         757            87       1,083
Net loss....................          --            --            --           (318)     (1,839)       (3,884)     (6,041)

UNCONSOLIDATED JOINT
  VENTURES
Revenues....................      $9,704        $  277        $5,647         $6,783      $2,387       $   608     $25,406
Depreciation and
  amortization..............       3,426           182           843            855         113            59       5,478
Operating income (loss).....         294        (1,707)          406          1,791        (244)           30         570
Interest income.............          18            --            --             76          --            --          94
Interest expense............       2,782           460            66          1,346          46            10       4,710
Net income (loss)...........        (995)       (2,785)          621            226        (272)           80      (3,125)

Equity in income (losses) of
  unconsolidated
  investees.................        (616)       (1,509)          185          1,436          44            56        (404)
</TABLE>

                                       18
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. 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
                        --------------------------------------------------------------------------------------------------------
                                                     INTERNATIONAL
                                                       AND LONG
                        CELLULAR TELE-     FIXED       DISTANCE        CABLE                    RADIO
                        COMMUNICATIONS   TELEPHONY     TELEPHONY     TELEVISION    PAGING    BROADCASTING   OTHER (2)    TOTAL
                        --------------   ---------   -------------   ----------   --------   ------------   ---------   --------
<S>                     <C>              <C>         <C>             <C>          <C>        <C>            <C>         <C>
CONSOLIDATED
  SUBSIDIARIES AND
  JOINT VENTURES (1)
Revenues..............     $    --         $ --          $   --        $   863    $ 1,160       $5,019        $ --      $ 7,042
Depreciation and
  amortization........          --           --              --            426        318          337          --        1,081
Operating income
  (loss)..............          --           --              --           (181)    (1,420)          13          --       (1,588)
Interest income.......          --           --              --             --         --          157          --          157
Interest expense......          --           --              --            237        483          103          --          823
Net loss..............          --           --              --           (343)    (2,070)        (280)         --       (2,693)

UNCONSOLIDATED JOINT
  VENTURES REVENUES...     $ 6,302         $ --          $7,436        $ 6,843    $ 3,383       $  593        $908      $25,465
Depreciation and
  amortization........       2,501            6             489          3,486        414           58         109        7,063
Operating income
  (loss)..............      (1,173)        (255)          2,988         (1,010)       (98)         (21)       (716)        (285)
Interest income.......           1            3              --              1          1           --          --            6
Interest expense......       1,985           51              59          1,252        265            4          67        3,683
Net income (loss).....      (3,489)        (306)          2,515         (2,929)      (561)         (24)       (788)      (5,582)

Equity in income
  (losses) of
  unconsolidated
  investees...........         482         (251)            755         (1,707)      (435)         (13)        (22)      (1,191)
</TABLE>

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

(1) Does not reflect the Communications Group's headquarter's revenue and
    selling, general and administrative expenses for the three and nine months
    ended September 30, 1999 and 1998.

(2) Other includes the results of Protocall Ventures, the Communications Group's
    trunked mobile radio operations, consolidated and unconsolidated joint
    ventures and subsidiaries through the six months ended March 31, 1998 and
    the results of Spectrum through the nine months ended June 30, 1998.

                                       19
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

    At September 30, 1999 and December 31, 1998 the Company's investments,
through Metromedia China, in the joint ventures in China, at cost, net of
adjustments for its equity in earnings or losses, were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                               YEAR          YEAR
                                                                             VENTURE      OPERATIONS
NAME                                       1999       1998     OWNERSHIP %    FORMED       COMMENCED
----                                     --------   --------   -----------   --------   ---------------
<S>                                      <C>        <C>        <C>           <C>        <C>
Sichuan Tai Li Feng
  Telecommunications Co., Ltd.
  ("Sichuan JV").......................  $18,025    $19,292        92%         1996          1999
Chongqing Tai Le Feng
  Telecommunications Co., Ltd.
  ("Chongqing JV").....................   14,525     15,504        92%         1997          1999
Ningbo Ya Mei
  Telecommunications Co., Ltd.
  ("Ningbo JV")........................   28,769     29,741        70%         1996          1997
Ningbo Ya Lian
  Telecommunications Co., Ltd.
  ("Ningbo JV II").....................    8,593      7,022        70%         1998          1998
Huaxia Metromedia Information
  Technology Co., Ltd.
  ("Huaxia JV")........................      500         --        49%         1999     Pre-operational
                                         -------    -------
                                         $70,412    $71,559
                                         =======    =======
</TABLE>

Metromedia International Group and Metromedia International Telecommunications
have made intercompany loans to Metromedia China under a credit agreement, and
Metromedia China has used the proceeds of these loans to fund its investments in
these joint ventures in China. At September 30, 1999, Metromedia China had
borrowed $91.0 million under this credit agreement (including accrued interest).

The Company's investments (through its majority owned subsidiary, Asian American
Telecommunications) in telecommunications joint ventures in China have been made
through a commonly accepted structure in China known as a sino-sino-foreign
joint venture. Because legal restrictions in China prohibit direct foreign
participation in the operation or ownership in the telecommunications sector,
Asian America Telecommunications' joint ventures in China were limited to
providing financing, technical advice, consulting and other services for the
construction and development of telephony networks for China United
Telecommunications Incorporated, known as China Unicom, a Chinese state-owned
telecommunications operator. The completed networks are operated by China
Unicom. The Company's joint ventures were to receive payments in return from
China Unicom based on the distributable cash flow generated by the networks.
Asian American Telecommunications accounts for its investments in its
sino-sino-foreign joint ventures under the equity method. Since mid-1998,
positions unofficially taken by some departments of the Chinese government have
raised uncertainty regarding the continued viability of the sino-sino-foreign
structure and, as a result, the Company's associated financing and consulting
arrangements.

                                       20
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

In July 1999, Ningbo Ya Mei Telecommunications, Ltd., one of the Company's two
telecommunications joint ventures in Ningbo Municipality, China, received a
letter from China Unicom stating that the supervisory department of the Chinese
government had requested that China Unicom terminate the project with Ningbo Ya
Mei. China Unicom subsequently informed the Company that the notification also
applies to the Company's other telecommunications joint venture in Ningbo
Municipality. In further letters from China Unicom to the Company's joint
ventures in Ningbo and Sichuan, China Unicom stated its intention to terminate
all cooperation contracts with sino-sino-foreign joint ventures in China,
including those with the Company's Ningbo and Sichuan joint ventures, pursuant
to an August 30, 1999 mandate from the Chinese Ministry of Information Industry.
The original letter and subsequent letters from China Unicom requested that
negotiations begin regarding a suitable settlement of the matter and other
matters related to the winding up of the Company's joint ventures cooperation
agreements with China Unicom as a result of the Ministry of Information Industry
notice. China Unicom has ceased further performance of its cooperation
agreements with the Company's joint ventures. Negotiations regarding the terms
of the termination have begun and are continuing. The content of the
negotiations includes determining the investment principal of the Company's
joint ventures, appropriate compensation and other matters related to
termination of contracts. China Unicom made a distribution of amounts owed for
the first half of 1999 according to the cooperation agreement it has with the
Ningbo Ya Mei joint venture.

On November 6, 1999, our four Chinese telecommunications joint ventures engaged
in projects with China Unicom, each entered into non-binding letters of intent
with China Unicom which set forth certain terms for termination of their
cooperation arrangements with China Unicom. Under the terms contemplated in
these letters of intent, our joint ventures will receive cash amounts in RMB
from China Unicom in full and final payment for the termination of their
cooperation contracts with China Unicom. Upon receipt of this payment, China
Unicom and the joint ventures will waive all of their respective relevant rights
against the other party with respect to the cooperative arrangements. In
addition, all assets which comprise the projects that are currently held by the
joint ventures will be unconditionally transferred to China Unicom. Portions of
any amount paid to the joint ventures will, in due course, be distributed to the
Company. The Company currently estimates the total amount of such distributions
to be approximately US $86.0 million at current exchange rates. Final execution
of the agreements contemplated in the letters of intent is subject to certain
conditions, including further verification of certain elements of the
cooperation between China Unicom and the joint ventures and execution of legally
binding termination agreements between China Unicom and the joint ventures on or
before December 1, 1999. Negotiations are continuing with China Unicom regarding
this verification and the content of the definitive termination agreements. The
Company cannot assure at this time that it will enter into definitive
termination agreements with China Unicom or that those agreements will provide
for payments producing distributions to the Company in the amounts specified
above or otherwise contain terms that are satisfactory to the Company.

Each of the Company's sino-sino-foreign joint ventures has stopped its
accounting for its share of the net distributable cash flows under the
cooperation agreements with China Unicom and the amortization of the investment
in the projects effective July 1, 1999 based on the termination notices received
from China Unicom.

For the period ended September 30, 1999, the joint ventures have performed
impairment analyses of their investments in the cooperation agreements based on
information they have obtained from their

                                       21
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

termination negotiations with China Unicom. Based on these negotiations, the
Company and its joint ventures believe that the joint ventures will recover
their recorded investment balances as of September 30, 1999. Accordingly, no
impairment writedowns will be taken by the joint ventures during the third
quarter.

For the quarter ended September 30, 1999, the Company continues to account for
its investments in sino-sino-foreign joint ventures under the equity method of
accounting. The Company has performed an impairment analysis of its investments
in and advances to joint ventures and related goodwill to determine the amount
that these assets have been impaired.

The Company reviewed its investment in the joint ventures for other than
temporary decline and the Company has determined the related goodwill should be
considered an asset to be disposed of and has estimated the fair value less
costs to dispose of its investment and has stopped amortizing the balance. The
Company believes that the termination notices relating to the cooperation
agreements with China Unicom is an event that gives rise to an accounting loss
which is probable. The amount of the non-cash impairment charge will be the
difference between the sum of the carrying values of its investments and
advances made to joint ventures plus goodwill less the Company's best estimate
of compensation it will receive from the joint ventures which China Unicom will
make.

Based on the status of the negotiations with China Unicom, the Company believes
that it will recover its investments in and advances to the affected joint
ventures, exclusive of goodwill, as of September 30, 1999 of approximately
$70.4 million. However, the Company cannot give any assurances that it will
recover its net investment and if these negotiations are adversely concluded,
they could have a material adverse effect on our financial position or results
of operations. Based on the Company's best estimates, the Company will record a
non-cash impairment charge of approximately $50.9 million for the write off of
goodwill. Regardless of the actions taken presently, a further adjustment will
likely be required once settlement is reached with China Unicom. This is a
consequence of the inherent present uncertainty of the situation rather than of
any factor within the Company's control.

HUAXIA JV

On May 7, 1999, Asian American Telecommunications entered into a joint venture
agreement with All Warehouse Commodity Electronic Commerce Information
Development Co., Ltd., a Chinese trading company, for the purpose of
establishing Huaxia Metromedia Information Technology Co., Ltd., known as Huaxia
JV. Also on May 7, 1999, Huaxia JV entered into a computer information system
and services contract with All Warehouse and its parent company, China Product
Firm Corporation. The Huaxia JV will develop and operate electronic commerce
computer information systems for use by All Warehouse and China Product Firm and
its affiliates and customers. The contract has a term of thirty years and grants
Huaxia JV exclusive rights to manage all of All Warehouse and China Product
Firm's electronic trading systems during that period.

The total amount to be invested in Huaxia JV is $25.0 million with registered
capital contributions from its shareholders amounting to $10.0 million. Asian
American Telecommunications will make registered capital contributions of
$4.9 million and All Warehouse will contribute $5.1 million. The remaining
investment in Huaxia JV will be in the form of up to $15.0 million of loans from
Asian American Telecommunications. As of September 30, 1999, Asian American
Telecommunications has made $500,000 of its scheduled registered capital
investment. Huaxia JV received its operating license

                                       22
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

on July 5, 1999 and has begun operations. Ownership in Huaxia JV is 49% by Asian
American Telecommunications and 51% by All Warehouse.

Huaxia JV is established as a sino-foreign equity joint venture between Asian
American Telecommunications and All Warehouse Commodity Electronic Commerce
Information Development Co., Ltd. The Huaxia JV does not have any contractual
relationship with China Unicom and is engaged in business fundamentally
different from that of the Communications Group's joint ventures cooperating
with China Unicom. Computer and software services, such as offered by the Huaxia
JV, are subject to regulations different from those applied to
telecommunications in China. The Communications Group believes that the
fee-for-services arrangement of Huaxia JV and the lines of business undertaken
by the joint venture do not constitute foreign involvement in telecommunications
activities, which are at the center of certain Chinese authorities' actions
against the Communication Group's joint telecommunications projects with China
Unicom.

The following tables represent summary financial information for the joint
ventures and their related projects in China as of and for the nine months ended
September 30, 1999 and 1998, respectively, (in thousands):

<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED SEPTEMBER 30, 1999
                                               ----------------------------------------------------------------
                                                NINGBO     NINGBO    SICHUAN    CHONGQING    HUAXIA
                                                  JV       JV II        JV         JV          JV       TOTAL
                                               --------   --------   --------   ---------   --------   --------
<S>                                            <C>        <C>        <C>        <C>         <C>        <C>
Revenues.....................................  $ 1,996     $  504     $   --     $   30     $    --    $ 2,530
Depreciation and amortization................   (1,224)      (144)      (249)      (283)         --     (1,900)
Operating income (loss)......................      581        315       (449)      (494)         --        (47)
Interest expense, net........................   (2,075)      (301)      (737)      (198)         --     (3,311)
Net income (loss)............................   (1,494)        14     (1,185)      (692)         --     (3,357)
Equity in income (losses) of joint
  ventures...................................      147        137       (474)      (462)         --       (652)
Assets.......................................   32,673     14,893     19,291     15,989          --     82,846
Net investment in project....................   30,117     12,097     18,143      9,386          --     69,743
</TABLE>

<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED SEPTEMBER 30, 1998
                                                     -----------------------------------------------------
                                                      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)    (2,475)
Equity in income (loss) of joint ventures..........       43         (4)      (587)       (326)      (874)
Assets.............................................   34,731      5,304     18,404      14,484     72,923
Net investment in project..........................   32,051        920     12,642       5,968     51,581
</TABLE>

                                       23
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED SEPTEMBER 30, 1999
                                             ----------------------------------------------------------------
                                              NINGBO     NINGBO    SICHUAN    CHONGQING    HUAXIA
                                                JV       JV II        JV         JV          JV       TOTAL
                                             --------   --------   --------   ---------   --------   --------
<S>                                          <C>        <C>        <C>        <C>         <C>        <C>
Revenues...................................  $    --    $    --    $    --     $     3    $    --    $     3
Depreciation and amortization..............       (3)      (144)         6         (43)        --       (184)
Operating loss.............................      (69)      (161)       (25)       (123)        --       (378)
Interest expense, net......................     (705)      (191)      (236)        (72)        --     (1,204)
Net loss...................................     (774)      (352)      (260)       (195)        --     (1,581)
Equity in losses of joint ventures.........     (140)      (199)       (47)       (119)        --       (505)
</TABLE>

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED SEPTEMBER 30, 1998
                                                 -----------------------------------------------------
                                                  NINGBO     NINGBO    SICHUAN    CHONGQING
                                                    JV       JV II        JV         JV        TOTAL
                                                 --------   --------   --------   ---------   --------
<S>                                              <C>        <C>        <C>        <C>         <C>
Revenues.......................................  $   980     $   --    $    --     $    24    $ 1,004
Depreciation and amortization..................     (613)        --        (10)        (58)      (681)
Operating income (loss)........................      273        (11)      (162)       (122)       (22)
Interest income (expense), net.................     (564)         5       (161)         11       (709)
Net loss.......................................     (289)        (6)      (326)       (121)      (742)
Equity in income (losses) of joint ventures....      146         (4)      (300)         56       (102)
</TABLE>

For the three and nine months ended September 30, 1999 and 1998 the results of
operations presented above are before the elimination of intercompany interest.

5. EARNINGS PER SHARE OF COMMON STOCK

    Basic earnings per share excludes all dilutive securities. It is based upon
the weighted average number of common shares outstanding during the period.
Diluted earnings per share reflects the potential dilution that would occur if
securities exercisable for or convertible into common stock were exercised or
converted into common stock. In calculating diluted earnings per share, no
potential shares of common stock are to be included in the computation when a
loss from continuing operations attributable to common stockholders exists. For
the three and nine months ended September 30, 1999 and 1998 the Company had
losses from continuing operations.

At September 30, 1999 and 1998, the Company had potentially dilutive shares of
common stock of 21,648,436 and 18,993,000, respectively.

6. LONG-TERM DEBT

    In connection with the merger with PLD Telekom, the Company issued
$210.6 million in aggregate principal amount at maturity of its 10 1/2% Senior
Discount Notes due 2007 (the "Metromedia Notes") to the holders of the PLD Notes
pursuant to an Agreement to Exchange and Consent, dated as of May 18, 1999, by
and among the Company, PLD Telekom and such holders.

The terms of the Metromedia Notes are set forth in an Indenture, dated as of
September 30, 1999, between the Company and U.S. Bank Trust National Association
as Trustee. The Metromedia Notes will mature on September 30, 2007. The
Metromedia Notes were issued at a discount to their aggregate principal amount
at maturity and will accrete in value until March 30, 2002 at the rate of
10 1/2% per year, compounded semi-annually to an aggregate principal amount at
maturity of $210.6 million. The

                                       24
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. LONG-TERM DEBT (CONTINUED)

Metromedia Notes will not accrue interest in cash before March 30, 2002. After
this date, the Metromedia Notes will pay interest at the rate of 10 1/2% per
year, payable semi-annually in cash and in arrears to the holders of record on
March 15 or September 15 immediately preceding the interest payment date on
March 30 and September 30 of each year, commencing September 30, 2002. The
interest on the Metromedia Notes will be computed on the basis of a 360-day year
comprised of twelve months.

The Metromedia Notes are general senior unsecured obligations of the Company,
rank senior in right of payment to all existing and future subordinated
indebtedness of the Company, rank equal in right of payment to all existing and
future indebtedness of the Company and will be effectively subordinated to all
existing and future secured indebtedness of the Company to the extent of the
assets securing such indebtedness and to all existing and future indebtedness of
the Company's subsidiaries.

The Metromedia Notes will be redeemable at the sole option of the Company on and
after March 30, 2002 only at a redemption price equal to their principal amount
plus accrued and unpaid interest, if any, up to but excluding the date of
redemption.

Upon the occurrence of a change of control of the Company (as such term is
defined in the Indenture), the holders of the Metromedia Notes will be entitled
to require the Company to repurchase such holders' notes at a purchase price
equal to 101% of the accreted value of the Metromedia Notes (if such repurchase
is before March 30, 2002) or 101% of the principal amount of such Notes plus
accrued and unpaid interest to the date of repurchase (if such repurchase is
after March 30, 2002).

The Indenture for the Metromedia Notes limits the ability of the Company and
certain of its subsidiaries to, among other things, incur additional
indebtedness or issue capital stock or preferred stock, pay dividends on, and
repurchase or redeem their capital stock or subordinated obligations, invest in
and sell assets and subsidiary stock, engage in transactions with affiliates and
incur additional liens. The Indenture for the Metromedia Notes also limits the
ability of the Company to engage in consolidations, mergers and transfers of
substantially all of its assets and also contains limitations on restrictions on
distributions from its subsidiaries.

The Company has registered a new series of Metromedia Notes under the Securities
Act of 1933, as amended, and has exchanged all of its outstanding Metromedia
Notes for such new series of Metromedia Notes which have been registered.

At March 31, 1999, Snapper was not in compliance with all financial covenants
under its loan and security agreement. On May 14, 1999, the lenders under the
loan and security agreement waived any event of default arising from such
noncompliance. At September 30, 1999, Snapper was not in compliance with all
financial covenants under its loan and security agreement. On November 15, 1999,
the lenders under the loan and security agreement waived any event of default
arising from such noncompliance.

                                       25
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

7. INVESTMENT IN RDM SPORTS GROUP, INC.

    The Company owns approximately 39% of the outstanding common stock of RDM
Sports Group, Inc. In August 1997, RDM and certain of its affiliates filed a
voluntary bankruptcy petition under chapter 11 of the Bankruptcy Code. The
chapter 11 trustee is in the process of selling all of RDM's assets to satisfy
its obligations to its creditors and the Company believes that it is unlikely
that it will recover any distribution on account of its equity interest in RDM.
The Company also holds certain claims in the RDM proceedings, although there can
be no assurance that the Company will receive any distributions with respect to
such claims.

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

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

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

                                       26
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

7. INVESTMENT IN RDM SPORTS GROUP, INC. (CONTINUED)

to be proven at trial, reasonable attorneys' fees, and such other and further
relief as the court deems just and proper.

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

8. BUSINESS SEGMENT DATA

    The Communications Group's joint ventures in Eastern Europe and the
republics of the former Soviet Union currently offer cellular
telecommunications, fixed telephony, international and long distance telephony,
cable television, paging and radio broadcasting. The Communications Group's
joint ventures in China provide financing, technical assistance and consulting
service for telecommunications projects. The revenues, operating results and
assets by the Communication Group's operations in Eastern Europe and the
republics of the former Soviet Union (excluding PLD Telekom) are disclosed in
note 3 and the Communications Group's operations in China are disclosed in
note 4. Snapper manufactures Snapper-Registered Trademark- brand premium priced
power lawnmowers, lawn tractors, garden tillers, snow throwers and related parts
and accessories.

The Company evaluates the performance of its operating segments based on
earnings before interest, taxes, depreciation, and amortization. The segment
information is based on operating income (loss) which includes depreciation and
amortization. In addition, the Company evaluates the performance of the
Communications Group's operating segment in Eastern Europe and the republics of
the former Soviet Union on a combined basis. As previously discussed, legal
restrictions in China prohibit foreign participation in the operations or
ownership in the telecommunications sector. The segment information for the
Communications Group's China joint ventures represent the investment in network
construction and development of telephony networks for China Unicom. The segment
information does not reflect the results of operations of China Unicom's
telephony networks. The Company has received notification from China Unicom
stating that the Chinese government has requested termination of its four joint
telecommunications projects with the Company.

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

                                       27
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. BUSINESS SEGMENT DATA (CONTINUED)

The Company's segment information is set forth as of and for the nine months
ended September 30, 1999 and 1998 in the following table (in thousands):

                      NINE MONTHS ENDED SEPTEMBER 30, 1999
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                              COMMUNICATIONS GROUP--EASTERN EUROPE AND
                                              THE REPUBLICS OF THE FORMER SOVIET UNION
                             --------------------------------------------------------------------------   COMMUNICATIONS
                                           CABLE                    RADIO         SEGMENT                     GROUP-
                             TELEPHONY   TELEVISION    PAGING    BROADCASTING   HEADQUARTERS    TOTAL         CHINA        SNAPPER
                             ---------   ----------   --------   ------------   ------------   --------   --------------   --------
<S>                          <C>         <C>          <C>        <C>            <C>            <C>        <C>              <C>
COMBINED
Revenues...................  $  45,187     $24,510    $11,402      $13,326        $ 1,260      $95,685
Depreciation and
  amortization.............     12,067       8,066      1,063        3,550          4,064       28,810
Operating income (loss)....     (1,123)        348     (1,809)      (4,259)       (21,401)     (28,244)

CONSOLIDATED
Revenues...................         --       4,100      2,483       11,531          1,260       19,374       $    --       $166,207
Gross profit...............                                                                                                  53,880
Depreciation and
  amortization.............         --       1,366        646        3,360          4,064        9,436        52,507          4,610
Operating income (loss)....         --        (212)    (1,757)      (4,271)       (21,401)     (27,641)      (59,396)         6,317

UNCONSOLIDATED JOINT
  VENTURES
Revenues...................     45,187      20,410      8,919        1,795             --       76,311        (2,530)
Depreciation and
  amortization.............     12,067       6,700        417          190             --       19,374         1,900
Operating income (loss)....     (1,123)        560        (52)          12             --         (603)          (47)
Net loss...................    (11,291)     (3,741)      (472)          (8)            --      (15,512)       (3,357)
Equity in income (losses)
  of unconsolidated
  investees................     (6,330)        199        (35)         (24)            --       (6,190)         (652)            --
Loss on disposition of
  business.................                                                                     (1,200)           --             --
Foreign currency loss......                                                                     (4,054)           --             --
Minority interest..........                                                                        352        26,882             --
Interest expense...........
Interest income............
Income tax expense.........
Discontinued operations....
Net loss...................

Capital expenditures.......                                                                      2,013            33          2,238
Assets at September 30,
  1999.....................                                                                    567,508        92,014        109,132

<CAPTION>

                              CORPORATE
                             HEADQUARTERS   CONSOLIDATED
                             ------------   ------------
<S>                          <C>            <C>
COMBINED
Revenues...................
Depreciation and
  amortization.............
Operating income (loss)....
CONSOLIDATED
Revenues...................   $      --       $ 185,581
Gross profit...............
Depreciation and
  amortization.............           5          66,558
Operating income (loss)....      (4,861)        (85,581)
UNCONSOLIDATED JOINT
  VENTURES
Revenues...................
Depreciation and
  amortization.............
Operating income (loss)....
Net loss...................
Equity in income (losses)
  of unconsolidated
  investees................          --          (6,842)
Loss on disposition of
  business.................          --          (1,200)
Foreign currency loss......          --          (4,054)
Minority interest..........          --          27,734
Interest expense...........                      (9,721)
Interest income............                       6,098
Income tax expense.........                        (358)
Discontinued operations....                     (12,776)
                                              ---------
Net loss...................                   $ (87,200)
                                              =========
Capital expenditures.......          --           4,284
Assets at September 30,
  1999.....................      56,682         825,336
</TABLE>

                                       28
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. BUSINESS SEGMENT DATA (CONTINUED)

                      NINE MONTHS ENDED SEPTEMBER 30, 1998
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                             COMMUNICATIONS GROUP--EASTERN EUROPE AND
                                             THE REPUBLICS OF THE FORMER SOVIET UNION
                       -------------------------------------------------------------------------------------   COMMUNICATIONS
                                     CABLE                    RADIO                    SEGMENT                    GROUP -
                       TELEPHONY   TELEVISION    PAGING    BROADCASTING    OTHER     HEADQUARTERS    TOTAL         CHINA
                       ---------   ----------   --------   ------------   --------   ------------   --------   --------------
<S>                    <C>         <C>          <C>        <C>            <C>        <C>            <C>        <C>
COMBINED
Revenues.............  $  36,214     $23,336    $13,525      $15,276      $ 5,888      $ 1,682      $95,921
Depreciation and
  amortization.......      8,636      10,067      2,226        1,077        1,071        4,132       27,209
Operating income
  (loss).............         31      (4,561)    (6,550)         (14)      (2,500)     (31,525)     (45,119)

CONSOLIDATED
Revenues.............         --       2,439      3,317       13,713        3,200        1,682       24,351       $     --
Gross profit.........
Depreciation and
  amortization.......         --       1,092      1,092          927          481        4,132        7,724          2,293
Operating income
  (loss).............         --      (1,265)    (6,571)         157         (186)     (31,525)     (39,390)       (10,205)

UNCONSOLIDATED JOINT
  VENTURES
Revenues.............     36,214      20,897     10,208        1,563        2,688           --       71,570          2,426
Depreciation and
  amortization.......      8,636       8,975      1,134          150          590           --       19,485          1,960
Operating income
  (loss).............         31      (3,296)        21         (171)      (2,314)          --       (5,729)          (630)
Net income (loss)....     (7,461)     (7,715)    (2,102)        (186)      (2,503)          --      (19,967)        (2,475)
Equity in income
  (losses) of
  unconsolidated
  investees..........     (1,553)     (4,015)    (1,736)         (94)        (666)          --       (8,064)          (874)

Gain on sale of
  Protocall
  Ventures...........                                                                                 7,091             --
Foreign currency
  gain...............                                                                                     7             --
Minority interest....                                                                                 1,497          5,925
Interest expense.....
Interest income......
Income tax expense...
Discontinued
  operations.........
Net loss.............
Capital
  expenditures.......                                                                                 5,973            330
Assets at December
  31, 1998...........                                                                               194,864        139,726

<CAPTION>

                                   CORPORATE
                       SNAPPER    HEADQUARTERS   CONSOLIDATED
                       --------   ------------   ------------
<S>                    <C>        <C>            <C>
COMBINED
Revenues.............
Depreciation and
  amortization.......
Operating income
  (loss).............
CONSOLIDATED
Revenues.............  $165,159     $     --       $189,510
Gross profit.........    44,648
Depreciation and
  amortization.......     5,478            5         15,500
Operating income
  (loss).............   (12,245)      (4,500)       (66,340)
UNCONSOLIDATED JOINT
  VENTURES
Revenues.............
Depreciation and
  amortization.......
Operating income
  (loss).............
Net income (loss)....
Equity in income
  (losses) of
  unconsolidated
  investees..........        --           --         (8,938)
Gain on sale of
  Protocall
  Ventures...........        --           --          7,091
Foreign currency
  gain...............        --           --              7
Minority interest....        --           --          7,422
Interest expense.....                               (12,487)
Interest income......                                 9,947
Income tax expense...                                (1,203)
Discontinued
  operations.........                                 5,267
                                                   --------
Net loss.............                              $(59,234)
                                                   ========
Capital
  expenditures.......     3,022           --          9,325
Assets at December
  31, 1998...........   134,460      140,591        609,641
</TABLE>

                                       29
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. BUSINESS SEGMENT DATA (CONTINUED)

Information about the Communications Group's operations (exclusive of PLD
Telekom) by geographic location for the nine months ended September 30, 1999 and
1998 and as of September 30, 1999 and December 31, 1998 is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                             REVENUES               ASSETS
                                                        -------------------   -------------------
COUNTRY                                                   1999       1998       1999       1998
-------                                                 --------   --------   --------   --------
<S>                                                     <C>        <C>        <C>        <C>
Austria...............................................  $   537    $   976    $  1,012   $  1,049
Azerbaijan............................................       --         --      12,461      5,172
Belarus...............................................       --         --       6,710      2,934
Czech Republic........................................    1,241        677       3,403      3,527
Estonia...............................................      559        849       1,966      2,026
Georgia...............................................      273        334      22,707     24,412
Germany...............................................       97        148       1,294      4,941
Hungary...............................................    5,242      6,470       6,215      6,288
Kazakhstan............................................       --         --      66,224      7,162
Krgyzstan.............................................       --         --         984
Latvia................................................      502        499      13,914     14,219
Lithuania.............................................      795        303       1,848      2,141
Moldova...............................................       --         --       4,072      4,896
People's Republic of China (1)........................       --         --      76,426    139,726
Romania...............................................    3,730      3,232      23,040      6,115
Russia................................................    4,641      5,811     267,391     17,676
Ukraine...............................................      511         --       3,023      3,640
United Kingdom........................................       --      3,670       8,521      1,568
United States (2).....................................    1,246      1,382     133,119     81,862
Uzbekistan............................................       --         --       5,192      5,236
                                                        -------    -------    --------   --------
                                                        $19,374    $24,351    $659,522   $334,590
                                                        =======    =======    ========   ========
</TABLE>

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

(1) The Communications Group has received notification from China Unicom stating
    that a department of the Chinese government has requested termination of its
    four joint telecommunications projects in China. For the three months ended
    September 30, 1999, the Company wrote down a portion of the goodwill
    associated with these telecommunications projects of $50.9 million. See
    "Management's Discussion and Analysis of Financial Condition and Results of
    Operations."

(2) Assets include goodwill of $111.3 million, and $54.5 million at
    September 30, 1999 and December 31, 1998, respectively.

All remaining assets and substantially all remaining revenue relate to
operations in the United States.

                                       30
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

9. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION

ACCOUNTS RECEIVABLE

The total allowance for doubtful accounts at September 30, 1999 and
December 31, 1998 was $2.5 million and $2.2 million, respectively.

INVENTORIES

Inventories consist of the following as of September 30, 1999 and December 31,
1998 (in thousands):

<TABLE>
<CAPTION>
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Lawn and garden equipment:
  Raw materials.............................................  $ 8,347    $ 8,388
  Finished goods............................................   40,634     55,488
                                                              -------    -------
                                                               48,981     63,876
  Less: LIFO reserve........................................    1,702      1,660
                                                              -------    -------
                                                               47,279     62,216
                                                              -------    -------
Communications Group:
  Telecommunications........................................    3,332         --
  Pagers....................................................      191         --
  Cable.....................................................      473        561
                                                              -------    -------
                                                                3,996        561
                                                              -------    -------
                                                              $51,275    $62,777
                                                              =======    =======
</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.

DISCONTINUED OPERATIONS

The Company became involved in litigation concerning the sale of the
Entertainment Group on July 10, 1997. On June 30, 1997, the plaintiffs in SIDNEY
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 in the State of
California alleging $28.7 million in damages from the alleged breach of an oral
agreement to pay a finder's fee in connection with the Entertainment Group Sale.
On September 23, 1999, the jury in this litigation returned a verdict of
$4.5 million in compensatory damages and $3.4 million in other damages against
the Company. Before the conclusion of the proceedings relating to punitive
damages, the Company agreed to a settlement with the plaintiffs. Under the terms
of the settlement, the Company paid $5.0 million to the plaintiffs on
September 30, 1999 and is obligated to pay an additional $5.0 million on
September 30, 2000 and an additional $4.0 million on September 30, 2001. The
settlement fully resolves all litigation among the Company and the other parties
in this litigation. The future settlement payments are secured by a
collateralized letter of credit of $9.0 million. The Company has recorded a

                                       31
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

9. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION (CONTINUED)

$12.8 million charge, which represents the net present value of the payments to
be made, against discontinued operations in its results of operations for the
three months ended September 30, 1999 as a result of this settlement.

10. CONTINGENCIES

RISKS ASSOCIATED WITH THE COMPANY

The ability of the Communications Group and its joint ventures and subsidiaries
(including PLD Telekom Inc.) to establish profitable operations is subject to,
among other things, significant political, economic and social risks inherent in
doing business in emerging markets such as Eastern Europe, the former Soviet
Union and China. These include matters arising out of government policies,
economic conditions, imposition of or changes in government regulations or
policies, imposition of or changes to taxes or other similar charges by
government bodies, exchange rate fluctuations and controls, civil disturbances,
deprivation or unenforceability of contractual rights, and taking of property
without fair compensation. These and other risks associated with the Company are
disclosed more fully in the Company's Annual Report on Form 10-K/A (Amendment
No. 2), "Item 1. Risks Associated with Company."

The Communications Group's strategy is to minimize its foreign currency risk. To
the extent possible, in countries that have experienced high rates of inflation,
the Communications Group bills and collects all revenues in U.S. dollars or an
equivalent local currency amount adjusted on a monthly basis for exchange rate
fluctuations. The Communications Group's joint ventures are generally permitted
to maintain U. S. dollar accounts to serve their U.S. dollar debt and current
account obligations, thereby reducing foreign currency risk. As the
Communications Group and its joint ventures expand their operations and become
more dependent on local currency based transactions, the Communications Group
expects that its foreign currency exposure will increase. The Communications
Group does not hedge against foreign exchange rate risks at the current time
and, therefore, could be subject in the 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 Company's investments (through its majority owned subsidiary, Asian American
Telecommunications) in telecommunications joint ventures in China have been made
through a commonly accepted structure in China known as a sino-sino-foreign
joint venture. Because legal restrictions in China prohibit direct foreign
participation in the operation or ownership in the telecommunications sector,
Asian America Telecommunications' joint ventures in China were limited to
providing financing, technical advice, consulting and other services for the
construction and development of telephony networks for China United
Telecommunications Incorporated, known as China Unicom, a Chinese state-owned
telecommunications operator. The completed networks are operated by China
Unicom. The Company's joint ventures were to receive payments in return from
China Unicom based on the distributable cash flow generated by the networks.
Since mid-1998, positions unofficially taken by some departments of the Chinese
government have raised uncertainty regarding the continued viability of the
sino-sino-foreign structure and, as a result, the Company's associated financing
and consulting arrangements.

In July 1999, Ningbo Ya Mei Telecommunications, Ltd., one of the Company's two
telecommunications joint ventures in Ningbo Municipality, China, received a
letter from China Unicom stating that the

                                       32
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

10. CONTINGENCIES (CONTINUED)

supervisory department of the Chinese government had requested that China Unicom
terminate the Project with Ningbo Ya Mei. China Unicom subsequently informed the
Company that the notification also applies to the Company's other
telecommunications joint venture in Ningbo Municipality. In further letters from
China Unicom to the Company's joint ventures in Ningbo and Sichuan, China Unicom
stated its intention to terminate all cooperation contracts with
sino-sino-foreign joint ventures in China, including those with the Company's
Ningbo and Sichuan joint ventures, pursuant to an August 30, 1999 mandate from
the Chinese Ministry of Information Industry. The original letter and subsequent
letters from China Unicom requested that negotiations begin regarding a suitable
settlement of the matter and other matters related to the winding up of the
Company's joint ventures cooperation agreements with China Unicom as a result of
the Ministry of Information Industry notice. China Unicom has ceased further
performance of its cooperation agreements with the Company's joint ventures.
Negotiations regarding the terms of the termination have begun and are
continuing. The content of the negotiations includes determining the investment
principal of the Company's joint ventures, appropriate compensation and other
matters related to termination of contracts. China Unicom made a distribution of
amounts owed for the first half of 1999 according to the cooperation agreement
it has with the Ningbo Ya Mei joint venture.

On November 6, 1999, our four Chinese telecommunications joint ventures engaged
in projects with China Unicom, each entered into non-binding letters of intent
with China Unicom which set forth certain terms for termination of their
cooperation arrangements with China Unicom. Under the terms contemplated in
these letters of intent, our joint ventures will receive cash amounts in RMB
from China Unicom in full and final payment for the termination of their
cooperation contracts with China Unicom. Upon receipt of this payment, China
Unicom and the joint ventures will waive all of their respective relevant rights
against the other party with respect to the cooperative arrangements. In
addition, all assets which comprise the projects that are currently held by the
joint ventures will be unconditionally transferred to China Unicom. Portions of
any amount paid to the joint ventures will, in due course, be distributed to the
Company. The Company currently estimates the total amount of such distributions
to be approximately US $86.0 million at current exchange rates. Final execution
of the agreements contemplated in the letters of intent is subject to certain
conditions, including further verification of certain elements of the
cooperation between China Unicom and the joint ventures and execution of legally
binding termination agreements between China Unicom and the joint ventures on or
before December 1, 1999. Negotiations are continuing with China Unicom regarding
this verification and the content of the definitive termination agreements. The
Company cannot assure at this time that it will enter into definitive
termination agreements with China Unicom or that those agreements will provide
for payments producing distributions to the Company in the amounts specified
above or otherwise contain terms that are satisfactory to the Company.

Based on the status of the negotiations with China Unicom, the Company believes
that it will recover its investments in and advances to the affected joint
ventures, exclusive of goodwill, as of September 30, 1999 of approximately
$70.4 million. However, the Company cannot give any assurances that it will
recover its net investment and if these negotiations are adversely concluded,
they could have a material adverse effect on our financial position or results
of operations. Based on the Company's best estimates, the Company will record a
non-cash impairment charge of approximately $50.9 million for the write off of
goodwill. Regardless of the actions taken presently, a further adjustment will
likely be required once settlement is reached with China Unicom. This is a
consequence of the inherent present uncertainty of the situation rather than of
any factor within the Company's control.

                                       33
<PAGE>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

10. CONTINGENCIES (CONTINUED)

The Communication Group's Huaxia JV is established as a sino-foreign equity
joint venture between Asian American Telecommunications and All Warehouse
Commodity Electronic Commerce Information Development Co., Ltd. The Huaxia JV
does not have any contractual relationship with China Unicom and is engaged in
business fundamentally different from that of the Communication Group's joint
ventures cooperating with China Unicom. Computer and software services such as
offered by the Huaxia JV are subject to regulations different from those applied
to telecommunications in China. The Communications Group believes that the
fee-for-services arrangement of Huaxia JV and the lines of business undertaken
by the joint venture do not constitute foreign involvement in telecommunications
activities, which are at the center of certain Chinese authorities' actions
against the Communication Group's joint telecommunications projects with China
Unicom.

LITIGATION

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

                                       34
<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.

The business activities of Metromedia International Group, Inc. ("Metromedia",
"MMG" or "the Company") are composed of two operating groups, the Communications
Group and Snapper. The Communications Group consists of two geographic areas,
Eastern Europe and the republics of the former Soviet Union, and China. The
operations in Eastern Europe and the former Soviet Union are as follows:
(i) various types of telephony services; (ii) cable television; (iii) paging
services; and (iv) radio broadcasting. The Company's Communications Group has
investments in various telephony related and e-commerce services in China. The
Company manufactures lawn and garden products through Snapper.

In 1998, the Communications Group's paging business continued to incur operating
losses. Accordingly, the Communications Group developed a revised operating plan
to stabilize its paging operation. Under the revised plan, the Communications
Group intends to manage its paging business to a level that will not require
significant additional funding for its operations. As a result of the revised
plan, in 1998 the Company recorded a non-cash, nonrecurring charge on its paging
assets of $49.9 million, which included a $35.9 million write off of goodwill
and other intangibles. The non-cash, nonrecurring charge adjusted the carrying
value of goodwill and other intangibles, fixed assets and investments in and
advances to joint ventures and wrote down inventory. The Communications Group
anticipates that under the revised plan its paging business's operating losses
will decrease significantly. In addition, the Company has reviewed the
amortization periods for the remaining goodwill and intangibles associated with
licenses for its operations in Eastern Europe and the republics of the former
Soviet Union and has revised these amortization periods commencing in the
quarter ending September 30, 1999. This change in estimates is accounted for
prospectively and will result in additional annual amortization expense of
approximately $4.4 million.

On September 30, 1999, the Company consummated the acquisition of PLD
Telekom Inc. pursuant to which a wholly owned subsidiary of the Company was
merged with and into PLD Telekom with PLD Telekom as the surviving corporation.
Following the consummation of the merger, PLD Telekom became a wholly owned
subsidiary of the Company.

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

On November 1, 1995, as a result of the mergers of Orion Pictures Corporation
and Metromedia International Telecommunications, Inc. with and into wholly-owned
subsidiaries of the Company and MCEG Sterling Incorporated with and into the
Company, the Company changed its name from "The Actava Group Inc." to
"Metromedia International Group, Inc." As part of the November 1, 1995 merger,
the Company acquired approximately 39% of RDM Sports Group, Inc. On August 29,
1997, RDM and certain of its affiliates filed voluntary bankruptcy petitions
under chapter 11. The Company believes that it is unlikely that it will recover
any distribution on account 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 and Section 21E of the

                                       35
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Securities Exchange Act of 1934, as amended. See "Special Note Regarding
Forward-Looking Statements" on page 83

COMMUNICATIONS GROUP

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

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

The Communications Group has received notification from China Unicom stating
that a department of the Chinese government has requested termination of its
four joint telecommunications projects with the Communications Group. China
Unicom has suspended cooperation with the Communications Group's joint ventures
on the further development of networks. See Note 4 to Consolidated Condensed
Financial Statements and "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital
Resources-Communications Group-Risks Associated with the Company."

Huaxia JV was established as a sino-foreign equity joint venture between the
Communications Group and All Warehouse Commodity Electronic Commerce Information
Development Co. Ltd., a Chinese trading company. Under this structure, Huaxia JV
will develop and operate electronic commerce computer information systems for
use by its Chinese partner, its affiliates and customers in return for
transaction fees under a fee-for-services arrangement.

The Company's financial statements at September 30, 1999 include PLD Telekom in
its balance sheet and consolidated only the accounts and results of operations
of 27 of the Communications Group's 62 operating joint ventures at
September 30, 1999. Investments in other companies and joint ventures which are
not majority owned, or which the Communications Group does not control, but over
which the Communications Group exercises significant influence, have been
accounted for using the equity method. Investments of the Communications Group
or its consolidated subsidiaries over which significant influence is not
exercised are carried under the cost method. See Notes 3 and 4 of the "Notes to
Consolidated Condensed Financial Statements" of the Company, for those joint
ventures recorded under the equity method and their summary financial
information.

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

The Communications Group accounts for the majority of its joint ventures under
the equity method of accounting since it generally does not exercise control.
Under the equity method of accounting, the Communications Group reflects the
cost of its investments, adjusted for its share of the income or losses of the
joint ventures, on its balance sheet. The losses recorded for the three and nine
months ended September 30, 1999 and 1998 represent the Communications Group's
equity in the losses of the joint ventures in Eastern Europe, the former Soviet
Union and China. Equity in the losses of the joint ventures by the
Communications Group are generally reflected according to the level of ownership
of the Joint Venture by the Communications Group until such Joint Venture's
contributed capital has been fully depleted. Subsequently, the Communications
Group recognizes the full amount of losses generated by the Joint Venture when
the Communications Group is the sole funding source of the joint ventures. The
results of operations of PLD Telekom will be included in the consolidated
financial statements subsequent to September 30, 1999. PLD Telekom reports the
results of its operations on a current basis (without a reporting lag).

The following table summarizes the Communications Group's (exclusive of PLD
Telekom) joint ventures and subsidiaries at September 30, 1999, as well as the
amounts contributed, amounts loaned net of repayments and total amounts invested
in such joint ventures and subsidiaries at September 30, 1999 (in thousands).

<TABLE>
<CAPTION>
                                                                 AMOUNT        AMOUNT
                                                               CONTRIBUTED     LOANED         TOTAL
                                                                TO JOINT      TO JOINT     INVESTED IN
                                                   COMPANY      VENTURE/      VENTURE/    JOINT VENTURE/
JOINT VENTURE(1)                                 OWNERSHIP %   SUBSIDIARY    SUBSIDIARY   SUBSIDIARY(2)
----------------                                 -----------   -----------   ----------   --------------
<S>                                              <C>           <C>           <C>          <C>
CELLULAR TELECOMMUNICATIONS
Baltcom GSM (Latvia)...........................       22%        $ 13,712     $     --       $ 13,712
Magticom (Tbilisi, Georgia)....................       35%           2,450       18,415         20,865
Tyumenruskom (Tyumen, Russia)(3)...............       46%           2,662        3,261          5,923
Ningbo Ya Mei Telecommunications Co., Ltd.
  (Ningbo City, China)(4)......................       41%           9,530       18,772         28,302
Ningbo Ya Lian Telecommunications Co., Ltd.
  (Ningbo Municipality, China)(4)..............       41%           5,046        3,380          8,426
                                                                 --------     --------       --------
                                                                   33,400       43,828         77,228
                                                                 --------     --------       --------
FIXED TELEPHONY
Sichuan Tai Li Feng Telecommunications Co.,
  Ltd. (Sichuan Province, China)(3)(5).........       54%          11,087        8,851         19,938
Chongqing Tai Le Feng Telecommunications Co.,
  Ltd. (Chongqing Municipality, China)(3)(5)...       54%          13,581        2,040         15,621
Instaphone (Kazakhstan)........................       50%              93        1,899          1,992
Caspian American Telecommunications
  (Azerbaijan)(6)..............................       37%             200       13,751         13,951
                                                                 --------     --------       --------
                                                                   24,961       26,541         51,502
                                                                 --------     --------       --------
INTERNATIONAL AND LONG DISTANCE TELEPHONY
Telecom Georgia (Tbilisi, Georgia).............       30%           2,554           --          2,554
                                                                 --------     --------       --------
</TABLE>

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

<TABLE>
<CAPTION>
                                                                 AMOUNT        AMOUNT
                                                               CONTRIBUTED     LOANED         TOTAL
                                                                TO JOINT      TO JOINT     INVESTED IN
                                                   COMPANY      VENTURE/      VENTURE/    JOINT VENTURE/
JOINT VENTURE(1)                                 OWNERSHIP %   SUBSIDIARY    SUBSIDIARY   SUBSIDIARY(2)
----------------                                 -----------   -----------   ----------   --------------
<S>                                              <C>           <C>           <C>          <C>
CABLE TELEVISION
Romsat Cable TV (Bucharest, Romania)(7)........      100%           2,405        6,238          8,643
Viginta (Vilnius, Lithuania)(7)................       55%             397        3,414          3,811
ATK (Archangelsk, Russia)(7)...................       81%           1,995          800          2,795
Ala TV (Bishkek, Kyrgyzstan)(3)(8).............       53%               1          972            973
Kosmos TV (Moscow, Russia).....................       50%           1,093       12,821         13,914
Baltcom TV (Riga, Latvia)......................       50%             819       12,209         13,028
Ayety TV (Tbilisi, Georgia)....................       49%             779        9,573         10,352
Kamalak TV (Tashkent, Uzbekistan)..............       50%             400        3,084          3,484
Sun TV (Chisinau, Moldova).....................       50%             400        7,366          7,766
Alma TV (Almaty, Karaganda, Actau and Ust-
  Kamenogorsk, Kazakhstan).....................       50%             222        7,294          7,516
Cosmos TV (Minsk, Belarus).....................       50%             400        4,977          5,377
Teleplus (St. Petersburg, Russia)..............       45%             990        1,518          2,508
                                                                 --------     --------       --------
                                                                    9,901       70,266         80,167
                                                                 --------     --------       --------
PAGING
Baltcom Paging (Tallinn, Estonia)(7)...........       85%        $  6,025     $    455       $  6,480
CNM (Romania)(7)...............................       54%             490       13,941         14,431
Paging One Services (Austria)(7)(9)............      100%           1,036       14,448         15,484
Eurodevelopment (Ukraine)(7)...................       51%           1,000        1,787          2,787
Kamalak Paging (Tashkent, Samarkand, Bukhara
  and Andijan, Uzbekistan).....................       50%             180        1,832          2,012
Mobile Telecom (Russia)(10)....................       50%           7,618           --          7,618
Baltcom Plus (Riga, Latvia)(11)................       50%              --           --             --
Paging One (Tbilisi, Georgia)(11)..............       45%              --           --             --
Raduga Poisk (Nizhny Novgorod, Russia)(11).....       45%              --           --             --
PT Page (St. Petersburg, Russia)(11)...........       40%              --           --             --
Kazpage (Kazakhstan)(11)(12)...................    26-41%              --           --             --
Alma Page (Almaty and Ust-Kamenogorsk,
  Kazakhstan)(11)..............................       50%              --           --             --
Paging Ajara (Batumi, Georgia)(11).............       35%              --           --             --
                                                                 --------     --------       --------
                                                                   16,349       32,463         48,812
                                                                 --------     --------       --------
RADIO BROADCASTING
Radio Juventus (Budapest, Hungary)(7)..........      100%           8,107          551          8,658
SAC (Moscow, Russia)(7)........................       83%             631        2,277          2,908
Radio Skonto (Riga, Latvia)(7).................       55%             289           --            289
Radio One (Prague, Czech Republic)(7)..........       80%             627          493          1,120
NewsTalk Radio (Berlin, Germany)(7)............       85%           2,758        8,262         11,020
Radio Vladivostok, (Vladivostok, Russia)(7)....       51%             267           61            328
Country Radio (Prague, Czech Republic)(7)......       85%           2,043           --          2,043
Radio Georgia (Tbilisi, Georgia)(7)(13)........       51%             705          319          1,024
Radio Katusha (St. Petersburg,
  Russia)(7)(13)...............................       75%             464          721          1,185
Radio Nika (Socci, Russia).....................       51%             260            4            264
AS Trio LSL (Tallinn, Estonia)(13).............       49%           1,545          419          1,964
                                                                 --------     --------       --------
                                                                   17,696       13,107         30,803
                                                                 --------     --------       --------
</TABLE>

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

<TABLE>
<CAPTION>
                                                                 AMOUNT        AMOUNT
                                                               CONTRIBUTED     LOANED         TOTAL
                                                                TO JOINT      TO JOINT     INVESTED IN
                                                   COMPANY      VENTURE/      VENTURE/    JOINT VENTURE/
JOINT VENTURE(1)                                 OWNERSHIP %   SUBSIDIARY    SUBSIDIARY   SUBSIDIARY(2)
----------------                                 -----------   -----------   ----------   --------------
<S>                                              <C>           <C>           <C>          <C>
E-COMMERCE
Huaxia Metromedia Information Technology Co.,
  Ltd. (Beijing, China)........................       29%             500           --            500
                                                                 --------     --------       --------
OTHER
Spectrum (Kazakhstan)(12)(14)..................       33%              --           --             --
                                                                 --------     --------       --------
TOTAL..........................................                  $105,361     $186,205       $291,566
                                                                 ========     ========       ========
</TABLE>

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

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

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

(3) Pre-operational systems as of September 30, 1999.

(4) Ningbo Ya Mei Telecommunications was formed to support the development by
    China Unicom, a Chinese telecommunications operator, of a GSM mobile
    telephone system in Ningbo City, China. Ningbo Ya Lian Telecommunications
    was similarly formed to support development by China Unicom of expansion of
    GSM services throughout Ningbo Municipality, China. Both joint ventures
    provided financing, technical assistance and consulting services to the
    Chinese operator. The Communications Group has received notification from
    China Unicom stating that a department of the Chinese government has
    requested termination of its cooperation projects with these joint ventures.
    See Note 3 to the Consolidated Condensed Financial Statements, "Management's
    Discussion and Analysis of Financial Condition and Results of
    Operations-Risks Associated with the Company".

(5) Sichuan Tai Li Feng Telecommunications and Chongqing Tai Le Feng
    Telecommunications were formed to support the development by China Unicom of
    fixed-line, public switched telephone networks in Sichuan Province and
    Chongqing Municipality, China, respectively. Both joint ventures provided
    financing, technical assistance and consulting services to the Chinese
    operator. The Communications Group has received notification from China
    Unicom stating that a department of the Chinese government has requested
    termination of its cooperation projects with these joint ventures. See
    Note 3 to the Consolidated Condensed Financial Statements, "Management's
    Discussion and Analysis of Financial Condition and Results of
    Operations-Risks Associated with the Company".

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

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

(8) In June 1999, Ala TV, a joint venture 51% owned by the Communications Group
    and 4% owned by its 50% owned Kazakh joint venture Alma TV, launched cable
    television services in Bishkek, Kyrgyzstan. This joint venture will be
    consolidated subsequent to September 30, 1999.

(9) On July 7, 1999, Paging One Services entered into an agreement to sell
    certain of its assets and transfer its customers to a competing service
    provider in Austria. Pursuant to such agreement, Paging One transferred
    title to such assets and completed the transfer of its customers to the
    buyer on August 31, 1999. The Communications Group recorded a $1.2 million
    loss on the sale of Paging One Services.

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

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

(11) Balances reflect write down of investment.

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

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

(14) 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
    received Protocall Ventures Limited's interest in Spectrum in partial
    satisfaction of its outstanding debt. The Company recorded a gain of
    approximately $7.1 million on the sale. The Company's interest in Spectrum
    of $1.6 million was written down and offset against the gain on the sale of
    Protocall Ventures.

                                       40
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

The following table summarizes by country the amounts contributed, amounts
loaned net of repayments and total amounts invested in the Communications
Group's joint ventures and subsidiaries (exclusive of PLD Telekom) at
September 30, 1999 (in thousands):

<TABLE>
<CAPTION>
                                                    AMOUNT                   AMOUNT                  TOTAL
                                                  CONTRIBUTED                LOANED                 INVESTED
                                                   TO JOINT                 TO JOINT                IN JOINT
                                                   VENTURE/                 VENTURE/                VENTURE/
COUNTRY                                           SUBSIDIARY       %       SUBSIDIARY      %       SUBSIDIARY      %
-------                                           -----------   --------   ----------   --------   ----------   --------
<S>                                               <C>           <C>        <C>          <C>        <C>          <C>
Austria.........................................    $  1,036       1.0      $ 14,448       7.8      $ 15,484       5.3
Azerbaijan......................................         200       0.2        13,751       7.4        13,951       4.8
Belarus.........................................         400       0.4         4,977       2.7         5,377       1.8
Czech Republic..................................       2,670       2.5           493       0.3         3,163       1.1
Estonia.........................................       7,570       7.2           874       0.5         8,444       2.9
Georgia.........................................       6,488       6.2        28,307      15.2        34,795      11.9
Germany.........................................       2,758       2.6         8,262       4.4        11,020       3.8
Hungary.........................................       8,107       7.7           551       0.3         8,658       3.0
Kazakhstan......................................         315       0.3         9,193       4.9         9,508       3.3
Krgyzstan.......................................           1       0.0           972       0.5           973       0.3
Latvia..........................................      14,820      14.1        12,209       6.6        27,029       9.3
Lithuania.......................................         397       0.4         3,414       1.8         3,811       1.3
Moldova.........................................         400       0.4         7,366       4.0         7,766       2.7
People's Republic of China (1)..................      39,744      37.7        33,043      17.7        72,787      25.0
Romania.........................................       2,895       2.7        20,179      10.8        23,074       7.9
Russia..........................................      15,980      15.2        21,463      11.5        37,443      12.5
Ukraine.........................................       1,000       0.9         1,787       1.0         2,787       0.9
Uzbekistan......................................         580       0.5         4,916       2.6         5,496       1.9
                                                    --------     -----      --------     -----      --------     -----
                                                    $105,361     100.0      $186,205     100.0      $291,566     100.0
                                                    ========     =====      ========     =====      ========     =====
</TABLE>

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

(1) The Communications Group has received notification from China Unicom stating
    that a department of the Chinese government has requested termination of its
    four joint telecommunications projects in China. See "Management's
    Discussion and Analysis of Financial Condition and Results of
    Operations--Risks Associated with the Company."

SNAPPER

Snapper manufactures Snapper-Registered Trademark- brand premium-priced power
lawnmowers, lawn tractors, garden tillers, snowthrowers and related parts and
accessories. The lawnmowers include rear-engine riding mowers, front-engine
riding mowers or lawn tractors, and self-propelled and push-type walk-behind
mowers. Snapper also manufactures a line of commercial lawn and turf equipment
under the Snapper-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, 1999 and 1998 of the Company's Communications Group
and lawn and garden products segments.

                                       41
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

                              SEGMENT INFORMATION
                     THREE MONTHS ENDED SEPTEMBER 30, 1999
                                 (IN THOUSANDS)
                                   SEE NOTE 1
<TABLE>
<CAPTION>
                                                       COMMUNICATIONS GROUP--EASTERN EUROPE AND THE
                                                           REPUBLICS OF THE FORMER SOVIET UNION
                                ------------------------------------------------------------------------------------------
                                                        INTERNATIONAL
                                 CELLULAR                 AND LONG                                       SEGMENT
                                 TELECOM-      FIXED      DISTANCE       CABLE                RADIO       HEAD-
                                MUNICATIONS  TELEPHONY    TELEPHONY    TELEVISION  PAGING  BROADCASTING  QUARTERS   TOTAL
                                -----------  ---------  -------------  ----------  ------  ------------  --------  -------
<S>                             <C>          <C>        <C>            <C>         <C>     <C>           <C>       <C>
COMBINED
Revenues......................    $ 9,704     $   277      $ 5,647      $ 8,222    $3,125     $4,034     $   342   $31,351
Depreciation and
  amortization................      3,426         182          843        1,268       452      2,888       1,898    10,957
Operating income (loss).......        294      (1,707)         406        1,757      (702)    (2,988)     (7,372)  (10,312)
CONSOLIDATED
Revenues......................         --          --           --        1,439       738      3,426         342     5,945
Gross profit..................
Depreciation and
  amortization................         --          --           --          413       339      2,829       1.898     5,479
Operating loss................         --          --           --          (34)     (458)    (3,018)     (7,372)  (10,882)
UNCONSOLIDATED JOINT VENTURES
Revenues......................      9,704         277        5,647        6,783     2,387        608          --    25,406
Depreciation and
  amortization................      3,426         182          843          855       113         59          --     5,478
Operating income (loss).......        294      (1,707)         406        1,791      (244)        30          --       570
Net loss......................       (995)     (2,785)         621          226      (272)        80          --    (3,125)
Equity in income (losses) of
  unconsolidated investees
  (Note 2)....................       (616)     (1,509)         185        1,436        44         56          --      (404)
Loss on disposition of
  business....................                                                                                      (1,200)
Foreign currency loss.........                                                                                      (1,260)
Minority interest.............                                                                                        (272)
Interest expense..............
Interest income...............
Income tax expense............
Discontinued operations.......
Net loss......................

<CAPTION>

                                COMMUNICATIONS
                                    GROUP-                CORPORATE
                                    CHINA       SNAPPER  HEADQUARTERS  CONSOLIDATED
                                --------------  -------  ------------  ------------
<S>                             <C>             <C>      <C>           <C>
COMBINED
Revenues......................
Depreciation and
  amortization................
Operating income (loss).......
CONSOLIDATED
Revenues......................     $    --      $46,989    $    --       $ 52,934
Gross profit..................                   13,337
Depreciation and
  amortization................      50,933        1,557          2         57,971
Operating loss................     (52,323)      (4,334)    (1,928)       (69,467)
UNCONSOLIDATED JOINT VENTURES
Revenues......................           3
Depreciation and
  amortization................         184
Operating income (loss).......        (378)
Net loss......................      (1,581)
Equity in income (losses) of
  unconsolidated investees
  (Note 2)....................        (505)          --         --           (909)
Loss on disposition of
  business....................          --           --         --         (1,200)
Foreign currency loss.........          --           --         --         (1,260)
Minority interest.............      22,654           --         --         22,382
Interest expense..............                                             (2,792)
Interest income...............                                              1,852
Income tax expense............                                               (153)
Discontinued operations.......                                            (12,776)
                                                                         --------
Net loss......................                                           $(64,323)
                                                                         ========
</TABLE>

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

NOTE 1: The Company evaluates the performance of its operating segments based on
earnings before interest, taxes, depreciation, and amortization or EBITDA. The
above information and the discussion of the Company's operations is based on
operating income (loss) which includes depreciation and amortization. In
addition, the Company evaluates the performance of the Communications Group's
operations in Eastern Europe and the republics of the former Soviet Union on a
combined basis. The Company is providing as supplemental information an analysis
of combined revenues and operating income (loss) for its consolidated and
unconsolidated joint ventures in Eastern Europe and the republics of the former
Soviet Union. As previously discussed, legal restrictions in China prohibit
foreign participation in the operations or ownership in the telecommunications
sector. The above information for the Communications Group's China joint
ventures represents the investment in network construction and development of
telephony networks for China Unicom. The above information does not reflect the
results of operations of China Unicom's telephony networks. The Company has
received notification from China Unicom stating that a department of the Chinese
government has requested termination of its four joint telecommunications
projects in China. See Note 4 to the Consolidated Condensed Financial
Statements, "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Risks Associated with the Company".

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

                                       42
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

                              SEGMENT INFORMATION
                     THREE MONTHS ENDED SEPTEMBER 30, 1998
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                              COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION
                              ---------------------------------------------------------------------------------
                                                        INTERNATIONAL
                               CELLULAR                   AND LONG                                                        SEGMENT
                               TELECOM-       FIXED       DISTANCE        CABLE                    RADIO                   HEAD-
                              MUNICATIONS   TELEPHONY     TELEPHONY     TELEVISION    PAGING    BROADCASTING    OTHER     QUARTERS
                              -----------   ---------   -------------   ----------   --------   ------------   --------   --------
<S>                           <C>           <C>         <C>             <C>          <C>        <C>            <C>        <C>
COMBINED
Revenues....................    $ 6,302          --         $7,436        $ 7,706    $ 4,543       $5,612       $ 908     $    680
Depreciation and
  amortization..............      2,501           6            489          3,912        732          395         109        1,424
Operating income (loss).....     (1,173)       (255)         2,988         (1,191)    (1,518)          (8)       (716)     (10,764)
CONSOLIDATED
Revenues....................         --          --             --            863      1,160        5,019          --          680
Gross profit................
Depreciation and
  amortization..............         --          --             --            426        318          337          --        1,424
Operating loss..............         --          --             --           (181)    (1,420)          13          --      (10,764)
UNCONSOLIDATED JOINT
  VENTURES
Revenues....................      6,302          --          7,436          6,843      3,383          593         908           --
Depreciation and
  amortization..............      2,501           6            489          3,486        414           58         109           --
Operating income (loss).....     (1,173)       (255)         2,988         (1,010)       (98)         (21)       (716)          --
Net income (loss)...........     (3,489)       (306)         2,515         (2,929)      (561)         (24)       (788)          --
Equity in income (losses) of
  unconsolidated investees
  (Note 2)..................        482        (251)           755         (1,707)      (435)         (13)        (22)          --
Gain on disposition of
  business..................
Foreign currency gain.......
Minority interest...........
Interest expense............
Interest income.............
Income tax expense..........
Discontinued operation......
Net loss....................

<CAPTION>

                                         COMMUNICATIONS
                                             GROUP-                   CORPORATE
                               TOTAL         CHINA        SNAPPER    HEADQUARTERS   CONSOLIDATED
                              --------   --------------   --------   ------------   ------------
<S>                           <C>        <C>              <C>        <C>            <C>
COMBINED
Revenues....................  $ 33,187
Depreciation and
  amortization..............     9,568
Operating income (loss).....   (12,637)
CONSOLIDATED
Revenues....................     7,722      $     --      $47,330       $    --       $ 55,052
Gross profit................                               10,336
Depreciation and
  amortization..............     2,505           796        1,756             1          5,058
Operating loss..............   (12,352)       (2,920)      (9,127)       (1,603)       (26,004)
UNCONSOLIDATED JOINT
  VENTURES
Revenues....................    25,465         1,004
Depreciation and
  amortization..............     7,063           681
Operating income (loss).....      (285)          (22)
Net income (loss)...........    (5,582)         (742)
Equity in income (losses) of
  unconsolidated investees
  (Note 2)..................    (1,191)         (102)          --            --         (1,293)
Gain on disposition of
  business..................     7,091            --           --            --          7,091
Foreign currency gain.......      (314)           --           --            --           (314)
Minority interest...........       155         1,782           --            --          1,937
Interest expense............                                                            (2,927)
Interest income.............                                                             2,734
Income tax expense..........                                                              (573)
Discontinued operation......                                                                --
                                                                                      --------
Net loss....................                                                          $(19,349)
                                                                                      ========
</TABLE>

                                       43
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

                              SEGMENT INFORMATION
                      NINE MONTHS ENDED SEPTEMBER 30, 1999
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                            COMMUNICATIONS GROUP--EASTERN EUROPE AND
                                                            THE REPUBLICS OF THE FORMER SOVIET UNION
                              ----------------------------------------------------------------------------------------------------
                                                        INTERNATIONAL
                               CELLULAR                   AND LONG                                             SEGMENT
                               TELECOM-       FIXED       DISTANCE        CABLE                    RADIO        HEAD-
                              MUNICATIONS   TELEPHONY     TELEPHONY     TELEVISION    PAGING    BROADCASTING   QUARTERS    TOTAL
                              -----------   ---------   -------------   ----------   --------   ------------   --------   --------
<S>                           <C>           <C>         <C>             <C>          <C>        <C>            <C>        <C>
COMBINED
Revenues....................    $27,624      $   331       $17,232        $24,510    $11,402      $13,326      $  1,260   $ 95,685
Depreciation and
  amortization..............      9,981          210         1,876          8,066      1,063        3,550         4,064     28,810
Operating income (loss).....       (579)      (1,890)        1,346            348     (1,809)      (4,259)      (21,401)   (28,244)
CONSOLIDATED
Revenues....................         --           --            --          4,100      2,483       11,531         1,260     19,374
Gross profit................
Depreciation and
  amortization..............         --           --            --          1,366        646        3,360         4,064      9,436
Operating income (loss).....         --           --            --           (212)    (1,757)      (4,271)      (21,401)   (27,641)
UNCONSOLIDATED JOINT
  VENTURES
Revenues....................     27,624          331        17,232         20,410      8,919        1,795            --     76,311
Depreciation and
  amortization..............      9,981          210         1,876          6,700        417          190            --     19,374
Operating income (loss).....       (579)      (1,890)        1,346            560        (52)          12            --       (603)
Net loss....................     (6,474)      (3,388)       (1,429)        (3,741)      (472)          (8)           --    (15,512)
Equity in income (losses) of
  unconsolidated investees
  (Note 2)..................     (2,860)      (3,040)         (430)           199        (35)         (24)           --     (6,190)
Loss on disposition of
  business..................                                                                                                (1,200)
Foreign currency loss.......                                                                                                (4,054)
Minority interest...........                                                                                                   352
Interest expense............
Interest income.............
Income tax expense..........
Discontinued operations.....
Net loss....................

<CAPTION>

                              COMMUNICATIONS
                                  GROUP-                   CORPORATE
                                  CHINA        SNAPPER    HEADQUARTERS   CONSOLIDATED
                              --------------   --------   ------------   ------------
<S>                           <C>              <C>        <C>            <C>
COMBINED
Revenues....................
Depreciation and
  amortization..............
Operating income (loss).....
CONSOLIDATED
Revenues....................     $     --      $166,207      $    --      $ 185,581
Gross profit................                     53,880
Depreciation and
  amortization..............       52,507         4,610            5         66,558
Operating income (loss).....      (59,396)        6,317       (4,861)       (85,581)
UNCONSOLIDATED JOINT
  VENTURES
Revenues....................        2,530
Depreciation and
  amortization..............        1,900
Operating income (loss).....          (47)
Net loss....................       (3,357)
Equity in income (losses) of
  unconsolidated investees
  (Note 2)..................         (652)           --           --         (6,842)
Loss on disposition of
  business..................                                                 (1,200)
Foreign currency loss.......           --            --           --         (4,054)
Minority interest...........       26,882            --           --         27,234
Interest expense............                                                 (9,721)
Interest income.............                                                  6,098
Income tax expense..........                                                   (358)
Discontinued operations.....                                                (12,776)
                                                                          ---------
Net loss....................                                              $ (87,200)
                                                                          =========
</TABLE>

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

                              SEGMENT INFORMATION
                      NINE MONTHS ENDED SEPTEMBER 30, 1998
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                              COMMUNICATIONS GROUP--EASTERN EUROPE AND THE
                                                  REPUBLICS OF THE FORMER SOVIET UNION
                                ------------------------------------------------------------------------
                                                        INTERNATIONAL
                                 CELLULAR                 AND LONG
                                 TELECOM-      FIXED      DISTANCE       CABLE                 RADIO
                                MUNICATIONS  TELEPHONY    TELEPHONY    TELEVISION  PAGING   BROADCASTING
                                -----------  ---------  -------------  ----------  -------  ------------
<S>                             <C>          <C>        <C>            <C>         <C>      <C>
COMBINED
Revenues......................   $ 15,152      $  --       $21,062      $23,336    $13,525    $15,276
Depreciation and
  amortization................      7,226          6         1,404       10,067      2,226      1,077
Operating income (loss).......     (5,814)      (255)        6,100       (4,561)    (6,550)       (14)

CONSOLIDATED
Revenues......................         --         --            --        2,439      3,317     13,713
Gross profit..................
Depreciation and
  amortization................         --         --            --        1,092      1,092        927
Operating income (loss).......         --         --            --       (1,265)    (6,571)       157

UNCONSOLIDATED JOINT VENTURES
Revenues......................     15,152         --        21,062       20,897     10,208      1,563
Depreciation and
  amortization................      7,226          6         1,404        8,975      1,134        150
Operating income (loss).......     (5,814)      (255)        6,100       (3,296)        21       (171)
Net income (loss).............    (11,554)      (306)        4,399       (7,715)    (2,102)      (186)
Equity in income (losses) of
  unconsolidated investees
  (Note 2)....................     (2,622)      (251)        1,320       (4,015)    (1,736)       (94)
Gain on disposition of
  business....................
Foreign currency gain.........
Minority interest.............
Interest expense..............
Interest income...............
Income tax expense............
Discontinued operations.......
Net loss......................

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

                                         SEGMENT            COMMUNICATIONS
                                           HEAD                 GROUP-                 CORPORATE
                                 OTHER   QUARTERS   TOTAL       CHINA       SNAPPER   HEADQUARTERS  CONSOLIDATED
                                -------  --------  -------  --------------  --------  ------------  ------------
<S>                             <C>      <C>       <C>      <C>             <C>       <C>           <C>
COMBINED
Revenues......................  $ 5,888  $  1,682  $95,921
Depreciation and
  amortization................    1,071     4,132   27,209
Operating income (loss).......   (2,500)  (31,525) (45,119)
CONSOLIDATED
Revenues......................    3,200     1,682   24,351     $    --      $165,159    $    --       $189,510
Gross profit..................                                                44,648
Depreciation and
  amortization................      481     4,132    7,724       2,293         5,478          5         15,500
Operating income (loss).......     (186)  (31,525) (39,390)    (10,205)      (12,245)    (4,500)       (66,340)
UNCONSOLIDATED JOINT VENTURES
Revenues......................    2,688        --   71,570       2,426
Depreciation and
  amortization................      590        --   19,485       1,960
Operating income (loss).......   (2,314)       --   (5,729)       (630)
Net income (loss).............   (2,503)       --  (19,967)     (2,475)
Equity in income (losses) of
  unconsolidated investees
  (Note 2)....................     (666)       --   (8,064)       (874)           --         --         (8,938)
Gain on disposition of
  business....................                       7,091          --            --         --          7,091
Foreign currency gain.........                           7          --            --         --              7
Minority interest.............                       1,497       5,925            --         --          7,422
Interest expense..............                                                                         (12,487)
Interest income...............                                                                           9,947
Income tax expense............                                                                          (1,203)
Discontinued operations.......                                                                           5,267
                                                                                                      --------
Net loss......................                                                                        $(59,234)
                                                                                                      ========
</TABLE>

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

RESULTS OF OPERATIONS-THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1998, AND NINE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1998

LEGEND

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

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

The following sets forth, by line of business, the Communications Group's
consolidated and unconsolidated subsidiaries and joint ventures, the
Communications Group's ownership percentage and selected income statement
information for the three and nine months ended September 30, 1999 and 1998.

TELEPHONY

CELLULAR TELECOMMUNICATIONS

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,
                                                                            -------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %     1999       1998
------------------------                                      -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Baltcom GSM (Latvia)........................................      22%          E           E
Magticom (Tbilisi, Georgia).................................      35%          E           E
Tyumenruskom (Tyumen, Russia)...............................      46%          P         N/A
</TABLE>

UNCONSOLIDATED JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    SEPTEMBER 30,                    SEPTEMBER 30,
                                            ------------------------------   ------------------------------
                                              1999       1998     % CHANGE     1999       1998     % CHANGE
                                            --------   --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>
Revenues..................................  $ 9,704    $ 6,302       54%     $27,624    $ 15,152      82%
Operating income (loss)...................  $   294    $(1,173)     N/M      $  (579)   $ (5,814)    (90)%
Net loss..................................  $  (995)   $(3,489)     (71)%    $(6,474)   $(11,554)    (44)%
Equity in income (losses) of joint
  ventures................................  $  (616)   $   482      N/M      $(2,860)   $ (2,622)     (9)%
Ending subscribers........................   98,840     41,446      138%      98,840      41,446     138%
Average monthly revenue per subscriber....  $ 35.42    $ 53.98      (34)%    $ 41.35    $  64.91     (36)%
</TABLE>

REVENUES.  Baltcom GSM operates a nationwide cellular telecommunication system
in Latvia. Magticom provides service in major cities in Georgia and is licensed
to provide service nationwide. Revenue and subscriber increases for the three
and nine months ended September 30, 1999 as

                                       46
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

compared to the same periods in 1998 reflect the increasing demand for reliable
and mobile telephone service in these markets. However, average monthly revenue
per subscriber has declined for the three and nine months ended September 30,
1999 as compared to 1998. In Latvia, this is attributable to an increase in the
number of prepaid customers. In Georgia, the devaluation of the Georgian lari
from September 1998 to June 1999 has negatively impacted the U.S. dollar value
of revenue generated.

OPERATING LOSS.  Baltcom GSM and Magticom were both launched in 1997. Decreasing
operating losses are a result of both operations moving out of the start-up
phase and increasing revenues and subscriber base, as well as improved cost
controls.

NET LOSS.  The increase in interest expense in 1999 from the prior year
represents additional borrowings by the joint ventures to fund and expand their
operations. Additionally, included in the net losses in the nine months ended
September 30, 1999 and 1998 were foreign currency gains of $1.5 million and
losses of $702,000, respectively. For the three months ended September 30, 1999
and 1998, net losses included foreign currency gains of $1.5 million and losses
of $259,000, respectively. Foreign currency losses represent the remeasurement
of the ventures' financial statements, using the U.S. dollar as the functional
currency.

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

FIXED TELEPHONY

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,
                                                                            -------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %     1999       1998
------------------------                                      -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Instaphone (Kazakhstan).....................................      50%          E           P
Caspian American Telecommunications (Azerbaijan)............      37%          E         N/A
</TABLE>

UNCONSOLIDATED JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED               NINE MONTHS ENDED
                                                          SEPTEMBER 30,                    SEPTEMBER 30,
                                                  ------------------------------   ------------------------------
                                                    1999       1998     % CHANGE     1999       1998     % CHANGE
                                                  --------   --------   --------   --------   --------   --------
<S>                                               <C>        <C>        <C>        <C>        <C>        <C>
Revenues........................................  $   277     $  --       N/A      $   331     $  --       N/A
Operating loss..................................  $(1,707)    $(255)      N/M      $(1,890)    $(255)      N/M
Net loss........................................  $(2,785)    $(306)      N/M      $(3,388)    $(306)      N/M
Equity in losses of joint ventures..............  $(1,509)    $(251)      N/M      $(3,040)    $(251)      N/M
Ending subscribers..............................      671        --       N/A          671        --       N/A
Average monthly revenue per subscriber..........  $258.28        --       N/M      $102.87        --       N/M
</TABLE>

REVENUES.  The revenues above were realized at the Communications Group's joint
venture in Azerbaijan, which launched in April 1999. Operations of the
Kazakhstan venture have been delayed by the lack of success in securing an
interconnection agreement with the local ministry that is economically

                                       47
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

and technically appropriate. An interconnection agreement is required to access
public switched traffic from a private overlay network such as Instaphone's. The
local ministry is not obligated to provide an interconnection agreement to the
Communications Group's joint venture and despite the Communications Group's
efforts, the Communications Group cannot determine when it will obtain an
agreement, if ever. Since the lack of an interconnection essentially precludes
the joint venture from establishing viable commercial operations, even though it
meets the company requirement to be classified as an operational joint venture.
When Instaphone is granted an interconnection agreement, it will begin to market
its services and implement its business plan.

OPERATING AND NET LOSS.  Included in the net losses in the three and nine months
ended September 30, 1999 were foreign currency losses of $616,000 and $946,000,
respectively. There were no corresponding losses for the same periods in 1998.

EQUITY IN LOSSES OF JOINT VENTURES.  Equity in joint venture losses represents
the Communications Group's proportionate share of fixed telephony net losses for
the periods.

INTERNATIONAL AND LONG DISTANCE TELEPHONY

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

UNCONSOLIDATED JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED               NINE MONTHS ENDED
                                                        SEPTEMBER 30,                    SEPTEMBER 30,
                                                ------------------------------   ------------------------------
                                                  1999       1998     % CHANGE     1999       1998     % CHANGE
                                                --------   --------   --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>        <C>        <C>
Revenues......................................   $5,647     $7,436      (24)%    $17,232    $21,062      (18)%
Operating income..............................   $  406     $2,988      (86)%    $ 1,346    $ 6,100      (78)%
Net income (loss).............................   $  621     $2,515      (75)%    $(1,429)   $ 4,399      N/M
Equity in income (loss) of joint venture......   $  185     $  755      (75)%    $  (430)   $ 1,320      N/M
</TABLE>

REVENUES.  Telecom Georgia handles international calls inbound to and outbound
from the Republic of Georgia. Revenues have decreased for the three months and
nine months ended September 30,1999 as compared to the three months and nine
months ended September 30, 1998. This is partially the effect of increased
competition from other international telephone service providers during 1999.
Whereas during the nine months ended September 30, 1998, Telecom Georgia was the
only entity licensed to handle international call traffic in or out of Georgia.
Further, the devaluation of the Georgian lari from September 1998 to June 1999
has negatively impacted the U.S. dollar value of revenue generated by outgoing
calls. Telecom Georgia charges the local caller a per minute rate on these calls
and pays a destination fee to the interconnect carrier.

OPERATING INCOME (LOSS).  Operating results in the three and nine months ended
September 30, 1999 decreased as a result of contractual reductions in
termination accounting rates in international settlement agreements for traffic
with overseas carriers.

                                       48
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

NET INCOME (LOSS).  Included in net income (loss) were foreign currency losses
of $2.3 million in the first nine months of 1999 and $611,000 in the first nine
months of 1998. In the three months ended September 30, 1999, the lari began to
appreciate against the US dollar, resulting in a foreign currency gain of
$450,000. For the three months ended September 30, 1998, the foreign currency
loss was $91,000. The increased foreign currency loss experienced in 1999 is a
result of the devaluation of the Georgian lari from September 1998 to
June 1999. Net income also included income taxes of $391,000 and $814,000 in the
first nine months of 1999 and 1998, respectively. In the three months ended
September 30, 1999 and 1998, income taxes were $178,000 and $322,000,
respectively. The decrease in net results in the three months and nine months
ended September 30, 1999 as compared to the net income in the three months and
nine months ended September 30, 1998 is attributable to the significant
devaluation of the Georgian lari.

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

CABLE TELEVISION

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30
                                                                            -------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %     1999       1998
------------------------                                      -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Romsat Cable TV (Bucharest, Romania.........................      100%         C           C
Viginta (Vilnius, Lithuania)................................       55%         C           C
ATK (Archangelsk, Russia)...................................       81%         C         N/A
Kosmos TV (Moscow, Russia)..................................       50%         E           E
Baltcom TV (Riga, Latvia)...................................       50%         E           E
Ayety TV (Tbilisi, Georgia).................................       49%         E           E
Kamalak TV (Tashkent, Uzbekistan)...........................       50%         E           E
Sun TV (Chisinau, Moldova)..................................       50%         E           E
Alma TV (Almaty, Kazakhstan)................................       50%         E           E
Cosmos TV (Minsk, Belarus)..................................       50%         E           E
Teleplus (St. Petersburg, Russia)...........................       45%         E           P
</TABLE>

CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED               NINE MONTHS ENDED
                                                          SEPTEMBER 30,                    SEPTEMBER 30,
                                                  ------------------------------   ------------------------------
                                                    1999       1998     % CHANGE     1999       1998     % CHANGE
                                                  --------   --------   --------   --------   --------   --------
<S>                                               <C>        <C>        <C>        <C>        <C>        <C>
Revenues........................................   $1,439     $ 863        67%      $4,100    $ 2,439       68%
Operating loss..................................   $  (34)    $(181)      (81)%     $ (212)   $(1,265)     (83)%
</TABLE>

REVENUES.  Revenue increased by $1.7 million for the nine months ended
September 30, 1999 as compared to the nine months ended September 30, 1998; and
by $576,000 for the quarter ended September 30, 1999 as compared to the quarter
ended September 30, 1998. The increases are primarily due to increased revenue
at Romsat of $898,000 and $296,000 for the nine and three months ended
September 30, 1999, respectively, coupled with the acquisition of ATK in the
Archangelsk region of

                                       49
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

Russia. Romsat's favorable revenue trend was generated by an increase in rates
and the launch of internet services via the cable network.

OPERATING LOSS.  For the nine months ended September 30, 1999, operating losses
included cost of services of $908,000, selling, general and administrative
expenses of $2.0 million and depreciation and amortization expenses of
$1.4 million. For the nine months ended September 30, 1998, operating losses
included cost of services of $820,000, selling, general and administrative
expenses of $1.8 million and depreciation and amortization expenses of
$1.1 million. Included in operating loss for the three months ended
September 30, 1999 were cost of services of $285,000, selling general and
administrative expenses of $775,000 and depreciation and amortization expenses
of $413,000. Included in operating loss for the three months ended
September 30, 1998 were cost of services of $173,000, selling general and
administrative expenses of $446,000 and depreciation and amortization expenses
of $426,000. The decreased operating loss for the quarter and nine months ended
September 30, 1999 as compared to the quarter and nine months ended
September 30, 1998 reflects the increase in revenue realized by continuing to
emphasize the strategy of increasing the customer base by wiring buildings in
advance and targeting for a lower priced, broader based program package.

UNCONSOLIDATED JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED               NINE MONTHS ENDED
                                                     SEPTEMBER 30,                    SEPTEMBER 30,
                                             ------------------------------   ------------------------------
                                               1999       1998     % CHANGE     1999       1998     % CHANGE
                                             --------   --------   --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>        <C>        <C>
Revenues...................................   $6,783    $ 6,843       (1)%    $20,410    $20,897       (2)%
Operating income (loss)....................   $1,791    $(1,010)     N/M      $   560    $(3,296)     N/M
Net income (loss)..........................   $  226    $(2,929)     N/M      $(3,741)   $(7,715)     (52)%
Equity in income (losses) of joint
  ventures.................................   $1,436    $(1,707)     N/M      $   199    $(4,015)     N/M
</TABLE>

REVENUES.  For the nine months ended September 30, 1999 as compared to the nine
months ended September 30, 1998, revenue decreased by approximately $487,000.
Revenues at Kosmos TV, Moscow, Kamalak TV and Sun TV decreased by approximately
$813,000, 531,000 and $643,000, respectively, for reasons described below. These
decreases were offset by increases at Alma TV and Cosmos TV. Alma TV revenue
increased by approximately $1.2 million. In Almaty, Alma-TV distributes service
through MMDS and wireline technologies. The growth and increased revenue has
been achieved primarily through a rapid wireline build. The number of wireline
homes servicable grew from approximately 71,000 at September 30, 1998 to
approximately 185,000 at September 30, 1999, resulting in an increase in
wireline subscribers from approximately 17,000 to approximately 37,000.
Additionally, during the nine months ended September 30, 1999, the wireline
build was expanded within Kazakhstan to the cities of Actua, Ust- Kamenogorsk,
and Karaganda. This expansion accounts for approximately $182,000 of Alma TV's
revenue increase. Increased revenue of approximately $763,000 at Cosmos TV,
Minsk was a result of a 50% increase in subscribers from approximately 6,000 at
September 30, 1998 to approximately 9,000 at September 30, 1999. However, the
Communications Group is intentionally slowing the growth of Cosmos TV due to
policies adopted by various governmental entities which may adversely affect the
operations of the venture. These include foreign exchange controls which,
coupled with scarcity of hard currency, limit the ability of the joint venture
to purchase equipment abroad. Additionally, the Communications Group decided not
to move ahead with a proposal to wire certain

                                       50
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

parts of the city of Minsk for cable television after it was informed by the
city of Minsk that this expansion would be subject to the payment of an
additional fee.

As a deterrent to subscriber churn during the Russian economic crisis, Kosmos TV
began granting price discounts to existing customers, which has negatively
impacted revenue. The devaluation of the Moldovan lei has had an adverse impact
on Sun TV's revenue as the rate increase necessary to achieve the
pre-devaluation U.S. dollar value rate was made incrementally. Kamalak TV's
installation revenue has decreased due to the limited ability to purchase
equipment abroad due to foreign exchange controls in Uzbekistan.

The decrease in revenue of $60,000 for the three months ended September 30, 1999
as compared to the three months ended September 30, 1998 is primarily made up of
decreases of approximately $147,000, $183,000, and $147,000 at Ayety TV, Kamalak
TV and Sun TV, respectively, offset by increases at Alma TV and Cosmos TV of
approximately $348,000 and $103,000 respectively.

OPERATING LOSS.  For the nine months ended September 30, 1999, operating losses
included cost of services of $2.8 million, selling, general and administrative
expenses of $10.4 million and depreciation and amortization expenses of
$6.7 million. For the nine months ended September 30, 1998, operating losses
included cost of services of $3.4 million, selling general and administrative
expenses of $11.8 million and depreciation and amortization expenses of
$9.0 million. Included in operating loss for the three months ended
September 30, 1999 were cost of services of $980,000, selling general and
administrative expenses of $3.2 million and depreciation and amortization
expenses of $855,000. Included in operating loss for the three months ended
September 30, 1998 were cost of services of $722,000, selling general and
administrative expenses of $3.6 million and depreciation and amortization
expenses of $3.5 million. The decreased operating loss for the nine months ended
September 30, 1999 as compared to the nine months ended September 30, 1998
reflects the fact that certain operating costs are fixed and as the number of
subscribers increased, it reduced the operating loss per subscriber, combined
with cost savings achieved through economies of scale resulting from contract
renegotiation with programmers and other suppliers. Also contributing to the
improved results for the three and nine months ended September 30, 1999 was a
reconciling adjustment of approximately $1.7 million decreasing depreciation
expense recorded at Baltcom TV.

NET LOSS.  Included in net losses in the nine months ended September 30, 1999
and 1998 were interest charges of $3.9 million and $3.3 million, respectively.
In the three months ended September 30, 1999 and 1998, net income (loss)
included interest charges of $1.3 million and $1.3 million, respectively. Also
included in net income (loss) was foreign currency losses of $753,000 in the
first nine months of 1999 and $708,000 in the first nine months of 1998. In the
three months ended September 30, 1999 and 1998 foreign currency loss was
$377,000 and $550,000, respectively. The increase in interest expense in the
nine months and quarter ended September 30, 1999 as compared to the nine months
and quarter ended September 30, 1998 relates to additional borrowings by the
joint ventures to fund and expand their operations.

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

                                       51
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

COMBINED RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED               NINE MONTHS ENDED
                                               SEPTEMBER 30,                    SEPTEMBER 30,
                                       ------------------------------   ------------------------------
                                         1999       1998     % CHANGE     1999       1998     % CHANGE
                                       --------   --------   --------   --------   --------   --------
<S>                                    <C>        <C>        <C>        <C>        <C>        <C>
Revenues.............................  $  8,222   $  7,706       7%     $ 24,510   $ 23,336       5%
Depreciation and amortization........  $ (1,268)  $ (3,912)    (68)%    $ (8,006)  $(10,067)     20%
Operating income (loss)..............  $  1,757   $ (1,191)    N/M      $    348   $ (4,561)    N/M
Ending subscribers...................   407,277    291,664      40%      407,277    291,664      40%
Average revenue per subscriber.......  $   7.00   $   9.16     (24)%    $   7.53   $  10.03     (25)%
</TABLE>

ANALYSIS OF COMBINED RESULTS OF OPERATIONS.  As noted above, subscriber growth
and revenue increases in 1999 were the result of further implementation of the
strategy by which buildings were wired in advance and targeted for a lower
priced, broader band program package. Total subscribers increased from 291,664
in 1998 to 407,277 in 1999. In 1999, the improvement in operating results
reflects the favorable relationship between certain fixed operating costs and
the increase in subscribers as described above, combined with cost savings
achieved through economies of scale resulting in advantageous contract
renegotiations with programmers and other suppliers. Additionally, as described
above, a reconciling adjustment made at Baltcom TV favorably impacted the
results of operations for the three and nine months ended September 30, 1999.

Revenue per average subscriber decreased during the three and nine months ended
September 30, 1999 as compared to the three and nine months ended September 30,
1998 as a result of increased wireline network build-outs and penetration, which
distribute lower priced cable plans relative to the MMDS cable package.

PAGING

OVERVIEW.  In 1998, the Communications Group's paging business continued to
incur operating losses. Accordingly, the Communications Group developed a
revised operating plan to stabilize its paging operations. Under the revised
plan, the Communications Group intends to manage its paging business to a level
that should not require significant additional funding for its operation. The
Communications Group anticipates that under the revised plan its paging business
operating losses will decrease significantly. The Company has adjusted its
investment in certain paging operations which were recorded under the equity
method to zero, and unless it provides future funding, will no longer record

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

its proportionate share of any future net losses of these investees and is
reflected in the following table as E*.

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,
                                                                            -------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %     1999       1998
------------------------                                      -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Paging One Services (Austria)...............................       100%       N/A          C
Baltcom Paging (Tallinn, Estonia)...........................        85%         C          C
CNM (Romania)...............................................        54%         C          C
Eurodevelopment (Ukraine)...................................        51%         C        N/A
Kamalak Paging (Tashkent, Samarkand, Bukhara and
Andijan, Uzbekistan)........................................        50%         E          E
Mobile Telecom (Russia).....................................        50%         E        N/A
Baltcom Plus (Riga, Latvia).................................        50%        E*          E
Alma Page (Almaty and Ust-Kamenogorsk, Kazakhstan)..........        50%        E*          E
Paging One (Tbilisi, Georgia)...............................        45%        E*          E
Raduga Poisk (Nizhny Novgorod, Russia)......................        45%        E*          E
PT Page (St. Petersburg, Russia)............................        40%        E*          E
Kazpage (Kazakhstan)........................................     26-41%        E*          E
Paging Ajara (Batumi, Georgia)..............................        35%        E*          E
</TABLE>

CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                      SEPTEMBER 30,                    SEPTEMBER 30,
                                              ------------------------------   ------------------------------
                                                1999       1998     % CHANGE     1999       1998     % CHANGE
                                              --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Revenues....................................   $ 738     $ 1,160      (36)%    $ 2,483    $ 3,317      (25)%
Operating loss..............................   $(458)    $(1,420)     (68)%    $(1,757)   $(6,571)     (73)%
</TABLE>

REVENUES.  For the nine months and quarter ended September 30, 1999 as compared
to the nine months and quarter ended September 30, 1998, the decrease in revenue
reflects the increasing competition from GSM operators in the markets in which
the Communications Group has paging businesses. This factor has been partially
offset by the acquisition during the fourth quarter of 1998 of a paging
operation in the Ukraine.

OPERATING LOSS.  For the nine months ended September 30, 1999, operating losses
included cost of services of $173,000, selling general and administrative
expenses of $3.4 million and depreciation and amortization expenses of $646,000.
For the nine months ended September 30, 1998, operating losses included cost of
services of $2.6 million, selling general and administrative expenses of
$6.2 million and depreciation and amortization expenses of $1.1 million.
Included in operating loss for the three months ended September 30, 1999 were
cost of services of $33,000, selling general and administrative expenses of
$824,000 and depreciation and amortization expenses of $339,000. Included in
operating loss for the three months ended September 30, 1998 were cost of
services of $615,000, selling general and administrative expenses of
$1.6 million and depreciation and amortization expenses of $318,000. During the
nine months and quarter ended September 30, 1998, increased marketing,
advertising, technical and distribution expenses were incurred to introduce
calling party pays service.

                                       53
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

UNCONSOLIDATED JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED               NINE MONTHS ENDED
                                                  SEPTEMBER 30,                    SEPTEMBER 30,
                                          ------------------------------   ------------------------------
                                            1999       1998     % CHANGE     1999       1998     % CHANGE
                                          --------   --------   --------   --------   --------   --------
<S>                                       <C>        <C>        <C>        <C>        <C>        <C>
Revenues................................   $2,387     $3,383      (29)%     $8,919    $10,208      (13)%
Operating income (loss).................   $ (244)    $  (98)     149 %     $  (52)   $    21      N/M
Net loss................................   $ (272)    $ (561)     (52)%     $ (472)   $(2,102)     (78)%
Equity in losses of joint ventures......   $   44     $ (435)     N/M       $  (35)   $(1,736)     (98)%
</TABLE>

REVENUES.  For the nine months and quarter ended September 30, 1999 as compared
to the nine months and quarter ended September 30, 1998, the decrease in revenue
reflects the increasing competition from GSM operators in the markets in which
the Communications Group has paging businesses. These factors have been
partially offset by the acquisition during the third quarter of 1998 of Mobile
Telecom, a paging operation in Russia.

OPERATING INCOME (LOSS).  Included in operating income for the nine months ended
September 30, 1999 were cost of services of $1.8 million, selling, general and
administrative expenses of $6.7 million and depreciation and amortization
expenses of $417,000. For the nine months ended September 30, 1998, operating
income included cost of services of $2.8 million, selling general and
administrative expenses of $6.2 million and depreciation and amortization
expenses of $1.1 million. For the three months ended September 30, 1999,
operating loss included cost of services of $513,000, selling general and
administrative expenses of $2.0 million and depreciation and amortization
expenses of $113,000. Included in operating income for the three months ended
September 30, 1998 were cost of services of $866,000, selling general and
administrative expenses of $2.2 million and depreciation and amortization
expenses of $414,000. Operating loss increased for the quarter ended
September 30, 1999 as compared to the quarter ended September 30, 1998 as a
result of the operating loss of $428,000 at Mobile Telecom, which was purchased
during the third quarter of 1998.

NET INCOME (LOSS).  Included in the net losses in the nine months ended
September 30, 1999 and 1998 were interest charges of $126,000 and $638,000,
respectively. Also included in the net losses were foreign currency losses of
$429,000 in the first nine months of 1999 and $547,000 in the first nine months
of 1998. Net losses also included income taxes of $243,000 and $538,000 in the
first nine months of 1999 and 1998, respectively. Finally, net losses also
included other income of $379,000 and other loss of $403,000 in the first nine
months of 1999 and 1998, respectively. In the three months ended September 30,
1999 and 1998, the net losses included interest charges of $46,000 and $265,000,
respectively. In the three months ended September 30, 1999 and 1998 foreign
currency gains (losses) were $(72,000) and $1,000, respectively. In the three
months ended September 30, 1999 and 1998, income taxes were $68,000 and
$206,000, respectively. In the three months ended September 30, 1999 and 1998,
other income was $158,000 and $3,000, respectively

EQUITY IN INCOME (LOSSES) OF JOINT VENTURES.  As noted above, the Communications
Group recognizes its proportionate share of the net income or loss of its joint
ventures, however, for 1998, the Communications Group recognized the full amount
of losses generated by the joint ventures since the contributed capital of the
joint venture had been depleted and the Communications Group was

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

generally the sole funding source. During 1998, the Company adjusted its
investments in certain paging operations which were recorded under the equity
method to zero, and as noted above, unless it provides future funding will no
longer record its proportionate share of any future net losses of these
investees.

COMBINED RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED               NINE MONTHS ENDED
                                                SEPTEMBER 30,                    SEPTEMBER 30,
                                        ------------------------------   ------------------------------
                                          1999       1998     % CHANGE     1999       1998     % CHANGE
                                        --------   --------   --------   --------   --------   --------
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>
Revenues..............................   $3,125    $ 4,543      (31)%    $11,402    $13,525      (16)%
Depreciation and amortization.........   $ (452)   $  (732)     (38)%    $(1,063)   $(2,226)     (52)%
Operating loss........................   $ (702)   $(1,518)     (54)%    $(1,809)   $(6,550)     (72)%
</TABLE>

ANALYSIS OF COMBINED RESULTS OF OPERATIONS.  Total subscribers increased from
102,703 in 1998 to 110,437 in 1999. Revenues of investments written off at
December 31, 1998 are not included in the results of the unconsolidated or
combined joint ventures above. Subscribers reported in 1999 includes 33,653
subscribers of these investments. Calling party pays subscribers are not
included in the subscriber count. Decreases in operating loss in 1999 were due
to the implementation during 1999 of the Communications Group's revised
operating plan.

RADIO BROADCASTING

<TABLE>
<CAPTION>
                                                                                    SEPTEMBER 30
                                                                               ----------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %        1999          1998
------------------------                                      -----------      --------      --------
<S>                                                           <C>              <C>           <C>
Radio Juventus (Budapest, Hungary)..........................      100%            C             C
Country Radio (Prague, Czech Republic)......................       85%            C             P
NewsTalk Radio (Berlin, Germany)............................       85%            C             C
SAC (Moscow, Russia)........................................       83%            C             C
Radio One (Prague, Czech Republic)..........................       80%            C             C
Radio Katusha (St. Petersburg, Russia)......................       75%            C             E
Radio Skonto (Riga, Latvia).................................       55%            C             C
Radio Vladivostok, (Vladivostok, Russia)....................       51%            C             P
Radio Georgia (Tbilisi, Georgia)............................       51%            C             P
Radio Nika (Socci, Russia)..................................       51%            E             E
AS Trio LSL (Tallinn, Estonia)..............................       49%            E             E
</TABLE>

                                       55
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

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

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED               NINE MONTHS ENDED
                                                SEPTEMBER 30,                    SEPTEMBER 30,
                                        ------------------------------   ------------------------------
                                          1999       1998     % CHANGE     1999       1998     % CHANGE
                                        --------   --------   --------   --------   --------   --------
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>
Revenues..............................  $ 3,426     $5,019      (32)%    $11,531    $13,713      (16)%
Operating income (loss)...............  $(3,018)    $   13      N/M      $(4,271)   $   157      N/M
</TABLE>

REVENUES.  For the nine months ended September 30, 1999 as compared to the nine
months ended September 30, 1998, revenues decreased by approximately
$2.2 million. Revenues decreased at Radio 7 and Radio Katusha by approximately
$642,000 and $904,000, as the economic crisis had a negative impact on
advertising spending in Russian markets and was offset by increased revenues at
Country Radio, which was purchased at the end of the first quarter in 1998, of
approximately $388,000. In addition, decreased revenue of approximately
$1.2 million at Radio Juventus resulted from increased competition from
television and from two national radio networks. The decrease was partially
offset by smaller revenue increases at the other stations for the nine months
ended September 30, 1999 as compared to the nine months ended September 30,
1998.

Revenue decreased by approximately $1.6 million for the three months ended
September 30, 1999 compared to the three months ended September 30, 1998.
Individually, revenues at Radio 7 and at Radio Katusha decreased by
approximately $492,000 and $398,000, respectively, as the economic crisis had a
negative impact on advertising spending in Russian markets. Revenue decreased by
approximately $633,000 at Radio Juventus for the quarter ended September 30,
1999 as compared to the quarter ended September 30, 1998.

OPERATING LOSS.  For the nine months ended September 30, 1999, operating losses
included selling, general and administrative expenses of $12.4 million and
depreciation and amortization expenses of $3.4 million. For the nine months
ended September 30, 1998, operating losses included selling, general and
administrative expenses of $12.6 million and depreciation and amortization
expenses of $927,000. Included in operating loss for the three months ended
September 30, 1999 were selling, general and administrative expenses of
$3.6 million and depreciation and amortization expenses of $2.8 million.
Included in operating loss for the three months ended September 30, 1998 were
selling, general and administrative expenses of $4.7 million and depreciation
and amortization expenses of $337,000.

For the nine months ended September 30, 1999 as compared to the three and nine
months ended September 30, 1998, operating loss increased by approximately
$4.4 million and $3.0 million, respectively. This reflects the impact on
revenue, as described above, of the economic climate in the Russian markets and
increased competition in Hungary, as well as the increased programming and other
expenses associated with the news and talk format at Berlin Aktuelle. The news
and talk format has higher start up and continuing costs than traditional music
radio stations. Included in amortization expense for the three and nine months
ended September 30, 1999 is a write off of $2.4 million of the goodwill
associated with the acquisition of the Communications Group's radio station in
Berlin.

                                       56
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

UNCONSOLIDATED JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                      SEPTEMBER 30,                    SEPTEMBER 30,
                                              ------------------------------   ------------------------------
                                                1999       1998     % CHANGE     1999       1998     % CHANGE
                                              --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Revenues....................................    $608       $593        3%       $1,795     $1,563      15%
Operating income (loss).....................    $ 30       $(21)      N/M       $   12     $ (171)     N/M
Net income (loss)...........................    $ 80       $(24)      N/M       $   (8)    $ (186)     (96)%
Equity in income (losses) of joint
  ventures..................................    $ 56       $(13)      N/M       $  (24)    $  (94)     (74)%
</TABLE>

REVENUES.  The increase in revenues in the nine months and quarter ended
September 30, 1999 as compared to the nine months and quarter ended
September 30, 1998 is primarily attributable to additional revenues at the radio
operations in Tallinn, Estonia.

OPERATING LOSS.  For the nine months ended September 30, 1999, operating losses
included selling, general and administrative expenses of $1.6 million and
depreciation and amortization expenses of $190,000. For the nine months ended
September 30, 1998, operating losses included selling, general and
administrative expenses of $1.6 million and depreciation and amortization
expenses of $150,000. Included in operating loss for the three months ended
September 30, 1999 were selling, general and administrative expenses of $519,000
and depreciation and amortization expenses of $59,000. Included in operating
loss for the three months ended September 30, 1998 were selling, general and
administrative expenses of $556,000 and depreciation and amortization expenses
of $58,000. The decreased operating losses for the nine months and quarters
ended September 30, 1999 and September 30, 1998 are a result of the increases in
revenue growth and are reflective of management's philosophy to continually
develop existing audience share and revenue base.

NET LOSS.  Included in net loss for the nine months ended September 30, 1999 and
1998 were interest charges of $32,000 and $9,000, respectively and foreign
currency losses of $54,000 and $0, respectively. Included in net loss for the
three months ended September 30, 1999 and 1998 were interest charges of $10,000
and $4,000, respectively.

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

                                       57
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

COMBINED RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED               NINE MONTHS ENDED
                                                SEPTEMBER 30,                    SEPTEMBER 30,
                                        ------------------------------   ------------------------------
                                          1999       1998     % CHANGE     1999       1998     % CHANGE
                                        --------   --------   --------   --------   --------   --------
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>
Revenues..............................  $ 4,034     $5,612      (28)%    $13,326    $15,276      (13)%
Depreciation and amortization.........  $(2,888)    $ (395)     N/M      $(3,550)   $(1,077)     N/M
Operating loss........................  $(2,988)    $   (8)     N/M      $(4,259)   $   (14)     N/M
</TABLE>

ANALYSIS OF COMBINED RESULTS OF OPERATIONS.  The decreased revenues and
increased losses for the nine months and quarter ended September 30, 1999
compared to the nine months and quarter ended September 30, 1998, reflect the
impact on revenues, as described above, of the economic climate in the Russian
markets and increased competition in Hungary, as well as the increased
programming and other expenses associated with the news and talk format at
Berlin Aktuelle. The news and talk format has higher start up and continuing
costs than traditional music radio stations.

OTHER

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

<TABLE>
<CAPTION>
                                                                                   SEPTEMBER 30,
                                                                               ----------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %        1999          1998
------------------------                                      -----------      --------      --------
<S>                                                           <C>              <C>           <C>
Spectrum (Kazakhstan).......................................      33%              E*          E
Protocall Ventures Ltd......................................      --             N/A          C/E
</TABLE>

CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                           SEPTEMBER 30,                      SEPTEMBER 30,
                                                  --------------------------------   -------------------------------
                                                    1999        1998      % CHANGE     1999        1998     % CHANGE
                                                  ---------   ---------   --------   ---------   --------   --------
<S>                                               <C>         <C>         <C>        <C>         <C>        <C>
Revenues........................................  $     --    $     --      N/A      $     --     $3,200      N/A
Operating loss..................................  $     --    $     --      N/A      $     --     $ (186)     N/A
</TABLE>

REVENUES AND OPERATING LOSS.  Operations of the consolidated trunked mobile
radio ventures for the nine months and quarter ended September 30, 1998 reflect
the activities of the Protocall Venture's operations in Portugal, Spain and
Belgium. In July 1998, the Communications Group sold its investment in Protocall
Ventures Limited.

                                       58
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

UNCONSOLIDATED JOINT VENTURES

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

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                         SEPTEMBER 30,                     SEPTEMBER 30,
                                                -------------------------------   -------------------------------
                                                  1999        1998     % CHANGE     1999        1998     % CHANGE
                                                ---------   --------   --------   ---------   --------   --------
<S>                                             <C>         <C>        <C>        <C>         <C>        <C>
Revenues......................................  $     --     $ 908       N/A      $     --    $ 2,688      N/A
Operating loss................................  $     --     $(716)      N/A      $     --    $(2,314)     N/A
Net loss......................................  $     --     $(788)      N/A      $     --    $(2,503)     N/A
Equity in losses of joint ventures............  $     --     $ (22)      N/A      $     --    $  (666)     N/A
</TABLE>

REVENUES, OPERATING LOSS AND NET LOSS.  Results for the nine months and quarter
ended September 30, 1998, include results of Protocall Ventures' equity
investments as well as results of Spectrum. As has been noted, the
Communications Group sold its interest in Protocall Ventures in July 1998.
Additionally, the Company's interest in Spectrum was written off during the
fourth quarter of 1998.

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

COMBINED RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                         SEPTEMBER 30,                     SEPTEMBER 30,
                                                -------------------------------   -------------------------------
                                                  1999        1998     % CHANGE     1999        1998     % CHANGE
                                                ---------   --------   --------   ---------   --------   --------
<S>                                             <C>         <C>        <C>        <C>         <C>        <C>
Revenues......................................  $     --     $ 908       N/A      $     --    $ 5,888      N/A
Depreciation and amortization.................  $     --     $(109)      N/A      $     --    $(1,071)     N/A
Operating loss................................  $     --     $(716)      N/A      $     --    $(2,500)     N/A
</TABLE>

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

SEGMENT HEADQUARTERS

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

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED               NINE MONTHS ENDED
                                             SEPTEMBER 30,                    SEPTEMBER 30,
                                     ------------------------------   ------------------------------
                                       1999       1998     % CHANGE     1999       1998     % CHANGE
                                     --------   --------   --------   --------   --------   --------
<S>                                  <C>        <C>        <C>        <C>        <C>        <C>
Revenues...........................  $   342    $    680     (50)%    $  1,260   $  1,682     (25)%
Operating loss.....................  $(7,372)   $(10,764)    (32)%    $(21,401)  $(31,525)    (32)%
</TABLE>

                                       59
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

REVENUES.  The decreased revenue for the three and nine months ended
September 30, 1999 compared to the three and nine months ended September 30,
1998 reflects a decrease in management fee revenues from the Communications
Group's unconsolidated subsidiaries offset by an increase in programming fees.

OPERATING LOSS.  Depreciation and amortization charges of $7.6 million and
$4.1 million are included in operating loss for the nine months ended
September 30, 1999 and 1998, respectively. For the three months ended
September 30, 1999 and 1998, depreciation and amortization was $5.4 million and
$1.4 million, respectively. The decreased operating loss for the three and nine
month periods is primarily a result of reductions to headcount made in the
fourth quarter of 1998, and the ensuing decreases in salary, employee benefits
and travel expenses. These reductions were made in accordance with the
Communications Group's plan to decrease corporate management and administration
operating expenses.

The following table sets forth minority interest and foreign currency gain
(loss) for the consolidated operations of the Communications Group-Eastern
Europe and the republics of the former Soviet Union (in thousands):

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED               NINE MONTHS ENDED
                                                  SEPTEMBER 30,                    SEPTEMBER 30,
                                          ------------------------------   ------------------------------
                                            1999       1998     % CHANGE     1999       1998     % CHANGE
                                          --------   --------   --------   --------   --------   --------
<S>                                       <C>        <C>        <C>        <C>        <C>        <C>
Gain (loss) on sale of business.........  $(1,200)    $7,091      N/M      $(1,200)    $7,091      N/M
Foreign currency gain (loss)............  $(1,260)    $ (314)     N/M      $(4,054)    $    7      N/M
Minority interest.......................  $  (272)    $  155      N/M      $   352     $1,497      (77)%
</TABLE>

GAIN (LOSS) ON SALE OF BUSINESS, FOREIGN CURRENCY GAIN (LOSS) AND MINORITY
INTEREST. In August, 1999, the Communications Group sold the assets of Paging
One Vienna, its wholly-owned paging subsidiary in Austria and recorded a loss of
$1.2 million on the disposition of the business. In July, 1998, the
Communications Group sold its share of Protocall Ventures. For the three and
nine months ended September 30, 1999 and 1998, foreign currency gain (loss)
includes losses from consolidated joint ventures and subsidiaries operating in
highly inflationary economies. Foreign currency losses represent the
remeasurement of the joint ventures' financial statements, in all cases using
the U.S. dollar as the functional currency. U.S. dollar transactions are shown
at their historical value. Monetary assets and liabilities denominated in local
currencies are translated into U.S. dollars at the prevailing period-end
exchange rate.

All other assets and liabilities are translated at historical exchange rates.
Results of operations have been translated using the monthly average exchange
rates. The foreign currency loss is the aggregate of the transaction differences
resulting from the use of these different rates. For the three and nine months
ended September 30, 1999 and 1998, minority interest represents the allocation
of losses and distributions by the Communications Group's majority owned
subsidiaries and joint ventures to its minority ownership interest.

                                       60
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

COMMUNICATIONS GROUP-CHINA

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,
                                                                            -------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %     1999       1998
------------------------                                      -----------     ----       ----
<S>                                                           <C>           <C>        <C>
CELLULAR TELECOMMUNICATIONS
Ningbo Ya Mei Telecommunications Co., Ltd.
  (Ningbo City, China)......................................      70%          E         E
Ningbo Ya Lian Telecommunications Co., Ltd.
  (Ningbo Municipality, China)..............................      70%          E        N/A
FIXED TELEPHONY
Sichuan Tai Li Feng Telecommunications Co., Ltd.
  (Sichuan Province, China).................................      92%          E         P
Chongqing Tai Le Feng Telecommunications Co., Ltd.
  (Chongqing Municipality, China)...........................      92%          E         P
E-COMMERCE
Huaxia Metromedia Information Technology Co., Ltd.
  (Beijing, China)..........................................      49%          P        N/A
</TABLE>

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

                                       61
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

JOINT VENTURE INFORMATION

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED SEPTEMBER 30, 1999
                                                  -----------------------------------------------------
                                                   NINGBO     NINGBO    SICHUAN    CHONGQING
                                                     JV       JV II        JV         JV        TOTAL
                                                  --------   --------   --------   ---------   --------
<S>                                               <C>        <C>        <C>        <C>         <C>
Revenues........................................  $    --     $  --     $    --      $   3     $     3
Depreciation and amortization...................  $    (3)    $(144)    $     6      $ (43)    $  (184)
Operating loss..................................  $   (69)    $(161)    $   (25)     $(123)    $  (378)
Net loss........................................  $  (774)    $(352)    $  (260)     $(195)    $(1,581)
Equity in losses of joint ventures..............  $  (140)    $(199)    $   (47)     $(119)    $  (505)
</TABLE>

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED SEPTEMBER 30, 1998
                                                  -----------------------------------------------------
                                                   NINGBO     NINGBO    SICHUAN    CHONGQING
                                                     JV       JV II        JV         JV        TOTAL
                                                  --------   --------   --------   ---------   --------
<S>                                               <C>        <C>        <C>        <C>         <C>
Revenues........................................  $   980     $  --     $    --      $  24     $ 1,004
Depreciation and amortization...................  $  (613)    $  --     $   (10)     $ (58)    $  (681)
Operating income (loss).........................  $   273     $ (11)    $  (162)     $(122)    $   (22)
Net income (loss)...............................  $  (289)    $  (6)    $  (326)     $(121)    $  (742)
Equity in income (losses) of joint ventures.....  $   146     $  (4)    $  (300)     $  56     $  (102)
</TABLE>

<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED SEPTEMBER 30, 1999
                                                  -----------------------------------------------------
                                                   NINGBO     NINGBO    SICHUAN    CHONGQING
                                                     JV       JV II        JV         JV        TOTAL
                                                  --------   --------   --------   ---------   --------
<S>                                               <C>        <C>        <C>        <C>         <C>
Revenues........................................  $ 1,996     $ 504     $    --      $  30     $ 2,530
Depreciation and amortization...................  $(1,224)    $(144)    $  (249)     $(283)    $(1,900)
Operating income (loss).........................  $   581     $ 315     $  (449)     $(494)    $   (47)
Net income (loss)...............................  $(1,494)    $  14     $(1,185)     $(692)    $(3,357)
Equity in income (losses) of joint ventures.....  $   147     $ 137     $  (474)     $(462)    $  (652)
</TABLE>

<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED SEPTEMBER 30, 1998
                                                  -----------------------------------------------------
                                                   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)
Net loss........................................  $(1,300)    $  (6)    $  (636)     $(533)    $(2,475)
Equity in income (losses) of joint ventures.....  $    43     $  (4)    $  (587)     $(326)    $  (874)
</TABLE>

The Communications Group has received notification from China Unicom stating
that a department of the Chinese government has requested termination of its
four joint telecommunications projects in China. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Risks Associated
with the Company".

                                       62
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

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

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED               NINE MONTHS ENDED
                                             SEPTEMBER 30,                    SEPTEMBER 30,
                                     ------------------------------   ------------------------------
                                       1999       1998     % CHANGE     1999       1998     % CHANGE
                                     --------   --------   --------   --------   --------   --------
<S>                                  <C>        <C>        <C>        <C>        <C>        <C>
Operating loss.....................  $(52,323)  $(2,920)     N/M      $(59,396)  $(10,205)    N/M
Equity in losses of joint
  ventures.........................  $   (505)  $  (102)     N/M      $   (652)  $   (874)    (25)%
Minority interests.................  $ 22,654   $ 1,782      N/M      $ 26,882   $  5,925     N/M
</TABLE>

OVERVIEW.  The Company's (through its majority owned subsidiary, Asian American
Telecommunications) investments in telecommunications joint ventures in China
have been made through a commonly accepted structure in China known as a
sino-sino-foreign joint venture. Because legal restrictions in China prohibit
direct foreign participation in the operation or ownership in the
telecommunications sector, Asian America Telecommunications' joint ventures in
China were limited to providing financing, technical advice, consulting and
other services for the construction and development of telephony networks for
China United Telecommunications Incorporated, known as China Unicom, a Chinese
state-owned telecommunications operator. The completed networks are operated by
China Unicom. The Company's joint ventures were to receive payments in return
from China Unicom based on the distributable cash flow generated by the
networks. Asian American Telecommunications accounts for its investments in its
sino-sino-foreign joint ventures under the equity method. Since mid-1998,
positions unofficially taken by some departments of the Chinese government have
raised uncertainty regarding the continued viability of the sino-sino-foreign
structure and, as a result, the Company's associated financing and consulting
arrangements.

In July 1999, Ningbo Ya Mei Telecommunications, Ltd., one of the Company's two
telecommunications joint ventures in Ningbo Municipality, China, received a
letter from China Unicom stating that the supervisory department of the Chinese
government had requested that China Unicom terminate the Project with Ningbo Ya
Mei. China Unicom subsequently informed the Company that the notification also
applies to the Company's other telecommunications joint venture in Ningbo
Municipality. In further letters from China Unicom to the Company's joint
ventures in Ningbo and Sichuan, China Unicom stated its intention to terminate
all cooperation contracts with sino-sino-foreign joint ventures in China,
including those with the Company's Ningbo and Sichuan joint ventures, pursuant
to an August 30, 1999 mandate from the Chinese Ministry of Information Industry.
The original letter and subsequent letters from China Unicom requested that
negotiations begin regarding a suitable settlement of the matter and other
matters related to the winding up of the Company's joint ventures cooperation
agreements with China Unicom as a result of the Ministry of Information Industry
notice. China Unicom has ceased further performance of its cooperation
agreements with the Company's joint ventures. Negotiations regarding the terms
of the termination have begun and are continuing. The content of the
negotiations includes determining the investment principal of the Company's
joint ventures, appropriate compensation and other matters related to
termination of contracts. China Unicom made a distribution of amounts owed for
the first half of 1999 according to the cooperation agreement it has with the
Ningbo Ya Mei joint venture.

On November 6, 1999, our four Chinese telecommunications joint ventures engaged
in projects with China Unicom each, entered into non-binding letters of intent
with China Unicom which set forth certain terms for termination of their
cooperation arrangements with China Unicom. Under the terms contemplated in
these letters of intent, our joint ventures will receive cash amounts in RMB
from China Unicom in full and final payment for the termination of their
cooperation contracts with China

                                       63
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

Unicom. Upon receipt of this payment, China Unicom and the joint ventures will
waive all of their respective relevant rights against the other party with
respect to the cooperative arrangements. In addition, all assets which comprise
the projects that are currently held by the joint ventures will be
unconditionally transferred to China Unicom. Portions of any amount paid to the
joint ventures will, in due course, be distributed to the Company. The Company
currently estimates the total amount of such distributions to be approximately
US $86.0 million at current exchange rates. Final execution of the agreements
contemplated in the letters of intent is subject to certain conditions,
including further verification of certain elements of the cooperation between
China Unicom and the joint ventures and execution of legally binding termination
agreements between China Unicom and the joint ventures on or before December 1,
1999. Negotiations are continuing with China Unicom regarding this verification
and the content of the definitive termination agreements. The Company cannot
assure at this time that it will enter into definitive termination agreements
with China Unicom or that those agreements will provide for payments producing
distributions to the Company in the amounts specified above or otherwise contain
terms that are satisfactory to the Company.

Each of the Company's sino-sino-foreign joint ventures has stopped its
accounting for its share of the net distributable cash flows under the
cooperation agreements with China Unicom and the amortization of the investment
in the projects effective July 1, 1999 based on the termination notices received
from China Unicom.

For the period ended September 30, 1999, the joint ventures have performed
impairment analyses of their investments in the cooperation agreements based on
information they have obtained from their termination negotiations with China
Unicom. Based on these negotiations, the Company and its joint ventures believe
that the joint ventures will recover their recorded investment balances as of
September 30, 1999. Accordingly, no impairment writedowns will be taken by the
joint ventures during the third quarter.

For the quarter ended September 30, 1999, the Company continues to account for
its investments in sino-sino-foreign joint ventures under the equity method of
accounting. The Company has performed an impairment analysis of its investments
in and advances to joint ventures and related goodwill to determine the amount
that these assets have been impaired.

The Company reviewed its investment in the joint ventures for other than
temporary decline and the Company has determined the related goodwill should be
considered an asset to be disposed of and has estimated the fair value less
costs to dispose of its investment and has stopped amortizing the balance. The
Company believes that the termination notices relating to the cooperation
agreements with China Unicom is an event that gives rise to an accounting loss
which is probable. The amount of the non-cash impairment charge will be the
difference between the sum of the carrying values of its investments and
advances made to joint ventures plus goodwill less the Company's best estimate
of compensation it will receive from the joint ventures which China Unicom will
make.

Based on the status of the negotiations with China Unicom, the Company believes
that it will recover its investments in and advances to the affected joint
ventures, exclusive of goodwill, as of September 30, 1999 of approximately
$70.4 million. However, the Company cannot give any assurances that it will
recover its net investments and if these negotiations are adversely concluded,
they could have a material adverse effect on our financial position or results
of operations. Based on the Company's best estimates, the Company will record a
non-cash impairment charge of approximately $50.9 million for the write off of
goodwill. Regardless of the actions taken presently, a further adjustment will
likely be required once settlement is reached with China Unicom. This is a
consequence of the inherent present uncertainty of the situation rather than of
any factor within the Company's control.

                                       64
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

OPERATING LOSS.  Operating losses increased by $49.4 million for the three
months ended September 30, 1999 as compared to the losses of $2.9 million for
the same period in 1998 due principally to the write-down of the goodwill
$50.9 million. This writedown was taken as a result of the suspension of the
project cooperation between the Communication Group's Ningbo, Sichuan and
Chongqing joint ventures and China Unicom. Overall operating losses were
partially offset as the Communications Group completed reducing the workforce it
devotes to support of China Unicom telecommunications projects. For the
development of the new business in China, expatriate and local employees were
recruited in the third quarter. Operating losses similarly increased
$49.2 million to $59.4 million for the nine months ended September 30, 1999 as
compared to the same period in 1998.

EQUITY IN LOSSES OF JOINT VENTURES.  Equity in losses of the Communications
Group's joint ventures in China amounted to $505,000 for the three months ended
September 30, 1999 as compared to equity losses of $294,000 for the same period
in 1998. For the third quarter of 1999, the equity in losses recorded for the
Company's China Unicom related joint ventures are limited to the internal
operations of these joint ventures and reflect principally interest expense. The
recorded equity in losses of these joint ventures excludes accounting for any
amount receivable from China Unicom under sino-sino-foreign joint venture
contracts and any amortization of the joint ventures' investment in China
Unicom. These measures reflect the fact that cooperation with China Unicom has
been suspended and will not likely be resumed (see "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Risks Associated with
the Company"). The Company's Huaxia joint venture had not yet commenced revenue
generating operations as of September 30, 1999.

Equity in losses of the Communications Group's joint ventures in China amounted
to $652,000 for the nine months ended September 30, 1999 as compared to $874,000
for the same period in 1998. As noted above, the equity in losses recorded for
the Company's China Unicom related joint ventures are limited to the internal
operations of these joint ventures for the third quarter of 1999. The majority
of the 1999 and 1998 losses arise from the absence of any revenues for the joint
ventures in Sichuan and Chongqing during the pre-operational and start-up stages
of the China Unicom projects each venture supports. The projects remained in a
pre-operational state until the commercial service launch in January 1999.
However, the projects did not return any revenue to the joint ventures during
their initial start-up period of operation during 1999. The Sichuan and
Chongqing joint ventures contributed $913,000 to the losses for the first nine
months of 1998 and $936,000 to losses for the first nine months of 1999. The
joint ventures supporting China Unicom's Ningbo City and Ningbo Municipality GSM
projects recorded income of $284,000 in 1999, partially offsetting losses in the
wire line joint ventures. The Ningbo projects generated $2.5 million in year to
date 1999 revenues to the joint ventures, but this was not yet sufficient to
overcome the joint ventures' $3.7 million of amortization and interest expenses
during the same period.

MINORITY INTERESTS.  For the three and nine months ended September 30, 1999 and
1998, minority interests represents the allocation of losses to Metromedia China
Corporation's minority ownership.

INFLATION AND FOREIGN CURRENCY

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

                                       65
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

In 1998, a number of emerging market economies suffered significant economic and
financial difficulties resulting in liquidity crises, devaluation of currencies,
higher interest rates and reduced opportunities for financing. At this time, the
prospects for recovery by the economies of Russia and other republics of the
former Soviet Union and Eastern Europe negatively affected by the economic
crisis remain unclear. The economic crisis has resulted in a number of defaults
by borrowers in Russia and other countries and a reduced level of financing
available to investors in these countries. The devaluation of many of the
currencies in the region has also negatively affected the U.S. dollar value of
the revenues generated by certain of the Company's joint ventures and may lead
to certain additional restrictions on the convertibility of certain local
currencies. The Company expects that these problems will negatively affect
certain of its cable television, telephony, radio broadcasting and paging
ventures.

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

SNAPPER

The following table sets forth Snapper's results of operations for the three
months and nine months ended September 30, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED               NINE MONTHS ENDED
                                             SEPTEMBER 30,                    SEPTEMBER 30,
                                     ------------------------------   ------------------------------
                                       1999       1998     % CHANGE     1999       1998     % CHANGE
                                     --------   --------   --------   --------   --------   --------
<S>                                  <C>        <C>        <C>        <C>        <C>        <C>
Revenues...........................  $46,989    $47,330       (1)%    $166,207   $165,159       1 %
Gross profit.......................  $13,337    $10,336       29 %    $ 53,880   $ 44,648      21 %
Operating income (loss)............  $(4,334)   $(9,127)     (53)%    $  6,317   $(12,245)    N/M
</TABLE>

REVENUES.  Snapper's 1999 third quarter sales were $47.0 million as compared to
$47.3 million in 1998. Sales of lawn and garden equipment contributed the
majority of the revenues during both periods. Sales for the quarter ended
September 30, 1999 were flat compared to the same period of 1998, as decreases
in walk and rear-engine rider lawn mower sales were offset by $3.6 million of
higher snowthrower sales during the quarter.

Snapper's 1999 year-to-date sales were $166.2 million as compared to
$165.2 million in 1998. Walk and rear-engine rider lawn mower sales decreased
during the last two quarters of 1999 and were offset by $9.4 million in higher
snowthrower sales in 1999 as compared to 1998.

GROSS PROFIT.  Gross profit for the three months ended September 30, 1999 was
$13.3 million as compared to $10.3 million in 1998. Improved gross profit
margins in 1999 were due to the production of snowthrowers during the quarter,
which generated greater operating efficiencies than in 1998, when no
snowthrowers were produced. The lower gross profit in 1998 was also due to sales
of older equipment during the quarter at special pricing to help eliminate older
inventory acquired in distributor inventory repurchases during 1997.

                                       66
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

Gross profit year-to-date 1999 was $53.9 million as compared to $44.6 million.
The gross profit increase is due to production efficiencies in 1999, as noted
above, as compared with 1998, when production was reduced to lower inventory
levels. The 1998 gross profit was also affected by special pricing of inventory
in the second and third quarters.

OPERATING INCOME(LOSS).  Operating loss for the third quarter was $4.3 million
in 1999 as compared to an operating loss of $9.1 million in 1998. The 1999
operating loss improvement was due to higher gross profit margins as noted above
and a $2.7 million reduction in advertising expense. The third quarter 1999
operating loss was negatively impacted by a $3.8 million settlement on certain
legal matters. In addition, in 1998, Snapper accrued $1.3 million for expenses
on certain legal matters and $2.6 million for slow-moving and excess spare
parts.

For the nine months ending September 30, 1999 operating income was $6.3 million
as compared to a 1998 operating loss of $12.2 million. The 1999 operating income
is due to improved gross profit margins, productivity increases and decreased
advertising and excess inventory expenses as noted above. In addition, in 1999
Snapper settled certain legal matters, which resulted in a loss of
$3.2 million.

CORPORATE HEADQUARTERS

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

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED               NINE MONTHS ENDED
                                                SEPTEMBER 30,                    SEPTEMBER 30,
                                        ------------------------------   ------------------------------
                                          1999       1998     % CHANGE     1999       1998     % CHANGE
                                        --------   --------   --------   --------   --------   --------
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>
Operating loss........................  $(1,928)   $(1,603)      20 %    $(4,861)   $(4,500)       8 %
</TABLE>

OPERATING LOSS.  For the three months ended September 30, 1999 and 1998,
Corporate Headquarters had general and administrative expenses of approximately
$1.9 million and $1.6 million, respectively. For the nine months ended
September 30, 1999 and 1998, Corporate Headquarters had general and
administrative expenses of approximately $4.9 million and $4.5 million,
respectively. Corporate headquarters includes general and administrative
expenses.

MMG CONSOLIDATED

The following table sets forth on a consolidated basis the following items for
the three months and nine months ended September 30, 1999 and 1998 (in
thousands):

<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED                NINE MONTHS ENDED
                                           SEPTEMBER 30,                     SEPTEMBER 30,
                                   ------------------------------   -------------------------------
                                     1999       1998     % CHANGE     1999        1998     % CHANGE
                                   --------   --------   --------   ---------   --------   --------
<S>                                <C>        <C>        <C>        <C>         <C>        <C>
Interest expense.................  $ (2,792)  $ (2,927)     (5)%    $  (9,721)  $(12,487)    (22)%
Interest income..................  $  1,852   $  2,734     (32)%    $   6,098   $  9,947     (39)%
Income tax expense...............  $   (153)  $   (573)    (73)%    $    (358)  $ (1,203)    (70)%
Discontinued operations..........  $(12,776)  $     --     N/M      $ (12,776)  $  5,267     N/M
Net loss.........................  $(64,323)  $(19,349)    N/M      $ (87,200)  $(59,234)    N/M
</TABLE>

INTEREST EXPENSE.  Interest expense decreased $135,000 to $2.8 million for the
three months ended September 30, 1999. The decrease in interest was due
principally to a decrease in borrowings at Snapper.

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

Interest expense decreased $2.8 million to $9.7 million for the nine months
ended September 30, 1999. The decrease in interest expense was due to the
repayment of debt at Corporate Headquarters and a decrease in borrowings at
Snapper.

INTEREST INCOME.  Interest income decreased $882,000 and $3.8 million for the
three and nine months ended September 30, 1999, respectively, principally from
the reduction of funds at Corporate Headquarters which have been utilized in the
operations of the Company.

INCOME TAX EXPENSE.  For the three and nine months ended September 30, 1999 and
1998, the income tax benefit from continuing operations that would have resulted
from applying the federal statutory rate of 35% was $18.0 million and
$6.6 million, $25.9 million and $22.2 million, respectively. The income tax
benefit in 1999 and 1998 was reduced principally by losses attributable to
foreign operations, equity losses in joint ventures currently not deductible and
a 100% valuation allowance on the current year loss not utilized. The income tax
expense in all periods in 1999 and 1998 reflects foreign taxes in excess of the
federal credit.

NET LOSS INCLUDING DISCONTINUED OPERATIONS.  Net loss increased to
$64.3 million for the three months ended September 30, 1999 from $19.3 million
for the three months ended September 30, 1998. The increase in operating loss in
1999 is primarily from the write-off of the goodwill relating to the
Communications Group's operations in China, partially offset by a reduction in
the Communications Group's operating loss in the current year of $1.5 million
and an increase in the operating results of Snapper in the current year of
$4.8 million. Equity in losses of unconsolidated investees increased in 1999 by
$308,000. The net loss for 1999 includes the settlement of a lawsuit in
connection with the sale of the Entertainment Group.

Net loss increased to $87.2 million for the nine months ended September 30,
1999, from $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. The increase in operating loss and net
loss in 1999 is primarily from the write-off of the goodwill relating to the
Communications Group's operations in China partially offset by a reduction in
the Communications Group's operating loss of $11.7 million and an improvement in
Snapper's operating results of $18.6 million. The net loss for 1999 includes
from discontinued operations the settlement of a lawsuit in connection with the
sale of the Entertainment Group.

LIQUIDITY AND CAPITAL RESOURCES

THE COMPANY

MMG is a holding company and, accordingly, does not generate cash flows from
operations. In connection with the acquisition of PLD Telekom, the Company has
incurred $163.0 million of debt. The Communications Group is dependent on MMG
for significant capital infusions to fund its operations and make acquisitions,
as well as to fulfill its commitments to make capital contributions and loans to
its joint ventures. Such funding requirements are based on the anticipated
funding needs of its joint ventures and certain acquisitions committed to by the
Company. Cash amounts expended in connection with the Company's acquisition of
PLD Telekom were funded from cash on hand. In addition, future capital
requirements of PLD Telekom and 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 and PLD Telekom to generate
positive cash flows. PLD Telekom and Snapper are restricted under covenants
contained in their credit agreements from making dividend payments or advances,
other than certain permitted debt repayments, to the Company. In addition, the
Company has periodically funded the short-term working capital needs of Snapper.

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

There are 70,000,000 shares of preferred stock authorized and 4,140,000 shares
were outstanding as of September 30, 1999.

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

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

Since each of the Communications Group's joint ventures operates or invests in
businesses, such as cable television, fixed telephony and cellular
telecommunications, that are capital intensive and require significant capital
investment in order to construct and develop operational systems and market
their services. In addition, the Company will be required to pay interest on the
debt incurred in the acquisition of PLD Telekom commencing September 30, 2000.
As a result, 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, debt service, funding of
pre-operational joint ventures and acquisition and expansion requirements. Such
additional capital may be provided through the public or private sale of equity
or debt securities of the Company or by separate equity or debt financings by
the Communications Group or certain companies of the Communications Group or
proceeds from the sale of assets. The indenture for the Metromedia Notes permits
the Company to finance the development of its communications operations. 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 (including debt service)
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

                                       69
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

and subsidiaries, including PLD Telekom, 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.

PLD TELEKOM

In connection with the merger with PLD Telekom, the Company issued
$210.6 million in aggregate principal amount at maturity of its 10 1/2% Senior
Discount Notes due 2007 (the "Metromedia Notes") to the holders of the PLD Notes
pursuant to an Agreement to Exchange and Consent, dated as of May 18, 1999, by
and among the Company, PLD Telekom and such holders.

The terms of the Metromedia Notes are set forth in an Indenture, dated as of
September 30, 1999, between the Company and U.S. Bank Trust National Association
as Trustee. The Metromedia Notes will mature on September 30, 2007. The
Metromedia Notes were issued at a discount to their aggregate principal amount
at maturity and will accrete in value until March 30, 2002 at the rate of
10 1/2% per year, compounded semi-annually to an aggregate principal amount at
maturity of $210.6 million. The Metromedia Notes will not accrue cash interest
before March 30, 2002. After this date, the Metromedia Notes will pay interest
at the rate of 10 1/2% per year, payable semi-annually in cash and in arrears to
the holders of record on March 15 or September 15 immediately preceding the
interest payment date on March 30 and September 30 of each year, commencing
September 30, 2002. The interest on the Metromedia Notes will be computed on the
basis of a 360-day year comprised of twelve months.

The Metromedia Notes are general senior unsecured obligations of the Company,
rank senior in right of payment to all existing and future subordinated
indebtedness of the Company, rank equal in right of payment to all existing and
future senior indebtedness of the Company and will be effectively subordinated
to all existing and future secured indebtedness of the Company to the extent of
the assets securing such indebtedness and to all existing and future
indebtedness of the Company's subsidiaries, whether or not secured.

The Metromedia Notes will be redeemable at the sole option of the Company on and
after March 30, 2002 only at a redemption price equal to their principal amount
plus accrued and unpaid interest, if any, up to but excluding the date of
redemption.

Upon the occurrence of a change of control of the Company (as such term is
defined in the Indenture), the holders of the Metromedia Notes will be entitled
to require the Company to repurchase such holders' Notes at a purchase price
equal to 101% of the accreted value of the Metromedia Notes (if such repurchase
is before March 30, 2002) or 101% of the principal amount of such Notes plus
accrued and unpaid interest to the date of repurchase (if such repurchase is
after March 30, 2002).

The Indenture for the Metromedia Notes limits the ability of the Company and
certain of its subsidiaries to, among other things, incur additional
indebtedness or issue capital stock or preferred stock, pay dividends on, and
repurchase or redeem their capital stock or subordinated obligations, invest in
and sell assets and subsidiary stock, engage in transactions with affiliates and
incur additional liens. The Indenture for the Metromedia Notes also limits the
ability of the Company to engage in consolidations, mergers and transfers of
substantially all of its assets and also contains limitations on restrictions on
distributions from its subsidiaries.

                                       70
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

Also at completion of the merger, PLD Telekom repaid The Travelers Insurance
Company and The Travelers Indemnity Company (together, "Travelers")
approximately $8.7 million of amounts due under the revolving credit and warrant
agreement dated November 26, 1997 between PLD Telekom and Travelers (the "Old
Travelers Agreement"). PLD Telekom and Travelers also entered into an amended
and restated revolving credit note agreement (the "New Travelers Agreement")
pursuant to which PLD Telekom has agreed to repay Travelers the remaining
$4.9 million due under the Old Travelers Agreement on August 30, 2000 and to pay
interest on the outstanding amount at a rate of 10 1/2%. In addition, Travelers
received at the closing of the merger 100,000 shares of PLD Telekom common stock
(which were converted in the merger into shares of common stock of the Company
at the .6353 exchange ratio) and 10-year warrants to purchase 700,000 shares of
common stock of the Company at an exercise price to be determined in
December 2000 that will be between $10.00 and $15.00 per share. However, if the
amount outstanding under the New Travelers Agreement has not been fully repaid
by August 30, 2000, the exercise price of the warrants will be reset to $.01 per
share. Travelers retained its existing security interests in certain of PLD
Telekom's assets. The performance by PLD Telekom of its obligations under the
New Travelers Agreement is guaranteed by the Company and certain subsidiaries of
PLD Telekom.

During the second half of 1999, PLD Telekom entered into certain option
arrangements with First National Holding SA ("FNH") which owns the majority of
the ordinary shares of OAO Telecominvest, a Russian company with interests in a
wide range of telecommunications companies in St. Petersburg and Northwestern
Russia and PLD Telekom's joint venture partner in its subsidiary PeterStar. The
aggregate consideration for the options was $8.5 million and they give the
Company the right to participate in FNH's planned private placement by
acquiring, for nominal value, that number of shares equal to $8.5 million
divided by 80% of the issuance price in the placement or, if the placement is
not completed by December 31, 1999, to acquire up to 16% of FNH for additional
consideration of approximately $8.5 million. The options expire if not exercised
by January 31, 2000.

PLD Telekom is a holding company and has historically funded its own
requirements and the needs of its operating businesses for capital expenditures
and operating expenses out of the proceeds of its financing activities,
including supplier financing, proceeds from sales of assets and, to the extent
that these existed, distributions from its operating businesses (in the form of
management fees and dividends).

PLD Telekom's operating businesses have become largely self-sustaining, and
while they continue to have on-going capital requirements associated with the
development of their businesses, they have been able to pay for capital
expenditures and operational expenses out of internally generated cash flows
from operations and/or have been able to arrange their own financing, including
supplier financing. In no case is PLD Telekom specifically obligated to provide
capital to its operating businesses; it was so obligated in the past, but all
such obligations have been met. During the course of 1998 and 1999 PLD Telekom
has engaged in the development of two new businesses--Cardlink (through which it
is intended to implement wireless card validation systems using proprietary
technology), and a new international carrier services business under the name
"PLDncompass", but PLD Telekom currently has no specific capital commitments in
relation to these businesses.

As a result of the acquisition of PLD Telekom by MMG, the majority of PLD
Telekom's commitments at the holding company level have been satisfied or
assumed by MMG, such that the $4.9 million due to Travelers on August 30, 2000,
as described above, and a promissory note in the amount of $1.2 million which
falls due on November 20, 1999 are the only commitments upcoming during 1999 and
2000. Historically, PLD Telekom's corporate overhead has been funded as
described above. It is anticipated that as a consequence of the merger, the
overall corporate overhead of the

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

Communications Group will be significantly reduced, with the resulting more
limited corporate function being funded as described elsewhere in this section.

METROMEDIA INTERNATIONAL TELECOMMUNICATIONS

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

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

Until the Communications Group's operations generate positive cash flow, the
Communications Group will require significant capital to fund its operations,
and to make capital contributions and loans to its joint ventures. The
Communications Group relies on the Company to provide the financing for these
activities. The Company believes that as more of the Communications Group's
joint ventures commence operations and reduce their dependence on the
Communications Group for funding, the Communications Group will be able to
finance its own operations and commitments from its operating cash flow and will
be able to attract its own financing from third parties. There can be no
assurance, however, that additional capital in the form of debt or equity will
be available to the Communications Group at all or on terms and conditions that
are acceptable to the Communications Group or the Company, and as a result, the
Communications Group will continue to depend upon the Company for its financing
needs.

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, 1999, the Communications Group was
committed to provide funding under various charter fund agreements and credit
lines in an aggregate amount of approximately $227.8 million, of which
$47.0 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.

Metromedia International Group and Metromedia International
Telecommunications, Inc. have made intercompany loans to Metromedia China under
a credit agreement, and Metromedia China has used the proceeds of these loans to
fund its investments in these joint ventures in China. At September 30, 1999,
Metromedia China had borrowed $91.0 million under this credit agreement
(including accrued interest).

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

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

of commercial advertising time and their ability to control operating expenses.
Management's current plans with respect to the joint ventures are to increase
subscriber and advertiser bases and thereby operating revenues by developing a
broader band of programming packages for cable television and radio broadcasting
and by offering additional services and options for telephony services. By
offering the large local populations of the countries in which the joint
ventures operate desired services at attractive prices, management believes that
the joint ventures can increase their subscriber and advertiser bases and
generate positive operating cash flow, reducing their dependence on the
Communications Group for funding of working capital. Additionally, advances in
the price performance of telephony technology are expected to reduce capital
requirements per subscriber. Further initiatives to develop and establish
profitable operations include reducing operating costs as a percentage of
revenue and assisting joint ventures in developing management information
systems and automated customer care and service systems. No assurances can be
given that such initiatives will be successful or if successful, will result in
such reductions. Additionally, if the joint ventures do become profitable and
generate sufficient cash flows in the future, there can be no assurance that the
joint ventures will pay dividends or will return capital at any time.

EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET UNION

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

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

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

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

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

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

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

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

As part of the original transaction, the Communications Group has sold a 17.1%
participation in the $36.5 million loan commitment to AIG Silk Road Fund, Ltd.,
which requires AIG Silk Road Fund to provide the Communications Group 17.1% of
the funds to be provided under the loan agreement and entitles AIG Silk Road
Fund to 17.1% of the repayments to the Communications Group. The Communications
Group agreed to repurchase such loan participation from AIG Silk Road Fund in
August 2005 on terms and conditions agreed by the parties. In addition, the
Communications Group provided AIG Silk Road Fund the right to put its 15.7%
ownership interest in Omni-Metromedia to the Communications Group starting in
February 2001 for a price equal to seven times the EBITDA of

                                       74
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

Caspian American minus debt, as defined, multiplied by AIG Silk Road Fund's
percentage ownership interest.

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

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

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

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

CHINA

The Company's investments (through its majority owned subsidiary, Asian American
Telecommunications) in telecommunications joint ventures in China have been made
through a commonly accepted structure in China known as a sino-sino-foreign
joint venture. Because legal restrictions in China prohibit direct foreign
participation in the operation or ownership in the telecommunications sector,
Asian America Telecommunications' joint ventures in China were limited to
providing financing, technical advice, consulting and other services for the
construction and development of telephony networks for China United
Telecommunications Incorporated, known as China Unicom, a Chinese state-owned
telecommunications operator. The completed networks are operated by China
Unicom. The Company's joint ventures were to receive payments in return from
China Unicom based on the distributable cash flow generated by the networks.
Asian American Telecommunications accounts for its investments in its
sino-sino-foreign joint ventures under the equity method. Since mid-1998,
positions unofficially taken by some departments of the Chinese government have
raised uncertainty regarding the continued viability of the sino-sino-foreign
structure and, as a result, the Company's associated financing and consulting
arrangements.

In July 1999, Ningbo Ya Mei Telecommunications, Ltd., one of the Company's two
telecommunications joint ventures in Ningbo Municipality, China, received a
letter from China Unicom stating that the

                                       75
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

supervisory department of the Chinese government had requested that China Unicom
terminate the Project with Ningbo Ya Mei. China Unicom subsequently informed the
Company that the notification also applies to the Company's other
telecommunications joint venture in Ningbo Municipality. In further letters from
China Unicom to the Company's joint ventures in Ningbo and Sichuan, China Unicom
stated its intention to terminate all cooperation contracts with
sino-sino-foreign joint ventures in China, including those with the Company's
Ningbo and Sichuan joint ventures, pursuant to an August 30, 1999 mandate from
the Chinese Ministry of Information Industry. The original letter and subsequent
letters from China Unicom requested that negotiations begin regarding a suitable
settlement of the matter and other matters related to the winding up of the
Company's joint ventures cooperation agreements with China Unicom as a result of
the Ministry of Information Industry notice. China Unicom has ceased further
performance of its cooperation agreements with the Company's joint ventures.
Negotiations regarding the terms of the termination have begun and are
continuing. The content of the negotiations includes determining the investment
principal of the Company's joint ventures, appropriate compensation and other
matters related to termination of contracts.

On November 6, 1999, our four Chinese telecommunications joint ventures engaged
in projects with China Unicom, each entered into non-binding letters of intent
with China Unicom which set forth certain terms for termination of their
cooperation arrangements with China Unicom. Under the terms contemplated in
these letters of intent, our joint ventures will receive cash amounts in RMB
from China Unicom in full and final payment for the termination of their
cooperation contracts with China Unicom. Upon receipt of this payment, China
Unicom and the joint ventures will waive all of their respective relevant rights
against the other party with respect to the cooperative arrangements. In
addition, all assets which comprise the projects that are currently held by the
joint ventures will be unconditionally transferred to China Unicom. Portions of
any amount paid to the joint ventures will, in due course, be distributed to the
Company. The Company currently estimates the total amount of such distributions
to be approximately US $86.0 million at current exchange rates. Final execution
of the agreements contemplated in the letters of intent is subject to certain
conditions, including further verification of certain elements of the
cooperation between China Unicom and the joint ventures and execution of legally
binding termination agreements between China Unicom and the joint ventures on or
before December 1, 1999. Negotiations are continuing with China Unicom regarding
this verification and the content of the definitive termination agreements. The
Company cannot assure at this time that it will enter into definitive
termination agreements with China Unicom or that those agreements will provide
for payments producing distributions to the Company in the amounts specified
above or otherwise contain terms that are satisfactory to the Company.

Based on the status of the negotiations with China Unicom, the Company cannot
predict the amount of compensation it will receive with any degree of certainty.
The Company believes, based on information received during these negotiations,
that any settlement with China Unicom will include both a return of amounts
contributed by the joint ventures to China Unicom plus a return on such amounts.
The Company believes that it will recover its investments in and advances to the
affected joint ventures, exclusive of goodwill, as of September 30, 1999 of
approximately $70.4 million. However, the Company cannot give any assurances
that it will recover its net investment and if these negotiations are adversely
concluded, they could have a material adverse effect on our financial position
or results of operations. With even an incidental level of return on the
contributed funds, the Company believes that it will most likely obtain recovery
of its net investment (exclusive of goodwill). Based on the Company's best
estimates of the fair value of the compensation to be received, the Company will
record a non-cash impairment charge of approximately $66.4 million for the
writeoff of goodwill. Regardless of the actions taken presently, a further
adjustment will likely be required once settlement is

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

reached with China Unicom. This is a consequence of the inherent present
uncertainty of the situation rather than of any factor within the Company's
control.

Metromedia International Group and Metromedia International
Telecommunications, Inc. have made intercompany loans to Metromedia China under
a credit agreement, and Metromedia China has used the proceeds of these loans to
fund its investments in these joint ventures in China. At September 30, 1999,
Metromedia China had borrowed $91.0 million under this credit agreement
(including accrued interest).

The Company's Huaxia joint venture is not affected by the matter with China
Unicom and the Company is currently reviewing other similar investment
opportunities in China in the e-commerce sector.

On May 7, 1999, Asian American Telecommunications entered into a joint venture
agreement with All Warehouse Commodity Electronic Commerce Information
Development Co., Ltd., a Chinese trading company, for the purpose of
establishing Huaxia Metromedia Information Technology Co., Ltd., known as Huaxia
JV. Also on May 7, 1999, Huaxia JV entered into a computer information system
and services contract with All Warehouse and its parent company, China Product
Firm Corporation. The Huaxia JV will develop and operate electronic commerce
computer information systems for use by All Warehouse and China Product Firm and
its affiliates and customers. The contract has a term of thirty years and grants
Huaxia JV exclusive rights to manage all of All Warehouse and China Product
Firm's electronic trading systems during that period.

The total amount to be invested in Huaxia JV is $25.0 million with registered
capital contributions from its shareholders amounting to $10.0 million. Asian
American Telecommunications will make registered capital contributions of
$4.9 million and All Warehouse will contribute $5.1 million. The remaining
investment in Huaxia JV will be in the form of up to $15.0 million of loans from
Asian American Telecommunications. As of September 30, 1999, AAT has made
$500,000 of its scheduled registered capital investment. Huaxia JV received its
operating license on July 5, 1999 and has begun operations. Ownership in Huaxia
JV is 49% by Asian American Telecommunications and 51% by All Warehouse.

Huaxia JV is established as a sino-foreign equity joint venture between Asian
American Telecommunications and All Warehouse Commodity Electronic Commerce
Information Development Co., Ltd. The Huaxia JV does not have any contractual
relationship with China Unicom and is engaged in business fundamentally
different from that of the Communications Group's joint ventures cooperating
with China Unicom. Computer and software services such as offered by the Huaxia
JV are subject to regulations different from those applied to telecommunications
in China. The Communications Group believes that the fee-for-services
arrangement of Huaxia JV and the lines of business undertaken by the joint
venture do not constitute foreign involvement in telecommunications activities,
which are at the center of certain Chinese authorities' actions against the
Communication Group's joint telecommunications projects with China Unicom.

RISKS ASSOCIATED WITH THE COMPANY

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

                                       77
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

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 Company's (through its majority owned subsidiary, Asian American
Telecommunications) investments in telecommunications joint ventures in China
have been made through a commonly accepted structure in China known as a
sino-sino-foreign joint venture. Because legal restrictions in China prohibit
direct foreign participation in the operation or ownership in the
telecommunications sector, Asian America Telecommunications' joint ventures in
China were limited to providing financing, technical advice, consulting and
other services for the construction and development of telephony networks for
China United Telecommunications Incorporated, known as China Unicom, a Chinese
state-owned telecommunications operator. The completed networks are operated by
China Unicom. The Company's joint ventures were to receive payments in return
from China Unicom based on the distributable cash flow generated by the
networks. Asian American Telecommunications accounts for its investments in its
sino-sino-foreign joint ventures under the equity method. Since mid-1998,
positions unofficially taken by some departments of the Chinese government have
raised uncertainty regarding the continued viability of the sino-sino-foreign
structure and, as a result, the Company's associated financing and consulting
arrangements.

In July 1999, Ningbo Ya Mei Telecommunications, Ltd., one of the Company's two
telecommunications joint ventures in Ningbo Municipality, China, received a
letter from China Unicom stating that the supervisory department of the Chinese
government had requested that China Unicom terminate the Project with Ningbo Ya
Mei. China Unicom subsequently informed the Company that the notification also
applies to the Company's other telecommunications joint venture in Ningbo
Municipality. In further letters from China Unicom to the Company's joint
ventures in Ningbo and Sichuan, China Unicom stated its intention to terminate
all cooperation contracts with sino-sino-foreign joint ventures in China,
including those with the Company's Ningbo and Sichuan joint ventures, pursuant
to an August 30, 1999 mandate from the Chinese Ministry of Information Industry.
The original letter and subsequent letters from China Unicom requested that
negotiations begin regarding a suitable settlement of the matter and other
matters related to the winding up of the Company's joint ventures cooperation
agreements with China Unicom as a result of the Ministry of Information Industry
notice. China Unicom has ceased further performance of its cooperation
agreements with the Company's joint ventures. Negotiations regarding the terms
of the termination have begun and are continuing. The content of the
negotiations includes determining the investment principal of the Company's
joint ventures, appropriate compensation and other matters related to
termination of contracts. China Unicom made a distribution of amounts owed for
the first half of 1999 according to the cooperation agreement it has with the
Ningbo Ya Mei joint venture.

On November 6, 1999, our four Chinese telecommunications joint ventures engaged
in projects with China Unicom, each entered into non-binding letters of intent
with China Unicom which set forth certain terms for termination of their
cooperation arrangements with China Unicom. Under the terms contemplated in
these letters of intent, our joint ventures will receive cash amounts in RMB
from

                                       78
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS (CONTINUED)

China Unicom in full and final payment for the termination of their cooperation
contracts with China Unicom. Upon receipt of this payment, China Unicom and the
joint ventures will waive all of their respective relevant rights against the
other party with respect to the cooperative arrangements. In addition, all
assets which comprise the projects that are currently held by the joint ventures
will be unconditionally transferred to China Unicom. Portions of any amount paid
to the joint ventures will, in due course, be distributed to the Company. The
Company currently estimates the total amount of such distributions to be
approximately US $86.0 million at current exchange rates. Final execution of the
agreements contemplated in the letters of intent is subject to certain
conditions, including further verification of certain elements of the
cooperation between China Unicom and the joint ventures and execution of legally
binding termination agreements between China Unicom and the joint ventures on or
before December 1, 1999. Negotiations are continuing with China Unicom regarding
this verification and the content of the definitive termination agreements. The
Company cannot assure at this time that it will enter into definitive
termination agreements with China Unicom or that those agreements will provide
for payments producing distributions to the Company in the amounts specified
above or otherwise contain terms that are satisfactory to the Company.

Based on the status of the negotiations with China Unicom, the Company believes
that it will recover its investments in and advances to the affected joint
ventures, exclusive of goodwill, as of September 30, 1999 of approximately
$70.4 million. However, the Company cannot give any assurances that it will
recover its net investment and if these negotiations are adversely concluded,
they could have a material adverse effect on our financial position or results
of operations. Based on the Company's best estimates, the Company will record a
non-cash impairment charge of approximately $50.9 million for the write off of
goodwill. Regardless of the actions taken presently, a further adjustment will
likely be required once settlement is reached with China Unicom. This is a
consequence of the inherent present uncertainty of the situation rather than of
any factor within the Company's control.

SNAPPER

Snapper's liquidity is generated from operations and borrowings. On
November 11, 1998, Snapper entered into a loan and security agreement with the
Lenders named therein and Fleet Capital Corporation, as agent and as the initial
lender, pursuant to which the lenders have agreed to provide Snapper with a
$5.0 million term loan facility and a $55.0 million revolving credit facility,
the proceeds of which were used to refinance Snapper's then outstanding
obligations under its prior revolving credit agreement and will also be used for
working capital purposes. The Snapper loan will mature in November 2003 (subject
to automatic one-year renewals), and is guaranteed by the Company up to
$10.0 million (increasing to $15.0 million on the occurrence of specified
events). Interest on the Snapper loan is payable at Snapper's option at a rate
equal to prime plus up to 0.5% or the London interbank offered rate or LIBOR
plus between 2.5% and 3.25%, in each case depending on Snapper's leverage ratio
under the Snapper loan agreement. The agreements governing the Snapper loan
contain standard 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. At March 31,
1999, Snapper was not in compliance with all financial covenants required under
the loan agreement; the lenders have waived any event of default arising from
such noncompliance. At September 30, 1999, Snapper was not in compliance with
all financial covenants under the loan agreement and security agreement. On
November 15, 1999, the lenders under the loan and security agreement waived any
event of default arising from such noncompliance.

                                       79
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

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, 1999, noncancellable commitments under these
agreements amounted to approximately $10.4 million.

Snapper has an agreement with a financial institution which makes available
floor plan financing to dealers of Snapper products. This agreement provides
financing for dealer inventories and accelerates Snapper's cash flow. Under the
terms of the agreement, a default in payment by a dealer is nonrecourse to
Snapper. However, Snapper is obligated to repurchase any new and unused
equipment recovered from the dealer. At September 30, 1999, there was
approximately $82.9 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 loan
agreement 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.

MMG CONSOLIDATED

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operating activities for the nine months ended September 30, 1999
was $12.0 million, a decrease in cash used in operating activities of
$18.1 million from the same period in the prior year.

Losses from operating activities include significant non-cash items such as
discontinued operations, disposition of businesses, depreciation, amortization,
equity in losses of joint ventures and investees, and losses allocable to
minority interests. Excluding discontinued operations and disposition of
businesses, non-cash items increased $28.7 million from $17.7 million to
$46.4 million for the nine months ended September 30, 1998 and 1999,
respectively. The increase relates principally to the write off of goodwill
related to the Communication Group's operations in China and increased
amortization expense relating to the Company's decision to reduce the period
that it will amortize the goodwill related to the Communications Group's
operations in Eastern Europe and the republics of the former Soviet Union.
Changes in operating assets and liabilities, net of the effect of acquisitions
and dispositions, increased cash flows for the nine months ended September 30,
1999 and 1998 by $19.7 million and $23.7 million, respectively.

The increase in cash flows for the nine months ended September 30, 1999 resulted
from the improved operating results of the Communications Group's operations in
Eastern Europe and the republics of the former Soviet Union and Snapper.

CASH FLOWS FROM INVESTING ACTIVITIES

Cash used in investing activities was $37.0 million for the nine months ended
September 30, 1999 as compared to cash provided by investing activities of
$110.2 million for the nine months ended September 30, 1998. The principal uses
of funds for the nine months ended September 30, 1999 were investments in and
advances to joint ventures of $14.5 million, funds utilized in the acquisition
of PLD Telekom of $19.6 million, acquisitions by the Communications Group of
$1.4 million and additions to property, plant and equipment of $4.3 million. 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 form the
sale of Protocall Ventures. The principal uses of funds for the nine months
ended September 30, 1998 were investments

                                       80
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

in and advances to joint ventures of $44.2 million, acquisitions by the
Communications Group of $9.3 million and additions to property, plant and
equipment of $9.3 million.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash used in financing activities was $26.6 million and $37.7 million, for the
nine months ended September 30, 1999 and 1998, respectively. Funds used in
financing activities in 1999 were for the preferred stock dividend of
$11.3 million and payments of Snapper's debt of $15.4 million. 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.

YEAR 2000 SYSTEM MODIFICATIONS

METROMEDIA INTERNATIONAL TELECOMMUNICATIONS AND SNAPPER

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

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

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

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

The Company has initiated communications with all of its suppliers and its joint
ventures' suppliers of mission critical systems. The Company has accepted the
service providers' statement of Year 2000 compliance as evidence in its
assessment phase. For those mission critical systems determined not to be
compliant, the Company is in the process of replacing or remediating the system
at each significant

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

joint venture or subsidiary. In addition, limited testing has been performed at
certain joint ventures and at the subsidiaries and joint venturers' technical
facilities.

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

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

As of September 30, 1999, the Company has incurred $595,000 in respect of its
Year 2000 conversion effort, or 79% of the total estimated cost. The Company
expects that the source of funds for Year 2000 costs will be cash on hand. No
other information systems projects of the Company and its subsidiaries and joint
ventures have been deferred due to the Year 2000 efforts.

The Company's Communications Group is heavily dependent on third parties, many
of whom are themselves heavily dependent on technology. In some cases, the
Company's third-party dependence is on vendors of technology who are themselves
working toward solutions to Year 2000 problems. Moreover, the Company is
dependent on the continued functioning of basic, heavily computerized services
such as banking and telephony. Further, the Company's Communications Group's
businesses are located in countries where basic services are operated by the
government or other governmental entities and the Company may not be able to
obtain information on Year 2000 problems. In certain joint ventures within the
Communications Group, the Company does not have a controlling management
interest and cannot unilaterally cause the joint venture to commit the necessary
resources to solve any Year 2000 problems. However, substantially all of the
Company's joint ventures operate or are planned to operate in countries where
reliance on automated systems is substantially less significant, and more
recent, than in the United States. Therefore, the Company believes that, in the
event Year 2000 problems arise in such joint ventures, the local operators of
such joint ventures and customers and vendors should be able to revert to manual
methods. If the Company, its joint ventures in which it does not have a
controlling management interest, and their respective customers and vendors are
unable to solve any Year 2000 issues, a material adverse effect on the Company's
results of operations and financial condition could result.

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

PLD TELEKOM INC.

PLD Telekom has conducted, and has caused each of its operating subsidiaries to
conduct a survey of the equipment and software used by them.

PLD Telekom's business involves the supply of services. To the very limited
extent that it maintains actual inventory for sale (e.g., cellular telephone
equipment sold to subscribers for its cellular telephony

                                       82
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

services), PLD Telekom does not manufacture such inventory itself but resells
goods supplied by recognized manufacturers of such goods.

PLD Telekom's survey has involved testing of equipment as well as contacting the
manufacturers of equipment and producers of software (or review of materials
published by such parties, including websites) to assess such parties' Year 2000
readiness. Such survey has indicated that, except in a few instances, the
equipment and software which it uses are Year 2000 compliant. PLD Telekom is
taking steps to upgrade or replace those items which are not compliant. In many
cases the items required to be upgraded or replaced were due to be upgraded or
replaced in any event, so that PLD Telekom's exposure has been the acceleration
of already planned expenditures, rather than new or unanticipated expenditures.
PLD Telekom expects that all of its upgrading and replacement work, and any
remaining testing required, will be complete by the end of 1999.

As of September 30, 1999, the estimated remaining expenditures in relation to
PLD Telekom's remediation effort are approximately $700,000. While all work is
expected to be completed by the end of 1999, a portion of this amount will not
be payable until 2000, when any outstanding amounts are expected to be paid from
cash on hand.

Starting in January 1998, all operating businesses were required to use their
best efforts to obtain specific warranties of Year 2000 compliance from parties
with which they contract for products or services thereafter. While almost all
new contracts for products or services entered into since that date have
contained some form of warranty, these have generally been limited to recovering
of direct losses, and not indirect or consequential losses, such as loss of
revenues or profits. In consequence, the actual efficacy of such warranties may
be somewhat limited.

Additionally, all operating businesses have been required to review the terms
under which they have heretofore supplied products and/or services to third
parties. No case has been identified in which any operating business has
specifically guaranteed Year 2000 compliance, and PLD Telekom has instituted a
policy regarding the giving of such guarantees in the future in order to control
and limit possible exposure thereunder. Further, since none of the operating
businesses manufacture equipment or produce proprietary software for customers
other than in exceptional cases, virtually all such transactions involve the
re-sale or assignment of products and services supplied by others. Accordingly,
PLD Telekom believes that, to the extent that such products and services are
either warranted or shown to be Year 2000 compliant, its own exposure is
commensurately reduced.

While there can be no assurances that equipment failures will not occur, the
effect of such failures may be ameliorated by the fact that such equipment is
usually part of a network of facilities and equipment maintained by PLD Telekom.
This means that a failure in an individual component will not necessarily cause
a substantial disruption to the network as a whole, because no individual item
is critical to the operation of the network as a whole, and the network also
provides opportunities to by-pass the failure.

The foregoing indicates that, to the extent that its business depends upon
equipment, software, facilities and networks under its control, PLD Telekom
believes that, by the year 2000, it will have taken all steps reasonably
required to ensure that those items are Year 2000 compliant, and that it has
reasonable contingency arrangements to deal with failures.

PLD Telekom's principal Year 2000 risks arise from the fact that it is dependent
for the completion of its calls upon a variety of other traffic carriers who
provide interconnection and termination services. Since in many cases there are
a variety of routes over which traffic can be carried, it is simply not possible
for PLD Telekom to verify that each entity which could be involved in providing
telecommunications services to its operating subsidiaries will be Year 2000
compliant. To a large extent, PLD Telekom is reliant in these circumstances on
the actions of the other telecommunications

                                       83
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

operators and service providers to ensure that their counterparts are Year 2000
compliant. While PLD Telekom believes that the parties providing these services
which are based in the United States and other Western countries are expected to
be substantially Year 2000 compliant, the Year 2000 compliance and readiness of
the republics of the former Soviet Union parties with which PLD Telekom's
operating businesses interact appears to be substantially behind that of Western
parties. PLD Telekom has been unable to determine with any degree of certainty
the extent to which its interconnect partners in the republics of the former
Soviet Union are non-compliant because those parties have generally been
reluctant to share this information. Nevertheless PLD Telekom believes, based on
such reluctance and anecdotal and other evidence, that many of those partners,
particularly in those in the less developed regions of the republics of the
former Soviet Union are substantially non-compliant.

Furthermore, the likelihood that those parties will be able to become Year 2000
compliant seems problematical, given the limited amount of time left for this,
the severe funding constraints faced by those parties, principally as a result
of poor economic conditions in their home countries, and the possible lack of
governmental pressure on those parties.

Accordingly, there is a significant risk that PLD Telekom's operating businesses
may experience disruptions in their operations as a result of the republics of
the former Soviet Union interconnect partners not being able to complete calls
or pass traffic to those businesses. While PLD Telekom is unable to predict the
extent or duration of such disruptions, the possibility exists that they could
be extensive, and also take considerable time, perhaps even months, to correct.

An additional risk is the likelihood that the billing systems of those
interconnect partners may also be disrupted, resulting in those partners being
unable to collect from their customers or to make timely settlements with PLD
Telekom's operating businesses.

Accordingly, PLD Telekom believes that there is a considerable risk that it will
experience disruptions in providing telecommunications services to and from the
countries of the republics of the former Soviet Union which it serves, and that
those disruptions may be substantial. Given its inability to obtain an accurate
assessment of the extent to which its republics of the former Soviet Union
partners may be non-compliant, it is impossible for PLD Telekom to predict
either the extent or the magnitude of those disruptions. Nevertheless, they have
the potential to adversely impact the operations of its operating subsidiaries,
and such adverse impact may be material.

PLD Telekom has investigated the possibility of obtaining insurance against
liability arising out of claims that products or services supplied are not Year
2000 compliant, but has determined that such insurance is not obtainable upon
terms which are sufficiently comprehensive and/or is only obtainable upon terms
which are uneconomical given the level of perceived risk, and accordingly has
elected not to pursue such insurance.

THIS QUARTERLY REPORT ON FORM 10-Q CONSTITUTES A YEAR 2000 READINESS DISCLOSURE
STATEMENT, THE STATEMENTS IN THIS FORM 10-Q ARE SUBJECT TO THE YEAR 2000
INFORMATION AND READINESS DISCLOSURE ACT, AND THE COMPANY HEREBY CLAIMS THE
PROTECTION OF THIS ACT FOR THIS DOCUMENT AND ALL INFORMATION CONTAINED HEREIN.

NEW ACCOUNTING DISCLOSURES

ACCOUNTING FOR DERIVATIVES

In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", was issued. Statement 133
established accounting and reporting standards for derivative instruments and
for hedging activities. Statement 133 requires that an entity recognize all
derivatives as either assets or liabilities and measure those instruments at
fair value. The

                                       84
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

accounting for the gain or loss due to changes in fair value of the derivative
instrument depends on whether the derivative instrument qualifies as a hedge.
Statement 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. Statement 133 can not be applied retroactively to financial
statements of prior periods. The Company anticipates that the adoption of
Statement 133 will not have a material impact on the Company's consolidated
financial position and results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

With the exception of Snapper and prior to the acquisition of PLD Telekom at
September 30, 1999, the Company did not have any significant long term
obligations at September 30, 1999. Since Snapper's bank debt is a floating rate
instrument, its carrying value approximates its fair value. A 100 basis point
increase in the level of interest rates with all other variables held constant
would result in an increase in interest expense of $28,000. In addition, a 100
basis point increase in interest rates on Snapper's floor plan financing and
dealers would have resulted in an increase in interest expense of $64,000.

In connection with the acquisition of PLD Telekom with the exception of certain
vendor financing at the operating business level (approximately $3.0 million in
the aggregate), PLD Telekom's and the Company's debt obligations and those of
PLD Telekom's operating businesses, are fixed rate obligations, and are
therefore not exposed to market risk from changes in interest rates. The Company
does not believe that it is exposed to a material market risk from changes in
interest rates. Furthermore, with the exception of the approximately
$3.0 million in vendor financing which is denominated in Euros, PLD Telekom's
long-term debt and that of its operating businesses is denominated in U.S.
dollars. The Company does not believe that PLD Telekom's Euro-denominated debt
exposes the Company to a material market risk from changes in foreign exchange
rates.

The Company does not hedge against foreign exchange rate risks at the current
time. In the majority of the countries that the Communications Group's joint
ventures operate, there currently do not exist derivative instruments to allow
the Communications Group to hedge foreign currency risk. In addition, at the
current time the majority of the Communications Group's joint ventures are in
the early stages of development and the Company does not expect in the near term
to repatriate significant funds from the Communications Group's joint ventures.
"Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations--Inflation and Foreign Currency" contains additional
information on risks associated with the Company's investments in Eastern
Europe, the former Soviet Union and China.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    Any statements in this quarterly report on Form 10-Q about the Company's
expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements are often but
not always made through the use of words or phrases like "believes," "expects,"
"may," "will," "should" or "anticipates"

                                       85
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS (CONTINUED)

or the negative of these words or phrases or other variations on these words or
phrases or comparable terminology, or by discussions of strategy that involves
risks and uncertainties.

These forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the Company's actual results, performance or
achievements or industry results to be materially different from any future
results, performance or achievements expressed or implied by these
forward-looking statements. These risks, uncertainties and other factors
include, among others:

    - general economic and business conditions, which will, among other things,
      impact 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, industry trends and demographic changes,

    - competition from other communications companies, which may affect the
      Company's ability to generate revenues,

    - political, social and economic conditions and changes in laws, rules and
      regulations or their administration or interpretation, particularly in
      Eastern Europe, the former Soviet Union, China and other selected 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
      these projects,

    - developing legal structures in Eastern Europe, the former Soviet Union,
      China and other selected emerging markets, which may affect the Company's
      ability to enforce its legal rights,

    - cooperation of local partners for the Company's communications investments
      in Eastern Europe, the former Soviet Union, China and other selected
      emerging markets, which may affect its results of operations,

    - exchange rate fluctuations,

    - license renewals for the Company's communications investments in Eastern
      Europe, the former Soviet Union, China and other selected emerging
      markets,

    - the loss of any significant customers,

    - changes in business strategy or development plans,

    - the quality of management,

    - the availability of qualified personnel,

    - changes in or the failure to comply with government regulations, and

    - other factors referenced in this report.

Accordingly, any forward-looking statement is qualified in its entirety by
reference to these risks, uncertainties and other factors and you should not
place any undue reliance on them. Furthermore, any forward-looking statement
speaks only as of the date on which it is made. New factors emerge from time to
time and it is not possible for the Company to predict which will arise. In
addition, the Company cannot assess the impact of each factor on its business or
the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statements.

                                       86
<PAGE>
                           PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

FUQUA INDUSTRIES, INC. SHAREHOLDER LITIGATION

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

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

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

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

                                       87
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)

MICHAEL SHORES V. SAMUEL GOLDWYN COMPANY, ET AL.

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

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

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

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

On June 30, 1997, the plaintiffs in SYDNEY H. SAPSOWITZ AND SID SAPSOWITZ &
ASSOCIATES, INC. V. JOHN W. KLUGE, STUART SUBOTNICK, METROMEDIA INTERNATIONAL
GROUP, INC., ORION PICTURES CORPORATION, LEONARD WHITE, ET AL. filed a lawsuit
in Superior Court of the State of California alleging $28.7 million in damages
from the alleged breach of an oral agreement to pay a finder's fee in connection
with the Entertainment Group Sale. On September 23, 1999, the jury in this
litigation returned a verdict of $4.5 million in compensatory damages and
$3.4 million in other damages against the Company. Before the conclusion of the
proceedings relating to punitive damages, the Company agreed to a settlement
with the plaintiffs. Under the terms of the settlement, the Company paid
$5 million to the plaintiffs on or about September 30, 1999 and is obligated to
pay an additional $5 million on September 30, 2000 and an additional $4 million
on September 30, 2001. The settlement fully resolves all litigation among the
Company and the other parties in this litigation. The Company has recorded a
$12.8 million charge

                                       88
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)

against discontinued operations in its results of operations for the three
months ended September 30, 1999 as a result of this settlement.

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.

LEGAL PROCEEDINGS IN CONNECTION WITH RDM

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

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

                                       89
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)

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

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

INDEMNIFICATION AGREEMENTS

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

At September 30, 1999, Snapper was not in compliance with all financial
covenants under its loan and security agreement ("Loan and Security
Agreements"). On November 15, 1999, the lenders of the Loan and Security
Agreement waived any event of default arising from such noncompliance.

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

At the Company's 1999 Annual Meeting of Stockholders held on September 30, 1999
the stockholders of the Company were asked to consider and vote on the following
matters: (i) approval of the issuance of shares of common stock of the Company
in connection with the merger agreement among the Company, PLD Telekom Inc. and
Moscow Communications, Inc.; (ii) the election of three (3) members to the
Company's Board of Directors to serve as Class I directors for a three (3) year
term ending in the year 2002; (iii) the ratification of the appointment of KPMG
LLP as the Company's independent accountants for the year ending December 31,
1999 and (iv) a proposal submitted by a stockholder of the Company to amend the
Company's certificate of incorporation to allow stockholders of the Company to
take action by written consent and to call special meetings.

At such meeting, a majority of the Company's Stockholders voted to approve
(i) the issuance of shares of common stock of the Company in connection with the
merger agreement among the Company, PLD Telekom Inc. and Moscow
Communications, Inc.; (ii) the election of John P. Imlay, Jr., John W. Kluge and
Stuart Subotnick as Class I directors for three year terms ending in the year
2002; and (iii) the

                                       90
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)

ratification of the appointment of KPMG LLP as the Company independent
accountants for the year ending December 31, 1999, and did not approve the
stockholder proposal.

<TABLE>
<CAPTION>
                                                                                          BROKER
PROPOSAL                                              FOR        AGAINST     ABSTAIN    NON-VOTES
--------                                           ----------    -------     --------   ----------
<S>                                                <C>          <C>          <C>        <C>
1.    Approve Merger............................   42,892,532    165,241      88,579    15,345,471
2.    Election of Directors
</TABLE>

<TABLE>
<CAPTION>
                                                     FOR        WITHHOLD
                                                  ----------   ----------
<S>                                               <C>          <C>          <C>        <C>
     John P. Imlay, Jr..........................  57,948,307    543,516
     John W. Kluge..............................  57,945,190    546,633
     Stuart Subotnick...........................  57,949,994    541,829
</TABLE>

<TABLE>
<CAPTION>
                                                                                         BROKER
                                                    FOR        AGAINST      ABSTAIN    NON-VOTES
                                                 ----------    -------     ---------   ----------
<S>                                              <C>          <C>          <C>         <C>
3.    Ratification of the appointment of
      independent accountants..................  58,278,812     129,596       83,415            0
4.    The stockholder proposal.................  11,753,294   26,481,460   3,911,597   16,345,472
</TABLE>

No other matters were submitted to a vote of the Company's stockholders, through
the solicitation of proxies or otherwise, during the third quarter of the year
ended December 31, 1999.

ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K

    (a) Exhibits

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

                  (b)   Reports on Form 8-K
                        (i)   On August 4, 1999, a Form 8-K was filed to report on
                              certain developments in China.
                        (ii)  On September 27, 1999, a Form 8-K was filed to report
                              the settlement on outstanding litigation with the
                              plaintiffs in SIDNEY H. SAPSOWITX AND SID SAPSOWITZ
                              AND ASSOCIATES, INC. V. JOHN W. KLUGE, STUART
                              SUBOTNICK, METROMEDIA INTERNATIONAL GROUP, INC.,
                              ORION PICTURES CORPORATION, LEONARD WHITE, ET AL.
                        (iii) On September 28, 1999, a Form 8-K was filed to report
                              that the common stock exchange ratio as determined in
                              accordance with the terms of the merger agreement
                              between the Company and PLD Telekom Inc. had been
                              calculated to be .6353.
                        (iv)  On October 13, 1999, a Form 8-K was filed to report
                              the completion of the Company's merger with PLD
                              Telekom Inc.
</TABLE>

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

*   Filed herewith

                                       91
<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>                             <C>
                                               METROMEDIA INTERNATIONAL GROUP, INC.

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

Dated: November 15, 1999

                                       92