----

----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

**x **
**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934**

**For      the fiscal year ended December 31, 2005**

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

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

|   | **BERMUDA**                                                                    |   | **98-0438382**                                   |   |
|--------|--------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|   | (State                or other jurisdiction of incorporation and organization) |   | (IRS                Employer Identification No.) |   |
|   | **Clarendon                House, Church Street, Hamilton**                    |   | **HM                CX Bermuda**                 |   |
|   | (Address                of principal executive offices)                        |   | (Zip                Code)                        |   |

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

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

**CLASS      A COMMON STOCK, $0.08 PAR VALUE**

| Large                accelerated filer x | Accelerated                filer  ̈ | Non-accelerated                filer  ̈ |
|------------------------------------------|-----------------------------------------|---------------------------------------------|

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*Page          1*

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**DOCUMENTS      INCORPORATED BY REFERENCE**

| **Document**                                                                                                                                        | **Location                in Form 10-K in Which Document is****Incorporated** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|
| Registrant's                Proxy Statement for the Annual General Meeting of Shareholders to                be held                on June 7, 2006 | Part                III                                                       |

*Page            2*

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**TABLE      OF CONTENTS**

|                        |                   |                                                                                                                                                      | Page   |
|-----------------------------|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **PART                I**   |                   |
|                        | Item                1  | Business                                                                                                                                                  | 4      |
|                        | Item                1A | Risk                Factors                                                                                                                               | 28     |
|                        | Item                1B | Unresolved                Staff Comments                                                                                                                  | 33     |
|                        | Item                2  | Properties                                                                                                                                                | 34     |
|                        | Item                3  | Legal                Proceedings                                                                                                                          | 34     |
|                        | Item                4  | Submission                of Matters to a Vote of Security                Holders                                                                         | 38     |
|                        |                   |                                                                                                                                                      |   |
| **PART                II**  |                   |
|                        | Item                5  | Market                for Registrant's Common Equity, Related                Stockholder Matters and Issuer Purchases of Equity                Securities | 39     |
|                        | Item                6  | Selected                Financial Data                                                                                                                    | 39     |
|                        | Item                7  | Management's                Discussion and Analysis of Financial                Condition and Results of Operations                                       | 42     |
|                        | Item                7A | Quantitative                and Qualitative Disclosures About Market                Risk                                                                  | 77     |
|                        | Item                8  | Financial                Statements and Supplementary                Data                                                                                 | 78     |
|                        | Item                9  | Changes                in and Disagreements with Accountants on                Accounting and Financial Disclosure                                        | 146    |
|                        | Item                9A | Controls                and Procedures                                                                                                                    | 146    |
|                        | Item                9B | Other                Information                                                                                                                          | 148    |
|                        |                   |                                                                                                                                                      |   |
| **PART                III** |                   |
|                        | Item                10 | Directors                and Executive Officers of the                Registrant                                                                          | 149    |
|                        | Item                11 | Executive                Compensation                                                                                                                     | 149    |
|                        | Item                12 | Security                Ownership of Certain Beneficial Owners and                Management and Related Stockholder Matters                              | 149    |
|                        | Item                13 | Certain                Relationships and Related                Transactions                                                                              | 149    |
|                        | Item                14 | Principal                Accountant Fees and Services                                                                                                     | 149    |
|                        |                   |                                                                                                                                                      |   |
| **PART                IV**  |                   |
|                        | Item                15 | Exhibits                and Financial Statement                Schedules                                                                                  | 150    |
|                        |                   |                                                                                                                                                      |   |
| **SIGNATURES**              | 154                    |

*Page            3*

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*Table            of Contents*

**PART      I**

| **ITEM                1.** | **BUSINESS** |
|----------------------------|--------------|

***Forward-looking      Statements***

*This      report contains forward-looking statements, including statements regarding      the      renewal of broadcasting licenses in the Slovak Republic and Ukraine, the impact      of legal proceedings in Ukraine, the results of modifying our sales strategy      in      the Czech Republic, the impact of the reorganization of our operations in the      Czech Republic and the Slovak Republic, the results of additional investment      in      Croatia and Ukraine, the impact of the acquisition of control of our operations      in the Slovak Republic, our ability to develop and implement multi-channel      strategies generally, the growth of television advertising in our markets,      the      future economic conditions in our markets, future investments in television      broadcast operations, the growth potential of advertising spending in our      markets, and other business strategies and commitments. For these statements      and      all other forward-looking statements, we claim the protection of the safe harbor      for forward-looking statements contained in the Private Securities Litigation      Reform Act of 1995. Forward-looking statements are inherently subject to risks      and uncertainties, many of which cannot be predicted with accuracy or are      otherwise beyond our control and some of which might not even be anticipated.      Future events and actual results, affecting our strategic plan as well as our      financial position, results of operations and cash flows, could differ      materially from those described in or contemplated by the forward-looking      statements. Important factors that contribute to such risks include, but are      not      limited to*
***,***
*      the      general regulatory environments where we operate and application of relevant      laws and regulations, the renewals of broadcasting licenses, our ability to      implement strategies regarding sales and multi-channel distribution, the rate      of      development of advertising markets in countries where we operate, our ability      to      acquire necessary programming and the ability to attract audiences, our ability      to obtain additional frequencies and licenses, and general market and economic      conditions in these countries as well as in the United States and Western      Europe.*

**GENERAL**

*Page            4*

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*Table            of Contents*

**CORPORATE      STRUCTURE**

| **Key                Subsidiaries and Affiliates as at****December                31, 2005** |   | **Voting ****Interest** |   | **Share                of****Profits** |   | **Accounting****Treatment**            |   | **TV                Channels**                                                                  |
|----------------------------------------------------------------------------------------------|--------|------------------------------|--------|----------------------------------------|--------|----------------------------------------|--------|-------------------------------------------------------------------------------------------------|
| **Continuing                Operations**                                                     |   |                         |   |                                   |   |                                   |   |                                                                                            |
|                                                                                         |   |                         |   |                                   |   |                                   |   |                                                                                            |
| ***Croatia***                                                                                |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Operating                Company:                                                            |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Operativna                Kompanija d.o.o. (OK)                                         |   | 100%                         |   | 100%                                   |   | Consolidated                Subsidiary |   |                                                                                            |
| License                Company:                                                              |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Nova                TV d.d. (Nova TV Croatia)                                                |   | 100%                         |   | 100%                                   |   | Consolidated                Subsidiary |   | NOVA                TV (Croatia)                                                                |
|                                                                                         |   |                         |   |                                   |   |                                   |   |                                                                                            |
| ***Czech                Republic***                                                          |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Operating                Company:                                                            |   |                         |   |                                   |   |                                   |   |                                                                                            |
| CME                Media Services s.r.o. (CME Media Services)                                |   | 100%                         |   | 100%                                   |   | Consolidated                Subsidiary |   |                                                                                            |
|                                                                                         |   |                         |   |                                   |   |                                   |   |                                                                                            |
| License                Companies:                                                            |   |                         |   |                                   |   |                                   |   |                                                                                            |
| CET                21 s.r.o. (CET 21)                                                        |   | 96.5%                        |   | 96.5%                                  |   | Consolidated                Subsidiary |   | TV                NOVA(Czech                Republic)                                           |
| Galaxie                Sport s.r.o. (Galaxie Sport)                                          |   | 100%                         |   | 100%                                   |   | Consolidated                Subsidiary |   | GALAXIE                SPORT                                                                    |
|                                                                                         |   |                         |   |                                   |   |                                   |   |                                                                                            |
| ***Romania***                                                                                |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Operating                Companies:                                                          |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Media                Pro International S.A. (MPI)                                            |   | 85%                          |   | 85%                                    |   | Consolidated                Subsidiary |   |                                                                                            |
| Media                Vision S.R.L. (Media Vision)                                            |   | 70%                          |   | 70%                                    |   | Consolidated                Subsidiary |   |                                                                                            |
| License                Company:                                                              |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Pro                TV S.A. - formerly Pro TV S.R.L. (Pro TV)                                 |   | 85%                          |   | 85%                                    |   | Consolidated                Subsidiary |   | PRO                TV, ACASA, PRO                CINEMA and PRO                TV INTERNATIONAL |
| ***Slovenia***                                                                               |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Operating                Company:                                                            |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Produkcija                Plus d.o.o. (Pro Plus)                                             |   | 100%                         |   | 100%                                   |   | Consolidated                Subsidiary |   |                                                                                            |
| License                Companies:                                                            |   |                         |   |                                   |   |                                   |   |                                                                                            |
| Pop                TV d.o.o. (Pop TV)                                                        |   | 100%                         |   | 100%                                   |   | Consolidated                Subsidiary |   | POP                TV                                                                           |

*Page            5*

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*Table            of Contents*

| **Key                Subsidiaries and Affiliates as at****December                31, 2005** |   | **Voting****Interest** |   | **Share                of****Profits** |   | **Accounting****Treatment**                                         |   | **TV                Channels** |
|----------------------------------------------------------------------------------------------|--------|------------------------|--------|----------------------------------------|--------|---------------------------------------------------------------------|--------|--------------------------------|
| **Continuing                Operations**                                                     |   |                   |   |                                   |   |                                                                |   |                           |
|                                                                                         |   |                   |   |                                   |   |                                                                |   |                           |
| Kanal                A d.o.o. (Kanal A)                                                      |   | 100%                   |   | 100%                                   |   | Consolidated                Subsidiary                              |   | KANAL                A         |
|  ***Slovak                Republic***                                                   |   |                   |   |                                   |   |                                                                |   |                           |
| Operating                Company:                                                            |   |                   |   |                                   |   |                                                                |   |                           |
| Slovenska                Televizna Spolocnost s.r.o. (STS)                                   |   | 49%                    |   | 70%                                    |   | Equity                Accounted Affiliate                           |   |                           |
| License                Company:                                                              |   |                   |   |                                   |   |                                                                |   |                           |
| Markiza-Slovakia                s.r.o. (Markiza)                                             |   | 34%                    |   | 0.1%                                   |   | Equity                Accounted Affiliate                           |   | MARKIZA                TV      |
|                                                                                         |   |                   |   |                                   |   |                                                                |   |                           |
| ***Ukraine***                                                                                |   |                   |   |                                   |   |                                                                |   |                           |
| Operating                Companies:                                                          |   |                   |   |                                   |   |                                                                |   |                           |
| Innova                Film GmbH (Innova)                                                     |   | 60%                    |   | 60%                                    |   | Consolidated                Subsidiary                              |   |                           |
| International                Media Services Ltd. (IMS)                                       |   | 60%                    |   | 60%                                    |   | Consolidated                Subsidiary                              |   |                           |
| Enterprise                "Inter-Media" (Inter-Media)                                        |   | 60%                    |   | 60%                                    |   | Consolidated                Subsidiary                              |   |                           |
| License                Company:                                                              |   |                   |   |                                   |   |                                                                |   |                           |
| Broadcasting                Company "Studio 1+1 LLC " (Studio 1+1)                           |   | 18%                    |   | 60%                                    |   | Consolidated                Variable                Interest Entity |   | STUDIO                1+1      |

*Page            6*

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*Table            of Contents*

*Page            7*

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*Table            of Contents*

**OPERATING      ENVIRONMENT**

***Market      and Audience Share***

| **Country**                    |   | **Channels**                                      |   | **Launch                Date**                 |   | **Technical****Reach****(1)** |   | **2005                Audience****Share****(2)** |   | **Market****Rank****(2)**   |
|--------------------------------|--------|---------------------------------------------------|--------|------------------------------------------------|--------|-------------------------------|--------|--------------------------------------------------|--------|-----------------------------|
|                           |   |                                              |   |                                           |   |                          |   |                                             |   |                        |
| Croatia                        |   | NOVA                TV (Croatia)                  |   | August                2000 (3)                 |   | 88%                           |   | 14%                                              |   | 4                           |
| Czech                Republic  |   | TV                NOVA (Czech                Rep) |   | February                1994 (4)               |   | 100%                          |   | 41%                                              |   | 1                           |
|                           |   | GALAXIE                SPORT                      |   | April                2002 (5)                  |   | 26%                (7)        |   | Not                Measured                      |   | Not                Measured |
| Romania                        |   | PRO                TV                             |   | December                1995                   |   | 76%                           |   | 16%                                              |   | 2                           |
|                           |   | ACASA                                             |   | February                1998                   |   | 65%                           |   | 8%                                               |   | 4                           |
|                           |   | PRO                CINEMA                         |   | April                2004                      |   | 44%                           |   | 1%                                               |   | 12                          |
| Slovak                Republic |   | MARKIZA                TV                         |   | August                1996                     |   | 86%                           |   | 31%                                              |   | 1                           |
| Slovenia                       |   | POP                TV                             |   | December                1995                   |   | 95%                           |   | 27%                                              |   | 1                           |
|                           |   | KANAL                A                            |   | October                1991                (6) |   | 86%                           |   | 9%                                               |   | 4                           |
| Ukraine                        |   | STUDIO                1+1                         |   | January                1997                    |   | 95%                           |   | 20%                                              |   | 2                           |

| (1) | “Technical                Reach” is a measurement of the percentage of a country’s population that                is able to receive the signals of the indicated channels. Source:                Internal                estimates supplied by each country's operations. Each of our stations                in                the relevant country has estimated its own technical reach based                on the                location, power and frequency of each of its transmitters and the                local                population density and geography around that transmitter. The technical                reach calculation is separate from the independent third party measurement                that determines audience share. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | National                all day audience share and rank. Source: Croatia: Peoplemeters AGB                Media                Services, Czech Republic: ATO - Mediaresearch / GFK, Romania: Peoplemeters                Taylor Nelson Sofres, Slovak Republic: Visio / MVK, Slovenia: Peoplemeters                AGB Media Services, Ukraine: Peoplemeters GFK USM. There are four                stations                ranked in Croatia, four in Czech Republic, twenty three in Romania,                six in                the Slovak Republic, four in Slovenia, and six significant stations                ranked                in Ukraine. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | We                acquired NOVA TV (Croatia) in July                2004. |
|-----|---------------------------------------------------------------------------|

| (4) | We                acquired TV NOVA (Czech Republic) in May                2005. |
|-----|---------------------------------------------------------------------------------|

| (5) | We                acquired GALAXIE SPORT in September                2005. |
|-----|----------------------------------------------------------------------------|

| (6) | We                acquired KANAL A in October                2000. |
|-----|-------------------------------------------------------------------------|

| (7) | 26%                technical reach in the Czech Republic. In addition, GALAXIE SPORT                has a                technical reach of 38% in the Slovak                Republic. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            8*

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*Table            of Contents*

| **Country**                    | ** ** | **Population****(in                millions) (1)** | ** ** | **Technical****Reach                (in****millions)                (2)** | ** ** | **Television****Households                (in****millions)                (3)** | ** ** | **Per                Capita GDP****2005                US$ (4)** | ** ** | **Cable****Penetration                (3)** |
|--------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|------------------------------------------------------------------|------------|---------------------------------------------|
|                           |       |                                               |       |                                                                      |       |                                                                            |       |                                                             |       |                                        |
| Croatia                        |       | 4.3                                                |       | 3.8                                                                       |       | 1.5                                                                             |       | $                  8,176                               |       | 16%                                         |
| Czech                Republic  |       | 10.2                                               |       | 10.2                                                                      |       | 3.9                                                                             |       | $                11,148                                          |       | 26%                                         |
| Romania                        |       | 21.3                                               |       | 16.2                                                                      |       | 7.4                                                                             |       | $                  4,460                               |       | 68%                                         |
| Slovak                Republic |       | 5.4                                                |       | 4.6                                                                       |       | 1.9                                                                             |       | $                  9,312                               |       | 35%                                         |
| Slovenia                       |       | 2.0                                                |       | 1.9                                                                       |       | 0.6                                                                             |       | $                17,050                                          |       | 58%                                         |
| Ukraine                        |       | 47.4                                               |       | 45.0                                                                      |       | 18.4                                                                            |       | $                  1,715                               |       | 19%                                         |
| **Total**                      |       | **90.6**                                           |       | **81.7**                                                                  |       | **33.7**                                                                        |       |                                                             |       |                                        |

| (1) | Source:                Global Insight Country Analysis (2005                data). |
|-----|------------------------------------------------------------------------------------|

| (2) | Source:                Internal estimates supplied by each country's operations. Each of                our                operations has estimated its own technical reach based on the location,                power and frequency of each of its transmitters and the local population                density and geography around that transmitter. The technical reach                is                separate from the independent third party measurement that determines                audience shares. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Source:                Informa Telecoms and Media (2005 data). A Television Household is                a                residential dwelling with one or more television sets. Cable Penetration                refers to the percentage of Television Households that subscribe                to                television services via cable                channels. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Source:                ING (September 2005 data). |
|-----|---------------------------------------------------|

***Regulation***

*Page            9*

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*Table            of Contents*

***License      Renewal***

| Croatia | The                license of NOVA TV (Croatia) expires in April                2010. |
|---------|---------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Czech                  Republic | The                  license of TV NOVA (Czech Republic) expires in January 2017. The                  GALAXIE                  SPORT license expires in March                  2014. |
|---------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Romania | Licenses                  expire on dates ranging from July 2006 to February 2014. ** ** |
|---------|-----------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Slovak                  Republic | The                  license of MARKIZA TV in the Slovak Republic expires in September                  2007. |
|----------------------------------|---------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Slovenia | The                  licenses of both our channels in Slovenia expire in August                  2012. |
|----------|--------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Ukraine | The                  15-hour license of STUDIO 1+1 expires in December 2006. The license                  to                  broadcast for the remaining nine hours in off prime expires in                  August                  2014. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**OPERATIONS      BY COUNTRY**

**CROATIA**

**General**

**Operating      and License Companies **

*Page            10*

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*Table            of Contents*

**Operations**

*NOVA      TV (CROATIA)*

|                                    |   | **2001** |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   |
|-----------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| **NOVA                TV****(Croatia)** |   |     |   |     |   |     |   |     |   |     |   |
| All                day                  |   |     | 11.8%  |     |   | 15.3%    |   |     | 15.6%  |     |   | 12.0% |   |   | 13.6% |   |
| Prime                time               |   |     | -      |     |   | -        |   |     | 12.7%  |     |   | 10.9% |   |   | 13.3% |   |

**Programming**

**Advertising**

*Page            11*

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*Table            of Contents*

**Competition**

| **Main                Television****Channels** |   | **Ownership**                    |   | **Year                of first****transmission** |   | **Signal****distribution**                                           |   | **Audience****share                (2005)** |   | **Technical****reach** |
|------------------------------------------------|--------|----------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------|--------|------------------------|
|                                           |   |                             |   |                                             |   |                                                                 |   |                                        |   |                   |
| HRT                1                           |   | Public                Television |   | 1956                                             |   | Terrestrial                / satellite                / cable        |   | 38.1%                                       |   | 99%                    |
| HRT                2                           |   | Public                Television |   | 1972                                             |   | Terrestrial                / satellite                / cable        |   | 15.9%                                       |   | 99%                    |
| RTL                                            |   | Bertelsmann                      |   | 2004                                             |   | Terrestrial                / satellite                / cable        |   | 24.7%                                       |   | 95%                    |
| **NOVA                TV****(Croatia)**        |   | **CME**                          |   | **2000**                                         |   | **Terrestrial                /****satellite                / cable** |   | **13.6****%**                               |   | **88****%**            |
| Others                                         |   |                             |   |                                             |   |                                                                 |   | 7.7%                                        |   |                   |
|                                           |   |                             |   |                                             |   |                                                                 |   | 100.0%                                      |   |                   |

**License      Renewal **

*Page            12*

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*Table            of Contents*

**CZECH      REPUBLIC**

**General**

**Operating      and License Companies**

**Operations      **

*TV      NOVA (Czech Republic)*

|                                                          |   | **2001** |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   |
|---------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| **TV                NOVA****(Czech                Republic)** |   |     |   |     |   |     |   |     |   |     |   |
| All                day                                        |   |     | 47.7%  |     |   | 44.2%    |   |     | 43.4%  |     |   | 42.2% |   |   | 40.9% |   |
| Prime                time                                     |   |     | 51.9%  |     |   | 48.3%    |   |     | 45.8%  |     |   | 44.9% |   |   | 42.3% |   |

*Galaxie      Sport*

*Page            13*

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*Table            of Contents*

**Programming**

**Advertising**

*Page            14*

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*Table            of Contents*

**Competition**

| **Main                Television****Channels**                |   | **Ownership**                                                 |   | **Year                of first****transmission** |   | **Signal****distribution**             |   | **Audience****share                (2005)** |   | **Technical****reach** |
|---------------------------------------------------------------|--------|---------------------------------------------------------------|--------|--------------------------------------------------|--------|----------------------------------------|--------|---------------------------------------------|--------|------------------------|
|                                                          |   |                                                          |   |                                             |   |                                   |   |                                        |   |                   |
| **TV                NOVA****(Czech                Republic)** |   | **CME**                                                       |   | **1994**                                         |   | **Terrestrial**                        |   | **40.9%**                                   |   | **100%**               |
| TV                Prima                                       |   | Modern                Times Group/Local                owners |   | 1993                                             |   | Terrestrial                / satellite |   | 23.2%                                       |   | 95%                    |
| CT                1                                           |   | Public                Television                              |   | 1953                                             |   | Terrestrial                            |   | 21.7%                                       |   | 100%                   |
| CT                2                                           |   | Public                Television                              |   | 1970                                             |   | Terrestrial                            |   | 8.1%                                        |   | 99%                    |
| Others                                                        |   |                                                          |   |                                             |   |                                   |   | 6.1%                                        |   |                   |
|                                                          |   |                                                          |   |                                             |   |                                   |   | 100.0%                                      |   |                   |

**Regulation      and License Renewal**

**ROMANIA**

**General**

*Page            15*

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*Table            of Contents*

**Operating      and License Companies **

**Operations      **

*PRO      TV, ACASA, PRO CINEMA and PRO TV INTERNATIONAL*
** **

|                          |   | **2001** |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   |
|-------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| **PRO                TV**     |   |     |   |     |   |     |   |     |   |     |   |
| All                day        |   |     | 15.2%  |     |   | 14.9%    |   |     | 15.4%  |     |   | 15.8% |   |   | 15.7% |   |
| Prime                time     |   |     | 15.9%  |     |   | 16.3%    |   |     | 17.1%  |     |   | 17.2% |   |   | 16.6% |   |
| **ACASA**                     |   |     |   |          |   |     |        |     |   |          |   |   |  |   |   |  |
| All                day        |   |     | 5.6%   |     |   | 6.0%     |   |     | 6.6%   |     |   | 7.4% |   |   | 8.1% |   |
| Prime                time     |   |     | 6.2%   |     |   | 6.8%     |   |     | 7.8%   |     |   | 7.7% |   |   | 9.1% |   |
| **PRO                CINEMA** |   |     |   |     |   |     |   |     |   |     |   |   |  |   |   |  |
| All                Day        |   |     | -      |     |   | -        |   |     | -      |     |   | 0.6% |   |   | 0.8% |   |
| Prime                Time     |   |     | -      |     |   | -        |   |     | -      |     |   | 0.6% |   |   | 0.7% |   |

*Page            16*

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*Table            of Contents*

**Programming**

**Advertising**

*Page            17*

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*Table            of Contents*

**Competition**

| **Main                Television****Channels** |   | **Ownership**                    |   | **Year                of first****transmission** |   | **Signal****distribution**                                           |   | **Audience****share                (2005)** |   | **Technical****reach** |
|------------------------------------------------|--------|----------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------|--------|------------------------|
|                                           |   |                             |   |                                             |   |                                                                 |   |                                        |   |                   |
| TVR                1                           |   | Public                Television |   | 1956                                             |   | Terrestrial                / satellite                / cable        |   | 18.9%                                       |   | 99%                    |
| **PRO                TV**                      |   | **CME**                          |   | **1995**                                         |   | **Terrestrial                /****satellite                / cable** |   | **15.7****%**                               |   | **76****%**            |
| Antena                1                        |   | Local                owner       |   | 1993                                             |   | Terrestrial                / satellite                / cable        |   | 13.5%                                       |   | 71%                    |
| **ACASA**                                      |   | **CME**                          |   | **1998**                                         |   | **Satellite                / cable**                                 |   | **8.1****%**                                |   | **65****%**            |
| TVR                2                           |   | Public                Television |   | 1968                                             |   | Terrestrial                / satellite                / cable        |   | 5.2%                                        |   | 78%                    |
| Prima                TV                        |   | SBS                              |   | 1994                                             |   | Terrestrial                / satellite                / cable        |   | 4.6%                                        |   | 57%                    |
| **PRO                CINEMA**                  |   | **CME**                          |   | **2004**                                         |   | **Satellite                / cable**                                 |   | **0.8%**                                    |   | **44%**                |
| Others                                         |   |                             |   |                                             |   |                                                                 |   | 33.2%                                       |   |                   |
|                                           |   |                             |   |                                             |   |                                                                 |   | 100.0%                                      |   |                   |

**License      Renewal**

**Ownership      **

*Page            18*

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*Table            of Contents*

**SLOVAK      REPUBLIC**

**General**

**Operating      and License Companies**

**Operations**

*MARKIZA      TV *

*Page            19*

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*Table            of Contents*

|                          |   | **2001** |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   |
|-------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| **MARKIZA                TV** |   |     |   |     |   |     |   |     |   |     |   |   |   |   |   |   |
| All                day        |   |     | 50.3%  |     |   | 48.2%    |   |     | 45.8%  |     |   | 39.6% |   |   | 31.1% |   |
| Prime                time     |   |     | 50.7%  |     |   | 47.4%    |   |     | 45.5%  |     |   | 40.0% |   |   | 32.8% |   |

**Programming**

**Advertising**

*Page            20*

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*Table            of Contents*

**Competition**

| **Main****Television****Channels** |   | **Ownership**                    |   | **Year                of first****transmission** |   | **Signal                distribution** |   | **Audience****share                (2005)** |   | **Technical****reach** |
|------------------------------------|--------|----------------------------------|--------|--------------------------------------------------|--------|----------------------------------------|--------|---------------------------------------------|--------|------------------------|
|                               |   |                             |   |                                             |   |                                   |   |                                        |   |                   |
| **MARKIZA                TV**      |   | **CME**                          |   | **1996**                                         |   | **Terrestrial**                        |   | **31.1%**                                   |   | **86%**                |
| STV                1               |   | Public                Television |   | 1956                                             |   | Terrestrial                            |   | 19.2%                                       |   | 97%                    |
| TV                JOJ              |   | Local                owner       |   | 2002                                             |   | Terrestrial                            |   | 14.7%                                       |   | 61%                    |
| STV                2               |   | Public                Television |   | 1969                                             |   | Terrestrial                            |   | 5.7%                                        |   | 89%                    |
| Others                             |   |                             |   |                                             |   |                                   |   | 29.3%                                       |   |                   |
|                               |   |                             |   |                                             |   |                                   |   | 100.0%                                      |   |                   |

**License      Renewal**

**Ownership**

*Page            21*

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**SLOVENIA**

**General      **

**Operating      and License Companies**

**Operations**

*POP      TV and KANAL A *

|                       |   | **2001** |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   |
|----------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| **POP                TV**  |   |     |   |     |   |     |   |     |   |     |   |
| All                day     |   |     | 29.0%  |     |   | 29.2%    |   |     | 29.5%  |     |   | 27.6% |   |   | 27.3% |   |
| Prime                time  |   |     | 32.0%  |     |   | 32.3%    |   |     | 34.0%  |     |   | 31.9% |   |   | 32.2% |   |
| **KANAL                A** |   |     |   |     |   |     |   |     |   |     |   |   |   |   |   |   |
| All                day     |   |     | 11.5%  |     |   | 11.0%    |   |     | 10.2%  |     |   | 8.3% |   |   | 8.5% |   |
| Prime                time  |   |     | 12.0%  |     |   | 11.0%    |   |     | 10.9%  |     |   | 9.4% |   |   | 9.8% |   |

**Programming**

*Page            22*

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**Advertising**

**Competition**

*Page            23*

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*Table            of Contents*

| **Main                Television****Channels** |   | **Ownership**                    |   | **Year                of first****transmission** |   | **Signal****distribution**                                    |   | **Audience****share                (2005)** |   | **Technical****reach** |
|------------------------------------------------|--------|----------------------------------|--------|--------------------------------------------------|--------|---------------------------------------------------------------|--------|---------------------------------------------|--------|------------------------|
|                                           |   |                             |   |                                             |   |                                                          |   |                                        |   |                   |
| **POP                TV**                      |   | **CME**                          |   | **1995**                                         |   | **Terrestrial                /****cable**                     |   | **27.3%**                                   |   | **95%**                |
| SLO                1                           |   | Public                Television |   | 1958                                             |   | Terrestrial                / satellite                / cable |   | 25.5%                                       |   | 100%                   |
| SLO                2                           |   | Public                Television |   | 1967                                             |   | Terrestrial                / satellite                / cable |   | 8.7%                                        |   | 99%                    |
| **KANAL                A**                     |   | **CME**                          |   | **1991**                                         |   | **Terrestrial                /****cable**                     |   | **8.5%**                                    |   | **86%**                |
| Others                                         |   |                             |   |                                             |   |                                                          |   | 30.0%                                       |   |                   |
|                                           |   |                             |   |                                             |   |                                                          |   | 100.0%                                      |   |                   |

**License      Renewals **

**Ownership**

**UKRAINE**

**General**

**Operating      and License Companies **

*Page            24*

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*Table            of Contents*

**Operations**

*STUDIO      1+1*

|                          |   | **2001** |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   |
|-------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| **STUDIO                1+1** |   |     |   |     |   |     |   |     |   |     |   |
| All                day        |   |     | 21.9%  |     |   | 22.2%    |   |     | 19.1%  |     |   | 20.9% |   |   | 20.0% |   |
| Prime                time     |   |     | 28.9%  |     |   | 27.4%    |   |     | 25.8%  |     |   | 26.9% |   |   | 22.2% |   |

**Programming**

*Page            25*

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**Advertising**

**Competition**

| **Main****Television****Channels** |   | **Ownership**                    |   | **Year                of first****transmission** |   | **Signal                distribution**                               |   | **Audience****share                (2005)** |   | **Technical****reach** |
|------------------------------------|--------|----------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------|--------|------------------------|
|                               |   |                             |   |                                             |   |                                                                 |   |                                        |   |                   |
| Inter                              |   | Local                owners      |   | 1997                                             |   | Terrestrial                / satellite /                cable        |   | 25.5%                                       |   | 78%                    |
| **STUDIO                1+1**      |   | **CME**                          |   | **1997**                                         |   | **Terrestrial                /****satellite                / cable** |   | **20.0%**                                   |   | **95%**                |
| Novi                Kanal          |   | Local                owners      |   | 1998                                             |   | Terrestrial                                                          |   | 9.1%                                        |   | 50%                    |
| ICTV                               |   | Local                owners      |   | Unknown                                          |   | Terrestrial                                                          |   | 7.2%                                        |   | n/a                    |
| STV                                |   | Local                owners      |   | Unknown                                          |   | Terrestrial                                                          |   | 5.2%                                        |   | n/a                    |
| UT-1                               |   | Public                Television |   | 1952                                             |   | Terrestrial                / cable                                   |   | 1.8%                                        |   | 98%                    |
| Others                             |   |                             |   |                                             |   |                                                                 |   | 31.2%                                       |   |                   |
|                               |   |                             |   |                                             |   |                                                                 |   | 100.0%                                      |   |                   |

*Page            26*

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**License      Renewal**

**Ownership**

**CORPORATE      OPERATIONS**

**SEASONALITY**

**EMPLOYEES**

**FINANCIAL      INFORMATION BY OPERATING SEGMENT AND BY GEOGRAPHICAL AREA**

*Page            27*

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| **ITEM                1A.** | **RISK                FACTORS** |
|-----------------------------|---------------------------------|

**Risks      Relating to our Business and Operations**

*Our      operating results are dependent on the importance of television as an      advertising medium*

*Our      broadcasting licenses may not be renewed and may be subject to revocation*

*We      do      not have management control of our affiliate in Ukraine and could lose our      contractual rights*

*Page            28*

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*We      have a history of net operating losses and our operations may not be profitable      in the future*

*Our      operating results are dependent on general economic conditions*

*Our      increased debt service obligations following the acquisition of the TV Nova      (Czech Republic) group may adversely affect our business*

*Page            29*

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*Our      cash flow and capital resources may not be sufficient for future debt service      obligations*

*We      are subject to risks relating to fluctuations in exchange      rates*

*Our      operations are in developing markets where there is a risk of economic      uncertainty, biased treatment and loss of business*

*Our      holding company structure may limit our access to cash*

*Page            30*

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*We      may require additional external sources of capital, which may not be available      on acceptable terms*

*Our      related party transactions may involve risks of conflicts of interest and      delayed payments resulting in the conclusion of transactions on less favorable      terms than could be obtained in arms length transactions and the risk of a      negative impact on cashflow*

*We      may not be able to prevent our general directors from entering into transactions      that are outside their authority and not in the best interests of      shareholders*

*Page            31*

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*Our      business is subject to significant changes in technology that could adversely      affect our business*

*We      may not be able to enforce our indemnification rights in a timely      manner*

*Enforcement      of civil liabilities and judgments may be difficult*

**Risks      Relating to Our Common Stock**

*The      price of our Common Stock is likely to remain volatile*

*Page            32*

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*Our      share price may be adversely affected by potential future issuances and sales      of      our shares*

*There      is a risk that we may become subject to the passive foreign investment company      rules under United States tax laws*

| **ITEM                1B.** | **UNRESOLVED                STAFF COMMENTS** |
|-----------------------------|----------------------------------------------|

*Page            33*

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| **ITEM                2.** | **PROPERTIES** |
|----------------------------|----------------|

| **Location**                                                 |   | **Property**                                                                                                     |   | **Use**                                                          |
|--------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|
|                                                         |   |                                                                                                             |   |                                                             |
| Hamilton,                Bermuda                             |   | Leased                office                                                                                     |   | Registered                Office, Corporate                      |
| London,                United Kingdom                        |   | Leased                office                                                                                     |   | Administrative                Center, Corporate                  |
| Amsterdam,                Netherlands                        |   | Leased                office                                                                                     |   | Corporate                Office, Corporate                       |
| Zagreb,                Croatia                               |   | Owned                buildings (currently disclosed as assets held-for-sale) and leased                buildings |   | Office                and studio space, NOVA TV (Croatia)        |
| Prague,                Czech Republic                        |   | Leased                buildings                                                                                  |   | Office                and studio space, TV NOVA (Czech Republic) |
| Bucharest                and other key cities within Romania |   | Leased                buildings                                                                                  |   | Office                and studio space, PRO TV                   |
| Blatne,                Slovak Republic                       |   | Owned                buildings                                                                                   |   | Office                and studio space, MARKIZA TV               |
| Ljubljana,                Slovenia                           |   | Owned                buildings and leased buildings                                                              |   | Office                and studio space, POP TV and KANAL A       |
| Kiev,                Ukraine                                 |   | Leased                buildings                                                                                  |   | Office                space, STUDIO 1+1                          |
| Surrounding                suburbs of Kiev, Ukraine          |   | Leased                offices                                                                                    |   | Studio                space, STUDIO 1+1                          |

| **ITEM                3.** | **LEGAL                PROCEEDINGS** |
|----------------------------|--------------------------------------|

**General**

*Page            34*

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**Croatia**

**Czech      Republic**

*Claims      Relating to the Vilja Shareholding in CET 21*

*Page            35*

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*Disposition      of the CET 21 Interest Held by CET 21*

*Claims      brought by Alan, Huncik, Venclik and Gal*

*Claims      Relating to the Interests of CS and CEDC in CET 21*

*Other      Claims*

*Page            36*

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*Table            of Contents*

*Antimonopoly        Office*

**Romania**

**Slovenia**

**Slovak      Republic**

**Ukraine**

*Page            37*

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| **ITEM                4.** | **SUBMISSION                OF MATTERS TO A VOTE OF SECURITY                HOLDERS** |
|----------------------------|---------------------------------------------------------------------------------------|

*Page            38*

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**PART      II**

| **ITEM                5.** | **MARKET                FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER                MATTERS****AND ISSUER PURCHASES OF EQUITY                SECURITIES** |
|----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Price                Period** |   | **High                (US$/Share)** |   | **Low                (US$/Share)** |   |
|---------------------------------|--------|-------------------------------------|--------|------------------------------------|--------|
| **2004**                        |   |                                |   |                               |   |
| First                Quarter    |   |                                | 21.32  |                               |   | 17.50 |   |
| Second                Quarter   |   |                                | 23.18  |                               |   | 18.13 |   |
| Third                Quarter    |   |                                | 29.12  |                               |   | 22.34 |   |
| Fourth                Quarter   |   |                                | 40.27  |                               |   | 28.60 |   |
| **2005**                        |   |                                |   |                               |   |   |   |
| First                Quarter    |   |                                | 56.08  |                               |   | 34.90 |   |
| Second                Quarter   |   |                                | 50.70  |                               |   | 40.04 |   |
| Third                Quarter    |   |                                | 55.79  |                               |   | 47.10 |   |
| Fourth                Quarter   |   |                                | 59.00  |                               |   | 44.72 |   |

**DIVIDEND      POLICY**

**PURCHASE      OF OWN STOCK**

| **ITEM                6.** | **SELECTED                FINANCIAL DATA** |
|----------------------------|--------------------------------------------|

**SELECTED      CONSOLIDATED FINANCIAL DATA **

*Page            39*

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|                                                                                                        |   | **For                  the Years Ended December 31,**         |          |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|---------------|
|                                                                                                        |   | **2005                  (3)**                                 |          | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                                                                        |   | **(US$                  000’s, except per share data)** |          |
| **CONSOLIDATED                  STATEMENT OF****OPERATIONS                  DATA:**                         |   |                                                          |          |   |   |   |   |   |   |   |   |
| Net                  revenues                                                                               |   | $                                                             | 400,978       |   | $ | 182,339 |   | $ | 124,978 |   | $ | 99,143 |   | $ | 84,116 |   |
| Operating                  income/(loss)                                                                    |   | $                                                             | 52,369        |   |   | 18,740 |   |   | (4,410 | ) |   | 1,466 |   |   | (8,315 | ) |
| Net                  income/(loss) from continuing operations                                               |   |                                                          | 43,008        |   |   | 16,007 |   |   | (24,201 | ) |   | (25,106 | ) |   | (25,240 | ) |
| (Loss)/income                  on discontinued operations (1)                                               |   |                                                          | (513          | ) |   | 2,524 |   |   | 370,213 |   |   | 10,922 |   |   | 3,129 |   |
| Net                  income/(loss)                                                                          |   | $                                                             | 42,495        |   | $ | 18,531 |   | $ | 346,012 |   | $ | (14,184 | ) | $ | (22,111 | ) |
|                                                                                                        |   |                                                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PER                  SHARE DATA:**(2)                                                                     |   |                                                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income/(loss) per common share from:                                                   |   |                                                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                  operations - basic                                                              |   | $                                                             | 1.24          |   | $ | 0.57 |   | $ | (0.91 | ) | $ | (0.95 | ) | $ | (0.95 | ) |
| Continuing                  operations - diluted                                                            |   |                                                          | 1.21          |   |   | 0.55 |   |   | (0.91 | ) |   | (0.95 | ) |   | (0.95 | ) |
| Discontinued                  operations - basic                                                            |   |                                                          | (0.01         | ) |   | 0.09 |   |   | 13.97 |   |   | 0.41 |   |   | 0.12 |   |
| Discontinued                  operations - diluted                                                          |   |                                                          | (0.01         | ) |   | 0.09 |   |   | 13.97 |   |   | 0.41 |   |   | 0.12 |   |
| Net                  income/(loss) - basic                                                                  |   |                                                          | 1.23          |   |   | 0.66 |   |   | 13.06 |   |   | (0.54 | ) |   | (0.84 | ) |
| Net                  income/(loss) - diluted                                                                |   | $                                                             | 1.20          |   | $ | 0.64 |   | $ | 13.06 |   | $ | (0.54 | ) | $ | (0.84 | ) |
| Weighted                  average common shares used in computing per share amounts                  (000s) |   |                                                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                       |   |                                                          | 34,664        |   |   | 27,871 |   |   | 26,492 |   |   | 26,451 |   |   | 26,449 |   |
| Diluted                                                                                                     |   |                                                          | 35,430        |   |   | 29,100 |   |   | 26,492 |   |   | 26,451 |   |   | 26,449 |   |
|                                                                                                        |   |                                                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  BALANCE SHEET DATA:**                                                       |   |                                                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                  assets                                                                             |   | $                                                             | 286,926       |   | $ | 265,049 |   | $ | 266,891 |   | $ | 109,558 |   | $ | 81,024 |   |
| Non-current                  assets                                                                         |   |                                                          | 1,101,924     |   |   | 179,590 |   |   | 101,861 |   |   | 74,464 |   |   | 75,114 |   |
| **Total                  assets**                                                                           |   |                                                          | **1,388,850** |   |   | **444,639** |   |   | **368,752** |   |   | **184,022** |   |   | **156,138** |   |
| Current                  liabilities                                                                        |   |                                                          | 206,961       |   |   | 109,745 |   |   | 71,116 |   |   | 77,156 |   |   | 79,619 |   |
| Non-current                  liabilities                                                                    |   |                                                          | 488,099       |   |   | 18,965 |   |   | 23,118 |   |   | 200,723 |   |   | 165,225 |   |
| Minority                  interests                                                                         |   |                                                          | 13,237        |   |   | 4,861 |   |   | 994 |   |   | 2,019 |   |   | 90 |   |
| Shareholders’                  equity/(deficit)                                                       |   |                                                          | 680,553       |   |   | 311,068 |   |   | 273,524 |   |   | (95,876 | ) |   | (88,796 | ) |
| **Total                  liabilities and shareholders’ equity**                                       |   | **$**                                                         | **1,388,850** |   | **$** | **444,639** |   | **$** | **368,752** |   | **$** | **184,022** |   | **$** | **156,138** |   |

*Page            40*

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|                                                                     |   | **For                the Year Ended December 31, 2005**     |   |
|--------------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
|                                                                     |   | **First                Quarter**                            |   | **Second                Quarter** |   | **Third                Quarter** |   | **Fourth                Quarter** |   |
|                                                                     |   | **(US$                000’s, except per share data)** |   |
| Consolidated                Statement of Operations                data: |   |                                                        |   |   |   |   |   |   |   |
| Net                Revenues                                              |   | $                                                           | 48,304 |   | $ | 113,109 |   | $ | 87,067 |   | $ | 152,498 |   |
| Operating                Income/(Loss)                                   |   |                                                        | (2,252 | ) |   | 6,862 |   |   | 4,792 |   |   | 42,967 |   |
| Net                Income/(Loss)                                         |   |                                                        | (7,949 | ) |   | 25,459 |   |   | (9,614 | ) |   | 34,599 |   |
| Net                Income/(Loss) per share:                              |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Basic                EPS                                                 |   | $                                                           | (0.28  | ) | $ | 0.74 |   | $ | (0.25 | ) | $ | 0.91 |   |
| Effect                of dilutive securities                             |   |                                                        | -      |   |   | (0.02 | ) |   | - |   |   | (0.01 | ) |
| Diluted                EPS                                               |   | $                                                           | (0.28  | ) | $ | 0.72 |   | $ | (0.25 | ) | $ | 0.90 |   |

|                                                                     |   | **For                the Year Ended December 31, 2004**     |   |
|--------------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
|                                                                     |   | **First                Quarter**                            |   | **Second                Quarter** |   | **Third                Quarter** |   | **Fourth                Quarter** |   |
|                                                                     |   | **(US$                000’s, except per share data)** |   |
| Consolidated                Statement of Operations                data: |   |                                                        |   |   |   |   |   |   |   |
| Net                Revenues                                              |   | $                                                           | 35,848 |   | $ | 44,886 |   | $ | 36,543 |   | $ | 65,062 |   |
| Operating                Income/(Loss)                                   |   |                                                        | 6,022  |   |   | 8,771 |   |   | (6,736 | ) |   | 10,683 |   |
| Net                Income/(Loss)                                         |   |                                                        | 5,171  |   |   | 6,032 |   |   | (5,647 | ) |   | 12,975 |   |
| Net                Income/(Loss) per share:                              |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Basic                EPS                                                 |   | $                                                           | 0.19   |   | $ | 0.22 |   | $ | (0.20 | ) | $ | 0.46 |   |
| Effect                of dilutive securities                             |   |                                                        | (0.01  | ) |   | (0.01 | ) |   | - |   |   | (0.02 | ) |
| Diluted                EPS                                               |   | $                                                           | 0.18   |   | $ | 0.21 |   | $ | (0.20 | ) | $ | 0.44 |   |

**Seasonality**

*Page            41*

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| **ITEM                7.** | **MANAGEMENT'S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS** |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------|

***Contents***

| ***I.***   | ***Executive                Summary***                                  |
|------------|-------------------------------------------------------------------------|
| ***II.***  | ***General                Market Information***                         |
| ***III.*** | ***Analysis                of Segment Results***                        |
| ***IV.***  | ***Analysis                of the Results of Consolidated Operations*** |
| ***V.***   | ***Liquidity                and Capital Resources***                    |
| ***VI.***  | ***Critical                Accounting Policies and Estimates***         |
| ***VII.*** | ***Related                Party Matters***                              |

| ***I.*** | ***Executive                Summary*** |
|----------|----------------------------------------|

| · | We                improved the financial performance of our core stations (Romania,                Slovak                Republic, Slovenia, Ukraine) by delivering an increase in Segment                Net                Revenues of 22% and Segment EBITDA of 31% from                2004; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We                completed the acquisition of the TV Nova (Czech Republic) group,                which has                substantially increased the scale of our business and created                opportunities to leverage our market size;                and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We                increased our interest in our Romanian operations to 85% and in our                Slovenian operations to 100% and reached an agreement to increase                our                interest in our Slovak operations to                80%. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | In                May 2005, we acquired the TV Nova (Czech Republic) group for total                consideration of US$ 909.5 million, which owns and operates TV NOVA,                the                leading television channel in the Czech Republic; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | To                finance our acquisition of the TV Nova (Czech Republic) group in                May 2005,                we issued Senior Notes in the aggregate principal amount of Euro                370.0                million (approximately US$ 480 million at the time of issuance);                we also                raised net proceeds of approximately US$ 230.6 million by selling                approximately 5.4 million shares of Class A Common                Stock; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On                June 27, 2005, our Class A Common Stock began trading on the Prague                Stock                Exchange; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

| · | We                increased our interest in our Slovenian operations to 100% following                the                sale by Marijan Jurenec of his 3.15% interest in Pro Plus during                the                second quarter of 2005; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | In                June 2005, we performed an analysis of our Croatian intangible assets                and                goodwill to determine if they were impaired in light of our modified                strategy. As a result of this analysis we determined that our Croatian                investment was impaired by US$ 35.3 million (for further information                see                Part II, Item 8, Note 4, “Goodwill and Intangible                Assets”); |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On                September 1, 2005, we acquired Galaxie Sport, which operates the                leading                sports cable channel GALAXIE SPORT in the Czech and Slovak                Republics; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            42*

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*Table            of Contents*

| · | At                the end of October 2005, we entered into an agreement with our Slovak                partners to acquire a controlling interest in our Slovak operations,                and                to increase our economic interest in those operations from 70% to                80% for                total consideration of approximately US$ 29.5 million (including                deferred                consideration of US$ 5.1 million payable on May 31, 2006). Following                completion on January 23, 2006, we now own (directly and indirectly)                an                80% voting interest in Markiza and a voting interest of 89.8% in                STS. As a                result of this transaction, we will begin consolidating the results                of our                Slovak operations from January 2006 (for further information see                Part II,                Item 8, Note 21, “Subsequent Events, Slovak                Republic”); |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On                October 28, 2005, we entered into an agreement with Dertus Finance                Group                Limited (“Dertus”) providing for the purchase by us of a 65.5% interest in                Ukrpromtorg 2003 LLC (“Ukrpromtorg”), a company that owns and operates the                GRAVIS channel and CHANNEL 7 in Kiev and one other local channel                in                Ukraine, for a total investment of approximately US$ 7.0 million                (subject                to any adjustment following an audit of the closing balance sheet).                This                acquisition of additional distribution capacity in the Ukraine, which                was                completed on January 11, 2006, is intended to complement STUDIO 1+1                and to                allow the costs of our Ukrainian operations to be allocated across                multiple channels (for further information, see Part II, Item 8,                Note 21                “Subsequent Events, Ukraine”); and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On                February 17, 2006, we purchased an additional 5% of Pro TV, MPI and                Media                Vision from Adrian Sarbu for consideration of US$ 27.2 million (for                further information, see Part II, Item 8, Note 21, “Subsequent Events,                Romania”). We now own a 90% voting and economic interest in Pro TV and MPI                and a 75% voting and economic interest in Media                Vision. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Future      Trends*

| · | Pursuing                sub-regional efficiencies, especially between Slovenia and Croatia                and                between the Czech and Slovak                Republics; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Supporting                the growth of television advertising in our markets through increased                pricing and through development of additional channels to expand                our                advertising inventory and target niche                audiences; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Leveraging                our existing brands and assets to develop new revenue opportunities,                including in the creation and distribution of programming and in                the new                media sectors; and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Continuing                to expand our footprint into additional Central and Eastern European                markets when financially prudent opportunities                arise. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            43*

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*Table            of Contents*

| · | Following                the completion of our acquisition of a controlling interest in Ukrpromtorg                on January 11, 2006, we intend to re-brand the channels and to expand                their reach through the activation of the satellite license and                acquisition of additional local (and regional) licenses with coverage                of                key population centers. We will continue to seek similar opportunities                to                expand our footprint within each of our markets where                possible. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We                are planning to continue to invest in the development of our Croatian                operations as described in Nova TV (Croatia) Development Plan that                we                published in August 2005. We expect to continue to increase our audience                share by acquiring higher quality programming by making additional                strategic investments in local productions, as well as by making                limited                capital investments in order to extend the technical reach of those                operations.  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Management      Changes *

| · | Effective                April 12, 2005, Marijan Jurenec was promoted to the new role of Director                of the Adriatic Region with responsibility for our operations in                Croatia                and Slovenia; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Effective                October 1, 2005, Romana Tomasová was appointed as Director of Corporate                Communications, responsible for investor, government and public                relations; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Effective                February 1, 2006, Vaclav Mika was appointed General Director for                the                MARKIZA TV channel; and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Effective                February 20, 2006, we appointed Adrian Sarbu to oversee our operations                in                the Czech and Slovak Republics in addition to his existing                responsibilities as General Director of our operations in                Romania. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Continuing      Operations*

|                                                        |   | **For                the Year Ended December 31, (US$ 000's)** |       |
|-------------------------------------------------------------|--------|----------------------------------------------------------------|------------|
|                                                        |   | **2005**                                                       |       | **2004** |   | **Movement** |   | **2004** |   | **2003** |   | **Movement** |   |
| Net                Revenues                                 |   |                                                           | 400,978    |   |   | 182,339 |   |   | *218,639* |   |   | 182,339 |   |   | 124,978 |   |   | *57,361* |   |
|                                                        |   |                                                           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income/(loss)                      |   |                                                           | 52,369     |   |   | 18,740 |   |   | *33,629* |   |   | 18,740 |   |   | (4,410 | ) |   | *23,150* |   |
| Net                income/(loss) from continuing operations |   |                                                           | 43,008     |   |   | 16,007 |   |   | *27,001* |   |   | 16,007 |   |   | (24,201 | ) |   | *40,208* |   |
| **Net                income**                               |   |                                                           | **42,495** |   |   | **18,531** |   |   | ***23,964*** |   |   | **18,531** |   |   | **346,012** |   |   | ***(327,481*** | ***)*** |

| ***II.*** | ***General                Market Information*** |
|-----------|-------------------------------------------------|

*Emerging      Markets*

*Page            44*

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*Table            of Contents*

| **Country**                    |   | **2005****Rating** |   | **Detail                of 2005 Rating**                                                                                                                                                                                                                       |   | **2004****Rating** |   | **2003****Rating** |   | **2002****Rating** |
|--------------------------------|--------|--------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------------------|--------|--------------------|
|                           |   |               |   |                                                                                                                                                                                                                                                           |   |               |   |               |   |               |
| Croatia                        |   | A4                 |   | An                already patchy payment record could be further worsened by a deteriorating                political and economic environment. Nevertheless, the probability                of a                default is still acceptable.                  |   | *A4*               |   | *A4*               |   | *A4*               |
| Czech                Republic  |   | A2                 |   | Default                probability is still weak even in the case when one country's political                and economic environment or the payment record of companies is not                as good                as in A1-rated countries.               |   | *A2*               |   | *A3*               |   | *A3*               |
| Romania                        |   | A4                 |   | An                already patchy payment record could be further worsened by a deteriorating                political and economic environment. Nevertheless, the probability                of a                default is still acceptable.                  |   | *B*                |   | *B*                |   | *B*                |
| Slovenia                       |   | A2                 |   | Default                probability is still weak even in the case when one country's political                and economic environment or the payment record of companies is not                as good                as in A1-rated countries.               |   | *A2*               |   | *A2*               |   | *A2*               |
| Slovak                Republic |   | A3                 |   | Adverse                political or economic circumstances may lead to a worsening payment                record                that is already lower than the previous categories, although the                probability of a payment default is still low. |   | *A3*               |   | *A3*               |   | *A4*               |
| Ukraine                        |   | C                  |   | A                very unsteady political and economic environment could deteriorate                an                already bad payment record.                                                                                                               |   | *C*                |   | *C*                |   | *D*                |

*European      Union Expansion*

*Television      Advertising Markets*

*Page          45*

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*Table          of Contents*

| **Country**                    | ** ** | **Population****(in                millions)****(1)** | ** ** | **Per                Capita****GDP                2005****(2)** | ** ** | **Total****Advertising****Spending                per****Capita                2005****(US$)                (3)** | ** ** | **Total****Advertising****Spending                as****a                % of GDP****2005                (3)** | ** ** | **TV****Advertising****Spending                per****Capita                (US$)****(3)** | ** ** | **TV****Advertising****Spending                as****a                % of Total****Advertising****Spending                (3)** |   |
|--------------------------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Croatia                        |       |                                                  | 4.3        |                                                            | $          | 8,176                                                                                                             |       | $                                                                                                              | 57.95      |                                                                                       |       | 0.71%                                                                                                                            |   | $ | 27.54 |   |   | 48% |   |
| Czech                Republic  |       |                                                  | 10.2       |                                                            | $          | 11,148                                                                                                            |       | $                                                                                                              | 73.59      |                                                                                       |       | 0.66%                                                                                                                            |   | $ | 34.76 |   |   | 47% |   |
| Romania                        |       |                                                  | 21.3       |                                                            | $          | 4,460                                                                                                             |       | $                                                                                                              | 12.24      |                                                                                       |       | 0.27%                                                                                                                            |   | $ | 7.32 |   |   | 60% |   |
| Slovak                Republic |       |                                                  | 5.4        |                                                            | $          | 9,312                                                                                                             |       | $                                                                                                              | 35.63      |                                                                                       |       | 0.38%                                                                                                                            |   | $ | 17.84 |   |   | 50% |   |
| Slovenia                       |       |                                                  | 2.0        |                                                            | $          | 17,050                                                                                                            |       | $                                                                                                              | 55.85      |                                                                                       |       | 0.33%                                                                                                                            |   | $ | 33.29 |   |   | 59% |   |
| Ukraine                        |       |                                                  | 47.4       |                                                            | $          | 1,715                                                                                                             |       | $                                                                                                              | 8.35       |                                                                                       |       | 0.49%                                                                                                                            |   | $ | 3.92 |   |   | 47% |   |

|   | (1) | Source:                Global Insight Country Analysis (2005                data). |
|--------|-----|------------------------------------------------------------------------------------|

|   | (2) | Source:                ING (September 2005 data). |
|--------|-----|---------------------------------------------------|

|   | (3) | Source:                CME estimates. |
|--------|-----|---------------------------------------|

| **Country** | ** ** | **Population****(in                millions)****(1)** | ** ** | **Per                Capita****GDP                2005****(1)** | ** ** | **Total****Advertising****Spending                per****Capita                2005****(US$)                (2)** | ** ** | **Total****Advertising****Spending                as****a                % of GDP****2005                (2)** | ** ** | **TV****Advertising****Spending                per****Capita                (US$)****(2)** | ** ** | **TV****Advertising****Spending                as****a                % of Total****Advertising****Spending                (2)** |   |
|-------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Greece      |       |                                                  | 11.1       |                                                            | $          | 19,685                                                                                                            |       | $                                                                                                              | 213        |                                                                                       |       | 1.09%                                                                                                                            |   | $ | 71 |   |   | 33% |   |
| Hungary     |       |                                                  | 10.1       |                                                            | $          | 10,713                                                                                                            |       | $                                                                                                              | 122        |                                                                                       |       | 1.14%                                                                                                                            |   | $ | 81 |   |   | 66% |   |
| Italy       |       |                                                  | 58.0       |                                                            | $          | 29,567                                                                                                            |       | $                                                                                                              | 166        |                                                                                       |       | 0.56%                                                                                                                            |   | $ | 92 |   |   | 55% |   |
| Poland      |       |                                                  | 38.6       |                                                            | $          | 6,622                                                                                                             |       | $                                                                                                              | 28         |                                                                                       |       | 0.42%                                                                                                                            |   | $ | 14 |   |   | 51% |   |
| Russia      |       |                                                  | 143.9      |                                                            | $          | 4,279                                                                                                             |       | $                                                                                                              | 34         |                                                                                       |       | 0.79%                                                                                                                            |   | $ | 16 |   |   | 46% |   |
| Turkey      |       |                                                  | 72.2       |                                                            | $          | 4,345                                                                                                             |       | $                                                                                                              | 23         |                                                                                       |       | 0.52%                                                                                                                            |   | $ | 13 |   |   | 56% |   |
| UK          |       |                                                  | 59.5       |                                                            | $          | 37,333                                                                                                            |       | $                                                                                                              | 322        |                                                                                       |       | 0.86%                                                                                                                            |   | $ | 95 |   |   | 30% |   |
| USA         |       |                                                  | 295.4      |                                                            | $          | 42,471                                                                                                            |       | $                                                                                                              | 507        |                                                                                       |       | 1.19%                                                                                                                            |   | $ | 188 |   |   | 37% |   |

|   | (1) | Source:                ZenithOptimedia (December 2005). |
|--------|-----|---------------------------------------------------------|

|   | (2) | Source:                CME estimates. |
|--------|-----|---------------------------------------|

*Page            46*

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| **Country**                    | ** ** | **2001**               | ** ** | **2002**                | ** ** | **2003**                 | ** ** | **2004**                 | ** ** | **2005**                 |
|--------------------------------|------------|------------------------|------------|-------------------------|------------|--------------------------|------------|--------------------------|------------|--------------------------|
| Croatia                        |       |                   |       |                    |       |                     |       | 110                - 120 |       | 115                - 125 |
| Czech                Republic  |       |                   |       |                    |       |                     |       | 335                - 345 |       | 350                - 360 |
| Romania                        |       | 60                - 70 |       | 65                - 75  |       | 85                - 95   |       | 110                - 120 |       | 150                - 160 |
| Slovak                Republic |       | 35                -45  |       | 40                - 50  |       | 60                - 70   |       | 80                - 90   |       | 90                - 100  |
| Slovenia                       |       | 45                - 55 |       | 45                - 55  |       | 45                - 55   |       | 55                - 65   |       | 60                - 70   |
| Ukraine                        |       | 70                - 85 |       | 85                - 100 |       | 100                - 115 |       | 130                - 140 |       | 180                - 190 |

*Television      Advertising Sales *

*Cost      per GRP pricing:*

*Rate-card      pricing:*

*Page            47*

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*Table            of Contents*

| ***III.*** | ***Analysis                of Segment Results*** |
|------------|--------------------------------------------------|

**OVERVIEW**

| · | expenses                presented as corporate operating costs in our Consolidated Statement                of                Operations; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

| · | foreign                currency exchange gains and losses;                and |
|--------|-------------------------------------------------------------------------------|

| · | certain                unusual or infrequent items (e.g., extraordinary gains and losses,                impairments on assets or                investments). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            48*

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*Table            of Contents*

|                                                   |   | **SEGMENT                FINANCIAL INFORMATION**                |        |
|--------------------------------------------------------|--------|-----------------------------------------------------------------|-------------|
|                                                   |   | **For                the Years Ended December 31, (US$ 000's)** |        |
|                                                   |   | **2005**                                                        | ** **  | **(1)** | ** ** | **2004** | ** ** | **(1)** | ** ** | **2003** | ** ** | **(1)** |   |
| **Segment                Net Revenue**                 |   |                                                            |        |   |   |   |   |   |   |   |   |   |   |
| Croatia                (NOVA TV)                       |   | $                                                               | 22,030      |   |   | 5 | %    | $ | 9,757 |   |   | 4 | % | $ | - |   |   | - | % |
| Czech                Republic (TV NOVA, GALAXIE SPORT) |   |                                                            | 154,010     |   |   | 33 | % |   | - |   |   | - | % |   | - |   |   | - | % |
| Romania                (2)                             |   |                                                            | 103,321     |   |   | 22 | % |   | 76,463 |   |   | 31 | % |   | 51,177 |   |   | 29 | % |
| Slovak                Republic (MARKIZA TV)            |   |                                                            | 64,266      |   |   | 14 | % |   | 61,576 |   |   | 25 | % |   | 50,814 |   |   | 29 | % |
| Slovenia                (POP TV and KANAL A)           |   |                                                            | 48,770      |   |   | 10 | % |   | 45,388 |   |   | 18 | % |   | 37,168 |   |   | 21 | % |
| Ukraine                (STUDIO 1+1)                    |   |                                                            | 72,847      |   |   | 16 | % |   | 53,351 |   |   | 22 | % |   | 36,633 |   |   | 21 | % |
| **Total                Segment Net Revenue**           |   | **$**                                                           | **465,244** |   |   | **100** | **%** | **$** | **246,535** |   |   | **100** | **%** | **$** | **175,792** |   |   | **100** | **%** |
|                                                   |   |                                                            |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Segment                EBITDA**                      |   |                                                            |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Croatia                (NOVA TV)                       |   | $                                                               | (15,866     | ) |   | (10 | )% | $ | (3,756 | ) |   | (5 | )%   | $ | - |   |   | - | % |
| Czech                Republic (TV NOVA, GALAXIE SPORT) |   |                                                            | 71,544      |   |   | 45 | % |   | - |   |   | - | % |   | - |   |   | - | % |
| Romania                (2)                             |   |                                                            | 43,803      |   |   | 28 | % |   | 25,198 |   |   | 34 | % |   | 12,206 |   |   | 27 | % |
| Slovak                Republic (MARKIZA TV)            |   |                                                            | 17,240      |   |   | 11 | % |   | 18,975 |   |   | 25 | % |   | 11,657 |   |   | 26 | % |
| Slovenia                (POP TV and KANAL A)           |   |                                                            | 19,337      |   |   | 12 | % |   | 19,077 |   |   | 26 | % |   | 13,173 |   |   | 29 | % |
| Ukraine                (STUDIO 1+1)                    |   |                                                            | 21,803      |   |   | 14 | % |   | 14,729 |   |   | 20 | % |   | 7,999 |   |   | 18 | % |
| **Total                Segment EBITDA**                |   | **$**                                                           | **157,861** |   |   | **100** | **%** | **$** | **74,223** |   |   | **100** | **%** | **$** | **45,035** |   |   | **100** | **%** |
|                                                   |   |                                                            |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Segment                EBITDA Margin (3)**           |   |                                                            | **34**      | **%** |   |   |   |   | **30** | **%** |   |   |   |   | **26** | **%** |   |   |   |

**ANALYSIS      BY GEOGRAPHIC SEGMENT**

**(A)      CROATIA**

|                                  |   | **SEGMENT                FINANCIAL INFORMATION**                |    |
|---------------------------------------|--------|-----------------------------------------------------------------|---------|
|                                  |   | **For                the Years Ended December 31, (US$ 000's)** |    |
|                                  |   | **2005**                                                        |    | **2004                (1)** |   | ***Movement*** |   |
| Croatian                Net Revenues  |   | $                                                               | 22,030  |   | $ | 9,757 |   | *$* | *12,273* |   |
| Croatian                EBITDA        |   | $                                                               | (15,866 | ) | $ | (3,756 | ) | *$* | *(12,110* | *)* |
| Croatian                EBITDA Margin |   |                                                            | (72     | )%  |   | (38 | )%  |   | *(34* | *)%* |

*Page            49*

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**Market      Background: **

| · | **Net                Revenues**for                the year ended December 31, 2005 were US$ 22.0 million compared to                US$ 9.8                million for the period from acquisition on July 16, 2004 to December                31,                2004. Net revenue for the period from July 2005 fell US$ 1.0 million                or                10% when compared to the equivalent post acquisition period in 2004.                The                reduction in revenue was attributable to lower barter revenues as                some of                these were forgone in accordance with our policy to minimize barter                transactions. Net spot revenues increased by 19% over the period                from July                to December 2005 when compared to the same period in 2004, driven                principally by growth in the volume of ratings                sold. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | **Croatian                Segment EBITDA**for                the year ended December 31, 2005 was a loss of US$ 15.9 million,                which is                substantially attributable to investment in programming to attract                greater                audience share. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**(B)      CZECH REPUBLIC**

|                                        |   | **SEGMENT                FINANCIAL INFORMATION**                             |                                      |
|---------------------------------------------|--------|------------------------------------------------------------------------------|-------------------------------------------|
|                                        |   | **For                the Eight Months Ended December 31, (US$ 000’s)** |                                      |
|                                        |   | **2005                (1)**                                                  |                                      |
| Czech                Republic Net Revenues  |   |                                                                         | $                 154,010            |   |
| Czech                Republic EBITDA        |   |                                                                         | $                   71,544 |   |
| Czech                Republic EBITDA Margin |   |                                                                         | *46%*                                     |   |

**Market      Background: **

*Page            50*

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|   | · | **Net                Revenues**for                the period from acquisition to December 31, 2005 were US$ 154.0 million.                We acquired our Czech Republic operations in May, 2005 and accordingly                no                comparative data from 2004 is available. Galaxie Sport (acquired                on                September 1, 2005) contributed US$ 1.6 million to total net                revenue. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | **Czech                Republic Segment EBITDA**for                the period from May 2, 2005 to December 31, 2005 was US$ 71.5 million                resulting in an EBITDA margin of 46%. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**(C)      ROMANIA**

|                                  |   | **SEGMENT                FINANCIAL INFORMATION**                      |    |
|---------------------------------------|--------|-----------------------------------------------------------------------|---------|
|                                  |   | **For                the Years Ended December 31, (US$ 000’s)** |    |
|                                  |   | **2005**                                                              |    | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Romanian                Net Revenues  |   | $                                                                     | 103,321 |   | $ | 76,463 |   | *$* | *26,858* |   | $ | 76,463 |   | $ | 51,177 |   | *$* | *25,286* |   |
| Romanian                EBITDA        |   | $                                                                     | 43,803  |   | $ | 25,198 |   | *$* | *18,605* |   | $ | 25,198 |   | $ | 12,206 |   | *$* | *12,992* |   |
| Romanian                EBITDA Margin |   |                                                                  | 42      | %   |   | 33 | %   |   | *9* | *%  * |   | 33 | %   |   | 24 | %   |   | *9* | *%* |

**Market      Background: **

| · | **Net                Revenues**for                the year ended December 31, 2005** **increased                by US$ 26.9 million, or 35%, compared to 2004. Net spot revenue increased                by US$ 25.0 million or 34% and non-spot revenue increased by US$                1.9                million or 52%, principally due to increased cable tariff revenue.                Excluding RADIO PRO, which was included in our results in 2004 but                excluded in 2005, Segment Net Revenues grew US$ 29.5 million or 40%,                principally due to net spot revenue growth of                39%. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            51*

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| · | **Romanian                Segment EBITDA**for                the year ended December 31, 2005 increased by US$ 18.6 million or                74%                compared to 2004, resulting in an EBITDA margin of 42%, which represents                a                significant increase over the 33% EBITDA margin delivered in the                prior                year. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**(D)      SLOVAK REPUBLIC**

|                                         |   | **SEGMENT                FINANCIAL INFORMATION**                      |   |
|----------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                         |   | **For                the Years Ended December 31, (US$ 000’s)** |   |
|                                         |   | **2005**                                                              |   | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Slovak                Republic Net Revenues  |   | $                                                                     | 64,266 |   | $ | 61,576 |   | $ | *2,690* |   | $ | 61,576 |   | $ | 50,814 |   | $ | *10,762* |   |
| Slovak                Republic EBITDA        |   | $                                                                     | 17,240 |   | $ | 18,975 |   | $ | *(1,735* | *)* | $ | 18,975 |   | $ | 11,657 |   | $ | *7,318* |   |
| Slovak                Republic EBITDA Margin |   |                                                                  | 27     | %   |   | 31 | %   |   | *(4* | *)%  * |   | 31 | %   |   | 23 | %   |   | *8* | *%* |

**Market      Background:**

| · | **Net                Revenues**for                the year ended December 31, 2005 increased by US$ 2.7 million, or                4%,                compared to 2004. Spot revenue increased by US$ 2.9 million, or 5%,                however, this was partially offset by a US$ 0.2 million or 4% decline                in                non-spot revenue as a result of reduced barter revenue. In local                currency,                net revenue growth in 2005 was 1%. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            52*

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| · | **Slovak                Republic Segment EBITDA**for                the year ended December 31, 2005 decreased by US$ 1.7 million or                9%                compared to 2004, and the EBITDA margin decreased from 31% in 2004                to 27%                in 2005. Local currency EBITDA decreased by 12% in 2005 compared                to 2004. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**(E)      SLOVENIA**

|                                   |   | **SEGMENT                FINANCIAL INFORMATION**                      |   |
|----------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                   |   | **For                the Years Ended December 31, (US$ 000’s)** |   |
|                                   |   | **2005**                                                              |   | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Slovenian                Net Revenues  |   | $                                                                     | 48,770 |   | $ | 45,388 |   | $ | *3,382* |   | $ | 45,388 |   | $ | 37,168 |   | $ | *8,220* |   |
| Slovenian                EBITDA        |   | $                                                                     | 19,337 |   | $ | 19,077 |   | $ | *260* |   | $ | 19,077 |   | $ | 13,173 |   | $ | *5,904* |   |
| Slovenian                EBITDA Margin |   |                                                                  | 40     | % |   | 42 | % |   | *(2* | *)%* |   | 42 | % |   | 35 | % |   | *7* | *%* |

**Market      Background**

| · | **Net                Revenues**for                the year ended December 31, 2005 increased by US$ 3.4 million, or                7%,                compared to 2004. Net spot revenue increased by US$ 1.8 million,                or 4%,                and non-spot revenue grew by US$ 1.6 million, or 96%. In local currency,                net revenues increased by 8%. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            53*

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| · | **Slovenian                Segment EBITDA**for                the year ended December 31, 2005 increased by US$ 0.3 million or                1%. In                local currency Segment EBITDA increased by 2%. EBITDA margin decreased                from 42% in 2004 to 40% in 2005. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**(F)      UKRAINE**

|                                   |   | **SEGMENT                FINANCIAL INFORMATION**                      |   |
|----------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                   |   | **For                the Years Ended December 31, (US$ 000’s)** |   |
|                                   |   | **2005**                                                              |   | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Ukrainian                Net Revenues  |   | $                                                                     | 72,847 |   | $ | 53,351 |   | $ | *19,496* |   | $ | 53,351 |   | $ | 36,633 |   | $ | *16,718* |   |
| Ukrainian                EBITDA        |   | $                                                                     | 21,803 |   | $ | 14,729 |   | $ | *7,074* |   | $ | 14,729 |   | $ | 7,999 |   | $ | *6,730* |   |
| Ukrainian                EBITDA Margin |   |                                                                  | 30     | %   |   | 28 | %   |   | *2* | *%  * |   | 28 | %   |   | 22 | %   |   | *6* | *%* |

**Market      Background: **

| · | **Net                Revenues**for                the year ended December 31, 2005 increased by US$ 19.5 million or                37%                compared to 2004. Net spot revenue increased by US$ 13.9 million                or 28%                and non-spot revenue increased by US$ 5.6 million or                165%. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            54*

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| · | **Ukrainian                Segment EBITDA**for                the year ended December 31, 2005 increased by US$ 7.1 million or                48%                compared to 2004, resulting in an EBITDA margin of 30% compared to                28% in                2004. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**PROGRAMMING      PAYMENTS AND PROGRAM AMORTIZATION**

|                                   |   | **For                the Years Ended December 31,** |        |
|----------------------------------------|--------|-----------------------------------------------------|-------------|
|                                   |   | **(US$                000’s)**                |        |
|                                   |   | **2005**                                            |        | **2004** |   | **2003** |   |
| Production                expenses     |   | $                                                   | 67,366      |   | $ | 29,458 |   | $ | 20,657 |   |
| Program                amortization    |   |                                                | 81,471      |   |   | 42,335 |   |   | 30,090 |   |
| **Cost                of programming** |   | **$**                                               | **148,837** |   | **$** | **71,793** |   | **$** | **50,747** |   |

*Page            55*

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|                                                                        |   | **For                the Years Ended December                31,** |        |
|-----------------------------------------------------------------------------|--------|--------------------------------------------------------------------|-------------|
|                                                                        |   | **(US$                000’s)**                               |        |
|                                                                        |   | **2005**                                                           |        | **2004** |   | **2003** |   |
| **Program                amortization:**                                    |   |                                                               |        |   |   |   |   |
| Croatia                (NOVA TV)                                            |   | $                                                                  | 16,373      |   | $ | 3,695 |   | $ | - |   |
| Czech                Republic (TV NOVA, GALAXIE SPORT)                      |   |                                                               | 19,154      |   |   | - |   |   | - |   |
| Romania                (PRO TV, ACASA, PRO CINEMA and PRO TV INTERNATIONAL) |   |                                                               | 20,132      |   |   | 18,215 |   |   | 12,413 |   |
| Slovenia                (POP TV and KANAL A)                                |   |                                                               | 5,517       |   |   | 5,117 |   |   | 5,326 |   |
| Ukraine                (STUDIO 1+1)                                         |   |                                                               | 20,295      |   |   | 15,308 |   |   | 12,351 |   |
| **Total                consolidated program amortization**                  |   |                                                               | **81,471**  |   |   | **42,335** |   |   | **30,090** |   |
| Slovak                Republic (MARKIZA TV)                                 |   |                                                               | 6,970       |   |   | 9,038 |   |   | 9,392 |   |
|                                                                        |   | **$**                                                              | **88,441**  |   | **$** | **51,373** |   | **$** | **39,482** |   |
|                                                                        |   |                                                               |        |   |   |   |   |   |   |   |
| **Cash                paid for programming:**                               |   |                                                               |             |   |   |   |   |   |  |   |
| Croatia                (NOVA TV)                                            |   | $                                                                  | 16,062      |   | $ | 3,076 |   | $ | - |   |
| Czech                Republic (TV NOVA, GALAXIE SPORT)                      |   |                                                               | 26,027      |   |   | - |   |   | - |   |
| Romania                (PRO TV, ACASA, PRO CINEMA and PRO TV INTERNATIONAL) |   |                                                               | 40,279      |   |   | 22,164 |   |   | 14,876 |   |
| Slovenia                (POP TV and KANAL A)                                |   |                                                               | 6,200       |   |   | 5,177 |   |   | 5,587 |   |
| Ukraine                (STUDIO 1+1)                                         |   |                                                               | 27,019      |   |   | 21,022 |   |   | 11,534 |   |
|                                                                        |   |                                                               | **115,587** |   |   | **51,439** |   |   | **31,997** |   |
| Slovak                Republic (MARKIZA TV)                                 |   |                                                               | 10,692      |   |   | 8,120 |   |   | 9,088 |   |
|                                                                        |   | **$**                                                              | **126,279** |   | **$** | **59,559** |   | **$** | **41,085** |   |

| ***IV.*** | ***Analysis                of the Results of Consolidated                Operations*** |
|-----------|----------------------------------------------------------------------------------------|

**OVERVIEW**

*Page            56*

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**IV      (a) Net Revenues for the years ending December 31, 2005, 2004 and      2003:**

|                                               |   | **Consolidated                Net Revenues**                          |        |
|----------------------------------------------------|--------|-----------------------------------------------------------------------|-------------|
|                                               |   | **For                the Years Ended December 31, (US$ 000’s)** |        |
|                                               |   | **2005**                                                              |        | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Croatia                                            |   | $                                                                     | 22,030      |     | $ | 9,757 |     | *$* | *12,273* |     | $ | 9,757 |     | $ | - |     | *$* | *9,757* |   |
| Czech                Republic                      |   |                                                                  | 154,010     |   |   | - |   |   | *154,010* |   |   | - |   |   | - |   |   | *-* |   |
| Romania                                            |   |                                                                  | 103,321     |   |   | 73,843 |   |   | *29,478* |   |   | 73,843 |   |   | 51,177 |   |   | *22,666* |   |
| Slovenia                                           |   |                                                                  | 48,770      |   |   | 45,388 |   |   | *3,382* |   |   | 45,388 |   |   | 37,168 |   |   | *8,220* |   |
| Ukraine                                            |   |                                                                  | 72,847      |   |   | 53,351 |   |   | *19,496* |   |   | 53,351 |   |   | 36,633 |   |   | *16,718* |   |
| **Total                Consolidated Net Revenues** |   | **$**                                                                 | **400,978** |   | **$** | **182,339** |   | ***$*** | ***218,639*** |   | **$** | **182,339** |   | **$** | **124,978** |   | ***$*** | ***57,361*** |   |

| · | The                inclusion of US$ 154.0 million of net revenues from our newly acquired                Czech Republic operations as described in Item 7, III “Analysis of Segment                Results”; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The                inclusion of a full twelve months of revenue from our Croatian operations                in 2005 following the acquisition in July 2004 as described above                in Item                7, III "Analysis of Segment Results", which contributed an additional                US$                12.3 million to net revenues in                2005; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 29.5 million, or 40%, increase in the net revenues of our Romanian                operations as described above in Item 7, III "Analysis of Segment                Results"; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 3.4 million, or 7%, increase in the net revenues of Slovenian                operations as described above in Item 7, III “Analysis of Segment                Results"; and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 19.5 million, or 37%, increase in the net revenues of our Ukrainian                operations as described above in Item 7, III “Analysis of Segment                Results". |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**IV      (b) Total Operating Expenses for the years ending December 31, 2005, 2004 and      2003**

|                                                                    |   | **Consolidated                Operating Expenses**                    |        |
|-------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|-------------|
|                                                                    |   | **For                the Years Ended December 31, (US$ 000’s)** |        |
|                                                                    |   | **2005**                                                              |        | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Operating                costs                                          |   | $                                                                     | 65,138      |     | $ | 33,615 |     | *$* | *31,523* |     | $ | 33,615 |     | $ | 26,608 |     | *$* | *7,007* |   |
| Cost                of programming                                      |   |                                                                  | 148,837     |   |   | 71,793 |   |   | *77,044* |   |   | 71,793 |   |   | 50,747 |   |   | *21,046* |   |
| Station                selling, general and administrative expenses     |   |                                                                  | 46,382      |   |   | 22,112 |   |   | *24,270* |   |   | 22,112 |   |   | 14,245 |   |   | *7,867* |   |
| Depreciation                of station property, plant and equipment    |   |                                                                  | 16,367      |   |   | 6,429 |   |   | *9,938* |   |   | 6,429 |   |   | 5,276 |   |   | *1,153* |   |
| Amortization                of broadcast licenses and other intangibles |   |                                                                  | 11,180      |   |   | 465 |   |   | *10,715* |   |   | 465 |   |   | - |   |   | *465* |   |
| Corporate                operating costs                                |   |                                                                  | 25,374      |   |   | 29,185 |   |   | *(3,811* | *)* |   | 29,185 |   |   | 32,512 |   |   | *(3,327* | *)* |
| Impairment                Charge                                        |   |                                                                  | 35,331      |   |   | **-** |   |   | *35,331* |   |   | **-** |   |   | **-** |   |   | *-* |   |
| **Total                Operating Expenses**                             |   | **$**                                                                 | **348,609** |   | **$** | **163,599** |   | ***$*** | ***185,010*** |   | **$** | **163,599** |   | **$** | **129,388** |   | ***$*** | ***34,211*** |   |

*Page            57*

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**Operating      Costs: **

| · | The                inclusion of US$ 14.9 million of additional station operating costs                relating to our newly acquired Czech Republic                operations; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 6.5 million increase in the station operating costs of our Croatian                operations, primarily as a result of the inclusion of expenses in                2004                only from the acquisition in July 2004; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Operating                costs of our Romanian operations increasing by US$ 3.0 million, or                22%,                due to the appreciation of the New Romanian Lei, compared to the                US                dollar, as well as increased salary and wage costs as described in                Item 7,                III “Analysis of Segment Results”; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Operating                costs of our Slovenian operations increasing by US$ 2.2 million,                or 23%,                as described in Item 7, III “Analysis of Segment Results”;                and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Operating                costs of our Ukrainian operations increasing by US$ 5.0 million,                or 64%,                as described in Item 7, III “Analysis of Segment Results”. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Cost      of Programming: **

| · | The                inclusion of US$ 50.6 million of additional programming costs relating                to                our newly acquired Czech Republic                operations; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 14.4 million increase in the programming costs of our Croatian                operations primarily as a result of the inclusion of expenses in                2004 only                from the acquisition in July 2004; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 5.9 million, or 20%, increase in the programming costs of our                Romanian                operations as described in Item 7, III “Analysis of Segment                Results”; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 0.8 million, or 7%, increase in the programming costs of our                Slovenian                operations station operating costs and expenses of our Slovenian                operations as described in Item 7, III “Analysis of Segment Results”;                and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 5.3 million, or 22%, increase in the programming costs of our                Ukrainian operations as described in Item 7, III “Analysis of Segment                Results”. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Station      Selling, General and Administrative Expenses: **

*Page            58*

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| · | The                inclusion of US$ 16.9 million of station selling, general and                administrative expenses from our newly acquired Czech Republic                operations; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 3.6 million, or 79%, increase in the station selling, general                and                administrative expenses of our Croatian operations, for which expenses                were included in 2004 only from its acquisition in July                2004; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 1.6 million, or 24%, increase in the station selling, general                and                administrative expenses of our Romanian operations as described in                Item 7,                III “Analysis of Segment Results”; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 0.1 million, or 2%, increase in the station selling, general                and                administrative expenses of our Slovenian operations as described                in Item                7, III “Analysis of Segment Results”;                and |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 2.1 million, or 32%, increase in the station selling, general                and                administrative expenses of our Ukrainian operations as described                in Item                7, III “Analysis of Segment                Results”. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Depreciation      of Station Property, Plant and Equipment: **

| · | The                inclusion of US$ 5.5 million of additional depreciation relating                to our                newly acquired Czech Republic                operations; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 1.9 million increase in the depreciation costs of our Croatian                operations primarily as a result of the inclusion of expenses in                2004 only                from the acquisition in July 2004; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 1.2 million, or 52%, increase in the depreciation costs of our                Romanian operations due to depreciation of newly acquired production                equipment assets; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 1.5 million, or 103%, increase in the depreciation costs of our                Slovenian operations as a result of depreciation of newly acquired                digital                production and editing equipment assets;                and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                US$ 0.6 million, or 59%, increase in the depreciation costs of our                Ukrainian due to depreciation of newly acquired studio equipment                assets. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Amortization      of Broadcast Licenses and Other Intangibles:**

*Page            59*

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**Corporate      operating costs (including non-cash stock-based      compensation)**

|                                                                                                      |   | **For                the Years Ended December 31, (US$ 000’s)** |       |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|------------|
|                                                                                                      |   | **2005**                                                              |       | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Corporate                operating costs (excluding non-cash stock-based                compensation)     |   | $                                                                     | 22,420     |     | $ | 19,083 |     |   | *3,337* |     | $ | 19,083 |     | $ | 19,303 |     |   | *(220* | *)* |
| Non-cash                stock-based compensation                                                          |   |                                                                  | 2,954      |   |   | 10,102 |   |   | *(7,148* | *)* |   | 10,102 |   |   | 13,209 |   |   | *(3,107* | *)* |
| **Corporate                operating costs (including non-cash stock-based                compensation)** |   | **$**                                                                 | **25,374** |   | **$** | **29,185** |   |   | ***(3,811*** | ***)*** | **$** | **29,185** |   | **$** | **32,512** |   |   | ***(3,327*** | ***)*** |

| · | an                increase in staff-related costs caused by an increase in corporate                staff                from 27 to 41, and temporary staff costs relating to the acquisition                of                the TV Nova (Czech Republic) group; and; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | an                increase in professional fees in respect of legal, tax and press                and                public relations expenses relating to advice in connection with our                investment in Ukraine, legal proceedings in our Ukrainian operations                (for                further information                see Item 8, Note 19, “Commitments and Contingencies”) and in connection                with the acquisition of our Czech Republic operations and subsequent                listing on the Prague Stock Exchange together with an increase in                investor                relations activity; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | a                decrease in business development expenses. |
|--------|-------------------------------------------------------------|

| · | an                increase in staff-related costs caused in part by an increase in                corporate                staff from 20 to 27 (including three staff primarily focused on internal                audit work related to Sarbanes-Oxley requirements); |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | an                increase in travel expenses as a result of implementation of                Sarbanes-Oxley certification requirements in respect of internal                controls                and travel related to business development and station visits; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | an                increase in press and public relations expenses due to the acquisition                of                our Croatian operations and the preparation for the TV Nova (Czech                Republic) group acquisition as well as costs associated with our                celebration of the 10th                anniversary of our listing on NASDAQ; and |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | increased                business development expenses incurred in researching potential                acquisition targets; |
|--------|------------------------------------------------------------------------------------------------------------------------------|

*Page            60*

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**Impairment      charge:**

**IV      (c) Operating Income / (Loss) for the years ending December 31, 2005, 2004      and      2003**

|                                   |   | **For                the Years Ended December 31, (US$ 000’s)** |       |
|----------------------------------------|--------|-----------------------------------------------------------------------|------------|
|                                   |   | **2005**                                                              |       | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Operating                income/(loss) |   |                                                                  | **52,369** |     |   | **18,740** |     |   | ***33,629*** |     |   | **18,740** |     |   | **(4,410** | **)  ** |   | ***23,150*** |   |

**IV      (d) Other expense items for the years ending December 31, 2005, 2004 and      2003**

|                                                                    |   | **For                the Years Ended December 31, (US$ 000’s)** |    |
|-------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|---------|
|                                                                    |   | **2005**                                                              |    | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Interest                income                                          |   |                                                                  | 4,124   |   |   | 4,318 |   |   | *(194* | *)* |   | 4,318 |   |   | 5,507 |   |   | *(1,189* | *)* |
| Interest                expense                                         |   |                                                                  | (29,387 | )   |   | (1,203 | )   |   | *(28,184* | *)  * |   | (1,203 | )   |   | (12,010 | )   |   | *10,807* |   |
| Foreign                currency exchange gain/(loss), net               |   |                                                                  | 37,968  |   |   | (574 | ) |   | *38,542* |   |   | (574 | ) |   | (10,023 | ) |   | *9,449* |   |
| Other                income/(expense)                                   |   |                                                                  | (4,705  | ) |   | (698 | ) |   | *(4,007* | *)* |   | (698 | ) |   | (2,458 | ) |   | *1,760* |   |
| Provision                for income taxes                               |   |                                                                  | (16,691 | ) |   | (11,089 | ) |   | *(5,602* | *)* |   | (11,089 | ) |   | (3,760 | ) |   | *(7,329* | *)* |
| Minority                interest in income of consolidated subsidiaries |   |                                                                  | (8,908  | ) |   | (4,106 | ) |   | *(4,802* | *)* |   | (4,106 | ) |   | (676 | ) |   | *(3,430* | *)* |
| Equity                in income of unconsolidated affiliates            |   |                                                                  | 8,238   |   |   | 10,619 |   |   | *(2,381* | *)* |   | 10,619 |   |   | 3,629 |   |   | *6,990* |   |
| Discontinued                operations                                  |   |                                                                  | (513    | ) |   | 2,524 |   |   | *(3,037* | *)* |   | 2,524 |   |   | 370,213 |   |   | *(367,689* | *)* |

**Interest      income**

**Interest      expense**

**Foreign      currency gain/(loss): **

*Page            61*

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**Other      expense:**

**Provision      for income taxes: **

**Minority      interest in income of consolidated subsidiaries: **

**Equity      in income of unconsolidated affiliates: **

|                                                             |   | **For                the Years Ended December 31, (US$ 000’s)** |      |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------------|-----------|
|                                                             |   | **2005**                                                              |      | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Slovak                Republic operations                        |   | $                                                                     | 8,240     |     | $ | 10,382 |     | *$* | *(2,142* | *)  * | $ | 10,382 |     | $ | 4,521 |     | *$* | *5,861* |   |
| Romanian                operations                               |   |                                                                  | (2        | ) |   | 237 |   |   | *(239* | *)* |   | 237 |   |   | (215 | ) |   | *452* |   |
| Slovenian                operations                              |   |                                                                  | -         |   |   | - |   |   | *-* |   |   | - |   |   | (677 | ) |   | *677* |   |
| **Equity                in income of unconsolidated affiliates** |   | **$**                                                                 | **8,238** |   | **$** | **10,619** |   | ***$*** | ***(2,381*** | ***)*** | **$** | **10,619** |   | **$** | **3,629** |   | ***$*** | ***6,990*** |   |

**Discontinued      operations: **

|                                                       |   | **For                the Years Ended December 31, (US$ 000’s)** |     |
|------------------------------------------------------------|--------|-----------------------------------------------------------------------|----------|
|                                                       |   | **2005**                                                              |     | **2004** |   | ***Movement*** |   | **2004** |   | **2003** |   | ***Movement*** |   |
| Gain                on disposal of discontinued operations |   | $                                                                     | 164      |     | $ | 146 |     |   | *18* |     | $ | 146 |     | $ | 384,213 |     |   | *(384,067* | *)* |
| Tax                on disposal of discontinued operations  |   |                                                                  | (677     | ) |   | 2,378 |   |   | *(3,055* | *)* |   | 2,378 |   |   | (14,000 | ) |   | *16,378* |   |
| Discontinued                operations                     |   | **$**                                                                 | **(513** | **)** | **$** | **2,524** |   |   | ***(3,037*** | ***)*** | **$** | **2,524** |   | **$** | **370,213** |   |   | ***(367,689*** | ***)*** |

*Page            62*

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**IV      (e) Consolidated Balance Sheet as at December 31, 2005 compared to December      31,      2004**

| **Summarized                Consolidated Balance Sheet (US$ 000’s)** |   | **December                31, 2005** |      | **December                31, 2004** |   | **Movement** |   |
|----------------------------------------------------------------------------|--------|--------------------------------------|-----------|--------------------------------------|--------|--------------|--------|
| Current                assets                                              |   | $                                    | 286,926   |                                 | $      | 265,049      |   | $ | 21,877 |   |
| Non-current                assets                                          |   |                                 | 1,101,924 |                                 |   | 179,590      |   |   | 922,334 |   |
| Current                liabilities                                         |   |                                 | 206,961   |                                 |   | 109,745      |   |   | 97,216 |   |
| Non-current                liabilities                                     |   |                                 | 488,099   |                                 |   | 18,965       |   |   | 469,134 |   |
| Minority                interests in consolidated subsidiaries             |   |                                 | 13,237    |                                 |   | 4,861        |   |   | 8,376 |   |
| Shareholders’                equity                                  |   | $                                    | 680,553   |                                 | $      | 311,068      |   | $ | 369,485 |   |

**Current      assets:**

**Non-current      assets:**

**Current      liabilities:**

**Non-current      liabilities:**

**Minority      interests in consolidated subsidiaries:**

**Shareholders’      Equity:**

*Page            63*

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| ***V.*** | ***Liquidity                and Capital Resources*** |
|----------|------------------------------------------------------|

**V      (a) Summary of cash flows:**

| **(US$                000’s)**                                                                          |   | **For                the Years Ended December 31,** |        |
|---------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|
|                                                                                                          |   | **2005**                                            |        | **2004** |   | **2003** |   |
|                                                                                                          |   |                                                |        |   |   |   |   |
| Net                cash generated from/(used in) continuing operating                activities               |   | $                                                   | 3,544       |   | $ | 2,415 |   | $ | (7,450 | ) |
| Net                cash used in continuing investing activities                                               |   |                                                | (298,803    | ) |   | (57,009 | ) |   | (12,110 | ) |
| Net                cash received from/(used in) financing activities                                          |   |                                                | 225,359     |   |   | 1,886 |   |   | (199,471 | ) |
| Net                cash (used in)/received from discontinued operations - operating                activities |   |                                                | (2,000      | ) |   | (9,463 | ) |   | 343,358 |   |
| Net                cash received from discontinued operations - investing                activities           |   |                                                | -           |   |   | 20,349 |   |   | 15,000 |   |
| Impact                of exchange rate fluctuations on cash                                                   |   |                                                | (9,010      | ) |   | 2,144 |   |   | 1,146 |   |
| **Net                (decrease) / increase in cash and cash                equivalents**                      |   | **$**                                               | **(80,910** | **)** | **$** | **(39,678** | **)** | **$** | **140,473** |   |

*Operating      Activities*

*Page            64*

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*Table            of Contents*

*Investing      Activities*

| · | Total                cash payments of US$ 218.1 million (net of cash acquired of US$ 35.6                million) for the acquisition of the TV Nova (Czech Republic) group                in May                2005. The remainder of the total purchase price of US$ 909.5 million                consisted of non-cash items,                including: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | the                issuance of 3.5 million shares of Class A Common Stock (US$ 120.9                million); |
|--------|---|---------------------------------------------------------------------------------------------------------------|

|   | o | the                incurrence of US$ 491.7 million of short-term indebtedness to PPF                (which                was repaid in cash on May 5, 2005); |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | forgiveness                of a US$ 18.5 million balance categorized as “Other Receivable” in our                Consolidated Balance Sheet as at December 31, 2004;                and |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | the                placement of US$ 24.7 million of cash into escrow as the second and                final                payment to Mr. Krsak (see Item 8, Note 3, "Acquisitions and Disposals,                Czech Republic"); |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                payment of US$ 20.0 million in connection with the 5% increase in                our                holding of our Romanian operations (for further information, see                Item 8,                Note 3, "Acquisitions and Disposals,                Romania"); |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                payment of US$ 2.1 million in connection with our acquisition of                Galaxie                Sport (for further information, see Item 8, Note 3, "Acquisitions                and                Disposals, Czech Republic"); |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                payment of Euro 4.7 million (approximately US$ 5.7 million) to acquire                the                remaining 3.15% interest in Pro Plus (for further information, see                Item 8,                Note 3, "Acquisitions and Disposals, Slovenia"); |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Advance                payments of US$ 5.1 million with respect to our acquisition of                a 65.5% interest in Ukrpromtorg 2003 LLC                (for further information, see Item 8, Note 21, "Subsequent                Events"); |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Capital                expenditures of approximately US$ 26.5 million. Capital expenditures                during 2005 primarily related to upgrades of broadcasting facilities                and                production equipment; and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                net increase in restricted cash of $18.6 million, of which $24.6                million                was a result of the acquisition of the TV Nova (Czech Republic) group,                $0.7 million of other increases, and a reduction of $6.7 million                being the                second payment for our acquisition of our Croatian operations (for                further                information, see Item 8, Note 3, "Acquisitions and Disposals"). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Financing      Activities*

| · | Net                proceeds of approximately US$ 465.1 million from the issuance of                Senior                Notes in the aggregate principal amount of Euro 370.0 million, consisting                of Euro 245.0 million of 8.25% Senior Notes due May 2012 and Euro                125.0                million of floating rate Senior Notes due May 2012 (for further                information, see Item 8, Note 5, "Senior Notes"). The proceeds from                this                loan were used to finance part of the acquisition of the TV Nova                (Czech                Republic) group; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            65*

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| · | Net                proceeds from the issuance of Class A Common Stock of approximately                US$                236.5 million, of which US$ 230.6 million was raised from the issuance                of                5.4 million shares of Class A Common Stock, the proceeds of which                were                used for our acquisition of the TV Nova (Czech Republic) group (for                further information, see Item 8, Note 3, "Acquisitions and Disposals")                and                approximately US$ 5.9 million from stock option                exercises; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Proceeds                from borrowing of our Czech Republic operations (US$ 42.7 million)                and our                Slovenian operations (US$ 23.2 million). US$ 41.6 million of the                proceeds                from the borrowings of our Czech Republic operations were used to                repay                the settlement liability discussed in *Operating                Activities*                above; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Repayments                of indebtedness by our Czech Republic operations (US$ 8.0 million),                our                Slovenian operations (US$ 31.7 million) and our Croatian operations                (US$                0.3 million); |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Repayments                of short-term indebtedness to PPF for the purchase of the TV Nova                (Czech                Republic) group (US$ 491.7 million) and Galaxie Sport (US$ 3.0                million). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Discontinued      Operations*

**V      (b) Sources and Uses of Ca**
**sh      **

*Page            66*

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*Table            of Contents*

| **Operating                segment****(US$                000’s)** |   | **December                31,****2****005** |        | **December                31,****2004** |   |
|--------------------------------------------------------------------------|--------|---------------------------------------------|-------------|-----------------------------------------|--------|
| Croatia                                                                  |   | $                                           | 40,166      |                                    | $      | 11,087 |   |
| Czech                Republic                                            |   |                                        | 441,569     |                                    |   | - |   |
| Romania                                                                  |   |                                        | 28,873      |                                    |   | 37,109 |   |
| Slovak                Republic                                           |   |                                        | 88          |                                    |   | - |   |
| Slovenia                                                                 |   |                                        | 39          |                                    |   | 1,590 |   |
| Ukraine                                                                  |   |                                        | 10,617      |                                    |   | 13,459 |   |
| **Total**                                                                |   | **$**                                       | **521,352** | ** **                              | **$**  | **63,245** |   |

*Page            67*

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**V      (c) Contractual Obligations, Commitments and Off-Balance Sheet      Arrangements**

| **Contractual                Obligations**        |   | **Payments                due by period (US$ 000’s)** |        |
|---------------------------------------------------|--------|-------------------------------------------------------------|-------------|
|                                              |   | **Total**                                                   | ** **  | **Less                than 1 ****year** | ** ** | **1-3                years** | ** ** | **3-5                years** | ** ** | **More                than 5****years** |   |
| Long-Term                Debt - principal         |   | $                                                           | 480,262     |     | $ | 43,081 |     | $ | 317 |     | $ | 348 |     | $ | 436,516 |   |
| Long-Term                Debt - interest          |   |                                                        | 227,240     |   |   | 35,794 |   |   | 71,262 |   |   | 71,230 |   |   | 48,954 |   |
| Capital                Lease Obligations          |   |                                                        | 5,906       |   |   | 694 |   |   | 1,118 |   |   | 930 |   |   | 3,164 |   |
| Operating                Leases                   |   |                                                        | 20,206      |   |   | 7,841 |   |   | 8,053 |   |   | 2,782 |   |   | 1,530 |   |
| Unconditional                Purchase Obligations |   |                                                        | 52,715      |   |   | 45,836 |   |   | 6,783 |   |   | 96 |   |   | - |   |
| Other                Long-Term Obligations        |   |                                                        | 18,062      |   |   | 12,818 |   |   | 4,244 |   |   | 1,000 |   |   | - |   |
| Total                Contractual Obligations      |   | **$**                                                       | **804,391** |   | **$** | **146,064** |   | **$** | **91,777** |   | **$** | **76,386** |   | **$** | **490,164** |   |

*Long-Term      Debt*

|                                     |   |   |                    | **December                31, 2005****(US$                000’s)** |   |
|------------------------------------------|--------|--------|-------------------------|--------------------------------------------------------------------------|--------|
| CME                Ltd.                  |   |   | (1                      | )                                                                        | $      | 436,                424 |   |
| Czech                Republic Operations |   |   | (2)                - (3 | )                                                                        |   | 42,703 |   |
| Slovenian                Operations      |   |   | (4                      | )                                                                        |   | - |   |
| Croatian                operations       |   |   | (5)                - (7 | )                                                                        |   | 1,135 |   |
| **Total**                                |   |   |                    |                                                                     | **$**  | **480,262** |   |

| (1) | In                May 2005, we issued Senior Notes in the aggregate principal amount                of Euro                370.0 million consisting of Euro 245.0 million of 8.25% Senior Notes                due                May 2012 and Euro 125.0 million of floating rate Senior Notes due                May                2012, which bear interest at six-month Euro Inter-Bank Offered Rate                (“EURIBOR”) plus 5.5% (8.0% at December 31, 2005). Interest is payable                semi-annually in arrears on each May 15 and November 15, commencing                November 15, 2005. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Page            68*

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| (2) | CET                21 has a four-year credit facility of CZK 1.2 billion (approximately                US$                48.8 million) with Ceska Sporitelna, a.s. (“CS”). The final repayment date                is October 31, 2009. This facility may, at the option of CET 21,                be drawn                in CZK, USD or Euro and bears interest at the three-month, six-month                or                twelve-month LIBOR, EURIBOR or Prague Inter-Bank Offered Rate (“PRIBOR”)                rate plus 1.95%. This facility is secured by a guarantee of CME Media                Services and a pledge of receivables under a factoring agreement                between                CME Media Services and Factoring Ceska Sporitelna, a.s., a subsidiary                of                CS. As at December 31, 2005, CZK 800 million (approximately US$ 32.5                million) has been drawn under this facility and bears interest at                4.12%                (PRIBOR three-month rate at December 31, 2005 was 2.17%). Following                the                merger of CET 21 with CME Media Services, scheduled for 2006, this                loan                will be renegotiated. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | CET                21 and CME Media Services have a working capital credit facility                of CZK                250 million (approximately US$ 10.2 million) with CS, expiring October                31,                2006. This working capital facility bears interest at the three-month                PRIBOR rate plus 1.65%. This facility is secured by a pledge of                receivables under the factoring agreement between CME Media Services                and                Factoring Ceska Sporitelna. As at December 31, 2005, CZK 250 million                (approximately US$ 10.2 million) was drawn under this facility and                bears                interest at 3.82% (PRIBOR three-month rate at December 31, 2005 was                2.17%). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | A                revolving five-year facility agreement (the “Revolving Facility”) was                entered into for up to Euro 37.5 million (approximately US$ 44.2                million)                in aggregate principal amount among Pro Plus, ING Bank N.V., Nova                Ljubljanska Banka d.d., Ljubljana and Bank Austria Creditanstalt                d.d.,                Ljubljana. The facility availability amortizes by 10% each year for                four                years commencing one year after signing, with 60% repayable after                five                years. This facility is secured by a pledge of the bank accounts                of Pro                Plus, the assignment of certain receivables, a pledge of our interest                in                Pro Plus and a guarantee of our wholly-owned subsidiary CME Media                Enterprises B.V. Loans drawn under this facility will bear interest                initially at EURIBOR plus 3.6%. The applicable margin may be reduced                (by                increments of 0.5% to a minimum of 2.1%) if Pro Plus exceeds certain                benchmarks for the ratio of net debt to broadcasting cash flow. As                at                December 31, 2005, nil had been drawn down and was outstanding. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | A                total of Euro 0.8 million (approximately                US$ 0.9 million) was drawn down on three loan agreements our Croatian                operations have with Hypo Alpe-Adria-Bank d.d. These                loans bear a variable interest rate of the three-month EURIBOR plus                2.5%                and are repayable in quarterly installments until April 1, 2011.                As at                December 31, 2005 a rate of 4.75% applied to these loans.                These loan facilities are secured by the real property and fixed                assets of                OK, which as at December 31, 2005 have a carrying amount of approximately                US$ 0.3 million. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Euro                0.01 million (approximately US$ 0.01 million) was drawn down on a                loan                agreement our Croatian operations have with Hypo Alpe-Adria-Bank                d.d.                This                loan bears a fixed interest rate of 7.25% and is repayable on July                31,                2006. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Euro                0.2 million (approximately US$ 0.2 million) was drawn down by our                Croatian                operations under a loan agreement with BKS Bank fur Karnten and Steiermark                AG.                This loan bears a variable interest rate of the three-month EURIBOR                plus                3.0% and is repayable on October 1, 2006. As at December 31, 2005                a rate                of 5.25% applied to this loan.  |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Capital      Lease Obligations*

*Page            69*

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*Table            of Contents*

*Operating      Leases*

*Unconditional      Purchase Obligations*

*Other      Long-Term Obligations*

**V      (d) Cash Outlook **

*Page            70*

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*Table            of Contents*

**V      (e) Tax Inspections**

**V      (f) Off-Balance Sheet Arrangements**

*Page            71*

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*Table            of Contents*

| ***VI.*** | ***Critical                Accounting Policies and                Estimates*** |
|-----------|--------------------------------------------------------------------------------|

*Program      Rights*

*Goodwill      and intangible assets*

*Page            72*

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*Table            of Contents*

*Impairment      or disposal of long-lived assets*

*Revenue      Recognition*

*Page            73*

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*Table            of Contents*

*Income Taxes*

*Reporting      exchange differences on intercompany foreign currency      transactions*
*that      are long-term in nature*

*Contingencies*

| ***VII.*** | ***Related                party matters*** |
|------------|--------------------------------------------|

***Overview***

*Page            74*

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*Table            of Contents*

**Related      Party Transactions**

***Croatia***

***Czech      Republic***

***Romania***

***Slovenia***

***Slovak      Republic***

*Page            75*

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*Table            of Contents*

***Ukraine***

***Corporate***

*Page            76*

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*Table            of Contents*

| **ITEM                7A.** | **QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |
|-----------------------------|-------------------------------------------------------------------------------|

**Foreign      Currency Exchange Risk Management **

**Interest      Rate Risk Management**

*Interest      Rate Table as at December 31, 2005 *

| **Expected                Maturity Dates** |   | **2006** |      | **2007** |   | **2008** |   | **2009** |   | **2010** |   | **Thereafter** |   |
|--------------------------------------------|--------|----------|-----------|----------|--------|----------|--------|----------|--------|----------|--------|----------------|--------|
|                                       |   |     |      |     |   |     |   |     |   |     |   |           |   |
| *Total                Debt in Euro 000's*  |   |     |      |     |   |     |   |     |   |     |   |           |   |   |   |   |   |   |   |
| Fixed                Rate                  |   |     | 10        |     |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | 245,000 |   |
| Average                Interest Rate       |   |     | 7.25      | %        |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | 8.25 | % |
| Variable                Rate               |   |     | 184       |     |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | 125,768 |   |
| Average                Interest Rate       |   |     | 5.14      | %        |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | 7.96 | % |
|                                       |   |     |      |     |   |     |   |     |   |     |   |           |   |   |   |   |   |   |   |
| *Total                Debt in CZK 000's*   |   |     |      |     |   |     |   |     |   |     |   |           |   |   |   |   |   |   |   |
| Fixed                Rate                  |   |     | 246,048   |     |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | - |   |
| Average                Interest Rate       |   |     | 8.50      | %        |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | - |   |
| Variable                Rate               |   |     | 1,050,000 |     |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | - |   |
| Average                Interest Rate       |   |     | 4.05      | %        |   | -        |   |     | -      |     |   | -              |   |   | - |   |   | - |   |

*Variable      Interest Rate Sensitivity as at December 31, 2005*

|                                                                                                     |   |                                                                                            |        |                                                                             |   | **Yearly                interest charge if interest rates                increase by** |               |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|-------------|----------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------------------|
|                                                                                                     |   |                                                                                            |        |                                                                             |   | **(US$                000s):**                                                         |               |
| **Value                of Debt as at****December                31, 2005****(US$                000's)** |   | **Interest                Rate****as                at****December                31,****2005** |        | **Yearly                Interest****Charge****(US$                000’s)** |   |  **1%**                                                                           |               |  **2%** |   |  **3%** |   |  **4%** |   |  **5%** |   |
| 148,563(Euro                126.0 million)                                                               |   |                                                                                            | 5.14%-7.96% |                                                                             | $      | 11,820                                                                                 |     | $ | 13,306 |     | $ | 14,791 |     | $ | 16,277 |     | $ | 17,762 |     | $ | 19,248 |   |
| 42,704(CZK                1,050.0 million)                                                               |   |                                                                                            | 4.05%       |                                                                             |   | 1,729                                                                                  |               |   | 2,156 |   |   | 2,583 |   |   | 3,010 |   |   | 3,437 |   |   | 3,864 |   |
| **Total**                                                                                                |   |                                                                                            |        |                                                                             | **$**  | **13,549**                                                                             |               | **$** | **15,462** |   | **$** | **17,374** |   | **$** | **19,287** |   | **$** | **21,199** |   | **$** | **23,112** |   |

*Page            77*

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*Table            of Contents*

| **ITEM                8.** | **FINANCIAL                STATEMENTS AND SUPPLEMENTARY                DATA** |
|----------------------------|-------------------------------------------------------------------------------|

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

*Page            78*

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*Table            of Contents*

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**CONSOLIDATED      BALANCE SHEETS**

**(US$      000’s)**

|                                                   |   |                                    |          |                                    |   |
|--------------------------------------------------------|--------|-----------------------------------------|---------------|-----------------------------------------|--------|
|                                                   |   | **December                31,****2005** |          | **December                31,****2004** |   |
| **ASSETS**                                             |   |                                    |          |                                    |   |
| **Current                assets**                      |   |                                    |          |                                    |   |
| Cash                and cash equivalents               |   | $                                       | 71,658        |                                    | $      | 152,568 |   |
| Restricted                cash (Note 7)                |   |                                    | 34,172        |                                    |   | 15,574 |   |
| Accounts                receivable (Note 8)            |   |                                    | 97,396        |                                    |   | 45,170 |   |
| Income                taxes receivable                 |   |                                    | 9,930         |                                    |   | 90 |   |
| Program                rights                          |   |                                    | 34,914        |                                    |   | 22,055 |   |
| Other                current assets (Note 9)           |   |                                    | 38,856        |                                    |   | 29,592 |   |
| **Total                current assets**                |   |                                    | **286,926**   |                                    |   | **265,049** |   |
| **Non-current                assets**                  |   |                                    |          |                                    |   |   |   |
| Investments                (Note 6)                    |   |                                    | 23,936        |                                    |   | 28,558 |   |
| Acquisition                costs (Notes 3 and 21)      |   |                                    | 5,118         |                                    |   | 10,770 |   |
| Property,                plant and equipment (Note 10) |   |                                    | 58,897        |                                    |   | 31,548 |   |
| Program                rights                          |   |                                    | 33,081        |                                    |   | 18,299 |   |
| Goodwill                (Note 4)                       |   |                                    | 746,583       |                                    |   | 59,092 |   |
| Broadcast                licenses (Note 4)             |   |                                    | 171,591       |                                    |   | 14,575 |   |
| Other                intangible assets (Note 4)        |   |                                    | 47,658        |                                    |   | 12,756 |   |
| Other                non-current assets (Note 9)       |   |                                    | 15,060        |                                    |   | 3,992 |   |
| **Total                non-current assets**            |   |                                    | **1,101,924** |                                    |   | **179,590** |   |
| **Total                assets**                        |   | **$**                                   | **1,388,850** |                                    | **$**  | **444,639** |   |

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

*Page            79*

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*Table            of Contents*

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**CONSOLIDATED      BALANCE SHEETS (continued)**

**(US$      000’s)**

|                                                                                                    |   | **December                31,****2005** |          | **December                31,****2004** |   |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------------|-----------------------------------------|--------|
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                           |   |                                    |          |                                    |   |
| **Current                liabilities**                                                                  |   |                                    |          |                                    |   |
| Accounts                payable and accrued liabilities (Note 11)                                       |   | $                                       | 84,849        |                                    | $      | 67,042 |   |
| Duties                and other taxes payable                                                           |   |                                    | 27,654        |                                    |   | 20,243 |   |
| Income                taxes payable (Note 14)                                                           |   |                                    | 21,894        |                                    |   | 4,658 |   |
| Credit                facilities and obligations under capital leases (Note 12)                         |   |                                    | 43,566        |                                    |   | 10,472 |   |
| Deferred                consideration - Croatia (Note 3)                                                |   |                                    | 3,591         |                                    |   | 6,384 |   |
| Deferred                consideration - Czech Republic (Note 3)                                         |   |                                    | 24,402        |                                    |   | - |   |
| Deferred                tax (Note 14)                                                                   |   |                                    | 1,005         |                                    |   | 946 |   |
| **Total                current liabilities**                                                            |   |                                    | **206,961**   |                                    |   | **109,745** |   |
| **Non-current                liabilities**                                                              |   |                                    |          |                                    |   |   |   |
| Credit                facilities and obligations under capital leases (Note 12)                         |   |                                    | 4,740         |                                    |   | 8,898 |   |
| Senior                Notes (Note 5)                                                                    |   |                                    | 436,424       |                                    |   | - |   |
| Income                taxes payable (Note 14)                                                           |   |                                    | 681           |                                    |   | 3,120 |   |
| Deferred                tax (Note 14)                                                                   |   |                                    | 42,149        |                                    |   | 6,213 |   |
| Other                non-current liabilities                                                            |   |                                    | 4,105         |                                    |   | 734 |   |
| **Total                non-current liabilities**                                                        |   |                                    | **488,099**   |                                    |   | **18,965** |   |
| Commitments                and contingencies (Note 19)                                                  |   |                                    |          |                                    |   |   |   |
| **Minority                interests in consolidated subsidiaries**                                      |   |                                    | **13,237**    |                                    |   | **4,861** |   |
| **SHAREHOLDERS'                EQUITY (Note 13):**                                                      |   |                                    |          |                                    |   |   |   |
| Nil                shares of Preferred Stock of $0.08 each (2004 - nil)                                 |   |                                    | -             |                                    |   | - |   |
| 31,032,994                shares of Class A Common Stock of $0.08 each (2004 - 21,049,400)              |   |                                    | 2,482         |                                    |   | 1,684 |   |
| 6,966,533                shares of Class B Common Stock of $0.08 each (2004 -                7,334,768) |   |                                    | 558           |                                    |   | 587 |   |
| Additional                paid-in capital                                                               |   |                                    | 746,880       |                                    |   | 387,305 |   |
| Accumulated                deficit                                                                      |   |                                    | (44,973       | )                                       |   | (87,468 | ) |
| Accumulated                other comprehensive income / (loss)                                          |   |                                    | (24,394       | )                                       |   | 8,960 |   |
| **Total                shareholders’ equity**                                                     |   |                                    | **680,553**   |                                    |   | **311,068** |   |
| **Total                liabilities and shareholders’ equity**                                     |   | **$**                                   | **1,388,850** |                                    | **$**  | **444,639** |   |

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

*Page            80*

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**CONSOLIDATED      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**

**(US$      000’s, except share and per share data)**

|                                                                                                                                                                                                          |   | **For                the Years Ended December 31,** |        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|
|                                                                                                                                                                                                          |   | **2005**                                            |        | **2004** |   | **2003** |   |
| **Net                revenues**                                                                                                                                                                               |   | **$**                                               | **400,978** |   | **$** | **182,339** |   | **$** | **124,978** |   |
| Operating                costs                                                                                                                                                                                |   |                                                | 65,138      |   |   | 33,615 |   |   | 26,608 |   |
| Cost                of programming                                                                                                                                                                            |   |                                                | 148,837     |   |   | 71,793 |   |   | 50,747 |   |
| Station                selling, general and administrative expenses                                                                                                                                           |   |                                                | 46,382      |   |   | 22,112 |   |   | 14,245 |   |
| Depreciation                of station property, plant & equipment                                                                                                                                        |   |                                                | 16,367      |   |   | 6,429 |   |   | 5,276 |   |
| Amortization                of broadcast licenses and other intangibles (Note 4)                                                                                                                              |   |                                                | 11,180      |   |   | 465 |   |   | - |   |
| Corporate                operating costs                                                                                                                                                                      |   |                                                | 25,374      |   |   | 29,185 |   |   | 32,512 |   |
| Impairment                charge (Note 4)                                                                                                                                                                     |   |                                                | 35,331      |   |   | - |   |   | - |   |
| **Total                operating expenses**                                                                                                                                                                   |   |                                                | **348,609** |   |   | **163,599** |   |   | **129,388** |   |
| **Operating                income/(loss)**                                                                                                                                                                    |   |                                                | **52,369**  |   |   | **18,740** |   |   | **(4,410** | **)** |
| Interest                income                                                                                                                                                                                |   |                                                | 4,124       |   |   | 4,318 |   |   | 5,507 |   |
| Interest                expense                                                                                                                                                                               |   |                                                | (29,387     | ) |   | (1,203 | ) |   | (12,010 | ) |
| Foreign                currency exchange gain/(loss), net                                                                                                                                                     |   |                                                | 37,968      |   |   | (574 | ) |   | (10,023 | ) |
| Other                expense                                                                                                                                                                                  |   |                                                | (4,705      | ) |   | (698 | ) |   | (2,458 | ) |
| **Income/(loss)                before provision for income taxes, minority interest, equity in income                of                unconsolidated affiliates and discontinued                operations** |   |                                                | **60,369**  |   |   | **20,583** |   |   | **(23,394** | **)** |
| Provision                for income taxes (Note 14)                                                                                                                                                           |   |                                                | (16,691     | ) |   | (11,089 | ) |   | (3,760 | ) |
| **Income/(loss)                before minority interest, equity in income of unconsolidated affiliates                and discontinued operations**                                                           |   |                                                | **43,678**  |   |   | **9,494** |   |   | **(27,154** | **)** |
| Minority                interest in income of consolidated subsidiaries                                                                                                                                       |   |                                                | (8,908      | ) |   | (4,106 | ) |   | (676 | ) |
| Equity                in income of unconsolidated affiliates (Note 6)                                                                                                                                         |   |                                                | 8,238       |   |   | 10,619 |   |   | 3,629 |   |
| **Net                income/(loss) from continuing operations**                                                                                                                                               |   |                                                | **43,008**  |   |   | **16,007** |   |   | **(24,201** | **)** |
| **Discontinued                operations (Note 18):**                                                                                                                                                         |   |                                                |        |   |   |   |   |   |   |   |
| Pre-tax                income from discontinued operations (Czech Republic)                                                                                                                                   |   |                                                | 164         |   |   | 146 |   |   | 384,213 |   |
| Tax                on disposal of discontinued operations (Czech Republic)                                                                                                                                    |   |                                                | (677        | ) |   | 2,378 |   |   | (14,000 | ) |
| **Net                income/(loss) from discontinued operations**                                                                                                                                             |   |                                                | **(513**    | **)** |   | **2,524** |   |   | **370,213** |   |
| **Net                income**                                                                                                                                                                                 |   | **$**                                               | **42,495**  |   | **$** | **18,531** |   | **$** | **346,012** |   |
|                                                                                                                                                                                                          |   |                                                |        |   |   |   |   |   |   |   |
| Currency                translation adjustment, net                                                                                                                                                           |   |                                                | (33,354     | ) |   | 4,228 |   |   | 10,056 |   |
| **Total                comprehensive income**                                                                                                                                                                 |   | **$**                                               | **9,141**   |   | **$** | **22,759** |   | **$** | **356,068** |   |

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

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*Table            of Contents*

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**CONSOLIDATED      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME      (continued)**

**(US$      000’s, except share and per share data)**

|                                                                                                       |   | **For                the Years Ended December 31,** |   |
|------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                                                                       |   | **2005**                                            |   | **2004** |   | **2003** |   |
|                                                                                                       |   |                                                |   |   |   |   |   |
| **PER                SHARE DATA (Note 16):**                                                               |   |                                                |   |   |   |   |   |
| *Net                income/(loss) per share:*                                                              |   |                                                |   |   |   |   |   |
| Continuing                operations - Basic                                                               |   | $                                                   | 1.24   |   | $ | 0.57 |   | $ | (0.91 | ) |
| Continuing                operations - Diluted                                                             |   |                                                | 1.21   |   |   | 0.55 |   |   | (0.91 | ) |
| Discontinued                operations - Basic                                                             |   |                                                | (0.01  | ) |   | 0.09 |   |   | 13.97 |   |
| Discontinued                operations - Diluted                                                           |   |                                                | (0.01  | ) |   | 0.09 |   |   | 13.97 |   |
| Net                income - Basic                                                                          |   |                                                | 1.23   |   |   | 0.66 |   |   | 13.06 |   |
| Net                income - Diluted                                                                        |   | $                                                   | 1.20   |   | $ | 0.64 |   | $ | 13.06 |   |
|                                                                                                       |   |                                                |   |   |   |   |   |   |   |   |
| *Weighted                average common shares used in computing per share amounts                (000s):* |   |                                                |   |   |   |   |   |   |   |   |
| Basic                                                                                                      |   |                                                | 34,664 |   |   | 27,871 |   |   | 26,492 |   |
| Diluted                                                                                                    |   |                                                | 35,430 |   |   | 29,100 |   |   | 26,492 |   |

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

*Page            82*

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**CONSOLIDATED      STATEMENT OF SHAREHOLDERS' EQUITY **

**(US$      000’s)**

|                                                                                             |   | **Class                  A Common Stock** |           | **Class                  B Common Stock** |   |                                     |               |                           |          |                                                                 |   |                       |               |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------|----------------|-------------------------------------------|--------|------------------------------------------|--------------------|--------------------------------|---------------|----------------------------------------------------------------------|--------|----------------------------|--------------------|
|                                                                                             |   | **Number                  of****shares**  |           | **Par                  value**            |   | **Number                  of****shares** |               | **Par                  value** |          | **Additional                  Paid-****In                  Capital** |   | **Accumulated****Deficit** |               | **Accumulated****Other****Comprehensive****Income/(Loss)** |   | **Total****Shareholders'****Equity/                  (Deficit)** |   |
| **BALANCE,****December                  31, 2002**                                               |   |                                      | **18,523,768** |                            | **$**  | **1,482**                                |     |                           | **7,934,768** |                                                       | **$**  | **635**                    |     | **$** | **359,342** |     | **$** | **(452,011** | **)  ** | **$** | **(5,324** | **)  ** | **$** | **(95,876** | **)** |
| Stock-based                  Compensation                                                        |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | 13,209 |   |   | - |   |   | - |   |   | 13,209 |   |
| Stock                  options exercised                                                         |   |                                      | 145,998        |                                      |   | 12                                       |               |                           | -             |                                                                 |   | -                          |               |   | 111 |   |   | - |   |   | - |   |   | 123 |   |
| Conversion                  of Class                  B to Class A Common                  Stock |   |                                      | 600,000        |                                      |   | 48                                       |               |                           | (600,000      | )                                                                    |   | (48                        | )                  |   | - |   |   | - |   |   | - |   |   | - |   |
| Net                  income                                                                      |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | - |   |   | 346,012 |   |   | - |   |   | 346,012 |   |
| Currency                  translation                  adjustment                                |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | - |   |   | - |   |   | 10,056 |   |   | 10,056 |   |
| **BALANCE,****December                  31, 2003**                                               |   |                                      | **19,269,766** |                                      | **$**  | **1,542**                                |               |                           | **7,334,768** |                                                                 | **$**  | **587**                    |               | **$** | **372,662** |   | **$** | **(105,999** | **)** | **$** | **4,732** |   | **$** | **273,524** |   |
| Stock-based                  Compensation                                                        |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | 10,102 |   |   | - |   |   | - |   |   | 10,102 |   |
| Stock                  options exercised                                                         |   |                                      | 1,083,634      |                                      |   | 87                                       |               |                           | -             |                                                                 |   | -                          |               |   | 2,853 |   |   | - |   |   | - |   |   | 2,940 |   |
| Warrants                  exercised                                                              |   |                                      | 696,000        |                                      |   | 55                                       |               |                           | -             |                                                                 |   | -                          |               |   | 1,688 |   |   | - |   |   | - |   |   | 1,743 |   |
| Net                  income                                                                      |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | - |   |   | 18,531 |   |   | - |   |   | 18,531 |   |
| Currency                  translation                  adjustment                                |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | - |   |   | - |   |   | 4,228 |   |   | 4,228 |   |
| **BALANCE,****December                  31, 2004**                                               |   |                                      | **21,049,400** |                                      | **$**  | **1,684**                                |               |                           | **7,334,768** |                                                                 | **$**  | **587**                    |               | **$** | **387,305** |   | **$** | **(87,468** | **)** | **$** | **8,960** |   | **$** | **311,068** |   |
| Stock-based                  Compensation                                                        |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | 2,954 |   |   | - |   |   | - |   |   | 2,954 |   |
| Shares                  issued to PPF                                                            |   |                                      | 3,500,000      |                                      |   | 280                                      |               |                           | -             |                                                                 |   | -                          |               |   | 120,603 |   |   | - |   |   | - |   |   | 120,883 |   |
| Shares                  issued, net of                  fees                                     |   |                                      | 5,405,000      |                                      |   | 432                                      |               |                           | -             |                                                                 |   | -                          |               |   | 230,172 |   |   | - |   |   | - |   |   | 230,604 |   |
| Stock                  options exercised                                                         |   |                                      | 710,359        |                                      |   | 57                                       |               |                           | -             |                                                                 |   | -                          |               |   | 5,846 |   |   | - |   |   | - |   |   | 5,903 |   |
| Conversion                  of Class                  B to Class A Common                  Stock |   |                                      | 368,235        |                                      |   | 29                                       |               |                           | (368,235      | )                                                                    |   | (29                        | )                  |   | - |   |   | - |   |   | - |   |   | - |   |
| Net                  income                                                                      |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | - |   |   | 42,495 |   |   | - |   |   | 42,495 |   |
| Currency                  translation                  adjustment                                |   |                                      | -              |                                      |   | -                                        |               |                           | -             |                                                                 |   | -                          |               |   | - |   |   | - |   |   | (33,354 | ) |   | (33,354 | ) |
| **BALANCE,****December                  31, 2005**                                               |   |                                      | **31,032,994** |                                      | **$**  | **2,482**                                |               |                           | **6,966,533** |                                                                 | **$**  | **558**                    |               | **$** | **746,880** |   | **$** | **(44,973** | **)** | **$** | **(24,394** | **)** | **$** | **680,553** |   |

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

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS **

**(US$      000’s)**

|                                                                                                                                   |   | **For                the Years Ended December 31,** |         |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------------|
|                                                                                                                                   |   | **2005**                                            |         | **2004** |   | **2003** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                                               |   |                                                |         |   |   |   |   |
| **Net                income**                                                                                                          |   | **$**                                               | **42,495**   |   | **$** | **18,531** |   | **$** | **346,012** |   |
| Adjustments                to reconcile net income to net cash generated from/(used in) operating                activities:           |   |                                                |         |   |   |   |   |   |   |   |
| (Income)/loss                from discontinued operations (Note 18)                                                                    |   |                                                | 513          |   |   | (2,524 | ) |   | (370,213 | ) |
| Equity                in income of unconsolidated affiliates, net of dividends                received                                 |   |                                                | 3,454        |   |   | (4,340 | ) |   | (243 | ) |
| Depreciation                and amortization                                                                                           |   |                                                | 110,846      |   |   | 49,357 |   |   | 38,037 |   |
| Impairment                charge (Note 4)                                                                                              |   |                                                | 35,331       |   |   | - |   |   | - |   |
| Interest                receivable                                                                                                     |   |                                                | (185         | ) |   | (340 | ) |   | (344 | ) |
| Loss                on disposal of fixed assets                                                                                        |   |                                                | 685          |   |   | 18 |   |   | - |   |
| Stock-based                compensation (Note 15)                                                                                      |   |                                                | 2,954        |   |   | 10,102 |   |   | 13,209 |   |
| Minority                interest in income of consolidated subsidiaries                                                                |   |                                                | 8,908        |   |   | 4,106 |   |   | 676 |   |
| Foreign                currency exchange (gain)/loss, net                                                                              |   |                                                | (37,968      | ) |   | 574 |   |   | 10,023 |   |
| Net                change in (net of effects of acquisitions and disposals of                businesses):                              |   |                                                |         |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                     |   |                                                | 1,693        |   |   | (9,100 | ) |   | (3,547 | ) |
| Program                rights costs                                                                                                    |   |                                                | (110,364     | ) |   | (45,446 | ) |   | (33,049 | ) |
| Other                assets                                                                                                            |   |                                                | 12,174       |   |   | (4,572 | ) |   | 1,246 |   |
| Settlement                liability (Note 11)                                                                                          |   |                                                | (41,606      | ) |   | - |   |   | - |   |
| Other                accounts payable and accrued liabilities                                                                          |   |                                                | (13,642      | ) |   | (13,611 | ) |   | (7,642 | ) |
| Income                and other taxes payable                                                                                          |   |                                                | (11,744      | ) |   | (340 | ) |   | (1,615 | ) |
| **Net                cash generated from/(used in) continuing operating                activities**                                    |   |                                                | **3,544**    |   |   | **2,415** |   |   | **(7,450** | **)** |
|                                                                                                                                   |   |                                                |         |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                                               |   |                                                |         |   |   |   |   |   |   |   |
| Net                change in restricted cash                                                                                           |   |                                                | (19,521      | ) |   | (10,145 | ) |   | 1,769 |   |
| Purchase                of property, plant and equipment                                                                               |   |                                                | (26,548      | ) |   | (10,808 | ) |   | (7,811 | ) |
| Proceeds                from disposal of property, plant and equipment                                                                 |   |                                                | 125          |   |   | 72 |   |   | - |   |
| Investments                in subsidiaries and unconsolidated affiliates                                                               |   |                                                | (35,305      | ) |   | (35,800 | ) |   | (8 | ) |
| Partial                consideration for acquisition of TV Nova (Czech Republic)                group                                  |   |                                                | (218,054     | ) |   | - |   |   | - |   |
| Proceeds                from partial disposal of investment                                                                            |   |                                                | -            |   |   | 42 |   |   | - |   |
| Repayment                of loans and advances to related parties                                                                      |   |                                                | 500          |   |   | 400 |   |   | - |   |
| License                costs, other assets and intangible assets                                                                       |   |                                                | -            |   |   | (770 | ) |   | (6,060 | ) |
| **Net                cash used in continuing investing activities**                                                                    |   |                                                | **(298,803** | **)** |   | **(57,009** | **)** |   | **(12,110** | **)** |
|                                                                                                                                   |   |                                                |         |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                                                                               |   |                                                |         |   |   |   |   |   |   |   |
| Net                proceeds from issuance/(repurchase) of Senior Notes                                                                 |   |                                                | 465,120      |   |   | - |   |   | (183,739 | ) |
| Proceeds                from other credit facilities                                                                                   |   |                                                | 65,902       |   |   | - |   |   | - |   |
| Payment                of credit facilities and capital leases                                                                         |   |                                                | (41,243      | ) |   | (2,275 | ) |   | (17,905 | ) |
| Proceeds                from/(repayment) of loans from unconsolidated affiliates                                                       |   |                                                | (5,827       | ) |   | - |   |   | 2,450 |   |
| Repayment                of notes for acquisition of TV Nova (Czech Republic) group                                                    |   |                                                | (491,703     | ) |   | - |   |   | - |   |
| Repayment                of liabilities on acquisition of Galaxie Sport                                                                |   |                                                | (3,000       | ) |   | - |   |   | - |   |
| Issuance                of Class A Common Stock                                                                                        |   |                                                | 236,507      |   |   | 4,161 |   |   | 123 |   |
| Dividends                paid to minority shareholders                                                                                 |   |                                                | (397         | ) |   | - |   |   | - |   |
| Repayment                of other non-current liabilities                                                                              |   |                                                | -            |   |   | - |   |   | (400 | ) |
| **Net                cash received from/(used in) financing activities**                                                               |   |                                                | **225,359**  |   |   | **1,886** |   |   | **(199,471** | **)** |
|                                                                                                                                   |   |                                                |         |   |   |   |   |   |   |   |
| NET                CASH RECEIVED FROM/(USED IN) DISCONTINUED OPERATIONS-OPERATING (Revised                -                See Note 2) |   |                                                | (2,000       | ) |   | (9,463 | ) |   | 343,358 |   |
| NET                CASH RECEIVED FROM DISCONTINUED OPERATIONS-INVESTING (Revised - See                Note                2)           |   |                                                | -            |   |   | 20,349 |   |   | 15,000 |   |
| **Impact                of exchange rate fluctuations on cash**                                                                        |   |                                                | **(9,010**   | **)** |   | **2,144** |   |   | **1,146** |   |
|                                                                                                                                   |   |                                                |         |   |   |   |   |   |   |   |
| Net                increase/(decrease) in cash and cash equivalents                                                                    |   |                                                | (80,910      | ) |   | (39,678 | ) |   | 140,473 |   |
| **CASH                AND CASH EQUIVALENTS, beginning of year**                                                                        |   |                                                | **152,568**  |   |   | **192,246** |   |   | **51,773** |   |
| **CASH                AND CASH EQUIVALENTS, end of year**                                                                              |   | **$**                                               | **71,658**   |   | **$** | **152,568** |   | **$** | **192,246** |   |

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

*Page            84*

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*Table            of Contents*

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS (continued) **

**(US$      000’s)**

|                                                                                                                  |   | **For                the Years Ended December 31,** |    |
|-----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|
|                                                                                                                  |   | **2005**                                            |    | **2004** |   | **2003** |   |
|                                                                                                                  |   |                                                |    |   |   |   |   |
| **SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION:**                                                  |   |                                                |    |   |   |   |   |
| Cash                paid for interest                                                                                 |   | $                                                   | 19,402  |   | $ | 581 |   | $ | 16,658 |   |
| Cash                paid for income taxes (net of refunds)                                                            |   | $                                                   | 10,066  |   | $ | 18,920 |   | $ | 4,938 |   |
|                                                                                                                  |   |                                                |    |   |   |   |   |   |   |   |
| **SUPPLEMENTAL                DISCLOSURE OF NON-CASH FINANCING AND INVESTING                ACTIVITIES:**             |   |                                                |    |   |   |   |   |   |   |   |
| Exchange                of 3.5 million shares of Class A Common Stock (Note 3)                                        |   | $                                                   | 120,883 |   | $ | - |   | $ | - |   |
| Notes                taken out for acquisition of TV Nova (Czech Republic) group (Note                3)              |   | $                                                   | 491,703 |   | $ | - |   | $ | - |   |
| Exchange                of Other receivable (Note 3)                                                                  |   | $                                                   | 18,541  |   | $ | - |   | $ | - |   |
| Purchase                of Krsak interest financed with payable (Note 3)                                              |   | $                                                   | 24,683  |   | $ | - |   | $ | - |   |
| Purchase                of share of Romania operations through settlement of loans receivable                (Note 3) |   | $                                                   | -       |   | $ | 3,400 |   | $ | - |   |
| Acquisition                of property, plant and equipment under capital lease                                       |   | $                                                   | 4,967   |   | $ | 333 |   | $ | 156 |   |

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

*Page            85*

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*Table            of Contents*

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

| **1.** | **ORGANIZATION                AND BUSINESS** |
|--------|----------------------------------------------|

| **Company                Name**                                                             |   | **Voting                Interest** |   | **Jurisdiction                of Organization** |   | **Subsidiary                / Equity-Accounted Affiliate (1)** |
|---------------------------------------------------------------------------------------------|--------|------------------------------------|--------|-------------------------------------------------|--------|----------------------------------------------------------------|
|                                                                                        |   |                               |   |                                            |   |                                                           |
| CME                Media Investments s.r.o.                                                 |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                                                     |
| Vilja                a.s. (“Vilja”)                                             |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                                                     |
| CET                21 s.r.o. (“CET 21”)                                         |   | 96.5%                              |   | Czech                Republic                   |   | Subsidiary                                                     |
| CME                Media Services s.r.o. (“CME Media Services”)                 |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                (2)                                  |
| ERIKA                a.s.                                                                   |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                                                     |
| Media                Capitol, a.s.                                                          |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                                                     |
| NOVA                Consulting, a.s.                                                        |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                                                     |
| HARTIC,                a.s.                                                                 |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                                                     |
| Galaxie                Sport s.r.o. (“Galaxie Sport”)                           |   | 100%                               |   | Czech                Republic                   |   | Subsidiary                                                     |
| Plejada                a.s.                                                                 |   | 96.5%                              |   | Czech                Republic                   |   | Subsidiary                (in liquidation)                     |
|                                                                                        |   |                               |   |                                            |   |                                                           |
| Media                Pro International S.A. (“MPI”)                             |   | 85%                                |   | Romania                                         |   | Subsidiary                                                     |
| Media                Vision S.R.L. (“Media Vision”)                             |   | 70%                                |   | Romania                                         |   | Subsidiary                                                     |
| MPI                Romania B.V.                                                             |   | 85%                                |   | Netherlands                                     |   | Subsidiary                                                     |
| Pro                TV S.A. (“Pro TV”)                                           |   | 85%                                |   | Romania                                         |   | Subsidiary                                                     |
| Radio                Pro S.R.L (“Radio Pro”)                                    |   | 20%                                |   | Romania                                         |   | Equity-Accounted                Affiliate                      |
|                                                                                        |   |                               |   |                                            |   |                                                           |
| International                Media Services Ltd. (“IMS”)                        |   | 60%                                |   | Bermuda                                         |   | Subsidiary                                                     |
| Innova                Film GmbH (“Innova”)                                      |   | 60%                                |   | Germany                                         |   | Subsidiary                                                     |
| Enterprise                “Inter-Media” (“Inter-Media”)             |   | 60%                                |   | Ukraine                                         |   | Subsidiary                                                     |
| TV                Media Planet Ltd                                                          |   | 60%                                |   | Cyprus                                          |   | Subsidiary                                                     |
| Broadcasting                Company “Studio 1+1” LLC (“Studio 1+1”) |   | 18%                                |   | Ukraine                                         |   | Consolidated                Variable Interest Entity (3)       |
| Ukraine                Media Services LLC                                                   |   | 99%                                |   | Ukraine                                         |   | Subsidiary                                                     |
|                                                                                        |   |                               |   |                                            |   |                                                           |
| Slovenska                Televizna Spolocnost s.r.o. (“STS”)                    |   | 49%                                |   | Slovak                Republic                  |   | Equity-Accounted                Affiliate (4)                  |
| Markiza-Slovakia                s.r.o. (“Markiza”)                              |   | 34%                                |   | Slovak                Republic                  |   | Equity-Accounted                Affiliate (4)                  |
| Gamatex                s.r.o.                                                               |   | 49%                                |   | Slovak                Republic                  |   | Equity-Accounted                Affiliate (4)                  |
| ADAM                a.s.                                                                    |   | 49%                                |   | Slovak                Republic                  |   | Equity-Accounted                Affiliate (4)                  |

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **Company                Name**                                |   | **Voting                Interest** |   | **Jurisdiction                of Organization** |   | **Subsidiary                / Equity-Accounted Affiliate (1)** |
|----------------------------------------------------------------|--------|------------------------------------|--------|-------------------------------------------------|--------|----------------------------------------------------------------|
|                                                           |   |                               |   |                                            |   |                                                           |
| MM                TV 1 d.o.o.                                  |   | 100%                               |   | Slovenia                                        |   | Subsidiary                                                     |
| Produkcija                Plus d.o.o. (“Pro Plus”) |   | 100%                               |   | Slovenia                                        |   | Subsidiary                                                     |
| POP                TV d.o.o. (“Pop TV”)            |   | 100%                               |   | Slovenia                                        |   | Subsidiary                                                     |
| Kanal                A d.o.o. (“Kanal A”)          |   | 100%                               |   | Slovenia                                        |   | Subsidiary                                                     |
| Super                Plus Holding d.d.                         |   | 100%                               |   | Slovenia                                        |   | Subsidiary                (in liquidation)                     |
| MTC                Holding d.o.o.                              |   | 24%                                |   | Slovenia                                        |   | Equity-Accounted                Affiliate                      |
|                                                           |   |                               |   |                                            |   |                                                           |
| Nova                TV d.d. (“Nova TV Croatia”)    |   | 100%                               |   | Croatia                                         |   | Subsidiary                                                     |
| Operativna                Kompanija d.o.o. (“OK”)  |   | 100%                               |   | Croatia                                         |   | Subsidiary                                                     |
| Media                House d.o.o.                              |   | 100%                               |   | Croatia                                         |   | Subsidiary                                                     |
|                                                           |   |                               |   |                                            |   |                                                           |
| CME                Media Enterprises B.V.                      |   | 100%                               |   | Netherlands                                     |   | Subsidiary                                                     |
| CME                Czech Republic B.V.                         |   | 100%                               |   | Netherlands                                     |   | Subsidiary                                                     |
| CME                Czech Republic II B.V.                      |   | 100%                               |   | Netherlands                                     |   | Subsidiary                                                     |
| CME                Germany B.V.                                |   | 100%                               |   | Netherlands                                     |   | Subsidiary                                                     |
| CME                Hungary B.V.                                |   | 100%                               |   | Netherlands                                     |   | Subsidiary                                                     |
| CME                Poland B.V.                                 |   | 100%                               |   | Netherlands                                     |   | Subsidiary                                                     |
| CME                Romania B.V.                                |   | 100%                               |   | Netherlands                                     |   | Subsidiary                                                     |
|                                                           |   |                               |   |                                            |   |                                                           |
| CME                Ukraine Holding GmbH                        |   | 100%                               |   | Austria                                         |   | Subsidiary                                                     |
| CME                Germany GmbH                                |   | 100%                               |   | Germany                                         |   | Subsidiary                (in liquidation)                     |
| CME                Cyprus Holding Ltd                          |   | 100%                               |   | Cyprus                                          |   | Subsidiary                                                     |
| CME                Development Corporation                     |   | 100%                               |   | USA                                             |   | Subsidiary                                                     |
|                                                           |   |                               |   |                                            |   |                                                           |
| Central                European Media Enterprises N.V.         |   | 100%                               |   | Netherlands                Antilles             |   | Subsidiary                                                     |
| Central                European Media Enterprises II B.V.      |   | 100%                               |   | Netherlands                Antilles             |   | Subsidiary                                                     |

| (1) | All                subsidiaries have been consolidated in our Consolidated Financial                Statements. All equity-accounted affiliates have been accounted for                using                the equity method. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Ceska                Produkcni 2000 a.s. and Mag Media 99 a.s. were merged into CME Media                Services s.r.o. on December 31, 2005. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | For                further information, see Note 2, "Summary of Significant Accounting                Policies". |
|-----|------------------------------------------------------------------------------------------------------------------|

| (4) | On                January 23, 2006, we acquired 100% of A.R.J. a.s., thereby increasing                our                effective voting interest in STS to 89.8% and in Markiza to 80%.                From                January 23, 2006 we consolidate these entities. See Note 21, “Subsequent                Events”. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **2.** | **SUMMARY                OF SIGNIFICANT ACCOUNTING                POLICIES** |
|--------|------------------------------------------------------------------------------|

**Basis      of Presentation**

|                                        |   | **December                31, 2005** |                                                                      | **December                31, 2004** |   |
|---------------------------------------------|--------|--------------------------------------|---------------------------------------------------------------------------|--------------------------------------|--------|
| **Balance                Sheet:**           |   |                                 |                                                                      |                                 |   |
| Current                assets               |   | $                                    | 18,475                                                                    |                                 | $      | 10,711 |   |
| Non-current                assets           |   |                                 | 1,315                                                                     |                                 |   | 1,822 |   |
| Current                liabilities          |   |                                 | (9,678                                                                    | )                                    |   | (10,689 | ) |
| Non-current                liabilities      |   |                                 | (106                                                                      | )                                    |   | - |   |
| Minority                interest            |   |                                 | (4,002                                                                    | )                                    |   | (738 | ) |
| **Net                Assets**               |   | **$**                                | **6,004**                                                                 | ** **                           | **$**  | **1,106** |   |
|                                        |   |                                 |                                                                      |                                 |   |   |   |
|                                        |   |                                 |                                                                      |                                 |   |   |   |
| **Statement                of Operations:** |   |                                 | **For                the Year Ended****December                31, 2005** |                                 |   | **For                the Year Ended****December                31, 2004** |   |
| Net                revenues                 |   | $                                    | 62,586                                                                    |                                 | $      | 43,903 |   |
| Operating                income             |   |                                 | 12,401                                                                    |                                 |   | 6,001 |   |
| Net                income                   |   | $                                    | 5,423                                                                     |                                 | $      | 2,985 |   |

**Revenue      Recognition**

*Advertising      revenue*

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Cable      and satellite revenues*

*Program      distribution revenue*

*Barter      transactions*

**Cash      and Cash Equivalents**

**Property,      Plant and Equipment**

| **Asset                  category**                        |                                               |  | **Estimated                  useful life** |
|------------------------------------------------------------|-----------------------------------------------|--|--------------------------------------------|
| Land                                                       | Indefinite                                    |
| Buildings                                                  | 25                  years                     |
| Station                  machinery, fixtures and equipment | 4                  -                  8 years |
| Other                  equipment                           | 3                  -                  8 years |
| Software                  licenses                         | 3                  -                  5 years |

**Long-Lived      Assets Including Intangible Assets with Finite Lives**

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

**Program      Rights**

*Purchased      program rights*

|                                                          |   | **Amortization                %** |       |
|---------------------------------------------------------------|--------|-----------------------------------|------------|
| **Type              of programming**                          |   | ***Run                1***        | ** ** | ***Run                2*** | ** ** | ***Run                3*** | ** ** | ***Run                4*** | ** ** | ***Run                5*** |   |
| Special                blockbuster                            |   |                              | 30%        |   |   | 25% |   |   | 20% |   |   | 15% |   |   | 10% |   |
| Films                and series, 2 runs                       |   |                              | 65%        |   |   | 35% |   |   | - |   |   | - |   |   | - |   |
| Films                and series, 3 runs                       |   |                              | 60%        |   |   | 30% |   |   | 10% |   |   | - |   |   | - |   |
| Concerts,                documentaries, film about film, etc. |   |                              | 100%       |   |   | - |   |   | - |   |   | - |   |   | - |   |

*Produced      program rights*

**Goodwill      and Indefinite-Lived Intangible Assets**

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| · | We                intend to renew the licenses into the foreseeable                future; |
|--------|--------------------------------------------------------------------------------------------|

| · | We                have precedents of renewals, or reasonable expectation of                renewals; |
|--------|------------------------------------------------------------------------------------------------------|

| · | We                do not expect any substantial cost to be incurred as part of a future                license renewal and no costs have been incurred in the renewals to                date; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We                have not experienced any historical evidence of a compelling challenge                to                our holding these licenses; and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We                do not foresee that the technology used to exploit these licenses                will                undergo significant changes in the foreseeable                future. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Income      Taxes**

**Foreign      Currency**

*Translation      of financial statements*

*Transactions      in foreign currencies*

**Use      Of Estimates**

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

**Leases**

**Stock-Based      Compensation**

|                                                                                                                                                                            |   |   |                           | **For                the Years Ended December 31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------|-----------------------------------------------------|--------|
|                                                                                                                                                                            |   |   |                           | **2005**                                            |   | **2004** |   | **2003** |   |
|                                                                                                                                                                            |   |   |                           |                                                |   |   |   |   |   |
| **Net                Income**                                                                                                                                                   |   |   | **As                Reported** |                                                | **$**  | **42,495** |   | **$** | **18,531** |   | **$** | **346,012** |   |
| Add:                Stock-based compensation expense included in reported net income,                net of                related tax effects                                  |   |   | As                Reported     |                                                |   | 2,954 |   |   | 10,102 |   |   | 13,209 |   |
| Deduct:                Total stock-based compensation expense determined under fair value                based                method for all awards, net of related tax effects |   |   | Pro                Forma       |                                                |   | (3,022 | ) |   | (10,315 | ) |   | (13,778 | ) |
| **Net                Income**                                                                                                                                                   |   |   | **Pro                Forma**   |                                                | **$**  | **42,427** |   | **$** | **18,318** |   | **$** | **345,443** |   |
|                                                                                                                                                                            |   |   |                           |                                                |   |   |   |   |   |   |   |   |   |
| Net                Income - Basic:                                                                                                                                              |   |   | As                Reported     |                                                | $      | 1.23 |   | $ | 0.66 |   | $ | 13.06 |   |
|                                                                                                                                                                            |   |   | Pro                  Forma     |                                                | $      | 1.23 |   | $ | 0.66 |   | $ | 13.04 |   |
|                                                                                                                                                                            |   |   |                           |                                                |   |   |   |   |   |   |   |   |   |
| Net                Income - Diluted:                                                                                                                                            |   |   | As                Reported     |                                                | $      | 1.20 |   | $ | 0.64 |   | $ | 13.06 |   |
|                                                                                                                                                                            |   |   | Pro                Forma  |                                                | $      | 1.20 |   | $ | 0.63 |   | $ | 13.04 |   |

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

**Contingencies**

**Financial      Instruments**

*Fair      value of financial instruments*

*Derivative      financial instruments*

*Put      options*

**Discontinued      Operations**

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

**Advertising      Costs**

**Earnings      Per Share**

**Reclassifications**

**Recent      Accounting Pronouncements**

| **3.** | **ACQUISITIONS                AND DISPOSALS** |
|--------|-----------------------------------------------|

**Czech      Republic**

*Acquisition      - TV Nova*

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

|                                                             |   | **Fair                Value on Acquisition** |        |
|------------------------------------------------------------------|--------|----------------------------------------------|-------------|
| Cash                                                             |   | $                                            | 35,592      |   |
| Receivables                                                      |   |                                         | 56,832      |   |
| Property,                plant and equipment                     |   |                                         | 17,379      |   |
| Program                library                                   |   |                                         | 26,937      |   |
| Intangible                assets subject to amortization (1)     |   |                                         | 178,054     |   |
| Intangible                assets not subject to amortization (2) |   |                                         | 17,979      |   |
| Goodwill                                                         |   |                                         | 723,503     |   |
| Other                assets                                      |   |                                         | 23,562      |   |
| Liabilities                                                      |   |                                         | (122,249    | ) |
| Deferred                tax liability                            |   |                                         | (45,933     | ) |
| Minority                interest                                 |   |                                         | (2,200      | ) |
| **Total                purchase price****(3)**                   |   | **$**                                        | **909,456** |   |

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **Pro-forma                (unaudited)**                        |   | **For                the Years Ended December 31,** |    |
|-----------------------------------------------------------------|--------|-----------------------------------------------------|---------|
|                                                            |   | **2005**                                            |    | **2004** |   |
|                                                            |   |                                                |    |   |   |   |   |
| Net                revenues                                     |   | $                                                   | 483,102 |   | $ | 390,139 |   |
| Net                income from continuing operations            |   |                                                | 58,717  |   |   | 38,703 |   |
| Net                income                                       |   |                                                | 58,204  |   |   | 41,227 |   |
|                                                            |   |                                                |    |   |   |   |   |
| Per                Share Data:                                  |   |                                                |    |   |   |   |   |
| Net                income                -                Basic |   | $                                                   | 1.68    |   | $ | 1.12 |   |
| Net                income - Diluted                             |   | $                                                   | 1.64    |   | $ | 1.08 |   |

*Acquisition      - Galaxie Sport*

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

**Romania**

*Acquisition      of additional interest - MPI and Pro TV*

*Disposal      of Interest in Radio Pro*

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

**Croatia**

*Acquisition        - Nova TV*

**Slovenia**

*Acquisition      of additional interest - Pro Plus*

| **4.** | **GOODWILL                AND INTANGIBLE ASSETS** |
|--------|---------------------------------------------------|

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Goodwill:*

|                                          |   | **Slovenia**** ** |       | **Ukraine** |   | **Romania** |   | **Croatia** |       | **Czech****Republic** |   | **Total**  |   |
|-----------------------------------------------|--------|------------------------|------------|-------------|--------|-------------|--------|-------------|------------|-----------------------|--------|------------|--------|
|                                          |   |                   |       |        |   |        |   |        |       |                  |   |       |   |
| **Balance,                December 31, 2003** |   | **$**                  | **13,725** |        | **$**  | **4,096**   |   | **$**       | **-**      |                  | **$**  | **-**      |   | **$** | **-** |   | **$** | **17,821** |   |
| Additions                                     |   |                   | -          |        |   | -           |   |        | 8,826      |                  |   | 29,260     |   |   | - |   |   | 38,086 |   |
| Foreign                currency movements     |   |                   | 999        |        |   | -           |   |        | -          |                  |   | 2,186      |   |   | - |   |   | 3,185 |   |
| **Balance,                December 31, 2004** |   | **$**                  | **14,724** |        | **$**  | **4,096**   |   | **$**       | **8,826**  |                  | **$**  | **31,446** |   | **$** | **-** |   | **$** | **59,092** |   |
| Additions                                     |   |                   | 2,300      |        |   | -           |   |        | 10,928     |                  |   | -          |   |   | 727,282 |   |   | 740,510 |   |
| Allocation                (1)                 |   |                   | -          |        |   | -           |   |        | -          |                  |   | (18,817    | )      |   | - |   |   | (18,817 | ) |
| Impairment                charge              |   |                   | -          |        |   | -           |   |        | -          |                  |   | (9,706     | )      |   | - |   |   | (9,706 | ) |
| Foreign                currency movements     |   |                   | (1,936     | )           |   | -           |   |        | -          |                  |   | (2,228     | )      |   | (20,332 | ) |   | (24,496 | ) |
| **Balance,                December 31, 2005** |   | **$**                  | **15,088** |        | **$**  | **4,096**   |   | **$**       | **19,754** |                  | **$**  | **695**    |   | **$** | **706,950** |   | **$** | **746,583** |   |

*Broadcast      licenses:*

|                                          |   | **Indefinite-lived****broadcast****licenses** |       | **Amortized****broadcast****licenses** |   | **Total**   |   |
|-----------------------------------------------|--------|-----------------------------------------------|------------|----------------------------------------|--------|-------------|--------|
|                                          |   |                                          |       |                                   |   |        |   |
| **Balance,                December 31, 2003** |   | **$**                                         | **6,420**  |                                   | **$**  | **655**     |   | **$** | **7,075** |   |
| Additions                                     |   |                                          | 6,552      |                                   |   | 784         |   |   | 7,336 |   |
| Amortization                                  |   |                                          | -          |                                   |   | (234        | )      |   | (234 | ) |
| Foreign                currency movements     |   |                                          | 428        |                                   |   | (30         | )      |   | 398 |   |
| **Balance,                December 31, 2004** |   | **$**                                         | **13,400** |                                   | **$**  | **1,175**   |   | **$** | **14,575** |   |
| Additions                                     |   |                                          | 6,639      |                                   |   | 165,576     |   |   | 172,215 |   |
| Allocation                (1)                 |   |                                          | 18,654     |                                   |   | -           |   |   | 18,654 |   |
| Amortization                                  |   |                                          | -          |                                   |   | (9,316      | )      |   | (9,316 | ) |
| Impairment                charge              |   |                                          | (18,604    | )                                      |   | -           |   |   | (18,604 | ) |
| Foreign                currency movements     |   |                                          | (1,153     | )                                      |   | (4,780      | )      |   | (5,933 | ) |
| **Balance,                December 31, 2005** |   | **$**                                         | **18,936** |                                   | **$**  | **152,655** |   | **$** | **171,591** |   |

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

|                                    |   | **December                31,****2005** |        | **December                31,****2004** |   |
|-----------------------------------------|--------|-----------------------------------------|-------------|-----------------------------------------|--------|
|                                    |   |                                    |        |                                    |   |
| Gross                value              |   | $                                       | 163,628     |                                    | $      | 2,753 |   |
| Accumulated                amortization |   |                                    | (10,973     | )                                       |   | (1,578 | ) |
| **Total                net book value** |   | **$**                                   | **152,655** |                                    | **$**  | **1,175** |   |

*Other      intangible assets:*

|                                          |   | **Trademarks** |       | **Customer                relationships** |   | **Total**  |   |
|-----------------------------------------------|--------|----------------|------------|-------------------------------------------|--------|------------|--------|
|                                          |   |           |       |                                      |   |       |   |
| **Balance,                December 31, 2003** |   | **$**          | **2,479**  |                                      | **$**  | **-**      |   | **$** | **2,479** |   |
| Additions                                     |   |           | 7,816      |                                      |   | 2,468      |   |   | 10,284 |   |
| Amortization                                  |   |           | -          |                                      |   | (231       | )      |   | (231 | ) |
| Foreign                currency movements     |   |           | 224        |                                      |   | -          |   |   | 224 |   |
| **Balance,                December 31, 2004** |   | **$**          | **10,519** |                                      | **$**  | **2,237**  |   | **$** | **12,756** |   |
| Additions/Allocations                (1)      |   |           | 30,015     |                                      |   | 14,921     |   |   | 44,936 |   |
| Amortization                                  |   |           | -          |                                      |   | (1,864     | )      |   | (1,864 | ) |
| Impairment                charge              |   |           | (7,021     | )                                         |   | -          |   |   | (7,021 | ) |
| Foreign                currency movements     |   |           | (953       | )                                         |   | (196       | )      |   | (1,149 | ) |
| **Balance,                December 31, 2005** |   | **$**          | **32,560** |                                      | **$**  | **15,098** |   | **$** | **47,658** |   |

|                                    |   | **December                31,****2005** |       | **December                31,****2004** |   |
|-----------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
|                                    |   |                                    |       |                                    |   |
| Gross                value              |   | $                                       | 17,038     |                                    | $      | 2,468 |   |
| Accumulated                amortization |   |                                    | (1,940     | )                                       |   | (231 | ) |
| **Total                net book value** |   | **$**                                   | **15,098** |                                    | **$**  | **2,237** |   |

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

*Impairment*

| **5.** | **SENIOR                NOTES** |
|--------|---------------------------------|

|                                                         |   | **Carrying                  value**       |        | **Fair                  value**           |   |
|--------------------------------------------------------------|--------|-------------------------------------------|-------------|-------------------------------------------|--------|
|                                                         |   | **December                  31,****2005** |        | **December                  31,****2004** |   | **December                  31,****2005** |   | **December****31,                  2004** |   |
|                                                         |   |                                      |        |                                      |   |   |   |   |   |
| Euro                  245 million 8.25% Senior Notes         |   | $                                         | 288,984     |                                      | $      | - |   | $ | 323,737 |   | $ | - |   |
| Euro                  125 million floating rate Senior Notes |   |                                      | 147,440     |                                      |   | - |   |   | 156,324 |   |   | - |   |
|                                                         |   | **$**                                     | **436,424** |                                      | **$**  | **-** |   | **$** | **480,061** |   | **$** | **-** |   |

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

| **From:**                                   | **Euro                245 million 8.25%****Senior                Notes****Redemption                Price** | **From:**                                   | **Euro                125 million floating****rate                Senior Notes****Redemption                Price** |
|---------------------------------------------|-------------------------------------------------------------------------------------------------------------|---------------------------------------------|---------------------------------------------------------------------------------------------------------------------|
|                                        |                                                                                                        |                                        |                                                                                                                |
| May                15, 2009 to May 14, 2010 | 104.125%                                                                                                    | May                15, 2007 to May 14, 2008 | 102.000%                                                                                                            |
| May                15, 2010 to May 14, 2011 | 102.063%                                                                                                    | May                15, 2008 to May 14, 2009 | 101.000%                                                                                                            |
| May                15, 2011 and thereafter  | 100.000%                                                                                                    | May                15, 2009 and thereafter  | 100.000%                                                                                                            |

| **6.** | **INVESTMENTS** |
|--------|-----------------|

|   |   | **Voting                interest** |    | **December                31,****2005** |   | **December                31,****2004** |   |
|--------|--------|------------------------------------|---------|-----------------------------------------|--------|-----------------------------------------|--------|
|   |   |                               |    |                                    |   |                                    |   |
| STS    |   |                               | 49%     |                                    | $      | 23,886                                  |   | $ | 28,506 |   |
| Other  |   |                               | Various |                                    |   | 50                                      |   |   | 52 |   |
|   |   |                               |    |                                    | **$**  | **23,936**                              |   | **$** | **28,558** |   |

|                                   |   | **STS                (MARKIZA TV)**  |       |
|----------------------------------------|--------|--------------------------------------|------------|
|                                   |   | **December                31, 2005** |       | **December                31, 2004** |   |
|                                   |   |                                 |       |   |   |
| Current                assets          |   | $                                    | 23,261     |   | $ | 25,548 |   |
| Non-current                assets      |   |                                 | 18,612     |   |   | 16,919 |   |
| Current                liabilities     |   |                                 | (12,673    | ) |   | (15,445 | ) |
| Non-current                liabilities |   |                                 | (125       | ) |   | (149 | ) |
| Minority                interest       |   |                                 | (635       | ) |   | (371 | ) |
| **Net                Assets**          |   | **$**                                | **28,440** |   | **$** | **26,502** |   |

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

|                                           |   | **STS                (MARKIZA TV)**                 |   |
|------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                           |   | **For                the Years Ended December 31,** |   |
|                                           |   | **2005**                                            |   | **2004** |   | **2003** |   |
| Net                revenues                    |   | $                                                   | 64,266 |   | $ | 61,576 |   | $ | 50,814 |   |
| Operating                income                |   |                                                | 14,641 |   |   | 15,790 |   |   | 10,579 |   |
| Net                income                      |   |                                                | 11,771 |   |   | 13,868 |   |   | 8,523 |   |
| Currency                translation adjustment |   | $                                              | (3,226 | ) | $ | 4,760 |   | $ | 5,315 |   |

| **7.** | **RESTRICTED                CASH** |
|--------|------------------------------------|

|                                                          |   | **December                31,****2005** |       | **December                31,****2004** |   |
|---------------------------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
| Czech                Republic (Note 3)                        |   | $                                       | 24,554     |                                    | $      | - |   |
| Croatia                (Note 3)                               |   |                                    | 3,640      |                                    |   | 10,348 |   |
| Directors’                and officers’ insurance |   |                                    | 5,285      |                                    |   | 5,226 |   |
| Other                                                         |   |                                    | 693        |                                    |   | - |   |
| **Total**                                                     |   | **$**                                   | **34,172** |                                    | **$**  | **15,574** |   |

| **8.** | **ACCOUNTS                RECEIVABLE** |
|--------|----------------------------------------|

|                                                          |   | **December                31,****2005** |       | **December                31,****2004** |   |
|---------------------------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
| ***Trading:***                                                |   |                                    |       |                                    |   |
| Third-party                customers                          |   | $                                       | 103,921    |                                    | $      | 49,813 |   |
| Less:                allowance for bad debts and credit notes |   |                                    | (8,612     | )                                       |   | (5,661 | ) |
| Related                parties                                |   |                                    | 2,034      |                                    |   | 757 |   |
| Less:                allowance for bad debts and credit notes |   |                                    | (265       | )                                       |   | (189 | ) |
| **Total                trading**                              |   | **$**                                   | **97,078** |                                    | **$**  | **44,720** |   |
|                                                          |   |                                    |       |                                    |   |   |   |
| ***Other:***                                                  |   |                                    |       |                                    |   |   |   |
| Third-party                customers                          |   | $                                       | 257        |                                    | $      | 18 |   |
| Less:                allowance for bad debts and credit notes |   |                                    | (83        | )                                       |   | - |   |
| Related                parties                                |   |                                    | 434        |                                    |   | 722 |   |
| Less:                allowance for bad debts and credit notes |   |                                    | (290       | )                                       |   | (290 | ) |
| **Total                other**                                |   | **$**                                   | **318**    |                                    | **$**  | **450** |   |
|                                                          |   |                                    |       |                                    |   |   |   |
| **Total                accounts receivable**                  |   | **$**                                   | **97,396** |                                    | **$**  | **45,170** |   |

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **9.** | **OTHER                ASSETS** |
|--------|---------------------------------|

|                                              |   | **December                31,****2005** |       | **December                31,****2004** |   |
|---------------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
| **Current:**                                      |   |                                    |       |                                    |   |
| Prepaid                programming                |   | $                                       | 17,534     |                                    | $      | 2,837 |   |
| Other                prepaid expenses             |   |                                    | 6,009      |                                    |   | 6,189 |   |
| Other                receivable                   |   |                                    | -          |                                    |   | 18,368 |   |
| Deferred                tax                       |   |                                    | 3,025      |                                    |   | 760 |   |
| VAT                recoverable                    |   |                                    | 7,888      |                                    |   | 664 |   |
| Loan                to related party (Note 20)    |   |                                    | 600        |                                    |   | 300 |   |
| Capitalized                debt costs             |   |                                    | 2,250      |                                    |   | - |   |
| Assets                held-for-sale               |   |                                    | 341        |                                    |   | - |   |
| Other                                             |   |                                    | 1,209      |                                    |   | 474 |   |
| **Total                other current assets**     |   | **$**                                   | **38,856** |                                    | **$**  | **29,592** |   |
|                                              |   |                                    |       |                                    |   |   |   |
| **Non-current:**                                  |   |                                    |       |                                    |   |   |   |
| Capitalized                debt costs             |   | $                                       | 11,618     |                                    | $      | - |   |
| Loan                to related party (Note 20)    |   |                                    | 1,910      |                                    |   | 2,525 |   |
| Deferred                tax                       |   |                                    | 779        |                                    |   | 31 |   |
| Other                                             |   |                                    | 753        |                                    |   | 1,436 |   |
| **Total                other non-current assets** |   | **$**                                   | **15,060** |                                    | **$**  | **3,992** |   |

| **10.** | **PROPERTY,                PLANT & EQUIPMENT** |
|---------|----------------------------------------------------|

|                                                                        |   | **December                31,****2005** |        | **December                31,****2004** |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------|-------------|-----------------------------------------|--------|
|                                                                        |   |                                    |        |                                    |   |
| Land                and buildings                                           |   | $                                       | 17,548      |                                    | $      | 13,076 |   |
| Station                machinery, fixtures and equipment                    |   |                                    | 72,017      |                                    |   | 62,117 |   |
| Other                equipment                                              |   |                                    | 20,447      |                                    |   | 10,363 |   |
| Software                licenses                                            |   |                                    | 8,360       |                                    |   | 5,028 |   |
| Construction                in progress                                     |   |                                    | 5,180       |                                    |   | 4,846 |   |
| **Total                cost**                                               |   |                                    | **123,552** |                                    |   | **95,430** |   |
| Less:                Accumulated depreciation                               |   |                                    | (64,655     | )                                       |   | (63,882 | ) |
| **Total                net book value**                                     |   | **$**                                   | **58,897**  |                                    | **$**  | **31,548** |   |
|                                                                        |   |                                    |        |                                    |   |   |   |
| **Assets                held under capital leases (included in the above)** |   |                                    |        |                                    |   |   |   |
| Land                and buildings                                           |   | $                                       | 4,980       |                                    | $      | 983 |   |
| Station                machinery, fixtures and equipment                    |   |                                    | 1,434       |                                    |   | 393 |   |
| **Total                cost**                                               |   |                                    | **6,414**   |                                    |   | **1,376** |   |
| Less:                Accumulated depreciation                               |   |                                    | (1,167      | )                                       |   | (463 | ) |
| **Net                book value**                                           |   | **$**                                   | **5,247**   |                                    | **$**  | **913** |   |

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

| **11.** | **ACCOUNTS                PAYABLE AND ACCRUED                LIABILITIES** |
|---------|----------------------------------------------------------------------------|

|                                     |   | **December                31,****2005** |       | **December                31,****2004** |   |
|------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
| Accounts                payable          |   | $                                       | 21,533     |                                    | $      | 16,642 |   |
| Programming                liabilities   |   |                                    | 18,891     |                                    |   | 22,156 |   |
| Settlement                liability      |   |                                    | 10,007     |                                    |   | - |   |
| Accrued                interest payable  |   |                                    | 4,483      |                                    |   | - |   |
| Deferred                income           |   |                                    | 7,202      |                                    |   | 5,631 |   |
| Accrued                wages             |   |                                    | 9,402      |                                    |   | 6,027 |   |
| Other                accrued liabilities |   |                                    | 13,331     |                                    |   | 16,586 |   |
|                                     |   | **$**                                   | **84,849** |                                    | **$**  | **67,042** |   |

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000's, except share data)**

| **12.** | **CREDIT                FACILITIES AND OBLIGATIONS UNDER CAPITAL                LEASES** |
|---------|------------------------------------------------------------------------------------------|

|                                                          |   |   |                    | **December                31, 2005** |   | **December                31, 2004** |   |
|---------------------------------------------------------------|--------|--------|-------------------------|--------------------------------------|--------|--------------------------------------|--------|
| **Credit                facilities:**                         |   |   |                    |                                 |   |                                 |   |
| CME                Media Enterprises B.V.                     |   |   | (a                      | )                                    | $      | -                                    |   | $ | 7,687 |   |
| Croatian                operations                            |   |   | (b)                - (d | )                                    |   | 1,135                                |   |   | 1,668 |   |
| Czech                Republic operations                      |   |   | (e)                - (f | )                                    |   | 42,703                               |   |   | - |   |
| Slovenian                operations                           |   |   | (g)                - (h | )                                    |   | -                                    |   |   | 8,903 |   |
| **Total                credit facilities**                    |   |   |                    |                                 | **$**  | **43,838**                           |   | **$** | **18,258** |   |
|                                                          |   |   |                    |                                 |   |                                 |   |   |   |   |
| **Capital                leases**                             |   |   |                    |                                 |   |                                 |   |   |   |   |
| Croatian                operations, net of interest           |   |   |                    |                                 | $      | 132                                  |   | $ | 381 |   |
| Czech                operations, net of interest              |   |   |                    |                                 |   | 6                                    |   |   | - |   |
| Romanian                operations, net of interest           |   |   |                    |                                 |   | 290                                  |   |   | 44 |   |
| Slovenian                operations, net of interest          |   |   |                    |                                 |   | 4,040                                |   |   | 628 |   |
| Ukrainian                operations                           |   |   |                    |                                 |   | -                                    |   |   | 59 |   |
| **Total                capital leases**                       |   |   |                    |                                 | **$**  | **4,468**                            |   | **$** | **1,112** |   |
|                                                          |   |   |                    |                                 |   |                                 |   |   |   |   |
| **Total                credit facilities and capital leases** |   |   |                    |                                 | **$**  | **48,306**                           |   | **$** | **19,370** |   |
| **Less                current maturities**                    |   |   |                    |                                 |   | **(43,566**                          | **)**  |   | **(10,472** | **)** |
| **Total                non-current maturities**               |   |   |                    |                                 | **$**  | **4,740**                            |   | **$** | **8,898** |   |

*CME      Media Enterprises B.V.*

*Croatia*

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Czech      Republic*

*Slovenia*

*Total      Group*

| 2006                               |   | $      | 43,081      |   |
|------------------------------------|--------|--------|-------------|--------|
| 2007                               |   |   | 155         |   |
| 2008                               |   |   | 162         |   |
| 2009                               |   |   | 170         |   |
| 2010                               |   |   | 178         |   |
| 2011                and thereafter |   |   | 436,516     |   |
| **Total**                          |   | **$**  | **480,262** |   |

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Capital      Lease Commitments*

| 2006                                                           |   | $      | 694       |   |
|----------------------------------------------------------------|--------|--------|-----------|--------|
| 2007                                                           |   |   | 658       |   |
| 2008                                                           |   |   | 460       |   |
| 2009                                                           |   |   | 465       |   |
| 2010                                                           |   |   | 465       |   |
| 2011                and thereafter                             |   |   | 3,164     |   |
|                                                           |   |   | **5,906** |   |
| Less:                amount representing interest              |   |   | (1,438    | )      |
| **Present                value of net minimum lease payments** |   | **$**  | **4,468** |   |

| **13.** | **SHAREHOLDERS’                EQUITY** |
|---------|-----------------------------------------------|

*Preferred      Stock*

*Class      A and B Common Stock*

*Warrants*

*Two-for-One      Stock Splits:*

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**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **14.** | **INCOME                TAXES** |
|---------|---------------------------------|

*Income/(loss)      before provision for income taxes, minority interest, equity in income of      unconsolidated affiliates and discontinued operations:*

|     |   | **For                the Years Ended December 31,** |       |
|----------|--------|-----------------------------------------------------|------------|
|     |   | **2005**                                            |       | **2004** |   | **2003** |   |
| Domestic |   | $                                                   | (2,270     | ) | $ | 5,127 |   | $ | (39,207 | ) |
| Foreign  |   |                                                | 62,639     |   |   | 15,456 |   |   | 15,813 |   |
|     |   | **$**                                               | **60,369** |   | **$** | **20,583** |   | **$** | **(23,394** | **)** |

|                                                                                                  |   | **For                the Years Ended December 31,** |       |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
|                                                                                                  |   | **2005**                                            |       | **2004** |   | **2003** |   |
| Income                tax expense from continuing operations                                          |   | $                                                   | 16,691     |   | $ | 11,089 |   | $ | 3,760 |   |
| Income                tax expense/(benefit) from discontinued operations                              |   |                                                | 677        |   |   | (2,378 | ) |   | 14,000 |   |
| Currency                translation adjustment in accumulated other comprehensive                loss |   |                                                | (3,266     | ) |   | **-** |   |   | **-** |   |
| **Total                tax charge**                                                                   |   | **$**                                               | **14,102** |   | **$** | **8,711** |   | **$** | **17,760** |   |

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

*Income      Tax Provision:*

|                                          |   | **For                the Years Ended December 31,** |       |
|-----------------------------------------------|--------|-----------------------------------------------------|------------|
|                                          |   | **2005**                                            |       | **2004** |   | **2003** |   |
| Current                Income tax expense:    |   |                                                |       |   |   |   |   |
| Domestic                                      |   | $                                                   | 186        |   | $ | 2,104 |   | $ | 911 |   |
| Foreign                                       |   |                                                | 25,512     |   |   | 9,047 |   |   | 3,386 |   |
|                                          |   | **$**                                               | **25,698** |   | **$** | **11,151** |   | **$** | **4,297** |   |
| Deferred                tax benefit:          |   |                                                |       |   |   |   |   |   |   |   |
| Domestic                                      |   | $                                                   | (1,467     | ) | $ | - |   | $ | - |   |
| Foreign                                       |   |                                                | (7,540     | ) |   | (62 | ) |   | (537 | ) |
|                                          |   | **$**                                               | **(9,007** | **)** | **$** | **(62** | **)** | **$** | **(537** | **)** |
|                                          |   |                                                |       |   |   |   |   |   |   |   |
| **Provision                for income taxes** |   | **$**                                               | **16,691** |   | **$** | **11,089** |   | **$** | **3,760** |   |

*Reconciliation      of Effective Income Tax Rate:*

|                                                                              |   | **For                the Years Ended December 31,** |       |
|-----------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
|                                                                              |   | **2005**                                            |       | **2004** |   | **2003** |   |
| Income                taxes at Netherlands rates (2005: 31.5%; 2004, 2003: 34.5%) |   | $                                                   | 19,015     |   | $ | 7,101 |   | $ | (8,071 | ) |
| Jurisdictional                differences in tax rates                            |   |                                                | (15,685    | ) |   | 393 |   |   | 6,141 |   |
| Tax                effect of Croatian goodwill impairment                         |   |                                                | 1,983      |   |   | - |   |   | - |   |
| Tax                effect of other permanent differences                          |   |                                                | 4,867      |   |   | 6,186 |   |   | 1,667 |   |
| Effect                of change in tax rates                                      |   |                                                | 620        |   |   | (858 | ) |   | 68 |   |
| Change                in valuation allowance                                      |   |                                                | 5,115      |   |   | (1,366 | ) |   | 3,192 |   |
| Other                                                                             |   |                                                | 776        |   |   | (367 | ) |   | 763 |   |
| **Provision                for income taxes**                                     |   | **$**                                               | **16,691** |   | **$** | **11,089** |   | **$** | **3,760** |   |

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Components      of Deferred Tax Assets and Liabilities:*

|                                                                     |   | **December                31,****2005** |        | **December                31,****2004** |       |
|--------------------------------------------------------------------------|--------|-----------------------------------------|-------------|-----------------------------------------|------------|
| **Assets:**                                                              |   |                                    |        |                                    |       |
| Tax                benefit of loss carry-forwards and other tax credits  |   | $                                       | 17,748      |                                    | $          | 9,242 |   |
| Programming                rights                                        |   |                                    | 1,220       |                                    |       | - |   |
| Property,                plant and equipment                             |   |                                    | 527         |                                    |       | 127 |   |
| Accrued                expense                                           |   |                                    | 2,807       |                                    |       | 1,285 |   |
| Other                                                                    |   |                                    | 722         |                                    |       | 299 |   |
| **Gross                deferred tax assets**                             |   |                                    | **23,024**  | ** **                              | ** ** | **10,953** |   |
| Valuation                allowance                                       |   |                                    | (11,934     | )                                       |       | (8,011 | ) |
| **Net                deferred tax assets**                               |   | **$**                                   | **11,090**  |                                    | **$**      | **2,942** |   |
|                                                                     |   |                                    |        |                                    |       |   |   |
| **Liabilities:**                                                         |   |                                    |        |                                    |       |   |   |
| Broadcast                licenses, trademarks and customer relationships |   | $                                       | (42,674     | )                                       | $          | (4,406 | ) |
| Property,                plant and equipment                             |   |                                    | (4,057      | )                                       |       | - |   |
| Investment                write-off                                      |   |                                    | -           |                                    |       | (1,763 | ) |
| Undistributed                reserves not permanently reinvested         |   |                                    | (1,944      | )                                       |       | (2,437 | ) |
| Temporary                difference due to timing                        |   |                                    | (1,765      | )                                       |       | (704 | ) |
| **Total                deferred tax liabilities**                        |   | **$**                                   | **(50,440** | **)**                                   | **$**      | **(9,310** | **)** |
|                                                                     |   |                                    |        |                                    |       |   |   |
| **Net                deferred income tax liability**                     |   | **$**                                   | **(39,350** | **)**                                   | **$**      | **(6,368** | **)** |

|                                                 |   | **December                31,****2005** |        | **December                31,****2004** |   |
|------------------------------------------------------|--------|-----------------------------------------|-------------|-----------------------------------------|--------|
|                                                 |   |                                    |        |                                    |   |
| Current                deferred tax assets           |   | $                                       | 3,025       |                                    | $      | 760 |   |
| Non-current                deferred tax assets       |   |                                    | 779         |                                    |   | 31 |   |
|                                                 |   | $                                       | 3,804       |                                    | $      | 791 |   |
|                                                 |   |                                    |        |                                    |   |   |   |
| Current                deferred tax liabilities      |   |                                    | (1,005      | )                                       |   | (946 | ) |
| Non-current                deferred tax liabilities  |   |                                    | (42,149     | )                                       |   | (6,213 | ) |
|                                                 |   | $                                       | (43,154     | )                                       | $      | (7,159 | ) |
|                                                 |   |                                    |        |                                    |   |   |   |
| **Net                deferred income tax liability** |   | **$**                                   | **(39,350** | **)**                                   | **$**  | **(6,368** | **)** |

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

|                                            |   | **Total** |       |
|-------------------------------------------------|--------|-----------|------------|
| **Balance                at December 31, 2004** |   | **$**     | **8,011**  |   |
| Companies                acquired               |   |      | 1,045      |   |
| Charged                to costs and expenses    |   |      | 5,115      |   |
| Charged                to other accounts        |   |      | (1,230     | ) |
| Foreign                exchange                 |   |      | (1,007     | ) |
| **Balance                at December 31, 2005** |   | **$**     | **11,934** |   |

| **Year**   |   | **Total** |       | **Netherlands**    |   | **Austria** |               | **Croatia** |      | **Czech****Republic** |   | **Slovenia** |               |
|------------|--------|-----------|------------|--------------------|--------|-------------|--------------------|-------------|-----------|-----------------------|--------|--------------|--------------------|
| 2006       |   | $         | 9,007      |     | $      | -           |     | $           | -         |        | $      | -            |     | $ | - |     | $ | 9,007 |   |
| 2007       |   |      | 938        |               |   | -           |               |        | -         |                  |   | -            |               |   | - |   |   | 938 |   |
| 2008       |   |      | 150        |               |   | -           |               |        | -         |                  |   | -            |               |   | 18 |   |   | 132 |   |
| 2009       |   |      | 12,506     |               |   | -           |               |        | -         |                  |   | 11,288       |               |   | 1,218 |   |   | - |   |
| 2010       |   |      | 42,735     |               |   | -           |               |        | -         |                  |   | 18,089       |               |   | 24,646 |   |   | - |   |
| Indefinite |   |      | 11,689     |               |   | 4,956       |               |        | 6,733     |                  |   | -            |               |   | - |   |   | - |   |
|       |   | **$**     | **77,025** |               | **$**  | **4,956**   |               | **$**       | **6,733** |                  | **$**  | **29,377**   |               | **$** | **25,882** |   | **$** | **10,077** |   |

| **15.** | **STOCK-BASED                COMPENSATION** |
|---------|---------------------------------------------|

|                                                          |   | **For                the Years Ended December 31,** |      |
|---------------------------------------------------------------|--------|-----------------------------------------------------|-----------|
|                                                          |   | **2005**                                            |      | **2004** |   | **2003** |   |
| Stock-based                compensation charged under FIN 44  |   | $                                                   | 745       |   | $ | 8,977 |   | $ | 12,948 |   |
| Stock-based                compensation charged under FAS 123 |   |                                                | 2,209     |   |   | 1,125 |   |   | 261 |   |
| **Total                stock-based compensation**             |   | **$**                                               | **2,954** |   | **$** | **10,102** |   | **$** | **13,209** |   |

*Stock-based      compensation under FIN 44*

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

*Stock-based      compensation under FAS 123*

|                                       |   | **For                the Years Ended December 31,** |   |
|--------------------------------------------|--------|-----------------------------------------------------|--------|
|                                       |   | **2005**                                            |   | **2004** |   | **2003** |   |
| Risk-free                interest rate     |   |                                                | 4.00   | % |   | 3.50 | % |   | 1.90 | % |
| Expected                term (years)       |   |                                                | 6.25   |   |   | 6.00 |   |   | 6.00 |   |
| Expected                volatility         |   |                                                | 50.56  | % |   | 51.50 | % |   | 56.66 | % |
| Dividend                yield              |   |                                                | 0      | % |   | 0 | % |   | 0 | % |
| Weighted-average                fair value |   | $                                                   | 26.29  |   | $ | 12.51 |   | $ | 5.71 |   |

|                                                |   | **2005**   |          | **2004**                                              |   | **2003**   |   |
|-----------------------------------------------------|--------|------------|---------------|-------------------------------------------------------|--------|------------|--------|
|                                                |   | **Shares** |          | **Weighted****Average****Exercise****Price****(US$)** |   | **Shares** |   | **Weighted****Average****Exercise****Price****(US$)** |   | **Shares** |   | **Weighted****Average****Exercise****Price****(US$)** |   |
| **Outstanding                at beginning of year** |   |       | **1,705,017** |                                                  | **$**  | **12.89**  |   |   | **2,527,717** |   | **$** | **7.10** |   |   | **2,503,715** |   | **$** | **6.40** |   |
| Awards                granted                       |   |       | 194,500       |                                                  |   | 49.23      |   |   | 419,500 |   |   | 23.84 |   |   | 252,000 |   |   | 10.64 |   |
| Awards                exercised                     |   |       | (685,359      | )                                                     |   | 8.08       |   |   | (1,083,634 | ) |   | 2.74 |   |   | (145,998 | ) |   | 0.83 |   |
| Awards                forfeited                     |   |       | (95,883       | )                                                     |   | 11.90      |   |   | (158,566 | ) |   | 19.11 |   |   | (82,000 | ) |   | 7.83 |   |
| **Outstanding                at end of year**       |   |       | **1,118,275** |                                                  | **$**  | **22.23**  |   |   | **1,705,017** |   | **$** | **12.89** |   |   | **2,527,717** |   | **$** | **7.10** |   |

|                                           |       | **Outstanding                options** |          | **Exercisable**                                                        |       |
|------------------------------------------------|------------|----------------------------------------|---------------|------------------------------------------------------------------------|------------|
| **Range                of exercise****prices** | ** ** | **Shares**                             | ** **    | **Average****remaining****contractual                life****(years)** | ** ** | **Weighted****average****exercise                price****(US$)** | ** ** | **Shares** | ** ** | **Weighted****average****exercise                price****(US$)** |   |
| $1.00-9.99                                     |       |                                   | 182,000       |                                                                   |       | 6.20 |   | $ | 1.94 |   |   | 152,400 |   | $ | 1.99 |   |
| $10.00-19.99                                   |       |                                   | 374,400       |                                                                   |       | 7.73 |   |   | 15.03 |   |   | 139,300 |   |   | 13.62 |   |
| $20.00-29.99                                   |       |                                   | 275,000       |                                                                   |       | 4.47 |   |   | 22.78 |   |   | 184,300 |   |   | 22.87 |   |
| $30.00-39.99                                   |       |                                   | 92,375        |                                                                   |       | 8.92 |   |   | 32.95 |   |   | 21,600 |   |   | 32.93 |   |
| $40.00-49.99                                   |       |                                   | 122,000       |                                                                   |       | 9.42 |   |   | 44.61 |   |   | - |   |   | - |   |
| $50.00-59.99                                   |       |                                   | 72,500        |                                                                   |       | 10.00 |   |   | 57.00 |   |   | - |   |   | - |   |
| **Total**                                      |       |                                   | **1,118,275** |                                                                   |       | **7.11** |   | **$** | **22.23** |   |   | **497,600** |   | **$** | **14.31** |   |

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**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

| **16.** | **EARNINGS                PER SHARE** |
|---------|---------------------------------------|

|                                                                                 |       | **For                the Years Ended December 31,** |       |
|--------------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|
|                                                                                 |       | **2005**                                            |       | **2004** |   | **2003** |   |
| **Net                income available for common shareholders**                      |       | **$**                                               | **42,495** | ** ** | **$** | **18,531** | ** ** | **$** | **346,012** | ** ** |
| ** **                                                                           | ** ** | ** **                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |   |
| **Weighted                average outstanding shares of common stock (000’s)** |       |                                                | **34,664** | ** ** | ** ** | **27,871** | ** ** | ** ** | **26,492** |   |
| Dilutive                effect of employee stock options (000’s)               |       |                                                | 766        |   |   | 1,229 |   |   | - |   |
| **Common                stock and common stock equivalents**                         |       |                                                | **35,430** | ** ** | ** ** | **29,100** | ** ** | ** ** | **26,492** |   |
|                                                                                 |       |                                                |       |   |   |   |   |   |   |   |
| **Earnings                per share:**                                               |       |                                                |       |   |   |   |   |   |   |   |
| Basic                                                                                |       | $                                                   | 1.23       |   | $ | 0.66 |   | $ | 13.06 |   |
| Diluted                                                                              |       | $                                                   | 1.20       |   | $ | 0.64 |   | $ | 13.06 |   |

| **17.** | **SEGMENT                DATA** |
|---------|---------------------------------|

| · | expenses                presented as corporate operating costs in our Consolidated                Statements of Operations; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

| · | foreign                currency exchange gains and losses;                and |
|--------|-------------------------------------------------------------------------------|

| · | certain                unusual or infrequent items (e.g., extraordinary gains and losses,                impairments on assets or                investments). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

|                                                                                                                                                                                                                       |   | **SEGMENT                FINANCIAL INFORMATION**    |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|
|                                                                                                                                                                                                                       |   | **For                the Years Ended December 31,** |        |
|                                                                                                                                                                                                                       |   | **Segment                Net Revenues (1)**         |        | **Segment                EBITDA** |   |
|                                                                                                                                                                                                                       |   | **2005**                                            |        | **2004** |   | **2003** |   | **2005** |   | **2004** |   | **2003** |   |
| **Country**                                                                                                                                                                                                                |   |                                                |        |   |   |   |   |   |   |   |   |   |   |
| Croatia                (NOVA TV)                                                                                                                                                                                           |   | $                                                   | 22,030      |   | $ | 9,757 |   | $ | - |   | $ | (15,866 | ) | $ | (3,756 | ) | $ | - |   |
| Czech                Republic (TV NOVA, GALAXIE SPORT)                                                                                                                                                                     |   |                                                | 154,010     |   |   | - |   |   | - |   |   | 71,544 |   |   | - |   |   | - |   |
| Romania                (2)                                                                                                                                                                                                 |   |                                                | 103,321     |   |   | 76,463 |   |   | 51,177 |   |   | 43,803 |   |   | 25,198 |   |   | 12,206 |   |
| Slovak                Republic (MARKIZA TV)                                                                                                                                                                                |   |                                                | 64,266      |   |   | 61,576 |   |   | 50,814 |   |   | 17,240 |   |   | 18,975 |   |   | 11,657 |   |
| Slovenia                (POP TV and KANAL A)                                                                                                                                                                               |   |                                                | 48,770      |   |   | 45,388 |   |   | 37,168 |   |   | 19,337 |   |   | 19,077 |   |   | 13,173 |   |
| Ukraine                (STUDIO 1+1)                                                                                                                                                                                        |   |                                                | 72,847      |   |   | 53,351 |   |   | 36,633 |   |   | 21,803 |   |   | 14,729 |   |   | 7,999 |   |
| **Total                Segment Data**                                                                                                                                                                                      |   | **$**                                               | **465,244** |   | **$** | **246,535** |   | **$** | **175,792** |   | **$** | **157,861** |   | **$** | **74,223** |   | **$** | **45,035** |   |
| **Reconciliation                to Consolidated Statement of Operations and Comprehensive                Income:**                                                                                                         |   |                                                |        |   |   |   |   |   |   |   |   |   |
| **Consolidated                Net Revenues / Income/(loss) before provision for income taxes, minority                interest, equity in income of unconsolidated affiliates and discontinued                operations** |   | **$**                                               | **400,978** |   | **$** | **182,339** |   | **$** | **124,978** |   | **$** | **60,369** |   | **$** | **20,583** |   | **$** | **(23,394** | **)** |
| Corporate                operating costs                                                                                                                                                                                   |   |                                                | -           |   |   | - |   |   | - |   |   | 25,374 |   |   | 29,185 |   |   | 32,512 |   |
| Impairment                charge                                                                                                                                                                                           |   |                                                | -           |   |   | - |   |   | - |   |   | 35,331 |   |   | - |   |   | - |   |
| Unconsolidated                equity affiliates (3)                                                                                                                                                                        |   |                                                | 64,266      |   |   | 64,196 |   |   | 50,814 |   |   | 17,240 |   |   | 19,404 |   |   | 11,657 |   |
| Depreciation                of station property, plant & equipment                                                                                                                                                     |   |                                                | -           |   |   | - |   |   | - |   |   | 16,367 |   |   | 6,429 |   |   | 5,276 |   |
| Amortization                of broadcast licenses and other intangibles                                                                                                                                                    |   |                                                |        |   |   |   |   |   |   |   |   | 11,180 |   |   | 465 |   |   | - |   |
| Interest                income                                                                                                                                                                                             |   |                                                | -           |   |   | - |   |   | - |   |   | (4,124 | ) |   | (4,318 | ) |   | (5,507 | ) |
| Interest                expense                                                                                                                                                                                            |   |                                                | -           |   |   | - |   |   | - |   |   | 29,387 |   |   | 1,203 |   |   | 12,010 |   |
| Foreign                currency exchange (gain)/loss, net                                                                                                                                                                  |   |                                                | -           |   |   | - |   |   | - |   |   | (37,968 | ) |   | 574 |   |   | 10,023 |   |
| Other                expense                                                                                                                                                                                               |   |                                                | -           |   |   | - |   |   | - |   |   | 4,705 |   |   | 698 |   |   | 2,458 |   |
| **Total                Segment Data**                                                                                                                                                                                      |   | **$**                                               | **465,244** |   | **$** | **246,535** |   | **$** | **175,792** |   | **$** | **157,861** |   | **$** | **74,223** |   | **$** | **45,035** |   |

*Page            115*

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

|                                                                                                                                                    |   | **For                the Years Ended December 31,** |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
| **Depreciation                of station property, plant & equipment and amortization of broadcast                licenses and other intangibles:** |   | **2005**                                            |       | **2004** |   | **2003** |   |
|                                                                                                                                                    |   |                                                |       |   |   |   |   |
| Croatia                                                                                                                                                 |   | $                                                   | 2,951      |   | $ | 1,173 |   | $ | - |   |
| Czech                Republic                                                                                                                           |   |                                                | 15,960     |   |   | - |   |   | - |   |
| Romania                                                                                                                                                 |   |                                                | 3,829      |   |   | 2,843 |   |   | 3,144 |   |
| Slovak                Republic                                                                                                                          |   |                                                | 2,599      |   |   | 1,735 |   |   | 1,805 |   |
| Slovenia                                                                                                                                                |   |                                                | 2,947      |   |   | 1,654 |   |   | 1,385 |   |
| Ukraine                                                                                                                                                 |   |                                                | 1,860      |   |   | 1,224 |   |   | 747 |   |
| **Total**                                                                                                                                               |   | **$**                                               | **30,146** |   | **$** | **8,629** |   | **$** | **7,081** |   |
|                                                                                                                                                    |   |                                                |       |   |   |   |   |   |   |   |
| **Reconciliation                to Consolidated Statement of Operations:**                                                                              |   |                                                |       |   |   |   |   |   |   |   |
| Unconsolidated                equity affiliates                                                                                                         |   |                                                | (2,599     | ) |   | (1,735 | ) |   | (1,805 | ) |
|                                                                                                                                                    |   |                                                |       |   |   |   |   |   |   |   |
| **Total                consolidated depreciation and amortization**                                                                                     |   |                                                | **27,547** |   |   | **6,894** |   |   | **5,276** |   |
| Represented                as follows:                                                                                                                  |   |                                                |       |   |   |   |   |   |   |   |
| Depreciation                of station property, plant & equipment                                                                                  |   |                                                | 16,367     |   |   | 6,429 |   |   | 5,276 |   |
| Amortization                of broadcast licenses and other intangibles                                                                                 |   |                                                | 11,180     |   |   | 465 |   |   | - |   |

|                                                             |   | **As                at December 31,** |          |
|------------------------------------------------------------------|--------|---------------------------------------|---------------|
| **Total                assets (1):**                             |   | **2005**                              |          | **2004** |   |
|                                                             |   |                                  |          |   |   |
| Croatia                                                          |   | $                                     | 25,017        |   | $ | 52,905 |   |
| Czech                Republic                                    |   |                                  | 1,018,253     |   |   | - |   |
| Romania                                                          |   |                                  | 123,699       |   |   | 79,622 |   |
| Slovak                Republic                                   |   |                                  | 41,873        |   |   | 42,467 |   |
| Slovenia                                                         |   |                                  | 62,926        |   |   | 64,044 |   |
| Ukraine                                                          |   |                                  | 49,438        |   |   | 32,706 |   |
| **Total                segment assets**                          |   | **$**                                 | **1,321,206** |   | **$** | **271,744** |   |
|                                                             |   |                                  |          |   |   |   |   |
| **Reconciliation                to Consolidated Balance Sheet:** |   |                                  |          |   |   |   |   |
| Unconsolidated                equity affiliates                  |   |                                  | (41,873       | ) |   | (42,467 | ) |
| Corporate                                                        |   |                                  | 109,517       |   |   | 215,362 |   |
| **Total                assets**                                  |   | **$**                                 | **1,388,850** |   | **$** | **444,639** |   |

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

|                                                             |   | **As                at December 31,** |       |
|------------------------------------------------------------------|--------|---------------------------------------|------------|
| **Long-lived                assets (1):**                        |   | **2005**                              |       | **2004** |   |
|                                                             |   |                                  |       |   |   |
| Croatia                                                          |   | $                                     | 6,264      |   | $ | 6,775 |   |
| Czech                Republic                                    |   |                                  | 16,027     |   |   | - |   |
| Romania                                                          |   |                                  | 13,154     |   |   | 9,081 |   |
| Slovak                Republic                                   |   |                                  | 14,245     |   |   | 12,818 |   |
| Slovenia                                                         |   |                                  | 15,523     |   |   | 11,834 |   |
| Ukraine                                                          |   |                                  | 7,127      |   |   | 3,153 |   |
| **Total                long-lived assets**                       |   | **$**                                 | **72,340** |   | **$** | **43,661** |   |
| **Reconciliation                to Consolidated Balance Sheet:** |   |                                  |       |   |   |   |   |
| Unconsolidated                equity affiliates                  |   |                                  | (14,245    | ) |   | (12,818 | ) |
| Corporate                                                        |   |                                  | 802        |   |   | 705 |   |
| **Total                Long-lived assets**                       |   | **$**                                 | **58,897** |   | **$** | **31,548** |   |

| **18.** | **DISCONTINUED                OPERATIONS** |
|---------|--------------------------------------------|

|                                                              |   | **For                the Years Ended December 31,** |     |
|-------------------------------------------------------------------|--------|-----------------------------------------------------|----------|
|                                                              |   | **2005**                                            |     | **2004** |   | **2003** |   |
| Net                revenues of discontinued operation             |   | $                                                   | -        |   | $ | - |   | $ | 109 |   |
| Expenses                of discontinued operation                 |   |                                                | -        |   |   | - |   |   | (1,197 | ) |
| Gain                on disposal of CNTS                           |   |                                                | -        |   |   | - |   |   | 41,421 |   |
| Arbitration                related proceeds                       |   |                                                | -        |   |   | - |   |   | 358,635 |   |
| Arbitration                related costs                          |   |                                                | 164      |   |   | 146 |   |   | (14,796 | ) |
| Other                income of discontinued operation             |   |                                                | -        |   |   | - |   |   | 41 |   |
| **Income                on disposal of discontinued operations**  |   |                                                | **164**  |   |   | **146** |   |   | **384,213** |   |
| Tax                on disposal of discontinued operations         |   |                                                | (677     | ) |   | 2,378 |   |   | (14,000 | ) |
| **Net                income/(loss) from discontinued operations** |   | **$**                                               | **(513** | **)** | **$** | **2,524** |   | **$** | **370,213** |   |

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **19.** | **COMMITMENTS                AND CONTINGENCIES** |
|---------|--------------------------------------------------|

*Commitments*

| *a)* | *Station                Programming Rights Agreements* |
|------|--------------------------------------------------------|

|                          |   | **As                at December 31,** |       |
|-------------------------------|--------|---------------------------------------|------------|
|                          |   | **2005**                              |       | **2004** |   |
|                          |   |                                  |       |   |   |
| Croatia                       |   | $                                     | 3,014      |   | $ | 4,632 |   |
| Czech                Republic |   |                                  | 22,812     |   |   | - |   |
| Romania                       |   |                                  | 14,073     |   |   | 9,114 |   |
| Slovenia                      |   |                                  | 3,080      |   |   | 445 |   |
| Ukraine                       |   |                                  | 8,864      |   |   | 3,862 |   |
| **Total**                     |   | **$**                                 | **51,843** |   | **$** | **18,053** |   |

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000's, except share data)**

| *b)* | *Operating                Lease Commitments* |
|------|----------------------------------------------|

|                               |   | **December                31, 2005** |       |
|------------------------------------|--------|--------------------------------------|------------|
| 2005                               |   | $                                    | 7,841      |   |
| 2006                               |   |                                 | 5,733      |   |
| 2007                               |   |                                 | 2,320      |   |
| 2008                               |   |                                 | 1,456      |   |
| 2009                               |   |                                 | 1,326      |   |
| 2010                and thereafter |   |                                 | 1,530      |   |
| **Total**                          |   | **$**                                | **20,206** |   |

| *c)* | *Acquisition                of minority shareholdings* |
|------|--------------------------------------------------------|

| *d)* | *Other* |
|------|---------|

*Dutch      tax*

*Czech      Republic - Guarantee and Factoring of Trade Receivables *

*Page            119*

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*‘Accounting      for Transfers and Servicing of Financial Assets and Extinguishments of      Liabilities’,*

*Contingencies*

| *a)* | *Litigation* |
|------|--------------|

*Croatia*

*Czech      Republic*

*Claims      Relating to the Vilja Shareholding in CET 21*

*Page            120*

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Disposition      of the CET 21 Interest Held by CET 21*

*Claims      brought by Alan, Huncik, Venclik and Gal*

*Claims      Relating to the Interests of CS and CEDC in CET 21*

*Page            121*

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**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Other      Claims *

*Antimonopoly        Office*

*Romania*

*Page            122*

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

*Slovenia*

*Slovak      Republic*

*Ukraine*

| *b)* | *Licenses* |
|------|------------|

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

| Croatia | The                    license of NOVA TV (Croatia) expires in April                    2010. |
|---------|-----------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Czech                  Republic | The                  license of TV NOVA (Czech Republic) expires in January                  2017. |
|---------------------------------|----------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Romania | Licenses                  expire on dates ranging from July 2006 to February 2014. ** ** |
|---------|-----------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Slovak                  Republic | The                  license of MARKIZA TV in the Slovak Republic expires in September                  2007. |
|----------------------------------|---------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Slovenia | The                  licenses of both our channels in Slovenia expire in August                  2012. |
|----------|--------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Ukraine | The                  15-hour license of STUDIO 1+1 expires in December 2006. The license                  to                  broadcast for the remaining nine hours in off prime expires in                  August                  2014. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c) | *Restrictions                on dividends from Consolidated Subsidiaries and Unconsolidated                Affiliates* |
|----|------------------------------------------------------------------------------------------------------------------------|

| **20.** | **RELATED                PARTY TRANSACTIONS** |
|---------|-----------------------------------------------|

**Overview**

***Croatia***

***Czech      Republic***

***Romania***

*Page            124*

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*Table            of Contents*

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

***Slovenia***

***Slovak      Republic***

***Ukraine***

*Page            125*

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*Table            of Contents*

**CENTRAL      EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

***Corporate***

| **21.** | **SUBSEQUENT                EVENTS**** ** |
|---------|------------------------------------------------|

**Romania**

**Slovak      Republic**

*Acquisition      - A.R.J a.s.*

*Page            126*

----

*Table            of Contents*

**CENTRAL        EUROPEAN MEDIA ENTERPRISES LTD.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

**Ukraine      **

*Acquisition      - Ukrpromtorg 2003 LLC.*

*Page            127*

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*Table            of Contents*

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

*Page            128*

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*Table            of Contents*

**SLOVENSKA      TELEVIZNA SPOLOCNOST S.R.O.**

**CONSOLIDATED      BALANCE SHEETS**

**(US$      000’s)**

|                                                     |   | **December                31,****2005** |       | **December                31,****2004** |   |
|----------------------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
| **ASSETS**                                               |   |                                    |       |                                    |   |
| **Current                assets**                        |   |                                    |       |                                    |   |
| Cash                and cash equivalents                 |   | $                                       | 5,253      |                                    | $      | 4,601 |   |
| Accounts                receivable (Note 3)              |   |                                    | 9,452      |                                    |   | 18,043 |   |
| Program                rights                            |   |                                    | 5,509      |                                    |   | 1,815 |   |
| Other                current assets (Note 4)             |   |                                    | 3,047      |                                    |   | 1,089 |   |
| **Total                current assets**                  |   |                                    | **23,261** |                                    |   | **25,548** |   |
| **Non-current                assets**                    |   |                                    |       |                                    |   |   |   |
| Investments                                              |   |                                    | 4          |                                    |   | 4 |   |
| Property,                plant and equipment (Note 5)    |   |                                    | 14,245     |                                    |   | 12,818 |   |
| Program                rights                            |   |                                    | 4,156      |                                    |   | 2,722 |   |
| Intangible                assets (Note 6)                |   |                                    | 46         |                                    |   | 132 |   |
| Deferred                income tax, non-current (Note 4) |   |                                    | 161        |                                    |   | 1,243 |   |
| **Total                non-current assets**              |   |                                    | **18,612** |                                    |   | **16,919** |   |
| **Total                assets**                          |   | **$**                                   | **41,873** |                                    | **$**  | **42,467** |   |

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

*Page            129*

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*Table            of Contents*

**SLOVENSKA      TELEVIZNA SPOLOCNOST S.R.O.**

**CONSOLIDATED      BALANCE SHEETS (continued)**

**(US$      000’s)**

|                                                                           |   | **December                31,****2005** |       | **December                31,****2004** |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                  |   |                                    |       |                                    |   |
| **Current                liabilities:**                                        |   |                                    |       |                                    |   |
| Accounts                payable and accrued liabilities (Note 7)               |   | $                                       | 11,481     |                                    | $      | 10,874 |   |
| Duties                and other taxes payable                                  |   |                                    | 412        |                                    |   | 515 |   |
| Income                taxes payable                                            |   |                                    | -          |                                    |   | 917 |   |
| Credit                facilities and obligations under capital leases (Note 8) |   |                                    | 71         |                                    |   | 2,878 |   |
| Other                current liabilities                                       |   |                                    | 709        |                                    |   | 261 |   |
| **Total                current liabilities**                                   |   |                                    | **12,673** |                                    |   | **15,445** |   |
| **Non-current                liabilities**                                     |   |                                    |       |                                    |   |   |   |
| Credit                facilities and obligations under capital leases (Note 8) |   |                                    | 125        |                                    |   | 149 |   |
| **Total                non-current liabilities**                               |   |                                    | **125**    |                                    |   | **149** |   |
| Commitments                and contingencies (Note 10)                         |   |                                    |       |                                    |   |   |   |
| **Minority                interests in consolidated subsidiaries**             |   |                                    | **635**    |                                    |   | **371** |   |
| **SHAREHOLDERS'                EQUITY:**                                       |   |                                    |       |                                    |   |   |   |
| Registered                capital                                              |   |                                    | 6          |                                    |   | 6 |   |
| Additional                paid-in capital                                      |   |                                    | 24,242     |                                    |   | 24,242 |   |
| Shareholder                loans (Note 11)                                     |   |                                    | -          |                                    |   | (11,061 | ) |
| Retained                earnings                                               |   |                                    | 4,414      |                                    |   | 10,311 |   |
| Accumulated                other comprehensive income/ (loss)                  |   |                                    | (222       | )                                       |   | 3,004 |   |
| **Total                shareholders’ equity**                            |   |                                    | **28,440** |                                    |   | **26,502** |   |
| **Total                liabilities and shareholders’ equity**            |   | **$**                                   | **41,873** |                                    | **$**  | **42,467** |   |

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

*Page            130*

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*Table            of Contents*

**SLOVENSKA      TELEVIZNA SPOLOCNOST S.R.O.**

**CONSOLIDATED      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**

**(US$      000’s, except share and per share data)**

|                                                                                              |   | **For                the Years Ended December 31,** |       |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
|                                                                                              |   | **2005**                                            |       | **2004** |   | **2003** |   |
| **Net                revenues**                                                                   |   | **$**                                               | **64,266** |   | **$** | **61,576** |   | **$** | **50,814** |   |
| Operating                costs                                                                    |   |                                                | 7,090      |   |   | 6,824 |   |   | 5,828 |   |
| Cost                of programming                                                                |   |                                                | 22,445     |   |   | 20,902 |   |   | 19,276 |   |
| Depreciation                and amortization                                                      |   |                                                | 2,599      |   |   | 1,735 |   |   | 1,805 |   |
| Selling,                general and administrative expenses                                       |   |                                                | 17,491     |   |   | 16,325 |   |   | 13,326 |   |
| **Total                operating expenses**                                                       |   |                                                | **49,625** |   |   | **45,786** |   |   | **40,235** |   |
| **Operating                income**                                                               |   |                                                | **14,641** |   |   | **15,790** |   |   | **10,579** |   |
| Interest                income                                                                    |   |                                                | 588        |   |   | 836 |   |   | 731 |   |
| Interest                expense                                                                   |   |                                                | (134       | ) |   | (200 | ) |   | (285 | ) |
| Foreign                currency exchange gain/(loss), net                                         |   |                                                | (258       | ) |   | 571 |   |   | 932 |   |
| Other                income                                                                       |   |                                                | 245        |   |   | 405 |   |   | 436 |   |
| **Income                before provision for income taxes, and minority                interest** |   |                                                | **15,082** |   |   | **17,402** |   |   | **12,393** |   |
| Provision                for income taxes (Note 9)                                                |   |                                                | (3,276     | ) |   | (3,511 | ) |   | (3,870 | ) |
| **Income                before minority interest**                                                |   |                                                | **11,806** |   |   | **13,891** |   |   | **8,523** |   |
| Minority                interest in income of consolidated subsidiaries                           |   |                                                | (35        | ) |   | (23 | ) |   | - |   |
| **Net                income**                                                                     |   |                                                | **11,771** |   |   | **13,868** |   |   | **8,523** |   |
|                                                                                              |   |                                                |       |   |   |   |   |   |   |   |
| Currency                translation adjustment, net                                               |   |                                                | (3,226     | ) |   | 4,760 |   |   | 5,315 |   |
| **Total                comprehensive income**                                                     |   | **$**                                               | **8,545**  |   | **$** | **18,628** |   | **$** | **13,838** |   |

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

*Page            131*

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**SLOVENSKA      TELEVIZNA SPOLOCNOST, S.R.O.**

**CONSOLIDATED      STATEMENT OF SHAREHOLDERS' EQUITY**

**(US$      000’s)**

|                                             |   | **Registered****Capital** |   | **Additional                Paid-****In                Capital** |   | **Shareholders’****loans** |                | **Retained****Earnings                /****(Accumulated****Deficit)** |        | **Accumulated****Other****Comprehensive****Income/(Loss)** |   | **Total****Shareholders'****Equity** |                    |
|--------------------------------------------------|--------|---------------------------|--------|------------------------------------------------------------------|--------|----------------------------------|---------------------|-----------------------------------------------------------------------|-------------|------------------------------------------------------------|--------|--------------------------------------|-------------------------|
| **BALANCE,                December 31, 2002**    |   | **$**                     | **6**  |                                                             | **$**  | **39,326**                       |                | **$**                                                                 | **(4,694**  | **)   **                                    | **$**  | **(12,080**                          | **)   ** | **$** | **(7,071** | **)   ** | **$** | **15,487** |   |
| Shareholders’                loans granted |   |                      | -      |                                                             |   | -                                |                |                                                                  | (4,298      | )                                                          |   | -                                    |                    |   | - |   |   | (4,298 | ) |
| Dividend                distribution             |   |                      | -      |                                              |   | (4,678                           | )    |                                                                  | -           |                                                       |   | -                                    |                    |   | - |   |   | (4,678 | ) |
| Net                income                        |   |                      | -      |                                                             |   | -                                |                |                                                                  | -           |                                                       |   | 8,523                                |                    |   | - |   |   | 8,523 |   |
| Currency                translation adjustment   |   |                      | -      |                                                             |   | -                                |                |                                                                  | -           |                                                       |   | -                                    |                    |   | 5,315 |   |   | 5,315 |   |
| **BALANCE,                December 31, 2003**    |   | **$**                     | **6**  |                                                             | **$**  | **34,648**                       |                | **$**                                                                 | **(8,992**  | **)**                                                      | **$**  | **(3,557**                           | **)**                   | **$** | **(1,756** | **)** | **$** | **20,349** |   |
| Shareholders’                loans granted |   |                      | -      |                                                             |   | -                                |                |                                                                  | (2,069      | )                                                          |   | -                                    |                    |   | - |   |   | (2,069 | ) |
| Dividend                distribution             |   |                      | -      |                                                             |   | (10,406                          | )                   |                                                                  | -           |                                                       |   | -                                    |                    |   | - |   |   | (10,406 | ) |
| Net                income                        |   |                      | -      |                                                             |   | -                                |                |                                                                  | -           |                                                       |   | 13,868                               |                    |   | - |   |   | 13,868 |   |
| Currency                translation adjustment   |   |                      | -      |                                                             |   | -                                |                |                                                                  | -           |                                                       |   | -                                    |                    |   | 4,760 |   |   | 4,760 |   |
| **BALANCE,                December 31, 2004**    |   | **$**                     | **6**  |                                                             | **$**  | **24,242**                       |                | **$**                                                                 | **(11,061** | **)**                                                      | **$**  | **10,311**                           |                    | **$** | **3,004** |   | **$** | **26,502** |   |
| Shareholders’                loans repaid  |   |                      | -      |                                                             |   | -                                |                |                                                                  | 11,061      |                                                       |   | -                                    |                    |   | - |   |   | 11,061 |   |
| Dividend                distribution             |   |                      | -      |                                                             |   | -                                |                |                                                                  | -           |                                                       |   | (17,668                              | )                       |   | - |   |   | (17,668 | ) |
| Net                income                        |   |                      | -      |                                                             |   | -                                |                |                                                                  | -           |                                                       |   | 11,771                               |                    |   | - |   |   | 11,771 |   |
| Currency                translation adjustment   |   |                      | -      |                                                             |   | -                                |                |                                                                  | -           |                                                       |   | -                                    |                    |   | (3,226 | ) |   | (3,226 | ) |
| **BALANCE,                December 31, 2005**    |   | **$**                     | **6**  |                                                             | **$**  | **24,242**                       |                | **$**                                                                 | **-**       |                                                       | **$**  | **4,414**                            |                    | **$** | **(222** | **)** | **$** | **28,440** |   |

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

*Page            132*

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**SLOVENSKA      TELEVIZNA SPOLOCNOST, S.R.O.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(US$      000’s)**

|                                                                                                               |   | **For                the Years Ended December 31,** |       |
|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
|                                                                                                               |   | **2005**                                            |       | **2004** |   | **2003** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                           |   |                                                |       |   |   |   |   |
| **Net                income**                                                                                      |   | **$**                                               | **11,771** |   | **$** | **13,868** |   | **$** | **8,523** |   |
| Adjustments                to reconcile net income to net cash generated from operating                activities: |   |                                                |       |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                       |   |                                                | 9,584      |   |   | 10,834 |   |   | 11,454 |   |
| Receivables                write-off and provision for doubtful accounts receivable                                |   |                                                | 101        |   |   | 77 |   |   | (35 | ) |
| (Gain)/loss                on disposal of fixed assets                                                             |   |                                                | (40        | ) |   | (87 | ) |   | 2 |   |
| Deferred                income taxes                                                                               |   |                                                | 769        |   |   | 336 |   |   | 945 |   |
| Net                change in:                                                                                      |   |                                                |       |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                 |   |                                                | 6,790      |   |   | (1,080 | ) |   | (1,969 | ) |
| Other                assets                                                                                        |   |                                                | (1,131     | ) |   | (3 | ) |   | 198 |   |
| Program                rights                                                                                      |   |                                                | (11,779    | ) |   | (9,129 | ) |   | (10,124 | ) |
| Accounts                payable and accrued liabilities                                                            |   |                                                | 913        |   |   | 109 |   |   | (1,773 | ) |
| Income                and other taxes payable                                                                      |   |                                                | (1,751     | ) |   | (1,744 | ) |   | 2,329 |   |
| Other                current liabilities                                                                           |   |                                                | 440        |   |   | (17 | ) |   | 277 |   |
| **Net                cash generated from operating activities**                                                    |   |                                                | **15,667** |   |   | **13,164** |   |   | **9,827** |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                           |   |                                                |       |   |   |   |   |   |   |   |
| Purchase                of property, plant and equipment                                                           |   |                                                | (5,283     | ) |   | (2,110 | ) |   | (942 | ) |
| Proceeds                from disposal of property, plant and equipment                                             |   |                                                | 54         |   |   | 257 |   |   | 27 |   |
| Investments                in subsidiaries and unconsolidated affiliates                                           |   |                                                | -          |   |   | - |   |   | (3 | ) |
| Purchase                of other assets and intangibles                                                            |   |                                                | (154       | ) |   | (26 | ) |   | (212 | ) |
| **Net                cash used in investing activities**                                                           |   |                                                | **(5,383** | **)** |   | **(1,879** | **)** |   | **(1,130** | **)** |
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                                                           |   |                                                |       |   |   |   |   |   |   |   |
| Proceeds                from credit facilities                                                                     |   |                                                | -          |   |   | 105 |   |   | - |   |
| Payment                of credit facilities and capital leases                                                     |   |                                                | (2,565     | ) |   | (600 | ) |   | (973 | ) |
| Repayment                of loans and advances to shareholders                                                     |   |                                                | 10,104     |   |   | - |   |   | - |   |
| Loans                and advances to shareholders                                                                  |   |                                                | -          |   |   | (596 | ) |   | (2,955 | ) |
| Dividends                paid                                                                                      |   |                                                | (16,647    | ) |   | (10,329 | ) |   | (4,205 | ) |
| **Net                cash used in financing activities**                                                           |   |                                                | **(9,108** | **)** |   | **(11,420** | **)** |   | **(8,133** | **)** |
| **Impact                of exchange rate fluctuations on cash**                                                    |   |                                                | **(524**   | **)** |   | **657** |   |   | **628** |   |
| Net                increase in cash and cash equivalents                                                           |   |                                                | 652        |   |   | 522 |   |   | 1,192 |   |
| **CASH                AND CASH EQUIVALENTS, beginning of year**                                                    |   |                                                | **4,601**  |   |   | **4,079** |   |   | **2,887** |   |
| **CASH                AND CASH EQUIVALENTS, end of year**                                                          |   | **$**                                               | **5,253**  |   | **$** | **4,601** |   | **$** | **4,079** |   |
|                                                                                                               |   |                                                |       |   |   |   |   |   |   |   |
| **SUPPLEMENTAL                DISCLOSURES OF CASH FLOW INFORMATION:**                                              |   |                                                |       |   |   |   |   |   |   |   |
| Cash                paid for interest                                                                              |   | $                                                   | 131        |   | $ | 200 |   | $ | 212 |   |
| Cash                paid for income taxes (net of refunds)                                                         |   | $                                                   | 4,108      |   | $ | 6,448 |   | $ | 847 |   |

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

*Page            133*

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**SLOVENSKA      TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

| **1.** | **ORGANIZATION                AND BUSINESS** |
|--------|----------------------------------------------|

| · | The                broadcasting of programming (both own production and acquired);                and |
|--------|-------------------------------------------------------------------------------------------------------|

| · | The                sale of advertising. |
|--------|-----------------------------------------|

**License      renewal**

| **Company                Name**                                       |   | **Voting****Interest** |   | **Jurisdiction                of****Organization** |   | **Subsidiary                (1)**                        |
|-----------------------------------------------------------------------|--------|------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------------|
|                                                                  |   |                   |   |                                               |   |                                                     |
| ADAM                a.s.                                              |   | 100%                   |   | Slovakia                                           |   | Subsidiary                                               |
| Gamatex                s.r.o.                                         |   | 100%                   |   | Slovakia                                           |   | Subsidiary                                               |
| Markiza                Slovakia, spol. s.r.o. (“Markiza”) |   | -%                     |   | Slovakia                                           |   | Consolidated                Variable-Interest Entity (2) |

| (1) | All                subsidiaries have been consolidated in our Financial Statements. |
|-----|-------------------------------------------------------------------------------------|

| (2) | For                further information, see Note 2, "Summary of Significant Accounting                Policies". |
|-----|------------------------------------------------------------------------------------------------------------------|

| **2.** | **SUMMARY                OF SIGNIFICANT ACCOUNTING                POLICIES** |
|--------|------------------------------------------------------------------------------|

**Basis      of Presentation**

*Page            134*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **Consolidated                Balance Sheet Financial Statement Caption** |   | **As                at December 31, 2005**        |       |
|---------------------------------------------------------------------------|--------|---------------------------------------------------|------------|
|                                                                      |   |                                              |       |
|                                                                      |   | **Balance                prior to****adjustment** |       | **Impact                of FIN 46****(R)** |   | **Adjusted****Balance** |   |
|                                                                      |   | (US$                000's)                        |       |
| Total                current assets                                       |   | $                                                 | 22,682     |   | $ | 579 |   | $ | 23,261 |   |
| Total                assets                                               |   |                                              | 41,291     |   |   | 582 |   |   | 41,873 |   |
| Total                current liabilities                                  |   |                                              | 12,726     |   |   | (53 | ) |   | 12,673 |   |
| Total                non-current liabilities                              |   |                                              | 125        |   |   | - |   |   | 125 |   |
| Minority                interest                                          |   |                                              | -          |   |   | 635 |   |   | 635 |   |
| **Total                shareholders' equity**                             |   | **$**                                             | **28,440** | ** ** | **$** | **-** | ** ** | **$** | **28,440** | ** ** |

| **Consolidated                Statement of Operations Financial Statement                Caption** |   | **For                the Twelve Months ended December 31, 2005** |       |
|----------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|------------|
|                                                                                               |   |                                                             |       |
|                                                                                               |   | **Balance                prior to****adjustment**                |       | **Impact                of FIN 46****(R)** |   | **Adjusted****Balance** |   |
|                                                                                               |   | (US$                000's)                                       |       |
| Net                revenues                                                                        |   | $                                                                | 64,266     |   | $ | - |   | $ | 64,266 |   |
| Total                operating expenses                                                            |   |                                                             | 49,664     |   |   | (39 | ) |   | 49,625 |   |
| Operating                income                                                                    |   |                                                             | 14,602     |   |   | 39 |   |   | 14,641 |   |
| Income                before minority interest                                                     |   |                                                             | 11,771     |   |   | 35 |   |   | 11,806 |   |
| **Net                income**                                                                      |   | **$**                                                            | **11,771** | ** ** | **$** | **-** | ** ** | **$** | **11,771** |   |

*Revenue      Recognition*

*Page            135*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Advertising      revenues*

*Program      distribution revenue*

*Barter      transactions*

**Cash      and Cash Equivalents**

**Property,      Plant and Equipment**

| **Asset                category**                        | **Estimated              useful life** |
|----------------------------------------------------------|----------------------------------------|
| Land                                                     | Indefinite                             |
| Buildings                                                | 25              years                  |
| Station                machinery, fixtures and equipment | 4              - 8 years               |
| Other                equipment                           | 3              - 8 years               |
| Software                licenses                         | 3              - 5 years               |

*Page            136*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

**Long-lived      Assets Including Intangible Assets with Finite Lives**

**Program      Rights**

*Purchased      program rights*

|                                                          |   | **Amortization                %** |       |
|---------------------------------------------------------------|--------|-----------------------------------|------------|
| **Type              of programming**                          |   | ***Run                1***        | ** ** | ***Run                2*** | ** ** | ***Run                3*** | ** ** | ***Run                4*** | ** ** | ***Run                5*** |   |
| Films                and series, 2 runs                       |   |                              | 65%        |   |   | 35% |   |   | - |   |   | - |   |   | - |   |
| Concerts,                documentaries, film about film, etc. |   |                              | 100%       |   |   | - |   |   | - |   |   | - |   |   | - |   |

*Produced      program rights*

*Page            137*

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*Table            of Contents*

**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

**Intangible      Assets**

**Income      Taxes**

**Foreign      Currency**

*Translation      of Financial Statements*

*Transactions      in Foreign Currencies*

**Use      of Estimates**

**Leases**

*Page            138*

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**SLOVENSKA      TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular      amounts in US$ 000’s, except      share      data)**

**Contingencies**

**Financial      Instruments**

**Advertising      Costs**

**Reclassifications**

| **3.** | **ACCOUNTS                RECEIVABLE:** |
|--------|-----------------------------------------|

|                                                          |   | **December                31,****2005** |      | **December                31,****2004** |   |
|---------------------------------------------------------------|--------|-----------------------------------------|-----------|-----------------------------------------|--------|
| ***Trading:***                                                |   |                                    |      |                                    |   |
| Third-party                customers                          |   | $                                       | 10,936    |                                    | $      | 19,497 |   |
| Less:                allowance for bad debts and credit notes |   |                                    | (1,540    | )                                       |   | (1,902 | ) |
| Related                parties                                |   |                                    | 56        |                                    |   | 448 |   |
| **Total**                                                     |   | **$**                                   | **9,452** |                                    | **$**  | **18,043** |   |

*Page            139*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **4.** | **OTHER                ASSETS:** |
|--------|----------------------------------|

|                                          |   | **December                31,****2005** |      | **December                31,****2004** |   |
|-----------------------------------------------|--------|-----------------------------------------|-----------|-----------------------------------------|--------|
| **Current:**                                  |   |                                    |      |                                    |   |
| Prepaid                expenses and advances  |   | $                                       | 621       |                                    | $      | 590 |   |
| Income                tax receivable          |   |                                    | 1,084     |                                    |   | 216 |   |
| VAT                and other taxes receivable |   |                                    | 854       |                                    |   | - |   |
| Deferred                income taxes          |   |                                    | 267       |                                    |   | 79 |   |
| Other                receivables              |   |                                    | 221       |                                    |   | 204 |   |
| **Total**                                     |   | **$**                                   | **3,047** |                                    | **$**  | **1,089** |   |
|                                          |   |                                    |      |                                    |   |   |   |
| **Non-current:**                              |   |                                    |      |                                    |   |   |   |
| Deferred                income taxes          |   | $                                       | 161       |                                    | $      | 1,243 |   |
| **Total**                                     |   | **$**                                   | **161**   |                                    | **$**  | **1,243** |   |

| **5.** | **PROPERTY,                PLANT AND EQUIPMENT** |
|--------|--------------------------------------------------|

|                                                                        |   | **December                31,****2005** |       | **December                31,****2004** |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
|                                                                        |   |                                    |       |                                    |   |
| Land                and buildings                                           |   | $                                       | 11,771     |                                    | $      | 12,910 |   |
| Machinery,                fixtures and equipment                            |   |                                    | 19,734     |                                    |   | 17,945 |   |
| Other                equipment                                              |   |                                    | 6,963      |                                    |   | 7,186 |   |
| Software                                                                    |   |                                    | 1,431      |                                    |   | 1,435 |   |
| Construction                in progress                                     |   |                                    | 111        |                                    |   | 76 |   |
| **Total                cost**                                               |   |                                    | **40,010** |                                    |   | **39,552** |   |
| Less:                Accumulated depreciation                               |   |                                    | (25,765    | )                                       |   | (26,734 | ) |
| **Total                net book value**                                     |   | **$**                                   | **14,245** |                                    | **$**  | **12,818** |   |
|                                                                        |   |                                    |       |                                    |   |   |   |
| **Assets                held under capital lease (included in the above):** |   |                                    |       |                                    |   |   |   |
| Other                equipment                                              |   | $                                       | 429        |                                    | $      | 418 |   |
| **Total                costs**                                              |   |                                    | **429**    |                                    |   | **418** |   |
| Less:                Accumulated depreciation                               |   |                                    | (154       | )                                       |   | (114 | ) |
| **Net                book value**                                           |   | **$**                                   | **275**    |                                    | **$**  | **304** |   |

*Page            140*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

| **6.** | **INTANGIBLE                ASSETS** |
|--------|--------------------------------------|

|                                    |   | **December                31,****2005** |   | **December                31,****2004** |   |
|-----------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|--------|
|                                    |   |                                    |   |                                    |   |
| Gross                value              |   | $                                       | 577    |                                    | $      | 700 |   |
| Accumulated                amortization |   |                                    | (531   | )                                       |   | (568 | ) |
| **Total                net book value** |   | **$**                                   | **46** |                                    | **$**  | **132** |   |

| **7.** | **ACCOUNTS                PAYABLE AND ACCRUED                LIABILITIES** |
|--------|----------------------------------------------------------------------------|

|                                     |   | **December                31,****2005** |       | **December                31,****2004** |   |
|------------------------------------------|--------|-----------------------------------------|------------|-----------------------------------------|--------|
| Accounts                payable          |   | $                                       | 3,312      |                                    | $      | 2,650 |   |
| Programming                liabilities   |   |                                    | 3,623      |                                    |   | 3,028 |   |
| Other                accrued liabilities |   |                                    | 4,546      |                                    |   | 5,196 |   |
|                                     |   | **$**                                   | **11,481** |                                    | **$**  | **10,874** |   |

| **8.** | **CREDIT                FACILITIES AND OBLIGATIONS UNDER CAPITAL                LEASES** |
|--------|------------------------------------------------------------------------------------------|

|                                            |   |   |   | **December                31, 2005** |   | **December                31, 2004** |   |
|-------------------------------------------------|--------|--------|--------|--------------------------------------|--------|--------------------------------------|--------|
| Long-term                loans                  |   |   | (a     | )                                    | $      | -                                    |   | $ | 2,807 |   |
| Capital                leases                   |   |   |   |                                 |   | 196                                  |   |   | 220 |   |
| **Total**                                       |   |   |   |                                 |   | **196**                              |   |   | **3,027** |   |
| Less                current maturities          |   |   |   |                                 |   | (71                                  | )      |   | (2,878 | ) |
| **Total                non-current maturities** |   |   |   |                                 | **$**  | **125**                              |   | **$** | **149** |   |

*Page            141*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Capital      Lease Commitments*

| 2006                                                           |   | $      | 90      |   |
|----------------------------------------------------------------|--------|--------|---------|--------|
| 2007                                                           |   |   | 81      |   |
| 2008                                                           |   |   | 49      |   |
| 2009                                                           |   |   | -       |   |
| 2010                                                           |   |   | -       |   |
| 2011                and thereafter                             |   |   | -       |   |
| **Total**                                                      |   |   | **220** |   |
| Less:                amount representing interest              |   |   | (24     | )      |
| **Present                value of net minimum lease payments** |   | **$**  | **196** |   |

| **9.** | **INCOME                TAXES** |
|--------|---------------------------------|

*Income      Tax Provision:*

|                                          |   | **For                the Years Ended December 31,** |      |
|-----------------------------------------------|--------|-----------------------------------------------------|-----------|
|                                          |   | **2005**                                            |      | **2004** |   | **2003** |   |
| Current                income tax expense     |   | $                                                   | 2,507     |   | $ | 3,175 |   | $ | 2,925 |   |
| Deferred                tax provision         |   |                                                | 769       |   |   | 336 |   |   | 945 |   |
| **Provision                for income taxes** |   | **$**                                               | **3,276** | ** ** | **$** | **3,511** | ** ** | **$** | **3,870** |   |

*Reconciliation      of Effective Income Tax Rate:*

|                                                                            |   | **For                the Years Ended December 31,** |      |
|---------------------------------------------------------------------------------|--------|-----------------------------------------------------|-----------|
|                                                                            |   | **2005**                                            |      | **2004** |   | **2003** |   |
| Income                taxes at statutory rates (2005, 2004: 19.0%; 2003: 25.0%) |   | $                                                   | 2,866     |   | $ | 3,295 |   | $ | 3,098 |   |
| Effect                of change in tax rate                                     |   |                                                | -         |   |   | - |   |   | 531 |   |
| Tax                effect of permanent differences                              |   |                                                | 410       |   |   | 216 |   |   | 377 |   |
| Change                in valuation allowance                                    |   |                                                | -         |   |   | - |   |   | (136 | ) |
| **Provision                for income taxes**                                   |   | **$**                                               | **3,276** |   | **$** | **3,511** |   | **$** | **3,870** |   |

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Components      of Deferred Tax Assets and Liabilities:*

|                                              |   | **December                31,****2005** |    | **December                31,****2004** |   |
|---------------------------------------------------|--------|-----------------------------------------|---------|-----------------------------------------|--------|
| **Assets:**                                       |   |                                    |    |                                    |   |
| Property,                plant and equipment      |   | $                                       | 40      |                                    | $      | 185 |   |
| Programs                rights                    |   |                                    | 281     |                                    |   | 996 |   |
| Accounts                receivable                |   |                                    | 113     |                                    |   | 233 |   |
| **Gross                deferred tax assets**      |   |                                    | **434** |                                    |   | **1,414** |   |
| Valuation                allowance                |   |                                    | -       |                                    |   | - |   |
| **Net                deferred tax assets**        |   | **$**                                   | **434** |                                    | **$**  | **1,414** |   |
|                                              |   |                                    |    |                                    |   |   |   |
| **Liabilities:**                                  |   |                                    |    |                                    |   |   |   |
| Unrealized                foreign exchange, net   |   |                                    | (6      | )                                       |   | (83 | ) |
| Other                                             |   |                                    | -       |                                    |   | (9 | ) |
| **Total                deferred tax liabilities** |   | **$**                                   | **(6**  | **)**                                   | **$**  | **(92** | **)** |
|                                              |   |                                    |    |                                    |   |   |   |
| **Net                deferred income tax assets** |   | **$**                                   | **428** |                                    | **$**  | **1,322** |   |

| **10.** | **COMMITMENTS                AND CONTINGENCIES** |
|---------|--------------------------------------------------|

**Operating      lease commitments**

|                               |   |   |    |
|------------------------------------|--------|--------|---------|
| 2006                               |   | $      | 521     |   |
| 2007                               |   |   | 335     |   |
| 2008                               |   |   | -       |   |
| 2009                               |   |   | -       |   |
| 2010                               |   |   | -       |   |
| 2011                and thereafter |   |   | -       |   |
| **Total**                          |   | **$**  | **856** |   |

*Page            143*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

**Future      Contractual Obligations**

|                                              |   |      |       |                                      |   |
|---------------------------------------------------|--------|-----------|------------|-------------------------------------------|--------|
|                                              |   |      |       | **Payments                due by period** |   |
|                                              |   | **Total** |       | **Less                than 1 year**       |   | **2                years** |   | **3                years** |   | **More                than 3 years** |   |
|                                              |   |      |       |                                      |   |   |   |   |   |   |   |
| Unconditional                purchase obligations |   | $         | 13,170     |                                      | $      | 13,170 |   | $ | - |   | $ | - |   | $ | - |   |
| Station                program rights             |   |      | 4,629      |                                      |   | 2,267 |   |   | 2,362 |   |   | - |   |   | - |   |
| Other                long-term obligations        |   |      | 5,446      |                                      |   | 5,446 |   |   | - |   |   | - |   |   | - |   |
|                                              |   |      |       |                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total**                                         |   | **$**     | **23,245** |                                      | **$**  | **20,883** |   | **$** | **2,362** |   | **$** | **-** |   | **$** | **-** |   |

**Legal      claims**

| **11.** | **RELATED                PARTY TRANSACTIONS** |
|---------|-----------------------------------------------|

*CME*

*Page            144*

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**SLOVENSKA        TELEVIZNA SPOLOCNOST, S.R.O.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Tabular        amounts in US$ 000’s, except        share        data)**

*Media      Invest*

*Forza      Group*

| **12.** | **RESTRICTION                ON DIVIDEND DISTRIBUTION** |
|---------|---------------------------------------------------------|

*Page            145*

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| **ITEM                9.** | **CHANGES                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL                DISCLOSURE** |
|----------------------------|------------------------------------------------------------------------------------------------------------------------|

| **ITEM                9A.** | **CONTROLS                AND PROCEDURES** |
|-----------------------------|--------------------------------------------|

**Evaluation      of Disclosure Controls and Procedures **

**Management’s      Report on Internal Control Over Financial Reporting**

**Changes      in Internal Controls**

*Page            146*

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**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

*Page            147*

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*Table            of Contents*

| **ITEM                9B.** | **OTHER                INFORMATION** |
|-----------------------------|--------------------------------------|

*Page            148*

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**PART      III**

| **ITEM                10.** | **DIRECTORS                AND EXECUTIVE OFFICERS OF THE                REGISTRANT** |
|-----------------------------|--------------------------------------------------------------------------------------|

| **ITEM                11.** | **EXECUTIVE                COMPENSATION** |
|-----------------------------|-------------------------------------------|

| **ITEM                12.** | **SECURITY                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT****AND RELATED STOCKHOLDER                MATTERS** |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| **ITEM                13.** | **CERTAIN                RELATIONSHIPS AND RELATED                TRANSACTIONS** |
|-----------------------------|----------------------------------------------------------------------------------|

| **ITEM                14.** | **PRINCIPAL                ACCOUNTANT FEES AND                SERVICES** |
|-----------------------------|--------------------------------------------------------------------------|

*Page            149*

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**PART      IV**

| **ITEM                15.** | **EXHIBITS                AND FINANCIAL STATEMENT                SCHEDULES** |
|-----------------------------|------------------------------------------------------------------------------|

*Page            150*

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**EXHIBIT      INDEX**

| **Exhibit****Number** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.01*                 |   | Memorandum                of Association (incorporated by reference to Exhibit 3.01 to the                Company's                Registration Statement No. 33-80344 on Form S-1, filed June 17,                1994).                                                                                                                                                                                                     |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.02*                 |   | Bye-Laws                of Central European Media Enterprises Ltd., as amended, dated as                of May                25, 2000 (incorporated by reference to Exhibit 3.02 to the Company’s                Annual Report on Form 10-K for the fiscal year ending December 31,                2000).                                                                                                             |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.03*                 |   | Memorandum                of Increase of Share Capital (incorporated by reference to Exhibit                3.03 to                Amendment No. 1 to the Company's Registration Statement No. 33-80344                on                Form S-1, filed August 19, 1994).                                                                                                                                                   |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.04*                 |   | Memorandum                of Reduction of Share Capital (incorporated by reference to Exhibit                3.04                to Amendment No. 2 to the Company's Registration Statement No. 33-80344                on                Form S-1, filed September 14, 1994).                                                                                                                                               |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.05*                 |   | Certificate                of Deposit of Memorandum of Increase of Share Capital executed by                Registrar of Companies on May 20, 1997 (incorporated by reference                to                Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the                quarterly period ended September 30, 1997).                                                                                 |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.01*                 |   | Specimen                Class A Common Stock Certificate (incorporated by reference to Exhibit                4.01 to Amendment No. 1 to the Company's Registration Statement No.                33-80344 on Form S-1, filed August 19, 1994).                                                                                                                                                                               |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.01A+*              |   | Central                European Media Enterprises Ltd. 1995 Stock Incentive Plan, as amended                and                restated to April 11, 2004 (incorporated by reference to Exhibit                A to the                Company's Proxy Statement dated May 9, 2005).                                                                                                                                         |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.02*                |   | Cooperation                Agreement among CME Media Enterprises B.V., Ion Tiriac and Adrian                Sarbu                (incorporated by reference to Exhibit 10.27 to the Company's Registration                Statement No.33 - 96900 on Form S-1 filed September 13,                1995).                                                                                                                      |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.8*                 |   | Agreement                by and between International Media Services Ltd and Innova Film GmbH,                dated January 23, 1997 (incorporated by reference to Exhibit 10.65                to the                Company's Annual Report on Form 10-K for the fiscal year ended December                31, 1996).                                                                                                      |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.10*                |   | Amended                and Restated Charter of the Broadcasting Company 'Studio 1+1', dated                January 23, 1997 (incorporated by reference to Exhibit 10.67 to the                Company's Annual Report on Form 10-K for the fiscal year ended December                31, 1996).                                                                                                                              |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.11*                |   | Amended                and Restated Foundation Agreement on the Establishment and Operation                of                the Broadcasting Company 'Studio 1+1,' dated January 23, 1997                (incorporated by reference to Exhibit 10.68 to the Company's Annual                Report                on Form 10-K for the fiscal year ended December 31,                1996).                                 |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.12*                |   | Protocol                of the Participants' Assembly of the Broadcasting Company 'Studio                1+1,'                dated January 23, 1997 (incorporated by reference to Exhibit 10.69                to the                Company's Annual Report on Form 10-K for the fiscal year ended December                31, 1996).                                                                                      |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.13*                |   | Marketing,                Advertising and Sales Agreement by and between International Media                Services Ltd and Innova Film GmbH, dated January 23, 1997 (incorporated                by                reference to Exhibit 10.70 to the Company's Annual Report on Form                10-K for                the fiscal year ended December 31, 1996).                                                      |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.13A*               |   | Amendment                Agreement to Marketing, Advertising and Sales Agreement between Innova                Film GmbH and International Media Services Limited, dated May 7,                1997                (incorporated by reference to Exhibit 10.1 to the Company's Quarterly                Report on Form 10-Q for the quarterly period ended March 31,                1997).                                   |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.16*                |   | Advertising                Sales Agency Agreement between Studio 1+1 and Servland Continental                S.A.                dated March 14, 2001 (incorporated by reference to Exhibit 10.47                to the                Company’s Annual Report on Form 10-K for the fiscal year ending December                31, 2000).                                                                              |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.18*+               |   | Employment                Agreement between CME Development Corporation and Robert E. Burke                dated                July 6, 2001 (incorporated by reference to Exhibit 10.1 to the Company's                Quarterly Report on Form 10-Q for the quarterly period ended June                30,                2001).                                                                                           |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.19*                |   | Exclusive                Contract of Providing and Broadcasting of Television Signal between                Markiza-Slovakia s.r.o. and Slovenska Televizna Spolocnost s.r.o.                dated                August 30, 1996 (incorporated by reference to Exhibit 10.4 to the                Company's Quarterly Report on Form 10-Q for the quarterly period                ended                September 30, 2001). |

*Page            151*

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| 10.20*  |   | Exclusive                Rights Transfer Agreement between Markiza-Slovakia s.r.o and Slovenska                Televizna Spolocnost s.r.o. dated October 3, 2001 (incorporated by                reference to Exhibit 10.5 to the Company's Quarterly Report on Form                10-Q                for the quarterly period ended September 30, 2001).                                                                                                                                                         |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.21*  |   | Key                Agreement Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd,                Innova                Film GmbH, International Media Services Ltd, Ukraine Advertising                Holding,                CME Ukraine GmbH and CME Ukraine B.V entered into as of December                23, 1998                (incorporated by reference to Exhibit 10.43 to the Company’s Annual Report                on Form 10-K for the fiscal year ending December 31,                2001). |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.22*  |   | Memorandum                of Association of Slovenska televizna spolocnost s.r.o (incorporated                by                reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K for                the fiscal year ending December 31, 2001).                                                                                                                                                                                                                                          |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.23*  |   | Articles                of Association of Slovenska televizna spolocnost s.r.o (incorporated                by                reference to Exhibit 10.45 to the Company’s Annual Report on Form 10-K for                the fiscal year ending December 31, 2001).                                                                                                                                                                                                                                            |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.24*  |   | Amended                Memorandum of Association Markiza - Slovakia spol. s.r.o (incorporated                by                reference to Exhibit 10.46 to the Company’s Annual Report on Form 10-K for                the fiscal year ending December 31, 2001).                                                                                                                                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.25*  |   | Loan                arrangement between Vseobecna userova banka a.s and S.T.S. s.r.o,,                dated                July 24, 2002 (incorporated by reference to Exhibit 10.50 to the                Company's                Quarterly Report on Form 10-Q for the quarterly period ended June                30,                2002).                                                                                                                                                                      |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.26*+ |   | Employment                Agreement between CME Development Corporation and Wallace Macmillan                dated                March 17, 2003 (incorporated by reference to Exhibit 10.63 to the                Company's Quarterly Report on Form 10-Q for the quarterly period                ended                March 30, 2003).                                                                                                                                                                            |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.27*+ |   | Employment                Agreement between Central European Media Enterprises Ltd and Fred                T.                Klinkhammer dated October 21, 2003 (incorporated by reference to                Exhibit                10.63 to the Company's Quarterly Report on Form 10-Q for the quarterly                period ended September 30, 2003).                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.28*+ |   | Employment                Agreement between CME Development Corporation and Michael Garin dated                March 30, 2004 (incorporated by reference to Exhibit 10.63 to the                Company's Quarterly Report on Form 10-Q for the quarterly period                ended                March 30, 2004).                                                                                                                                                                                               |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.29*  |   | Agreement                between CME Media Enterprises BV and the Tax and Customs Administration                of                the Netherlands dated March 24, 2004 (incorporated by reference to                the                Company's Quarterly Report on Form 10-Q for the quarterly period                ended                March 31, 2004).                                                                                                                                                        |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.30*  |   | CME                Romania BV - Adrian Sarbu Funding and Share Sale Agreement, dated                March                12, 2004 (incorporated by reference to the Company's Quarterly Report                on                Form 10-Q for the quarterly period ended March 31,                2004).                                                                                                                                                                                                            |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.31*  |   | Share                sale and purchase agreement of Nova TV d.d. (Croatia), dated July                7, 2004.                (incorporated by reference to the Company's Quarterly Report on Form                10-Q                for the quarterly period ended June 30, 2004).                                                                                                                                                                                                                                |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.32*  |   | Pro                TV SA put-option between CME Romania BV, Adrian Sarbu and Rootland                Trading                Ltd (incorporated by reference to the Company's Quarterly Report                on Form                10-Q for the quarterly period ended September 30,                2004).                                                                                                                                                                                                          |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.33*  |   | MPI                SA put-option between CME Romania BV, Adrian Sarbu and Rootland Trading                Ltd (incorporated by reference to the Company's Quarterly Report                on Form                10-Q for the quarterly period ended September 30,                2004).                                                                                                                                                                                                                            |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.34*+ |   | Employee                Stock Option Form (a management contract) (incorporated by reference                to                the Company's Quarterly Report on Form 10-Q for the quarterly period                ended                September 30, 2004).                                                                                                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.35+  |   | Employment                Agreement between CME Development Corporation and Marina Williams                dated                November 22, 2004.                                                                                                                                                                                                                                                                                                                                                                  |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.36*  |   | Framework                Agreement CME Media Enterprises BV, Central European Media Enterprises                Ltd. and PPF (Cyprus) Ltd. dated December 13, 2004. (incorporated                by                reference to the Company's Annual Report on Form 10-K for the period                ended                December 31, 2004).                                                                                                                                                                      |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.37*  |   | Agreement                on Settlement of Disputes and Transfer of Ownership Interest, dated                February 24, 2005. (incorporated by reference to the Company's Annual                Report on Form 10-K for the period ended December 31,                2004).                                                                                                                                                                                                                                        |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.38*  |   | Subscription                Agreement between Central European Media Enterprises Ltd. and PPF                (Cyprus)                Ltd. dated May 2, 2005. (incorporated by reference to the Company's                Quarterly Report on Form 10-Q for the quarterly period ended March                30,                2005).                                                                                                                                                                                 |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

*Page            152*

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*Table            of Contents*

| 10.39* |   | Registration                Rights Agreement between Central European Media Enterprises Ltd.                and PPF                (Cyprus) Ltd. dated May 2, 2005. (incorporated by reference to the                Company's Quarterly Report on Form 10-Q for the quarterly period                ended                March 30, 2005).                                                                                                                                            |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.40* |   | Deed                of Guarantee among PPF a.s., Central European Media Enterprises Ltd.                and                CME Media Enterprises B.V. dated May 2, 2005. (incorporated by reference                to the Company's Quarterly Report on Form 10-Q for the quarterly                period                ended March 30, 2005).                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.41* |   | PPF                Group Guarantee among PPF Group N.V., Central European Media Enterprises                Ltd. and CME Media Enterprises B.V. dated May 2, 2005. (incorporated                by                reference to the Company's Quarterly Report on Form 10-Q for the                quarterly                period ended March 30, 2005).                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.42* |   | Indenture                among Central European Media Enterprises Ltd., Central European Media                Enterprises N.V., and CME Media Enterprises B.V. J.P. Morgan Chase                Bank                N.A., London Branch and J.P. Morgan Bank Luxembourg S.A. dated May                5,                2005. (incorporated by reference to the Company's Quarterly Report                on Form                10-Q for the quarterly period ended March 30, 2005). |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.43* |   | Euro                37.5 million facility agreement, dated July 29, 2005, between Produkcija                Plus Storitveno Podjetje d.o.o. and ING Bank N.V., Nova Ljubljanska                banka                d.d., and Bank Austria Creditanstalt d.d. (incorporated by reference                to                the Company's Quarterly Report on Form 10-Q for the quarterly period                ended                June 30, 2005).                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.44  |   | Credit                line agreement No. 2644/05/LCD between Ceska Sporitelna a.s. and                CET 21                spol. s r.o. dated October 27, 2005.                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.45  |   | Agreement                for the sale of shares in A.R.J., a.s. between PhDr. Pavol Rusko                and CME                Media Enterprises B.V. dated October 28, 2005.                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.46  |   | Agreement                for the sale of shares in A.R.J., a.s. among Media Partner, spol.                s r.o.,,                Salis, s.r.o., CME Media Enterprises B.V., Ing. Milan Fil’o and Mr. Jan                Kovacik dated October 31, 2005.                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.47  |   | Sale-Purchase                Contract for Shares of Media Pro International S.A. between CME Romania                B.V. and Adrian Sarbu dated February 17, 2006.                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.48  |   | Sale-Purchase                Contract for Shares of Pro TV S.A. between CME Romania B.V. and Adrian                Sarbu dated February 17, 2006.                                                                                                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.49  |   | Sale-Purchase                Contract for Shares of Media Vision SRL between CME Romania B.V.                and Media                Pro Pictures S.A. dated February 17, 2006.                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 21.01  |   | List                of subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 23.01  |   | Consent                of Deloitte & Touche LLP                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 24.01  |   | Power                of Attorney, dated as of February 24, 2006                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.01  |   | Sarbanes-Oxley                Certification s.302 CEO, dated March 2, 2006                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.02  |   | Sarbanes-Oxley                Certification s.302 CFO, dated March 2, 2006                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 32.01  |   | Sarbanes-Oxley                Certification - CEO and CFO, dated March 2, 2006 (furnished                only)                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| *      |   | Previously                filed exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| +      |   | Exhibit                is a management contract or compensatory plan                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| b)     |   | Exhibits:                See (a)(3) above for a listing of the exhibits included as part of                this                report.                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| c)     |   | Report                of Independent Registered Public Accountants on Schedule II — Schedule of                Valuation Allowances. (See pages S-1 to S-3 of this Form                10-K)                                                                                                                                                                                                                                                                                    |

*Page            153*

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**SIGNATURES**

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

| Date:                March 2, 2006 | /s/                Michael Garin                                                   |
|------------------------------------|------------------------------------------------------------------------------------|
|                               | Michael                Garin                                                       |
|                               | Chief                Executive Officer                                             |
|                               | (Duly                Authorized Officer)                                           |
|                               |                                                                               |
|                               |                                                                               |
| Date:                March 2, 2006 | /s/                Wallace Macmillan                                               |
|                               | Wallace                Macmillan                                                   |
|                               | Vice                President - Finance                                            |
|                               | (Principal                Financial Officer and Accounting                Officer) |

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

| Signature                            |   | Title                                                                         |   | Date                         |
|--------------------------------------|--------|-------------------------------------------------------------------------------|--------|------------------------------|
| *                          |   | Chairman                of the Board of Directors                             |   | March                2, 2006 |
| Ronald                S. Lauder      |   |                                                                          |   |                         |
| /s/                Michael Garin     |   | Chief                Executive Officer and Director                           |   | March                2, 2006 |
| Michael                Garin         |   | (Principal                Executive Officer)                                  |   |                         |
| /s/                Wallace Macmillan |   | Vice                President - Finance                                       |   | March                2, 2006 |
| Wallace                Macmillan     |   | (Principal                Financial Officer and Principal Accounting Officer) |   |                         |
| *                          |   | Director                                                                 |   | March                2, 2006 |
| Alfred                W. Langer      |   |                                                                          |   |                         |
| *                               |   | Director                                                                 |   | March                2, 2006 |
| Charles                Frank         |   |                                                                          |   |                         |
| *                          |   | Director                                                                 |   | March                2, 2006 |
| Herb                Granath          |   |                                                                          |   |                         |
| *                          |   | Director                                                                 |   | March                2, 2006 |
| Herbert                Kloiber       |   |                                                                          |   |                         |
| *                          |   | Director                                                                 |   | March                2, 2006 |
| Bruce                Maggin          |   |                                                                          |   |                         |
| *                          |   | Director                                                                      |   | March                2, 2006 |
| Ann                Mather            |   |                                                                          |   |                         |
| *                          |   | Director                                                                      |   | March                2, 2006 |
| Eric                Zinterhofer      |   |                                                                          |   |                         |
|                                 |   | *                By                                                           |   |                         |
|                                 |   | /s/                Wallace Macmillan                                          |   |                         |
|                                 |   | Wallace                Macmillan                                              |   |                         |
|                                 |   | Attorney-in-fact                                                              |   |                         |

*Page            154*

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**INDEX      TO SCHEDULES**

| Schedule                II : Schedule of Valuation Allowances | S-3 |
|---------------------------------------------------------------|-----|

**Schedule      II**

**Schedule      of Valuation Allowances**

**(US$      000’s)**

|                                            |   | **Bad                debt and credit note****provision** |      | **Deferred                tax****allowance** |   |
|-------------------------------------------------|--------|----------------------------------------------------------|-----------|----------------------------------------------|--------|
|                                            |   |                                                     |      |                                         |   |
| **Balance                at January 1, 2003**   |   |                                                     | **7,481** |                                         |   | **8,654** |   |
| Charged                to costs and expenses    |   |                                                     | 355       |                                         |   | 3,192 |   |
| Charged                to other accounts (1)    |   |                                                     | (58)      |                                         |   | - |   |
| Foreign                exchange                 |   |                                                     | (1,443)   |                                         |   | - |   |
| **Balance                at December 31, 2003** |   |                                                     | **5,625** |                                              |   | **11,846** |   |
| Charged                to costs and expenses    |   |                                                     | 250       |                                         |   | (1,366) |   |
| Charged                to other accounts (1)    |   |                                                     | (203)     |                                         |   | - |   |
| Foreign                exchange                 |   |                                                     | 468       |                                         |   | (2,469) |   |
| **Balance                at December 31, 2004** |   |                                                     | **6,140** |                                         |   | **8,011** |  |
| Charged                to costs and expenses    |   |                                                     | 1,750     |                                         |   | 5,115 |   |
| Charged                to other accounts (1)    |   |                                                     | 1,532     |                                         |   | (185) |   |
| Foreign                exchange                 |   |                                                     | (172)     |                                         |   | (1,007) |   |
| **Balance                at December 31, 2005** |   |                                                     | **9,250** |                                         |   | **11,934** |   |

|  | **(1)** | **Charged                to other accounts for the bad debt and credit note provision consist                primarily of accounts receivable written off and opening balances                of                acquired companies.** |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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