<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                           --------------------------
                                   FORM 10-K

                       FOR ANNUAL AND TRANSITION REPORTS
                      PURSUANT TO SECTIONS 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

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

      FOR THE TRANSITION PERIOD FROM ________________ TO ________________

                        COMMISSION FILE NUMBER 000-22877
                           --------------------------
                             @ ENTERTAINMENT, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
               DELAWARE                                     06-1487156
     (State or Other Jurisdiction               (I.R.S. EMPLOYER OF IDENTIFICATION
    Incorporation or Organization)                             NO.)

          4643 ULSTER STREET                                  80237
              SUITE 1300                                    (Zip Code)
           DENVER, COLORADO
    (Address of Principal Executive
               Offices)
</TABLE>

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

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 770-4001

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<TABLE>
<S>                                             <C>
          TITLE OF EACH CLASS                   NAME OF EACH EXCHANGE ON WHICH REGISTERED
                 None                                             None
</TABLE>

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

                                 Not Applicable
                           --------------------------

                                (Title of Class)

    Indicate by check mark (X) whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

    State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing. (See definition of affiliate in
Rule 405.) ZERO

    The number of shares outstanding of @ Entertainment, Inc.'s common stock as
of December 31, 1999, was:

                              Common Stock  1,000

                      DOCUMENTS INCORPORATED BY REFERENCE
                                     None.

       The Registrant meets the conditions set forth in General Instructions
  (I) (1) (a) and (b) of Form 10-K and is therefore filing this Form with the
                           reduced disclosure format.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                             @ ENTERTAINMENT, INC.
        ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                     PAGE NUMBER
                                                                                     -----------
<S>                    <C>                                                           <C>
                                             PART I

ITEM 1.                Business....................................................        5

ITEM 2.                Properties..................................................       24

ITEM 3.                Legal Proceedings...........................................       25

                                            PART II

ITEM 5.                Market for Registrant's Common Equity and Related
                       Stockholder Matters.........................................       28

ITEM 6.                Selected Financial Data.....................................       28

ITEM 7.                Management's Discussion and Analysis of Financial Condition
                       and Results of Operation....................................       29

ITEM 7A.               Quantitative and Qualitative Disclosure About Market Risk...       41

ITEM 8.                Financial Statements and Supplementary Data.................       42

ITEM 9.                Changes in and Disagreements with Accountants on Accounting
                       and Financial Disclosure....................................       81

                                            PART IV

ITEM 14.               Exhibits, Financial Statement Schedules and Reports on Form
                       8-K.........................................................       83
</TABLE>

                                       2
<PAGE>
                                     PART I

    @ Entertainment, Inc., a Delaware corporation which is wholly-owned by
United Pan-Europe Communications N.V. ("UPC"), was established in May 1997.
References to the "Company" mean @ Entertainment and its consolidated
subsidiaries, including Poland Communications, Inc. ("PCI"), Wizja TV Limited
(previously At Entertainment Limited) ("Wizja TV Ltd"), MEDIALNE TOWARZYSTWO
AKCYJNE S.A., Wizja TV B.V. (previously Sereke Holding B.V.) ("Wizja TV B.V."),
Wizja TV Sp. z o.o. ("Wizja TV Sp. z o.o."), Ground Zero Media Sp. z o.o.
("GZM"), At Media Sp. z o.o. ("At Media"), and @Entertainment Programming, Inc.
("@EP").

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    Certain statements in this Annual Report on Form 10-K constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, that are not historical facts but rather reflect
the Company's current expectations concerning future results and events. The
words "believes," "expects," "intends," "plans," "anticipates," "likely,"
"will," "may," "shall" and similar expressions identify such forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the actual results,
performance or achievements of the Company (or entities in which the Company has
interests), or industry results, to differ materially from future results,
performance or achievements expressed or implied by such forward-looking
statements.

    Readers are cautioned not to place undue reliance on these forward-looking
statements which reflect management's view only as of the date of this Annual
Report on Form 10-K. The Company undertakes no obligation to publicly release
the result of any revisions to these forward-looking statements which may be
made to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events, conditions or circumstances.

    The risks, uncertainties and other factors that might cause such differences
include, but are not limited to: (i) general economic conditions in Poland and
in the pay television business in Poland; (ii) changes in regulations the
Company operates under; (iii) uncertainties inherent in new business strategies,
including the Company's satellite television business, new product launches and
development plans, which the Company has not used before; (iv) rapid technology
changes; (v) changes in, or failure or inability to comply with government
regulations; (vi) the development and provision of programming for new
television and telecommunications technologies; (vii) the continued strength of
competitors in the multichannel video programming distribution industry and
satellite services industry and the growth of satellite delivered programming;
(viii) future financial performance, including availability, terms and
deployment of capital; (ix) the ability of vendors to deliver required
equipment, software and services on schedule at the budgeted cost; (x) the
Company's ability to and hold and attract qualified personnel; (xi) changes in
the nature of strategic relationships with joint ventures; (xii) the overall
market acceptance of those products and services, including acceptance of the
pricing of those products and services; (xiii) possible interference by
satellites in adjacent orbital positions with the satellites currently being
used for the Company's satellite television business; and (xiv) acquisition
opportunities and (xv) the Company's new ownership structure.

                                 EXCHANGE RATE

    In this Annual Report on Form 10-K, references to "U.S. dollars" or "$" are
to U.S. currency, references to "Deutsche-Marks" or "DM" are to German currency,
and references to "zloty" or "PLN" are to Polish currency. The Company has
presented its primary consolidated financial statements in accordance with
generally accepted accounting principles in the U.S. in U.S. dollars. Amounts
originally measured in zloty for all periods presented have been translated into
U.S. dollars.

                                       3
<PAGE>
    For your convenience, this Annual Report contains certain zloty amounts not
derived from the consolidated financial statements which have been translated
into U.S. dollars. Readers should not assume that the zloty amounts actually
represent such U.S. dollar amounts or could be, or could have been, converted
into U.S. dollars at the rates indicated or at any other rate. Unless otherwise
stated, such U.S. dollar amounts have been derived by converting from zloty to
U.S. dollars at the rate of PLN 4.1483 = $1.00, the exchange rate quoted by the
National Bank of Poland at noon on December 31, 1999. This rate may differ from
the actual rates in effect during the periods covered by the financial
information discussed herein. The Federal Reserve Bank of New York does not
certify for customs purposes a noon buying rate for zloty.

                                       4
<PAGE>
ITEM 1. BUSINESS

                                    BUSINESS

GENERAL

    The Company is the leading provider of pay television in Poland and is
engaged principally in the provision of cable television services and in the
development, packaging and delivery of high-quality programming. Over the past
four years, the Company has experienced rapid growth in revenues and
subscribers, through acquisitions, through expansion of its own cable and
digital satellite direct-to-home ("D-DTH") networks and through the launch of
its D-DTH service, resulting in an average increase in revenues of 60% and total
subscribers of 34% per year. The Company has also increased its average revenue
per subscriber by 11% per year during the past three years.

    On June 5, 1998, the Company launched its Wizja TV programming package,
originally consisting of 11 channels of primarily Polish-language programming,
over its cable networks. The Company believes that Wizja TV has provided it with
a significant competitive advantage for attracting new subscribers and
increasing revenue per subscriber. Wizja TV will also be sold on a wholesale
basis to other cable operators in Poland.

    In order to reach television households in Poland, which it did not expect
to cover with its cable networks, on September 18, 1998 the Company launched a
complementary D-DTH service allowing subscribers to receive Wizja TV via a
satellite dish. The Company's multi-channel Polish-language D-DTH service was
the first D-DTH service available in Poland. The Company has entered into an
agreement with Philips Business Electronic B.V. to supply the reception systems
which include a satellite dish, digital set top box and related hardware, and to
distribute the Company's D-DTH service through the Philips retail network in
Poland. As of December 31, 1999, the Company had sold and installed
approximately 254,000 of these packages to consumers. With the launch of the
Company's D-DTH service, the Company has started the transmission of Wizja TV,
which currently consists of 24 channels (of which 17 are primarily Polish
language), on both its D-DTH system and its cable networks.

    On June 2, 1999, the Company entered into an Agreement and Plan of Merger
with United Pan-Europe Communications N.V. ("UPC"), whereby UPC and its
wholly-owned subsidiary, Bison Acquisition Corp. ("Bison"), initiated a tender
offer to purchase all of the outstanding shares of the Company in an all cash
transaction valuing the Company's shares of common stock at $19.00 per share.

    The tender offer, initiated pursuant to the Agreement and Plan of Merger
with UPC and Bison, closed at 12:00 midnight on August 5, 1999. On August 6,
1999, Bison reported that it had accepted for payment a total of 33,701,073
shares of the Company's common stock (including 31,208 shares tendered pursuant
to notices of guaranteed delivery) representing approximately 99% of the
Company's outstanding shares of common stock (the "Acquisition"). In addition,
UPC acquired 100% of the outstanding Series A and Series B 12% Cumulative
Preference Shares of the Company and acquired all of the outstanding warrants
and stock options.

    Also on August 6, 1999, Bison was merged with and into the Company with the
Company continuing as the surviving corporation (the "Merger"). Accordingly, the
Company became a wholly-owned subsidiary of UPC. UnitedGlobalCom, Inc. is the
majority stockholder of UPC.

BUSINESS STRATEGY

    The Company's principal objective is to enhance its position as the leading
provider of pay television in Poland by capitalizing on favorable opportunities
that it believes exist in Poland in the cable television, D-DTH and programming
markets.

                                       5
<PAGE>
    The Company's business strategy is designed to increase its market share and
subscriber base and to maximize revenue per subscriber. To accomplish its goals,
the Company intends to do the following:

    - Develop and control the content of its programming;

    - Increase its distribution capabilities through internal growth and through
      acquisitions;

    - Control its management of subscribers by using advanced information
      systems; and

    - Establish Wizja TV as the leading brand name in the Polish pay television
      industry.

CABLE TELEVISION

    The Company operates the largest cable television system in Poland with
approximately 1,756,000 homes passed and approximately 1,024,000 total
subscribers as of December 31, 1999. The Company's cable subscribers are located
in regional clusters encompassing eight of the ten largest cities in Poland,
including those cities which the Company believes provide the most favorable
demographics for cable television in the country. The Company believes that
additional subscriber growth can be achieved through a combination of increased
penetration, new network expansion and acquisitions. The Company's cable
television networks have been constructed with the flexibility and capacity to
be cost-effectively reconfigured to offer an array of interactive and integrated
entertainment, telecommunications and information service.

REGIONAL CLUSTERS

    The Company has established five regional clusters for its cable television
business encompassing eight of the ten largest cities in Poland, which the
Company believes, are among those with the strongest economies and most
favorable demographics for cable television in the country. The following table
illustrates certain operating data of each of the Company's existing regional
clusters.

              OVERVIEW OF THE COMPANY'S EXISTING CABLE SYSTEMS(1)

<TABLE>
<CAPTION>
                                                                                                       AVERAGE MONTHLY
                                                                                                     SUBSCRIPTION REVENUE
                                                                        BASIC AND      BASIC AND          PER BASIC
                                                            TOTAL      INTERMEDIATE   INTERMEDIATE        SUBSCRIBER
REGION                      TOTAL HOMES   HOMES PASSED   SUBSCRIBERS   SUBSCRIBERS    PENETRATION         (USD) (2)
------                      -----------   ------------   -----------   ------------   ------------   --------------------
<S>                         <C>           <C>            <C>           <C>            <C>            <C>
North.....................     574,000       420,890        295,053      228,943         54.39%              6.98
South.....................     400,000       181,890         86,989       74,757         41.10%              7.50
Central...................     920,000       425,248        242,963      164,852         38.77%              7.74
West......................     624,000       234,315        123,934      111,421         47.55%              6.15
Katowice..................   1,200,000       493,255        274,884      203,001         41.16%              7.14
                             ---------     ---------      ---------      -------         -----               ----
  TOTAL...................   3,718,000     1,755,598      1,023,823      782,974         44.60%              6.68
                             =========     =========      =========      =======         =====               ====
</TABLE>

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

(1) All data at or for the year ended December 31, 1999.

(2) Represents a weighted average for the Company based on the total number of
    basic subscribers at December 31, 1999.

ACQUISITIONS

    The Company regularly evaluates potential acquisitions of cable networks.
The Company currently has no definitive agreement with respect to any material
acquisition, although from time to time it has discussions with other companies
and assesses opportunities on an ongoing basis. The Company may be required to
apply for the approval of the Polish Anti-Monopoly Office with respect to any
acquisitions it

                                       6
<PAGE>
wishes to consummate. The Company's ability to enter into definitive agreements
relating to material acquisitions and their potential terms, as well as its
ability to obtain the necessary anti-monopoly approvals, cannot be assured.

SERVICES AND FEES

    The Company charges cable television subscribers an initial installation fee
and fixed monthly fees for their choice of service packages and for other
services such as premium channels and rental of remote control devices.
Throughout its cable television systems, the Company currently offers three
packages of cable television service: basic ("basic package"), broadcast
("broadcast package") and intermediate ("intermediate package") packages of
service in selected areas of Poland. On December 31, 1999, approximately 732,800
or 71.6% of the Company's subscribers received the basic package, approximately
50,200 or 4.9% received the intermediate package and approximately 240,800 or
23.5% received the broadcast package of service.

    BASIC PACKAGE.  The basic package includes approximately 30 to 70 channels.
This package generally includes all Polish terrestrial broadcast channels, most
major European satellite programming legally available in Poland, regional and
local programming and, on most of its cable networks, Wizja TV, including the
Company's proprietary Polish-language channel, Atomic TV. The Company's basic
package offerings vary by location. With the launch of Wizja TV across the
Company's cable networks on June 5, 1998, all of the Wizja TV programming became
part of the basic package except for the HBO Poland service, a Polish-language
premium movie channel owned in part by Home Box Office and, since September 18,
1999, Wizja Sport, a Polish-language premium sport channel.

    INTERMEDIATE PACKAGE.  The intermediate package includes approximately 17 to
24 channels. This package is offered for monthly fees equal to approximately
one-half of the amount charged for the basic package. The intermediate package
is designed to compete with small cable operators on a basis of price, using a
limited programming offering. The Company's intermediate package offerings vary
by location.

    BROADCAST PACKAGE.  The broadcast package includes 6 to 12 broadcast
channels with clear reception for monthly fees, which are substantially less
than the amounts charged for the intermediate package.

    PREMIUM AND OTHER SERVICES.  For an additional monthly charge, certain of
the Company's cable networks currently offer two premium television
services--the HBO Poland service (a Polish-language premium movie channel owned
in part by Home Box Office) and, since September 18, 1999, Wizja Sport, a
Polish-language premium sport channel. The Company plans to create additional
pay-per-view channels that will also be offered to cable customers for an
additional charge.

    Other optional services include additional outlets and stereo service, which
enables a subscriber to receive 12 or more radio channels in stereo. Cable
television subscribers who require the use of a tuner to receive certain of the
Company's cable services are charged an additional fee of approximately $1.10
per month. Installation fees vary according to the type of connection required
by a cable television subscriber. The standard initial installation fee is
approximately $21 for buildings with multiple apartments and approximately $42
for single family dwellings, but such fees may be subject to reductions as a
result of promotional campaigns.

    PRICING STRATEGY.  Prior to December 1996, the Company's cable television
pricing strategy was designed to keep its profit margin relatively constant in
U.S. dollar terms in more mature systems and to increase rates in more recently
acquired or rebuilt systems. The Company has historically experienced annual
churn rates of less than 10%, and has been able to pass on the effects of
inflation through price increases. For the year ended December 31, 1999, the
churn rate was 21.5%, though it would have been 18.5% had the Company not
decided to reclassify another 20,556 subscribers to the intermediate tier. This
pricing strategy commenced in January 1997 and is designed to increase revenue
per subscriber and to achieve real profit margin increases in U.S. dollar terms.
The Company expects that it will continue to

                                       7
<PAGE>
experience churn rates above historical levels during the implementation of its
current pricing strategy. The Company expects to offer promotional incentives in
certain areas of the country from time to time in connection with its marketing.

    Cable television subscribers are billed monthly in advance and, as is
customary in Poland, most of the Company's customers pay their bills through
their local post office or bank. The Company has strict enforcement policies to
encourage timely payment. Such policies include notices of late payment, visits
from service personnel, and ultimately, disconnection for nonpaying customers
60 days after a bill becomes past due. The Company's system architecture in most
networks enables it to promptly shut off service to nonpaying customers and is
designed to reduce non-authorized use of its cable systems. The Company's bad
debts expense has historically averaged approximately 2.7% of revenue.

TECHNOLOGY AND INFRASTRUCTURE

    The Company believes the fiber-optic cable television networks that it has
constructed, which serve approximately 692,000 of its subscribers, are among the
most technologically advanced in Poland and are comparable to modern cable
television networks in the U.S. All of the Company's networks that have been
constructed by the Company have bandwidths of at least 550 MHz. New portions of
the networks, which are currently being constructed, are being designed to have
minimum bandwidths of 860 MHz. The Company's goal is to upgrade any portions of
its cable television networks that have bandwidths below 550 MHz (generally
acquired from other entities) to at least 860 MHz in an effort to reduce the
number of satellite receivers and parts inventory required in the networks by
the end of 2000. The Company uses fiber-optic and coaxial cables, electronic
components and connectors supplied by leading Western firms in its cable
television networks.

    The Company has been able to avoid constructing its own underground conduits
in certain areas by entering into a series of agreements with regional and local
branches of the Polish national telephone company (known in the Polish
telecommunications industry as "TPSA") which permit the Company to use TPSA's
conduit infrastructure for an indefinite period of time or for fixed periods up
to 20 years. The Company also has agreements to undertake joint construction
with another company for new conduits in certain areas. These agreements
represent a major advantage to the Company since they permit the Company to
minimize the costly and time-consuming process of building new conduit
infrastructure where TPSA conduit infrastructure exists and provide for joint
construction with TPSA and other utilities of conduit infrastructure where none
currently exists. As of December 31, 1999, approximately 81% of the Company's
cable television plant had been constructed utilizing pre-existing conduits of
TPSA. A substantial portion of the Company's contracts with TPSA allows for
termination by TPSA without penalty at any time either immediately upon the
occurrence of certain conditions or upon provision of three to six months'
notice without cause.

    Generally speaking, TPSA may terminate a conduit agreement immediately (and
without penalty) if:

    - the Company does not have a valid permit from the Polish State Agency of
      Radio Communications authorizing the construction and operation of a cable
      television network in a specified geographic area covering the subscribers
      to which the conduit delivers the signal;

    - the Company's cable network serviced by the conduit does not meet the
      technical specifications required by the Polish Communications Act of
      1990;

    - the Company does not have a contract with the cooperative authority
      allowing for the installation of the cable network; or

    - the Company does not pay the rent required under the conduit agreement.

    As of December 31, 1999, TPSA was legally entitled to terminate conduit
agreements covering approximately less than 1% of the Company's subscribers as a
result of the Company's failure to comply

                                       8
<PAGE>
with certain terms of its conduit agreements with TPSA. Any termination by TPSA
of such contracts could result in the Company losing its permits, the
termination of agreements with co-op authorities and programmers, and in
inability to service customer with respect to areas where its networks utilize
the conduits that were the subject of such TPSA contracts.

    In addition, some conduit agreements with TPSA provide that cables can be
installed in the conduit only for the use of cable television. If the Company
uses the cables for a purpose other than cable television, such as data
transmission, telephone, or Internet access, such use could be considered a
violation of the terms of certain conduit agreements, unless this use is
expressly authorized by TPSA. There is no guarantee that TPSA would give its
approval to permit other uses of the conduits.

D-DTH

    The Company has expanded its distribution capacity with the launch of its
D-DTH broadcasting service for Poland. The programming provided is Wizja TV. The
Company's multi-channel Polish-language D-DTH service, which was the first D-DTH
service available in Poland, is being broadcast to Poland from its transmission
facilities in Maidstone, U.K. As of December 31, 1999, the Company distributed
to Philips' authorized retailers approximately 294,000 D-DTH packages. As of
December 31, 1999, the Company had sold and installed approximately 254,000 of
these packages to consumers. However, due to technical problems that Philips had
with a component of the decoder, the Company faced a backlog in decoder
deliveries in the fourth quarter of 1999 of approximately 48,000 decoders, all
of which the Company believes would have been sold if the Company had received
those decoders.

SERVICES AND FEES

    The Company began broadcasting to Poland from its transmission facilities in
Maidstone, U.K. and retransmitting Wizja TV across its cable networks on
June 5, 1998, and on its D-DTH system on a limited basis on July 1, 1998, and on
a full-scale basis on September 18, 1998.

    The Company expects to be able to offer event pay per view service to its
D-DTH subscribers by late 2000. The Company also expects to offer certain
recently released feature films and sports and other live events on such a
service.

    The Company currently charges its D-DTH subscribers a monthly fee of
approximately $12 for all channels (other than any premium channels).
Subscribers to the Company's premium channels pay $5 per month for the HBO
Poland service and Wizja Sport.

TECHNOLOGY AND INFRASTRUCTURE

    The Company's D-DTH service is encoded, processed, compressed, encrypted,
multiplexed (i.e., combined with other channels), modulated (i.e., applied to
the designated carrier frequency for transmission to satellite) and broadcast
from Maidstone, U.K. to Astra satellites in geosynchronous orbits ("uplinked").
The satellites receive, convert and amplify the digital signals and retransmit
them to earth in a manner that allows individual subscribers to receive and be
billed for the particular program services to which they subscribe.

    TRANSMISSION AND UPLINK FACILITIES.  The channels available on the Company's
D-DTH service include the Company's own proprietary channels and channels from
third parties originating from a number of sources in Poland, the U.K. and
elsewhere. Most of the tailoring of programs for the local market
("localization") to be undertaken by the Company, which will principally consist
of adding voice or dubbing into Polish for the Company's proprietary channels on
Wizja TV, will occur in Poland. For most of the channels on Wizja TV,
localization, editorial control and program packaging will be the responsibility
and at the cost of the channel supplier. The channels provided by third parties
will be delivered in tape

                                       9
<PAGE>
format, through a landline or will be backhauled (i.e., transmitted via
satellite or other medium) to the Company's transmission facility in Maidstone
for broadcasting to Poland.

    The Company has a 5-year contract with British Telecommunications plc ("BT")
for the provision and maintenance of uplink equipment at Maidstone. Other than
the BT uplink equipment, the Company owns all the required broadcasting
equipment at its facility in Maidstone. The Company's programming is currently
transmitted to the Company's transponders on Astra satellites 1E and 1F.

    The Company's D-DTH signal is beamed by these satellites back to earth and
may be received in Poland by those who have the appropriate dedicated satellite
reception equipment and who have been connected by the Company to its D-DTH
service as subscribers. The signal is currently received by the Company's own
cable networks, and will also be received by the cable networks of other cable
operators, if any, having distribution agreements with the Company. Once the
D-DTH signal has been received at the cable networks, the signal is transmitted
by cable to those who have been connected by the Company to its cable service as
subscribers or connected by such other cable operators, if any, to their own
cable systems.

    Philips provides the following critical components and services used in the
Company's D-DTH satellite transmission system and is the primary point of
contact for subscribers to the Company's D-DTH service:

    - the Philips' digital integrated receiver decoders;

    - a smartcard-based proprietary conditional access system which uses Philips
      CryptoWorks-Registered Trademark- technology;

    - a satellite receiving dish and related equipment;

    - installation; and

    - support services.

    The Company's agreement with Philips provides for the following:

    - Philips will be the exclusive supplier of the first 500,000 D-DTH
      reception systems in connection with the launch of the Company's D-DTH
      business in Poland.

    - Philips has granted the Company an exclusive license of its
      CryptoWorks-Registered Trademark- technology in Poland for the term of the
      agreement, which will terminate when the Company has purchased 500,000
      D-DTH reception systems from Philips, unless terminated earlier in
      accordance with the terms of the agreement or extended by mutual consent
      of Philips and the Company.

    - Philips will not be able to distribute any other IRDs under the Philips'
      trademark in Poland until December 31, 1999 or any earlier date on which
      the Company has secured 500,000 initial subscribers to its D-DTH service
      in Poland. After such period the Company may license one or two suppliers
      of IRDs in addition to Philips and Philips shall license its
      CryptoWorks-Registered Trademark- technology to such additional suppliers
      for the Polish market. However, there can be no assurance that the Company
      will be able to secure such additional suppliers, if necessary.

    Any new D-DTH broadcaster wishing to commence the operation of an encrypted
pay television service within Poland would need to obtain a license from Philips
to use CryptoWorks-Registered Trademark- (after the exclusive license of
CryptoWorks-Registered Trademark- for Poland granted to the Company ends), or
acquire an alternative encryption and conditional access technology and build
its own decoder base capable of receiving transmissions encrypted using such
technology. If a competitor obtained a license from Philips, it could contract
with the Company for access to the installed encryption decoder base utilized by
the Company.

    Transmissions using conditional access technology are encrypted prior to
being transmitted to satellites. The signal from the satellite is received by a
subscriber through an antenna and integrated receiver decoder, and is decrypted
via a smartcard inserted into a decoder, which is usually integrated with a

                                       10
<PAGE>
receiver into the integrated receiver decoder and connected to a viewer's
television set. A smartcard is a plastic card, usually the size of a credit
card, carrying an embedded computer chip that implements the secure management
and delivery of decryption keys necessary to descramble pay television channels
and thereby enable and disable viewing according to whether the subscriber is
authorized to receive a particular service. The smartcard receives instructions
as to whether to enable, disable, upgrade or downgrade a subscriber's level of
service via the datastream sent to the decoder within the broadcast signal. The
encryption codes contained in the smartcards can be updated via over-the-air
addressing or physically replaced.

    The delivery of subscription programming requires the use of encryption
technology to prevent signal theft or "piracy." Although the Company expects its
conditional access system, subscriber management system and smartcard system to
adequately prevent unauthorized access to programming, there can be no assurance
that the encryption technology to be utilized in connection with the Company's
D-DTH system will remain effective.

    The Company believes that the Astra satellites,
CryptoWorks-Registered Trademark- encryption technology and the integrated
receiver decoder together constitute a reliable, end-to-end cost-effective D-DTH
system. However, certain other large European providers of D-DTH services have
selected different satellites, encryption technology and decoders.

    SATELLITES.  The Company currently broadcasts and expects to broadcast all
of its proprietary programming and that of most of third party programmers from
its transmission facility in the U.K. by cable to an earth station transmitting
antenna, located at its Maidstone site. The uplink facility transmits the
Company's programming signal via a transponder on an orbiting satellite
transponder to the cable system receiving antennae and also to D-DTH
subscribers' reception equipment throughout Poland. The Company has been
studying and discussing with relevant Polish authorities the feasibility of
locating its uplink and production facilities in Poland and applying for Polish
broadcasting licenses necessary to engage in such activities.

    In March 1997, the Company entered into contracts with Societe Europeenne
des Satellites S.A. ("SES") for the lease of three transponders on two
satellites, Astra 1E and 1F. The leases for the one transponder on the Astra 1E
satellite and two transponders on the Astra 1F satellite will expire in 2007.
All three transponders are currently operational and available to the Company.
Aggregate charges for each transponder are capped at $6.75 million per year for
each transponder and approximately $162.0 million for all three transponders for
the remaining term of the contracts remaining after December 31, 1999. The
Company's transponder leases provide that the Company's rights are subject to
termination in the event that SES's franchise is withdrawn by the Luxembourg
Government.

    The Company has been designated a "non-pre-emptible customer" under each of
its relevant transponder leases. As a result, in the event of satellite or
transponder malfunction, the Company's use of its transponders cannot be
suspended or terminated by a broadcaster which has pre-emption rights permitting
it to gain access to additional transponders in preference to certain other
Astra customers. The Company does not, however, have the right to pre-empt other
customers if its transponders stop working. A "protected customer" has
pre-emption rights if its transponders stop working and its service would be
moved on to the transponder carrying a pre-emptible customer's service.

PROGRAMMING

    The Company believes that there is unsatisfied demand in the Polish market
for high-quality Polish-language programming and that the quality and variety of
Polish-language programming offered is a critical factor in building and
maintaining successful multi-channel pay television systems in Poland. The
principal programming objective of the Company is to develop and acquire
high-quality Polish-language programming that can be commercially exploited
throughout Poland through D-DTH and cable television exhibition and advertising
sales. The Company intends to use Wizja TV to increase the penetration rate for

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its cable television networks and its D-DTH system and to increase per
subscriber revenue from its cable systems. The Company also expects to
distribute Wizja TV on a wholesale basis to other cable operators in Poland.

WIZJA TV PROGRAMMING PACKAGE

    Sport events were initially carried on Wizja Jeden or Twoja Wizja, and they
have been carried on Wizja Sport since its launch on September 18, 1999. Wizja
Sport provides approximately 10 hours of local and international sporting events
per day. The Company believes that Wizja Sport is the first channel in the
Polish market principally dedicated to Polish sports programming. The Company's
ability to broadcast certain of these sporting events on an exclusive basis may
be limited by pending regulatory changes.

    Several of the sports rights contracts give the Company the ability to
obtain additional seasons of those sports events, either by way of a right of
first refusal or a right of first offer. Most of the sports rights agreements
grant the Company exclusive rights to broadcast the sports events live in
Poland. The exclusivity in some cases is subject to the ability of the rights
owner to grant limited rights to other broadcasters to show the events on a
delayed or highlights basis. The Company is currently in negotiations with other
sports rights holders to purchase the rights to additional local and
international sports events.

    The Company has purchased exclusive rights from third parties for
programming on 9 of the current 24 channels on Wizja TV. In some of the
agreements, however, the channel supplier may terminate the agreement and/or
eliminate the exclusivity rights if the Company does not achieve specified
milestones for subscriber numbers by certain specified dates. In addition, most
of the agreements impose certain restrictions on the tiering of the particular
channel, which will limit the flexibility of the Company in determining program
tiering in the future, and also include provisions whereby the Company agrees to
indemnify the channel supplier against any claims, including claims made by
governmental authorities, resulting from the exclusive nature of the rights
granted or from the tiering restrictions. Some of the agreements require
payments based on a guaranteed minimum number of subscribers, and some require
payments at the time of execution. On December 31, 1999, the Company was
committed to pay approximately $214.0 million in guaranteed minimum payments
over the next seven years in respect of broadcasting and programming agreements,
of which approximately $55.6 million was committed through the end of 2000. In
addition, the Company is continuing to negotiate additional agreements with
channel and program suppliers and sports rights organizations, which agreements
if consummated may require the Company to pay additional guaranteed minimum
payments and/or payments at the time of execution. In most of the Company's
programming agreements, the channel supplier, at its own expense, must localize
its programming into the Polish language prior to the launch of Wizja TV. In
most of its programming agreements, the Company is required to make payments to
the channel supplier on a monthly basis based on the number of subscribers to
whom the programming is made available.

    In addition, some of the agreements impose certain limitations, including:

    - the channel must be received by 100% of subscribers to the Company's D-DTH
      service and by all "basic package" subscribers of the Company's cable
      system or by most of its cable subscribers;

    - the channel must be provided, under certain restricted circumstances, on a
      stand alone basis as well as part of a package of programming in certain
      situations;

    - the programming the Company may purchase for Wizja TV may be restricted;

    - distribution of other channels as part of the Company's programming
      package may be limited (consequently, the consummation of an agreement
      with one channel supplier has had, and will in the future continue to
      have, the effect of precluding the Company from entering into agreements
      with other potential channel suppliers);

                                       12
<PAGE>
    - suppliers of programming to a channel supplier may require the Company to
      assume the channel supplier's obligations to license the programming on
      financial terms which are more favorable to the program provider than
      those under the Company's existing agreement with the channel supplier;

    - The Company may be required to install encryption decoder-based technology
      in homes of cable subscribers receiving premium services; and

    - if the Company undertakes certain investments or enters into certain
      transactions, certain minimum guarantees payable under the agreement would
      increase and the Company would lose certain rights.

    The terms of the Company's agreements with third parties for programming on
Wizja TV range from 2 to 7 years.

PROPRIETARY PROGRAMMING

    Wizja TV contains four channels, Atomic TV, Wizja Jeden, Wizja Pogoda and
Wizja Sport, that are owned and operated by the Company. The Company intends to
create additional proprietary channels, to be added to the Wizja TV line-up. In
addition, the Company has established and intends to continue to establish
entities to engage in the production of programming either to be included on the
Company's proprietary channels, or to be licensed to the Company for
distribution as part of the Wizja TV line-up.

    In addition, the Company is developing Wizja Jeden as the primary channel
for entertainment. Wizja Pogoda as the weather channel, and Wizja Sport as the
sports channel for its programming platform. Wizja Jeden offers a wide range of
Polish-language programming, including full-length feature films, music,
lifestyle and childrens' programs, Wizja Sport offers a wide range of
international and Polish sports events.

    In November 1997, the Company purchased 50% of WPTS Sp. z o.o. ("Twoj
Styl"), a Polish company producing, among others, the leading Polish lifestyle
magazine. The Company outsourced the publishing of a TV guide for its
subscribers to Twoj Styl.

    In February 1998, the Company purchased, for approximately $500,000, an
option to buy a 50% plus one share interest in "Polonia" Sportowa S.A., a soccer
club in Poland. The purchase option expired in February 1999 and the Company has
no intention of extending this option.

    PREMIUM TELEVISION CHANNELS.  The Company has introduced its own premium
channel as well as premium channels supplied by third parties. On September 18,
1999 the Company introduced Wizja Sport as a premium channel. The Company has
also introduced a Polish-language version of premium movie channels to its cable
subscribers for an additional monthly fee. Currently, two premium movie channels
are available in Poland, Canal+ and the HBO Poland service. Both feature movies
and also carry, or will carry, live sports and other entertainment. The Company
has distributed Canal+ on a non-exclusive basis on some of its cable networks
since entering into a preliminary distribution agreement with Canal+ in
October 1995.

    The Company has signed agreements for the exclusive distribution on its
D-DTH system, and non-exclusive distribution across its cable networks, for the
HBO Poland service, a Polish-language premium movie channel owned in part by
Home Box Office. HBO currently has exclusive rights in Poland to movies from
Warner Bros., Columbia TriStar International Television and Buena Vista
International.

    The HBO Poland service was launched on the Company's cable network in
September 1996. The Company began distribution of the HBO Poland service in
Warsaw in April and in Gdansk and Krakow in May 1997, and rolled out this
service to most of the Company's remaining cable systems by the end of 1997. The
HBO Poland service was launched on the Company's D-DTH system in July 1998. The
Company has offered and continues to offer the HBO Poland service on a
promotional basis to D-DTH subscribers for a period of three months and offers
the HBO Poland service to its cable subscribers

                                       13
<PAGE>
through promotional campaigns. However, after this promotional period, the
Company charges approximately $5.29 per month for this service. Only a limited
number of subscribers continue the HBO Poland service past the expiration of the
promotional period.

    Wizja Sport was launched on the Company's D-DTH and Cable systems on
September 18, 1999.

    ADVERTISING

    In October 1998, the Company established At Media Sp. z o.o. in Poland a
wholly-owned subsidiary, to develop advertising opportunities for the Wizja TV
programming package. At Media, currently offers commercial airtime on 12 of the
Company's 24 channels on Wizja TV to major advertising agencies and advertisers
in the Polish market.

COMPETITION

    The multi-channel pay television industry in Poland has been, and is
expected to remain, highly competitive. The Company competes with other cable
television operators, as well as with companies employing numerous other methods
of delivering television signals to subscribers. The extent to which the
Company's multi-channel pay television services are competitive with alternative
delivery systems depends, in part, upon the Company's ability to provide a
greater variety of Polish-language programming at a more reasonable price than
the programming and prices available through alternative delivery systems.

    Pay television services also face competition from a variety of other
sources of news, information and entertainment such as newspapers, cinemas, live
sporting events, interactive computer programs and home video products such as
videocassette recorders. The extent of this type of competition depends upon,
among other things, the price, variety and quality of programming offered by pay
television services and the popularity of television itself.

    CABLE TELEVISION.  In the cable television industry, the Company believes
that competition for subscribers is primarily based on price, program offerings,
customer service, and quality and reliability of cable networks.

    Operators of small cable networks, which are active throughout Poland, pose
a competitive threat to the Company because they often incur lower capital
expenditures and operating costs and therefore have the ability to charge lower
fees to subscribers than does the Company. While these operators often do not
meet the technical standards for cable systems under Polish law, enforcement of
regulations governing technical standards has historically been poor. Regardless
of the enforcement of these laws and regulations, the Company expects that
operators of small cable networks will continue to remain a competitive force in
Poland.

    In addition, certain of the Company's competitors or their affiliates have
greater experience in the cable television industry and have significantly
greater resources (including financial resources and access to international
programming sources) than the Company. The largest competitors of the Company in
Poland include Elektrim S.A., which owns at least two cable systems (including
Aster City Cable Sp. z o.o.) and Multimedia Polska S.A., a Polish entity. In
addition, the Company understands that a number of cable operators in Poland
(led by Bresnan Communications) have formed, or are in the process of forming, a
consortium for the joint creation and production of Polish-language programming.

    The Company's cable television business also competes with companies
employing other methods of delivering television signals to the subscribers,
such as terrestrial broadcast television signals and A-DTH television services,
and with a multi-channel multi-point distribution system and D-DTH services
(including the Company's own D-DTH service).

    D-DTH.  The Company's D-DTH business will compete with traditional third
party cable systems, and terrestrial broadcast and analog direct-to-home
("A-DTH") services as well as other potential D-DTH

                                       14
<PAGE>
and MMDS services. TKP, which is partially owned by Canal+ S.A., currently
offers a single channel Polish-language pay television service (including
A-DTH). TKP, in conjunction with other Polish broadcasting entities such as
Polsat S.A. (a Polish private broadcaster), Telewizja Polska S.A. (the Polish
national public broadcaster), Polskie Media S.A. (a Polish regional broadcaster)
and Aster City Cable (a Warsaw-based cable television operator), launched a
multi-channel D-DTH service in Poland in November 1998 under the name Cyfra+.

    The Company cannot predict whether other European or Polish broadcasters,
such as BSkyB, Bertelsmann, Kirch or Polsat, will choose to enter the Polish
D-DTH market. Some of the Company's current and potential competitors, either
alone or in joint ventures with other competitors, have either launched or
announced plans to launch D-DTH systems for other European countries. Many of
the Company's current and potential competitors have significantly greater
financial, managerial and operational resources and more experience in the DTH
business than the Company.

    PROGRAMMING.  In the programming business, the Company competes with other
television companies, both free (broadcast) television and pay television
(including Canal + and HBO), for the acquisition of sports rights and most other
programming, including the rights to feature films and television series and the
right to participate in joint ventures with other creators of programming. The
Company also competes with other programming creators for the hiring of
personnel with creative and production talent for the development of
programming.

TRADEMARKS

    The Company, either itself or through its subsidiaries, has filed or is in
the process of filing for registration of its various trademarks. The PTK logo
was registered for use in connection with television and programming services in
July 1997. Trademark applications are pending in Poland for other variations of
PTK trademarks. Also, numerous trademark applications have been filed in Poland
for the various Wizja trademarks, including but not limited to Atomic TV, Wizja,
Wizja TV and Wizja Jeden logos. Additional applications for other Wizja
trademarks and related trademarks will be filed in Poland in the near future.

EMPLOYEES

    At December 31, 1999, the Company had approximately 1,257 permanent
full-time employees and approximately 47 part-time employees. In addition, as of
that date the Company employed approximately 35 salesmen who received both
commissions and a nominal salary, and from time to time the Company employs
additional salesmen on an as needed, commission only basis. The Company expects
that certain functions, such as satellite transmission and receiving and program
production, will be performed by employees of third parties pursuant to
medium-and long-term service agreements with the Company. In a division of one
of the Company's subsidiaries, a trade union, which has approximately 7 members,
was formed in mid-1999. The Company believes that its relations with its
employees are good.

                                       15
<PAGE>
                                   REGULATION

    The Company is subject to regulation in Poland, the U.K. and the European
Union

POLAND

GENERAL

    The operation of cable and digital satellite direct-to-home broadcasting
("D-DTH") television systems in Poland is regulated under the Polish
Communications Act of 1990 (the "Communications Act") and the Polish Radio and
Television Act of 1992 (the "Television Act"). These are regulated by:

    --The Polish Minister of Communications;

    --The Polish State Agency of Radio Communications ("PAR"); and

    --The Polish National Radio and Television Council (the "Council").

    Cable television operators in Poland are required to obtain permits from PAR
to install and operate cable television systems and must register certain
programming that they transmit over their networks with the Council.

    Neither the Minister of Communications nor PAR currently has the authority
to regulate the rates charged by operators of cable television and D-DTH
services. However, excessive rates could be challenged by the Polish
Anti-Monopoly Office should they be deemed to constitute monopolistic or other
anti-competitive practices. Cable television and D-DTH operators in Poland also
are subject to the Law on Copyright and Neighboring Rights of 1994 (the
"Copyright Act") which provides intellectual property rights protection to
authors and producers of programming. Under the terms of the Television Act,
broadcasters in Poland are regulated by, and must obtain a broadcasting license
from the Council.

    Poland is in the process of negotiating its membership in the EU. In
connection with this process, Poland has started to adjust its legal system to
EU requirements and currently is in the process of revising its
telecommunications, broadcasting and copyright regulation. Proposed legislation
regarding those regulations is currently being discussed in the Polish
Parliament.

    With one exception, all of the Wizja proprietary channels and all channels
on the Wizja platform are currently licensed in the United Kingdom by the
Independent Television Commission as satellite television services. As such,
they are then retransmitted under the European Convention on Transfrontier
Broadcasting to Poland and then distributed via cable and D-DTH in Poland. As
its regulatory regime develops, Poland may seek to regulate the reception of
D-DTH signals. Poland's regulatory environment is undergoing constant change.
The Company does not know how such change will impact its business.

COMMUNICATIONS ACT

    PERMITS.  The Communications Act and the required permits issued by PAR set
forth the terms and conditions for providing cable television services.

    If a cable operator breaches the terms of its permits or the provisions of
the Communications Act, or if such operator fails to acquire permits covering
areas serviced by its networks, PAR can impose penalties on such operator,
including:

    --fines;

    --the revocation of all permits covering the cable networks where such
breach occurred; and

    --the forfeiture of the cable operator's cable networks.

                                       16
<PAGE>
    In addition, the Communications Act provides that PAR may not grant a new
permit to, or renew an expiring permit held by, any applicant that has had, or
that is controlled by an entity that has had, a permit revoked within the
previous five years.

    The Company will be required to obtain additional permits from the Minister
of Communications to offer other telecommunications services such as internet
access or broadband transmission services.

    FOREIGN OWNERSHIP RESTRICTIONS.  The Communications Act provides that
permits may only be issued to and held by Polish citizens, or companies in which
foreign persons hold no more than 49% of the share capital, ownership interests
and voting rights. In addition, a majority of the management and supervisory
board of any cable television operator holding permits must be comprised of
Polish citizens residing in Poland. These restrictions do not apply to any
permits issued prior to July 7, 1995. If the Polish regulatory authorities were
to conclude that the Company's ownership or distribution structure is not in
compliance with Poland's regulatory restrictions on foreign ownership, the
Company could be forced to incur significant costs in order to bring its
ownership structure and distribution system into compliance with the applicable
regulations and the Company may be forced to dispose of its ownership interests
in various entities.

    THE COMPANY'S PERMITS AND NEW CORPORATE ORGANIZATIONAL STRUCTURE.  Prior to
the creation of PAR and the permit system, one of the Company's subsidiaries,
Polska Telewizja Kablowa S.A. ("PTK S.A."), received a license to operate cable
television systems in Warsaw, Krakow and the areas surrounding these cities
under the Polish Foreign Commercial Activity Act.

    To comply with the foreign ownership requirements discussed above in areas
that are not covered by the licenses currently held by PTK S.A., the Company is
in the process of creating a new entity, Polska Telewizja Kablowa Operator Sp. z
o.o. ("PTK Operator"), which will own and/or operate the Company's new or
existing cable networks whose permits are subject to the foreign ownership
restrictions discussed above. The Company's subsidiary will hold a 47% ownership
stake in PTK Operator while the remaining 53% will be held by a Polish entity.
PCI will, in turn, hold 49% of the Polish entity, and the remaining 51% interest
in the Polish entity is expected to be owned by a Polish company. The Company
believe that this ownership and operating structure complies with the
requirements of Polish law. PAR has granted permits to the Company and its
competitors, based on the lease of assets, for networks using an ownership and
operating structure substantially similar to the one described above.

    Specifically, subsidiaries of the Company have received approximately 106
permits from PAR, covering approximately 674,200 of the Company's approximately
732,000 basic subscribers at December 31, 1999, including approximately 11,700
subscribers for whom the Company's permits are deemed extended under Polish law
pending PAR's response to the Company's permit renewal applications. However,
certain subsidiaries of the Company do not have valid permits covering certain
of the areas in which it operates cable networks. Of the approximately 64,200
basic subscribers at December 31, 1999 located in areas for which subsidiaries
of the Company do not currently have valid permits, approximately 78% are
located in areas serviced by recently acquired or constructed cable networks for
which permit applications cannot be made until all permit requirements are
satisfied (including obtaining agreements with cooperative authorities and the
upgrade of the acquired network to meet technical standards where necessary and
satisfying foreign ownership limitations), and approximately 22% are located in
areas serviced by networks for which subsidiaries of the Company have permit
applications pending. These subsidiaries of the Company have 9 permit
applications pending. There can be no assurance that PAR will issue any or all
of the Permits for which such subsidiaries have applied.

    The Company may be subject to penalties if PAR or other Polish regulatory
authorities determine that all or part of the Company's ownership and operating
structure violates Polish regulatory restrictions on foreign ownership. The
Company would also be subject to penalties if PAR chooses to take action against
it for operating cable television networks in areas not covered by valid
permits.

                                       17
<PAGE>
    Any such actions by PAR or other Polish regulatory authorities would have a
material adverse effect on the Company's business, financial condition and
results of operations.

TELEVISION ACT

    THE POLISH NATIONAL RADIO AND TELEVISION COUNCIL.  The Council, an
independent agency of the Polish government, was created under the Television
Act to regulate broadcasting in Poland. The Council has regulatory authority
over both the programming that cable television operators transmit over their
networks and the broadcasting operations of broadcasters.

    REGISTRATION OF PROGRAMMING.  Under the Television Act, cable television
operators must register each channel and the programming, which will be aired on
that channel with the Chairman of the Council prior to transmission. The
Company's subsidiaries have registered most of the programming that they
transmit on their cable networks, except programming transmitted on networks for
which they do not have permits. The Chairman of the Council may revoke the
registration of any of the Company's programming, or may not register all
additional programming that the Company desires to transmit over the Company's
networks. In addition, the Council may take action regarding unregistered
programming that the Company transmits over cable networks for which the Company
does not yet have PAR permits. This pertains to areas for which permit
applications cannot be made until all permit requirements are satisfied
(including obtaining agreements with the cooperative authorities, upgrading of
the acquired networks to meet technical standards where necessary and satisfying
foreign ownership limitations). Such actions could include the levying of
monetary fines against the Company, and the seizure of equipment involved in
transmitting such unregistered programming as well as criminal sanctions against
the Company's subsidiaries' management. These actions could have a material
adverse effect on the Company's business, financial condition and results of
operations.

    RESTRICTIONS ON FOREIGN OWNERSHIP OF POLISH BROADCASTERS.  The Television
Act provides that programming may be broadcast in Poland only by Polish entities
in which foreign persons hold no more than 33% of the share capital, ownership
interest and voting rights. In addition, the Television Act provides that the
majority of the management and supervisory boards of any company holding a
broadcasting license must be comprised of Polish citizens residing in Poland.
Companies that engage in broadcasting in Poland are required to obtain a
broadcasting license from the Chairman of the Council under the Television Act.
The Council may revoke a broadcasting license for, among other things:

    --violations of the Television Act;

    --violations of the terms of the broadcasting license; or

    --violations of restrictions on foreign ownership of broadcasters.

REQUIREMENTS CONCERNING PROGRAMS BROADCAST FROM OUTSIDE OF POLAND.

    The Television Act does not include regulations directly applicable to the
broadcasting of programs being broadcast from abroad and received in Poland.
Specifically, there are no regulations in force concerning satellite
broadcasting of a program directed to a Polish audience if the transmission to
the satellite for the broadcasting of such program is made by a foreign
broadcaster from outside of Poland. The Company believes that the Television Act
does not apply to such broadcasting and that such activity is not subject to
Polish broadcasting requirements. A subsidiary of Canal + has filed suit against
HBO Polska Sp. z o.o. and certain Polish cable operators (including the
Company's subsidiaries) alleging violations of the Television Act in connections
with HBO's broadcasting activity from outside of Poland.

    The Company has established and intends to continue to establish entities to
engage in the development and production of Polish-language thematic television
programming outside of Poland. While all of the content and programs which the
Company distributes across its cable networks and its D-DTH system are
distributed via satellite systems which are located outside of Poland, much of
the programming is

                                       18
<PAGE>
produced or assembled entirely in Poland. The Company believes that the
ownership structure of its entities, as well as its operating strategy, are not
subject to Poland's regulatory restrictions on foreign ownership, licensing
requirements, restrictions and regulations on the operation of cable networks
and the broadcasting of programming.

    If the Polish regulatory authorities determine otherwise, the Company would
be required to:

    --secure additional licenses from the Chairman of the Council and permits
from PAR;

    --modify the nature and content of its programming;

    --pay fines or other penalties for lack of compliance with these
regulations; and

    --comply with Polish regulations governing ownership structure and the
production and transmission of programming across a D-DTH system.

COPYRIGHT PROTECTION

    Television operators, including cable and D-DTH operators, in Poland are
subject to the provisions of the Polish Copyright Act, which governs the
enforcement of intellectual property rights. In general, the holder of a Polish
copyright for a program transmitted over the cable networks of a cable
television operator or the system of a D-DTH operator has a right to receive
compensation from such operator or to prevent transmission of the program.

    The rights of Polish copyright holders are generally enforced by
organizations for collective copyright administration and protection such as
Zwiazek Autorow i Kompozytorow Scenicznych ("ZAIKS") and Zwiazek Artystow Scen
Polskich ("ZASP"), and can also be enforced by the holders themselves. Most of
the Company's cable subsidiaries operate under a contract with ZASP and all of
its cable subsidiaries operate under a contract with ZAIKS. A violation of the
Copyright Act by a cable television operator also constitutes a violation of the
Communications Act and of the operator's permits. See "--Television Act" for a
discussion of the penalties and consequences associated with violations of the
Television Act and "--Communications Act" for a discussion of the penalties and
consequences associated with violations of the Communications Act and of a
television operator's permits. In addition, currently proposed legislation
regarding copyrights may increase the rights of organizations for collective
administration of copyrights. Adoption of the amendments in the proposed version
could potentially lead to a significant increase of fees to be paid by
broadcaster to authors and performers.

    The Company is currently negotiating with several copyright collecting
societies in both the United Kingdom and Poland in relation to obtaining
appropriate copyright licenses for the Wizja owned channels.

ANTI-MONOPOLY ACT

    EXCLUSIVE PROGRAMMING AGREEMENTS.  Many of the programming agreements that
the Company has entered into for its cable networks and its D-DTH service
contain exclusivity clauses which restrict or prohibit the provider of such
programming from providing such programming to other cable or D-DTH operators.
Although such exclusivity clauses are not specifically prohibited under the
Anti-Monopoly Act, such agreements may be found unlawful, and therefore
unenforceable, if they restrict or hinder competition or otherwise involve the
abuse of a dominant position. A decision by the Anti-Monopoly Office to deem one
or more of these programming agreements as void due to the fact that it contains
an illegal exclusivity clause could have a material adverse effect on the
Company's business and financial results in that such a decision would
potentially reduce the commercial value of these contracts and could reduce the
consumer of appeal of the programming offered on the Company's cable networks
and its D-DTH system.

                                       19
<PAGE>
    MARKET DOMINANCE. Companies that obtain control of 40% or more of the
relevant market and do not encounter significant competition may be deemed to
have market dominance, and therefore face greater scrutiny from the
Anti-Monopoly Office.

    From time to time, the Company receives inquiries from and are subject to
review by various divisions of the Anti-Monopoly Office.

    RECENT ANTI-MONOPOLY OFFICE FINDINGS WITH RESPECT TO THE COMPANY AND ITS
SUBSIDIARIES. In mid 1998, the Anti-Monopoly Office issued a decision that PCI,
the Company's major cable operating subsidiary, had achieved a dominant position
and abused that dominant position in one of the areas in which it operates by
moving certain satellite channels to a different frequency. A number of PCI's
subscribers, whose television sets are not equipped to receive the new
frequency, received several different channels to replace the channels which had
been moved. The Company appealed both the finding of dominance and the finding
that PCI acted improperly by moving certain channels to the new frequency. In
late 1998, the Anti-Monopoly Court modified the Anti-Monopoly Office's decision
by ruling that PCI had abused its dominant position by moving certain channels
to the new frequency without termination of its agreements with subscribers
whose television sets are not equipped to receive the new frequency. The
Anti-Monopoly Court did not impose a fine on the Company or its subsidiaries.
The Company estimates that less than 1% of its subscribers in the area under
review have such television sets and would be affected by the ruling if, in the
future, the Company finds it necessary for technical reasons to move channels to
another frequency. The Company is appealing both the finding of dominance and
the finding that the Company must terminate some of its agreements with certain
subscribers before moving channels to another frequency.

    In another market, the Anti-Monopoly Office recently issued a decision that
PCI had achieved a dominant position and abused that dominant position by:
(1) failing to create a uniform system for customer complaints, (2) increasing
rates without providing subscribers a detailed basis for the price increases,
and (3) changing the programming line-up without sufficient notice to
subscribers. The Anti-Monopoly Office did not impose a fine in connection with
its decision. The Company appealed both the finding of dominance and the finding
that it acted improperly in its relations with subscribers. In a recent
decision, the Anti-Monopoly Court agreed with the Company's position and
overturned the Anti-Monopoly Office's decision. The Anti-Monopoly Office is
appealing the Anti-Monopoly Court's decision.

    In another market, the Anti-monopoly Office recently issued a decision that
PCI had achieved a dominant position and abused that dominant position by
issuing an offer for the extended basic package in a certain form. The
Anti-Monopoly Office imposed a fine of 26,700 zloty (the equivalent of $6,436).
The Company is appealing both the finding of dominance and finding that the form
of its offer to subscribers was improper. The case is suspended pending the
outcome of the Polish Supreme Court's ruling on the Anti-Monopoly Office's
appeal in another case.

    In another market, the Anti-Monopoly issued a decision that PCI had achieved
a dominant position and abused that dominant position by: increasing rates
without providing subscribers a detailed basis for the price increases; and
changing the programming offer. The Anti-Monopoly Office imposed a fine of
50,000 zloty (the equivalent of $12,053). The Company is appealing both the
finding of dominance and the finding that it acted improperly in its relations
with subscribers.

UNITED KINGDOM

BROADCASTING REGULATION

    Most of the channels in the Company's D-DTH service are regulated by U.K.
authorities (primarily the Independent Television Commission) as satellite
television services ("STS"). Under the U.K. Broadcasting Act 1990 (the
"Broadcasting Act"), satellite broadcasters established in the U.K. are required
to obtain an STS license. Wizja TV Limited has received an STS license for
Atomic TV, Wizja 1, Twoja Wizja, Wizja Sport, and Wizja Pogoda. For most of the
other channels on Wizja TV, the relevant channel supplier

                                       20
<PAGE>
is required to obtain an STS license from the Independent Television Commission.
The Independent Television Commission has wide discretion to vary the conditions
of licenses issued under the Broadcasting Act or amend its codes (including
codes on electronic programming guides, advertising sponsorship and content) to
which U.K.-licensed broadcasters are subject. Under the terms of its Astra
transponder agreements, the Company cannot carry programming if the channel
supplier does not have a valid broadcast license for that programming. An STS
license is issued for an initial period of 10 years but can be renewed.

    The Broadcasting Act classifies some persons as "disqualified persons" who
are not permitted to hold STS licenses, including (A) any bodies whose objects
are wholly or mainly of a political or religious nature and advertising
agencies, or (B) any person owned by more than 5% by a disqualified person or
otherwise associated with a disqualified person in any manner specified in the
relevant provisions of the Broadcasting Act. There are no foreign ownership
restrictions which apply to STS licensees. If any person with an interest in
excess of 5% of the Company's issued capital stock is or becomes a disqualified
person or is or becomes associated with such a disqualified person, or if the
Company or any person with an interest in the Company's capital stock does or
were to fall within the scope of the restriction, then the Company may not be
entitled to hold STS licenses.

    In issuing STS licenses, the Independent Television Commission follows the
"establishment" test set out in the EU's Television Without Frontiers Directive
which provides that each (European Union "EU") broadcaster should be regulated
primarily by the authorities in the member state of the EU where that
broadcaster is established, without regard to the country or countries within
the EU in which its transmits signal is received. Meanwhile, the 1989 European
Convention on Transfrontier Television currently provides that the country in
which a broadcaster transmits its programming to a satellite (or the country
which grants the broadcast frequency or satellite capacity) has jurisdiction
over that broadcaster. However, the 1989 European Convention on Transfrontier
Television was recently amended and if this amendment is implemented, the 1989
European Convention on Transfrontier Television would conform to the
"establishment" test and authorities in a receiving state should have less right
to seek to regulate a broadcaster whose services are intended to be received in
that state. In the event of inconsistency between the Television Without
Frontiers Directive and the 1989 European Convention of Transfrontier
Television, the provisions of the directive apply in member states of the EU
(e.g. the U.K.).

REGULATION OF COMPETITION

    In the U.K., the Competition Act 1998 ("CA 1998") came into force on
March 1, 2000 and repeals the Respective Trade Practices Acts 1976 and 1977, the
Resale Prices Act 1976 and certain parts of the Competition Act 1980. It
introduces into U.K. law a system of controls based on EC competition law. Anti-
competitive agreements and conduct amounting to the abuse of a dominant position
are prohibited (closely following Articles 81 and 82).

    The CA 1998 provides the Director General of Fair Trading ("DGFT") with
enhanced powers to investigate potential anti-competitive agreements and
conduct, including the power to require the production of any document or other
information which the DGFT considers relevant to the investigation and wide
powers of entry and search. The DGFT can impose fines for the infringement of
the CA of up to 10 per cent of U.K. turnover per annum for each year of
infringement, up to a maximum of three years. Competition rulings made by the
DGFT are subject to appeal to the Competition Commission and Restrictive
Practices Court. Wizja TV Limited is not involved in any current proceedings
relating to competition law before the U.K. courts nor are any investigations
which involve the Company underway before any authority exercising powers under
the CA 1998. For a more detailed description of Articles 81 and 82, see the
discussion in "--European Union--Regulation of Competition".

                                       21
<PAGE>
EUROPEAN UNION

BROADCASTING REGULATION

    TELEVISION WITHOUT FRONTIERS DIRECTIVE.  The Television Without Frontiers
Directive sets forth the following basic principles for the regulation of
broadcasting activity in the EU:

    --Each EU broadcasting service should be regulated by the authorities of one
member state (the "home member state") and some minimum standards should be
required by each member state of all broadcasting services which that state's
authorities regulate. (The U.K., which is regarded as the Company's "home member
state" for the purposes of its D-DTH services because Wizja TV Limited is
established in the U.K. and is the licensed broadcaster of its proprietary
channels, has adopted a variety of statutory and administrative measures based
on the Directive to give effect to the requirements of the Directive.)

    --Each member state is required to ensure "where practicable and by
appropriate means" that broadcasters reserve "a majority proportion of their
transmission time" for European works (excluding time covering news, sports
events, games, advertising, teleshopping and teletext services). The Directive
does not define the term "where practicable and by appropriate means" and its
precise ambit is unclear.

    --Each member states is required to ensure "where practicable and by
appropriate means" that broadcasters reserve at least 10% of their transmission
time (excluding time covering news, sports events, games, advertising,
teleshopping and teletext services) or, at the option of the member state, 10%
of their programming budget, for European works created by producers who are
independent of broadcasters. An adequate proportion of the relevant works should
be recent works. (Polish-language programming the Company produces or
commissions will be counted for the purposes of determining whether any service
broadcast by the Company complies with these quotas.)

    --There are restrictions on advertising including restrictions on the timing
of commercial breaks, restrictions on the content of advertising, limitations or
prohibitions on tobacco, non-prescription drug and alcohol advertising and
restrictions limiting commercials to a maximum of 20% of transmission time per
hour, subject to an overall limit of 15% per day.

    --There are restrictions on the content of programs to the extent necessary
(A) to protect minors and (B) to prevent the incitement of hatred on he grounds
of race, sex, religion or nationality.

    1989 EUROPEAN CONVENTION ON TRANSFRONTIER TELEVISION.  The 1989 European
Convention on Transfrontier Television is the other primary source of European
regulation affecting television broadcasting in Europe. The 1989 European
Convention on Transfrontier Television contains provisions that are
substantially similar to the Television Without Frontiers Directive. The 1989
European Convention on Transfrontier Television is effective in those countries
which have ratified it. Both the U.K. and Poland have ratified the 1989 European
Convention on Transfrontier Television. The 1989 European Convention on
Transfrontier Television currently provides that the country in which a
broadcaster transmits its programming to the satellite (or, if this is not the
case, the country which grants the broadcast frequency or satellite capacity to
the broadcaster) has jurisdiction over that broadcaster.Neither the Television
Without Frontiers Directive nor the 1989 European Convention on Transfrontier
Television contains any requirements or restrictions regarding foreign ownership
of broadcasters.

    A change to the 1989 European Convention on Transfrontier Television was
agreed on September 9, 1998. This amendment will be effective if and when all
member states have signed the amendment or automatically on October 1, 2000,
unless a member state objects to such amendment coming into force. This
amendment, if it becomes effective, would have three significant effects:

    --First, it would bring the 1989 European Convention on Transfrontier
Television into conformity with the Television Without Frontiers Directive's
"establishment" test, providing that a broadcaster should

                                       22
<PAGE>
be regulated primarily by the authorities in the 1989 European Convention on
Transfrontier Television country in which the broadcaster is established.

    --Second, this amendment would provide that when a broadcaster engages in
conduct that constitutes an "abuse of rights", the broadcaster would become
subject to the laws of the country of reception. Under this amendment, an "abuse
of rights" would occur when a broadcaster's channel is wholly or principally
directed at a country, other than that where it is established, for the purpose
of evading the laws of that country in the areas covered by the 1989 European
Convention on Transfrontier Television. The Company believes that its
broadcasting into Poland from the U.K. would not constitute an "abuse of rights"
under this amendment because it has valid business reasons for broadcasting from
the U.K. and it has not established its broadcasting facilities in the U.K. in
order to evade Polish laws in the areas covered by the 1989 European Convention
on Transfrontier Television. An adverse decision on this issue, if this
amendment becomes effective and Poland decides to invoke it against the
Company's broadcasts emanating from the U.K. could prevent the Company from
broadcasting its programming package.

    --Third, this amendment would allow parties to the 1989 European Convention
on Transfrontier Television to designate that certain important events (e.g.,
major sporting events) cannot be broadcast exclusively by a single television
station so as to deprive a large proportion of the public of that 1989 European
Convention on Transfrontier Television country from seeing the event live or on
a deferred coverage basis on free (broadcast) television, and also to ensure
that broadcasters under the jurisdiction of one 1989 European Convention on
Transfrontier Television country cannot purchase exclusive rights to major
events specified by another 1989 European Convention on Transfrontier Television
country which would deprive a large proportion of the public in such member
countries of the 1989 European Convention on Transfrontier Television from
seeing the specified event on a live or deferred coverage basis on free
(broadcast) television. (If this amendment becomes effective and if it were
applied to the Polish pay television rights to certain sporting events purchased
on an exclusive basis by us, the Company may lose the right to broadcast such
events in Poland on an exclusive basis and may not be able to acquire the
exclusive Polish pay television rights to such events and to similar events in
the future.)

    The 1989 European Convention on Transfrontier Television provides that where
a broadcaster under the jurisdiction of one member country of the 1989 European
Convention on Transfrontier Television transmits advertisements which are
directed specifically at audiences in another member country of the 1989
European Convention on Transfrontier Television, such advertisements must comply
with the advertising rules of the receiving member state. This rule requires
that advertisements inserted in the channels the Company distributes comply with
both Polish advertising rules as well as the rules applicable in the
jurisdiction in which the broadcaster is licensed.

REGULATION OF COMPETITION

    EC competition law governs agreements which prevent, restrict or distort
competition and prohibits the abuse of dominant market positions through
Articles 81 and 82 of the EC Treaty.

    Article 81 (1) renders unlawful agreements and concerted practices which may
affect trade between member states and which have as their object or effect the
prevention, restriction or distortion of competition within the member states of
the European Community/European Economic Area. Article 81 (2) voids the
offending provision or the entire agreement, if the offending parts are not
severable. Article 81 (3) allows for exemption from the provisions of Articles
81 (1) and 81 (2) for agreements whose beneficial effects in improving
production or distribution or promoting technical or economic progress outweigh
their restrictive effects, provided that consumers receive a fair share of the
benefit, that competition will not be eliminated and that no unnecessary
restrictions are accepted. Such an exemption may only be granted by the European
Commission. Article 82 prohibits undertakings from abuse of a dominant market
position in the EC or a substantial part of it, in so far as the abuse may
affect trade between member states. A company may be dominant in several member
states or part of a single member

                                       23
<PAGE>
state. A company enjoys a dominant position whenever it possesses such market
strength that it can act to an appreciable extent independently of its
competitors and customers. Generally speaking, a market share of as little as
40% can raise concern that a firm may be dominant. However, dominance is not
unlawful per se; only the abuse of a dominant position is prohibited by
Article 82. Any action that is designed to, or could, seriously injure
competitors, suppliers, distributors, or consumers is likely to raise issues
under Article 82.

    The European Commission has the power to fine heavily (up to 10% of a
group's annual worldwide turnover) in relation to a breach of Article 81 or in
relation to abusive conduct under Article 82. Agreements or practice that breach
these provisions will be void and unenforceable in national courts and third
parties that suffer loss as a result of a breach of Article 81 or Article 82 can
sue for damages and/or seek injunctive relief. The Company does not believe that
any of its current agreements infringe Article 81(1) or Article 82 and therefore
does not intend to bring them to the attention of the European Commission. If
the European Commission were to find the agreements infringed Article 81(1) or
Article 82, the agreements would be void and unenforceable. The parties could
also be fined and liable to damages to third parties.

POLAND'S EU MEMBERSHIP APPLICATION

    In 1994 Poland made an official application for membership of the EU.
Negotiations on the terms of Poland's proposed admission to the EU commenced in
March 1998. Poland has announced 2003 as a target date for accession. If Poland
joins the EU, it would be required to implement and obey all of the laws and
regulations emanating from the European Commission, including the Television
Without Frontiers Directive and EC competition law in their then current
versions.

ITEM 2. PROPERTIES

    On December 31, 1999, the Company owned equipment used for its cable
television business, including 99 satellite receivers for cable networks, and
approximately 4,664 kilometres of cable plant. The Company has approximately 206
lease agreements for offices, storage spaces and land adjacent to the buildings.
The total area leased amounts to approximately 29,300 square meters (most of
which is land adjacent to buildings). The areas leased by the Company range from
approximately 11 square meters up to more than 2,660 square meters. The
agreements are for specified and unspecified periods of time and those for an
unspecified period may be terminated with relatively short notice periods by
either party, usually three months.

    The Company has entered into conduit leases with TPSA (the Polish national
telephone company) and, in certain cases, with other entities. The majority of
the TPSA leases require the Company to bear the costs of the maintenance of the
cable. The Company may not sublease the conduit or cables or allow a third party
to use the conduits or cables free of charge without TPSA's consent. The rental
charge for the conduit is usually determined on each 100 meters of conduit
occupied. The agreements also contain indexation clauses for rent adjustment
purposes (based on the change of U.S. dollar exchange rates or on the increase
of real maintenance costs). A substantial portion of the Company's contracts
with TPSA for the use of such conduits permit termination by TPSA without
penalty at any time either immediately upon the occurrence of certain conditions
or upon provision of three to six months' notice without cause. Any termination
by TPSA of such contracts could result in the Company losing its permits, the
termination of agreements with cooperative authorities and programmers, and an
inability to service customers with respect to the areas where its networks
utilize the conduits that were the subject of such TPSA contracts. For a list of
the reasons for which TPSA can terminate a conduit agreement, the proportion of
the Company's cable subscribers serviced by conduits leases subject to immediate
termination and the consequences to the Company of the loss of those conduit
leases, see "Business--Cable Operations--Technology and Intrastructure."

                                       24
<PAGE>
    The Company believes that its existing owned properties, lease agreements
and conduit agreements are adequate for purposes of the Company's cable
television operations, although additional space and conduits will be needed in
the future if the Company acquires other cable television networks.

    In connection with the establishment of its D-DTH service and the
development of its programming business, the Company has leased office space and
premises providing satellite receiving (to receive programs from suppliers),
production, post-production and program packaging facilities. This space is in
aggregate approximately 6,500 square meters and is located in Maidstone, U.K.

    The Company believes that its existing owned properties, lease agreements
and conduit agreements are adequate for the Company's D-DTH and programming
operations, although additional space may be needed in the future for the
Company's programming production activities.

ITEM 3. LEGAL PROCEEDINGS

    The Company is involved in litigation from time to time in the ordinary
course of business. In management's opinion, the litigation in which the Company
is currently involved, individually and in the aggregate, is not material to the
Company's business financial condition or results of operations.

    Two of the Company's cable television subsidiaries, Telewizja Kablowa
Gosat-Service Sp. z o.o. and PTK S.A., and four unrelated Polish cable operators
and HBO Polska Sp. z o.o. ("HBO Polska") have been made defendants in a lawsuit
instituted by Polska Korporacja Telewizyjna Sp. z o.o., an indirect
partially-owned subsidiary of Canal+ S.A. The lawsuit was filed in the
Provincial Court in Warsaw, XX Economic Division (Sad Wojewodzki w Warszawie,
Wydzial XX Gospodarczy) (the "Court"). The main defendant in the proceedings is
HBO Polska which is accused of broadcasting HBO television programming in Poland
without a license from the Polish National Radio and Television Council as
required by the Polish Television Act and thereby undertaking an activity
constituting an act of unfair competition. The plaintiff has asked the Court to
order HBO Polska to cease broadcasting of its programming in Poland until it has
received a broadcasting license from the Polish National Radio and Television
Council, and that the defendant cable operators be ordered (i) to cease carrying
the HBO Polska programming on their cable networks in Poland until HBO Polska
has received a broadcasting license from the Polish National Radio and
Television Council, (ii) not to use their current filters for the purpose of
unscrambling the HBO Polska programming, and (iii) in the future, to use
effective encoding systems and systems of controlled access to the HBO Polska
programming. The Company does not believe that the lawsuit will have a material
adverse effect on its business operations.

    On April 17, 1998, the Company signed a binding letter of intent with
Telewizyna Korporacja Partycypacyjna ("TKP"), the parent company of Canal+
Polska, which provided for bringing together the Company's Wizja TV programming
platform and the Canal+ Polska premium pay television channel and for the joint
development and operation of a D-DTH service in Poland. The establishment of the
joint venture was subject to the execution of definitive agreements, regulatory
approvals and certain other closing conditions.

    The definitive agreements were not agreed and executed by the parties by the
date set forth in the letter of intent (the "Signature Date"). Therefore, the
Company terminated the letter of intent on June 1, 1998. TKP and its
shareholders have informed the Company that they believe the Company did not
have the right to terminate the letter of intent.

    Under the terms of the letter of intent, TKP is obligated to pay the Company
a $5 million break-up fee within 10 days of the Signature Date if the definitive
agreements were not executed by the Signature Date, unless the failure to obtain
such execution was caused by the Company's breach of any of its obligations
under the letter of intent. If there was any such breach by the Company, the
Company would be obligated to pay TKP $10 million. However, if any breach of the
letter of intent by TKP caused the definitive agreements not to be executed, TKP
would be obligated to pay the Company a total of

                                       25
<PAGE>
$10 million (including the $5 million break-up fee). In the event that TKP fails
to pay the Company any of the above-referenced amounts owed to the Company,
TKP's shareholders are responsible for the payment of such amounts.

    The Company has demanded monies from TKP as a result of the failure to
execute the definitive agreements by the Signature Date. While the Company was
waiting for the expiration of the 10-day period for payment of the break-up fee,
TKP initiated arbitration proceedings before a three member-arbitration panel in
Geneva, Switzerland. In their claim, TKP and its shareholders have alleged that
the Company breached its obligation to negotiate in good faith and to use its
best efforts to agree and execute the definitive agreements and claimed the
Company is obligated to pay TKP $10 million pursuant to the letter of intent.
The Company has answered and brought counterclaims against TKP and its
shareholders. The arbitration hearings were conducted in Geneva in June 1999,
and parties filed their post-hearing briefs in August and September 1999. The
Company believes that a decision may be rendered in April 2000. The Company does
not believe that the outcome of the arbitration proceedings will have a material
adverse effect on the Company's business, financial condition or results of
operations.

    On or about July 8, 1999, certain minority shareholders ("the minority
shareholders") of Poland Cablevision (Netherlands) B.V. (PCBV), an indirect
subsidiary of the Company, filed a lawsuit against the Company, Poland
Communications, Inc. ("PCI") and certain other defendants, in United States
District Court, Southern District of Ohio, Eastern Division, Civil Action No.
C2-99-621.

    The relief sought by the minority shareholders includes: (1) unspecified
damages in excess of $75,000, (2) an order lifting the restrictions against
transfer of shares set forth in the Shareholders' Agreement among PCBV's
shareholders, as amended (the "Shareholders' Agreement") so that the minority
shareholders can liquidate their shares in PCBV, (3) damages in the amount of
1.7 percent of the payment made by UPC for the shares of the Company as set
forth in the Agreement and Plan of Merger between the Company and UPC dated
June 2, 1999, and (4) attorneys' fees and costs incurred in prosecuting the
lawsuit.

    The amended complaint sets forth eight claims for relief based on
allegations that the defendants, including @Entertainment and PCI, committed the
following wrongful acts: (1) breached a covenant not to compete contained in the
Shareholders' Agreement relating to the shareholders of PCBV, (2) breached a
covenant in the Shareholders' Agreement requiring that any contract entered into
by PCBV with any other party affiliated with PCI be commercially reasonable or
be approved by certain of the minority shareholders, (3) breached a provision in
the Shareholders' Agreement that allegedly required co-defendant Chase
International Corp. ("CIC") to offer the minority shareholders the right to
participate in certain sales of PCBV shares and that required CIC to give
written notice of any offer to purchase the minority shareholders' shares in
PCBV, (4) breached their fiduciary duties to the minority shareholders,
(5) breached the agreement between PCBV and CIC, which allegedly limited the
amount of management fees that could be paid annually by PCBV, (6) made false
and misleading statements in various documents filed with the Securities and
Exchange Commission, (7) colluded to defraud the minority shareholders by
failing to make reference in certain Forms 8-K, 8-KA and 14D-1 to the minority
shareholders or their alleged rights and claims, (8) colluded to divert assets
of PCBV to affiliates of PCI and PCBV, including the Company, that allegedly
compete with PCI and PCBV.

    The minority shareholders also seek damages in the amount of 1.7 percent of
the payment made by UPC for the shares of the Company, although the amended
complaint does not contain a separate claim for relief seeking that amount.

    The Company intends to defend the lawsuit vigorously. The Company has also
conducted negotiations to purchase the minority shareholders' outstanding shares
in PCBV. If the negotiations produce a sale by the minority shareholders of
their shares in PCBV to the Company, the lawsuit would most likely be
terminated. The Company is unable to predict the outcome of those negotiations.

                                       26
<PAGE>
    In the event that the lawsuit is not terminated, its status is as follows:
The time for the Company and PCI to respond to the amended complaint has not yet
expired. Discovery has not yet commenced. At this early stage of the
proceedings, the Company is unable to predict the probable outcome of the
lawsuit or the Company's ultimate exposure in connection therewith.

    In addition to the Ohio lawsuit, the other minority shareholders of PCBV
(representing an additional 6% of PCBV) have asserted similar claims for
compensation, but have not filed suit.

    For a discussion of certain Anti-Monopoly Office's findings relating to the
Company, see "Regulation--Poland--Anti-Monopoly Act."

                                       27
<PAGE>
                                    PART II

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    @ Entertainment, Inc.'s common stock is owned by UPC and is not traded on
any public trading market.

ITEM 6. SELECTED FINANCIAL DATA

    Set forth below are selected consolidated financial data of the Company for
each of the periods in the five years period ended December 31, 1999. The
Company for the four years ended December 31, 1998 and the period from
January 1, 1999 through August 5, 1999 prior to the Acquisition, is herein
referred to as "Predecessor" and the Company from August 6, 1999 through
December 31, 1999 after Acquisition is referred to as the "Successor". The
selected consolidated financial data set forth below have been derived from the
consolidated financial statements of the Company and the notes thereto prepared
in conformity with generally accepted accounting principles as applied in the
United States, which have been audited by the Company's independent public
accountants (the "Consolidated Financial Statements"). The selected consolidated
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operation" included herein:

<TABLE>
                                                                         PREDECESSOR
                                                 -----------------------------------------------------------       SUCCESSOR
                                                                                              PERIOD FROM      -----------------
                                                                                              JANUARY 1,        PERIOD FROM
                                                          YEAR ENDED DECEMBER 31,                1999          AUGUST 6, 1999
                                                 ------------------------------------------     THROUGH           THROUGH
                                                  1995       1996        1997       1998      AUGUST 5, 1999   DECEMBER 31, 1999
                                                 --------   --------   --------   ---------   --------------   -----------------
                                                                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>        <C>        <C>        <C>         <C>              <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenues.......................................  $18,557    $24,923    $ 38,138   $  61,859     $  46,940          $  38,018

Operating expenses:
    Direct operating expenses..................   (5,129)    (7,193)    (14,621)    (61,874)      (70,778)           (69,351)
    Selling, general and administrative
      expenses (1).............................   (4,684)    (9,289)    (49,893)    (74,494)      (51,034)           (46,874)
    Depreciation and amortization..............   (5,199)    (9,788)    (16,294)    (26,304)      (23,927)           (40,189)
                                                 -------    -------    --------   ---------     ---------          ---------
Operating income/(loss)........................    3,545     (1,347)    (42,670)   (100,813)      (98,799)          (118,396)

Interest and investment income.................      174      1,274       5,754       3,355         2,823                731
Interest expense...............................   (4,373)    (4,687)    (13,902)    (21,957)      (28,818)           (24,459)
Equity in losses of affiliated companies.......       --         --        (368)     (6,310)       (1,004)              (291)
Foreign exchange loss, net.....................      (17)      (761)     (1,027)       (130)       (2,188)            (2,637)

Non-operating (expense)/revenue................       --         --          --          --            --              1,977
Impairment.....................................       --         --          --          --            --             (1,091)
Loss before income taxes, minority interest and
  extraordinary item...........................     (671)    (5,521)    (52,213)   (125,855)     (127,986)          (144,166)

Income tax (expense)/ benefit..................     (600)    (1,273)        975        (210)          (30)               (11)
Minority interest..............................      (18)     1,890      (3,586)         --            --                 --
                                                 -------    -------    --------   ---------     ---------          ---------
Loss before extraordinary item.................   (1,289)    (4,904)    (54,824)   (126,065)     (128,016)          (144,177)
Extraordinary item--loss on early
  extinguishment of debt.......................       --     (1,713)         --          --            --
                                                 -------    -------    --------   ---------     ---------          ---------
  Net loss.....................................   (1,289)    (6,617)    (54,824)   (126,065)     (128,016)          (144,177)

Accretion of redeemable preferred stock........       --     (2,870)     (2,436)         --        (2,436)                --
Preferred stock dividend.......................       --     (1,738)         --          --            --                 --
(Excess)/ deficit of consideration paid for
  preferred stock under / (over) amount (2)....       --      3,549     (33,806)         --            --                 --
                                                 -------    -------    --------   ---------     ---------          ---------
Net loss applicable to holders of common
  stock........................................  $(1,289)   $(7,676)   $(91,066)  $(126,065)    $(130,452)         $(144,177)
                                                 =======    =======    ========   =========     =========          =========
Basic and diluted loss per common share........  $ (0.10)   $ (0.44)   $  (3.68)  $   (3.78)    $   (3.90)               N/A
                                                 =======    =======    ========   =========     =========          =========
</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>
                                                           PREDECESSOR                   SUCCESSOR
                                            -----------------------------------------   -----------
                                                       AS OF DECEMBER 31,                  AS OF
                                            -----------------------------------------   DECEMBER 31
                                              1995       1996       1997       1998        1999
                                            --------   --------   --------   --------   -----------
<S>                                         <C>        <C>        <C>        <C>        <C>
CONSOLIDATED BALANCE SHEETS DATA:
  Cash and cash equivalents...............  $ 2,343    $ 68,483   $105,691   $ 13,055       35,520
  Property, plant and equipment, net......   52,320      84,833    117,579    213,054      218,784
  Total assets............................   68,058     217,537    307,096    348,374    1,218,871
  Total notes payable.....................   59,405     130,074    130,110    263,954      534,696
  Redeemable preferred stock..............       --      34,955         --         --           --
  Total stockholder's equity..............      190      31,048    152,355     33,656      606,960
</TABLE>

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

(1) The year ended December 31, 1997 includes a non-cash compensation expense of
    $18,102,000 relating to the granting of certain management stock options.
    See "Management's Discussion and Analysis of Financial Condition and Results
    of Operations" and note 16 to the Consolidated Financial Statements.

(2) Represents the amount paid to preferred stockholders in excess of or less
    than the carrying value of such shares.

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

OVERVIEW

    On August 6, 1999, Bison Acquisition Corp., UPC's wholly-owned subsidiary,
was merged with and into the Company with the Company continuing as the
surviving corporation. Accordingly, the Company became a wholly-owned subsidiary
of UPC. UnitedGlobalCom, Inc. is the majority stockholder of UPC.

    Until the limited launch of the Company's D-DTH business on July 1, 1998 and
subsequent full-scale launch on September 18, 1998, the Company's revenues were
derived entirely from its cable television business and programming related
thereto. The Company's revenue has increased 37.3% from $61.9 million in the
year ended December 31, 1998 to $85.0 million in the year ended December 31,
1999. This increase was due primarly to internal growth in subscribers through
increased penetration and new network expansion, increases in cable subscription
rates, further development of the Wizja TV programming package and advertising
sales.

    Prior to June 1997, the Company's expenses were primarily incurred in
connection with its cable television business and programming related thereto.
Since June 1997, the Company has been incurring, in addition to expenses related
to its cable television and programming businesses, expenses in connection with
the operation of its D-DTH business and Wizja TV.

    The Company generated an operating loss of $217.2 million for the year ended
December 31, 1999, primarily due to the significant costs associated with the
development of the Company's D-DTH and programming businesses, promotion of
those businesses, the development, production and acquisition of programming for
Wizja TV and fees paid for services in connection with the acquisition by UPC.

    The Company divides operating expenses into (i) direct operating expenses,
(ii) selling, general and administrative expenses, and (iii) depreciation and
amortization expenses. Direct operating expenses consist of programming
expenses, maintenance and related expenses necessary to service, maintain and
operate the Company's cable systems, and D-DTH programming platform, billing and
collection expenses and customer service expenses. Selling, general and
administrative expenses consist principally of administrative costs, including
office related expenses, professional fees and salaries, wages and benefits of
non-technical employees, advertising and marketing expenses, bank fees and bad
debt expense. Depreciation and amortization expenses consist of depreciation of
property, plant and equipment and amortization of intangible assets.

                                       29
<PAGE>
SEGMENT RESULTS OF OPERATIONS

    The Company classifies its business into three segments: (1) cable
television, (2) D-DTH television and programming, and (3) corporate. Information
about the operations of the Company in these different business segments is set
forth below based on the nature of the services offered. In addition to other
operating statistics, the Company measures its financial performance by EBITDA,
an acronym for earnings before interest, taxes, depreciation and amortization.
The Company defines EBITDA to be net loss adjusted for interest and investment
income, depreciation and amortization, interest expense, foreign currency gains
and losses, equity in losses of affiliated companies, income taxes and minority
interest. The items excluded from EBITDA are significant components in
understanding and assessing the Company's financial performance. The Company
believes that EBITDA and related measures of cash flow from operating activities
serve as important financial indicators in measuring and comparing the operating
performance of media companies. EBITDA is not a U.S. GAAP measure of profit and
loss or cash flow from operations and should not be considered as an alternative
to cash flows from operations as a measure of liquidity.

    The following table presents an aggregation of the Company's segment results
of operations for the seven months of 1999 and five months of 1999 with
comparatives for the years ended December 31, 1998 and 1997.

SEGMENT RESULTS OF OPERATIONS

<TABLE>
                                        SEVEN                  AGGREGATE
                                       MONTHS       FIVE       YEAR ENDED    YEAR ENDED DECEMBER 31,
                                         OF       MONTHS OF    DECEMBER     -------------------------
                                        1999        1999       31, 1999       1998           1997(1)
                                       --------   ----------   ----------   --------         --------
                                                       (IN THOUSANDS OF U.S. DOLLARS)
<S>                                    <C>        <C>          <C>          <C>              <C>
REVENUES
Cable................................   35,434       27,027       62,461      52,971          38,138
D-DTH and programming................   23,633       19,851       43,484      22,320              --
Corporate and Other..................       --           --           --          --              --
Intersegment elimination.............  (12,127)      (8,860)     (20,987)    (13,432)             --
                                       -------     --------     --------    --------         -------
TOTAL................................   46,940       38,018       84,958      61,859          38,138

OPERATING LOSS
Cable................................  (11,936)     (26,923)     (38,859)    (23,066)        (20,308)
D-DTH and programming................  (72,926)     (86,705)    (159,631)    (69,047)        (10,210)
Corporate and Other..................  (13,937)      (4,768)     (18,705)     (8,700)        (12,152)
                                       -------     --------     --------    --------         -------
TOTAL................................  (98,799)    (118,396)    (217,195)   (100,813)        (42,670)

EBITDA
Cable................................    1,883       (8,765)      (6,882)     (1,431)          5,387
D-DTH and programming................  (62,836)     (64,691)    (127,527)    (64,378)        (10,186)
Corporate and Other..................  (13,919)      (4,751)     (18,670)     (8,700)         (3,475)
                                       -------     --------     --------    --------         -------
TOTAL................................  (74,872)     (78,207)    (153,079)    (74,509)         (8,274)
</TABLE>

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

(1) In 1997, the cable segment included the activities of Mozaic Entertainment,
    Inc., a subsidiary which provided programming content for the cable
    business. In 1998, the Company's programming activities related solely to
    the development of the Wizja TV platform and have been included solely in
    the D-DTH and Programming segment. For the year ended December 31, 1997,
    Mozaic Entertainment, Inc. revenues, operating loss and EBITDA were
    $563,000, $2,071,000 and $(2,071,000), respectively. For the year ended
    December 31, 1998, Mozaic Entertainment, Inc. was dormant.

                                       30
<PAGE>
    The period from January 1, 1999 through August 5, 1999 and the period from
August 6, 1999 through December 31, 1999 are referred to herein as the "seven
months of 1999" and "five months of 1999", respectively. All other references to
the period ended July 31, 1999 or balances as of July 31, 1999 should be
construed as relating to the period from January 1, 1999 through August 5, 1999
or August 5, 1999, respectively. All other references to the period ended
December 31, 1999 should be construed as relating to the period from August 6,
1999 through December 31, 1999.

    All references to the year ended December 31, 1999 herein represent an
aggregation of the seven months of 1999 and the five months of 1999. No
adjustments have been made to the seven months of 1999 for the effect of the
Merger.

CABLE SEGMENT OVERVIEW

    The Company's revenues in its cable segment have been and will continue to
be derived primarily from monthly subscription fees for cable television
services and one-time installation fees for connection to its cable television
networks. The Company charges cable subscribers fixed monthly fees for their
choice of service packages and for other services, such as premium channels,
tuner rentals and additional outlets, all of which are included in monthly
subscription fees. Through its cable segment, the Company currently offers
broadcast, intermediate (in limited areas) and basic packages of cable service.
At December 31, 1999, approximately 71.6% of the Company's cable subscribers
received its basic package compared to 74.7% for the year ended December 31,
1998. For the year ended December 31, 1999, approximately 94.0% of the Company's
cable revenue was derived from monthly subscription fees compared to
approximately 88.9% for the year ended December 31, 1998.

    When the Company began operations in 1990, revenue from installation fees
exceeded revenue from monthly subscription fees because of the significant
number of new installations and the high amount of the installation fees
relative to the small existing subscriber base. As the Company's cable
subscriber base has grown, aggregate monthly subscription revenue has increased
and installation fees, while currently increasing on an aggregate basis, have
declined as a percentage of total revenue. The Company expects that installation
fees will continue to constitute a declining portion of the Company's revenue.

    During 1998 and 1999, management completed or was in the process of
completing several strategic actions in support of its cable business and
operating strategy. On June 5, 1998, the Company began providing the Wizja TV
programming package, with its initial 11 channels of primarily Polish-language
programming, to its basic cable subscribers. Since that date, the basic Wizja TV
package has been expanded to 24 channels. On September 18, 1999, the Company
launched a proprietary premium channel called Wizja Sport. Management believes
that this selection of high quality primarily Polish-language programming will
provide it with a significant competitive advantage in increasing its cable
subscriber penetration rates.

    The Company has implemented a pricing strategy designed to increase revenue
per cable subscriber and its profit margin. The Company has increased the
monthly price for the "basic" package to reflect the increased channel
availability, and premium channels such as the HBO Poland service (a
Polish-language version of HBO's premium movie channel) and Wizja Sport are
offered to cable customers for an additional monthly charge. The Company is in
the process of encrypting the HBO Poland service on cable and installing analog
decoders for all premium channel subscribers. This encryption and installation
process is expected to be rolled out in all major systems in 2000.

    The cable segment generated operating losses of $38.9 million for aggregated
1999, $ 23.1 million for 1998 and $20.3 million for 1997 primarily due to the
purchase of Wizja TV programming for $21.0 million and $13.4 million in 1999 and
1998, respectively and the increased levels of the acquisition and related
costs. In addition, for the year ended December 31, 1997 the Company recorded a
one time charge for non-cash compensation related to stock options of
$9.4 million.

                                       31
<PAGE>
D-DTH AND PROGRAMMING SEGMENT OVERVIEW

    D-DTH.  The principal objectives of the Company for the D-DTH and
programming segment is to develop, acquire and distribute high-quality
Polish-language programming that can be commercially exploited throughout Poland
through D-DTH and cable television exhibition, and to develop and maximize
advertising sales.

    The Company's D-DTH roll-out strategy was to lease D-DTH reception systems
to up to 380,000 initial subscribers at promotional prices in the start-up phase
of its D-DTH service. The launch of its D-DTH service has been supported by the
Company's development of Wizja TV, which the Company believes addresses the
demand for high-quality Polish-language programming in Poland. Between
April 1999 and November 7, 1999, the Company switched its policy from leasing to
selling D-DTH reception systems and sold such systems to customers at a price
substantially reduced by promotional incentives. Beginning November 8, 1999, the
Company returned to leasing the D-DTH reception systems to its customers.

    As of December 31, 1999, the Company distributed to Philips' authorized
retailers approximately 294,000 D-DTH packages. As of December 31, 1999, the
Company had sold and installed approximately 254,000 of these packages to
consumers. In September 1998, the number of Philips authorized electronics
retailers distributing the Wizja TV package increased from 70 to 550, and since
November 1998 more than 1,200 retailers have been distributing the Wizja TV
package. Each store is staffed with personnel specifically trained by the
Company to provide information on the Wizja TV packages. Installation personnel
are also trained to complete each customer's installation within 48 hours of
order placement. However, due to technical problems that Philips had with a
component of the decoder, the Company faced a backlog in decoder deliveries in
the fourth quarter of 1999 of approximately 48,000 decoders, all of which the
Company believes would have been sold if the Company had received those
decoders.

    PROGRAMMING.  The Company, both directly and through joint ventures,
produces television programming for distribution. The Company has developed a
multi-channel, primarily Polish-language programming platform under the brand
name Wizja TV. Wizja TV's current channel line-up includes four channels, Atomic
TV, Wizja Jeden, Wizja Pogoda and Wizja Sport, that are owned and operated by
the Company, and 20 channels that are produced by third parties, 11 of which are
broadcast under exclusive agreements for pay television in Poland.

    The Company currently distributes Atomic TV and intends to distribute the
Wizja TV programming package to third party cable operators in Poland on a
per-subscriber fee basis. The Company exchanged letters of intent and is
continuing negotiations with two major cable associations in Poland,
representing an aggregate of approximately 2.6 million subscribers (including
the Company's cable subscribers), with the objective of making the Wizja TV
programming package available for distribution within the cable networks of
other providers which are members of the associations.

    The Company expects to incur substantial operating losses and negative cash
flows related to the launch of its D-DTH business at least for the next year
while it develops and expands its D-DTH subscriber base. The Company's D-DTH
business plan requires the funding of substantial capital expenditures and
promotional incentives in order to expand its D-DTH business. The Company's
business plan anticipates spending an additional $33 million to provide D-DTH
reception systems to the 380,000 initial planned subscribers.

1999 COMPARED WITH 1998

CABLE SEGMENT

    CABLE TELEVISION REVENUE.  Revenue increased $9.5 million or 17.9% from
$53.0 million in the year ended December 31, 1998 to $ 62.5 million in the year
ended December 31, 1999. This increase was primarily attributable to a 6.0%
increase in the number of basic and intermediate subscribers from approximately
738,000 at December 31, 1998 to approximately 783,000 at December 31, 1999, as
well as an increase in monthly subscription rates. The Company introduced the
Wizja TV programming package on its cable systems for basic subscribers on
June 5, 1998, and after an initial free period, increased prices significantly
in September 1998. Approximately 28.2% of the net increase in basic subscribers
was the result of build-out of the Company's existing cable networks and the
remainder was due to acquisitions.

                                       32
<PAGE>
    Revenue from monthly subscription fees represented 88.9% of cable television
revenue for the year ended December 31, 1998 and 94.0% for the year ended
December 31, 1999. During the year ended December 31, 1999, the Company
generated approximately $2.1 million of additional premium subscription revenue
as a result of providing the HBO Poland service pay movie channels to cable
subscribers as compared to $3.1 million for the year ended December 31, 1998.

    DIRECT OPERATING EXPENSES.  Direct operating expenses increased $11.0
million or 31.6%, from $34.8 million for the year ended December 31, 1998 to
$45.8 million for the year ended December 31, 1999, principally as a result of
the purchase of the Wizja TV programming package from the Company's D-DTH and
programming segment and higher levels of technical personnel and increased
maintenance expenses associated with recently acquired networks as well as the
increased size of the Company's cable television system. Direct operating
expenses increased from 65.7 % of revenues for the year ended December 31, 1998
to 73.3% of revenues for the year ended December 31, 1999. However, without
considering the intersegment charge for Wizja TV programming package, direct
operating expenses as a percentage of revenue would have been 39.7% and 40.4% in
the year ended December 31, 1999 and 1998, respectively.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses increased $3.9 million or 19.9% from $19.6 million for
the year ended December 31, 1998 to $23.5 million for the year ended
December 31, 1999, principally as a result of increases in sales and marketing
expenses incurred in newly acquired networks to support our pricing strategy,
extensive country-wide Autumn marketing campaign and general growth of the
business. Selling, general and administrative expenses increased from 37.0% of
revenues for the year ended December 31, 1998 to 37.6% for the year ended
December 31, 1999.

    DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense rose
$10.4 million, or 48.1%, from $21.6 million for the year ended December 31, 1998
to $32.0 million for the year ended December 31, 1999 principally as a result of
depreciation and amortization of additional goodwill pushed down as a result of
the merger with UPC and the continued build-out of the Company's cable networks.
Depreciation and amortization expense as a percentage of revenues increased from
40.8% for the year ended December 31, 1998 to 51.2 % for the year ended
December 31, 1999.

    OPERATING LOSS.  Each of these factors contributed to an operating loss of
$38.9 million for the year ended December 31, 1999 and $23.1 million for the
year ended December 31, 1998.

D-DTH AND PROGRAMMING SEGMENT

    D-DTH AND PROGRAMMING REVENUE.  D-DTH and programming revenue increased
$21.2 million or 95.1% from $22.3 million for the year ended December 31, 1998
to $ 43.5 million for the year ended December 31, 1999. Revenue from the
provision of the Wizja TV programming package to the Company's cable systems,
which was eliminated as a result of the consolidation of the Company's financial
results, represented $13.4 million and $21.0 million or 60.1% and 48.3% of D-DTH
revenue for the year ended December 31, 1998 and 1999, respectively.

    Revenue from subscription fees, after elimination of revenue from the cable
segment represented 88.6% of D-DTH revenue for the year ended December 31, 1998
and 75.6%for the year ended December 31, 1999. Advertising and other revenue for
the year ended December 31, 1998 and 1999 represented 11.3% and 24.4%,
respectively of D-DTH revenue after elimination of inter-segment revenues.

    DIRECT OPERATING EXPENSES.  Direct operating expenses increased
$74.8 million, from $40.5 million for the year ended December 31, 1998 to
$115.3 million for the year ended December 31, 1999. These increases principally
were the result of: the $31.7 million cost related to D-DTH reception systems
sold below cost and the write down of D-DTH reception systems included in
inventory from April 1, 1999 to November 8, 1999 to net realizable value, a
$30.0 million increase in programming costs in the year ended December 31, 1999,
and costs associated with the lease of three transponders on the Astra
satellites which provide the capability to deliver the Company's Polish-language
programming platform to cable and

                                       33
<PAGE>
D-DTH customers in Poland. Direct operating expenses increased from 181.6% of
revenue for the year ended December 31, 1998 to 265.1% for the year ended
December 31, 1999. Excluding the write down of D-DTH reception systems to net
realizable value, direct operating expenses as a percentage of revenue would
have been 198.9% in 1999.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses increased $9.4 million or 20.3% from $46.3 million for
the year ended December 31, 1998 to $55.7 million for the year ended
December 31, 1999. As a percentage of revenue, selling, general and
administrative expenses amounted to approximately 207.2% and 128.0% for the
years ended December 31, 1998 and 1999, respectively. The increase in selling,
general and administrative expenses was attributable mainly to sales and
marketing expenses associated with promotion of the Company's D-DTH service and
Wizja TV programming platform and the preparation for the launch and operation
of the Company's proprietary premium sports channel called Wizja Sport. The
increase in selling, general and administrative expenses was also attributable
to the installation and distribution costs associated with the sale of Wizja TV
programming packages an increase in the number of Sales and Call Center staff
associated with the Wizja TV programming package, as well as an increase in
professional fees associated with obtaining long-term programming contracts and
broadcast/exhibition rights.

    DEPRECIATION AND AMORTIZATION.  Depreciation and amortization charges
increased $27.4 million from $4.7 million for the year ended December 31, 1998
to $32.1 million for the year ended December 31, 1999, principally as a result
of additional goodwill pushed down as a result of the merger with UPC and an
increased number of D-DTH decoders. Depreciation and amortization expense as a
percentage of revenues increased from 21.1% for the year ended December 31, 1998
to 73.8% for the year ended December 31, 1999.

    OPERATING LOSS  Each of these factors contributed to an operating loss of
$69.1 million for the year ended December 31, 1998 compared to an operating loss
of $159.6 million for the year ended December 31, 1999.

CORPORATE AND OTHER SEGMENT

    Corporate and other segment consists of corporate overhead costs. The
Company continues to evaluate opportunities for improving its operations and
reducing its cost structure. Corporate net expenses amounted to $18.7 million
for the year ended December 31, 1999 as compared to $8.7 million for the
corresponding period in 1998. Corporate expenses for the year ended
December 31, 1999 included a non-recurring expense of $9.1 million related to
fees paid to Goldman Sachs for its services in connection with the acquisition
by UPC.

NON OPERATING RESULTS

    INTEREST EXPENSE.  Interest expense increased $31.3 million, or 142.7%, from
$22.0 million for the year ended December 31, 1998 to $53.3 million for the year
ended December 31, 1999 mainly as a result of the accretion of interest of the
$252 million aggregate principal amount at maturity of the Company's 14 1/2%
Senior Discount Notes due 2009, which were issued on January 22, 1999 and
Series C Senior Discount Notes due 2008, which were issued on January 20, 1999.

    INTEREST AND INVESTMENT INCOME.  Interest and investment income increased
$0.2 million, or 5.9%, from $3.4 million for the year ended December 31, 1998 to
$3.6 million for the year ended December 31, 1999, primarily due to increase in
cash balances resulting from the issuance of the above mentioned Discount Notes
and an increase in interest rates.

    EQUITY IN LOSSES OF AFFILIATED COMPANIES.  The Company recorded
$6.3 million of equity in losses of affiliated companies for the year ended
December 31, 1998 and $1.3 million for the year ended December 31, 1999. This
equity in losses resulted from the Company's 50% investment in Twoj Styl, a
publishing

                                       34
<PAGE>
company and 20% investment in Fox Kids Poland, a channel content provider and
30% investment in Mazowiecki Klub Sportowy Sportowa Spolka Akcyjna, a Polish
basketball team.

    FOREIGN EXCHANGE LOSS, NET.  For the year ended December 31, 1999 foreign
exchange loss amounted to $4.8 million. For the year ended December 31, 1998
foreign exchange loss amounted to $0.1 million.

    NET LOSS.  For the years ended December 31, 1998 and 1999, the Company had
net losses of $126.1 million and $272.2 million, respectively. These losses were
the result of the factors discussed above.

    NET LOSS APPLICABLE TO COMMON STOCKHOLDERS.  Net loss applicable to common
stockholders increased from a loss of $126.1 million for the year ended
December 31, 1998 to a loss of $274.6 million for the year ended December 31,
1999 due to the factors discussed above.

1998 COMPARED WITH 1997

CABLE SEGMENT

    CABLE TELEVISION REVENUE.  Revenue increased $14.9 million or 39.1% from
$38.1 million in the year ended December 31, 1997 to $53.0 million in the year
ended December 31, 1998. This increase was primarily attributable to a 16%
increase in the number of basic and intermediate subscribers from approximately
636,300 at December 31, 1997 to approximately 738,000 at December 31, 1998, as
well as an increase in monthly subscription rates. The Company introduced the
Wizja TV programming package on its cable systems for basic subscribers on
June 5, 1998, and after an initial free period, increased prices significantly
in September 1998. Approximately 91.9% of the net increase in basic subscribers
was the result of build-out of the Company's existing cable networks and the
remainder was due to acquisitions.

    Revenue from monthly subscription fees represented 84.0% of cable television
revenue for the year ended December 31, 1997 and 88.9% for the year ended
December 31, 1998. During the year ended December 31, 1998, the Company
generated approximately $3.1 million of additional premium subscription revenue
as a result of providing the HBO Poland service and Canal+ pay movie channels to
cable subscribers as compared to $1.0 million for the year ended December 31,
1997.

    DIRECT OPERATING EXPENSES.  Direct operating expenses increased
$23.0 million or 194.9%, from $11.8 million for the year ended December 31, 1997
to $34.8 million for the year ended December 31, 1998, principally as a result
of the purchase of the Wizja TV programming package from the Company's D-DTH and
programming segment and higher levels of technical personnel and increased
maintenance expenses associated with recently acquired networks as well as the
increased size of the Company's cable television system. Direct operating
expenses increased from 31.0% of revenues for the year ended December 31, 1997
to 65.7% of revenues for the year ended December 31, 1998. However, without
considering the intersegment charge for the Wizja TV programming package, direct
operating expenses as a percentage of revenue would have been 41.0% in 1998.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses decreased $10.7 million or 35.3% from $30.3 million for
the year ended December 31, 1997 to $19.6 million for the year ended
December 31, 1998. A portion of this decrease was attributable to non-recurring,
non-cash compensation expense of approximately $9.4 million recorded in the year
ended December 31, 1997 in connection with stock options granted to certain key
executives. Selling, general and administrative expenses decreased from 79.5% of
revenues for the year ended December 31, 1997 to 37% for the year ended
December 31, 1998. However, without considering the non-cash compensation
expense related to the stock options described above, selling, general and
administrative expenses as percentage of revenues would have been 54.9% in 1997.
This percentage decrease was attributable to operating efficiencies realized by
the Company in 1998.

    DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense rose
$5.3 million, or 32.5%, from $16.3 million for the year ended December 31, 1997
to $21.6 million for the year ended December 31, 1998 principally as a result of
depreciation and amortization of additional cable television systems and

                                       35
<PAGE>
related goodwill acquired and the continued build-out of the Company's cable
networks. Depreciation and amortization expense as a percentage of revenues
decreased from 42.8% for the year ended December 31, 1997 to 40.8% for the year
ended December 31, 1998.

    OPERATING LOSS.  Each of these factors contributed to an operating loss of
$20.3 million for the year ended December 31, 1997 and $23.1 million for the
year ended December 31, 1998.

D-DTH AND PROGRAMMING SEGMENT

    D-DTH AND PROGRAMMING REVENUE.  D-DTH and programming revenue amounted to
$22.3 million for the year ended December 31, 1998. Revenue from the supply of
the Wizja TV programming package to the Company's cable systems, which
eliminates on consolidation, represented $13.4 million or 60.1% of D-DTH revenue
for the year ended December 31, 1998.

    Since the Company only commenced the broadcast of its Wizja TV programming
package over its cable systems on June 5, 1998 and through its D-DTH service in
July 1998, there were no revenue related to this segment in 1997.

    Revenue from subscription fees, after elimination of revenue from the cable
segment represented 88.6% of D-DTH revenue for the year ended December 31, 1998.
Advertising and other revenue for the year ended December 31, 1998 represented
11.3% of D-DTH revenue after elimination of inter-segment revenues.

    DIRECT OPERATING EXPENSES.  Direct operating expenses increased
$37.6 million, from $2.8 million for the year ended December 31,1997 to
$40.4 million for the year ended December 31,1998. These costs principally were
the result of the following: programming costs for the Wizja TV platform of
$22.6 million, expenses associated with the establishment of a satellite up-link
and studio facility located in Maidstone, U.K. the $4.1 million payment for
Wizja TV brand name, costs associated with the lease of three transponders on
the Astra satellites which provide the capability to deliver the Company's
Polish-language programming platform to cable and D-DTH customers in Poland.
Direct operating expenses amounted to 181.2% of revenues for the year ended
December 31, 1997 and 1998.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses increased $38.9 million or 525.7% from $7.4 million for
the year ended December 31, 1997 to $46.3 million for the year ended
December 31, 1998. As a percentage of revenue, selling, general and
administrative expenses amounted to approximately 207.2% for the year ended
December 31, 1998. The increase in selling, general and administrative expenses
was attributable mainly to an increase in sales and marketing expenses incurred
in preparation for launch and operation of the Company's D-DTH service and Wizja
TV programming package, installation and distribution costs associated with the
sale of Wizja TV programming packages an increase in the number of
administrative staff associated with the Maidstone facility, a $5 million
payment to Philips to compensate it for costs incurred as a result of the
temporary suspension of production of the D-DTH reception systems' and the Wizja
TV programming package, as well as an increase in professional fees associated
with obtaining long-term programming contracts and broadcast/ exhibition rights,
and negotiations with TKP, a Polish pay television provider, regarding a
potential joint-venture.

    DEPRECIATION AND AMORTIZATION.  The Company incurred $4.7 million in
depreciation and amortization for the year ended December 31, 1998. Depreciation
and amortization expense as a percentage of revenues amounted to 21.1% for the
year ended December 31, 1998.

    Each of these factors contributed to an operating loss of $69.1 million for
the year ended December 31, 1998 compared to an operating loss of $10.2 million
for the year ended December 31, 1997.

CORPORATE AND OTHER SEGMENT

    Corporate and other consists of corporate overhead costs when primarily
include remuneration of corporate employees, costs associated with operation of
the Company's corporate officers in London,

                                       36
<PAGE>
consulting fees and certain legal costs. Corporate expenses amounted to
$8.7 million for the year ended December 31, 1998 compared with $12.2 million
for the year ended December 31, 1997. Included in 1997 costs is an $8.7 million
non-cash compensation expense relating to stock options granted to certain key
executives.

NON OPERATING RESULT

    INTEREST EXPENSE.  Interest expense increased $8.1 million, or 58.3%, from
$13.9 million for the year ended December 31, 1997 to $22.0 million for the year
ended December 31, 1998 mainly as a result of the accretion of interest of the
$252 million aggregate principal amount at maturity of the Company's 14 1/2%
Senior Discount Notes due 2008, which were issued on July 14, 1998.

    INTEREST AND INVESTMENT INCOME.  Interest and investment income decreased
$2.4 million, or 41.4%, from $5.8 million for the year ended December 31, 1997
to $3.4 million for the year ended December 31, 1998, primarily due to reduction
of cash balances resulting from the increased payments and expenses described
above and decrease in interest rates.

    EQUITY IN LOSSES OF AFFILIATED COMPANIES.  The Company recorded
$6.3 million of equity in losses of affiliated companies for the year ended
December 31, 1998. This equity in losses resulted from the Company's 50%
investment in WPTS ("Twoj Styl"), a publishing company and 20% investment in Fox
Kids Poland, a channel content provider.

    FOREIGN EXCHANGE LOSS, NET.  For the year ended December 31, 1998 foreign
exchange loss amounted to $0.1 million. For the year ended December 31, 1997
foreign exchange loss amounted to $1.0 million.

    MINORITY INTEREST.  No minority interest was recorded for the year ended
December 31, 1998, compared to minority interest expense of $3.6 million for the
corresponding period in 1997. The 1997 expense represents a fourth quarter
adjustment to write-off certain receivable balances that were not recoverable.
All minority interest were eliminated in 1998 as the minority interest share of
the losses exceeded the value of the minority interest investments.

    NET LOSS.  For the years ended December 31, 1997 and 1998, the Company had
net losses of $54.9 million and $126.1 million, respectively. These losses were
the result of the factors discussed above.

    NET LOSS APPLICABLE TO COMMON STOCKHOLDERS.  Net loss applicable to common
stockholders increased from a loss of $91.1 million for the year ended
December 31, 1997 to a loss of $126.1 million for the year ended December 31,
1998 due to the factors discussed above. For the year ended December 31, 1997,
net loss applicable to common stockholders included the excess of consideration
paid for preferred stock over the carrying amount of such stocks of
$33.8 million and $2.4 million related to the accretion of redeemable preferred
stock.

LIQUIDITY AND CAPITAL RESOURCES

    The Company has met its cash requirements in recent years primarily with
(i) capital contributions and loans from certain of the Company's principal
stockholders, (ii) borrowings under available credit facilities, (iii) cash
flows from operations, (iv) the sale of approximately $200 million of common
stock through the Company's initial public equity offering in August 1997,
(v) the sale of $252 million aggregate principal amount at the maturity of the
14 1/2% Senior Discount Notes in July 1998 with gross proceeds of approximately
$125 million, (vi) the sale of $36,001,321 principal amount at maturity of its
Series C Discount Notes in January 1999 with gross proceeds of $9.8 million,
(vii) the sale of its 14 1/2% Senior Discount Notes in January 1999 with gross
proceeds of $96.1 million, and (viii) the sale of the Series A 12% Cumulative
Preference Shares, the Series B 12% Cumulative Preference Shares and Warrants in
January 1999 with gross proceeds of $48.2 million.

    Since the acquisition of all of the outstanding stock of the Company by UPC
on August 6, 1999, the Company has met its capital requirements primarily
through capital contributions and loans from UPC.

                                       37
<PAGE>
    FINANCING.  PCI has entered into an agreement with American Bank in Poland
S.A. ("AmerBank") which provides for a credit facility of approximately
$6.5 million. All amounts under this facility were drawn in June 1998. Interest,
based on LIBOR plus 3%, was due quarterly. All advances under the loan were
repaid on November 20, 1999.

    On October 31, 1996, $130 million aggregate principal amount of 9 7/8%
Senior Notes ("PCI Notes") were sold by PCI to initial purchasers pursuant to a
purchase agreement. The initial purchasers subsequently completed a private
placement of these notes. These notes were issued pursuant to an indenture.

    In August 1997, the Company raised approximately $200 million through its
initial public equity offering. The Company used $60 million to purchase all of
PCI's outstanding Series A Preferred Stock and its Series C Preferred Stock held
by affiliates of the principal stockholders.

    On July 14, 1998, $252 million principal amount at maturity of 14 1/2%
Senior Discount Notes ("@Entertainment Notes") were sold by the Company to
initial purchasers pursuant to a purchase agreement, with gross proceeds to the
Company of approximately $125 million. The initial purchasers subsequently
completed a private placement of the @Entertainment Notes. The @Entertainment
Notes were issued pursuant to an indenture.

    On January 19, 1999 the Company sold $36 million principal amount at
maturity of its Series C Senior Discount Notes ("Series C Notes") to an initial
purchaser pursuant to a purchase agreement for gross proceeds of approximately
$9.8 million. The Series C Notes were issued pursuant to an indenture.

    On January 22, 1999 the Company sold $256.8 million principal amount at
maturity of 14 1/2% Senior Discount Notes ("Discount Notes") to initial
purchasers pursuant to purchase agreement, with gross proceeds to the Company
$96.1 million. The Discount Notes were issued pursuant to the indenture.

    Pursuant to the indentures governing the PCI Notes, the @Entertainment
Notes, the Series C Notes, and the Discount Notes, the Company is subject to
certain restrictions and covenants, including, without limitation, covenants
with respect to the following matters:

    a.  limitation on indebtedness;

    b.  limitation on restricted payments;

    c.  limitation on issuances and sales of capital stock of restricted
       subsidiaries;

    d.  limitation on transactions with affiliates;

    e.  limitation on liens;

    f.  limitation on guarantees of indebtedness by subsidiaries;

    g.  purchase of the notes upon a change of control;

    h.  limitation on sale of assets;

    i.  limitation on dividends and other payment restrictions affecting
       restricted subsidiaries;

    j.  limitation on investments in unrestricted subsidiaries;

    k.  consolidations, mergers, and sale of assets;

    l.  limitation on lines of business; and

    m. provision of financial statements and reports

    The Company is in compliance with these covenants.

    The indentures covering each of the @Entertainment Notes, Series C Notes,
Discount Notes and the PCI Notes provide that, following a Change of Control (as
defined therein), each noteholder had the right, at such holder's option, to
require the respective issuer to offer to repurchase all or a portion of such
holder's notes at the repurchase prices, described below. The Company believes
that the August 6, 1999 acquisition by UPC of the Company constituted a Change
of Control. Accordingly, @Entertainment and PCI made offers to repurchase (the
"Offers") from the holders the @Entertainment Notes, Series C

                                       38
<PAGE>
Notes, Discount Notes and the PCI Notes. The Offers expired at 12:01 PM, New
York City time, on November 2, 1999.

    In accordance with the terms of the indentures governing the @Entertainment
Notes, Series C Notes, Discount Notes and the PCI Notes, @Entertainment was
required to offer to repurchase the @Entertainment Notes, Series C Notes,
Discount Notes at 101% of their accreted value at maturity on the Expiration
Date plus accrued and unpaid interest and PCI was required to offer to
repurchase the PCI Notes at the purchase price 101% of principal. As of
August 5, 1999, @Entertainment had $376,943,000 aggregate principal amount at
maturity of @Entertainment Notes, Series C Notes, Discount Notes outstanding and
PCI had $129,668,000 aggregate principal amount at maturity of PCI Notes
outstanding. Pursuant to the Offer, @Entertainment has purchased $49,139,000
aggregate principal amount of @Entertainment Notes, Series C Notes, Discount
Notes for an aggregate price of $26,455,014 and PCI has purchased $113,237,000
aggregate principal amount of PCI Notes for an aggregate price of $114,369,370.

    UPC financed the repurchase of the @Entertainment Notes Series C Notes,
Discount Notes and PCI Notes and the Company's operating activities by making
loans of $217.3 million to @Entertainment in the fourth quarter of 1999.

    On December 31, 1999, the Company had, on a consolidated basis,
approximately $534.7 million aggregate principal amount of indebtedness
outstanding, of which $220.1 million was owed UPC.

    The Company purchased 14,000 shares of Debenture Stock issued by PCI for
$140 million to fund PCI's purchase of PCI Notes and operations. The Company
used a portion of the proceeds of the loans from UPC to purchase the Debenture
Stock. The Debenture Stock is redeemable on December 31, 2003 at the issue price
plus interest of 10% per annum compounded annually. To secure its obligations
under the Debenture Stock, PCI will pledge to the Company notes issued to it by
its subsidiary PCBV with an aggregate principal amount of $176,815,000. The PCI
Noteholders will be equally and ratably secured by the pledge in accordance with
the terms of the PCI Indenture.

    The Company had negative cash flows from operating activities of $143.4
million for the year ended December 31, 1999 and $70.7 million for the year
ended December 31, 1998, primarily due to the significant operating costs
associated with the development and launch of its D-DTH service and the Wizja TV
programming platform. The Company had negative cash flow from operating
activities of $18.8 million for the year ended December 31, 1997, primarily due
to the operating loss for that year.

    Cash used for the purchase and build-out of the Company's cable television
networks, purchase of D-DTH equipment including set top decoders, and the
purchase of other property, plant, and equipment was $51.0 million in 1999,
$115.0 million in 1998 and $39.6 million in 1997. The 1998 increase primarily
relates to the Company's acquisition of additional cable networks' assets and
capital expenditures associated with the expansion of its existing cable
networks and the development of its D-DTH service and Wizja TV. The decrease in
1999 is partially related to the fact that a significant portion of the D-DTH
boxes were sold as opposed to leased in 1999.

    On December 31, 1999, the Company was committed to pay at least $453.7
million in guaranteed payments (including but not limited to payments for D-DTH
reception systems and payments of guaranteed minimum amounts due under
programming agreements and satellite transponder leases) over the next eight
years of which at least approximately $140.7 million was committed through the
end of 2000.

    Cash used for the acquisition of subsidiaries, net of cash received, was
$7.9 million in 1999, $27.0 million in 1998 and $20.9 million in 1997.

    The Company used the net proceeds from the offerings completed in
January 1999 to fund capital expenditures, operating losses and working capital
primarily related to the development and operation of its D-DTH business, and
for general corporate purposes and certain other investments, including the
possible acquisition of cable television networks and certain minority interests
in our subsidiaries which are held by unaffiliated third parties. The loans from
UPC were used primarily for the repurchase of the

                                       39
<PAGE>
@Entertainment Notes, Discount Notes, Series C Notes and PCI Notes and for the
same purposes as the proceeds of the January 1999 offerings.

    As of December 31, 1999, the Company has negative working capital and
significant commitments under non-cancelable operating leases and for
programming rights.

    The Company's cash on hand will be insufficient to satisfy all of its
obligations related to its offer to repurchase its and its subsidiary's
outstanding senior notes and to complete its current business plan for its D-DTH
and programming businesses. UPC and the Company are evaluating various
alternatives to meet the Company's capital needs. Future sources of financing
for the Company could include public or private debt or bank financing or any
combination thereof, subject to the restrictions contained in the indentures
governing the outstanding senior indebtedness of the Company, UPC, and United
GlobalCom, Inc., UPC's parent. Moreover, if the Company's plans or assumptions
change, if its assumptions prove inaccurate, if it consummates unanticipated
investments in or acquisitions of other companies, if it experiences unexpected
costs or competitive pressures, or if existing cash, and projected cash flow
from operations prove to be insufficient, the Company may need to obtain greater
amounts of additional financing. While it is the Company's intention to enter
only into new financing or refinancings that it considers advantageous, there
can be no assurance that such sources of financing would be available to the
Company in the future, or, if available, that they could be obtained on terms
acceptable to the Company. The Company is also dependent on its parent, UPC, to
provide financing to achieve the Company's business strategy. UPC has declared
that it will continue to financially support the Company and its subsidiaries as
a going concern, and accordingly enable the Company and its subsidiaries to meet
their financial obligations if and when needed, for the period at least through
January 31, 2001.

YEAR 2000 COMPLIANCE

    The Company has not experienced any problems with its computer systems
relating to distinguishing twenty-first century dates from twentieth century
dates, which generally are referred to as year 2000 problems. The Company is
also not aware of any material year 2000 problems with its clients or vendors.
The Company did not and does not anticipate incurring material expenses or
experiencing any material operation disruptions as a result of any year 2000
problems.

CURRENT OR ACCUMULATED EARNINGS AND PROFITS

    For the fiscal year ended December 31, 1999, the Company had no current or
accumulated earnings and profits. Therefore, none of the interest which accreted
during the fiscal year ended December 31, 1999 with respect to the Company's
14 1/2% Senior Discount Notes due 2008, 14 1/2% Series B Discount Notes due
2008, 14 1/2% Senior Discount Notes due 2009, 14 1/2% Series B Discount Notes
due 2009 and its Series C Senior Discount Notes will be deemed to be a "Dividend
Equivalent Portion" as such term is defined in Section 163(e)(5)(B) of the
Internal Revenue Code, as amended.

IMPLEMENTATION OF A NEW ACCOUNTING STANDARDS

    None.

IMPACT OF NEW ACCOUNTING STANDARDS NOT YET ADOPTED

NEW ACCOUNTING PRINCIPLES

    The Financial Accounting Standards Board ("FASB") recently issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which requires that companies
recognize all derivatives as either assets or liabilities in the balance sheet
at fair value. Under this statement, accounting for changes in fair value of a
derivative depends on its intended use and designation. In June 1999, the FASB
approved Statement of Financial Accounting Standards No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of Effective Date of
FASB Statement No. 133" ("SFAS 137"). SFAS 137 amends the effective date of

                                       40
<PAGE>
SFAS 133, which will now be effective for our first quarter 2001. We are
currently assessing the effect of this new standard.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

    The principal market risk (i.e., the risk of loss arising from adverse
changes in market rates and prices) to which the Company is exposed is foreign
exchange rate risk from fluctuations in the Polish zloty currency exchange rate.
The Company's long term debt is primarily subject to a fixed rate, and therefore
variations in the interest rate do not have a material impact on net interest
expense.

FOREIGN EXCHANGE AND OTHER INTERNATIONAL MARKET RISKS.

    Operating in international markets involves exposure to movements in
currency exchange rates. Currency exchange rate movements typically affect
economic growth, inflation, interest rates, governmental actions and other
factors. These changes, if material, can cause the Company to adjust its
financing and operating strategies. The discussion of changes in currency
exchange rates below does not incorporate these other important economic
factors.

    International operations constitute 100% of the Company's 1999 consolidated
operating loss. Some of the Company's operating expenses and capital
expenditures are expected to continue to be denominated in or indexed in U.S.
dollars. By contrast, substantially all of the Company's revenues are
denominated in zloty. Therefore, any devaluation of the zloty against the U.S.
dollar that the Company is unable to offset through price adjustments will
require it to use a larger portion of its revenue to service its U.S. dollar
denominated obligations and contractual commitments.

    The Company estimates that a further 10% change in foreign exchange rates
would impact operating loss by approximately $10.3 million. In other terms a 10%
depreciation of the Polish zloty and British pound against the U.S. dollar,
would result in a $10.3 million decrease in the reported operating loss for the
year ended December 31, 1999. The Company believes that this quantitative
measure has inherent limitations because, as discussed in the first paragraph of
this section, it does not take into account any governmental actions or changes
in either customer purchasing patterns or the Company's financing or operating
strategies.

    The Company does not generally hedge currency translation risk. While the
Company may consider entering into transactions to hedge the risk of exchange
rate fluctuations, there is no assurance that it will be able to obtain hedging
arrangements on commercially satisfactory terms. Therefore, shifts in currency
exchange rates may have an adverse effect on the Company's financial results and
on its ability to meet its U.S. dollar denominated debt obligations and
contractual commitments.

    Poland has historically experienced high levels of inflation and significant
fluctuations in the exchange rate for the zloty. The Polish government has
adopted policies that slowed the annual rate of inflation from approximately
250% in 1990 to approximately 14.9% in 1997, approximately 11.8% in 1998 and
7.3% in 1999. The exchange rate for the zloty has stabilized and the rate of
devaluation of the zloty has generally decreased since 1991. The zloty
appreciated against the U.S. dollar by approximately 0.4% for the year ended
December 31, 1998. However for the year ended December 31, 1999, the zloty has
depreciated against the U.S. dollar by approximately 17.4%. Inflation and
currency exchange fluctuations may have a material adverse effect on the
business, financial condition and results of operations of the Company.

                                       41
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors and Stockholder of @ Entertainment, Inc.:

    We have audited the accompanying consolidated balance sheet of @
Entertainment, Inc. and its subsidiaries as of December 31, 1999 and the related
consolidated statements of operations, comprehensive loss, changes in
stockholder's equity and cash flows for the period from January 1, 1999 to
August 5, 1999 and the period from August 6, 1999 to December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

    We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of @
Entertainment, Inc. and its subsidiaries as of December 31, 1999, and the
results of their operations and their cash flows for the period from January 1,
1999 to August 5, 1999 and the period from August 6, 1999 to December 31, 1999
in conformity with generally accepted accounting principles in the United States
of America.

                                          Arthur Andersen

Warsaw, Poland
March 29, 2000

                                       42
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
@ Entertainment, Inc.:

    We have audited the accompanying consolidated balance sheet of @
Entertainment, Inc. and subsidiaries as of December 31, 1998, and the related
consolidated statements of operations, comprehensive loss, changes in
stockholder's equity and cash flows for the years ended December 31, 1998 and
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of @
Entertainment, Inc. and subsidiaries as of December 31, 1998, and the results of
their operations and their cash flows for the years ended December 31, 1998 and
1997, in conformity with generally accepted accounting principles in the United
States of America.

                                          KPMG

Warsaw, Poland
March 29, 1999

                                       43
<PAGE>
                             @ ENTERTAINMENT, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
                                                               SUCCESSOR      PREDECESSOR
                                                               (NOTE 2)         (NOTE 2)
                                                              DECEMBER 31,    DECEMBER 31
                                                                 1999             1998
                                                               ----------        ---------
<S>                                                           <C>             <C>
                                                                         )      (IN THOUSANDS
                                           ASSETS
Current assets:
  Cash and cash equivalents.................................   $   35,520        $  13,055
  Trade accounts receivable, net of allowance for doubtful
    accounts of $3,090 in 1999 and $1,095 in 1998 (note
    5)......................................................       12,808            7,408
  Programming and broadcast rights (note 9).................        7,200            9,030
  VAT recoverable...........................................        9,623            8,785
  Prepayments...............................................        1,883           10,803
  Other current assets......................................        1,162            1,475
                                                               ----------        ---------
    Total current assets....................................       68,196           50,556
                                                               ----------        ---------
Property, plant and equipment (note 7):
  Cable television systems assets...........................      123,845          175,053
  D-DTH equipment...........................................       82,327           68,419
  Construction in progress..................................        7,400            2,739
  Vehicles..................................................        1,943            2,792
  Other.....................................................       15,871           16,119
                                                               ----------        ---------
                                                                  231,386          265,122
  Less accumulated depreciation.............................      (12,602)         (52,068)
                                                               ----------        ---------
    Net property, plant and equipment.......................      218,784          213,054
Inventories for construction................................        5,511            8,869
Intangible assets, net (note 8).............................      906,987           43,652
Investments in affiliated companies (note 10)...............       19,393           19,956
Other assets................................................           --           12,287
                                                               ----------        ---------
    Total assets............................................   $1,218,871        $ 348,374
                                                               ==========        =========
                            LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable and accrued expenses.....................   $   72,963        $  44,258
  Accrued interest..........................................          243            2,140
  Deferred revenue..........................................        4,009            4,366
  Current portion of notes payable..........................           --            6,500
                                                               ----------        ---------
    Total current liabilities...............................       77,215           57,264

Long-term liabilities:
  Notes payable and accrued interest to UPC (note 12).......      220,149               --
  Notes payable (note 12)...................................      314,547          257,454
                                                               ----------        ---------
    Total liabilities.......................................      611,911          314,718
                                                               ----------        ---------
Commitments and contingencies (notes 17 and 19)
Stockholder's equity (note 1):
  Common stock, $.01 par value; Authorized 70,000,000
    shares, issued and outstanding 33,310,000 shares in 1998
    and 1,000 issued and outstanding in 1999................           --              333
  Paid-in capital...........................................      812,549          237,954
  Accumulated other comprehensive income....................      (61,412)            (467)
  Accumulated deficit.......................................     (144,177)        (204,164)
                                                               ----------        ---------
      Total stockholder's equity............................      606,960           33,656
                                                               ----------        ---------
      Total liabilities and stockholder's equity............   $1,218,871        $ 348,374
                                                               ==========        =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       44
<PAGE>
                             @ ENTERTAINMENT, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                SUCCESSOR
                                                 (NOTE 2)              PREDECESSOR (NOTE 2)
                                               ------------   ---------------------------------------
                                               PERIOD FROM    PERIOD FROM
                                                AUGUST 6,      JANUARY 1,
                                               1999 THROUGH   1999 THROUGH   YEAR ENDED DECEMBER 31,
                                               DECEMBER 31,    AUGUST 5,     ------------------------
                                                   1999           1999          1998         1997
                                               ------------   ------------   ----------   -----------
<S>                                            <C>            <C>            <C>          <C>
<CAPTION>
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                            <C>            <C>            <C>          <C>
Revenues.....................................   $  38,018      $  46,940     $  61,859     $ 38,138
Operating expenses:
  Direct operating expenses..................      69,351         70,778        61,874       14,621
  Selling, general and administrative
    expenses.................................      46,874         51,034        74,494       49,893
  Depreciation and amortization..............      40,189         23,927        26,304       16,294
                                                ---------      ---------     ---------     --------
Total operating expenses.....................     156,414        145,739       162,672       80,808

  Operating loss.............................    (118,396)       (98,799)     (100,813)     (42,670)

Interest and investment income...............         731          2,823         3,355        5,754
Interest expense.............................     (24,459)       (28,818)      (21,957)     (13,902)
Equity in losses of affiliated companies.....        (291)        (1,004)       (6,310)        (368)
Foreign exchange loss, net...................      (2,637)        (2,188)         (130)      (1,027)
Non-operating income.........................       1,977             --            --           --
Impairment of D-DTH equipment (note 7).......      (1,091)            --            --           --
                                                ---------      ---------     ---------     --------
  Loss before income taxes and minority
    interest.................................    (144,166)      (127,986)     (125,855)     (52,213)
Income tax (expense)/benefit (note 11).......         (11)           (30)         (210)         975
Minority interest............................          --             --            --       (3,586)
                                                ---------      ---------     ---------     --------

  Net loss...................................    (144,177)      (128,016)     (126,065)     (54,824)

  Accretion of redeemable preferred stock....          --         (2,436)           --       (2,436)
  Excess of consideration paid for preferred
    stock over carrying amount...............          --             --            --      (33,806)
                                                ---------      ---------     ---------     --------
Net loss applicable to holders of common
  stock......................................   $(144,177)     $(130,452)    $(126,065)    $(91,066)
                                                =========      =========     =========     ========
Basic and diluted net loss per common share
  (note 15)..................................         N/A      $   (3.90)    $   (3.78)    $  (3.68)
                                                =========      =========     =========     ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       45
<PAGE>
                             @ ENTERTAINMENT, INC.

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                SUCCESSOR
                                                (NOTE 2)                  PREDECESSOR (NOTE 2)
                                              -------------   --------------------------------------------
                                               PERIOD FROM    PERIOD FROM
                                                AUGUST 6,      JANUARY 1,
                                              1999 THROUGH    1999 THROUGH    YEAR ENDED      YEAR ENDED
                                              DECEMBER 31,     AUGUST 5,     DECEMBER 31,    DECEMBER 31,
                                                  1999            1999           1998            1997
                                              -------------   ------------   -------------   -------------
                                                                             (IN THOUSANDS)
<S>                                           <C>             <C>            <C>             <C>
Net loss....................................    $(144,177)     $(128,016)      $(126,065)      $(54,824)
Other comprehensive income/(loss):
  Translation adjustment....................      (61,412)       (21,327)           (249)          (218)
                                                ---------      ---------       ---------       --------
Comprehensive loss..........................     (205,589)      (149,343)       (126,314)       (55,042)
                                                =========      =========       =========       ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       46
<PAGE>
                             @ ENTERTAINMENT, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                                            ACCUMULATED
                                   PREFERRED STOCK          COMMON STOCK                       OTHER
                                 -------------------   ----------------------   PAID-IN    COMPREHENSIVE   ACCUMULATED
                                  SHARES     AMOUNT      SHARES       AMOUNT    CAPITAL       INCOME         DEFICIT      TOTAL
                                 --------   --------   -----------   --------   --------   -------------   -----------   --------
                                                               (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S>                              <C>        <C>        <C>           <C>        <C>        <C>             <C>           <C>
Balance January 1, 1997........                         18,948,000      189       54,134           --        (23,275)      31,048
  Translation adjustment.......       --         --             --       --           --         (218)            --         (218)
  Net loss.....................       --         --             --       --           --           --        (54,824)     (54,824)
  Net proceeds from initial
    public offering............       --         --      9,500,000       95      183,197           --             --      183,292
  Purchase of PCI series A and
    C redeemable preferred
    stock......................       --         --             --       --      (33,806)          --             --      (33,806)
  Accretion of redeemable
    preferred stock............       --         --             --       --       (2,436)          --             --       (2,436)
  Conversion of series B
    redeemable preferred
    stock......................       --         --      4,862,000       49       11,148           --             --       11,197
  Stock option compensation
    expense (note 16)..........       --         --             --       --       18,102           --             --       18,102
                                  ------    -------    -----------     ----     --------      -------       --------     --------
Balance December 31, 1997......       --         --     33,310,000      333      230,339         (218)       (78,099)     152,355
  Translation adjustment.......       --         --             --       --           --         (249)            --         (249)
  Net loss.....................       --         --             --       --           --           --       (126,065)    (126,065)
  Warrants attached to Senior
    Discount Notes (note 12)...       --         --             --       --        7,615           --             --        7,615
                                  ------    -------    -----------     ----     --------      -------       --------     --------
Balance December 31, 1998......       --         --     33,310,000      333      237,954         (467)      (204,164)      33,656
Proceeds from issuance of
  preferred stock..............    5,000     28,812             --       --       19,483           --             --       48,295
Accretion of redeemable
  preferred stock..............       --      2,436             --       --       (2,436)          --             --           --
Warrants attached to Senior
  Discount Notes...............       --         --             --       --        7,452           --             --        7,452
Proceeds from issuance of
  common stock.................       --         --         96,000        1          195           --             --          196
Proceeds from exercise of
  warrants.....................       --         --        538,616        5        6,441           --             --        6,446
Translation adjustment.........       --         --             --       --           --      (21,327)            --      (21,327)
Net loss.......................       --         --             --       --           --           --       (128,016)    (128,016)
                                  ------    -------    -----------     ----     --------      -------       --------     --------
  Balance August 5, 1999,
    Predecessor (note 2).......    5,000     31,248     33,944,616      339      269,089      (21,794)      (332,180)     (53,298)
                                  ======    =======    ===========     ====     ========      =======       ========     ========
  Warrants exercise............       --         --             --       --          146           --             --          146
  Issuance of common stock.....       --         --          1,000       --           --           --             --           --
  Purchase accounting
    adjustments................   (5,000)   (31,248)   (33,944,616)    (339)     543,314       21,794        332,180      865,701
                                  ------    -------    -----------     ----     --------      -------       --------     --------
  Balance August 6, 1999,
    Successor..................       --         --             --       --      812,549           --             --      812,549
                                  ------    -------    -----------     ----     --------      -------       --------     --------
  Translation adjustment.......       --         --             --       --           --      (61,412)            --      (61,412)
  Net loss.....................       --         --             --       --           --           --       (144,177)    (144,177)
                                  ------    -------    -----------     ----     --------      -------       --------     --------
Balance December 31, 1999,
  Successor (note 2)...........       --         --          1,000       --      812,549      (61,412)      (144,177)     606,960
                                  ======    =======    ===========     ====     ========      =======       ========     ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       47
<PAGE>
                             @ ENTERTAINMENT, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

<S>                                                   <C>                 <C>                  <C>         <C>
                                                       SUCCESSOR (NOTE
                                                             2)                     PREDECESSOR (NOTE 2)
                                                      -----------------   -----------------------------------------
                                                       PERIOD FROM         PERIOD FROM         YEAR ENDED DECEMBER
                                                      AUGUST 6, 1999      JANUARY 1, 1999              31,
                                                         THROUGH             THROUGH           --------------------
                                                      DECEMBER 31, 1999   AUGUST 5, 1999         1998        1997
                                                      -----------------   ------------------   ---------   --------
<CAPTION>
                                                                        (IN THOUSANDS)
<S>                                                   <C>                 <C>                  <C>         <C>
Cash flows from operating activities:
  Net loss..........................................      $(144,177)          $(128,016)       $(126,065)  $(54,824)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
    Minority interest...............................             --                  --               --      3,586
    Depreciation and amortization...................         40,189              23,927           26,304     16,294
    Amortization of notes payable discount and issue
      costs.........................................         16,838              19,209            9,182      1,040
    Gain on sale of investment securities...........             --                  --               --       (358)
    Non-cash stock option compensation expense......             --                  --               --     18,102
    Equity in loss of affiliated companies..........            291               1,004            6,310        368
    Impairment of D-DTH equipment...................          1,091                  --               --         --
    Unrealized foreign exchange losses..............          3,939                  --               --         --
    Other...........................................         (2,200)                619            2,196         --
    Changes in operating assets and liabilities:
      Accounts receivable...........................         (3,746)             (2,651)          (2,780)    (3,191)
      Other current assets..........................          1,647               6,985           (7,959)    (2,101)
      Programming and broadcast rights..............          5,208              (3,378)          (8,136)      (894)
      Accounts payable..............................          6,688                 403           25,185      5,757
      Income taxes payable..........................            (85)                 85            2,026     (2,707)
      Accrued interest..............................             --                  --              (35)        --
      Deferred revenue..............................          1,125               1,103            3,104        155
      Trade accounts payable to UPC.................          1,206                  --               --         --
      Interest payable to UPC.......................          2,804                  --               --         --
      Other.........................................          3,211               3,468               --         --
                                                          ---------           ---------        ---------   --------
        Net cash used in operating activities.......        (65,971)            (77,242)         (70,668)   (18,773)
                                                          ---------           ---------        ---------   --------
Cash flows from investing activities:
      Construction and purchase of property, plant
        and equipment...............................        (27,021)            (24,034)        (114,992)   (39,643)
      Repayment of notes receivable from
        affiliates..................................             --                  --               --      2,521
      Issuance of notes receivable from
        affiliates..................................             --                  --               --       (721)
      Proceeds from maturity of investment
        securities..................................             --                  --               --     25,473
      Purchase of other assets......................             --                  --               --    (10,200)
      Investment in affiliated companies............             --                  --           (5,228)   (21,420)
      Other investments.............................           (237)             (1,753)              --         --
      Purchase of intangibles.......................           (308)                 --               --         --
      Purchase of subsidiaries, net of cash
        received....................................           (954)             (6,860)         (26,990)   (20,852)
                                                          ---------           ---------        ---------   --------
        Net cash used in investing activities.......        (28,520)            (32,647)        (147,210)   (64,842)
                                                          ---------           ---------        ---------   --------
Cash flows from financing activities:
      Net proceeds from issuance of stock and
        exercise of warrants........................            146               6,447               --    183,292
      Redemption of preferred stock.................             --                  --               --    (60,000)
      Proceeds from issuance of notes payable.......             --             109,755          123,985         --
      Proceeds from loans from affiliates...........        217,012                  --               --         --
      Proceeds from issuance of preferred stock and
        warrants....................................             --              48,295            7,615         --
      Repayment of bonds payables...................       (149,395)             (5,156)          (5,960)    (1,749)
      Repayment of notes payable....................             --                  --             (398)      (720)
                                                          ---------           ---------        ---------   --------
        Net cash provided by financing activities...         67,763             159,341          125,242    120,823
                                                          ---------           ---------        ---------   --------
        Net increase/(decrease) in cash and cash
          equivalents...............................        (26,728)             49,452          (92,636)    37,208
        Effect of exchange rates on cash and cash
          equivalents...............................           (259)                 --               --         --
Cash and cash equivalents at beginning of period....         62,507              13,055          105,691     68,483
                                                          ---------           ---------        ---------   --------
Cash and cash equivalents at end of period..........      $  35,520           $  62,507        $  13,055    105,691
                                                          =========           =========        =========   ========
Supplemental cash flow information:
Cash paid for interest..............................      $   6,270           $   7,304        $  13,014   $ 12,873
Cash paid for income taxes..........................      $      37           $      47        $     589   $  1,732
                                                          =========           =========        =========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       48
<PAGE>
                             @ ENTERTAINMENT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997

1. ORGANIZATION AND FORMATION OF HOLDING COMPANY

    @ Entertainment, Inc. ("@ Entertainment"), a Delaware corporation and fully
owned subsidiary of United Pan-Europe Communications N.V. ("UPC") was
established in May 1997. @ Entertainment succeeded Poland Communications, Inc.
("PCI") as the group holding company to facilitate an initial public offering of
stock in the United States and internationally (the "IPO"). PCI was founded in
1990 by David T. Chase, a Polish-born investor. On August 6, 1999, United
Pan-Europe Communications N.V. ("UPC") through its wholly-owned subsidiary,
Bison Acquisition Corporation ("Bison") acquired all of the outstanding shares
of the Company. The period from January 1, 1999 through August 5, 1999 and the
period from August 6, 1999 through December 31, 1999 are referred to herein as
the "seven months of 1999" and "five months of 1999", respectively.

    @ Entertainment, Inc. and its subsidiaries (the "Company") offer pay
television services to business and residential customers in Poland. Its
revenues are derived primarily from monthly basic and premium service fees for
cable and digital satellite direct-to-home ("D-DTH") television services
provided primarily to residential, rather than business, customers. In
September 1998, the Company launched its D-DTH broadcasting service throughout
Poland. In addition to developing and acquiring programming for distribution on
its cable and D-DTH television networks, the Company commenced distribution of a
branded digital encrypted platform of Polish-language programming under the
brand name Wizja TV in June and September 1998 on its cable and D-DTH television
networks, respectively.

    At December 31, 1999, @ Entertainment, wholly owned PCI, @ Entertainment
Programming, Inc. ("@EPI")--United States corporations, Wizja TV Limited
(previously AT Entertainment Limited ("Wizja TV Ltd")), At Entertainment
Services Limited ("@ES")--United Kingdom corporations, Wizja TV B.V.(previously
Sereke Holding B.V.("Wizja TV BV"))--a Netherlands corporation and Wizja TV Sp.
z o.o., Ground Zero Media Sp. z o.o. ("GZM") and Wizja TV Spolka Produkcyjna Sp.
z o.o., which are Polish corporations. PCI owns 92.3% of the capital stock of
Poland Cablevision (Netherlands) B.V. ("PCBV"), a Netherlands corporation and
first-tier subsidiary of PCI. @ Entertainment, PCI and PCBV are holding
companies that directly or indirectly hold controlling interests in a number of
Polish cable television companies, collectively referred to as the "PTK
Companies". As of December 31, 1999, substantially all of the assets and
operating activities of the Company were located in Poland and the United
Kingdom.

2. CONSUMMATION OF UPC TENDER OFFER AND MERGER

    On June 2, 1999, the Company entered into an Agreement and Plan of Merger
with United Pan-Europe Communications N.V. ("UPC"), whereby UPC and its
wholly-owned subsidiary, Bison Acquisition Corp. ("Bison"), initiated a tender
offer to purchase all of the outstanding shares of the Company in an all cash
transaction valuing the Company's shares of common stock at $19.00 per share.

    The tender offer, initiated pursuant to the Agreement and Plan of Merger
with UPC and Bison, closed at 12:00 midnight on August 5, 1999. On August 6,
1999, Bison reported that it had accepted for payment a total of 33,701,073
shares of the Company's common stock (including 31,208 shares tendered pursuant
to notices of guaranteed delivery) representing approximately 99% of the
Company's outstanding shares of common stock (the "Acquisition"). In addition
UPC acquired 100% of the outstanding Series A and Series B 12% Cumulative
Preference Shares of the Company and acquired all of the outstanding warrants
and stock options.

    Also on August 6, 1999, Bison was merged with and into the Company with the
Company continuing as the surviving corporation (the "Merger"). Accordingly, the
Company became a wholly-owned subsidiary

                                       49
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

2. CONSUMMATION OF UPC TENDER OFFER AND MERGER (CONTINUED)
of UPC. UnitedGlobalCom, Inc. is the majority stockholder of UPC. The Company
believes that a Change of Control occurred on August 6, 1999 as a result of the
Acquisition and Merger. @ Entertainment prior to the Acquisition, is herein
referred to as the "Predecessor" while the Company after the Acquisition is
referred to as the "Successor".

    The Acquisition was accounted for under the purchase method of accounting,
with all of the purchase accounting adjustments "pushed-down" to the
consolidated financial statements of @ Entertainment. Accordingly, the purchase
price was allocated to the underlying assets and liabilities based upon their
estimated fair values and any excess to goodwill. The Company restated some of
its assets and liabilities at August 5, 1999. At this date the Notes of the
Company and Poland Communications, Inc. ("PCI") were restated to reflect the
market value and as a result were increased by $61.9 million and deferred
financing costs of $16.1 million and deferred revenues of $2.0 million were
written down to zero. The consideration paid by UPC for all shares outstanding,
warrants and options totalled $812.5 million. At this time the Company had
negative net assets of approximately $53.3 million and existing goodwill at net
book value of $37.5 million which was realized on previous transactions. As a
result of the above considerations, UPC recognized goodwill of approximately
$979.3 million. As a result of the Acquisition, UPC pushed down its basis to the
Company establishing a new basis of accounting as of the acquisition date.

    The following pro forma condensed consolidated results for the seven months
of 1999, the years ended December 31, 1998 and 1997 give effect to the
Acquisition of @ Entertainment as if it had occurred at the beginning of the
periods presented. This pro forma condensed consolidated financial information
does not purport to represent what the Company's results would actually have
been if such transaction had in fact occurred on such date. The pro forma
adjustments are based upon the assumptions that goodwill and the amortization
thereon would be pushed down as if the transaction had occurred at the beginning
of each period presented. Additionally, interest expense related to the deferred
financing costs was removed for each of the periods presented. There was no tax
effect from these adjustments because of the significant net losses.

<TABLE>
<CAPTION>
                              FIVE MONTHS        SEVEN MONTHS               YEAR ENDED                YEAR ENDED
                                OF 1999             OF 1999              DECEMBER 31, 1998         DECEMBER 31, 1997
                              -----------   -----------------------   -----------------------   -----------------------
                              HISTORICAL    HISTORICAL   PRO FORMA    HISTORICAL   PRO FORMA    HISTORICAL   PRO FORMA
                              -----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                           <C>           <C>          <C>          <C>          <C>          <C>          <C>
Service and other revenue...   $  38,018    $  46,940    $  46,940    $  61,859    $  61,859     $ 38,138    $  38,138
                               =========    =========    =========    =========    =========     ========    =========
Net loss....................   $(144,177)   $(128,016)   $(163,421)   $(126,065)   $(187,509)    $(54,824)   $(116,518)
                               =========    =========    =========    =========    =========     ========    =========
</TABLE>

3. FINANCIAL POSITION AND BASIS OF ACCOUNTING

   These consolidated financial statements have been prepared on a going concern
basis which contemplates the continuation and expansion of trading activities as
well as the realization of assets and liquidation of liabilities in the ordinary
course of business. Pay television operators typically experience losses and
negative cash flow in their initial years of operation due to the large capital
investment required for the construction or acquisition of their cable networks,
acquisition of programming rights and reception system for its D-DTH business
and the administrative costs associated with commencing operations. Consistent
with this pattern, the Company has incurred substantial operating losses since
inception (1990). The Company expects to experience substantial operating losses
and negative cash flows for at least the next year in association with the
expansion of the D-DTH and programming businesses. As of December 31, 1999, the
Company has negative working capital and significant commitments under non-

                                       50
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

3. FINANCIAL POSITION AND BASIS OF ACCOUNTING (CONTINUED)
cancelable operating leases and for programming rights. Additionally, the
Company is currently and is expected to continue to be highly leveraged. The
ability of the Company to meet its debt service obligations will depend on the
future operating performance and financial results of the Company as well as its
ability to obtain additional third party financing to support the planned
expansion, as well as obtaining additional financing from its parent, UPC. The
Company's current cash on hand will be insufficient to satisfy all of its
commitments and to complete its current business plan for its D-DTH, cable and
programming business.

    Management of the Company believes that significant opportunities exist for
pay television providers capable of delivering high quality, Polish-language
programming on a multi-channel basis. As such, the Company has focused its
financial and business efforts toward its position in the cable, D-DTH and
programming markets. The Company's business strategy is designed to increase its
market share and subscriber base and to maximize revenue per subscriber. To
accomplish its objectives and to capitalize on its competitive advantages, the
Company intends to (i) develop and control the content of programming on its
cable and D-DTH systems; (ii) increase its distribution capabilities through
internal growth and through acquisitions; (iii) control its management of
subscribers by using advanced integrated management information systems; and
(iv) establish Wizja TV as the leading brand name in the Polish pay television
industry. If the Company's plans or assumptions change, if its assumptions prove
inaccurate, if it consummates unanticipated investments in or acquisitions of
other companies, if it experiences unexpected costs or competitive pressures, or
if existing cash, and projected cash flow from operations prove to be
insufficient, the Company may need to obtain greater amounts of additional
financing. While it is the Company's intention to enter only into new financing
or refinancing that it considers advantageous, there can be no assurance that
such sources of financing would be available to the Company in the future, or,
if available, that they could be obtained on terms acceptable to the Company.
The Company is also dependent on its parent, UPC, to provide financing to
achieve the Company's business strategy. UPC has declared that it will continue
to financially support @ Entertainment and its subsidiaries as a going concern,
and accordingly enable @ Entertainment and its subsidiaries to meet their
financial obligations if and when needed, for the period at least through
January 31, 2001.

    Several of the Company's Polish subsidiaries have statutory shareholders'
equity less than the legally prescribed limits because of accumulated losses.
The management of these companies will have to make decisions on how to increase
the shareholders' equity to be in compliance with the Polish Commercial Code.
The Company is currently considering several alternatives, including the
conversion of intercompany debt into equity, in order to resolve these
deficiencies.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

    The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America ("U.S. GAAP").

    The Company maintains its books of account in Poland and in the UK in
accordance with accounting standards in the respective countries. These
financial statements include certain adjustments not reflected in the Company's
statutory books to present these statements in accordance with U.S. GAAP.

    The consolidated financial statements include the financial statements of @
Entertainment, Inc. and its wholly owned and majority owned subsidiaries. Also
consolidated is a 49% owned subsidiary for which the Company maintains control
of operating activities and has the ability to influence the appointment of

                                       51
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
members to the Managing Board. All intercompany balances and transactions have
been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents consist of cash and other short-term investments
with original maturities of less than three months.

USE OF ESTIMATES

    Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with U.S. GAAP. Actual results could differ from those estimates.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

    The allowance for doubtful accounts is based upon the Company's assessment
of probable loss related to overdue accounts receivable.

REVENUE RECOGNITION

    CABLE TELEVISION REVENUES:

    Revenue from subscription fees is recognized on a monthly basis as the
    service is provided. Installation fee revenue for connection to the
    Company's cable television system, is recognized to the extent of direct
    selling costs and the balance is deferred and amortized to income over the
    estimated average period that new subscribers are expected to remain
    connected to the systems.

    D-DTH SUBSCRIPTION REVENUES:

    Until April 1, 1999 the Company provided its Wizja TV package (consisting of
    a one-year rental of a D-DTH reception system, installation and a one-year
    subscription to the Company's D-DTH service) to retail customers for one
    up-front payment at the time of installation. The Company recognized
    subscription revenues at the time of installation to the extent of direct
    selling costs incurred, and the balance is deferred and amortized to income
    over the remaining term of the subscription. There were no revenues derived
    from D-DTH subscription revenues prior to 1998.

    Since April 1, 1999 the Company has no longer provided its Wizja TV package
    based on up-front one year payment for installation and subscription. As a
    result the Company recognizes revenue from subscription fees on a monthly
    basis as the service is provided.

    OTHER REVENUES:

    Advertising revenues are recognized when advertisements are aired under
    broadcast contracts.

TAXATION

    Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled.

                                       52
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    U.S. TAXATION:

    The Company and PCI are subject to U.S. federal income taxation on its
    worldwide income. The Polish corporations are not engaged in a trade or
    business within the U.S. or do not derive income from U.S. sources and
    accordingly, are not subject to U.S. income tax.

    FOREIGN TAXATION:

    The Polish companies are subject to corporate income taxes, value added tax
    (VAT) and various local taxes within Poland, as well as import duties on
    materials imported by them into Poland. Under Polish law, the Polish
    companies are exempt from import duties on certain in-kind capital
    contributions.

    The Polish companies' income tax is calculated in accordance with Polish tax
    regulations. Due to differences between accounting practices under Polish
    tax regulations and those required by U.S. GAAP, certain income and expense
    items are recognized in different periods for financial reporting purposes
    and income tax reporting purposes which may result in deferred income tax
    assets and liabilities.

    Effective January 1998, the Company adopted EITF 92-8--"Accounting for the
Income Tax Effects under FASB Statement No. 109 of a Change in Functional
Currency When an Economy Ceases to Be Considered Highly Inflationary". As a
result of adopting EITF 92-4, "Accounting for a Change in Functional Currency
When the Economy Ceases to Be Considered Highly Inflationary," the Company's
functional currency bases exceeded the local currency tax bases of nonmonetary
items. The difference between the new functional currency and the tax bases have
been recognized as temporary differences in accordance with EITF 92-8.

PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment includes assets used in the development and
operation of the Company's D-DTH and cable television systems and set-top boxes.
During the period of construction, plant costs and a portion of design,
development and related overhead costs are capitalized as a component of the
Company's investment in D-DTH and cable television systems. When material, the
Company capitalizes interest costs incurred during the period of construction in
accordance with SFAS No. 34, "Capitalization of Interest Cost". Interest is not
capitalized for short-term construction projects. During 1998, the Company
capitalized approximately $664,000 of interest related to required up-front
payments to Philips for D-DTH reception systems. During the five months of 1999,
seven months of 1999 and the year ended December 31, 1997, no interest costs
were capitalized.

    Cable and D-DTH subscriber related costs and general and administrative
expenses are charged to operations when incurred.

    Depreciation is computed for financial reporting purposes using the
straight-line method over the following estimated useful lives:

<TABLE>
<S>                                                           <C>
Cable television system assets..............................    10 years
D-DTH system assets.........................................     5 years
Set-top boxes...............................................     5 years
Vehicles....................................................     5 years
Other property, plant and equipment.........................  5-10 years
</TABLE>

                                       53
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES FOR CONSTRUCTION

    Inventories for construction are stated at the lower of cost, determined by
the average cost method, or net realizable value. Inventories are principally
related to cable television systems. Cost of inventory includes purchase price,
transportation, customs and other direct costs.

GOODWILL AND OTHER INTANGIBLES

    Prior to the Merger, goodwill, which represents the excess of purchase price
over fair value of net assets acquired, was amortized on a straight-line basis
over the expected periods to be benefited, generally ten years, with the
exception of amounts paid relating to non-compete agreements. The portion of the
purchase price relating to the non-compete agreements was amortized over the
term of the underlying agreements, generally five years.

    Effective as of the Merger Date, the Company revalued all its goodwill,
including amounts related to non-compete agreements that related to transactions
completed prior to the Merger. The goodwill that was pushed down to the Company
is amortized using straight-line basis over the expected periods to be
benefited, which is fifteen years.

    Through its subsidiaries, the Company has entered into lease agreements with
the Polish national telephone company ("TPSA"), for the use of underground
telephone conduits for cable wiring. Costs related to obtaining conduit and
franchise agreements with housing cooperatives and governmental authorities are
capitalized and amortized generally over a period of ten years. In the event the
Company does not proceed to develop cable systems within designated cities,
costs previously capitalized will be charged to expense.

PROGRAMMING AND BROADCAST RIGHTS

    The Company enters into contracts for the purchase of certain exhibition or
broadcast rights. Broadcast or exhibition rights consist principally of rights
to broadcast syndicated programs, sports and feature films and are accounted for
as a purchase of rights by the licensee. The asset and liability for the rights
acquired and obligations incurred under a license agreement are reported by the
Company, at the gross amount of the liability, when the license period begins
and certain specified conditions have been met, in accordance with the
guidelines established within SFAS No. 63, "FINANCIAL REPORTING BY
BROADCASTERS".

DEFERRED FINANCING COSTS

    Costs incurred to obtain financing have been deferred and amortized over the
life of the related loan using the effective interest method. Such costs were
written off in 1999 at the Merger as part of the purchase accounting adjustment.

INVESTMENTS IN AFFILIATED COMPANIES

    Investments in affiliated companies are accounted for using the equity
method. Where the purchase price exceeds the fair value of the Company's
percentage of net assets acquired, the difference is amortized over the expected
period to be benefited as a charge to equity in profits of affiliated companies.
Where the expected period to be benefited is limited by licensing agreements,
the difference is amortized over the term of the licensing agreement.

                                       54
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MINORITY INTEREST

    Recognition of the minority interests' share of losses of consolidated
subsidiaries is limited to the amount of such minority interests' allocable
portion of the equity of those consolidated subsidiaries.

STOCK-BASED COMPENSATION

    The Company has adopted SFAS No. 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION", which gives companies the option to adopt the fair value based
method for expense recognition of employee stock options and other stock-based
awards or to account for such items using the intrinsic value method as outlined
under APB Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES", with pro
forma disclosure of net loss and loss per share as if the fair value method had
been applied. The Company has elected to apply APB Opinion No. 25 and related
interpretations for stock options and other stock-based awards.

FOREIGN CURRENCIES

    Foreign currency transactions are recorded at the exchange rate prevailing
at the date of the transactions. Assets and liabilities denominated in foreign
currencies are translated at rates of exchange at balance sheet date. Gains and
losses on foreign currency transactions are included in the consolidated
statement of operations.

    The financial statements of foreign subsidiaries are translated to U.S.
dollars using (i) exchange rates in effect at period end for assets and
liabilities, and (ii) average exchange rates during the period for results of
operations. Adjustments resulting from translation of financial statements are
reflected in accumulated other comprehensive loss as a separate component of
stockholder's equity. The Company considers all of its intercompany loans to its
Polish subsidiaries to be of a long-term investment nature. As a result, any
foreign exchange gains or losses resulting from the intercompany loans are
reported in accumulated other comprehensive loss.

    Effective January 1, 1998, Poland is no longer deemed to be a highly
inflationary economy. In accordance with this change, the Company established a
new functional currency basis for non-monetary items of its Polish subsidiaries
in accordance with guidelines established within EITF Issue 92-4, "ACCOUNTING
FOR A CHANGE IN FUNCTIONAL CURRENCY WHEN AN ECONOMY CEASES TO BE CONSIDERED
HIGHLY INFLATIONARY". That basis is computed by translating the historical
reporting currency amounts of non-monetary items into the local currency at
current exchange rates.

    Prior to January 1, 1998 the financial statements of foreign subsidiaries
were translated into U.S. dollars using (i) exchange rates in effect at period
end for monetary assets and liabilities, (ii) exchange rates in effect at
transaction dates (historical rates) for non monetary assets and liabilities,
and (iii) average exchange rates during the period for revenues and expenses,
other than those revenues and expenses that relate to non monetary assets and
liabilities (primarily amortization of fixed assets and intangibles) which are
translated using the historical exchange rates applicable to those non monetary
assets and liabilities. Adjustments resulting from translation of financial
statements were reflected as foreign exchange gains or losses in the
consolidated statements of operations.

                                       55
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS

    SFAS No. 107, "Disclosures about Fair Value Of Financial Instruments"
requires the Company to make disclosures of fair value information of all
financial instruments, whether or not recognized on the consolidated balance
sheets, for which it is practicable to estimate fair value.

    The Company's financial instruments include cash and cash equivalents,
accounts receivable, accounts payable and accrued expenses and notes payable.

    At December 31, 1999 and 1998, the carrying value of cash and cash
equivalents, accounts receivable, and accounts payable and accrued expenses on
the accompanying consolidated balance sheets approximates fair value due to the
short maturity of these instruments.

    At December 31, 1999 and 1998 the fair value of the Company's notes payable
balance approximates $320,635,000 and $230,194,000, respectively, based on the
last trading price of the notes payable in the respective years.

    At the date of the Merger the Company's and PCI Notes were restated to their
fair market value at this date. The resulting $61.9 million, increase was
recorded in the pushed-down purchase accounting entries.

IMPAIRMENT OF LONG-LIVED ASSETS

    The Company assesses the recoverability of long-lived assets (mainly
property, plant and equipment, intangibles and certain other assets) by
determining whether the carrying value of the assets can be recovered over the
remaining lives through projected undiscounted future operating cash flows,
expected to be generated by such assets. If an impairment in value is estimated
to have occurred, the assets carrying value is reduced to its estimated fair
value. The assessment of the recoverability of long-lived assets will be
impacted if estimated future operating cash flows are not achieved.

COMMITMENTS AND CONTINGENCIES

    Liabilities for loss contingencies arising from claims, assessments,
litigation, fines and penalties, and other sources are recorded when it is
probable that a liability has been incurred and the amount of the assessment can
be reasonably estimated.

ADVERTISING COSTS

    All advertising costs of the Company are expensed as incurred.

RECLASSIFICATIONS

    Certain amounts have been reclassified in the prior year consolidated
financial statements to conform to the presentation contained in the 1999
periods.

NEW ACCOUNTING PRINCIPLES

    The Financial Accounting Standards Board ("FASB") recently issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which requires that companies
recognize all derivatives as either assets or liabilities in the balance sheet
at fair value. Under this statement, accounting for changes in fair value of a
derivative depends on its intended use and designation. In June 1999, the FASB
approved Statement of Financial Accounting Standards No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral

                                       56
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of Effective Date of FASB Statement No. 133" ("SFAS 137"). SFAS 137 amends the
effective date of SFAS 133, which will now be effective for the first quarter
2001. We are currently assessing the effect of this new standard.

5. VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                   BALANCE AT     ADDITIONS                  BALANCE AT
                                                  THE BEGINNING   CHARGED TO     AMOUNTS     THE END OF
                                                  OF THE PERIOD    EXPENSE     WRITTEN OFF   THE PERIOD
                                                  -------------   ----------   -----------   ----------
                                                                     (IN THOUSANDS)
<S>                      <C>                      <C>             <C>          <C>           <C>
                         Allowance for Doubtful
1997...................  Accounts                    $  545         $  494        $  273       $  766
                         Allowance for Doubtful
1998...................  Accounts                    $  766         $1,383        $1,054       $1,095
                         Allowance for Doubtful
Seven months of 1999...  Accounts                    $1,095         $  740        $  223       $1,612
                         Allowance for Doubtful
Five months of 1999....  Accounts                    $1,612         $2,331        $  853       $3,090
</TABLE>

6. ACQUISITIONS

    During 1999, the Company made several acquisitions of which details follow.
In each case, the acquisition was accounted for using the purchase method,
whereby the purchase price was allocated to the underlying assets and
liabilities based on their proportionate share of fair values on the date of
acquisition and any excess to goodwill. The results of operations of each of the
businesses acquired are included in the Company's consolidated financial
statements since the date of acquisition. In each case the goodwill life was 10
years. However, as discussed in Note 4, the revalued goodwill resulting from the
Merger is being amortized over 15 years.

    On February 25, 1999, @ Entertainment purchased for approximately
$1.8 million a 30% interest in Mazowiecki Klub Sportowy Sportowa Spolka Akcyjna,
a joint stock company which owns Hoop Pekaes Pruszkow, a Polish basketball club.
In connection with this purchase @ Entertainment has agreed to act as a sponsor
for Hoop Pekaes Pruszkow. As of year ended December 31, 1999 the Company through
its subsidiaries committed to pay an additional $4.8 million for the sponsorship
of this basketball club and to secure future programming rights.

    On March 31, 1999, a subsidiary of PCI purchased certain cable television
system assets for an aggregate consideration of approximately $509,000. The
acquisition was accounted for using the purchase method, whereby the purchase
price was allocated among the fixed assets acquired based on their fair value on
the date of acquisition and any excess to goodwill. The purchase price exceeded
fair value of the assets acquired by approximately $108,000.

    On July 9, 1999, a subsidiary of the Company entered into an agreement to
acquire 100% of a cable television system for total consideration of
approximately $7,500,000. The consummation of this transaction is subject to
Polish Ministry of Telecommunications approval. The acquisition has been
accounted for under the purchase method where the purchase price was allocated
to the underlying assets and liabilities based upon their estimated fair values
and any excess to goodwill. The acquisition did not have a material effect on
the Company's results of operations in 1999. The purchase price exceeded fair
value of the assets acquired by approximately $5,336,000.

                                       57
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

6. ACQUISITIONS (CONTINUED)
    On July 26, 1999, a subsidiary of the Company entered into an agreement to
purchase all of the assets and subscriber lists of a cable television system for
total consideration of approximately $2,800,000. The purchase was accounted for
under the purchase method where the purchase price was allocated to the
underlying assets based upon their estimated fair values and the excess to
goodwill. The purchase price did not materially exceed the value of the assets
acquired.

    Had these acquisitions occurred on January 1, 1998, the Company's pro-forma
consolidated results for the years ended December 31, 1999 and 1998, would not
be materially different from those presented in the Consolidated Statements of
Operations.

    In February 1998, PCI acquired substantially all of the assets and
liabilities of a cable television business for an aggregate consideration of
approximately $1,574,000. The purchase price exceeded the fair value of the net
liabilities acquired by approximately $2,041,000. In association with this
acquisition, the Company assumed a $2,150,000 loan from Bank Rozwoju Exportu
S.A. (refer to note 12).

    In February and March 1998, the Company acquired the remaining 55% equity
interest in an affiliated company for approximately $9,389,000. The purchase
price exceeded the fair value of the net liabilities acquired by approximately
$9,945,000.

    On July 16, 1998, the Company purchased the remaining 45.25% interest in a
subsidiary of the Company which was held by unaffiliated third parties for an
aggregate purchase price of approximately $10,655,000, of which approximately
$9,490,000 relates to non-compete agreements. The purchase price, excluding the
amount paid relating to the non-compete agreements, exceeded the fair value of
the assets acquired by $604,000. The portion of the purchase price relating to
the non-compete agreements will be amortized over the five-year term of the
agreements.

    On August 15, 1998, a subsidiary of the Company purchased the remaining
approximately 50% minority interest in another subsidiary of the Company which
was held by unaffiliated third parties for aggregate consideration of
approximately $5,372,000. The purchase price exceeded the fair value of the
assets acquired by $1,104,000.

    Additionally, during 1998 PCI acquired certain cable television system
assets and subscriber lists for aggregate consideration of approximately
$2,000,000. The purchase price did not materially exceed the fair value of the
assets acquired.

    Effective January 1, 1997, PCI acquired the remaining 51% of a subsidiary
company for aggregate consideration of approximately $9,927,000. The acquisition
has been accounted for as a purchase with the purchase price allocated among the
assets acquired and liabilities assumed based upon the fair values at the date
of acquisition and any excess to goodwill. The purchase price exceeded the fair
value of the net assets acquired by approximately $5,556,000.

    In May 1997, the Company's subsidiaries acquired a 54.75% ownership interest
in a cable television company for aggregate consideration of approximately
$10,925,000. The acquisition has been accounted for as a purchase with the
purchase price allocated among the assets acquired and liabilities assumed based
upon the fair values at the date of acquisition and any excess as goodwill. The
purchase price exceeded the fair value of the net assets acquired by
approximately $9,910,000.

    During 1997, the Company's subsidiaries acquired certain cable television
system assets and subscriber lists for aggregate consideration of approximately
$3,200,000. The acquisitions have been accounted for as fixed asset purchases
with the purchase price allocated among the fixed assets acquired based upon
their

                                       58
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

6. ACQUISITIONS (CONTINUED)
fair values at the dates of acquisition and any excess to goodwill. The purchase
prices exceeded the fair value of the assets acquired by approximately $548,000.

7. PROPERTY, PLANT AND EQUIPMENT

    As part of the accounting for the Merger the Company recorded its fixed
asset fair values and re-set accumulated depreciation to zero. The following pro
forma consolidated tangible fixed assets balances for the year ended
December 31, 1999 and 1998 give effect of the Acquisition of @Entertainment as
it had occurred on December 31, 1998.

<TABLE>
<CAPTION>
                                                                              PRO FORMA
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  1999           1998
                                                              ------------   ------------
                                                                    (IN THOUSANDS)
<S>                                                           <C>            <C>
Property, plant and equipment:
  Cable television systems assets...........................     123,845        129,625
  D-DTH equipment...........................................      82,327         65,227
  Construction in progress..................................       7,400          2,739
  Vehicles..................................................       1,943          1,930
  Other.....................................................      15,871         13,533
                                                                --------        -------
                                                                 231,386        213,054
  Less accumulated depreciation.............................     (12,602)            --
                                                                --------        -------
    Net property, plant and equipment.......................     218,784        213,054
</TABLE>

    Between April 1, and November 8, 1999 the Company was selling digital
direct-to-home ("D-DTH") reception systems to customers. Prior to April 1, 1999,
the systems were leased to customers, classified as fixed assets and depreciated
over 5 years. Due to this change, the Company classified reception systems as
inventory. As a result of the change the Company wrote down the value of all
reception systems acquired after April 1, 1999 and before November 8, 1999 to
their net realizable value. The effect of the change was to increase operating
loss by approximately $8,852,000, and $19,891,000 for the five months of 1999
and seven months of 1999, respectively. Due to the change of ownership of the
Company in connection with the Merger, beginning November 8, 1999 the Company
returned to leasing its D-DTH reception systems. The Company has impaired the
value of D-DTH boxes leased to customers, which have been disconnected and where
it is unlikely for the Company to recover the value of the boxes.

    The Company incurred depreciation charges for tangible fixed assets of
$14,079,000, $19,733,000, $19,864,000 and $14,010,000 for the five months of
1999, seven months of 1999 and for years ended December 31, 1998 and 1997,
respectively.

                                       59
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

8. INTANGIBLE ASSETS

    Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                       SUCCESSOR     PREDECESSOR
                                                      ------------   ------------
                                                      DECEMBER 31,   DECEMBER 31,
                                                          1999           1998
                                                      ------------   ------------
                                                            (IN THOUSANDS)
<S>                                                   <C>            <C>
Conduit, franchise agreements and other.............    $  4,334       $ 6,745
Goodwill............................................     928,763        27,510
Non-compete agreements..............................          --        19,006
                                                        --------       -------
                                                         933,097        53,261
Less accumulated amortization.......................     (26,110)       (9,609)
                                                        --------       -------
Net intangible assets...............................    $906,987       $43,652
                                                        ========       =======
</TABLE>

    The Acquisition was accounted for under the purchase method of accounting,
with all of the purchase accounting adjustments "pushed-down" to the
consolidated financial statements of @ Entertainment. Accordingly, the purchase
price was allocated to the underlying assets and liabilities based upon their
estimated fair values and any excess to goodwill. The Company restated some of
its assets and liabilities at August 5, 1999. At this date the Notes of the
Company and PCI were restated by $61.9 million and deferred financing costs of
$16.1 million and deferred revenue of $2.0 million were written down to zero.
The consideration paid by UPC for all shares outstanding, warrants and options
totalled $812.5 million. At this time the Company had negative net assets of
approximately $53.3 million and existing goodwill at net book value of $37.5
million which was realized on previous transactions. As a result of the above
considerations, UPC recognized goodwill of approximately $979.3 million. As a
result of the Acquisition, UPC pushed down its basis to the Company establishing
a new basis of accounting as of the acquisition date. The Company incurred
amortization charges for intangible assets of $26,110,000, $4,194,000,
$6,440,000, and $2,284,000 for five and seven months of 1999 and the years ended
December 31, 1998 and 1997, respectively.

9. PROGRAMMING AND BROADCAST RIGHTS

    Programming and broadcast rights include approximately $7,200,000 and
$9,030,000 paid for certain broadcast rights purchased as of December 31, 1999
and 1998, respectively, but not yet available for viewing.

10. INVESTMENTS IN AFFILIATED COMPANIES

    Investment in affiliated companies at December 31, 1999 consist of 30% of
common Stock of Mazowiecki Klub Sportowy Sportowa Spolka Akcyjna, 20% of the
common stock of Fox Kids Poland Ltd. ("FKP") and 50% of the common stock of Twoj
Styl Sp. z o.o. ("Twoj Styl"). At December 31, 1997 investments in affiliated
companies also included 45% of the common stock of Ground Zero Media
Sp. z o.o. During 1998, the Company acquired the remaining interest in Ground
Zero Media Sp. z o.o (refer to note 6).

                                       60
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

10. INVESTMENTS IN AFFILIATED COMPANIES (CONTINUED)
    On February 25, 1999, @ Entertainment purchased for approximately
$1.8 million a 30% interest in Mazowiecki Klub Sportowy Sportowa Spolka Akcyjna,
a joint stock company which owns Hoop Pekaes Pruszkow, a Polish basketball team.
In connection with this purchase @ Entertainment has agreed to act as a sponsor
for Hoop Pekaes Pruszkow.

    For five months of 1999 and seven months of 1999 the Company recorded a loss
related to this investment of $325,000 and $473,000, respectively.

    In December 1997, the Company acquired a 20% interest in FKP, a joint
venture formed to provide programming to the Company for an aggregate purchase
price of approximately $10,000,000. The purchase price exceeded the fair value
of the Company's ownership percentage of net assets by approximately
$10,000,000. During 1998, the Company contributed an additional $4,926,000 to
the joint venture which was accounted for as an additional investment in
affiliated companies. These differences are being amortized over five years as a
charge to equity in profits of affiliated companies.

    For the five months of 1999, seven months of 1999 and the years ended
December 31, 1998 and 1997, the Company recorded losses related to this
investment of $333,000, $445,000, $6,343,000 and $0, respectively.

    In December 1997, the Company acquired a 50% interest in Twoj Styl, a
magazine publishing company for an aggregate purchase price of approximately
$11,100,000. In 1998, the Company paid approximately $302,000 for stamp duty and
professional fees, which was added to the cost of the investment. The purchase
price exceeded the fair value of the Company's ownership percentage of net
assets by approximately $9,600,000. This difference is being amortized over ten
years as a charge to equity in income of affiliated companies. For five months
of 1999, seven months of 1999 and the years ended December 31, 1998 and 1997,
the Company recorded a (loss)/profit related to this investment of $367,000,
$(86,000), $(181,000) and $152,000, respectively. In addition, the Company
agreed to provide additional future financing to Twoj Styl, either debt or
equity, of up to $7,700,000 to develop Polish-language programming and ancillary
services. As of December 31, 1999, no additional financing had been provided.

    It was not practical to estimate the market value of the investments in
affiliated companies due to the nature of these investments, the relatively
short existence of the affiliated companies and the absence of quoted market
price for the affiliated companies. Because these acquisitions occurred only
shortly before the Acquisition, the historical investments costs were assessed
as the fair values.

                                       61
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

11. INCOME TAXES

    Income tax (expense)/benefit consists of:

<TABLE>
<CAPTION>
                                                     CURRENT    DEFERRED    TOTAL
                                                     --------   --------   --------
                                                             (IN THOUSANDS)
<S>                                                  <C>        <C>        <C>
Five months of 1999
  U.S. Federal.....................................   $   --      $ --      $   --
  State and local..................................       --        --          --
  Foreign..........................................      (11)       --         (11)
                                                      ------      ----      ------
                                                      $  (11)     $ --      $  (11)
                                                      ======      ====      ======
Seven months of 1999
  U.S. Federal.....................................   $   --      $ --      $   --
  State and local..................................       --        --          --
  Foreign..........................................      (30)       --         (30)
                                                      ------      ----      ------
                                                         (30)                  (30)
                                                      ======      ====      ======
Year ended December 31, 1998:
  U.S. Federal.....................................   $   --      $ --      $   --
  State and local..................................       --        --          --
  Foreign..........................................     (210)       --        (210)
                                                      ------      ----      ------
                                                      $ (210)     $ --      $ (210)
                                                      ======      ====      ======
Year ended December 31, 1997:
  U.S. Federal.....................................   $1,438      $ --      $1,438
  State and local..................................       --        --          --
  Foreign..........................................     (463)       --        (463)
                                                      ------      ----      ------
                                                      $  975      $ --      $  975
                                                      ======      ====      ======
</TABLE>

    Sources of loss before income taxes and minority interest are presented as
follows:

<TABLE>
<CAPTION>
                                              FIVE MONTHS OF   SEVEN MONTHS OF   YEAR ENDED DECEMBER 31,
                                              --------------   ---------------   ------------------------
                                                   1999             1999            1998          1997
                                              --------------   ---------------   -----------   ----------
                                                                    (IN THOUSANDS)
<S>                                           <C>              <C>               <C>           <C>
Domestic loss...............................      (85,831)         (53,786)       $ (52,341)    $(20,628)
Foreign loss................................      (58,335)         (74,200)         (73,514)     (31,585)
                                                ---------         --------        ---------     --------
                                                 (144,166)        (127,986)       $(125,855)    $(52,213)
                                                =========         ========        =========     ========
</TABLE>

                                       62
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

11. INCOME TAXES (CONTINUED)
    Income tax (expense)/benefit for five months of 1999, seven months of 1999
and the years ended December 31, 1998 and, 1997 differed from the amounts
computed by applying the U.S. federal income tax rate of 34 percent to pre-tax
loss as a result of the following:

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED
                                                                                 DECEMBER 31,
                                               FIVE MONTHS     SEVEN MONTHS   -------------------
                                                 OF 1999         OF 1999        1998       1997
                                             ---------------   ------------   --------   --------
                                                                (IN THOUSANDS)
<S>                                          <C>               <C>            <C>        <C>
Computed "expected" tax benefit............       49,016           43,515     $ 43,061   $ 17,752
Non-deductible expenses....................       (5,973)          (5,330)      (1,635)      (101)
Change in valuation allowance..............      (33,722)         (29,932)     (30,299)   (15,424)
Adjustment for adoption of EITF 92-8.......           --               --      (11,311)        --
Adjustment to deferred tax asset for
  enacted changes in tax rates.............       (9,332)          (8,283)        (695)      (789)
Foreign tax rate differences...............           --               --          606       (463)
Other......................................           --               --           63         --
                                                --------         --------     --------   --------
                                                     (11)             (30)    $   (210)  $    975
                                                ========         ========     ========   ========
</TABLE>

                                       63
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

11. INCOME TAXES (CONTINUED)
    The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities are presented below:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              --------------------
                                                                1999        1998
                                                              ---------   --------
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
Deferred tax assets:
  Foreign net operating loss carry forward..................  $  35,181   $ 27,930
  Domestic net operating loss carry forward.................     39,326      7,459
  Interest income...........................................         --      2,650
  Service revenue...........................................      2,351      2,100
  Accrued liabilities.......................................      4,176      4,061
  Deferred costs............................................      4,570      6,447
  Stock options.............................................         --      2,950
  Bad debt expense..........................................        927         --
  Deferred revenue..........................................      1,203         --
  Accrued interest..........................................     14,420      2,183
  Unrealized foreign exchange losses........................     23,112      9,066
  Other.....................................................      1,237      1,394
                                                              ---------   --------
Total gross deferred tax assets.............................    126,503     66,240
Less valuation allowance....................................   (117,986)   (54,332)
                                                              ---------   --------
Net deferred tax assets.....................................      8,517   $ 11,908
                                                              =========   ========
Deferred tax liabilities:
  Excess of book value over tax basis of fixed assets
    resulting from conversion off hyperinflation............  $  (5,614)  $(11,311)
  Accelerated fixed assets depreciation.....................     (2,337)      (475)
  Other.....................................................       (566)      (122)
                                                              ---------   --------
  Total gross deferred tax liabilities......................     (8,517)  $(11,908)
                                                              ---------   --------
  Net deferred tax liability................................  $      --   $     --
                                                              =========   ========
</TABLE>

    The net increase in the valuation allowance for five months of 1999, seven
months of 1999 and the years ended December 31, 1998 and 1997 was $33,722,000,
$29,932,000, $30,299,000 and $15,424,000, respectively. In assessing the
realiability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers projected future taxable
income and tax planning strategies in making this assessment. Based upon the
level of historical taxable income and projections for future taxable income
over the periods which the deferred tax assets are deductible, management
believes it is more likely than not the Company will realize the benefits of
these deductible differences, net of the existing valuation allowances at
December 31, 1999.

                                       64
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

11. INCOME TAXES (CONTINUED)
    As each of the Polish, Netherlands and UK subsidiaries of the Company are
not subject to group taxation, the deferred tax assets and liabilities in the
individual companies must be evaluated on a stand-alone basis. The reported
foreign net operating losses are presented on an aggregate basis and are not
necessarily indicative of the actual losses available to the individual
companies. As a result, some of the foreign subsidiaries may have no losses or
other deferred tax assets available to them individually.

    Subsequently recognized tax benefits relating to the valuation allowance for
deferred tax assets as of December 31, 1999 will be reported in the consolidated
statement of operations.

    Prior to 1999, foreign losses carryforwards can be offset against Polish
subsidiaries taxable income and utilized at rate of one-third per year in each
of the three years subsequent to the year of loss. If there is no taxable income
in a given year during the carryforward period, the portion of the loss
carryforward to be utilized is permanently forfeited. Foreign loss carryforwards
starting from 1999 can be offset against the Polish subsidiaries taxable income
and utilized during each of the five years subsequent to the year of the loss
with no more than 50% of the loss in one given year. For losses incurred in U.S.
taxable years prior to 1998, loss carryforwards can be applied against taxable
income three years retroactively and fifteen years into the future. For losses
incurred in U.S. taxable years from 1998, loss carryforwards can be applied
against taxable income two years retroactively and twenty years into the future.
As of December 31, 1999, the Company has approximately $115 million of U.S. net
operating loss carryforwards.

    At December 31, 1999, the Company has foreign net operating loss
carryforwards of approximately $141,654,000 which will expire as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31                                        (IN THOUSAND)
-----------------------                                        --------------
<S>                                                            <C>
2000........................................................    $     22,620
2001........................................................          20,350
2002........................................................              --
2003........................................................          49,342
2004........................................................          49,342
                                                                ------------
                                                                $    141,654
                                                                ============
</TABLE>

                                       65
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

12. NOTES PAYABLE AND OFFER TO REPURCHASE NOTES

    Notes payable excluding amounts due to UPC consist of the following:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
@ Entertainment Senior Discount Notes due 2008, net of
  discount..................................................  $144,442   $125,513
@ Entertainment Senior Discount Notes due 2009, net of
  discount..................................................   141,807         --
@ Entertainment Series C Senior Discount Notes due 2008, net
  of discount...............................................    11,841         --
PCI Notes, net of discount..................................    14,899    129,627
American Bank in Poland S.A. ("AmerBank") revolving credit
  loan......................................................        --      6,500
Bank Rozwoju Exportu S.A. Deutsche--Mark facility...........     1,286      1,912
Other.......................................................       272        402
                                                              --------   --------
Total notes payable.........................................  $314,547   $263,954
                                                              ========   ========
</TABLE>

@ ENTERTAINMENT NOTES

    On January 22, 1999, the Company sold 256,800 units (collectively, the
"Units") to two initial purchasers pursuant to a purchase agreement, each Unit
consisting of $1,000 principal amount at maturity of 14 1/2% Senior Discount
Notes (the "Notes") due 2009 and four warrants (each a "Warrant"), each
initially entitling the holder thereof to purchase 1.7656 shares of common
stock, par value $0.01per share at an exercise price of $9.125 per share,
subject to adjustment. The Notes were issued at a discount to their aggregate
principal amount at maturity and, together with the Warrants generated gross
proceeds to the Company of approximately $100,003,000, of which $92,551,000 has
been allocated to the initial accreted value of the Notes and approximately $
7,452,000 has been allocated to the Warrants.

    The Notes are unsubordinated and unsecured obligations. Cash interest on the
Notes will not accrue prior to February 1, 2004. Thereafter cash interest will
accrue at a rate of 14.5% per annum on the principal amount and will be payable
semiannually in arrears on August 1 and February 1 of each year, commencing
August 1, 2004. The Notes will mature on February 1, 2009. At any time prior to
February 1, 2002, the Company may redeem up to a maximum of 35% of the
originally issued aggregate principal amount at maturity of the Notes at a
redemption price equal to 117.5% of the accreted value thereof at the redemption
date, plus accrued and unpaid interest, if any, to the date of redemption with
some or all of the net cash proceeds of one or more public equity offerings;
provided, however, that not less than 65% of the originally issued aggregate
principal amount at maturity of the Notes remain outstanding immediately after
giving effect to such redemption.

    The Warrants initially entitled the holders thereof to purchase 1,813,665
shares of common stock, representing, in the aggregate, approximately 5% of the
outstanding common stock on a fully-diluted basis (using the treasury stock
method) immediately after giving effect to the Units offering and the Company's
offering of Series A 12% Cumulative Preference Shares and Series B 12%
Cumulative Preference Shares. In July and August 1999 certain warrant holders
executed their right to purchase common stock (see note 13). The remaining
unexercised Warrants were redeemed in connection with the Merger.

    On January 20, 1999, the Company sold $36,001,000 aggregate principal amount
at maturity of Series C Senior Discount Notes (collectively the "Series C
Notes") due 2008. The Series C Notes are

                                       66
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

12. NOTES PAYABLE AND OFFER TO REPURCHASE NOTES (CONTINUED)
senior unsecured obligations of the Company ranking PARI PASSU in right of
payment with all other existing and future unsubordinated obligations of the
Company. The Series C Notes were issued at a discount to their aggregate
principal amount at maturity and generated gross proceeds to the Company of
approximately $9,815,000. Cash interest on the Series C Notes will not accrue
prior to July 15, 2004. Thereafter cash interest will accrue at a rate of 7.0%
per annum on the principal amount at maturity, and will be payable semiannually
in arrears on July 15 and January 15 of each year commencing January 15, 2005.
The Series C Notes will mature on July 15, 2008.

    On July 14, 1998, the Company sold 252,000 units (collectively, the "Units")
to two initial purchasers pursuant to a purchase agreement, each Unit consisting
of $1,000 principal amount at maturity of 14 1/2% Senior Discount Notes (the
"Discount Notes") due 2008 and four warrants (each a "Warrant"), each initially
entitling the holder thereof to purchase 1.81 shares of common stock, par value
$0.01 per share (the "Common Stock") at an exercise price of $13.20 per share,
subject to adjustment.

    The Discount Notes were issued at a discount to their aggregate principal
amount at maturity and, together with the Warrants generated gross proceeds to
the Company of approximately $125,100,000 of which $117,485,000 has been
allocated to the initial accreted value of the Discount Notes and approximately
$7,615,000 has been allocated to the Warrants. The portion of the proceeds that
is allocable to the Warrants was accounted for as part of paid-in capital. The
allocation was made based on the relative fair values of the two securities at
the time of issuance. Net proceeds to the Company after deducting initial
purchasers' discount and offering expenses were approximately $118,972,000.

    The Discount Notes are unsubordinated and unsecured obligations. Cash
interest on the Discount Notes will not accrue prior to July 15, 2003.
Thereafter cash interest will accrue at a rate of 14.5% per annum and will be
payable semiannually in arrears on January 15 and July 15 of each year,
commencing January 15, 2004. The Discount Notes will mature on July 15, 2008. At
any time prior to July 15, 2001, the Company may redeem up to a maximum of 25%
of the originally issued aggregate principal amount at maturity of the Discount
Notes at a redemption price equal to 114.5% of the accreted value thereof at the
redemption date, plus accrued and unpaid interest, if any, to the date of
redemption with some or all of the net cash proceeds of one or more public
equity offerings; provided, however, that not less than 75% of the originally
issued aggregate principal amount at maturity of the Discount Notes remains
outstanding immediately after giving effect to such redemption. The effective
interest rate of the Discount Notes is approximately 16.5%.

    The Warrants initially entitled the holders thereof to purchase 1,824,514
shares of Common Stock, representing, in the aggregate, approximately 5% of the
outstanding Common Stock on a fully-diluted basis immediately after giving
effect to the sale of the Units. The Warrants were exercisable at any time and
will expire on July 15, 2008. The remaining unexercised Warrants were redeemed
in connection with the Merger.

    Pursuant to the Indenture governing the Notes, Series C Notes, and the
Discount Notes (the "Indenture"), the Company is subject to certain restrictions
and covenants, including, without limitation, covenants with respect to the
following matters: (i) limitation on additional indebtedness; (ii) limitation on
restricted payments; (iii) limitation on issuance and sales of capital stock of
restricted subsidiaries; (iv) limitation on transactions with affiliates;
(v) limitation on liens; (vi) limitation on guarantees of indebtedness by
restricted subsidiaries; (vii) purchase of Notes upon a change of control;
(viii) limitation

                                       67
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

12. NOTES PAYABLE AND OFFER TO REPURCHASE NOTES (CONTINUED)
on sale of assets; (ix) limitation on dividends and other payment restrictions
affecting restricted subsidiaries; (x) limitation on investments in unrestricted
subsidiaries; (xi) consolidations, mergers, and sale of assets;
(xii) limitation on lines of business; and (xiii) provision of financial
statements and reports. As of December 31, 1999 the Company is in compliance
with these covenants.

PCI NOTES

    On October 31, 1996, PCI sold $130,000,000 aggregate principal amount of
Senior Notes ("PCI Notes") to an initial purchaser pursuant to a purchase
agreement. The initial purchaser subsequently completed a private placement of
the PCI Notes. In June 1997, substantially all of the outstanding PCI Notes were
exchanged for an equal aggregate principal amount of publicly-registered PCI
Notes.

    The PCI Notes have an interest rate of 9 7/8% and a maturity date of
November 1, 2003. Interest is paid on the PCI Notes on May 1 and November 1 of
each year. As of December 31, 1999 and 1998 the Company accrued interest expense
of $243,000 and $2,140,000, respectively. Prior to November 1, 1999, PCI could
have redeem up to a maximum of 33% of the initially outstanding aggregate
principal amount of the PCI Notes with some or all of the net proceeds of one or
more public equity offerings at a redemption price equal to 109.875% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption; provided that immediately after giving effect to such redemption,
at least $87 million aggregate principal amount of the PCI Notes remains
outstanding.

    PCI has pledged to State Street Bank and Trust Company, the trustee for the
PCI Notes (for the benefit of the holders of the PCI Notes) intercompany notes
issued by PCBV, of a minimum aggregate principal amount (together with cash and
cash equivalents of PCI), equal to at least 110% of the outstanding principal
amount of the PCI Notes, and that, in the aggregate, provide cash collateral or
bear interest and provide for principal repayments, as the case may be, in
amounts sufficient to pay interest on the PCI Notes. Notes payable from PCBV to
PCI were $176,398,000 and $160,450,000 at December 31, 1999 and 1998,
respectively.

    Pursuant to the PCI Indenture, PCI is subject to certain restrictions and
covenants, including, without limitation, covenants with respect to the
following matters: (i) limitation on additional indebtedness; (ii) limitation on
restricted payments; (iii) limitation on issuances and sales of capital stock of
restricted subsidiaries; (iv) limitation on transactions with affiliates;
(v) limitation on liens; (vi) limitation on guarantees of indebtedness by
subsidiaries; (vii) purchase of PCI Notes upon a change of control;
(viii) limitation on sale of assets; (ix) limitation on dividends and other
payment restrictions affecting subsidiaries; (x) limitation on investments in
unrestricted subsidiaries; (xi) consolidations, mergers and sale of assets;
(xii) limitation on lines of business; and (xiii) provision of financial
statements and reports. As of December 31, 1999, the Company was in compliance
with such covenants.

    Pursuant to the terms of the indentures covering each of the @Entertainment
Notes and the PCI Notes (as defined hereinafter), which provided that, following
a Change of Control (as defined therein), each holder of @Entertainment Notes
and PCI Notes had the right, at such holder's option, to require the Company and
PCI, respectively to offer to repurchase all or a portion of such holder's
@Entertainment Notes and PCI Notes at the Repurchase Price. @Entertainment and
PCI made offers to repurchase (the "Offers") from the holders of the Notes
@Entertainment's 14 1/2% Series B Senior Discount Notes due 2008, 14 1/2% Senior
Discount Notes due 2008, Series C Senior Discount Notes due 2008, 14 1/2%
Series B

                                       68
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

12. NOTES PAYABLE AND OFFER TO REPURCHASE NOTES (CONTINUED)
Senior Discount Notes due 2009, and 14 1/2% Senior Discount Notes due 2009
(collectively, the "@Entertainment Notes") and PCI's 9 7/8% Series B Senior
Notes Due 2003 and 9 7/8% Senior Notes Due 2003 (collectively, the "PCI
Notes").The Offers expired at 12:01 PM, New York City time, on November 2, 1999.

    The Company was required to offer to repurchase the @Entertainment Notes at
101% of their accreted value per $1,000 principal amount of @Entertainment Notes
at maturity on the Expiration Date plus accrued and unpaid interest and PCI was
required to offer to repurchase the PCI Notes at their purchase price of $1,010
per $1,000 principal amount of the PCI Notes, which is 101% per $1,000 principal
amount of the PCI. As of August 5, 1999, the Company had $376,943,000 aggregate
principal amount at maturity of @Entertainment Notes outstanding and PCI had
$130,000,000 aggregate principal amount at maturity of PCI Notes outstanding.
Pursuant to its repurchase offer, the Company has purchased $49,139,000
aggregate principal amount of @Entertainment Notes for an aggregate price of
$26,455,014, and PCI has purchased $113,237,000 aggregate principal amount of
PCI Notes for an aggregate price of $114,369,370. In December 1999, PCI
repurchased an additional $2,000,000 aggregate principal amount of PCI Notes for
an aggregate price of $2,040,024. PCI's repurchases were funded by the sale of
14,000 shares of PCI's Mandatorily Redeemable Debenture Stock to the Company for
$140 million. To secure its obligations under the Debenture Stock, PCI will
pledge to the Company notes issued by its subsidiary PCBV with an aggregate
principal amount of $176,815,000. The PCI Noteholders will be equally and
ratably secured by the pledge in accordance with the terms of the PCI Indenture.

NOTES PAYABLE TO UPC

    As of December 31, 1999, the Company had a loan payable to UPC of
approximately $220,149,000. The amount includes accrued interest of
approximately $2,804,000. All of the interest was accrued in the five months of
1999. The loan bears interest at a rate of 10% per annum and has no defined
repayment terms.

AMERICAN BANK IN POLAND S.A. REVOLVING CREDIT LOAN

    The revolving credit loan allowing the Company to borrow up to a maximum
principal amount of $6,500,000 on or before December 31, 1998, was fully drawn
as of December 31, 1998. The facility bears interest at LIBOR plus 3.0% (8.0% as
at December 31, 1998), was repaid in full on November 20, 1999, and was secured
by promissory notes en blanc from certain of the Company's subsidiaries, and
pledges of the shares of certain of the Company's subsidiaries.

BANK ROZWOJU EKSPORTU S.A. DEUTSCHE--MARK FACILITY

    The Deutsche--Mark facility represents a credit facility of DM 3,948,615 of
which approximately DM 2,503,000 was outstanding at December 31, 1999. The
facility bears interest at LIBOR plus 2.0% (5.5% as at December 31, 1999), is
repayable in full on December 27, 2002, and is ultimately secured by a pledge of
the common shares of one of the Company's subsidiaries.

    Interest expense relating to notes payable was in the aggregate
approximately $24,459,000, $28,818,000, $21,535,000 and $13,902,000 for the five
months of 1999, the seven months of 1999 and for the years ended December 31,
1998 and 1997, respectively.

                                       69
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

13. PREFERENCE OFFERINGS

    On January 22, 1999 the Company sold 50,000 (45,000 Series A and 5,000
Series B) 12% Cumulative Redeemable Preference Shares (collectively "the
Preference Shares") and 50,000 Warrants (each a "Preference Warrant") each
Preference Warrant initially entitling the holders thereof to purchase 110
shares of common stock, par value $0.01 per share, of the Company at an exercise
price of $10.00 per share, subject to adjustment. The Preference Shares together
with the Preference Warrants generated gross proceeds to the Company of
$50,000,000 of which approximately $28,812,000 has been allocated to the initial
unaccreted value of the Preference Shares (net of commissions and offering costs
payable by the Company of approximately $1,700,000), and approximately
$19,483,000 has been allocated to the Preference Warrants.

    The Series A 12% Cumulative Redeemable Preference Shares, the Series A 12%
Cumulative Redeemable Preference Shares and the Preference Warrants issued in
the Preference offering were registered on a registration statement on
Form S-3. This registration statement was declared effective on July 2, 1999.

    In the Tender Offer, initiated pursuant to the Agreement and Plan of Merger
with UPC and Bison, UPC acquired 100% of the outstanding Series A and Series B
12% Cumulative Redeemable Preference Shares, and the Preference Warrants.

14. RELATED PARTY TRANSACTIONS

    During the ordinary course of business, the Company enters into transactions
with related parties. The principal related party transactions are described
below.

PROGRAMMING

    Programming is provided to the Company by certain of its affiliates. The
Company incurred programming fees from these affiliates of $1,745,000 and
$1,025,000 for five and seven months of 1999, respectively and $418,000 and
$559,000 for the years ended December 31, 1998 and 1997, respectively.

PRINT MEDIA SERVICES

    An affiliate of the Company provides print media services to the Company.
The Company incurred operating costs related to these services of $2,849,000,
$3,863,000 , $4,355,000 for the five months of 1999, seven months of 1999 and
the year ended December 31, 1998, respectively. The Company did not incur any
costs from this affiliate prior to 1998.

UPC

    As discussed in the note 12, the Company has $220,149,000 of notes payable
to UPC, additionally the Company has $1,206,000 of trade payables related to
management fees charged during the five months of 1999.

15. PER SHARE INFORMATION

    Basic loss per share has been computed by dividing net loss attributable to
common stockholders by the weighted average number of common shares outstanding
during the year. The effect of potential

                                       70
<PAGE>
                             @ ENTERTAINMENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        DECEMBER 31, 1999, 1998 AND 1997

15. PER SHARE INFORMATION (CONTINUED)
common shares (stock options and warrants outstanding) is antidilutive,
accordingly, dilutive loss per share is the same as basic loss per share. As of
December 31, 1998 options for 3,924,000 shares were excluded from the
calculation of earnings per share.

    The following table provides a reconciliation of the numerator and
denominator in the loss per share calculation:

<TABLE>
<CAPTION>
                                                SUCCESSOR                 PREDECESSOR (NOTE 2)
                                                 (NOTE 2)      ------------------------------------------
                                              --------------                     YEAR ENDED DECEMBER 31,
                                              FIVE MONTHS OF   SEVEN MONTHS OF   ------------------------
                                                   1999             1999            1998          1997
                                              --------------   ---------------   -----------   ----------
<S>                                           <C>              <C>               <C>           <C>
Net loss attributable to common stockholders
  (in thousands)............................    $(144,177)        $(130,452)      $(126,065)    $(91,066)
Basic weighted average number of common
  shares outstanding (in thousands).........          N/A            33,459          33,310       24,771
                                                ---------         ---------       ---------     --------
Net loss per share-basic and diluted........          N/A         $   (3.90)      $   (3.78)    $  (3.68)
                                                =========         =========       =========     ========
</TABLE>

16. STOCK OPTION PLAN

    On June 22, 1997, the Company adopted a stock option plan (the "1997 Plan")
pursuant to which the Company's Board of Directors may grant stock options to
officers, key employees and consultants of the Company. The 1997 Plan authorizes
grants of options to purchase up to 4,436,000 shares, subject to adjustment in
accordance with the 1997 Plan. At December 31, 1998, options for 3,924,000
shares had been granted. Of this amount, 1,671,000 options became exercisable
upon the IPO but could not be sold for a period of two years from July 30, 1997.

    The Company granted 1,671,000 stock options in January 1997 at a price
substantially below the IPO price of $21.00 per share. Such options vested in
full upon the completion of the IPO. In accordance with generally accepted
accounting principles, the Company recognized approximately $18,102,000 of
compensation expense included in selling, general, and administrative expenses
for these options in 1997 representing the difference between the exercise price
of the options and the fair market value of the shares on the date of grant. All
other stock options were granted with exercise prices at or below the fair
market value of the shares on the date of grant.

    Future stock options are granted with an exercise price that must be at
least equal to the stock's fair market value at the date of grant. With respect
to any participant who owns stock possessing more than 10% of the voting power
of all classes of stock of the Company, the exercise price of any incentive
stock option granted must equal at least 110% of the fair market value on the
grant date and the maximum term of an incentive stock option must not exceed
five years. The term of all other options granted under the 1997 Plan may not
exceed ten years. Options become exercisable at such times as determined by the
Board of Directors and as set forth in the individual stock option agreements.
Generally, all stock options vest ratably over 2 to 5 years commencing one year
after the date of grant.

                                       71
<PAGE>
                             @ ENTERTAINMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1999, 1998 AND 1997

16. STOCK OPTION PLAN (CONTINUED)

    Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
                                                                       WEIGHTED
                                                                       AVERAGE
                                                          NUMBER OF    EXERCISE
                                                            SHARES      PRICE
                                                          ----------   --------
<S>                                                       <C>          <C>
Balance at January 1, 1997 (none exercisable)...........     241,000   $  1.99
Granted.................................................   2,083,000   $  5.98
                                                          ----------   -------
Balance at December 31, 1997 (none exercisable).........   2,324,000   $  5.57
Granted.................................................   1,600,000   $ 12.31
                                                          ----------   -------
Balance at December 31, 1998 (2,643,000 exercisable)....   3,924,000   $  8.32
Granted.................................................     700,000   $ 14.30
Forfeited...............................................    (623,750)  $ (4.55)
Exercised...............................................     (96,000)  $ (1.99)
Acquired as part of Merger and cancelled................  (3,904,250)  $(10.16)
                                                          ----------   -------
Balance at August 5, 1999...............................          --
Transactions during five months of 1999                                     --
                                                          ----------   -------
Balance at December 31, 1999                                      --        --
                                                          ==========   =======
</TABLE>

    In February 1999 a number of the Company's employees were granted options to
purchase 700,000 shares of common stock at a price of $14.30 per share, vesting
ratably over a three-year period starting from January 1, 2000. The exercise
price of such options exceeded the quoted market price for the Company's shares
on the date of grant. All stock options were cancelled and paid in cash in full
in connection with the Merger.

    The per share weighted-average fair value of stock options granted during
1999 and 1998 was $2.82 and $4.22, respectively on the date of grant using the
Black Scholes option-pricing model. The following weighted-average assumptions
were used; expected volatility of 53% and 43.0%, expected dividend yield 0.0%,
risk-free interest rate of 4.78% and 5.72%, and an expected life of 4 years,
respectively for 1999 and 1998.

    Had the Company determined compensation cost based on the fair value at the
grant date for its stock options under SFAS No. 123, the Company's net loss and
net loss per share would have increased to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                FIVE MONTHS   SEVEN MONTHS   -----------------------
                                                  OF 1999       OF 1999         1998         1997
                                                -----------   ------------   ----------   ----------
                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>           <C>            <C>          <C>
Net loss-as reported..........................   $(144,177)    $(128,689)    $(126,065)   $ (54,824)
Net loss-pro forma............................     N/A          (128,016)     (131,511)     (56,607)
Basic and diluted net loss per share--as
  reported....................................     N/A             (3.90)        (3.78)       (3.68)
Basic and diluted loss per share-pro forma....     N/A             (3.92)        (3.95)       (3.75)
</TABLE>

                                       72
<PAGE>
17. LEASES

    Total rental expense associated with the operating leases mentioned below
for five months of 1999, seven months of 1999 and the years ended December 31,
1998 and 1997 was $3,827,000, $5,358,000, $10,521,000, and $3,696,000,
respectively.

BUILDING LEASES

    The Company leases several offices and warehouses within Poland under
cancelable operating leases. The Company has a noncancelable operating lease for
a building in the United Kingdom which houses the majority of its technical
equipment relating to the D-DTH network. The noncancelable lease for the
building in the United Kingdom expires in 2002, and contains a renewal option
for an additional five years. Future minimum lease payments as of December 31,
1999 are $1,337,000 in 2000, $1,377,000 in 2001 and $1,418,000 in 2002.

D-DTH TECHNICAL EQUIPMENT LEASE

    The Company has an eight year agreement with British Telecommunications plc
("BT") for the lease and maintenance of certain satellite uplink equipment. The
agreement requires the payment of equal monthly installments of approximately
$50,000 approximating future minimum commitments of $580,000 in 2000, $580,000
in 2001, $580,000 in 2002, $580,000 in 2003 and $1,305,000 in 2004 and
thereafter. Other than the BT uplink equipment, the Company owns all of the
required broadcasting equipment at its transmission facility in the United
Kingdom.

CONDUIT LEASES

    The Company leases space within various telephone duct systems from TPSA
under cancelable operating leases. The TPSA leases expire at various times, and
a substantial portion of the Company's contracts with TPSA permit termination by
TPSA without penalty at any time either immediately upon the occurrence of
certain conditions or upon provision of three to six months notice without
cause. Refer to note 20 for further detail. All of the agreements provide that
TPSA is the manager of the telephone duct system and will lease space within the
ducts to the Company for installation of cable and equipment for the cable
television systems. The lease agreements provide for monthly lease payments that
are adjusted quarterly or annually, except for the Gdansk lease agreement which
provides for an annual adjustment after the sixth year and then remains fixed
through the tenth year of the lease.

    Minimum future lease commitments for the aforementioned conduit leases
relate to 2000 only, as all leases are cancelable in accordance with the
aforementioned terms. The future minimum lease commitments related to these
conduit leases approximates $622,000 as of the year ended December 31, 1999.

TRANSPONDER LEASES

    During 1997, the Company entered into certain operating leases pursuant to
which the Company is liable for charges associated with each of its three
transponders on the Astra satellites, which can amount to a maximum of
$6,750,000 per year for each transponder and up to $162 million for all three
transponders for the term of their leases. The future maximum lease payments
applicable to the transponders approximate $20,250,000 in 2000, $20,250,000 in
2001, $20,250,000 in 2002, $20,250,000 in 2003 and $81,000,000 in 2004 and
thereafter. The leases for the two transponders on the Astra 1F satellite and
the transponder on the Astra 1G satellite will expire in 2007. The Company's
transponder leases provide that the Company's rights are subject to termination
in the event that the lessor's franchise is withdrawn by the Luxembourg
Government.

                                       73
<PAGE>
18. SEGMENT INFORMATION

    @Entertainment and its subsidiaries operate in three business segments,
cable television, digital direct-to-home television and programming, and
corporate functions. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies. The Company
evaluates performance based on profit or loss from operations before income
taxes not including nonrecurring items and foreign exchange gains and loss. The
Company accounts for intersegment sales and transfers as if the sales or
transfers were to third parties, that is, at current market prices.

    The Company classifies its business into three segments: (1) cable
television, (2) D-DTH television and programming, and (3) corporate. Information
about the operations of the Company in these different business segments is set
forth below based on the nature of the services offered. In addition to other
operating statistics, the Company measures its financial performance by EBITDA,
an acronym for earnings before interest, taxes, depreciation and amortization.
The Company defines EBITDA to be net loss adjusted for interest and investment
income, depreciation and amortization, interest expense, foreign currency gains
and losses, equity in losses of affiliated companies, income taxes and minority
interest. The items excluded from EBITDA are significant components in
understanding and assessing the Company's financial performance. The Company
believes that EBITDA and related measures of cash flow from operating activities
serve as important financial indicators in measuring and comparing the operating
performance of media companies.

                                       74
<PAGE>
18. SEGMENT INFORMATION (CONTINUED)
    EBITDA is not a U.S. GAAP measure of profit and loss or cash flow from
operations and should not be considered as an alternative to cash flows from
operations as a measure of liquidity.

<TABLE>
<CAPTION>
                                                               D-DTH AND
                                                    CABLE     PROGRAMMING   CORPORATE     TOTAL
                                                   --------   -----------   ---------   ----------
                                                                   (IN THOUSANDS)
<S>                                                <C>        <C>           <C>         <C>
FIVE MONTHS OF 1999
Revenues from external customers.................  $ 27,027    $ 10,991      $    --    $   38,018
Intersegment revenues............................        --       8,860           --         8,860
Operating loss...................................   (26,923)    (86,705)      (4,768)     (118,396)
EBIDTA...........................................    (8,765)    (64,691)      (4,751)      (78,207)
Depreciation and amortization....................   (18,158)    (22,014)         (17)      (40,189)
Net loss.........................................   (33,130)    (97,653)     (13,394)     (144,177)
Segment assets...................................   524,931     678,588       15,352     1,218,871

SEVEN MONTHS OF 1999
Revenues from external customers.................  $ 35,434    $ 11,506      $    --    $   46,940
Intersegment revenues............................        --      12,127           --        12,127
Operating loss...................................   (11,936)    (72,927)     (13,936)      (98,799)
EBIDTA...........................................     1,883     (62,837)     (13,918)      (74,872)
Depreciation and amortization....................   (13,819)    (10,090)         (18)      (23,927)
Net loss.........................................   (20,672)    (85,358)     (21,986)     (128,016)
Segment assets...................................   186,941     126,911       69,164       383,016

1998
Revenues from external customers.................  $ 52,971    $  8,888      $    --    $   61,859
Intersegment revenues............................        --      13,432           --        13,432
Operating loss...................................   (23,066)    (69,047)      (8,700)     (100,813)
EBIDTA...........................................    (1,431)    (64,378)      (8,700)      (74,509)
Depreciation and amortization....................   (21,635)     (4,669)          --       (26,304)
Net loss.........................................   (37,193)    (79,877)      (8,995)     (126,065)
Segment assets...................................   193,785     132,998       21,591       348,374

1997
Revenues from external customers.................  $ 38,138    $     --      $    --    $   38,138
Intersegment revenues............................        --          --           --            --
Operating loss...................................   (20,308)    (10,210)     (12,152)      (42,670)
EBIDTA...........................................     5,387     (10,186)      (3,475)       (8,274)
Depreciation and amortization....................   (16,270)        (24)          --       (16,294)
Net loss.........................................   (35,087)     (7,668)     (12,069)      (54,824)
Segment assets...................................   187,449      36,466       83,181       307,096
</TABLE>

    In 1997, the cable segment includes the activities of Mozaic
Entertainment, Inc., a subsidiary that provided programming content for the
cable business. In 1999 and 1998, the Company's programming activity related to
the department of Wizja platform and has been included solely in the D-DTH and
Programming segment. For the year ended December 31, 1997, Mozaic
Entertainment, Inc. revenues, operating loss and net loss were $563,000,
$2,071,000 and $3,027,000, respectively.

                                       75
<PAGE>
18. SEGMENT INFORMATION (CONTINUED)
    Total long-lived assets as of December 31, 1999 and 1998 and total revenues
for five and seven months of 1999 and years ended December 31, 1998 and 1997
analyzed by geographical location are as follows:

<TABLE>
<CAPTION>
                                                             TOTAL REVENUES
                                            ------------------------------------------------    LONG-LIVED ASSETS
                                            FIVE MONTHS   SEVEN MONTHS                         -------------------
                                              OF 1999       OF 1999        1998       1997       1999       1998
                                            -----------   ------------   --------   --------   --------   --------
                                                             (IN THOUSAND)                        (IN THOUSAND)
<S>                                         <C>           <C>            <C>        <C>        <C>        <C>
Poland....................................     38,018        46,940       61,859     38,138    206,442    257,625
United Kingdom............................         --            --           --         --     21,493     20,208
Other.....................................         --            --           --         --        514         29
                                               ------        ------       ------     ------    -------    -------
Total.....................................     38,018        46,940       61,859     38,138    228,449    277,862
                                               ======        ======       ======     ======    =======    =======
</TABLE>

    All of the Company's revenue is derived from activities carried out in
Poland. Long-lived assets consist of property, plant, and equipment, inventories
for construction and intangible assets other than goodwill and other assets.

19. COMMITMENTS AND CONTINGENCIES

    In addition to lease commitments presented in note 17 the Company has the
following commitments and contingencies:

PURCHASE COMMITMENTS

    The Company has concluded an agreement with Philips, whereby Philips would
supply Reception Systems, as well as retail, installation and support services
in connection with the launch of the Company's D-DTH Business in Poland. Philips
will be the exclusive supplier to the Company of the first 500,000 D-DTH
Reception Systems and will not distribute any other digital integrated receiver
decoders under the Philips trademark in Poland until December 31, 1999 or any
earlier date on which the Company has secured 500,000 initial subscribers to its
D-DTH service in Poland. Philips has granted the Company an exclusive license of
its CryptoWorks-Registered Trademark- technology in Poland for the term of the
agreement, which will terminate when the Company has purchased 500,000 D-DTH
Reception Systems from Philips, unless terminated earlier in accordance with the
terms of the agreement or extended by mutual consent of Philips and the Company.
As of December 31, 1999, the Company had an aggregate minimum commitment toward
the purchase of the Reception Systems of approximately $60,800,000 over the next
two years.

PROGRAMMING, BROADCAST AND EXHIBITION RIGHT COMMITMENTS

    The Company has entered into long-term programming agreements and agreements
for the purchase of certain exhibition or broadcast rights with a number of
third party content providers for its digital direct-to-home ("D-DTH") and cable
systems. The agreements have terms which range from one to seven years and
require that the license fees be paid either at a fixed amount payable at the
time of execution or based upon a guaranteed minimum number of subscribers
connected to the system each month. At December 31, 1999, the Company had an
aggregate minimum commitment in relation to these agreements of approximately
$213,973,000 over the next seven years, approximating $55,555,000 in 2000,
$51,787,000 in 2001, $48,116,000 in 2002, $29,922,000 in 2003 and $28,593,000 in
2004 and thereafter.

                                       76
<PAGE>
19. COMMITMENTS AND CONTINGENCIES (CONTINUED)
SPONSORSHIP COMMITMENTS

    As of the year ended December 31, 1999, the Company through its subsidiaries
commited to pay approximately $4.8 million for the sponsorship of the Hoop
Pekaes Pruszkow basketball club and to secure future programming rights.

REGULATORY APPROVALS

    The Company is in the process of obtaining permits from the Polish State
Agency for Radiocommunications ("PAR") for several of its cable television
systems. If these permits are not obtained, PAR could impose penalties such as
fines or in severe cases, revocation of all permits held by an operator or the
forfeiture of the operator's cable networks. Management of the Company does not
believe that these pending approvals result in a significant risk to the
Company.

LITIGATION AND CLAIMS

ARBITRATION RELATING TO TELEWIZYJNA KORPORACJA PARTYCYPACYJNA

    On April 17, 1998, the Company signed a binding letter of intent with
Telewizyna Korporacja Partycypacyjna ("TKP"), the parent company of Canal+
Polska, which provided for bringing together the Company's Wizja TV programming
platform and the Canal+ Polska premium pay television channel and for the joint
development and operation of a D-DTH service in Poland. The establishment of the
joint venture was subject to the execution of definitive agreements, regulatory
approvals and certain other closing conditions.

    The definitive agreements were not agreed and executed by the parties by the
date set forth in the letter of intent (the "Signature Date"). Therefore, the
Company terminated the letter of intent on June 1, 1998. TKP and its
shareholders have informed the Company that they believe the Company did not
have the right to terminate the letter of intent.

    Under the terms of the letter of intent, TKP is obligated to pay the Company
a $5 million break-up fee within 10 days of the Signature Date if the definitive
agreements were not executed by the Signature Date, unless the failure to obtain
such execution was caused by the Company's breach of any of its obligations
under the letter of intent. If there was any such breach by the Company, the
Company would be obligated to pay TKP $10 million. However, if any breach of the
letter of intent by TKP caused the definitive agreements not to be executed, TKP
would be obligated to pay the Company a total of $10 million (including the
$5 million break-up fee). In the event that TKP fails to pay the Company any of
the above-referenced amounts owed to the Company, TKP's shareholders are
responsible for the payment of such amounts.

    The Company has demanded monies from TKP as a result of the failure to
execute the definitive agreements by the Signature Date. While the Company was
waiting for the expiration of the 10-day period for payment of the break-up fee,
TKP initiated arbitration proceedings before a three member-arbitration panel in
Geneva, Switzerland. In their claim, TKP and its shareholders have alleged that
the Company breached its obligation to negotiate in good faith and to use its
best efforts to agree and execute the definitive agreements and claimed the
Company is obligated to pay TKP $10 million pursuant to the letter of intent.
The Company has answered and brought counterclaims against TKP and its
shareholders. The arbitration hearings were conducted in Geneva in June 1999,
and parties filed their post-hearing briefs in August and September 1999. The
Company believes that a decision may be rendered by April 2000. The Company does
not believe that the outcome of the arbitration proceedings will have a material
adverse effect on the Company's business, financial condition or results of
operations.

                                       77
<PAGE>
19. COMMITMENTS AND CONTINGENCIES (CONTINUED)
PCBV MINORITY STOCKHOLDER'S CLAIM

    On or about July 8, 1999, certain minority shareholders ("the minority
shareholders") of Poland Cablevision (Netherlands) B.V. (PCBV), an indirect
subsidiary of the Company, filed a lawsuit against the Company, Poland
Communications, Inc. ("PCI") and certain other defendants, in United States
District Court, Southern District of Ohio, Eastern Division, Civil Action No.
C2-99-621.

    The relief sought by the minority shareholders includes: (1) unspecified
damages in excess of $75,000, (2) an order lifting the restrictions against
transfer of shares set forth in the Shareholders' Agreement among PCBV's
shareholders, as amended (the "Shareholders' Agreement") so that the minority
shareholders can liquidate their shares in PCBV, (3) damages in the amount of
1.7 percent of the payment made by UPC for the shares of the Company as set
forth in the Agreement and Plan of Merger between the Company and UPC dated
June 2, 1999, and (4) attorneys' fees and costs incurred in prosecuting the
lawsuit.

    The amended complaint sets forth eight claims for relief based on
allegations that the defendants, including @Entertainment and PCI, committed the
following wrongful acts: (1) breached a covenant not to compete contained in the
Shareholders' Agreement relating to the shareholders of PCBV, (2) breached a
covenant in the Shareholders' Agreement requiring that any contract entered into
by PCBV with any other party affiliated with PCI be commercially reasonable or
be approved by certain of the minority shareholders, (3) breached a provision in
the Shareholders' Agreement that allegedly required co-defendant Chase
International Corp. ("CIC") to offer the minority shareholders the right to
participate in certain sales of PCBV shares and that required CIC to give
written notice of any offer to purchase the minority shareholders' shares in
PCBV, (4) breached their fiduciary duties to the minority shareholders,
(5) breached the agreement between PCBV and CIC, which allegedly limited the
amount of management fees that could be paid annually by PCBV, (6) made false
and misleading statements in various documents filed with the Securities and
Exchange Commission, (7) colluded to defraud the minority shareholders by
failing to make reference in certain Forms 8-K, 8-KA and 14D-1 to the minority
shareholders or their alleged rights and claims, (8) colluded to divert assets
of PCBV to affiliates of PCI and PCBV, including the Company, that allegedly
compete with PCI and PCBV.

    The minority shareholders also seek damages in the amount of 1.7 percent of
the payment made by UPC for the shares of the Company, although the amended
complaint does not contain a separate claim for relief seeking that amount.

    The Company intends to defend the lawsuit vigorously. The Company has also
conducted negotiations to purchase the minority shareholders' outstanding shares
in PCBV. If the negotiations produce a sale by the minority shareholders of
their shares in PCBV to the Company, the lawsuit would most likely be
terminated. The Company is unable to predict the outcome of those negotiations.

    In the event that the lawsuit is not terminated, its status is as follows:
The time for the Company and PCI to respond to the amended complaint has not yet
expired. Discovery has not yet commenced. At this early stage of the
proceedings, the Company is unable to predict the probable outcome of the
lawsuit or the Company's ultimate exposure in connection therewith.

    In addition to the Ohio lawsuit, the other minority shareholders of PCBV
(representing an additional 6% of PCBV) have asserted similar claims for
compensation, but have not filed suit.

                                       78
<PAGE>
19. COMMITMENTS AND CONTINGENCIES (CONTINUED)
DIVIDEND RESTRICTIONS

    The Company's Polish subsidiaries are only able to distribute dividends to
the extent of accounting profit determined in accordance with Polish Accounting
Principles. As of December 31, 1999, the Company's Polish subsidiaries have no
profit available for distribution as dividends.

20. CONCENTRATIONS OF BUSINESS AND CREDIT RISK

D-DTH BUSINESS

    The Company expects to experience substantial operating losses and negative
free cash flows for at least the next year due to (i) the large investments
required for the acquisition of equipment and facilities for its D-DTH business,
and (ii) the large investments required to develop, produce and acquire the
programming for Wizja TV. There can be no assurance that the Company will be
able to generate operating income or positive cash flows in the future or that
its operating losses and negative cash flows will not increase.

SUPPLIER AGREEMENT

    Certain critical components and services used in the Company's D-DTH
satellite transmission system, including the D-DTH Reception System, as well as
retail, installation and support services, are initially to be provided
exclusively by Philips. The Company has concluded an agreement with Philips
providing for Philips to be the exclusive supplier to the Company of the first
500,000 D-DTH Reception Systems in connection with the launch of the Company's
D-DTH business in Poland. Philips had granted the Company an exclusive license
of its CryptoWorks-Registered Trademark- technology in Poland for the term of
the agreement, which will terminate when the Company has purchased 500,000 D-DTH
Reception Systems from Philips, unless terminated earlier in accordance with the
terms of the agreement or extended by mutual consent of Philips and the Company.
Philips had agreed not to distribute any other IRDs under the Philips' trademark
in Poland until December 31, 1999 or any earlier date on which the Company has
secured 500,000 initial subscribers to its D-DTH service in Poland. The
Company's agreement with Philips provides that after such period the Company may
license one or two suppliers of IRDs in addition to Philips and Philips shall
license its CryptoWorks-Registered Trademark- technology to such additional
suppliers for the Polish market. Although the agreement with Philips provides a
means by which the Company could obtain a second and third supplier for all or
part of its future requirements for D-DTH Reception Systems, there can be no
assurance that the Company will be able to secure such additional suppliers.

    The failure of Philips to deliver D-DTH Reception Systems on schedule, or at
all, would delay or interrupt the development and operation of the Company's
D-DTH service and thereby could have a material adverse effect on the Company's
business, financial condition and results of operations.

    The Company's agreement with Philips provides for full distribution,
installation and servicing through more than 1,200 Philips authorized
electronics retailers located throughout Poland. Philips has agreed to
distribute a complete subscription package, comprising the D-DTH Reception
System, as well as the necessary installation and support services through
Philips' retail network in Poland, and will therefore be the primary point of
contact for subscribers to the Company's D-DTH service. Failure by Philips'
retail network to provide the desired levels of service, quality and expertise
(which are outside the control of the Company) could have a material adverse
impact on the Company's operations and financial condition.

    In the fourth quarter of 1999, due to technical problems that Philips had
with a component of the decoder, the Company faced a backlog in decoder
deliveries of approximately 48,000 decoders.

                                       79
<PAGE>
20. CONCENTRATIONS OF BUSINESS AND CREDIT RISK (CONTINUED)
PIRACY

    The delivery of subscription programming requires the use of encryption
technology to prevent signal theft or "piracy." Historically, piracy in the
cable television and European A-DTH industries has been widely reported. The
Company's IRDs incorporate Philips' CryptoWorks-Registered Trademark-
proprietary encryption technology as part of its conditional access system.
These IRDs use smartcard technology, making it possible to change the
conditional access system in the event of a security breach either through
over-the-air methods such as issuing new electronic decryption "keys"
over-the-air as part of the Company's regular D-DTH broadcasts or by issuing new
smartcards. To the Company's knowledge, there has not been a breach of
CryptoWorks-Registered Trademark- since its introduction in Malaysia in 1996. To
the extent a breach occurs, the Company will take countermeasures, including
over-the-air measures and, if necessary, the replacement of smartcards. Although
the Company expects its conditional access system, subscriber management system
and smartcard system to adequately prevent unauthorized access to programming,
there can be no assurance that the encryption technology to be utilized in
connection with the Company's D-DTH system will remain effective. If the
encryption technology is compromised in a manner which is not promptly
corrected, the Company's revenue and its ability to contract or maintain
contracts for programming services from unrelated third parties would be
adversely affected.

USE OF TPSA CONDUITS

    The Company's ability to build out its existing cable television networks
and to integrate acquired systems into its cable television networks depends on,
among other things, the Company's continued ability to design and obtain access
to network routes, and to secure other construction resources, all at reasonable
costs and on satisfactory terms and conditions. Many of such factors are beyond
the control of the Company. In addition, at December 31, 1999, approximately
81.0% of the Company's cable plant had been constructed utilizing pre-existing
conduits of TPSA. A substantial portion of the Company's contracts with TPSA for
the use of such conduits permits termination by TPSA without penalty at any time
either immediately upon the occurrence of certain conditions or upon provision
of three to six months' notice without cause.

LIMITED INSURANCE COVERAGE

    While the Company carries general liability insurance on its properties,
like many other operators of cable television systems it does not insure the
underground portion of its cable television networks. Due to the high cost of
insurance policies relating to satellite operations, the Company does not insure
against possible interruption of access to the transponders leased by it for
satellite transmission of its broadcasting. Accordingly, any catastrophe
affecting a significant portion of the Company's cable television networks or
disrupting its access to its leased satellite transponders could result in
substantial uninsured losses and could have a material adverse effect on the
Company.

YEAR 2000 COMPLIANCE

    The Company has not experienced any problems with its computer systems
relating to distinguishing twenty-first century dates from twentieth century
dates, which generally are referred to as year 2000 problems. The Company is
also not aware of any material year 2000 problems with its clients or vendors.
The Company did not and does not anticipate incurring material expenses or
experiencing any material operation disruptions as a result of any year 2000
problems.

                                       80
<PAGE>
20. CONCENTRATIONS OF BUSINESS AND CREDIT RISK (CONTINUED)
CREDIT WORTHINESS

    All of the Company's customers are located in Poland. As is typical in this
industry, no single customer accounted for more than five percent of the
Company's sales in 1999 or 1998. The Company estimates an allowance for doubtful
accounts based on the credit worthiness of its customers as well as general
economic conditions. Consequently, an adverse change in those factors could
effect the Company's estimate of its bad debts.

21. SUBSEQUENT EVENTS

    Subsequent to December 31, 1999 UPC TV, an affiliate of the Company entered
into joint venture with MTV Network Europe for a 50% equity interest in MTV
Polska for the purpose of producing MTV and VH1 programming for distribution in
Poland. The Company contributes all Ground Zero Media assets to the joint
venture. UPC TV and MTV Polska enter into a distribution agreement whereby MTV
Polska licenses its programming to UPC TV for distribution throughout the UPC
Group.

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

    (a) Previous independent accountant:

        (i) On November 17, 1999, the Company notified KPMG Polska Sp. z o.o.
    ("KPMG") by telephone of its intent to dismiss KPMG as its independent
    accountants, and on the same date KPMG sent a letter to the the Company,
    with a copy to the Chief Accountant at the Securities and Exchange
    Commission, acknowledging such dismissal. On November 26, 1999, the Company
    sent a letter to KPMG formally dismissing KPMG as its independent
    accountants.

        (ii) The report of KPMG Polska Sp. z o.o. on the Company's financial
    statements for the fiscal years ended December 31, 1997 and 1998 contained
    no adverse opinion or disclaimer of opinion and was not qualified or
    modified as to uncertainty, audit scope or accounting principle.

       (iii) The Company's Board of Directors participated in and approved the
    decision to change independent accountants.

        (iv) In connection with its audits for the fiscal years ended
    December 31, 1997 and 1998 and the relationship through the date of the
    dismissal, there have been no disagreements with KPMG on any matter of
    accounting principles or practices, financial statement disclosure, or
    auditing scope or procedure, which disagreements if not resolved to the
    satisfaction of KPMG would have caused them to make reference thereto in
    their report on the financial statements for such fiscal years.

        (v) In a letter dated March 31, 1999 to the Company's Board of Directors
    following its 1998 audit, KPMG commented on certain matters involving the
    internal control structure and operation of the Company, including:

           (i) the need for more experience and resources in the financial
       reporting area;

           (ii) the need for an effective internal audit department;

          (iii) problems in the translation of Polish zloty balances and
       transactions into U.S. dollars;

           (iv) problems with financial statements of certain subsidiaries and
       affiliates presented for consolidation; and

                                       81
<PAGE>
           (v) other control weaknesses involving currency translations, monthly
       reconciliations and other matters that should have been resolved prior to
       being presented for consolidation and audit purposes.

    Certain members of management, including a member of the Company's Board of
Directors, discussed the subject matter of certain of these issues with KPMG.
The Company intends to continue addressing these issues, and the Company has
authorized KPMG to respond fully to the inquiries of the successor accountant
concerning such events.

        (vi) The Company has requested that KPMG furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not it
agrees with the above statements. A copy of such letter, dated December 2, 1999,
is incorporated by reference to this Form 10-K.

    (b) New independent accountant:

        (i) The Company engaged Arthur Andersen Sp. z o.o. ("Arthur Andersen")
as its new independent accountant as of November 30, 1999. During the two most
recent fiscal years and through November 26, 1999, the Company has not consulted
with Arthur Andersen regarding either (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements
(and no written report or oral advice has been provided to the Company by Arthur
Andersen on an accounting, auditing or financial reporting issue); or (ii) any
matter that was either the subject of a disagreement, as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event, as that term is defined in Item
304(a)(1)(v) of Regulation S-K.

                                       82
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

    (A) FINANCIAL STATEMENTS AND SCHEDULES.

    The financial statements as set forth under Item 8 of this report on
Form 10-K are incorporated herein by reference. Financial statement schedules
have been omitted since they are either not required, not applicable, or the
information is otherwise included.

    (B) REPORTS ON FORM 8-K

    The Company filed the following Reports on Form 8-K during the quarter ended
December 31, 1999:

    Report on Form 8-K, filed on December 2, 1999, relating to change in the
Company's certified accountant.

    Report on Form 8-K, filed on November 3, 1999, relating to the expiration of
@ Entertainment's Offer to Repurchase Notes due to a change in control.

    (C) EXHIBIT LISTING

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER
---------------------
<S>                     <C>
 2.1                    Merger Agreement and Plan of Merger among @Entertainment,
                        Inc, United Pan-Europe Communications N.V., and Bison
                        Acquisition Corp., dated as of June 2, 1999 (Incorporated by
                        reference to Exhibit (c)(1) of @Entertainment, Inc.'s
                        Schedule 14D-9)

 2.2                    Form of Common Stockholder Agreement, dated as of June 2,
                        1999, between United Pan-Europe Communications N.V., Bison
                        Acquisition Corp., and certain common stockholders of
                        @Entertainment, Inc.

 2.3                    Form of Preferred Stockholder Agreement, dated as of
                        June 2, 1999, between United Pan-Europe Communications N.V.,
                        Bison Acquisition Corp., and each of @Entertainment, Inc.

 2.4                    Confidentiality Agreement between @Entertainment, Inc. and
                        United Pan-Europe Communications, N.V., dated April 12, 1999
                        (Incorporated by reference to Exhibit (c)(2) of
                        @Entertainment, Inc.'s Schedule 14D-9)

 3(i)                   Certificate of Ownership and Merger Merging Bison
                        Acquisition Corp. Into @ Entertainment.

 3(ii)                  Amended and Restated By-laws of @Entertainment, Inc., as
                        amended.

 3(iii)                 Certificate of Designations, Preferences and Rights of
                        Series A 12% Cumulative Preference Shares and Series B 12%
                        Cumulative Preference Shares. (Incorporated by reference to
                        Exhibit 4.15 to @Entertainment's Annual Report on
                        Form 10-K).

 4.1                    Form of Indenture dated as of January 20, 1999 between
                        @Entertainment and Bankers Trust Company relating to
                        @Entertainment's Series C Senior Discount Notes due 2008.

 4.2                    Form of Indenture dated as of January 27, 1999 between
                        @Entertainment and Bankers Trust Company relating to
                        @Entertainment's 14 1/2% Senior Discount Notes due 2009 and
                        its 14 1/2% Series B Senior Discount Notes due 2009.

 11                     Statement re computation of per share earnings (contained in
                        Note 15 to Financial Statements in this Annual Report on
                        Form 10-K)

 21                     Subsidiaries of @Entertainment, Inc.

 27                     Financial Data Schedule

 99.1                   Letter from KPMG, dated December 2, 1999. (Incorporated by
                        reference to @Entertainment's Form 8-K, filed in
                        December 2, 1999)
</TABLE>

                                       83
<PAGE>
                                   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.

<TABLE>
<S>                                                    <C>  <C>
                                                       @ ENTERTAINMENT, INC.

                                                       By:             /s/ RAY D. SAMUELSON
                                                            -----------------------------------------
                                                                         Ray D. Samuelson
                                                                CHIEF FINANCIAL OFFICER (PRINCIPAL
                                                                FINANCIAL AND PRINCIPAL ACCOUNTING
                                                                             OFFICER)
</TABLE>

    In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                    DATE
                      ---------                                    -----                    ----
<C>                                                    <S>                             <C>
                                                       Chief Executive Officer and
     -------------------------------------------         Director
                  Nimrod J. Kovacs

                                                       Chief Financial Officer
                /s/ RAY D. SAMUELSON                     (Principal Financial and
     -------------------------------------------         Principal Accounting          March 30, 2000
                  Ray D. Samuelson                       Officer)

                 /s/ GENE MUSSELMAN                    Director
     -------------------------------------------                                       March 30, 2000
                   Gene Musselman

                                                       Chairman of the Board of
     -------------------------------------------         Directors
                  Mark L. Schneider

                  /s/ ANTON TUIJTEN                    Director
     -------------------------------------------                                       March 30, 2000
                    Anton Tuijten

                   /s/ SIMON OAKES                     Director
     -------------------------------------------                                       March 30, 2000
                     Simon Oakes
</TABLE>

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